ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT ("Agreement") is made as of the 27th day of
February, 2002 by and among TECHNOLOGY INTEGRATION FINANCIAL SERVICES, INC., a
Kentucky corporation (the "Seller"), T.I.F.S. ADVISORY SERVICES, INC., a
Delaware corporation (the "Seller No. 2"), XXXXXXX COMPUTER RESOURCES, INC., a
Delaware corporation ("Xxxxxxx") and INFORMATION LEASING CORPORATION, an Ohio
corporation (the "Buyer").
R E C I T A L S:
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WHEREAS, this Agreement contemplates a transaction in which the Buyer will
purchase and acquire from the Seller, and the Seller will sell, transfer, assign
and convey to the Buyer the Acquired Assets in return for cash and the
assumption or payment by the Buyer of the Assumed Liabilities;
WHEREAS, Seller No. 2 is a wholly owned subsidiary of Seller and pursuant
to an Assignment and Assumption Agreement by and between itself and Seller dated
January 5, 2000, was assigned certain of Seller's rights, title and interest in
certain intangible property and all of Seller's right, title and interest in an
employment agreement with Xxx Xxxxx;
WHEREAS, Seller No. 2 will sell, transfer, assign and convey to the Buyer
all of Seller No. 2's right, title and interest in certain intangible property
in return for cash and the assumption or payment by Buyer of the Assumed
Liabilities; and
WHEREAS, as the transactions contemplated by this Agreement constitute the
sale of certain of Seller No. 2's and Seller's assets and Xxxxxxx is the sole
shareholder of Seller, Buyer desires that Xxxxxxx also be liable to Buyer for
any breach by Seller or Seller No. 2 of its respective warranties,
representations, agreements, covenants and indemnities hereunder, and Xxxxxxx is
willing to assume such liability, all on the terms specified herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties and agreements hereinafter contained, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be bound hereby, the parties agree as follows:
ARTICLE 1
DEFINITIONS
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Section 1.1 Definitions.
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth in this Section 1.1 (such definitions to be
equally applicable to both the singular and plural forms of the terms herein
defined):
"Acquired Assets" means all right, title, and interest in and to the assets
used in the Business excluding, however, the Excluded Assets (as hereinafter
defined), but specifically including (without limitation): (a) lease agreements,
schedules, promissory notes, loan agreements, conditional sale agreements or
other title retention instruments, collateral security
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agreements, letters of credit, certificates of deposit, if any, guarantees,
bills of sale, assignments, cross-default and/or cross-collateral agreements,
commitments letters, or any other agreements, documents or instruments
evidencing a payment obligation (excluding any payment obligation relating to
reimbursement for personal property taxes that have been paid by Seller and
require reimbursement by the lessee, which shall be an Excluded Asset) under,
providing the security for or relating to any lease transaction under which
Seller is a lessor, vendor, lender or seller, including month-to-month leases,
(collectively, the "Customer Leases") which leases entered into on or prior to
January 5, 2002 are set forth on Section 5.11 of the Disclosure Schedule; (b)
all tangible personal property including the equipment used in the Business and
located at any of Seller's locations and at third party locations, including
without limitation, all machinery, equipment, furniture, trade fixtures,
samples, supplies, owned vehicles and personal computers owned by Seller
(collectively, the "Fixed Assets"); (c) all of the equipment and personal
computers and other miscellaneous property subject to Customer Leases, or
equipment held for sale or lease as set forth on Section 5.13 of the Disclosure
Schedule (collectively, the "Equipment"); (d) all of the Seller's or Seller No.
2's rights in the Intellectual Property including, without limitation, the
T.I.F.S. website, domain names and the corporate name and tradename Technology
Integration Financial Services, Inc., T.I.F.S., and T.I.F.S. Advisory Services,
Inc., and all trademarks, service marks, trade dress, logos and tradenames
containing the foregoing names; (e) to the extent permitted by law to be
transferred, all permits, licenses, agency approvals and all pending
applications therefor or renewals thereof relating to the Business (the
"Permits"); (f) all Books and Records (or copies thereof) that relate to the
Business; (g) rights under agreements, contracts, including, but not limited to,
remarketing agreements, instruments, security interests, guaranties, and other
similar arrangements that relate to the Business which are set forth on Section
5.12 of the Disclosure Schedule ("Other Contracts"); (h) accounts receivable,
notes receivable and other receivables of the Business (excluding any of these
items that are scheduled as Excluded Assets); (i) prepaid assets of the Business
not related to the Excluded Assets; (j) Interim Rent due and payable for periods
on or after the Closing Date. The Acquired Assets shall not include the Excluded
Assets.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly controls, is controlled by or is under common control
with such Person. The term "control," for the purposes of this definition, means
the power to direct or cause the direction of the management or policies of the
controlled Person.
"Agreement" means this Asset Purchase Agreement among the Buyer, Xxxxxxx
and Seller and Seller No. 2, as amended hereafter from time to time in
accordance with its terms.
"Applicable Law" means any federal, state, local or foreign statute, law,
ordinance, rule, regulation, order, writ, injunction, judgment or decree
applicable to a Person or any such Person's subsidiaries, properties, assets,
officers, directors, employees or agents.
"Asserted Liability" has the meaning set forth in Section 9.4(a).
"Assumed Liabilities" means: (a) all unperformed or unfulfilled obligations
of the Seller arising after the Closing under the Customer Leases set forth on
Section 5.11 of the Disclosure Schedule including, without limitation any future
funding obligations of Seller with respect to the Unfunded Customer Leases set
forth on Section 5.11 of the Disclosure Schedule, other than liabilities or
obligations arising from a breach by Seller or any of its Affiliates prior to
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the Closing Date; and (b) all unperformed or unfulfilled obligations of the
Seller under the Other Contracts, other than liabilities or obligations arising
from a breach by Seller or any of its Affiliates prior to the Closing Date of a
provision of such Other Contracts. For the avoidance of doubt, notwithstanding
any provision of this Agreement to the contrary, the Assumed Liabilities shall
not include the Excluded Liabilities.
"Books and Records" means all data, books, records, including customer and
supplier lists and records, referral sources, production reports and records,
equipment logs, operating guides and manuals, financial and accounting records,
relevant portions of the Tax Returns (i.e., those portions of the Tax Returns
relating to the Business), trademark and copyright records, creative,
advertising and promotional materials, studies, reports, correspondence and
personnel records, and forms and files relating to the operations of the
Business or reflecting the operations thereof.
"Business" means the business of leasing and financing the acquisition of
various types of equipment to commercial users.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banks in Cincinnati, Ohio are required to be closed for regular banking
business.
"Buyer" has the meaning set forth in the first paragraph of this Agreement.
"Claims Notice" has the meaning set forth in Section 9.4(a).
"Closing" has the meaning set forth in Section 4.1.
"Closing Date" means the date of the Closing.
"Closing Pro Forma Balance Sheet" means the balance sheet of Seller and
Seller No. 2 prepared as described in Section 3.1 and adjusted for Excluded
Assets and Excluded Liabilities relating to the Business as of the Closing Date.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Conveyance Documents" has the meaning set forth in Section 3.1(a).
"Customer Leases" has the meaning set forth in the definition of Acquired
Assets.
"Disclosure Schedule" has the meaning set forth in the preface to Article
5.
"Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement; (b) qualified defined contribution retirement
plan or arrangement which is an Employee Pension Benefit Plan; (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan; or (d) Employee Welfare Benefit Plan or fringe benefit or other
retirement, bonus or incentive, employee loan, salary continuation,
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severance, job elimination, retention, vacation, sick leave, stock or other
equity-related, educational assistance, or leave of absence plan, program or
arrangement.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec.3(l).
"Employment Agreement" means the Employment Agreement between Buyer and Xxx
Xxxxx in form and substance acceptable to Buyer and Xxx Xxxxx.
"Encumbrance" means any lien, pledge, security interest, claim, easement,
limitation, restriction or encumbrance of any kind or nature whatsoever, or any
agreement to give any of the foregoing.
"Environmental, Health and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations concerning public health and safety, worker health and
safety and pollution or protection of the environment, including without
limitation all those relating to the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution, labeling,
testing, processing, discharge, release, threatened release, control or cleanup
of any hazardous or toxic materials, substances or wastes, chemical substances
or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum
products or byproducts, asbestos, poly-chlorinated biphenyls, noise or
radiation.
"Equipment" has the meaning set forth in the definition of Acquired Assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any entity required to be aggregated with the
Seller or Seller No. 2 pursuant to Section 414(b) or (c) of the Code and/or
Section 4001 (b) of ERISA.
"Escrow Account" means an interest bearing deposit account at Escrow Agent.
"Escrow Agent" means a bank or trust company or other legal entity mutually
acceptable to Xxxxxxx, Seller, Seller No. 2 and Buyer.
"Escrow Agreement" means an Escrow Agreement to be entered into among
Seller, Seller No. 2, Buyer and Escrow Agent on the Closing Date, in form and
substance acceptable to Buyer, Seller and Seller No. 2.
"Excluded Assets" means (i) any investment in lease residuals set forth on
Schedule 1.1-1; (ii) property tax receivables arising prior to the Closing Date
for property taxes paid by the Seller; (iii) loans made to employees of Seller;
(iv) customer leases, and the related equipment, that are 60 days or more past
due or otherwise in default or do not meet Buyer's credit criteria, in each case
in its sole and absolute discretion, determined at or prior to Closing and which
shall be set forth on Schedule 1.1-2; (v) the corporate charter, qualifications
to conduct business as a foreign corporation, arrangements with registered
agents relating to foreign qualifications, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
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certificates and other documents relating to the organization, maintenance and
existence of Seller and Seller No. 2 as corporations; (vi) any part of the
Purchase Price or any of the rights of the Seller or Seller No. 2 under this
Agreement (or under any ancillary agreement between the Seller and/or Seller No.
2, on the one hand, and the Buyer, on the other hand, entered into on or after
the date of this Agreement); (vii) any rights Seller may have under the policies
of insurance relating to stolen or damaged equipment set forth in Schedule
1.1-3; (viii) customer leases, and the related equipment, that are specifically
being retained by Seller or for which Seller has received a notice of Seller's
default from the lessee on or prior to the Closing Date, which are set forth on
Schedule 1.1-4; (ix) any cash or cash equivalents of Seller; (x) Interim Rent
due and payable for periods prior to the Closing Date; (xi) any prepaid Assets
that relate to Excluded Assets; (xii) any rights of Seller or Seller No. 2 under
the remarketing agreements or arrangements set forth on Schedule 1.1-5.
"Excluded Environmental Liabilities" means any liabilities, whether known
or unknown, discovered or undiscovered, contingent or otherwise, under any
Environmental, Health and Safety Requirements that are attributable to or
otherwise related to the Acquired Assets or the Business.
"Excluded Liabilities" means all liabilities arising out of or related to
the Acquired Assets or the Business other than the Assumed Liabilities,
including without limitation and without limiting the generality of the
foregoing: (i) liabilities for any action, suit or proceeding pending prior to
the Closing Date; (ii) except as expressly assumed herein, all indebtedness for
borrowed money of, or guaranteed by, Seller and/or Seller No. 2; (iii) all
liabilities arising out of or relating to the Excluded Assets, (iv) any
obligation of Seller or Seller No. 2 to indemnify any Person by reason of the
fact that such Person was a director, officer, employee or agent of Seller or
Seller No. 2 or their respective subsidiaries or was serving at the request of
any such entity as a partner, trustee, director, officer, employee, or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses or
otherwise and whether such indemnification is pursuant to any statute, charter
document, bylaw, agreement or otherwise); (v) any liability of the Seller or
Seller No. 2 for any Taxes (including Tax Liabilities of Seller and Seller No. 2
set forth in Section 5.8 of the Disclosure Schedule) and any liability of the
Seller or Seller No. 2 for any costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby; and (vi) any liability
arising under any employment agreement or other employment arrangement between
Seller, Seller No. 2 or Xxxxxxx and any of its employees, including, but not
limited to, those listed on Section 5.23 of the Disclosure Schedule.
"Exclusive Vendor Agreement" means the exclusive vendor agreement effective
from and after the Closing Date between Buyer, T.I.F.S., a division of Buyer and
Xxxxxxx in the form attached hereto as Exhibit A.
"Family Medical and Leave Act" means the Family Medical and Leave Act of
1993, 29 USC Sec.2601-2654.
"GAAP" means generally accepted accounting principles applied on a
consistent basis as used in the United States of America as in effect at the
time any applicable financial statements were prepared.
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"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Hazardous Material" means any chemical, material, substance or waste,
prohibited limited, or regulated, or exposure to which is prohibited, limited or
regulated under any Environmental, Health and Safety Requirements.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended and the rules and regulations promulgated thereunder.
"Indemnifying Party" has the meaning set forth in Section 9.4(a).
"Indemnitee" has the meaning set forth in Section 9.4(a).
