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EXHIBIT 10.12
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
May 5, 2000, by and among ViaSource Communications, Inc., a New Jersey
corporation, and together with its wholly-owned subsidiary for purposes of this
Agreement, Acquisition Sub (as defined below) ("ViaSource"); SCC Acquisition,
Inc., a Delaware corporation ("Acquisition Sub"); Service Cable Electric, Inc.,
a Florida corporation, and its wholly-owned subsidiaries ("SCEC"), Service Cable
Corporation, a Florida corporation, and its subsidiaries ("SCC" and together
with SCEC, each a "Company" and collectively the "Companies"); Xxxxxxx X.
Xxxxxxx, Xxx Xxxxxxx and Xxxx Xxxxxxx (each a "Shareholder" and collectively,
the "Shareholders"). Certain other capitalized terms used herein are defined in
Article IX and throughout this Agreement.
RECITALS
A. The Companies are engaged in the business of electrical
contracting involving the installation of electrical wiring, power distribution
equipment, lighting and connections of electrical equipment and of providing low
voltage and fiber optic installation services, including telephone, cable
television and computer network cabling systems (the "Business").
B. The Shareholders are the owners of all of the issued and
outstanding capital stock of the Companies.
C. The Companies wish to sell and ViaSource wishes to buy, the
assets relating to the Business (as defined in Section 1.1 below) on the terms
and subject to the conditions hereinafter set forth (the "Asset Purchase").
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF
ASSETS; PURCHASE PRICE; CLOSING
1.1 PURCHASED ASSETS. The Companies agree to and hereby sell,
convey, transfer, assign and deliver to ViaSource concurrently herewith on the
terms and subject to the conditions set forth in this Agreement, all of their
respective assets, properties, business and trade names, goodwill and business
of every kind and description, whether real, personal or mixed, tangible or
intangible,
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wherever located (except those assets of the Companies which are specifically
excluded as provided in Section 1.2 hereof) as exist as of the date hereof
(collectively, the "Purchased Assets"). Without limiting the generality of the
foregoing, the Purchased Assets shall include the following:
(a) all machinery, equipment, tools, supplies, leasehold
improvements, furniture and fixtures of each Company and other tangible personal
property used by, or located on the premises of, the Companies (the "Fixed
Assets");
(b) all inventories of each Company;
(c) all receivables, and work in process, of whatsoever
kind or nature of each Company;
(d) all of the interests, rights and benefits accruing to
either Company under any licenses, service agreements, maintenance and support
agreements, real estate leases, equipment leases, franchise contracts, sales
orders, sales contracts, supply contracts, service agreements, insurance
policies, purchase orders, purchase commitments and Material Contracts (as
defined herein) made by either Company in the ordinary course of business, all
other agreements to which either Company is a party or by which it is bound in
the ordinary course of business and all choses in action, causes of action and
other rights of every kind of either Company;
(e) all operating data and records of each Company,
including all customer lists;
(f) all cash and cash equivalents of each Company;
provided, however, that the cash shall be reduced by (i) an amount equal to
$300,000, which represents the tax liability of the Shareholders for the fiscal
year ended December 31, 1999, (ii) an amount equal to $505,000, which represents
bonuses payable to employees of the Companies, administrative fees paid to
affiliates of the Companies and distributions to the Shareholders of the
Companies, and (iii) an amount, if any, to reflect the increase in the Net Worth
(as defined below) of the Companies for the period beginning on January 1, 2000
and ending on the Closing Date, as determined in accordance with Section 4.15
hereof (all such adjustments shall be deemed to be adjustments to the Purchase
Price (as defined below)); provided, that in the case of the payments and
distributions provided for in (i) and (ii) above, such amounts shall be paid or
distributed by the Companies prior to the Closing Date (as defined below) to the
extent that funds are available to make such payments or distributions, and will
be included on Schedule 1.6 as Assumed Liabilities (as defined below) and paid
or distributed to the appropriate recipients in accordance with ordinary
business practices to the Shareholders by ViaSource after the Closing Date as
the receivables of the Companies are collected by ViaSource to the extent that
funds are not available to make such payments or distributions prior to the
Closing Date; provided, further, that anything in this Section 1.1(f) to the
contrary notwithstanding, in no event shall the Shareholders reduce the
aggregate Working Capital (as defined below) of the Companies below $200,000 on
or prior to the Closing Date;
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(g) all intangibles of each Company, including but not
limited to all patents (and applications therefor), licenses, trademarks (and
applications therefor), service marks, tradenames (whether registered or
unregistered), domain names (and any derivations thereof), copyrights (and
applications therefor), proprietary computer software, proprietary inventions,
proprietary technology, technical information, discoveries, designs, proprietary
rights and non-public information, trade secrets, and know-how, in each case
whether or not patentable (including, without limitation, the rights and
properties listed on Schedule 1.1(g) hereto) (collectively, the "Intellectual
Property"); and
(h) all prepaid expenses of each Company.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set
forth in Section 1.1, the Purchased Assets shall exclude the following assets of
the Companies: (i) the Purchase Price (as defined in Section 1.5) and other
rights of the Companies under this Agreement; (ii) the shares of capital stock
of each Company which are owned and held by each such Company as treasury
shares; (iii) the corporate minute books and stock records of the Companies; and
(iv) those assets set forth on Schedule 1.2.
1.3 INSTRUMENTS OF TRANSFER. On the date hereof, each Company will
deliver to ViaSource, or will cause to be delivered to ViaSource, duly executed
instruments of transfer and assignment in form and substance reasonably
satisfactory to ViaSource and its counsel, sufficient to vest in ViaSource good
and valid title to, and all of each respective Company's right, title and
interest in and to, the Purchased Assets, including, without limitation, one or
more of each of the following:
(a) bills of sale and assignments;
(b) instruments of transfer and assignment of the
Intellectual Property;
(c) assignments by each Company of its rights under all
leases pertaining to leased assets; and
(d) such other instruments of transfer and assignment as
may be reasonably necessary to transfer and assign the Purchased Assets to
ViaSource.
1.4 ASSIGNMENT OF CONTRACTS. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall not constitute an assignment of
any claim, contract, or other right or benefit if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a breach
thereof or in any way adversely affect the rights of ViaSource thereunder. If
any attempt at an assignment thereof would be ineffective so that ViaSource
would not in fact receive all such rights, the Companies shall cooperate with
ViaSource to the extent necessary to provide for ViaSource the benefits under
such claim, contract, or other right or benefit.
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1.5 PURCHASE PRICE. Subject to the terms and conditions as set
forth herein, each Company agrees to sell and ViaSource agrees to purchase from
each Company the Purchased Assets for (a) $980,000.00 in immediately available
funds, (b) 560,000 shares of ViaSource common stock, no par value, adjusted for
any stock splits, stock dividends or other similar such events prior to the
Closing Date, (the "ViaSource Shares"), allocated to the Shareholders as
provided in Schedule 1.5 hereto and (c) a $1,960,000 subordinated promissory
note (the "Note") payable to the Companies in the forms and the amounts attached
hereto as Exhibit A and Exhibit B (the "Purchase Price"). Of the 560,000
ViaSource Shares referred to above, ViaSource shall retain a total of 140,000
shares, taken pro rata from the amounts payable to the Shareholders on Schedule
1.5 hereto, to be held in accordance with Section 5.3 hereof as the held back
shares ("Held Back Shares").
1.6 ASSUMED LIABILITIES. ViaSource hereby agrees to assume, pay,
discharge and perform when lawfully required all of the obligations, duties and
liabilities of the Companies set forth on Schedule 1.6 (the "Assumed
Liabilities").
1.7 EXCLUDED LIABILITIES. Notwithstanding anything else to the
contrary contained in this Agreement, the parties expressly agree that ViaSource
does not assume or otherwise become liable for, and the Companies and/or the
Shareholders shall remain unconditionally liable for the following obligations
and liabilities of the Companies or the Shareholders (collectively, the
"Excluded Liabilities"):
(a) any liability or obligation, absolute or contingent,
known or unknown, not expressly set forth on Schedule 1.6;
(b) any and all professional fees and expenses incurred
by the Companies or the Shareholders related to the transactions contemplated by
this Agreement;
(c) any Taxes or liabilities therefor imposed on either
Company or any of the Shareholders with respect to taxable years or periods
ending on, prior to or following the date hereof or with respect to or, except
as provided in Section 11.3 hereof, in connection with the consummation of the
transactions contemplated in this Agreement;
(d) except as set forth on Schedule 1.6, any liability,
obligation, claim, cost, damage and expense with respect to employees of either
Company (whether arising before, on or after the date hereof) relating to,
arising out of, or in connection with their employment by either Company at any
time on or before the date hereof, including, without limitation, all rights and
benefits under any contract, document, policy or understanding with any such
employee, all pension, death benefit, retirement, medical, retiree, insurance,
vacation, workers' compensation and other liabilities and obligations with
respect to such employee;
(e) all claims for severance, other employee benefits or
other moneys or damages (including, without limitation, claims under the Worker
Adjustment and Retraining Notification Act of 1988) from or on behalf of any of
the employees of either Company who are employed by either
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Company at any time on or prior to the date hereof (or from any federal, state
or local governmental agency or authority on behalf of such employees or
relating to such claims) involving an alleged employment loss or termination,
including, without limitation, those which are based upon or arise out of the
execution and delivery of this Agreement or any of the transactions contemplated
hereby (whether or not such employees are hired by ViaSource);
(f) any and all expenses, costs, damages, liabilities, or
obligations (including, without limitation, fees and expenses of counsel)
incurred in connection with any breach of contract, breach of warranty, tort,
violation of law, action, suit, or other legal or administrative proceeding or
governmental investigation arising as a result of events occurring or facts or
circumstances arising or existing on or prior to the date hereof (whether or not
in the ordinary course of business, and whether filed or made before, on or
after the date hereof); and
(g) any liability or obligation resulting from either
Company's failure to provide satisfactory services or products prior to Closing
with respect to each obligation set forth on Schedule 3.22 hereto, subject to
the provisions of Section 5.2 with respect to the warranties set forth on
Schedule 3.35 or warranties relating to services rendered in the amount of
$200.00 or less.
