1
ASSET PURCHASE AGREEMENT EXHIBIT 2
BETWEEN
R.O.I. CONSULTING, INC.
AND
POWERCERV TECHNOLOGIES CORPORATION
MARCH 30, 1999
2
TABLE OF CONTENTS
Page
1. DEFINITIONS................................................................-1-
2. BASIC TRANSACTION..........................................................-5-
(a) Purchase and Sale of Assets.......................................-5-
(b) Assumption of Liabilities.........................................-5-
(c) Allocation of Expenses............................................-5-
(d) Purchase Price....................................................-6-
(e) The Closing.......................................................-6-
(f) Deliveries at the Closing.........................................-7-
(g) Allocation........................................................-7-
(h) Assets and Accounts Receivable Valuation..........................-7-
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............................-8-
(a) Organization of the Seller........................................-8-
(b) Authorization of Transaction......................................-8-
(c) Noncontravention..................................................-8-
(d) Income Statement..................................................-9-
(e) Brokers' Fees.....................................................-9-
(f) Title to Tangible Assets..........................................-9-
(g) Employees.........................................................-9-
(h) Significant Customers.............................................-9-
(i) Licenses and Permits..............................................-9-
(j) Legal Compliance..................................................-9-
(k) Powers of Attorney...............................................-10-
(l) Employee Benefits................................................-10-
(m) Insurance........................................................-11-
(n) Contracts........................................................-11-
(o) Intellectual Property............................................-11-
(p) Taxes............................................................-11-
(q) Litigation.......................................................-12-
(r) Environmental Matters............................................-12-
(s) Notes............................................................-12-
(t) Accounts Receivable..............................................-13-
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER...............................-13-
(a) Organization of the Buyer........................................-13-
(b) Authorization of Transaction.....................................-13-
(c) Noncontravention.................................................-13-
(d) Brokers' Fees....................................................-13-
(e) Title to PCRV Shares.............................................-13-
(f) Financing........................................................-14-
-i-
3
(g) Litigation.......................................................-14-
5. COVENANTS.................................................................-14-
(a) General..........................................................-14-
(b) Notices and Consents.............................................-14-
(c) Leased Employees, Office Locations...............................-14-
(d) Operation of Business............................................-14-
(e) Full Access......................................................-14-
(f) Closing Date Income Statement....................................-15-
(g) Tax Returns......................................................-15-
(i) Employees........................................................-15-
(j) Reciprocal No Hire Clause........................................-16-
(k) Cooperation......................................................-16-
Books and Records................................................-16-
6. CONDITIONS TO OBLIGATION TO CLOSE.........................................-16-
(a) Conditions to Obligation of the Buyer............................-16-
(b) Conditions to Obligation of the Seller...........................-17-
7. REMEDIES FOR BREACHES OF THIS AGREEMENT...................................-18-
(a) Survival of Representations and Warranties.......................-18-
(b) Indemnification Provisions for Benefit of the Buyer..............-19-
(c) Indemnification Provisions for Benefit of the Seller.............-20-
(d) Matters Involving Third Parties..................................-20-
(e) Determination of Adverse Consequences............................-21-
(f) Other Indemnification Provisions.................................-21-
(g) Offset...........................................................-21-
8. TERMINATION...............................................................-22-
(a) Termination of Agreement.........................................-22-
(b) Effect of Termination............................................-22-
9. MISCELLANEOUS.............................................................-22-
(a) Press Releases and Public Announcements..........................-22-
(b) No Third-Party Beneficiaries.....................................-22-
(c) Entire Agreement.................................................-23-
(d) Succession and Assignment........................................-23-
(e) Counterparts.....................................................-23-
(f) Headings.........................................................-23-
(g) Notices..........................................................-23-
(h) Specific Performance.............................................-24-
(i) Governing Law....................................................-24-
(j) Amendments and Waivers...........................................-24-
(k) Severability.....................................................-24-
-ii-
4
Page
(l) Expenses.........................................................-25-
(m) Construction.....................................................-25-
(n) Incorporation of Exhibits and Schedules..........................-25-
(o) Employee Benefits Matters........................................-25-
Exhibit A - Net Asset/AR Note
Exhibit A-1 - Senior Note
Exhibit B - Subordinated Note
Exhibit C - Termination Agreement
Exhibit D - License Agreement
Exhibit E - OEM Agreement
Exhibit F - Security Agreement
Schedule 1.1 - Assets of the Business
Schedule 1.2 - Liabilities of the Business/Contract Commitments
Schedule 3(d) - Accounting Procedures
Schedule 3(d)-1 - Income Statement
Schedule 3(f) - Permitted Encumbrances
Schedule 3(g)-1 - Employment Law Exceptions
Schedule 3(h) - Top Twenty Customers
Schedule 3(o) - Intellectual Property
Schedule 3(p) - Tax Exceptions
Schedule 3(q) - Schedule of Seller Litigation
Schedule 3(t) - List of Accounts Receivable
Schedule 4(g) - Schedule of Buyer Litigation
-iii-
5
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") entered into on March 30, 1999, by and
between R.O.I. CONSULTING, INC., a Florida corporation (the "Buyer") and
Powercerv Technologies Corporation, a Florida corporation (the "Seller"). The
Buyer and the Seller are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase the listed assets (and assume the listed liabilities) used in the
Seller's general consulting group (known as the Technologies Services Group or
"TSG") and general education group, all as further described in this Agreement
and related schedules (referred to collectively as the "Business") in return
for cash, Notes and the PCRV Shares (all as defined below).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Accounting Procedures" has the meaning set forth in ss. 3(d)
hereof.
"Accounts Receivable" means all accounts receivable and
accrued revenues of the Business except those accounts receivable due from
Integroup, Inc. and HSB Reliability Technologies, Inc.
"Acquired Assets" means all of the right, title, and interest
that the Seller possesses and has the right to transfer in and to the assets of
the Business as specifically listed on Schedule 1.1 hereof, which includes
customer contracts, Accounts Receivable, furniture and fixtures, leases,
computers, phone systems and prepaid assets, and all other assets of the
Business provided however, the "Acquired Assets" will not include the Excluded
Assets.