"Intellectual Property" means: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications and patent disclosures, together with all
reissuances, divisionals, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos and trade names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith and all applications, registrations and renewals in connection
therewith, and all domain names and URL addresses; (c) all copyrightable works,
all copyrights and all applications, registrations, and, renewals in connection
therewith; (d) all mask works and all applications, registrations and renewals
in connection therewith; (e) all trade secrets and confidential business
information (including ideas, research and development, knowhow, formulas,
compositions, processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals); and (f) any licenses or other
agreements related to the foregoing, including, without limitation, secrecy (to
the extent assignable) and non-analysis agreements; and all copies and tangible
embodiments thereof (in whatever form or medium), in the case of each of clauses
(a) through (f), inclusive, used in the Business.
"Interim Rent" means rent that is due and owing under any Customer Lease
for the interim period from acceptance of equipment or any funding prior to the
rent commencement date of such Customer Lease.
"IRS" means the Internal Revenue Service.
"January 5, 2002 Pro Forma Balance Sheet" means the unaudited balance sheet
of Seller and Seller No. 2 adjusted for Excluded Assets and Excluded Liabilities
relating to the Business as of January 5, 2002.
"Knowledge of the Seller" or "Seller's Knowledge" means the actual
knowledge of Seller or Seller No. 2.
"Leased Properties" has the meaning set forth in Section 5.9(b).
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"Loss" means any and all claims, losses, liabilities, damages, costs and
expenses (including attorneys, accountants, consultants and experts fees) that
are imposed upon or otherwise incurred or suffered by the relevant party.
"Material Adverse Effect" has the meaning set forth in Section 5.1.
"Multiemployer Plan" has the meaning set forth in ERISA Sec.3(37).
"Net Book Value" shall have the meaning set forth in Section 3.1.
"New Employees" has the meaning set forth in Section 7.11 hereof.
"Ordinary Course of Business" means the ordinary course of the Business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Other Contracts" has the meaning set forth in the definition of Acquired
Assets.
"Permitted Encumbrance" means: (i) liens for current Taxes and assessments
not yet due and payable, including, without limitation, liens for nondelinquent
ad valorem Taxes and nondelinquent statutory liens arising other than by reason
of any default on the part of the Seller and/or Seller No. 2 and liens for Taxes
being contested in good faith by the Seller and/or Seller No. 2 by appropriate
proceedings and with respect to which adequate reserves have been established by
the Seller and/or Seller No. 2; (ii) minor imperfections of title or easements
on real property or leasehold estates as do not in any material respect detract
from the value thereof and do not in any material respect interfere with the
present use of the property subject thereto; and (iii) materialmen's,
mechanics', workmen's, repairmen's, employees', carriers', warehousemen's,
landlord's and other like liens arising in the Ordinary Course of Business or
relating to any construction, rebuilding or repair of any property, so long as
any such lien does not materially impair the value of such property and lessee
has an obligation to remove such lien.
"Permits" has the meaning set forth in the definition of Acquired Assets.
"Person" means any individual, corporation, company, partnership (limited
or general), joint venture, limited liability company, association, trust or
other entity.
"Xxxxxxx'x Knowledge" means the actual knowledge of Xxxxxxx.
"Projected Closing Net Book Value" shall mean the sum of Three Million One
Hundred Thirty Thousand Nine Hundred Thirty-Four and 00/100 Dollars
($3,130,934.00).
"Purchase Price" has the meaning set forth in Section 2.3(a).
"Release" means, except to the extent authorized pursuant to a valid
permit, license or exemption issued or approved by a Governmental Authority and
in compliance with any such permit, license or exemption, any release or
threatened release, spill, emission, leaking, pumping, injection, deposit,
discharge, dispersal, leaching or migration of Hazardous Materials into the
environment.
"Required Consents" has the meaning set forth in Section 7.5(a).
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"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller No. 2" has the meaning set forth in the first paragraph of this
Agreement.
"Servicing Agreement" has the meaning set forth in Section 7.14(b).
"Soft Costs" means such items as software, maintenance agreements,
installation costs, shipping expenses, labor costs and various other "for fee"
services provided by Xxxxxxx.
"Sublease" has the meaning set forth in Section 7.14.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall-profits, environmental (including taxes under Code Sec.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
"Tax Liability" means any liability for Taxes.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Unfunded Customer Leases" means prospective lease transactions for which
Seller has granted credit approval or has otherwise committed to finance the
lease transaction.
ARTICLE 2
BASIC TRANSACTION
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Section 2.1 Purchase and Sale of the Acquired Assets.
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On and subject to the terms and conditions of this Agreement, the Buyer
agrees to purchase and acquire from the Seller and Seller No. 2, and Seller and
Seller No. 2 agree to sell, transfer, assign and convey to the Buyer, all of the
Acquired Assets owned by such party at the Closing free and clear of all
Encumbrances, except Permitted Encumbrances, for the consideration specified
below and the assumption and payment of the Assumed Liabilities as specified
below in Section 2.2.
Section 2.2 Liabilities to be Paid at Closing or Assumed by Buyer.
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On and subject to the terms and conditions of this Agreement, on the
Closing Date, the Buyer agrees to assume and/or pay in full at Closing, as
indicated, and become responsible for all of the Assumed Liabilities, as
follows, provided such Assumed Liability relates to the Customer Leases that are
being acquired under this Agreement:
(a) Seller's obligation to Xxxxxxx under an intercompany loan, the
outstanding amount of which on the January 5, 2002 Pro Forma Balance Sheet
totaled $17,410,359.75;
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(b) Seller's obligation to Xxxxxxx under an intercompany loan, the
current portion of which is contained in the accounts payable portion of the
January 5, 2002 Pro Forma Balance Sheet, and as of that date, totaled
$2,987,203.86;
(c) Seller's obligation to Xxxxxxx under an intercompany loan,
reflected as an overdraft on Seller's checking account on the January 5, 2002
Pro Forma Balance Sheet, totaling $308,104.66;
(d) Seller's obligations to various financial institutions under
certain non-recourse financing, the outstanding amount of which on the January
5, 2002 Pro Forma Balance Sheet totaled $33,274,961.05, which non-recourse
financing is collateralized by a security interest in the equipment and the
lease relating to the financing covered by such indebtedness;
(e) All of the trade accounts payable of the Seller relating to the
Business (other than the current portion owed to Xxxxxxx as set forth above),
the outstanding amount of which totaled $175,214.14 in the aggregate, on the
January 5, 2002 Pro Forma Balance Sheet;
(f) All of the other current liabilities of the Seller relating to
the Business which totaled $653,264.56 on the January 5, 2002 Pro Forma Balance
Sheet.
Subject to terms and conditions of this Agreement, Buyer agrees to pay or
assume the Assumed Liabilities as set forth in Section 2.2, as such Assumed
Liabilities may be incurred, increased or decreased since the January 5, 2002
Pro Forma Balance Sheet to the Closing Pro Forma Balance Sheet for operations in
the Ordinary Course of Business related solely to the Business (except any
liabilities relating to the Excluded Assets) or any other transaction permitted
by this Agreement.
It is intent of the parties that Buyer shall pay in full at Closing, to
Xxxxxxx or its lender, Deutsche Financial Services Corporation, as
Administrative Agent for itself, and the other required lenders under a Credit
Facilities Agreement dated the 28th day of June, 2001, the items set forth in
Section 2.2(a), Section 2.2(b) and Section 2.2(c) above, and shall assume and
pay in full and discharge when due, all obligations of Seller set forth in
Section 2.2(d), Section 2.2(e) and Section 2.2(f) above related solely to the
Business (except any liabilities relating to the Excluded Assets); provided such
items and obligations were incurred in the Ordinary Course of Business and
pursuant to the terms of this Agreement.
Section 2.3 Contracts to be Assumed by Buyer.
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At Closing, Buyer shall assume:
(a) All unperformed or unfulfilled obligations of the Seller arising
after the Closing under the Customer Leases, including, without limitation, any
future funding obligations of Seller with respect to Unfunded Customer Leases
set forth on Section 5.11 of the Disclosure Schedule, other than liabilities or
obligations arising from a breach by Seller or any of its Affiliates under the
Customer Leases prior to the Closing Date; and
(b) All the obligations and liabilities of Seller arising after the
Closing under the Other Contracts set forth on Section 5.12 of the Disclosure
Schedule, other than liabilities or obligations arising from a breach by Seller
or any of its Affiliates, prior to the Closing Date.
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Notwithstanding any other provision of this Agreement, Buyer is not
assuming any debts, liabilities or obligations of Seller, other than the Assumed
Liabilities, and Buyer will not, pursuant to these Section 2.2 and Section 2.3,
assume or be liable for any Excluded Liabilities.
Section 2.4 Purchase Price for Purchased Assets.
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Subject to the other terms of this Agreement, the Purchase Price for the
Acquired Assets shall be the sum of:
(a) The Net Book Value determined pursuant to the provisions of
Article 3;
(b) The liabilities assumed or paid at Closing under Section 2.2(a),
Section 2.2(b), Section 2.2(c), Section 2.2(d), Section 2.2(e) and Section
2.2(f) and
(c) The amount to be paid to Seller under Section 2.6.
Section 2.5 Payment of the Purchase Price.
---------------------------------
(a) Subject to the conditions, covenants, representations and
warranties hereof, at Closing, Buyer shall:
(i) Deliver by certified or bank cashier's check or by wire
transfer to Seller Ninety-Five Percent (95%) of the Projected Closing Net Book
Value;
(ii) Deliver by certified or bank check or by wire transfer to
Escrow Agent Five Percent (5%) of the Projected Closing Net Book Value, which
funds shall be held pursuant to the terms of the Escrow Agreement; and
(iii) Assume the Assumed Liabilities assumed or paid under
Section 2.2.
(b) Subject to the conditions, covenants, representations and
warranties hereof, after the Closing, Buyer shall deliver to the Seller, to the
extent received by Buyer any amounts owing pursuant to the provisions of Section
2.6.
Section 2.6 Month-to-Month Leases.
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Buyer shall pay to Seller as part of the Purchase Price any regularly
scheduled basic rental payments actually received by Buyer on or after the
Closing Date pursuant to Customer Leases acquired by Buyer that terminated on or
prior to December 1, 2001, and which are continuing on a month-to-month basis
with the then current lessee for the period commencing on the Closing Date and
continuing for six (6) months thereafter. A description of the Customer Leases
that terminated on or prior to December 1, 2001 and which continue on a
month-to-month basis are set forth in Section 2.6 of the Disclosure Schedule.
Buyer shall remit to Seller on a monthly basis any regularly scheduled basic
rental payments received during the preceding month. Any Customer Leases
acquired by Buyer that terminated after December 1, 2001, and which are
continuing on a month-to-month basis shall not be subject to the provisions of
this Section 2.6, and any rental payments received by Buyer after the Closing
Date relating to such leases shall be the sole property of Buyer. A description
of such Customer Leases that
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terminated after December 1, 2001, and which are continuing on a month-to-month
bases are set forth on Section 2.6 of the Disclosure Schedule attached hereto.
Section 2.7 Allocation of Purchase Price.
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The Purchase Price to be paid to the Seller hereunder, including the
liabilities assumed or paid by Buyer pursuant to Section 2.1, shall be allocated
as agreed to by the parties to this Agreement. Seller, Seller No. 2 and Buyer
agree that each shall act in a manner consistent with such allocation (a) filing
in a timely fashion Internal Revenue Form 8594; and (b) in paying sales and
other transfer taxes in connection with the purchase and sale of assets pursuant
to this Agreement.
Section 2.8 Certain Closing Expenses.
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Except as set forth elsewhere herein, Buyer shall be responsible for and
shall pay all sales and use taxes (if any), in connection with the conveyance
and transfer of the Acquired Assets by Seller and/or Seller No. 2 to Buyer.
ARTICLE 3
POST CLOSING ADJUSTMENTS
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Section 3.1 Net Book Value Determination.
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(a) Within forty-five (45) days after the Closing Date (the "Post
Closing Date"), Seller and Seller No. 2 will deliver to Buyer a copy of the
Closing Pro Forma Balance Sheet prepared by Seller, along with any supporting
documentation reasonably requested by Buyer, reflecting the Net Book Value as of
the Closing Date which shall be defined as the total of the Acquired Assets,
less the total of the Assumed Liabilities relating to the Business (except any
liabilities relating to the Excluded Assets) ("Net Book Value Report"). The
Closing Pro Forma Balance Sheet shall be prepared using the same accounting
methods, policies, practices and procedures, with consistent classifications,
judgments, estimations and methodologies as used in the preparation of the
January 5, 2002 Pro Forma Balance Sheet; provided, however, for purposes of
depreciation of the Customer Leases entered into after January 5, 2002 until
Closing Date, Seller and Seller No. 2 shall depreciate all Customer Leases over
the term of the lease. The Closing Pro Forma Balance Sheet shall likewise
reflect any lease fundings that occur up to and including to the Closing.
