AGREEMENT OF PURCHASE AND SALE
By and Among
TELEMANAGEMENT SERVICES, INC.,
XXX X. XXXXXXXXX
and
TLM HOLDINGS CORP.
THIS AGREEMENT dated as of the 1st day of January, 1997 by and
among TeleManagement Services, Inc., a Florida corporation (the "Company"), Xxx
X. Xxxxxxxxx (the "Shareholder") and TLM Holdings Corp., a Delaware corporation
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of providing
pharmaceutical, medical and other healthcare related teleservices and related
activities at one (1) location in the State of Florida (such activities being
hereinafter referred to as the "Business");
WHEREAS, the Shareholder is the holder of 600 shares of the
common stock, $1.00 par value (the "Common Stock"), of the Company, which shares
constitute all of the issued and outstanding shares of capital stock of the
Company;
WHEREAS, effective on the date of the Closing (as hereinafter
defined), the Purchaser, through its wholly owned subsidiary TLM Acquisition
Corp., a Delaware corporation (the "Designee"), desires to acquire from the
Company certain assets of the Company as described in Section I(C)(i) hereof
(the "Assets") and, through the Designee, to assume certain liabilities and
contractual obligations of the Company as described in Section I(C)(ii) hereof
(the "Assumed Liabilities"), and the Company desires to sell or assign the
Assets and to assign the Assumed Liabilities to the Purchaser, through the
Designee, on the terms and subject to the conditions hereinafter set forth; and
WHEREAS, to induce the Purchaser to enter into this Agreement
and perform its obligations hereunder, the Shareholder has agreed to make the
representations, warranties, covenants and agreements of the Shareholder
(including the indemnification and non-competition agreements) set forth herein.
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NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties hereto hereby agree as follows:
SECTION I
PURCHASE AND SALE OF THE ASSETS
A. Purchase and Sale of the Assets. Subject to the terms and
conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements herein contained:
(i) The Company hereby sells, assigns and
conveys to the Purchaser (through the Designee), and the Purchaser (through the
Designee) hereby purchases, acquires and accepts from the Company, the Assets.
(ii) The Company hereby assigns to the Purchaser
(through the Designee) and the Purchaser (through the Designee) hereby accepts
and assumes from the Company, the Assumed Liabilities. The Purchaser (and the
Designee) shall not assume and shall have no responsibility with respect to, and
shall be indemnified by each of the Company and the Shareholder, jointly and
severally, against, any and all liabilities or obligations of the Company other
than the Assumed Liabilities.
(iii) The designation of the Designee to acquire
the Assets and assume the Assumed Liabilities will in no event affect the
Purchaser's payment obligations hereunder.
B. Purchase Price. The purchase price (the "Purchase Price")
for the Assets is (i) $7,800,000 which is non-refundable and unconditional,
subject to the terms of this Agreement, and (ii) the contingent payments, if any
(the "Contingent Payments"), provided for in Section I(D) hereof. The Purchase
Price payable at the Closing shall be made by delivery to the Company of (a) a
wire transfer in immediately available funds to an account designated by the
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Company in the amount of $6,500,000 and (b) a three-year 6% subordinated
promissory note of the Purchaser in the form of Exhibit A attached hereto,
payable to the order of the Company in the principal amount of $1,300,000 (the
"Note").
C. Assets; Assumed Liabilities.
(i) The Assets shall consist of all assets,
business, contract rights, financial books and records and goodwill of every
kind and nature, real, personal, and mixed, tangible and intangible, wherever
located, of the Company used in or in any way related to the Business as
conducted by the Company. The Assets shall not include the assets listed in
Schedule I hereto (hereinafter, the "Excluded Assets").
(ii) The Assumed Liabilities shall consist of
and shall be limited solely to the obligations and liabilities of the Company
incurred in connection with the Business listed in Schedule II hereto. The
Purchaser (and the Designee) shall not assume, shall have no responsibility with
respect to, and shall be indemnified, by each of the Company and the
Shareholder, jointly and severally, against, any liabilities or obligations of
the Company, except for the Assumed Liabilities set forth in Schedule II hereto.
The Company shall remain liable for, and shall pay when due, any and all
obligations and liabilities of the Company, other than the Assumed Liabilities.
(iii) It is specifically understood and agreed
that the Assumed Liabilities shall not include (a) liabilities of the Company
for expenses incurred or accrued, at any time, in connection with the
transactions contemplated by this Agreement or in any other connection not in
the ordinary course of business, (b) liabilities of the Company for federal,
state and municipal income, sales, franchise and other taxes, including any
interest, penalties and assessments thereon, (c) any liabilities of the Company
to any former owners of the Company except for that promissory note in the
original principal amount of $450,000 payable to the order of Xxxxxx X. Xxxxxxx
("Xxxxxxx") and the obligations of the Company to Xxxxxxx pursuant to that
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certain consulting agreement dated February 16, 1996 by and between the Company
and Xxxxxxx, and (d) any liabilities or obligations of the Company under the
consulting agreement between the Company and U.S. Healthcare Consultants, Inc.
dated April 15, 1996, including the bonus arrangement thereunder. Neither the
Purchaser nor any designee of the Purchaser assuming the Assumed Liabilities
shall assume any liabilities of the Company in connection with any understanding
or agreement, whether written or oral, with respect to any retirement plan,
including, but not limited to, any profit sharing, 401(k) or defined benefit
plan (as defined in Section 414(j) of the Internal Revenue Code of 1986, as
amended (the "Code").
D. Contingent Payments. Subject to the conditions set forth
herein and in Schedule IV hereto, within ninety (90) days after December 31,
1997, December 31, 1998 and December 31, 1999, the Purchaser shall deliver to
the Company the Contingent Payments, if any, payable with respect to the
twelve-month periods ending December 31, 1997, December 31, 1998 and December
31, 1999, respectively. The amount of the Contingent Payments payable to the
Company with respect to each such twelve-month period (each, a "Contingent
Period") shall be calculated based upon the earnings before interest, taxes and
amortization ("EBITA") achieved by the Contingent Payment Business (as
hereinafter defined) during such Contingent Period. Each of the Contingent
Payments, if any, shall be made by delivery to the Company of (i) a certified or
official bank check payable to the order of the Company and (ii) a certificate
representing shares of common stock, $.01 par value ("Purchaser Common Stock"),
of the Purchaser, registered in the name of the Company, in each case, in such
amounts of cash and in such numbers of shares as are determined in accordance
with Schedule IV hereto.
E. Computation of EBITA. The Purchaser shall, within ninety
(90) days after the end of each Contingent Period, compute the amount of the
EBITA of the Contingent Payment Business for such Contingent Period. The amount
so computed shall be the EBITA for purposes of determining whether or not
Contingent Payments shall be due and payable.
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Notwithstanding the determination of EBITA for any applicable period by the
Purchaser, the Company shall receive the information upon which such
determination was made, and shall, in the event of a dispute as to the amount or
method of calculation of such EBITA have the right to review all work papers
relating to the determination of EBITA. For purposes of this Agreement, "EBITA"
shall mean the earnings before interest, taxes and amortization of the
Contingent Payment Business (or, in the event that all or substantially all the
assets and business of the Contingent Payment Business shall have been
transferred to another entity or entities, the allocable portion of the EBITA of
such other entity or entities) for the applicable Contingent Period as
determined in accordance with generally accepted accounting principles
consistent with the Purchaser's accounting practices. For purposes of
calculating EBITA for any Contingent Period, it is agreed that corporate
overhead (including audit fees for the Business and ordinary course corporate
legal fees) directly related to the Contingent Payment Business will be
deducted; however, no deduction will be made (i) for amortization of goodwill in
connection with the Business or the Contingent Payment Business or (ii) for any
salaries or benefits paid to the Chief Executive Officer or Chief Financial
Officer of the Purchaser or any other officer of the Purchaser (other than to
the Shareholder which shall be a deduction) except that the Purchaser may
allocate to the Contingent Payment Business a portion of an officer's salary or
benefits (other than the Chief Executive Officer or Chief Financial Officer of
the Purchaser) which is directly related to that officer's activities for the
Contingent Payment Business which are not part of corporate overhead, or (iii)
for any costs or expenses associated with any public offering involving the
Contingent Payment Business. For purposes of determining the Contingent
Payments, the Contingent Payment Business shall mean the business activities of
the Purchaser and the Designee from the activities set forth in Schedule V
attached hereto.
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Numbers of shares of Purchaser Common Stock set forth herein
shall be appropriately adjusted for any stock split, stock dividend, reverse
stock split or other similar event affecting the Purchaser Common Stock.
Fractional shares shall be rounded up to the nearest whole share.
In the event (a "Reorganization") of the consolidation or
merger of the Purchaser with or into another person or the acquisition of all or
substantially all the Purchaser Common Stock or all or substantially all of the
assets of the Purchaser by another person (other than a consolidation or merger
in which the Purchaser is the continuing corporation and which does not result
in any change in the Purchaser Common Stock), the Purchaser shall have the
option to pay the Shareholder at such time as a payment is due pursuant to
Section I(D) hereof, in lieu of the Purchaser Common Stock provided for in such
Section, the consideration (the "Reorganization Consideration") per share in the
form (in stock or cash or other consideration) payable to the other holders of
Purchaser Common Stock in connection with such transaction, multiplied by the
number of shares of Purchaser Common Stock deliverable to the Shareholder
provided for in Section I(D) hereof.