"Administrative Services Agreement" has the meaning set forth
in ss.6(a)(vi).
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court costs and reasonable attorneys'
fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Code Sec.
-1-
6
1504(a) or any similar group defined under a similar provision of state, local,
or foreign law.
"Assumed Liabilities" means only the liabilities and
obligations of the Business, as specifically listed on Schedule 1.2 hereof,
including but not limited to all liabilities and obligations of the Seller
under the agreements, contracts, leases, licenses (provided such contracts are
not in material default.)
"Buyer" has the meaning set forth in the preface above.
"Change of Control" means (i) any sale, transfer or other
conveyance, whether direct or indirect, of a majority of the fair market value
of the assets of the Buyer or any parent company of Buyer, on a consolidated
basis, in one transaction or a series of related transactions, if, immediately
after giving effect to such transactions, any "person" or "group" (as such
terms are used for purposes of Sections 13(d) and 14(d) of the Securities
Exchange Act, whether or not applicable), other than as an Excluded Person or
Excluded Group, is or becomes the "beneficial owner" (as such term is used in
Rule 13(d)-3 promulgated pursuant to the Securities Exchange Act), directly or
indirectly, of more than 50% of the equity of the transferee, (ii) any person
or "group" (as such terms are used for purposes of Section 13(d) and 14(d) of
the Securities Exchange Act, whether or not applicable), other than an Excluded
Person or Excluded Group, is or becomes the "beneficial owner" (as such term is
used in Rule 13(d)-3 promulgated pursuant to the Securities Exchange Act),
directly or indirectly, of more than 50% of the equity of the Buyer or any
parent company of the Buyer then outstanding normally entitled to vote in
elections of directors, or (iii) during any period following the Closing Date,
individuals who on the Closing Date constituted the Board of Directors of the
Buyer or any parent company of Buyer, cease for any reason to constitute at
least a majority of the Board of Directors of Buyer or any parent company of
Buyer.
"Closing" has the meaning set forth in ss.2(e) below.
"Closing Date" has the meaning set forth in ss.2(e) below.
"Closing Date Income Statement" has the meaning set forth in
ss.5(f).
"Confidential Information" means any information concerning
the businesses and affairs of the Business that is not already generally
available to the public.
"Contracts" has the meaning set forth in ss.3(n).
"Customer Contracts" has the meaning set forth in ss.3(n).
"Effective Time" has the meaning set forth in ss.2(e) hereof.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined
-2-
7
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multi-employer Plan),
or (d) Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Employees" has the meaning set forth in ss.5(i).
"Employees' Noncompetition Agreements" means any agreements
that exist between the Employees and Seller, which contains a non-compete
provision, confidentiality provision and inventions assignment provision among
other terms and conditions.
"Encumbrances" means any material security interest,
mortgage, pledge, lien, charge, adverse claim, or material restriction of any
kind, including but not limited to any restriction on the use, voting,
transfer, receipt of income, or other exercise of any attributes of ownership.
"Environmental Law" has the meaning set forth in ss.3(r).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" means all assets of Seller not specifically
listed on Schedule 1.1 hereof.
"Excluded Group" means a "group" (as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act) that includes one or
more Excluded Persons, provided however, that the voting power at all classes
of stock of the Buyer or any parent company of Buyer "beneficially owned" (as
such term is used in Rule 13d-3 promulgated under the Securities Act) by such
Excluded Persons (without attribution to such Excluded Persons of ownership of
other members of the "group") represents a majority of the voting power of all
classes of stock beneficially owned" (as such term is used in Rule 13d-3
promulgated under the Securities Exchange Act) by such group.
"Excluded Persons" means Xxx X. Xxxxxxx III and Xxxx Xxxx.
"Final Net Asset List" has the meaning set forth in ss.2(h).
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Income Tax" means any federal, state, local, or foreign
income tax, including
-3-
8
any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report,
claim for refund, or information return or statement relating to Income Taxes,
including any schedule or attachment thereto.
"Intellectual Property" has the meaning set forth in ss.3(o).
"IT Services" has the meaning set forth in ss.5(h).
"Knowledge" means actual knowledge of officers of Seller,
except Xxx X. Xxxxxxx, Xxxx Xxxxxxxxxxxx-Xxxxxxx and Xxxx Xxxxxx.
"License Agreement" has the meaning set forth in ss.6(a)(vii)
"Multi-employer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Net Asset/AR Note" has the meaning set forth in ss.2(c)(iii)
hereof.
"Net Asset/AR Schedule" has the meaning set forth in ss.2(h)
hereof
"Notes" means the Net Asset/AR Note, Senior Note and
Subordinated Note.
"OEM Agreement" has the meaning set forth in ss.6(a)(viii).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PCRV Shares" means the 700,000 restricted shares of
Powercerv Corporation common stock held by Buyer and to be transferred to
Seller on the Closing Date.
"Permitted Encumbrances" means those Encumbrances of Seller
disclosed to Buyer on Schedule 3(f) hereto.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in ss.2(c) below.
-4-
9
"Reportable Event" has the meaning set forth in ERISA Sec.
4043.
"Securities Act" means the Securities Act of 1933, as amended
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Agreement" has the meaning set forth in ss.6(b)
(viii).
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for taxes not yet due and payable
or for taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Senior Note" shall have the meaning set forth in 2c(iii)
below.
"Significant Contracts" means those significant contracts
identified by the Parties at Closing.
"Subordinated Note" shall have the meaning set forth in 2(d)
(iv) below.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Termination Agreement" shall have the meaning set forth in
ss.6(a)(v).
2. BASIC TRANSACTION.
(a) Purchase and Sale of Assets. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to purchase from the
Seller, and the Seller agrees to sell, transfer, convey, and deliver to the
Buyer, all of the Acquired Assets at the Closing for the consideration
specified below in this ss.2.
(b) Assumption of Liabilities. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to assume and become
responsible for all of the Assumed Liabilities at the Closing. The Buyer will
not assume or have any responsibility, however, with respect to any other
obligation or liability of the Seller not included within the definition of
Assumed Liabilities.
