STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SR. TELEPERFORMANCE S.A.
AND
HA-LO INDUSTRIES, INC.
Dated as of May 10, 2001
TABLE OF CONTENTS
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ARTICLE 1 PURCHASE AND SALE OF SHARES..................................2
1.1 Purchase and Sale of Shares................................2
1.2 Purchase Price.............................................2
1.3 Payment of Purchase Price..................................2
1.4 Allocation of Purchase Price...............................2
1.5 Closing Certificate........................................2
1.6 Post-Closing Certificate...................................3
1.7 Post-Closing Payment.......................................3
1.8 Purchase Price Withholding.................................4
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLER.................5
2.1 Organization...............................................5
2.2 Subsidiaries and Affiliates................................6
2.3 Capitalization.............................................6
2.4 Title; Valid Issuance......................................6
2.5 Authorization..............................................6
2.6 No Violation...............................................7
2.7 Financial Statements.......................................8
2.8 Liabilities................................................8
2.9 Absence of Certain Changes.................................8
2.10 Contracts.................................................10
2.11 Title and Related Matters.................................11
2.12 Litigation................................................12
2.13 Tax Matters...............................................12
2.14 Compliance with Law and Applicable Government
Regulations...............................................14
2.15 ERISA and Related Matters.................................15
2.16 Environmental Matters.....................................18
2.17 Insurance.................................................19
2.18 Accounts Receivable; Inventory............................20
2.19 Equipment.................................................20
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2.20 Brokers and Finders.......................................20
2.21 [RESERVED]................................................20
2.22 Transactions with Affiliates..............................20
2.23 Disclosure................................................21
2.24 Intellectual Property.....................................21
2.25 Customers.................................................22
2.26 Transaction Costs.........................................22
2.27 Occupational Safety and Health............................22
2.28 Bonus and Severance Arrangements..........................22
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.............22
3.1 Corporate Organization....................................23
3.2 Authorization.............................................23
3.3 Brokers and Finders.......................................23
3.4 No Violation..............................................23
3.5 Investment Intent.........................................23
3.6 Sufficient Funds..........................................24
ARTICLE 4 COVENANTS OF THE SELLER.....................................24
4.1 Employment Arrangements...................................24
4.2 Dissolution of Nerok......................................24
4.3 Sale Bonus Payments.......................................24
4.4 Advances; Loans...........................................24
ARTICLE 5 OTHER AGREEMENTS............................................24
5.1 Further Assurances........................................24
5.2 Non-Competition and Non-Solicitation......................25
5.3 Environmental Assessments.................................25
5.4 Tax Matters...............................................26
5.5 Confidentiality After Closing Date........................29
5.6 Agreements Regarding Collection of Accounts Receivable....30
5.7 Severance Payments........................................30
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5.8 Xxxxxx Financial Agreements...............................30
5.9 Market USA 401(k) Retirement Plan.........................30
ARTICLE 6 DELIVERIES AT CLOSING.......................................30
6.1 Opinion of Counsel; Secretary's Certificate...............30
6.2 Certificates of Good Standing.............................30
6.3 Resignations..............................................31
6.4 FIRPTA Certificate........................................31
6.5 Guarantee Releases........................................31
6.6 Escrow Agreement..........................................31
6.7 Lease Consents............................................31
6.8 Insurance.................................................31
ARTICLE 7 [RESERVED]..................................................31
ARTICLE 8 CLOSING.....................................................31
8.1 Closing...................................................31
ARTICLE 9 [RESERVED]..................................................32
ARTICLE 10 SURVIVAL OF TERMS; INDEMNIFICATION.........................32
10.1 Survival..................................................32
10.2 Indemnification by the Seller.............................32
10.3 Indemnification by the Purchaser..........................34
10.4 Limitations on Indemnification............................34
10.5 Third Party Claims........................................35
10.6 Characterization of Indemnity Payments....................36
10.7 Exclusive Remedy..........................................36
ARTICLE 11 MISCELLANEOUS PROVISIONS...................................36
11.1 Amendment and Modification................................36
11.2 Waiver of Compliance; Consents............................36
11.3 Certain Definitions.......................................36
11.4 Notices...................................................44
11.5 Assignment................................................45
11.6 Confidentiality...........................................45
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11.7 GOVERNING LAW.............................................45
11.8 Counterparts..............................................45
11.9 Headings..................................................46
11.10 Entire Agreement..........................................46
11.11 WAIVER OF JURY TRIAL; Consent to Jurisdiction; Service
of Process................................................46
11.12 Binding Effect............................................47
11.13 Injunctive Relief.........................................47
11.14 Delays or Omissions.......................................47
11.15 Severability..............................................48
11.16 Expenses..................................................48
11.17 Arbitration...............................................48
11.18 Currency..................................................48
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Exhibits
Exhibit 1.8(a) Form of Escrow Agreement
Exhibit 2.7(a) 2000 Financial Statements
Exhibit 6.1(a) Form of Opinion of the Seller's Counsel
Exhibit 6.1(b) Form of Secretary's Certificate of the Seller
Exhibit 6.4 FIRPTA Certificate of Seller
Schedules
Schedule 1.2 Calculation of Purchase Price
Schedule 1.4 Allocation Schedule
Schedule 2.1(a) Jurisdictions
Schedule 2.1(b) Certificate of Incorporation and Bylaws or other
Organizational Documents
Schedule 2.2 Investments or Interests in other Persons; Conduct of
Business through other Persons
Schedule 2.3 Capitalization
Schedule 2.4(a) Title; Valid Issuance
Schedule 2.4(b) Rights of Xxxxxx Marketing Shares and Xxxxxx Financial
Shares
Schedule 2.6(d) Termination Rights
Schedule 2.6(f) Consents not Obtained Prior to Closing
Schedule 2.8 Liabilities
Schedule 2.9 Absence of Changes
Schedule 2.10 Contracts
Schedule 2.11(a) Title
Schedule 2.11(b) Ownership
Schedule 2.12 Litigation
Schedule 2.13(b) Tax Matters
Schedule 2.13(c) Consolidated Tax Matters
Schedule 2.13(d) Tax Deficiencies
Schedule 2.14(a) Compliance with Law/Regulations
Schedule 2.14(b) Insurance Products Matters; Insurance Services Matters
Schedule 2.15 ERISA
Schedule 2.16 Environmental Matters
Schedule 2.16(h) Environmental Permits
Schedule 2.17(a) Insurance Policies
Schedule 2.17(b) Insurance Claims
Schedule 2.19 Equipment
Schedule 2.20 Brokers and Finders
Schedule 2.22 Transactions with Affiliates
Schedule 2.24 Intellectual Property
Schedule 2.25 Customers
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(continued)
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Schedule 2.28 Bonus and Severance Arrangements
Schedule 6.7 Lease Consents
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of May 10, 2001 (the
"AGREEMENT"), is entered into by and between SR. Teleperformance S.A., a French
joint stock company ("TELEPERFORMANCE" or the "PURCHASER") and Ha-Lo Industries,
Inc., a Delaware corporation (the "SELLER").
RECITALS
WHEREAS, Market USA, Inc., an Illinois corporation ("MARKET USA"),
Xxxxxx Marketing Inc., a Canadian federal corporation ("XXXXXX MARKETING"), and
Xxxxxx Financial Services Ltd., a Canadian federal corporation ("XXXXXX
FINANCIAL" and, together with Market USA and Xxxxxx Marketing, collectively, the
"COMPANIES" and each, a "COMPANY") are engaged in the business of providing
in-bound and out-bound telemarketing and teleservices, operating multimedia
contact centers and customer interaction centers, and providing outsourced
customer relationship management with respect to the foregoing (the "BUSINESS");
WHEREAS, the Seller owns of record and beneficially 10,000 shares of
outstanding common stock, no par value per share, of Market USA, which
constitute one hundred percent (100%) of the issued and outstanding capital
stock of Market USA (the "MARKET USA SHARES");
WHEREAS, the Seller owns of record and beneficially one share of
outstanding Class A common stock, no par value per share, of Xxxxxx Marketing,
which constitutes one hundred percent (100%) of the issued and outstanding
capital stock of Xxxxxx Marketing (the "XXXXXX MARKETING SHARES");
WHEREAS, the Seller owns of record and beneficially two shares of
outstanding Class A common stock and 49 shares of Class B common stock, each
with no par value per share, of Xxxxxx Financial (the "XXXXXX FINANCIAL SHARES"
and, collectively with the Market USA Shares and the Xxxxxx Marketing Shares,
the "SHARES");
WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Seller desires to sell to the Purchaser, and the Purchaser
desires to purchase from the Seller, the Shares;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth and subject to the terms and conditions hereof,
the parties hereto, intending legally to be bound, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
of this Agreement, on the Closing Date, the Seller shall sell, assign, transfer,
convey and deliver to the Purchaser, free and clear of all Liens, and the
Purchaser shall purchase from the Seller, the Shares.
1.2 PURCHASE PRICE. In consideration for the sale, assignment,
transfer, conveyance and delivery of the Shares and in reliance on the
representations and warranties, covenants and agreements of the parties
contained herein and in the other agreements and instruments contemplated
hereby, the aggregate purchase price for the Shares (the "PURCHASE PRICE") shall
be an amount equal to $32,566,956; PROVIDED that (a) as of the Closing Date,
none of the Companies shall have any Indebtedness; (b) as of the Closing Date,
the Companies shall have cash on hand (the "CASH ON HAND") in an amount equal to
the sum of (i) the aggregate amount of all Outstanding Checks PLUS (ii) the
Excess Profit, if any, and (c) in no event shall the Purchase Price exceed an
amount equal to the result of (i) $35,000,000 MINUS (ii) the aggregate amount of
the Transaction Costs, if any. The calculation of the Purchase Price is set
forth on SCHEDULE 1.2, which, together with the footnotes therein, shall be
incorporated by reference in this SECTION 1.2.
1.3 PAYMENT OF PURCHASE PRICE. At the Closing, the Purchaser shall
pay an amount equal to the Purchase Price to the Seller in cash by wire transfer
of immediately available funds, via a U.S. bank account of the Purchaser's
counsel, to an account designated by the Seller in writing not less than two
Business Days prior to the Closing Date.
1.4 ALLOCATION OF PURCHASE PRICE. The Purchaser and the Seller agree
that the consideration for the agreements of noncompetition and nonsolicitation
set forth in SECTION 5.2 of this Agreement shall be $1,628,349, which is
included in the Purchase Price. The Purchaser and the Seller further agree to
allocate the remaining portion of the Purchase Price (and all other
capitalizable costs) among the Shares of the Companies for all purposes
(including financial accounting and tax purposes) in accordance with SCHEDULE
1.4.
1.5 CLOSING CERTIFICATE. At the Closing, the Seller shall provide to
the Purchaser a certificate setting forth (a) the aggregate amount of all
outstanding checks issued by the Companies that have not cleared as of the
Closing Date (the "OUTSTANDING CHECKS"), (b) the preliminary calculation of the
amount of the Excess Profit, if any, and the Seller's best estimate of (i) the
Year-to-Date Earnings and (ii) the income tax liability of the Companies on the
Agreed Profit that the Seller (y) has paid or (z) has agreed to pay under
SECTION 5.4(d)(ii) and (c) the aggregate amount of the Cash on Hand at the
Closing Date.
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1.6 POST-CLOSING CERTIFICATE. Within 20 Business Days following the
Closing, the Companies shall deliver to the Purchaser and the Seller a
certificate setting forth:
(a) if different from the amount set forth in the
closing certificate delivered pursuant to SECTION 1.5, the amount of the
Outstanding Checks;
(b) the Companies' actual Year-to-Date Earnings, calculated
using the same principles used in the preparation of the 2000 Financial
Statements, and the actual aggregate amount of all Sale Bonus Payments, which
shall be deducted from Year-to-Date Earnings; and
(c) if different from the amount set forth in the closing
certificate delivered pursuant to SECTION 1.5, the amount of the Cash on Hand on
the Closing Date;
and the Seller shall deliver to the Purchaser a certificate setting forth:
(d) the income Tax liability of the Companies on the
Agreed Profit; and
(e) the amount thereof that Seller has (i) paid and (ii)
agreed to pay under SECTION 5.4(d)(ii).
Promptly upon receipt of the certificates referred to in clauses (a) through (e)
above, the Purchaser shall calculate, and shall deliver to the Seller a
certificate setting forth, the amount of the Excess Profit, if any. If the
Seller, on the one hand, or the Purchaser, on the other hand, has any objection
to the amount or manner of calculation of (i) the Outstanding Checks, (ii) the
Year-to-Date Earnings, (iii) the Cash on Hand on the Closing Date, (iv) the
income Tax liability of the Companies on the Agreed Profit, (v) the amount
thereof that the Seller has paid or agreed to pay under SECTION 5.4(d)(ii) or
(vi) the Excess Profit, then the Seller or the Purchaser, as applicable, shall
deliver to the Purchaser or the Seller, as applicable, within 20 Business Days
after receipt of the certificates, a detailed statement describing its
objections. The Seller and the Purchaser each shall then use reasonable efforts
to resolve any such objections themselves. If the parties do not obtain a final
resolution in this manner within 20 Business Days after receipt of the
applicable statement of objections, the objections shall be submitted to a
mutually agreed-upon accounting firm for binding resolution. The Seller and the
Purchaser each shall bear half of the fees and expenses of such accounting firm.
Both parties shall make their work papers and other materials available to the
accounting firm. The accounting firm shall make its determination, based upon
the presentations made by the Seller and the Purchaser and not on its
independent review, within 30 days after the submission of the objections for
resolution, and the determination shall be conclusive, final and binding on the
parties.
1.7 POST-CLOSING PAYMENT. In the event that, upon final resolution
or determination pursuant to SECTION 1.6, it is determined that the Companies
did not have Cash on Hand on the Closing Date in an amount equal to the sum of
(a) the final
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determination of the amount of the Outstanding Checks PLUS (b) the final
determination of the amount of the Excess Profit, if any (such amount, the
"REQUIRED CASH ON HAND"), then within five Business Days of such final
resolution or determination, (x) if the amount of Cash on Hand on the Closing
Date was more than the Required Cash on Hand, the Purchaser shall, or shall
cause the Companies to, pay to the Seller in cash by wire transfer of
immediately available funds an amount equal to such excess or (y) if the amount
of Cash on Hand on the Closing Date was less than the Required Cash on Hand, the
Seller shall pay to the Purchaser in cash by wire transfer of immediately
available funds an amount equal to such shortfall.
1.8 PURCHASE PRICE WITHHOLDING.
(a) If, at or before the Closing, a valid certificate issued
by the Minister of National Revenue under subsection 116(2) of the INCOME TAX
ACT (Canada) (the "ITA"), specifying a certificate limit in an amount which is
not less than that portion of the Purchase Price otherwise payable on Closing
that is allocated to the shares of Xxxxxx Marketing and Xxxxxx Financial in
accordance with SECTION 1.4 hereof (the "CANADIAN SHARE PURCHASE PRICE"), is not
delivered to the Purchaser, the Purchaser shall withhold from the Canadian Share
Purchase Price an amount equal to the percentage specified in subsection 116(5)
of the ITA of the Canadian Share Purchase Price (the "WITHHELD AMOUNT"), which
amount shall be deposited by the Purchaser in an escrow account (the "ESCROW
ACCOUNT") to be maintained with the Escrow Agent pursuant to the terms of the
Escrow Agreement among the Seller and the Purchaser (the "ESCROW AGREEMENT")
substantially in the form of EXHIBIT 1.8. Distribution of such Withheld Amount
shall be on the terms and subject to the conditions set forth in this SECTION
1.8 and in the Escrow Agreement.
