ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of the 30th day of November, 2002, by and among AUTOMATION
RESEARCH, INC., an Ohio corporation, ("ARI") and MKTG SERVICES, INC., a Nevada
corporation ("MKTG"), MKTG SERVICES - BOSTON, INC., a Delaware corporation
("Boston"), MKTG SERVICES - NEW YORK, INC., a New York corporation ("New York"),
and MKTG SERVICES - PHILLY, INC., a New York corporation ("Philly," collectively
with Boston and New York, "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers engage in the direct marketing business at
locations in Wilmington, Massachusetts, Newtown, Pennsylvania and New York, New
York (the "Business"); and
WHEREAS, MKTG owns all of the issued and outstanding capital
stock of each of the Sellers; and
WHEREAS, in reliance on and subject to the terms and
conditions contained herein, ARI desires to purchase, and MKTG and Sellers
desire to sell, all of the assets of Sellers used in connection with or which
are necessary for the conduct of, the Business other than the Excluded Assets
(as defined in Paragraph 1.2);
NOW, THEREFORE, for and in consideration of the premises, and
the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets. Subject to the terms and conditions
hereinafter set forth, at the Closing, Sellers shall sell, assign, transfer,
convey, and deliver to ARI, and ARI shall purchase and acquire from Sellers for
the Purchase Price (as defined in Paragraph 1.3), all of the business, assets,
properties and rights used by Sellers in connection with or which are necessary
for the conduct of the Business, of every kind and nature, whether tangible or
intangible, and whether real, personal or mixed, wherever located and whether or
not carried or reflected on the books and records of Sellers and whether or not
carried in the name of any Seller, and including any thereof acquired after the
date hereof and prior to the Closing (all of such business, assets, properties
and rights, collectively, the "Assets"), free and clear of all Liens, except for
Permitted Liens (such terms and certain other terms being defined in Article
12).
The Assets specifically include, without limitation,
(a) all Contracts of the Business including the Assigned Contracts set
forth on Schedule 1.1(a) (the "Assigned Contracts");
(b) all databases and all tangible and intangible personal property
used in connection with or relating to the Business, including, but not limited
to, all software (including data and related documentation), machinery,
equipment, terminals and other computer hardware and systems of Sellers used in
the Business;
(c) all of Sellers' right, title and interest under licenses related
to the Business, including without limitation those specifically set forth on
Schedule 1.1(c);
(d) all customer lists, account records and other information and
documentation relating to the Business and all goodwill related to the Business;
(e) all of the Intellectual Property Rights which are owned by, issued
or licensed to, or used by Sellers in connection with the Business, including
without limitation, all names, tradenames and trademarks associated with the
Business, including without limitation, those set forth on Schedule 1.1(e), and
other proprietary rights and all copies and tangible embodiments of such
Intellectual Property Rights (in whatever form or medium), in each case
including the items set forth on Schedules 4.9(a) and 4.9(b), along with all
income, royalties, damages and payments due or payable to any Seller including
damages and payments for past, present or future infringement or
misappropriation and the right to xxx and recover for past infringement or
misappropriation), and any and all corresponding rights that, now or hereafter,
may be secured throughout the world;
(f) all inventory, office supplies, forms, labels, spare parts, and
other miscellaneous supplies and tangible personal property of Sellers that
relate to the Business;
(g) any insurance proceeds received by MKTG or Sellers that relate to
claims of the Business or damages incurred to any of the Assets;
(h) the right to receive mail and other communications relating to the
Business (including mail and communications from customers, suppliers, agents
and others and mail relating to payments or accounts receivable);
(i) all lists and records pertaining to suppliers, personnel, and
agents and all other books, ledgers, files, documents, promotional materials,
correspondence, drawings, specifications, computer programs and business records
of every kind and nature of any Seller or its Affiliates, in each case relating
to the Business;
(j) all warranties and guaranties by, and rights, choses in action,
and claims, known or unknown, matured or unmatured, accrued or contingent
against third parties relating to any other Asset(s), including rights in and to
insurance and indemnity claims of any Seller relating to any such other
Asset(s);
(k) all franchises, certificates, licenses, permits, orders, approvals
and other authorizations from any Government or self-regulatory organization of
or used by any Seller that relate to the Business (collectively, "Permits");
(l) all refunds relating to the payment of Taxes, other than income
Taxes, to the extent provided in Paragraph 3.6;
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(m) all accounts receivable of the Business including without
limitation those accounts receivable that are listed on Schedule 1.1(m);
(n) Seller's bank accounts (but not any cash in the bank accounts
except for cash for which checks have been written prior to the Closing Date but
not presented to the applicable banks for payment), prepaid deposits and similar
items and all other assets and properties identified on Schedule 1.1(n).
1.2. Excluded Assets. Notwithstanding anything to the contrary herein
or otherwise, ARI expressly understands and agrees that the following assets and
properties of Sellers (the "Excluded Assets") shall be excluded from the Assets:
(a) all Seller's cash and cash equivalents on hand and in banks,
except for cash for which checks have been written prior to the Closing Date but
not presented to the applicable banks for payment (the parties acknowledge that
all bank accounts, prepaid deposits or similar items are included with the
Assets);
(a) the insurance policies of Sellers; provided, that ARI shall be
entitled to receive as a part of the Assets any insurance proceeds received by
MKTG or Sellers that relate to claims of the Business or damages incurred to any
of the Assets;
(c) the capital stock of Sellers and agreements related thereto;
(d) minute and stock books of Sellers and any other documents relating
to the organization, maintenance and existence of Sellers as
corporations; and
(e) the specific assets or properties listed on Schedule 1.2.
1.3. Purchase Price. (a) In consideration of the sale of all of the
Assets ARI shall pay to Sellers, the aggregate sum of $11,000,000 (the "Purchase
Price"). The Purchase Price will be paid as provided in this Paragraph 1.3.
(b) At the Closing, ARI shall:
(i) pay to Boston by wire transfer to an account designated by
Boston the sum of Six Million Six Hundred Thousand Dollars
($6,600,000);
(ii) pay to New York by wire transfer to an account designated by
New York the sum of Two Million Five Hundred Thousand Dollars
($2,500,000);
(iii) pay to Philly by wire transfer to an account designated by
Philly the sum of One Million Four Hundred Thousand Dollars
($1,400,000);
(iv) deliver to Bank One Trust Company, National Association (the
"Escrow Agent"), the sum of Five Hundred Thousand Dollars ($500,000)
to be held and disbursed pursuant to an Escrow Agreement to be entered
into at Closing among ARI,
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Agent (as defined in Paragraph 3.12) and the Escrow Agent in
substantially the form of Exhibit A attached hereto (the "Escrow
Agreement"); and
(v) assume the Assumed Liabilities (as defined in Paragraph 1.4).
1.4. Assumption of Certain Liabilities. (a) As additional
consideration for the sale of the Assets, ARI shall assume at the Closing the
executory obligations of MKTG and the Sellers arising and to be performed after
the Closing under the Assigned Contracts and those specific liabilities listed
on Schedule 1.4, all of which shall be assumed pursuant to an Assumption
Agreement in substantially the form of Exhibit B (collectively, the "Assumed
Liabilities").
(b) Nothing contained in this Paragraph 1.4 or in any instrument of
assumption executed by ARI at the Closing or any other agreements, instruments,
certificates, schedules or documents executed or delivered by any party pursuant
to or in connection with this Agreement (collectively, the "Other Agreements")
shall be deemed to release or relieve MKTG or any Seller from their
representations, warranties, covenants, agreements and indemnities contained in
this Agreement or any Other Agreement, each of which shall survive the execution
and delivery hereof and thereof and the Closing.
1.5. Obligations Not Assumed. Except for the Assumed Liabilities, ARI
shall not assume any Liability of any MKTG or any Seller (whether related to the
Business or otherwise) of any kind, and MKTG and each Seller shall pay, satisfy
and perform all of such other Liabilities of MKTG and the Sellers (including
without limitation of the Business) as and when due (collectively, the "Excluded
Liabilities"). Without limiting the generality of the foregoing, the Excluded
Liabilities shall include and the Assumed Liabilities shall not include, and
under no circumstances shall ARI be deemed to assume, any Liability of MKTG or
the Sellers or their respective Affiliates or Representatives (as defined in
Paragraph 3.3) arising out of or relating to:
(a) any Liability related in whole or in part to the businesses of
MKTG, any Seller or any of their Affiliates other than the Business;
(b) any Liability arising from any default, breach, nonperformance,
misfeasance, malfeasance, violation of Law, or nonfeasance by or on behalf of
MKTG, any Seller or any of their Affiliates, including without limitation any
warranty claims or claims of breach or default under any Assigned Contract;
(c) any Liability for accounts or notes payable of the Business other
than the Assumed Liabilities;
(d) any litigation, pending or threatened as of the Closing Date, or
arising from or relating to activities of Sellers or their Affiliates including
litigation identified on Schedule 4.13;
(e) any Liability for violations of any Laws, or arising out of or
resulting from any events, circumstances, plans, programs, or conditions
occurring prior to the Closing Date;
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(f) any indebtedness, obligations, duties or other Liabilities related
to or arising in connection with the Excluded Assets, including all executory
obligations under Contracts included in the Excluded Assets;
(g) any Liability arising out of the actual or alleged tortious
conduct of any Seller, its Affiliates or any of their respective
Representatives, whether related to the Business or otherwise; and
(h) except as otherwise expressly provided in Paragraph 3.6, any
Liability for Taxes, including Taxes imposed on or measured by the income,
profits or sales of Sellers, whether related to the Business or otherwise.
1.6. Allocation. The Purchase Price shall be allocated among the
Assets as set forth on Schedule 1.6, and such allocations are intended by ARI
and Sellers to comply with Section 1060 of the Code and the regulations
promulgated thereunder. Sellers and ARI each shall prepare and submit to the
other for review and comment a completed Internal Revenue Service Form 8594, in
a manner consistent with Schedule 1.6, at least sixty (60) days prior to the due
date of such Forms 8594. Neither Sellers nor ARI shall take any position on any
Return (as defined in Paragraph 4.14(a)) that is that is consistent with the
allocation set forth on Schedule 1.6.
2. TRANSACTIONS AND DOCUMENTS AT CLOSING
2.1. Closing. Subject to any prior termination of this Agreement
pursuant to Article 10, the consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxxxxx
Xxxxxxx, LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New York
time, on the second Business Day after all the conditions set forth in Articles
7 and 8 hereof (other than those to be satisfied by the delivery of documents at
Closing) have been satisfied or waived (the "Closing Date"). As used herein,
"Effective Time" shall mean the time at which the Closing is consummated. For
purposes of allocating financial or accounting items between the parties only,
the Closing shall be deemed to have occurred at the close of business on the
Closing Date.
