EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
by and among
TELESPECTRUM WORLDWIDE INC.
(a Delaware corporation),
TECHNICAL ASSISTANCE RESEARCH PROGRAMS, INC.
(a District of Columbia corporation),
TARP INFORMATION SYSTEMS, INC.
(a Maryland corporation),
XXXX XXXXXXX,
and
XXXX XXXXXXX
Dated as of October 1, 1996
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Section Page
1. Reference to Definitions.............................................. -1-
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2. Purchase and Sale of the Business and Assets.......................... -1-
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3. Closing............................................................... -7-
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4. Conditions to Buyer's Obligations..................................... -8-
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5. Conditions to each Company's and each Shareholder's Obligations....... -8-
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6. Representations and Warranties of the Companies and the Shareholders.. -9-
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7. Representations and Warranties of the Buyer........................... -21-
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8. Certain Agreements.................................................... -22-
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9. Conduct of the Business Prior to the Closing.......................... -25-
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10. Survival of Representations; Indemnification.......................... -26-
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11. Termination........................................................... -29-
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12. Payment of Expenses................................................... -30-
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13. Contents of Agreement................................................. -30-
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14. Amendment, Parties in Interest, Assignment, Etc....................... -30-
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15. Interpretation........................................................ -30-
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16. Remedies.............................................................. -30-
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17. Notices............................................................... -31-
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18. Governing Law......................................................... -32-
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19. Consent to Jurisdiction; Service of Process, etc...................... -32-
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20. Counterparts.......................................................... -32-
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21. Definitions........................................................... -32-
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Exhibits
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A Form of Employment Agreement (Xxxxxxx)
B Form of Employment Agreement (Xxxxxxx)
C Form of Pledge Agreement
2.2 Excluded Assets
2.4 Excluded Liabilities
2.7 Allocation of Purchase Price
3.2(b)(i) Wire Instructions
3.2(b)(ii) Form of Xxxx of Sale and Assumption Agreement
4.2 Closing Certificate
4.3 Legal Opinion of Xxxxxxx & Xxxxxxxx
5.3 Legal Opinion of Xxxxxx, Xxxxx & Bockius
6 Disclosure Letter
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of October 1, 1996, by and among
TeleSpectrum Worldwide Inc., a Delaware corporation ("Buyer"), Technical
Assistance Research Programs, Inc. (formerly known as TARP, Inc.), a District of
Columbia corporation ("Research"), Tarp Information Systems, Inc., a Maryland
corporation ("Systems" and together with Research, the "Companies"), Xxxx
Xxxxxxx and Xxxx Xxxxxxx. Messrs. Xxxxxxx and Xxxxxxx are sometimes referred to
together as the "Shareholders."
Background
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The Companies are engaged in the business of providing customer service,
customer service training, management research and consulting. The Companies
offer a wide range of services to help business maximize customer satisfaction.
These services include but are not limited to the assessments of customer
service performance; satisfaction measurement, baseline measurement;
satisfaction tracking and economic modeling; 800 number related assistance;
customer/inquiry handling for retail outlets; preventative analysis assistance;
casetracking software ("XXXX Software"); benchmarking studies, customer service
training and general consultative assistance in the area of customer driven
quality. The Shareholders own all of the issued and outstanding capital stock of
each Company. The Buyer desires to purchase the Purchased Assets (as defined
herein), the Companies desire the Purchased Assets to be sold, and the
Shareholders desire to cause the Companies to sell the Purchased Assets, all on
the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of and reliance on the respective
representations, warranties and covenants contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Reference to Definitions. For convenience, certain terms used in this
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Agreement are listed in alphabetical order and defined or referred to in Section
21 (such terms as well as any other terms defined elsewhere in this Agreement
shall be equally applicable to both the singular and plural forms of the terms
defined).
2. Purchase and Sale of the Business and Assets.
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2.1. The Purchased Assets. Each Company, subject to the terms and
conditions of this Agreement, shall sell, transfer, convey and deliver to the
Buyer all of such Company's right, title and interest in all of its respective
Assets (collectively, the "Purchased Assets") which are not Excluded Assets. The
Purchased Assets include, without limitation, all of the following assets:
(a) the Business of each Company;
(b) the names Technical Assistance Research Programs, TARP, and
Tarp Information Systems; (c) the cash and cash equivalents of
each Company, wherever located;
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(c) the cash and cash equivalents of each Company, wherever
located;
(d) each Company's accounts and notes receivable and rights to
payment from any party for products sold and/or services delivered prior to the
Closing;
(e) the tangible and intangible personal property of each Company,
however owned, leased, or held, including, without limitation, machinery,
equipment, furniture, fixtures, supplies, vehicles, inventory, supplies and
computer hardware and software;
(f) the interests of each Company under all Contracts related to
the Business;
(g) the Permits of each Company;
(h) the goodwill, going concern value, past and present customer
and supplier lists and Intellectual Property (including the goodwill associated
therewith) of each Company;
(i) the prepaid expenses of each Company; and
(j) the books and records of each Company.
2.2. Excluded Assets. Notwithstanding anything to the contrary in
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Section 2.1, the corporate seal, Charter Documents, bylaws, minute books and
other corporate records of each Company and any other assets listed on Exhibit
2.2 (the "Excluded Assets") shall not be included in the Purchased Assets:
2.3. Assumed Liabilities. At the Closing, the Buyer shall assume and
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thereafter in due course timely pay and fully satisfy all obligations (the
"Assumed Liabilities"):
(a) incurred after the Closing under all Contracts and Permits
which are conveyed to Buyer as Purchased Assets pursuant to the terms and
conditions hereof;
(b) any and all Liabilities relating exclusively to the Businesses
that are reflected on the Closing Balance Sheets and incurred after the date of
the Closing Balance Sheets in the ordinary course of business.
2.4. Excluded Liabilities. Except as expressly set forth in Section 2.3,
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the Buyer shall not, by virtue of its purchase of the Purchased Assets or
otherwise in connection with the Transactions, assume or become responsible for
any Liabilities (the "Excluded Liabilities") of the Company; including, without
limitation, (a) Liabilities for any taxes, other than for federal and state
income taxes owed by the Companies for periods prior to the Closing Date, (b)
Liabilities relating to any claims for health care or other welfare benefits,
(c) Liabilities relating to the violation of any Regulation, (d) tort
Liabilities, (e) Liabilities from claims arising under any Contract or Permit
not assumed by the Buyer hereunder and as described on Exhibit 2.4 hereto as
such Exhibit may be amended at or prior
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to the Closing; and (f) Liabilities for claims arising under any Contract or
Permit to the extent such claim is based on acts or omissions of any person
which occurred prior to the Closing.
2.5. Consent of Third Parties. Nothing in this Agreement shall be
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construed as an attempt by the Company to assign to the Buyer pursuant to this
Agreement any Contract or Permit included in the Purchased Assets which is by
its terms or by Regulation nonassignable without the consent of any other party
or parties, unless such consent or approval shall have been given, or as to
which all the remedies for the enforcement thereof available to the Company
would not by Regulation pass to the Buyer as an incident of the assignments
provided for by this Agreement (a "Non-Assignable Contract"). To the extent that
any such consent or approval in respect of, or a novation of, a Non-Assignable
Contract shall not have been obtained on or before the Closing Date, the
Companies and the Shareholders shall continue to use commercially reasonable
efforts to obtain any such consent, approval or novation after the Closing Date
until such time as it shall have been obtained, and the Companies shall
cooperate with the Buyer in any economically feasible arrangement to provide
that the Buyer shall receive the applicable Company's benefits under such
Non-Assignable Contract, provided that Buyer shall undertake to pay or satisfy
the corresponding Liabilities under the terms of such Non-Assignable Contract to
the extent that the Buyer would have been responsible therefor if such consent,
approval or novation had been obtained.
2.6. Post-Closing Adjustment to Purchase Price. As soon as practicable,
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but in any event within 30 days after the Closing, the Buyer shall engage Xxxxxx
Xxxxxxxx LLP to prepare, in accordance with GAAP (applied in a manner consistent
with the Audited Financial Statements), a balance sheet of each Company (the
"Closing Date Balance Sheets") as of the end of the business on September 30,
1996. If the aggregate shareholders' equity as shown on the Closing Date Balance
Sheets is less than $1,350,000 (such amount is referred to as the "Net Worth
Deficiency"), within ten business days after delivery of the Post-Closing
Balance Sheets to the Companies, the Companies shall pay the Buyer by wire
transfer of immediately available funds an amount equal to the Net Worth
Deficiency. If the aggregate shareholders' equity as shown on the Closing Date
Balance Sheets is greater than $1,350,000 (such amount is referred to as the
"Net Worth Excess"), within ten business days after delivery of the Post-Closing
Balance Sheets to the Companies, the Buyer shall pay to the Companies by wire
transfer of immediately available funds an amount equal to the Net Worth Excess.
Notwithstanding anything in this Section 2.6 to the contrary, if there is any
Net Worth Deficiency or Net Worth Excess and the parties hereto dispute any item
contained on the Closing Date Balance Sheets, the party disputing such item
shall notify the other party in writing of each disputed item, and specify the
amount thereof in dispute within thirty business days after the delivery of the
Closing Balance Sheets. If the Buyer and the Companies cannot resolve any such
dispute which would eliminate or reduce the amount of the Net Worth Deficiency
or Net Worth Excess, as applicable, then the amount to which there is no dispute
promptly shall be paid and the amount in dispute shall be resolved by an
independent nationally recognized accounting firm which is reasonably acceptable
to the Buyer and the Companies (the "Independent Accounting Firm"). The
determination of the Independent Accounting Firm shall be made as promptly as
practical and shall be final and binding on the parties, absent manifest error
which error may only be corrected by such Independent Accounting Firm. Any
expenses relating to the engagement of the Independent Accounting Firm shall be
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allocated between the Buyer and the Companies so that the Companies share of
such costs shall be in the same proportion that the aggregate amount of the
disputed amounts submitted to the Independent Accounting Firm that are
unsuccessfully disputed by the Companies (as finally determined by the
Independent Accounting Firm) bears to the total amount of such disputed amounts
so submitted to the Independent Account Firm. All distributions made by the
Companies prior to the Closing Date shall be deemed to have been made on or
before September 30, 1996 for purposes of this calculation regardless of when
declared or made.
The parties acknowledge that all profits and losses of the Companies
realized after the close of business on September 30, 1996 will accrue to the
benefit or detriment of the Buyer, as applicable. In this regard, for tax
purposes, the Companies shall operate the Businesses as agents for the Buyer and
the Buyer, as principal, shall recognize all such income, profit, losses and
expenses.