(b) If, on or before the 25th day after the end of the month
in which the Closing occurs, the Seller delivers to the Purchaser a valid
certificate issued by the Minister of National Revenue under subsection 116(2)
or 116(4) of the ITA, the Purchaser shall promptly pay to the Seller the
Withheld Amount less, in the case of a certificate issued by the Minister of
National Revenue under subsection 116(2) of the ITA, an amount expressed in U.S.
dollars at the exchange rate in effect at the time of payment equal to the
percentage specified in subsection 116(5) of the ITA of the amount, if any, by
which the Canadian Share Purchase Price, expressed in Canadian dollars at the
exchange rate in effect at the time of Closing, exceeds the amount specified in
such certificate expressed in Canadian dollars as the certificate limit,
together with any interest earned to the date of such payment on the Withheld
Amount so paid (net of any applicable Tax). The amount so paid, before taking
into account interest and tax, shall be credited to the Purchaser as a payment
to the Seller on account of the Purchase Price.
(c) If, after the 25th day after the end of the month in which
the Closing occurs, the Purchaser has withheld the Withheld Amount and before
that time either:
(i) the Seller has not delivered to the Purchaser a
certificate issued by the Minister of National
4
Revenue under subsection 116(2) or subsection
116(4) of the ITA, or
(ii) the Seller has delivered a certificate issued by
the Minister of National Revenue under subsection
116(2) but the certificate limit (in Canadian
dollars) is less than the Canadian Share Purchase
Price expressed in Canadian dollars at the
exchange rate in effect at the time of Closing,
the Purchaser shall convert the remainder of the Withheld Amount into Canadian
currency at the exchange rate in effect at that time. If the amount after
conversion is less than the amount in Canadian dollars required to be remitted
by the Purchaser under subsection 116(5) of the ITA, the Seller shall pay to the
Purchaser forthwith the amount of such shortfall. The Purchaser shall remit to
the Receiver General the amount, if any, required to be remitted by the
Purchaser under subsection 116(5) of the ITA and pay the remainder of the
Withheld Amount, if any, to the Seller. The amounts so remitted to the Receiver
General and paid to the Seller, expressed in U.S. dollars at the exchange rate
in effect at that time, shall be credited to the Purchaser as a payment to the
Seller on account of the Purchase Price. The Purchaser shall pay to the Seller
any interest earned to the date of such remittance on the Withheld Amount (net
of any applicable Tax).
(d) The Seller and the Purchaser shall bear equally the amount
of any account fees or other bank or related charges reasonably incurred by the
Purchaser or the Seller in respect of the Escrow Account or any other payments
made hereunder. The Purchaser may set off any amounts owing to the Purchaser
under this SECTION 1.8 against any amounts payable by the Purchaser to the
Seller under this SECTION 1.8.
ARTICLE 2
REPRESENTATIONS AND
WARRANTIES OF THE SELLER
Disclosure on any Schedule shall be provided separately for each
Company. The Seller represents and warrants to the Purchaser as follows:
2.1 ORGANIZATION. Each Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization with full corporate and other power and authority
to carry on its business as it is now being conducted, and to own, operate and
lease its properties and assets. Each Company is duly qualified or licensed to
do business and is in good standing in every jurisdiction in which the conduct
of its business or the ownership or lease of its properties requires it to be so
qualified or licensed except where the failure to be so qualified or licensed
would not have a Material Adverse Effect on the Companies, taken as a whole, and
all such jurisdictions in which each Company is so qualified or licensed are set
forth on SCHEDULE 2.1(a). True, complete and correct copies of the certificate
of incorporation
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and bylaws or, if applicable, other organizational documents of each Company as
in effect on the date of this Agreement are annexed to SCHEDULE 2.1(b).
2.2 SUBSIDIARIES AND AFFILIATES. None of the Companies has any
Subsidiaries. Except as set forth on SCHEDULE 2.2, none of the Companies (a) has
any investments or interests in any other Person, or (b) conducts any of the
Business through any other Person.
2.3 CAPITALIZATION. Market USA has an authorized capitalization
consisting exclusively of 100,000 shares of common stock, no par value per
share, of which 10,000 shares are issued and outstanding, all of which are owned
beneficially and of record by the Seller. Xxxxxx Marketing has an authorized
capitalization consisting exclusively of an unlimited number of shares of Class
A and Class B common stock, each with no par value per share, of which one share
of Class A common stock is issued and outstanding, which is owned beneficially
and of record by the Seller. Xxxxxx Financial has an authorized capitalization
consisting exclusively of an unlimited number of shares of Class A and Class B
common stock, each with no par value, of which two shares of Class A common
stock and 100 shares of Class B common stock are issued and outstanding, of
which two shares of Class A common stock and 49 shares of Class B common stock
are owned beneficially and of record by the Seller and 51 shares of Class B
Common Stock are owned beneficially and of record by Xxxxxx X. Xxxxxxx, who is a
Canadian resident. There are no outstanding subscriptions, options, warrants,
preemptive or other rights, securities, Contracts, commitments, understandings
or arrangements by which the Seller or any of the Companies has offered, agreed
or is obligated or bound to issue any additional shares of capital stock of any
of the Companies or any other equity interest in any of the Companies or
pursuant to which any Person has a right to purchase any capital stock of any of
the Companies or other equity interests in the Companies (any of the foregoing,
a "COMPANY OPTION"). Except as disclosed on SCHEDULE 2.3, none of the Seller,
the Companies or any of their respective Affiliates is a party to any Contracts,
commitments, understandings or arrangements by which any of them is bound or
obligated to transfer or assign any interest, economic or otherwise, in any
capital stock of any of the Companies or other any equity interests of any of
the Companies to any Person.
2.4 TITLE; VALID ISSUANCE. Except as disclosed on SCHEDULE 2.4(a),
the Seller is the record and beneficial owner of the Shares, free and clear of
all Liens, and no Person other than the Seller (including, without limitation,
any Affiliate of the Seller) has any right to or claim upon the Shares. The
Shares were duly authorized and validly issued, are fully paid and nonassessable
and were issued in accordance with all applicable securities laws. Any
agreements or instruments setting forth the rights, privileges, restrictions and
conditions attached to the Xxxxxx Financial Shares, the Xxxxxx Marketing Shares
and the shares of capital stock of Xxxxxx Financial owned by Xxxxxx X. Xxxxxxx
in existence immediately prior to the Closing Date, other than those provided
for by Regulation, are set out in SCHEDULE 2.4(b).
2.5 AUTHORIZATION. The Seller has full corporate power and authority
to execute and deliver this Agreement and the other agreements and instruments
6
contemplated hereby to which it is a party, to consummate the transactions
contemplated hereby and thereby and to take all other actions required to be
taken by it pursuant to the provisions hereof and thereof. The execution,
delivery and performance of this Agreement and the other agreements and
instruments contemplated hereby to which the Seller is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Seller by all requisite corporate acts and proceedings and no
other corporate proceedings on its part are necessary to authorize this
Agreement and the other agreements and instruments contemplated hereby to which
it is a party and to consummate the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the Seller. This
Agreement constitutes and, upon execution and delivery thereof by the Seller of
the other agreements and instruments contemplated hereby to which the Seller is
a party, each such other agreement or instrument will constitute (assuming due
and valid authorization, execution and delivery hereof and thereof by the
Purchaser), the legal, valid and binding obligations of the Seller, enforceable
against it in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, moratorium,
reorganization or creditor's rights laws of general applicability or by general
principles of equity.
2.6 NO VIOLATION. Except, solely with respect to clause (f) below,
for applicable filings by the Seller with the SEC pursuant to the Exchange Act
and with any national securities exchange on which the shares of common stock of
the Seller are listed, in each case to be made on or after the Seller's
execution and delivery of this Agreement, and for applicable filings by the
Purchaser pursuant to the Investment Canada Act and filings by the Purchaser and
the Companies pursuant to the Competition Act Canada, if applicable, the
execution, delivery and performance by the Seller of this Agreement and the
other agreements and instruments contemplated hereby to which it is a party, the
consummation of the transactions contemplated hereby and thereby, the
fulfillment of and compliance with the terms hereof and thereof by the Seller
and the sale and transfer of the Shares by the Seller do not and will not (a)
conflict with or result in a breach of the terms, conditions or provisions of,
(b) constitute a default or event of default under (with due notice, lapse of
time or both), (c) result in the creation of any Lien upon any of the properties
or assets of any of the Seller or the Companies or any of the Shares pursuant
to, (d) except as disclosed on SCHEDULE 2.6(d), give any third party the right
to terminate, modify, accelerate or otherwise change any right or obligation
under, (e) result in a violation of or (f) except as disclosed on SCHEDULE
2.6(f), require any authorization, consent, approval, exemption or other action
by, notice to, or filing with any Authority or any other Person prior to or
simultaneously with the Closing which has not been obtained as of the Closing
pursuant to: (i) the organizational documents of the Seller or any of the
Companies, (ii) any applicable Regulation, (iii) any Order to which the Seller
or any of the Companies is subject or (iv) any Contract to which the Seller, any
of the Companies or any of their respective properties or assets are subject
except, in the case of clauses (ii), (iii) or (iv), for such conflicts,
breaches, defaults, Liens, rights and violations which, or such authorizations,
consents, approvals, exemptions, actions, notices or filings the failure of
which to obtain, would become applicable as a result of the business or
activities in which the Purchaser is or proposes to be engaged or as a result of
any acts or omissions by, or the status of any facts pertaining to, the
Purchaser. Each of the Seller and the Companies has complied with all applicable
Regulations and Orders in
7
connection with the execution, delivery and performance of this Agreement and
the other agreements and instruments contemplated hereby to which it is a party
and the transactions contemplated hereby and thereby.
2.7 FINANCIAL STATEMENTS.
(a) A copy of the 2000 Financial Statements for all the
Companies is attached hereto as EXHIBIT 2.7(a). The 2000 Financial Statements
have been prepared from the books and records of the Companies in accordance
with GAAP and consistently applied and maintained throughout the periods
indicated except for those items which are otherwise noted therein, fairly
present in all material respects the financial condition of the Companies on a
combined basis at such date, the results of the Companies' operations and the
changes in financial position for the periods covered thereby, and reflect all
material claims against, and all debts and liabilities of, the Companies, fixed
or contingent, as of the date thereof, each in accordance with GAAP.
(b) Each of the Companies possesses books and records which
contain all financial and other information (regarding such Company and any
predecessor entities) with respect to the three most recently completed fiscal
years and the current fiscal year through the date hereof necessary for the
preparation of financial statements in accordance with GAAP, for the three most
recently completed fiscal years and the current fiscal year.
2.8 LIABILITIES. Except as disclosed on SCHEDULE 2.8 and except (a)
as and to the extent reflected or reserved against on the 2000 Financial
Statements (including the notes thereto), (b) to the extent incurred in the
Ordinary Course after the Balance Sheet Date, (c) to the extent incurred in
connection with the transactions contemplated hereby or otherwise as
contemplated by this Agreement, or (d) to the extent otherwise specifically the
subject of any representations and warranties contained in SECTIONS 2.4, 2.11
through 2.16, 2.24 and 2.27, none of the Companies has any material direct or
indirect debts, liabilities, claims, losses, damages, deficiencies, cost,
expense or obligations (whether absolute, accrued, known or unknown, contingent
or otherwise) of any nature whatsoever, or any other debts, liabilities or
obligations relating to or arising out of any act, transaction, circumstance or
state of facts due or payable (including, without limitation, obligations under
capital leases). SCHEDULE 2.8 sets forth any obligations of the Seller or any of
its affiliates which have been guaranteed by any of the Companies, including a
description of the applicable obligation and the terms of the guarantee.
2.9 ABSENCE OF CERTAIN CHANGES. Except as set forth on SCHEDULE 2.9,
since the Balance Sheet Date, each of the Companies has conducted the Business
only in the Ordinary Course. Without in any way limiting or qualifying the
preceding sentence, except as set forth on SCHEDULE 2.9, since the Balance Sheet
Date, none of the Companies has:
(a) except in the Ordinary Course, incurred any material
liabilities, discharged or satisfied any Lien or encumbrance, or paid any
material
8
liabilities or failed to pay or discharge when due any liabilities of which the
failure to pay or discharge has caused or will cause any material damage or risk
or material loss to the Company or any of its assets or properties, made or
authorized a single capital expenditure in excess of $10,000 or capital
expenditures in the aggregate in excess of $100,000,
(b) sold, assigned or transferred any of its material
assets or properties,
(c) created, incurred, assumed or guaranteed any
indebtedness for money borrowed or mortgaged, pledged or subjected any of
its assets or properties to any Lien,
(d) made or suffered any amendment or termination of any
material Contract to which it is a party or by which it is bound, or canceled,
modified or waived any material debts or claims held by it or waived any
material rights of value, whether or not in the Ordinary Course,
(e) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) which had a Material Adverse Effect on the Companies,
taken as a whole, or (ii) of any item or items carried on its books of account
at more than $50,000, on an aggregate basis, or suffered any repeated, recurring
or prolonged shortage, cessation or interruption of supplies or services
required to conduct its business and operations,
(f) suffered any change in its Business, assets, liabilities,
results of operations or condition (financial or otherwise), financial records
or contracts (whether or not arising in the Ordinary Course) that had or could
reasonably be expected to have a Material Adverse Effect on the Companies, taken
as a whole,
(g) received notice or had Knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of any
similar character which has caused or might cause a Material Adverse Change on
the Companies, taken as a whole,
(h) except for items in the Ordinary Course which do not
constitute increases in compensation of 10% or more for employees receiving
annual salaries of $25,000 or more, increased the salaries or other compensation
of, or made any advance (excluding advances for ordinary and necessary business
expenses) or loan to, any of its directors, officers or other employees or
stockholders, or made any increase in, or any addition to, other benefits to
which any of its directors, officers or other employees or stockholders may be
entitled,
(i) declared, paid or set aside any dividend or other
distribution to any security holder, except for distributions in connection with
cash-management procedures in the Ordinary Course and all dividends which to the
Closing Date have been declared or paid have been duly and validly declared and
paid, or
9
(j) except as contemplated by this Agreement, entered into any
transaction other than in the Ordinary Course.
To the Knowledge of the Seller, no matter has occurred or exists or is
contemplated or threatened which is not the subject of any other representation
or warranty in this ARTICLE 2 and which those persons identified in the
definition of "Knowledge" in SECTION 11.3 hereof reasonably anticipate is likely
to cause a Material Adverse Effect on any of the Companies in the future except
as set forth on SCHEDULE 2.9 and other than such conditions as may affect the
telemarketing industry as a whole.