If the Company shall disagree with the Purchaser's
determination of EBITA for any Contingent Period and/or the amount of the
resulting Contingent Payments, the Company shall so notify the Purchaser within
fifteen (15) days of receipt of the Purchaser's computations and the Purchaser
and the Company shall in good faith attempt to agree upon the amount of the
Contingent Payments within ninety (90) days after the end of the Contingent
Period. If the Purchaser and the Company are unable to agree within such period,
then the amount of the Contingent Payments shall be determined as soon as
possible thereafter by the Philadelphia office of one of the six largest
national accounting firms mutually selected by the Purchaser and the Company,
other than any of the six largest national accounting firms which have provided
services to the Purchaser or its parent, subsidiaries or Affiliates (as defined
in Rule 12b-2 of the Securities Exchange Act of 1934), or the Company within the
three year period prior to
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the date of the Closing (the "Arbitrator"), for a final and binding
determination. Pending the resolution of such final amount, any amounts not in
dispute shall be paid to the Company within ninety (90) days of the end of each
applicable Contingent Period by certified or official bank check, in the case of
the cash portion, and the parties shall be obligated to act in good faith to
attempt to resolve the disputed amounts.
Any disputed amount of the Contingent Payments shall be paid
by the Purchaser to the Company within five (5) days after the amount thereof
has become final and binding in accordance with the final and binding
determination of the Arbitrator. Any disputed cash amount awarded to the Company
shall be paid with interest at the rate of nine percent (9%) per annum, such
interest to accrue from the date which is ninety (90) days after the end of the
Contingent Period until the date of payment of the disputed cash amount.
F. Allocation. The Purchase Price (including the Assumed
Liabilities) shall be allocated as set forth in Schedule VI hereto. The parties
hereto agree that the allocation of the Purchase Price is intended to comply
with the allocation method required by Section 1060 of the Code. The parties
shall cooperate to comply with all substantive and procedural requirements of
Section 1060 of the Code and any regulations thereunder, and the allocation
shall be adjusted if, and to the extent, necessary to comply with the
requirements of Section 1060 of the Code. Neither the Purchaser nor the Company
will take, nor permit any affiliated person to take, for federal, state or local
income tax purposes, any position inconsistent with the allocation set forth in
Schedule VI hereto, or, if applicable, such adjusted allocation. The Purchaser
and the Company agree that each of them shall attach to its tax returns for the
tax year in which the Closing shall occur an information statement on Form 8594,
which shall be completed in accordance with allocations set forth in Schedule VI
hereto.
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SECTION II
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE COMPANY AND THE SHAREHOLDER
Each of the Company and the Shareholder, jointly and
severally, hereby represents and warrants to, and covenants and agrees with, the
Purchaser, as of the date of the Closing, that:
A. Organization and Qualification. The Company is duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate power and authority to own its properties and to
conduct the businesses in which it is now engaged. The Company is in good
standing in each other jurisdiction wherein the failure so to qualify would have
a material adverse effect on the financial condition, operations, assets and
properties of the Business taken as a whole (a "Material Adverse Effect").
Except as set forth in Exhibit B, the Company does not own any subsidiaries, nor
does it own any capital stock or other proprietary interest, directly or
indirectly, in any other corporation, association, trust, partnership, joint
venture or other entity and has no agreement with any person, firm or
corporation to acquire any such capital stock or other proprietary interest.
Except as set forth in Exhibit B, the Company has full corporate power,
authority and legal right, and all necessary approvals, permits, licenses and
authorizations, to own its properties and to conduct the Business conducted by
it and to enter into and consummate the transactions contemplated under this
Agreement, except for such approvals, permits, licenses and authorizations, the
absence of which would not have a Material Adverse Effect. The copies of the
certificate of incorporation and by-laws of the Company which have been
delivered to the Purchaser are complete and correct.
B. Authority. The execution and delivery of this Agreement by
the Company, the performance by the Company of its covenants and agreements
hereunder and the consummation by the Company of the transactions contemplated
9
hereby have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the enforcement of creditors' rights generally.
C. No Legal Bar; Conflicts. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
violates any provision of the certificate of incorporation or by-laws of the
Company or any statute, ordinance, regulation, order, judgment or decree of any
court or governmental agency or board, or conflicts with or will result in any
breach of any of the terms of or constitute a default under or result in the
termination of or the creation of any lien pursuant to the terms of any contract
or agreement to which the Company is a party or by which the Company or any of
the Assets is bound, except where such violation, conflict, breach, default,
termination or lien creation would not have a Material Adverse Effect. No
consents, approvals or authorizations of, or filings with, any governmental
authority or any other person or entity are required in connection with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, except for required consents, if any, to
assignment of permits, certificates, contracts, leases and other agreements as
set forth in Exhibit B attached hereto.
D. Financial Statements; No Undisclosed Liabilities. The
Company and the Shareholder have delivered to the Purchaser the balance sheet of
the Company as of November 30, 1996 and the related statement of income (loss)
and supplementary information and the notes thereto for the one month and eleven
months periods then ended, which financial statements (hereinafter referred to
as the "Financial Statements") have been compiled by Xxxxxxx X. Xxxxxx &
Associates, P.A., the Company's independent accountants. The Financial
Statements are true and correct
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in all material respects and have been prepared in accordance with generally
accepted accounting principles applied consistently throughout the periods
involved except that the Company has elected to omit substantially all of the
disclosures and statement of cash flows required by generally accepted
accounting principles. The Financial Statements fully and fairly present the
financial condition of the Company as at the dates thereof and the results of
the operations of the Company for the periods indicated. The balance sheets
contained in the Financial Statements fairly reflect all liabilities of the
Company of the types normally reflected in balance sheets as at the dates
thereof. Except to the extent set forth in or provided for in the balance sheet
of the Company as of November 30, 1996 included in the Financial Statements (the
"1996 Balance Sheet") or as identified in Exhibit B, and except for current
liabilities incurred in the ordinary course of business consistent with past
practices (and not materially different in type or amount), the Company has no
liabilities or obligations of any nature, whether accrued, absolute, contingent
or otherwise, whether due or to become due, whether properly reflected under
generally accepted accounting principles as a liability or a charge or reserve
against an asset or equity account, and whether the amount thereof is readily
ascertainable or not. A true and correct copy of the Financial Statements is
attached hereto as Exhibit C.
E. Absence of Certain Changes. Except as set forth in
Exhibit B, subsequent to November 30, 1996, there has not been any (i) change in
the condition of the Business, financial or otherwise, or in the results of the
operations of the Company which has or could reasonably be expected to have a
Material Adverse Effect; (ii) material damage or destruction (whether or not
insured) affecting the properties or business operations of the Company; (iii)
labor dispute or, to the best of the knowledge of the Company and the
Shareholder, threatened labor dispute involving the employees of the Company;
(iv) actual or, to the
11
best of the knowledge of the Company and the Shareholder, threatened disputes
pertaining to the Business with an major accounts of the Company, or actual or,
to the best of the knowledge of the Company and the Shareholder, threatened loss
of business from any of the major accounts of the Company; or (v) changes in the
methods or procedures for billing or collection of customer accounts or
recording of customer accounts receivable or reserves for doubtful accounts with
respect to the Company.
F. Liabilities Incurred. Except as disclosed in Exhibit B,
subsequent to November 30, 1996, the Company has not (i) incurred any bank
indebtedness, entered into any leases, loan agreements or, except in the
ordinary course of business consistent with past practices, contracts,
obligations or arrangements of any kind, including, without limitation, for the
payment of money or property to any person, or (ii) permitted any liens or
encumbrances to attach to the Assets.
G. Real Property Owned or Leased. A list and description of
all real property owned by or leased to or by the Company or in which the
Company has any interest is set forth in Exhibit B. Except as set forth in
Exhibit B, all such leased real property is held subject to written leases or
other agreements which are enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally, and there are no existing defaults or events of default, or events
which with notice or lapse of time or both would constitute defaults, thereunder
on the part of the Company, except for defaults, if any, which would not have a
Material Adverse Effect. Neither the Company nor the Shareholder has any
knowledge of any material default or claimed or purported or alleged material
default on the part of any other party in the performance of any obligation to
be performed or paid by such other party under any lease referred to in Exhibit
B. Neither the Company nor the Shareholder has received any written or oral
notice to the effect that any lease will not be renewed at the termination of
the term thereof or that any such lease be renewed only at a substantially
higher rent.
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H. Title to Assets; Condition of Property. The
Company has good and valid title to all its owned properties
and assets, real, personal and mixed, tangible and
intangible used in the operations of the Business as
currently conducted, except where the failure to have good
and valid title would not have a Material Adverse Effect.
Except as set forth in Exhibit B, the Company leases or owns
all properties and assets used in the operations of the
Business as currently conducted. All such properties and
assets are in good condition and repair, consistent with
their respective ages and subject to ordinary wear and tear,
and have been maintained and serviced in accordance with the
normal practices of the Company and as necessary in the
normal course of business. Except for the liens on the
Assets by Xxxxxxx Bank and Xxxxxxx, none of the assets or
properties of the Company is subject to any liens, charges,
encumbrances or security interests, except as set forth in
Exhibit B. None of the assets of the Company (or uses to
which they are put) fails to conform with any applicable
agreement, law, ordinance or regulation in a manner which
could reasonably be expected to have a Material Adverse
Effect.