(b) Within thirty (30) days following delivery to Buyer of the Net
Book Value Report, Buyer shall have the right to object in writing to the
results contained therein. During this period, Seller shall grant the Buyer and
its accountants access to the relevant books and records and other information
relevant to the preparation of the Closing Pro Forma Balance Sheet as shown on
the Net Book Value Report. If timely objection is not made by Buyer to the Net
Book Value Report, the Net Book Value Report shall become final and binding for
purposes of this Agreement. If timely objection is made by Buyer to the Net Book
Value Report, and Seller, Seller No. 2 and Buyer are able to resolve their
differences in writing within fifteen (15) days following the expiration of such
thirty (30) day period, then the Net Book Value Report, as resolved, shall
become final and binding as it relates to this Agreement. If timely objection is
made by Buyer to the Net Book Value Report, and Seller and Buyer are unable to
resolve their differences in writing within such fifteen (15) day period, then
all disputed accounting matters
Page 11
pertaining to the Net Book Value Report shall be submitted to and reviewed by an
arbitrator (the "Arbitrator") which shall be an independent accounting firm
selected by the Seller and Buyer, as applicable. If Seller and Buyer are unable
to agree promptly on the accounting firm to serve as the Arbitrator, each shall
select by not later than the seventh (7th) day following the expiration of the
Net Book Value Report objection period, a recognized independent accounting
firm, and each selected accounting firm shall be instructed to jointly select
promptly another independent recognized accounting firm, and such third
accounting firm shall serve as the Arbitrator. The Arbitrator shall consider
only the disputed accounting matters pertaining to the determination and shall
act promptly and fairly to resolve all disputed matters and its decision with
respect to all disputed matters shall be final and binding upon the parties. The
Seller and the Buyer shall furnish or cause to be furnished to the Arbitrator
all information the Arbitrator shall reasonably request for purposes of making
this determination.
(c) Expenses of the arbitration shall be borne one-half (1/2) by
Buyer and one-half (1/2) by Seller. Each party shall be responsible for its own
attorney and accounting fees. If the Net Book Value (by agreement of Buyer and
Seller, or if Buyer and Seller fail to agree, by the Arbitrator) is equal to or
greater than the Projected Closing Net Book Value, the Buyer shall first pay to
Seller by certified or cashier's check or wire transfer the entire Escrow
Account, including all interest earned thereon and if the Escrow Account is
insufficient, then by certified or cashier's check or wire transfer, from Buyer
to Seller, plus interest thereon at the prime rate of The Provident Bank from
the Closing Date until the date of payment. If the Net Book Value (by agreement
of Buyer and Seller, or if Buyer and Seller fail to agree, by the Arbitrator) is
less than the Projected Closing Net Book Value paid by Buyer at Closing and the
Escrow Account is sufficient to pay such deficiency, the amount to be paid to
Seller shall be decreased by Seller first repaying to Buyer by certified or
cashier's check or by wire transfer, from the Escrow Account such deficiency
with a proportionate share of the interest thereon, with the remainder of the
Escrow Account being paid to Seller with a proportionate share of the interest
thereon. If the Net Book Value (by agreement of Buyer and Seller, or if Buyer
and Seller fail to agree, by the Arbitrator) is less than the Projected Closing
Net Book Value paid by Buyer at Closing and the Escrow Account is insufficient
to pay such deficiency, the amount to be paid to Seller shall be decreased by
the Seller first repaying to Buyer by certified or cashier's check or by wire
transfer, from the Escrow Account such deficiency including all interest earned
thereon, then by certified or cashier's check or wire transfer from Seller to
Buyer for any remaining amount, plus interest thereon at the prime rate of The
Provident Bank from the Closing Date until the date of payment. All payments
required under this Section shall be made within five (5) days of the final
determination of the Net Book Value. The resolution of any disputed legal
matters pertaining to the Net Book Value Report shall be subject to judicial
review.
ARTICLE 4
THE CLOSING
-----------
Section 4.1 Closing.
-------
Upon the terms and subject to the conditions of this Agreement, the closing
of the transactions contemplated hereby (the "Closing") shall be at 10:00
A.Mlocal time, at the offices of Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L. at 1400
Provident Tower, Cincinnati, Ohio on or before March 12, 2002, or such other
location, date and time not later than March 29, 2002 as
Page 12
the Buyer and the Seller and Seller No. 2 shall agree upon in writing. The
parties shall use their respective best efforts to satisfy the conditions set
forth in Article 8 as soon as practicable.
Section 4.2 Closing Deliveries.
-------------------
At the Closing, the parties hereto shall deliver the following:
(a) The Seller and Seller No. 2 (as to the Intellectual Property
owned by it) shall deliver to the Buyer:
(i) a duly executed copies of such bills of sale, assignments of
leases, assignment and assumption agreements, Intellectual Property transfer
documents in a form suitable for recordation where Seller or Seller No. 2, as
applicable, is currently registered as the owner or applicant and/or owns
Intellectual Property to be transferred under this Agreement and other
instruments of conveyance and/or assumption, in form and substance reasonably
satisfactory to the Seller, Seller No. 2 and the Buyer and their respective
counsel (and containing no warranties, representations, indemnifications or
other terms different from the warranties and representations, indemnifications
and other terms set forth in this Agreement) (collectively, the "Conveyance
Documents"), necessary or appropriate to convey (or to evidence the conveyance
of) the Acquired Assets to the Buyer in accordance with the terms and conditions
of this Agreement and to evidence the Buyer's assumption of the Assumed
Liabilities;
(ii) a duly executed original of the Employment Agreement;
(iii) a receipt of payment by the Buyer of the Purchase Price to
be paid at Closing;
(iv) a certificate as to the good standing of the Seller in the
Commonwealth of Kentucky, and Seller No. 2 in the State of Delaware, together
with copies of the Certificate of Incorporation, as amended, of the Seller,
certified by the Commonwealth of Kentucky, and copies of the Certificate of
Incorporation, as amended, of Seller No. 2, certified by the Secretary of State
of Delaware.
(v) resolutions of the Board of Directors and respective
shareholder of Seller and Seller No. 2, certified by the Secretary or Assistant
Secretary of Seller and Seller No. 2, as applicable, approving and authorizing
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby;
(vi) the By-Laws of the Seller and Seller No. 2, certified by
the Secretary or Assistant Secretary of the Seller and Seller No. 2, as
applicable, as of the Closing Date;
(vii) duly executed originals of the Exclusive Vendor Agreement;
(viii) an opinion of counsel of Seller and Seller No. 2 in form
and substance reasonably acceptable to Buyer and its counsel;
(ix) the Required Consents set forth in Section 7.5 of the
Disclosure Schedule;
Page 13
(x) all UCC releases with respect to any liens encumbering the
Acquired Assets;
(xi) duly executed originals of the Escrow Agreement;
(xii) duly executed originals of the Sublease; and
(xiii) duly executed originals of the Servicing Agreement.
(b) The Buyer shall deliver to Seller and Seller No. 2:
(i) resolutions of the Board of Directors of the Buyer,
certified by the Secretary or Assistant Secretary of the Buyer, approving and
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated
(ii) an amount equal to the Purchase Price by wire transfer or
delivery of other immediately available funds to be paid at Closing (which
amount may be paid in whole or in part to Seller's lender, if so desired by
Seller);
(iii) duly executed originals of such of the Conveyance Documents
as are required to be executed by the Buyer in connection with the Closing;
(iv) duly executed originals of the Exclusive Vendor Agreement;
(v) an opinion letter of counsel for Buyer, in form and
substance reasonable acceptable to Seller and Seller No. 2;
(vi) an assignment and assumption agreement under which Buyer
shall assume and pay in full when due the liabilities set forth in Section 2.2
and Section 2.3;
(vii) duly executed originals of the Escrow Agreement;
(viii) duly executed originals of the Sublease; and
(ix) duly executed originals of the Servicing Agreement.
(c) The Buyer shall deliver to Escrow Agent:
(i) a certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to Escrow Agent pursuant to Section 2.5.
(d) The Buyer shall deliver to Seller/Xxxxxxx'x lender:
(i) a certified or bank cashier's check or wire transfer for the
aggregate amount to be paid pursuant to Section 2.2(a), Section 2.2(b) and
Section 2.2(c).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES CONCERNING THE BUSINESS
------------------------------------------------------
Page 14
The Seller, Seller No. 2 and Xxxxxxx, jointly and severally, represent and
warrant to the Buyer, except as set forth in the disclosure schedule delivered
by Seller and Seller No. 2 to the Buyer on the date hereof (the "Disclosure
Schedule"):
Section 5.1 Organization and Qualification.
--------------------------------
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Kentucky. The Seller is
duly authorized to conduct business and is in good standing (or the local law
equivalent) under the laws of each jurisdiction in which such qualification is
legally required, except where the failure to be so qualified would not have an
effect that is material and adverse to the financial condition, assets,
liabilities, prospects or results of operations of the Business, whether within
or outside the control of Seller (a "Material Adverse Effect"). The Seller has
full corporate power and authority and all licenses, permits and authorizations
necessary to carry on the business in which it is currently engaged and to own
and use the properties owned and used by it. Section 5.1 of the Disclosure
Schedule contains a true and complete list of all jurisdictions where Seller is
qualified as a foreign corporation.
(b) Seller No. 2 is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Seller No. 2 is
duly authorized to conduct business and is in good standing (or the local law
equivalent) under the laws of each jurisdiction in which such qualification is
legally required, except where the failure to be so qualified would not have a
Material Adverse Effect. Seller No. 2 has full corporate power and authority and
all licenses, permits and authorizations necessary to carry on the business in
which it is currently engaged and to own and use the properties owned and used
by it. Section 5.1 of the Disclosure Schedule contains a true and complete list
of all jurisdictions where Seller No. 2 is qualified as a foreign corporation.
Section 5.2 Authorization of Transaction.
------------------------------
Seller and Seller No. 2 have full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and the
Conveyance Documents, as applicable to such party, and to perform any of its
obligations contemplated hereby and thereby. This Agreement has been, and each
of the Conveyance Documents will be, duly and validly executed and delivered by
the Seller and/or Seller No. 2, as applicable, and (assuming the due
authorization, execution and delivery by the other parties thereto) this
Agreement constitutes, and each of the Conveyance Documents will constitute, the
legal, valid and binding obligation of the Seller and/or Seller No. 2, as
applicable, enforceable against the Seller and/or Seller No. 2, as applicable,
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
Section 5.3 Noncontravention.
----------------
Neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will: (A) violate any
constitution, statute, regulation, rule,
Page 15
injunction, judgment, order, decree, ruling, charge or other restriction of any
Governmental Authority, or court to which the Seller or Seller No. 2 are subject
or any provision of the Certificate of Incorporation or By-laws of the Seller or
of Seller No. 2; (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
Customer Lease or Other Contracts involving the Business to which the Seller is
a party or by which it is bound or to which any of the Acquired Assets is
subject, or any other agreement or arrangement to which Seller or Seller No. 2
is a party or by which it is bound or to which any of the Acquired Assets is
subject; or (C) result in the creation of any lien, charge or encumbrance upon
any of the Acquired Assets. Except as disclosed in Section 5.3 of the Disclosure
Schedule and other than any filing required under the HSR Act, neither Seller
nor Seller No. 2 is required to give any notice to, make any filing with, or
obtain any authorization, consent or approval of any Governmental Authority in
order for the Seller to consummate the transactions contemplated by this
Agreement. Neither Seller nor Seller No. 2 is a party to or bound by any
agreement, commitment or understanding which restricts, or will after the
Closing Date, restrict the conduct of its business in any jurisdiction or
location.
Section 5.4 Recent Events.
--------------
Except as set forth in Section 5.4 of the Disclosure Schedule, since
November 5, 2001, there has been no event in the operations of the Business
which has resulted in or may result in a Material Adverse Effect.
Section 5.5 Legal Compliance; Permits.
---------------------------
Except as set forth in Section 5.5 of the Disclosure Schedule, Seller and
Seller No. 2 are in compliance in all material respects with all Applicable Laws
of federal, state, local and foreign governments (and all agencies thereof).
Section 5.5 of the Disclosure Schedule sets forth a full and complete list of
all Permits owned by, issued to, or otherwise benefiting Seller and/or Seller
No. 2 with respect to the Acquired Assets, and which are material to the
operation of the Acquired Assets and the ownership or use of the Acquired
Assets. Such Permits constitute all Permits necessary or useful in the operation
of the Business as currently conducted. All of such Permits are valid and in
full force and effect and there are no proceedings pending, or to the Knowledge
of the Seller, threatened which may result in the revocation, cancellation,
suspension or adverse modification of any such Permit. Except as set forth on
Section 5.5 of the Disclosure Schedule, no default or violation, or event that
with the lapse of time or giving of notice or both would become a default of
violation, has occurred in the due observance of any such Permit.
Section 5.6 Financial Statements.
---------------------
(a) Included in Section 5.6 of the Disclosure Schedule is a balance
sheet for the Business as of January 5, 2002 (the "Financial Statements").
Except as disclosed in Section 5.6 of the Disclosure Schedule, or to the extent
reflected on or reserved against in the Financial Statements, the Financial
Statements (i) have been prepared in accordance with GAAP; (ii) fully reflect
all liabilities and contingent liabilities of the Seller and Seller No. 2
required to be reflected therein on such basis as at the date thereof and; (iii)
fairly present in all material respects the financial position of Seller and
Seller No. 2 as of the date thereof and the results of Seller's and Seller No.
2's operations for the periods indicated.
