EXHIBIT 2.4
AGREEMENT OF PURCHASE AND SALE OF ASSETS
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THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (the "Agreement") is
entered into effective the 14th day of May, 1997 (the "Effective Date"), by and
between LITIGATION RESOURCES OF AMERICA-CALIFORNIA, INC., a California
corporation, whose address is 0000 Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
("Purchaser"), a wholly owned subsidiary of Litigation Resources of America,
Inc., a Texas corporation ("LRA-Texas"), and SAN FRANCISCO REPORTING SERVICE, a
California general partnership whose address is Xxxx Xxxxx Xxxxxx, Xxxxx 000,
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("Seller"). Purchaser and Seller may be
hereinafter sometimes referred to collectively as the "Parties" or individually
as a "Party."
W I T N E S S E T H :
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WHEREAS, Seller is the sole owner of certain assets associated with
the Business (as hereinafter defined); and
WHEREAS, Purchaser desires to purchase from Seller, and Seller desires
to sell to Purchaser, all or substantially all of the assets of Seller, on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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As used herein, the following terms shall have the meanings set forth
below:
1.1. ACCOUNTS PAYABLE REPORT. The term "Accounts Payable Report"
shall mean a report prepared as of the time specified which shows accounts
payable by creditor and age of each account payable.
1.2. ACCOUNTS RECEIVABLE REPORT. The term "Accounts Receivable
Report" shall mean a report prepared as of the time specified which shows
accounts receivable by client and age of each account receivable.
1.3. ACCRUED LIABILITIES REPORT. The "Accrued Liabilities Report"
shall mean a report prepared as of a given date, showing all of the liabilities
of Seller which do not appear in the balance sheet of Seller due to the fact
that Seller uses the cash method of accounting, but which would be included in
Seller's balance sheet under GAAP.
1.4. AFFILIATE. The term "Affiliate" of a person or entity shall
mean, with respect to that person or entity, a person or entity who or which
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or is acting as agent on behalf
of, or as an officer, partner, shareholder or director of, that person or
entity. Specifically, the Seller, Xxx X. Xxxxxxxx, and Xxxx Xxxxxx are agreed
to be Affiliates of one another.
1.5. BALANCE SHEET REPORT. The term "Balance Sheet Report" shall
mean the cash basis balance sheet of the Seller as of a given date showing the
assets, liabilities and equity of the Seller, adjusted to include accounts
receivable, accounts payable and accrued liabilities, and further adjusted to
exclude the Excluded Assets, prepared by the Seller on a basis consistent with
prior time periods.
1.6. BUSINESS. The term "Business" shall mean the current business
of the Seller of providing court reporting and litigation support services.
1.7. CLOSING. The term "Closing" shall mean the consummation of the
events and transactions to take place on the Closing Date pursuant to ARTICLE VI
herein.
1.8. CLOSING DATE. The term "Closing Date" shall mean the date of
execution of this Agreement.
1.9. CODE. The term "Code" shall mean the Internal Revenue Code of
1986, as amended.
1.10. EMPLOYEE. The term "Employee" shall mean any employee of the
Seller who as of the Effective Date or the Closing Date is employed or otherwise
performs work or provides services in connection with the operation of the
Business, including those, if any, on disability, sick leave, layoff or leave of
absence, who, in accordance with the Seller's applicable policies, are eligible
to return to active status.
1.11. ENVIRONMENTAL, HEALTH & SAFETY LAWS The term "Environmental,
Health & Safety Laws" shall mean all laws (including rules and regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments and all agencies
thereof concerning pollution or protection of the environment, public health and
safety, or employee health and safety.
1.12. EXCLUDED ASSETS. The term "Excluded Assets" shall mean those
assets of Seller which are not being transferred to Purchaser, which are
specifically set forth on SCHEDULE 2.1 hereof.
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1.13. FINANCIAL STATEMENTS. The term "Financial Statements" shall
mean (i) the unaudited balance sheets and income statements of Seller, together
with Accounts Receivable Reports, for the fiscal years ending December 31, 1994,
December 31, 1995, and December 31, 1996, and the months ending January 31,
1997, February 28, 1997, and March 31, 1997, and (ii) Accrued Liabilities
Reports, Accounts Payable Reports and Balance Sheet Reports for the fiscal year
of Seller ending December 31, 1996, and the months ending January 31, 1997 and
March 31, 1997.
1.14. INDEPENDENT CONTRACTORS. The term "Independent Contractors"
shall mean all independent contractors used by Seller during the preceding one
(1) year, as set forth on SCHEDULE 3.19 (B) hereof.
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1.15. KNOWLEDGE. The term "knowledge" and words of similar import
with respect to matters "known" to Seller shall mean to the actual knowledge of
any director, partner, officer or shareholder of Seller, after reasonable
investigation and inquiry.
1.16. LEASED ASSETS. The term "Leased Assets" shall have the meaning
ascribed thereto in SECTION 3.6.
1.17. MEASUREMENT DATE. The term "Measurement Date" shall mean
January 31, 1997.
1.18. ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of
Business" shall mean the ordinary course of Seller's business consistent with
past custom and practice (including with respect to quantity and frequency).
1.19. PBGC. The term "PBGC" shall mean the Pension Benefits
Guaranty Corporation.
1.20. PURCHASE PRICE. The term "Purchase Price" shall mean the
consideration payable to the Seller for the Assets as set forth or contemplated
in SECTION 2.2.
ARTICLE II
PURCHASE AND SALE OF ASSETS; PURCHASE PRICE
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2.1 SALE OF ASSETS. Subject to the terms and conditions set forth in
this Agreement, Seller agrees to grant, bargain, sell, convey, transfer, assign
and deliver to Purchaser, and Purchaser agrees to purchase from Seller, on the
Closing Date, to be effective as of the Effective Date, all of the assets owned
by Seller (such assets to be referred to herein collectively as the "Assets"),
including without limitation all of the assets set forth on the Balance Sheet
Report dated as of the Measurement Date, subject only to changes occurring in
the Ordinary Course of Business since the Measurement Date, and the following:
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(a) all tangible personal property (such as office equipment, service
equipment, computer equipment, software, machinery, supplies, furniture,
fixed assets, fixtures and vehicles) owned by the Seller;
(b) all of Seller's patents, patent applications or other patent
rights, service marks, trademarks, trade and assumed names, inventions,
trade secrets and royalty rights and other proprietary intangibles,
licenses and sublicenses, and rights thereunder, and remedies against
infringements thereof, and rights to protection of interests therein under
the laws of all jurisdictions;
(c) all leases, subleases, contracts, contract rights, and agreements
relating to the operation of the Business;
(d) all of Seller's general intangibles, claims, causes of action,
choses in action, rights of recovery, rights of set off, rights of
recoupment and goodwill;
(e) all of Seller's franchises, approvals, permits, licenses, orders,
registrations, certificates, variances, and similar rights obtained from
governments and governmental agencies;
(f) all of Seller's books, records, client and supplier lists,
ledgers, files, documents, correspondence, lists, creative materials,
advertising and promotional materials, studies, reports, and other printed
or written materials;
(g) all of Seller's accounts, accounts receivable, trade receivables,
notes and other receivables, including those outstanding on the Measurement
Date and those arising or accruing thereafter, all of which remain
outstanding as of the Closing Date, other than those which have been
collected by Seller in the Ordinary Course of Business; and
(h) all rights to the name "San Francisco Reporting Service" and all
variations thereof, and Seller's current telephone number;
however, notwithstanding the foregoing or any provision hereof to the contrary,
the term "Assets" shall not include, and Purchaser shall not acquire, any assets
disposed of, used or consumed in the Ordinary Course of Business between the
Measurement Date and the Closing Date, nor any cash or other property to the
extent such cash or other property is specifically disclosed and described as an
"Excluded Asset" on SCHEDULE 2.1 hereof.
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2.2 PURCHASE PRICE CONSIDERATION. As consideration for the
purchase of the Assets and the performance by Seller of various other matters as
provided herein, Purchaser shall pay and deliver to Seller at the Closing the
following (the "Purchase Price"):
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(a) A certified or bank cashier's check, payable to the order of
Seller, or by wire transfer to an account of Seller designated by Seller,
in the amount of Five Hundred Five Thousand Six Hundred Ninety-Four and
No/100 Dollars ($505,694.00); and
(b) Shares of Common Stock issued by LRA-Texas, having a par value of
one-cent ($0.01) per share, issued in the names of Xxx X. Xxxxxxxx and Xxxx
Xxxxxx, respectively, the general partners of Seller (the "Common Stock"),
in the amounts set forth in Section 6.3, at an issue price of Seven and
56/100 Dollars ($7.56), per share based on the cash flow multiple paid by
the institutional investors in the initial capitalization of LRA-Texas,
adjusted to reflect the pro forma cash flow of LRA-Texas at the Effective
Date; and
(c) Shares of Series C Preferred Stock issued by LRA-Texas, having a
par value of One Dollar ($1.00) per share, issued in the names of Xxx X.