-5-
10
(c) Allocation of Expenses. Operating expenses, including
without limitation rent payable under real estate and equipment leases, staff
commissions, unpaid vacation and holiday pay and rebates to customers for which
bills are received or payment became due after the Closing Date with respect to
periods both prior to and after the Closing Date will be allocated to each of
the Seller and the Buyer on a pro-rata basis according to the ratio of pre-
Closing Date days to post-Closing Date days. The parties shall cooperate to
promptly allocate such expense between the Parties and make appropriate
payment.
(d) Purchase Price. The Buyer agrees to pay Seller the
aggregate purchase price ("Purchase Price") as follows:
(i) a payment of Two Million Four Hundred
Fifty-Five Thousand Dollars and 00/100 ($2,455,000) in United States
Dollars via wire transfer of immediately available funds to an account
specified by Seller;
(ii) delivery of stock certificates evidencing
the PCRV Shares endorsed to Seller's parent, PowerCerv Corporation
(the Parties agree that the fair market value of the PCRV Shares is
One Million Five Hundred Seventy-Five Dollars ($1,575,000));
(iii) delivery of a senior secured promissory note
bearing no interest in an amount up to One Million Eight Hundred Sixty
Thousand Dollars ($1,860,000) representing seventy-five percent (75%)
of the face value of the Accounts Receivable and One Hundred Percent
(100%) of the estimated book value of the net assets of the Business
as of the Closing Date ("Net Asset/AR Note"), the form of which is
attached hereto as Exhibit A, the final valuation of the Accounts
Receivable and book value of the net assets described above shall be
pursuant to ss. 2(h) below, the Net Asset/AR Note is payable in full
on the earlier of the date of a Change of Control of Buyer or June 30,
1999.
(iv) delivery of a senior secured promissory note
in the amount of Two Million Eight Hundred Fifty Thousand Dollars and
00/100 ($2,850,000) ("Senior Note") payable to Seller in full on the
earlier of the date of a Change of Control of Buyer or June 30, 1999
and bearing interest at a rate of seven and one-half percent (7.5%)
per annum, the form of which is attached hereto as Exhibit A1;
(v) a payment of Eight Hundred Fifty Thousand
Dollars and 00/100 in United States Dollars ($850,000), represented by
a subordinated promissory note ("Subordinated Note") payable to Seller
and bearing interest at a rate of 4.56% per annum, the form of which
is attached hereto as Exhibit B;
(e) The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Holland & Knight LLP in Tampa, FL, commencing at 9:00 a.m. local time on the
first business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions
-6-
11
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
parties may mutually determine (the "Closing Date"); provided, however, that
the Closing Date shall be no later than March 31, 1999. The Closing and
transfer of the Acquired Assets shall be effective as of the close of business
on March 31, 1999 ("Effective Time").
(f) Deliveries at the Closing. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates, instruments, and
documents referred to in ss.6(a) below; (ii) the Buyer will deliver to the
Seller the various certificates, instruments, and documents referred to in
ss.6(b) below; (iii) the Seller will execute, acknowledge (if appropriate), and
deliver to the Buyer assignments, bills of sale such other instruments of sale,
transfer, conveyance and assignment as the Buyer and its counsel reasonably may
request; (iv) the Buyer will execute, acknowledge (if appropriate), and deliver
to the Seller an assumption and such other instruments of assumption or
conveyance of the PCRV Shares as Seller and its counsel reasonably may request;
and (v) the Buyer will deliver to the Seller the Purchase Price specified in
ss.2(c) above.
(g) Allocation. The Parties agree to allocate the
Purchase Price (and all other capitalizable costs) among the Acquired Assets
for all purposes (including financial accounting and tax purposes) in
accordance with the allocation schedule to be agreed to by the Parties after
Closing.
(h) Assets and Accounts Receivable Valuation. On the date
hereof, the Seller will provide Buyer with Schedule 1.1 hereof (Acquired
Assets), which will include a list of all the assets of the Business. No later
than thirty (30) days after the Closing Date, the Seller shall provide Buyer a
schedule of all Accounts Receivable and net assets of the Business as of the
Closing Date. ("Net Asset/AR Schedule") Such schedule will list each account
and the amount of the receivable of the Business as of the Closing Date and
will list each net asset of the Business and its net book value as of the
Closing Date. Within thirty (30) days of Buyer's receipt of the Net Asset/AR
Schedule, Buyer will provide Seller with written confirmation of the exact
descriptions of the net assets Buyer has chosen to purchase from the Net
Asset/AR Schedule ("Final Net Asset List"), provided, however, the parties
understand that Buyer will purchase all of the Accounts Receivable on the Net
Asset/AR Schedule for Seventy-five percent (75%) of the face value of such
Accounts Receivable. The AR/Net Asset Schedule will be complete and accurate as
of the Closing Date and shall be binding on the Parties as to the value of the
Final Net Asset List and Accounts Receivable. The final amount of the Net
Asset/AR Note shall be calculated from the Net Asset/AR Schedule. It is the
intent of the Parties that Buyer will take all assets located at Chantilly,
Virginia, Houston, Texas, Orlando, Florida and Troy, Michigan Seller locations
("Total Properties") and will take certain assets at Buyer's sole discretion,
from Net Asset/AR Schedule hereof that are located at the Tampa, Florida and
Minneapolis, Minnesota Seller locations ("Subdivided Properties" together with
Total Properties the "Properties"). In the event Buyer decides that it wishes
to return assets located at any of the Properties, Buyer agrees to pay shipping
and insurance to return such asset(s) to Seller in Tampa, Florida. In the event
Seller fails to include an asset located at a Total Property on the Net
Asset/AR Schedule, Buyer shall receive asset without further obligation to
Seller. Prior to
-7-
12
delivery of the Final Net Asset List to Seller, Buyer agrees that it will not
purchase or agree to purchase any assets for the purpose of substituting for or
replacing assets listed on the Net Asset/AR Schedule.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Buyer that the statements contained in this ss.3
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
ss.3), except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this ss.3.
(a) Organization of the Seller. The Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and is qualified to do business
in all appropriate jurisdictions.