Page 16
(b) Included in Section 5.6 of the Disclosure Schedule is the January
5, 2002 Pro Forma Balance Sheet. The January 5, 2002 Pro Forma Balance Sheet (i)
has been prepared in accordance with GAAP; (ii) fully reflects all Assumed
Liabilities of the Seller and Seller No. 2 required to be reflected therein on
such basis as at the date thereof and; (iii) fairly presents in all material
respects the financial position of the Business of Seller and Seller No. 2 as of
the date thereof and the results of Seller's and Seller No. 2's operations for
the periods indicated.
(c) The Closing Pro Forma Balance Sheet (i) shall be prepared in
accordance with GAAP; (ii) fully reflects all Assumed Liabilities of the Seller
and Seller No. 2 required to be reflected therein on such basis as at the date
thereof and; (iii) fairly presents in all material respects the financial
position of the Business of Seller and Seller No. 2 as of the date thereof and
the results of Seller's and Seller No. 2's operations for the periods indicated.
Section 5.7 Title to Assets.
-----------------
(a) Except as set forth in Section 5.7 of the Disclosure Schedule,
the Seller and Seller No. 2, as applicable, has/have good and marketable title
to, or a valid leasehold interest in the Acquired Assets, free and clear of any
Encumbrances or restriction on transfer, except Permitted Encumbrances.
(b) Seller No. 2 does not own any assets used in the operation of the
Business other than the Intellectual Property being acquired under the terms of
this Agreement.
Section 5.8 Tax Matters.
------------
(a) Except as set forth in Section 5.8 of the Disclosure Schedule,
Seller and Seller No. 2 have filed all Tax Returns required to be filed by
Seller and/or Seller No. 2 prior to the expiration of their due date, including
extensions. The Tax Returns were correct in all material respects, as filed,
and no claims have been assessed with respect to such returns. Except for Taxes
the payment of which is being diligently contested in good faith and by proper
proceedings and for which adequate reserves have been established in accordance
with generally accepted accounting principles, all Taxes owed by the Seller or
Seller No. 2 (whether or not shown on any Tax Return) have been paid. There are
no Encumbrances on any of the Acquired Assets of Seller or Seller No. 2 that
arose in connection with any failure (or alleged failure) to pay any Tax except
for statutory liens relating to Taxes which are not yet due.
(b) The Seller and Seller No. 2 have withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, creditor, stockholder or other third party.
(c) Except as set forth in Section 5.8 of the Disclosure Schedule,
there is no dispute, claim, or audit concerning any Tax Liability of Seller or
Seller No. 2 either claimed or raised by any authority.
(d) Except as set forth in Section 5.8 of the Disclosure Schedule,
neither the Seller nor Seller No. 2 have waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
Page 17
Section 5.9 Real Property.
--------------
(a) Neither Seller nor Seller No. 2 owns any real property.
(b) Section 5.9 of the Disclosure Schedule lists and describes
briefly all real property leased or subleased to the Business and specifies the
location of the real property, the commencement and expiration dates, the amount
and type of rental and other charges payable by the tenant, and the name and
address of the lessor under each lease or sublease (collectively, the "Leased
Properties"). The Seller and Seller No. 2 have delivered to the Buyer correct
and complete copies of the leases (collectively, the "Leases") and subleases
(collectively, the "Subleases") listed in Section 5.9 of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 5.9 of the
Disclosure Schedule:
(i) the Lease or Sublease is legal, valid, binding, enforceable
and in full force and effect against Seller, or Seller No. 2, as applicable, in
all material respects;
(ii) Neither Seller nor Seller No. 2 and, to the Knowledge of
Seller, any other party to the Lease or Sublease is, in material breach or
default and no event has occurred which, with notice or lapse of time, would
constitute a material breach or default or permit termination, modification or
acceleration thereunder;
(iii) no party to the Lease or Sublease has repudiated any
material provision thereof;
(iv) there are no material disputes, oral agreements or
forbearance programs in effect as to the Lease or Sublease; and
(v) Seller and Seller No. 2 have, in all material respects,
performed all of the obligations required to be performed by it as of the date
hereof and possesses and quietly enjoys the Leased Properties to which it is a
party;
(vi) except for Permitted Encumbrances, the Seller has not
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold.
Section 5.10 Intellectual Property.
----------------------
(a) Section 5.10 of the Disclosure Schedule identifies the
Intellectual Property used in the conduct of the Business, including a
designation of ownership, and identifies each application for trademark,
tradename, service xxxx, copyright or other registration or patent which the
Seller or Seller No. 2 have made with respect to any of such Intellectual
Property. All Intellectual Property registrations, filings or patents owned by
Seller or Seller No. 2, and licensed or assigned to Seller or Seller No. 2, are
in full force and effect.
(b) Seller and/or Seller No. 2 have title or the right to use by
ownership, license or otherwise all Intellectual Property rights that are
currently used in the operation of the Business.
Page 18
(c) Except as set forth in Section 5.10 of the Disclosure Schedule:
(i) no third party asserts that the Seller or Seller No. 2 has infringed upon or
misappropriated any Intellectual Property rights of third parties; and (ii) no
third party is asserted by the Seller or Seller No. 2 to have infringed upon or
misappropriated any Intellectual Property rights of the Seller or Seller No. 2.
(d) After the Closing Date, the Intellectual Property as used in the
conduct of Business will not infringe upon the rights of others.
Section 5.11 Customer Leases.
----------------
(a) As of the signing of this Agreement, Section 5.11 of the
Disclosure Schedule contains a true, correct and complete list of all Customer
Leases entered into prior to January 5, 2002, and as of the Closing Date shall
contain a true, correct and complete list of all Customer Leases, identifies all
Unfunded Customer Leases as of January 5, 2002, and as of the Closing Date shall
identify all Unfunded Customer Leases and sets forth or reflects with respect to
each such Customer Lease (i) the commencement and expiration dates thereof, (ii)
the amount and frequency of payments due thereunder, (iii) a description of any
renewal and purchase options, and the booked residual value of the leased
equipment (iv) the amount of any delinquent or advance payments, (v) the amount
of any security deposit, (vi) the estimated residual value of the leased
equipment, (vii) the classification of such lease as an operating or a direct
financing lease (in accordance with Statement of Financial Accounting Standards
No. 13, Accounting for Leases ("SFAS-13") for purposes of the Financial
Statements and Closing Pro Forma Balance Sheet, (viii) whether Seller is the
lessor/vendor/lender/seller thereunder, and (ix) any and all addenda,
amendments, modifications or supplements.
(b) True and complete copies of each Customer Lease have been
delivered to, or made available for inspection by, Buyer. Each Customer Lease is
a valid, binding and enforceable agreement of Seller and, to the best of
Seller's Knowledge, each of the other parties thereto. Except as indicated on
Section 5.11 of the Disclosure Schedule, neither Seller, Xxxxxxx or to the best
of Seller's or Xxxxxxx'x Knowledge, any other party to any Customer Lease is in
violation of or in default under such Lease and no events or circumstances have
occurred which constitute, or, after notice or lapse of time or both would
constitute, a violation or default thereunder on the part of Seller or, to the
best of Seller's or Xxxxxxx'x Knowledge, any other party thereto. Except as set
forth on Section 5.11 of the Disclosure Schedule, each Customer Lease will
continue to be binding in accordance with its terms after the Closing Date.
Seller has not received any notices of destruction or loss of use of the
Equipment.
(c) Each of the Customer Leases has been entered into by Seller in
the Ordinary Course of Business, in accordance with the past practices of Seller
and general operating guidelines, as modified from time to time.
(d) The booked residual values of the leased equipment set forth on
Section 5.11 of the Disclosure Schedule and reflected in the Financial
Statements were established in good faith and are based upon reasonable
assumptions by management of Seller utilizing such management's reasonable best
efforts to estimate, based upon past experience, judgment and market data, the
value of the leased equipment at the termination of such Customer Lease. Each
Customer Lease is and will be properly recorded on the books and records of
Seller, and is and
Page 19
will be properly reflected in the Financial Statements and the Closing Pro Forma
Balance Sheet, in accordance with SFAS-13.
Section 5.12 Other Contracts.
----------------
(a) Section 5.12 of the Disclosure Schedule contains a true and
complete list of all of the Other Contracts (whether written or oral), other
than the Customer Leases, Real Property Leases and insurance contracts, to which
Seller or Seller No. 2 is a party or by which Seller or Seller No. 2 is bound or
to which Seller or Seller No. 2 or any of its respective assets is subject.
True and complete copies of each such Other Contracts and true and complete
written summaries of each such oral contract described on Section 5.12 of the
Disclosure Schedule have been delivered to Buyer.
(b) The Other Contracts are valid, binding, enforceable agreements of
Seller and, to the best of Seller's Knowledge, all other parties thereto; no
party to any such contract is in violation of or in default under such contracts
and no events or circumstances have occurred which constitute, or, after notice
or lapse of time or both would constitute, a violation or default thereunder on
the part of Seller and, to the best of Seller's Knowledge, any other party
thereto; and, except as described on Section 5.12 of the Disclosure Schedule,
such Other Contracts will continue to be binding in accordance with their terms
after the Closing Date.
Section 5.13 Equipment Held for Sale or Lease.
-------------------------------------
The Equipment held by Seller for sale or lease, is listed on Section 5.13
of the Disclosure Schedule under the heading "Equipment" and the Fixed Assets
are listed on Section 5.13 of the Disclosure Schedule under the heading "Fixed
Assets". Except as noted in Section 5.13 of the Disclosure Schedule, the
Equipment and Fixed Assets, are in good condition and repair (ordinary wear and
tear not impairing functionality excepted). Except as noted in Section 5.13 of
the Disclosure Schedule, the Equipment other than equipment previously leased to
customers and, to the Knowledge of Seller, the Equipment that is equipment
previously leased to customers has been maintained in accordance with normal
industry practice. Except as indicated in Section 5.13 of the Disclosure
Schedule, the Equipment and Fixed Assets are owned by Seller, and will after the
Closing Date be owned by the Buyer, in each case free and clear of any liens,
claims or encumbrances, except Permitted Encumbrances. The Equipment and Fixed
Assets are located at the locations designated in Section 5.13 of the Disclosure
Schedule.
Section 5.14 Insurance.
---------
(a) Section 5.14 of the Disclosure Schedule sets forth the following
information with respect to each material insurance policy (including policies
providing property, casualty, liability and workers' compensation coverage and
bond and surety arrangements) relating to the conduct of the Business with
respect to which the Seller, is a party, a named insured or otherwise the
beneficiary of coverage:
(i) the name, address and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder and
the name of each covered insured;
Page 20
(iii) the policy number, the premium payments and the period of
coverage;
(iv) the scope (including an indication of whether the coverage
is on a claims made, occurrence or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or
other material loss-sharing arrangements.
Except as set forth in Section 5.14 of the Disclosure Schedule, with
respect to each such insurance policy: (A) the policy is legal, valid, binding,
enforceable and in full force and effect in all material respects; (B) neither
the Seller nor any other party to the policy is in material breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a material breach or default or permit termination, modification
or acceleration, under the policy; and (C) no party to the policy has repudiated
any material provision thereof.
(b) Section 5.14 of the Disclosure Schedule describes any material
self-insurance arrangements affecting the Seller and relating to the Business.
Section 5.15 Litigation.
----------
Except as set forth in Section 5.15 of the Disclosure Schedule, neither the
Seller nor Seller No. 2: (i) is subject to any injunction, judgment or judicial
order or decree relating to the Acquired Assets or the Business that remains
outstanding and in effect as of the date of this Agreement; or (ii) is a party
or, to the Knowledge of the Seller, is threatened to be made a party to any
action, suit, proceeding, hearing or investigation of, in or before any court or
quasi-judicial or administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator relating to the Acquired Assets or the
Business. Except as set forth in Section 5.15 of the Disclosure Schedule, each
action, suit and proceeding listed on the Disclosure Schedule is fully covered
by existing policies of insurance.
Section 5.16 Employee Benefits.
------------------
(a) Section 5.16 of the Disclosure Schedule identifies each Employee
Benefit Plan that the Seller, Seller No. 2 or Xxxxxxx maintains or to which the
Seller, Seller No. 2 or Xxxxxxx contributes for the benefit of the employees or
former employees of Seller and/or Seller No. 2.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract or fund) complies in form and in operation with the
applicable requirements of ERISA, the Code and other Applicable Laws. Except as
set forth in Section 5.16 of the Disclosure Schedule, Seller and Seller No. 2
warrant that its respective defined benefit and defined contribution plans have
Internal Revenue Service determination letters establishing that such plans are
qualified ERISA plans, except to the extent of any provisions for which the
remedial amendment period still permits amendments to be timely adopted for
purposes of the Uruguay Round Agreements Act, the Uniformed Services Employment
and Reemployment
Page 21
Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer
Relief Act of 1997, and the Internal Revenue Service Restructuring and Reform
Act of 1998 ("GUST").
(ii) All required reports and descriptions (including Form 5500
Annual Reports, Summary Annual Reports, PBGC-1s, and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each such Employee
Benefit Plan. To the Knowledge of the Seller, the requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Sec. 4980B have been substantially
met with respect to each such Employee Benefit Plan which is an Employee Welfare
Benefit Plan and which is subject to such requirements.