I. Taxes. The Company has filed or caused to be
filed on a timely basis all federal, state, local, foreign
and other tax returns, reports and declarations (collectively, "Tax Returns")
required to be filed by it. All Tax Returns filed by or on behalf of the Company
are true, complete and correct in all material respects. The Company has paid
all income, estimated, excise, franchise, gross receipts, capital stock,
profits, stamp, occupation, sales, use, transfer, value added, property (whether
real, personal or mixed), employment, unemployment, disability, withholding,
social security, workers' compensation and other taxes, and interest, penalties,
fines, costs and assessments (collectively, "Taxes"), due and payable with
respect to the periods covered by such Tax Returns (whether or not reflected
thereon). There are no Tax liens on any of the properties or assets, real,
personal or mixed, tangible or intangible, of the Company. The accrual for Taxes
reflected in the Financial Statements accurately reflects the total amount of
all unpaid Taxes, whether or not
13
disputed and whether or not presently due and payable, of the Company as of the
close of the period covered by the Financial Statements, and the amount of the
Company's unpaid Taxes does not exceed the accrual for Taxes reflected in the
Financial Statements for the period ended December 31, 1995. Since November 30,
1996, the Company has not incurred any tax liability other than in the ordinary
course of business. No Tax Return of the Company has ever been audited. No
deficiency in Taxes for any period has been asserted by any taxing authority
which remains unpaid at the date hereof (the results of any settlement being set
forth in Exhibit B), no written inquiries or notices have been received by the
Company from any Taxing authority with respect to possible claims for Taxes, the
Company has no reason to believe that such an inquiry or notice is pending or
threatened, and there is no basis for any additional claims or assessments for
Taxes. The Company has not agreed to the extension of the statute of limitations
with respect to any Tax Return or Tax period.
J. Permits; Compliance with Applicable Law.
(i) General. The Company is not in default
under any, and has complied with all, statutes, including the Federal Telephone
Consumer Act of 1991 and the Federal Telemarketing and Consumer Fraud and Abuse
Prevention Act of 1994, ordinances, regulations and laws, orders, judgments and
decrees of any court or governmental entity or agency, relating to the Business
or the Assets as to which a default or failure to comply might have a Material
Adverse Effect on the Business or the Assets. Within the last three (3) years,
neither the Company nor the Shareholder has any knowledge of any basis for
assertion of any violation of the foregoing or for any claim for compensation or
damages or otherwise arising out of any violation of the foregoing. Within the
last three (3) years, neither the Company nor the Shareholder has received any
notification of any asserted present or past failure to comply with any of the
foregoing which has not been satisfactorily responded to in the time period
required thereunder.
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(ii) Permits; Intellectual Property. Set
forth in Exhibit B is a complete and accurate list of all material permits,
licenses, approvals, franchises, patents, registered and common law trademarks,
service marks, tradenames, copyrights (and applications for each of the
foregoing), notices and authorizations issued by governmental entities or other
regulatory authorities, federal, state or local (collectively the "Permits"),
held by the Company in connection with the Business. The Permits set forth in
Exhibit B are all the material Permits required for the conduct of the Business.
All the Permits set forth in Exhibit B are in full force and effect, and the
Company has not engaged in any activity which would cause or permit revocation
or suspension of any such Permit, and to the best of the knowledge of the
Company and the Shareholder, no action or proceeding looking to or contemplating
the revocation or suspension of any such Permit is pending or threatened. There
are no existing material defaults or events of default or event or state of
facts which with notice or lapse of time or both would constitute a default by
the Company under any such Permit. Neither the Company nor the Shareholder has
any knowledge of any default or claimed or purported or alleged default or state
of facts which with notice or lapse of time or both would constitute a material
default on the part of any other party in the performance of any obligation to
be performed or paid by any other party under any Permit set forth in Exhibit B.
The use by the Company of any proprietary rights relating to any Permit does not
involve any claimed infringement of such Permit or rights. The consummation of
the transactions contemplated hereby will in no way affect the continuation,
validity or effectiveness of the Permits set forth in Exhibit B or require the
consent of any person. Except as set forth in Section II(J)(iii) below, the
Company is not required to be licensed by, nor is it subject to the regulation
of, any governmental or regulatory body by reason of the conduct of the
Business.
(iii) Environmental. (a) The Company has
duly complied in all material respects with the provisions of all federal, state
and local environmental, health and safety laws, codes and ordinances and all
rules and
15
regulations promulgated thereunder, except where the failure to so
comply would not have a Material Adverse Effect.
(b) The Company has not received any
notice of, and neither the Company nor the Shareholder knows of any facts which
might constitute, violations of any federal, state or local environmental,
health or safety laws, codes or ordinances, and any rules or regulations
promulgated thereunder, which relate to the use, ownership or occupancy of any
leased premises by the Company or of any premises formerly owned, leased or
occupied by the Company.
K. Accounts Receivable; Accounts Payable.
(i) The accounts receivable of the Company are in their
entirety valid accounts receivable, arising in the ordinary course of business.
(ii) The accounts and notes payable and other accrued expenses
reflected in the Financial Statements, and the accounts and notes payable and
accrued expenses incurred by the Business subsequent to November 30, 1996, are
in all respects valid claims that arose in the ordinary course of business.
Since November 30, 1996, the accounts and notes payable and other accrued
expenses of the Business have been
paid in a manner consistent with past practice. Set forth in Schedule III is a
good faith itemization of the expected outstanding accounts payable, accrued
expenses and debt of the Business as of the date of the Closing.
L. Contractual and Other Obligations. Set forth in
Exhibit B is a list and brief description of all (i) material contracts,
agreements, licenses, leases, arrangements (written or oral) and other documents
to which the Company is a party or by which the Company or any of the Assets is
bound (including, in the case of loan agreements, a description of the amounts
of any outstanding borrowings thereunder and the collateral, if any, for such
borrowings); (ii) obligations and liabilities of the Company pursuant to
uncompleted orders for the purchase of materials, supplies, equipment and
services for the requirements of the Business with respect to which the
remaining obligation of the
16
Company is in excess of $25,000; and (iii) material contingent obligations and
liabilities of the Company; all of the foregoing being hereinafter referred to
as the "Contracts". Neither the Company nor, to the best of the knowledge of
the Company and the Shareholder, any other party is in default in the
performance of any covenant or condition under any Contract and no claim of such
a default has been made and no event has occurred which with the giving of
notice or the lapse of time would constitute a default under any covenant or
condition under any Contract, except where such default would not have a
Material Adverse Effect. The Company is not a party to any Contract which would
terminate or be materially adversely affected by consummation of the
transactions contemplated by this Agreement. The Company is not a party to any
Contract expected to be performed at a loss. Originals or true, correct and
complete copies of all written Contracts have been provided to the Purchaser.
M. Compensation. Set forth in Exhibit D attached hereto is a
list of all material agreements between the Company and each person employed by
or independently contracting with the Company with regard to compensation,
whether individually or collectively, and set forth in Exhibit D is a list of
all employees of the Company entitled to receive annual compensation in excess
of $30,000 and their respective salaries. The transactions contemplated by this
Agreement will not result in any liability for severance pay to any employee or
independent contractor of the Company. The Company has not informed any employee
or independent contractor providing services to the Company that such person
will receive any increase in compensation or benefits (except for such increases
that are in the ordinary course of business) or any ownership interest in the
Company or the Business.
N. Employee Benefit Plans. Except as set forth in Exhibit E
attached hereto, the Company does not maintain or sponsor, nor does it
contribute to, any pension, profit-sharing, savings, bonus, incentive or
deferred compensation, severance pay, medical, life insurance, welfare or other
employee benefit plan. All pension,
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profit-sharing, savings, bonus, incentive or deferred compensation, severance
pay, medical, life insurance, welfare or other employee benefit plans within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (hereinafter referred to as "ERISA"), in which the employees
participate (such plans and related trusts, insurance and annuity contracts,
funding media and related agreements and arrangements being hereinafter referred
to as the "Benefit Plans") comply with all requirements of the Department of
Labor and the Internal Revenue Service, and with all other applicable laws, and
the Company has not taken or failed to take any action with respect to the
Benefit Plans which might create any liability on the part of the Company or the
Purchaser. Each "fiduciary" (within the meaning of Section 3(21)(A) of ERISA) as
to each Benefit Plan has complied with all requirements of ERISA and all other
applicable laws in respect of each such Benefit Plan. The Company has furnished
to the Purchaser copies of all Benefit Plans and all financial statements,
actuarial reports and annual reports and returns filed with the Internal Revenue
Service with respect to such Benefit Plans prior to the date hereof. Such
financial statements and actuarial reports and annual reports and returns are
true and correct in all material respects, and none of the actuarial assumptions
underlying such documents have changed since the respective dates thereof. In
addition:
(i) Each Benefit Plan intended to qualify under Section
401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service as to its qualification;
(ii) The Company does not maintain, sponsor or contribute
to, and has never maintained, sponsored or contributed to a "defined
benefit plan" (within the meaning of Section 3(35) of ERISA) or a
Multiemployer Plan (within the meaning of Section 3(37) of ERISA);
(iii) No "prohibited transaction" (within the meaning of
Section 406 of ERISA or Section 4975(c) of
18
the Code) has occurred with respect to any Benefit
Plan;
(iv) No provision of any Benefit Plan or of any agreement,
and no act or omission of the Company in any way limits, impairs,
modifies or otherwise affects the right of the Company or the Purchaser
unilaterally to amend or terminate any Benefit Plan after the Closing,
subject to the requirements of applicable law;
(v) There are no contributions which are or hereafter will
be required to have been made to trusts in connection with any Benefit
Plan that would constitute a "defined contribution plan" (within the
meaning of Section 3(34) of ERISA);
(vi) Other than claims in the ordinary course for benefits
with respect to the Benefit Plans, there are no actions, suits or
claims (including claims for income taxes, interest, penalties, fines
or excise taxes with respect thereto) pending with respect to any
Benefit Plan, or any circumstances which might give rise to any such
action, suit or claim (including claims for income taxes, interest,
penalties, fines or excise taxes with respect thereto);
(vii) All reports, returns and similar documents with respect
to the Benefit Plans required to be filed with any governmental agency
have been so filed on or before their due date; and
(viii) The Company does not have any obligation to provide
health or other welfare benefits to former, retired or terminated
employees, except as specifically required under Section 4980B of the
Code or Section 601 of ERISA. The Company has complied with the notice
and continuation requirements of Section 4980B of the Code or Section
601 of ERISA and the regulations thereunder.
