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EXHIBIT 10.14
MERGER AGREEMENT
This MERGER AGREEMENT (this "AGREEMENT") is entered into as of June 1,
2000 by and among VIASOURCE COMMUNICATIONS, INC., a New Jersey corporation
("Viasource"), TC ACQUISITION, INC., a Delaware corporation and direct
wholly-owned subsidiary of Viasource (the "MERGER SUB") and, together with
Viasource, (the "VIASOURCE COMPANIES"), TELECORE, INC., a Delaware corporation
(the "COMPANY"), and XXXX X. XXXXXX, XXXXXXX XXXXXX, XXXX XXXXXX, and XXXXX
XXXXXXX, XXXXXX X. XXXX and XXXXXXX XXXXXXXX, residents of the State of
California and who constitute a majority of the holders of the Company common
stock, par value $0.001 per share ("COMPANY COMMON STOCK") (each a "COMMON
SHAREHOLDER," and collectively, the "COMMON SHAREHOLDERS") and PALOMAR VENTURES
I, L.P., CREST COMMUNICATIONS PARTNERS, L.P., BV-P HOLDING I, L.L.C., XXXXXX X.
XXXX and XXXXX XXXXX who constitute the holders of all of the Company preferred
stock, par value $0.001 per share ("COMPANY PREFERRED STOCK") (each, a
"PREFERRED SHAREHOLDER" and collectively, the "PREFERRED SHAREHOLDERS"). The
Common Shareholders and the Preferred Shareholders are also collectively
referred to as the "SHAREHOLDERS." Certain other capitalized terms used herein
are defined in Article XIII and throughout this Agreement.
RECITALS
A. The Company is engaged in the business of providing broadband network
integration services to businesses throughout the country (the "BUSINESS");
B. The Common Shareholders are the owners of a majority of the Common
Stock of the Company;
C. Viasource and the Board of Directors of the Company have determined
that it is in the best interests of their respective stockholders for Viasource
to acquire the business of the Company. In order to effectuate the acquisition,
Viasource has organized the Merger Sub and the parties have agreed, subject to
the terms and conditions set forth in this Agreement, to merge the Company with
and into the Merger Sub and the separate corporate existence of the Company
shall cease. The Merger Sub shall be the surviving corporation, shall continue
its corporate existence under the laws of the state of Delaware and shall remain
a wholly owned subsidiary of Viasource, and a Shareholder will be issued a
promissory note and the Company's stockholders shall receive shares of common
stock and preferred stock of Viasource, in exchange for the issued and
outstanding Company Common Stock, warrants issued by the Company and Company
Preferred Stock.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Agreement, and
in accordance with the Delaware General Corporation Law, at the Effective Time
(as defined below), the Company will be merged with and into the Merger Sub (the
"MERGER"), with the Merger Sub being the surviving corporation in the Merger and
the separate corporate existence of the Company shall cease.
ARTICLE II
AGGREGATE CONSIDERATION
2.1 AGGREGATE CONSIDERATION. Subject to the terms and conditions set forth
herein, the aggregate consideration that will be paid in the Merger shall be:
(i) SIXTEEN MILLION EIGHT HUNDRED SIXTY-SIX THOUSAND FOUR HUNDRED EIGHTY-ONE
DOLLARS ($16,866,481) by the issuance by Viasource of two subordinated
promissory notes in the form attached as Exhibit A-I and A-II (the "Promissory
Notes"), plus (ii) 6,271,070 shares of Viasource common stock, no par value per
share ("VIASOURCE COMMON STOCK"), in exchange for all of the issued and
outstanding shares of Company Common Stock, and all of the issued and
outstanding rights to purchase Company Common Stock pursuant to certain warrants
issued by the Company (the "COMMON STOCK WARRANTS"), plus (iii) 5,263,470 shares
of Viasource Series A convertible preferred stock, par value $.001 per share
(the "VIASOURCE PREFERRED STOCK"), in exchange for all of the issued and
outstanding shares of Company Preferred Stock and all of the issued and
outstanding rights to purchase Company Preferred Stock pursuant to certain
warrants issued by the Company (the "PREFERRED STOCK WARRANTS") (the "AGGREGATE
CONSIDERATION"). The Common Stock Warrants and the Preferred Stock Warrants are
also collectively referred to as the "WARRANTS". The Shareholders of the Company
shall have the right to receive that portion of the Aggregate Consideration as
set forth on Schedule 2.1.
ARTICLE III
CLOSING/MERGER PROCEDURE
3.1 TIME AND PLACE. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "CLOSING") shall take place at 9:00 a.m. on or
before June 2, 2000, at the offices of Viasource's counsel, or such other time
and place as the parties may otherwise agree. The date on which the Closing
occurs shall be referred to as the "CLOSING DATE".
3.2 FILING OF PLAN OF MERGER. At the Closing, the parties shall cause the
Merger to be consummated by filing a duly executed Certificate of Merger with
the Secretary of State of the State of Delaware in such form as Viasource
determines is required by and in accordance with the relevant provisions of the
Delaware General Corporation Law, as amended (the date and time of such filings
is referred to herein as the "EFFECTIVE DATE" or "EFFECTIVE TIME").
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3.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger
shall be as provided under the Delaware General Corporation Law, as amended.
Without limiting the generality of the foregoing, at the Effective Time:
(a) all property, rights, privileges, policies and franchises of the
Merger Sub and the Company shall vest in the Merger Sub and all debts,
liabilities and duties of the Merger Sub and the Company shall become the debts,
liabilities and duties of the Merger Sub;
(b) the Certificate of Incorporation and Bylaws of the Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation and the Bylaws of the Merger Sub thereafter, except that the
name of the Merger Sub shall be TeleCore, Inc., unless and until amended in
accordance with their terms and as provided by law; and
(c) the directors and officers of the Merger Sub at the Effective
Time shall be the directors and officers as set forth on Schedule 3.3(c) each to
hold a directorship or office in accordance with the Certificate of
Incorporation and Bylaws of the Merger Sub, until his or her respective
successor is duly elected and qualified.
3.4 CONVERSION OF OPTIONS. At the Effective Time Viasource shall assume
the obligations of the Company under the TeleCore, Inc. 1999 Option/Stock
Issuance Plan. Each outstanding stock option granted by the Company pursuant to
the TeleCore, Inc. 1999 Stock Option/Stock Issuance Plan which is outstanding
and unexercised immediately prior to the Effective Time (a "TELECORE OPTION")
shall be assumed by Viasource and converted into an option to purchase shares of
Viasource Common Stock (a "VIASOURCE OPTION") in such number and at such
exercise price as provided below:
(a) the number of shares Viasource Common Stock issuable upon
exercise of each Viasource Option shall be equal to the number of shares of
Company common stock issuable upon exercise of each TeleCore Option multiplied
by 1.4184;
(b) The exercise price per share of Viasource Common Stock under
each Viasource Option shall be equal to the exercise price per share of Company
Common Stock under the TeleCore option divided by 1.4184;
(c) upon each exercise of a Viasource Option by a holder thereof,
the aggregate number of shares of Viasource Common Stock deliverable upon such
exercise shall be rounded down, if necessary, to the nearest whole share and the
aggregate exercise price shall be rounded up, if necessary, to the nearest cent;
(d) The vesting period, exercise period and other terms of the
option shall remain the same; and
(e) the adjustments provided herein with respect to any options
which are "incentive stock options" (as defined in Section 422 of the Code)
shall be effected in a manner consistent with the requirement of Section 424(a)
of the Code.
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3.5 TAX AND ACCOUNTING TREATMENT. The parties hereto acknowledge and agree
that the Merger contemplated hereby shall be treated as a tax free
reorganization under Section 368 of the Code. The parties agree that they shall
take such actions as may be necessary to cause the Merger, undertaken in
accordance with this Agreement, to qualify as a reorganization within the
meaning of Code Section 368(a) of the Code.
3.6 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that the
following shall occur:
(a) The Company and the Shareholders shall have satisfied each of
the conditions set forth in Article XI and shall deliver to Viasource the
documents, certificates, opinions, consents and letters required by Article XI.
(b) Viasource shall have satisfied each of the conditions set forth
in Article XII and shall deliver to the Company and the Shareholders the
documents, certificates, consents and letters required by Article XII.
(c) Viasource shall issue the shares of Viasource Common Stock
issuable pursuant to Section 2.1, registered in the names of the Common
Shareholders as provided in Schedule 2.1 hereto and shall deliver such shares in
the following manner: (i) Viasource shall set aside and hold in accordance with
Section 9.4 stock certificates representing 2,069,453 shares of Viasource Common
Stock (the "HELD BACK COMMON STOCK"), and (ii) Viasource shall deliver stock
certificates representing the balance of the shares of Viasource Common Stock on
Schedule 2.1 to the applicable Shareholders. The number of shares of Held Back
Common Stock registered in the name of each Stockholder is set forth on Schedule
2.1.
(d) Viasource shall issue the shares of Viasource Preferred Stock
issuable pursuant to Section 2.1 registered in the names of the Preferred
Shareholders as provided in Schedule 2.1 hereto and shall deliver such shares in
the following manner: (i) Viasource shall set aside and hold in accordance with
Section 9.4 stock certificates representing 1,736,945 shares of Viasource
Preferred Stock (the "HELD BACK PREFERRED STOCK"), and (ii) Viasource shall
deliver stock certificates representing the balance of the shares of Viasource
Preferred Stock to the applicable Preferred Stockholders. The Held Back Common
Stock and the Held Back Preferred Stock shall be collectively referred to as the
"HELD BACK SHARES." The shares of Viasource Common Stock and Viasource Preferred
Stock, including the Held Back Shares, issuable pursuant to Section 2.1, are
referred to herein as the "VIASOURCE SHARES." The number of shares of Held Back
Preferred Stock registered in the name of each Stockholder is set forth on
Schedule 2.1.
(e) Viasource shall issue the Note to the applicable Shareholder as
provided in Schedule 2.1 hereto.
3.7 FRACTIONAL SHARES. Fractional shares of Viasource Common Stock will
not be issued, instead, shares of Viasource Common Stock will be issued by
rounding any fractional share down to the nearest whole share of Viasource
Common Stock.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIASOURCE
As a material inducement to the Company and the Shareholders to enter into
this Agreement and to consummate the transactions contemplated hereby, Viasource
makes the following representations and warranties to the Company and the
Shareholders:
4.1 CORPORATE STATUS. Viasource and the Merger Sub are duly organized,
validly existing and in good standing under the laws of the jurisdiction of
their incorporation and have the requisite power and authority to own or lease
its properties and to carry on its business as presently conducted. Viasource is
legally qualified or licensed to do business as a foreign company and is in good
standing as a foreign corporation in each of the jurisdictions set forth in
Schedule 4.1. Viasource is legally qualified or licensed to do business as a
foreign company and is in good standing as a foreign corporation in each of the
jurisdictions in which the nature of Viasource's business makes such
qualification or licensing necessary, except in those jurisdictions where the
failure to be so qualified or licensed would not have a Material Adverse Effect
on its business or properties, either individually or in the aggregate.
Viasource has fully complied with all of the requirements of any statute
governing the use and registration of fictitious names, and has the legal right
to use the names under which it operates its businesses. There is no pending or
threatened proceeding for the dissolution, liquidation, insolvency or
rehabilitation of Viasource. All names under which Viasource does business as of
the date hereof are specified on Schedule 4.1. Except as otherwise disclosed in
Schedule 4.1, Viasource has not changed its name or used any assumed or
fictitious name, or been the surviving entity in a merger, acquired any business
or changed its principal place of business or chief executive office, within the
past three years.
4.2 CORPORATE POWER AND AUTHORITY. Viasource and the Merger Sub have the
corporate power and authority to execute and deliver this Agreement, to perform
their respective obligations hereunder and to consummate the transactions
contemplated hereby. Viasource and the Merger Sub have taken all corporate
action necessary to authorize the execution and delivery of this Agreement, the
performance of their respective obligations hereunder and the consummation of
the transactions contemplated hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
Viasource and the Merger Sub and constitutes a legal, valid and binding
obligation of Viasource and the Merger Sub, enforceable against Viasource and
the Merger Sub in accordance with its terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
4.4 VIASOURCE COMMON STOCK: CAPITALIZATION. Schedule 4.4 sets forth (a)
the number of authorized shares, (b) the number of issued and outstanding shares
and (c) the number of shares reserved for issuance of each class of capital
stock of Viasource. Viasource is the sole record and beneficial owner of all of
the capital stock of Merger Sub. All of the issued and outstanding shares
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of Viasource Common Stock (i) have been duly authorized and validly issued and
are fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, (iii) were not issued in violation
of any preemptive rights or rights of first refusal, (iv) were issued for fair
market value in exchange for lawful consideration, and (v) no preemptive rights
or rights of first refusal exist, and no such rights arise by virtue of or in
connection with the transactions contemplated hereby. Except as set forth on
Schedule 4.4, there are no outstanding or authorized rights, options, warrants,
convertible securities, subscription rights, conversion rights, exchange rights
or other agreements or commitments of any kind that could require Viasource to
issue or sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to Viasource. There are no proxies, voting rights or other agreements or
understandings with respect to the voting or transfer of the shares of
Viasource. Except as set forth on Schedule 4.4, (A) Viasource is not obligated
to redeem or otherwise acquire any of the Viasource Common Stock and (B) there
has been no transaction or action taken with respect to the equity ownership of
Viasource in contemplation of the transactions described in this Agreement. Upon
consummation of the transactions contemplated hereby and the issuance and
delivery of certificates representing the Viasource Shares to the shareholders,
the Viasource Shares will be validly issued, fully paid and non-assessable
shares of Viasource Common Stock and the Viasource Preferred Stock as the case
may be.
4.5 NO VIOLATION; CONSENTS AND APPROVALS. Except for any approvals or
consents identified in Schedule 4.5 as requiring the consent of third parties,
the execution and delivery of this Agreement by Viasource, the performance by
Viasource of its obligations hereunder and the consummation by it of the
transactions contemplated by this Agreement will not (a) contravene any
provision of the Certificates of Incorporation or Bylaws of Viasource or Merger
Sub, (b) violate or conflict with any law, statute, ordinance, rule, regulation,
decree, writ, injunction, judgment or order of any Governmental Authority or of
any arbitration award which is either applicable to, binding upon or enforceable
against Viasource, (c) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right of payment
or right to terminate, amend, modify, abandon or accelerate, any Contract which
is applicable to, binding upon or enforceable against Viasource or Merger Sub,
(d) result in or require the creation or imposition of any Lien upon or with
respect to any of the properties or assets of Viasource, (e) give to any
individual or entity a right or claim against Viasource or (f) require the
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, any court or tribunal or any other Person.
4.6 RECORDS OF THE VIASOURCE COMPANIES. The copies of the Certificate of
Incorporation, Bylaws, and other documents and agreements of Viasource and the
Merger Sub which were provided to the Company and the Shareholders are true,
accurate and complete and reflect all amendments made through the date of this
Agreement. All material corporate actions taken by Viasource have been duly
authorized or ratified. All accounts, books, ledgers and official and other
records of Viasource are substantially complete and fairly, fully and accurately
reflect all matters contained therein.