(iii) All premiums or other payments which are due have been paid
to each Employee Benefit Plan and all premiums or other payments for any payroll
period ending prior to the Closing Date will be paid to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan or accrued in accordance
with the past custom and practice of the Seller.
(iv) The Seller and Seller No. 2 have made available to the Buyer
correct and complete copies of the current plan documents, summary plan
descriptions, the most recent determination letter received from the IRS, the
most recent Form 5500 Annual Report and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan.
(b) Neither Seller nor Seller No. 2 has contributed to or has been
required to contribute to any Multiemployer Plan or has any liability (including
withdrawal liability), contingent or otherwise, under any Multiemployer Plan.
Section 5.17 Sufficiency of Assets.
-----------------------
The properties and assets owned or leased by Seller and/or Seller No. 2 and
being conveyed as part of the Acquired Assets comprise substantially all the
properties and assets currently used by Seller or Seller No. 2 in the Business
and are sufficient for the continued operation of the Business.
Section 5.18 Labor Matters.
--------------
(a) Seller No. 2 has no employees other than Xxx Xxxxx. Seller has
not experienced any strike or labor difficulty resulting in any interruption of
work or received any notice of any union organizational effort relating to any
of its employees. Seller is not a party to any collective bargaining agreement
with any labor organization.
(b) Except as disclosed in Section 5.18 of the Disclosure Schedule,
no party (including, but not limited to, employees and governmental agencies of
any kind) has made any claim, and, to the best of Seller's Knowledge, there is
no basis for any such claim, against Seller or Seller No. 2 under or arising out
of any employment agreement or arrangement, or arising out of any federal, state
or local statute, ordinance or regulation relating to discrimination with
respect to employees or any other employment practices, including, without
limitation, retirement, labor relations, equal employment opportunity and
occupational, safety and health standards.
Page 22
Section 5.19 Interest in Customers, Suppliers, Creditors and
----------------------------------------------------
Competitors.
------------
Except as disclosed in Section 5.19 of the Disclosure Schedule, neither
Seller nor any shareholder or officer, director or employee of either, nor any
spouse or child of any of them, has any material (whether as to Seller or any
Shareholder or as to any such customer, supplier, creditor or competitor) direct
or indirect interest in any customer, supplier, creditor or competitor of Seller
or in any person from whom or to whom Seller leases any equipment, or in any
other person with whom Seller is doing business.
Section 5.20 Notes and Accounts Receivable.
--------------------------------
All accounts and notes or other advance receivables of the Seller arising
in connection with the operation and conduct of the Business reflected in the
Financial Statements which are included as Acquired Assets are reflected
properly on its books and records, are genuine and valid receivables subject to
no setoffs or counterclaims, have arisen solely out of bona fide sales and
deliveries of goods, performance of services and other business transactions in
the Ordinary Course of Business, are current and collectible net of any reserves
and will be collected in accordance with their terms at their recorded amounts.
Section 5.21 Environmental, Health, and Safety Matters.
---------------------------------------------
(a) Except as set forth in Section 5.21 of the Disclosure Schedule,
Seller and Seller No. 2 has complied and is in compliance with all
Environmental, Health, and Safety Requirements.
(b) Except as set forth in Section 5.21 of the Disclosure Schedule,
without limiting the generality of the foregoing, the Seller and Seller No. 2
has obtained, complied and is in compliance with, all permits, licenses and
other authorizations that are required pursuant to Environmental, Health, and
Safety Requirements for the operation of the Business; a list of all such
permits, licenses and other authorizations currently held by Seller or Seller
No. 2 is set forth on Section 5.21 of the Disclosure Schedule.
(c) Except as set forth in Section 5.21 of the Disclosure Schedule,
neither Seller nor Seller No. 2 has received any notice, report or other
information from any Governmental Authorities or any other person regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements or
any liabilities or potential liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
obligations, arising under any Environmental, Health, and Safety Requirements.
(d) Except as set forth in Section 5.21 of the Disclosure Schedule,
neither Seller nor Seller No. 2 has treated, stored, disposed of, arranged for
or permitted the disposal of, transportation of, handling, or Release of any
Hazardous Material, in compliance with Environmental, Health, and Safety
Requirements.
(e) Except as set forth in Section 5.21 of the Disclosure Schedule,
no Release of any Hazardous Material has occurred on, at, from or to any real or
personal property operated, occupied, leased or managed by Seller or Seller No.
2 that constitutes Acquired Assets that requires investigation, assessment,
monitoring, remediation, response, removal, corrective
Page 23
action, cleanup or any similar action under Environmental, Health and Safety
Requirements, except where such Release would not have a Material Adverse
Effect.
Section 5.22 Absence of Undisclosed Liabilities.
-------------------------------------
Except for the Unfunded Customer Leases set forth on Section 5.11 of the
Disclosure Schedule, there are no liabilities of Seller or Seller No. 2, whether
accrued, absolute, fixed, contingent or otherwise, other than those disclosed in
Section 5.22 of the Disclosure Schedule or reflected in the Financial Statements
or incurred in the Ordinary Course of Business since January 5, 2002.
Section 5.23 Employees.
---------
Set forth in Section 5.23 of the Disclosure Schedule is the name, date of
hire, current status (i.e., full or part time, sick or disability leave, etc.),
----
job designation, current salary or wage and a description of fringe benefits of
each employee of Seller and Seller No. 2. Except as set forth in Section 5.23
of the Disclosure Schedule and other than commissions arising under the Customer
Leases in the Ordinary Course of Business, neither Seller, Seller No. 2 nor
Xxxxxxx has any outstanding obligations or liabilities to the employees of the
Business.
Section 5.24 Absence of Certain Changes.
-----------------------------
Since January 5, 2002, except as shown in Section 5.24 of the Disclosure
Schedule, there has not been:
(a) Other than changes in the economy generally, any material adverse
change in the condition (financial or otherwise), assets, liabilities (accrued,
absolute, fixed, contingent or otherwise) or business of Seller or Seller No. 2;
(b) Any waiver by Seller or Seller No. 2 of any material right or
rights of value, or any material payment, direct or indirect, of any debt,
liability or other obligation before the same shall have become due in
accordance with its terms;
(c) Any change in the accounting methods, practices or policies
followed by Seller;
(d) Except in the Ordinary Course of Business, any increase in the
compensation payable or to become payable by Seller or Seller No. 2, or any
increase in the rate of commission or other variable compensation to be paid by
Seller or Seller No. 2 to any person;
(e) Any merger or consolidation of or by Seller or Seller No. 2 with
any other entity or any acquisition of all or any part of the stock, equity
interest or the business or assets of any other association, corporation or
business organization by Seller or Seller No. 2;
(f) Except for the sale, lease, replacement or disposition of Fixed
Assets in the Ordinary Course of Business, any sale, lease, disposition of,
mortgage, pledge or creation of any lien or encumbrance on, or any waiver of any
substantial rights relating to, any material property or assets, tangible or
intangible, of Seller or Seller No. 2;
Page 24
(g) Any contract, agreement or transaction out of the Ordinary Course
of Business;
(h) Any acquisition of assets by Seller or Seller No. 2 other than in
the Ordinary Course of Business;
(i) Any revaluation of any of the material assets of Seller or Seller
No. 2; or
(j) Any event or condition not in the Ordinary Course of Business of
Seller or Seller No. 2.
Section 5.25 Disclosures.
-----------
Neither this Agreement nor the Disclosure Schedule contain any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
Section 5.26 Broker.
------
The Seller and Seller No. 2 have no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become liable or
obligated.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------
The Buyer represents and warrants to the Seller and Seller No. 2 as
follows:
Section 6.1 Organization of the Buyer.
----------------------------
The Buyer is a corporation organized, validly existing and in good standing
under the laws of the State of Ohio.
Section 6.2 Authorization of Transaction.
------------------------------
The Buyer has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid, legal and binding obligation of
the Buyer, enforceable in accordance with its terms and conditions. This
Agreement has been, and each of the Conveyance Documents will be, duly and
validly executed and delivered by the Buyer, and (assuming the due
authorization, execution and delivery by the other parties thereto) this
Agreement and each of the Conveyance Documents will constitute the legal, valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
Page 25
Section 6.3 Noncontravention.
----------------
Neither the execution and the delivery of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency or
court to which the Buyer is subject or any provision of its charter or bylaws;
or (ii) 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, or other arrangement to which the Buyer is a party or by
which it is bound or to which any of its assets is subject. Except as set forth
in Section 6.3 of the Disclosure Schedule and other than any filing required
under the HSR Act, the Buyer does not need to give any notice to, make any
filing with or obtain any authorization, consent or approval of any Governmental
Authority in order for the parties to consummate the transactions contemplated
by this Agreement.
Section 6.4 Brokers' Fees.
--------------
The Buyer has no liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement for which the Seller could become liable or obligated.
ARTICLE 7
COVENANTS
---------
Section 7.1 Conduct of Business.
---------------------
Except as set forth on Section 7.1 of the Disclosure Schedule, as otherwise
expressly permitted by this Agreement or as consented to by the Buyer, during
the period from the date of this Agreement through the Closing Date, the Seller
shall use its commercially reasonable efforts to: (a) conduct the Business in
the Ordinary Course of Business; (b) preserve the present business organization
and relationships of the Business; and (c) preserve the rights, franchises,
goodwill and relations of the customers and others with whom business
relationships exist with the Business. Without limiting the generality of the
foregoing, except as otherwise contemplated or permitted by this Agreement or as
consented to by the Buyer, the Seller will not, during the period from the date
of this Agreement through the Closing Date: (x) take or cause to be taken any
action described in Section 5.24 hereof; (y) sell, assign or convey or enter
into an agreement to sell, assign or convey any Acquired Assets of the Business
(excepting the sale of equipment in the Ordinary Course of Business); (z)
increase or change in any material respect the compensation or benefits of
employment of any employees.
Section 7.2 Confidentiality and Announcements.
-----------------------------------
(a) Except as provided in Section 7.2(b), neither the Seller or
Seller No. 2, nor the Buyer, nor any of their respective Affiliates, shall
publicly disclose the execution, delivery or contents of this Agreement other
than: (i) with the prior written consent of the other party hereto; or (ii) as
required by any Applicable Law or the applicable rules of any stock exchange
upon prior notice to the other party hereto.
Page 26
(b) The Buyer, the Seller and Seller No. 2 shall agree with each
other as to the form, timing and substance of any press release or other public
disclosure, including any general announcement to employees, related to this
Agreement or the transactions contemplated hereby or thereby, provided however,
----------------
that nothing contained herein shall prohibit either party, following
notification to the other party, from making any disclosure which its counsel
determines to be required by any Applicable Law or the applicable rules of any
stock exchange.
Section 7.3 Expenses.
--------
Regardless of whether any or all of the transactions contemplated by this
Agreement are consummated and except as otherwise expressly provided herein, the
Buyer, Xxxxxxx, the Seller and Seller No. 2 shall each bear their respective
direct and indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and the consummation of the transactions
contemplated hereby or thereby.
Section 7.4 Access; Certain Communications.
--------------------------------
Between the date of this Agreement and the Closing Date, subject to
Applicable Laws relating to the exchange of information, the Seller shall afford
to the Buyer and its authorized agents and representatives reasonable access,
upon reasonable notice and during normal business hours, to all contracts,
documents and information of or relating to the Acquired Assets, Assumed
Liabilities and operations and other aspects of the Business. The Seller and
Seller No. 2 shall cause the employees of the Business to provide reasonable
assistance to the Buyer in the Buyer's investigation of matters relating to the
Business, provided however, that the Buyer's investigation shall be conducted in
----------------
a manner which does not interfere with the normal operations, customers and
employee relations of the Business.
Section 7.5 Regulatory Matters, Third Party Consents.
--------------------------------------------
(a) The Buyer, the Seller and Seller No. 2 shall cooperate with each
other and: (i) shall use their commercially reasonable efforts promptly to
prepare and to file all necessary documentation and to effect all applications,
notices, petitions and filings with each Governmental Authority which are
necessary or advisable to consummate the transactions contemplated by this
Agreement; and (ii) shall use their commercially reasonable efforts to obtain as
promptly as practicable any permit, consent, approval, waiver or authorization
of such Governmental Authority or other third party consent which is necessary
or advisable to consummate the transactions contemplated by this Agreement,
including the consents, approval and authorizations set forth on Section 7.5 of
the Disclosure Schedule on or prior to the Closing Date except with respect to
the HSR Act approval, the filing of which is the obligation of Buyer (the
"Required Consents").
(b) The Buyer, the Seller and Seller No. 2 shall have the right to
review in advance, and shall consult with the other party on, in each case
subject to Applicable Laws relating to the exchange of information, all the
information relating to the Seller and Seller No. 2, the Business or the Buyer,
as the case may be, and any of their respective Affiliates, which appear in any
filing made with or written materials submitted to, any Governmental Authority
or any other third party in connection with the transactions contemplated by
this Agreement. The parties hereto agree that they will consult with each other
with respect to the obtaining of any
Page 27
permit, consent, approval or authorization of a Governmental Authority or other
third party necessary or advisable to consummate the transactions contemplated
by this Agreement and each party shall keep the other apprised of the status of
obtaining any such permit, consent, approval or authorization. The party
responsible for any such filing shall promptly deliver to the other party
evidence of the filing of all applications, filings, registrations and
notifications relating thereto, and any supplement, amendment or item of
additional information in connection therewith. The party responsible for a
filing shall also promptly deliver to the other party a copy of each notice,
order, opinion and other item of correspondence received from or sent to any
Governmental Authority by such filing party in respect of any such application.
