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Exhibit 2.6
ASSET PURCHASE AGREEMENT
BY AND AMONG
SCB COMPUTER TECHNOLOGY, INC.,
PARTNERS RESOURCES, INC.,
GLOBAL SERVICES, INC.
AND
THE SHAREHOLDERS OF
GLOBAL SERVICES, INC.
DATED AS OF MAY 1, 1999
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), is dated to be effective
as of May 1, 1999 by and among SCB Computer Technology, Inc. ("SCB"), Partners
Resources, Inc., an Arizona corporation and wholly owned subsidiary of SCB
("Buyer"), Global Services, Inc., a Colorado corporation (the "Seller"), and all
of the shareholders of the Seller, as identified on the signature pages hereto
(individually, a "Shareholder," and, collectively, the "Shareholders").
WHEREAS, the Shareholders own all of the issued and outstanding shares of
capital stock of the Seller; and
WHEREAS, the Shareholders desire to cause Seller to sell to SCB, and SCB
desires to purchase from Seller, substantially all of the assets of Seller on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1.
TRANSFER OF ASSETS AND PURCHASE PRICE
1.1 Purchase and Sale of Assets. On the terms and subject to the
conditions set forth herein, Seller agrees to sell, convey, transfer, and assign
and deliver to Buyer, and Buyer agrees to purchase, receive, assume, and accept,
good and marketable title to the assets used or useful to the business of
Seller, whether tangible or intangible, real, personal, or mixed, including,
without limitation, leases and leasehold improvements, contract rights,
trademarks, service marks, trade names (including the right to the use of
Seller's corporate name) and associated goodwill; cash and cash equivalents;
inventory; receivables (including accounts receivable, loans receivable, and
advances) and records related thereto; equipment, furniture, and fixtures;
customer lists; sales data; supplies; computer systems (both hardware and
software); licenses and permits; stock in subsidiaries; patents and copyrights;
and know how (such assets being collectively referred to herein as the
"Transferred Assets"). Without limiting the generality of the foregoing, it is
agreed that the Transferred Assets will include, without limitation, all of the
assets listed on Exhibit A hereto.
1.2 Assumption of Liabilities. Except for the accounts payable set forth
on Exhibit B hereto and Buyer's pro rata portion of any personal property taxes
for calendar year 1999, neither SCB nor Buyer will in any event assume or be
responsible for any liabilities, liens, claims,
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obligations, or encumbrances of the Seller or the Shareholders, contingent or
otherwise, and the Transferred Assets shall be sold and conveyed to Buyer free
and clear of all liabilities, liens, claims, obligations, and encumbrances.
Without limiting the generality of the foregoing, in no event will SCB or Buyer
assume or be responsible for:
(a) any income, sales, property, franchise, use, or other tax of
Seller or any Shareholder arising out of or resulting from the sale of the
Transferred Assets pursuant hereto or any transaction of Seller or any
Shareholder prior to or subsequent to the execution of this Agreement;
(b) any liability, obligation, or cost resulting from any claim or
lawsuit or other proceeding relating to the Transferred Assets or naming
Seller, or any successors thereof, or the Shareholders as a party arising
out of events, transactions, or circumstances occurring or existing prior
to Closing (as defined herein);
(c) any claim against SCB, Buyer, or Seller, which claim is based,
in whole or in part, upon the failure of Seller, SCB, or Buyer to comply
with laws applicable to bulk transfers; or
(d) any accrued vacation or sick leave, any employee benefit, or any
other employee cost of Seller.
1.3 Purchase Price. Subject to adjustment as set forth in this Agreement,
the aggregate consideration (the "Purchase Price") for the Transferred Assets
payable by SCB to Seller will consist of an aggregate amount of $6,647,513 in
cash (the "Cash Consideration"), $6,147,513 of which will be payable to Seller
by wire transfer of immediately available funds at Closing (as hereinafter
defined), and $500,000 (the "Escrow Amount") of which will be deposited on or
prior to the Closing in an escrow account to be maintained with SunTrust Bank
Nashville, N.A., as escrow agent (the "Escrow Agent"), which Escrow Amount shall
be held for one year following the effective date hereof in connection with
potential indemnification claims under Article 5 hereof and pursuant to the
terms of an Indemnity and Escrow Agreement (the "Escrow Agreement")
substantially in the form of Exhibit C attached hereto.
1.4 Allocation of Consideration.
(a) The Purchase Price will be allocated among the Transferred
Assets as set forth on Exhibit D. The parties hereto agree to cooperate in
preparing and filing IRS Form 8594 reflecting the allocation set forth on
Exhibit D and acknowledge and agree that such allocation was determined by
arm's length negotiations and that none of them will take a
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position on any income tax return, before any governmental agency charged
with the collection of any income tax, or in any judicial proceeding, that
is inconsistent with such allocation.