O. Labor Relations. There have been no violations of any
federal, state or local statutes, laws, ordinances, rules, regulations, orders
or directives with
19
respect to the employment of individuals by, or the employment practices or work
conditions of, the Company, or the terms and conditions of employment, wages and
hours, which violations would have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth in Exhibit B, the Company is not
engaged in any unfair labor practice or other unlawful employment practice and
there are no charges of unfair labor practices or other employee-related
complaints pending or, to the best of the knowledge of the Company and the
Shareholder, threatened against the Company before the National Labor Relations
Board, the Equal Employment Opportunity Commission, the Occupational Safety and
Health Review Commission, the Department of Labor or any other federal, state,
local or other governmental authority. There is no strike, picketing, slowdown
or work stoppage or organizational attempt pending, or, to the best of the
knowledge of the Company and the Shareholder, threatened against or involving
the Business. No issue with respect to union representation is pending or
threatened with respect to the employees of the Company. No union or collective
bargaining unit or other labor organization has ever been certified or
recognized by the Company as the representative of any of the employees of the
Company.
P. Increases in Compensation or Benefits. Except as set forth
in Exhibit D, subsequent to the date of the 1996 Balance Sheet, there have been
no increases in the compensation payable or to become payable to any of the
employees of the Company and there have been no payments or provisions for any
awards, bonuses, loans, profit sharing, pension, retirement or welfare plans or
similar or other disbursements or arrangements for or on behalf of such
employees (or related parties thereof), in each case, other than pursuant to
currently existing plans or arrangements, if any, set forth in Exhibit E;
provided, however, that in no event was any such increase in compensation or any
such payment or provision made with respect to the Shareholder (or any members
of the family of the Shareholder). All bonuses heretofore granted to employees
of the Company have been paid in full to such employees. The vacation policy of
the Company is set forth in
20
Exhibit E. Except as set forth in Exhibit E, no employee of the Company is
entitled to vacation time in excess of three weeks during the current calendar
year and no employee of the Company has any accrued vacation or sick time with
respect to any prior period.
Q. Insurance. A list and brief description of the insurance
policies maintained by the Company with respect to the Business is set forth in
Exhibit B. Such insurance policies are in full force and effect and all premiums
due thereon prior to or on the date of the Closing have been paid. The Company
has complied in all material respects with the provisions of such policies.
There are no notices of any pending or threatened termination or premium
increases with respect to any such policies, except where such terminations or
increases would not have a Material Adverse Effect. The Company has not had any
casualty loss or occurrence which may give rise to any claim of any kind not
covered by insurance and neither the Company nor the Shareholder is aware of any
occurrence which may give rise to any claim of any kind not covered by
insurance. No third party has filed any claim against the Company or the
Business for personal injury or property damage of a kind for which liability
insurance is generally available which is not fully insured, subject only to the
standard deductible. All claims against the Company or the Business covered by
insurance have been reported to the insurance carrier on a timely basis. The
Company has adequate insurance and reserves to cover any liability that may
arise out of any claims, including but not limited to workers compensation and
health insurance claims, that may be asserted against the Business for
occurrences prior to the date of the Closing.
R. Conduct of Business. The Company is not restricted from
conducting the Business in any location by agreement or court decree.
S. Allowances. The Company has no obligation outside of the
ordinary course of business to make allowances to any customers with respect to
the Business.
21
T. Use of Names. All names under which the Company currently
conducts the Business are listed in Exhibit B. To the best of the knowledge of
the Company and the Shareholder, there are no other persons or businesses
conducting businesses similar to those of the Company in the State of Florida
having the right to use or using the names set forth in Exhibit B or any
variants of such names; and no other person or business has ever attempted to
restrain the Company or the Shareholder from using such names or any variant
thereof.
U. Power of Attorney. The Company has not granted any power of
attorney (revocable or irrevocable) to any person, firm or corporation for any
purpose whatsoever, except as may have been granted pursuant to leases or as
otherwise disclosed herein.
V. Litigation; Disputes. Except as set forth in Exhibit B,
there are no material claims, disputes, actions, suits, investigations or
proceedings pending or, to the best of the knowledge of the Company and the
Shareholder, threatened against or affecting the Company, the Business or any of
the Assets, no such claim, dispute, action, suit, proceeding or investigation
has been pending or, to the best of the knowledge of the Company and the
Shareholder, threatened during the five-year period preceding the date of the
Closing and, to the best of the knowledge of the Company and the Shareholder,
there is no basis for any such claim, dispute, action, suit, investigation or
proceeding. Neither the Company nor either of the Shareholder has any knowledge
of any default under any such action, suit or proceeding. The Company is not in
default in respect of any judgment, order, writ, injunction or decree of any
court or of any federal, state, municipal or other government department,
commission, bureau, agency or instrumentality or any arbitrator.
W. Location of Business and Assets. Set forth in Exhibit B is
each location (specifying state, county and city) where the Company (i) has a
place of business, (ii) owns or leases real property and (iii) owns or leases
any other property, including equipment and furniture.
22
X. Computer Software. The Company has the right to use all
computer software, including all property rights constituting part of that
computer software, used in connection with the Company's business operations
(the "Computer Software"). A list of all written licenses pertaining to the
Computer Software is set forth in Exhibit B (the "Licenses"). The Company has no
knowledge that any of the Licenses may not be valid or enforceable by the
Company or that the use of the Computer Software or any of the Licenses may
infringe upon or conflict with the rights of any third party. The Company has
not granted any licenses to use the Computer Software or any sub-licenses with
respect to any of the Licenses.
Y. Disclosure. No representation or warranty made under any
Section hereof and none of the information furnished by the Company or either of
the Shareholder set forth herein, in the exhibits hereto or in any document
delivered by the Company or the Shareholder to the Purchaser, or any authorized
representative of the Purchaser, pursuant to this Agreement knowingly and
purposefully contains any untrue statement of a material fact or knowingly and
purposefully omits to state a material fact necessary to make the statements
herein or therein not misleading.
Z. Investment. (i) The Company has had access to such
information relating to the business and affairs of the Purchaser which the
Company and the Shareholder have reasonably requested, and all additional
information which the Company and the Shareholder have considered necessary to
verify the accuracy of the information so received. The Company and the
Shareholder have had the opportunity to ask questions of and receive answers
from the Purchaser concerning the terms and conditions of the transactions
contemplated by this Agreement. On the basis of the foregoing, the Company and
the Shareholder are familiar with the operations, business plans and financial
condition of the Purchaser.
(ii) Each of the Company and the Shareholder
understands that the Purchaser may issue and deliver to the
23
Company, as part of the Contingent Payments, shares of Purchaser Common Stock
pursuant to this Agreement, without compliance with the registration
requirements of the Securities Act; that for such purpose the Purchaser will
rely upon the representations, warranties, covenants and agreements contained
herein; and that such non-compliance with registration is not permissible unless
such representations and warranties are correct and such covenants and
agreements performed. Each of the Company and the Shareholder is an "accredited
investor" as such term is defined in Rule 501 under the Securities Act.
(iii) Each of the Company and the Shareholder
understands that, under existing rules of the Securities and Exchange Commission
(the "SEC"), the Company may be unable to sell its shares of Purchaser Common
Stock except to the extent that its shares of Purchaser Common Stock may be sold
(i) pursuant to an effective registration statement covering such shares
pursuant to the Securities Act or (ii) in a bona fide private placement to a
purchaser who shall be subject to the same restrictions on any resale or (iii)
subject to the restrictions contained in Rule 144 under the Securities Act
("Rule 144"). Each of the Company and the Shareholder understands that the
Purchaser is under no obligation to effect a registration of their shares of
Purchaser Common Stock under the Securities Act.
(iv) Each of the Company and the Shareholder
is familiar with the provisions of Rule 144 and the limitations upon the
availability and applicability of such rule.
(v) Each of the Company and the Shareholder
is a sophisticated investor familiar with the type of risks inherent in the
acquisition of restricted securities such as the shares of Purchaser Common
Stock and their financial position is such that they can afford to retain the
shares of Purchaser Common Stock for an indefinite period of time without
realizing any direct or indirect cash return on their investment.
24
(vi) The Company is acquiring its shares of
Purchaser Common Stock for its account and not with a view to, or for sale in
connection with, the distribution thereof within the meaning of the Securities
Act.
SECTION III
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF THE SHAREHOLDER
The Shareholder hereby represents and warrants to, and
covenants and agrees with, the Purchaser, as of the date of the Closing, that:
A. Authority. The Shareholder is fully able to execute and
deliver this Agreement and to perform the Shareholder's covenants and agreements
hereunder, and this Agreement constitutes a valid and legally binding obligation
of the Shareholder, enforceable against the Shareholder in accordance with its
terms, except as enforceability may be limited by applicable equitable
principles or by bankruptcy, insolvency, reorganization, moratorium or similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally.