(b) Authorization of Transaction. The Seller has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of the Seller
have duly authorized the execution, delivery, and performance of this Agreement
by the Seller. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms and
conditions.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
ss.2 above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the Seller is subject or
any provision of the charter or bylaws of the Seller or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or Security Interest would not have a
material adverse effect on the financial condition of the Business or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement. The Seller does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in ss.2 above), except where the failure to give notice, to file,
or to obtain any authorization, consent, or approval would not have a material
adverse effect on the financial condition of the Business or on the ability of
the Parties to consummate the transactions contemplated by this Agreement.
-8-
13
(d) Income Statement. Attached hereto as Schedule 3(d)
are the accounting procedures agreed to by the Parties with respect to
developing an income statement for the Business dated December 31, 1998
("Accounting Procedures"). Buyer has enjoyed full and complete access to the
books and records of the Business and full and complete access to the
development of the Accounting Procedures. Conditioned upon the foregoing, the
income statement of the Business, attached hereto as Schedule 3(d)-1 has been
prepared in accordance with the Accounting Procedures and was prepared from the
books and records of the Seller for the Business. Such books and records are
complete and correct for such period in all material respects.
(e) Brokers' Fees. The Seller has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
(f) Title to Tangible Assets. The Seller has good and
marketable title to, or a valid leasehold interest in the Acquired Assets, free
and clear of all Encumbrances, except those Permitted Encumbrances. All of the
Acquired Assets, whether owned or leased, are in operating condition.
(g) Employees. Schedule 3(g) lists all full time
employees of the Business as of the Closing Date and certain other employees,
along with their hire date, position and current base salaries and specifies
which employees are H1b candidates. Except as set forth on Schedule 3(g) -1,
the Seller has complied in all material respects with all applicable laws,
rules and regulations which relate to prices, wages, hours discrimination in
employment and collective bargaining, and to the operations of the Business,
and the Seller is not liable for any arrearages or any taxes or penalties for
failure to comply with any of the foregoing. The Seller is not a party to, and
the Business is not presently affected by, nor to the Seller's knowledge, has
been threatened with, any dispute or controversy with any union.
(h) Significant Customers. Schedule 3(h) contains a true
and correct list of the twenty largest customers of the Business and revenues
therefrom for the twelve (12) month period ending December 31, 1998.
(i) Licenses and Permits. The Seller possesses all
franchises, permits, licenses, certificates and consent required from any
governmental or regulatory authority in order for the Seller to carry on the
Business as currently conducted and to own and operate the properties and
assets of the Business as now owned and operated.
(j) Legal Compliance. The Seller has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except where the
failure to comply would not have a material adverse effect upon the financial
condition of the Business.
-9-
14
(k) Powers of Attorney. There are no outstanding powers
of attorney executed by Seller on behalf of Business.
(l) Employee Benefits.
(i) With respect to each Employee Benefit Plan
that the Seller maintains or to which the Seller contributes:
(A) Each such Employee Benefit Plan
(and each related trust, insurance contract, or fund)
complies in form and in operation in all respects with the
applicable requirements of ERISA and the Code, except where
the failure to comply would not have a material adverse
effect on the financial condition of the Business.
(B) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(C) Each such Employee Benefit Plan
which is an Employee Pension Benefit Plan has received a
determination letter from the Internal Revenue Service to the
effect that it meets the requirements of Code Sec. 401(a).
(D) As of the last day of the most
recent prior plan year, the market value of assets under each
such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multi-employer Plan) equaled or
exceeded the present value of liabilities thereunder
(determined in accordance with then current funding
assumptions).
(ii) With respect to each Employee Benefit Plan
that any of the Seller and its Subsidiaries maintains or ever has
maintained or to which any of them contributes, ever has contributed,
or ever has been required to contribute:
(A) No such Employee Benefit Plan
which is an Employee Pension Benefit Plan (other than any
Multi-employer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multi-employer Plan) has been
instituted.
(B) No action, suit, proceeding,
hearing, or investigation with respect to the administration
or the investment of the assets of any such Employee Benefit
Plan (other than routine claims for benefits) is pending,
except where the action, suit, proceeding, hearing, or
investigation would not have a material adverse effect on the
financial condition of the Seller taken as a whole.
-10-
15
(C) The Seller has not incurred any
liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
liability) with respect to any such Employee Benefit Plan
which is an Employee Pension Benefit Plan.
(m) Insurance. The Seller is, and will be through the
Closing Date, insured in respect of the Acquired Assets, such insurance
coverage will remain in full force and effect with respect to all Acquired
Assets until the Closing Date.
(n) Contracts. Seller's written services agreements with
its customers ("Customer Contracts"), which involve obligations of Seller of
$10,000 or more and which have not already expired by their terms or are not
otherwise in a non-active or dormant status, are in full force and effect and
enforceable in accordance with their terms, except to the extent that the
enforceability thereof may be subject to or attached by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or other laws
relating to or affecting the rights of creditors generally or consent is
required and has not been obtained as of Closing. Seller's written leases or
written commitments ("Contracts"), which involve obligations of Seller of
$10,000 or more and which have not already expired by their terms or are not
otherwise in a non-active or dormant status, are in full force and effect and
enforceable in accordance with their terms, except to the extent that the
enforceability thereof may be subject to or attached by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, or other laws
relating to or affecting the rights of creditors generally or consent is
required and has not been obtained as of Closing. To the Knowledge of the
Seller, Seller and each other party thereto has materially performed all the
obligations required to be performed by it, has received no notice of default
and is not in default (with due notice or lapse of time or both) under any of
the contracts. The Seller has no present expectation or intention of not fully
performing all its obligations under each of the contracts, and the Seller has
no Knowledge of any material breach or anticipated material breach by the other
party to any of the contracts to which the Seller is a party other than late
payments and customer consents for assignment of agreements. To Seller's
Knowledge, none of the Customer Contracts or other Contracts has been
terminated and to Seller's Knowledge, no party has threatened to terminate any
such contracts.