2.2. Deliveries at the Closing. (a) At the Closing:
(i) Sellers shall unconditionally sell, assign, transfer,
convey, and deliver to ARI all of the Assets, free and clear of any and
all Liens, except for Permitted Liens, and in furtherance thereof,
Seller shall deliver to ARI (A) an Assignment and Xxxx of Sale in
substantially the form of Exhibit C, (B) an affidavit of each Seller
pursuant to Section 1445(b)(2) of the Code stating, under penalties of
perjury, the Seller's United States taxpayer identification number and
that the Seller is not a foreign person and (C) such other deeds, bills
of sale, assignments, certificates of title, documents and other
instruments of transfer and conveyance as ARI shall reasonably request;
(ii) upon such delivery by MKTG and the Sellers, ARI shall
make the payment and delivery of the Purchase Price in accordance with
Paragraph 1.3. and ARI
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shall assume the Assumed Liabilities by delivering to MKTG and the
Sellers an Assumption Agreement in substantially the form of Exhibit
B; and
(iii) without limiting any other obligation of MKTG and
Sellers under this Agreement, Sellers shall deliver to ARI the written
consent, in form and substance reasonably satisfactory to ARI, of each
of the other parties to any Assigned Contract or License identified on
Schedule 2.2(a) whose consent is required to permit the assignment of
such Assigned Contract or License to ARI with effect from the Effective
Time and without change in the respective terms and conditions of such
Assigned Contract or License.
(b) At the Closing, the relevant Persons shall, in addition to the
other documents, agreements, papers, and instruments required to be executed and
delivered under or pursuant to this Agreement, execute and deliver a restrictive
covenant agreement among MKTG, Sellers and ARI in substantially the form
attached hereto as Exhibit D (the "MKTG Restrictive Covenant Agreement").
(c) All deliveries, payments and other transactions and documents
relating to the Closing shall be interdependent and none shall be effective
unless and until all are effective (except to the extent that the party entitled
to the benefit thereof has waived satisfaction or performance thereof as a
condition precedent to Closing).
(d) From time to time and at any time, at ARI's request, whether prior
to, on or after the Closing Date, and without further consideration, MKTG and
Sellers shall, at their expense, execute and deliver such further documents and
instruments of sale, assignment, transfer, conveyance and delivery and shall
take such further reasonable actions as may be necessary or desirable, in the
reasonable opinion of ARI, further to assign, transfer, convey and deliver to
ARI all right, title and interest in and to the Assets, free and clear of any
and all Liens, except for Permitted Liens, or as may otherwise be necessary or
desirable to consummate the transactions contemplated by, or to carry out the
intent of, this Agreement.
(e) If any Contract or Permit included in the Assets may not be
transferred or assigned without the consent, approval or waiver of a third party
(including, if applicable, the execution by any Government of a novation
agreement with respect to any government Contract) and the transfer or
assignment or attempted transfer or assignment would constitute a breach thereof
or a violation of any Law, nothing in this Agreement or in any Other Agreement
will be deemed a transfer or assignment or an attempted transfer or assignment
thereof. If ARI identifies any Contract of MKTG and/or Sellers that was not
assigned to ARI on the Closing Date and ARI desires to have such Contract MKTG
and Sellers will use their commercially reasonable efforts, both before and
after the Closing to secure any such consents, approvals or waivers. Without
limiting any other provision of this Agreement, if any such consents, approvals
and waivers are not (for any reason) obtained before the Closing, then MKTG and
Sellers will cooperate (at their expense) in any reasonable arrangement
requested by ARI to transfer to ARI the economic benefit for all periods after
the Closing of any such Assigned Contract as to which consent is not obtained,
including by enforcement for the benefit of ARI of any and all rights of MKTG
and/or Sellers against any other party thereto, and all payments received by
MKTG and/or Sellers under any affected Assigned Contract for all periods after
the Closing will be immediately paid over to
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ARI. ARI's consummation of the transactions contemplated in this Agreement shall
not abridge ARI's rights or MKTG's and/or Sellers' obligations under this
subparagraph, which obligations shall survive the execution and delivery hereof
and the Closing, and remain in full force and effect thereafter.
3. ADDITIONAL AGREEMENTS AND COVENANTS.
3.1. Expenses. Except as otherwise provided in this Agreement, all
expenses incurred by ARI in connection with the negotiations among the parties,
and the authorization, preparation, execution and performance of this Agreement,
any Other Agreement and the transactions contemplated by this Agreement shall be
paid by ARI. Except as otherwise provided in this Agreement, all expenses
incurred by MKTG and Sellers in connection with the negotiations among the
parties, and the authorization, preparation, execution and performance of this
Agreement, any Other Agreement and the transactions contemplated by this
Agreement shall be paid by Sellers (and not out of any assets of Sellers that
would constitute Assets).
3.2. Brokers. ARI shall indemnify MKTG and the Sellers and hold them
harmless from and against all claims or demands for commissions or other
compensation by any broker, finder, or similar agent claiming to have been
employed by or on behalf of ARI. MKTG and Sellers shall, jointly and severally,
indemnify ARI and hold it harmless from and against all claims or demands for
commissions or other compensation by any broker, finder, or similar agent
claiming to have been employed by or on behalf of MKTG and/or Sellers.
3.3. Publicity. All press releases and other public announcements
respecting the subject matter hereof shall be made only with the mutual written
agreement of ARI, MKTG and Sellers; provided, however, that any party hereto may
make any disclosure required to be made under applicable Law or stock exchange
rule if such party has determined in good faith that it is necessary to do so
and uses its best efforts, prior to making the disclosure, to provide the other
parties with a copy of the proposed disclosure and to discuss the proposed
disclosure with the other parties.
3.4. Access and Inspection. (a) MKTG and Sellers shall provide ARI and
its Representatives full access, during normal business hours from the date of
this Agreement through the Closing (or earlier termination of this Agreement
pursuant to Article 10), to the books, records, properties and personnel of MKTG
and Sellers for the purpose of making such investigation regarding the Business
as ARI may reasonably desire, and MKTG and Sellers shall furnish such
information concerning MKTG and Sellers, the Business and the Assets as ARI may
reasonably request; provided, however, that all contacts between ARI and any
employees of MKTG and any Seller related to such investigation shall be
coordinated through one or more Representatives of MKTG or the Sellers. Subject
to the foregoing sentence, MKTG and Sellers will not interfere with reasonable
efforts by ARI to meet with employees of MKTG or any Seller involved in the
Business for screening procedures. No investigation made heretofore or hereafter
by or for ARI shall limit or affect the representations, warranties, covenants
and agreements of Sellers contained in this Agreement all of which shall survive
the execution or delivery of this Agreement and the Other Agreements and the
Closing, except expressly provided otherwise in this Agreement.
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(b) ARI shall provide MKTG and the Sellers full access, during normal
business hours from the date Closing through such reasonable time as is
necessary, to the books, records, properties and personnel of the Business and
the Assets, for the sole purpose of making such investigation regarding the
Business and the Assets, as MKTG and Sellers may require for the purposes of
complying with their obligations under the Securities and Exchange Act of 1934,
as amended.
3.5. Cooperation. The parties shall cooperate fully with each other
and with their respective counsel and accountants in connection with any steps
required to be taken as part of their respective obligations hereunder, and all
parties shall use commercially reasonable efforts to consummate the transactions
contemplated herein and to fulfill their obligations hereunder, including by
causing to be fulfilled at the earliest practical date the conditions precedent
to the obligations of the parties to consummate the transactions contemplated
3.6. Tax Matters. (a) MKTG and Sellers shall make all federal, state,
local and foreign filings with respect to income Taxes for the Business for the
Tax period ending on the Closing Date. All liabilities with respect to income
Taxes under federal, state, local and foreign income Tax laws attributable to
the operations of the Business through the Closing Date shall be borne by MKTG
and Sellers, and any refunds or credits or rights to refunds or credits with
respect thereto (including interest and penalties) shall be the property of MKTG
and Sellers.
(b) All Tax liabilities (other than income Taxes) attributable to the
Business through the Closing Date shall be borne by MKTG and the Sellers.
(c) All Taxes attributable to the Business subsequent to the Closing
shall be the responsibility of ARI.
(d) All real property taxes, personal property taxes and similar ad
valorem obligations levied with respect to the Business for a Tax period that
includes (but does not end on) the Closing Date shall be apportioned between
Paragraph 3.6(b) and Paragraph 3.6(c) as of the Closing Date based upon the
number of days of such Tax period included in the pre-Closing period and the
number of days of such Tax period included in the post-Closing period.
(e) If either party pays any Taxes to be borne by the other party
under this Paragraph 3.6, the other party shall promptly reimburse such party
for the Taxes paid. If, in preparing Returns or payments after the Closing, it
appears to ARI that MKTG and/or Sellers will be asked to pay additional Taxes,
ARI shall so notify MKTG, and provide MKTG a reasonable opportunity to review
and comment upon any related Returns prior to filing them and paying the Tax. If
either party receives any refunds or credits which are the property of the other
party under this Paragraph 3.6, such party shall promptly pay the amount of such
refunds or credits to the other party.
(f) MKTG and Sellers shall file all necessary documentation and
Returns with respect to sales, use, excise, transfer, value added and other
similar Taxes arising from the sale of the Assets. ARI shall be responsible for
one-half (1/2) of all such Taxes and MKTG and the Sellers shall be responsible
for one-half of all such Taxes.
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(g) The parties agree to cooperate with each other and to provide each
other with all information and documentation reasonably necessary to permit the
preparation and filing of all federal, state, local and foreign Returns and Tax
elections with respect to the Business. ARI shall make available to MKTG and the
Sellers and their representatives all records and materials reasonably required
by them to pursue or contest any Tax matters and shall provide reasonable
cooperation to MKTG and the Sellers in such case, including having personnel of
the Business provide reasonable assistance to MKTG and Sellers, consistent with
the manner in which such matters would have been dealt with prior to the
Closing. MKTG and Sellers shall make available to ARI and its representatives
those records and materials reasonably required by them to prepare, pursue or
contest any Tax matters arising after the Closing which have factual reference
to the pre-Closing periods.