2.10 CONTRACTS. Except as set forth on SCHEDULE 2.10, none
of the Companies is a party to or bound by any written or oral:
(a) Contract with any present or former stockholder,
director, officer, employee or consultant or for the employment of any
person, including any consultant,
(b) Contract or collective bargaining agreement with
any labor union or other representative of employees,
(c) Except as set forth on SCHEDULE 2.10, no trade union,
council of trade unions, employee bargaining agency or affiliated bargaining
agent:
(i) holds bargaining rights with respect to any of the
Companies' employees by way of certification,
interim certification, voluntary recognition,
designation or successor rights,
(ii) has applied to be certified as the bargaining
agent of any of the Companies' employees, or
(iii) has applied to have any of the Companies declared
a related employer under any labour Regulations.
(d) Contract for the future purchase of, or payment for,
supplies or products, or for the performance of services whether by the Company
or by a third party, involving in any one case $25,000 or more,
(e) Contract not otherwise listed on SCHEDULE 2.10 and
continuing for a period of more than 12 months from the date hereof or exceeding
$25,000 in value,
(f) representative, sales agency, dealer or
distributor agreement, contract or commitment,
(g) lease under which the Company is either lessor or
lessee,
(h) note, debenture, bond, conditional sale agreement,
equipment trust agreement, loan agreement or other contract or commitment for
the
10
borrowing or lending of money (including, without limitation, loans to or from
officers, directors, stockholders or any member of their immediate families),
agreement or arrangement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any Person,
(i) Contract for any charitable or political
contribution,
(j) Contract for any capital expenditure in excess of
$25,000,
(k) Contract limiting or restraining it or any of its
officers or employees from engaging or competing in any lines of business
with any Person,
(l) license, royalty, franchise, distributorship, management
or other agreement, including those which relate in whole or in part to any
patent, trademark, trade dress, trade name, service xxxx, trade secret or
copyright or to any ideas, technical assistance or other know-how of or used by
the Company,
(m) Contract not made in the Ordinary Course or
(n) Contract with the Seller or any of its Affiliates.
True, correct and complete copies of all such Contracts listed on SCHEDULE 2.10
are in the files of the applicable Company and have been made available to the
Purchaser.
(o) Except as set forth on SCHEDULE 2.10, each of the
Companies has performed in all material respects all obligations required to be
performed by it and is not in default in any material respect under, in breach
of or in receipt of any claim of default or breach under, any Contract listed on
SCHEDULE 2.10. No event has occurred which has resulted or, with the passage of
time or the giving of notice or both, would result in a default, breach or event
of non-compliance by any of the Seller or the Companies under any Contract
listed on SCHEDULE 2.10, other than an event or events which, individually or in
the aggregate, would not result in a Material Adverse Effect on the Companies,
taken as a whole. None of the Seller or the Companies has any present
expectation or intention of not fully performing all such obligations, and the
Seller has no Knowledge of any material breach or anticipated material breach by
any other party to any Contract listed on SCHEDULE 2.10.
2.11 TITLE AND RELATED MATTERS.
(a) Except as set forth on SCHEDULE 2.11(a), each of the
Companies has good and marketable title to, or valid leasehold interests in, all
real and personal property (in fee simple as to all real property) and other
assets, tangible or intangible (other than Intellectual Property, which is the
subject of a separate representation and warranty contained in SECTION 2.24),
owned by it, used by it or necessary for the conduct of its respective portion
of the Business, including, without limitation, those reflected as owned in the
2000 Financial Statements or acquired after the Balance Sheet Date, except for
tangible property and assets that have been sold or otherwise disposed of in the
Ordinary Course since the Balance Sheet Date, in each case
11
free and clear of all Liens. Except as otherwise noted in the 2000 Financial
Statements, all properties and assets used in the Business as of the Balance
Sheet Date (other than Intellectual Property, which is the subject of a separate
representation and warranty contained in SECTION 2.24) are reflected in the 2000
Financial Statements in accordance with and to the extent required by GAAP. Each
lease to which any of the Companies is a party is in full force and effect, and
is valid and enforceable against the applicable Company in accordance with its
respective terms, and there is not under any of such leases on the part of any
Company nor, to the Knowledge of the Seller, on the part of any other party
thereto, any existing material default or any event which, with notice or lapse
of time or both, would constitute a material default. Except as set forth on
SCHEDULE 2.11(a), none of the assets owned by any of the Companies is or on the
Closing Date will be subject to any (i) Contracts of sale or lease or (ii)
Liens.
(b) Except as set forth on SCHEDULE 2.11(b), upon completion
of the Closing, each of the Companies will own or have all rights necessary for
the use of all properties and assets that are currently used by it in or
necessary for the conduct of the Business.
2.12 LITIGATION. Except as set forth on SCHEDULE 2.12,
(a) there is no Claim pending or, to the Knowledge of the
Seller, threatened against or affecting any of the Companies, any assets or
properties of any of the Seller or the Companies, the Shares or the Business,
any of the directors, officers or employees of any of the Companies with respect
to their activities as such directors, officers or employees, or the
transactions contemplated by this Agreement;
(b) since (i) May 1, 1998, none of the Companies has ever been
a defendant in any litigation with respect to employees or employment related
matters and (ii) September 30, 1996, none of the Companies has ever been a
defendant in any litigation with respect to any other matter;
(c) none of the Companies is a party to or subject to the
provisions of any Order, including, without limitation, any settlement agreement
or similar negotiated resolution of any prior Claim; and
(d) the Seller has never been a defendant in any litigation
nor has any such litigation ever been threatened against the Seller, nor is the
Seller a party to or subject to the provisions of any Order (including, without
limitation, any settlement agreement or similar negotiation resolution of any
Claim), in any case with respect to, in connection with or arising out of its
ownership of the Shares, its interests in any of the Companies or its ability to
enter into and consummate the transactions contemplated by this Agreement.
2.13 TAX MATTERS.
(a) Market USA is a corporation described in Treasury
Regulation Section 1.338(h)(10)-1(b)(1) and is not, as of the date hereof or the
Closing Date, a corporation for which an election under Subchapter S of the Code
is in effect.
12
Market USA is a U.S. person within the meaning of Code Section 1445 and Treasury
Regulations Section 1.1445 and for purposes of Code Section 897. Xxxxxx
Marketing and Xxxxxx Financial are taxable Canadian corporations, and are not
public corporations, for purposes of and as defined in the ITA.
(b) Each Company has (i) timely filed as of the date hereof,
all United States and Canadian federal, state and provincial income Tax Returns
(as defined below) and material local Tax Returns, that are required to be filed
by it on or before the date hereof, or the Closing Date, as the case may be
(taking into account applicable valid and authorized extensions), and all such
Tax Returns were true, correct and complete in all material respects when filed
and the Company has not become aware of any information to the contrary since
such filings and (ii) paid, or accrued (in accordance with GAAP) on the 2000
Financial Statements all Taxes of such Company that are due and payable by such
Company with respect to the periods covered by such Tax Returns. All Taxes which
any of the Seller or the Companies are required by applicable law to withhold or
collect on behalf of any of the Companies for payment have been duly withheld
and collected, and have been paid or will be paid to the appropriate
governmental authority as required by applicable law. The 2000 Financial
Statements reflect an adequate reserve in accordance with GAAP (without regard
to any amount reserved for deferred taxes) for all unpaid payroll taxes payable
by each of the Companies for all Tax periods and any portion thereof through the
date of the 2000 Financial Statements and the Companies have paid all
installments of Taxes due in respect of their current taxation periods.
(c) None of the Companies (i) has disposed of property in a
transaction being accounted for under the installment method pursuant to Section
453 or 453A of the Internal Revenue Code of 1986, as amended (the "CODE") or
similar provision of state, local or foreign law; (ii) has filed a consent under
Section 341(f) of the Code; or (iii) is a party to any Tax sharing or Tax
allocation agreement, arrangement or understanding. There are no Tax Liens upon
any property or assets of any of the Companies except for Liens for current
Taxes not yet due and payable. Except as disclosed on SCHEDULE 2.13(c), none of
the Companies (x) was included or includable in any consolidated, combined or
unitary Tax Return with any entity and (y) has any liability for the Taxes of
any Person under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local, or foreign law) as a transferee or successor, by contract, or
otherwise. Since January 1, 1998, none of the Companies has been at any time a
member of any partnership, limited liability company or joint venture or other
arrangement or contract which is treated as a partnership for federal, state,
local or foreign tax purposes or the holders of beneficial interests in any
trust for any period for which the statute of limitations for any Tax has not
expired. None of the Companies has made any payments, is obligated to make any
payments, and is a party to any agreement or other arrangement or understanding
that would obligate it to make any payments (individually or in the aggregate)
as a result of the transactions contemplated by this Agreement that are or would
not be deductible under Section 280G of the Code or an excise Tax to the
recipient pursuant to Section 4999 of the Code.
13
There are no circumstances existing that could result in the
application to the Companies of section 78 or sections 80 through 80.4 of the
ITA or any equivalent provincial provision. The Companies have not claimed, and
will not have claimed in respect of any taxation period ending prior to Closing,
any reserve under any one or more of subparagraph 40(1)(a)(iii), or paragraphs
20(1)(m) or 20(1)(n) of the ITA or any equivalent provision, if any such amount
could be included in the income of the Companies for any period ending after
Closing.
(d) There are no assessments or reassessments or Taxes against
the Companies that have been issued and are outstanding, and there is no audit,
examination or inquiry now pending or threatened in writing regarding any Tax
Return of any of the Companies, except for the United States Federal income tax
audit of HA-LO Industries, Inc. for the taxable years 1997, 1998 and 1999 as
disclosed on SCHEDULE 2.13(d), and any and all tax deficiencies which have been
asserted in writing against any of the Seller or the Companies with respect to
any Tax Return have been paid, fully settled or adequately provided for in the
2000 Financial Statements and disclosed on SCHEDULE 2.13(d). Purchaser has been
given true and accurate copies of all material correspondence and documents
relating to the tax audits listed on SCHEDULE 2.13(d) to the extent related to
any of the Companies. None of the Companies has (i) waived, nor been requested
in writing by any taxing authority to waive, any statute of limitations in
respect of any Taxes, (ii) agreed to any extension of time with respect to any
Tax assessment or deficiency or (iii) executed, or entered into, a closing
agreement pursuant to Section 7121 of the Code, or any predecessor provision or
any similar provision of state, local or foreign law. There are no written
proposed reassessments of any property owned by any of the Companies or other
proposals that would reasonably be expected to increase the amount of any Tax to
which the Company would be subject.
(e) [RESERVED]
(f) As used in this Agreement, (i) "TAX" or "TAXES" shall mean
any United States or Canadian federal, state, provincial, local or foreign
taxes, levies, premiums, government fees or dues or other like assessments or
charges, including, without limitation, net or gross income, gross receipts,
capital stock, franchise, profits, withholding, social security, Canada or
Quebec Pension Plan, employment, unemployment, health, disability, real
property, personal property, ad valorem, stamp, windfall profits, customs
duties, registration, excise, occupation, sales, use, transfer, value added,
goods and services, alternative minimum, estimated or other taxes of any sort,
including any interest, penalty or addition thereto and including any taxes,
levies or other like assessments relating to transferee liability; and (ii) "TAX
RETURN" or "TAX RETURNS" shall mean any tax return (including any estimated tax
return), report claim for refund, election, information return, declaration,
statement or other filing relating to Taxes supplied or required to be supplied
to any taxing authority or jurisdiction, including any schedule or attachment
thereto, and including any amendments thereto.
2.14 COMPLIANCE WITH LAW AND APPLICABLE GOVERNMENT Regulations.
Except as disclosed on SCHEDULE 2.14(a), each of the Companies is, and, since
September 30, 1996 (except as would not reasonably likely to have a Material
Adverse Effect on the
14
Companies) each of the Companies has been, in material compliance with its
organizational documents and all applicable Regulations and Orders with regard
to its operations, practices (including, without limitation, employment
practices and customer confidentiality and privacy practices), real property,
plants, structures, machinery, equipment and other property, and all other
aspects of the Business and each of the foregoing is capable of continued
operation in compliance with all applicable Regulations and Orders. To the
extent required by applicable Regulation, each of Market USA and Xxxxxx
Financial, and each of the employees of each of such Companies, is properly
licensed to sell insurance and other financial services products (collectively,
"INSURANCE PRODUCTS") and to provide customer care and sales support services to
insurance companies and other financial services companies (collectively,
"INSURANCE SERVICES"), in each case in each jurisdiction in which any of the
Companies sells Insurance Products or provides Insurance Services. SCHEDULE
2.14(b) sets forth (a) each jurisdiction in which any of the Companies sells
Insurance Products or provides Insurance Services, (b) the name of the Company
and the employees which are licensed to sell Insurance Products or provide
Insurance Services in such jurisdiction and (c) the customers for which such
Insurance Products are sold or Insurance Services are provided in such
jurisdiction. In the conduct of its Business as currently conducted, Xxxxxx
Marketing is not required to be licensed to sell Insurance Products or to
provide Insurance Services. There are no Claims pending, or, to the Knowledge of
the Seller, threatened, nor has any of the Seller or the Companies received any
notice, regarding any violations by the Company of any Regulations or Orders by
any Authority claiming jurisdiction over the Company. Notwithstanding anything
to the contrary contained in this Agreement, this Section 2.14 shall not apply
to those matters addressed by SECTIONS 2.13, 2.15 and 2.16, which matters shall
be governed solely by the terms of such Sections.
2.15 ERISA AND RELATED MATTERS.
(a) BENEFIT PLANS; OBLIGATIONS TO EMPLOYEES. Except as set
forth on SCHEDULE 2.15, none of the Companies, or any member of a controlled
group of corporations or organizations (within the meaning of Code Sections
414(b), 414(c), 414(m), and 414(o)) of which any of the Companies is a member
("ERISA AFFILIATE"), is a party to, or participates in or has any liability with
respect to:
(i) any "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or any benefit or pension plan maintained by or on behalf of Xxxxxx
Marketing or Xxxxxx Financial for any of their respective employees (any of the
foregoing, a "PLAN");
(ii) any retirement or deferred compensation
plan, incentive compensation plan, stock plan, unemployment compensation plan,
vacation pay, severance pay, bonus or benefit arrangement, insurance or
hospitalization program or any other fringe benefit arrangements (referred to
collectively hereinafter as "FRINGE BENEFIT ARRANGEMENTS") for any employee,
director, consultant or agent, whether pursuant to Contract, arrangement, custom
or informal understanding (A) which does not constitute a Plan and (B) pursuant
to which the fair market value of the aggregate benefits payable to all
participants during any calendar year exceeds $50,000; or
15
(iii) any employment or consulting agreement
not terminable on 30 days' or less written notice, without further
liability.
For all purposes of this Agreement, the term "PLAN" shall include
each Predecessor Plan (as defined herein). "PREDECESSOR PLAN" shall mean any
plan, program, policy, practice, arrangement or system as otherwise described in
this SECTION 2.15(a) but which was maintained, contributed to or resulted in
liability to any Predecessor Employer (as defined herein) or any of the
Companies during the five-year period immediately preceding the Closing.