(o) Intellectual Property. Except as set forth on
Schedule 3(o), described in the License Agreement, and the OEM Agreement and
commercial software licensed for use on personal computers, there are no other
patents, software licenses, know-how licenses, tradename, trademarks,
copyrights, inventions, service marks, trademark registrations and
applications, service xxxx registrations and applications, and copyright
registrations and applications, trade secrets or other confidential proprietary
information owned or used by Seller in the operation of the Business
("Intellectual Property").
(p) Taxes. Except as set forth on Schedule 3(p), all
federal, state, local and foreign tax returns and tax reports required to be
filed by the Seller in connection with the conduct of the appropriate
governmental agencies in all jurisdictions in which such returns and reports
are required to be filed and all amounts shown as owing thereon have been paid.
All
-11-
16
taxes in connection with the conduct of the Business (including, without
limitation, income, accumulated earnings, property, sales, use, franchise,
excise, license, value added, fuel, employees' income withholding and social
security taxes) which have become due, payable or are required to be collected
by the Seller or are otherwise attributable to any periods ending before the
Closing Date and all interest and penalties thereon, whether disputed or not,
have been paid or will be paid in full or adequately reflected on the Seller's
books and records in accordance with generally accepted accounting principles
on or prior to the Closing Date. Except as set forth on Schedule 3(p), all
deposits required by law to be made by the Seller in connection with the
conduct of the Business with respect to employees' withholding taxes have been
duly made, and as of the Closing Date all such deposits due will have been
made.
(q) Litigation. Except as set forth on Schedule 3(q),
there is no (i) action, suit, claim, proceeding or investigation pending or, to
the Knowledge of the Seller, threatened against or affecting the conduct of the
Business (whether or not the Seller is a party or prospective party thereto),
at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, and (ii) governmental inquiry pending or threatened
against or involving the conduct of the Business.
(r) Environmental Matters. The Seller is in material
compliance with all applicable federal, state and local laws, rules,
regulations, ordinances and requirements relating to the environment
("Environmental Laws"). (i) No "Hazardous Wastes" (as hereinafter defined) have
ever been generated, transported, treated, stored, released or disposed of by
Seller on any of the leased facilities, (ii) the Seller has not transported nor
disposed or caused or permitted any person to transport or dispose of any
Hazardous Wastes other than in accordance with all Environmental Laws, and
(iii) to the Knowledge of the Seller, no asbestos, PCBs or other Hazardous
Wastes or any petroleum product or constituents thereof is present on, in or
under any of the Seller's leased facilities. "Hazardous Wastes" for purposes of
this Agreement shall include, without limitation: (i) hazardous substances or
hazardous wastes, as those terms are defined by the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., and any
other applicable federal, state or local law, rule, regulation, ordinance or
requirement, all as amended or hereafter amended; (ii) petroleum, including
without limitation crude oil or any fraction thereof which is liquid at
standard conditions of temperature and pressure; (iii) any radioactive
material, including without limitation any source, special nuclear, or
by-product material as defined in 42 U.S.C. Section 2011 et seq.; and (iv)
asbestos or any asbestiform minerals in any form or condition.
(s) Notes. The Seller understands that the Net Asset/AR
Note, the Senior Note and the Subordinated Note have not been and will not be
registered under the Securities Act or under any state securities law, and are
being offered and sold in reliance upon federal and state exemptions for
transactions involving any public offering, (ii) is acquiring the Notes solely
for its own account for investment purposes, and not with a view to the
distribution thereof, (iii) is a sophisticated investor with knowledge and
experience in business and financial matters, (iv)
-12-
17
has received certain information concerning the Buyer and has had the
opportunity to obtain additional information as desired in order to evaluate
the merits and the risks inherent in holding the Notes, and (v) is able to bear
the economic risk and lack of liquidity inherent in holding the Notes.
(t) Accounts Receivable. The Accounts Receivable arose
in the ordinary course of the Business. Attached hereto as Schedule 3(t) are
the Accounts Receivable as of December 31, 1998 and such Schedule is complete
and correct as of the date hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Seller that the statements contained in this
ss.4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout
this ss.4).
(a) Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation.
(b) Authorization of Transaction. The Buyer has full
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the Buyer,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby (including the assignments and assumptions referred to in
ss.2 above), will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the Buyer is subject or
any provision of its charter or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject. The Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in ss.2 above).
(d) Brokers' Fees. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Seller
could become liable or obligated.
(e) Title to PCRV Shares. As of the date hereof, Buyer
has (and upon consummation of the transfer of the shares hereunder Seller will
acquire) good and valid title to the PCRV Shares free and clear of all
Encumbrances.
-13-
18
(f) Financing. Buyer will have available on the Closing
Date sufficient funds to consummate the transaction and will have on the
Closing Date binding commitments for sufficient funds to pay all obligations
pursuant to the Notes.
(g) Litigation. Except as set forth on Schedule 4(g), to
the Buyer's knowledge there is no action, suit, claim, proceeding or
investigation pending or, to the threatened against or affecting the conduct of
Buyer or its properties.
5. COVENANTS. The Parties agree as follows:
(a) General. Each of the Parties will use its reasonable
best efforts to consummate and make effective the transactions contemplated by
this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in ss.6 below).
(b) Notices and Consents. The Seller will give all
notices to third parties, and the Seller will use its reasonable best efforts
to obtain any third party consents. If any of the contracts or leases to be
acquired or assumed by Buyer hereunder, require the consent of a third party,
and if such consent has not been obtained by the Closing Date, Seller (i) shall
use its best efforts within the thirty (30) days after the Closing Date, or
longer period as mutually agreed upon by the Parties, to promptly obtain and
secure any and all consents necessary to effect the valid transfer and
assignment of the same to Buyer and Buyer shall assist and cooperate with
Seller in obtaining such required consents, and (ii) shall cooperate with Buyer
in any reasonable arrangement, which will provide for Buyer the immediate
benefits under such contract or lease provided that Buyer pay the cost under
such contract or lease and Seller is not in breach or violation of such
contract or lease by engaging in such conduct.
(c) Leased Employees, Office Locations. Buyer hereby
agrees to assume any and all liabilities with respect to any employees leased
to Buyer in connection with this transaction and with respect to Buyer's use of
any of Seller's Properties.