(h) ARI and Sellers agree that 2002 Forms W-2 for those employees of
the Business hired by ARI shall be prepared and filed in accordance with the
"alternate procedure" pursuant to Internal Revenue Service Revenue Procedure
96-60, 1996-2 C.B. 399, and any comparable provisions of applicable state and
local laws.
(i) No new elections with respect to Taxes, or changes in current
elections with respect to Taxes, affecting the Assets shall be made after the
date of this Agreement without the prior written consent of ARI.
3.7. Sellers use of MKTG Name. As soon as practicable after the
Closing, MKTG will (a) change the names of each of the other Sellers to a name
that does not reference or use the "MKTG" name or xxxx, (b) solicit stockholder
approval to change the name of MKTG to some other name not using the "MKTG" name
or xxxx and (c) after the Closing, until papers are duly filed with the
applicable Secretaries of State to effect such name changes, not to use the name
of any Seller in any way for the purpose of selling or marketing any product or
service or otherwise in any manner which does or might compete with ARI or, in
any other way which, in ARI's reasonable judgment, could be detrimental to ARI's
enjoyment of the rights and goodwill it sought when it paid for and acquired the
assets of Sellers, except as expressly agreed by ARI in its sole discretion.
Notwithstanding the foregoing, ARI shall grant MKTG a license to use the xxxx
"MKTG" for a period of one (1) year from the Closing Date for "MKTG
TeleServices, Inc." in connection with its business.
3.8. Conversion of Customer Base. MKTG and Sellers acknowledge that a
material component of the Business being purchased by ARI is the customer base
of the Business, including information about and the goodwill of all customers
thereof. MKTG and Sellers covenant and agree that after the Closing Date, they
will in good faith and without additional consideration, consult with and assist
ARI in converting all of the customers of MKTG and any Seller, whether under an
Assigned Contract or otherwise, to customers of ARI.
3.9. Agent. Each Seller hereby irrevocably appoints MKTG Services,
Inc. (the "Agent") as its agent and attorney-in-fact, with full power to
negotiate and settle claims for indemnification under Article 9 hereof, and to
perform any other act arising under or pertaining to this Agreement, and the
transactions contemplated hereby, including to waive any right or remedy of, or
make any election or give any instructions on behalf of Sellers, or to settle or
compromise any dispute between Sellers, on the one hand, and ARI on the other
hand. The
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appointment of the Agent being coupled with an interest, it shall be irrevocable
and shall be binding upon Sellers and their successors and assigns, and shall
not be revoked by the dissolution of any thereof. The Agent shall be authorized
to receive service of process on behalf of Sellers in any Action before any
Forum, and any such service of process shall have the same effect as if served
upon all Sellers. Any notice or communication to the Agent provided in
accordance with this Agreement shall be effective as notice upon or
communication to all Sellers for all purposes of this Agreement. Without
limiting any other provision of this Paragraph 3.9, Sellers shall be obligated
at all times during the term of this Agreement to designate and maintain an
Agent with the powers and authorities described in this Paragraph 3.9.
3.10 Sellers' Employees.
(a) At the Closing, ARI will offer employment to those employees of
MKTG and Sellers listed on Schedule 3.10(a). Any such offer of employment made
by ARI which is not accepted on or prior to the Closing Date shall be revocable
at ARI's option. Each employee employed by ARI (a "Transferred Employee") will
be hired as an employee at will, subject to termination in the discretion of
ARI. ARI will not, at the Closing, assume any of the MKTG or Sellers' Benefit
Plans. After the Closing, each Transferring Employee will be eligible to
participate in employee benefit plans and programs established and maintained by
ARI or an affiliate of ARI in accordance with the terms and conditions of such
plans or programs. Notwithstanding the preceding sentence, for purposes of
eligibility to participate in, and the vesting of benefits under, such employee
benefit plans and programs (and for purposes of accruing benefits with respect
to vacation and sick leave only, subject to any terms and limitations of ARI's
vacation and sick leave policies), each Transferring Employee will receive
credit for all years of service with MKTG or Sellers prior to the Closing.
(b) Schedule 3.10(b) hereto contains a list of the Sellers' Employees
with all of the vacation and short-term disability (i.e., sick leave), set forth
in number of days as of the most recent praticable date to which each such
Transferring Employee has remaining for the calendar year 2002. The Sellers
shall update this Schedule 3.10(b) as of the date which is two (2) days before
the Closing Date.
(c) Notwithstanding any other provision of this Agreement, MKTG and
the Sellers shall be jointly liable for, and shall indemnify and hold ARI or any
Affiliate employing the Sellers' Employees harmless from and against, any
liabilities or obligations relating to the Sellers' Employees or their
dependents, including reasonable fees and disbursements of attorneys, resulting
from, and including, but not limited to, (i) any and all claims for life
insurance, disability and medical benefits based on occurrences prior to the
Closing, whether such claims are asserted before, on or after the Closing Date,
(ii) any and all other welfare and fringe benefit claims based on occurrences
prior to the Closing, whether such claims are asserted before, on or after the
Closing Date, (iii) any and all life insurance, disability, severance (including
severance claims based upon the transactions contemplated hereunder), medical or
other welfare and fringe benefit claims of any individual (or his or her covered
dependents) who retired from or terminated employment with MKTG and/or the
Sellers prior to the Closing or who died prior to the Closing, whether such
claim is asserted before, on or after the Closing Date, (iv) any and all claims
related to any severance or other termination benefits provided for by federal
or state statute or otherwise and arising out of a claim of actual or
constructive
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termination resulting from the consummation of the transactions
contemplated hereunder if the termination occurred, or is claimed to have
occurred, before or in connection with the Closing, and (v) any and all claims
related to any compensation arrangement or benefit plan sponsored by MKTG or the
Sellers including, but not limited to, any liability for any amounts payable
thereunder as a result of the execution or performance of this Agreement or on
the termination of any Sellers' Employees after the Closing in connection
therewith.
3.11 Non-Solicitation of Employees. In the event that this Agreement
is terminated pursuant to Article 10 below, neither ARI nor any of MKTG or any
of the Sellers shall, for a period of one (1) year following the date of such
termination, employ as an employee or retain as a consultant, or persuade or
attempt to persuade any person who is at the date hereof, or at any time prior
to the termination of this Agreement was, an employee of or exclusive consultant
to ARI or any Affiliate of ARI, MKTG or the Sellers, to leave such employment,
or to become employed as an employee or retained as a consultant by such party,
without the prior written consent of the other applicable party to this
Agreement.
3.12 Cash Reconciliation. No later than five (5) days after the
Closing Date, MKTG, Sellers and ARI will mutually determine the amount of cash
on hand by the Business as of 5:00 p.m. New York time on the date that is one
(1) day prior to the Closing Date and ARI will cause such amount to be paid to
Sellers. In no event will MKTG or Sellers be entitled to any cash generated by
the Business after 5:00 p.m. on the date that is one (1) day prior to the
Closing Date. Cash on hand shall be based upon the book balance of each such
account for cash on hand less any cash for which checks have been written but
not presented to the applicable banks for payment and less any other appropriate
adjustments or prorations.
3.13 Post-Closing Delivery. Sellers shall comply with the covenant set
forth in the definition of "Permitted Liens" pursuant to the terms thereof and
shall, if deemed reasonably necessary or desirable by ARI, execute and deliver
documentation to transfer of record to ARI at the U.S. Patent and Trademark
Office or other applicable office title to any Intellectual Property Rights
being conveyed hereunder.
3.14 Sublease of New York Office Space. At the Closing, MKTG and the
Sellers shall sublease to ARI its office space located on floors 19, 20 and 21
at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. In consideration for the
foregoing, ARI shall pay to MKTG the amount equivalent to the rent rate per
square foot that is commensurate with that having been paid by MKTG and the
Sellers on the date hereof.
3.15 Assignment of Sellers' Office Space. At the Closing, MKTG and the
Sellers shall assign to ARI its office space located in Wilmington, Delaware and
Newtown, Pennsylvania.
3.16 Post Closing Price Adjustment. To the extent that on the Closing
Date and as reflected on the post-closing Schedule 4.19 (the "Account Payable
List" as defined in Section 4.19) and the post-closing Schedule 1.1(m) (the
"Accounts Receivable List" as defined in Section 4.19), the amount of accounts
payable plus unbilled payables of the Business exceed the amount of accounts
receivable plus unbilled work in process of the Business (the "Payable
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Excess"), MKTG and the Sellers hereby agree, jointly and severally, to pay ARI
in cash the amount of the Payable Excess (if any) within five (5) calendar days
of the date when the Accounts Payable List and Accounts Receivable List are
required to be finalized and delivered to ARI.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS
MKTG and Sellers have delivered to ARI the Disclosure Letter
attached hereto (the "Disclosure Letter") which contains certain information
regarding MKTG, the Sellers, the Assets, the Assumed Liabilities and the
Business. The information contained in the Disclosure Letter shall be deemed to
be part of and qualify only those representations and warranties contained in
this Article 4 which correspond to or are specifically referred to in the
schedule contained in the Disclosure Letter. In addition to the Disclosure
Letter, MKTG and Sellers have delivered to ARI certain documents and materials
pursuant to this Agreement and the Disclosure Letter, and all such documents and
materials expressly referred to herein are all true, correct and complete as of
the date furnished, and any and all modifications or amendments thereto have
been delivered to ARI. To induce ARI to enter into and perform this Agreement,
MKTG and Sellers represent and warrant to ARI as follows:
4.1. Organization and Qualification. (a) MKTG is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Nevada. MKTG Services - Boston, Inc. is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. MKTG
Services - New York, Inc. is a corporation duly organized, validly existing and
in good standing under the Laws of the State of New York. MKTG Services -
Philly, Inc. is a corporation duly organized, validly existing and in good
standing under the Laws of the State of New York. Sellers have all requisite
power and authority and are entitled to own or lease the Assets and to carry on
the Business as and in all places where such business is conducted and such
Assets are owned or leased. Schedule 4.1 sets forth a list of all jurisdictions
where Sellers are qualified or licensed to conduct business as a foreign
corporation and in which they conduct the Business, which are all the
jurisdictions where the character of the assets or properties owned or leased by
Sellers in connection with the Business or the nature of such business conducted
by them requires such qualification or licensure. Sellers have previously
furnished to ARI true and complete copies of their certificates of
incorporation, bylaws, or other governing documents, each as in effect on the
date hereof.
(b) Other than this Agreement, there are no outstanding Contracts,
demands, or other circumstances under which any Seller is obliged or may become
obliged to sell, assign, transfer, convey, or deliver any of the Assets to any
Person.