Xxxxxxxx and Xxxx Xxxxxx, respectively, the general partners of Seller (the
"Preferred Stock"), in the amount set forth in Section 6.3, at an issue
price of One Dollar ($1.00) per share.
2.3 ASSUMPTION OF LIABILITIES. Subject to the exceptions and
exclusions of this SECTION 2.3, Purchaser agrees that on the Closing Date,
Purchaser will assume and agree to perform and pay when due the following
liabilities of Seller (collectively, the "Liabilities"):
(a) All liabilities reflected in the Balance Sheet Report dated as of
the Measurement Date (except as hereinafter expressly set forth);
(b) Liabilities and obligations of the Business incurred in the
Ordinary Course of Business between the Measurement Date and the Closing
Date, which do not otherwise constitute violations of any of the
representations, warranties, covenants, agreements or obligations of Seller
set forth herein;
however, notwithstanding the foregoing or any provisions hereof to the contrary,
the term "Liabilities" shall not include, and Purchaser shall not assume nor be
deemed to have assumed, any other debts, liabilities or obligations, whether
accrued, absolute, contingent or otherwise, in contract or in tort, nor any of
the following: (i) accrued income taxes, (ii) deferred income taxes, (iii)
accrued franchise taxes, (iv) any tax imposed on Seller or any Affiliate of
Seller, as a result of or in connection with the operation of the Business, (v)
any of the liabilities or expenses of Seller incurred in negotiating and
carrying out its obligations under this Agreement; (vi) any obligations of
Seller or any Affiliate of Seller under any employee stock or benefits
agreements; (vii) any obligations incurred by Seller on or before the Closing
Date except as otherwise specifically assumed by Purchaser pursuant to this
SECTION 2.3; (viii) any of the liabilities set forth in SCHEDULE 3.22; (ix) any
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liabilities or obligations incurred by Seller in violation of, or as a result
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of Seller's violation of, this Agreement; nor (x) any liabilities arising from
sales of products or services on or before the Closing Date.
2.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price of the Assets
shall be allocated in accordance with SCHEDULE 2.4 attached hereto. Each of the
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Parties agrees to report this transaction for federal tax purposes in accordance
with the manner set forth in SCHEDULE 2.4, however, the Purchase Price of the
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Assets may be reallocated in a manner to be agreed upon by the Parties after
finalization of the Post-Closing Financial Statements.
2.5 TAXES. Payment of the Purchase Price shall include payment for
all sales and use taxes arising out of the sale, transfer or removal of the
Assets, and the assumption of the Liabilities. On or before the Closing Date,
Seller agrees to furnish to Purchaser certificates from the state taxing
authorities, and any related certificates that Purchaser may reasonably request,
as evidence that all sales and use tax liabilities of Seller accruing before the
Effective Date have been fully provided for or satisfied. Purchaser shall not
be responsible for any business, occupation, income, withholding or similar tax,
or any taxes of any kind, of Seller, or otherwise relating to the Business or
the operation thereof for any period before the Effective Date.
2.6 TITLE TO ASSETS AND RISK OF LOSS. Title to the Assets and risk
of loss or damage to the Assets by casualty (whether or not covered by
insurance) will pass to Purchaser immediately upon completion of Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller hereby represents and warrants that:
3.1 ORGANIZATION. Seller is a general partnership duly organized and
validly existing under the laws of the State of California, has all necessary
partnership powers to own its properties and to operate the Business as now
owned and operated by it, and is not qualified, nor required to be qualified, to
do business in any other state.
3.2 AUTHORITY. Seller has the full right, power, legal capacity and
authority to execute, deliver and perform Seller's obligations under this
Agreement. The execution, delivery and performance of this Agreement by Seller
has been duly authorized by Seller's partners. Xxx X. Xxxxxxxx and Xxxx Xxxxxx
are the only partners of Seller.
3.3 CONSENTS AND APPROVALS; NO BREACH OR DEFAULT. Except as set forth
on SCHEDULE 3.3(A), no consent, approval or authorization of, or filing or
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registration with, any governmental or regulatory authority, or any other person
or entity, is required to be made or obtained by Seller in connection with the
execution, delivery or performance of this Agreement, or the consummation by
Seller of the transactions contemplated hereby. Except as set forth on SCHEDULE
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3.3(B), neither the execution and delivery of this Agreement by Seller, nor the
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consummation of the transactions contemplated herein by Seller, will (A) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency or court to which Seller is, or the Assets are, subject, or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under, any agreement, contract, lease, license,
instrument, promissory note, conditional sales contract, partnership agreement
or other arrangement to which Seller or any of Seller's Affiliates is a party,
or by which Seller is bound, or to which the Assets are subject, or (C) conflict
with or violate the partnership agreement or other charter document of Seller.
3.4 VALID AND BINDING OBLIGATION. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Seller,
or any of Seller's Affiliates, in connection herewith, will constitute the
legal, valid, and binding obligation of Seller and/or each Affiliate which is a
party thereto, enforceable against Seller and/or each such Affiliate in
accordance with its terms, except as same may be limited by applicable
bankruptcy laws, insolvency laws, or other similar laws affecting the rights of
creditors generally.
3.5 TITLE TO ASSETS. Except as set forth on SCHEDULE 3.5, Seller has
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good, indefeasible and marketable title to the Assets, free and clear of
restrictions or conditions to transfer or assignment, or mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights-of-way,
covenants, conditions or restrictions. Seller shall deliver to Purchaser at
Closing good, indefeasible and marketable title to the Assets, free and clear of
restrictions or conditions to transfer or assignment, or mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights-of-way,
covenants, conditions or restrictions.
3.6 POSSESSION OF ASSETS; LEASED ASSETS. Seller is in possession of all
of the Assets, and all of the assets leased to Seller from others. All assets
leased to Seller from others, whether real, personal or mixed, are described on
SCHEDULE 3.6 and SCHEDULE 3.14(B) attached hereto (the "Leased Assets"). The
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Assets and the Leased Assets constitute all of the property, whether real,
personal, mixed, tangible, or intangible, that is owned or used in the Business
by Seller, other than the Excluded Assets. Seller does not own legal or
equitable title to any assets or interests in assets except the Assets and the
Leased Assets. Seller shall deliver to Purchaser on the Closing Date, possession
of and/or control or dominion over all of the Assets and the Leased Assets,
including without limitation all of Seller's accounts receivable, property,
plant and equipment, other personal property, contract rights and general
intangibles, client and supplier lists, and assumed and trade names.
3.7 CONDITION. All of the Assets and the Leased Assets are in good
operating condition and repair for their intended use, ordinary wear and tear
excepted.
3.8 CONTRACTS AND LEASES. All of the contracts, leases, documents,
instruments, agreements, and other written or oral arrangements to which Seller
is a party or by which Seller or the Assets may be bound (collectively, the
"Contracts") are set forth on SCHEDULE 3.8. Except
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as set forth on SCHEDULE 3.8, all of the Contracts are valid and in full force
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and effect, and there has not been any default by Seller or any third party to
any of said Contracts, or any event, fact or circumstance which with notice or
lapse of time or both, would constitute a default by Seller or any other party
to any of the Contracts. Seller has not received notice that any party to any of
the Contracts intends to cancel or terminate any of the Contracts or exercise or
not exercise any options that such party might have under any of the Contracts.
3.9 EQUIPMENT. All of the equipment owned by Seller is set forth on
SCHEDULE 3.9.
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3.10 ACCOUNTS RECEIVABLE. All of the accounts receivable of Seller as set
forth in the books and records of Seller (collectively, the "Accounts"), and all
papers and documents relating thereto, are genuine and in all respects what they
purport to be, and each such Account is valid and subsisting and is owed by the
account debtor named in such Account. The amount of each Account represented as
owing as of the date indicated (i) is the correct amount actually and
unconditionally owing as of the date indicated, (ii) is not subject to any set-
offs, credits, disputes, defenses, deductions or countercharges, and (iii) to
the best knowledge of Seller, will be paid in the Ordinary Course of Business.