(d) Operation of Business. The Seller will not engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Seller shall cooperate in all reasonable respects
with and assist Buyer in order to provide an efficient transfer of the control
and management of the Business.
(e) Full Access. The Seller will permit representatives
of the Buyer to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller, to all
premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to the Business. The Buyer will treat
and hold as such any Confidential Information it receives from the Seller in
the course of the reviews contemplated by this ss.5(e), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller
all tangible embodiments (and all copies) of the Confidential Information which
are in its possession. Buyer and Seller will continue to abide by the terms
-14-
19
of that certain Reciprocal Nondisclosure Agreement dated September 23, 1998
between the Parties.
(f) Closing Date Income Statement. No later than May
15th, Seller shall provide Buyer an Income Statement of the Business, for the
period ending on the Closing Date, ("Closing Date Income Statement") prepared
in accordance with the Accounting Procedures and from the books and records of
the Seller for the Business, Seller shall arrange for Seller's auditors Ernst &
Young LLP to review the Accounting Procedures used to prepare such Income
Statement and such review shall be consistent with the review performed in
connection with Schedule 3(d) hereof. Buyer will be responsible for any and all
amounts due Ernst & Young for such review. The Closing Date Income Statement
shall be prepared by the same person that prepared the Income Statement
attached hereto as Schedule 3(d)-1 hereof.
(g) Tax Returns. The Seller shall prepare and timely file
all of its required tax returns relating to the Business for periods ending
prior to the Closing Date. The Seller shall be responsible for the payment of
all taxes due for operation of the Business prior to the Closing Date. The
Buyer shall prepare and file all required tax returns relating to the Business
for the period beginning on the Closing Date and Buyer shall be responsible for
the payment of all taxes due for such period after the Closing Date.
(h) Noncompetition and Nondisclosure. For a period of 2
years from the Closing Date and without the prior written consent of a duly
authorized officer of Buyer, Seller will not (a) engage in any "ground floor"
application development consulting services, DBA consulting services or other
IT general consulting services (collectively, the "IT Services") for any third
party customer located in the United States, which IT Services are unrelated to
Seller application products, other application products resold/OEM'd by Seller,
or the products of any successor to Seller's interests (including but not
limited to product modifications, customizations, enhancements, interfaces,
implementations, education and training on or related to Seller, third party or
their successors' application products), or (b) provide general education and
training services (including but not limited to Sybase/PowerBuilder, Apptivity,
or Java) to third party customers located in the United States which are
unrelated to Seller application products, other application products
resold/OEM'd by or the products of any successor to Seller interests. The
Parties agree that, notwithstanding the foregoing, Seller may provide
consulting services referenced above in subsection (a) to Seller application
customers, customers who purchase other application products resold/OEM'd by
Seller, application customer prospects in connection with application pre-sales
efforts and/or the application customers of any successors in interest to
Seller or its resellers/OEMs. Seller agrees to hold in confidence any and all
Confidential Information of the Business.
(i) Employees. Buyer shall offer employment to all of the
current employees of the Business, as Parties shall agree on employee list
prior to Closing ("Employees") and Buyer will assume all liability for such
Employees including any termination liability that would otherwise be Seller's
liability due to the fact such Employee did not accept employment with Buyer or
otherwise, including, but not limited to, any fees or charges related to any
Employee's
-15-
20
immigration status. Buyer shall be entitled to review such Employees' records.
Seller shall cooperate with Buyer in connection with the interviewing and
hiring of the existing employees of the Business. Buyer will not encourage the
Employees to violate their obligations to Seller pursuant to their
Noncompetition Agreements and provide notice to Seller of any such violations.
(j) Reciprocal No Hire Clause. Except as otherwise
expressly set forth in this Agreement or with the prior written consent of the
other Party hereto, neither Party may hire, solicit for hire or retain the
services of the other Party's employees during the period such employee is
employed by said Party and for six months after such employment terminates. In
the event either Party terminates the covenant in this ss. 5(j) hereof, the
breaching Party agrees that the damages to the other Party shall be two (2)
times the subject employees' annual total compensation. Such damages shall be
exclusive of the indemnification provisions in ss. 7 hereof.
(k) Cooperation. The Seller will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other associate of the Business from
maintaining the same business relationships with the Buyer after the Closing as
it maintained with the Seller prior to the Closing.
(l) Books and Records. After the Closing Date, the
Seller and Buyer shall provide such assistance and cooperation to each other
and shall provide the other party such access to Seller's books and records as
may be reasonably necessary to the continuation of the Business by the Buyer.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer. The obligation
of the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set
forth in ss.3 above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer
a certificate to the effect that each of the conditions specified
above in ss.6(a)(i)-(iii) is satisfied in all respects;
(v) Termination Agreement. The Seller and Xxx
X. Xxxxxxx, III shall have executed that certain Termination
Agreement, ("Termination Agreement") in
-16-
21
substantially the form attached hereto as Exhibit C.
(vi) Administrative Services Scope and Terms.
The Seller and Buyer shall agree on the scope and payment terms of the
Administrative Services Agreement, ("Administrative Services
Agreement").
(vii) Software License Agreement. The Seller and
Buyer shall execute that certain Software License Agreement, dated as
of the Closing Date, ("License Agreement"), in the form attached
hereto as Exhibit D and Buyer shall pay, on the Closing Date, to
Seller, via wire transfer all fees associated with the License
Agreement.
(viii) OEM Agreement. The Parties shall execute an
OEM Agreement, dated as of the Closing Date ("OEM Agreement") in the
form attached hereto as Exhibit E, and Buyer shall pay, on the Closing
Date, to Seller, via wire transfer all fees associated with the OEM
Agreement.
(ix) Closing Documents. The Seller shall have
delivered all closing documents required by 6(a) hereof.
The Buyer may waive any condition specified in this ss.6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The
obligation of the Seller to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set
forth in ss.4 above shall be true and correct in all material respects
at and as of the Closing Date;
(ii) the Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller
a certificate to the effect that each of the conditions specified
above in ss.6(b)(i)-(iii) is satisfied in all respects;
(v) Termination Agreement. The Seller and Xxx
X. Xxxxxxx, III shall have executed the Termination Agreement, in
substantially the form attached hereto as Exhibit C.