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4.7 FINANCIAL STATEMENTS. Viasource has delivered to the Company and the
Shareholders the financial statements of Viasource for the years ended January
2, 1999, and January 1, 2000, including the notes thereto, (collectively, the
"VIASOURCE FINANCIAL STATEMENTS"), copies of which are attached hereto as
Schedule 4.7. The Viasource Financial Statements have been audited by Xxxxxx
Xxxxxxxx, LLP, have been prepared in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, and fairly present the
financial position of Viasource and its subsidiaries at each of the balance
sheet dates and the results of operations for the periods covered thereby. The
books and records of Viasource fully and fairly reflect all transactions,
properties, assets and liabilities of Viasource in all material respects. There
are no extraordinary items of income or expense during the periods covered by
the Viasource Financial Statements. The Viasource Financial Statements reflect
all adjustments necessary for a fair presentation of the financial information
contained therein.
4.8 DISCLOSURE. Except as later corrected in writing prior to the date
hereof, no information furnished by Viasource to the Company and the
Shareholders in connection with the Merger contains any untrue statement of a
material fact or omits to state a material fact required to be stated herein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading as of the date hereof. The representations
and warranties and statements of Viasource contained in this Agreement
(including, without limitation, the Schedules attached hereto) or any agreement
executed in connection herewith or in any certificate delivered pursuant hereto
or thereto do not contain any untrue statement of a material fact, and, when
taken together, do not omit to state any material fact necessary to make such
representations, warranties and statements, in light of the circumstances under
which they are made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Viasource to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company makes the following
representations and warranties to Viasource, which representations set forth in
Sections 5.10 through Section 5.33 and as otherwise indicated shall also be
deemed to be made by the Company's subsidiaries set forth on Schedule 5.9:
5.1 CORPORATE STATUS. The Company and its subsidiaries are duly organized,
validly existing and in good standing under the laws of the respective
jurisdictions of their formation and have the requisite power and authority to
own or lease their properties and to carry on its business as now being
conducted. The Company and its subsidiaries are legally qualified or licensed to
do business as a foreign company and are in good standing as a foreign
corporation in each of the jurisdictions set forth in Schedule 5.1. The Company
and its subsidiaries are legally qualified or licensed to do business as a
foreign company and are in good standing as a foreign corporation in each of the
jurisdictions in which the nature of the Company's Business and its
subsidiaries' businesses makes such qualification or licensing necessary, except
in those jurisdictions where the failure to be so qualified or licensed would
not have a Material Adverse Effect on the Company's business or properties,
either individually or in the aggregate. The Company and its subsidiaries have
fully complied with all of the requirements of any statute governing the use and
registration of
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fictitious names, and have the legal right to use the names under which they
operate their businesses. There is no pending or threatened proceeding for the
dissolution, liquidation, insolvency or rehabilitation of the Company or its
subsidiaries. All names under which the Company or its subsidiaries does
business as of the date hereof are specified on Schedule 5.1. Except as
otherwise disclosed in Schedule 5.1, the Company and its subsidiaries have not
changed its name or used any assumed or fictitious name, or been the surviving
entity in a merger, acquired any business or changed its principal place of
business or chief executive office, within the past three years.
5.2 POWER AND AUTHORITY. The Company has the corporate power and authority
to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The Company has taken all
corporate action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby.
5.3 ENFORCEABILITY. This Agreement has been duly executed and delivered by
the Company and constitutes the legal, valid and binding obligation of it,
enforceable against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
5.4 THE SHAREHOLDERS AND OFFICERS OF THE COMPANY. Schedule 5.4 sets forth,
with respect to the Company, (a) the name and address, and the number of
outstanding shares of each class of its capital stock owned by, each stockholder
of record as of the close of business on the date of this Agreement; (b) the
name and address, and number of shares of each class of its capital stock
beneficially owned by, each beneficial owner of outstanding shares of capital
stock (to the extent that record and beneficial ownership of any such shares are
different) provided, however, that the Preferred Shareholders, other than Xxxxxx
X. Xxxx and Xxxxx Xxxxx, shall not be required to provide such information; and
(c) the name and title of each officer of the Company.
5.5 CAPITALIZATION. Schedule 5.5(a) sets forth (a) the number of
authorized shares, (b) the number of issued and outstanding shares and (c) the
number of shares reserved for issuance of each class of capital stock of the
Company (the "COMPANY SHARES") and its subsidiaries (the "SUBSIDIARY SHARES").
Except as set forth on Schedule 5.5(b), all of Company Shares and Subsidiary
Shares (a) have been duly authorized and validly issued and are fully paid and
non-assessable, (b) were issued in compliance with all applicable state and
federal securities laws, (c) were not issued in violation of any preemptive
rights or rights of first refusal, (d) were issued for fair market value in
exchange for lawful consideration, and (e) no preemptive rights or rights of
first refusal exist, and no such rights arise by virtue of or in connection with
the transactions contemplated hereby. Except as set forth on Schedule 5.5(c)
there are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require the Company to issue or
sell any shares of its capital stock (or securities convertible into or
exchangeable for shares of its capital stock). There are no outstanding stock
appreciation, phantom stock, profit participation or other similar rights with
respect to the Company. There are no proxies, voting rights or other
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agreements or understandings with respect to the voting or transfer of the
shares of the Company. Except as set forth on Schedule 5.5(d), (i) the Company
is not obligated to redeem or otherwise acquire any of the Company Shares and
(ii) there has been no transaction or action taken with respect to the equity
ownership of the Company in contemplation of the transactions described in this
Agreement.
5.6 NO VIOLATION; CONSENTS AND APPROVALS. Except for any approvals or
consents required under the Material Contracts (as defined in Section 5.23)
identified in Schedule 5.23 as requiring the consent of third parties, the
execution and delivery of this Agreement by the Company and the Shareholders,
the performance by the Company and the Shareholders of their obligations
hereunder and the consummation by them of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Certificate of
Incorporation or Bylaws of the Company, (b) violate or conflict with any law,
statute, ordinance, rule, regulation, decree, writ, injunction, judgment or
order of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against the Company, (c) conflict
with, result in any breach of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right of payment or right to terminate, amend, modify,
abandon or accelerate, any Contract which is applicable to, binding upon or
enforceable against the Company, (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties or assets
of the Company, (e) give to any individual or entity a right or claim against
the Company or (f) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any applicable filings required to be made
by Viasource.
5.7 RECORDS OF THE COMPANY. The copies of the Certificate of
Incorporation, Bylaws, and other documents and agreements of the Company and its
subsidiaries which were provided to Viasource are true, accurate and complete
and reflect all amendments made through the date of this Agreement. The minute
books for the Company and its subsidiaries made available to Viasource for
review were correct and complete in all material respects as of the date hereof,
and such minute books contain an accurate record of all material corporate
actions of the stockholders and directors (and any committees thereof) of the
Company and its subsidiaries taken by written consent or at a meeting since
Incorporation. All material corporate actions taken by the Company and its
subsidiaries have been duly authorized or ratified. All accounts, books, ledgers
and official and other records of the Company and its subsidiaries are
substantially complete and fairly, fully and accurately reflect all matters
contained therein. The stock ledgers of the Company, as previously made
available to Viasource, contain accurate and complete records of all issuances,
transfers and cancellations of shares of the capital stock of the Company.
5.8 FINANCIAL STATEMENTS. The Company has delivered to Viasource the
financial statements of the Company and its subsidiaries for the years ended
December 31, 1997, 1998 and 1999, including the notes thereto, (collectively,
the "TELECORE FINANCIAL STATEMENTS"), copies of which are attached hereto as
Schedule 5.8. The balance sheet dated as of March 31, 2000 of the Company
included in the TeleCore Financial Statements is referred to herein as the
"CURRENT BALANCE Sheet." The TeleCore Financial Statements have been audited by
KPMG, LLP, have been prepared in accordance with generally accepted accounting
principles ("GAAP"), and fairly present
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the financial position of the Company at each of the balance sheet dates and the
results of operations for the periods covered thereby. The Current Balance Sheet
fairly presents the financial position of the Company and the results of
operations as of March 31, 2000. The books and records of the Company fully and
fairly reflect all transactions, properties, assets and liabilities of the
Company in all material respects. There are no extraordinary items of income or
expense during the periods covered by the TeleCore Financial Statements, and the
Current Balance Sheet does not reflect any writeup or revaluation increasing the
book value of any assets, except as specifically disclosed in the notes thereto.
The TeleCore Financial Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
5.9 SUBSIDIARIES. Except as set forth in Schedule 5.9 the Company does not
own, directly or indirectly, any outstanding voting securities of or other
interests in, or have any control over, any other company, partnership, joint
venture or other business entity.
5.10 LIABILITIES OF THE COMPANY. The Company does not have any liabilities
or obligations, whether accrued, absolute, contingent or otherwise, except (a)
to the extent reflected or taken into account in the Current Balance Sheet, (b)
liabilities and obligations incurred in the ordinary course of business
consistent with past practice (none of which relates to breach of contract,
warranty, tort, infringement or violation of law, or which arose out of any
action, suit, claim, governmental investigation or arbitration proceeding), (c)
normal accruals, reclassifications and audit adjustments which would be
reflected on an audited financial statement and which would not be material in
the aggregate or (d) as set forth on Schedule 5.10. Schedule 5.10 includes all
indebtedness owed by the Company as of the date hereof for borrowed money
(including principal and accrued but unpaid interest) and remaining payments on
capitalized equipment leases, of the Company. Schedule 5.10 also includes all
contingent liabilities of the Company (and the amount of such liabilities)
including, without limitation, those resulting from deposits, fees or any other
form of payments, in cash or kind, previously received by the Company for
services which have not been completed or otherwise provided.
5.11 LITIGATION. Except as set forth on Schedule 5.11, there is no action,
suit, or other legal or administrative proceeding or governmental investigation
pending, threatened, or to the Company's knowledge anticipated or contemplated
against, by or affecting the Company, or any of the Company's properties or
assets, or which question the validity or enforceability of this Agreement or
the transactions contemplated hereby, and to the Company's knowledge there is no
basis for any of the foregoing. There are no outstanding orders, decrees or
stipulations issued by any Governmental Authority in any proceeding to which the
Company is or was a party which have not been complied with in full or which
continue to impose any material obligations on the Company.
5.12 ENVIRONMENTAL MATTERS
The Company has at all times complied with all applicable Environmental
Laws.
5.13 REAL ESTATE, PERSONAL PROPERTY.
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(a) Except as set forth on Schedule 5.13, the Company does not own
any real property or any interest therein (including without limitation any
option or other right or obligation to purchase any real property or any
interest therein). The Shareholders do not own any real property (or any
interest therein, including leasehold interests) used by the Company.
(b) Schedule 5.13 sets forth a list of all leases, licenses or
similar agreements for the use or occupancy of real property to which the
Company is a party ("REAL PROPERTY LEASES") copies of which have previously been
furnished to Viasource, in each case setting forth: (a) the lessor and lessee
thereof and the date and term of each of such leases, (b) the street address of
each property covered thereby (the "LEASED PREMISES"), and (c) a brief
description (including size and function) of the principal improvements and
buildings thereon. The Real Property Leases are in full force and effect and
have not been amended, and neither the Company nor, to the knowledge of the
Company, any other party thereto is in default or breach under any such Lease.
Except for the effect of the transactions contemplated hereby, no event has
occurred which, with the passage of time or the giving of notice or both, would
cause a breach of or default by the Company under any of such leases and, to the
knowledge of the Company there is no breach or anticipated breach by any other
party to such leases. With respect to each of the Leased Premises: (i) the
Company has valid leasehold interests or other rights of use and occupancy in
the Leased Premises, free and clear of any Liens on such leasehold interests or
other rights of use and occupancy, or any covenants, easements or title defects
known to or created by the Company, except as do not affect the occupancy or
uses of such properties; (ii) are in good repair and condition, normal wear and
tear excepted, and are in the aggregate sufficient to satisfy the Company's
respective normal business activities as conducted thereat; (iii) each of the
Leased Premises (a) has access to public roads sufficient to satisfy the current
and reasonably anticipated normal transportation requirements of the Company's
Business as presently conducted at such parcel, and (b) is served by all
utilities in such quantity and quality as are sufficient to satisfy the current
normal business activities as conducted at such parcel; and (iv) the Company has
not received notice of (a) any condemnation proceeding with respect to any
portion of the Leased Premises or any access thereto and to the knowledge of the
Company, no such proceeding is contemplated by any Governmental Authority, or
(b) any special assessment which may affect any of the Leased Premises and to
the knowledge of the Company, no such special assessment is contemplated by any
Governmental Authority.
(c) Schedule 5.13(c) sets forth all personal property included (or
that will be included) on the Current Balance Sheet, all personal property of
the Company with a value in excess of $5,000 and acquired since the date of the
Current Balance Sheet, and all leases for personal property to which the Company
is a party involving personal property having a value in excess of $2,500,
including, in each case, complete and correct copies of all such leases and
including an indication as to which personal property is currently owned, or was
formerly owned, by the Shareholders or the Company or their Affiliates. Except
as set forth in Schedule 5.13(c), (i) all of the personal property of the
Company is in good working order and condition, ordinary wear and tear excepted,
and have been maintained in accordance with all applicable specifications and
warranties, and (ii) all personal property loans set forth in Schedule 5.13(c)
are in full force and effect and constitute valid and binding agreements of the
Company and the other parties thereto in accordance with their respective terms.
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5.14 GOOD TITLE TO AND CONDITION OF ASSETS
(a) Except (i) as reflected in the TeleCore Financial Statements and
the Current Balance Sheet, (ii) for statutory liens for payment of current Taxes
that are not yet delinquent, (iii) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like liens arising in the ordinary course of
business, payment for which is not yet due, and (iv) as set forth on Schedule
5.14, the Company is the true and lawful owner of the assets of the Business
(the "Assets") free and clear of all Liens.
(b) The Assets currently in use or necessary for the conduct of the
business and operations of the Company are in good operating condition, normal
wear and tear excepted, and have been maintained substantially in accordance
with all applicable manufacturer's specifications and warranties.
(c) The Assets constitute all the properties, assets and rights
forming a part of, used, held or intended to be used in, and all such
properties, assets and rights as are necessary in the conduct of the Business.
5.15 COMPLIANCE WITH LAWS. The Company is and has been in compliance with
all laws, regulations and orders applicable to it, its business and operations
(as conducted by it now and in the past), the Assets and the Leased Premises and
any other properties and assets (in each case owned or used by it now or in the
past) except for non compliance that would not have a Material Adverse Effect on
the Company's financial condition or operations. The Company has not been cited,
fined or otherwise notified of any asserted past or present failure to comply
with any laws, regulations or orders and no proceeding with respect to any such
violation is pending or threatened. Neither the Company, nor any of its
respective employees, officers, directors or agents, has made any payment of
funds in connection with their business which is prohibited by law, and no funds
have been set aside to be used in connection with their business for any payment
prohibited by law. The Company is not subject to any Contract, decree or
injunction in which it is a party which restricts the continued operation of the
Business, any business or the expansion of the Business or any business to other
geographical areas, customers and suppliers or lines of business.