4.2. Inconsistent Obligations; Authorization. (a) MKTG and each Seller
has all requisite power and authority to execute, deliver and perform its
obligations under this Agreement and all Other Agreements to which it is or will
be a party. This Agreement has been and each of the Other Agreements has been
(or at the Closing will be) duly and validly executed and delivered by MKTG and
each Seller, as applicable, and each constitutes (or will, assuming the valid
execution of this Agreement by ARI, when executed and delivered constitute) the
valid and legally binding obligation of each such Seller and MKTG, enforceable
in accordance with its respective terms.
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(b) Neither the execution, delivery nor performance of this Agreement
or of any Other Agreement by MKTG or any Seller will or could, with the passage
of time, the giving of notice, or both: (i) result in a violation of MKTG's or
any such Seller's certificate of incorporation, bylaws, or other governing
documents, or (ii) result in a breach of, conflict with or default under or
violate any term or provision of any indenture, note, mortgage, bond, security
agreement, loan agreement, guaranty, pledge, instrument, Order, or Law
(including any applicable bulk sales laws), or, to the Knowledge of MKTG and
Sellers, any other Contract to which MKTG or any Seller is a party or by which
its assets and properties (including any Assets), is subject or bound; nor will
such actions result in (w) the creation of any Lien on any of the Assets, (x)
the acceleration or creation of any Liability of MKTG or any Seller (as it
relates to the Business), or (y) the forfeiture of any right or privilege of
MKTG or any Seller (as it relates to the Business).
(c) All of the issued and outstanding shares of capital stock of each
Seller are owned of record and beneficially by MKTG, free and clear of any and
all Liens, including any adverse claims of any former shareholder.
4.3. Consents. Except as set forth on Schedule 4.3, the execution,
delivery and performance by each Seller of this Agreement and the Other
Agreements to which each of them is (or will be) a party, and the consummation
of the transactions contemplated in this Agreement and such Other Agreements do
not and will not: (a) require the consent, approval or action of, or any filing
with or notice to, any Government or other Person, (b) impose any other term,
condition or restriction on ARI or any Seller pursuant to any business
combination or takeover Law, or (c) impose any other term, condition or
restriction on or under any Asset.
4.4. No Violation; Compliance with Laws. Except as set forth on
Schedule 4.4, neither MKTG nor any Seller is in default under or in violation
of: (a) its certificate of incorporation, bylaws, or other governing documents,
or (b) any Law or Order (as any of them relate to the Business). The operations
of MKTG and each Seller as they relate to the Business have been conducted at
all times in all material respects in compliance with all applicable Laws.
Neither MKTG nor any Seller has received any notification of any asserted past
or present failure by MKTG or any Seller to comply with any applicable Law
relating to the Business.
4.5. Possession of Licenses. Each Seller possesses all franchises,
certificates, licenses, Permits and other authorizations from Governments and
all other Persons, free from burdensome restrictions, that are necessary for the
ownership, maintenance, operation or transfer of the Assets and the conduct of
the Business, and no Seller is in violation thereof.
4.6. Financial Statements. Schedule 4.6 contains true, correct and
complete copies of the following unaudited financial statements and reports (the
"Financial Statements") relating to the Business: a balance sheet, a statement
of income and a cash flow statement all dated as of September 30, 2002 (the
"Reference Date"), which is the most recent balance sheet relating to the
Business and prepared in the ordinary course of business as at the date of this
Agreement. Sellers will deliver to ARI no later than twenty five (25) calendar
days after the Closing Date the following unaudited financial statements and
reports (the "Closing Date Financial Statements") relating to the Business: a
balance sheet, a statement of income and a cash flow statement all dated as of
the Closing Date. The Financial Statements and the Closing
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Date Financial Statements are or will be true and correct in all material
respects, have been or will be compiled in the ordinary course of business from
books and records, were prepared or will be prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby and present
or will present fairly the financial condition of the Business as at the
respective dates thereof and the results of operations and cash flows for the
periods then ended, and are or will be consistent with the books and records of
such Sellers; provided, however, that the Financial Statements and the Closing
Date Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items. The books and records of each Seller are
sufficient to allow the preparation of financial statements in accordance with
GAAP with respect to the Business, and are true, correct and complete in all
material respects.
4.7. Liabilities. Neither MKTG nor any Seller has any Liability
related to the Business, except (i) those reflected on the most recent Financial
Statements, (ii) Liabilities incurred in the ordinary course of business since
the Reference Date consistent with MKTG's and each Seller's past experience
during the periods covered by the Financial Statements (none of which arises out
of any default, breach, misfeasance, malfeasance, nonperformance, violation of
Law or Order, or is in the nature of a tort, product liability claim or
infringement claim), and (iii) as set forth on Schedule 4.7.
4.8. Title to Properties. (a) Each Seller owns or leases all tangible
personal property included in the Assets. Except for any items of personal
property identified as leased on Schedule 4.8, each Seller has (and at the
Closing will transfer to ARI) good, valid and complete title to all of the
Assets, free and clear of any and all Liens, except for Permitted Liens. Each
Seller holds (and at the Closing will transfer to ARI) a valid and enforceable
leasehold interest, free and clear of any other Liens, with respect to each item
of personal property identified as leased by such Seller on Schedule 4.8. Except
as set forth on Schedule 4.8, and except for the assets and properties included
in the Excluded Assets, the Assets sold to ARI pursuant to this Agreement
constitute all of the assets and properties used to operate the Business in the
manner previously operated by Sellers.
(b) All machinery, equipment, computers, vehicles, and other items of
tangible personal property included in the Assets are in good condition and
repair, subject to normal wear and tear, suited for the use intended and are and
have been operated in compliance with all applicable Laws. To the Knowledge of
MKTG and the Sellers, there are no defects or conditions which would cause any
of such tangible personal property to be or become inoperable or unsafe.
(c) There is not, with respect to any lease for personal property
included in the Assets: (i) any default by MKTG or any Seller, or any event
which could, with the passage of time, the giving of notice, or both, constitute
a default by MKTG or any Seller, or (ii) to the Knowledge of MKTG and the
Sellers, any existing default by any lessor of any machinery, equipment or other
tangible personal property, or any event which could, with the passage of time,
the giving of notice, or both, constitute a default by such lessor.
(d) There is no real estate owned by MKTG or any Seller that is used
exclusively or primarily in the Business.
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4.9. Ability to Conduct Business and Intellectual Property Rights. (a)
Schedule 4.9(a) sets forth a complete and correct list and summary description
of the Intellectual Property Rights owned or used by MKTG and each Seller that
are or have been used by it in connection with the Business together with a
complete list of all licenses granted by or to any Person with respect to any of
the listed Intellectual Property Rights. Except as set forth in Schedule 4.9(a),
all of such Intellectual Property Rights are owned by Sellers, free and clear of
any and all Liens, except Permitted Liens.
(b) Schedule 4.9(b) contains a complete and accurate list of all
computer software, other than off-the-shelf software available for non-material
one-time fees, owned, licensed or used by Sellers in the Business (the
"Software"), specifying in each case whether such Software is owned or licensed
and the names of all licensors. Sellers have the exclusive title to all owned
Software, free and clear of all Liens, including claims or rights of employees,
agents, consultants, contractors and other parties involved in the development,
creation, maintenance or enhancement of such Software. MKTG and each Seller are
in compliance with the provisions of any license or other agreement pursuant to
which it has the right to use any licensed Software. MKTG's and Sellers' use of
the Software does not, and ARI's use of the Software after the Closing will not,
infringe on any intellectual property rights of any other Person.
(c) Neither MKTG nor any of the Sellers has interfered with,
infringed, misappropriated or otherwise violated or come into conflict with any
intellectual property rights of any other Person in connection with the
ownership or operation of the Business or the use of the Assets. Neither MKTG
nor any Seller has received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation, violation or
conflict. To the Knowledge of MKTG and the Sellers, no Person has interfered
with, infringed, misappropriated, violated or otherwise come into conflict with
any of the Intellectual Property Rights or any know-how or other intellectual
property of MKTG or any Seller used in the Business. MKTG and each Seller have
taken reasonable measures to protect and maintain the secrecy and proprietary
nature of its Confidential Information relating to the Business.
4.10. Contracts. (a) Each of the Contracts has been entered into in
the ordinary course of business, is valid and enforceable in accordance with its
terms, is in full force and effect, and will continue to be valid and
enforceable and in full force and effect on substantially identical terms
immediately following the Closing.
(b) Except as set forth on Schedule 4.10(b), there are no existing
defaults, events of default or events which could, with the passage of time, the
giving of notice, or both, constitute a default by MKTG or any Seller or, to the
Knowledge of MKTG or any of the Sellers, by any other party, under any Contract.
Except as set forth on Schedule 4.10(b), no event has occurred which may give
rise in the future (nor shall the consummation of the transactions contemplated
by this Agreement give rise) to any right of termination, acceleration, damages
or any other remedy under any Contract.
(c) Schedule 4.10(c) sets forth a true and complete list of all
Contracts that are material to the Business to which any Seller is a party, and
contemporaneously with the execution and delivery of this Agreement, each Seller
has delivered to ARI a true and complete copy of each such Contract. Except for
Contracts identified on Schedules 4.10, 4.12 or 4.16, no
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Seller is a party or subject to, whether oral or written, any of the following
to the extent it relates to the Business or any Asset:
(i) Any Contract involving an obligation which cannot, or in
reasonable probability will not, be performed or terminated within
thirty (30) days from the date as of which these representations are
made;
(ii) Any lease, rental agreement or other Contract affecting the
ownership or leasing of, title to or use of any interest in any Asset
and any maintenance or service agreements relating to any Asset;
(iii) Any Contract providing for payments based in any manner
upon the sales, purchases, receipts, income or profits of the
Business;
(iv) Any single Contract, including any sales or purchase order,
which involves future payments, performance of services or delivery of
goods or materials, to or by Seller with an amount or value in the
aggregate in excess of $5,000; Any franchise agreement, marketing
agreement or royalty agreement;
(v) Any non-competition, non-solicitation, exclusive territory or
other Contract restricting the conduct of the Business in any
territory;
(vi) Any instrument or arrangement evidencing or related to
indebtedness for money borrowed or to be borrowed, whether directly or
indirectly, by way of purchase money obligation, guaranty,
subordination, conditional sale, capital lease, lease purchase or
otherwise that are (i) secured by any Lien on the Assets or (ii)
extended by or to any customers or suppliers of the Business; or
(vii) Any vendor, bulletin production, licensing, data
processing, maintenance or other agreement relating to the licensing,
installation, servicing or use of computer software, or any Contract
with any contract programmer, independent contractor, nonemployee
agent or other entities (other than an employee) to perform computer
programming services.