2.7. Purchase Price.
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(a) In addition to assuming the Assumed Liabilities, the aggregate
price to be paid by the Buyer to the Companies (the "Purchase Price") for the
purchase of the Purchased Assets shall be the sum of (i) $15,000,000 (the
"Closing Payment") and (ii) the Contingent Payments. The Buyer shall pay the
Closing Payment by wire transfer of immediately available funds pursuant to
written instructions provided by the Companies to the Buyer. The Closing Payment
shall be allocated among the Companies as set forth on Exhibit 2.7 hereto as
such Exhibit is amended on prior to the Closing.
(b) As additional consideration for the sale of the goodwill of the
Companies accompanying the Purchased Assets, the Companies shall have the
opportunity to receive up to an additional $1,666,667 on account of the
operating performance of the TARP Division in each of the 1997, 1998 and 1999
Periods. The Contingent Payment, if any, in each of the 1997, 1998 and 1999
Periods shall be equal to $1,666,667 provided the EBITDA of the TARP Division in
any such year exceeds $4,000,000. If the EBITDA of the TARP Division in any of
the 1997, 1998 or 1999 Periods is less than or equal to $3,500,000 then the
Companies shall not receive any Contingent Payment with respect to such
Period(s). If the EBITDA of the TARP Division in any of the 1997, 1998 or 1999
Periods is greater than $3,500,000 and less than $4,000,000, then the Companies
shall be entitled receive a Contingent Payment with respect to any such
Period(s) equal to (x) the difference between the EBITDA for such period minus
$3,500,000, divided by (y) $500,000, and multiplied by (z) $1,666,667. Subject
to Section 10.4(c), each Contingent Payment, if any, shall be payable on the
later of the 45th day after the end of the Buyer's fiscal quarter in which the
end of the applicable 1997, 1998 or 1999 Period ends or the date the EBITDA
Statement becomes final pursuant to Section 2.7(c). Notwithstanding anything to
the contrary in this Section 2.7(b), if EBITDA in 1998 or 1999 exceeds
$4,000,000, then the amount of the excess ("Excess EBITDA") shall be carried
back to the 1997 or 1998 periods and treated as earned EBITDA in such other
periods for purposes of calculating the amount of the Contingent Payments
payable in such other periods. In no event shall any Excess EBITDA be carried
forward to future periods in the calculation of any Contingent Payment. If the
carry back of any Excess EBITDA results in an increase in the amount of any
Contingent Payment payable with respect to a prior period, such portion of the
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Contingent Payment shall be due and payable at the same time as the Contingent
Payment is due with respect to the current period. The right to receive a
Contingent Payment shall be assignable to the Shareholders upon liquidation of
the Companies (and further assignable by the Shareholders but only to trusts for
the benefit of their respective families); provided, however, that the
obligations of the Shareholders to reimburse the Company under this Section 2.7
shall not be assignable. Since the value of the Contingent Payments, if any, is
highly speculative, the parties hereto acknowledge that they have not assigned
any value to the Contingent Payment.
For purposes hereof:
"EBITDA" shall mean the income from operations before income taxes,
depreciation and amortization of the TARP Division during the twelve
month period ending on September 30 in each of 1997, 1998 and 1999 (as
applicable), as calculated in accordance with GAAP. For purposes of
this calculation, EBITDA for the 1997, 1998 and 1999 Periods will be
adjusted for any of the following items:
(1) any expenses, charges and write-downs or any losses resulting
from the sale, conversion or other disposition of capital
assets, other than in the ordinary course of business, or
inconsistent with the past practice;
(2) any excess depreciation from assets as a result of the
write-up of any such asset's basis;
(3) any amortization of goodwill or other intangibles from the
write-up of such items;
(4) any management fees or allocations of overhead costs
attributable to the Buyer except for such fees or allocations
attributable to those administrative or other functions
previously performed by the TARP Division to the extent that
such fees or allocations do not exceed the cost which the TARP
Division would incur in performing such services;
(5) expenses incurred in the development of XXXX Software
(currently estimated to consist of approximately $400,000 of
outside vendor costs, plus related hardware and software costs
and employee costs) from a DOS-environment to a Windows-based
environment, but only to the extent the incursion of such
related hardware and software costs and employee costs are
pre-approved in writing by each of Buyer and each Shareholder;
and;
(6) any foreign currency gains or losses.
The Companies and the Shareholders acknowledge that as part of each
Shareholder's obligations under his respective Employment Agreement, he will be
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required to work with certain members of Buyer's management in connection with
the integration of the operations of the TARP Division with those of the Buyer.
In addition, the Shareholders further acknowledge that the Buyer is engaged in
the business of operating call centers and that he will periodically be
assisting the Buyer in the sale of its call center services, as well as advising
the Buyer from time to time regarding the performance of its call centers.
Accordingly, the Companies and each Shareholder further acknowledge that such
activities may adversely or positively affect the amount of the Contingent
Payments. The Buyer, however, shall not cause a diversion of a material portion
of the TARP Division's historical revenues from the TARP Division without first
obtaining the Shareholders prior written consent, such consent shall not
unreasonably be withheld. In the event of any such diversion of revenues, the
Shareholders and the Buyer shall amend this Section 2.7 to appropriately reflect
the financial impact of such diversion on the opportunity to earn the Contingent
Payments, so that the Shareholders shall be credited with the loss in EBITDA
when calculating the Contingent payments.
(c) Buyer shall engage Xxxxxx Xxxxxxxx LLP to calculate the EBITDA of
TARP Division as soon as reasonably practical after each of the 1997, 1998 and
1999 Periods and deliver to the Companies and the Buyer a statement (each an
"EBITDA Statement"), as soon as reasonably practical after each such Period, but
in no case more than 30 days thereafter, indicating its calculation of EBITDA
for the applicable Period. If the Companies or the Buyer disputes any item
contained on an EBITDA Statement, such person shall notify the other in writing
of each disputed item (collectively, the "Disputed Amounts") and specify the
amount thereof in dispute within twenty business days after the delivery of the
applicable EBITDA Statement. If the Companies and the Buyer cannot resolve any
such dispute within ten days thereafter, then the amount on which the parties
are in agreement promptly shall be paid and the amount in dispute shall be
resolved by an Independent Accounting Firm. The determination of the Independent
Accounting Firm shall be made as promptly as practical and shall be final and
binding on the parties, absent manifest error which error may only be corrected
by such Independent Accounting Firm. Any expenses relating to the engagement of
the Independent Accounting Firm shall be allocated between the Companies and the
Buyer so that the Companies' share of such costs shall bear the same proportion
to the total costs as the total of Disputed Amounts unsuccessfully contested by
the Companies (as finally determined by the Independent Accounting Firm) bears
to the total of the Disputed Amounts so submitted to the Independent Accounting
Firm.
2.8. Allocation of the Purchase Price. The Purchase Price shall be
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allocated among the Purchased Assets as set forth on Exhibit 2.7 hereto. The
Companies and the Buyer shall prepare their respective Federal, state and local
tax returns (and any applicable statements required by Section 1060 of the Code)
employing the allocation set forth on Exhibit 2.7 and shall not take a position
in any tax proceeding or otherwise that is inconsistent with such allocation.
The Companies and the Buyer shall give prompt notice to each other of the
commencement of any tax audit or the assertion of any proposed deficiency or
adjustment by any taxing authority or agency which challenges such allocation.
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3. Closing.
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3.1. Location, Date. The closing of the Transactions (the "Closing") shall
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take place at the offices of the Xxxxxx, Xxxxx & Bockius LLP, 0000 Xxx Xxxxx
Xxxxxx, Xxxxxxxxxxxx, XX 00000 on or before October 28, 1996 (the "Termination
Date") or such earlier date upon the satisfaction of (or waiver by the party
entitled to the benefit of) the conditions set forth in Sections 5 and 6, or at
such other place, date and time as the parties may agree in writing.
3.2. Closing Deliveries. In connection with the completion of the
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Transactions contemplated in Section 3, at the Closing,
(a) the Buyer shall deliver or cause to be delivered:
(i) the cash portion of the Purchase Price which is required
to be delivered to the Companies at the Closing;
(ii) executed copies of the Employment Agreements and the
Pledge Agreement; and
(iii) such other agreements, documents and instruments
contemplated by this Agreement and such other items as may be
reasonably requested; and
(b) the Companies shall deliver or cause to be delivered:
(i) payment instructions regarding the cash portion of the
Purchase Price as set forth on Exhibit 3.2(b)(i), which may be
amended by the Companies at the Closing;
(ii) bills of sale and assignment and assumption agreements
transferring all of the Companies right, title and interest in and to
the Purchased Assets in form and substance satisfactory to the Buyer
and substantially in the form of Exhibit 3.2(b)(ii) hereof); and
(iii) such other agreements, documents and instruments
contemplated by this Agreement and such other items as may be
reasonably requested.
(c) each Shareholder shall deliver his respective executed
counterparts of his Employment Agreement and the Pledge Agreement.
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4. Conditions to Buyer's Obligations.
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The obligations of Buyer to effect the Closing shall be subject to
the satisfaction at or prior to the Closing of the following conditions, any one
or more of which may be waived by Buyer:
4.1. No Court Order or Litigation. No Court Order or Litigation shall be
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pending or threatened that prevents or that seeks to restrain the consummation,
or challenges the validity or legality, of Transactions or that would limit or
affect adversely Buyer's acquisition of the Purchased Assets.
4.2. Representations, Warranties and Agreements. (a) The representations
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and warranties of the Companies and the Shareholders set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date as
though made at such time and (b) the Companies and the Shareholders shall have
each performed or tendered performance in all material respects of all covenants
and agreements contained in this Agreement required to be performed and complied
with by them at or prior to the Closing. The Companies and the Shareholders
shall have delivered to the Buyer a certificate signed by the President of each
Company and each Shareholder, in form and substance reasonably satisfactory to
counsel to the Buyer, substantially in the form set forth in Exhibit 4.2 that
the Companies and the Shareholders have performed all covenants and agreements
to be performed by them under this Agreement and as regarding the accuracy of
its representations and warranties contained herein as of the Closing Date.
4.3. Legal Opinion. The Companies and the Shareholders shall have
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tendered a legal opinion of Xxxxxxx & Xxxxxxxx, counsel to the Companies and the
Shareholders, that is reasonably acceptable to counsel to the Buyer and
substantially in the form of Exhibit 4.3.
4.4. Regulatory Approvals. All Permits, if any, necessary for the
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consummation of Buyer's acquisition of the Purchased Assets shall have been
obtained and shall be in full force and effect.
4.5. Required Tender. The Shareholders and the Companies shall have
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tendered or caused the tender of the items set forth in Section 3.2 (b).