B. No Legal Bar; Conflicts. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
violates any statute, ordinance, regulation, order, judgment or decree of any
court or governmental agency, or conflicts with or will result in any breach of
any of the terms of or constitute a default under or result in the termination
of or the creation of any lien pursuant to the terms of any contract or
agreement to which the Shareholder is a party or by which the Shareholder or any
of the Shareholder's assets is bound, except as set forth in Exhibit B.
25
SECTION IV
CONDUCT OF THE BUSINESS
Each of the Company and the Shareholder, jointly and
severally, hereby covenant and agree with the Purchaser that, except as
hereafter consented to in writing by the Purchaser, from and after the date of
this Agreement and until the Closing, the Company shall not:
A. Operation of the Business. Make a purchase, sale or
lease in respect of the Business or introduce any method of management,
accounting or operation in respect of the Business, except in a manner
consistent with prior practice.
B. Accounts Receivable. Fail to maintain sales or accounts
receivable on a normal basis or change the cash equivalent accounts or the
methods or procedures for billing, collecting, or recording customer accounts
receivable or reserves for doubtful accounts.
C. Properties, Plant and Equipment. Fail to maintain, repair,
service, preserve, and in any way further encumber, its properties, other than
accounts receivable collected upon and supplies used in the ordinary course of
business after the date hereof.
D. No Loans, Advances, etc. Make any loans or advances, debt
repayments or forgiveness, interest payments or forgiveness, or grant pay
raises, bonuses or awards, or unusual salary or other payments, disbursements or
other distributions, directly or indirectly, in any form to any management
personnel, employee, director, officer or shareholder of the Company, or any
relative of any such person, or entities or persons affiliated with or related
to any such management personnel, employee, director, officer or shareholder of
the Company other than in the ordinary course of business or as consistent with
prior practices.
E. No Dividends; Distributions; Payment of Certain
Indebtedness. Declare or pay any dividend or make
26
any other distribution in respect of its capital stock, or, except as
specifically contemplated by this Agreement, directly or indirectly, purchase,
redeem or otherwise acquire or dispose of any shares of its capital stock or,
except in the ordinary course of business, pay or discharge any outstanding
indebtedness and in any event pay or discharge any outstanding indebtedness of
the Shareholder, the relatives or affiliates of the Shareholder or of any of the
management personnel, employees, directors or officers of the Company.
F. Preservation of Organization, Employees and Business
Relationships. Fail to use its best efforts to (i) preserve the present business
organization of the Company intact; (ii) keep available the services of the
present employees of the Business; and (iii) preserve present relationships and
goodwill with entities or persons having business dealings with the Business,
including, without limitation, existing customers of the Business.
G. Books and Records. Fail to maintain the books and
records of the Business in accordance with good business practices, on a basis
consistent with prior practice.
H. Compliance with Laws. Fail to use its best efforts to
comply in all material respects with all statutes, ordinances, regulations,
orders, judgments and decrees of every court or governmental entity or agency
applicable to the Company and to the conduct of the Business and perform all of
its obligations with respect thereto without default.
I. Maintenance of Insurance. Fail to maintain
and pay all premiums with respect to such policies of
insurance as are currently held in the name of the Company.
J. Contracts. Make any change adverse to the
Business in the terms of any Contract or fail to perform any
of its obligations with respect thereto without default.
27
K. Claims. Waive, cancel, sell or otherwise
dispose of for less than the face value thereof any claim or
right the Company has against others.
L. Bonuses, etc. Take any action described in the first
sentence of Section II(P) hereof.
X. Xxxxxxxx; Accounts Payable. Fail to xxxx for services
rendered or permit any account payable or accrued expense of the Business to be
outstanding for more than sixty (60) days, other than accounts payable or
accrued expenses being diligently contested in good faith by the Company and as
to which the Purchaser shall have consented in writing.
N. Contracts. Enter into any contract, contractual obligation,
bank debt, lease, loan or other commitment, written or oral, or agreement for
amounts to be due to third parties, other than in the ordinary course of
business.
O. Encumbrances. Permit any encumbrance, lien
or attachment against any of its property.
P. Further Information. Fail to make available to the
Purchaser the books of account, records, Tax Returns, leases, contracts and
other documents or agreements of the Company and the Business as the Purchaser,
its counsel, accountants and its authorized representatives may from time to
time reasonably request.
Q. Cooperation. Fail to cooperate fully with the Purchaser, do
all things reasonably necessary to assist the Purchaser and use its reasonable
best efforts at its own expense to obtain all consents and approvals necessary
for the transfer of the Assets, including the furnishing of all financial and
other information reasonably required by the party whose consent or approval is
being sought.
28
SECTION V
ADDITIONAL REPRESENTATIONS, WARRANTIES
AND COVENANTS OF THE COMPANY,
THE SHAREHOLDER AND THE PURCHASER
A. Publicity. Each of the Company and the Shareholder
covenants and agrees, jointly and severally, that any and all publicity (whether
written or oral) and notices to third parties (other than employees of the
Company) concerning the sale of the Assets and other transactions contemplated
by this Agreement shall be subject to the prior written approval of the
Purchaser, which approval may be withheld in the sole discretion of the
Purchaser.
B. Correspondence, etc. Each of the Company and the
Shareholder covenants and agrees, jointly and severally, that each of them will
deliver to the Purchaser, promptly after the receipt thereof, all inquiries,
correspondence and other materials received by either of them from any person or
entity relating to the Business or the Assets.
C. Books and Records. Each of the Company and the Shareholder
represents and warrants, jointly and severally, that the books and records of
the Company are in all respects complete and correct, have been maintained in
accordance with good business practices and accurately reflect the basis for the
financial position and results of operations of the Company set forth in the
Financial Statements. All of such books and records have been available for
inspection by the Purchaser and its representatives. Each of the Company and the
Shareholder covenants and agrees, jointly and severally, that each of them shall
give the Purchaser reasonable access to the historical financial books and
records of the Company, to the extent such books and records are not included in
the Assets, for a period of five years from the date of the Closing. The Company
or the Shareholder shall retain all such books and records in substantially
their condition at the time of the Closing. None of such books and records shall
be destroyed without the prior written approval of the
29
Purchaser or without first offering such books and records to the Purchaser.
D. Discharge of Obligations. Each of the Company and the
Shareholder covenants and agrees, jointly and severally, to pay promptly and
otherwise to fulfill and discharge all obligations and liabilities of the
Company which are not Assumed Liabilities hereunder when due and payable and
otherwise prior to the time at which any of such obligations or liabilities
could in any way result in or give rise to a claim against the Assets, the
Business or the Purchaser, result in the imposition of any lien, charge or
encumbrance on any of the Assets, or adversely affect the Purchaser's title to
or use of any of the Assets.
E. Delivery of Funds. Subsequent to the Closing, each of the
Company and/or the Shareholder shall deliver on a daily basis any funds and any
checks, notes, drafts and other instruments for the payment of money, duly
endorsed to the Purchaser, received by any of them (i) comprising payment of any
of the accounts receivable of the Company constituting a part of the Assets and
(ii) comprising payment of any amounts due from customers of the Company or
others for services rendered by the Company prior to the Closing, including
pursuant to any agreements constituting part of the Assets.
F. Pass Through of Rights and Obligations. To the
extent that the Company and the Shareholder are unable to obtain any necessary
consents of third parties prior to the consummation of the transactions
contemplated hereby under the contracts, agreements, leases, insurance policies
and other instruments of the Company which are part of the Assets and are set
forth in Exhibit B (the "Exhibit B Contracts"), each of the Company and the
Shareholder covenant and agree to use their best efforts to obtain such consents
within thirty (30) days after the Closing. The Company and the Shareholder
covenant and agree (i) not to assign any such Exhibit B Contract to any party
other than the Purchaser (or the Designee), (ii) to use their best efforts to
keep such Exhibit B Contract in full force and effect, except as otherwise
directed by the Purchaser, (iii)
30
to operate under such Exhibit B Contract only under the direction of the
Purchaser, (iv) to the extent such Exhibit B Contract requires by its terms the
performance of services by the Company, that the Purchaser is hereby
subcontracted and employed to perform all such services on behalf of the
Company, (v) to remit or otherwise provide to the Purchaser all revenues and
other benefits derived from such Exhibit B Contract immediately upon receipt
thereof and (vi) in the case of any Exhibit B Contract, in the event
that such consent cannot be obtained, to cooperate with the Purchaser and the
other party to such Exhibit B Contract to enable the Purchaser to enter into a
contract directly with such other party.