1.8 NO EXPANSION OF THIRD-PARTY RIGHTS. The assumption by
ViaSource of the Assumed Liabilities, the transfer thereof by the Companies, and
the limitations of such transfer shall in no way expand the rights or remedies
of any third party against ViaSource or either Company as compared to the rights
and remedies which such third party would have had against such Company had
ViaSource not assumed such liabilities. Without limiting the generality of the
preceding sentence, the assumption by ViaSource of the Assumed Liabilities shall
not create any third-party beneficiary rights.
1.9 TAX TREATMENT. The parties hereto acknowledge and agree that
the transactions contemplated hereby are intended to be treated for tax purposes
as taxable transactions under the Internal Revenue Code of 1986, as amended (the
"Code"). The parties agree that the allocation of the Purchase Price among the
Purchased Assets to be transferred pursuant to this Agreement shall be as set
forth on Schedule 1.9 and has been allocated among such assets in a manner
consistent with the requirements set forth in Section 1060 of the Code and the
Treasury regulations promulgated thereunder. In addition, it is agreed that such
allocation will be binding on both parties for federal income tax purposes in
connection with this purchase and sale of the Purchased Assets, and will be
consistently reflected by each party on their respective federal income tax
returns. The parties agree to prepare and timely file all applicable Internal
Revenue Service forms, including Form 8594 (Asset Acquisition Statement), and
other governmental forms, to cooperate with each other in the preparation of
such forms and to furnish each other with a copy of such forms prepared in
draft, within a reasonable period prior to the filing due date thereof.
1.10 CLOSING. Subject to the provisions of Article VII and Article
VIII hereof, the closing (the "Closing") of the sale and purchase of the Assets
shall take place on May 5, 2000, Eastern time, at the offices of ViaSource's
counsel or such other time, place or date as the parties may mutually
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agree (the "Closing Date"), with the Closing to be effective as of the close of
business on the Closing Date. Failure to consummate the transactions provided
for in this Agreement on the date and time selected pursuant to this Section
1.10 shall not, except as permitted by Section 1.10 hereof, result in the
termination of this Agreement and shall not relieve any party to this Agreement
of any obligation hereunder.
1.11 OPTIONS. In connection with the transactions contemplated
hereby, ViaSource hereby agrees to allocate up to 100,000 options to purchase
Common Stock of ViaSource, at an exercise price of $4.50 per share and subject
to a vesting period of one year from the Closing Date, under ViaSource's 1999
Stock Incentive Plan to employees of the Companies as directed by the Companies
in accordance with Schedule 1.11 hereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF VIASOURCE
As a material inducement to the Companies and the Shareholders to enter
into this Agreement and to consummate the transactions contemplated hereby,
ViaSource makes the following representations and warranties to the Companies
and the Shareholders as of the date hereof and as of the Closing Date:
2.1 CORPORATE STATUS. ViaSource is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite power and authority to own or lease its
properties and to carry on its business as presently conducted.
2.2 CORPORATE POWER AND AUTHORITY. ViaSource has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
ViaSource has taken all corporate action necessary to authorize its execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby.
2.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by ViaSource and constitutes a legal, valid and binding obligation of
ViaSource, enforceable against ViaSource 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.
2.4 VIASOURCE COMMON STOCK. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
the ViaSource Shares to the
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Companies, the ViaSource Shares will be validly issued, fully paid and
non-assessable shares of ViaSource Common Stock.
2.5 NO COMMISSIONS. ViaSource has not 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.
2.6 CAPITALIZATION. Schedule 2.6 sets forth, with respect to
ViaSource, (a) the number of authorized shares of each class of its capital
stock, (b) the number of issued and outstanding shares of each class of its
capital stock, and (c) the number of shares of each class of its capital stock
which are held in treasury. All of the issued and outstanding shares of capital
stock of ViaSource (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, and (iii) were not issued in
violation of any preemptive rights, rights of first refusal or similar rights.
Except as set forth in Schedule 2.6, no preemptive rights, rights of first
refusal or similar rights exist with respect to the shares of capital stock of
ViaSource and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. Except as set forth in Schedule 2.6, 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.
Except as set forth in Schedule 2.6, there are no proxies, voting rights or
other agreements or understandings with respect to the voting or transfer of the
capital stock of ViaSource. Except as set forth in Schedule 2.6, ViaSource is
not obligated to redeem or otherwise acquire any of its outstanding shares of
capital stock.
2.7 FINANCIAL STATEMENTS. Attached as Schedule 2.7 are the
financial statements of ViaSource and its predecessor entities for the years
ended December 31, 1997, 1998 and 1999, including the notes thereto,
(collectively, the "Financial Statements"). The Financial Statements have been
audited by Xxxxxx Xxxxxxxx, LLP, have been prepared in accordance with generally
accepted accounting principles ("GAAP"), and fairly present the financial
position of ViaSource 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. There are no material special or non-recurring items of income or
expense during the periods covered by the Financial Statements, and the
applicable balance sheets do not reflect any writeup or revaluation increasing
the book value of any assets, except as specifically disclosed in the notes
thereto. The Financial Statements reflect all adjustments necessary for a fair
presentation of the financial information contained therein.
2.8 NO VIOLATION; CONSENTS AND APPROVALS. There is no action, suit
or other legal or administrative proceeding or governmental investigation
pending, threatened, anticipated or contemplated against, by or affecting
ViaSource, or which questions the validity or enforceability of this Agreement
or the transactions contemplated hereby, and there is no basis for any of the
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foregoing. 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 Articles of Incorporation or Bylaws of ViaSource, (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, (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, except any applicable
filings required under the HSR Act and any filings required to be made by either
of the Companies or their Shareholders.
2.9 CHANGES SINCE THE DECEMBER 31, 1999. Except as set forth on
Schedule 2.9, since December 31, 1999, ViaSource has not (a) declared, set
aside, made or paid any dividend or other distribution payable in cash, stock,
property or otherwise of or with respect to its capital stock, or other
securities, or reclassified, combined, split, subdivided or redeemed, purchased
or otherwise acquired, directly or indirectly, any of its capital stock, or
other securities; (b) sold, leased or transferred any of its properties or
assets or acquired any properties or assets; (c) entered into any transaction
with any Affiliate of ViaSource; or (d) agreed to do or authorized any of the
foregoing.
2.10 ACCURACY OF INFORMATION FURNISHED. No representation,
statement or information made or provided by ViaSource contained in this
Agreement (including, without limitation, the various Schedules attached hereto)
or any agreement executed in connection herewith or in any certificate delivered
pursuant hereto or thereto, contains or shall contain any untrue statement of a
material fact or omits or shall omit any material fact necessary to make the
information contained therein not misleading.
2.11 DISCLOSURE. No information furnished by or on behalf of
ViaSource to either of the Companies or the Shareholders contain any untrue
statement of a material fact or omits to state any fact necessary to make the
information disclosed not misleading.
2.12 CREDIT AGREEMENT. ViaSource is party to the GECC Amended and
Restated Credit Agreement dated March ___, 2000 (the "Credit Agreement"). With
respect to the Credit Agreement: (i) ViaSource is not currently in default under
any of the provisions of the Credit Agreement or any other loan agreement,
promissory note or other obligation to repay money, and ViaSource has not
received any notice that it is in such a default; (ii) payment of the Note by
ViaSource in accordance with its terms will not constitute a violation of the
Credit Agreement; and (iii) the indebtedness represented by the Note is not, and
without the consent of the holders thereof will not be, subordinate to any other
indebtedness of ViaSource other than the indebtedness under the Credit Agreement
and
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the Subordinated Promissory Note (as defined in the Note) issued in connection
with the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANIES AND THE SHAREHOLDERS
As a material inducement to ViaSource to enter into this Agreement and
to consummate the transactions contemplated hereby, each Company and each of the
Shareholders, jointly and severally, make the following representations and
warranties to ViaSource as of the date hereof and as of the Closing Date:
3.1 CORPORATE STATUS. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has the requisite power and authority to own or lease its properties
and to carry on its business as now being conducted. Neither Company is, nor is
required to be, legally qualified to do business as a foreign corporation in any
state outside of the State of Florida. Each Company 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 either Company. All
names under which either Company does business as of the date hereof are
specified on Schedule 3.1. Except as otherwise disclosed in Schedule 3.1,
neither Company has 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.