5. Conditions to each Company's and each Shareholder's Obligations.
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The obligations of the Companies and the Shareholders to effect the Closing
shall be subject to the satisfaction at or prior to the Closing of the following
conditions, any one or more of which may be waived by such parties:
5.1. No Injunction. No Court Order or Litigation shall be pending or
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threatened that prevents or that seeks to restrain the consummation, or
challenges the validity or legality, of Transactions.
5.2. Representations, Warranties and Agreements. The representations and
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warranties of the Buyer set forth in this Agreement shall be true and complete
in all material respects as of the Closing Date as though made at such time and
the Buyer shall have performed or tendered performance in all material respects
of all covenants and agreements contained in this Agreement required to be
performed and complied with by it at or prior to the Closing. The Buyer shall
have delivered a certificate signed by the President of the Buyer, in form and
substance reasonably satisfactory to counsel to the Companies, that the Buyer
has performed all covenants and agreements to be performed by it under this
Agreement and as regarding the accuracy of its representations and warranties
contained herein as of the Closing Date.
5.3. Legal Opinion. The Buyer shall have tendered a legal opinion of
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Xxxxxx, Xxxxx & Bockius LLP, counsel to the Buyer, that is reasonably acceptable
to counsel to the Companies and substantially in the form of Exhibit 5.3.
5.4. Regulatory Approvals. All Permits, if any, necessary for the
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consummation of Buyer's acquisition of the Purchased Assets shall have been
obtained and shall be in full force and effect.
5.5. Required Tender. The Buyer shall have tendered or caused the tender
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of the items set forth in Section 3.2(a).
6. Representations and Warranties of the Companies and the Shareholders. Each
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Company and each Shareholder hereby jointly and severally represents and
warrants to the Buyer that, except as set forth in a letter dated as of the date
of this Agreement, executed by each Company and each Shareholder, addressed and
delivered to Buyer by each Company and each Shareholder on or prior to the
Closing Date and containing information required by this Agreement and
exceptions to the representations and warranties of the Companies and the
Shareholders under this Agreement (the "Disclosure Letter"):
6.1. Corporate Status. Research is a corporation duly organized, validly
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existing and in good standing under the laws of the District of Columbia and is
qualified to do business as a foreign corporation under the laws of the
Commonwealth of Virginia and is in good standing in each jurisdiction where it
is required to be so qualified, except where the failure to so qualify would not
have a material adverse effect. The Charter Documents and bylaws of Research
that have been delivered to the Buyer are effective under applicable Regulations
and are current, correct and complete. Systems is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland
and is qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where it is required to be so qualified, except where the
failure to so qualify would not have a material adverse effect. The Charter
Documents and bylaws of Systems that have been delivered to the Buyer are
effective under applicable Regulations and are current, correct and complete.
6.2. Authorization. Each Company has the requisite power and authority to
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own its property and carry on its Business as currently conducted, and to
execute and deliver the Transaction Documents to which it is a party and to
perform the Transactions to be performed by it. Such execution, delivery and
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performance by each Company have been duly authorized by all necessary corporate
action. Each Shareholder has the requisite power, capacity, legal right and
authority to execute and deliver the Transaction Documents to which he is a
party and to perform the Transactions to be performed by him thereunder. Each
Transaction Document executed and delivered by each Company has been duly
executed and delivered by such Company and constitutes a valid and binding
obligation of such Company, enforceable against it in accordance with its terms.
Each Transaction Document to be executed and delivered by each Shareholder will
be duly executed and delivered by him and will constitute a valid and binding
obligation of him, enforceable against him in accordance with its terms.
6.3. Consents and Approvals. Except for the consents specified in the
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Disclosure Letter (the "Required Consents"), neither the execution or delivery
by either Company or either Shareholder of the Transaction Documents to which it
or he is a party, nor the performance of the Transactions to be performed by it
or her thereunder, will require any filing, consent or approval, constitute a
Default or cause any payment obligation to arise under (a) any Regulation or
Court Order to which such Company or Shareholder is subject, (b) the Charter
Documents or bylaws of either Company or (c) any Contract, Government Permit or
other document to which either Company is a party or by which its Business or
Assets may be subject.
6.4. Stock Ownership. The Shareholders own all of the issued and
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outstanding capital stock of each Company.
6.5. Financial Statements. The Disclosure Letter includes correct and
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complete copies of each Company's audited financial statements consisting of a
balance sheet of each Company as of December 31, 1993, 1994 and 1995 and the
related statements of income, retained earnings and cash flows for the years
then ended (collectively, the "Audited Financial Statements"), each of which
were audited by the firm of Halt, Xxxxxxx & Xxxxxxxx. The Disclosure Letter also
includes correct and complete copies of each Company's unaudited financial
statements consisting of a balance sheet of each Company as of the period ended
August 31, 1996 and the related statements of income and cash flow for the
period then ended (the "Unaudited Financial Statements," and together with the
Audited Financial Statements, the "Financial Statements"). The Financial
Statements of each Company are consistent with the books and records of such
Company, and there are no material transactions required by GAAP to be recorded
in accounting records that have not been recorded in the accounting records
underlying such Financial Statements. The Financial Statements have been
prepared in accordance with GAAP consistently applied and present fairly the
financial position and assets and liabilities of each Company as of the dates
thereof and its cash flows and the results of its operations for the years and
periods then ended, subject to normal recurring year-end adjustments and the
absence of notes in the case of the Unaudited Financial Statements. The balance
sheets of the Companies as of December 31, 1995 that are included in the
Financial Statements are referred to herein as the "Company Balance Sheets" and
the dates thereof is referred to as the "Balance Sheet Date." The balance sheets
of the Companies as of August 31, 1996 that are included in the Financial
Statements are referred to herein as the "Interim Company Balance Sheets" and
the dates thereof is referred to as the "Interim Balance Sheet Date."
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6.6. Title to Assets and Related Matters. Each Company has good and
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marketable title to, valid leasehold interests in or valid licenses to use, all
of its respective Purchased Assets, free from any Encumbrances except those
specified on the Disclosure Letter. The use of the Purchased Assets is not
subject to any Encumbrances (other than those specified in the preceding
sentence), and such use does not materially encroach on the property or rights
of anyone else. All Purchased Assets are in the possession or under the control
of the Companies and consist of all of the Assets necessary to operate the
Businesses as now being operated. Except as set forth on the Disclosure Letter,
all of the tangible personal property included in the Assets (a) is in good
working condition and reasonable repair, subject to normal wear and tear, (b) is
usable in the ordinary course of business and (c) conforms in all material
respects with all applicable Regulations relating to its construction, use and
operation. Except for those items subject to the Personal Property Leases, no
Person other than the Companies own any vehicles, equipment or other tangible
assets located on the Real Property that are used by the Companies in the
Businesses (other than immaterial items of personal property owned by the
employees of the Companies) or that are necessary for the operation of the
Businesses.
6.7. Real Property. The Disclosure Letter describes all real estate
--------------
(including, without limitation, a description of how such real estate is zoned)
used in the operation of the Businesses as well as any other real estate that is
in the possession of or leased by the Companies and the improvements (including
buildings and other structures) located on such real estate (collectively, the
"Real Property"), identifies which Real Property is owned and which is leased,
and lists any leases under which any such Real Property is possessed by the
Companies or leased by the Companies to others (the "Real Estate Leases"). The
Disclosure Letter also describes any other real estate previously owned, leased
or otherwise operated by the Companies and the time periods of any such
ownership, lease or operation. All of the buildings and structures included in
the Real Property are structurally sound, and all of the heating, ventilating,
air conditioning, plumbing, sprinkler, electrical and drainage systems,
elevators and roofs, and all other fixtures, equipment and systems at or serving
such Real Property are generally in good condition, repair and working order and
are generally adequate for the present use of the Real Property by the Companies
in conducting their respective Businesses, and there is no condition which will
result in the termination of the present access from the Real Property to such
utility services and other facilities. The Companies have received no notices,
oral or written, and have no reason to believe, that any governmental body
having jurisdiction over any Real Property intends to exercise the power of
eminent domain or a similar power with respect to all or any part of the Real
Property. Neither Company has received any notices, oral or written, from any
governmental body, and has any reason to believe, that any of the Real Property
or any improvements erected or situate thereon, or the uses conducted thereon or
therein, violate any Regulations of any governmental body having jurisdiction
over such Real Property. The Companies have not received any notice from the
holder of any mortgage, from any insurance company which has issued a policy
with respect to any of the Real Property or from any board of fire underwriters
(or other body exercising similar functions) claiming any defects or
deficiencies in any of the Real Property or suggesting or requesting the
performance of any repairs, alterations or other work to any of the Real
Property.
6.8. Certain Personal Property. The Companies have delivered to the Buyer
--------------------------
a complete
-11-
fixed asset schedule, describing and specifying the location of all items of
tangible personal property that are included in the Company Balance Sheets.
Except as listed on the Disclosure Letter, since the Balance Sheet Date, the
Companies have not (i) acquired any items of tangible personal property that
has, in any case, a carrying value in excess of $25,000, or an aggregate
carrying value in excess of $50,000 or (ii) disposed of any items of tangible
personal property (other than inventory) that have, in any case, an initial
carrying value in excess of $25,000, or an initial aggregate carrying value in
excess of $50,000.
6.9. Personal Property Leases. The Disclosure Letter lists all assets
-------------------------
and property (other than Real Property) that have been used in the operation of
the Businesses and that are possessed by the Companies under an existing lease,
including all trucks, automobiles, forklifts, machinery, equipment, furniture
and computers, except for any lease under which the aggregate annual payments
are less than $12,000 (each, an "Immaterial Lease"). The Disclosure Letter also
lists the leases under which such assets and property listed on the Disclosure
Letter are possessed. All of such leases (excluding "Immaterial Leases") are
referred to herein as the "Personal Property Leases."
6.10. Accounts Receivable. The accounts receivable of each Company are
--------------------
bona fide accounts receivable created in the ordinary course of business and are
not subject to defenses, set-offs or counterclaims and are good and collectible
at the aggregate recorded amounts thereof (in each case, net of the reserves for
such items included in the Interim Company Balance Sheets). The Disclosure
Letter includes a correct and complete accounts and notes receivable aging of
the Companies as of the Interim Balance Sheet Date reflecting the aggregate
dollar amount of all accounts and notes receivable due the Companies which have
been outstanding for: 30 days or less; more than 30 but less than 61 days; more
than 60 but less than 91 days; and more than 90 days.
6.11. Inventory. All inventory of each Company consists of items
----------
useable or saleable in the ordinary course and is valued on each Company's books
and records at the lower of cost or fair market value. The inventory records for
each Company that have been delivered to the Buyer or made available for
inspection by the Buyer are accurate with respect to the data contained therein.