4.11. Suppliers. Schedule 4.11 sets forth the names and addresses of
any suppliers of significant data, goods, equipment or services to any Seller as
it relates to the Business with respect to which practical alternative sources
of supply are not available.
4.12. Insurance. Schedule 4.12 lists the policy numbers, insurers,
types and amounts of coverage and deductibles of all insurance policies relating
to the Business, and true, correct and complete copies of such insurance
policies have been delivered to ARI prior to the date of this Agreement.
4.13. Litigation. Except as set forth on Schedule 4.13, no Action is
pending or, to the Knowledge of the Sellers, threatened against, by or affecting
MKTG or any of the Sellers relating to the Business or any Asset. There are no
unsatisfied judgments or other Orders against any Seller that constitute or
could result in a Lien on any Asset.
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4.14. Taxes. (a) MKTG and each Seller and any entity at any time
eligible or required to file a consolidated or combined Tax return with MKTG
and/or any such Seller (individually, an "Affiliated Entity" and collectively,
the "Affiliated Entities"), have duly and timely filed all federal, state,
municipal, local and foreign, if any, Tax returns and reports (including returns
for estimated Tax), and all reports and returns of all other Governments having
jurisdiction (collectively, "Returns") with respect to all Taxes. All such
Returns show the correct and proper amount due, and the Taxes shown on all such
Returns and all Tax assessments received by MKTG or any Seller or Affiliated
Entity have been paid to the extent that such Taxes or assessments are due.
Except as provided on Schedule 4.14, there is not in force any extension of time
with respect to the due date for the filing of any Return of MKTG or any Sellers
or any waiver or agreement for any extension of time for the assessment or
payment of any Tax of or with respect to MKTG or any Sellers. None of MKTG nor
any of the Sellers has any Liability for the Taxes of any Person as a transferee
or successor, by contract or otherwise.
(b) Each of MKTG and the Sellers has previously provided true, correct
and complete copies of all Returns relating to the Business or any Assets filed
with respect to the preceding three (3) tax years. All Taxes imposed on MKTG
and/or any Seller and its Affiliated Entities by any Government (including all
withholding deposits in connection therewith required by applicable Law) which
have become due and payable for any period have been paid in full, and adequate
reserves for all other Taxes, whether or not due and payable, and whether or not
disputed, have been set up on the books of MKTG and/or each such Seller, and
such reserves will be adequate to pay all such Taxes of MKTG and/or each such
Seller and of any Affiliated Entity for which MKTG and/or each such Seller may
be liable, for all periods through the Closing. There is not now any proposed
assessment against MKTG and/or any Seller or any Affiliated Entity or any Assets
of additional Taxes of any kind. There is no dispute or Action concerning any
Tax Liability of MKTG and/or any Sellers raised by a Government in writing.
(c) None of the Assets (i) directly or indirectly secures any debt the
interest on which is tax exempt under Section 103(a) of the Code or (ii) is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
4.15. Absence of Certain Business Practices. Neither MKTG nor any of
the Sellers nor any of their officers, employees or agents, nor any other Person
acting on behalf of MKTG or any of the Sellers, has, directly or indirectly,
within the past five years, given or agreed to give any: (a) bribe, kickback or
similar payment or benefit to any Person in connection with the Business or (b)
any gift or similar benefit to any Person who is or may be in a position to help
or hinder the Business (or assist MKTG or any Sellers in connection with any
actual or proposed transaction relating to the Business) which (i) might subject
MKTG or any such Sellers to any material damage or penalty in any Action or
which might have a material adverse effect on the Business or the Assets, (ii)
if not given in the past, might have had a material adverse effect on the
Business or the Assets, or (iii) if not continued in the future, might have a
material adverse effect on the Business or any Asset or which might subject ARI
or its Affiliates to any material damage or penalty in any Action.
4.16. Agreements and Transactions with Related Parties. Except as set
forth on Schedule 4.16, no Seller is a party, directly or indirectly, to any
Assigned Contract, or any other Contract that relates primarily or exclusively
to the Business with, (a) any Person owning, or
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formerly owning, beneficially or of record, directly or indirectly, any of the
shares of or other equity interests in MKTG or any Seller, (b) any Affiliate of
such a Person, (c) any director or officer of MKTG or any Seller, (d) any Person
of which any of the foregoing Persons holds, directly or indirectly, more than
three percent (3.0%) of the capital stock or other equity interests, or (e) any
partnership in which any of the foregoing Persons is a general partner (the
foregoing, "Related Parties"). Without limiting the generality of the foregoing,
except as described on Schedule 4.16, (x) no Related Party, directly or
indirectly, owns or controls any assets or properties which are or have been
used by in the Business, and (y) no Related Party, directly or indirectly,
engages in or has any significant interest in or connection with any business
which is or within the last three years has been a competitor, customer or
supplier of MKTG or any Seller or has done business with MKTG or any Seller as
it relates to the Business.
4.17. Absence of Changes. Except as set forth on Schedule 4.17, since
the Reference Date:
(a) there has been no change in the business, assets, properties,
Liabilities, affairs, results of operations, condition (financial or otherwise)
or cash flows of the Business or in its relationships with suppliers, customers,
employees, lessors or others, other than changes in the ordinary course of
business consistent with past practice, none of which have had or will have a
material adverse effect on the Assets or the Business, in the aggregate;
(b) there has been no damage, destruction or loss to the Business or
any Asset, whether or not covered by insurance that has had or will have a
material adverse effect on the Assets or the Business, in the aggregate;
(c) MKTG and each Seller have operated the Business in the ordinary
course and consistent with prior practices;
(d) the books, accounts and records of MKTG and each Seller relating
to the Business have been maintained in the usual, regular and ordinary manner
on a basis consistent with prior years and in accordance with GAAP;
(e) no Liability of MKTG nor any Seller relating to the Business or
any Asset has been discharged or satisfied, other than in the ordinary course of
business and consistent with prior practice;
(f) there has been no Lien (other than Liens for current Taxes which
are not yet due and payable) created on or in any of the Assets;
(g) there has been no sale, transfer, lease or other disposition of
any asset of MKTG or any Seller relating to the Business to any Related Party
or, except in the ordinary course of business of MKTG or any such Seller, to any
other Person, and no material debt to, or material claim or right of, MKTG or
any Seller relating to the Business has been canceled, compromised, waived or
released;
(h) there has been no amendment, termination or waiver of, or any
notice of any amendment, termination or waiver of, any right of MKTG or any
Seller under any Assigned
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Contract or under any franchise, certificate, license, permit or authorization
from any Government relating to the Business;
(i) neither MKTG nor any Seller has entered into any Contract related
to the Business or the Assets outside the ordinary course of business;
(j) neither MKTG nor any Seller has incurred or increased any
Liability for, or entered into any instrument or arrangement evidencing or
related to, indebtedness for money borrowed or to be borrowed in connection with
the Business that would be classified as a long-term Liability on a balance
sheet of MKTG or any such Seller prepared in accordance with GAAP; and
(k) neither MKTG nor any of Sellers has engaged in any plan or taken
any actions outside of the ordinary course of business to increase the amount of
cash in the Business on the Closing Date, including, but not limited to,
increasing the collection of receivables or delaying the payment of any payables
prior to the Closing.
4.18. Real Property. The Assets do not include any fee interests in
real estate. To the Knowledge of Sellers, the operations of Sellers at the
locations which are subject to a lease which will be assigned to ARI have been
conducted at all times in compliance with all applicable environmental Laws.
4.19 Accounts Payable and Accounts Receivable. Sellers have provided
ARI Schedule 4.19 (the "Accounts Payable List") and Schedule 1.1(m) (the
"Accounts Receivable List") which are lists of accounts payable and accounts
receivable, respectively, of the Business. MKTG and Sellers represent and
warrant that Schedule 4.19 and Schedule 1.1(m) are and will be true and correct
in all material respects, have been and will be compiled in the ordinary course
of business from books and records of the Business, are and will be prepared in
accordance with GAAP and include and will include all amounts for unbilled
payables and unbilled work in process and any other necessary and relevant
information to make such lists true and correct. MKTG and Sellers represent and
warrant that Schedule 4.19 and Schedule 1.1(m) shall include the following
information all of which shall be true and correct: the amounts of the payables
or receivables, the dates when the payables or receivables accrued and became
payable or receivable and the names of the Persons from which the receivables
are owed and to which the Payables will be paid. Within twenty five (25)
calendar days of the Closing, MKTG and Sellers will provide ARI with the final
Accounts Payable List and Accounts Receivable List dated as of the Closing Date.
4.20 Full Disclosure. No representation or warranty of any Seller
contained in this Agreement or any Other Agreement contains any untrue or
incomplete statement of material fact or omits to state a material fact
necessary to make the statements contained herein and therein not misleading. To
the Knowledge of MKTG and the Sellers, there is no existing fact(s) which
materially adversely affects, or in the future may materially adversely affect,
the business, Assets, properties, Liabilities, affairs, results of operations,
condition (financial or otherwise), or cash flows of the Business which is not
disclosed in this Agreement. The representations and warranties set forth in
this Article 4 shall be deemed made at and as of the execution and delivery of
this Agreement and again at and as of the Effective Time.
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5. REPRESENTATIONS AND WARRANTIES OF ARI
As an inducement to Sellers to enter into and perform this
Agreement, ARI hereby represents and warrants as follows:
5.1. Organization. ARI is an Ohio corporation duly organized, validly
existing and in good standing under the Laws of the State of Ohio.
5.2. Authorization; No Inconsistent Agreements. ARI has all requisite
power and authority to execute, deliver and perform this Agreement and the Other
Agreements to which it is or will be a party. This Agreement has been, and each
of such Other Agreements has been (or at the Closing will be) duly and validly
executed and delivered by ARI and constitutes (or will when executed and
delivered constitute) the valid and legally binding obligation of ARI,
enforceable in accordance with its respective terms.
5.3. Inconsistent Obligations. Neither the execution, delivery nor the
performance of this Agreement and any Other Agreement by ARI will or could, with
the passage of time, the giving of notice, or both: (i) result in a violation of
its articles of incorporation, by laws or other governing documents, or any Law,
or (ii) result in a breach of, conflict with or default under any term or
provision of any indenture, note, mortgage, bond, security agreement, loan
agreement, guaranty, pledge or other Contract, or any Order to which ARI is a
party or by which it is bound; nor will such actions result in the creation of
any Lien on any of the assets of ARI or the acceleration or creation of any
Liability of ARI that would affect its ability to perform under this Agreement.