5.16 LABOR AND EMPLOYMENT MATTERS. Schedule 5.16 sets forth the name,
address, social security number and current rate of compensation of each of the
employees of the Company. Except as set forth on Schedule 5.16, the Company is
not a party to or bound by any collective bargaining agreement or any other
agreement with a labor union, and to the Company's knowledge there has been no
effort by any labor union during the twenty-four (24) months prior to the date
hereof to organize any employees of the Company into one or more collective
bargaining units or expand the existing collective bargaining unit. No event has
occurred which constitutes, or after notice or the passage of time or both,
would constitute, a default by the Company under the collective bargaining
agreement set forth on Schedule 5.16. There is no pending or threatened labor
dispute, strike or work stoppage which affects or which may affect the business
of the Company or which may interfere with its continued operations. Neither the
Company nor any agent, representative or employee thereof has within the last
twenty-four (24) months committed any unfair labor practice as defined in the
National Labor Relations Act, as amended, and there is no pending
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or threatened charge or complaint against the Company by or with the National
Labor Relations Board or any representative thereof. There has been no strike,
walkout or work stoppage involving any of the employees of the Company during
the twenty-four (24) months prior to the date hereof. The Company is not aware
that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with the Company as a result of the
Merger or otherwise. Schedule 5.16 contains information about each contract,
agreement or plan of the following nature, whether formal or informal, and
whether or not in writing, to which the Company is a party or under which it has
an obligation: (i) employment agreements, (ii) employee handbooks, policy
statements and similar plans, (iii) noncompetition agreements and (iv)
consulting agreements. The Company has provided copies of the contracts set
forth on Schedule 5.16 to Viasource. The Company has complied in all material
respects with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities, including but not limited to,
the Civil Rights Act of 1964, the Fair Labor Standards Act, and the Americans
with Disabilities Act, as amended.
5.17 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. Except as set forth on Schedule 5.17,
the Company has no employee benefit plans or arrangements, including but not
limited to employee pension benefit plans, as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
multiemployer plans, as defined in Section 3(37) of ERISA, employee welfare
benefit plans, as defined in Section 3(1) of ERISA, deferred compensation plans,
stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and
policies, whether or not described in Section 3(3) of ERISA, in which employees,
their spouses or dependents, of the Company participate ("EMPLOYEE BENEFIT
PLANS"). Copies of all Employee Benefit Plans have been provided to Viasource.
(b) CONTROLLED GROUP LIABILITY. Neither the Company, nor any entity
that would be aggregated with it under Code Section 414(b), (c), (m) or (o): (i)
has ever terminated or withdrawn from an employee benefit plan under
circumstances resulting (or expected to result) in liability to the Pension
Benefit Guaranty Company ("PBGC"), the fund by which the employee benefit plan
is funded, or any employee or beneficiary for whose benefit the plan is or was
maintained (other than routine claims for benefits); (ii) has any assets subject
to (or expected to be subject to) a lien for unpaid contributions to any
employee benefit plan; (iii) has failed to pay premiums to the PBGC when due;
(iv) is subject to (or expected to be subject to) an excise tax under Code
Section 4971; or (v) has engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA.
(c) OTHER LIABILITIES. (i) Except as set forth on Schedule 5.17, the
Company is not under any obligation to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code) and (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions or
reimbursements for all periods ending prior to or as of the date hereof shall
have been made, or if not yet due, have been properly reflected on the Current
Balance Sheet.
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(d) TERMINATION OF EMPLOYMENT. Except as may be required under
applicable law, the Company is not obligated under any Employee Benefit Plan to
provide medical or death benefits with respect to any employee or former
employee of the Company or its predecessors after termination of employment. The
Company has complied with the notice and continuation of coverage requirements
of Section 4980B of the Code, and the regulations thereunder, and Part 6 of
Title I of ERISA ("COBRA") and has complied with the Health Insurance
Portability and Accountability Act of 1996 ("HIPAA") with respect to any group
health plan within the meaning of Section 5000(b)(1) of the Code.
(e) COMPLIANCE. Each Employee Benefit Plan is in compliance with all
applicable laws and regulations and has been operated in accordance with its
terms and provisions. With respect to each Employee Benefit Plan there are no
actions claims or disputes pending by any third party and no audits,
proceedings, claims or demands pending by any governmental authority (other than
routine benefit claims). All amendments required to bring any Employee Benefit
Plan into conformity with any applicable provisions of ERISA and the Code have
been duly adopted, except in the event the time provided under Section 401(b) of
the Code and regulations or IRS pronouncements thereunder for making retroactive
amendments has not expired.
5.18 TAX MATTERS.
(a) All Tax Returns required to be filed by, on behalf of or with
respect to the Company and each of its subsidiaries have been prepared in the
manner required by applicable law and duly and timely filed with the appropriate
taxing authorities in all jurisdictions in which such Tax Returns are required
to be filed (after giving effect to any valid extensions of time in which to
make such filings), and all such Tax Returns were true, complete and correct in
all material respects.
(b) All Taxes payable, whether or not shown (or required to be
shown) on a Tax Return, by, on behalf of or with respect to the Company, each of
its subsidiaries or any Affiliated Group of which the Company or any of its
subsidiaries is or was a member, or in respect of their income, assets or
operations (including interest and penalties) have been fully and timely paid,
and adequate reserves or accruals for Taxes (without regard to deferred Tax
assets and liabilities) have been provided in the Financial Statements with
respect to any Taxable Period for which Tax Returns have not yet been filed or
for which Taxes are not yet due and owing (the "TAX RESERVE"). The Company and
each of its subsidiaries have made all required estimated tax payments to avoid
any underpayment penalty.
(c) Neither the Company nor any of its subsidiaries has executed or
filed with any taxing authority any agreement, waiver or other document or
arrangement extending or having the effect of extending the period for
assessment or collection of Taxes (including, but not limited to, any applicable
statute of limitation), and no power of attorney with respect to any Tax matter
is currently in force.
(d) The Company and each of its subsidiaries has complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes, including, without limitation, the
withholding and reporting requirements under Sections
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1441 through 1464, 3121 through 3128, 3401 through 3406 and 6041 through 6049 of
the Code, and has duly and timely withheld from employee salaries, wages and
other compensation and has paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
(e) The Company has made or will make available to Viasource true
and complete copies of (i) all U.S. federal, state, local and foreign income or
franchise Tax Returns and payroll Tax Returns of the Company and each of its
subsidiaries relating to the taxable periods commencing on or after January 1,
1995 and (ii) any audit report issued within the last three years relating to
Taxes due from or with respect to the Company and any of its subsidiaries, or
their income, assets or operations. The Tax Returns filed by, on behalf of or
with respect to the Company or its subsidiaries identified on the Disclosure
Schedule have been examined by the relevant taxing authority or the statute of
limitations with respect to such Tax Returns have expired.
(f) Schedule 5.18 lists all material types of Taxes paid and
material types of Tax Returns filed by, on behalf of or with respect to the
Company and each of its subsidiaries. No claim has been made by a taxing
authority in a jurisdiction where the Company or any of its subsidiaries does
not file Tax Returns such that it is or may be subject to taxation by that
jurisdiction.
(g) All deficiencies asserted or assessments made as a result of
examinations by any taxing authority of the Tax Returns of the Company or any of
its subsidiaries have been fully paid or are being contested in good faith, and
there are no other audits or investigations by any taxing authority or
proceedings in progress, nor has the Company or any of its subsidiaries received
any notice from any taxing authority that it intends to conduct such an audit or
investigation. No issue has been raised in writing by a U.S. federal, state,
local or foreign taxing authority in any current or prior examination which, by
application of the same or similar principles, could reasonably be expected to
result in a proposed adjustment or deficiency for any subsequent Taxable Period.
The results of any settlement and the necessary adjustments resulting therefrom
are properly reflected in the Financial Statements.
(h) Neither the Company, its subsidiaries or any other Person
(including any of the Shareholders) on behalf of the Company or its subsidiaries
has (i) filed a consent pursuant to Section 341 (f) of the Code or agreed to
have Section 341 (f)(2) of the Code apply to any disposition of a subsection (f)
asset (as such term is defined in Section 341 (f)(4) of the Code) owned by the
Company or any of its subsidiaries, (ii) agreed to or is required to make any
adjustments pursuant to Section 481 (a) or Section 482 of the Code or any
similar provision of state, local or foreign law by reason of a change in
accounting method initiated by the Company or any of its subsidiaries or
otherwise or has any knowledge that the Internal Revenue Service has proposed
any such adjustment or change in accounting method, or has any application
pending with any taxing authority requesting permission for any changes in
accounting methods that relate to the business or operations of the Company or
its subsidiaries, or has otherwise taken any action that would have the effect
of deferring any liability for Taxes from any Taxable Period ending on or before
the Closing Date to any Taxable Period ending thereafter, (iii) executed or
entered into a closing agreement pursuant to Section 7121 of the Code or any
predecessor provision thereof or any similar provision of state, local
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or foreign law with respect to the Company or any of its subsidiaries, or (iv)
requested any extension of time within which to file any Tax Return, which Tax
Return has since not been filed.
(i) No property owned by the Company or any of its subsidiaries (i)
is property required to be treated as being owned by another Person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (ii) constitutes "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code or (iii) is "tax-exempt bond financed property"
within the meaning of Section 168(g) of the Code.
(j) Neither the Company nor any of its subsidiaries is a party to
any tax sharing or similar agreement or arrangement (whether or not written)
relating to allocating or sharing the payment of, or liability for, Taxes with
respect to any Taxable Period.
(k) There is no contract, agreement, plan or arrangement covering
any person that, individually or collectively, or when taken together with any
payment that may be made under this Agreement or any agreements contemplated
hereby, could give rise to the payment of any amount that would not be
deductible by the Company or any of its Affiliates by reason of Section 280G of
the Code, or would constitute compensation in excess of the limitation set forth
in Section 162(m) of the Code.
(l) The Company and each of its subsidiaries has substantial
authority for the treatment of or has disclosed (in accordance with Section
6662(d)(2)(B)(ii) of the Code) on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income tax within the meaning of Section 6662(d) of the Code.
(m) Neither the Company nor any of its subsidiaries is subject to
any private letter ruling of the Internal Revenue Service or comparable rulings
of other taxing authorities.
(n) There are no security interests or liens as a result of any
unpaid Taxes upon any of the assets of the Company or any of its subsidiaries.
(o) All material Tax elections of the Company and each of its
subsidiaries are clearly set forth in the Tax Returns described in Section
3.17(e). Neither the Company nor any of its subsidiaries has elections in effect
for U.S. federal income tax purposes under Sections 108, 338, 441(f), 473, 1017,
1033 or 4977 of the Code.
(p) Except as otherwise set forth on Schedule 5.18, neither the
Company nor any of its subsidiaries has ever been a member of any Affiliated
Group of Companies for any Tax purposes, other than the Affiliated Group of
which the Company is the parent. Neither the Company nor any of its subsidiaries
has any liability for Taxes of any person (other than the Company and its
subsidiaries) under Section 1. 1502-6 of the Treasury regulations under the Code
(or any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise. Except as otherwise set forth on Schedule
5.18, neither the Company nor any of its subsidiaries own
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any interest in any entity that is treated as a partnership for U.S. federal
income tax purposes or could be treated as a pass-through or transparent entity
for any Tax purpose.
(q) None of the Shareholders is a foreign person within the meaning
of Section 1445 of the Code.
(r) Neither the Company nor any of its subsidiaries has filed an
election pursuant to Revenue Procedure 95-11, 1995-1 C.B. 505 or under Treasury
regulation Section 1. 1 502-75(c) or any similar provision of foreign, national,
international, state or local law.
(s) Since the Current Balance Sheet, neither the Company nor any of
its subsidiaries has incurred any liability for Taxes outside of the ordinary
course of business.
(t) Neither the Company nor any of its subsidiaries has any deferred
income reportable for a period ending after the Closing Date but that is
attributable to a transaction (e.g., an installment sale) occurring in, or
resulting from a change of accounting method for, a period ending on or prior to
the Closing Date.
(u) Neither the Company nor any of its subsidiaries has distributed
the stock of any the Company in a transaction satisfying the requirements of
Section 355 of the Code since April 16, 1997. The stock of neither the Company
nor any of its subsidiaries has been distributed in a transaction satisfying the
requirements of Section 355 of the Code since April 16, 1997.
(v) None of the indebtedness of the Company or any of its
subsidiaries constitutes "corporate acquisition indebtedness" (as defined in
Section 279(b) of the Code) with respect to which any interest deductions may be
disallowed under Section 279 of the Code.
(w) Neither the Company nor any of its subsidiaries have been a
member of an Affiliated Group other than the Affiliated Group of which the
Company is the common parent.
5.19 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by companies in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such companies (the
"INSURANCE Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. As of the Effective Time, each of the
Insurance Policies will be in full force and effect. None of the Insurance
Policies will lapse or terminate as a result of the transactions contemplated by
this Agreement. The Company has complied with the provisions of such Insurance
Policies. Schedule 5.19 contains (i) a complete and correct list of all
Insurance Policies and all amendments and riders thereto (copies of which have
been provided to Viasource) and (ii) a description of each pending claim under
any of the Insurance Policies for an amount in excess of $5,000 that relates to
loss or damage to the properties, assets or businesses of the Company. The
Company has not failed to give, in a timely manner, any notice required under
any of the Insurance Policies to preserve its rights thereunder.
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5.20 RECEIVABLES. All of the Receivables (as hereinafter defined) are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of the Company. All of the Receivables are good and
collectible receivables subject to the allowance for doubtful accounts set forth
on the Current Balance Sheet, and will be collected in full in accordance with
the terms of such receivables (and in any event within one hundred and eighty
(180) days following the date hereof) without setoff or counterclaims. Schedule
5.20 sets forth a true, complete and accurate list of all Receivables. For
purposes of this Agreement, the term "RECEIVABLES" means all receivables of the
Company, including, without limitation, all trade account receivables arising
from the provision of goods and/or services, notes receivable and insurance
proceeds receivable.
5.21 LICENSES AND PERMITS. The Company possesses all licenses, approvals,
permits or authorizations from governmental authorities (collectively, the
"Permits") for the operation of the Business, the lack of which could materially
and adversely affect the Business, properties or financial condition of the
Company, and Schedule 5.21 sets forth a true, complete and accurate list of all
such Permits and all applications for Permits. All such Permits are valid and in
full force and effect, the Company is in full compliance with the respective
requirements thereof in all material respects, and no proceeding is pending or
threatened to revoke or amend any of them.
5.22 INTELLECTUAL PROPERTY
(a) Schedule 5.22 contains a true and complete list of the Company's
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service xxxx applications, Internet domain names, Internet domain
name applications, copyrights and copyright registrations and applications and
other filings and formal actions made or taken pursuant to federal, state, local
and foreign laws by the Company to protect its interests therein (the
"INTELLECTUAL PROPERTY").
(b) The Intellectual Property consists solely of items and rights
which are: (i) owned Intellectual Property or (ii) in the public domain. The
Company possesses all rights in Intellectual Property necessary to conduct the
Business, including without limitation, to the extent required to make, use,
reproduce, modify, adopt, create derivative works based on, translate,
distribute (directly and indirectly), transmit, display and perform publicly,
license, rent and lease and assign and sell, the Intellectual Property. Except
as set forth on Schedule 5.22, no payments are required for the continued use of
the Intellectual Property.
(c) The Company's reproduction, manufacturing, distribution,
licensing, sublicensing, sale or the exercise of any other rights in any
Intellectual Property or product, work, technology or process as now used in the
conduct of the Business or offered or proposed for use in the conduct of the
Business does not infringe on any copyright, trade secret, trademark, service
xxxx, trade name, trade dress, firm name, Internet domain name, logo, trade
dress of any person or the patent of any person. No claims have been asserted or
are threatened by any person, nor are there any valid grounds for any bona fide
claim (i) challenging the validity, effectiveness or ownership by the Company of
any of the Intellectual Property, or (ii) to the effect that the Company's use,
distribution, licensing, sublicensing, sale or any other exercise of rights in
any product, work,
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technology or process as now used or offered or proposed for use in the conduct
of the Business, infringes or will infringe on any intellectual property or
other proprietary right of any person. All registered, granted or issued
patents, trademarks, Internet domain names and copyrights held by the Company
are enforceable and subsisting. To the Company's knowledge there is no
unauthorized use, infringement or misappropriation of any of the Intellectual
Property owned by the Company by any third party, employee or former employee.