1.5 The Closing.
(a) Time and Place. Subject to the terms and conditions of this
Agreement, the Closing under this Agreement (the "Closing") will take
place with the delivery of executed documents by all parties at the
offices of Bass, Xxxxx & Xxxx PLC, 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx, to be effective as of 12:01 a.m. on May 1, 1999, or at such
other time, date, or place as SCB, Buyer, Seller, and the Shareholders may
agree. The date on which the Closing occurs is referred to herein as the
"Closing Date."
(b) Parties' Obligations at Closing.
(i) At the Closing, SCB and Buyer will deliver to Seller:
(A) $6,147,513 in cash by wire transfer of immediately
available funds pursuant to instructions delivered by Seller
to SCB prior to Closing, together with a copy of the Escrow
Agreement duly executed by SCB and the Escrow Agent and
evidence, reasonably satisfactory to Seller, that the Escrow
Amount has been duly delivered to the Escrow Agent;
(B) a copy of the resolutions of the Boards of Directors
of SCB and Buyer, certified by their respective corporate
secretaries, authorizing the execution, delivery, and
performance of this Agreement and the other documents
referenced herein and the consummation of the transactions
contemplated hereby;
(C) employment agreements (the "Employment Agreements"),
substantially in the form of Exhibit E hereto, among SCB,
Buyer, and each of Xxxxxxx X. XxXxxx and Xxxx X. Xxxx, duly
executed by SCB and Buyer;
(D) the Xxxx of Sale, Assignment and Assumption
Agreement relating to the Transferred Assets and the Assumed
Liabilities, duly executed by Buyer, substantially in the form
of Exhibit F hereto;
(E) such other certificates and documents as Seller or
its counsel may reasonably request.
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(ii) At Closing, Seller and the Shareholders will deliver to
SCB and Buyer:
(A) the Xxxx of Sale, Assignment and Assumption
Agreement relating to the Transferred Assets, duly executed by
the Seller, substantially in the form of Exhibit F hereto;
(B) such other instruments of conveyance, assignment,
and transfer, in form and substance satisfactory to SCB's
counsel, as shall be effective to vest in Buyer good and
marketable title to the Transferred Assets, duly executed by
the Seller;
(C) Employment Agreements, duly executed by Xxxxxxx X.
XxXxxx and Xxxx X. Xxxx;
(D) a copy of the resolutions of the Board of Directors
and Shareholders of Seller, certified by the Seller's
corporate secretary, authorizing the execution, delivery, and
performance of this Agreement and the other documents
referenced herein and the consummation of the transactions
contemplated hereby;
(E) an opinion of McGloin, Davenport, Xxxxxxxx and Snow,
legal counsel to Seller and the Shareholders, substantially in
the form of Exhibit G hereto;
(F) any required consent or approval of a creditor,
contract party, or public or governmental authority to the
transactions contemplated hereby;
(G) the Escrow Agreement, duly executed by Seller; and
(H) such other certificates or documents as SCB, Buyer,
or their counsel may reasonably request.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF
SELLER AND THE SHAREHOLDERS
Except as set forth in the disclosure letter delivered prior to the
execution hereof to SCB (the "Seller Disclosure Letter"), Seller and the
Shareholders, jointly and severally, represent and warrant to SCB and Buyer as
follows:
2.1 Assets. Seller is the lawful owner of the Transferred Assets free and
clear of all liens, claims, charges, restrictions, security interests, pledges,
or encumbrances of any kind, and Seller has the full right, power, authority,
and capacity to sell and transfer the Transferred Assets owned by the Seller. By
virtue of the transfer of the Transferred Assets to Buyer, Buyer will obtain
full title to the Transferred Assets free and clear of all liens, claims,
charges, restrictions, security interests, pledges, and encumbrances of any
kind.
(a) Tangible Assets. Exhibit A hereto contains an accurate and
complete description of all material fixed and other tangible assets
owned, leased, or used by the Seller, including, without limitation,
improvements to leased property and real property, plants and structures
located thereon, equipment located therein, vehicles, and all personal
property relating to Seller and its business and properties. All such
plants, structures, machinery, and equipment are in good working condition
and repair, normal wear and tear excepted, and are adequate for the uses
for which they are intended. All such plants, structures, machinery, and
equipment conform in all respects to applicable health, sanitation, fire,
environmental (including air and water pollution laws and regulations),
safety, labor, zoning, and building laws and ordinances; and Seller has
not received any notification within the last five years of any violation
of any applicable ordinance or regulation of building, zoning, or other
law, in respect of its plants, structures, properties, or operations. None
of such real property is currently the subject of any eminent domain,
condemnation, or similar proceeding and, to the best of the Seller's
knowledge, no such proceeding is threatened. Seller is now in possession
of each parcel of such real property, there is no adverse claim against
such real property and there are no pending or, to Seller's knowledge,
threatened proceedings that might interfere with Buyer's quiet enjoyment
of such real property.