-17-
22
(vi) Administrative Services Scope and Terms.
The Seller and Buyer shall agree on the scope and payment terms of the
Administrative Services Agreement.
(vii) Software License Agreement. The Seller and
Buyer shall execute License Agreement, dated as of the Closing Date,
the form attached hereto as Exhibit D and shall pay on the Closing
Date to Seller, via wire transfer all fees associated with the License
Agreement.
(viii) OEM Agreement. The Parties shall execute an
OEM Agreement, dated as of the Closing Date, in the form attached
hereto as Exhibit E, and Buyer shall pay, on the Closing Date, to
Seller, via wire transfer all fees associated with the OEM Agreement.
(viii) Security Agreement. The Seller shall have
executed that certain Security Agreement providing Seller a first lien
security interest in the Acquired Assets to secure the Senior Note
("Security Agreement"), in substantially the form attached hereto as
Exhibit F.
(ix) Closing Documents. The Seller shall have
delivered all closing documents required by 6(b) hereof.
(x) Fairness Opinion. The Seller shall have
received a Fairness Opinion regarding the transaction contemplated by
this Agreement, satisfactory to Seller from FAC Equities, a division
of First Albany Corporation.
The Seller may waive any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of
the representations and warranties of the Buyer and the Seller contained in
this Agreement shall survive the Closing (unless the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time of
closing) and continue in full force for one year thereafter, except that
claims, if any, asserted in writing prior to such first anniversary identified
as a claim for indemnification pursuant to this ss.7 shall survive until
finally resolved and satisfied in full; and employment-related, tax or
environmental claims arising from a breach of ss.3(g), ss.3(p) or ss.3(r),
respectively, shall survive for the full period of the applicable statute of
limitations, and until finally resolved and satisfied in full if asserted on or
prior to the expiration of any such period. The representations and warranties
shall not be affected or otherwise diminished by any investigation at any time
by or on behalf of the party for whose benefit such representations and
warranties were made.
(b) Indemnification Provisions for Benefit of the Buyer.
-18-
23
(i) In the event the Seller breaches any of its
representations, warranties, and covenants contained in this
Agreement, except breaches relating to Significant Contracts
which are the subject of ss.7(b)(ii) or any person asserts a
claim against, or liability or obligation of the Buyer
(whether absolute, accrued, contingent or otherwise) relating
to, or arising out of, the operation of the Business prior to
the Closing Date or facts and circumstances existing prior to
the Closing Date and relating specifically to the Business or
the Seller, whether or not such liabilities, obligations or
claims were known on such date, excluding any and all
liabilities relating to or arising out of facts and
circumstances relating to the Assumed Liabilities and
Significant Contracts and, provided that the Buyer makes a
written claim for indemnification against the Seller pursuant
to ss.9(g) below within the applicable survival period
pursuant to ss.7(a) above, then the Seller agrees to
indemnify the Buyer (A) once the Buyer has suffered Adverse
Consequences by reason of all such breaches in excess of a
Twenty-Five Thousand Dollars ($25,000) aggregate deductible
(after which point the Seller will be obligated only to
indemnify the Buyer from and against further such Adverse
Consequences); provided, however, that this limitation or
"basket" shall not apply to any damages or claims arising in
connection with fraud or willful misconduct of Seller or the
representations and warranties with respect to title to the
Acquired Assets, environmental matter and litigation as set
forth in ss.3(f), ss.3(l) and ss.3(q) hereof respectively or
thereafter (B) to the extent the Adverse Consequences the
Buyer has suffered by reason of all such breaches exceeds a
One Million Five Hundred Thousand Dollars ($1,500,000)
aggregate ceiling (after which point the Seller will have no
obligation to indemnify the Buyer from and against further
such Adverse Consequences), provided, however, this aggregate
ceiling on liability shall not apply to any damages or claims
arising in connection with the fraud or willful misconduct of
Seller.
(ii) In the event the Seller breaches any of its
representations, warranties and covenants contained in this
Agreement regarding solely and exclusively the Significant
Contracts only or any person asserts a claim against, or
liability or obligation of the Buyer (whether absolute,
accrued, contingent or otherwise) relating to, or arising out
of facts and circumstances existing prior to the Closing Date
and relating specifically and exclusively to the Significant
Contracts only, whether or not such liabilities, obligations
or claims were known on such date, excluding any and all
liabilities relating to or arising out of facts and
circumstances relating to any matters of Business or Seller
other than the Significant Contracts as specified in this
ss.7(b)(ii), and, provided that Buyer makes a written claim
for indemnification against the Seller pursuant to ss.9(g)
below within the applicable survival period pursuant to
ss.7(a) above, then Seller agrees to indemnify the Buyer (A)
once the Buyer has suffered Adverse Consequences by reason of
all such breaches in excess of a Thirty-Five Thousand Dollars
($35,000) aggregate deductible (after which point the Seller
will be obligated only to indemnify the Buyer from and against
further such Adverse Consequences);
-19-
24
provided, however, that this limitation or "basket" shall not
apply to any damages or claims arising in connection with
fraud or willful misconduct by Seller or representations and
warranties with respect to title to the Acquired Assets,
environmental matters and litigation as set for in ss.3(f),
ss.3(q) and ss.3(r) hereof respectfully or thereafter (B) to
the extent the Adverse Consequences the Buyer has suffered by
reason of all such breaches exceeds a Three Million Dollar
($3,000,000) aggregate ceiling (after which point the Seller
will have no obligation to indemnify the Buyer from and
against such Adverse Consequences).
(c) Indemnification Provisions for Benefit of the Seller.