(d) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the Intellectual Property owned by the Company on behalf of the
Company (i) have been a party to a "work-for-hire" arrangement or agreements
with the Company in accordance with applicable national and state law that has
accorded the Company full, effective, exclusive and original ownership of all
tangible and intangible property arising during the course of employment, or
(ii) have executed appropriate instruments of assignment in favor or the Company
as assignee that have conveyed to the Company effective and exclusive ownership
of all tangible and intangible property arising during the course of employment.
(e) The Company is not, nor as a result of the execution or delivery
of this Agreement or performance of the Company's obligations hereunder will the
Company be, in violation of any license, sublicense, agreement or instrument to
which the Company is a party or otherwise bound, nor will execution or delivery
of this Agreement, or performance of the Company's obligations hereunder cause,
the diminution, termination or forfeiture of any Intellectual Property.
(f) Schedule 5.22(f) contains a true and complete list of all of the
Company's software programs developed by the Company (the "SOFTWARE PROGRAMS").
The Company owns full and unencumbered right and good, valid and marketable
title to such Software Programs free and clear of all mortgages, pledges, liens,
security interests, conditional sales agreements, encumbrances or charges of any
kind or uses such Software Programs pursuant to a valid license.
(g) The source code and system documentation relating to the
Software Programs (i) have at all times been maintained in strict confidence,
(ii) have been disclosed by the Company only to employees who have a "need to
know" the contents thereof in connection with the performance of their duties to
the Company and who have executed the nondisclosure agreements referred to in
Section 5.22(d), and (iii) have not been disclosed to any third party.
(h) All software sold or licensed by the Company to end users, or
used by the Company, has been duly licensed by the owner of such software and is
set forth on Schedule 5.22(h).
5.23 CONTRACTS. Schedule 5.23 sets forth a list of each Material Contract
(as defined below), true, correct and complete copies of which have been
provided to Viasource. Schedule 5.23 identifies Material Contracts that require
the Consents of third parties to the transactions contemplated hereby. Schedule
5.23 reflects the consents of the Material Contracts that have been obtained.
The copy of each Material Contract furnished to Viasource is a true, correct and
complete copy of the document it purports to represent and reflects all
amendments thereto made through the date of this Agreement. The Company has not
violated any of the terms or conditions of any
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Material Contract or any term or condition which would permit termination or
material modification of any Material Contract, all of the covenants to be
performed by any other party thereto have been fully performed, and there are no
claims for breach or indemnification or notice of default or termination under
any Material Contract. Except for the effect of the transactions contemplated
hereby, no event has occurred which constitutes, or after notice or the passage
of time, or both, would constitute, a default by the Company or any other party
under any Material Contract. The Company is not subject to any liability or
payment resulting from renegotiation of amounts paid under any Material
Contract. As used in this Section 5.23 "MATERIAL CONTRACTS" shall mean formal or
informal, written or oral, (a) loan agreements, indentures, mortgages, pledges,
hypothecations, deeds of trust, conditional sale or title retention agreements,
security agreements, equipment financing obligations or guaranties, or other
sources of contingent liability in respect of any indebtedness or obligation to
any other Person, or letters of intent or commitment letters with respect to
same; (b) contracts obligating the Company to obtain products (in each case in
excess of $25,000) or to provide services (in each case in excess of $50,000);
(c) leases of real property; (d) leases of personal property; (e) distribution,
sales agency or franchise or similar agreements; (f) agreements providing for an
independent contractor's services (in each case where such agreement is not
terminable after thirty (30) days notice or terminable without penalty); (g)
employment agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements, employee handbooks,
policy statements and any other agreements relating to any employee, officer or
director of the Company (in each case where such agreement is not terminable
after thirty (30) days written notice or terminable without penalty); (h)
licenses, assignments or transfers of trademarks, trade names, service marks,
patents, copyrights, trade secrets or know how, or other agreements regarding
proprietary rights or intellectual property; (i) contracts relating to pending
capital expenditures by the Company (in each case in excess of $5,000); (j)
non-competition agreements restricting the Company or any Shareholder in any
manner, (k) any contracts obligating the Company to make payments in excess of
$25,000, in the aggregate, over the remaining term of such contract; and (l) all
other Contracts or understandings which are material to the Company, or the
Business, assets or properties, irrespective of subject matter and whether or
not in writing. Except as set forth on Schedule 5.23, the continuation, validity
and effectiveness of all the Material Contracts will not be effected by their
transfer to Viasource under this Agreement.
5.24 NO COMMISSIONS. Except as set forth on Schedule 5.24, neither the
Company nor any of the Shareholders have incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby.
5.25 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 5.25(a) sets forth all
accounts of the Company with any bank, broker or other depository institution,
and the names of all persons authorized to withdraw funds from each such
account. As of the date hereof, the Company has no office or place of business
other than as identified on Schedule 5.25(b) and the Company's principal places
of business and chief executive offices are indicated on Schedule 5.25(b). All
locations where the equipment, inventory, chattel paper and books and records of
the Company are located as of the date hereof are fully identified on Schedule
5.25(b).
5.26 DISCLOSURE. Except as later corrected prior to the date hereof, no
information furnished by Company to Viasource in connection with the Merger
contains any untrue statement
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of a material fact or omits to state a material fact required to be stated
herein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading as of the date hereof.
The representations and warranties and statements of the Company contained in
this Agreement (including, without limitation, the Schedules attached hereto) or
any agreement executed in connection herewith or in any certificate delivered
pursuant hereto or thereto do not contain any untrue statement of a material
fact, and, when taken together, do not omit to state any material fact necessary
to make such representations, warranties and statements, in light of the
circumstances under which they are made, not misleading.
5.27 YEAR 2000 COMPLIANCE.
(a) All computer hardware, software, systems and equipment utilized
by the Company shall, as currently designed, fully operate, during and after the
calendar year 2000. Without limiting the foregoing, such computer hardware and
software shall during and after the calendar year 2000:
(i) Operate without error relative to date or time data;
(ii) Record, store, process, and present calendar dates falling
on or after January 1, 2000, in the same manner, and with the same
functionality as on or before December 31, 1999;
(iii) Maintain functionality with respect to the introduction of
records containing dates falling on or after January 1, 2000;
(iv) Maintain functionality with respect to date and time date
handling, including but not limited to date and time data century
recognition, calculations which accommodate same century, single-century,
and multi-century formulas and data values, and date and time data
interface values that reflect century;
(v) Include the indication of century in all date-related
interface functions and data fields;
(vi) Include the appropriate logic for leap year
determination; and
(vii) Be interoperable with other product(s) used by the
Company.
5.28 RELATED PARTY TRANSACTIONS. No officer, director, shareholder,
employee or former employee of the Company, and no affiliate or relative of any
of them:
(A) owns, directly or indirectly, any interest in (excepting
not more than five percent share holdings for investment purposes in
securities of publicly held and traded companies), or is in an
officer, partner, director, employee or consultant of, or otherwise
receives remuneration in excess of $5,000 from, any person which is,
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or is engaged in business as, a competitor, lessor, lessee, customer
or supplier of the Company;
(B) owns, directly or indirectly, in whole or in part, any
tangible or intangible property, the use of which is necessary for
the conduct of the Business; or
(C) owes any amount to the Company.
5.29 CHANGES SINCE THE CURRENT BALANCE SHEET. Except as set forth on
Schedule 5.29, since the date of the Current Balance Sheet, the Company has not
(a) issued any capital stock or other securities; (b) made any distribution of
or with respect to its capital stock or other securities or purchased or
redeemed any of its securities; (c) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees, or amended any other
terms of employment of such persons except in the ordinary course of its
business consistent with past practice; (d) sold, leased or transferred any of
its properties or assets other than in the ordinary course of business
consistent with past practice; (e) made or obligated itself to make capital
expenditures out of the ordinary course of business consistent with past
practice; (f) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice; (g) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $5,000 in the
aggregate out of the ordinary course of business, except for this Agreement and
the transactions contemplated hereby; (h) waived, canceled, compromised or
released any rights having a value in excess of $5,000 in the aggregate; (i)
made or adopted any change in its accounting practice or policies; (j) made any
adjustment to its books and records other than in respect of the conduct of its
business activities in the ordinary course consistent with past practice; (k)
entered into any transaction with any Affiliate other than intercompany
transactions in the ordinary course of business consistent with past practice;
(l) entered into any employment agreement; (m) terminated, amended or modified
any agreement involving an amount in excess of $5,000; (n) imposed any security
interest or other Lien on any of its Assets except for carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like liens
arising in the ordinary course of business, payment for which is not yet due;
(o) delayed paying any account payable which is due and payable except to the
extent being contested in good faith; (p) made or pledged any charitable
contribution; (q) entered into any other transaction or was subject to any event
which had or may have a Material Adverse Effect on the Corporation or the
Business; (r) engaged in any transaction out of the ordinary course of the
Business; (s) suffered or incurred any work interruptions, labor grievances, or
claims filed, or any similar event which has or would have a Material Adverse
Effect on the Company or the Business; or (t) agreed to do or authorized any of
the foregoing.
5.30 SUPPLIERS AND CUSTOMERS.
(a) Schedule 5.30 lists (i) all suppliers to which the Company made
payments during the year ended December 31, 1999, in excess of five percent (5%)
of the cost of sales as reflected on the Company's statement of operations for
the year ended December 31, 1999 (the "SUPPLIERS") and (ii) all customers that
paid the Company during the year ended December 31, 1999,
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more than five percent (5%) of the Company's sales revenues as reflected on its
statement of operations for the year ended December 31, 1999 ("CUSTOMERS").
(b) None of the Customers or Suppliers has terminated or
discontinued their business with the Company and the Company has no knowledge
which might reasonably indicate that any of the Customers or Suppliers intend to
cease purchasing from, selling to, or dealing with, the Company, nor has any
information been brought to the Company's attention which might reasonably lead
them to believe any such customer or supplier intends to alter in any material
respect the amount of such purchases, sales or the extent of dealings with the
Company or would alter in any material respect such purchases, sales or dealings
in the event of the consummation of the transactions contemplated by this
Agreement. The Company has no knowledge which might reasonably indicate, (i) any
supplier will not be able to fulfill outstanding or currently anticipated
purchase orders placed by the Company, or (ii) any customer will cancel
outstanding or currently anticipated purchase orders placed with the Company.
5.31 ORDINARY COURSE. Since December 31, 1999, except as set forth in
Schedule 5.31 or otherwise disclosed herein or in the Schedules hereto, the
Company has conducted the business only in the ordinary course and consistently
with its prior practices.
5.32 EQUIPMENT. As of the date hereof and on the Closing Date, all
equipment owned or leased by the Company and used in connection with the
operation of the Business shall be in good condition and working order, subject
to such routine maintenance and repairs thereto as may be required in the
ordinary course of the Business of the Company.
5.33 NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither the Company nor any
officer, director, employee, agent or Affiliate of any of them has offered, paid
or agreed to pay to any Person (including any governmental official) or
solicited, received or agreed to receive from any Person, directly or
indirectly, any money or thing of value for the purpose or with the intent of
(a) obtaining or maintaining business for the Company and its subsidiaries, (b)
facilitating the purchase or sale of any product or service, or (c) avoiding the
imposition of any fine or penalty, in any such case in any manner which is in
violation of any applicable ordinance, regulation or law; and there have been no
false or fictitious entries made in the books or records of the Company and its
subsidiaries.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each of the Shareholders, severally, represents and warrants to Viasource
only as to himself, herself or itself as follows:
6.1 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. Such Shareholder has the
full legal right and power and all authority and approvals required to enter
into, execute and deliver this Agreement and to perform fully his, her or its
respective obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by such Shareholder and constitutes the legal valid and
binding obligation of such Shareholder, enforceable in accordance with its
terms, except as their
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enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors or general principles of equity regardless of whether such
enforceability is considered in a proceeding at law or in equity.
6.2 NO BREACH. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and thereby will
not (i) violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or otherwise give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any material instrument,
contract or other agreement to which such Shareholder is a party or to which
such Shareholder or his, her or its securities, assets or properties may be
bound or subject; (ii) violate any order, judgment, injunction, award or decree
of any Governmental Authority against, or binding upon, such Shareholder or upon
the securities, properties or assets of such Shareholder; (iii) violate any
statute, law or regulation of any jurisdiction as such statute, law or
regulation that relates to such Shareholder; (iv) contravene any organizational
documents of any Shareholder that is not a natural person or (v) require any
filing with, notice to, or permit, consent or approval of, any other
Governmental Authority.
6.3 TITLE TO SHARES. Such Shareholder owns beneficially and of record,
free and clear of any lien, claim or encumbrance, the shares of capital stock of
the Company set forth opposite such Shareholder's name on Schedule 5.4. There
are no stockholder agreements, voting trusts, proxies or other agreements or
understandings with respect to the outstanding shares of capital stock of the
Company to which such Shareholder is a party.
6.4 BROKERAGE. Except as otherwise disclosed to Viasource in writing prior
to the date hereof, no broker, finder, agent or similar intermediary has acted
on behalf of such Shareholder in connection with this Agreement or the
transactions contemplated hereby, and there are no brokerage commissions,
finders' fees or similar fees or commissions payable in connection herewith
based on any agreement, arrangement or understanding with such Shareholder, or
any action taken by such Shareholder.
6.5 DISCLOSURE. The representations and warranties and statements of such
Shareholder contained in this Agreement (including, without limitation, the
Schedules attached hereto) or any agreement executed in connection herewith by
such Shareholder or in any certificate delivered pursuant hereto or thereto by
such Shareholder do not contain any untrue statement of a material fact, and,
when taken together, do not omit to state any material fact necessary to make
such representations, warranties and statements, in light of the circumstances
under which they are made, not misleading.
6.6 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES DOCUMENTS.