6.12. Accounts Payable. All accounts payable as set forth on the
------------------
Interim Company Balance Sheets or arising since the date thereof have been
incurred in the ordinary course of business.
6.13. Product Warranties and Price Guarantees. The Disclosure Letter
-----------------------------------------
sets forth all express product warranties and price guarantees made by the
Companies.
6.14. Liabilities. Except as specified on the Disclosure Letter, the
------------
Companies do not have any Liabilities, and none of the Purchased Assets are
subject to any Liabilities, except (a) as specifically disclosed on the Interim
Company Balance Sheets, (b) Liabilities incurred in the ordinary course since
the Interim Balance Sheet Date, and (c) Liabilities under any Contracts
specifically disclosed on the Disclosure Letter (or not required to be disclosed
because of the term or amount
-12-
involved) that were not required under GAAP to
have been specifically disclosed or reserved for on the Interim Company Balance
Sheets.
6.15. Taxes. The Companies have duly filed all Federal, state, local,
------
foreign and other tax returns that are required to be filed and that were due
prior to the Closing Date, and have paid all taxes and assessments shown as
being due pursuant to such returns or pursuant to any assessment received. All
taxes and other assessments and levies that the Companies have been required by
law to withhold or to collect have been duly withheld and collected and have
been paid over to the proper governmental authorities or are properly held by
the Companies for such payment. There are no proceedings or other actions, nor
is there any basis for any proceedings or other actions, for the assessment or
collection of additional taxes of any kind for any period for which returns have
or should have been filed.
6.16. Subsidiaries. No Company owns, directly or indirectly, any
-------------
interest or investment (whether equity or debt) in any corporation, partnership,
business, trust, joint venture or other legal entity.
6.17. Legal Proceedings and Compliance with Law.
------------------------------------------
(a) Except as disclosed on the Disclosure Letter, there is no
Litigation that is pending or, to knowledge of either Company or either
Shareholder, threatened against or related to either Company. There has been no
Default under any Regulation applicable to either Company, the Assets or the
Businesses, including any Regulation relating to pollution or protection of the
environment, except for any Defaults that have been cured without material cost,
and no Company has received any notices from any governmental entity regarding
any alleged Default under any Regulation except those that have been cured
without material cost. There has been no Default with respect to any Court Order
applicable to either Company..
(b) Without limiting the generality of Section 6.17(a), except
as described on Disclosure Letter, there has not been any Environmental
Condition (i) at any premises at which the Businesses of the Companies (or any
predecessor of either Company) is currently conducted, (ii) at any property
owned, leased or operated at any time by either Company (or any predecessor of
either Company) or any Person controlled by any Affiliate of either Company, or
(iii) at any property at which wastes have been deposited or disposed by or at
the behest or direction of either Company (or any predecessor of either Company)
or any Person controlled by any Affiliate of either Company, nor has either
Company received written notice of any such Environmental Condition.
"Environmental Condition" means any condition or circumstance, including the
presence of Hazardous Substances, whether created by either Company (or any
predecessor of either Company) or any third party, at or relating to any such
property or premises that would (i) require abatement or correction under an
Environmental Law, (ii) give rise to any civil or criminal liability under an
Environmental Law, or (iii) create a public or private nuisance. "Environmental
Law" means all Regulations and Court Orders relating to pollution or protection
of the environment as well as any principles of common law under which a Person
may be held liable for the release or discharge of any materials into the
-13-
environment.
(c) The Companies have delivered to the Buyer correct and
complete copies of any written reports, studies or assessments in the possession
or control of either Company or any Shareholder that relate to any Environmental
Condition. Neither Company or any Shareholder knows of any other written
reports, studies or assessments, whether or not in the possession or control of
either Company or either Shareholder, that relate to any Environmental
Condition.
(d) Except in those cases where the failure would not have a
Material Adverse Effect, (i) each Company has obtained and is in full compliance
with all Permits, all of which are listed on the Disclosure Letter along with
their respective expiration dates, that are required for the ownership of the
Assets or operation of the Business and Assets as currently operated by such
Company, (ii) all of the Permits are currently valid and in full force and (iii)
each Company has filed such timely and complete renewal applications as may be
required with respect to its Permits. To the knowledge of each Company and each
Shareholder, no revocation, cancellation or withdrawal of a Permit has been
threatened.
6.18. Contracts.
----------
(a) The Disclosure Letter lists each Contract of the following
types to which either Company is a party or by which it is bound:
(i) Contracts with any present or former
stockholder, director, officer, employee, partner or consultant
or with any Affiliate of either Shareholder;
(ii) Contracts for the purchase of, or payment for,
supplies or products, or for the performance of services, from
or by a third party, in excess of $25,000 with respect to any
one supplier or other party;
(iii) Contracts to sell or supply products, inventory
or other property to, or to perform services for, a third
party, that involve an amount in excess of $25,000 with respect
to any one customer or other party;
(iv) Contracts to sell any product or provide any
service to a governmental or regulatory body;
(v) Contracts limiting or restraining it from
engaging or competing in any lines or business with any Person;
(vi) Contracts with any customer providing for
a volume refund, retrospective price adjustment or price
guarantee;
-14-
(vii) Contracts to lease to or to operate for
any other party any asset that involve an amount in excess of
$25,000 in any individual case (other than Real Estate Leases
and Personal Property Leases identified on the Disclosure
Letter);
(viii) Any notes, debenture, bonds, conditional sale
agreements, equipment trust agreements, letter of credit
agreements, reimbursement agreements, loan agreements or other
Contracts for the borrowing or lending of money (including
loans to or from officers, directors, partners or stockholders
or with Affiliates of either Shareholder or any members of his
immediate families), or agreements or arrangements for a line
of credit or for a guarantee of, or other undertaking in
connection with, the indebtedness of any other Person;
(ix) Contracts creating or recognizing any
Encumbrances with respect to any Assets;
(x) Contracts with distributors, manufacturers
sales representatives or other sales agents;
(xi) Contracts which relate in whole or in
part to any software, technical assistance or other know-how or
other Intellectual Property right;
(xii) Contracts for any capital expenditure or
leasehold improvement in excess of $25,000; and
(xiii) Any other Contracts (other than those that may
be terminated on not more than 30 days' notice without
Liability and those described in any of (i) through (xii)
above) not made in the ordinary course of business or which are
material to the Business or the assets.
(b) No Company is in Default under any Contract. To the
knowledge of each Company and each Shareholder, no Company has received any
communication from, or given any communication to, any other party indicating
that such Company or such other party, as the case may be, is in Default under
any Contract. To the knowledge of each Company and each Shareholder, none of the
other parties to any such Contract to which a Company is a party is in Default
thereunder.
6.19. Insurance. The Disclosure Letter lists all policies or binders of
---------
insurance held by or on behalf of the Companies or relating to the Business or
any of the Assets, specifying with respect to each policy the insurer, the type
of insurance, the amount of the coverage, insured, the expiration date, the
policy number and any pending claims thereunder. There is no Default with
respect to any such policy or binder, nor has there been any failure to give any
notice or present any claim under any such policy or binder in a timely fashion
or in the manner or detail required by the policy or binder, except for any of
the foregoing that would not, individually or in the aggregate, have a Material
Adverse Effect. There is no notice of nonrenewal or cancellation with respect
to, or disallowance
-15-
of any claim under, any such policy or binder that has been received by either
Company, except for any of the foregoing that would not, individually or in the
aggregate, have a Material Adverse Effect.
6.20. Intellectual Property and Software Products.
-------------------------------------------
(a) Neither Company neither currently uses nor has it previously
used in the development, production or marketing of its products and services
any Copyrights, Patents or Trademarks except for those listed on Disclosure
Letter. Each Company owns or has the lawful right to use all material
Intellectual Property that is used in the operation of its business in the
ordinary course or otherwise. All of the Intellectual Property listed on
Disclosure Letter is owned by such Company free and clear of any Encumbrances,
or used pursuant to an agreement that is described on Disclosure Letter. Except
in such cases that would not have a Material Adverse Effect, individually or in
the aggregate, neither Company infringes upon nor unlawfully or wrongfully uses
any Intellectual Property rights owned or claimed by another Person, and neither
Company is in Default, nor has received any notice of any claim of infringement
or any other claim or proceeding, with respect to any such Intellectual
Property. Except for any rights under written licenses or other written
Contracts, no current or former employee of the Company and no other Person owns
or has any proprietary, financial or other interest, direct or indirect, in
whole or in part, and including any right to royalties or other compensation, in
any of the Intellectual Property, or in any application therefor.
(b) Disclosure Letter contains a complete list of all of the
computer software products sold, licensed, distributed, marketed, used or under
development by the Companies (the "Software Products"). Each of the Software
Products performs substantially in accordance with the specifications,
documentation and other written material used in connection with the sale,
license, distribution, marketing or use thereof and is free of defects in
programming and operation except such defects as would not materially and
adversely affect the use of the respective Software Products for their intended
purposes.
(c) Except as specified on Disclosure Letter, all right, title and
interest in and to the Software Products are owned by the Companies, free and
clear of all Encumbrances. No government funding was utilized in the development
of any of the Software Products. Except for such violations that would not have
a Material Adverse Effect, individually or in the aggregate, the sale, license,
distribution, marketing or use of the Software Products by the Companies
violates any rights of any other Person, and the Companies have not received any
communication alleging such a violation. Except as specified on Disclosure
Letter, the Companies have no obligation to compensate any Person for the sale,
license, distribution, marketing or use of the Software Products. Other than as
set forth on Disclosure Letter, the Companies have not granted to any other
Person any license, option or other right in or to any of the Software Products,
except for non-exclusive, royalty-bearing, end-user licenses granted pursuant to
license agreements, substantially in the forms attached as part of Disclosure
Letter (the "End-User Licenses").
(d) The Companies have no obligation to any Person to maintain,
modify, improve or upgrade any of the Software Products, except for any such
obligation set forth in an End-User
-16-
License or under a customer-specific services agreement and such other
obligations as would not have a Material Adverse Effect.
(e) The Companies have kept secret and has not disclosed the source
codes for the Software Products to any Person other than to those Persons
identified on Disclosure Letter and to certain employees of the Companies.
6.21. Employee Relations.
------------------
(a) Except as described in the Disclosure Letter, no Company is
(a) a party to or otherwise bound by any collective bargaining or other type of
union agreement, (b) a party to, involved in or, to the knowledge of either
Company or either Shareholder, threatened by, any labor dispute or unfair labor
practice charge, or (c) currently negotiating any collective bargaining
agreement, and no Company has experienced any work stoppage during the last
three years. The Disclosure Letter sets forth the names and current annual
salary rates or current hourly wages of all present employees of each Company.
(b) Each Company is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice.