In exercising the foregoing rights and obligations, the Buyer, the Seller and
Seller No. 2 shall act reasonably and promptly.
(c) The Buyer, the Seller and Seller No. 2 shall, upon request,
furnish each other with all information concerning themselves, their
subsidiaries, directors, officers and stockholders and such other matters as may
be reasonably necessary in connection with any statement, filing, notice or
application made by or on behalf of the Buyer, the Seller, Seller No. 2 or any
of their respective Affiliates to any Governmental Authority in connection with
the transactions contemplated by this Agreement (except to the extent that such
information would be, or relates to information that would be, filed under a
claim of confidentiality).
(d) The Buyer, the Seller and Seller No. 2 shall promptly advise each
other upon receiving any communication from any Governmental Authority whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement which causes such party to believe that there is
a reasonable likelihood that any requisite regulatory approval will not be
obtained or that the receipt of any such approval will be materially delayed.
Section 7.6 Further Assurances.
-------------------
On and after the Closing Date, each of the parties hereto shall execute
such documents and other papers and perform such further acts as may be
reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each such party shall, on or prior to the Closing Date, use
its commercially reasonable efforts to fulfill or obtain the fulfillment of the
conditions precedent to the consummation of the transactions contemplated
hereby, including the execution and delivery of any documents, certificates,
instruments or other papers that are reasonably required for the consummation of
the transactions contemplated hereby.
Section 7.7 Notification of Certain Matters.
----------------------------------
(a) Each party shall give prompt notice to the other party of (i) the
occurrence, or failure to occur, of any event or the existence of any condition
that has caused or could reasonably be expected to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time after the date of this Agreement,
up to and including the Closing Date (except to the extent such representations
and warranties are given as of a particular date or period and relate solely to
such particular date or period); and (ii) any failure on its part to comply with
or satisfy, in any material respect, any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement.
Page 28
(b) Except with respect to Section 5.11 of the Disclosure Schedule,
the Seller and/or Seller No. 2 shall, prior to the Closing, with the prior
written consent of Buyer, which shall not be unreasonably withheld, supplement
any Section of the Disclosure Schedule (collectively, the "Supplemental
Schedules") to reflect any change or event that occurs in the Ordinary Course of
Business after the date of this Agreement or otherwise to amend any such
representation or Schedule to correct any inadvertent statement or omission;
provided, however, that the impact of all matters disclosed in any such
------------------
supplementation, amendment or correction shall not, individually or in the
aggregate, have a Material Adverse Effect. Upon written consent of the Buyer,
which shall not be unreasonably withheld, such Supplemental Schedules shall be
deemed to be part of the Disclosure Schedule. With respect to Section 5.11 of
the Disclosure Schedule, Seller shall supplement Section 5.11 of the Disclosure
Schedule prior to and on the Closing Date to reflect any change or event that
occurs after the date of this Agreement with respect to the Customer Leases
entered into prior to January 5, 2002; provided, however, the impact of all
-------- -------
matters disclosed shall not, individually or in the aggregate, have a Material
Adverse Effect, and to reflect Customer Leases entered into on or after January
5, 2002. Within five (5) days of the execution of this Agreement, Buyer shall
supplement Section 5.11 of the Disclosure Schedule to reflect Customer Leases
entered into on or after January 5, 2002 and prior to the execution of this
Agreement and Buyer shall, in its sole and absolute discretion, approve or
reject such Customer Leases or Unfunded Customer Leases within five (5) days of
receiving such supplement. Thereafter, within five (5) days of supplementing
Section 5.11 of the Disclosure Schedule, Buyer, in its sole and absolute
discretion, may accept or reject any such Customer Leases or Unfunded Customer
Leases reflected on such supplement. In the event Buyer agrees to assume such
Customer Leases, Section 5.11 of the Disclosure Schedule shall be supplemented
to include such Customer Leases.
Section 7.8 Maintenance of Records and Reporting Requirements.
------------------------------------------------------
(a) Through the Closing Date, the Seller and Seller No. 2 shall cause
the Business to maintain its Books and Records in all material respects in the
same manner and with the same care that its Books and Records have been
maintained prior to the execution of this Agreement. From and after the Closing
Date, each of the parties shall permit the other party reasonable access to any
applicable Books and Records in its possession and the right, at their own
expense, to duplicate such Books and Records, to the extent that the requesting
party has a reasonable business purpose for requesting such access or
duplication. Each party hereto shall notify the other party of any extension of
any applicable statute of limitations related to such Books and Records and
either party shall obtain the consent of the other party before destroying any
of its Books and Records retained pursuant to this Section 7.8. Notwithstanding
any other provision of this Section 7.8, access to any Books and Records may be
denied to the requesting party if the other party is required under Applicable
Law to deny such access. The Seller and Seller No. 2 and the Buyer agree that
each of them shall preserve and keep the records held by it relating to the
Business of the Seller for a period of three (3) years from the Closing Date or
such later date as may be required by Applicable Law and shall make such records
and employees (to the extent possible) available to the other as may be
reasonably required by such party in connection with, among other things, any
insurance claims by, legal proceedings against or governmental investigations or
Tax audits, examination, or Tax-related litigation of the Seller, Seller No. 2
or the Buyer or any of their respective Affiliates or in order to enable the
Seller, Seller No. 2 or the Buyer to comply with their respective obligations
under this Agreement and each other agreement, document or instrument
contemplated hereby or thereby. In the event the
Page 29
Seller, Seller No. 2 or the Buyer wishes to destroy such records after that
time, such party shall first give sixty (60) days prior written notice to the
other and such other party shall have the right at its option and expense, upon
prior written notice given to such party within that sixty (60) day period, to
take possession of the records within ninety (90) days after the date of such
notice.
(b) After the Closing, Seller, Seller No. 2 and Buyer shall cooperate
in the filing of any Tax Returns, audits, examinations or Tax-related litigation
by providing each other with reasonable access to records, documents and
employees relating to the Acquired Assets, the Business or the Excluded Assets
or Excluded Liabilities.
Section 7.9 No Solicitation.
----------------
(a) The Seller will not, directly or indirectly, solicit, initiate or
encourage the submission of any inquiries or proposals relating to the
acquisition of the Acquired Assets or the Business (including any acquisition
structured as a merger, consolidation or share exchange); provided, however,
-----------------
that the Seller, its shareholders and their respective officers and trustees
shall remain free to participate in any discussions or negotiations regarding,
furnish any 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 may require.
(b) For a period beginning on the Closing Date and ending upon the
termination of the Exclusive Vendor Agreement, each of Seller, Seller No. 2 and
Xxxxxxx hereby covenants and agrees that it shall not, either directly or
indirectly, (x) hire, solicit, entice away or cause or arrange for another
Person to hire, solicit or entice away any Person that is (i) an Employee of
Seller that commences employment with Buyer after the Closing Date, or (ii) a
director, officer or employee of Buyer or The Provident Bank that engages in the
Business; it being the intent of the parties that Seller, Seller No. 2 or
Xxxxxxx shall not solicit any Employee of Buyer without the consent of, or
otherwise interfere with, the Business acquired by the Buyer hereunder or the
relationship of the Buyer with any customer, supplier or vendor of such Business
or any other Persons with which the Buyer interacts regarding such Business;
provided, however, subject to the terms of the Servicing Agreement, nothing
------------------
contained herein shall prevent Seller from pursuing any rights or remedies it
may have under the customer leases being retained by Seller under the terms of
this Agreement. In the event of a breach or threatened breach by Seller, Seller
No. 2 or Xxxxxxx of the provisions of Section 7.9(b) of this Agreement, the
Buyer shall be entitled to an injunction restraining the Seller, Seller No. 2 or
Xxxxxxx from any such breach. Nothing herein shall be construed as prohibiting
the Buyer or any of its Affiliates from pursuing any other available remedy for
such breach or threatened breach, including the recovery of damages.
(c) For a period beginning on the Closing Date and ending upon the
termination of the Exclusive Vendor Agreement, Buyer hereby covenants and agrees
that it shall not, either directly or indirectly, (x) hire, solicit, entice away
or cause or arrange for another Person to hire, solicit or entice away any
Person that is (i) an employee of Xxxxxxx or any of its subsidiaries, except as
contemplated by this Agreement, it being the intent that Buyer shall not solicit
any employees of Xxxxxxx or its subsidiaries without the written consent of
Xxxxxxx. In the event of a breach or threatened breach by the Buyer of the
provisions of Section 7.9(c) of this Agreement, Xxxxxxx shall be entitled to an
injunction restraining the Buyer from any such breach. Nothing herein shall be
construed as prohibiting Xxxxxxx or any of its subsidiaries from
Page 30
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
Section 7.10 Non-Competition.
---------------
(a) For a period beginning on the Closing Date and ending upon the
termination of the Exclusive Vendor Agreement, each of Seller, Seller No. 2 and
Xxxxxxx hereby covenants and agrees that it shall not, within North America,
either directly or indirectly, (x) in any manner engage in or operate, manage or
maintain a business that competes, in whole or in part, with the Business or (y)
participate as a stockholder, member, partner, agent or representative or other
independent contractor of, or have any direct or indirect financial interest in,
any enterprise that is engaged, or plans to engage, in any business that
competes with the Business or in the operation, management or maintenance of any
business that competes, in whole or in part, with the Business within North
America; provided, however that the foregoing restriction shall be inapplicable
-----------------
to (i) the ownership of less than one percent (1%) of the securities of any
publicly traded company; (ii) the ownership of and the performance of any and
all actions relating to the continued leasing, remarketing or selling of any
equipment subject to a customer lease that is an Excluded Asset under the
provisions of this Agreement; (iii) the ownership of stock in Val Tech Computer
Systems, Inc. incident to the winding down in the ordinary course of business of
all of the leases currently owned by Val Tech Computer Systems, Inc.; or (iv)
any activity permitted under the terms of the Exclusive Vendor Agreement between
the parties that relates to lease opportunities that are rejected by Buyer
pursuant to the terms thereof; the intention of the parties being that after the
Closing Date Seller and Seller No. 2 shall not continue to engage in the
Business except as specifically set forth in these Section 7.10(i), Section
7.10(ii), Section 7.10(iii) and Section 7.10(iv). In the event of a breach or
threatened breach by Seller, Seller No. 2 or Xxxxxxx of the provisions of this
Section 7.10, the Buyer shall be entitled to an injunction restraining Seller,
Seller No. 2 or Xxxxxxx, as the case may be, from any such breach. Nothing
herein shall be construed as prohibiting the Buyer or any of its Affiliates from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
(b) Xxxxxxx shall not sell all or substantially all of its assets, in
one transaction or a series of transactions, unless the acquiror of such assets
agrees to be bound by the terms of this Agreement.
Section 7.11 Employment of New Employees.
------------------------------
(a) As of the Closing Date, the Seller and Seller No. 2 shall
terminate all of Seller's and Seller No. 2's employees, as applicable. The Buyer
shall offer employment to all of Seller's and Seller No. 2's employees listed on
Section 5.23 of the Disclosure Schedule and such employees that accept
employment with Buyer shall be deemed New Employees. Buyer shall offer
employment to such New Employees at initial salary, benefits and on the other
terms and conditions which, in the aggregate, are comparable to those enjoyed by
the New Employees on the date of this Agreement (other than changes in wages,
salaries, benefits or other terms and conditions occurring in the Ordinary
Course of Business).
(b) After the Closing Date, each of the New Employees shall be
entitled to participate in the benefits afforded from time to time by Buyer to
employees of Buyer (including,
Page 31
but not limited to, vacations, medical and life insurance plans, pension plans,
profit sharing plans and disability insurance), to the extent such employee is
otherwise eligible under the terms and conditions of the applicable plan or
policy and as such benefit program or plans may, from time to time, be amended,
modified or terminated with or without prior notice. This covenant shall not be
construed to limit in any respect Buyer's right to establish, amend, modify or
terminate any benefit, plan or policy.
(c) For purposes of eligibility, vesting and determination of
benefits available under any such benefit programs or plans of Buyer, any prior
service of an employee of Seller or Seller No. 2 that becomes a New Employee
shall be credited as years of service with Buyer.
Section 7.12 Transfer of Name.
------------------
Within five (5) days after the Closing Date, Seller shall prepare and file
an amendment to its Articles of Incorporation changing Seller's name and
changing Seller No. 2's name. Seller agrees not to use the name "Technology
Integration Financial Services", "T.I.F.S. Advisory Services, Inc." or any
derivation thereof after the Closing Date in connection with any business,
except as provided herein.
Section 7.13 License to Use Name.