(b) Material Contracts. Exhibit A also contains a complete and
accurate list of all contracts and agreements for the performance of
services or the purchase or leasing of property by Seller of an amount or
value in excess of $10,000 ("Material Contracts"). Each of the Material
Contracts is in full force and effect and is valid and enforceable in
accordance
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with its terms, and Seller and each other person that has or had any
obligation under a Material Contract is in full compliance with all
applicable terms and requirements thereof. No event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give
any person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate, or
modify, any Material Contract. There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any amounts paid or
payable under any Material Contract with any person.
(c) Intangible Assets. Exhibit A also contains an accurate and
complete description of all intangible assets owned or used by Sellers,
including without limitation, copyrights, patents, tradenames, trademarks,
and servicemarks (collectively, the "Intangible Assets"). Seller has sole,
full, and clear title to the Intangible Assets for the goods and services
for which such Intangible Assets are used and all registrations thereof
are valid and subsisting and are in full force and effect. Seller has the
sole, full, and clear title to each copyright in the Intangible Assets and
all the registrations thereof are valid and subsisting and are in full
force and effect. Seller (either itself or through its licensees) has
placed and will continue to place appropriate notice of copyright on all
copies embodying such copyrighted works which are publicly distributed,
and Seller will not (and will not permit any licensee thereof to) do any
act or knowingly omit to do any act whereby any copyright may become
invalidated or dedicated to the public domain.
2.2 Existence; Good Standing; Corporate Power and Authority. Seller is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Colorado. Seller is not qualified to do business as a
foreign corporation and neither the character of the properties owned or leased
by it or the transaction of its business makes such qualification necessary.
Seller has all requisite corporate power and authority to own, operate, and
lease its properties and to carry on its business as now conducted.
2.3 Authorization, Validity, and Effect of Agreements. Seller and the
Shareholders have full power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. This Agreement and the
transactions contemplated hereby have been approved by Seller's Board of
Directors and shareholders and the consummation by Seller of the transactions
contemplated hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto) will constitute, the valid and
legally binding obligations of Seller and the Shareholders, enforceable in
accordance with their respective terms.
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2.4 Capitalization. The 1,000 shares of common stock, no par value, of
Seller (the "Seller Shares") are owned beneficially and of record by the
Shareholders as set forth on the Seller Disclosure Letter. Seller does not have
any outstanding capital stock, bonds, debentures, notes, or other obligations
the holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the Shareholders on
any matter. All issued and outstanding Seller Shares are duly authorized,
validly issued, fully paid, nonassessable, and free of preemptive rights. None
of the outstanding Seller Shares are subject to any voting trust agreement,
lien, encumbrance, security interest, restriction, or claim.
2.5 Other Interests. Seller does not own, directly or indirectly, nor has
any obligation to acquire any interest or investment in any corporation,
partnership, joint venture, business, trust, or other entity.
2.6 No Violation. Neither the execution and delivery by Sellers of this
Agreement nor the consummation by Seller and the Shareholders of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the articles of
incorporation or bylaws of Seller; (ii) conflict with, result in a breach of any
provision of or the modification or termination of, constitute a default under,
or result in the creation or imposition of any lien, security interest, charge,
or encumbrance upon any of the assets of Seller or any Shareholder pursuant to
any commitment, lease, contract, or other material agreement or instrument to
which Seller or any Shareholder is a party (including any Material Contract); or
(iii) violate or result in a change in any rights or obligations under any
governmental permit or license or any order, arbitration award, judgment, writ,
injunction, decree, statute, rule, or regulation applicable to Seller or any
Shareholder.
2.7 Regulatory Consents. No consent, approval, order, or authorization of,
or registration, declaration, or filing with, any governmental entity, is
required by or with respect to Seller or any Shareholder in connection with the
execution and delivery of this Agreement by Seller or any Shareholder, or the
consummation by Seller or any Shareholder of the transactions contemplated
hereby, which has not been made or obtained.
2.8 Financial Statements. Prior to the date hereof, the Seller has
delivered to SCB true and complete copies of (a) the unaudited financial
statements of Seller as of and for the year ended December 31, 1998; and (b) the
unaudited financial statements of Seller as of and for the period ended April
30, 1999. The historical balance sheets provided to SCB by Seller (including the
related notes and schedules) fairly present the financial position of Seller as
of their respective dates and the historical statements of income, stockholders'
equity, and cash flows provided to SCB by Seller (including any related notes
and schedules) fairly present the results of operations, stockholders' equity,
and cash flows of Seller for the periods set forth therein, in each case in
accordance with
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generally accepted accounting principles consistently applied, except as may be
noted therein. All financial statements provided by Seller to SCB have been
prepared from the books and records of Seller, which accurately and fairly
reflect the transactions and the acquisitions and dispositions of the assets of
Seller. As of the Closing Date, Seller did not have any liabilities, contingent
or otherwise, whether due or to become due, known or unknown, other than as
indicated on the balance sheet dated December 31, 1998, except for current
liabilities incurred in the ordinary course of business since such date.