"PREDECESSOR EMPLOYER" shall mean any employer, entity or business operation
acquired by any of the Companies or an ERISA Affiliate in any type of
acquisition (including, without limitation, a merger, stock acquisition or asset
acquisition).
(b) PLAN DOCUMENTS AND REPORTS. A true, correct and complete
copy of each of the plans, arrangements and agreements listed on SCHEDULE 2.15,
and all Contracts relating thereto, or to the funding thereof, and brochures and
information provided to plan members, each as in effect on the date of this
Agreement, has been supplied to the Purchaser. A true, correct and complete copy
of the three most recent annual reports and financial statements, independent
auditors' reports and actuarial reports, summary plan description, Statement of
Investment Policy and Goals, Annual Information Returns and Internal Revenue
Service determination letter with respect to each such plan or arrangement, to
the extent applicable, has been delivered or made available to the Purchaser by
the Seller, and there have been no material changes in the financial condition
in the respective plans from that stated in such reports and statements
supplied.
(c) TITLE IV OF ERISA AND CODE SECTION 412. No Plan is subject
to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code and no
Plan is a "multiemployer pension plan," as such term is defined in Section 3(37)
of ERISA. No Plan is subject to the laws of a country or jurisdiction other than
the United States, except for the Plans of Xxxxxx Marketing and Xxxxxx
Financial.
(d) PLAN ADMINISTRATION. Except as set forth on SCHEDULE 2.15,
each of the Plans, Fringe Benefit Arrangements, and all related trusts,
insurance contracts, and funds, have been operated and administered in all
material respects in accordance with its terms and all applicable laws,
including but not limited to ERISA, the ITA and the Code. Except as set forth in
SCHEDULE 2.15, each of the Plans and Fringe Benefit Arrangements have been duly
registered where required by, and are in good standing under, all applicable
laws including, without limitation, the ITA and all required employer
contributions under the Plans and Fringe Benefit Arrangements have been made and
the applicable funds have been funded in accordance with the terms thereof and
no past service funding liabilities exist thereunder. No examinations,
investigations, audits or claims with respect to the Plans or Fringe Benefit
Arrangements (other than claims for benefits payable in the course of normal
operations) are pending or threatened, and there are no facts which could give
rise to or be expected to give rise to any such examinations, investigations,
audits or claims. All reports, returns and similar documents required to be
filed with any governmental agency or distributed to any participant, with
16
respect to the Plans and Fringe Benefit Arrangements, have been timely filed or
distributed and, to the Knowledge of each of the Seller and the Companies, all
reports, returns and similar documents actually filed or distributed were
complete and correct in all material respects.
(e) LIABILITIES FROM AGREEMENT. Except for Sale Bonus
Payments, Severance Payments and obligations arising pursuant to Regulations, no
employee, former employee, or independent contractor of any of the Companies
will become entitled to any bonus, retirement, severance, job security or
similar benefit or enhanced such benefit or any acceleration of the time of
payment or vesting of any benefits under any Plan or Fringe Benefit Arrangement
as a result of the transactions contemplated by this Agreement, and no tax under
Section 4999 of the Code will be incurred nor will any deduction be lost
pursuant to Section 162 of the Code or the ITA, as a direct or indirect result
of the transactions contemplated by this Agreement.
(f) RETIREE WELFARE BENEFITS. Except as disclosed on SCHEDULE
2.28, no Plan, Fringe Benefit Arrangement, or employment or consulting agreement
provides for post-employment or post-retirement welfare benefits for retired or
former employees, directors, and consultants (other than in accordance with Code
Section 4980B or state continuation coverage law).
(g) ADDITIONAL ERISA REPRESENTATIONS. With respect to
each Plan, Fringe Benefit Arrangement, employment agreement, and other
plan or arrangement described in SECTION 2.15(a),
(i) No underfunded "defined benefit plan" within
the meaning of ERISA Section 3(35) of ERISA has been, during the five years
preceding the Closing, transferred by a controlled group of corporations or
organizations (within the meaning of Code Sections 414(b), (c), (m) and (o)) of
which any of the Companies or any ERISA Affiliate was a member during such
five-year period.
(ii) With respect to any Plan covered by Title I
of ERISA, (A) no "prohibited transaction", as defined in Section 406 of ERISA or
Section 4975 of the Code, has occurred, excluding transactions effected pursuant
to a statutory or administrative exemption, and (B) none of the Companies nor,
to the Knowledge of the Seller, any other Person has acted or failed to act in a
manner that would reasonably be expected to subject any of the Companies to any
liability for breach of fiduciary duty under ERISA or any other applicable law.
(iii) Each Plan that is intended to be qualified under
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified and, except as would not be reasonably likely to have a
Material Adverse Effect on the Companies, has been so qualified during the
period from the later of (A) January 1, 1996 and (B) the date of its adoption,
to date, and no event has occurred since the date of such determination that
would adversely affect such qualification, and each trust created under any such
Plan is exempt from tax under Section 501(a) of the Code.
17
(iv) With respect to each Plan, Fringe Benefit
Arrangement and employment agreement, all required payments, premiums,
contributions, reimbursements or accruals for all periods ending prior to or as
of the Closing shall have been made. Except as has been disclosed on SCHEDULE
2.15 pursuant to SECTION 2.15(a), there has been no amendment to, written
interpretation of or announcement (whether or not written) by any of the Seller
or the Companies relating to, or change in employee participation or coverage
that would increase materially the expense of any Plan, Fringe Benefit
Arrangement or employment agreement above the level of the expense incurred in
respect thereof since for the fiscal year ended prior to the date hereof. Each
Plan, Fringe Benefit Arrangement and employment agreement may be amended or
terminated at any time by the applicable Company's Board of Directors, subject
to compliance with applicable laws.
(v) Market USA is, and since January 1, 1996 (except as
would not be reasonably likely to have a Material Adverse Effect on the
Companies) Market USA has been, in compliance with all of the requirements of
Section 4980B of the Code ("COBRA") and the Health Insurance and Portability and
Accountability Act of 1996, as amended.
2.16 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 2.16,
(a) all real property owned, leased or operated by each of the Companies is free
of all asbestos which is, or is capable of becoming friable, urea formaldehyde
insulation, PCBs and mercury in amounts in excess of applicable regulatory
limits; (b) during each Company's ownership, lease or operation, and to the
Knowledge of the Seller, for any other period, there has been no reportable
quantity of any Hazardous Substance (as defined below) on any such property,
except for such substances that are in such amounts and of the type typically
found in commercial cleaning products or standard office supplies of businesses
similar to the Business (and then only in compliance with applicable law), nor
has any reportable quantity of any Hazardous Substance been released into, on,
over or under such property; (c) each of the Companies and each of their
respective businesses and properties is, and has been for the shorter of the
period of the applicable Company's ownership or operation or the relevant
statute of limitations period, in compliance in all material respects with all
Environmental Laws; (d) the Business, as currently equipped, is capable of
continued operation (consistent with the operations conducted prior to Closing)
in compliance in all material respects with all Environmental Laws; (e) each
Company has not, and to the Knowledge of the Seller, no other person has, used,
treated, stored, released or disposed of on, under or in any of the Companies'
real property (whether owned or leased), any Hazardous Substances, except for
Hazardous Substances which have been disposed of off-site in compliance with
applicable laws and regulations or would not be reasonably likely to lead to
material liability of any Company; (f) none of the Companies has received any
written notice from any Authority indicating that the real property owned,
leased or operated by the Company has been or may be placed on any federal,
provincial or state "Superfund" or "Superlien" list; and none of the Companies
caused and, to the Knowledge of the Seller, no other person caused, any
circumstances existing at any property currently or formerly owned or operated
by any of the Companies, and to the Knowledge of the Seller, at any other
location to which Hazardous Substances generated by any of the Companies have
been
18
sent for treatment or disposal that would be reasonably likely to lead to
material liability of any Company; (g) the Seller has provided the Purchaser
with copies of all material, reports, audits, studies or analyses of any kind
whatsoever in the possession or under the control of the Seller or any of the
Companies relating to environmental matters affecting any of the Companies; and
(h) each of the Companies at all times during each Company's operation has had,
and currently has and upon completion of the Closing shall have all material
permits, licenses and other authorizations (any of the foregoing, a "PERMIT")
required by applicable Environmental Law for the conduct of its business, (i)
none of the Companies operates nor has any of them operated during the shorter
of the period of the applicable Company's ownership or operation or the relevant
statute of limitations period, and to the Knowledge of the Seller, no property
currently operated, and to the Knowledge of the Seller, no property currently
occupied by any of the Companies or used by any of the Companies in the conduct
of its business, contains, any underground or above ground tank that would be
reasonably likely to lead to material liability of any Company. Each Permit is
properly issued and in full force and effect, no transfer or reissuance of any
Permit is required in connection with the consummation of the transactions
contemplated by this Agreement and no consent of any issuing Authority is
required to maintain all such Permits in full force and effect following the
consummation of the transactions contemplated by this Agreement. Each Permit is
listed on SCHEDULE 2.16(h). Each of the Companies has timely made all filings
and reports required under applicable Environmental Law.
2.17 INSURANCE.
(a) Each of the Companies currently has insurance contracts or
policies and fidelity or other bonds (collectively, the "POLICIES") which
provide for coverages that are usual and customary as to amount and scope in
businesses similar to the Business. All of the Policies are in full force and
effect, all premiums with respect thereto covering all periods through the
Closing Date have been paid or accrued, and no notice of cancellation or
termination has been received with respect to any of the Policies. The Policies
are sufficient for compliance with (i) Regulations and (ii) all Contracts to
which any of the Companies is a party, and are valid and enforceable in
accordance with their terms. SCHEDULE 2.17(a) identifies all Policies, including
the name of the insurer or bonding company, the policy number, the Persons
insured and the types and amounts of coverages. None of the Companies has
breached or otherwise failed to perform its obligations, in each case, in any
material respect under any of the Policies nor has any of the Companies received
any adverse notice from any of the insurers or bonding companies party to the
Policies with respect to any such alleged breach or failure in connection with
any of the Policies. To the Knowledge of the Seller, since the respective dates
of their acquisition by the Seller, none of the Companies has ever been refused
any insurance or bond with respect to its assets or operations, nor has coverage
ever been limited by any insurance carrier or bonding company to which any of
the Companies has applied for any Policy or with which it has carried a Policy.
(b) Except as set forth on SCHEDULE 2.17(b), there are no
pending or, to the Knowledge of the Seller, threatened, Claims under any Policy.
Such claim information includes the following information with respect to each
accident, loss
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or other event: (i) the identity of the claimant; (ii) the date of the
occurrence; (iii) the status as of the report date, and (iv) the amounts paid or
recovered to date.
2.18 ACCOUNTS RECEIVABLE; INVENTORY.
(a) The Accounts Receivable of the Companies reflected in the
2000 Financial Statements and such additional Accounts Receivable generated in
the Ordinary Course since the Balance Sheet Date are good and collectible except
to the extent reserved against in the 2000 Financial Statements (which reserves
have been determined based upon actual prior experience and are consistent with
GAAP) and except in the case of Accounts Receivable generated since the Balance
Sheet Date and not collected as of the Closing Date, for risk of collection
incurred in the Ordinary Course. Except as set forth on SCHEDULE 2.18,
substantially all Accounts Receivable generated on or prior to the Balance Sheet
Date have been collected by the Companies by the date of this Agreement. All
Accounts Receivable (except to the extent so reserved against) and all unbilled
invoices are valid, genuine and subsisting, arise out of BONA FIDE sales and
deliveries of goods, performance of services or other business transactions and
are not presently subject to defenses, set-offs or counterclaims.
(b) None of the Companies has any inventory.
2.19 EQUIPMENT. SCHEDULE 2.19 sets forth a true, correct and
complete list of all equipment (any piece having an original cost in excess of
$10,000) regularly or customarily used by any of the Companies in the operation
of the Business. All equipment used by any of the Companies in the operation of
the Business which is not listed on SCHEDULE 2.19 constitutes a value of less
than $100,000 in the aggregate. Each of the Companies owns or leases from one or
more unaffiliated third parties all equipment regularly or customarily used by
it, or necessary for, the operation of the Business, and all such equipment has
been properly maintained and is in good working order for the purposes of
ongoing operation, subject to ordinary wear and tear for equipment of comparable
age.
2.20 BROKERS AND FINDERS. Except as set forth on SCHEDULE 2.20, none
of the Seller, the Companies or any Person acting on its behalf has employed any
broker, agent or finder or incurred any liability for any brokerage fees,
agents' commissions or finders' fees in connection with the transactions
contemplated by this Agreement. The Seller agrees that it shall be solely
responsible for any fees payable to each party listed on SCHEDULE 2.20. Without
limiting the generality of ARTICLE 10, the Seller agrees to indemnify, defend
and hold the Purchaser harmless from any losses (including attorneys' fees and
expenses) arising from the claim of any broker, agent or finder for any such fee
to the extent claiming through any of the Seller or the Companies.
2.21 [RESERVED]
2.22 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE
2.22, to the Knowledge of the Seller, no director, officer, employee or equity
owner of any of the Companies owns or during the past three years has owned,
directly or indirectly, or
20
has, or within the past three years has had, an interest, either of record,
beneficially or equitably, in any business, corporate or otherwise, which (a)
has or had, or which is or was a party to, any material contract, agreement,
business arrangement, relationship or course of dealing with any of the
Companies or (b) conducts the same business as, or a similar business to, the
Business of the Companies. Except as set forth on SCHEDULE 2.22, no director,
former director, officer, shareholder or employee of the Companies or any person
not dealing at arm's length within the meaning of the ITA with any such person
is indebted to the Corporation.
2.23 DISCLOSURE. The representations and warranties contained in
this ARTICLE 2, as modified by the Schedules, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated herein necessary to make the statements herein (in light of the
circumstances under which they were made) not misleading.
2.24 INTELLECTUAL PROPERTY.
(a) SCHEDULE 2.24 sets forth a list of all Intellectual
Property of the type referred to in clause (a) of the definition thereof, that
any of the Companies owns, uses or has the right to use in connection with the
Business for which state, federal or foreign registration has been obtained or
is pending and all agreements under which any Person has granted a license for
any Intellectual Property to any Company (other than license agreements for "off
the shelf" third party computer software not included within such Company's
products or services).
(b) Except as set forth on SCHEDULE 2.24, (i) each of the
Companies, in each case as specified on SCHEDULE 2.24, owns or, based on the
licenses set forth on SCHEDULE 2.24, possesses all licenses or other valid
rights to use (without the making of any payment to others or the obligation to
grant rights to others in exchange) all Intellectual Property material to the
conduct of the Business as presently being conducted by the Company and no
consents are required to transfer same; (ii) the validity of such items and the
title thereto or use thereof by each of the Companies have not been questioned
or challenged in any litigation to which the Company is a party nor, to the
Knowledge of the Seller, is any such litigation threatened; (iii) to the
Knowledge of the Seller, the conduct of the Business as presently being
conducted by each of the Companies does not infringe any Intellectual Property
rights of others; and (iv) to the Knowledge of the Seller, no proceedings are
pending against any of the Companies nor are any proceedings threatened against
any of the Companies alleging any violation of Intellectual Property rights of
any third party.