3.2 POWER AND AUTHORITY. Each 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. Each 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. Each of the Shareholders
has the requisite competence and authority to execute and deliver this
Agreement, to perform their respective obligations hereunder and to consummate
the transactions contemplated hereby.
3.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each Company and each of the Shareholders, and constitutes the
legal, valid and binding obligation of each of them, enforceable against each of
them 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. The delivery of the instruments of transfer set
forth in Section 1.3 of this Agreement will grant ViaSource good and
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marketable or merchantable title in the Purchased Assets free and clear of all
Liens, except as set forth on Schedule 3.3.
3.4 SHAREHOLDERS, OFFICERS AND DIRECTORS OF THE COMPANIES.
Schedule 3.4 sets forth, with respect to each Company, (a) the name, address and
federal taxpayer identification/social security number of, and the number of
outstanding shares of each class of its capital stock owned by, each shareholder
of record as of the close of business on the date of this Agreement; (b) the
name, address and federal taxpayer identification number of, 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); and (c) the name and
title of each officer and director of each Company.
3.5 NO VIOLATION; CONSENTS AND APPROVALS. Except for any approvals
or consents required under the Material Contracts (as defined in Section 3.22)
identified in Schedule 3.22 as requiring the consent of third parties, the
execution and delivery of this Agreement by each Company and the Shareholders,
the performance by each 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 Articles of Incorporation
or Bylaws of either 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 either Company or any of the
Shareholders, (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 either Company or the
Shareholders, (d) result in or require the creation or imposition of any Lien
upon or with respect to any of the properties or assets of either Company, (e)
give to any individual or entity a right or claim against either Company or the
Shareholders 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 under the
HSR Act and any filings required to be made by ViaSource.
3.6 RECORDS OF THE COMPANIES. The copies of the Articles of
Incorporation, Bylaws, and other documents and agreements of each Company 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 each
Company made available to ViaSource for review were correct and complete in all
material respects as of the date of such review, no further entries have been
made through the date of this Agreement (except for the adoption of such
resolutions by the directors and/or Shareholders of each Company as shall be
necessary for the authorization of this Agreement and the transactions
contemplated herein), such minute books contain the true signatures of the
persons purporting to have signed them, and such minute books contain an
accurate record of all material corporate actions of the shareholders and
directors (and any committees thereof) of each Company taken by written consent
or at a meeting since incorporation. All material corporate actions taken by
each Company have been duly authorized or ratified. All accounts, books, ledgers
and official
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and other records of each Company are substantially complete and fairly, fully
and accurately reflect all matters contained therein. The stock ledgers of each
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 each such Company.
3.7 FINANCIAL STATEMENTS. Each Company has delivered to ViaSource,
the financial statements of each such Company and its predecessor entities for
the years ended December 31, 1997, 1998 and 1999, including the notes thereto,
(collectively, the "Financial Statements"), copies of which are attached hereto
as Schedule 3.7. The balance sheet dated as of December 31, 1999 of each Company
included in the Financial Statements is referred to herein as the "Current
Balance Sheet." The Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP"), and fairly present the
financial position of each Company at each of the balance sheet dates and the
results of operations for the periods covered thereby. The books and records of
each Company fully and fairly reflect all transactions, properties, assets and
liabilities of such Company. There are no material special or non-recurring
items of income or expense during the periods covered by the Financial
Statements, and the applicable balance sheets do not reflect any writeup or
revaluation increasing the book value of any assets, except as specifically
disclosed in the notes thereto. The Financial Statements reflect all adjustments
necessary for a fair presentation of the financial information contained
therein.
3.8 SUBSIDIARIES. Neither Company owns, directly or indirectly,
any outstanding voting securities of or other interests in, or has any control
over, any other corporation, partnership, joint venture or other business
entity.
3.9 LIABILITIES OF THE COMPANIES. Neither Company has any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except as set forth on Schedule 1.6. Schedule 1.6 includes all indebtedness owed
by each Company as of the date hereof to a bank or any other Person, including,
without limitation, indebtedness for borrowed money (including principal and
accrued but unpaid interest) and remaining payments on capitalized equipment
leases, of each Company. Schedule 1.6 also includes all contingent liabilities
of each 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 either Company for the establishment of
customer websites or other services which have not been completed or otherwise
provided.
3.10 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, threatened,
anticipated or contemplated against, by or affecting either Company or the
Shareholders, or any of either Company's properties or assets, or which question
the validity or enforceability of this Agreement or the transactions
contemplated hereby, and 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 either Company is or was a party which have
not been complied with in full or which continue to impose any material
obligations on either Company.
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3.11 ENVIRONMENTAL MATTERS.
(a) (i) All Permits required under Environmental Laws
that are necessary for the operations of the Business ("Environmental Permits")
have been obtained and are in full force and effect, and neither Company is
aware of any basis for revocation or suspension of any such Environmental
Permits; (ii) no Environmental Laws impose any obligation upon ViaSource, the
Shareholders, or either Company, as a result of any transaction contemplated
hereby, to provide any prior notification to any governmental entity of the
transactions contemplated hereby; and (iii) the Business has at all times been
operated in full compliance with all such Environmental Permits and within the
production levels or emission levels specified in such Environmental Permits.
(b) The Shareholders (with respect to the Business) and,
each Company has at all times complied with all applicable Environmental Laws.
(c) There are no existing, pending or, to the knowledge
of the Companies threatened actions, suits, claims, investigations, inquiries or
proceedings by or before any Governmental Body directed against either Company,
and neither Company is subject to any orders, judgments, decrees or settlements,
and none of the Shareholders or, either Company has received or is otherwise
aware of any notices, claims or other communications alleging any potential
liability of either Company, which pertain or relate to Environmental Laws,
including, without limitation, (i) any remedial obligations at any location
under any Environmental Law, (ii) violations of any Environmental Law at any
location, (iii) personal injury or property damage claims relating to a Release
of Hazardous Materials at any location, or (iv) Environmental Remediation Costs.
(d) There has been no Release of any Hazardous Materials
by either Company or, to the knowledge of each Company, any other Person, on,
to, from or underlying any real property owned or leased by each Company.
(e) No asbestos-containing materials or polychlorinated
biphenyls are present in, on or to the knowledge of each Company, underlying any
real property owned or leased by either Company.
(f) Neither Company has owned or operated, nor to the
knowledge of each Company has any other Person owned or operated, any
underground storage tanks, sumps or septic fields, active or abandoned, at any
real property owned or leased by either Company.
(g) Neither of the Companies nor any Shareholder has in
its or their possession any engineering, geologic, environmental reports and
other documents in the possession or control of either Company, any Shareholder
or any of the Companys' subsidiaries relating to any real property owned or
leased by either Company, including, without limitation, those relating to (i)
any Environmental Conditions existing on any real property owned or leased by
either Company and (ii) any violations of any Environmental Laws.
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(h) No Hazardous Materials have been generated, used,
stored, transported, treated, disposed of or otherwise handled by or on behalf
of either Company.
(i) None of the Shareholders (with respect to the
Business) or either Company has any current liability, nor is there any
liability on the part of the Shareholders (with respect to the Business) or,
either Company, or ViaSource which may be reasonably anticipated, for
Environmental Remediation Costs at any location.
(j) None of the Shareholders (with respect to the
Business) or either Company has any current liability, nor is there any
liability on the part of the Shareholders (with respect to the Business), either
Company or ViaSource which may be reasonably anticipated, under Environmental
Laws (including, without limitation, for the violation of any Environmental Law
or Environmental Remediation Costs) in connection with any businesses or
properties previously owned, leased, operated or otherwise used by either
Company or any of their predecessors.
(k) Neither Company has ever performed or authorized the
performance of vehicle fueling, maintenance, or, except as performed in
compliance with Environmental Law, washing at any location owned, leased, or
operated by any of them.
3.12 REAL ESTATE
(a) Neither Company owns 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 either Company.
(b) Schedule 3.12(b) sets forth a list of all leases,
licenses or similar agreements ("Leases") to which either Company is a party,
which are for the use or occupancy of real estate owned by a third party (copies
of which have previously been furnished to ViaSource), in each case, setting
forth (A) the lessor and lessee thereof and the commencement date, term and
renewal rights of each of the Leases, and (B) the street address or legal
description of each property covered thereby (the "Leased Premises").
(c) Neither Company nor any of the other parties to any
Lease, is in default under any of the Leases and no amount due under the Leases
remains unpaid. No material controversy, claim, dispute or disagreement exists
between either Company and any other party to the Leases, nor does there exist
any event or condition which, with notice or lapse of time or both, would
constitute a default or event of default by either Company as lessee.
3.13 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Each Company is the true and lawful owner of the
Purchased Assets free and clear of all Liens.