Such Shareholder is acquiring the Viasource Shares hereunder for his, her or its
own account for investment and not with a view to, or for the sale in connection
with, any distribution of any of the Viasource Shares, except in compliance with
applicable state and federal securities laws. Such Shareholder has had the
opportunity to discuss the transactions contemplated hereby with Viasource and
has had the opportunity to obtain such information pertaining to Viasource as
has been requested. Such Shareholder is an "accredited investor" within the
meaning of Regulation D
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promulgated under the Securities Act, and has such knowledge and experience in
business or financial matters that he, she or it is capable of evaluating the
merits and risks of an investment in the Viasource Shares. Such Shareholder
hereby represents that he, she or it can bear the economic risk of losing his,
her, its investment in the Viasource Shares and has adequate means for providing
for his, her, its current financial needs and contingencies.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE CLOSING
7.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. The Company
and the Shareholders, jointly and severally, covenant and agree that, except as
otherwise expressly required or permitted by the terms of this Agreement,
between the date of this Agreement and the Closing, the business of the Company
or its subsidiaries shall be conducted only in, and neither the Company nor its
subsidiaries shall take any action except in, the ordinary course of business
consistent with past practice. The Company and the Shareholders shall use its or
their best efforts to preserve intact the Company's and its subsidiaries
business organizations, to keep available the services of their current
officers, employees and consultants, and to preserve their present relationships
with customers, suppliers and other Persons with which they have business
relations. By way of amplification and not limitation, neither the Company nor
its subsidiaries shall, except as expressly required or permitted by the terms
of this Agreement between the date of this Agreement and the Closing, directly
or indirectly, do or propose or agree to do any of the following without the
prior written consent of Viasource:
(a) amend or otherwise change its Certificate of Incorporation or
Bylaws;
(b) issue, sell, pledge, dispose of, encumber, or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any of its assets,
tangible or intangible, except in the ordinary course of business consistent
with past practice; or any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to acquire
any shares of such capital stock;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock or other securities;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or other
securities;
(e) sell, lease or transfer any of its properties or assets (except
in the ordinary course of business consistent with past practice), or acquire
(including, without limitation, for cash or shares of stock, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership or other business organization or division thereof or
any assets; or make any investment either by purchase of stock or securities,
contributions of capital or property transfer, or purchase any property or
assets of any other Person (except in the ordinary course of business consistent
with past practice); make or obligate itself to make capital expenditures, incur
any
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obligations or liabilities including, without limitation, any indebtedness
for borrowed money, issue any debt securities or assume, guarantee or endorse or
otherwise as an accommodation become responsible for, the obligations of any
Person, or make any loans or advances, modify, terminate, amend or enter into
any Contract other than as expressly required or permitted herein or (except in
the ordinary course of business consistent with past practice), or impose any
security interest or other Lien on any of its assets (except in the ordinary
course of business consistent with past practice);
(f) pay any bonus to its officers or employees, or increase the
compensation payable or to become payable to its officers or employees or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any of its directors,
officers or employees, or establish, adopt, enter into or amend or take any
action to accelerate any rights or benefits which any collective bargaining,
bonus, profit sharing trust, compensation, stock option, restricted stock
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) take any action with respect to accounting policies or
procedures (except in the ordinary course of business and in a manner consistent
with past practices);
(h) pay, discharge or satisfy any existing claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in the TeleCore Financial Statements
and the Current Balance Sheet, as appropriate, or liabilities incurred after the
date thereof in the ordinary course of business and consistent with past
practice or delay paying any amount payable beyond forty-five (45) days
following the date on which it is due, except to the extent being contested in
good faith;
(i) enter into any transaction or agreement with the Shareholders or
an Affiliate thereof except for such transactions or agreements expressly
permitted herein;
(j) make or pledge any charitable contributions in excess of $5,000
in the aggregate; or
(k) agree, in writing or otherwise, to take or authorize any of the
foregoing actions or any action which would make any representation or warranty
in Article V untrue or incorrect in any respect.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 FURTHER ASSURANCES/COMPLIANCE WITH COVENANTS. Each party shall execute
and deliver such additional instruments and other documents and shall take such
further actions as may be necessary or appropriate to effectuate, carry out and
comply with all of the terms of this
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Agreement and the transactions contemplated hereby including but not limited to
the delivery of certain reasonable and customary representation letters in
connection with the delivery of legal and tax opinions. The Shareholders shall
cause the Company to comply with all of the covenants of the Company under this
Agreement. At the Closing, the Company and the Shareholders covenant and agree
to deliver to Viasource the certificates, opinions and other documents required
to be delivered to Viasource pursuant to Article XI, and Viasource covenants and
agrees to deliver to the Company and the Shareholders and certificates and other
documents required to be delivered to the Company and the Shareholders pursuant
to Article XII.
8.2 OTHER ACTIONS. Each of the parties hereto shall take all appropriate
actions, and do, or cause to be done, all things necessary, proper or advisable
under any applicable laws, regulations and Contracts to consummate and make
effective the transactions contemplated herein, including, without limitation,
obtaining all licenses, permits, consents, approvals, authorizations,
qualifications and orders of any Governmental Authority and parties to Contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby. Each of the parties agrees to cooperate with the others in
the preparation and filing of all forms, notifications, reports and information,
if any, required or reasonably deemed advisable pursuant to any law, rule or
regulation in connection with the transactions contemplated by this Agreement,
and to use their respective best efforts to agree jointly on a method to
overcome any objections by any Governmental Authority to any such transactions.
The parties also agree to use reasonable best efforts to defend all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby and to lift or rescind any injunction or
restraining order or other adversely affecting the ability of the parties to
consummate the transactions contemplated hereby.
8.3 ACCESS TO INFORMATION. From the date hereof to the Effective Time, the
Company shall (and shall cause its directors, officers, employees, auditors,
counsel and agents to) afford Viasource and Viasource's officers, employees,
auditors, counsel and agents reasonable access at all reasonable times to its
properties, offices, and other facilities, to its officers and employees and to
all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be requested. Neither the due
diligence investigation made by Viasource in connection with the transactions
contemplated hereby nor information provided to or obtained by Viasource shall
affect any representation or warranty in this Agreement.
8.4 NOTIFICATION OF CERTAIN MATTERS. The Company and the Shareholders
shall give prompt notice to Viasource of the occurrence or non-occurrence of any
event which would likely cause any representation or warranty contained herein
to be untrue or inaccurate, or any covenant, condition, or agreement contained
herein not to be complied with or satisfied.
8.5 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement, the subject matter or terms hereof or any
confidential information or other proprietary knowledge concerning the business
or affairs of the other party which it may have acquired from such party or
their respective Affiliates, employees, agents and representatives in the course
of pursuing the transactions contemplated by this Agreement without the prior
consent of the other party hereto; provided, that any information
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that is otherwise publicly available, or has been obtained from a third party,
without breach of this provision, shall not be deemed confidential information.
No press release or other public announcement related to this Agreement or the
transactions contemplated hereby shall be issued by the Company or the
Shareholders without the prior approval of Viasource.
8.6 RESTRICTIVE COVENANT. In order to assure that Viasource will realize
the benefits of this transaction, each of the Common Shareholders agree with
Viasource that he, she or it will not:
(a) for a period of three (3) years from the Effective Date,
directly or indirectly, alone or as a partner, joint venturer, officer,
director, member, employee, consultant, agent, independent contractor or
shareholder of, or lender to, any company or business, engage in any Competitive
Activity provided, however, that the beneficial ownership of less than five
percent (5%) of any class of securities of any entity having a class of equity
securities actively traded on a national securities exchange or over-the-counter
market shall not be deemed, in and of itself, to violate the prohibitions of
this Section 8.6. As used herein "COMPETITIVE ACTIVITY" shall consist of any
business activity of whatsoever kind or nature, which competes, directly or
indirectly, with the business, technology, products or services of Viasource and
its Affiliates in the United States at the time such activity is commenced.
(b) for a period of three (3) years from the Effective Date,
directly or indirectly (i) induce any Person which is a customer of Viasource or
any Affiliate of Viasource to patronize any business directly or indirectly
engaged in any Competitive Activity; (ii) canvass, solicit or accept from any
Person which is a customer of Viasource or any Affiliate of Viasource any
Competitive Business; or (iii) request or advise any Person which is a customer
or supplier of Viasource or any Affiliate of Viasource to withdraw, curtail or
cancel any such customer's or supplier's business with Viasource or any
Affiliate of Viasource, or its or their successors;
(c) for a period of three (3) years from the Effective Date,
directly or indirectly employ, or knowingly permit any company or business
directly or indirectly controlled by him, to employ, any person who was employed
by Viasource or any Affiliate of Viasource at or within the six (6) month period
immediately preceding the date of such employment, or in any manner seek to
induce any such person to leave his or her employment;
(d) at any time following the date hereof, directly or indirectly,
in any way utilize, disclose, copy, reproduce or retain in his/her possession
Viasource's or any Viasource Affiliates' proprietary rights or records,
including, but not limited to, any of its or their customer lists.
The Company and the Common Shareholders agree and acknowledge that the
restrictions contained in this Section 8.6 are reasonable in scope and duration
and are necessary to protect Viasource after the date hereof. If any provision
of this Section 8.6 as applied to any party or to any circumstance is adjudged
by a court to be invalid or unenforceable, the same will in no way affect any
other circumstance or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to
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reduce the duration and/or area of such provision, and/or to delete specific
words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced. The parties agree and acknowledge that the
breach of this Section 8.6 will cause irreparable damage to Viasource and upon
breach of any provision of this Section 8.6, Viasource shall be entitled to
injunctive relief, specific performance or other equitable relief; provided,
however, that, this shall in no way limit any other remedies which Viasource may
have (including, without limitation, the right to seek monetary damages).
Notwithstanding the foregoing, nothing in this Section 8.6 shall apply to Xxxxx
Xxxxxxx, Xxxxxx X. Xxxx or Xxxxxxx XxXxxxxx.
8.7 TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Viasource and the Shareholders for certain tax matters
following the Effective time:
(a) Returns not Required to be Filed Prior to the Effective Time.
Viasource shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns of the Company and its subsidiaries which are not required to be
filed prior to the Effective Time. Any such returns which include periods prior
to the Effective Time or will have a material impact on taxes due with respect
to such periods shall be prepared in accordance with the past practices of and
elections made by the Company. The Shareholders' Representative will have the
right to review such Tax Return before it is filed if such Return could affect
the Shareholders' liability for Taxes to any Governmental Body or their
indemnification obligations under Article IX of this Agreement. Any Tax Return
described in the preceding sentence will be provided to the Shareholders'
Representative not less than 15 business days before the proposed filing date.
Viasource shall promptly provide or cause to be provided to the Shareholders'
Representative any underlying information or records requested by the
Shareholders' Representative or his designated representatives to assist their
review. To the extent that the Shareholders would otherwise incur liability
under Article IX of this Agreement, Viasource and the Company shall make such
changes to the Tax Return as the Shareholders' Representative may reasonably
request in order to eliminate or reduce such liability.
(b) Cooperation on Tax Matters.
(i) The Company, the Shareholders and Viasource shall
cooperate fully, as and to the extent reasonably requested by the other
party, in connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
The parties agree (A) to retain all books and records with respect to Tax
matters pertinent to the Company or its subsidiaries relating to any
taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by Viasource, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and
(B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if
the other party so requests, shall allow the other party to take
possession of such books and records.
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(ii) The parties further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other person or entity as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(iii) The parties further agree, upon request, to
provide each other with all information that a party may be required to
report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder.
(c) Tax Contests. Viasource will notify the Shareholders'
Representative in writing promptly upon receipt by Viasource or any Affiliate of
Viasource of any notice of any pending or threatened audits or assessments, and
any administrative or court proceeding relating thereto, relating to Taxes (a
"TAX PROCEEDING") with respect to the Company or the Subsidiaries other than
Taxes as to which the Shareholders and/or their Affiliates have no
indemnification obligation or other liability relating to Taxes. The
Shareholders will have the right to control, at their expense, the handling and
disposition of such Tax Proceeding (and to employ counsel of its choice at its
expense) to the extent that such Tax Proceeding principally relates to Tax of
the Company or the Subsidiaries for periods prior to the Effective Time or which
are otherwise within the Shareholders' indemnification obligations under this
Agreement. In any Tax Proceeding in which the party not controlling the
Proceedings may incur a liability for Tax or under indemnification obligations,
such party shall have the right, at its own expense, to monitor the Tax
Proceeding. Neither party will agree to any settlement concerning Taxes that
would result in a material increase in Tax or indemnification obligation of the
other party without the prior written consent of that party (which consent will
not be unreasonably withheld).
(d) Tax Benefit. If any loss, Tax adjustment or other event
giving rise to a claim for indemnification under this Agreement results in
additional Tax in respect of the payment, or if such loss or adjustment results
in any deduction or exclusion from income (a "TAX COST OR BENEFIT") to the
indemnified Party or any Affiliate thereof in the same or a later taxable
period, the amount of the claim will be increased or reduced to reflect such Tax
Cost or Benefit, or the amount of the Tax Cost or Benefit will be paid at such
time or times as, and to the extent that, such Tax Cost is incurred or such
Benefit is realized. Viasource will provide the Shareholders' Representative
with copies of Tax Returns and related documentation as may be reasonably
necessary to enable the Parties to calculate any increase or reduction in the
indemnification payments or the amount of payments to be made pursuant to this
paragraph.
(e) Amended Returns. Without the Shareholders'
Representative's prior written consent, Viasource will not cause or permit to be
filed any amended Tax Return pertaining to the Company or any Subsidiary for
taxable periods (or portions thereof) ending on or before the Closing Date if
such amended Tax Return would cause the Shareholder to incur liability under
Article IX of this Agreement.
8.8 DELIVERY OF PROPERTY RECEIVED BY THE SHAREHOLDERS AFTER CLOSING.
The Shareholders agree that they will transfer or deliver to Viasource, promptly
after the receipt thereof,
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any cash or other property which the Shareholders receive after the date hereof
in respect of any claims, contracts, licenses, leases, commitments, sales
orders, purchase orders, receivables of any character or any other items
transferred or intended to be transferred to Viasource as part of this
Agreement.
8.9 EMPLOYMENT AND NON-COMPETITION AGREEMENT, SALARY CONTINUATION
AGREEMENTS. Xxx Xxxxxxx, Xxxxx Xxxxxx and Xxxx Xxxxxx shall enter into an
Employment and Non-Competition Agreements with Viasource, in the form set forth
on Exhibit C (the "EMPLOYMENT AGREEMENTS"). Viasource shall provide Salary
Continuation Agreements, in the form set forth on Exhibit D to five vice
presidents of the Company, as determined by Viasource.
8.10 SHAREHOLDER AND DIRECTOR VOTE. Each of the Shareholders, in
executing the Agreement, consents as a director and/or shareholder (as
applicable) of the Company to the Merger and waives notice of any meeting in
connection therewith.
8.11 RELEASE BY THE COMPANY AND THE SHAREHOLDERS. Each of the
Shareholders do hereby each, for themselves and for their respective heirs,
personal representatives, successors and assigns (collectively, the "RELEASORS")
release, remise and forever discharge the Company, Viasource and their
subsidiaries, affiliates, officers, directors, trustees, shareholders, agents,
representatives, employees, consultants, attorneys, accountants, successors and
assigns (collectively, the "RELEASEES"), from any and all debts, sums of money,
accounts, claims, actions, causes of action, suits, damages, judgments, losses,
contracts, demands, expenses (including attorneys' fees and costs) and/or
liabilities of any kind which any of the Releasors ever had, now have or which
they can, shall or may have for, upon or by reason of any matter, cause or thing
whatsoever, from the beginning of time to the day of this Agreement, against the
Releasees (the "RELEASE") provided, however, that the Release shall not apply to
any obligations, commitments or liabilities arising out of and/or relating to
(i) the performance by the Releasees pursuant to this Agreement, (ii) amounts
loaned to the Company by certain Releasors as disclosed on Schedule 5.10, (iii)
employee, director and officer rights to indemnification provided by the Company
pursuant to Delaware law, the Company's Certificate of Incorporation or Bylaws
or (iv) any accrued salary and benefits owed to the Shareholders by the Company
in accordance with the Employee Benefit Plans arising out of this employment
relationship.
8.12 USE OF THE INTELLECTUAL PROPERTY. None of the Shareholders shall
use any of the Intellectual Property after the date hereof, except in connection
with employment by Viasource.