(c) None of the Companies has authorized any third parties to
use any of the Intellectual Property listed on SCHEDULE 2.24, and, to the
Knowledge of the Seller, no use by any such party has heretofore been made or is
now being made of any such Intellectual Property owned by any of the Companies.
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2.25 CUSTOMERS.
(a) SCHEDULE 2.25 lists customers for which each of the
Companies provides its services as of the date hereof, such customers
representing not less than 90% of the aggregate revenues of the Companies (i)
for the year ended December 31, 2000 and (ii) for the period from January 1,
2001 to the date of this Agreement.
(b) Except as set forth on SCHEDULE 2.25, none of the
Companies' customers has notified any of the Seller or the Companies, or
expressed in any manner, that it intends to terminate, materially modify or
limit its relationship with any of the Companies for any reason, including,
without limitation, the transfer of control of the Companies from the Seller to
the Purchaser as contemplated hereby.
2.26 TRANSACTION COSTS. The Transaction Costs set forth on SCHEDULE
1.2 constitute all the Transaction Costs of any of the Seller or the Companies
incurred by any of the Companies prior to the Closing or to be incurred by any
of the Companies in connection with or as a result of the transactions
contemplated by this Agreement.
2.27 OCCUPATIONAL SAFETY AND HEALTH.
(a) Each of the Companies and each of their businesses and
properties is in compliance in all material respects with all applicable
Occupational Safety and Health Laws.
(b) The Business, as currently equipped, is capable of
continued operation in material compliance with all applicable Occupational
Safety and Health Laws.
(c) There are no pending occupational safety and health
inspections or citations involving any of the Companies or any of their
businesses or properties.
2.28 BONUS AND SEVERANCE ARRANGEMENTS. SCHEDULE 2.28 sets forth all
agreements or other arrangements, other than obligations arising pursuant to
Regulation, under which any current or former employee, officer or director of
any of the Companies has a right to any payment or other consideration from any
of the Companies as a result of or in connection with (a) the consummation of
the transactions contemplated by this Agreement or (b) the termination of such
Person's employment with any of the Companies, including, without limitation, in
the case of clauses (a) and (b) the amount of any such payment or other
consideration and the event(s) upon which such right arises.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as follows:
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3.1 CORPORATE ORGANIZATION. The Purchaser is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation with full corporate and other power and authority to carry on its
business, and to own, operate and lease its properties and assets.
3.2 AUTHORIZATION. The Purchaser has full corporate power and
authority to execute and deliver this Agreement and the other agreements and
instruments contemplated hereby to which it is a party, to consummate the
transactions contemplated hereby and thereby and to take all other actions
required to be taken by it pursuant to the provisions hereof and thereof. The
execution, delivery and performance of this Agreement and the other agreements
and instruments contemplated hereby to which it is a party and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all requisite corporate acts and proceedings, and no other corporate proceedings
on its part are necessary to authorize this Agreement and the other agreements
and instruments contemplated hereby to which it is a party and to consummate the
transactions contemplated hereby and thereby. This Agreement has been duly
executed and delivered by the Purchaser. This Agreement constitutes and, upon
execution and delivery thereof by the Purchaser, the other agreements and
instruments contemplated hereby to which the Purchaser is a party will
constitute (assuming due and valid authorization, execution and delivery hereof
and thereof by the Seller), the legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with their respective
terms except as such enforceability may be limited by applicable bankruptcy,
moratorium, reorganization or creditor's rights laws of general applicability or
by general principles of equity.
3.3 BROKERS AND FINDERS. Neither the Purchaser nor any Person acting
on its behalf has employed any broker, agent or finder or incurred any liability
for any brokerage fees, agents' commissions or finders' fees in connection with
the transactions contemplated by this Agreement.
3.4 NO VIOLATION. The execution, delivery and performance by the
Purchaser of this Agreement and the other agreements and instruments
contemplated hereby to which it is a party, the consummation of the transactions
contemplated hereby and thereby, the fulfillment of and compliance with the
terms hereof and thereof by the Purchaser and the purchase of the Shares by the
Purchaser do not and will not (a) conflict with or result in a breach of the
terms, conditions or provisions of, (b) constitute a default or event of default
under (with due notice, lapse of time or both), (c) result in a violation of or
(d) require any authorization, consent, approval, exemption or other action by,
notice to, or filing with any Authority or any other Person pursuant to: (i) the
organizational documents of the Purchaser, (ii) any applicable Regulation or
(iii) any Order to which the Purchaser is subject. The Purchaser has complied
with all applicable Regulations and Orders in connection with the execution,
delivery and performance of this Agreement and the other agreements and
instruments contemplated hereby to which it is a party and the transactions
contemplated hereby and thereby.
3.5 INVESTMENT INTENT. The Purchaser is acquiring the Shares for its
own account with the intention of holding the Shares for investment purposes and
not
23
with a view or intent to distribute the Shares in violation of any applicable
securities laws.
3.6 SUFFICIENT FUNDS. As of the date hereof, the Purchaser has, and
on the Closing Date the Purchaser shall have, sufficient funds available
(through existing credit arrangements or otherwise) to enable it to consummate
the transactions contemplated by this Agreement.
ARTICLE 4
COVENANTS OF THE SELLER
4.1 EMPLOYMENT ARRANGEMENTS. The Seller shall assume and be solely
responsible for all obligations under that certain Employment Agreement, dated
September 30, 1996, among Market USA, the Seller and Xxxxxx X. Xxxxx, as
amended.
4.2 DISSOLUTION OF NEROK. From and after the date hereof, the Seller
shall use its best efforts to cause Nerok Verifications, Inc., a Canadian
federal corporation, to be liquidated and dissolved (the "NEROK DISSOLUTION")
within one year of the date of this Agreement and (b) deliver to the Purchaser
written evidence of the Nerok Dissolution, in form and substance reasonably
satisfactory to the Purchaser.
4.3 SALE BONUS PAYMENTS. The Seller shall, prior to or concurrently
with the Closing, pay all amounts required to be paid as of the Closing Date
pursuant to the Sale Bonus Payments described under the heading "Sale Bonus" on
SCHEDULE 2.28.
4.4 ADVANCES; LOANS. As of the Closing, all advances from any of the
Companies to any stockholder or Affiliate of any of the Companies shall be
repaid or otherwise extinguished and no other such advances shall have been made
or otherwise be outstanding. As of the Closing, all loans or advances to any of
the Companies from any stockholder or Affiliate of any of the Companies shall be
repaid or otherwise extinguished and no other loans or advances to any
stockholder or Affiliate of any of the Companies shall have been made or
otherwise be outstanding.
ARTICLE 5
OTHER AGREEMENTS
Each of the parties hereto, as applicable, further agrees as
follows:
5.1 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each of the Seller and the Purchaser shall use its respective
commercially reasonable efforts at their own expense to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable Regulations to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, and to
cooperate with each other in connection with the foregoing, including, without
limitation, using its respective commercially reasonable efforts to (a) obtain
all necessary waivers, consents, and
24
approvals from other parties to loan agreements, leases, mortgages and other
Contracts, (b) obtain all necessary consents, approvals and authorizations as
are required to be obtained under any Regulations, (c) lift or rescind any
injunction or restraining order or other Order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby, and (d)
fulfill all conditions to the obligations of the parties under this Agreement.
5.2 NON-COMPETITION AND NON-SOLICITATION.
(a) The Seller agrees that from the date of this Agreement
until the fourth anniversary of the Closing Date it will not, directly or
indirectly or through, for or on behalf of a third party, compete with the
Companies, the Purchaser or any of their respective Affiliates, in each case in
the businesses of (i) providing inbound or outbound telemarketing or
teleservices, (ii) operating multimedia contact centers or customer interaction
centers that handle customer interaction or service over the telephone,
interactive voice response or the Internet, including, without limitation,
monitoring chat rooms and/or providing click-to-chat, direct response e-mail or
voice over Internet protocol, but not including services related to
click-through e-mail (which includes, without limitation, YourMail) (such
businesses, collectively, the "RESTRICTED BUSINESS"), and (iii) providing
outsourced customer relationship management in the Restricted Business,
including, without limitation, by soliciting any Clients or Prospects for
services in the Restricted Business; PROVIDED that the provisions contained in
this SECTION 5.2(a) shall not be binding upon any third party unaffiliated with
the Seller to whom the Seller sells or transfers all or any portion of its
remaining businesses. Notwithstanding the foregoing, nothing in this Agreement
shall prohibit the Seller or its Affiliates (other than the Companies) from
conducting their respective businesses as conducted by them on the Closing Date.
The Seller agrees that the foregoing restriction is reasonable and that each of
the Purchaser and the Companies may enforce this covenant by seeking to enjoin
the Seller for its violation; PROVIDED that if such restriction is not
enforceable, then the Seller shall accept such restriction as a court of
competent jurisdiction shall allow. The Seller hereby acknowledges and agrees
that the carrying on of the Restricted Business is not limited to the physical
locations of the offices of the Purchaser or the Companies.
(b) The Seller agrees that, from the date of this Agreement
until the fourth anniversary of the Closing Date, it will not (without the prior
written consent of the Purchaser) solicit for employment or hire any person
employed (as of the date of any such solicitation or hiring) by any of the
Companies, the Purchaser or any of their respective Affiliates as a Management
Employee, whether directly or indirectly or through, for or on behalf of a third
party.
5.3 ENVIRONMENTAL ASSESSMENTS. The Purchaser has conducted a Phase I
environmental assessment of each property owned by any of the Companies. The
Purchaser shall not report or disclose the results of its Phase I investigation
to any Authority, except as required by applicable law, without the consent of
the Seller, which shall not be unreasonably withheld.
25
5.4 TAX MATTERS.
(a) Each of the Seller, on the one hand, and the Purchaser and
the Companies, on the other hand, shall promptly notify the other party in
writing upon receipt of notice of any pending, proposed or threatened United
States or Canadian federal, state, provincial, local or other Tax audit,
examination, assessment, deficiency, adjustment or proceeding that pertains to
the applicable Company for any taxable period that begins before the Closing
Date (a "TAX PROCEEDING"). The parties shall consult regularly in good faith and
cooperate regarding the status of any such Tax Proceeding and none of the
Seller, the Purchaser nor the applicable Company shall settle any such Tax
Proceeding without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. The Seller shall control the
conduct of any Tax Proceeding to the extent that such Tax Proceeding reasonably
could result in liability for indemnification under SECTION 10.2; PROVIDED that
the Purchaser shall have the right, directly and through its own designated
representatives, to review in advance and comment on all submissions made in the
course of such Tax Proceedings and to attend all conferences (whether in person
or telephonic) in connection with such Tax Proceedings.
(b) Any United States or Canadian federal, state, provincial
or local stock transfer, real property transfer, sales, use, value-added, stamp
duties or other like transfer taxes or recording fees payable as a result of the
transactions contemplated hereby, if any, shall be paid by the Seller.
(c) For purposes of this Agreement, if a taxable period begins
before the Closing Date and ends after the Closing Date, then the Closing Date
shall be treated as the last day of a taxable period. In the case of all Taxes
other than those based on or measured by property or capital or otherwise
described in this SECTION 5.4(c), the amount of Taxes attributable to such
period shall be based upon, where relevant, the actual operations of the
Companies, through the Closing Date as shown on their books and records,
including work papers. In the case of Taxes based on, or measured by, property
or capital (including, but not limited to, any AD VALOREM and real and personal
property Taxes) the amount of Taxes attributable to the period ending on the
Closing Date shall be equal to the total amount of such Taxes for the taxable
period in question multiplied by a fraction the numerator of which is the number
of days in such period through the Closing Date and the denominator of which is
the total number of days in such period.
(d) RETURNS AND PAYMENTS. The Seller shall prepare and file or
otherwise furnish in proper form to the appropriate Authority (or cause to be
prepared and filed or so furnished) in a timely manner (including any applicable
extensions) all Tax Returns relating to the Companies that are due on or before
the Closing Date or relate to any taxable period ending on or before the Closing
Date. Tax Returns of the Companies not yet filed for any taxable period that
begins before the Closing Date shall be prepared in a manner consistent with
past practices employed with respect to the applicable Company (except to the
extent counsel for the Seller or the Company renders a legal opinion that there
is no substantial authority therefor or determines that a Tax
26
Return cannot be so prepared and filed without the filer thereof or the Company
being subject to penalties).
(i) The Seller shall notify the Purchaser in
writing of the filing of any income Tax Return or material other Tax Returns
relating to any of the Companies at least 10 days prior to the filing thereof,
and the Purchaser shall have the right, directly or through its designated
representatives, to review any income Tax Returns or material other Tax Returns
to be filed by or with respect to any of the Companies at least 10 days prior to
the filing thereof. The Seller agrees to cooperate fully with the Purchaser in
connection with the review of any such Tax Return.
(ii) The Seller shall remit or cause to be
remitted when due and payable all Taxes with respect to the Companies for any
taxable period ending for which it is responsible for filing a Tax Return.
(e) CONTESTS. After the Closing, the Purchaser shall promptly
notify the Seller in writing within 10 days of the receipt of any written notice
of a proposed assessment or claim in an audit or administrative or judicial
proceeding of the Purchaser or of any of the Companies which, if determined
adversely to the taxpayer, would be grounds for indemnification under SECTION
10.2; PROVIDED that a failure to give such notice will not affect the
Purchaser's right to indemnification under SECTION 10.2 except to the extent, if
any, that, but for such failure, the Seller would have been likely to avoid all
or a portion of the Tax liability in question.
(i) Neither the Purchaser nor the Seller shall
enter into any compromise or agree to settle any claim pursuant to any Tax audit
or proceeding which would adversely affect the other party for such year or a
subsequent year without the written consent of the other party, which consent
may not be unreasonably withheld or delayed. The Purchaser and the Seller agree
to cooperate, and the Purchaser agrees to cause the Companies to cooperate, in
the defense against or compromise of any claim in any audit or proceeding.
(f) TIME OF PAYMENT. Payment by the Seller of any amounts due
under this SECTION 5.4 in respect of Taxes shall be made (i) at least 3 Business
Days before the due date of the applicable estimated or final Tax Return
required to be filed by the Purchaser on which is required to be reported income
for a period ending after the Closing Date for which the Seller is responsible
under this SECTION 5.4 without regard to whether the Tax Return shows overall
net income or loss for such period, and (ii) within ten Business Days following
an agreement between the Seller and the Purchaser that an indemnity amount is
payable, or a "determination" as defined in Section 1313(a) of the Code. If
liability under this SECTION 5.4 is in respect of costs or expenses other than
Taxes, payment by the Seller of any amounts due under this SECTION 5.4 shall be
made within ten Business Days after the date when the Seller has been notified
by the Purchaser that the Seller has a liability for a determinable amount under
this SECTION 5.4 and is provided with calculations or other materials supporting
such liability.