G. Working Capital. On or before 270 days from the date of the
Closing (the "Reconciliation Date"), the Purchaser shall calculate the amount of
the actual collections by the Purchaser after January 1, 1997, and prior to June
30, 1997(the "Collection Period") of the accounts receivable of the Business
which were outstanding on January 1, 1997 (the "Pre-Closing Receivables"). In
the event that the sum of the collections of Pre-Closing Receivables during the
Collection Period plus the amount of cash of the Company on January 1, 1997(the
"Closing Cash") exceeds (the "Excess") the sum of $1,200,000 plus the aggregate
amount of current liabilities per GAAP of the Company as of January 1, 1997 less
the amount of interest and principal of indebtedness to Xxxxxxx Bank and other
debt to former owners included in the current liabilities per GAAP as of January
1, 1997 (such amount is hereinafter referred to as the "Target Amount"), the
Purchaser shall pay to the Company the amount of such Excess on or before the
Reconciliation Date. In the event that the sum of the amount collected plus the
Closing Cash shall be less (the "Shortfall") than the Target Amount, each of the
Company and the Shareholder, jointly and severally, shall be obligated to pay on
or before the Reconciliation Date to the Purchaser the amount by which the sum
of the amounts of such collections and of Closing Cash are less than the Target
Amount. The Purchaser shall permit the Company to review the Purchaser's
calculations of collections of Pre-Closing Receivables and the amounts of the
Closing Cash, and the
31
current liabilities per GAAP as of January 1, 1997 and the parties agree to
negotiate in good faith to resolve any controversies relating to such
calculations.
Any amount of Excess or Shortfall shall be paid to the Company
or the Purchaser, as the case may be, with interest at the rate of nine percent
(9%) per annum, such interest to accrue from the date of the Closing.
H. Fort Lauderdale Location. The Purchaser covenants and
agrees that the operations of the Business shall remain in the Fort Lauderdale,
Florida area for a period of three (3) years following the date of the Closing
unless the Shareholder consents to a move outside the Fort Lauderdale area.
I. Seniority of the Company's Employees. The Purchaser
covenants and agrees that the current employees of the Company shall be given
credit for their past service with the Company when considering their
eligibility for the Purchaser's employee benefits except with respect to
employee benefit plans such as 401(k), Profit Sharing and Stock Option plans.
SECTION VI
CLOSING
A. Time and Place of Closing. The closing of the purchase and
sale of the Assets as set forth herein (the "Closing") shall be held at the
offices of Xxxxxxx X. Xxxxxxx, P.A., 000 Xxxx Xxx XXX Xxxx., Xx. Xxxxxxxxxx, XX,
at 10:00 am January 15, 1997 or such other time and place as the parties
mutually agree upon.
B. Delivery of Assets. Delivery of the Assets shall be made by
the Company to the Purchaser (or the Designee) at the Closing by delivering such
deeds, bills of sale, assignments and other instruments of conveyance and
transfer, and such powers of attorney, as shall be effective to vest in the
Purchaser (or the Designee) title to or other
32
interest in, and the right to full custody and control of, the Assets, free and
clear of all liens, charges, encumbrances and security interests whatsoever, all
of which documents shall be prepared by the Purchaser unless specifically
provided otherwise.
C. Sales and Use Taxes. Any and all sales or
use Taxes or any other Taxes or charges assessed in
connection with this transaction shall be paid by the
Company.
SECTION VII
CONDITIONS TO THE COMPANY'S OBLIGATION TO CLOSE
Notwithstanding the Company's right to bring an action as a
result of the Purchaser's breach of or failure to perform any of its obligations
hereunder, which right the Purchaser hereby acknowledges, the obligation of the
Company to sell the Assets and the obligation of the Company otherwise to
consummate the transactions contemplated by this Agreement at the Closing are
subject to the following conditions precedent, any or all of which may be waived
by the Company in writing in its sole discretion, and each of which the
Purchaser hereby agrees to use its best efforts to satisfy at or prior to the
Closing:
A. No Litigation. No action, suit or proceeding against the
Company, the Shareholder or the Purchaser relating to the consummation of any of
the transactions contemplated by this Agreement or any governmental action
seeking to delay or enjoin any such transactions shall be pending or threatened.
B. Representations and Warranties. The representations and
warranties made by the Purchaser herein shall be correct as of the date of the
Closing in all respects with the same force and effect as though such
representations and warranties had been made as of the date of the Closing, and,
on the date of the Closing, the Purchaser shall deliver to the Company a
certificate
33
dated the date of the Closing to such effect. All the terms, covenants and
conditions of this Agreement to be complied with and performed by the Purchaser
on or before the date of the Closing shall have been duly complied with and
performed in all material respects, and, on the date of the Closing, the
Purchaser shall deliver to the Company a certificate dated the date of the
Closing to such effect.
C. Other Certificates. The Company shall have received such
additional certificates, instruments and other documents in form and substance
satisfactory to it and its counsel, as it shall have reasonably requested in
connection with the transactions contemplated hereby.
D. Deliveries. All deliveries by the Purchaser required
hereunder shall have been made.
E. Payment of the Purchase Price. The Company shall have
received from the Purchaser a (i) wire transfer to the account designated by,
the Company in the amount of $6,500,000 and (ii) the Note, representing the
Purchase Price deliverable at Closing.
F. Employment Agreement. The Purchaser (or the Designee) and
the Shareholder shall have entered into an employment agreement (the "Employment
Agreement") substantially in the form of Exhibit F attached hereto.
X. Xxxxxxx Bank. The Shareholder, his wife Xxxxxxx Xxxxxxxxx,
and the Company shall have been released by Xxxxxxx Bank (the "Bank") from all
obligations to the Bank and all pledges of their assets to the Bank relating to
the Company's term loan from the Bank in the original principal amount of
$800,000 and the Company's line of credit with the Bank in the amount of up to
$100,000.
34
SECTION VIII
CONDITIONS TO THE PURCHASER'S OBLIGATION TO CLOSE
Notwithstanding the Purchaser's right to bring an action as a
result of the Company's or the Shareholder's breach of or failure to perform any
of its or his obligations hereunder, which right each of the Company and the
Shareholder hereby acknowledges, the obligation of the Purchaser to purchase the
Assets and otherwise to consummate the transactions contemplated by this
Agreement at the Closing is subject to the following conditions precedent, any
or all of which may be waived by the Purchaser in its sole discretion, and each
of which the Company hereby agrees to use its best efforts to satisfy at or
prior to the Closing:
A. Opinion of the Company's Counsel. The Purchaser shall have
received an opinion of Xxxxxxx X. Xxxxxxx, P.A., counsel for the Company and the
Shareholder, delivered to the Purchaser pursuant to the instructions of the
Company and the Shareholder, dated the date of the Closing, substantially to the
effect set forth in Exhibit J attached hereto.
B. No Litigation. No action, suit or proceeding against the
Company, the Shareholder or the Purchaser relating to the consummation of any of
the transactions contemplated by this Agreement nor any governmental action
seeking to delay or enjoin any such transactions shall be pending or threatened.
C. Representations and Warranties. The representations and
warranties made by the Company and the Shareholder herein shall be correct as of
the date of the Closing in all respects with the same force and effect as though
such representations and warranties had been made as of the date of the Closing,
and, on the date of the Closing, the Company and the Shareholder shall deliver
to the Purchaser a certificate dated the date of the Closing to such effect. All
the terms, covenants and conditions of this Agreement to be complied with and
performed by the
35
Company and the Shareholder on or before the date of the Closing shall have been
duly complied with and performed in all material respects and, on the date of
the Closing, the Company and the Shareholder shall deliver to the Purchaser a
certificate dated the date of the Closing to such effect.
D. Other Certificates. The Purchaser shall have
received such other certificates, instruments and other documents, in form and
substance satisfactory to the Purchaser and its counsel, as it shall have
reasonably requested in connection with the transactions contemplated hereby.
E. Third Party Consents. The Purchaser shall have received all
necessary consents of third parties under the contracts, agreements, leases,
insurance policies and other instruments of the Company or the Shareholder to
the consummation of the transactions contemplated hereby which consents shall
not provide for the acceleration of any liabilities or any other detriment to
the Purchaser or the Business.
F. Employment Agreement. The Purchaser (or the
Designee) and the Shareholder shall have entered into the
Employment Agreement.
X. Xxxxxxx Release. The Purchaser shall have received from
Xxxxxxx (i) a fully executed financing statement on Form UCC-3 releasing the
accounts receivable of the Company from Xxxxxxx'x xxxx on such accounts
receivable and (ii) the original promissory note of the Company in the original
principal amount of $450,000 payable to the order of Xxxxxxx dated February 16,
1996, marked paid in full.
H. Stockholders Agreement. The Company and the
Purchaser shall have entered into a Stockholders Agreement in the form of
Exhibit G attached hereto.
I. Stock Purchase Agreement. The Shareholder
and the Purchaser shall have entered into a Stock Purchase
Agreement in the form of Exhibit H attached hereto.
36
J. Key Employee Employment Agreements. The Purchaser (or the
Designee) shall have entered into employment agreements with each of Xxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxxx and Xxxxxxx Xxxx
(collectively the "Key Employees") in the form of Exhibit I attached hereto (the
"Key Employee Employment Agreements").
K. Key Employee Stock Purchase Agreements. The Purchaser shall
issue to the Key Employees an aggregate of 50,000 shares of Purchaser Common
Stock and shall enter into with each of the Key Employees a Stock Purchase
Agreement in the form of Exhibit J attached hereto (collectively, the "Key
Employee Stock Purchase Agreements").
L. Deliveries. All deliveries by the Company and the
Shareholder required hereunder shall have been made, including such deeds, bills
of sale, assignments and other instruments of conveyance and transfer, and such
powers of attorney, as shall be effective to vest in the Purchaser (or the
Designee) title to or other interest in, and the right to full custody and
control of, the Assets, free and clear of all liens, charges, encumbrances and
security interests whatsoever.
M. Change of Name. The Purchaser shall have received evidence
that the Company has taken all steps necessary to change its name to a corporate
name other than Telemanagement Services and a written consent duly executed by
the Company evidencing its consent to the use by the Purchaser and any
subsidiaries, affiliated companies or assigns of the Purchaser of the name
Telemanagement Services and variants thereof.