8.13 NO SHOP
(a) The Company and the Shareholders covenant, jointly and
severally, that, from and after the date hereof until the termination of this
Agreement without the express written consent of Viasource, the Company or the
Shareholders shall not, directly or indirectly, (i) solicit, initiate
discussions or engage in negotiations with any Person (other than Viasource or
its Affiliates or their representatives) relating to the possible acquisition,
whether by way of merger, reorganization, purchase of shares of capital stock,
purchase of assets, management agreement, license or distribution agreement or
otherwise (any such acquisition or other transaction or agreement being
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referred to herein as an "ACQUISITION TRANSACTION"), of any interest in the
Company (other than inventory or obsolete, damaged or worn assets sold or
otherwise disposed of in the ordinary course of the Business and consistent with
past practice), (ii) provide information with respect to the Company to any
Person (other than Viasource or its Affiliates or their representatives) in
connection with a possible Acquisition Transaction or (iii) enter into an
agreement with any Person (other than Viasource or its Affiliates) concerning a
possible Acquisition Transaction. Prior to the termination of this Agreement, if
the Company or the Shareholders receives an unsolicited offer or proposal
relating to a possible Acquisition Transaction, the Company or the Shareholders,
as the case may be, shall immediately notify Viasource and provide information
to Viasource as to the identity of the party making any such offer or proposal
and the specific terms of such offer or proposal (including, without limitation,
the proposed price and financing therefor).
(b) The parties recognize and acknowledge that a breach by the
Company and the Shareholders of this Section 8.13 will cause irreparable and
material loss and damage to Viasource as to which it will not have an adequate
remedy at law or in damages. Accordingly, each party acknowledges and agrees
that the issuance of an injunction or other equitable remedy is an appropriate
remedy for any such breach. In addition, in the event of any breach of the
foregoing which results in the acquisition by a Person other than Viasource or
its Affiliates of a majority of the assets of the Business (measured by fair
market value) or of the capital stock of the Company and the Shareholders shall
promptly reimburse Viasource for all fees and expenses (including, without
limitation, out-of-pocket expenses, fees and expenses of accountants, counsel
and other advisors, and the like) incurred by them in connection with the
transactions contemplated by this Agreement. Viasource may also take any action
or exercise any remedy available to it by appropriate legal proceedings.
8.14 VIASOURCE STOCKHOLDERS AGREEMENT. Each of the Shareholders agree
as of the Effective Time to join as a party to the Viasource Communications,
Inc. Amended and Restated Stockholders Agreement ("VIASOURCE STOCKHOLDERS
AGREEMENT").
8.15 BOARD OF DIRECTORS. In accordance with the Viasource Stockholders
Agreement, effective immediately after the Effective Time, (a) the number of
members of the Board of Directors of Viasource will be increased to nine (9) and
Xxxxxxx Xxxx (the "NOMINEE") shall be appointed as a member of the Board of
Directors of Viasource to serve for a term expiring at the annual meeting of the
shareholders of Viasource to be held in 2001. Viasource agrees to use its
reasonable best efforts to nominate the Nominee unless otherwise advised by the
TeleCore Shareholders (as that term is defined in the Viasource Stockholders
Agreement) to serve an additional term on the Board of Directors of Viasource,
subject to any fiduciary duties of the Board of Directors of Viasource.
8.16 WAIVER OF CERTAIN RIGHTS OF PREFERRED SHAREHOLDERS. Each of the
Preferred Shareholders hereby waive any and all rights to (i) any liquidation
preference they would be entitled to receive as a result of the Merger pursuant
to the Certificate of Designation of Rights, Preferences and Limitations of
Series A Preferred Stock of the Company (the "CERTIFICATE OF DESIGNATION") and
(ii) any notice obligations of the Company with respect to the Merger under the
Certificate of Designation.
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8.17 WAIVER OF RIGHT TO RECEIVE ADDITIONAL SHARES. Each of Xxxx X.
Xxxxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxx hereby waive any and all rights to
receive any additional shares of Viasource Common Stock from Viasource in
connection with Section 1.2 of the Exchange Agreement, dated September 30, 1999,
among the Company, the shareholders of The Synectics Group, Inc., Xxxx X.
Xxxxxx, Xxxxxxx Xxxxxx, Xxxxx X. Xxxxxx and Xxxx Xxxxxx (the "EXCHANGE
AGREEMENT"). At the Effective Time, the Shareholders shall cause Xxxxx X. Xxxxxx
to execute a waiver of any and all rights to receive any additional shares of
Viasource Common Stock from Viasource in connection with Section 1.2 of the
Exchange Agreement.
8.18 CONSENT UNDER INVESTORS' RIGHT AGREEMENT. The Shareholders agree
to execute a written consent to the Merger pursuant to the Investors' Rights
Agreement, dated September 30, 1999, by and among the Company and the
Shareholders (the "RIGHTS AGREEMENT") and such agreement is hereby deemed
terminated as of the Effective Time.
8.19 WAIVER OF RIGHT OF FIRST REFUSAL, ASSIGNMENT OF OPTION AGREEMENT.
Each of Xxxx X. Xxxxxx and Xxxxxxx Xxxxxx hereby waive any and all rights of
first refusal pursuant to the Stock Restriction Agreement dated September 30,
1999 by and among Xxxx X. Xxxxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxx, and such
agreement is hereby deemed terminated as of the Effective Time. In consideration
of $264,061, which amount has been paid to Xxxx X. Xxxxxx and Xxxxxxx Xxxxxx by
Viasource by increasing the amount of the Promissory Note (the form of which is
attached as Exhibit A-II), Xxxx X. Xxxxxx and Xxxxxxx Xxxxxx shall (i) assign
their rights to that certain Option Agreement dated as of September 30, 1999 by
and among Xxxx X. Xxxxxx, Xxxxxxx Xxxxxx and Xxxx Xxxxxx pursuant to that
certain Assignment of Option Agreement and Termination of Stock Restriction
Agreement and (ii) shall sell, transfer and convey to Viasource 135,416 shares
of Company's Common Stock.
8.20 EMPLOYEE BENEFIT PLANS.
(a) On or as soon as practicable following the Effective Time,
continuing employees of the Company ("CONTINUING EMPLOYEES") shall be eligible
to participate in those benefit plans (other than the RTK 401(k) Plan) and
programs maintained for similarly situated employees of Viasource (or in
substantially similar programs), on the same terms applicable to similarly
situated employees of Viasource and to the extent that such plans and programs
provide the following benefits: medical/dental/vision care, life insurance,
disability income, sick pay, holiday and vacation pay, 401(k) plan coverage,
Code Section 125 benefit arrangements, bonus, profit-sharing or other incentive
plans, pension or retirement programs, dependent care assistance, severance
benefits, and employees stock option and stock purchase plans. Each Continuing
Employee shall be given credit, for purposes of any service requirements for
participation or vesting, for his or her period of service with the Company
under a similar plan prior to the Effective Time, subject to appropriate break
in service rules. Each such employee shall, with respect to any Viasource plans
or programs which have co-payment, deductible or other co-insurance features,
receive credit for any amounts such individual has paid to date in the plan year
of the Effective Time under comparable plans or programs maintained by the
Company prior to the Effective Time. Each Continuing Employee and eligible
dependent who, at the Effective Time, was participating in an employee group
health plan maintained by the Company shall not be excluded from Viasource's
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employee group health plan or limited in coverage thereunder by reason of any
waiting period restriction or pre-existing condition limitation.
(b) Viasource shall be responsible for providing the continued
health coverage required under Section 4980B of the Code ("COBRA COVERAGE") with
respect to any employees of the Company or eligible dependents who had a
qualifying event under Section 4980B of the Code on or before the Effective
Time.
8.21 TAX COVENANTS
(a) The Shareholders and the Company each covenant that they have
not taken any action prior to the date hereof, and will not take any action
prior to the Effective Time, which would cause the Merger to fail to qualify as
a tax-free reorganization under Section 368(a) of the Code.
(b) Viasource covenants that it has not taken any action prior to
the date hereof, and that it will not take any action after the date hereof and
after the Effective Time which would cause the Merger to fail to qualify as a
tax-free reorganization under Section 368(a) of the Code.
(c) The Shareholders, Company and Viasource all agree to comply
with the reporting requirements of Treasury Regulation Section 1.368-3.
8.22 SENIOR INDEBTEDNESS. Until such time as the Promissory Notes are
paid in full, "Senior Indebtedness" (as defined in Schedule 1 of the Promissory
Notes), shall be limited to all obligations of Viasource under that Amended and
Restated Credit agreement dated March 10, 2000 among Viasource and General
Electric Capital Corporation ("GECC") together with all amendments,
modifications, increases or refinancing thereof.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE COMPANY AND THE SHAREHOLDERS FOR INDEMNIFICATION.
(a) The Company and the Shareholders agree to indemnify and hold
Viasource and its shareholders, directors, officers, employees, attorneys and
Affiliates (collectively, for purposes of this Article IX, the "VIASOURCE
INDEMNITEES") harmless from and against the aggregate of all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
related counsel and paralegal fees and expenses) incurred or suffered by the
Viasource Indemnitees arising out of or resulting from (i) any breach of a
representation or warranty made by the Company or its subsidiaries in or
pursuant to this Agreement, (without regard to any materiality qualifications or
disclosures pursuant to Section 11.1), (ii) any breach of the covenants or
agreements made by the Company or its subsidiaries in or pursuant to this
Agreement or (iii) any inaccuracy in any
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certificate, instrument or other document delivered by the Company as required
by this Agreement, (iv) claims brought by or on behalf of any former or alleged
shareholder of the Company, (v) any violations by the Company of applicable
state and federal securities laws with respect to securities issued by the
Company, (vi) liabilities to the union resulting from any breach of the
Collective Bargaining Agreement listed on Schedule 5.16 (the "Collective
Bargaining Agreement") for the period of time prior to the Effective Time, and
(vii) matters set forth on Schedule 5.17(e), (collectively, "INDEMNIFIABLE
DAMAGES"); provided, that the parties agree that the Company's obligation to
indemnify Viasource Indemnities shall terminate at the Effective Time.
Notwithstanding anything to the contrary herein, the maximum Indemnifiable
Damages that each Shareholder shall be liable for herein, shall not exceed
thirty-three percent (33%) of that portion of the Aggregate Consideration
received in the Merger by such Shareholder (the "INDEMNIFICATION CAP").
(b) The Shareholders shall severally indemnify and hold harmless
the Viasource Indemnities from and against all Losses arising out of or
resulting from (i) any breach of any representation or warranty made by such
Shareholder in or pursuant to this Agreement, (ii) any breach of the covenants
or agreements made by such Shareholder or (iii) any inaccuracy in any
certificate, instrument or other document (other than this Agreement) delivered
by such Shareholder (also "INDEMNIFIABLE DAMAGES"). Notwithstanding any
provision hereof to the contrary, no Shareholder shall have any liability for
breach of any of the representations and warranties set forth in Article VI
hereof by any other Shareholder, or for any other Shareholder's failure to
perform any covenant or agreement herein.
(c) No indemnification shall be payable pursuant to 9.1(a)(i),
(iii), (iv), (v), (vi) or (vii) until the amount of all claims for
indemnification exceeds $250,000 ("INDEMNIFICATION THRESHOLD") in which case
Viasource shall be entitled to collect all Indemnifiable Damages irrespective of
the Indemnification Threshold.
9.2 AGREEMENT BY VIASOURCE FOR INDEMNIFICATION. Viasource agrees to
indemnify and hold the Shareholders (collectively, the "COMPANY INDEMNITEES")
harmless from and against losses incurred or suffered by the Company Indemnitees
arising out of or resulting from (i) any breach of a representation or warranty
made by Viasource in or pursuant to this Agreement, (ii) any breach of the
covenants or agreements made by Viasource in or pursuant to this Agreement, or
(iii) any inaccuracy in any certificate, instrument or other document delivered
by Viasource as required by this Agreement.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Company, the Shareholders or
Viasource shall survive the Closing of this Agreement for a period of two (2)
years, provided, however, that the representations and warranties provided in
Sections 5.4, 5.5, 5.12, 5.17, 5.18 and 6.3 shall survive until the expiration
of the applicable statute of limitations. Notwithstanding any knowledge of facts
determined or determinable by any party by investigation, each party shall have
the right to fully rely on the representations, warranties, covenants and
agreements of the other parties hereto contained in this Agreement or in any
other documents or papers delivered in connection herewith. Each
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representation, warranty, covenant and agreement contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
9.4 SECURITY FOR INDEMNIFICATION OBLIGATION. As security for the
indemnification obligations contained in Section 9.1 (a) and (b), Viasource
shall hereby set aside and hold, and the Shareholders hereby grant a security
interest in (i) the certificates representing the Held Back Shares issued
pursuant to this Agreement and (ii) the Note. The Viasource Indemnitees shall
set off against the Held Back Shares and the Note pro rata in accordance with
the Shareholders' percentage ownership reflected in Schedule 2.1 hereof, during
the Hold Back Period (as defined in Section 9.6), the Indemnifiable Damages for
which the Shareholders may be responsible pursuant to this Agreement subject,
however, to the following terms and conditions:
(a) The Viasource Indemnitees shall give written notice to the
Shareholders of any claim for Indemnifiable Damages which notice shall set forth
(i) the amount of Indemnifiable Damages which the Viasource Indemnitees claims
to have sustained by reason thereof, and (ii) the basis of such claim;
(b) Such set off shall be effected on the later to occur on the
expiration of 30 days from the date of such notice (the "NOTICE OF CONTEST
PERIOD") or, if such claim is contested, the date the dispute is resolved, and
such set off, shall be charged pro rata (in accordance with the Shareholders'
percentage ownership reflected in Schedule 2.1 hereof) against the Held Back
Shares;
(c) If, prior to the expiration of the Notice of Contest Period,
the Shareholders shall notify Viasource in writing of an intention to dispute
the claim and if such dispute is not resolved within thirty (30) days after
expiration of such period, then Viasource may take any action or exercise any
remedy available to it by appropriate legal proceedings to collect the
Indemnifiable Damages; and
(d) For purposes of any set off against the Held Back Shares
pursuant to this Article IX, the shares of Viasource Common Stock and the shares
of Viasource Preferred Stock shall be valued at $10.00 per share.
(e) Any set off against the Aggregate Consideration received by
Xxxx X. Xxxxxx and Xxxxxxx Xxxxxx (the "Clareys") prior to the closing of an
Initial Public Offering (as hereinafter defined) shall be made pro rata between
the value of the Held Back Shares and the Notes subject to a maximum of
thirty-three percent (33%) of each of the Held Back Shares and the Notes. Any
prepayment of the Notes during the Hold Back Period shall be conditioned upon
the Clareys, providing to Viasource, to set aside and hold pursuant to this
Section 9.4, additional shares of Viasource Common Stock so that Viasource
continues to hold back thirty-three percent (33%) Aggregate Consideration
received by the Clareys during the Hold Back Period.
9.5 VOTING OF, DIVIDENDS ON AND SALE OF THE HELD BACK SHARES. Except
with respect to shares transferred pursuant to the foregoing right of set off
(and in the case of such shares, until the same are transferred), all Held Back
Shares shall be deemed to be owned by the Shareholders to which such Held Back
Shares are allocable, shall be entitled to vote the Held Back Shares
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allocable to such Shareholders; provided, however, that, there shall also be
deposited with Viasource subject to the terms of this Article IX, all shares of
Viasource Common Stock issued as a result of any conversion of Viasource
Preferred Stock to Viasource Common Stock or issued to the Shareholders as a
result of any stock dividend or stock split and all cash issuable to the
Shareholders as a result of any cash dividend, with respect to the Held Back
Shares. All stock and cash issued or paid upon Held Back Shares shall be
distributed to the person or entity entitled to receive such Held Back Shares
together with such Held Back Shares as provided in Section 9.6. At any time
during the Hold Back Period the Shareholders may sell the Held Back Shares,
provided that funds equal to ten dollars ($10) per share are immediately
deposited with Viasource and further provided that all such parties comply with
all applicable federal and state securities laws.