There are no outstanding claims against either Company (whether under
Regulation, Contract, policy, or otherwise) asserted by or on behalf of any
present or former employee or job applicant of such Company on account of or for
(i) overtime pay, other than overtime pay for work done in the current payroll
period, (ii) wages or salary for any period other than the current payroll
period, (iii) any amount of vacation pay or pay in lieu of vacation time off,
other than vacation time off or pay in lieu thereof earned in or in respect of
the current fiscal year, (iv) any amount of severance pay or similar benefits,
(v) unemployment insurance benefits, (vi) workers' compensation or disability
benefits, (vii) any violation of any statute, ordinance, order, rule or
regulation relating to plant closings, employment terminations or layoffs,
including but not limited to The Workers Adjustment and Retraining Act, (viii)
any violation of any statute, ordinance, order, rule or regulations relating to
employee "whistle blower" or "right-to-know" rights and protection, (ix) any
violation of any statute, ordinance, order, rule or regulations relating to the
employment obligations of federal contractors or subcontractors or (x) any
violation of any Regulation relating to minimum wages or maximum hours of work,
and neither Company nor either the Shareholder is aware of any such claims which
have not been asserted. No Person (including any governmental body) has asserted
or threatened any claims against either Company under or arising out of any
Regulation relating to discrimination or occupational safety in employment or
employment practices.
6.22. ERISA.
-----
(a) The Disclosure Letter contains a complete list of all
Benefit Plans sponsored or maintained by each Company or under which such
Company may be obligated. The Companies have delivered to the Buyer (i) accurate
and complete copies of all Benefit Plan documents and all other material
documents relating thereto, including all summary plan descriptions, summary
annual reports
-17-
and insurance contracts, (ii) accurate and complete detailed summaries of all
unwritten Benefit Plans, (iii) accurate and complete copies of the most recent
financial statements and actuarial reports with respect to all Benefit Plans for
which financial statements or actuarial reports are required or have been
prepared, and (iv) accurate and complete copies of all annual reports for all
Benefit Plans (for which annual reports are required) prepared within the last
three years. Each Benefit Plan providing benefits that are funded through a
policy of insurance is indicated by the word "insured" placed by the listing of
the Benefit Plan in the Disclosure Letter.
(b) All Benefit Plans conform (and at all times have conformed)
to, and are being administered and operated (and at all times have been
administered and operated) in material compliance with, the requirements of
ERISA, the Code and all other applicable Regulations. All returns, reports and
disclosure statements required to be made under ERISA and the Code with respect
to all Benefit Plans have been timely filed or delivered. There have not been
any "prohibited transactions," as such term is defined in Section 4975 of the
Code or Section 406 of ERISA involving any of the Benefit Plans, that could
subject either Company to any penalty or tax imposed under the Code or ERISA.
(c) Except as set forth in the Disclosure Letter, any Benefit
Plan that is intended to be qualified under Section 401(a) of the Code and
exempt from tax under Section 501(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and such determination remains in
effect and has not been revoked. To the knowledge of either Company or either
Shareholder, nothing has occurred since the date of any such determination that
would affect adversely such qualification or exemption, or result in the
imposition of excise taxes or income taxes on unrelated business income under
the Code or ERISA with respect to any Benefit Plan.
(d) No Company has a defined benefit plan subject to Title IV
of ERISA, nor does it have a current or contingent obligation to contribute to
any multiemployer plan (as defined in Section 3(37) of ERISA). No Company has
any liability with respect to any employee benefit plan (as defined in Section
3(3) of ERISA) other than with respect to the Benefit Plans. For purposes of
this Section 7.22(d), the term "Company" shall include any corporation that is a
member of any controlled group of corporations (as defined in Section 414(b) of
the Code) that includes each Company, any trade or business (whether or not
incorporated) that is under common control (as defined in Section 414(c) of the
Code) with either Company, any organization (whether or not incorporated) that
is a member of an affiliated service group (as defined in Section 414(m) of the
Code) that includes either Company and any other entity required to be
aggregated with such Company pursuant to the regulations issued under Section
414(o) of the Code.
(e) There are no pending or, to the knowledge of either Company
or either Shareholder, threatened claims by or on behalf of any Benefit Plans,
or by or on behalf of any individual participants or beneficiaries of any
Benefit Plans, alleging any breach of fiduciary duty on the part of either
Company or any of its officers, directors or employees under ERISA or any other
applicable Regulation, or claiming benefit payments other than those made in the
ordinary operation of such plans, nor is there, to the knowledge of either
Company or either Shareholder, any basis for
-18-
any such claim. To the knowledge of either Company or either Shareholder, the
Benefit Plans are not the subject of any investigation, audit or action by the
Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation ("PBGC").
(f) Each Company has made all required contributions under its
Benefit Plans, including the payment of any premiums payable to the PBGC and
other insurance premiums on a timely basis, or such contributions are properly
accrued on such Company's Financial Statements.
(g) With respect to any Benefit Plan that is an employee
welfare benefit plan (within the meaning of Section 3(1) of ERISA) (a "Welfare
Plan"), (i) each Welfare Plan for which contributions are claimed as deductions
under any provision of the Code is in material compliance with all applicable
requirements pertaining to such deduction, (ii) with respect to any welfare
benefit fund (within the meaning of Section 419 of the Code) related to a
Welfare Plan, there is no disqualified benefit (within the meaning of Section
4976(b) of the Code) that would result in the imposition of a tax under Section
4976(a) of the Code, (iii) any Benefit Plan that is a group health plan (within
the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every
case has complied, with all of the material requirements of Section 4980B of the
Code, ERISA, Title XXII of the Public Health Service Act and the applicable
provisions of the Social Security Act, and (iv) all Welfare Plans may be amended
or terminated by the Companies at any time on or after the Closing Date.
6.23. Corporate Records. The minute books of each Company contain
-----------------
complete and correct copies of its Charter Documents and bylaws and of all
minutes of meetings, resolutions and other proceedings of its Board of Directors
and stockholders. The stock record book of each Company is complete and correct.
6.24. Absence of Certain Changes. Except as contemplated by this
--------------------------
Agreement, since the Balance Sheet Date, except as mutually agreed, each Company
has conducted its Business in the ordinary course and there has not been with
respect to such Company:
(a) any material adverse change in its Business, Assets or
Liabilities;
(b) any change or amendment in its Charter Documents;
(c) any distribution or payment declared or made in respect of
its capital stock by way of dividend, purchase or redemption of shares or
otherwise;
(d) any increase in the compensation payable or to become
payable to any director, officer, employee or agent, except for increases for
non-officer employees made in the ordinary course of business, nor any other
change in any employment or consulting arrangement;
(e) any sale, assignment or transfer of any material Assets, or
any additions to or transactions involving any material Assets, other than those
made in the ordinary course of business;
-19-
(f) other than in the ordinary course of business, any waiver
or release of any claim or right or cancellation of any debt held;
(g) any payment to any Affiliate of such Company, except as
specified in the Disclosure Letter;
(h) any change in the accounting policies followed by such
Company or the method of applying such principles; or
(i) any capital expenditure commitment involving in any
individual case, or series of related cases, more than (i) $25,000 or (ii) an
amount that would cause the sum of all such capital expenditure commitments to
exceed $50,000.
6.25. Customers. Each Company has used its reasonable business
---------
efforts to maintain and currently maintains, good working relationships with all
of its customers. The Disclosure Letter contains a list of the names of each of
the five customers that, for the year ended December 31, 1995, were the largest
dollar volume customers of products and services sold and provided by each
Company. Except as specified on the Disclosure Letter, none of such customers
has given either Company notice terminating, canceling or threatening to
terminate or cancel any Contract or relationship with such Company.
6.26. Finder's Fees. Except for Xxxxxxxx Capital Partners, Inc.,
-------------
whose fee will be paid at the Closing by the Company, no Person retained by
either Company or either Shareholder is or will be entitled to any commission or
finder's or similar fee in connection with the Transactions.
6.27. [Intentionally Left Blank]
------------------------
6.28. Additional Information. The Disclosure Letter accurately lists
----------------------
the following:
(a) the names of all officers and directors of each Company;
(b) the names and addresses of every bank or other financial
institution in which each Company maintains an account (whether checking, saving
or otherwise), lock box or safe deposit box, and the account numbers and names
of the Persons having signing authority or other access thereto;
(c) the names of all Persons authorized to borrow money or
incur or guarantee indebtedness on behalf of each Company;
(d) the names of all Persons holding powers of attorney from
each Company and a summary statement of the terms thereof; and
(e) all names under which each Company has conducted any
Business or which it has
-20-
otherwise used at any time during the past five years.
6.29. Transactions with Affiliates. Except as set forth on the
----------------------------
Disclosure Letter, no affiliate of any Shareholder or any member of his
immediate family, owns or has a controlling ownership interest in any
corporation or other entity (other than TARP Europe Ltd.) that is a party to any
Contract with respect to the Assets or Business.
6.30. Full Disclosure. There are and will be no materially misleading
---------------
misstatements in any of the representations and warranties made by either
Company or either Shareholder in this Agreement, the Disclosure Letter, the
Exhibits to this Agreement, any other Transaction Document or in any of the
documents, certificates and instruments delivered or to be delivered by either
Company or either Shareholder pursuant to this Agreement and each Company and
each Shareholder has not omitted to state any fact necessary to make statements
made herein or therein not materially misleading.
6.31. Full Disclosure. The representations and warranties of the
---------------
Companies and the Shareholders contained in this Agreement, disregarding all
qualifications and exceptions herein relating to materiality or Material Adverse
Effect, are true and correct with only such exceptions as would not in the
aggregate have a Material Adverse Effect.
7. Representations and Warranties of the Buyer. The Buyer hereby repre-
-------------------------------------------
sents and warrants to each Company and each Shareholder as follows:
7.1. Corporate. The Buyer is a corporation duly organized, validly
---------
existing and in good standing under the laws of the State of Delaware. The Buyer
has the requisite power and authority to execute and deliver the Transaction
Documents to which it is a party and to perform the Transactions to be performed
by it thereunder, and such execution, delivery and performance by it have been
duly authorized by all necessary corporate action.
7.2. Enforceability. The Transaction Documents to which the Buyer
--------------
is a party constitute valid and binding obligations of the Buyer, enforceable
against it in accordance with their terms.
7.3. Consents and Approvals. Neither the execution and delivery by
----------------------
the Buyer of the Transaction Documents to which it is a party, nor the
performance of the Transactions to be performed by it thereunder, will require
any filing, consent or approval or constitute a Default under (a) any Regulation
or Court Order to which it is subject, (b) its Charter Documents or bylaws or
(c) any Contract, Permit or other document to which it is a party or by which
its properties or other assets may be subject.