27
(g) COOPERATION AND EXCHANGE OF INFORMATION. Upon the terms
set forth in SECTION 5.1 of this Agreement, the Seller and the Purchaser will
provide each other with such cooperation and information as either of them
reasonably may request of the other in filing any Tax Return, amended Tax Return
or claim for refund, determining a liability for Taxes or a right to a refund of
Taxes, participating in or conducting any audit or other proceeding in respect
of Taxes or making representations to or furnishing information to parties
subsequently desiring to purchase any of the Companies or any part of the
Business from the Purchaser. Such cooperation and information shall include
providing copies of relevant Tax Returns or portions thereof, together with
accompanying schedules, related work papers and documents relating to rulings or
other determinations by Tax authorities. Each of the Seller and the Purchaser
shall retain all Tax Returns, schedules and work papers, records and other
documents in its possession relating to Tax matters of the Companies for each
taxable period first ending after the Closing Date and for all prior taxable
periods until six months after the expiration of the statute of limitations of
the taxable periods to which such Tax Returns and other documents relate,
without regard to extensions, except to the extent notified by the other party
of such extensions for the respective Tax periods. Any information obtained
under this SECTION 5.4(g) shall be kept confidential in accordance with SECTION
5.5 and SECTION 11.6 except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
(h) SECTION 338. No election under Section 338 of the Code (or
any similar provision of state or local law) shall be made with respect to the
purchase of the Xxxxxx Marketing Shares or Xxxxxx Financial Shares pursuant to
this Agreement. At any time up to 180 days after the Closing Date, the Purchaser
may request of the Seller in writing (the "ELECTION NOTICE") that the Purchaser
and the Seller file a joint election under Code Section 338(h)(10) with respect
to the purchase of the Market USA Shares and under any similar provisions of
state, local or foreign law (the "ELECTIONS"), and the Seller shall agree to
such request. The Election Notice shall specify each state, local and foreign
election to be made with respect to the acquisition of the Market USA Shares by
the Purchaser. If the Purchaser requests the Elections, as promptly as
practicable following the Closing Date, (i) the Seller and the Purchaser shall
cooperate with each other to take all actions necessary and appropriate
(including filing such forms, returns, elections, schedules and other documents
as may be required) to effect and preserve timely Elections in accordance with
the provisions of Treasury Regulation Section 1.338(h)(10)-1 (or any comparable
provision of state or foreign law or any successor provision) and (ii) the
Purchaser and the Seller shall mutually agree on the allocation of the Purchase
Price (including assumed liabilities and liabilities taken subject to) among the
assets of the Companies that are deemed to have been acquired pursuant to the
Elections. If such Elections are requested, the Seller and the Purchaser shall
report the purchase by the Purchaser of the Shares pursuant to this Agreement
consistent with the Elections and shall take no position inconsistent therewith
in any Tax Return, any proceeding before any taxing authority or otherwise. The
Seller and the Purchaser shall cooperate in sharing and verifying information to
carry out this SECTION 5.4(h).
(i) MISCELLANEOUS. Any tax sharing agreement or arrangement
and any power of attorney with respect to Taxes or Tax Returns involving any of
the
28
Companies shall be terminated as to the Companies prior to the Closing and no
such agreement or power of attorney shall be in effect at the time of the
Closing.
(i) From and after the date of this Agreement,
the Seller shall not without the prior written consent of the Purchaser (which
may, in its sole and absolute discretion, withhold such consent) make, or cause
or permit to be made, any Tax election that would affect any of the Companies
for any period after the Closing Date. Each of the Seller and the Companies
further agrees, upon request, to use commercially reasonable efforts to obtain
any certificate or other document from any taxing authority or other Person as
may be necessary to mitigate, reduce, or eliminate any Tax that could be imposed
(including Taxes with respect to transactions contemplated hereby).
(ii) For purposes of this SECTION 5.4 and SECTION
10.2, the "PURCHASER" shall include each member of the affiliated group of
corporations of which it is or becomes a member (other than the Companies,
except to the extent expressly referenced).
(iii) The Purchaser agrees that, for the tax year
ending December 31, 2001, neither the Purchaser nor any successor, assignee or
transferee of the Purchaser shall cause or permit Xxxxxx Marketing or Xxxxxx
Financial to declare or pay any dividend or enter into any transaction that (A)
would constitute a dividend for United States Federal income tax purposes or (B)
would otherwise result in the diminution of the foreign tax credits that, absent
any such transaction, may be claimed by the Seller in respect of its United
States Federal income tax liability.
(iv) Any credit or refund of Taxes relating to
periods (or portions thereof) ending on or before the Closing Date shall be for
the account of the Seller. The Purchaser or the appropriate Company shall pay
all such refunds or credits to the Seller within five Business Days after
receipt or utilization thereof.
5.5 CONFIDENTIALITY AFTER CLOSING DATE. The Seller and its
representatives and Affiliates and their representatives and advisors agree to
hold in strict confidence and not to directly or indirectly disclose (a)
information pertaining to any aspect of the Companies' Business which is not
known by actual or potential competitors of any of the Companies and (b)
proprietary information of each of the Companies or any of their respective
Affiliates, whether of a technical nature or otherwise which any of the
Companies or their respective Affiliates take reasonable measures to protect
against unauthorized disclosure to or use by third parties, including, without
limitation, technical, financial, marketing or distribution information,
customer or client lists and names; addresses and phone numbers of the
customers, clients and employees of any of the Companies or their respective
Affiliates; or other technical or business information or trade secrets of any
of the Companies or their respective Affiliates at any time after the Closing
Date except if the Seller is required by deposition, interrogatories, requests
for information or documents in legal proceedings, subpoenas, civil
investigative demand or similar process to disclose such information protected
by this SECTION 5.5.
29
5.6 AGREEMENTS REGARDING COLLECTION OF ACCOUNTS RECEIVABLE. With
respect to all Accounts Receivable outstanding as of Closing, the Purchaser
shall: (a) use commercially reasonable efforts to collect such Accounts
Receivable, (b) apply all payments received for any customer to the oldest
invoice with respect to such customer unless otherwise directed by such
customer, (c) take no action that may impair or reduce the amount of such
Accounts Receivable and (d) assign to the Seller any Accounts Receivable with
respect to which the Seller has indemnified the Purchaser.
5.7 SEVERANCE PAYMENTS. The Purchaser and the Seller shall each be
responsible for one-half of all costs associated with the Companies' liabilities
under any of the arrangements described under the heading "Severance Pay" on
SCHEDULE 2.28.
5.8 XXXXXX FINANCIAL AGREEMENTS. As of the Closing, the Purchaser
will obtain agreements with Xxxxxx Xxxxxxx with respect to the shares of Xxxxxx
Financial owned by him which are satisfactory to the Purchaser. Notwithstanding
anything to the contrary contained in this Agreement, the Seller makes no
representation or warranty, nor shall any other provision of this Agreement be
deemed to be a representation or warranty by the Seller, with respect to such
agreements.
5.9 MARKET USA 401(k) RETIREMENT PLAN. With respect to the Market
USA 401(k) Retirement Plan, the Seller and the Purchaser agree that (a)
following the Closing Date the Seller and the Purchaser shall mutually determine
what, if any, steps are reasonably necessary to resolve any issues that may
arise from the Seller's filings for plan years 1998 and 1999 with the Internal
Revenue Service with respect to the Market USA 401(k) Retirement Plan, (b) the
Seller shall be responsible for all reasonable costs associated with the
resolution of such issues and (c) the Seller shall indemnify and hold harmless
the Purchaser from and against any and all costs referred to in paragraph (b)
above, penalties and charges that may be assessed against the Purchaser by the
Internal Revenue Service or the Department of Labor with respect to the
resolution of any such issues.
ARTICLE 6
DELIVERIES AT CLOSING
6.1 OPINION OF COUNSEL; SECRETARY'S CERTIFICATE. The Purchaser has
received opinions of Canadian and U.S. counsel to the Seller dated the Closing
Date, substantially in the form of EXHIBIT 6.1(a). The Purchaser has received
the certificate of the Secretary or Assistant Secretary of the Seller dated the
Closing Date, substantially in the form of EXHIBIT 6.1(b).
6.2 CERTIFICATES OF GOOD STANDING. The Seller has delivered to the
Purchaser certificates issued as of a date not more than ten days prior to the
Closing Date by the appropriate governmental authorities evidencing the good
standing, with respect to the corporate existence, the conduct of business and
the payment of all franchise taxes, (a) of each of the Seller and the Companies
under the laws of its jurisdiction of organization and (b) of each of the
Companies as a foreign or extra-provincial
30
corporation authorized to do business under the laws of each of the
jurisdictions in which any of the Companies' owned or leased facilities is
located.
6.3 RESIGNATIONS. Each member of the Board of Directors of each of
the Companies, and each officer of each of the Companies, other than Xxxxxx X.
Xxxxxx, Xxx Xxxxx and any other employee designated by the Purchaser prior to
the Closing, has submitted a duly executed resignation effective on or prior to
the Closing Date.
6.4 FIRPTA CERTIFICATE. The Seller has delivered to the
Purchaser a properly completed and duly executed form, in the form attached
as EXHIBIT 6.4, indicating that it is a U.S. person under Code Section 1445.
6.5 GUARANTEE RELEASES. The Seller has obtained and
delivered to the Purchaser a complete release of each guarantee by any of
the Companies of any obligation of the Seller.
6.6 ESCROW AGREEMENT. Each of the Seller and the Purchaser
has entered into the Escrow Agreement.
6.7 LEASE CONSENTS. The Seller has obtained and delivered
to the Purchaser copies of those lease consents listed on SCHEDULE 6.7.
6.8 INSURANCE. Each of the Seller and the Purchaser has entered
into a letter agreement with respect to the continuation of insurance
benefits for the Companies.
ARTICLE 7
[RESERVED]
ARTICLE 8
CLOSING
8.1 CLOSING. Subject to the terms and conditions of this Agreement,
the purchase and sale of the Shares and the consummation of the other
transactions contemplated by this Agreement (the "CLOSING") shall occur
concurrently with the execution of this Agreement on the date hereof at 10:00
a.m., New York City time, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois), 000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, or at
such other hour or on such other date as shall be agreed upon between the Seller
and the Purchaser (the date on which the Closing occurs being referred to as the
"CLOSING DATE"). At the Closing:
(a) The Seller shall deliver or cause to be delivered to the
Purchaser, against payment by the Purchaser of the Purchase Price in accordance
with the provisions of SECTION 1.3:
31
(i) certificates representing the Shares, duly
endorsed for transfer to the Purchaser or its designee or accompanied by
stock powers endorsed in blank, duly executed by the Seller; and
(ii) all of the documents, certificates and
instruments required to be delivered, or caused to be delivered, by the
Seller pursuant to ARTICLE 6.
(b) The Purchaser shall deliver or cause to be delivered to
the Seller, against delivery of the certificates representing the Shares duly
endorsed for transfer to the Purchaser:
(i) wire transfer funds in the amount of the
Purchase Price in accordance with the provisions of SECTION 1.3; and
(ii) all of the documents required to be
delivered, or caused to be delivered, by the Purchaser pursuant to ARTICLE 7.
ARTICLE 9
[RESERVED]
ARTICLE 10
SURVIVAL OF TERMS; INDEMNIFICATION
10.1 SURVIVAL. All the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, and the agreements of the Seller, on the one hand, and the Purchaser,
on the other hand, to indemnify each other set forth in this ARTICLE 10, shall
survive the execution of this Agreement and the Closing Date notwithstanding any
investigation heretofore or hereafter made by or on behalf of any party hereto
or any knowledge of facts determined or determinable by any party hereto and
shall continue until, and all claims with respect thereto shall be made prior to
December 31, 2003, except for (a) the representations, warranties and covenants
set forth in (i) SECTIONS 2.1 (Organization), SECTION 2.3 (Capitalization),
SECTION 2.4 (Title; Valid Issuance), SECTION 2.5 (Authorization), SECTION 2.11
(Title and Related Matters) and SECTION 2.16 (Environmental Matters) which shall
survive indefinitely, (ii) SECTION 2.13 (Tax Matters), SECTION 2.15 (ERISA and
Related Matters) and SECTION 2.24 (Intellectual Property) which shall survive
until, and all claims with respect thereto shall be made prior to, 45 days after
the expiration of the applicable statute of limitations or limitation period,
and (b) agreements, representations, warranties and indemnities for which notice
of a Claim for indemnification has been given in accordance with this Agreement
as of the end of the applicable period referred to above, in which event such
indemnities shall survive with respect to such Claim until the final disposition
thereof.
10.2 INDEMNIFICATION BY THE SELLER. The Seller shall indemnify and
hold harmless the Purchaser and its officers, directors, employees,
stockholders, Affiliates, representatives and agents (each, a "PURCHASER
INDEMNITEE") against and in respect of any
32
and all damage, loss, deficiency, liability, obligation, commitment, Tax, cost
or expense, including the reasonable fees and expenses of counsel (collectively,
"LOSSES"), suffered or incurred directly or indirectly by any Purchaser
Indemnitee and Losses suffered or incurred by any of the Companies (net of any
insurance proceeds actually recovered by the Purchaser or any Company in
reduction of the related indemnifiable Loss and net of any Tax benefit actually
realized by any Company in the year of the indemnification payment by the Seller
as a result of such indemnifiable Loss) resulting from, related to or in respect
of any of the following, including, without limitation, claims made by third
parties ("THIRD PARTY CLAIMS"), in each case to the extent not reflected or
reserved for on the balance sheet included in the 2000 Financial Statements:
(a) any breach of any representation or warranty contained in
ARTICLE 2, or any covenant or agreement of the Seller, or non-fulfillment of any
obligation on the part of the Seller, in each case under this Agreement;
(b) any Claim (other than a Claim for Taxes, it being
understood that Claims for Taxes are covered exclusively by SECTION 10.2(d))
arising out of, related to or resulting in any way from the conduct by any of
the Seller or the Companies of the Business on or prior to the Closing Date,
whether or not disclosed under this Agreement, including, without limitation,
the Claims set forth on SCHEDULES 2.12 and 2.13(b);
(c) any Transaction Costs or other similar liability incurred
by any of the Seller or the Companies in connection with, arising out of or
resulting from the consummation of the transactions contemplated by this
Agreement (excluding any liabilities arising as a consequence of the identity,
actions, status or jurisdiction of formation of the Purchaser or any actions
taken or required to be taken by the Companies from and after the Closing);
(d) any of the following Taxes: (i) Taxes imposed on any of
the Companies with respect to taxable periods of the Company (or with respect to
elections of the Company) ending or occurring on or before the Closing Date
(other than Taxes reflected on the Financial Statements or SCHEDULE 2.13(b) and
Taxes arising as a result of extraordinary transactions not in the Ordinary
Course occurring on the Closing Date but after the Closing (other than
transactions contemplated by this Agreement); (ii) Taxes imposed as a result of
or in connection with the consummation of the acquisition of the Companies by
the Purchaser, but excluding Taxes imposed on any of the Companies or the
Purchaser by any French authority as a consequence of the identity, business or
jurisdiction of origin of the Purchaser; and (iii) Taxes imposed on any member
of any affiliated group with which any of the Companies files or has filed a Tax
Return on a consolidated, combined or unitary basis for a taxable period ending
on or before the Closing Date;
(e) the failure to obtain any consent of the landlord
required to be obtained as a result of the consummation of the
transactions contemplated by this Agreement under that certain lease
agreement, dated September 23, 1996, as amended,
33
between Market USA and Flatrock Partners II, L.P. with respect to the premises
located at 0000 X. Xxxxx, Xxx Xxxxxxx, XX;
(f) any liability of the Companies with respect to the
Application (Case No. 482/99/LRA), filed on July 27, 1999, by the United Food
and Commercial Workers Local 832 with the Manitoba Labour Board, and related
review; and
(g) all demands, assessments, judgments, costs and reasonable
legal and other expenses arising from, or in connection with, any Claim incident
to any of the foregoing.