9.6 DELIVERY OF HELD BACK SHARES. Viasource agrees to deliver to the
Shareholders, as applicable, no later than twelve (12) months after the date
hereof any Held Back Shares then held by it other than to the extent that there
then remains unresolved any claim for Indemnifiable Damages as to which notice
has been given, in which event any Held Back Shares remaining on deposit after
such claim shall have been satisfied shall be returned to the Shareholders, as
applicable, promptly after the time of satisfaction (the "HOLD BACK PERIOD").
9.7 ADJUSTMENT TO PURCHASE PRICE. All payments for Indemnifiable
Damages made pursuant to this Article IX shall be treated as adjustments to the
Aggregate Consideration.
9.8 NO BAR. If the Held Back Shares have been delivered to the
Shareholders or if the Notes are no longer outstanding to set off any claim for
Indemnifiable Damages made hereunder (or have been delivered to the Company
prior to the making or resolution of such claim), then the Viasource Indemnitees
may take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages up to the amount of the
Indemnification Cap. The remedies provided herein shall not preclude the
Viasource Indemnitees from asserting equitable remedies against the
Shareholders.
ARTICLE X
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the date hereof of the Viasource Shares:
10.1 DISPOSITION OF SHARES.
(a) No Shareholder may, directly or indirectly, offer, sell,
contract to sell (other than pursuant to preexisting options), pledge, purchase
or sell any put or call options, or participate in any derivative transaction
relating to, or otherwise dispose of the Viasource Shares received in connection
with the Merger prior to a date that is the earlier of twelve (12) months from
the Closing Date or the expiration of a lockup period requested of the
Shareholders and entered into by other major stockholders of Viasource.
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(b) The Shareholders represent and warrant that the shares of
Viasource Common Stock hereafter acquired by them are being acquired for their
own respective accounts and will not be sold or otherwise disposed of, except
pursuant to (i) an exemption from the registration requirements under the
Securities Act, (ii) in accordance with Rule 144 under the Securities Act, or
(iii) an effective registration statement filed by Viasource with the SEC under
the Securities Act. To the extent Viasource or the Shareholders complies with
the provisions of Rule 144 under the Securities Act in effecting sales of the
Viasource Shares, Viasource agrees to provide its transfer agent with
appropriate instructions and/or opinions of counsel in order for them to sell,
transfer and/or dispose of the Viasource Shares in accordance with Rule 144.
10.2 LEGEND. The certificates representing the Viasource Shares shall
bear the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. SUCH SHARES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS. THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS, CONDITIONS AND RESTRICTIONS OF THAT CERTAIN AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT, A COPY OF WHICH IS AVAILABLE
BY CONTACTING THE SECRETARY OF THE COMPANY.
Viasource may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
ARTICLE XI
CONDITIONS TO THE OBLIGATIONS OF VIASOURCE
The obligation of Viasource to effect the transactions contemplated
hereby, shall be subject to the fulfillment at or prior to the date hereof of
the following conditions, any or all of which may be waived in whole or in part
by Viasource:
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as though made at and as of that time. The Company and the Shareholders shall
have performed and complied with all of their obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date,
including these obligations set forth in
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Article VIII herein. The Company and the Shareholders shall have delivered to
Viasource a certificate, dated as of the Closing Date, duly signed (in the case
of the Company, by its President), certifying that such representations and
warranties are true and correct and that all such obligations have been
performed and complied with.
11.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the Company or the Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the service, or products of the Company or the Business, and
(iii) none of the Assets shall have been damaged by fire, flood, casualty, riot
or other cause (regardless of insurance coverage for such damage), and there
shall have been delivered to Viasource a certificate to that effect, dated as of
the Closing Date and signed by or on behalf of the Company and the Shareholders.
11.3 CERTIFICATE. The Company shall have delivered to Viasource (i)
copies of the Certificate of Incorporation and Bylaws of the Company as in
effect immediately prior to the date hereof, (ii) copies of resolutions adopted
by the Board of Directors and the Shareholders of the Company authorizing the
transactions contemplated by this Agreement, and (iii) a certificate of good
standing of the Company issued by the Secretary of State of the State of
Delaware and each other state in which it is qualified to do business as of a
date not more than ten (10) days prior to the date hereof, certified in each
case as the date hereof by the Secretary of the Company as being true, correct
and complete.
11.4 DELIVERY OF THE SHARES AND WARRANTS. At the Closing, the
shareholders shall duly endorse for transfer and deliver to Viasource (or its
assignee) the shares of Company Common Stock, Warrants and Company Preferred
Stock and such other instruments of transfer of title as are necessary to
transfer to Viasource (or its assignee) good and marketable title to Company
Common Stock, Warrants and Company Preferred Stock free and clear of any Liens.
11.5 OPINION OF COUNSEL. Viasource shall have received an opinion,
dated as of the Closing Date, from counsel for the Company and the Shareholders
acceptable to Viasource, in form and substance acceptable to Viasource, to the
effect that:
(a) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to carry on the business now conducted by it and to own or lease the
properties now owned or leased by it;
(b) the Company has the requisite power and authority to execute,
deliver and perform the Agreement and transactions contemplated hereby;
(c) all issued and outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and nonassessable;
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(d) such counsel does not know of any litigation, proceeding or
investigation pending or threatened in writing against the Company or the
Shareholders, or which questions the validity of this Agreement;
(e) this Agreement is a valid and binding obligation of the
Company and the Shareholders, enforceable against each of them in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or general equitable principles; and
(f) to the knowledge of such counsel, the execution and delivery
of this Agreement by the Company and the Shareholders, the performance by the
Company and the Shareholders of their obligations hereunder and the consummation
by them of the transactions contemplated by this Agreement will not (a)
contravene any provision of the Certificate of Incorporation or Bylaws of the
Company, (b) violate or conflict with any law, statute, ordinance, rule,
regulation applicable to the Company and does not conflict with or constitute a
default under the provisions of any decree, writ, injunction, judgment or order
of any Governmental Authority or of any arbitration award which is either
applicable to, binding upon or enforceable against the Company and the
Shareholders or (c) other than in connection with any Securities Laws require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, any court or tribunal or any other
Person.
11.6 CONSENTS. The Company and Viasource shall have received consents
to the transactions contemplated hereby or waivers of rights to terminate or
modify any material rights or obligations of the Company or Viasource from any
Person from whom such consent or waiver is required under any Contract including
but not limited to Viasource's senior lender.
11.7 EMPLOYMENT AND NON-COMPETITION AGREEMENT. Xxx Xxxxxxx, Xxxxx
Xxxxxx and Xxxx Xxxxxx shall have executed and delivered the Employment
Agreements.
11.8 HOLDERS. At the Effective Time, there shall be no more than
thirty-five (35) "purchasers" receiving Viasource Common Stock or Viasource
Preferred Stock hereunder calculated pursuant to Rule 506(b)(2) under the
Securities Act.
11.9 STOCKHOLDERS AGREEMENT; STOCK POWERS. At the Closing, each
Shareholder shall have executed and delivered to Viasource, the Viasource
Stockholders Agreement and ten stock powers executed in blank, for use in
connection with the Held Back Shares.
11.10 LEGAL PROHIBITION. On the Closing Date, no injunction, decree or
order shall be in effect prohibiting consummation of the transactions
contemplated hereby or which would make the consummation of such transactions
unlawful and no action, suit or proceeding shall have been instituted and remain
pending before a court, governmental body or regulatory authority to restrain or
prohibit the transactions contemplated by this Agreement and no adverse decision
shall have been made by any such court, governmental body or regulatory
authority which constitutes, or could be reasonably anticipated to constitute, a
Material Adverse Change. Between the date hereof and the Closing Date, no
federal, state or local statute, rule or regulation shall have been enacted or
deemed
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applicable by any government or governmental or administrative agency or court
the effect of which would be to prohibit, restrict, impair or delay the
consummation of the transactions contemplated hereby.
11.11 SECURITIES LAWS. Viasource shall have received all necessary
securities laws consents and otherwise complied with any securities laws
applicable to the issuance of the Viasource Shares in connection with the
transactions contemplated hereby.
11.12 OTHER CLOSING DOCUMENTS. The Company and the Shareholders shall
have executed and delivered the documents required by this Agreement to have
been executed and delivered by them, and such other closing documents necessary
to consummate the transactions contemplated hereby.
11.13 CONSENT UNDER INVESTORS' RIGHT AGREEMENT. The Shareholders shall
have executed a written consent to the Merger pursuant to the Rights Agreement.
11.14 TAX OPINION. Viasource shall have received an opinion, the form
of which is attached as Exhibit E, dated as of the Closing Date, from its
counsel that the Merger qualifies as a tax free reorganization under Section
368(a) of the Code. In rendering such opinions, counsel may rely upon customary
representations made by certain Shareholders, the Company and Viasource the
forms of which are attached as Exhibit F.
11.15 COMPANY AUDIT. Company shall have received an audit opinion of
the TeleCore Financial Statements acceptable to Viasource.
ARTICLE XII
CONDITIONS TO THE
OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by the Company and the Shareholders:
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Viasource contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time. Viasource shall have performed and complied with all of their obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. Viasource shall have delivered to the Shareholders a certificate,
dated as of the Closing Date, duly signed, certifying that such representations
and warranties are true and correct and that all such obligations have been
performed and complied with.
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12.2 OTHER CONDITIONS AND CLOSING DOCUMENTS. At the Closing, Viasource
shall have delivered to the applicable Shareholder the Note and to the
shareholders the Viasource Shares (reduced by the Held Back Shares). Viasource
shall have executed and delivered the documents required by this Agreement to
have been executed and delivered by it, and such other closing documents
necessary to consummate the transactions contemplated hereby.
12.3 NO ORDER OR INJUNCTION. There shall not be pending by or before
any court or other governmental body an order or injunction restraining or
prohibiting the transaction's contemplated hereby.
12.4 OPINION OF COUNSEL. Company shall have received an opinion, dated
as of the Closing Date, from counsel for Viasource acceptable to, in form and
substance acceptable to the Company and the Shareholders to the effect that:
(a) Viasource is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New Jersey and is authorized
to carry on the business now conducted by it and to own or lease the properties
now owned or leased by it;
(b) Viasource has the requisite power and authority to execute,
deliver and perform the Agreement and the transactions contemplated hereby;
(c) the shares of capital stock of Viasource issued pursuant to
this Agreement will be duly authorized, validly issued, fully paid and
nonassessable;
(d) the Note has been duly executed and delivered and is a valid
and binding obligation of Viasource, enforceable against it in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or general equitable principles.
(e) such counsel does not know of any litigation, proceeding or
investigation pending or threatened in writing against Viasource, or which
questions the validity of this Agreement.
(f) this Agreement is a valid and binding obligation of Viasource,
enforceable against it in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or general equitable
principles; and
(g) to the knowledge of such counsel, the execution and delivery
of this Agreement by Viasource, the performance by Viasource of its obligations
hereunder and the consummation by it of the transactions contemplated by this
Agreement will not (a) contravene any provision of the Certificate of
Incorporation or Bylaws of Viasource, (b) violate or conflict with any law,
statute, ordinance, rule, regulation applicable to Viasource and does not
conflict with or constitute a default under the provisions of any decree, writ,
injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or
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enforceable against Viasource, or (c) other than in connection with any
Securities Laws require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person hereby.
12.5 TAX OPINION. The Shareholders shall have received an opinion, the
form of which is attached as Exhibit G dated as of the Closing Date, from its
counsel that the Merger qualifies as a tax free reorganization under Section
368(a) of the Code. In rendering such opinion, such counsel may rely upon
representations made by certain Shareholders, the Company and Viasource the
forms of which are attached as Exhibit H.
ARTICLE XIII
DEFINITIONS
13.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"AFFILIATE" shall have the meaning ascribed to it in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on
the date hereof.
"AFFILIATED GROUP" means a Consolidated Group as defined by Treasury
Regulation Section 1.1502-1(h) or a consolidated or combined group for
State Tax purposes.
"CLOSING" means the consummation of the transactions contemplated
hereby.
"CONTRACT" means any agreement, contract, lease, note, mortgage,
indenture, loan agreement, franchise agreement, covenant, employment
agreement, license, instrument, purchase and sales order, commitment,
undertaking, obligation, whether written or oral, express or implied.
"EFFECTIVE TIME" means the time when the transactions contemplated by
this Agreement are consummated.
"ENVIRONMENTAL LAWS" means all laws, treatises, compacts, settlement or
consent agreements, orders, writs, injunctions, judgments, rules,
regulations, statutes, ordinances, common law principles, decrees or
orders or other binding requirements with or of any national,
international, provincial, federal, state, municipal, local or foreign
Governmental Authority relating to the environment (including, without
limitation, natural resources) or the health of humans or other living
organisms, including, without limitation, (a) the control, release or
remediation of any Hazardous Material or potential Hazardous Material
or protection of the air, water or land, (b) generation, handling,
treatment, storage, disposal or transportation of any Hazardous
Material, or (c) exposure to hazardous, toxic or other substances
alleged to be harmful, and (d) final and binding requirements related
to the foregoing imposed by (i) the terms and conditions of any
license, permit, approval or other authorization by any Governmental
Authority, and (ii) applicable judicial, administrative or
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other regulatory decrees, judgments and orders of any such Governmental
Authority. The term "ENVIRONMENTAL LAWS" shall include, but not be
limited to, the following statutes and the regulations promulgated
thereunder, as currently in effect or as subsequently amended: the
Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Clean Water Act, 33
U.S.C. Section 1251 et seq.; the Resource Conservation Recovery Act, 42
U.S.C. Section 6901 et seq.; the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section I 10 11 et seq.; the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Water
Pollution Control Act, 33 U.S.C. Section 125 1, et seq.; the Safe
Drinking Water Act, 42 U.S.C. Section 300 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq.; and any similar state, federal, foreign or local
statute or ordinance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state,
regional, local or other political subdivision thereof, and any entity
or official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS MATERIAL" means any (a) toxic or hazardous materials or
substances; (b) solid, liquid or gaseous wastes, including asbestos,
buried contaminants, chemicals, flammable or explosive materials; (c)
radioactive materials; (d) petroleum wastes and Releases of petroleum
products; and (e) any other chemical, pollutant, contaminant, waste or
other substance (including, without limitation, any product) that is
regulated by or pursuant to any Environmental Law.
"LIEN" means any mortgage, pledge, security interest, collateral
assignment, preemptive or refused right, equity of any kind
encumbrance, lien or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law
or any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"MATERIAL ADVERSE CHANGE (or EFFECT)" means a change (or effect), in
the condition (financial or otherwise), properties, assets, prospects,
liabilities, rights, obligations, operations, or business which change
(or effect) individually or in the aggregate, is materially adverse to
such condition, properties, assets, liabilities, rights, obligations,
operations, or business.
"PERSON" means an individual, partnership, the Company, business trust,
joint stock Company, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
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"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration of
the offering and sale of securities effected by preparing and filing a
registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration
statement.
"SEC" means the Securities and Exchange Commission.