N. Bank Release of the Company's Receivables. The Purchaser
shall have received from the Bank a fully executed financing statement on Form
UCC-3 releasing the accounts receivable of the Company from the Bank's liens on
such accounts receivable.
37
SECTION IX
INDEMNIFICATION
A. Indemnification by the Company and the Shareholder. Each of
the Company and the Shareholder, jointly and severally, shall indemnify and hold
harmless the Purchaser from and against any and all losses, claims, assessments,
demands, damages, liabilities, obligations, costs and/or expenses whatsoever
(hereinafter referred to collectively as the "Purchaser's Damages"), including,
without limitation, Purchaser's Counsel Expenses (as hereinafter defined),
sustained or incurred by the Purchaser (or the Designee) as a result of or
arising from (a) the breach of any of the obligations, covenants or provisions
of, or the inaccuracy of any of the representations or warranties made by, the
Company or the Shareholder herein or (b) any liabilities or obligations of the
Company which are not Assumed Liabilities. For purposes hereof "Purchaser's
Counsel Expenses" shall mean reasonable fees and disbursements of counsel
howsoever sustained or incurred by the Purchaser (or the Designee), including,
without limitation, in any action or proceeding between the Purchaser and the
Shareholder and/or the Company or in any action or proceeding between the
Purchaser and any third party. In addition to the right of the Purchaser to
indemnification hereunder, the Purchaser shall have the right from time to time
to set off the amount of any of the Purchaser's Damages against any Contingent
Payments;
provided, however, that the Purchaser shall not have the right to set-off under
this Section IX(A) the amount of the Purchaser's Damages which it may sustain or
incur by reason of a breach of the Company's or Shareholder's covenants
contained in Section X hereof.
In the event that the Purchaser shall determine to exercise
its right to set off the amount of any of the Purchaser's Damages against any
Contingent Payments, the Purchaser shall give the Company sixty (60) days'
written notice (the "Set Off Notice Period") prior to any such set off, which
notice shall specify the amount of such set off and the nature of the
Purchaser's Damages. During the Set
38
Off Notice Period, the Company shall have the right to attempt to mitigate any
such Purchaser's Damages or pay the amount of such Purchaser's Damages in lieu
of any set off. If the Purchaser and the Company are unable to agree on the
amount or cause of any of the Purchaser's Damages, the parties shall submit
their dispute to arbitration in accordance with Section XII(G) hereof; provided,
however, the Purchaser shall place into escrow any amounts it is seeking to set
off with an escrow agent mutually agreeable to the Company and the Purchaser.
Any amounts of cash set off by the Purchaser which are later awarded to the
Company in accordance with Section XII(G) hereof, shall accrue interest at a
rate of nine percent (9%) per annum from the time of any such set off.
B. Indemnification by the Purchaser. The
Purchaser shall indemnify and hold harmless each of the
Company and the Shareholder from and against any and all
losses, claims, assessments, demands, damages, liabilities,
obligations, costs and/or expenses whatsoever (hereinafter
referred to as the "Shareholder's Damages"; the
Shareholder's Damages and the Purchaser's Damages are
sometimes referred to herein as the "Damages"), including,
without limitation, Shareholder's Counsel Expenses (as
hereinafter defined), sustained or incurred by the Company
and/or the Shareholder as a result of or arising from (a)
the breach of any of the obligations, covenants or
provisions of, or the inaccuracy of any of the
representations or warranties made by, the Purchaser herein
or (b) the Assumed Liabilities. For purposes hereof
"Shareholder's Counsel Expenses" shall mean reasonable fees
and disbursements of counsel howsoever sustained or incurred
by the Company and/or the Shareholder, including, without
limitation, in any action or proceeding between the
Shareholder and/or the Company and the Purchaser or in any
action or proceeding between the Shareholder and/or the
Company and any third party.
C. Procedure for Indemnification. In the event that any party
hereto shall incur (or anticipates that it may incur in the case of third party
claims) any Damages in respect of which indemnity may be sought by such party
39
pursuant to this Section IX, the party indemnified hereunder (the "Indemnitee")
shall notify the party or parties providing indemnification (the "Indemnitor")
promptly; in the case of third party claims, such notice shall in any event be
given within thirty (30) days of the filing or assertion of any claim against
the Indemnitee stating the nature and basis of such claim; provided, however,
that any delay or failure to notify any Indemnitor of any claim shall not
relieve it from any liability except to the extent that the Indemnitor
demonstrates that the defense of such action is materially prejudiced by such
delay or failure to notify. In the case of third party claims, the Indemnitor
shall, within ten (10) days of receipt of notice of such claim, notify the
Indemnitee of its intention to assume the defense of such claim at its own
expense. If the Indemnitor shall not assume the defense of any such claim or
litigation resulting therefrom, the Indemnitee may defend against any such claim
or litigation in such manner as it may deem appropriate and the Indemnitee may
settle such claim or litigation on such terms as it may deem appropriate. In the
event that a dispute arises concerning the obligation of the Indemnitor to
assume the defense of a claim, or a dispute arises concerning a claim hereunder
which does not involve a third party claim, or in the event that there is any
other dispute relating to indemnification, the parties shall submit any such
dispute to arbitration pursuant to Section XII(G) hereof; provided, however,
that the parties agree to negotiate in good faith for a period of at least sixty
(60) days prior to initiating arbitration to resolve any dispute. If it shall be
finally determined that the Indemnitor failed to assume the defense of any claim
for which the Indemnitor is liable to the Indemnitee for Damages, then the
expense of defending the claim shall be borne by the Indemnitor. Payment of the
Damages shall be made within ten (10) days of a final determination of a claim.
A final determination of a claim shall be (i) a judgment of
any court determining the validity of a disputed claim, if no appeal is pending
from such judgment and if the time to appeal therefrom has elapsed, (ii) an
award of any arbitration determining the validity of such disputed claim, it
there is not pending any motion to set aside such award
40
or if the time within which to move to set such award aside has elapsed,
(iii) a written termination of the dispute with respect to such claim signed by
all of the parties thereto or their attorneys and the Indemnitors, (iv) a
written acknowledgment of the Indemnitor that he or it no longer disputes the
validity of such claim, or (v) such other evidence of final determination of a
claim as shall be acceptable to the parties.
As used herein, the term "Damages" shall refer to the Purchaser's
Damages or the Shareholder's Damages as the context requires.
D. Agreements Concerning Indemnification. It is
specifically understood and agreed that:
(i) The Company and the Shareholder shall not
be obligated to indemnify the Purchaser for the Purchaser's Damages unless and
until the aggregate amount of all claims for such Purchaser's Damages exceeds
$250,000 (the "Basket") at which time claims may be asserted for the excess of
such amount.
(ii) The Company and the Shareholder shall not
be obligated to indemnify the Purchaser for the Purchaser's Damages in excess of
an aggregate of $1,250,000 (the "Cap") and the obligations of the Company and
the Shareholder for indemnification hereunder shall terminate when the Cap has
been paid.
SECTION X
NON-COMPETITION AGREEMENT
Following the consummation of the transactions contemplated
hereby, and in consideration thereof, neither the Company nor the Shareholder
shall, (a) subsequent to the date of the Closing and until the Shareholder is no
longer employed by the Purchaser or other member of the Purchaser Group pursuant
to his Employment Agreement (provided, however, that (q) if the Shareholder's
employment pursuant
41
to his Employment Agreement is terminated for due cause (as defined in the
Employment Agreement) or (r) if the Shareholder voluntarily resigns his position
under the Employment Agreement or (s) if at the end of the term of the
Employment Agreement there is no renewal of such Employment Agreement, or (t) if
the Shareholder's employment under his Employment Agreement is terminated by the
Purchaser pursuant to Section 6.4 of the Employment Agreement after January 15,
2000, then the length of this non-competition covenant shall be two years from
the date of such due cause termination, resignation, non-renewal or Section 6.4
termination), directly or indirectly, (i) engage, whether as principal, agent,
investor, distributor, representative, stockholder, employee, consultant,
volunteer or otherwise, with or without pay, in any activity or business venture
which is competitive with the Business as conducted on the date hereof or any
other business of the Purchaser or any other member of the Purchaser Group ( as
hereinafter defined) which the Shareholder has operational or administrative
responsibility for during his employment with the Purchaser, (ii) solicit or
entice or endeavor to solicit or entice away from any member of the Purchaser
Group any person who was or is at the time of the solicitation or enticement a
director, officer, employee, agent or consultant of such member of the Purchaser
Group, either on the Company's or the Shareholder's own account or for any
person, firm, corporation or other organization, whether or not such person
would commit any breach of such person's contract of employment by reason of
leaving the service of such member of the Purchaser Group, (iii) solicit or
entice or endeavor to solicit or entice away any person who was or is at the
time of the solicitation or enticement a client or customer of any member of the
Purchaser Group, either on the Company's or the Shareholder's own account or for
any other person, firm, corporation or organization, or (iv) employ any person
who was a director, officer or employee of any member of the Purchaser Group or
any person who is or may be likely to be in possession of any confidential
information or trade secrets relating to the business of any member of the
Purchaser Group, or (b) at any time, take any action or make any statement the
effect of which would be, directly or indirectly, to impair the good will of any
member of the
42
Purchaser Group or the business reputation or good name of any member of the
Purchaser Group, or be otherwise detrimental to the Purchaser, including any
action or statement intended, directly or indirectly, to benefit a competitor of
any member of the Purchaser Group. Because the remedy at law for any breach of
the foregoing provisions of this Section X would be inadequate, the Company and
the Shareholder hereby consent, in case of any such breach, to the granting by
any court of competent jurisdiction of specific enforcement, including, but not
limited to pre-judgment injunctive relief, of such provisions, as provided for
in Section XII(F) hereof.