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(b) The Fixed Assets currently in use or necessary for
the conduct of the business and operations of each 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 Purchased 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 of each Company.
(d) Each Company has the complete and unrestricted power
and unqualified right to sell, assign, transfer, convey and deliver the
Purchased Assets to ViaSource without penalty or other adverse consequences free
and clear of all liens except those set forth on Schedule 3.3.
3.14 COMPLIANCE WITH LAWS. Each Company and the Shareholders 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
Purchased Assets and the Leased Premises and any other properties and assets (in
each case owned or used by it now or in the past). Neither Company has 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 of the Companies, the
Shareholders nor any of their respective employees 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. Neither Company nor the Shareholders are
subject to any Contract, decree or injunction in which it is a party which
restricts the continued operation of any business or the expansion thereof to
other geographical areas, customers and suppliers or lines of business.
3.15 LABOR AND EMPLOYMENT MATTERS. Schedule 3.15 sets forth the
name, address, social security number and current rate of compensation of each
of the employees of each Company. Neither Company is a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
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 either Company into one or
more collective bargaining units. There is no pending or threatened labor
dispute, strike or work stoppage which affects or which may affect the business
of either Company or which may interfere with its continued operations. Neither
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 or threatened
charge or complaint against either 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 either Company during the
twenty-four (24) months prior to the date hereof. None of the Shareholders is
aware that any executive or key employee or group of employees has any plans to
terminate his, her or their employment with either Company as a result of the
Asset Purchase or otherwise. Schedule 3.15 contains detailed information about
each contract, agreement or plan of the following nature,
15
whether formal or informal, and whether or not in writing, to which either
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. Each Company has
complied 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.
3.16 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Except as set forth on
Schedule 3.16, neither Company has any 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 either Company participate
("Employee Benefit Plans").
(b) Controlled Group Liability. Neither 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 Corporation ("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; (v) has engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA; or (vi) has violated
Code Section 4980B or Section 601 through 608 of ERISA.
(c) Other Liabilities. (i) Neither Company is 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) except for accrued but unused vacation and sick leave of the
employees of each of the Companies as of the date hereof and as of the Closing
Date, 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.
(d) Termination of Employment. Except as may be required
under applicable law, neither Company is obligated under any Employee Benefit
Plan to provide medical or death benefits with respect to any employee or former
employee of either Company or its predecessors after termination of employment.
Each Company has complied with the notice and continuation of coverage
requirements of Section 4980B of the Code, and the regulations thereunder, and
Part 6
16
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.
All amendments required to bring any employee benefit plan into conformity with
any applicable provisions of ERISA and the Code have been duly adopted.
3.17 TAX MATTERS.
(a) All Tax Returns required to be filed by, on behalf of
or with respect to either Company, 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. No such Tax Returns have been audited or are currently being audited.
(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 either
Company, 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"). Each Company has made all required estimated tax
payments for the fiscal year ended December 31, 1999 to avoid any underpayment
penalty.
(c) Neither Company 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) Each Company 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 1441 through 1464, 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) Each Company has made available to ViaSource true and
complete copies of (i) all U.S. federal, state, local and foreign income or
franchise Tax Returns of such Company
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relating to the taxable periods since January 1, 1997 and (ii) any audit report
issued within the last three years relating to Taxes due from or with respect to
such Company or its income, assets or operations, all of which are set forth on
Schedule 3.17(e). Except as set forth on Schedule 3.17(e), none of the income
and franchise Tax Returns filed by, on behalf of or with respect to the Company
for the taxable years ended on the respective dates set forth on Schedule
3.17(e) have been examined by the relevant taxing authority or the statute of
limitations with respect to such Tax Returns have expired.
(f) Schedule 3.17(f) lists all material types of Taxes
paid and material types of Tax Returns filed by, on behalf of or with respect to
either Company. No claim has been made by a taxing authority in a jurisdiction
where either Company 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 or covering
or including either Company have been fully paid, and there are no other audits
or investigations by any taxing authority or proceedings in progress, nor have
the Shareholders, or either Company 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 Company, or any other Person (including any
of the Shareholders) on behalf of either Company 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 either Company, (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 either Company 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 either Company, 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 or foreign law with respect to either Company,
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 either Company (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
18
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 Company 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 either Company 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) Each Company has substantial authority for the
treatment of or has disclosed (in accordance with Section 6662(d)(2)(B)(ii) of
the Code) on its respective 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 Company 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 either Company.
(o) All material Tax elections of either Company are
clearly set forth in the Tax Returns described in Section 3.17(e). Neither
Company has elections in effect for U.S. federal income tax purposes under
Sections 108, 168, 338, 441, 463, 473, 1017, 1033 or 4977 of the Code.
(p) Neither Company has ever been a member of any
Affiliated Group of corporations for any Tax purposes. Neither Company has any
liability for Taxes of any person (other than each such Company) 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. Neither Company owns 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 Company 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.
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(s) Since December 31, 1999, neither Company has incurred
any liability for Taxes outside of the ordinary course of business.
(t) Neither Company 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 Company has distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the
Code since April 16, 1997. The stock of neither Company has been distributed in
a transaction satisfying the requirements of Section 355 of the Code since April
16, 1997.
(v) There are no outstanding options, warrants,
securities convertible into stock, or other contractual obligations that might
be treated for U.S. federal income tax purposes as stock or another equity
interest in either Company.
(w) None of the indebtedness of either Company
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.
3.18 INSURANCE. Each 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 corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations (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. Each Company has complied with the provisions of such Insurance
Policies. Schedule 3.18 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 detailed 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 either
Company. Neither Company has failed to give, in a timely manner, any notice
required under any of the Insurance Policies to preserve its rights thereunder.
3.19 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 each Company. All of the Receivables are good and
collectible receivables, and will be collected in full in accordance with the
terms of such receivables and in the ordinary course of business without setoff
or counterclaims, subject to the allowance for doubtful accounts set forth on
Schedule 3.19. For purposes of this Agreement, the term "Receivables" means all
receivables of either Company, including, without limitation, all trade account
receivables arising from the provision of goods and/or services, notes
receivable and insurance proceeds receivable. There is no contest, claim or
right of
20
set-off under any Contract with any obligor of any Receivable of either Company
relating to the amount or validity of such Receivable.
3.20 LICENSES AND PERMITS. Each Company possesses all licenses,
approvals, permits or authorizations from governmental authorities
(collectively, the "Permits") for the operation of the business and Schedule
3.20 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, each Company is in full compliance with their respective requirements
thereof, and no proceeding is pending or threatened to revoke or amend any of
them.
3.21 INTELLECTUAL PROPERTY.
(a) Neither of the Companies owns or possesses any
patents, patent applications, trademarks, trademark applications, trade names,
service marks, service xxxx applications, Internet domain names, Internet domain
name applications, copyrights or copyright registrations or applications or
other filings and formal actions made or taken pursuant to federal, state, local
and foreign laws to protect its interests in 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 Purchased Assets include 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. No payments are required for the continued use of the Intellectual
Property.
(c) Each 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
either Company of any of the Intellectual Property, or (ii) to the effect that
either Company's use, distribution, licensing, sublicensing, sale or any other
exercise of rights in any product, work, 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.
(d) Neither Company is, nor as a result of the execution
or delivery of this Agreement or performance of each Company's obligations
hereunder, will either Company be, in violation of any license, sublicense,
agreement or instrument to which either Company is a party or otherwise bound,
nor will execution or delivery of this Agreement, or performance of either
21
Company's obligations hereunder, cause the diminution, termination or forfeiture
of any Intellectual Property.
(e) All software used by either Company, has been duly
licensed by the owner of such software and is set forth on Schedule 3.21(e).
3.22 CONTRACTS. Schedule 3.22 sets forth a list of each Material
Contract (as defined below), true, correct and complete copies of which have
been provided to ViaSource. Schedule 3.22 identifies certain Material Contracts
identified therein that require the Consents of third parties to the
transactions contemplated hereby. All consents set forth on Schedule 3.22 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. Neither
Company has violated any of the terms or conditions of any 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.
No event has occurred which constitutes, or after notice or the passage of time,
or both, would constitute, a default by either Company or any other party under
any material Contract. Neither Company is subject to any liability or payment
resulting from renegotiation of amounts paid under any Material Contract. As
used in this Section 3.22 "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 either Company to provide or obtain products or
services; (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; (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 either
Company; (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 either Company; (j) non-competition
agreements restricting either Company or any Shareholder in any manner, (k) any
contracts obligating either Company to make payments in excess of $5,000, in the
aggregate, over the remaining term of such contract; and (l) all other Contracts
or understandings which are material to either Company, or the Business, assets
or properties, irrespective of subject matter and whether or not in writing. The
continuation, validity and effectiveness of all the Material Contracts will not
be effected by their transfer to ViaSource under this Agreement.
3.23 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each Company and each of the Shareholders 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
22
distribution of any of the ViaSource Shares, except in compliance with
applicable state and federal securities laws. Each of the Shareholders 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. Except as set forth on Schedule 3.23, each of the
Shareholders is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act, and has such knowledge and experience in
business or financial matters that he/she is capable of evaluating the merits
and risks of an investment in the ViaSource Shares. Each of the Shareholders
hereby represents that he/she can bear the economic risk of losing his/her
investment in the ViaSource Shares and has adequate means for providing for
his/her current financial needs and contingencies.