7.4. Finder's Fees. No Person retained by the Buyer is or will be
-------------
entitled to any commission or finder's or similar fee in connection with the
Transactions.
-21-
7.5. Full Disclosure. There are and will be no materially misleading
---------------
misstatements in any of the representations and warranties made by the Buyer in
this Agreement, the Disclosure Letter, the Exhibits to this Agreement or in any
of the documents, certificates and instruments delivered or to be delivered by
the Buyer pursuant to this Agreement and the Buyer has not omitted to state any
fact necessary to make statements made herein or therein not materially
misleading.
8. Certain Agreements.
------------------
8.1. Access. Between the date of this Agreement and the Closing
------
Date, the Companies shall (a) give Buyer and its authorized representatives and
legal counsel reasonable access to all properties, books, Contracts, Assets and
records of the Companies, (b) permit Buyer to make inspections thereof, and (c)
cause its officers and its advisors to furnish the Buyer with such financial and
operating data and other information with respect to the Business of the
Companies and to discuss with the Buyer and its authorized representatives and
legal counsel the affairs of the Companies, all as Buyer may from time to time
reasonably request.
8.2. Regulatory Matters. The Companies and the Buyer shall (a) file
------------------
with applicable regulatory authorities any applications and related documents
required to be filed by them in order to consummate the transactions and (b)
cooperate with each other as they may reasonably request in connection with the
foregoing.
8.3. Exclusivity. From the date hereof until the earlier of the
-----------
Closing or the termination of this Agreement, no Company nor either Shareholder
or any of their respective agents shall, directly or indirectly, solicit or
negotiate or enter into any agreement with any other Person, or provide any
nonpublic information to any other Person, with respect to or in furtherance of
any proposal for a merger or business combination involving, or acquisition of
any interest in, or (except in the ordinary course of business) sale of assets
by, the Companies, except for the acquisition of the Purchased Assets by Buyer.
8.4. Update Disclosure Letter. Between the date hereof and the
------------------------
Closing Date, the Companies and the Shareholders shall promptly disclose to
Buyer in writing any information set forth in the Disclosure Letter which is no
longer applicable and any information of the nature of that set forth in the
Disclosure Letter which arises after the date hereof and which would have been
required to be included in the Disclosure Letter if such information had been
obtained on the date of delivery thereof.
8.5. Best Efforts. Each party shall use their best efforts to cause
------------
all conditions to the performance of the parties hereto that are within its
control to be satisfied and the Transactions consummated by the Termination
Date.
8.6. Financial Information. Until the Closing, each Company shall
---------------------
provide the Buyer, within 15 days after the end of each month, with an unaudited
consolidated balance sheet and income statement of such Company as of and for
the month then ended, prepared on the same basis as the
-22-
interim financial statements referred to in Section 6.5, and certified as such
by the chief financial officer of such Company.
8.7. Restrictive Covenants.
---------------------
(a) Each Shareholder covenants that for the period ending four
years after the Closing Date, he will not, directly or indirectly, own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as a partner, principal,
agent, representative, consultant or otherwise with or use or permit his name to
be used in connection with, any business or enterprise engaged directly or
indirectly in competition with the business conducted by the Buyer at any time
during such period within any portion of the United States or Western Europe in
the direct marketing business which includes inbound and outbound telemarketing,
fulfillment, direct mail and customer retention (the "Restricted Business"). It
is recognized by the Buyer and each Shareholder that the Restricted Business is
and is expected to continue to be conducted throughout the United States and
Western Europe and that more narrow geographical limitations of any nature on
this non-competition covenant (and the non-solicitation covenant set forth in
Section 8.7(b)) are therefore not appropriate. The foregoing restriction shall
not be construed to prohibit (i) the ownership by a Shareholder as a passive
investment of not more than five percent (5%) of any class of securities of any
corporation which is engaged in any of the foregoing businesses having a class
of securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934, as amended, or (ii) teaching, the authorship of articles or other
scholarly works or the delivery of speeches by either Shareholder.
(b) Each Shareholder further covenants that for the period
ending four years after the Closing Date, he will not, either directly or
indirectly, (i) call on or solicit any Person who or which within the past two
years has been a customer with respect to the Restricted Business with respect
to the activities prohibited by Section 8.7(a) or (ii) solicit the employment of
any person who is employed by the Buyer during such period on a full or
part-time basis.
(c) Each Shareholder recognizes and acknowledges that by reason
of his ownership of and employment by the Companies she has had access to
Confidential Information relating to the Restricted Business. Each Shareholder
acknowledges that such Confidential Information is a valuable and unique asset
and covenants that he will not disclose any such Confidential Information after
the Closing Date to any person for any reason whatsoever, unless such
information (a) is in the public domain through no wrongful act of such
Shareholder, (b) has been rightfully received from a third party without
restriction and without breach of this Agreement or (c) except as may be
required by law.
(d) Each Shareholder acknowledges that the restrictions
contained in this Section 8.7 are reasonable and necessary to protect the
legitimate interests of the Buyer, and that any violation will result in
irreparable injury to the Buyer.
(e) Each Shareholder agrees that the Buyer shall be entitled to
preliminary and
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permanent injunctive relief, without the necessity of proving actual damages, as
well as an equitable accounting of all earnings, profits and other benefits
arising from any violation of this Section 8.7, which rights shall be cumulative
and in addition to any other rights or remedies to which the Buyer may be
entitled. In the event that any of the provisions of this Section 8.7 should
ever be adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(f) The covenants set forth in this Section 8 shall be in
addition to and not in limitation of any similar covenants set forth in any
employment agreement between the Buyer or any of its Affiliates and either
Shareholder.
8.8. Required Consents. Each Company and each Shareholder shall use
-----------------
their best efforts to take, or cause to be taken, such action to execute and
deliver, or cause to be executed and delivered, such additional documents and
instruments and to do, or cause to be done, all things necessary, proper or
advisable to obtain the Required Consents.
8.9. Release of Personal Guarantees. The Buyer shall cause all
------------------------------
obligations of the Company which have been guaranteed by any Shareholder to
either be retired or use its best efforts to arrange to have such guarantees
released; provided, however, to the extent that the Company and the Buyer are
unable to effectuate any such release, Buyer shall indemnify and holds harmless
each Shareholder from and against any liabilities, claims, demands, judgments,
losses, costs, damages or expenses whatsoever (including reasonable attorneys'
fees and disbursements incurred by them in connection therewith) that he may
sustain, suffer or incur and that result from, arise out of or relate to such
guarantees.
8.10. Satisfaction of Liabilities. Each Company shall at the Closing,
---------------------------
fully satisfy or cause to have been satisfied all material third party
Liabilities and obligations of such Company which are not also Assumed
Liabilities.
8.11. Termination of the 401(k) Plan. The Companies shall terminate
------------------------------
the Technical Assistance Research Programs, Inc. 401(k)/Profit Sharing Plan as
or before the Closing Date, and shall take all actions necessary to enable the
participants to receive a distribution of their account balances on account of
the termination of the plan and roll over their distributed benefits to a 401(k)
plan maintained by Buyer if such Buyer's plan so permits.
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9. Conduct of the Business Prior to the Closing.
--------------------------------------------
9.1. Operation in Ordinary Course. Between the date of this
----------------------------
Agreement and the Closing Date, each Company shall conduct its Business in all
material respects in the ordinary course and to use commercially reasonable
efforts to maintain all current business relationships.
9.2. Business Organization. Between the date of this Agreement and
---------------------
the Closing Date, each Company shall use commercially reasonable efforts, to
preserve substantially intact its business organization and keep available the
services of the present officers and employees of such Company.
9.3. Corporate Organization. Between the date of this Agreement and
----------------------
the Closing Date, no Company shall amend its Charter Document or bylaws and
shall not:
(a) issue, sell or otherwise dispose of any of its capital
stock, or create, sell or otherwise dispose of any options, rights, conversion
rights or other agreements or commitments of any kind relating to the issuance,
sale or disposition of any of its capital stock;
(b) reclassify, split up or otherwise change its capital stock;
(c) be party to any merger, consolidation or other business
combination;
(d) sell, lease, license or otherwise dispose of any of its
Assets (including, but not limited to rights with respect to its Intellectual
Property), except in the ordinary course of business; or
(e) organize any subsidiary or acquire any equity securities of
any Person or any equity or ownership interest in any business.
9.4. Business Restrictions. Between the date of this Agreement (the
---------------------
Balance Sheet Date with respect to Section 9.4(a)) and the Closing Date, except
as mutually agreed, no Company shall:
(a) borrow any funds or otherwise become subject to, whether
directly or by way of guarantee or otherwise, any indebtedness for borrowed
money;
(b) create any material Encumbrance on any of its material
Assets;
(c) except in the ordinary course of business, increase in any
manner the compensation of any director or officer or increase in any manner the
compensation of any class of employees;
(d) create or materially modify any bonus, deferred
compensation, pension, profit sharing, retirement, insurance, stock purchase,
stock option, or other fringe benefit plan, arrangement or practice or any other
employee benefit plan (as defined in section 3(3) of ERISA);
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(e) make any capital expenditure or acquire any property or
assets (other than raw materials and supplies) for a cost in excess of $50,000
in any one case or $100,000 in the aggregate;
(f) enter into any agreement that materially restricts either
Company from carrying on the Business;
(g) cancel any material debts of others or waive any material
claims or rights; or
(h) act or omit from taking any action which would cause any of
the representations and warranties in Section 7 to be inaccurate.
9.5. Duty of Shareholders. The Shareholders shall cause each
--------------------
Company to take or refrain from taking such actions set forth elsewhere in this
Section 9.
10. Survival of Representations; Indemnification.
--------------------------------------------
10.1. Survival of Representations, Etc. The representations and
--------------------------------
warranties given by each Company, each Shareholder and the Buyer under this
Agreement shall survive the Closing for a period of two years after the Closing
Date, except that all representations and warranties contained in Sections 6.4,
6.15, 6.17 and 6.22 shall survive the Closing for the period of the applicable
statute of limitations plus any extensions or waivers thereof.