2.9 No Material Adverse Changes. Since December 31, 1998, there has not
been (i) any material adverse change in the financial condition, results of
operations, business, assets, prospects or liabilities (contingent or otherwise,
whether due or to become due, known or unknown) of the Seller; (ii) any dividend
declared or paid or distribution made on the capital stock of Seller, or any
capital stock thereof redeemed or repurchased; (iii) any incurrence by Seller of
long term debt for borrowed money; (iv) any increases in salary, bonus, or other
compensation to any officers, employees, or agents of Seller; (v) any pending or
threatened labor disputes or other labor problems against or potentially
affecting Seller; or (vi) any other transaction entered into by Seller, except
in the ordinary course of business and consistent with past practice.
2.10 Tax Matters.
(a) For purposes of this Agreement, (i) "Tax" means any federal,
state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the Internal
Revenue Code of 1986, as amended (the "Code")), customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and (ii) "Tax
Return" means any return, report, information return, or other document
(including any related or supporting information) filed or required to be
filed with any taxing authority in connection with its determination,
assessment, collection, administration, or imposition of any Tax.
(b) Seller has duly and timely filed all Tax Returns required to be
filed by it and has duly and timely paid all Taxes and other charges
(whether or not shown on any Tax Return) due or claimed to be due from it
by federal, foreign, state, or local taxing authorities or has set up an
adequate reserve for all Taxes payable by Seller. True and correct copies
of all Tax Returns relating to federal taxes and sales taxes for the
period from organization through December 31, 1998 have been heretofore
delivered to SCB. The accruals and reserves for Taxes contained in the
financial statements and carried on the books of Seller
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are adequate to cover all Tax liabilities. Since December 31, 1998, Seller
has not incurred any Tax liabilities other than in the ordinary course of
business. There are no Tax liens upon any properties or assets of Seller
(whether real, personal, or mixed, tangible or intangible), and there are
no pending or, to the Shareholders' knowledge, threatened audits or
examinations relating to, or claims asserted for, Taxes or assessments
against Seller, and the Shareholders are aware of no substantial basis for
any such claims. Seller has not granted or been requested to grant any
extension of the limitation period applicable to any claim for Taxes or
assessments with respect to Taxes. Seller is not a party to any Tax
allocation or sharing agreement. Seller has no liability for the Taxes of
any Affiliated Group under Treasury Regulation 1.1502-6 (or any similar
provision of state, local, or foreign law). Seller has withheld and paid
all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
or shareholder.
(c) The Seller Disclosure Letter lists each jurisdiction in which
each Seller files tax returns for each period or portion thereof ending on
or before the Closing Date. Except as set forth in the Seller Disclosure
Letter, there is no reason outstanding against Seller by any taxing
authority in a jurisdiction where Seller does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction.
(d) All material elections with respect to Taxes affecting Seller as
of the date hereof are set forth in the Seller Disclosure Letter.
(e) All joint venturers, partnerships, or other arrangements or
contracts to which Seller is a party and that could be treated as a
partnership for federal income tax purposes are set forth in the Seller
Disclosure Letter.
(f) Seller (i) has not filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f) of the
Code) owned by Seller; (ii) has not agreed, or is not required, to make
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method or otherwise that will affect the liability of Seller
for Taxes; (iii) has not made an election, or is not required, to treat
any asset of Seller as owned by another person pursuant to the provisions
of former Section 168(f)(8) of the Code or as tax-exempt bond financed
property or tax-exempt use property within the meaning of Section 168 of
the Code; and (iv) has not made any of the foregoing elections or is
required to apply any of the foregoing rules under any comparable state or
local tax provision.
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2.11 Employees and Fringe Benefit Plans.
(a) The Seller Disclosure Letter sets forth the names, ages, and
titles of all members of the Board of Directors and officers of Seller and
all employees of Seller, and the annual rate of compensation (including
bonuses) being paid to each such officer and employee as of the most
recent practicable date.
(b) The Seller Disclosure Letter lists each employment, bonus,
deferred compensation, pension, stock option, stock appreciation right,
profit-sharing, or retirement plan, arrangement, or practice, each
medical, vacation, retiree medical, severance pay plan, and each other
agreement or fringe benefit plan, arrangement, or practice, of Seller,
whether legally binding or not, that affects one or more of Seller's
employees, including all "employee benefit plans" as defined by Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (collectively, the "Plans"). Seller does not have, sponsor, or
participate in any Plan that is subject to Title IV of ERISA or the
minimum funding standards of Section 412 of the Code.