"SHAREHOLDER REPRESENTATIVE" shall be Xxxxxxx Xxxx.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"TAX RETURN" means any tax return, filing or information statement
required to be filed in connection with or with respect to any Tax.
"TAXES" means all taxes, fees or other assessments, including, but not
limited to, income, excise, property, sales, franchise, intangible,
payroll, withholding, social security and unemployment taxes imposed by
any federal, state, local or foreign governmental agency, and any
interest or penalties related thereto, whenever they may be assessed.
13.2 OTHER DEFINITIONAL PROVISIONS
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
ARTICLE XIV
TERMINATION
14.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
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(b) by Viasource in the event of a material breach by the
Company of any provision of this Agreement, including but not limited to the
provisions of Article XI hereto if the Company has not cured such breach within
seven (7) days of receipt of written notice from Viasource;
(c) by the Company in the event of a material breach by
Viasource of any provision of this Agreement, including but not limited to the
provisions of Article XII hereto if Viasource has not cured such breach within
seven (7) days of receipt of written notice from Viasource; or
(d) by Viasource or the Company if the Closing shall not have
occurred by June 2, 2000.
14.2 EFFECT OF TERMINATION. Except as provided in Article IX and for
the provisions of Section 8.5, in the event of termination of this Agreement
pursuant to Section 14.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
IF TO VIASOURCE: 0000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxx, President
Facsimile Number: (000) 000-0000
WITH A COPY TO: Akerman, Senterfitt & Xxxxxx, P.A.
One X.X. 0xx Xxxxxx
00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
IF TO THE COMPANY TO: TeleCore, Inc.
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130 Theory
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
WITH A COPY TO: Xxxxxxx, Phleger & Xxxxxxxx, LLP
00 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
If to the Shareholders, to the
address set forth next to such
Shareholder's name on the signature
pages hereto.
15.2 ENTIRE AGREEMENT. This Agreement (including the Schedules attached
hereto) and other documents delivered concurrently herewith, contains the entire
understanding of the parties in respect of its subject matter and supersedes all
prior agreements and understandings (oral or written) between or among the
parties with respect to such subject matter. The Schedules constitute a part
hereof as though set forth in full above.
15.3 EXPENSES. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby.
15.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
all parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
15.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned or delegated by the Company or the Shareholders
without the prior written consent of Viasource. Viasource may assign all or any
portion of its rights hereunder.
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15.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
15.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
15.8 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Florida
applicable to contracts executed and to be wholly performed within such State,
without regard to conflict of laws principles.
15.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself (or has had the opportunity to
do so) of the terms, contents, conditions and effects of this Agreement; (b)
said party has relied solely and completely upon its own judgment in executing
this Agreement; (c) said party has had the opportunity to seek and has obtained
the advice of counsel before executing this Agreement; (d) said party has acted
voluntarily and of its own free will in executing this Agreement; (e) said party
is not acting under duress, whether economic or physical, in executing this
Agreement; and (f) this Agreement is the result of arm's length negotiations
conducted by and among the parties and their respective counsel.
15.10 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
15.11 ANCILLARY AGREEMENTS. To the extent any agreement ancillary to
this Agreement contains any representation or warranty that provides for
different or conflicting rights, duties or obligations from those
representations and warranties contained herein, the provisions of this
Agreement will control.
15.12 ARBITRATION
(a) The Shareholders and Viasource shall give each other notice of any
claims related to the Collective Bargaining Agreement and a representative of
the Shareholders shall have a right to participate in negotiations related to
the defense or settlement of such claims for periods of time prior to the date
hereof and in negotiations related to the renewal or replacement of the
Collective Bargaining Agreement. If the Shareholders dispute the settlement of
any such claim related to the Collective Bargaining Agreement in good faith,
then the Shareholders may seek
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arbitration of their liability under Section 9.1(a)(vi) in accordance with this
Section 15.12.
(b) Any controversy or claim arising out of or relating to Section
9.1(a)(vi) of this Agreement shall be solely and finally settled by arbitration
administered by the American Arbitration Association (the "AAA") in accordance
with its Commercial Arbitration Rules as then in effect (the "Rules"), except to
the extent such Rules vary from the following provisions. The Shareholders shall
choose one arbitrator by majority vote of the Shareholders weighted according to
that portion of the Aggregate Consideration received by each Shareholder in the
Merger; Viasource shall choose one arbitrator; and the third arbitrator shall be
chosen by the two previously chosen arbitrators (such arbitrators are
hereinafter referred to as the "Arbitrators"). The judgment of the award
rendered by the Arbitrators may be entered in any court having jurisdiction
thereof.
(c) If a party hereto determines to submit a dispute for arbitration
pursuant to this Section 15.12, such party shall furnish the other party with
whom it has the dispute with a notice of arbitration as provided in the Rules
(an "Arbitration Notice") which, in addition to the liens required by the Rules,
shall include a statement of the nature, with reasonable detail, of the dispute.
A copy of the Arbitration Notice shall be concurrently provided to the AAA,
along with a copy of this Agreement.
(d) Once Arbitrators are assigned to hear the matter, the Arbitrators
shall schedule a pre-hearing conference to reach agreement on procedural and
scheduling matters, arrange for the exchange of information, obtain stipulations
and attempt to narrow the issues.
(e) The parties have the right to representation by legal counsel
throughout the arbitration proceedings. The presentation of evidence of the
arbitration hearing shall be governed by the Federal Rules of Evidence. Oral
evidence given at the arbitration hearing shall be given under oath. Any party
desiring a stenographic record may secure a court reporter to attend the
arbitration proceedings. The party requesting the court reporter must notify the
other parties and the Arbitrators of the arrangement in advance of the hearing,
and must pay for the cost incurred. The Arbitrators' award shall be in writing,
signed by the Arbitrators shall contain a concise statement regarding the
reasons for the disposition of any claim. To the extent permissible under
applicable law, the award of the Arbitrators shall be final. It is the intent of
the parties that the arbitration provisions hereof be enforced to the fullest
extent permitted by applicable law.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
VIASOURCE COMMUNICATIONS, INC.,
a New Jersey corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
------------------------
Title: President
------------------------
TC ACQUISITION, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
------------------------
Title: President
------------------------
TELECORE, INC.,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Name: Xxxx X. Xxxxxx
------------------------
Title: President and CEO
------------------------
/s/ Xxxx X. Xxxxxx
--------------------------------
XXXX X. XXXXXX,
a resident of the State of California, individually
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/s/ Xxxxxxx Xxxxxx
---------------------------------------------------
XXXXXXX XXXXXX,
a resident of the State of California, individually
/s/ Xxxx Xxxxxx
---------------------------------------------------
XXXX XXXXXX,
a resident of the State of California, individually
/s/ Xxxxx Xxxxxxx
---------------------------------------------------
XXXXX XXXXXXX,
a resident of the State of California, individually
PALOMAR VENTURES I, L.P.
BY:PALOMAR MANAGEMENT PARTNERS, L.L.C., ITS GENERAL
PARTNER
By: /s/ Xxxxxxx X. Xxxx
------------------------------------------------
Name: Xxxxxxx X. Xxxx
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CREST COMMUNICATIONS PARTNERS, L.P.
BY:CREST PARTNERS V LLL, ITS GENERAL PARTNER
BY:WAT CAPITAL LLC, ITS MANAGING MEMBER
By: /s/ V. Xxxxxxx Xxxxxxxxxx
---------------------------------------------
Name: V. Xxxxxxx Xxxxxxxxxx
----------------------------------------
Title: Managing Director
----------------------------------------
BV-P HOLDING I, L.L.C.
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxx
----------------------------------------
/s/ Xxxxxx X. Xxxx
---------------------------------------------------
XXXXXX X. XXXX,
a resident of the State of California, individually
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/s/ Xxxxx Xxxxx
---------------------------------------------------
XXXXX XXXXX,
a resident of the state of California, individually
/s/ Xxxxxxx XxXxxxx
---------------------------------------------------
XXXXXXX XXXXXXX,
a resident of the state of California, individually
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TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER 2
1.1 THE MERGER 2
ARTICLE II AGGREGATE CONSIDERATION 2
2.1 AGGREGATE CONSIDERATION 2
ARTICLE III CLOSING/MERGER PROCEDURE 2
3.1 TIME AND PLACE 2
3.2 FILING OF PLAN OF MERGER 2
3.3 EFFECT OF THE MERGER 3
3.4 CONVERSION OF OPTIONS 3
3.5 TAX AND ACCOUNTING TREATMENT 4
3.6 PROCEDURE AT THE CLOSING 4
3.7 FRACTIONAL SHARES 4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF VIASOURCE 5
4.1 CORPORATE STATUS 5
4.2 CORPORATE POWER AND AUTHORITY 5
4.3 ENFORCEABILITY 5
4.4 VIASOURCE COMMON STOCK: CAPITALIZATION 5
4.5 NO VIOLATION; CONSENTS AND APPROVALS 6
4.6 RECORDS OF THE VIASOURCE COMPANIES 6
4.7 FINANCIAL STATEMENTS 7
4.8 DISCLOSURE 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
5.1 CORPORATE STATUS 7
5.2 POWER AND AUTHORITY 8
5.3 ENFORCEABILITY 8
5.4 THE SHAREHOLDERS AND OFFICERS OF THE COMPANY 8
5.5 CAPITALIZATION 8
5.6 NO VIOLATION; CONSENTS AND APPROVALS 9
5.7 RECORDS OF THE COMPANY 9
5.8 FINANCIAL STATEMENTS 9
5.9 SUBSIDIARIES 10
5.10 LIABILITIES OF THE COMPANY 10
5.11 LITIGATION 10
5.12 ENVIRONMENTAL MATTERS 10
5.13 REAL ESTATE, PERSONAL PROPERTY. 10
5.14 GOOD TITLE TO AND CONDITION OF ASSETS 12
5.15 COMPLIANCE WITH LAWS 12
5.16 LABOR AND EMPLOYMENT MATTERS 12
5.17 EMPLOYEE BENEFIT PLANS 13
5.18 TAX MATTERS 14
5.19 INSURANCE 17
5.20 RECEIVABLES 18
5.21 LICENSES AND PERMITS 18
5.22 INTELLECTUAL PROPERTY 18
5.23 CONTRACTS 19
5.24 NO COMMISSIONS 20
5.25 BANK ACCOUNTS; BUSINESS LOCATIONS 20
5.26 DISCLOSURE 20
5.27 YEAR 2000 COMPLIANCE 21
5.28 RELATED PARTY TRANSACTIONS 21
5.29 CHANGES SINCE THE CURRENT BALANCE SHEET 22
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5.30 SUPPLIERS AND CUSTOMERS 22
5.31 ORDINARY COURSE 23
5.32 EQUIPMENT 23
5.33 NO ILLEGAL OR IMPROPER TRANSACTIONS 23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS 23
6.1 AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS 23
6.2 NO BREACH 24
6.3 TITLE TO SHARES 24
6.4 BROKERAGE 24
6.5 DISCLOSURE 24
6.6 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES DOCUMENTS 24
ARTICLE VII CONDUCT OF BUSINESS PENDING THE CLOSING 25
7.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING 25
ARTICLE VIII ADDITIONAL AGREEMENTS 26
8.1 FURTHER ASSURANCES/COMPLIANCE WITH COVENANTS 26
8.2 OTHER ACTIONS 27
8.3 ACCESS TO INFORMATION 27
8.4 NOTIFICATION OF CERTAIN MATTERS 27
8.5 CONFIDENTIALITY; PUBLICITY 27
8.6 RESTRICTIVE COVENANT 28
8.7 TAX MATTERS 29
8.8 DELIVERY OF PROPERTY RECEIVED BY THE SHAREHOLDERS AFTER CLOSING 30
8.9 EMPLOYMENT AND NON-COMPETITION AGREEMENT, SALARY CONTINUATION AGREEMENTS 31
8.10 SHAREHOLDER AND DIRECTOR VOTE 31
8.11 RELEASE BY THE COMPANY AND THE SHAREHOLDERS 31
8.12 USE OF THE INTELLECTUAL PROPERTY 31
8.13 NO SHOP 31
8.14 VIASOURCE STOCKHOLDERS AGREEMENT 32
8.15 BOARD OF DIRECTORS 32
8.16 WAIVER OF CERTAIN RIGHTS OF PREFERRED SHAREHOLDERS 32
8.17 WAIVER OF RIGHT TO RECEIVE ADDITIONAL SHARES 33
8.18 CONSENT UNDER INVESTORS' RIGHT AGREEMENT 33
8.19 WAIVER OF RIGHT OF FIRST REFUSAL, ASSIGNMENT OF OPTION AGREEMENT 33
8.20 EMPLOYEE BENEFIT PLANS 33
8.21 TAX COVENANTS
8.22 SENIOR INDEBTEDNESS 34
ARTICLE IX INDEMNIFICATION 34
9.1 AGREEMENT BY THE COMPANY AND THE SHAREHOLDERS FOR INDEMNIFICATION 34
9.2 AGREEMENT BY VIASOURCE FOR INDEMNIFICATION 35
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES 35
9.4 SECURITY FOR INDEMNIFICATION OBLIGATION 36
9.5 VOTING OF, DIVIDENDS ON AND SALE OF THE HELD BACK SHARES 36
9.6 DELIVERY OF HELD BACK SHARES 37
9.7 ADJUSTMENT TO PURCHASE PRICE 37
9.8 NO BAR 37
ARTICLE X SECURITIES LAW MATTERS 37
10.1 DISPOSITION OF SHARES 37
10.2 LEGEND 38
ARTICLE XI CONDITIONS TO THE OBLIGATIONS OF VIASOURCE 38
11.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH OBLIGATIONS 38
11.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY 39
11.3 CERTIFICATE 39
11.4 DELIVERY OF THE SHARES AND WARRANTS 39
11.5 OPINION OF COUNSEL 39
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56
11.6 CONSENTS 40
11.7 EMPLOYMENT AND NON-COMPETITION AGREEMENT 40
11.8 HOLDERS 40
11.9 STOCKHOLDERS AGREEMENT; STOCK POWERS 40
11.10 LEGAL PROHIBITION 40
11.11 SECURITIES LAWS. 41
11.12 OTHER CLOSING DOCUMENTS 41
11.13 CONSENT UNDER INVESTORS' RIGHT AGREEMENT 41
11.14 TAX OPINION 41
11.15 COMPANY AUDIT 41
ARTICLE XII CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND THE SHAREHOLDERS 41
12.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH OBLIGATIONS 41
12.2 OTHER CONDITIONS AND CLOSING DOCUMENTS 42
12.3 NO ORDER OR INJUNCTION 42
12.4 OPINION OF COUNSEL 42
12.5 TAX OPINION 43
ARTICLE XIII DEFINITIONS 43
13.1 DEFINED TERMS 43
13.2 OTHER DEFINITIONAL PROVISIONS 45
ARTICLE XIV TERMINATION 45
14.1 TERMINATION 45
14.2 EFFECT OF TERMINATION 46
ARTICLE XV MISCELLANEOUS 46
15.1 NOTICES 46
15.2 ENTIRE AGREEMENT 47
15.3 EXPENSES 47
15.4 AMENDMENT; WAIVER 47
15.5 BINDING EFFECT; ASSIGNMENT 47
15.6 COUNTERPARTS 48
15.7 INTERPRETATION 48
15.8 GOVERNING LAW 48
15.9 ARM'S LENGTH NEGOTIATIONS 48
15.10 SEVERABILITY 48
15.11 ANCILLARY AGREEMENTS 48
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