10.2. Indemnification by the Shareholders and the Companies. The
-----------------------------------------------------
Shareholders and the Companies, jointly and severally, hereby agree to indemnify
and hold harmless the Buyer, and its successors and assigns, (each, an
"Indemnified Buyer Party") from and against any and all Liabilities, claims,
demands, judgments, settlement payments, losses, costs, damages and expenses
whatsoever (including reasonable attorneys', consultants' and other professional
fees and disbursements of every kind, nature and description incurred by such
Indemnified Buyer Party in connection therewith) (collectively, "Damages") that
such Indemnified Buyer Party may sustain, suffer or incur that result from,
arise out of or relate to (a) any Excluded Liability, (b) any breach of or any
inaccuracy in any representation, warranty, covenant or agreement of either
Company or either Shareholder contained in this Agreement, including any breach
of the obligation to indemnify hereunder, (c) any Liability or obligation of
either Company involving an Environmental Condition or which otherwise relates
to, or involves a claim, Liability or obligation which arises out of or is based
upon, any Environmental Law, to the extent that such Liability or obligation
relates to or arises out of, in whole or in part, any activity occurring,
condition existing, omission to act or other matter existing prior to the
Closing Date, (d) any Liability or obligation of any Company or any shareholder
involving taxes due and payable by, or imposed with respect to either Company or
either Shareholder for any all taxable periods ending on or prior to the Closing
Date (whether or not such taxes have been due and payable) or (e) other
specified indemnities based upon due diligence investigation.
10.3. Indemnification by the Buyer. The Buyer hereby agrees to
----------------------------
indemnify and hold harmless each Company (each, an "Indemnified Seller Party")
from and against any Damages that any
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Indemnified Seller Party may sustain, suffer or incur that result from, arise
out of or relate to any breach of or inaccuracy in any representation, warranty,
covenant or agreement of the Buyer contained in this Agreement, including any
breach of the obligation to indemnify hereunder.
10.4. Limitation on Liabilities.
-------------------------
(a) Notwithstanding anything in this Agreement to the contrary,
an indemnifying party shall not have any liability to an indemnified party in
respect of any claim for indemnification for the breach of any representation or
warranty contained herein (i) unless a claim with respect thereto is delivered
to the indemnifying party specifying the factual basis of the claim in
reasonable detail to the extent then known by the indemnifying party prior to
the termination of the survival period for such representation and warranty set
forth in Section 10.1 hereof and (ii) until the damages to the indemnified
party, after taking into account Section 10.4(a) hereof, exceed a cumulative
aggregate total of $175,000, but then to the full extent of such Damages.
(b) In addition, the indemnification liability of the Companies
and the Shareholders under Section 10.2 of this Agreement shall be limited to an
aggregate of $6,250,000 in the case of any claim or claims for breaches of
representations and warranties of either Company or either Shareholder made
herein or in any other Transaction Document.
(c) In pursuing the indemnification liability of the Companies
and the Shareholders under Section 10.2 of this Agreement, the Company shall
first resort to the Pledged Shares, valued as set forth in the Pledge Agreement.
In addition, the Buyer shall have an offset right against Contingent Payments
otherwise payable pursuant to Section 2.7 of this Agreement.
10.5. Procedure for Claims.
--------------------
(a) An Indemnified Buyer Party or an Indemnified Seller Party
that desires to seek indemnification under any part of this Section 10 (each, an
"Indemnified Party") shall give notice (a "Claim Notice") to each party
responsible or alleged to be responsible for indemnification hereunder (an
"Indemnitor"). Such notice shall briefly explain the nature of the claim and the
parties known to be involved, and shall specify the amount thereof. If the
matter to which a claim relates shall not have been resolved as of the date of
the Claim Notice, the Indemnified Party shall estimate the amount of the claim
in the Claim Notice, but also specify therein that the claim has not yet been
liquidated (an "Unliquidated Claim"). If an Indemnified Party gives a Claim
Notice for an Unliquidated Claim, the Indemnified Party shall also give a second
Claim Notice (the "Liquidated Claim Notice") within 60 days after the matter
giving rise to the claim becomes finally resolved, and the Liquidated Claim
Notice shall specify the amount of the claim. Each Indemnitor to which or whom a
Claim Notice is given shall respond to any Indemnified Party that has given a
Claim Notice (a "Claim Response") within 30 days (the "Response Period") after
the later of (i) the date that the Claim Notice is given or (ii) if a Claim
Notice is first given with respect to an Unliquidated Claim, the date on which
the Liquidated Claim Notice is given. Any Claim Notice or Claim Response shall
be given in accordance with the notice requirements hereunder, and any Claim
Response shall specify whether or not the
-27-
Indemnitor giving the Claim Response disputes the claim described in the Claim
Notice. If any Indemnitor fails to give a Claim Response within the Response
Period, such Indemnitor shall be deemed not to dispute the claim described in
the related Claim Notice. If any Indemnitor elects not to dispute a claim
described in a Claim Notice, whether by failing to give a timely Claim Response
or otherwise, then the amount of such claim shall be conclusively deemed to be
an obligation of such Indemnitor.
(b) If any Indemnitor shall be obligated to indemnify an
Indemnified Party hereunder, such Indemnitor shall pay to such Indemnified Party
within 30 days after the last day of the applicable Response Period the amount
to which such Indemnified Party shall be entitled. If there shall be a dispute
as to the amount or manner of indemnification under this Section 10, the
Indemnitor and the Indemnified Party shall seek to resolve such dispute through
negotiations and, if such dispute is not resolved within twenty days, the
Indemnified Party may pursue whatever legal remedies may be available for
recovery of the Damages claimed from any Indemnitor. If any Indemnitor fails to
pay all or part of any indemnification obligation when due, then such Indemnitor
shall also be obligated to pay to the applicable Indemnified Party interest on
the unpaid amount for each day during which the obligation remains unpaid at an
annual rate equal to 10%.
10.6. Third Party Claims. An Indemnified Party that desires to seek
------------------
indemnification under any part of this Section 10 with respect to any actions,
suits or other administrative or judicial proceedings (each, an "Action") that
may be instituted by a third party shall give each Indemnitor prompt notice of a
third party's institution of such Action. After such notice, any Indemnitor may,
or if so requested by such Indemnified Party, any Indemnitor shall, participate
in such Action or assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party; provided, however, that such Indemnified
Party shall have the right to participate at its own expense in the defense of
such Action; and provided, further, that the Indemnitor shall not consent to the
entry of any judgment or enter into any settlement, except with the written
consent of such Indemnified Party (which consent shall not be unreasonably
withheld), that (a) fails to include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of any such Action or (b) grants the claimant or plaintiff
any injunctive relief against the Indemnified Party. Any failure to give prompt
notice under this Section 10.6 shall not bar an Indemnified Party's right to
claim indemnification under this Section 10, except to the extent that an
Indemnitor shall have been harmed by such failure.
10.7. Exceptions to Limitations. Nothing herein shall be deemed to
-------------------------
limit or restrict in any manner any rights or remedies which the Buyer has, or
might have, at law, in equity or otherwise, against either Company or either
Shareholder based on intentional fraud by either Company or either Shareholder
hereunder.
10.8. Effect of Investigation. Any claim for indemnification shall
-----------------------
not be invalid as a result of any investigation by or opportunity to investigate
afforded to Buyer unless the Buyer has actual conscious awareness of the claim
prior to the Closing.
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10.9. Contingent Claims. Nothing herein shall be deemed to prevent an
-----------------
Indemnified Party from making a claim hereunder for potential or contingent
claims or demands provided the Claim Notice sets forth the specific basis for
any such potential or contingent claim to the extent then feasible and the
Indemnified Party has reasonable grounds to believe that such a claim or demand
may be made; provided, however, that any such potential or contingent claim or
demand must mature into an actual claim or demand not later than three years
after the Closing Date.
10.10 Security for Indemnification. As security for their
----------------------------
indemnification obligations, under this Section 10, the Shareholders shall
pledge certain of shares of the Common Stock, par value $.01 per share, of Buyer
pursuant to the Pledge Agreement attached hereto as Exhibit C.
11. Termination.
-----------
11.1 Grounds for Termination. This Agreement may be terminated at
-----------------------
any time prior to the Closing Date:
(a) by mutual written consent of the Buyer and the Companies;
(b) by Buyer prior to the Closing Date if its due diligence
investigation and review of the Businesses, the Purchased Assets and the
prospects and obligations of each Company shall not have been completed to its
sole satisfaction;
(c) by either Company or by Buyer, if the Closing has not
occurred by the Termination Date; provided, however, that the right to terminate
this Agreement under this paragraph (b) of Section 11.1 shall not be available
to any party that has breached any of its covenants, representations or
warranties in this Agreement in any material respect (which breach has not been
cured);
(d) by either Company or the Buyer, if there shall be any
Regulation that makes consummation of the Transactions illegal or otherwise
prohibited or if any Court Order enjoining such Company or the Buyer from
consummating the Transactions is entered and such Court Order shall become final
and nonappealable;
(e) by the Buyer, if either Company shall have breached any of
its covenants hereunder or if the representations and warranties of such Company
contained in this Agreement or in any certificate or other writing delivered by
such Company pursuant hereto shall not be true and correct, except for such
changes as are contemplated by this Agreement, and, in either event, if such
breach is subject to cure, such Company has not cured such breach within 10
business days of the Buyer's notice of an intent to terminate;
(f) by either Company, if the Buyer shall have breached any of
its covenants hereunder or if the representations and warranties of the Buyer
contained in this Agreement or in any certificate or other writing delivered by
the Buyer pursuant hereto shall not be true and correct, except for such
-29-
changes as are contemplated by this Agreement, and, in either event, if such
breach is subject to cure, the Buyer has not cured such breach within 10
business days of a Company's notice of an intent to terminate.
11.2. Effect of Termination. If this Agreement is terminated pursuant
---------------------
to Section 11.1, any party may pursue any legal or equitable remedies that may
be available if such termination is based on a breach of another party.
12. Payment of Expenses. Each party hereto shall pay their own expenses for
-------------------
lawyers, accountants, consultants, investment bankers, brokers, finders and
other advisors with respect to the Transactions.
13. Contents of Agreement. This Agreement, together with the other
---------------------
Transaction Documents, sets forth the entire understanding of the parties hereto
with respect to the Transactions and supersedes all prior agreements or
understandings among the parties regarding those matters.
14. Amendment, Parties in Interest, Assignment, Etc. This Agreement may be
-----------------------------------------------
amended, modified or supplemented only by a written instrument duly executed by
each of the parties hereto. If any provision of this Agreement shall for any
reason be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the parties
hereto. Any term or provision of this Agreement may be waived at any time by the
party entitled to the benefit thereof by a written instrument duly executed by
such party. The parties hereto shall execute and deliver any and all documents
and take any and all other actions that may be deemed reasonably necessary by
their respective counsel to complete the Transactions.
15. Interpretation. Unless the context of this Agreement clearly requires
--------------
otherwise, (a) references to the plural include the singular, the singular the
plural, and the part the whole, (b) "or" has the inclusive meaning frequently
identified with the phrase "and/or" and (c) "including" has the inclusive
meaning frequently identified with the phrase "but not limited to." The section
and other headings contained in this Agreement are for reference purposes only
and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified. Each accounting
term used herein that is not specifically defined herein shall have the meaning
given to it under GAAP.