None of the Accounts has been paid outside of the Ordinary Course of Business,
and neither Seller nor any of its Affiliates has made any efforts to collect any
of the Accounts outside of the Ordinary Course of Business.
3.11 INVENTORIES. Seller does not have any raw materials, work in
process, finished goods or other inventory.
3.12 LICENSES. All licenses owned by Seller or in which Seller has any
rights, licenses or sublicenses (collectively, the "Licenses"), together with a
brief description of each, are set forth on SCHEDULE 3.12. Seller has not
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infringed, and is not now infringing, on any license belonging to any other
person or other entity. Seller owns and holds adequate licenses necessary for
the Business as now conducted by it, and that use does not, and will not,
conflict with, infringe on or otherwise violate any rights of others. Purchaser
is hereby acquiring, and will continue to enjoy the use and benefit of, the
Licenses.
3.13 INTELLECTUAL PROPERTY. All of the intellectual property (the
"Intellectual Property") of Seller is set forth on SCHEDULE 3.13. The
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Intellectual Property constitutes all of the intellectual property necessary to
the lawful conduct of the Business without any infringement or conflict with the
rights of others, and no adverse claims have been asserted against the
Intellectual Property, Seller or the Business with respect thereto.
3.14 REAL PROPERTY; LEASED REAL PROPERTY. Except as set forth in
SCHEDULE 3.14(A) with respect to real property owned by Seller, and SCHEDULE
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3.14(B) with respect to real property leased by Seller (such real property being
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hereinafter referred to collectively as the "Real Property"), Seller neither
owns nor leases any real property or improvements or interests therein. Except
for Seller, there are no parties in possession of any portion of the Real
Property as lessees, tenants at will or at sufferance, trespassers or otherwise.
The heating, electrical, plumbing and
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other building equipment, as of the Closing, will be adequate in quantity and
quality for normal operations of the Business, as presently conducted.
3.15 SUBSIDIARIES. Seller does not own, and has never previously owned,
directly or indirectly, any interest or investment (whether equity or debt) in
any corporation, partnership, business, trust, or other entity.
3.16 INSURANCE. Attached hereto as SCHEDULE 3.16 is a true, complete and
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accurate list of all insurance policies maintained by Seller.
3.17 BANKING. The names and addresses of all banks or other financial
institutions in which Seller has an account, deposit or safe deposit box, with
the names of all persons authorized to draw on these accounts or deposits or
having access to these boxes, are set forth on SCHEDULE 3.17 attached hereto.
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3.18 POWERS OF ATTORNEY. No person or other entity holds a general or
special power of attorney from Seller.
3.19 PERSONNEL. Attached hereto as SCHEDULE 3.19 (A) is a
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list of the names, addresses, hire dates, dates of birth and job descriptions of
all Employees of Seller, stating their rates of compensation including, if
determined, bonuses payable to each. Attached hereto as SCHEDULE 3.19 (B) is a
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list of the names, addresses, dates of birth and services provided by all
independent contractors used by Seller during the preceding one (1) year,
stating their rates and methods of compensation.
3.20 EMPLOYEE BENEFITS. SCHEDULE 3.20 is a true, correct and complete
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list of each "employee benefit plan," within the meaning of Section 3(3) of
ERISA, that has ever been maintained or sponsored by Seller or any of its
Affiliates. Each such employee benefit plan (and each related trust, insurance
contract, or fund) is in full force and effect, and complies in form and in
operation in all respects with the applicable requirements of ERISA, the Code,
and other applicable laws. Neither Seller nor any other party is in default
under any of the plans, there have been no claims of default, and to the
Seller's knowledge, there are no facts, conditions or circumstances which if
continued, or on notice, will result in a default, under any plan. None of the
plans will, by its terms or under applicable law, become binding upon or become
an obligation of the Purchaser. No assets of any plan are being transferred to
Purchaser or to any plan of Purchaser. Seller does not contribute to, and has
never contributed to, and has never been required to contribute to, any
multiemployer plan, and Seller does not have, and has never had, any liability
(including withdrawal liability) under any multiemployer plan.
3.21 EMPLOYMENT AGREEMENTS. SCHEDULE 3.21 is a list of all employment
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agreements, consulting agreements, collective bargaining agreements, and
agreements providing for director and officer indemnification or other
agreements or arrangements providing for employee or other remuneration,
severance payments or benefits to which Seller or any of its Affiliates is a
party or
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by which Seller or any of its Affiliates is bound (collectively, the "Employment
Agreements"). Purchaser will not have any duty, liability or obligation with
respect to any of the Employment Agreements. Except as set forth on SCHEDULE
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3.21, no Employees are represented by any labor organization.
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3.22 LIABILITIES. Seller does not have any liabilities, obligations or
commitments of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, except (i) liabilities which are adequately
disclosed or accrued against in the Balance Sheet Reports, (ii) liabilities
which have been incurred in the Ordinary Course of the Business since the
Measurement Date and in accordance with standard, customary and historical
practices and experiences of Seller, and (iii) liabilities expressly set forth,
as to the nature and amount thereof, on SCHEDULE 3.22. Purchaser shall not
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incur any duty, liability or obligation with respect to any liabilities set
forth on SCHEDULE 3.22. In no event shall the Purchaser be liable for (or have
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paid any) legal, accounting or other costs or expenses incurred by Seller in
connection with any of the transactions contemplated in this Agreement.
3.23 LITIGATION. Except as set forth on SCHEDULE 3.23, there is no
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suit, action, arbitration or legal, administrative or other proceeding or
governmental investigation pending or threatened against or affecting Seller,
its Affiliates, the Assets, the Leased Assets or the Business.
3.24 TAX MATTERS. Seller has filed all tax returns that Seller was
required to file, and all such tax returns were correct and complete in all
respects. All taxes owed by Seller (whether or not shown on any tax return) have
been paid. Seller is not the beneficiary of any extension of time within which
to file any tax return, and Seller has not waived any statute of limitations in
respect of taxes or agreed to any extension of time with respect to a tax
assessment or deficiency. Seller has withheld and paid all taxes required to
have been withheld or paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, partner, or other third party.
Neither Seller nor any partner, director or officer (or employee responsible for
tax matters) of Seller has reason to believe that any authority might assess any
additional taxes for any period for which tax returns have been filed. There is
no dispute or claim concerning any tax liability of Seller either (i) claimed or
raised by any authority in writing or (ii) as to which Seller or any partner or
any employee responsible for tax matters has knowledge.
3.25 COMPLIANCE WITH LAWS. Seller has complied with, and is not in
violation of, applicable federal, state or local ordinances, statutes, laws,
rules, restrictions and regulations (including, without limitation, any
applicable Environmental, Health & Safety Laws) that affects, or is likely to
affect, directly or indirectly, the Business, the Assets, the Leased Assets, the
Real Property or the clients, suppliers or financial prospects of Seller. There
are not any uncured violations of federal, state or local laws, ordinances,
statutes, orders, rules, restrictions, regulations or requirements affecting any
portion of the Business, the Real Property, the Assets or the Leased Assets, and
neither any of the Assets, the Leased Assets or the Real Property, nor the
operation thereof nor the conduct of the Business, violates any applicable
federal, state or municipal laws, ordinances, orders, regulations or
requirements. Seller has not received notice of any past, present or future
event, condition, circumstance, activity, practice, incident, action
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or plan which may interfere with or prevent compliance or continued compliance
with the Environmental, Health & Safety Laws or which may give rise to any
common law or legal liability, or otherwise form the basis of any claim, action,
demand, lawsuit, proceeding, hearing, study or investigation, based on, related
to, or alleging any violation of the Environmental Health & Safety Laws.
3.26 FINANCIAL STATEMENTS. The Financial Statements (i) are true,
complete, and correct in all material respects, (ii) fairly and accurately
present the financial position of Seller as of the periods described therein,
and the results of the operations of Seller for the periods indicated, and (iii)
have been prepared consistently and in accordance with the Seller's historical
customs and practices.