3.24 NO COMMISSIONS. Except as set forth on Schedule 3.24, neither
Company nor 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.
3.25 ACCURACY OF INFORMATION FURNISHED. No representation,
statement or information made or provided by either Company and/or any of the
Shareholders contained in this Agreement (including, without limitation, the
various Schedules attached hereto) or any agreement executed in connection
herewith or in any certificate delivered pursuant hereto or thereto, contains or
shall contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading. Each Company has provided ViaSource with true, accurate and complete
copies of all documents listed or described in the various Schedules attached
hereto.
3.26 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 3.26(a) sets forth
all accounts of each 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, neither Company has any office or place of
business other than as identified on Schedule 3.26(b) and each Company's
principal places of business and chief executive offices are indicated on
Schedule 3.26(b). All locations where the equipment, inventory, chattel paper
and books and records of either Company are located as of the date hereof are
fully identified on Schedule 3.26(b).
3.27 YEAR 2000 COMPLIANCE. Neither Company has experienced any
event nor is aware of any information which indicates that any computer
hardware, software, systems or equipment utilized by either Company cannot or
will not, as currently designed, fully operate before during and after calendar
year 2000.
3.28 RELATED PARTY TRANSACTIONS. Except as set forth on Schedule
3.28, no officer, director, shareholder, employee or former employee of either
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),
23
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, or is
engaged in business as, a competitor, lessor, lessee, customer or supplier of
either 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 either Company, or has any cause
of action or other claim against either Company.
3.29 CHANGES SINCE THE DECEMBER 31, 1999. Except as permitted by
Section 4.12, hereof or as otherwise set forth on Schedule 3.29, since December
31, 1999, neither Company has (a) declared, set aside, made or paid any dividend
or other distribution payable in cash, stock, property or otherwise of or with
respect to its capital stock, or other securities, or reclassified, combined,
split, subdivided or redeemed, purchased or otherwise acquired, directly or
indirectly, any of its capital stock, or other securities; (b) paid any bonus to
or increased the rate of compensation of any of its officers, partners, or
employees, or amended any other terms of employment or engagement of such
persons; (c) sold, leased or transferred any of its properties or assets or
acquired any properties or assets; (d) entered into any transaction with any
Shareholder or any Affiliate of either Company or any Shareholder; (e) entered
into any employment agreement that is not terminable at will without any
liability or obligation, (f) made or pledged any charitable contributions; (g)
borrowed any amounts from or against any credit facility or other line of credit
existing with respect to the Company; or (h) agreed to do or authorized any of
the foregoing.
3.30 SUPPLIERS AND CUSTOMERS.
(a) Schedule 3.30 lists (i) all suppliers to which either
Company made payments during the year ended December 31, 1999, in excess of five
percent (5%) of the cost of sales as reflected on either Company's statement of
operations for the year ended December 31, 1999 and (ii) all customers that paid
either Company during the year ended December 31, 1999, more than five percent
(5%) of such 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 listed on Schedule
3.30 has terminated or discontinued their business with either Company and
neither Company has knowledge which might reasonably indicate that any of the
customers or suppliers listed on Schedule 3.30 intend to cease purchasing from,
selling to, or dealing with, either Company, nor has any information been
brought to the Shareholders' 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 either
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. Neither Company has knowledge which might reasonably indicate, nor
has any information been brought to the Shareholders' attention which might
reasonably lead them to believe that, (i) any
24
supplier will not be able to fulfill outstanding or currently anticipated
purchase orders placed by either Company, or (ii) any customer will cancel
outstanding or currently anticipated purchase orders placed with either Company.
3.31 ORDINARY COURSE. Since December 31, 1999, except as
set forth in Schedule 3.31, each Company has conducted its business only in the
ordinary course and consistently with its prior practices.
3.32 EQUIPMENT. As of the date hereof and on the Closing
Date, all equipment owned or leased by either 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 either Company, except as would not have,
individually or in the aggregate, a Material Adverse Change on the Business.
3.33 DISCLOSURE. No information furnished by or on behalf
of either of the Shareholders or either Company to ViaSource contains any untrue
statement of a material fact or omits to state any fact necessary to make the
information disclosed not misleading.
3.34 NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither Company
nor any of their respective subsidiaries nor any shareholder, 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 either Company or its respective 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 either Company or its
respective subsidiaries.
3.35 WARRANTIES. Schedule 3.35 includes a listing of all
warranties for services rendered in excess of $200 granted by either of the
Companies in connection with services provided or otherwise which are still in
effect. Other than those warranties listed on Schedule 3.35 and warranties for
services rendered in the amount of $200.00 or less, neither of the Companies has
provided any warranties with respect to services provided or otherwise. For the
period from January 1, 1998 through the date hereof, the aggregate amount of
monetary warranty claims against the Companies is less than $10,000. As of the
date hereof, there are no unresolved outstanding warranty claims or obligations
with respect to any warranty granted by either of the Companies.
ARTICLE IV
ADDITIONAL AGREEMENTS
25
4.1 FURTHER ASSURANCES. 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 Agreement and the transactions contemplated hereby,
including, but not limited to, all such further deeds, bills of sale,
assignments, transfers, conveyances, powers of attorney and assurances as may
be required or appropriate to convey and transfer to and vest in ViaSource and
protect its right, title and interest in all of the Purchased Assets.
4.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause the
Companies to comply with all of the covenants of the Companies under this
Agreement.
4.3 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 in the
course of pursuing the transactions contemplated by this Agreement without the
prior consent of the other party hereto; provided, that any information 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 either Company or the
Shareholders without the prior approval of ViaSource.
4.4 RESTRICTIVE COVENANT. In order to assure that ViaSource will
realize the benefits of this transaction, each Company and each of the
Shareholders agree with ViaSource that he, she or it will not:
(a) for a period of three (3) years from the date hereof, 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. As
used herein "Competitive Activity" shall consist of the sale, solicitation for
sale, marketing, licensing, servicing, distributing of, or other business
activity of whatsoever kind or nature relating to the Business, which competes,
directly or indirectly, with the business, technology, products or services of
ViaSource and its Affiliates in the United States. Notwithstanding the
provisions of this Section 4.4(a), in no event shall a Shareholder be
prohibited from being the beneficial owner (as that term is defined under the
rules and regulations as promulgated by the SEC) of up to five percent (5%) of
the issued and outstanding capital stock of any publicly-held company;
provided, however, that such beneficial ownership shall not otherwise violate
the provisions of this Section 4.4.
(b) for a period of three (3) years from the date hereof, 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
26
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 date hereof, 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 Companies and the Shareholders agree and acknowledge that the restrictions
contained in this Section 4.4 are reasonable in scope and duration and are
necessary to protect ViaSource after the date hereof. If any provision of this
Section 4.4 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 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 4.4
will cause irreparable damage to ViaSource and upon breach of any provision of
this Section 4.4, 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).
In addition, the parties to this Agreement hereby agree that in the event that
there is a material default in the payment of the Purchase Price by ViaSource
under this Agreement, or a nonpayment of the Note at its maturity date, which
such default or nonpayment remains uncured by ViaSource for thirty (30) days
after receipt of written notice of such default or nonpayment by the
Shareholders or either of the Companies, as applicable, the provisions of
Section 4.4 shall no longer be applicable to the Shareholders or either
Company. For purposes of the preceding sentence, a default in payment of the
Purchase Price or a nonpayment of the Note which results from a good faith
claim of Indemnification by ViaSource including a setoff of Indemnifiable
Damages against the Held Back Shares or the Note shall not constitute a
material default in payment of the Purchase Price or nonpayment of the Note and
shall not cause the provisions of Section 4.4 to no longer be applicable to the
Shareholders or the Companies.
27
4.5 TAX MATTERS.
(a) Tax Returns. The Shareholders shall duly prepare, or cause to
be prepared, and file, or cause to be filed, and pay or cause to be paid, on a
timely basis, all Tax Returns and taxes due for or by either Company for any
period ending on or before the date hereof. The Shareholders shall not file any
amended Tax Returns with respect to either Company without the prior written
consent of ViaSource.
(b) Tax Cooperation. The Shareholders and ViaSource shall provide
the other party with such information and records and access to such of its
officers, directors, employees and agents as may be reasonably required by the
other party in connection with the preparation of any tax return or any audit
or other proceeding relating to either Company.
4.6 DELIVERY OF PROPERTY RECEIVED BY THE COMPANIES AFTER CLOSING. From
and after the date hereof, ViaSource shall have the right and authority to
collect, for the account of ViaSource, all receivables and other items which
shall be transferred or are intended to be transferred to ViaSource as part of
the Purchased Assets as provided in this Agreement, and to endorse with the
name of either Company, as appropriate, any checks or drafts received on
account of any such receivables or other items of the Purchased Assets. Each
Company and the Shareholders agree that they will transfer or deliver to
ViaSource, promptly after the receipt thereof, any cash or other property which
either Company or 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 the Purchased Assets under this
Agreement.