16. Remedies. The remedies provided by Section 10 shall constitute the
-------
exclusive remedies for the matters covered thereby. With respect to any matters
not covered by such Section, any party shall be entitled to such rights and
remedies as such party may have at law or in equity or otherwise for any breach
of this Agreement, including the right to seek specific performance, rescission
or restitution, none of which rights or remedies shall be affected or diminished
by the remedies provided hereunder.
-30-
17. Notices. All notices that are required or permitted hereunder shall be
-------
in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other delivery service. Any notices
shall be deemed given upon the earlier of the date when received at, or the
third day after the date when sent by registered or certified mail or the day
after the date when sent by Federal Express to, the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
party hereto given in accordance with the foregoing notice procedures:
If to the Buyer:
TeleSpectrum Worldwide Inc.
000 X. Xxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Senior Vice
President and Chief Financial Officer
with a required copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
If to Xxxxxxx:
Xxxx X. Xxxxxxx
0000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
If to Xxxxxxx:
Xxxx X. Xxxxxxx
0000 Xxxxxxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
In each case, with a required copy to:
Xxxxxxx & Xxxxxxxx
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
FAX: 000-000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
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18. Governing Law. This Agreement shall be construed and interpreted in
--------------
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
its provisions concerning conflict of laws.
19. Consent to Jurisdiction; Service of Process, etc.
-------------------------------------------------
(a) Each party hereto irrevocably and unconditionally (i)
agrees that any suit, action or other legal proceeding (collectively, "Suit")
arising out of this Agreement may be brought and adjudicated in the United
States District Court for the Eastern District of Pennsylvania or, if such court
does not have jurisdiction or will not accept jurisdiction, in any court of
competent civil jurisdiction in Xxxxxxx County, Pennsylvania, (ii) consents and
submits to the non-exclusive jurisdiction of any such court for the purposes of
any such Suit and (iii) waives and agrees not to assert by way of motion, as a
defense or otherwise in any such Suit, any claim that it or he is not subject to
the jurisdiction of the above courts, that such Suit is brought in an
inconvenient forum or that the venue of such Suit is improper.
(b) Each party hereto also irrevocably consents to the service
of any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 17 or by any other method provided or permitted
under applicable law. Each party hereto agrees that final judgment in any Suit
(with all right of appeal having either expired or been waived or exhausted)
shall be conclusive and that the Buyer shall be entitled to enforce such
judgment in any other jurisdiction of the world by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and amount of indebtedness arising from such judgment.
20. Counterparts. This Agreement may be executed in two or more counter-
-------------
parts, each of which shall be binding as of the date first written above, and
all of which shall constitute one and the same instrument. Each such copy shall
be deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
21. Definitions.
------------
"Affiliates" means, with respect to a particular party, persons or
entities controlling, controlled by or under common control with that party, as
well as the officers, directors and majority-owned entities of that party and of
its other Affiliates.
"Agreement" means this Agreement and the exhibits hereto.
"Assets" means all of the assets, properties, goodwill and rights of
every kind and description, real and personal, tangible and intangible
(including goodwill), wherever situated and whether or not reflected in the most
recent Financial Statements, that are owned or possessed by the Companies.
"Assumed Liabilities" is defined in Section 2.3.
-32-
"Balance Sheet Date" is defined in Section 6.5.
"Benefit Plans" means all employee benefit plans of each Company within
the meaning of Section 3(3) of ERISA and any related or separate Contracts,
plans, trusts, programs, policies, arrangements, practices, customs and
understandings, in each case whether formal or informal, that provide benefits
of economic value to any present or former employee of the Company, or present
or former beneficiary, dependent or assignee of any such employee or former
employee, including, without limitation, all incentive, bonus, deferred
compensation, vacation, holiday, medical, disability, share purchase or other
similar plans, policies, programs, practices or arrangements.
"Business" means the entire existing business and the operations,
facilities and other Assets of the Companies.
"Buyer" is defined above in the preamble.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Closing" is defined in Section 3.1.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" is defined the preamble.
"Company Balance Sheets" is defined in Section 6.5.
"Confidential Information" means any confidential information or trade
secrets of the Business, including, without limitation, information and
knowledge pertaining to products and services offered, innovations, designs,
ideas, plans, trade secrets, proprietary information, know-how and other
technical information, advertising, distribution and sales methods and systems,
sales and profit figures, customer and client lists, and relationships with
dealers, distributors, wholesalers, customers, clients, suppliers and others who
have business dealings with the Business.
"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document or commitment, arrangement, undertaking, practice
or authorization that is or may be binding on any Person or its property under
applicable law.
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
-33-
"Court Order" means any judgment, decree, injunction, order or ruling
of any Federal, state, local or foreign court or governmental or regulatory body
or arbitrator or authority that is binding on any Person or its property under
applicable law.
"Default" means (a) a breach, default or violation, (b) the occurrence
of an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or (c) with respect to any
Contract, the occurrence of an event that with or without the passage of time or
the giving of notice, or both, would give rise to a right of termination,
renegotiation or acceleration.
"Disclosure Letter" is defined in Section 6.
"Employment Agreement" means the Employment Agreement between the Buyer
and each Shareholder entered into as of the Closing Date, in substantially the
forms attached as Exhibits A and B.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability or voting, defect of title or other claim, charge
or encumbrance of any nature whatsoever on any property or property interest.
"End-User Licenses" is defined in Section 6.20(c).
"Environmental Condition" is defined in Section 6.17(b).
"Environmental Law" is defined in Section 6.17(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.4.
"Financial Statements" is defined in Section 6.5.
"GAAP" means United States generally accepted accounting principles.
"Hazardous Substances" means (i) any gasoline, fuel oil or any other
petroleum products, explosives, alcohols or chemical solvents or polychlorinated
biphenyls, (ii) any substance, waste, material or product defined as hazardous,
radioactive, extremely hazardous or toxic under any Environmental Law, and
(iii) asbestos, asbestos-containing substances or urea formaldehyde insulation.
"Indemnified Buyer Party" is defined in Section 10.2.
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"Indemnified Seller Party" is defined in Section 10.4.
"Interim Balance Sheet" is defined in Section 6.5.
"Interim Balance Sheet Date" is defined in Section 6.5.
"Intellectual Property" means any Copyrights, Patents, Trademarks,
know-how, trade secrets (including, without limitation, all results of research
and development), product formulae, franchises, inventions, rights-to-use and
other industrial and intellectual property rights.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"Litigation" means any lawsuit, action, arbitration, administrative or
other proceeding, criminal prosecution or governmental investigation or inquiry.
"Material Adverse Effect" means a material adverse effect on the
Business, Assets, financial condition, results of operations, liquidity,
products, competitive position, customers or customer relations of either
Company.
"Non-Assignable Contracts" is defined in Section 2.5.
"Ordinary course" or "ordinary course of business" means the ordinary
course of business that is consistent in nature and, where relevant, amount with
past practices.
"Patents" means all patents and patent applications.
"Permit" means any governmental permit, license, registration,
certificate of occupancy, approval and other authorization.
"Person" means any natural person, corporation, partnership,
proprietorship, association, trust or other legal entity.
"Personal Property Leases" is defined in Section 6.9.
"Pledge Agreement" means the Pledge Agreement between the Buyer and
each Shareholder entered into as of the Closing Date, in substantially the form
attached as Exhibit C.
"Purchase Price" is defined in Section 2.7.
"Purchased Assets" is defined in Section 2.1.
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"Real Estate Leases" is defined in Section 6.7.
"Real Property" is defined in Section 6.7.
"Regulation" means any statute, law, ordinance, regulation, order or
rule of any Federal, state, local, foreign or other governmental agency or body
or of any other type of regulatory body, including those covering environmental,
energy, safety, health, transportation, bribery, record keeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Shareholders" is defined in the preamble.
"TARP Division" shall collectively mean the subsidiary or other
distinct operating unit of Buyer that operates the Businesses and the Purchased
Assets following the Closing and TARP (Europe) Limited, a Company registered in
England and Wales.
"Trademarks" means registered trademarks, registered service marks,
trademark and service xxxx applications and unregistered trademarks and service
marks.
"Transaction Documents" means this Agreement and the Employment
Agreements.
"Transactions" means the purchase and sale of the Purchased Assets and
the consummation of the other transactions contemplated by the Transaction
Documents.
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IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto on the day and year first written above.
TELESPECTRUM WORLDWIDE INC.
By:
------------------------------------------
TECHNICAL ASSISTANCE RESEARCH
PROGRAMS, INC.
By:
------------------------------------------
Name:
Title:
TARP INFORMATION SYSTEMS, INC.
By:
------------------------------------------
Name:
Title:
SHAREHOLDERS
---------------------------------------------
Xxxx Xxxxxxx
---------------------------------------------
Xxxx Xxxxxxx
EXHIBIT A
EMPLOYMENT AGREEMENT -- XXXXXXX
EXHIBIT B
EMPLOYMENT AGREEMENT -- XXXXXXX
EXHIBIT C
PLEDGE AGREEMENT
Exhibit 2.2: EXCLUDED ASSETS
Exhibit 2.4: EXCLUDED LIABILITIES
EXHIBIT 2.8-- Allocation of Purchase Price
FMV Amt. Allocated
Technical Assistance Research Programs, Inc.
Class I Cash & Cash Equivalents
Class II CDS & Marketable Securities
Class III Class III Assets
A/R
FFE
Prepared Items
Non Compete (Part of 10,000 10,000
Employment Agt.)
Class IV Goodwill and Going Concern ______ ______
Other Contingent Payment for
Excess goodwill 0 0
TARP Information Systems, Inc.
Class I Cash & Cash Equivalents
Class II CDS & Marketable Securities
Class III Class III Assets
A/R
FFE
Prepared Items
Non Compete (Part of 10,000 10,000
Employment Agt.)
Class IV Goodwill and Going Concern ______ ______
EXHIBIT 3.2(b)(i) -- WIRE INSTRUCTIONS
1. Account of Technical Assistance Research Programs, Inc.
Account #
2. Account of TWP Information Systems, Inc.
Account #
3. Account of Xxxxxxxx Capital Partners
Account #
4. Account of Xxxxxxx & Xxxxxxxx
Account #
5. Account of Xxxx Xxxxxx Sears Lubersky
Account #
EXHIBIT 3.2(b)(ii) -- FORM OF XXXX OF SALE
AND ASSUMPTION AGREEMENTS
EXHIBIT 4.2 -- CLOSING CERTIFICATE
EXHIBIT 4.3 -- LEGAL OPINION OF XXXXXXX & XXXXXXXX
EXHIBIT 5.3
LEGAL OPINION OF XXXXXX, XXXXX & BOCKIUS LLP
EXHIBIT 6 -- DISCLOSURE LETTER