(c) For each Plan that is an "employee benefit plan" under Section
3(3) of ERISA, Seller has delivered to SCB correct and complete copies of
the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and funding agreements that implement each such Plan.
(d) Seller does not have any commitment, whether formal or informal
and whether legally binding or not, (i) to create any additional Plan;
(ii) to modify or change any Plan; or (iii) to maintain for any period of
time any Plan. The Seller Disclosure Letter contains an accurate and
complete description of the funding policies (and commitments, if any)
with respect to each existing Plan.
(e) Seller has no unfunded past service liability in respect of any
of its Plans; neither Seller nor any Plan nor any trustee, administrator,
fiduciary, or sponsor of any Plan has engaged in any prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code
for which there is no statutory exemption in Section 408 of ERISA or
Section 4975 of the Code; all filings, reports, and descriptions as to
such Plans (including Form 5500 Annual Reports, summary plan descriptions,
and summary annual reports) required to have been made or distributed to
participants, the Internal Revenue Service, the United States Department
of Labor, and other governmental agencies have been made in a timely
manner; there is no litigation, disputed claim, governmental proceeding,
or investigation pending or threatened with respect to any of the Plans,
the related trusts, or any
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fiduciary, trustee, administrator, or sponsor of the Plans; the Plans have
been established, maintained, and administered in all respects in
accordance with their governing documents and applicable provisions of
ERISA and the Code and Treasury Regulations promulgated thereunder; and
each Plan that is intended to be a qualified plan under Section 401(a) of
the Code has received a favorable determination letter from the Internal
Revenue Service with respect to the current terms of the Plan.
(f) Seller has complied in all respects with all applicable federal,
state, and local laws, rules, and regulations relating to employees'
employment and employment relationships, including, without limitation,
wage related laws, anti-discrimination laws, employee safety laws, and
COBRA (defined herein to mean the requirements of Code Section 4980B,
Proposed Treasury Regulation Section 1.162-26 and Part 6 of Subtitle B of
Title I of ERISA).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) result in the payment or series of payments by
Seller to any employee or other person of an "excess parachute payment"
within the meaning of Section 280G of the Code; (ii) entitle any employee
or former employee of Seller to severance pay, unemployment compensation,
or any other payment; or (iii) accelerate the time of payment or vesting
of any stock option, stock appreciation right, deferred compensation, or
other employee benefits under any Plan (including vacation and sick pay).
(h) None of the Plans that are "welfare benefit plans," within the
meaning of Section 3(1) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for COBRA
rights under a "group health plan" as defined in Code Section 4980B(g) and
ERISA Section 607.
(i) Neither Seller nor any member in a "controlled group" with
Seller (as defined in ERISA) has ever contributed to, participated in, or
withdrawn from a multi-employer plan as defined in Section 4001(a)(3) of
Title IV of ERISA, and Seller has not incurred and does not owe any
liability as a result of any partial or complete withdrawal by any
employer from such a multi-employer plan as described under Section 4201,
4203, or 4205 of ERISA.
2.12 Accounts Receivable. All accounts receivable of Seller reflected on
the accounting records of Seller as of the date hereof (collectively, the
"Accounts Receivable") represent or will represent valid obligations arising
from sales actually made or services actually performed in the ordinary course
of business. The Accounts Receivable are current and collectible, net of the
respective reserves shown on the accounting records of Seller as of the date
hereof (which reserves are adequate and calculated consistent with past practice
and will not represent a greater percentage
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of the Accounts Receivable as of the date hereof than the reserve reflected in
the balance sheet dated December 31, 1998, and will not represent a material
adverse change in the composition of such Accounts Receivable in terms of
aging). Subject to such reserves, each of the Accounts Receivable either has
been or will be collected in full, without any set-off, within one hundred and
twenty (120) days after the day on which it first becomes due and payable. There
is no contest, claim, or right of set-off with any maker of an Account
Receivable relating to the amount or validity of such Account Receivable.
2.13 Lawful Operations. Seller has been and currently is conducting its
business, and each of the premises leased or owned by Seller have been and now
are being used and operated, in compliance with all statutes, regulations,
orders, covenants, restrictions, and plans of federal, state, regional, county,
or municipal authorities, agencies, or boards applicable to the same.
2.14 Litigation. There is no suit, action, or proceeding pending or, to
the knowledge of any of the Shareholders or Seller, threatened against or
affecting Seller or the Transferred Assets. Seller is not subject to any
currently existing order, writ, injunction, or decree relating to its
operations.
2.15 Corporate Records; Other Information. The minute books of Seller,
copies of which have been provided to SCB, reflect all meetings of the boards of
directors, committees of the boards of directors, and the shareholders thereof.