5.4. Consents. The execution, delivery and performance by ARI of this
Agreement and the Other Agreements to which it is (or will be) a party, and the
consummation by ARI of the transactions contemplated in this Agreement and such
Other Agreements, do not require the consent, approval or action of, or any
filing with or notice to, any Government or other Person.
5.5. Availability of Funds. ARI has available and will have available
on the Closing Date sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
5.6. Litigation. There are no legal, administrative, arbitration or
other proceedings or governmental investigations pending or, to the Knowledge of
ARI, threatened against ARI or any of its Affiliates, which (i) could reasonably
be expected to impair ARI's ability to perform its obligations under this
Agreement, or which (ii) seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.
6. CONDUCT OF BUSINESS OF SELLERS PENDING CLOSING.
MKTG and Sellers covenant and agree that, except as may
otherwise be provided herein, without the prior written consent of ARI, between
the date of this Agreement and the Closing:
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6.1. Business in the Ordinary Course. Each Seller shall conduct its
operations as they relate to the Business only in the ordinary and usual course
and consistent with prior practices. Without limiting the generality of the
foregoing, without the prior written consent of ARI:
(a) Neither MKTG nor any Seller shall enter into any Contract relating
to the Business other than those: (i) entered into in the ordinary course of
business at prices and on terms consistent with the prior operating practices of
such Seller, or (ii) which do not obligate any Seller to provide services to any
customer or third party for a period in excess of twelve (12) months (unless
terminable without liability upon not more than thirty (30) days notice) and do
not involve consideration with an aggregate value in excess of $5,000, (iii) on
terms which do not permit the assignment thereof to ARI pursuant hereto;
provided, however, that neither MKTG nor any Seller will enter into any such
Contract relating to the Business with any Related Party;
(b) except for the disposal of used equipment, and the use of
miscellaneous supplies, all in the ordinary course of business in accordance
with past practices, neither MKTG nor any Seller shall sell, assign, transfer,
convey, pledge, mortgage, encumber or otherwise dispose of, or cause the sale,
assignment, transfer, conveyance, pledge, mortgage, encumbrance or other
disposition of, any of the Assets;
(c) no rebates, discounts or concessions shall be granted by MKTG nor
any Seller to customers, in connection with the Business after the date of this
Agreement other than in the ordinary course in accordance with past practices;
(d) MKTG and each Seller shall maintain, preserve and protect all of
its tangible Assets in good condition and repair, except for ordinary wear and
tear;
(e) the books, records and accounts of MKTG and each Seller relating
to the Business shall be maintained in the ordinary course of business on a
basis consistent with prior practices and in accordance with GAAP;
(f) MKTG and each Seller shall use its reasonable commercial efforts
to preserve the Business, to preserve the goodwill of the suppliers and
customers thereof and others having business relations with the Business;
(g) Neither MKTG nor any Seller shall take, or agree to take, any
action which would make any representation or warranty contained in this
Agreement untrue, incorrect or misleading in any material respect as of the date
when made or at any time through the Closing;
(h) at or prior to the Closing, MKTG will cause Sellers to repay any
and all amounts outstanding to Xxxxxxx Factors;
(i) neither MKTG nor Sellers will solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of all or substantially all of the capital stock or assets of any of Sellers
(including any acquisition structured as a merger, consolidation, or share
exchange); provided, however, that Sellers, and their directors and officers
will remain free to participate in any discussions or negotiations regarding,
furnish any
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information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing to the extent their fiduciary duties require them to do so; and
(j) neither MKTG nor any of Sellers will engage in any plan or take
any actions outside of the ordinary course of business to increase the
collection of receivables or to delay the payment of any payables for the
purpose of increasing the amount of cash in the Business on the Closing Date.
6.2. Changes in Representations and Warranties. At all times prior to
and including the Closing Date, MKTG and Sellers shall promptly provide ARI with
written notification of any event, occurrence or other information of any kind
whatsoever which affects or may affect, the continued truth, correctness or
completeness of any representation or warranty made in this Agreement or any
Other Agreement. Nothing contained in any such notification shall be deemed to
modify or qualify any such representation or warranty.
7. CONDITIONS TO OBLIGATIONS OF ARI
All obligations of ARI hereunder to consummate the
transactions contemplated in this Agreement at the Closing are subject to the
fulfillment and satisfaction of each of the following conditions on or prior to
the Closing, any or all of which may be waived in whole or in part by ARI,
provided that such waiver shall be without prejudice to any other right or
remedy which ARI may have as a result of any misrepresentation by, or breach of
any representation, warranty, covenant or agreement of, MKTG and Sellers
contained in this Agreement or any Other Agreement.
7.1. Representations and Warranties. The representations and
warranties of MKTG and Sellers contained in this Agreement and any Other
Agreements shall have been true and correct at and as of the date when made and
at and as of the Effective Time.
7.2. Compliance with Agreements and Conditions. Sellers shall have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed, complied with or satisfied by them prior to or
on the date of the Closing.
7.3. No Material Adverse Change. There shall not have occurred any
material adverse change in the business, assets, properties, Liabilities,
affairs, results of operations, condition (financial or otherwise), or cash
flows of MKTG or any Seller as it relates to the Business or Assets prior to the
Closing.
7.4. Certificate of Sellers. MKTG and Sellers shall have delivered to
ARI a certificate executed by an officer of MKTG and each Seller, dated the
Closing Date, certifying in such detail as ARI may reasonably request as to the
fulfillment and satisfaction of the conditions specified in Paragraphs 7.1, 7.2,
and 7.3.
7.5. Resolutions. ARI shall have received duly adopted resolutions of
the Board of Directors of MKTG and the Board of Directors of each Seller and
from MKTG (as the sole shareholder of each Seller), certified by MKTG's and each
such Seller's Secretary, and such other evidence of incumbency and corporate
authorizations as ARI may reasonably request,
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showing the authorization and approval of the execution, delivery and
performance by MKTG and the Sellers of this Agreement and each Other Agreement
to which they are a party, and of the taking of any and all other actions
necessary to enable MKTG and Sellers to comply with the terms of this Agreement
and to consummate the transactions contemplated by this Agreement.
7.6. Government Consents. ARI shall have received all authorizations,
consents and approvals of any Government necessary or desirable for the
execution, delivery and performance of this Agreement and the transactions
contemplated by this Agreement, all such authorizations, consents and approvals
shall be in full force and effect, and all notices required to be given to any
Government shall have been given.
7.7. Other Consents. MKTG and Sellers shall have delivered to ARI as
soon as practical and in no event later than two (2) Business Days prior to the
Closing Date, all authorizations, consents and approvals reasonably required in
connection with the consummation of the transactions contemplated by this
Agreement, including the consents identified on Schedule 2.2(a); provided,
however, that none of such authorizations, consents or approvals shall be given
on terms that could adversely affect the business, assets, properties,
Liabilities, affairs, results of operations, condition (financial or otherwise),
cash flows or prospects of MKTG or any Seller as it relates to the Business, or
ARI's ownership of the Assets and operation of the Business after the Closing.
7.8. No Inconsistent Requirements. No Action shall have been
instituted by any Government or other Person: (i) against a party to this
Agreement to restrain or prohibit the consummation of the transactions
contemplated in this Agreement or (ii) which could reasonably be expected to
have a material adverse effect on the business, assets, properties, Liabilities,
affairs, results of operations, condition (financial or otherwise), cash flows
or prospects of Seller as it relates to the Business or ARI's ownership of the
Assets and operation of the Business after the Closing.
7.9. Other Agreements. The following agreements shall have been
executed and delivered to ARI (i) the MKTG Restrictive Covenant Agreement, (ii)
the Escrow Agreement, (iii) the Assignment and Xxxx of Sale Agreement and (iv)
the Assumption Agreement.
7.10. Opinions of Counsel. ARI shall have received the legal opinion
of Xxxxxxxxx Xxxxxxx LLP, legal counsel for Sellers, in substantially the form
of Exhibit E.
8. CONDITIONS TO OBLIGATIONS OF MKTG AND SELLERS
All obligations of MKTG and Sellers hereunder to consummate the
transactions contemplated in this Agreement at the Closing are subject to the
fulfillment and satisfaction of each of the following conditions on or prior to
the Closing, any or all of which may be waived in whole or in part by MKTG and
Sellers, provided that such waiver shall be without prejudice to any other right
or remedy which Sellers may have as a result of any misrepresentation by, or
breach of any representation, warranty, covenant or agreement of ARI contained
in this Agreement or any Other Agreement.
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8.1. Representations and Warranties. The representations and
warranties of ARI contained in this Agreement and any Other Agreement shall have
been true and correct at and as of the date when made and at and as of the
Closing.
8.2. Compliance with Agreements and Conditions. ARI shall have
performed and complied with all covenants, agreements and conditions required by
this Agreement to be performed, complied with or satisfied by ARI prior to or on
the date of the Closing.
8.3. Certificates of ARI. ARI shall have delivered to MKTG a
certificate executed by an officer of ARI, dated the Closing Date, certifying in
such detail as MKTG may reasonably request as to the fulfillment and
satisfaction of the conditions specified in Paragraphs 8.1 and 8.2.
8.4. Resolutions. ARI shall have delivered to MKTG duly adopted
resolutions of the Board of Directors of ARI, certified by the Secretary or an
Assistant Secretary of ARI as of the date of the Closing, authorizing and
approving the execution of this Agreement and each Other Agreement to which ARI
is a party and the taking of any and all other actions necessary to enable ARI
to comply with the terms of this Agreement and to consummate the transactions
contemplated by this Agreement.
8.5. Other Agreements. The following agreements shall have been
executed and delivered to Sellers (i) the MKTG Restrictive Covenant Agreement,
(ii) the Escrow Agreement, (iii) the Assignment and Xxxx of Sale Agreement and
(iv) the Assumption Agreement.
8.6. Opinion of Counsel. Sellers shall have received the legal opinion
of Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP, legal counsel for ARI, in substantially
the form of Exhibit F.
8.7. No Inconsistent Requirements. No Action shall have been
instituted by any Government or other Person against a party to this Agreement
to restrain or prohibit the consummation of the transactions contemplated in
this Agreement.