4.7 VIASOURCE APPOINTED ATTORNEY FOR THE COMPANIES. The Companies each
hereby constitute and appoint ViaSource, and ViaSource's successors and
assigns, its true and lawful attorney, in the name of either ViaSource or
either Company (as ViaSource shall determine in its sole discretion) but for
the benefit and at the expense of ViaSource (except as otherwise herein
provided), (a) to institute and prosecute all proceedings which ViaSource may
deem proper in order to collect, assert or enforce any claim, right or title of
any kind in or to the Purchased Assets as provided for in this Agreement; (b)
to defend or compromise any and all actions, suits or proceedings in respect of
any of the Purchased Assets, and to do all such acts and things in relation
thereto as ViaSource shall deem advisable; and (c) to take all action which
ViaSource may reasonably deem proper in order to provide for ViaSource the
benefits under any of the Purchased Assets where any required consent of
another party to the sale or assignment thereof to ViaSource pursuant to this
Agreement shall not have been obtained. Each Company acknowledges that the
foregoing powers are coupled with an interest and shall be irrevocable.
ViaSource shall be entitled to retain for its own account any amounts collected
pursuant to the foregoing powers, including any amounts payable as interest in
respect thereof.
4.8 EMPLOYMENT AND NON-COMPETITION AGREEMENT; QUALIFYING AGENT
INDEMNIFICATION. Xxxxxxx X. Xxxxxxx shall enter into an Employment and
Non-Competition
28
Agreement with ViaSource in the form set forth on Schedule 4.8(a). ViaSource
shall execute the Qualifying Agent Indemnification Agreement in the form set
forth on Schedule 4.8(b).
4.9 SHAREHOLDER AND DIRECTOR VOTE. Each of the Shareholders, in
executing the Agreement, consents as a director and/or shareholder (as
applicable) of each respective Company to the Asset Purchase and waives notice
of any meeting in connection therewith.
4.10 RELEASE BY THE COMPANIES AND THE SHAREHOLDERS. Each Company and
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 ViaSource and its
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 (collectively referred to as the "Claims"), 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 the world to the day of this Agreement, against the Releasees.
Notwithstanding anything contained in this Section 4.10 to the contrary, the
release provided for herein shall not apply to any Claim by any Releasor
against any Releasee arising under this Agreement or arising out of or in any
way relating to the transactions provided for in this Agreement.
4.11 USE OF THE INTELLECTUAL PROPERTY. Neither Company nor the
Shareholders shall use any of the Intellectual Property after the date hereof,
except in connection with employment by ViaSource.
4.12 CONDUCT AND PRESERVATION OF BUSINESS. Each Company and each of
the Shareholders covenant that, except as contemplated by this Agreement,
during the period from the date of this Agreement to the Closing Date, each
Company shall (i) conduct its business in the usual manner and not enter into
any transactions outside the ordinary course of business; (ii) use its best
efforts to maintain, preserve and protect its properties and assets and the
Business, including, without limitation, to preserve its relationship with its
employees, independent contractors, suppliers and customers and to preserve its
goodwill; (iii) comply with all laws, ordinances, rules, regulations and orders
applicable to its business; (iv) continue to maintain and service the physical
assets used in the conduct of the Business in the same manner as has been its
consistent past practice; (v) not declare; set aside or pay any dividend or
make any distribution on any shares of its capital stock (whether in cash or in
kind), or redeem, purchase or otherwise acquire any shares of its capital
stock; (vi) not take any action or omit to take any action which would result
in the inaccuracy of any of the Companys' or the Shareholders' representations
and warranties set forth herein if such representations or warranties were to
be made immediately after the occurrence of such act or omission; (vii)
properly maintain and repair all real and personal property owned or leased by
either Company or the Shareholders and used in the business of either Company,
so that such property at
29
Closing is in the same condition as normally maintained by such Company; (viii)
use its prudent business efforts to have in effect and maintain at all times
all insurance of the kind, in the amount and with the insurers set forth on
Schedule 3.18 hereto or equivalent insurance; (ix) refrain from granting any
irrevocable powers of attorney or comparable delegations of authority; (x)
refrain from taking any action that would constitute, or fail to take any
action that would prevent, a breach of or a default under any agreement,
contract or understanding to which either Company is a party; (xi) use its
prudent business efforts to preserve all Permits; (xii) perform all obligations
required to be performed by it under any Contracts; (xiii) not enter into any
collective bargaining agreement or other contract or agreement (or any
amendment or modification thereto) with any labor union without the prior
written consent of ViaSource and (xiv) make any distributions in accordance
with the provisions of Section 1.1(f) hereof without providing prior
notification to ViaSource. Without limiting the foregoing, each Company and
each of the Shareholders covenant that until the Closing Date or termination of
this Agreement, except as set forth on Schedule 3.22 or Schedule 3.29 hereto,
neither Company will change the compensation of any of its respective
directors, officers, employees, independent contractors or consultants, or
enter into any employment, severance or other agreement with any of such
persons, except in the ordinary course of business.
4.13 NO SHOPPING.
(a) Each Company and each of 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,
neither Company nor any of the Shareholders shall, 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 referred to herein as an "Acquisition Transaction"), of any
interest in either 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 either
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 either Company or any of the Shareholders
receives an unsolicited offer or proposal relating to a possible Acquisition
Transaction, such 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
either Company and each of the Shareholders of this Section 4.13 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
30
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 either Company, the
Companies 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.
4.14 MUTUAL COOPERATION. The parties hereto will cooperate with
each other, and will use all reasonable efforts to cause the fulfillment of the
conditions to the parties' obligations hereunder and to obtain as promptly as
possible all material consents, authorizations, orders or approvals from each
and every third party, whether private or governmental, required in connection
with the transactions contemplated by this Agreement. In addition, ViaSource
agrees to provide the Companies and the Shareholders with reasonable access to
documents and information concerning the Purchased Assets with respect to the
filing of any required tax returns or other reports, or any other reasonable
purpose, by the Companies and/or the Shareholders after the Closing Date.
4.15 POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) In order to compensate the Companies for the increase, if
any, in the Net Worth of the Companies for the period beginning January 1, 2000
and ending on the Closing Date, ViaSource agrees that it shall, on or before
that date which is 120 days after the Closing Date, determine the aggregate Net
Worth of the Companies on the Closing Date. In the event that the aggregate Net
Worth of the Companies on the Closing Date exceeds the aggregate Net Worth of
the Companies on December 31, 1999, as set forth in Schedule 3.7 hereto, by
more than the amount of the Shareholders tax liabilities as set forth in
Section 1.1(f)(i) hereof and the amount of payments and distributions paid as
set forth in Section 1.1(f)(ii) hereof, ViaSource will make payment to the
Companies of fifty percent (50%) of such excess in immediately available funds
on or before that date which is 150 days after the Closing Date. In the event
that the aggregate Net Worth of the Companies on the Closing Date is less than
the aggregate Net Worth of the Companies of December 31, 1999, no adjustment to
the Purchase Price shall be required and no additional payments from ViaSource
to the Companies shall be made. For purposes of this Section 4.15, "Net Worth"
shall be defined as the aggregate Total Assets of the Companies less their
aggregate Total Liabilities, as reflected on the Companys' respective balance
sheets as of the applicable date, as determined in accordance with GAAP.
(b) In the event that the Companies disagree with the Net
Worth determination in Section 4.15(a) above, then they shall provide notice of
such disagreement and their proposed aggregate Net Worth determination to
ViaSource in writing in accordance with the notice provisions of this Agreement
within ten (10) days of receipt of the aggregate Net Worth determination (the
"Notice of Objection"). In the event of a disagreement between ViaSource and
the Companies with respect to the calculation of the aggregate Net Worth
determination, which is not resolved within thirty (30) days from the date of
delivery of the Company's Notice of Objection, then such
31
disagreement shall be referred to a "big five" accounting firm mutually
acceptable to all parties (the "Settlement Accountants"), and the determination
of the aggregate Net Worth by the Settlement Accountants shall be final and
shall not be subject to further review, challenge or adjustment absent fraud.
The Settlement Accountants shall use their best efforts to reach a
determination not more than thirty (30) days after such referral. The costs and
expenses of the services of the Settlement Accountants shall be paid equally by
the Companies and ViaSource.
4.16 WORKING CAPITAL OBLIGATION. From and after the date hereof, and
through the Closing Date, the Companies shall maintain an aggregate Working
Capital of at least $200,000. In the event that the distributions provided for
in Section 1.1(f)(i) and Section 1.1(f)(ii) hereof would result in the
aggregate Working Capital of the Companies to fall below $200,000, then such
distribution shall not be made prior to the Closing Date; and liabilities for
such distributions shall be included on Schedule 1.6 hereof as Assumed
Liabilities by ViaSource, and such amounts shall be paid by ViaSource after the
Closing Date as revenues with respect to the Purchased Assets are received by
ViaSource on a cash basis in accordance with ordinary business practices. For
purposes of this Agreement, "Working Capital" shall be defined as current
assets less current liabilities of the Companies on a combined basis, as
reflected on the Company's respective balance sheets as of the applicable date,
as determined in accordance with GAAP.