3.27 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
SCHEDULE 3.27, since the Measurement Date:
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(A) there has been no: (i) material adverse change in the financial
condition, assets, liabilities, business or prospects of Seller; (ii) loss,
destruction or damage to any property of Seller, whether or not insured;
(iii) labor trouble, pending or threatened, involving Seller, or change in
the personnel of Seller or the terms or conditions of their employment or
other engagement; nor (iv) other event or condition of any character that
has or could have a material adverse effect on the financial condition,
business, liabilities, goodwill or prospects of the Business;
(B) Seller and its Affiliates have used their best efforts to
preserve the business organization of Seller intact, to maintain the
goodwill of the Business, to keep available to the Business the Employees
and the Independent Contractors, and to preserve the present relationships
of Seller with its suppliers, clients, regulatory authorities and others
having business relationships with it;
(C) Seller has maintained and operated the Business in the Ordinary
Course of Business and in accordance with industry practices and Seller's
historical policies;
(D) Seller has not issued or sold, nor directly or indirectly
redeemed or acquired, any of its securities;
(E) Seller has not declared, set aside nor paid a dividend or other
distribution, nor made any payment of any type to the holders of any equity
interest in Seller or any of its Affiliates, other than ordinary salary or
expenses which have been paid in the Ordinary Course of Business and fully
disclosed to Purchaser;
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(F) Seller has neither waived nor released any material right of or
material claim held by it, nor discounted any of its receivables, nor
revalued any of its assets or liabilities;
(G) Seller has not acquired nor disposed of any assets having a
value of $5,000 individually or $15,000 in the aggregate, and has not
entered into any contract, commitment or arrangement therefor, and has not
entered into any other transaction, other than for value in the Ordinary
Course of Business and in accordance with industry practices;
(H) Seller has not changed the salary or other compensation payable
or to become payable by Seller to any of its partners, employees,
independent contractors, agents or other personnel, and has not declared,
made or committed to any kind of payment of a bonus or other additional
salary or compensation to any such person;
(I) Seller has not made a loan to any person or entity, and has not
guarantied any loan, in an amount in excess of $5,000 individually or
$15,000 in the aggregate;
(J) Seller has not amended nor terminated any material contract,
agreement, permit or license to which Seller is a party, or by which Seller
or any of the Assets or Leased Assets are bound;
(K) Seller has maintained all debt and lease instruments, and has
not entered into any new or amended debt or lease instruments;
(L) Seller has not entered into any agreement or instrument which
would constitute an encumbrance, mortgage or pledge of the Assets, or which
would bind Purchaser or the Assets after Closing, in an amount in excess of
$5,000 individually or $15,000 in the aggregate;
(M) Seller has provided to Purchaser any and all books, records,
contracts, and other documents or data pertaining to the ownership, use,
insurance, operation, renovation and maintenance of the Assets, the Leased
Assets and the Business;
(N) Seller has performed all of Seller's obligations under all
contracts and commitments applicable to Seller, the Assets and the Leased
Assets, and has maintained Seller's books of account and records in the
usual, regular and customary manner;
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(O) Seller has complied with all statutes, laws, ordinances and
regulations applicable to Seller, the Assets, the Leased Assets and the
conduct of the Business;
(P) Seller has paid all bills and other payments due with respect to
the ownership, use, insurance, operation and maintenance of the Business,
the Assets and the Leased Assets, as and when such bills or other payments
were due, and has taken all action necessary or prudent to prevent liens or
other claims for the same from being filed or asserted against any part of
the Assets or the Leased Assets; provided however, Seller has not made any
expenditures outside the Ordinary Course of Business, nor any capital
expenditures, in excess of $5,000 individually or $15,000 in the aggregate;
(Q) Seller has not made any material changes in its management,
operations, accounting or business practices or methods (including without
limitation, any change in depreciation or amortization policies or rates);
and
(R) all revenues or cash or other receipts from all sources in all
media received by Seller have been deposited in Seller's account.
3.28 CLIENTS. SCHEDULE 3.28 to this Agreement is a true, complete and
-------------
correct list of all clients and customers of Seller, together with summaries of
the sales or services provided to each client during the one (1) year preceding
the Effective Date. Except as indicated in SCHEDULE 3.28, Seller does not have
-------------
any information, nor is it aware of any facts or circumstances, indicating that
any of these clients intend not to do business with Purchaser to the same volume
and extent, and on the same terms, as they have historically done business with
Seller.
3.29 INTERESTS IN CLIENTS, SUPPLIERS AND COMPETITORS. No partner or
employee (nor any former partner or employee) of Seller, nor to the best
knowledge and reasonable belief of Seller any relative of any of them, has any
direct or indirect interest in any competitor, supplier or client of Seller, nor
any person or other entity who has done business with Seller in the one (1) year
preceding the Closing Date.
3.30 PARTNERSHIP DOCUMENTS. Seller has furnished to Purchaser for its
examination (i) a true, complete and correct copy of Seller's partnership
agreement and all other written agreements between the partners of Seller, all
as amended to date; (ii) true, complete and correct copies of the contents of
the minute books of Seller (including proceedings of audit and other
committees), each of which contains all records for all proceedings, consents,
actions and meetings of the partners of Seller since its date of formation.
3.31 BULK SALE WARRANTY FOR SALES TAX PURPOSES. Prior to Closing, Seller
has never sold a substantial or significant part of its assets in any single
transaction or series of transactions. The transaction contemplated herein is
the sale of the entire operating assets of a business, and
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a sale outside the ordinary course of Seller's business, and therefor no sales
tax is due upon the Closing of the purchase of the Assets.
3.32 DISCLOSURE. Seller has provided to Purchaser actual copies of all
Contracts, documents concerning all litigation and administrative proceedings,
employee benefit plans, Licenses, insurance policies, lists of suppliers,
clients, employees and independent contractors, and corporate and partnership
records relating to Seller or its assets and liabilities, the Business and the
Real Property, and such information covers all material commitments and
liabilities of Seller. In addition, (i) Purchaser has been kept fully informed
with respect to all material developments in the business of Seller since the
Measurement Date, (ii) management of Seller has not made any material business
decisions, nor taken any material actions, since the Measurement Date of which
Purchaser has not been advised, and (iii) Purchaser and its agents have been
granted unlimited access to the books and records of Seller (whether retained
electronically, on disc or on paper).
3.33 FULL DISCLOSURE. This Agreement, the schedules and exhibits
hereto, and all other documents and written information furnished by Seller or
its Affiliates to Purchaser or its representatives pursuant hereto or in
connection herewith, are true, complete and correct, and do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein and therein not misleading. There are no
facts or circumstances relating to the Business or Seller's liabilities,
prospects, operations or financial condition, or the Assets, which materially
and adversely affect or, so far as the Seller can now reasonably foresee, will
materially and adversely affect, the Business, Seller or the assets,
liabilities, prospects, operations or financial condition thereof, or the
ability of the Seller to perform this Agreement or the obligations of Seller
hereunder.
ARTICLE IV
PURCHASER'S REPRESENTATIONS AND WARRANTIES
------------------------------------------
Purchaser represents and warrants that:
4.1 ORGANIZATION. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of California,
has all necessary corporate powers to own its properties and to operate its
business as now owned and operated by it, and is qualified to do business in all
of the states in which the ownership of its assets or the operation of its
business require such qualification.
4.2 AUTHORITY. Purchaser has the right, power, legal capacity,
and authority to execute, deliver and perform this Agreement, and no approvals
or consents of any persons or other entities are required to be obtained by
Purchaser in connection herewith which have not been obtained. The execution,
delivery and performance of this Agreement by Purchaser has been duly authorized
by Purchaser's Board of Directors.
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4.3 CONSENTS AND APPROVALS; NO BREACH OR DEFAULT. No consent,
approval or authorization of, or filing or registration with, any governmental
or regulatory authority, or any other person or entity, is required to be made
or obtained by Purchaser in connection with the execution, delivery or
performance of this Agreement, or the consummation by Purchaser of the
transactions contemplated hereby, except for those which have been made or
obtained. Neither the execution and delivery of this Agreement by Purchaser,
nor the consummation of the transactions contemplated herein by Purchaser, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency or court to which Purchaser is subject, or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, promissory note, conditional sales contract, partnership agreement
or other arrangement to which Purchaser is a party, or by which Purchaser is
bound, or (C) conflict with or violate the Articles of Incorporation, Bylaws or
other charter document of Purchaser.
4.4 VALID AND BINDING OBLIGATION. Upon execution and delivery,
this Agreement and each document, instrument or agreement to be executed by
Purchaser in connection herewith will constitute the legal, valid, and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as same may be limited by applicable bankruptcy laws, insolvency
laws, or other similar laws affecting the rights of creditors generally.