Notwithstanding anything to the contrary contained in this
Section X, it is understood and agreed that the Shareholder shall be permitted,
subsequent to any termination of his employment with the Purchaser, to work in a
managerial, sales and/or marketing position for a pharmaceutical company.
The Purchaser agrees that in the event of a breach of the
covenants and agreements of the Company and the Shareholder contained herein,
the Purchaser may seek injunctive relief and recovery of its actual monetary
Damages but will not seek rescission of this Agreement unless the applicable
breach by the Company or the Shareholder of the covenants and agreements of the
Company or the Shareholder set forth in this Section X shall include the
Company's or the Shareholder's association (as employer, joint venturer, etc.)
with any of the current or former employees of the Company in a competitive
endeavor or the Company's or the Shareholder's servicing or doing business with
any of the customers or clients of the Purchaser Group or the Business.
The parties hereto agree that if, in any proceeding, the court
or other authority shall refuse to enforce the covenants herein set forth
because such covenants cover too extensive a geographic area or too long a
period of time, any such covenant shall be deemed appropriately amended and
modified in keeping with the
43
intention of the parties to the maximum extent permitted by law.
For purposes hereof, "Purchaser Group" shall mean,
collectively, the Purchaser and its subsidiaries, affiliates and parent entities
operating in the same lines of business.
SECTION XI
BROKERS AND FINDERS
A. The Shareholder's Obligation. The Purchaser shall not have
any obligation to pay any fee or other compensation to any person, firm or
corporation dealt with by the Company or the Shareholder in connection with this
Agreement and the transactions contemplated hereby, and the Company and the
Shareholder, jointly and severally, hereby agree to indemnify and save the
Purchaser harmless from any liability, damage, cost or expense arising from any
claim for any such fee or other compensation.
B. The Purchaser's Obligation. Neither the Company nor the
Shareholder shall have any obligation to pay any fee or other compensation to
any person, firm or corporation dealt with by the Purchaser in connection with
this Agreement and the transactions contemplated hereby, and the Purchaser
hereby agrees to indemnify and save the Company and the Shareholder harmless
from any liability, damage, cost or expense arising from any claim for any such
fee or other compensation.
SECTION XII
MISCELLANEOUS
A. Notices. All notices, requests or
instructions hereunder shall be in writing and delivered
personally, sent by telecopy or sent by registered or
certified mail, postage prepaid, as follows:
44
(1) If to the Company or the Shareholder:
Xxx X. Xxxxxxxxx
4901 Northwest 00 Xxx, Xxxxx Xxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
(2) If to the Purchaser:
c/o Foster Management Company
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and two business days after the date of
mailing, if mailed.
45
B. Survival of Representations. Subject to the limitations
described in Section IX, each representation, warranty, covenant and agreement
of the parties hereto herein contained shall survive the Closing,
notwithstanding any investigation at any time made by or on behalf of any party
hereto, for a period of one (1) year from the date of the Closing (the "Survival
Period"); except (a) for covenants and agreements to be performed subsequent to
the Closing and (b) that nothing in the foregoing shall be deemed to diminish
any Indemnitor's indemnification obligations to an Indemnitee respecting claims
for Damages properly made prior to the last day of the Survival Period (or the
applicable statutes of limitations period for claims for Damages based on common
law fraud which shall survive for the duration of the applicable statutes of
limitations periods).
C. Entire Agreement. This Agreement and the documents referred
to herein contain the entire agreement among the parties hereto with respect to
the transactions contemplated hereby, and no modification hereof shall be
effective unless in writing and signed by the party against which it is sought
to be enforced.
D. Further Assurances. Each of the parties hereto shall use
such party's best efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate the
transactions contemplated by this Agreement. The Shareholder agrees to execute
and deliver any reasonable and customary management representation letter
requested by the Purchaser's independent certified public accountants in
connection with their audit of the S-X Financial Statements.
E. Expenses. Each of the parties hereto shall bear such
party's own expenses in connection with this Agreement and the transactions
contemplated hereby.
F. Injunctive Relief. Notwithstanding the provisions of
Section XII(G) hereof, in the event of a breach or threatened breach by the
Company or the Shareholder of the provisions of Section X of this
46
Agreement, each of the Company and the Shareholder hereby consents and agrees
that the Purchaser shall be entitled in order to maintain the status quo ante
pending the outcome of any arbitration pursuant to XII(G) to an injunction or
similar equitable relief restraining the Company or the Shareholder, as the
case may be, from committing or continuing any such breach or threatened breach
or granting specific performance of any act required to be performed by the
Company or the Shareholder, as the case may be, under any such provision,
without the necessity of showing any actual damage or that money damages would
not afford an adequate remedy and without the necessity of posting any bond in
excess of $50,000. The parties hereto hereby consent to the jurisdiction of the
federal courts for the Southern District of Florida and the Florida state courts
located in such District for any proceedings under this Section XII(F). The
parties hereto agree that the availability of arbitration in Section XII(G)
hereof shall not be used by any party as grounds for the dismissal of any
injunctive actions instituted by the Purchaser pursuant to this Section XII(F).
G. Dispute Resolution.
(i) Arbitration. The parties shall attempt
amicably to resolve disagreements by negotiating with each other. In the event
that the matter is not amicably resolved through negotiation, any controversy,
dispute or disagreement arising out of or relating to this Agreement (a
"Controversy") shall be submitted to the American Arbitration Association for
final binding arbitration, which shall be conducted by a single arbitrator in
the Fort Lauderdale, Florida area, pursuant to the American Arbitration
Association Arbitration Rules (the "Rules"). The parties agree that,
notwithstanding anything to the contrary contained in the Rules, the arbitrator
shall not award consequential, exemplary, incidental, punitive or special
damages.
(ii) Procedure. It is agreed that if any
party shall desire relief of any nature whatsoever from any other party as a
result of any Controversy, such party will
47
initiate such arbitration proceedings within a reasonable time, but in no
event more than eighteen (18) months after the facts underlying said
Controversy first arise or become known to the party seeking relief (whichever
is later), except for claims for indemnification and/or concerning
representations and warranties, which claims are governed by shorter time
limitations as set forth elsewhere herein. The failure of such party to
institute such proceedings within said period shall be deemed a full waiver of
any claim for such relief. The parties shall bear equally all costs of said
arbitration (other than their own attorney's fees and costs). The parties agree
that the decision and award of the Arbitrator shall be final and conclusive upon
the parties, in lieu of all other legal, equitable (except as provided in
Section XII(F) above), or judicial proceedings between them, and that no appeal
or judicial review of the award or decision of the Arbitrator shall be taken,
but that such award or decision may be entered as a judgment and enforced in any
court having jurisdiction over the party against whom enforcement is sought. Any
equitable relief awarded under Section XII(F) shall be dissolved upon issuance
of the Arbitrator's decision and order.
H. Invalidity. Should any provision of this Agreement be held
by a court or arbitration panel of competent jurisdiction to be unenforceable,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto.
I. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company and
the Purchaser, respectively, and the legal representatives and heirs of the
Shareholder. At the Company's option, the Company may assign the right to
receive the Contingent Payments to another entity of which the Shareholder has a
controlling interest.
J. Governing Law. The validity of this Agreement and of any of
its terms or provisions, as well as the rights and duties of the parties under
this Agreement,
48
shall be construed pursuant to and in accordance with the laws of the State of
Florida, without regard to conflict of laws principles.
K. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
L. Additional Provisions Regarding Representations and
Warranties. By closing on the transaction contemplated herein, the Purchaser
will have acknowledged that, to the best of its knowledge and belief, it has had
full, free and unfettered access to all books, records, documents, personnel and
other information concerning the Company which the Purchaser deemed necessary
for full and complete consideration of the condition of the Assets it is
purchasing, and the Assumed Liabilities it is acquiring, hereby; provided,
however, that this statement shall not be deemed to limit in any manner
whatsoever the Purchaser's rights to indemnification set forth herein.
Furthermore, with respect to each and every representation and warranty made
herein by the Company and/or the Shareholder, jointly and/or severally, neither
the Company nor the Shareholder shall have any liability for any incorrect,
inaccurate, or erroneous representation and/or warranty (hereinafter, "Faulty
Reps") unless and until the aggregate of all Damages arising out of said Faulty
Reps exceeds $250,000, at which time claims may be asserted by the Purchaser for
the excess of such amount; provided, however, that the maximum combined
liability of the Company and the Shareholder for any Faulty Reps shall be
$1,250,000, and provided further that all claims for damages on the basis of
Faulty Reps must be made within one (1) year from the date of Closing (the
"Survival Period") or be deemed waived, it being expressly understood that no
representation, warranty, or claim based on same shall survive beyond the
Survival Period.
* * *
49
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the date first above written.
TELEMANAGEMENT SERVICES, INC.
By: /s/ Xxx X. Xxxxxxxxx
___________________________
Name: Xxx X. Xxxxxxxxx
Title: President
/s/ Xxx X. Xxxxxxxxx
------------------------------
Xxx X. Xxxxxxxxx
TLM HOLDINGS CORP.
By: /s/ Xxxx Xxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President