All documents and other written information as to existing facts relating to
Seller and its assets and liabilities which have been provided to SCB in
connection with this Agreement are true, correct, and complete in all material
respects except to the extent that any such documents or other written
information was later specifically supplemented or corrected prior to the date
of this Agreement with additional documents or written information that were
provided to SCB.
2.16 Hazardous Substances.
(a) Seller has not authorized nor conducted nor has knowledge of the
generation, transportation, storage, presence, use, treatment, disposal,
release, or handling of (in an amount or of a type that has been or must be
reported to any governmental agency, violates any Environmental Law (as defined
below), or has required or could require remediation expenditures) any hazardous
substance, asbestos, radon, polychlorinated biphenyls ("PCBs"), petroleum
product, or waste (including crude oil or any fraction thereof), natural gas,
liquefied gas, synthetic gas or other material defined, regulated, controlled,
or potentially subject to any remediation requirement under any environmental
law (collectively, "Hazardous Materials"), on, in, or under any real property
owned, leased, or by any means controlled by them;
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(b) Seller is in compliance with all federal, state, and local laws,
ordinances, rules, regulations, and other governmental requirements relating to
pollution, control of chemicals, management of waste, discharges of materials
into the environment, health, safety, natural resources, and the environment
(collectively, "Environmental Laws");
(c) Seller has been, and is in compliance with, all licenses,
permits, registrations, and government authorizations necessary to operate under
all applicable Environmental Laws;
(d) Seller has not received any written or oral notice from any
governmental entity or any other person and there is no pending or, to Seller's
or any Shareholder's knowledge, threatened claim, litigation or any
administrative agency proceeding that: alleges a violation of any Environmental
Law by Seller; alleges Seller is a liable party or a potentially responsible
party under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601, et seq., or any state superfund law; has resulted
in or could result in the attachment of an environmental lien on any real
property owned, leased, or controlled by Seller; or alleges the occurrence of
contamination of any of such real property, damage to natural resources,
property damage, or personal injury based on its activities or the activities of
Seller's predecessors or third parties (whether at the real property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
2.17 Certain Business Practices and Regulations. Neither Seller, nor to
any of the Shareholder's knowledge, any of its executive officers, directors, or
employees, has (i) made or agreed to make any contribution, payment, or gift to
any customer, supplier, landlord, political candidate, governmental official,
employee, or agent where either the contribution, payment, or gift or the
purpose thereof was illegal under any law or regulation; (ii) established or
maintained any unrecorded fund or asset for any purpose or made any false
entries on its respective books and records for any reason; (iii) made or agreed
to make any contribution, or reimbursed any political gift or contribution made
by any other person, to any candidate for federal, state, or local public office
in violation of any law or regulation; or (iv) submitted any claim for services
rendered or reimbursement for expenses to any person where the services were not
actually rendered or the expenses were not actually incurred.
2.18 No Brokers. Seller has not entered into any contract, arrangement, or
understanding with any person or firm that may result in the obligation of
Seller, any Shareholder, SCB, or Buyer pay any finder's fees, brokerage or
agent's commissions, or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
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2.19 Consents and Approvals. Seller has obtained all consents, approvals,
authorizations, or orders of third parties, including governmental authorities,
necessary for the authorization, execution, and performance of this Agreement,
which consents, approvals, authorizations, and orders are listed on the Sellers
Disclosure Schedule.
2.20 Year 2000. All information systems, equipment and software used by
the Seller complies with necessary requirements to function properly and
efficiently before, during and after the year 2000, or between the years 1999
and 2000, taking into account all leap years, and further, that when used in
combination with, or interfacing with, other information systems and software,
shall accurately accept, release and exchange date data. All reprogramming,
remediation and other corrective action, including all testing of such systems,
equipment and software will be completed by September 1, 1999, and the cost
thereof, as well as the cost of the consequences of failure to become year 2000
compliant, to the Seller will not result in a Seller Material Adverse Effect.
2.21 Insurance. All policies and binders of insurance for professional
liability, directors and officers, fire, liability, workers' compensation, and
other customary matters held by or on behalf of Seller ("Insurance Policies")
are described in the Seller Disclosure Letter and have been made available to
SCB. The Insurance Policies are in full force and effect. Seller is not in
default with respect to any material provision contained in any Insurance
Policy. Seller has not failed to give any notice of any claim under any
Insurance Policy in due and timely fashion, nor has any coverage for current
claims been denied.
2.22 Full Disclosure. All of the information provided by the Seller and
Shareholders and their representatives herein or in the Seller Disclosure Letter
is true, correct, and complete in all material respects, and no representation,
warranty, or statement made by the Seller or the Shareholders in or pursuant to
this Agreement or the Seller Disclosure Letter contains any untrue statement of
a material fact or omits or will omit to state any material fact necessary to
make such representation, warranty, or statement not misleading.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SCB AND BUYER
SCB and Buyer, jointly and severally, represent, and warrant to the Seller
and Shareholders as follows:
3.1 Existence; Good Standing; Corporate Authority. SCB is duly
incorporated, validly existing, and in good standing under the laws of the State
of Tennessee. Buyer is duly incorporated, validly existing, and in good standing
under the laws of the State of Arizona. SCB is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, results of operations, or
financial condition of SCB (an "SCB Material Adverse Effect"). SCB has all
requisite corporate power and authority to own, operate, and lease its
properties and carry on its business as now conducted.