In the event the Buyer breaches any of its representations, warranties, and
covenants contained in this Agreement, or any person asserts a claim against,
or liability or obligation of the Seller (whether absolute, accrued, contingent
or otherwise) relating to, or arising out of, the operation of the Business
subsequent to the Closing Date, provided that the Seller makes a written claim
for indemnification against the Buyer pursuant to ss.9(g) below within the
applicable survival period pursuant to ss.7(a) above, then the Buyer agrees to
indemnify the Seller once the Seller has suffered Adverse Consequences by
reason of all such breaches in excess of a Twenty-Five Thousand Dollar
($25,000) aggregate deductible (after which point the Buyer will be obligated
to indemnify the Seller from and against further such Adverse Consequences),
provided, however, that this limitation or "basket" shall not apply to any
damages or claims arising in connection with the fraud or willful misconduct of
Buyer or thereafter (B) to the extent the Adverse Consequences the Seller has
suffered by reason of all such breaches exceeds a One Million Five Hundred
Thousand Dollar ($1,500,000) aggregate ceiling (after which point the Buyer
will have no obligation to indemnify the Seller from and against further such
Adverse Consequences); provided, however, that this aggregate ceiling on
liability shall not apply to any damages or claims arising in connection with
any Assumed Liabilities or the fraud or willful misconduct of Buyer; provided
further, that this aggregate ceiling on liability shall have no effect on the
payment of the Notes, except as otherwise set forth in ss.7(g) hereof.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party
(the "Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim for
indemnification against the other Party (the "Indemnifying
Party") under this ss.7, then the Indemnified Party shall
promptly (and in any event within five business days after
receiving notice of the Third Party Claim) notify the
Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right
at any time to assume and thereafter conduct the defense of
the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party; provided, however,
that the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless
the
-20-
25
judgment or proposed settlement involves only the payment of
money damages and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party
assumes the defense of the Third Party Claim as provided in
ss.7(d)(ii) above, however, the Indemnified Party may defend
against the Third Party Claim in any manner it reasonably may
deem appropriate.
(iv) In no event will the Indemnified Party
consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be
withheld unreasonably).
(e) Determination of Adverse Consequences. The Parties
shall make appropriate adjustments for tax benefits and insurance
coverage and take into account the time cost of money in determining
Adverse Consequences for purposes of this ss.7. All indemnification
payments under this ss.7 shall be deemed adjustments to the Purchase
Price.
(f) Other Indemnification Provisions. Except as otherwise
provided herein, the indemnification provisions in this ss.7 shall be
the exclusive remedy of the Buyer and Seller for any breach by either
party of the representations and warranties in this Agreement.
(g) Offset. The Seller acknowledges and agrees that the
Buyer shall be entitled to offset any indemnity claim under ss.7(b)
against any payment due to the Seller under the Subordinated Note. The
Buyer shall deliver to the Seller written notice not less than thirty
(30) days prior to exercising its right of offset pursuant to this
ss.7(g), which notice shall set forth in reasonable detail the Buyer's
basis for exercising its right of offset and the amount of the
proposed offset. If within thirty (30) days of receiving the Buyer's
notice of its intent to exercise its right of offset Seller delivers
to the Buyer written notice setting forth Seller's objection to the
Buyer's exercise of its right of offset, then the Buyer shall place
into an interest-bearing escrow account the amount of the proposed
offset, which amount, along with all accrued interest, shall be
distributed to the Buyer or the Seller or both, as appropriate, upon
resolution of such dispute or upon the written consent of the Buyer
and the Seller. Neither the exercise of nor the failure to give a
notice of a claim shall constitute an election of remedies nor limit
indemnitee in any manner in the enforcement or any other remedies that
may be available to it.
-21-
26
8. TERMINATION.
(a) Termination of Agreement. Certain of the Parties may
terminate this Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing
in the event the Seller has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect and the Buyer has notified the Seller of the breach.
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing in
the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect and the Seller has notified the Buyer of the breach.
(iv) the Agreement shall terminate automatically
should the Closing not occur on or before March 31, 1999 for any
reason; and
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to ss.8(a) above, or the Agreement terminates on its own
terms pursuant to ss.8(a)(iv) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of either party to the other
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in ss.5(e) above shall survive
termination.
9. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party
shall issue any press release or make any public announcement relating to the
subject matter of this Agreement without the prior written approval of the
other Party; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall
not confer any rights or remedies upon any Person other than the Parties and
their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the
documents referred to herein) and the Schedules and Exhibits referenced herein
and attached hereto constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
-22-
27
(d) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the other Party, provided, however, that the Buyer
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases the Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(e) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument.
(f) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Seller: PowerCerv Technologies Corporation
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax: 813/000-0000
Copy to: Holland & Knight, LLP
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: K. Xxxxxxx Xxxxxx, Esq.
Fax: 813/000-0000
-23-
28
If to the Buyer: R.O.I. Consulting, Inc.
000 X. 0xx Xxxxxx, Xxxxx 0
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxx, President
Fax: (000) 000-0000
Copy to: Xxxxxx & Xxxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Coffee, Esq.
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth.
(h) Specific Performance. The transactions contemplated
by this Agreement are unique. Accordingly, each of the parties acknowledges and
agrees that, in addition to any other remedies to which it may be entitled,
each of the parties hereto is entitled to a decree of specific performance,
provided such party is not in material default hereunder.
(i) Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of Florida
without giving effect to any choice or conflict of law provision or rule that
would cause the application of the laws of any jurisdiction other than the
State of Florida. Any and all legal actions brought pursuant to this Agreement
shall be filed in Circuit Court of the Thirteenth (13th) Judicial District in
and for Hillsborough County, FL.
(j) Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
-24-
29
(l) Expenses. Each of the Buyer and the Seller will bear
its own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise.
(n) Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
(o) Employee Benefits Matters. The Seller will retain at
and as of the Closing each of the Employee Benefit Plans that the Seller
currently maintains and each trust, insurance contract, annuity contract, or
other funding arrangement that the Seller has established with respect thereto.
The Buyer will not assume any responsibility or liability for the Employee
Benefit Plans.
* * *
-25-
30
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
R.O.I. CONSULTING, INC.
By:
------------------------------
Title: Xxxx X. Xxxx, President
------------------------------------------
POWERCERV TECHNOLOGIES CORPORATION
By:
------------------------------
Title: Xxxx X. Xxxxxxxx, Chief Executive Officer
-----------------------------------------
-26-