9. INDEMNITIES
9.1. Indemnification of ARI. In accordance with and subject to the
provisions of this Paragraph 9.1 and Paragraph 9.2 hereof, Sellers (the
"Indemnitors") shall, jointly and severally, indemnify and hold harmless ARI,
its Affiliates and their respective officers, directors, agents and employees
(each, an "Indemnitee") from and against and in respect of any loss, damage,
Liability, diminution in value, cost and expense, including reasonable
attorneys' fees and amounts paid in settlement, and interest thereon, whether or
not arising out of a third party claim or Action (collectively, "Indemnified
Losses"), suffered or incurred by any Indemnitee by reason of, or arising out
of, directly or indirectly:
(a) any misrepresentation or breach of representation or warranty
contained in this Agreement or in any Other Agreement, or the breach of any
covenant or agreement of any Seller or any Shareholder contained in this
Agreement or any Other Agreement;
(b) any Liability of MKTG or any Seller, whether now in existence or
hereafter incurred, other than the Assumed Liabilities;
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(c) any and all losses, Liabilities or damages resulting from or
arising out of any failure to comply with any "bulk sales" or similar Laws
applicable to the transactions contemplated by this Agreement; and
(d) all Actions, Orders, assessments, fees and expenses incident to
any of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof (whether or not ultimately successful),
or in enforcing this Agreement.
9.2. Non-Third Party Claims. If any claim for Indemnified Losses that
does not relate to a claim or Action by a third party arises after the date
hereof, the Indemnitee shall provide written notice thereof to the Indemnitors.
The amount and liability for such claim shall be deemed final unless the
Indemnitors notify the Indemnitee in writing within thirty (30) days after such
written notice that the Indemnitors dispute such claim. The Indemnitors shall
pay or reimburse the Indemnitee for any such Indemnified Losses within fifteen
(15) days after such loss is deemed final. ARI shall not be entitled to seek
indemnification for any claims under Paragraph 9.1(a) of this Agreement until
the total amount of claims for which indemnification is sought under this
Agreement shall exceed $100,000 (the "Basket"); provided, however, that after
ARI has claims under this Agreement exceeding the amount of the Basket, ARI
shall be entitled to seek indemnification for the entire amount of any such
claims (subject to the limitation in the last sentence of this paragraph) from
MKTG and/or Sellers, jointly and severally; provided, further, that the Basket
shall only apply to limit indemnification claims pursuant to subparagraph 9.1(a)
and does in any way limit any other claims, rights, common law rights or
remedies of ARI under Paragraph 9 of this Agreement or any other provision of
this Agreement or otherwise. Notwithstanding any provision of this Agreement to
the contrary, to the extent that any Indemnified Losses exceed an aggregate
ceiling of $11,000,000, the Indemnitors shall have no obligation to indemnify
the Indemnitee in excess of such $11,000,000 ceiling amount. Notice of any such
claim must be made prior to the six-month anniversary of the Closing.
9.3. Defense of Third Party Claims. (a) If any claim or Action by a
third party arises after the date hereof for which the Indemnitors may have an
indemnification obligation under this Agreement, then the Indemnitee shall
notify the Indemnitors within a reasonable time after such claim or Action
arises and is known to the Indemnitee, and shall give the Indemnitors a
reasonable opportunity: (i) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend the Indemnitee; (ii)
to take all other required steps or proceedings to settle or defend any such
claim or Action; and (iii) to employ counsel to contest any such claim or Action
in the name of the Indemnitee or otherwise.
(b) The expenses of all proceedings, contests or lawsuits with respect
to such claims or Actions shall be borne by the Indemnitors. If the Indemnitors
wish to assume the defense of such claim or Action, then the Indemnitors shall
give written notice to the Indemnitee within thirty (30) days after notice from
the Indemnitee of such claim or Action, and the Indemnitors shall thereafter
assume the defense of any such claim or liability, through counsel reasonably
satisfactory to the Indemnitee; provided that the Indemnitee may participate in
such defense at its own expense. The Indemnitee shall have the right to control
the defense of the claim or Action unless and until the Indemnitors shall: (i)
assume the defense of such claim or Action, and (ii) acknowledge in writing to
the Indemnitee that the Indemnitors shall be obligated to indemnify the
Indemnitee in connection with such claim or Action. Notwithstanding any other
provision of
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this Agreement, the Indemnitors shall not agree to any settlement or other
resolution of any claim or Action that includes any remedy other than the
payment of monetary damages without the prior written consent of the Indemnitee.
(c) If the Indemnitors do not assume the defense of, or if after so
assuming, fail to defend, any such claim or Action, then the Indemnitee may
defend against such claim or Action in such manner as the Indemnitee may deem
appropriate (provided that the Indemnitor may participate in such defense at its
own expense) provided that the Indemnitee may not settle such claim or Action
without the Indemnitors' prior written consent, which will not be unreasonably
withheld, and the Indemnitors shall promptly reimburse the Indemnitee for the
amount of all expenses, legal and otherwise, reasonably and necessarily incurred
by the Indemnitee in connection with the defense against and settlement of such
claim or Action. If no settlement of such claim or Action is made, the
Indemnitors shall satisfy any judgment rendered with respect to such claim or in
such Action, before the Indemnitee is required to do so, and pay all expenses,
legal or otherwise, reasonably incurred by the Indemnitee in the defense of such
claim or Action.
(d) If an Order is rendered against the Indemnitee in any Action
covered by the indemnification hereunder, or any Lien in respect of such Order
attaches to any of the assets of the Indemnitee, the Indemnitors shall
immediately upon such entry or attachment pay any amount required by such Order
in full, or discharge such Lien unless, at the expense and request of the
Indemnitors, an appeal is taken under which the execution of the Order or
satisfaction of the Lien is stayed. If and when a final Order is rendered in any
such Action, the Indemnitors shall forthwith pay any amount required by such
Order or discharge such Lien before the Indemnitee is compelled to do so.
9.4. Survival. (a) All representations, warranties, agreements,
covenants and obligations made or undertaken by MKTG and Sellers in this
Agreement or in any of the Other Agreements executed and delivered pursuant
hereto are material, have been relied upon by ARI and shall survive any
investigation heretofore or hereafter made by ARI and shall survive the Closing
indefinitely except as specifically limited in this Agreement. The
representations and warranties of MKTG and Sellers contained in this Agreement
and the Closing hereunder and shall not merge in the performance of any
obligation by any party hereto.
(b) The representations and warranties of MKTG and Sellers under this
Agreement set forth in Paragraphs 4.1, 4.2, 4.3 and 4.8 shall survive
indefinitely. The representations and warranties of MKTG and Sellers set forth
in Paragraph 4.14 shall survive for the applicable Statute of Limitation period.
All other representations and warranties of MKTG and Sellers under this
Agreement shall be of no further force and effect after the six-month
anniversary of the Closing.
9.5. Indemnification by ARI. ARI shall indemnify and hold harmless
MKTG and Sellers from and against and in respect of any loss, damage, Liability,
cost and expense, including reasonable attorneys' fees and amounts paid in
settlement, and interest thereon, whether or not arising out of a third party
claim or Action suffered or incurred by MKTG or Sellers by reason of or arising
out of (a) any misrepresentation, or breach of any representation, warranty,
covenant or agreement of ARI contained in this Agreement or in any Other
Agreement; (b) ARI's failure to pay or perform any of the Assumed Liabilities,
and (c) any
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Liability that arises after the Closing Date from ARI's operation of the
Business; provided, however, that nothing contained in this Paragraph 9.5 shall
obligate ARI to indemnify MKTG and Sellers with respect to any matter as to
which MKTG and Sellers are obligated to indemnify an Indemnitee pursuant to
Paragraph 9.1. The procedures governing indemnification in Paragraphs 9.2 and
9.3 shall also apply to claims brought under this Paragraph 9.5 and for such
purposes, ARI shall be deemed to be the "Indemnitor" referred to therein and
MKTG and Sellers shall be deemed the "Indemnitee".
10. TERMINATION
10.1. Termination for Certain Reasons. This Agreement may be
terminated at any time prior to the Closing as follows:
(a) by ARI, if any material adverse change in the business, assets,
properties, Liabilities, affairs, results of operations, condition (financial or
otherwise), cash flows or prospects of the Business shall have occurred;
(b) by ARI or by MKTG and Sellers if the conditions to Closing
contained in Articles 7 or 8, as applicable, shall not have been satisfied or
waived in writing.
10.2. Effect of Termination. Upon any such termination, no party shall
have any further rights, Liabilities or obligations hereunder; provided,
however, if any of the provisions contained herein have been breached by any
party, the non-breaching parties may pursue any and all rights and remedies they
may have at Law, in equity or otherwise, by reason of such breach regardless of
such termination, and such termination shall not constitute an election of
remedies; provided, further, that the confidentiality provisions contained in
Paragraph 3.4 and the non-solicitation provisions contained in Paragraph 3.10
above shall survive termination.
11. MISCELLANEOUS
11.1. Notices. All notices and other communications required or
permitted to be given or made hereunder shall be in writing and delivered
personally or sent by overnight delivery with a nationally recognized service,
with receipt acknowledged; by pre-paid, first class certified or registered
mail, return receipt requested; or by facsimile transmission, to the intended
recipient thereof at the applicable address or facsimile number set out below.
If delivered personally, the date on which a notice or other communication is
delivered shall be the date on which such notice or communication is deemed
given. If delivered by confirmed facsimile and on the date thereof a copy is
dispatched by personal delivery, certified mail or overnight delivery service,
the date on which the notice or other communication is deemed given shall be the
date on which such delivery was made by facsimile. If delivered by mail, by
overnight delivery service or by any means not expressly covered above, the date
on which such notice or other communication is received shall be the date it is
deemed given. The addresses and facsimile numbers of the parties for purposes of
this Agreement are as follows:
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(i) If to ARI: Automation Research, Inc.
000 Xxxx Xxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxx 00000
Attn.: Xx. Xxxxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
with a copy to: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
X. X. Xxx 0000
Xxxxxxxx, Xxxx 00000-0000
Attn.: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(ii) If to MKTG or Sellers: MKTG Services, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to: Xxxxxxxxx Traurig, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxx X. Annex, Esq.
Facsimile No.: (000) 000-0000
Any party may change the address or facsimile number to which
notices or other communications to such party shall be delivered, mailed or
transmitted by giving notice thereof to the other parties in the manner provided
herein.
11.2. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
11.3. Governing Law. The validity and effect of this Agreement shall
be governed by and construed and enforced in accordance with the Laws of the
State of Ohio, without regard to its conflicts of Laws rules.
11.4. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided that no Seller may assign, delegate or otherwise transfer
any of its rights or obligations under this Agreement without the written
consent of ARI.