----------------------
For a period of three (3) years from the Closing Date or for such longer
period as may be mutually agreed upon by the parties (the "License Period"),
Buyer hereby grants to Seller a non-exclusive, nontransferable license to use
the name "T.I.F.S." (the "Name") for the sole purpose of administering the
leases under Section 7.10. All rights not specifically granted to the Seller
herein are reserved by Buyer. Seller acknowledges Buyer's ownership of the Name
and will not at any time do or cause to be done any act or thing contesting or
in any way impairing or intending to impair any part of such ownership. Seller
shall not use the Name in a form and manner that may (a) reduce the value of the
Name or (b) wrongfully injure the Buyer's Business or the reputation of the
Name.
Section 7.14 Lease of Office Space/Administrative Services.
-------------------------------------------------
(a) Seller's and Seller No. 2's current employees are located at the
local and regional offices of Seller or Xxxxxxx. On the Closing Date, Xxxxxxx
agrees to enter into a Sublease with Buyer, in form and substance acceptable to
Buyer and Xxxxxxx for a term of three (3) years to provide to Buyer the office
space currently utilized by employees of Seller that become New Employees.
Pursuant to the terms of such Sublease, Buyer shall pay Seller base rent in the
amount of Two Hundred Fifty Thousand and 00/100 Dollars ($250,000.00), payable
in equal monthly installments of Twenty Thousand Eight Hundred Thirty-Three
Dollars and 33/100 ($20,833.33) for the first twelve (12) month period of the
initial term of the Sublease. Thereafter, Buyer shall pay the sum of Two
Hundred Thousand and 00/100 Dollars ($200,000.00) per year for years 2 and 3 of
such Sublease, plus the sum of Fifteen Thousand Dollars ($15,000.00) per year
for each new employee, additional employees or any replacements thereof, in
excess of twenty (20) employees, that maintain office space at any of Seller's
or Xxxxxxx'x facilities, which amount shall be payable in equal monthly
installments. The parties agree to equitably adjust rent if the number of
employees in excess of 20 fluctuates during years 2 and 3.
Page 32
(b) Seller, Seller No. 2 and Xxxxxxx agree to provide and maintain,
at no additional cost to Buyer, reasonable support services that are comparable
to the services currently being provided to Seller and Seller No. 2, including
without limitation, receptionist support, computer hardware, copiers, fax
machines, telecommunications equipment, parking, long distance service
(excluding personal calls) and other equipment and materials currently utilized
by employees of the Seller and Seller No. 2. In addition, Xxxxxxx shall provide
information technology services and allow the New Employees to obtain assistance
from Xxxxxxx'x help desk. In the event that Seller, Seller No. 2 or Xxxxxxx
shall be required to provide an extraordinary level of services in excess of the
current services being provided to Seller and Seller No. 2, Xxxxxxx and Buyer
shall in good faith determine an amount to compensate Xxxxxxx for its actual
costs in performing such extraordinary level of services.
(c) Buyer, Seller and Xxxxxxx agree to enter into a Servicing
Agreement in form and substance acceptable to Buyer, Seller and Seller No. 2,
pursuant to which Buyer shall administer all of the customer leases referenced
in Section 7.10 and/or collection of certain accounts receivables of Seller in
accordance with the cost schedule set forth in the Servicing Agreement.
Section 7.15 Outstanding Employee Obligations.
----------------------------------
On or prior to the Closing Date, Seller, Seller No. 2 and Xxxxxxx shall
have satisfied all of their respective obligations to the employees listed in
Section 5.23 of the Disclosure Schedule, including, but not limited to,
obligations arising under any employment agreements with such employees.
Section 7.16 Payments Received.
------------------
The Seller, Seller No. 2 and the Buyer each agree that after the Closing
they will hold and promptly transfer and deliver to the other, from time to time
as and when received by them, any cash, checks with appropriate endorsements or
other property that they may receive on or after Closing which properly belongs
to the other party, including without limitation, accounts receivable and
Interim Rent and will account to the other for all receipts arising prior to the
Closing Date. From and after the Closing, the Buyer shall have the right and
authority to endorse without recourse the name of the Seller or Seller No. 2 on
any check or any other evidence of indebtedness received by the Buyer relating
to the Acquired Assets.
ARTICLE 8
CONDITIONS TO CLOSING
---------------------
Section 8.1 Conditions to The Buyer's Obligations.
-----------------------------------------
In addition to the conditions set forth in Section 8.3 of this Agreement,
the obligations of the Buyer to effect the Closing shall be subject to the
following conditions, any one or more of which may be waived in writing by the
Buyer:
(a) The representations and warranties of Seller and Seller No. 2 set
forth in this Agreement qualified as to materiality or Material Adverse Effect
shall be true and correct, and the representations and warranties of the Seller
and Seller No. 2 contained herein not qualified as to materiality or Material
Adverse Effect shall be true and correct in all material
Page 33
respects, in each case as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except that any such
representation and warranty that is given as of a particular date or period and
relates solely to such particular date or period shall be true and correct only
as of such date or period);
(b) Seller and Seller No. 2 shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement (including the Disclosure Schedule) to be performed
or complied with by the Seller and Seller No. 2 on or prior to the Closing Date;
(c) Seller and Seller No. 2 shall have caused to be delivered to the
Buyer a certificate executed by a duly authorized representative of the Seller
and Seller No. 2 certifying that the conditions set forth in this Section 8.1
have all been satisfied;
(d) The Buyer shall have received the documents set forth in Section
4.2 hereof;
(e) No change shall have occurred that has an effect that is material
and adverse to (i) the economy in general; (ii) the leasing industry; or (iii)
the condition (financial or otherwise) of Buyer; and
(f) The Seller shall have obtained the Required Consents set forth on
Section 7.5 of the Disclosure Schedule.
Section 8.2 Conditions to Seller's and Seller No. 2's Obligations.
---------------------------------------------------------
In addition to the conditions set forth in Section 8.3 of this Agreement,
the obligations of the Seller and Seller No. 2 to effect the Closing shall be
subject to the following conditions, any one or more of which may be waived in
writing by the Seller and Seller No. 2:
(a) The representations and warranties of the Buyer set forth in this
Agreement qualified as to materiality or Material Adverse Effect shall be true
and correct, and the representations and warranties of the Buyer contained
herein not qualified as to materiality or Material Adverse Effect shall be true
and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except that any such representation and warranty that is given as of a
particular date or period and relates solely to such particular date or period
shall be true and correct only as of such date or period);
(b) The Buyer shall have performed and complied in all material
respects with all agreements, covenants, obligations and conditions required by
this Agreement to be performed or complied with by the Buyer on or prior to the
Closing Date;
(c) The Buyer shall have caused to be delivered to the Seller and
Seller No. 2 a certificate executed by a duly authorized officer of the Buyer
certifying that the conditions set forth in this Section 8.2 have all been
satisfied; and
(d) The Seller and Seller No. 2, as applicable, shall have
received the documents set forth in Section 4.2 hereof.
Page 34
Section 8.3 Mutual Conditions.
------------------
The obligations of each of the Buyer and the Seller and Seller No. 2 to
effect the Closing shall be subject to the following conditions, any one or more
of which may be waived in writing, as to itself, by either party:
(a) No order, injunction or decree issued by any Governmental
Authority of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated by this Agreement
shall be in effect. No proceeding initiated by any Governmental Authority
seeking an injunction against the transactions contemplated by this Agreement
shall be pending. No statute, rule, regulation, order, injunction or decree
shall have been enacted, entered, promulgated or enforced by any Governmental
Authority which prohibits, restricts or makes illegal consummation of the
transactions contemplated hereby or thereby; and
(b) All approvals of Governmental Authorities, if any, required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired; and
(c) In respect of the notifications of the Buyer, Seller and Seller
No. 2 pursuant to the HSR Act, the applicable waiting period and any extensions
thereof shall have expired or been terminated.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS;
-----------------------------------------------------------------
INDEMNIFICATION
---------------
Section 9.1 Survival.
--------
(a) The Buyer has the right to rely upon the representations,
warranties, covenants and agreements of Seller, Seller No. 2 and Xxxxxxx
contained in this Agreement and the Seller and Seller No. 2 have the right to
rely upon the representations, warranties, covenants and agreements of the Buyer
set forth in this Agreement. The representations and warranties set forth in
Section 5.1, Section 5.2, Section 5.7, Section 5.8, Section 6.1 and Section 6.2
of this Agreement shall terminate on the fourth (4th) anniversary of the Closing
Date. The covenants set forth in Section 7.9 and Section 7.10 shall terminate
as provided therein. All other representations and warranties of the parties
set forth in this Agreement shall terminate on the second (2nd) anniversary of
the Closing Date. Notice with respect to any claim in respect of any inaccuracy
in or breach of any representation or warranty shall be in writing and shall be
given to the party against which such claim is asserted. Any representation or
warranty or indemnification obligation shall survive the time it would otherwise
terminate pursuant to this Section 9.1 to the extent that the party claiming
indemnification for such breach shall have delivered to the other party written
notice setting forth with reasonable specificity the basis of such claim prior
to the expiration of such time as set forth in this Section 9.1.
(b) Except as otherwise provided herein, all covenants and
agreements, including, without limitation, Seller's obligations to indemnify
Buyer for any Loss for an Excluded Liability and Buyer's obligation to indemnify
Seller for any Loss for an Assumed Liability made by the parties to this
Agreement, shall survive the Closing Date and shall terminate on the fourth
(4th) anniversary of the Closing Date.
Page 35
Section 9.2 Obligation of the Seller to Indemnify.
------------------------------------------
Subject to the limitations set forth in Section 9.1 and Section 9.5, the
Seller, Seller No. 2 and Xxxxxxx, jointly and severally, shall indemnify, defend
and hold harmless the Buyer and its directors, officers, employees, Affiliates,
and their respective successors and assigns from and against any Loss incurred
by any of them based upon, arising out of or otherwise in respect of: (i) any
inaccuracy in or any breach of any representation or warranty of the Seller or
Seller No. 2; (ii) the nonfulfillment on the part of the Seller or Seller No. 2
of any unwaived covenant or agreement set forth in this Agreement; and (iii) any
Excluded Liabilities.
Section 9.3 Obligation of the Buyer to Indemnify.
-----------------------------------------
Subject to the limitations set forth in Section 9.1 and Section 9.5 of this
Agreement, the Buyer shall indemnify, defend and hold harmless the Seller and
Seller No. 2 and their respective directors, officers, employees, Affiliates and
their respective successors and assigns from and against any Loss incurred by
any of them based upon, arising out of or otherwise in respect of: (i) any
inaccuracy in or breach of any representation or warranty of the Buyer; (ii) the
nonfulfillment on the part of the Buyer of any unwaived covenant or agreement
set forth in this Agreement; and (iii) any Assumed Liabilities.
Section 9.4 Notice and Opportunity to Defend Against Third Party
----------------------------------------------------------
Claims.
------
(a) Promptly after receipt from any third party by either party
hereto (the "Indemnitee") of a notice of any demand, claim or circumstance that,
immediately or with the lapse of time, would give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that may result in a Loss for which
Indemnitee believes indemnification may be sought hereunder, the Indemnitee
shall give written notice thereof (the "Claims Notice") to the party obligated
to provide indemnification pursuant to Section 9.2 or Section 9.3 of this
Agreement (the "Indemnifying Party"), provided, however, that a failure to give
-----------------
such notice shall not prejudice the Indemnitee's right to indemnification
hereunder except to the extent that the Indemnifying Party is actually
prejudiced thereby. The Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary) of
the Loss that has been or may be suffered by the Indemnitee.
(b) The Indemnifying Party shall, at its own cost and expense, assume
the defense of such Asserted Liability within thirty (30) Business Days of its
receipt of the Claims Notice (or sooner, if the nature of the Asserted Liability
so requires) and notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate with the Indemnifying Party in the defense of such
Asserted Liability. The Indemnifying Party may elect to compromise or defend, at
its own expense and by its own counsel, any Asserted Liability. If the
Indemnifying Party does not compromise or defend the Asserted Liability, fails
to notify the Indemnitee of its election as herein provided or contests its
obligation to provide indemnification under this Agreement, the Indemnitee may
pay, compromise or defend such Asserted Liability. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim without the consent of the other party, provided, however,
-----------------
that such consent to settlement or compromise shall not be unreasonably
withheld. In any event, the Indemnitee and the Indemnifying Party may
participate, at their own expense, in the defense of such Asserted
Page 36
Liability. The Indemnitee shall reasonably cooperate and make available to the
Indemnifying Party any books, records or other documents within its control that
are necessary or appropriate for such defense.
Section 9.5 Limits on Indemnification; Exclusive Remedy.
-----------------------------------------------
(a) Except as otherwise specifically provided in Section 9.2 of this
Agreement, the Buyer shall not be entitled to indemnification from the Seller
under this Agreement for Losses which would otherwise be indemnifiable hereunder
(including Losses incurred by all other indemnitees affiliated with or related
to the Buyer) which do not exceed One Hundred Seventy-Five Thousand and 00/100
Dollars ($175,000.00) in the aggregate, and the Buyer (including such affiliated
or related Persons) shall only be entitled to be indemnified for Losses in
excess of such aggregate amount; provided, however, such indemnification limit
------------------
shall not apply to Excluded Liabilities.