ARTICLE V
SELLER'S CLOSING AND POST-CLOSING
---------------------------------
WARRANTIES, COVENANTS AND AGREEMENTS
------------------------------------
5.1 TAXES. Seller has paid, and shall pay when due, or contest in
good faith, and shall be responsible for paying, all federal, state, and local
taxes and charges of any kind whatsoever related thereto, which relate to or
arise from the period on or prior to the Effective Date, whether such taxes and
charges shall be due and payable before or after the Effective Date. All state
and local taxes relating to the ownership of the Assets shall be prorated as of
the Effective Date.
5.2 LIENS ON ASSETS. On the Closing Date, all liens, security
interests or encumbrances of any nature on or affecting the Assets shall be
fully removed and discharged at the sole cost and expense of Seller.
5.3 INSURANCE. Seller shall assist, and shall cause its Affiliates
to assist, Purchaser in transferring to Purchaser any insurance applicable to
the Assets or the Leased Assets which Purchaser elects to maintain in effect.
5.4 HIRING OF EMPLOYEES; ENGAGEMENT OF INDEPENDENT CONTRACTORS. As
of the Closing Date, Seller shall permit Purchaser to offer employment to all of
the Employees. At
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or prior to Closing, Seller has paid or shall pay to the Employees and the
Independent Contractors all compensation and benefits to which they are entitled
by reason of their previous employment or engagement by Seller on such date, and
Purchaser shall have no liability with respect thereto. Seller shall use
Seller's best efforts to assist Purchaser in any reasonable manner in the hiring
by Purchaser of the Employees that Purchaser desires to hire, and in the
engagement by Purchaser of any of the Independent Contractors which it wishes to
engage. Purchaser shall have the right, but not the obligation, to offer
employment to such Employees as it desires to hire in its sole discretion.
Seller shall be solely responsible and liable for all severance pay, if any, to
the extent that any of the Employees are not offered employment with Purchaser
or do not accept an offer of employment. Under no circumstances shall the Seller
or any of Seller's Affiliates be permitted to employ or offer employment to any
of the Employees to whom Purchaser has offered employment, nor to engage any of
the Independent Contractors, for a period of two (2) years after the Closing
Date, without the prior written consent of Purchaser.
5.5 CONSENTS. Seller shall deliver to Purchaser at Closing all
necessary agreements and consents of any parties, including without limitation
all of Seller's vendors, lessors and creditors, to the consummation of the
transactions contemplated by this Agreement, or otherwise pertaining to the
matters covered by this Agreement.
5.6 CONFIDENTIALITY. Seller will not, and will not permit any of its
Affiliates to, disclose any information of a confidential or proprietary nature
concerning the Assets or the Business to any third parties, and in no event
shall Seller use, or allow any of its Affiliates to use, such confidential or
proprietary information for its or his own benefit or to the detriment of
Purchaser or the Business. No public or private announcement shall be made of
the transactions contemplated herein, nor the terms hereof, by Seller or any of
its affiliates, without the prior written approval of Purchaser as to timing,
form and content.
5.7 RECORD RETENTION. Seller acknowledges and agrees that from and
after the Closing, the Purchaser will be entitled to possession of all
documents, books, records, agreements, and financial data of any sort relating
to the Business.
5.8 BROKERS. On the Closing Date, Seller shall pay any and all
brokerage or finders fees or commissions for which Seller is liable in
connection with the consummation of the transactions contemplated by this
Agreement.
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ARTICLE VI
THE CLOSING
-----------
6.1 TIME AND PLACE. Payment of the Purchase Price required to be
made by Purchaser to Seller at the Closing Date, and the transfer of the Assets
by the Seller to Purchaser, and the other transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxx, Xxxxx & Xxxxxx
Incorporated, Nine Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, at or about
11:00 a.m., local time, on the Closing Date.
6.2 SELLER'S DELIVERIES. At Closing, Seller shall deliver or cause
to be delivered to Purchaser in form and content reasonably acceptable to the
Parties and their counsel:
(a) Two (2) counterparts of a Xxxx of Sale, Assignment and Assumption
Agreement (the "Xxxx of Sale"), executed by Seller, together with such
other instruments of assignment and transfer or bills of sale or otherwise
as Purchaser shall reasonably request;
(b) Two (2) counterparts of a Confidentiality and Noncompetition Agreement
between the Purchaser and Xxx X. Xxxxxxxx, executed by Xx. Xxxxxxxx (the
"Harbidge Noncompetition Agreement");
(c) Two (2) counterparts of a Confidentiality and Noncompetition Agreement
between the Purchaser and Xxxx Xxxxxx, executed by Xx. Xxxxxx (the "Posner
Noncompetition Agreement");
(d) From counsel to the Seller, an opinion in form and substance
acceptable to Purchaser, addressed to the Purchaser, and dated as of the
Closing Date containing such opinions, assumptions and qualifications as
may be reasonably acceptable to Purchaser's legal counsel;
(e) Two (2) counterparts of a Shareholders' Agreement with LRA-Texas
executed by Xx. Xxxxxxxx and Xx. Xxxxxx in a form similar to those
previously entered into by similarly situated shareholders of LRA-Texas
(the "Shareholders' Agreement);
(f) Two (2) counterparts of a Registration Rights Agreement executed by
Xx. Xxxxxxxx and Xx. Xxxxxx in a form similar to those previously entered
into by similarly situated shareholders of LRA-Texas (the "Registration
Rights Agreement");
(g) Certified resolutions adopted by all of the partners of the Seller,
authorizing the execution, delivery and performance of this Agreement and
all documents, instruments and agreements contemplated herein to be
executed by the Seller;
(h) Two (2) counterparts of a Preferred Stock Subordination Agreement in
form and content reasonably acceptable to Seller, LRA-Texas and the senior
lender for LRA-Texas, executed by Xx. Xxxxxxxx and Xx. Xxxxxx (the "TCB
Preferred Stock Subordination Agreement");
(i) Two (2) counterparts of a Preferred Stock Subordination Agreement in
form and content reasonably acceptable to Xx. Xxxxxxxx and Xx. Xxxxxx, LRA-
Texas and the senior subordinated lender for LRA-Texas, executed by the
Seller and/or any other parties to whom the Preferred Stock is to be issued
at Closing (the "Pecks Preferred Stock Subordination Agreement");
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(j) Two (2) counterparts of a Guaranty of Performance executed by Xx.
Xxxxxxxx, pursuant to which Xx. Xxxxxxxx guarantees the truth, completeness
and accuracy of the Seller's representations and warranties, and the
performance of the Seller's covenants, agreements and obligations hereunder
(the "Harbidge Guaranty");
(k) Two (2) counterparts of a Guaranty of Performance executed by Xx.
Xxxxxx, pursuant to which Xx. Xxxxxx guarantees the truth, completeness and
accuracy of the Seller's representations and warranties, and the
performance of the Seller's covenants, agreements and obligations hereunder
(the "Posner Guaranty");
(l) Two (2) counterparts of a Stock Pledge Agreement executed by Xx.
Xxxxxxxx pursuant to which Xx. Xxxxxxxx pledges the stock of LRA-Texas
received under this Agreement, to secure performance of his obligations
hereunder, and the performance of Xx. Xxxxxxxx and Xx. Xxxxxx under the
Harbidge Guaranty and the Posner Guaranty, respectively (the "Harbidge
Stock Pledge);
(m) Two (2) counterparts of a Stock Pledge Agreement executed by Xx.
Xxxxxx pursuant to which Xx. Xxxxxx pledges the stock of LRA-Texas received
under this Agreement, to secure performance of his obligations hereunder,
and the performance of Xx. Xxxxxx and Xx. Xxxxxxxx under the Posner
Guaranty and the Harbidge Guaranty, respectively (the "Posner Stock
Pledge");
(n) UCC-3 Termination Statements or other appropriate releases, duly
executed by the appropriate secured party or parties, with respect to any
liens, security interests, pledges or encumbrances affecting the Assets;
(o) Investor Representation Letters in form and content reasonably
acceptable to Seller and Purchaser, duly executed by the Seller, Xx.
Xxxxxxxx, Xx. Xxxxxx and/or any other parties to whom any Preferred Stock
or Common Stock is to be issued at Closing;
(p) Such consents, waivers, estoppel letters or similar documentation as
Purchaser shall request, in Purchaser's sole discretion, in connection with
the transfer of the Assets;
(q) Any tax certificates required to be delivered as set forth in SECTION
2.5 of this Agreement;
(r) Originals of all insurance policies which Purchaser elects to continue
in force, if any, together with appropriate assignments thereof;
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(s) A current certificate, issued by a company acceptable to Purchaser,
certifying that no Uniform Commercial Code filings, chattel mortgages,
assignments, pledges or other encumbrances have been created or filed in
any jurisdiction in which Seller does business, other than those for which
Seller has produced executed Termination Statements or other appropriate
releases, duly executed by the appropriate secured party or parties; and
(t) All other items required to be delivered hereunder or as may be
requested which are necessary or would reasonably facilitate consummation
of the transactions contemplated hereby.