3.2 Authorization, Validity, and Effect of Agreements. SCB and Buyer have
the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. The consummation
by SCB and Buyer of the transactions contemplated hereby has been duly
authorized by all requisite corporate action. This Agreement constitutes, and
all agreements and documents contemplated hereby (when executed and delivered
pursuant hereto) will constitute, the valid and legally binding obligations of
SCB and Buyer, enforceable in accordance with their respective terms.
3.3 No Violation. Neither the execution and delivery by SCB or Buyer of
this Agreement, nor the consummation by SCB of the transactions contemplated
hereby in accordance with the terms hereof, will: (i) conflict with or result in
a breach of any provisions of the charter or bylaws of SCB or Buyer; (ii)
conflict with, result in a breach of any provision of or the modification or
termination of, constitute a default under, or result in the creation or
imposition of any lien, security interest, charge, or encumbrance upon any of
the assets of SCB or Buyer pursuant to any material commitment, lease, contract,
or other material agreement or instrument to which SCB or Buyer is a party; or
(iii) violate or result in a change in any rights or obligations, under any
governmental permit or license or any order, arbitration award, judgment, writ,
injunction, decree, statute, rule, or regulation applicable to SCB or Buyer.
3.4 No Brokers. Neither SCB nor Buyer has entered into any contract,
arrangement, or understanding with any person or firm that may result in the
obligation of SCB, Buyer, Seller, or the
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Shareholders to pay any finder's fees, brokerage or agent's commissions, or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
ARTICLE 4.
COVENANTS
4.1 Change in Name; Use of Name. Within five (5) business days after the
Closing Date, the Shareholders shall deliver to SCB all such executed documents
as may be required to change Seller's name to other names bearing no similarity
to "Global Services, Inc." including, but not limited to, name change documents
in form suitable for filing with the Secretary of State of Colorado, and an
appropriate name change notice for each state where Seller is qualified to do
business. The Shareholders hereby appoint SCB as their attorney-in-fact to file
all such documents on or after the Closing Date. From and after the Closing
Date, the Shareholders will sign such consents and take such other actions as
SCB or Buyer shall reasonably request in order to permit SCB and Buyer to use
the name "Global Services, Inc." and any variations thereof. From and after the
Closing Date, neither Seller nor the Shareholders will use the name "Global
Services, Inc." or any names similar thereto or variants thereof.
4.2 Further Assurances. SCB and Buyer, from time to time after the Closing
and at the Shareholders' reasonable request, and Seller and the Shareholders
from time to time after the Closing and at SCB's reasonable request, will
execute, acknowledge, and deliver to Seller, the Shareholders, Buyer, or SCB, as
the case may be, such other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other documents, certifications,
and further assurances as Seller, the Shareholders, Buyer, or SCB, as the case
may be, may reasonably require in order to better enable the other party to
complete, perform, or discharge any of the liabilities or obligations assumed
hereunder. Each of the parties hereto will cooperate with the other and execute
and deliver to the other parties hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence, and confirm the intended
purposes of this Agreement.
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ARTICLE 5.
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
5.1 Survival of Representations and Warranties. The representations and
warranties of the parties contained in Articles 2 and 3 of this Agreement shall
survive for a period of one year from the effective date hereof.
5.2 Indemnification by Seller and the Shareholders. Subject to the
provisions of this Article 5 and the Escrow Agreement, Seller and the
Shareholders, jointly and severally, in accordance with the Escrow Agreement,
agree to indemnify and hold harmless SCB and Buyer, and each officer, director,
employee, or other agent thereof and their respective estates (each being an
"SCB Indemnified Party"), from and against any and all claims, losses, damages,
liabilities, and expenses (including without limitation, settlement costs and
any legal or other fees or expenses for investigating or defending any actions
or threatened actions) reasonably incurred by such SCB Indemnified Party in
connection with each and all of the following:
(a) any misrepresentation or breach of any warranty made by Seller
or the Shareholders in this Agreement;
(b) the nonfulfillment or breach of any covenant, agreement, or
obligation of Seller or the Shareholders contained in or contemplated by
this Agreement;
(c) any misrepresentation or breach of any warranty contained in any
statement, certificate, or other document furnished by Seller or the
Shareholders pursuant to this Agreement or in connection with the
transaction contemplated by this Agreement; and
(d) any attempt (whether or not successful) by any person to cause
or require such SCB Indemnified Party to pay or discharge any debt,
obligation, liability, or commitment, the existence of which would entitle
such SCB Indemnified Party to indemnification pursuant to clauses (a)
through (c) of this Section 5.2 or would constitute a breach of any such
representation, warranty, or agreement under this Agreement.