(b) Except as otherwise specifically provided in Section 9.3 of this
Agreement, the Seller shall not be entitled to indemnification from the Buyer
under this Agreement for Losses which would otherwise be indemnifiable hereunder
(including Losses incurred by all other indemnitees affiliated with or related
to the Seller) which do not exceed One Hundred Seventy-Five Thousand and 00/100
Dollars ($175,000.00) in the aggregate, and the Seller (including such
affiliated or related Persons) shall only be entitled to be indemnified for
Losses in excess of such aggregate amount; provided, however, such
-------------------
indemnification limit shall not apply to Assumed Liabilities.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the maximum liability that Seller, Seller No. 2 and Xxxxxxx in the
aggregate may be required to pay to Buyer under this Section 9.5 as a result of
any and all breaches shall be limited to the Net Book Value.
(d) Notwithstanding anything contained in this Agreement to the
contrary, the maximum amount that Buyer may pay to Seller and Seller No. 2 under
this Section 9.5 as a result of any and all breaches shall be limited to the Net
Book Value.
ARTICLE 10
TERMINATION
-----------
Section 10.1 Termination.
-----------
(a) This Agreement may be terminated on or prior to the Closing Date
only as follows:
(i) by mutual written consent of the Buyer and Seller and Seller
No. 2;
(ii) at the election of either the Buyer, the Seller or Seller
No. 2, if the Closing Date shall not have occurred on or before April 15, 2002;
provided that no party shall be entitled to terminate this Agreement pursuant to
this Section 10.1(a)(ii) if such party's failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the Closing
to occur on or before such date;
Page 37
(iii) by either the Buyer, the Seller or Seller No. 2 if a court
of competent jurisdiction shall have issued an order, decree or ruling
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable; or
(iv) by either the Buyer, the Seller or Seller No. 2 if a
condition to its obligation to perform becomes incapable of fulfillment.
Notwithstanding the foregoing, the right to terminate this Agreement pursuant to
this Section 10.1(a)(iv) shall not be available to any party if its condition to
perform became incapable of fulfillment due to its failure to fulfill any
obligation under this Agreement.
(b) The termination of this Agreement shall be effectuated by
the delivery of a written notice of such termination from the party terminating
this Agreement to the other party.
Section 10.2 Obligations upon Termination.
------------------------------
In the event that this Agreement shall be terminated pursuant to Section
10.1 of this Agreement, all obligations of the parties hereto under this
Agreement shall terminate and there shall be no liability of any party hereto to
any other party except: (i) as set forth in Section 7.2 and Section 7.3 of this
Agreement, and (ii) that nothing herein will relieve any party from liability
for any breach of this Agreement.
ARTICLE 11
MISCELLANEOUS
-------------
Section 11.1 Amendments; Extension; Waiver.
-------------------------------
This Agreement may not be amended, altered or modified except by means of a
written instrument that specifically states that it constitutes an amendment,
alteration or modification of this Agreement and that is executed by the Buyer,
the Seller and Seller No. 2.
Section 11.2 Entire Agreement.
-----------------
This Agreement together with the Disclosure Schedule and Exhibits
constitute the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and supersede all prior or contemporaneous
agreements and understandings, written and oral, between the parties with
respect to the subject matter hereof.
Section 11.3 Interpretation.
--------------
When reference is made in this Agreement to any Section, Exhibit or
Disclosure or other Schedule, such reference is to a Section, Exhibit or
Disclosure or other Schedule of this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof' and
terms of similar import, unless the context otherwise requires, shall be deemed
to refer to the date set forth in the first paragraph of this Agreement. The
words "hereof', "herein", "hereby" and other words of similar import
Page 38
refer to this Agreement as a whole unless otherwise indicated. Whenever the
singular is used herein, the same shall include the plural, and whenever the
plural is used herein, the same shall include the singular, where appropriate.
Section 11.4 Severability.
------------
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, that provision shall be interpreted to be only so
broad as is enforceable.
Section 11.5 Notices.
-------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been given when: (a) delivered in person; (b)
transmitted by facsimile (with telephonic confirmation of receipt); (c) mailed
by certified or registered mail (return receipt requested); or (d) delivered by
an express courier (with confirmation) to a party at its address listed below
(or at such other address as such party shall deliver to the other party by like
notice):
To the Seller: Technology Integration Financial Services, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
To Seller No. 2: T.I.F.S. Advisory Services, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
With a concurrent
copy (which shall
not constitute
notice) to: Xxxxxxxxx & Dreidame Co. LPA
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxx, III
To the Buyer: Information Leasing Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx
Page 39
With a concurrent
copy (which shall
not constitute
notice) to: Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L.
1400 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Section 11.6 Binding Effect; Persons Benefitting; No Assignment.
-------------------------------------------------------
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and the respective successors and permitted assigns of the
parties and such Persons. Nothing in this Agreement is intended or shall be
construed to confer upon any entity or person other than the parties hereto and
their respective successors and permitted assigns any right, remedy or claim
under or by reason of this Agreement or any part hereof. This Agreement may not
be assigned by either party hereto without the prior written consent of the
other party.
Section 11.7 Counterparts.
------------
This Agreement may be executed in two (2) or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same agreement, it being understood that all of the
parties need not sign the same counterpart.
Section 11.8 No Prejudice.
-------------
This Agreement has been jointly prepared by the parties hereto and the
terms hereof shall not be construed in favor of or against any party on account
of its participation in such preparation.
Section 11.9 Governing Law.
--------------
THIS AGREEMENT, THE LEGAL RELATIONS BETWEEN THE PARTIES AND THE
ADJUDICATION AND THE ENFORCEMENT THEREOF, SHALL BE GOVERNED BY AND INTERPRETED
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF
OHIO WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF OHIO OR OF ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF OHIO.
Section 11.10 Jurisdiction; Service of Process.
-----------------------------------
Any action or proceeding seeking to enforce any provision of, or based on
any rights arising out of, this Agreement of the transactions contemplated
hereby, may be brought against any of the parties in the courts of the State of
Ohio, County of Xxxxxxxx, or if it has or can acquire jurisdiction, in the
United States District Court for the Southern District of Ohio, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process
Page 40
in any action or proceeding referred to in the preceding sentence may be served
on any party anywhere in the world.
Section 11.11 Waiver of Jury Trial.
-----------------------
AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BUYER TO ENTER INTO THIS
AGREEMENT, AND AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL, SELLER,
SELLER NO. 2 AND XXXXXXX HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY LAWSUIT OR PROCEEDING RELATING TO THIS AGREEMENT.
Section 11.12 Specific Performance.
---------------------
Each party hereto acknowledges and agrees that the other party hereto would
be irreparably damaged in the event that any of the provisions of this Agreement
were not performed in accordance with its or their specific terms or were
otherwise breached. Accordingly, each party hereto agrees that the non-breaching
party shall be entitled to a temporary restraining order, preliminary or
permanent injunction and other appropriate equitable relief to remedy or to
prevent breaches of the provisions of this Agreement by the other party and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court in the State of Ohio, in addition to any other
remedy to which the non-breaching party may be entitled, at law or in equity.
ARTICLE 12
CONSENT TO GRANTING OF A SECURITY INTEREST AND ACQUISITION DOCUMENTS
--------------------------------------------------------------------
Section 12.1 Acquisition Documents.
----------------------
Buyer consents and agrees that upon the Closing of this transaction,
Seller, Seller No. 2 and Xxxxxxx shall have the right to grant to Deutsche
Financial Services Corporation, as Administrative Agent for the benefit of
itself and other lenders ("Deutsche") under the Credit Facilities Agreement, and
various Affiliates of such parties, a first priority security interest and lien
on all of Seller's rights, remedies, claims and interests under all the
acquisition documents for this transaction.
Buyer agrees to execute at Closing an assignment of rights agreement in
form and substance acceptable to Buyer and Deutsche.
Page 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first set forth above.
TECHNOLOGY INTEGRATION FINANCIAL
SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
T.I.F.S. ADVISORY SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
XXXXXXX COMPUTER RESOURCES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
INFORMATION LEASING CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Page 42
ASSET PURCHASE AGREEMENT
AMONG
TECHNOLOGY INTEGRATION
FINANCIAL SERVICES, INC. (THE "SELLER")
AND
T.I.F.S. ADVISORY SERVICES, INC.
("SELLER NO. 2")
XXXXXXX COMPUTER RESOURCES, INC.,
("POMEROY")
AND
INFORMATION LEASING CORPORATION
(THE "BUYER")
DATED AS OF FEBRUARY 27, 2002
Page 43
Table of Contents
-----------------
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 BASIC TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.1 Purchase and Sale of the Acquired Assets. . . . . . . . . . . . . . . . . . . . 8
Section 2.2 Liabilities to be Paid at Closing or Assumed by Buyer.. . . . . . . . . . . . . 8
Section 2.3 Contracts to be Assumed by Buyer. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4 Purchase Price for Purchased Assets.. . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Payment of the Purchase Price.. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.6 Month-to-Month Leases.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.8 Certain Closing Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3 POST CLOSING ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.1 Net Book Value Determination. . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 4 THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1 Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES CONCERNING THE BUSINESS. . . . . . . . . . . . . . . . 14
Section 5.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.2 Authorization of Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.4 Recent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.5 Legal Compliance; Permits.. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.6 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.7 Title to Assets.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.9 Real Property.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.10 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.11 Customer Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.12 Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.13 Equipment Held for Sale or Lease. . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.15 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.16 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.17 Sufficiency of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.19 Interest in Customers, Suppliers, Creditors and Competitors . . . . . . . . . . 23
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Section 5.20 Notes and Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.21 Environmental, Health, and Safety Matters. . . . . . . . . . . . . . . . . . . 23
Section 5.22 Absence of Undisclosed Liabilities.. . . . . . . . . . . . . . . . . . . . . . 24
Section 5.23 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.24 Absence of Certain Changes.. . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.25 Disclosures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.26 Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER . . . . . . . . . . . . . . . . . . . . . 25
Section 6.1 Organization of the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.2 Authorization of Transaction. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.3 Noncontravention. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.4 Brokers' Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 7 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.1 Conduct of Business.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.2 Confidentiality and Announcements.. . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.4 Access; Certain Communications. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.5 Regulatory Matters, Third Party Consents. . . . . . . . . . . . . . . . . . . . 27
Section 7.6 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.7 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.8 Maintenance of Records and Reporting Requirements . . . . . . . . . . . . . . . 29
Section 7.9 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.10 Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.11 Employment of New Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 7.12 Transfer of Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.13 License to Use Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 7.14 Lease of Office Space/Administrative Services. . . . . . . . . . . . . . . . . 32
Section 7.15 Outstanding Employee Obligations . . . . . . . . . . . . . . . . . . . . . . . 33
Section 7.16 Payments Received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 8 CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.1 Conditions to The Buyer's Obligations . . . . . . . . . . . . . . . . . . . . . 33
Section 8.2 Conditions to Seller's and Seller No. 2's Obligations . . . . . . . . . . . . . 34
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Section 8.3 Mutual Conditions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 9 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS; INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.2 Obligation of the Seller to Indemnify.. . . . . . . . . . . . . . . . . . . . . 36
Section 9.3 Obligation of the Buyer to Indemnify. . . . . . . . . . . . . . . . . . . . . . 36
Section 9.4 Notice and Opportunity to Defend Against Third Party Claims . . . . . . . . . . 36
Section 9.5 Limits on Indemnification; Exclusive Remedy . . . . . . . . . . . . . . . . . . 37
ARTICLE 10 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 10.2 Obligations upon Termination.. . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 11 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.1 Amendments; Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.6 Binding Effect; Persons Benefitting; No Assignment.. . . . . . . . . . . . . . 40
Section 11.7 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.8 No Prejudice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.9 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.10 Jurisdiction; Service of Process . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.12 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 12 CONSENT TO GRANTING OF A SECURITY INTEREST AND ACQUISITION DOCUMENTS. . . . . . . . 41
Section 12.1 Acquisition Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
iii
SCHEDULES
---------
Schedule 1.1-1 Excluded Lease Residuals
Schedule 1.1-2 Customer Leases 60 days past due
Schedule 1.1-3 Insurance relating to stolen or damaged equipment
Schedule 1.1-4 Customer Leases: Retained, Terminated, Cancelled or In Default
Schedule 1.1-5 Retained Remarking Agreements or Arrangements
DISCLOSURE SCHEDULE
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Section 5.1 Jurisdictions Qualified as Foreign Corporation
Section 5.3 Noncontravention of Seller
Section 5.4 Recent Events
Section 5.5 Legal Compliance
Section 5.6 Financial Statements
Section 5.7 Title to Assets
Section 5.8 Tax Matters
Section 5.9 Leased Real Property
Section 5.10 Intellectual Property
Section 5.11 Customer Leases
Section 5.12 Other Contracts
Section 5.13 Equipment Held for Sale or Lease
Section 5.14 Insurance
Section 5.15 Litigation
Section 5.16 Employee Benefit Matters
Section 5.18 Labor Matters
Section 5.19 Interest in Customers, Supplies, Creditors and Competitors
Section 5.21 Environmental, Health and Safety Matters
Section 5.22 Absence of Undisclosed Liabilities
Section 5.23 Employees
Section 5.24 Absence of Certain Changes
Section 6.3 Noncontravention of Buyer
Section 7.1 Conduct of Business
Section 7.5 Required Consents