In addition, Seller will put Purchaser into full and peaceful possession and
enjoyment of the Assets and the Leased Assets immediately upon the occurrence of
the Closing.
6.3 PURCHASER'S OBLIGATIONS. At the Closing, Purchaser shall
deliver or cause to be delivered to Seller, or other designated Affiliate of the
Seller, as appropriate, in form and content reasonably acceptable to the Parties
and their counsel the following:
(a) Certified checks or wire transfers of funds payable to Seller in
payment of the cash portion of the Purchase Price in the aggregate amount
of Five Hundred Five Thousand Six Hundred Ninety-Four Thousand and No/100
Dollars ($505,694.00), as contemplated by SECTION 2.2(A) hereof;
(b) Stock Certificates of LRA-Texas evidencing the issuance to Xx.
Xxxxxxxx and Xx. Xxxxxx of fifteen thousand three hundred four (15,304)
shares, each, of Common Stock, as contemplated by SECTION 2.2(B) hereof;
(c) Stock Certificates of LRA-Texas issued to Seller evidencing the
issuance to Xx. Xxxxxxxx and Xx. Xxxxxx of one hundred fifteen thousand
six hundred twenty-five (115,625) shares, each, of Preferred Stock, as
contemplated by SECTION 2.2(C) hereof;
(d) Two (2) counterparts of the Xxxx of Sale, executed by Purchaser;
(e) Two (2) counterparts of the TCB Preferred Stock Subordination
Agreement, executed by LRA-Texas and the senior lender for LRA-Texas;
(f) Two (2) counterparts of the Pecks Preferred Stock Subordination
Agreement, executed by LRA-Texas and the senior subordinated lender for
LRA-Texas;
(g) Two (2) counterparts of the Harbidge Noncompetition Agreement,
executed by Purchaser;
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(h) Two (2) counterparts of the Posner Noncompetition Agreement, executed
by Purchaser;
(i) Two (2) counterparts of the Company Stock Pledge, executed by
Purchaser;
(j) Two (2) counterparts of the Shareholders' Agreement, executed by LRA-
Texas;
(k) Two (2) counterparts of the Registration Rights Agreement executed by
LRA-Texas;
(l) From counsel to Purchaser, an opinion in form and substance acceptable
to Seller, addressed to the Seller, and dated as of the Closing Date
containing such opinions, assumptions and qualifications as may be
reasonably acceptable to Seller's legal counsel;
(m) Certified resolutions of the Board of Directors of Purchaser,
authorizing the execution, delivery and performance of this Agreement and
all documents, instruments and agreements contemplated herein to be
executed by the Purchaser;
(n) Certified resolutions of the Board of Directors of LRA-Texas,
authorizing the execution, delivery and performance of all documents,
instruments, agreements or obligations to be delivered or performed by LRA-
Texas; and
(o) All other items required to be delivered hereunder or as may be
requested or which are necessary or would reasonably facilitate
consummation of the transactions contemplated hereby.
6.4 NAME CHANGE AND REQUALIFICATION DOCUMENTS. At or prior to the
Closing, the Seller will execute, deliver and file, or cause to be executed,
delivered and filed, all necessary or reasonably requested amendments to
Seller's partnership agreement, and such other documents as may be required to
change Seller's name from "San Francisco Reporting Service" to
"___________________________________________." In addition, Seller shall
concurrently afford an Affiliate of Purchaser the opportunity to incorporate or
to change its corporate name to "San Francisco Reporting Service" or any name
substantially similar thereto, or to file such assumed name certificates as
Purchaser deems reasonable, necessary or appropriate. In addition, at or prior
to Closing, Seller and its Affiliates shall execute and deliver such
assignments, terminations and cancellations of assumed and trade names as
Purchaser may request. Seller shall coordinate all filings relating to the use
of Seller's name or names with any filings that Purchaser may desire to make in
order to effect such name change or otherwise protect such name.
6.5 INSURANCE, AD VALOREM TAXES, INCOME TAXES. The Parties
acknowledge and agree that all insurance premium payments that have been prepaid
by Seller constitute part of the Assets and are being acquired by Purchaser at
Closing. Purchaser shall be entitled to continue such insurance coverage as
Purchaser may elect, and to receive a refund of all insurance
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premiums with respect to which Purchaser elects not to continue coverage. Ad
valorem, intangible or similar taxes on the Assets for the 1997 tax year shall
be prorated as of the Effective Date. The Parties for themselves and for their
respective successors and assigns covenant and agree that they will file
coordinating Form 8594's in accordance with Section 1060 of the Internal Revenue
Code of 1986, as amended, with their respective income tax returns for the
taxable year that includes the Closing Date. Seller shall pay or cause to be
paid all federal and state income, franchise, and net worth tax returns with
respect to the Business or the Assets allocable to the time period on or before
the Effective Date.
6.6 FURTHER ASSURANCES. At and after the Closing, each of the
Parties shall take or cause to be taken all appropriate action, and execute and
deliver or cause to be executed and delivered all documents of any kind, which
may be reasonably necessary or desirable to carry out the transactions
contemplated hereby. Seller, at any time at or after the Closing, will execute,
acknowledge and deliver any further bills of sale, assignments and other
assurances, documents and instruments of transfer reasonably requested by
Purchaser, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by Purchaser, for the purpose of
assigning and confirming to Purchaser all of the Assets. Purchaser and Seller
each agree to notify the other promptly, and in no event more than ten (10)
business days after receipt, of any tax, environmental or employee benefit
inquiries or notifications relating to the Assets or the Business or the Assets
with respect to any period prior to the Closing Date, and Seller shall assist
Purchaser in any manner reasonably requested in preparing and delivering such
responses to such inquiries as Purchaser deems necessary or appropriate.
6.7 LIABILITIES CONCERNING SALES OF PRODUCTS AND SERVICES. Seller
shall be and remain solely liable for the sale of all products and services sold
through and including the Effective Date, and shall indemnify Purchaser from any
and all Damages arising therefrom, as defined in ARTICLE VII hereof, in the
manner described in ARTICLE VII. Purchaser shall be liable for the sale of all
products and services after the Effective Date, and shall indemnify Seller from
any and all Damages arising therefrom in the manner described in ARTICLE VII
hereof.
6.8 COLLECTION OF ACCOUNTS RECEIVABLE. The Seller's accounts
receivable are included within the Assets. All payments received on or after
the Effective Date shall be and become the exclusive property of Purchaser, and
shall be delivered immediately to Purchaser in the form received.
ARTICLE VII
INDEMNIFICATION, ADJUSTMENT TO
PURCHASE PRICE AND OTHER REMEDIES
---------------------------------
7.1 INDEMNIFICATION.
A. BY SELLER. Seller shall indemnify, save, defend and hold
harmless Purchaser, LRA-Texas and their respective shareholders, directors,
officers, agents and employees (collectively, the "Purchaser Indemnified
Parties") from and against any and all costs, lawsuits,
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losses, liabilities, deficiencies, claims and expenses, including interest,
penalties, attorneys' fees and all amounts paid in investigation, defense or
settlement of any of the foregoing (collectively referred to herein as
"Damages"), (i) incurred in connection with or arising out of or resulting from
or incident to any breach of any covenant or warranty, or the inaccuracy of any
representation, made by Seller in or pursuant to this Agreement or any other
agreement contemplated hereby or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Seller or its Affiliates under this
Agreement, or (ii) based upon, arising out of, or otherwise in respect of any
liability or obligation of the Business or relating to the Assets (a) relating
to any period prior to or as of the Effective Date, other than those Damages
incurred by Purchaser in performing any of the Liabilities assumed by Purchaser
with respect to which Seller was not in default as of the Closing Date, (b)
arising out of facts or circumstances existing prior to or as of the Effective
Date, other than those Damages incurred by Purchaser in performing any of the
Liabilities assumed by Purchaser with respect to which Seller was not in default
as of the Closing Date, or (c) relating to any period after the Effective Date
or arising out of facts or circumstances existing after the Effective Date which
constitute a breach or violation of this Agreement by Seller; provided, however,
that Seller shall not be liable for any such Damages to the extent, if any, such
Damages result from or arise out of a breach or violation of this Agreement by
any Purchaser Indemnified Parties, or (iii) arising out of or resulting from or
incident to Purchaser's and Seller's election not to comply with the applicable
bulk sales laws of the State of California.