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11.5. Partial Invalidity and Severability. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable Laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid and
enforceable. If any term of this Agreement, or part thereof, not essential to
the commercial purpose of this Agreement shall be held to be illegal, invalid or
unenforceable by a Forum of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part thereof, shall constitute their
agreement with respect to the subject matter hereof and all such remaining
terms, or parts thereof, shall remain in full force and effect. To the extent
legally permissible, any illegal, invalid or unenforceable provision of this
Agreement shall be replaced by a valid provision which will implement the
commercial purpose of the illegal, invalid or unenforceable provision.
11.6. Waiver. Any term or condition of this Agreement may be waived at
any time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party which makes specific
reference to this Agreement. No failure on the part of any party hereto to
exercise, and no delay in exercising, any right, power or remedy created
hereunder, shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or remedy by any party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. No
waiver by any party hereto of any breach of or default in any term or condition
of this Agreement shall constitute a waiver of or assent to any succeeding
breach of or default in the same or any other term or condition hereof.
11.7. Headings. The headings of particular provisions of this
Agreement are inserted for convenience only and shall not be construed as a part
of this Agreement or serve as a limitation or expansion on the scope of any term
or provision of this Agreement.
11.8. Number; Gender; Construction. Where the context requires, the
use of the singular form herein shall include the plural, the use of the plural
shall include the singular, and the use of any gender shall include any and all
genders. The use of the word "including" in this Agreement shall be deemed to
mean "including, without limitation."
11.9. Entire Agreement. This Agreement (together with the Schedules
and Exhibits to this Agreement, which are incorporated in and an integral part
of this Agreement) supersedes all prior discussions and agreements between the
parties with respect to the subject matter hereof, and this Agreement
constitutes and contains the sole and entire agreement between the parties with
respect to the matters covered hereby and thereby. This Agreement shall not be
altered or amended except by an instrument in writing signed by or on behalf of
the party entitled to the benefit of the provision against whom enforcement is
sought. Nothing expressed to or referred to in this Agreement will be construed
to give any Person other than the parties to this Agreement any legal or
equitable right, remedy or claim under or with respect to this Agreement, or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
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12. DEFINITIONS
For purposes of this Agreement, the following terms shall have
the meanings specified with respect thereto below:
"Action" shall mean any action, suit, litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative proceeding,
whether at Law, in equity, in arbitration or otherwise, and whether conducted by
or before any Government or other Person.
"Accounts Payable Lists" shall have the meanings set forth in
Paragraph 4.20.
"Accounts Receivable Lists" shall have the meanings set forth
in Paragraph 4.20.
"Affiliate" of any specified Person shall mean any other
Person directly or indirectly Controlling, Controlled by, or under direct or
indirect common Control with such specified Person, or with respect to any
natural person, any present or former spouse of such natural person and any
parent, sibling, child, grandchild or grandparent (and any present or former
spouse of the foregoing) of such natural person or such natural person's present
or former spouse.
"Affiliated Entity" or "Affiliated Entities" shall have the
meaning set forth in Paragraph 4.14(a).
"Agent" shall have the meaning set forth in Paragraph 3.10.
"Agreement" shall have the meaning set forth in the Preamble.
"ARI" shall have the meaning set forth in the Preamble.
"Assets" shall have the meaning set forth in Paragraph 1.1.
"Assigned Contracts" shall have the meaning set forth in
Paragraph 1.1.
"Assumed Liabilities" shall have the meaning set forth in
Paragraph 1.4(a).
"Business" shall have the meaning set forth in the Recitals.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which commercial banks in New York, New York or Columbus,
Ohio are required or authorized to be closed.
"Closing" shall have the meaning set forth in Paragraph 2.1.
"Closing Date" shall have the meaning set forth in Paragraph
2.1.
"Closing Date Financial Statements" shall have the meaning set
forth in Paragraph 4.6.
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"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidential Information" shall mean, with respect to any
Person, any and all technical, business, and other information of such Person
which derives value, actual or potential, from not being generally known to the
public or to other Persons, including technical or nontechnical data,
compositions, devices, methods, techniques, drawings, inventions, processes,
financial data, financial plans, product or service plans, lists of actual or
potential customers or suppliers, information regarding the acquisition and
investment plans and strategies, business plans or operations of the Person or
its Affiliates, whether or not such information constitutes a trade secret under
applicable Law. Confidential Information of a Person includes information of
third parties that such Person maintains or is obligated to keep or treat as
confidential.
"Contract" means any agreement, contract, commitment,
instrument, license, lease arrangement, consensual obligation, promise or
undertaking, whether written or oral and whether or not legally binding.
"Control" means a Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
another Person, whether through the ownership of voting securities, by Contract
or otherwise.
"Effective Time" shall have the meaning set forth in Paragraph
2.1.
"Escrow Agent" shall have the meaning set forth in Paragraph
1.3(b).
"Escrow Agreement" shall have the meaning set forth in
Paragraph 1.3(b).
"Excluded Assets" shall have the meaning set forth in
Paragraph 1.2.
"Excluded Liabilities" shall have the meaning set forth in
Paragraph 1.5.
"Financial Statements" shall have the meaning set forth in
Paragraph 4.6.
"Forum" shall mean any federal, national, state, local,
municipal or foreign court, governmental agency, administrative body or agency,
tribunal, private alternative dispute resolution system, or arbitration panel.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Government" shall mean any federal, national, state,
provincial, local, municipal, or foreign government or any department,
commission, board, bureau, agency, instrumentality, unit, or taxing authority
thereof.
"hereof," "herein," "hereunder" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and "Article," "Paragraph,"
"Exhibit," "Schedule" and like references are to this Agreement and the exhibits
and Schedules to this Agreement unless otherwise specified; any
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reference to this Agreement shall include the Exhibits and Schedules to this
Agreement unless the context clearly requires otherwise.
"Indemnified Losses" shall have the meaning set forth in
Paragraph 9.1.
"Indemnitee" shall have the meaning set forth in Paragraph
9.1.
"Indemnitors" shall have the meaning set forth in Paragraph
9.1.
"Intellectual Property Rights" shall mean patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice) and any reissues, continuations,
continuations-in-part, revisions, extensions or reexaminations thereof;
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all associated goodwill, all translations, adaptations,
derivations and combinations of any of the foregoing; copyrights and
copyrightable works; mask works; and all registrations, applications and
renewals for any of the foregoing; trade secrets and confidential information
(including Confidential Information, ideas, formulae, compositions, know-how,
discoveries, inventions, computer programs, designs, plans, proposals, technical
data, financial, business and marketing plans, and customer and supplier lists
and related information);
"Known," "to the Knowledge of," "Aware" or words of similar
import employed in this Agreement with reference to any individual or entity
shall be conclusively presumed to mean that the individual or entity has made
reasonable and diligent efforts under the circumstances to become knowledgeable;
in the case of MKTG and Sellers, "Knowledge" shall be deemed to be the
individual and collective Knowledge (as defined above) of any MKTG's Seller's
directors and senior officers and managers.
"Law" shall mean all federal, national, state, provincial,
local, municipal or foreign constitutions, statutes, rules, regulations, norms,
ordinances, acts, codes, legislation, treaties, conventions, common law
principles, judicial decisions and similar laws and legal requirements, whether
of the United States of America or any other jurisdiction as in effect from time
to time.
"Liability" shall mean any liability or obligation, whether
known or unknown, asserted or unasserted, absolute, contingent or conditional,
accrued or unaccrued, matured or unmatured, liquidated or unliquidated and
whether due or to become due, and including liability resulting from
contingencies.
"Lien" shall mean any mortgage, pledge, hypothecation,
security interest, encumbrance, claim, Tax, restriction on use, lien or charge
of any kind, or any rights of others, however evidenced or created (including
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the lien notice records or other
similar legislation of any jurisdiction).
"MKTG Restrictive Covenant Agreement" shall have the meaning
set forth in Paragraph 2.2.
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"Orders" shall mean all applicable orders, writs, judgments,
injunctions, decrees, rulings, consent agreements, and awards of or by any Forum
or entered by consent of the party to be bound.
"Other Agreements" shall have the meaning set forth in
Paragraph 1.4(b).
"Permitted Liens" shall mean those UCC financing statements
and if applicable, other liens, specifically identified on Schedule 12, which
shall constitute Permitted Liens hereunder only: (a) to the extent that ARI
receives at the Closing a signed certificate from the applicable secured party,
MKTG and the Sellers that the obligations secured by the collateral recited in
such financing statements have been paid in full; and (b) until December 15,
2002. In furtherance of the foregoing, MKTG and Sellers shall cause all UCC
financing statements and, if applicable, other liens, to be terminated and
released of record not later than December 15, 2002 and shall deliver to ARI by
such date a recorded copy of each such termination.
"Permits" shall have the meaning set forth in Paragraph
1.1(k).
"Person" shall include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization and a Government.
"Purchase Price" shall have the meaning set forth in Paragraph
1.3(a).
"Reference Date" shall have the meaning set forth in Paragraph
4.6.
"Related Parties" shall have the meaning set forth in
Paragraph 4.16.
"Returns" shall have the meaning set forth in Paragraph
4.14(a).
"Sellers" shall have the meaning set forth in the Preamble.
"Taxes" shall mean any taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including income, gross receipts, excise, property, sales, use, customs, value
added, consumption, transfer, license, payroll, employee income, withholding,
social security, and franchise taxes, now or hereafter imposed or levied by the
United States of America or any Government or by any department, agency or other
political subdivision or taxing authority thereof or therein, all deposits
required in connection therewith, and all interests, penalties, additions to
tax, and other similar Liabilities with respect thereto.
"Transferring Employees" shall have the meaning set forth in
Paragraph 3.10(b).
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized agents as of the day and year first above
written.
ARI:
AUTOMATION RESEARCH, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
----------------------------
Title: President
---------------------------
MKTG SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------
Title: CEO
---------------------------
SELLERS:
MKTG SERVICES - BOSTON, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------
Title: CEO
---------------------------
MKTG SERVICES - NEW YORK, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------
Title: CEO
---------------------------
MKTG SERVICES - PHILLY, INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------
Title: CEO
---------------------------
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List of Exhibits
Exhibit A -- Escrow Agreement
Exhibit B -- Assumption Agreement
Exhibit C -- Assignment and Xxxx of Sale
Exhibit D -- MKTG Restrictive Covenant Agreement
Exhibit E -- Opinion of Counsel to Sellers
Exhibit F -- Opinion of Counsel to ARI
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