5.3. Indemnification Procedure. Subject to the provisions of the Escrow
Agreement, if in effect, an SCB Indemnified Party shall promptly notify the
Seller and Shareholders of any claim, demand, action, or proceeding for which
indemnification will be sought under Section 5.2 of this Agreement, and, if such
claim, demand, action, or proceeding is a third party claim, demand, action, or
proceeding, the Seller and the Shareholders will have the right at their expense
to assume the
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defense thereof using counsel reasonably acceptable to the SCB Indemnified
Party. The SCB Indemnified Party shall have the right to participate, at its own
expense, with respect to any such third party claim, demand, action, or
proceeding. In connection with any such third party claim, demand, action, or
proceeding, SCB, Buyer, Seller and the Shareholders shall cooperate with each
other and provide each other with access to relevant books and records in their
possession. No such third party claim, demand, action, or proceeding shall be
settled without the prior written consent of the SCB Indemnified Party. If a
firm written offer is made to settle any such third party claim, demand, action,
or proceeding and the Seller and Shareholders propose to accept such settlement,
and the SCB Indemnified Party refuses to consent to such settlement, then: (i)
the Seller and Shareholders shall be excused from, and the SCB Indemnified Party
shall be solely responsible for, all further defense of such third party claim,
demand, action, or proceeding; and (ii) the maximum liability of the Seller and
Shareholders relating to such third party claim, demand, action, or proceeding
shall be the amount of the proposed settlement if the amount thereafter
recovered from the SCB Indemnified Party on such third party claim, demand,
action, or proceeding is greater than the amount of the proposed settlement.
ARTICLE 6.
GENERAL PROVISIONS
6.1 Assignment of Seller's Contracts. Nothing in this Agreement shall be
deemed to constitute an assignment or attempt to assign any contract or other
agreement to which Seller is a party if the attempted assignment thereof without
the consent of the other party to such contract or agreement would constitute a
breach thereof or affect in any way the rights of Seller thereunder. If after
Seller has used its best efforts to obtain a consent of any such other party to
such contract or agreement, such consent shall not be obtained or an attempted
assignment thereof would be ineffective and would affect the rights of Seller
thereunder, Seller will cooperate with Buyer in any reasonable arrangement
designed to provide for Buyer the benefits under any such contract or agreement,
including the enforcement, for the benefit of the Buyer, of any and all rights
of Seller or Buyer against such other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise.
6.2 Notices. Any notice required to be given hereunder shall be sufficient
if in writing, by courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid), addressed as follows:
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If to SCB or Buyer: If to Seller or the Shareholders:
Xxx X. Xxxxxx, Xx. Global Services, Inc.
President and Chief 0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx Xxxxx, Xxxxxxxx 00000
SCB Computer Technology, Inc.
0000 Xxxx Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
with a copy to: with a copy to:
Xxxxxxxx X. Xxxxxx Xxxxxx X. Xxxx
Bass, Xxxxx & Xxxx PLC McGloin, Davenport, Xxxxxxxx and Snow
2700 First American Center 0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
personally delivered or mailed.
6.3 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
6.4 Entire Agreement. This Agreement, the Exhibits, the Seller Disclosure
Letter, and any documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
6.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, if applicable. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
6.6 Governing Law. The validity of this Agreement, the construction of its
terms and the determination of the rights and duties of the parties hereto shall
be governed by and construed in
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accordance with the laws of the State of Tennessee applicable to contracts made
and to be performed wholly within such state.
6.7 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto. Each
separate signature page may be transmitted by facsimile or expedited delivery
service for assembly as an integrated document or otherwise as the parties may
agree. Any signature pages sent by facsimile shall be followed by overnight
delivery within two (2) business days.
6.8 Waivers. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties,
covenants, or agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be construed
as a waiver of any prior or subsequent breach of the same or any other provision
hereunder.
6.9 Incorporation of Exhibits. The Seller Disclosure Letter and the
Exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
6.10 Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
6.11 Expenses. Each party to this Agreement shall bear its own expenses in
connection with the transactions contemplated hereby.
6.12 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled by contract, at
law, or in equity.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
SCB COMPUTER TECHNOLOGY, INC.
By:
Title:
PARTNERS RESOURCES, INC.
By:
Title:
GLOBAL SERVICES, INC.
By:
Title:
THE SHAREHOLDERS:
Xxxxxxx X. Xxxxxxx
Xxxxxxx X. XxXxxx
Xxxx X. Xxxx
Xxxxxx X. Xxxxxxx
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