B. BY PURCHASER. Purchaser shall indemnify, save,
defend and hold harmless Seller and Seller's shareholders, directors, officers,
agents and employees (collectively, the "Seller Indemnified Parties") from and
against any and all Damages (i) incurred in connection with or arising out of or
resulting from or incident to any breach of any covenant or warranty, or the
inaccuracy of any representation, made by Purchaser in or pursuant to this
Agreement or any other agreement contemplated hereby or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by
Purchaser under this Agreement, or (ii) based upon, arising out of or otherwise
in respect of any liability or obligation of the Business or relating to the
Assets (a) arising out of facts or circumstances occurring after the Closing
Date, or (b) arising out of the Liabilities assumed by the Purchaser; provided,
however, that Purchaser shall not be liable for any such Damages if such Damages
result from or arise out of a breach or violation of this Agreement by any
Seller Indemnified Parties.
C. DEFENSE OF CLAIMS. If any lawsuit or enforcement
action is filed against any Purchaser Indemnified Party or any Seller
Indemnified Party (hereinafter referred to as an "Indemnified Party"), written
notice thereof describing such lawsuit or enforcement action in reasonable
detail and indicating the amount or good faith estimate of the reasonably
foreseeable estimated amount of Damages (which estimate shall in no way limit
the amount of indemnification to which the Indemnified Party is entitled
hereunder), shall be given to the indemnifying Party as promptly as practicable
(and in any event within ten days after the service of the citation or summons);
provided that the failure of any Indemnified Party to give timely notice shall
not affect such Indemnified Party's rights to indemnification hereunder to the
extent that the Indemnified Party demonstrates that the amount the Indemnified
Party is entitled to recover exceeds the actual
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damages to the indemnifying Party caused by such failure to so notify within ten
days. After such notice, if the indemnifying Party elects to compromise or
defend any such asserted liability and to perform its obligations under this
SECTION 7.1, then the indemnifying Party shall be entitled, if it so elects, to
take control of the defense and investigation of such lawsuit or action and to
employ and engage attorneys of its own choice to handle and defend the same, at
the indemnifying Party's sole cost, risk and expense, and such Indemnified Party
shall cooperate in all reasonable respects, at the indemnifying Party's sole
cost, risk and expense, with the indemnifying Party and such attorneys in the
investigation, trial, and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the Indemnified Party may, at its own
cost, risk and expense, participate in such investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. If the indemnifying
Party promptly notifies the Indemnified Party that it intends to defend the
claim and to perform its obligations under this SECTION 7.1, the Indemnified
Party shall not pay, settle or compromise such claim without the indemnifying
Party's consent, which consent shall not be unreasonably withheld. If the
indemnifying Party elects not to defend the claim of the Indemnified Party, the
Indemnified Party may, but shall not be obligated to, defend, or the Indemnified
Party may compromise or settle (exercising reasonable business judgment) the
claim or other matter on behalf, for the account, and at the risk, of the
indemnifying Party.
D. THIRD PARTY CLAIMS. The provisions of this SECTION
7.1 are not limited to matters asserted by the Parties, but cover costs, losses,
liabilities, damages, lawsuits, claims and expenses incurred in connection with
third party claims. The indemnity hereunder is in addition to any and all rights
and remedies of the Parties in connection herewith.
7.2 POST-CLOSING ADJUSTMENT TO PURCHASE PRICE. Within thirty (30) days
after the Closing Date, Seller shall deliver to Purchaser an unaudited Balance
Sheet Report and an income statement of the Business, prepared as of the
Effective Date (the "Post-Closing Financial Statements"), which shall be true,
complete and correct in all respects and prepared in accordance with the
Company's historical policies and procedures, consistently applied, and
certified as true, complete and correct by Seller, Xx. Xxxxxxxx and Xx. Xxxxxx.
These Post-Closing Financial Statements shall become final and binding on the
Parties on the 15th day following receipt thereof by Purchaser unless Purchaser
furnishes written notice of Purchaser's disagreement ("Notice of Disagreement")
to Seller prior to such date. Any Notice of Disagreement shall specify in
detail the nature of any disagreement so asserted. If a Notice of Disagreement
is sent by Purchaser to Seller in accordance with this SECTION 7.2, then the
Post-Closing Financial Statements shall become final and binding upon the
Parties on the earlier to occur of: (i) the date the Parties resolve in writing
any differences they have with respect to any matter specified in the Notice of
Disagreement, or (ii) the date any disputed matters are finally resolved in
writing by the Arbitrator (as defined below). During the 10-day period
following the delivery of a Notice of Disagreement, the Parties shall seek in
good faith to resolve in writing any differences which they may have with
respect to any matter specified in the Notice of Disagreement. If, at the end
of such 10-day period (or such longer period of time as the Parties may agree
upon in writing), the Parties have not reached agreement on such matters, the
matters which remain in dispute, together with copies of this Agreement, the
Post-Closing Financial Statements, and the Notice of Disagreement, shall be
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submitted, within five (5) days following the expiration of such 10-day period
(or any agreed upon extension thereof), to an arbitrator (the "Arbitrator") for
review and resolution. The Arbitrator shall be such nationally recognized
independent public accounting firm as shall be agreed upon by the Parties in
writing, and all proceedings conducted by the Arbitrator shall be conducted at
the offices of the Arbitrator in San Francisco, California. The Arbitrator
shall render a decision resolving the matters in dispute as soon as practicable
following the date of the submission to the Arbitrator. The cost of any
arbitration (including the fees of the Arbitrator but excluding the fees and
disbursements of each party's independent auditors and counsel) pursuant to this
SECTION 7.2 shall be borne one-half by Purchaser and one-half by Seller. The
fees and disbursements of Seller's independent auditors and counsel incurred in
connection with this SECTION 7.2 shall be borne by Seller, and the fees and
disbursements of Purchaser's independent auditors and counsel incurred in
connection with this SECTION 7.2 shall be borne by Purchaser. The final
determination as described in the procedures set forth hereinabove shall
constitute the "Final Post-Closing Financial Statements". To the extent that
the net worth of Seller, as set forth in the Final Post-Closing Financial
Statements, is less than or greater than Twenty-Seven Thousand Two Hundred
Twenty-Four Dollars ($27,224), then the Purchase Price shall be decreased by the
amount of any deficiency, or increased by the amount of any excess. Any
decrease in the Purchase Price shall be effected by Seller immediately refunding
to Purchaser, in cash or by certified or cashier's check or other immediately
available funds, the amount of such decrease. Any increase in the Purchase
Price shall be effected by Purchaser immediately delivering to Seller, in cash
or by certified or cashier's check or other immediately available funds, the
amount of such increase.
7.3 SPECIFIC PERFORMANCE. Each of the Parties hereby acknowledges and
agrees that the transactions contemplated by this Agreement are unique, and that
it would be impossible to measure the damages which would result if either Party
should default in such Party's obligations under this Agreement; accordingly the
Parties hereby agree that each Party shall have, in addition to any other legal
or equitable remedy available to such Party, the right to enforce this Agreement
by decree of specific performance or other equitable remedy, and each Party
hereby irrevocably waives any defense, claim or assertion that a remedy in
damages will be adequate.
7.4 OFFSET; ATTORNEYS' FEES. To the extent permitted by applicable law,
all amounts due and owing to Seller or any Affiliate of Seller under this
Agreement or any document, instrument, or agreement executed in connection
herewith or therewith, or with respect to the Preferred Stock or the Common
Stock, shall be subject to offset by the Purchaser and/or LRA-Texas to the
extent of any damages incurred as a result of the breach by Seller or any
Affiliate of Seller of this Agreement or any document, instrument, or agreement
executed by Seller or any Affiliate of Seller in connection herewith. Seller
hereby acknowledges and agrees that but for the right of offset contained in
this SECTION 7.4, the Purchaser would not have entered into this Agreement or
any of the transactions contemplated herein. If any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing Party or Parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding in addition to any other remedies to which such
Party or
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Parties may be entitled at law or equity. The rights and remedies granted herein
are cumulative and not exclusive of any other right or remedy granted herein or
provided by law.