4.17 PLAN TERMINATION. The Company has determined and represents that
following the Closing it will terminate each Employee Benefit Plan which is an
employee pension benefit plan as defined in Section 3(2) of ERISA (the
"Terminated Plan"). The Company represents that within sixty (60) days
following the Closing it will decide whether to file Form 5310 (Application for
Determination for Terminating Plan). If the Company does not file a Form 5310,
the Company will make terminating distributions to plan participants within
one-hundred eighty (180) days after Closing. If the Company decides to file
Form 5310, it will do so within such sixty (60) day period.
4.18 AGREEMENT REGARDING OPTIONS. Within thirty (30) days of the
Closing, the parties shall agree upon performance criteria pertaining to the
stock options referred to in Section 1.11.
ARTICLE V
32
INDEMNIFICATION
5.1 AGREEMENT BY THE COMPANIES AND THE SHAREHOLDERS FOR
INDEMNIFICATION. Each Company and the Shareholders jointly and severally agree
to indemnify and hold ViaSource and its stockholders, directors, officers,
employees, attorneys and Affiliates (collectively, for purposes of this Article
V, the "ViaSource Indemnitees") harmless from and against, and, at the
ViaSource Indemnitees' election, in its sole discretion, the ViaSource
Indemnitees shall be entitled to recover by set off against the Held Back
Shares in accordance with Section 5.3, 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 either Company or the Shareholders in or
pursuant to this Agreement, (ii) any breach of the covenants or agreements made
by either Company or the Shareholders in or pursuant to this Agreement or (iii)
any inaccuracy in any certificate, instrument or other document delivered by
either Company or the Shareholders as required by this Agreement, (iv) any
Excluded Liabilities, (v) the failure to obtain the consent of any landlord to
the assignment of either Company's real estate leases if such consent is
required pursuant to the terms of such leases, and (vi) any transfer taxes
(other than sales taxes on the transfer of automobiles) that may be due and
owing to any Governmental Authority (collectively, "Indemnifiable Damages").
The Indemnifiable Damages of the Companies and the Shareholders shall not
exceed the Purchase Price. Without limiting the generality of the foregoing,
with respect to the measurement of Indemnifiable Damages, the ViaSource
Indemnitees shall have the right to be put in the same pre-tax consolidated
financial position as it would have been in had each of the representations and
warranties of the Companies and the Shareholders hereunder been true and
correct and had the agreements of the Companies and the Shareholders hereunder
been performed in full.
5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Companies and the Shareholders and
ViaSource shall survive the Closing or termination of this Agreement and shall
remain in full force and effect for a period of two (2) years from the Closing
Date; provided, however, that the representations and warranties and rights of
indemnification with respect to breaches thereof set forth in Sections 3.11,
3.14, 3.15, 3.16, 3.17, 3.20, 3.21, 3.23, 3.26 and 3.34 shall remain in full
force and effect until the expiration of the applicable statute of limitations
(including any extension thereof). 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
representation, warranty, covenant and agreement contained in this Agreement is
independent of each other representation, warranty, covenant and agreement.
Notwithstanding the foregoing, no claim for Indemnifiable Damages or other
damages (other than claims under clause (ii) of Section 5.1) shall be asserted
by ViaSource until the aggregate of all such Indemnifiable Damages exceeds the
sum of $10,000 (the "Indemnification Threshold"), in which case ViaSource shall
be entitled to collect all Indemnifiable Damages irrespective of the
Indemnification Threshold. Notwithstanding anything in this Section 5.2 to the
contrary, with respect to any Indemnifiable Damages resulting
33
from a breach of Section 3.35, the Companies and Shareholders obligations under
Section 5.1 shall arise with respect to any of the warranties set forth on
Schedule 3.35 only in the event that the Indemnifiable Damages with respect to
such warranty equal or exceed $10,000, in which case ViaSource shall be
entitled to collect all such Indemnifiable Damages irrespective of any
threshold amounts.
5.3 SECURITY FOR INDEMNIFICATION OBLIGATION. As security for the
indemnification obligations contained in this Article V, ViaSource shall hereby
set aside and hold, and each Company and the Shareholders hereby grant a
security interest in (i) the shares represented by, the certificates
representing the Held Back Shares issued pursuant to this Agreement and (ii)
the Note. The ViaSource Indemnitees may set off against the Held Back Shares
and/or the Note, as determined by the ViaSource Indemnitees in their sole and
absolute discretion, the Indemnifiable Damages for which either Company or 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 Companies 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 10 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, if taken with respect to the Held Back Shares, shall be charged
proportionally against the shares set aside; and
(c) For purposes of any set off against the Held Back Shares
pursuant to this Article V, the shares of ViaSource Common Stock shall be
valued at $3.50 per share.
(d) The Companies or the Shareholders, in their sole
discretion, may elect to satisfy their obligations for Indemnifiable Damages by
making payments to ViaSource in immediately available funds, which may include
an agreement to set-off such an amount against the Note, in accordance with
this Section 5.3.
5.4 VOTING OF AND DIVIDENDS ON 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 Companies and the Companies shall be
entitled to vote the Held Back Shares; provided, however, that, there shall
also be deposited with ViaSource subject to the terms of this Article V, all
shares of ViaSource Common Stock issued to the Companies as a result of any
stock dividend or stock split and all cash issuable to the Companies 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.
34
5.5 DELIVERY OF HELD BACK SHARES. ViaSource agrees to deliver to the
Companies no later than eighteen (18) months after the date hereof any Held
Back Shares then held by it unless there then remains unresolved any claim for
Indemnifiable Damages as to which notice has been given, in which event
ViaSource shall distribute all of the Held Back Shares except for an amount
sufficient to compensate ViaSource for such Indemnifiable Damages. After such
claim has been satisfied, any remaining Held Back Shares shall be distributed
to the Companies promptly after the time of satisfaction.
5.6 ADJUSTMENT TO PURCHASE PRICE. All payments for Indemnifiable
Damages made pursuant to this Article V shall be treated as adjustments to the
Purchase Price.
5.7 NO BAR. If the Held Back Shares, the Note and any other payments
made by the Shareholders or the Companies are insufficient to set off any claim
for Indemnifiable Damages made hereunder (or have been delivered to the
Companies 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.
5.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude the ViaSource Indemnitees from asserting any
other right, or seeking any other remedies against the Shareholders or the
Companies.
5.9 LIMITATIONS. The indemnification obligations with respect to
representations and warranties of the Companies and the Shareholders in Article
III and all covenants of the Companies and the Shareholders in this Agreement
are joint and several obligations. This means that each Company and the
Shareholders will be responsible to the extent provided in this Article V for
the entirety of any indemnification to which the ViaSource Indemnitees may be
entitled under this Article V.
ARTICLE VI
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the date hereof of the ViaSource Shares:
6.1 DISPOSITION OF SHARES.
(a) Neither Company nor any Shareholder may, directly or
indirectly, offer, sell, contract to sell, 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 from Company in connection
with the Asset Purchase other than in compliance with applicable federal and
state securities laws; provided, however, Company may distribute the ViaSource
shares to its shareholders.
35
(b) Each Company and 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 145(d)
under the Securities Act, or (iii) an effective registration statement filed by
ViaSource with the SEC under the Securities Act. To the extent either Company
or the Shareholders complies with the provisions of Rule 145(d) 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 145(d).
6.2 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.
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.
6.3 NO REGISTRATION. Each Company and the Shareholders acknowledge
that the ViaSource Shares being delivered hereunder are not registered shares
and that ViaSource has no obligation to register the ViaSource Shares at any
time.
ARTICLE VII
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:
7.1 CERTIFICATE. The Shareholders shall have delivered to ViaSource
(i) copies of the Articles of Incorporation and Bylaws of each Company as in
effect immediately prior to the date
36
hereof, (ii) copies of resolutions adopted by the Board of Directors and
shareholders of each Company authorizing the transactions contemplated by this
Agreement, and (iii) a certificate of good standing of each Company issued by
the Secretary of State of Florida and each other state in which it is qualified
to do business as of a date not more than forty-five (45) days prior to the
date hereof, certified in each case as of the date hereof by the Secretary of
such Company as being true, correct and complete.
7.2 OPINION OF COUNSEL. ViaSource shall have received an opinion,
dated as of the date hereof, from counsel for each Company and the Shareholders
acceptable to ViaSource, in form and substance acceptable to ViaSource
substantially as set forth in Schedule 7.2 hereto.
7.3 CONSENTS. Each Company and ViaSource shall have received consents
to the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of either Company from any person
from whom such consent or waiver is required under any Contract.
7.4 EMPLOYMENT AND NON-COMPETITION AGREEMENT. Xxxxxxx Xxxxxxx shall
enter into an Employment and Non-Competition Agreement with ViaSource in the
form set forth on Schedule 4.8(a).