10.3 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify
and hold harmless the Seller against and in respect of any and all Losses
resulting from, related to or in respect of, any of the following (net of any
insurance proceeds actually recovered by the Seller in reduction of the related
indemnifiable Loss and net of any Tax benefit actually realized by the Seller in
the year of the indemnification payment by the Purchaser as a result of such
indemnifiable Loss):
(a) any breach of any representation or warranty contained in
ARTICLE 3, or any covenant or agreement of the Purchaser, or non-fulfillment of
any obligation on the part of the Purchaser, in each case under this Agreement;
and
(b) all demands, assessments, judgments, costs and reasonable
legal and other expenses arising from, or in connection with, any action, suit,
proceeding or Claim incident to any of the foregoing.
10.4 LIMITATIONS ON INDEMNIFICATION. No party hereto shall have any
indemnification obligation to an indemnified party arising under this ARTICLE 10
until the aggregate amount of all Losses suffered by an indemnified party, with
respect to indemnification obligations under this ARTICLE 10, exceeds $500,000
(the "BASKET") in which case the applicable indemnifying party shall be
obligated for the aggregate amount of such excess over $500,000; PROVIDED that
the maximum amount that an indemnifying party shall be required to pay in
respect of all indemnification obligations owed under this Agreement to an
indemnified party shall not exceed $5,135,043 (the "CAP"); PROVIDED, FURTHER,
that none of (i) the Seller's indemnification obligations with respect to
SECTION 2.16 (Environmental Matters), (ii) the Seller's obligations under
SECTION 5.4 (d)(ii), (iii) any Canadian federal, provincial or local Tax
liabilities of or imposed on or assessed or reassessed against any of the
Companies, including, without limitation, corporate income Taxes, commodity
Taxes (including, without limitation, Quebec goods and services tax and sales
tax), payroll withholding taxes, employer health taxes and Part XIII withholding
taxes in respect of payments to non-residents, for any period ending on or prior
to the Closing Date, except to the extent of any amounts specifically accrued
for any such Taxes on the 2000 Financial Statements, (iv) the Seller's
obligations under SECTIONS 4.2 and 4.3, (v) the Seller's obligations under
SECTION 5.9, (vi) the Seller's obligations under SECTION 10.2(f), (vii) the
Seller's and the Purchaser's obligations under
34
SECTION 5.7 and (viii) the Seller's obligations under Section 10.2(e) shall be
subject to the Basket or the Cap.
10.5 THIRD PARTY CLAIMS. Except as otherwise provided in this
Agreement, the following procedures shall be applicable with respect to
indemnification for Third Party Claims and Claims pursuant to SECTION 10.2(d).
Promptly after receipt by the party seeking indemnification hereunder
(hereinafter referred to as the "INDEMNITEE") of notice of the commencement of
any (a) Tax audit or proceeding for the assessment of Tax by any Taxing
Authority or any other proceeding likely to result in the imposition of a Tax
liability or obligation or (b) any action or the assertion of any Claim,
liability or obligation by a third party (whether by legal process or
otherwise), against which Claim, liability or obligation the other party to this
Agreement (hereinafter the "INDEMNITOR") is, or may be, required under this
Agreement to indemnify such Indemnitee, the Indemnitee shall, if a Claim thereon
is to be, or may be, made against the Indemnitor, notify the Indemnitor in
writing of the commencement or assertion thereof and give the Indemnitor a copy
of such Claim, process and all legal pleadings; PROVIDED any delay or failure so
to notify the Indemnitor shall not relieve the Indemnitor from its obligations
under this ARTICLE 10 unless and only to the extent such delay or failure
results in actual irreparable prejudice to the Indemnitor. The Indemnitor shall
have the right to assume the defense of such action with counsel of reputable
standing and reasonably acceptable to the Indemnitee unless in such action (i)
injunctive or equitable remedies have been sought therein in respect of the
Indemnitee or its business; or (ii) such action is solely for money damages for
an alleged amount of less than $10,000. The Indemnitor and the Indemnitee shall
reasonably cooperate in the defense of such claims. In the case that the
Indemnitor shall assume or participate in the defense of such audit, assessment
or other proceeding as provided herein, the Indemnitee shall make available to
the Indemnitor all relevant records and take such other action and sign such
documents as are necessary to defend such audit, assessment or other proceeding
in a timely manner. If the Indemnitee shall be required by judgment or a
settlement agreement to pay any amount in respect of any obligation or liability
against which the Indemnitor has agreed to indemnify the Indemnitee under this
Agreement, the Indemnitor shall promptly reimburse the Indemnitee in an amount
equal to the amount of such payment plus all reasonable expenses (including
reasonable legal fees and expenses) incurred by such Indemnitee in connection
with such obligation or liability subject to this ARTICLE 10. No Indemnitor, in
the defense of any such Claim, shall, except with the prior written consent of
the Indemnitee, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of an unconditional release from all
liability with respect to such claim or litigation. In the event that the
Indemnitor does not accept, on a timely basis, the defense of any matter for
which it is entitled to assume such defense as above provided, the Indemnitee
shall have the full right to defend against any such claim or demand, and shall
be entitled to settle or agree to pay in full such claim or demand, in its sole
discretion. With respect to any matter as to which the Indemnitor is not
entitled to assume the defense pursuant to the terms of this SECTION 10.5, the
Indemnitee shall not enter into any settlement for which an indemnification
claim will be made hereunder without the approval of the Indemnitor.
35
An Indemnitee shall have the right to employ its own counsel in any
case, but the fees and expenses of such counsel shall be at the expense of the
Indemnitee unless (a) the employment of such counsel shall have been authorized
in writing by the Indemnitor in connection with the defense of such action or
claim, (b) the Indemnitor shall not have employed counsel in the defense of such
action or claim on a timely basis, or (c) such Indemnitee shall have reasonably
concluded on the advice of its counsel that there may be defenses available to
it which are contrary to, or inconsistent with, those available to the
Indemnitor, in any of which events such fees and expenses of not more than one
additional counsel for the indemnified parties shall be borne by the Indemnitor.
10.6 CHARACTERIZATION OF INDEMNITY PAYMENTS. The parties agree to
treat any indemnification payments made under this Agreement as an adjustment to
the Purchase Price for tax purposes, unless otherwise required by applicable
law, in which case such payments shall be made in an amount sufficient to
indemnify the relevant party on an after-tax basis (taking into account any Tax
deductions actually resulting in a benefit to the Indemnitee as a result of the
claims giving rise to such payments).
10.7 EXCLUSIVE REMEDY. The indemnification provided by this ARTICLE
10, together with the Escrow Agreement, subject to the limitations set forth
herein and therein, shall be the sole and exclusive post-Closing remedy for
monetary damages available to the parties hereto for any breach of any
representation or warranty, covenant or agreement, or non-fulfillment of any
obligation under, and for any other claim under, or for any state of facts which
could be deemed to constitute such a breach of properly asserted pursuant to,
this Agreement, other than (a) claims for fraud (including fraud under
applicable securities laws) and (b) any party's rights for non-monetary remedies
based upon equitable principles (including specific performance and injunctive
relief).
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement of
the parties hereto, at any time with respect to any of the terms contained
herein.
11.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any party hereto
to comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other parties hereto, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing.
11.3 CERTAIN DEFINITIONS.
"2000 ADJUSTED EBITDA" means the 2000 EBITDA (a) adjusted to add
back any Parent Expenses which were deducted in determining 2000 EBITDA in an
36
amount up to $811,000 but deducting all Parent Expenses in excess of $811,000
and (b) otherwise subject to any other adjustment only with the approval of the
Seller and the Purchaser and only for one-time, nonrecurring items, as
determined in accordance with GAAP and as set forth on the relevant financial
statements of the Companies. In the event of an adjustment for "bad debts" or
similar items prior to the Closing, the gross margin that is included in the
2000 EBITDA and attributed to such "bad debts" or similar items shall be
deducted from the 2000 Adjusted EBITDA.
"2000 EBITDA" means the sum of the earnings before interest, taxes
and depreciation and amortization of the Companies, on a combined basis, for the
twelve-month period ending December 31, 2000, as determined in accordance with
GAAP.
"2000 FINANCIAL STATEMENTS" means the audited combined balance sheet
of the Companies, as at December 31, 2000, and the corresponding audited
combined statement of income and statement of cash flows for the twelve-month
period then ended, including the notes thereto, together with a summary of all
accounting principles and policies applied thereto, as certified by the
independent accounting firm of Xxxxxx Xxxxxxxx.
"ACCOUNTS RECEIVABLE" means all accounts receivable of the Companies
representing amounts owed to the Companies in connection with their operation,
and generated in the Ordinary Course.
"AFFILIATE" means, with regard to any Person, any Person which,
directly or indirectly Controls, is Controlled by, or is under common Control
with, such Person, and, with respect to any Person who is an individual, the
spouse, ancestors and descendants (lineal or by marriage) thereof.
"AGREED PROFIT" means an amount equal to $2,000,000.
"ASSETS" means all properties, privileges, rights, interests and
claims, real and personal, tangible and intangible and mixed, of every type and
description that are owned, leased, used or held for use in the Business, or in
which any Company has any right, title or interest or in which any Company
acquires any right, title or interest on or before the Closing Date.
"AUTHORITY" means any Canadian, U.S. or French governmental,
regulatory or administrative body, agency, commission, board, arbitrator or
authority, any court or judicial authority, any public, private or industry
regulatory authority, in each case whether federal, provincial, state,
provincial or local.
"BALANCE SHEET DATE" means December 31, 2000.
"BASKET" shall have the meaning ascribed to that term in SECTION
10.4.
"BUSINESS" shall have the meaning ascribed to that term in the
preamble to this Agreement.
37
"BUSINESS DAY" means any day, other than a Saturday or Sunday, on
which national banks are open for business in New York, New York and Paris,
France.
"CAP" shall have the meaning ascribed to that term in SECTION 10.4.
"CANADIAN SHARE PURCHASE PRICE" shall have the meaning ascribed to
that term in SECTION 1.8(a).
"CASH ON HAND" shall have the meaning ascribed to that term in
SECTION 1.2.
"CLAIM" means any pending or threatened action, claim, lawsuit,
demand, suit, inquiry, hearing, investigation, notice of a violation,
litigation, proceeding, arbitration, or other dispute, whether civil, criminal,
administration or otherwise.
"CLIENT" means any customer or client of any of the Companies at any
time during the 24 month period preceding the Closing Date, and "CLIENTS" means
all the foregoing.
"CLOSING" shall have the meaning ascribed to that term in SECTION
8.1.
"CLOSING DATE" shall have the meaning ascribed to that term in
SECTION 8.1.
"COBRA" shall have the meaning ascribed to that term in SECTION
2.15(g)(v).
"CODE" shall have the meaning ascribed to that term in SECTION
2.13(c).
"COMPANY OPTION" shall have the meaning ascribed to that term in
SECTION 2.3.
"CONFIDENTIALITY AGREEMENT" shall have the meaning ascribed to that
term in SECTION 9.2.
"CONTRACT" means any agreement, contract, commitment, lease,
license, instrument, plan or other binding arrangement or understanding.
"CONTROL" (including, with correlative meaning, the terms
"Controlled by" and "under the common Control with"), as used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by Contract or otherwise.
"ELECTION NOTICE" shall have the meaning ascribed to such term in
SECTION 5.4(h).
38
"ELECTIONS" shall have the meaning ascribed to such term in SECTION
5.4(h).
"ENVIRONMENTAL LAW" means any law (including, without limitation,
any common law), statute, Regulation, rule, Order, decree, judgment, consent
decree, settlement agreement, permit or permit condition or other binding
requirement of any Authority, each as amended and in effect at the relevant
time, which relates to otherwise imposes liability or standards of conduct
concerning the environment, or public health, including but not limited to
mining or reclamation of mined land, discharges, emissions, releases or
threatened releases of Hazardous Substances, whether as matter or energy, into
ambient air, water, or land, or otherwise relating to the manufacture,
processing, generation, distribution, use, treatment, storage, disposal,
cleanup, transport or handling of Hazardous Substances, including (but not
limited to) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, the
Toxic Substances Control Act of 1976, as amended, the Federal Water Pollution
Control Act Amendments of 1972, the Clean Water Act of 1977, as amended, the
Clean Air Act, as amended, the Oil Pollution Act, and any other similar Federal,
provincial, state or local statutes.
"ERISA" shall have the meaning ascribed to that term in SECTION
2.15(a)(i).
"ERISA AFFILIATE" shall have the meaning ascribed to that term in
SECTION 2.15(a).
"ESCROW ACCOUNT" shall have the meaning ascribed to that term in
SECTION 1.8(a).
"ESCROW AGENT" shall mean Citibank, N.A..
"ESCROW AGREEMENT" shall have the meaning ascribed to that term in
SECTION 1.8(a).
"EXCESS PROFIT" means the amount, if any, by which (a) the
Year-to-Date Earnings exceed (b) the result of (i) the Agreed Profit MINUS (ii)
any income tax liability of the Companies on the Agreed Profit that the Seller
has not paid or agreed to pay under SECTION 5.4(d)(iii).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FRINGE BENEFIT ARRANGEMENTS" shall have the meaning ascribed to
that term in SECTION 2.15(a)(ii).
"GAAP" means, with respect to Market USA, United States generally
accepted accounting principles, consistently applied and, with respect to Xxxxxx
Marketing and Xxxxxx Financial, Canadian GAAP, consistently applied. Under this
Agreement, all accounting terms not specifically defined herein shall be
interpreted, all
39
accounting determinations shall be made and all financial statements shall be
prepared in accordance with GAAP.
"HAZARDOUS SUBSTANCES" includes any pollutant or contaminant, and
any substance heretofore or hereafter designated as "hazardous" or "toxic,"
including, without limitation, petroleum and petroleum related substances, or
having characteristics identified as "hazardous" or "toxic" under any
Environmental Law.
"INDEBTEDNESS" means the aggregate outstanding indebtedness of the
Companies, including, without limitation, short and long-term indebtedness to
any creditors, including stockholders and Affiliates and capitalized leases, but
excluding trade payables, accrued commissions and wages as of the Closing Date;
PROVIDED that all such accruals are in accordance with GAAP.
"INDEMNITEE" shall have the meaning ascribed to that term in SECTION
10.5.
"INDEMNITOR" shall have the meaning ascribed to that term in SECTION
10.5.
"INSURANCE PRODUCTS" shall have the meaning ascribed to that term in
SECTION 2.14.