7.5 RIGHTS AND LIABILITIES OF PARTIES. Except as set forth in SECTION
7.1 with respect to certain indemnified third parties, and in Section 7.4 with
respect to offset rights granted to LRA-Texas, nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the Parties and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
Party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over against any Party to this Agreement.
7.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing of the transaction contemplated herein and
the execution and delivery of the documents, instruments and agreements executed
or delivered at Closing, notwithstanding any investigation made by or on behalf
of Seller or Purchaser.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 BROKERAGE COMMISSIONS AND OTHER FEES. Seller hereby represents
and warrants that Seller has not incurred any liability for, and does not know
of any person or entity entitled to, any commission or finder's fee or similar
fee in connection with this Agreement or the transactions contemplated herein.
Purchaser hereby represents and warrants that Purchaser has not incurred any
liability for, and does not know of any person or entity entitled to, any
commission or finders fee or similar fee in connection with this Agreement or
the transactions contemplated herein. Except as expressly set forth herein to
the contrary, each Party shall be responsible for all costs, fees and expenses
(including attorney and accountant fees and expenses) paid or incurred by such
Party in connection with the preparation, negotiation, execution, delivery and
performance of this Agreement, or otherwise in connection with the transaction
contemplated hereby.
8.2 ATTORNEYS' FEES. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other remedies to which it may be entitled at law or equity.
8.3 MODIFICATION OF AGREEMENT . This Agreement may be amended or
modified only by written instrument signed by both of the Parties.
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8.4 NOTICES. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or telefaxed during regular
business hours during a business day to the appropriate location described
below, or three (3) business days after posting thereof by United States first-
class, registered or certified mail, return receipt requested, with postage and
fees prepaid and addressed as follows:
IF TO PURCHASER: Litigation Resources of America-California, Inc.
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxx
With copy to: Xxxxx, Xxxxx & Xxxxxx Incorporated
Nine Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxx X. Xxxxx, Xx.
IF TO SELLER: /s/ X. X. Xxxxxxxx
-----------------------------------------------
f/k/a San Francisco Reporting Service
#5 Third St. Ste 815
-----------------------------------------------
SF, CA. 94103
-----------------------------------------------
Attn:
------------------------------------------
with copy to: XXXX XXXXXX
-----------------------------------------------
SEPS
-----------------------------------------------
Either Party may designate a different address for notices or communications by
furnishing notice to the other Party in the manner described above.
8.5 CONSTRUCTION. The Parties and their respective legal counsel have
participated extensively in the preparation, negotiation and drafting of this
Agreement. Accordingly, no presumption will apply in favor of either Purchaser
or Seller in the interpretation of this Agreement or in the resolution of the
ambiguity of any provision hereof. All words used herein shall be construed to
be of such gender or number as the circumstances require. As used herein the
term "this Agreement" shall mean this Agreement as a whole and as the same may,
from time to time hereafter, be amended, supplemented or modified. The words
"herein," "hereof," "hereto," "hereunder," "hereinafter," "hereinabove," and
"hereinbelow," and other words of similar import, refer to this Agreement as a
whole and not to any particular article, section, paragraph, clause or other
subdivision hereof, unless otherwise specifically noted. As used herein, the
words "include" or "including" shall mean "including without limitation. "
8.6 HEADINGS. The headings and subheadings of the Articles and
Sections contained herein or on any Schedule or Exhibit attached hereto are for
convenience of reference
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only and shall not affect the meaning or interpretation of this Agreement or any
provisions hereof. Any reference herein to an Article or Section shall be deemed
to be a reference to the corresponding Article or Section of this Agreement
unless otherwise stated herein.
8.7 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective, valid and
enforceable under applicable law, but if any provision of this Agreement shall
be prohibited by, or invalid or unenforceable under, applicable law, then (i)
the Parties agree that they will amend such provision by the minimal amount
necessary to bring such provision within the ambit of enforceability, and (ii)
the court may, at the request of either Party, revise, reform or reconstruct
such provision in a manner sufficient to cause it to be enforceable. In no
event shall any prohibition against, or the invalidity or unenforceability of,
any provision hereof affect the validity or enforceability of any other
provision hereof.
8.8 ENTIRE AGREEMENT; BINDING EFFECT. This Agreement and the
documents, instruments and agreements executed in connection herewith set forth
the entire agreement between the Parties with respect to the subject matter
hereof and thereof. This Agreement shall be binding upon and shall inure to the
benefit of the Parties and their respective successors and assigns.
8.9 NON-WAIVER. Failure on the part of a Party in any one or more
instances to enforce any of its rights which arise in connection with this
Agreement, or to insist upon the strict performance of any of the terms,
conditions or covenants of this Agreement, shall not be construed as a waiver or
relinquishment for the future of any such rights, terms, conditions or
covenants. No waiver of any condition of this Agreement shall be valid unless it
is in writing, and executed by the Party against whom such waiver is sought to
be enforced. Any valid waiver shall be effective only for the purposes
expressly set forth therein.
8.10 GOVERNING LAW; JURISDICTION; VENUE; SERVICE. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of California, without regard to conflicts of law principles, and the
laws of the United States applicable in California. Venue for any litigation
between the Parties hereto with respect to the subject matter of this Agreement
shall be San Francisco, California. Each Party hereby irrevocably submits to
personal jurisdiction in California. Each Party hereby waives all objections to
personal jurisdiction in California and venue in San Francisco County for
purposes of such litigation. Each Party waives summons or citation and agrees
that delivery of a duly filed complaint or petition as provided in the notice
section of this Agreement will suffice as substitute service of summons or
citation.
8.11 ASSIGNMENT. Neither Party shall assign this Agreement or any
interest herein without the prior written consent of the other Party. Any
attempted assignment by a Party of such Party's rights or obligations without
such consent shall be null and void.
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8.12 SCHEDULES. All of the schedules attached to this Agreement are
hereby incorporated in and made a part of this Agreement.
8.13 FURTHER ASSURANCES. Each of the Parties shall perform such
actions and deliver or cause to be delivered any and all such documents,
instruments and agreements as the other Party may reasonably request for the
purpose of fully and effectively carrying out this Agreement and the
transactions contemplated hereby.
8.14 SURVIVAL. This Agreement, including but not limited to all
covenants, warranties, representations and indemnities contained herein, shall
survive the Closing and the delivery of the Xxxx of Sale, the Harbidge
Noncompetition Agreement, the Posner Noncompetition Agreement, the Harbidge
Guaranty, the Posner Guaranty, the Shareholders' Agreement, and all other
documents, instruments or agreements relating to the Assets and the transactions
contemplated herein, and shall not be deemed merged therein.
8.15 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which together shall constitute one and the same agreement.
EXECUTED AND DELIVERED in multiple counterparts the ________ day of
May, 1997, to be effective as of the date first written above.
PURCHASER:
----------
LITIGATION RESOURCES OF AMERICA-CALIFORNIA, INC.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx,
President & Chief Executive Officer
SELLER:
-------
SAN FRANCISCO REPORTING SERVICE,
a California general partnership
By: /s/ Xxx X. Xxxxxxxx
-----------------------------------------------
Xxx X. Xxxxxxxx,
General Partner
By: /s/ Xxxx Xxxxxx
-----------------------------------------------
Xxxx Xxxxxx,
General Partner
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Xxx X. Xxxxxxxx and Xxxx Xxxxxx, in their individual capacities, join
in the execution hereof in order to evidence their acknowledgment of, and their
consent and agreement to, the offset provisions contained in SECTION 7.4 hereof.
/s/ Xxx X. Xxxxxxxx
---------------------------------------
Xxx X. Xxxxxxxx, Individually
/s/ Xxxx Xxxxxx
---------------------------------------
Xxxx Xxxxxx, Individually
Schedules
------------
2.1 - Excluded Assets
2.4 - Allocation of Purchase Price
3.3(A) - Consents and Approvals
3.3(B) - Breaches or Defaults
3.5 - Exceptions to Title
3.6 - Leased Personal Property
3.8 - Contracts
3.9 - Equipment
3.12 - Licenses
3.13 - Intellectual Property
3.14(A) - Owned Real Property
3.14(B) - Leased Real Property
3.16 - Insurance Policies
3.17 - Banking
3.19(A) - Employees
3.19(B) - Independent Contractors
3.20 - Employee Benefit Plans
3.21 - Employment Agreements
3.22 - Liabilities
3.23 - Litigation
3.27 - Certain Changes or Events
3.28 - Clients
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