7.5 RELEASE. At the Closing, each of the Shareholders, and such of
their Affiliates as may be designated by ViaSource, shall deliver to ViaSource
a release (collectively, the "Releases") in such form as is satisfactory to
ViaSource, releasing all claims of any nature against ViaSource; provided,
however, that such Releases shall not apply to any Claim by any Releasor
against any Releasee arising under this Agreement or arising out of or in any
way relating to the transactions provided for in this Agreement.
7.6 STOCK POWERS. At the Closing, each Company shall have delivered to
ViaSource, for use in connection with the Held Back Shares, ten stock powers
executed in blank, with signatures medallion guaranteed.
7.7 BOARD APPROVAL. The Board of Directors of ViaSource shall have
authorized and approved this Agreement, the Asset Purchase and transactions
contemplated hereby.
7.8 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
events that have had or are reasonably likely to have a Material Adverse
Change.
7.9 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
37
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 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 or restrict or impair the ability of ViaSource to own the
Assets.
7.10 FILING OF UCC TERMINATION STATEMENTS. On or before the Closing
Date, the required or necessary UCC termination statements relating to the
Purchased Assets shall have been filed, and all security interests in the
Purchased Assets shall have been terminated.
7.11 STOCKHOLDERS AGREEMENT. On or before the Closing Date, each
Shareholder shall have executed the restated and amended stockholders agreement
of ViaSource substantially in the form of Exhibit C hereto (the "Stockholders
Agreement").
7.12 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Shareholders and the
Companies 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 Shareholders and the Companies shall have
performed and complied with all of the obligations required by this Agreement
to be performed or complied with at or prior to the Closing Date, including
these obligations set forth in Article IV herein. The Shareholders and the
Companies shall have delivered to ViaSource 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.
ARTICLE VIII
CONDITION TO THE OBLIGATIONS OF THE COMPANIES
The obligation of each of the Companies and the Shareholders 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 each of the Companies and the Shareholders:
8.1 CERTIFICATE. ViaSource shall have delivered to the Companies and
the Shareholders (i) copies of the Articles of Incorporation and Bylaws of
ViaSource as in effect immediately prior to the date hereof, (ii) copies of
resolutions adopted by the Board of Directors and shareholders of ViaSource
authorizing the transactions contemplated by this Agreement, and (iii) a
certificate of good standing of ViaSource issued by the Secretary of State of
New Jersey.
8.2 OPINION OF COUNSEL. The Companies and the Shareholders shall have
received an opinion, dated as of the date hereof, from counsel for ViaSource
acceptable to the Company and the Shareholders, in form and substance
acceptable to the Companies and the Shareholders substantially as set forth in
Schedule 8.2 hereto.
38
8.3 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
events that have had or are reasonably likely to have a Material Adverse
Change.
8.4 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 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 or restrict or impair the ability of the Shareholders and the Companies
to dispose of the Assets.
8.5 QUALIFYING AGENT INDEMNIFICATION. ViaSource shall have entered
into the Qualifying Agent Indemnification Agreement set forth in Schedule
4.8(b).
8.6 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 the obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date, including these obligations set forth in Article IV herein.
ViaSource shall have delivered to the Shareholders and the Companies 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.
ARTICLE IX
DEFINITIONS
9.1 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.
"Closing" means the consummation of the transactions contemplated
hereby.
39
"Contaminated Site List" means any list, registry or other compilation
established by any Governmental Body of facilities or sites that
require or potentially require investigation, removal actions,
remedial actions or any other response under any Environmental Laws.
"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 Conditions" means any pollution, contamination,
degradation, damage or injury caused by, related to or arising from or
in connection with the generation, handling, use, treatment, storage,
transportation, disposal, discharge, Release or emission of any
Hazardous Materials.
"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 Body 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
Body, and (ii) applicable judicial, administrative or other regulatory
decrees, judgments and orders of any such Governmental Body. 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. -- 7401 et seq.; the Clean Water Act, 33 U.S.C. -- 1251 et seq.;
the Resource Conservation Recovery Act, 42 U.S.C. -- 6901 et seq.; the
Superfund Amendments and Reauthorization Act, 42 U.S.C. -- I 10 11 et
seq.; the Toxic Substances Control Act, 15 U.S.C. -- 2601 et seq.; the
Water Pollution Control Act, 33 U.S.C. -- 125 1, et seq.; the Safe
Drinking Water Act, 42 U.S.C. -- 300 et seq.; the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. --
9601 et seq.; and any similar state, federal, foreign or local statute
or ordinance.
"Environmental Remediation Costs" means all costs and expenses of any
Person of actions or activities to (a) clean up or remove or remediate
Hazardous Materials, (b) prevent
40
or minimize the movement, leaching or migration of Hazardous
Materials, (c) prevent, minimize or mitigate or otherwise respond to
the Release or threatened Release of Hazardous Materials, or injury or
damage from such Release, or (d) comply with the requirements of any
Environmental Laws. Environmental Remediation Costs include, without
limitation, costs and expenses payable in connection with the
foregoing for reasonable legal, engineering or other consultant
services, for investigation, testing, sampling and monitoring
(including, without limitation, medical monitoring), for boring,
excavation and construction, for removal, modification or replacement
of equipment or facilities, for labor and material, and for proper
storage, treatment and disposal of Hazardous Materials.
"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 Materials" 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, corporation, business
trust, joint stock company, estate, trust, unincorporated association,
joint venture, Governmental Authority or other entity, of whatever
nature.
41
"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.
"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.
9.2 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 X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
42
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by ViaSource in the event of a material breach by either
Company of any provision of this Agreement, including but not limited to the
provisions of Article VII hereto; or
(c) by ViaSource or the Companies if the Closing shall not
have occurred by May 5, 2000.
10.2 EFFECT OF TERMINATION. Except as provided in Article V and for
the provisions of Section 4.3, in the event of termination of this Agreement
pursuant to Section 10.1, 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 XI
MISCELLANEOUS
11.1 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 COMPANIES TO:
43
Service Cable Electric, Inc.
0000 Xxxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxx Xxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
WITH A COPY TO:
Xxxxx & Lardner
000 Xxxxx Xxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
11.2 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.
11.3 EXPENSES; SALES TAX. 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. The parties agree that ViaSource shall pay all sales taxes
associated with the transfer of any motor vehicles hereunder and all
documentary stamp taxes due with respect to the Note, and the Companies shall
pay all other sales, transfer or similar taxes required to be paid by reason of
the transfer by the Companies of the Purchased Assets pursuant to this
Agreement.
11.4 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.
11.5 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
44
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
either Company without the prior written consent of ViaSource. Prior to the
Closing Date, ViaSource may not assign all or any portion of its rights
hereunder except to an Affiliate without the express written consent of the
Companies and the Shareholders. After the Closing Date, ViaSource may assign
all or any portion of its rights hereunder without condition or limitation.
11.6 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.
11.7 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.
11.8 GOVERNING LAW; INTERPRETATION. 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.
11.9 JURISDICTION. Any suit, action or proceeding against either
Company or the Shareholders arising out of, or with respect to, this Agreement
or any judgment entered by any court in respect thereof may be brought in the
courts of Broward County, Florida, or in the U.S. District Court for the
Southern District of Florida, as ViaSource (in its sole discretion) may elect,
and each Company and the Shareholders hereby irrevocably accept and consent to
the nonexclusive personal jurisdiction of those courts for the purpose of any
suit, action or proceeding. In addition, each Company and the Shareholders
hereby irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
judgment entered by any court in respect thereof brought in Broward County,
Florida, or the U.S. District Court for the Southern District of Florida, as
selected by ViaSource, and hereby further irrevocably waives any claim that any
suit, action or proceedings brought in Broward County, Florida, or in such
District Court has been brought in an inconvenient forum.
11.10 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 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
45
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.
11.11 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.
11.12 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.
11.13 ANNOUNCEMENTS. All press releases, notices to customers and
suppliers and other announcements with respect to this Agreement and the
transactions contemplated by this Agreement shall be approved by both ViaSource
and the Companies prior to the issuance thereof; provided, that either party
may make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing party will advise the other party
prior to making such disclosure and provide the other party a reasonable
opportunity to review the proposed disclosure).
11.14 BULK SALES LAWS. The parties hereto hereby waive compliance with
the provisions of any applicable bulk sales laws, including Article 6 of the
Uniform Commercial Code as it may be in effect in any applicable jurisdiction.
This provision shall not be deemed to in any way limit the indemnity provided
for in Article V hereof.
[signatures appear on the next page]
46
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:
---------------------------------
Name:
-----------------------------
Title:
----------------------------
SCC ACQUISITION, INC.
a Delaware corporation
By:
---------------------------------
Name:
-----------------------------
Title:
----------------------------
SERVICE CABLE ELECTRIC, INC.
a Florida corporation
By:
---------------------------------
Name:
-----------------------------
Title:
----------------------------
SERVICE CABLE CORPORATION
a Florida corporation
By:
---------------------------------
Name:
-----------------------------
Title:
----------------------------
46
47
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Xxxxxxx X. Xxxxxxx, individually
--------------------------------
Xxx Xxxxxxx, individually
--------------------------------
Xxxx Xxxxxxx, individually
47