"INSURANCE SERVICES" shall have the meaning ascribed to that term in
SECTION 2.14.
"INTELLECTUAL PROPERTY" means (a) all registered and unregistered
marks, names, trademarks, service marks, patents, patent rights, assumed names,
logos, copyrights, trade names, computer software and (b) know-how, inventions,
protected formulae, processes, proprietary information, trade secrets, as well
as related documentation and manuals, all registrations and applications for
registration of such items with any Authority, and all licenses and research and
development relating thereto.
"ITA" shall have the meaning ascribed to that term in SECTION
1.8(a).
"KNOWLEDGE" (including, with correlative meaning, the terms
"KNOWING," "KNOWN BY" and other similar variations) means, in the case of the
Seller, the actual awareness, upon having made due inquiry with respect thereto,
of the fact or other matter in question by any of Xxxx Xxxxxx, Xx Xxxxxx, Xxxxxx
Xxxxxxxxx or Xxx Xxxxx.
"LETTER OF INTENT" means the letter of intent, dated March 5, 2001,
by and between the Seller and the Purchaser.
"LIEN" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, restriction on transfer or
otherwise, or interest of another Person of any kind or nature, whether
perfected, unperfected or inchoate, other than restrictions imposed by Federal,
provincial or state securities laws.
"LOSSES" shall have the meaning ascribed to that term in SECTION
10.2.
40
"MANAGEMENT EMPLOYEE" means any employee serving in a position of
manager of a call center, multimedia contact center or customer interaction
center, or a more senior position.
"MARKET USA" shall have the meaning ascribed to that term in the
preamble of this Agreement.
"MARKET USA SHARES" shall have the meaning ascribed to that term in
the preamble of this Agreement.
"XXXXXX FINANCIAL" shall have the meaning ascribed to that term in
the preamble of this Agreement.
"XXXXXX FINANCIAL SHARES" shall have the meaning ascribed to that
term in the preamble of this Agreement.
"XXXXXX MARKETING" shall have the meaning ascribed to that term in
the preamble of this Agreement.
"XXXXXX MARKETING SHARES" shall have the meaning ascribed to that
term in the preamble of this Agreement.
"MATERIAL ADVERSE CHANGE" means any development or change which has
or could reasonably be expected to have a Material Adverse Effect on the Person
specified.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets, liabilities, results of operations or condition (financial or
otherwise) of the Person(s) specified, whether or not arising from transactions
in the ordinary course of the Person's business; PROVIDED, HOWEVER that any
adverse effect on the Person(s) specified resulting from the execution of this
Agreement and the announcement of this Agreement and the transactions
contemplated hereby shall be excluded from the determination of Material Adverse
Effect.
"NEROK DISSOLUTION" shall have the meaning ascribed to that term in
SECTION 4.2.
"NEW YORK COURTS" shall have the meaning ascribed to that term in
SECTION 11.11(b).
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Regulation, Order or
governmental requirement which relates to or otherwise imposes liability or
standards of conduct concerning occupational safety or health.
"ORDER" means any judgment, decree, consent decree, order,
injunction, stipulation, rule, ruling, consent of or by an Authority and any
settlement agreement.
41
"ORDINARY COURSE" means the ordinary course of the applicable
Company's business consistent with its past practice.
"OUTSTANDING CHECKS" shall have the meaning ascribed to that term in
SECTION 1.5.
"PARENT EXPENSES" means all direct and indirect expenses incurred by
the Seller, as the parent of the Companies, to manage and operate the Companies,
including, without limitation, all overhead, management and staff expenses of
the Seller, in each case as evidenced by invoices from the Seller to the
Companies or other written statements or schedules reasonably acceptable to the
Purchaser.
"PERMIT" shall have the meaning ascribed to that term in SECTION
2.16.
"PERSON" means any corporation, partnership, company, limited
liability company, joint venture, organization, Authority or other entity or
natural person.
"PLAN" shall have the meaning ascribed to that term in SECTION
2.15(a)(i).
"POLICIES" shall have the meaning ascribed to that term in SECTION
2.17(a).
"PREDECESSOR EMPLOYER" shall have the meaning ascribed to that term
in SECTION 2.15(a).
"PREDECESSOR PLAN" shall have the meaning ascribed to that term in
SECTION 2.15(a).
"PROSPECT" means any Person to whom any of the Companies has made a
proposal at any time during the 24 month period preceding the Closing Date, and
"PROSPECTS" means all of the foregoing.
"PURCHASER INDEMNITEE" shall have the meaning ascribed to that term
in SECTION 10.2.
"PURCHASE PRICE" shall have the meaning ascribed to that term in
SECTION 1.2.
"REGULATION" means any law (including, without limitation, common
law), statute, regulation, rule, ordinance, requirement, executive order or
binding action of or by an Authority.
"REQUIRED CASH ON HAND" shall have the meaning ascribed to that term
in SECTION 1.7.
"RESTRICTED BUSINESS" shall have the meaning ascribed to that term
in SECTION 5.2(a).
42
"SALE BONUS PAYMENT" means any amount payable by any Company to any
current or former employee, director or officer of any Company as a result of or
in connection with the consummation of the transactions contemplated by this
Agreement, which is described under the heading "Sale Bonus" on SCHEDULE 2.28 to
the extent that any such amounts are not (a) paid by the Seller prior to the
Closing or (b) deducted from the Purchase Price.
"SEC" means the United States Securities and Exchange
Commission.
"SEVERANCE PAYMENT" means any amount payable by any Company to any
current or former employee, director or officer of any Company pursuant to an
agreement or arrangement, other than obligations arising pursuant to Regulation,
under which such Person's right to such payment arises or vests as a result of
or in connection with (a) the consummation of the transactions contemplated by
this Agreement and (b) the termination of such Person's employment with any of
the Companies, which is disclosed on SCHEDULE 2.28.
"SHARES" shall have the meaning ascribed to that term in the
preamble of this Agreement.
"SUBSIDIARY" means any corporation, partnership, company, limited
liability company or other Person more than 10% of whose outstanding shares,
securities or other equity interests representing the right to vote, exercise
management authority or make decisions is owned or Controlled, directly or
indirectly, by any of the Companies.
"TAX," "TAXES," "TAX RETURN" and "TAX RETURNS" shall have the
respective meanings ascribed to those terms in SECTION 2.13(f).
"TAX PROCEEDING" shall have the meaning ascribed to that term in
SECTION 5.4(a).
"THIRD PARTY CLAIMS" shall have the meaning ascribed to that term in
SECTION 10.2.
"TRANSACTION COSTS" means the costs and expenses of any of the
Seller or the Companies incurred at any time by any of the Companies in
connection with pursuing, negotiating or consummating the Letter of Intent, this
Agreement or the Closing, including, without limitation, fees and expenses for
investment banking services, fees and expenses in an aggregate amount in excess
of $10,000 incurred in connection with the preparation of the Companies' audited
financial statements, fees and expenses for any appraisal or other valuation of
the Companies, and travel and overhead expenses of representatives of any of the
Seller or the Companies incurred in connection with pursuing, negotiating or
consummating the Letter of Intent, this Agreement and/or the Closing.
"TREASURY REGULATION," and "TREASURY REGULATIONS" means the
Regulations promulgated by the U.S. Department of Treasury, including final,
proposed, temporary and procedural rules and Regulations.
43
"YEAR-TO-DATE EARNINGS" means the Companies' earnings before income
Taxes but net of all expenses and other Taxes, both paid and accrued, for the
period beginning on January 1, 2001 and ending on the Closing Date, on a
combined basis.
"WITHHELD AMOUNT" shall have the meaning ascribed to that term in
SECTION 1.8(a).
11.4 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given (a) if to any party other than the Purchaser: (i) upon actual receipt,
when delivered by hand, (ii) upon receipt of transmission confirmation, when
sent by facsimile, (iii) three days after mailing by registered or certified
mail within the United States, (iv) one day after sending by overnight courier
(with postage prepaid and confirmation requested) within the United States or
(v) two day after sending by international courier (with postage prepaid and
confirmation requested); and (b) if to the Purchaser, two days after sending by
international courier (with postage prepaid and confirmation requested):
(a) If to the Seller, to:
Ha-Lo Industries, Inc.
0000 X. Xxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax No.: (000) 000-0000
with a copy to:
Skadden, Arps, Slate,
Xxxxxxx & Xxxx (Illinois)
000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Fax No.: (312) 000- 0000
or to such other person or address as the Seller shall furnish by notice to the
Purchaser in writing.
(b) If to the Purchaser, to:
SR. Teleperformance S.A.
0-0 xxx Xxxxxx-Xxxxxx
00000 Xxxxx
Xxxxxx Cedex 15
Attn: Xxxxxx Xxxxxx
Fax No.: 000-00-0-0000-0000
with a copy to:
44
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Thirty-First Floor
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
Fax No.: (000) 000-0000
or to such other person or address as the Purchaser shall furnish by notice to
the Seller and Market USA in writing.
11.5 ASSIGNMENT. This Agreement and all the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (except by the Purchaser to any of its Affiliates or any
direct or indirect subsidiary of the Purchaser which is Controlled by the
Purchaser or any of its Affiliates) without the prior written consent of the
other parties.
11.6 CONFIDENTIALITY. The Purchaser agrees that unless and until the
transactions contemplated hereby have been consummated, the Purchaser and its
representatives and Affiliates and their representatives and advisors will hold
in strict confidence all data and information obtained from any of the Seller or
the Companies or any of their respective Affiliates in connection with the
transactions contemplated hereby, except any of the same which (a) was, is now,
or becomes generally available to the public (but not as a result of a breach of
any duty of confidentiality by which the Purchaser and its representatives and
Affiliates and their representatives and advisors is bound); (b) was known to
the Purchaser prior to its disclosure to the Purchaser; or (c) is disclosed to
the Purchaser by a third party not subject to any duty of confidentiality to any
of the Seller or the Companies or any of their respective Affiliates prior to
its disclosure to the Purchaser by the Seller, the Company or any of their
respective Affiliates. The Purchaser will use such data and information solely
for the specific purpose of evaluating the transactions contemplated hereby. If
this Agreement is terminated, each party hereto and their respective Affiliates
and their representatives and advisors will handle all such data, information
and other written material (including all copies thereof) which has been
obtained by such party in accordance with the applicable provisions of SECTION
9.2.
11.7 GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY THE
INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
THE CONFLICT OF LAWS THEREOF.
11.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
45
11.9 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.10 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits hereto and the documents, certificates and instruments referred to
herein, embodies the entire agreement and understanding of the parties hereto in
respect of the transactions contemplated by this Agreement and supersedes all
prior agreements, representations, warranties, promises, covenants,
arrangements, communications and understandings, oral or written, express or
implied, between the parties with respect to such transactions. There are no
agreements, representations, warranties, promises, covenants, arrangements or
understandings between the parties with respect to such transactions, other than
those expressly set forth or referred to herein. Without limitation of the
foregoing and notwithstanding anything to the contrary expressed in the Letter
of Intent, immediately upon the execution and delivery of this Agreement all of
the terms and conditions of the Letter of Intent and all obligations of the
parties thereto thereunder shall henceforth cease to operate or to bind in any
way such parties.
11.11 WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; SERVICE
OF PROCESS.
(a) EACH PARTY HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES ACKNOWLEDGE
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH PARTY HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THAT EACH PARTY WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE
DEALINGS. EACH PARTY FURTHER WARRANTS AND REPRESENTS IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
46
(b) Each of the parties hereto hereby expressly and
irrevocably submits to the non-exclusive personal jurisdiction of the United
States District Court for the Southern District of New York, and to the
jurisdiction of any other competent court of the State of New York
(collectively, the "NEW YORK COURTS"), preserving, however, all rights of
removal to such federal court under 28 U.S.C. Section 1441, in connection with
all disputes arising out of or in connection with this Agreement or the
transactions contemplated hereby and agrees not to commence any litigation
relating thereto except in such courts. If the aforementioned courts do not have
subject matter jurisdiction, then the proceeding shall be brought in any other
state or federal court located in the State of New York, preserving, however,
all rights of removal to such federal court under 28 U.S.C. Section 1441. Each
party hereby waives the right to any other jurisdiction or venue for any
litigation arising out of or in connection with this Agreement or the
transactions contemplated hereby to which any of them may be entitled by reason
of its present or future domicile. Notwithstanding the foregoing, each of the
parties hereto agrees that each of the other parties shall have the right to
bring any action or proceeding for enforcement of a judgment entered by the New
York Courts in any other court or jurisdiction.
(c) Each party irrevocably consents to the service of process
outside the territorial jurisdiction of the New York Courts in any such action
or proceeding by mailing copies thereof by registered mail, postage prepaid,
return receipt requested, to its address as specified in or pursuant to SECTION
11.4; PROVIDED that the foregoing shall not limit the right of a party to effect
service of process on the other party by any other legally available method.
11.12 BINDING EFFECT. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns.
11.13 INJUNCTIVE RELIEF. The parties hereto agree that in the event
of a breach of any provision of this Agreement, the aggrieved party or parties
may be without an adequate remedy at law. The parties therefore agree that in
the event of a breach of any provision of this Agreement, the aggrieved party or
parties may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining any such relief, the aggrieved party
shall not be precluded from seeking or obtaining any other relief to which it
may be entitled.
11.14 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any party hereto, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. All remedies, either under this Agreement or by law or
otherwise afforded to any party, shall be cumulative and not alternative.
47
11.15 SEVERABILITY. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
11.16 EXPENSES. Except as otherwise set forth herein, each party
hereto shall bear all of its own expenses, including, without limitation, legal
fees and expenses, with respect to this Agreement and the transactions
contemplated hereby.
11.17 ARBITRATION.
(a) Except as otherwise provided herein, in the event that a
dispute arises between the parties under or in connection with this Agreement,
the parties hereto agree to submit such dispute to binding arbitration conducted
in New York, New York in accordance with the rules for commercial arbitrations
of the American Arbitration Association in effect at the time of such
arbitration. Within 60 days of receipt of a demand for arbitration, each party
shall select an arbitrator and give notice to the other of the selection,
including the name, address and phone number of the arbitrator. The two chosen
arbitrators shall, within 30 days after they have been selected, select a third
arbitrator to act with them. A decision of the majority of the arbitrators shall
favor one party or the other, exclusively, shall be final and binding on the
parties and shall be enforceable in any court of competent jurisdiction. The
arbitrators shall have the authority to determine their own jurisdiction,
including but not limited to, determining whether an issue in dispute is within
this SECTION 11.17.
(b) The fees and expenses of the arbitrator selected by each
party hereto shall be borne by each such party. The fees and expenses of the
third arbitrator shall be shared equally by the Purchaser on the one hand, and
the Seller on the other hand.
11.18 CURRENCY. Each reference herein to "dollar," "dollars" or "$"
shall, unless otherwise indicated, be a reference to lawful currency of the
United States of America.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
SR. TELEPERFORMANCE S.A.
By: /s/ XXXXXX XXXXXX
---------------------------------
Name: Xxxxxx Xxxxxx
Title: Co-Chairman
HA-LO INDUSTRIES, INC.
By: /s/ XXXXXXX X. XXXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Financial Officer
