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EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement"), is made this
5th day of June, 1998, by and between TELESERVICES ACQUISITION CORPORATION, a
Delaware corporation ("Buyer"), SWEET, XXXXXX & XXXXX, INC., a Florida
corporation ("SS&L"), and Xxxxx X. Xxxxx, Xxxxx X. Xxxxx, II and Xxxxxx X.
Xxxxxxxx (the "Sellers", and each individually, a "Seller").
W I T N E S S E T H :
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WHEREAS, SS&L is principally engaged in the business of
supplying telemessaging services and is the end user and subscriber for certain
toll free telephone numbers listed on Schedule 2.1(q) hereto (the "Toll Free
Telephone Numbers");
WHEREAS, the Sellers are presently the owners of an aggregate
of 140 shares of common stock, par value $1.00 per share (the "SS&L Stock"),
which represents all of the issued and outstanding capital stock of SS&L; and
WHEREAS, the Sellers desire to sell their respective shares of
SS&L Stock to Buyer and Buyer desires to purchase all of the SS&L Stock from the
Sellers, all in the manner and subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION
1.1 STOCK PURCHASE. On the terms and subject to the conditions
of this Agreement, on the Closing Date (as hereinafter defined), each Seller
shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall
purchase and acquire from each such Seller, all right, title and interest of
such Sellers, legal or equitable, in and to the number of shares of SS&L Stock
set forth opposite such Seller's name on Schedule 1.1 hereto under the caption
"Number of Shares Owned." The certificates evidencing the SS&L Stock shall be
delivered at the Closing (as hereinafter defined) to Buyer, free and clear of
all liens, claims, security interests and encumbrances, accompanied by duly
executed stock powers (endorsed in blank, with signatures guaranteed) and any
necessary stock transfer tax stamps affixed thereto.
1.2 PURCHASE PRICE. As the purchase price for all of the SS&L
Stock (the "Purchase Price"), Buyer shall pay to the Sellers an aggregate sum of
[******] in cash. The Purchase Price shall be payable in cash at Closing by wire
transfer of immediately available funds to an account of the Sellers designated
in writing by Xxxxx X. Xxxxx ("Sellers' Rep"). The Purchase Price shall be
allocated by the Sellers' Rep among the Sellers as provided on Schedule 1.2
hereto under the caption "Allocation of Cash Purchase Price."
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In this Exhibit, "[***]" represents material omitted from this Exhibit and filed
separately with the Securities and Exchange Commission and for which
Confidential Treatment has been requested.
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1.3 CLOSING DATE. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxxx,
Calamari & Xxxxxxx, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00
A.M., June 5, 1998, or at such other place and/or on such other date and time as
shall be agreed upon by Buyer and the Sellers (the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SS&L AND THE SELLERS.
SS&L and the Sellers hereby, jointly and severally, represent and warrant to,
and covenant and agree with, Buyer as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. SS&L is a
corporation duly organized, validly existing and in good standing and authorized
to exercise its corporate powers, rights and privileges under the laws of the
State of Florida with full corporate power and authority to own, lease and
operate its properties and to carry on its business as presently conducted by
it. Schedule 2.1(a) hereto sets forth all states and other jurisdictions in
which SS&L is duly qualified and in good standing to do business as a foreign
corporation. There are no other states or jurisdictions in which the character
and location of the properties owned or leased by it, or the conduct of its
business makes such qualification necessary, except to the extent that failure
to do so would not have a material adverse effect on the financial condition,
business or operations of SS&L. Copies of SS&L's Articles of Incorporation and
all amendments thereto, and of SS&L's By-Laws, as amended to date, are attached
to Schedule 2.1(a) and are complete and correct. SS&L's minute books contain
complete and accurate records of all meetings and other corporate actions,
including, without limitation, actions by unanimous written consent of the
Sellers and board of directors of SS&L (including all committees of its board of
directors).
(b) CAPITALIZATION. The authorized capital stock of
SS&L consists of 7,500 shares of Common Stock, par value $1.00 per share, of
which 140 shares are issued and outstanding. The number of shares of SS&L Stock
owned beneficially or of record by each of the Sellers is set forth on Schedule
1.1 hereto. All issued shares of SS&L Stock have been duly authorized and
validly issued and are fully paid and nonassessable. All prior offerings and
sales of SS&L Stock have been made in accordance with all Federal and state
securities laws. There are no outstanding obligations, options, warrants,
rights, calls, commitments, conversion rights, plans or other agreements of any
character to which SS&L is a party or otherwise bound which provide for the
purchase or issuance by SS&L of any authorized but not outstanding, or
authorized and outstanding shares of capital stock of SS&L. There is no personal
liability attached to the SS&L Stock. No person has any preemptive or similar
rights in respect of any securities of SS&L.
(c) AUTHORITY. The execution and delivery by SS&L and
the Sellers of this Agreement and all of the agreements, schedules, exhibits,
documents and instruments specifically provided for hereunder to be executed
and/or delivered by any or all of them (all of the foregoing, including this
Agreement, being hereinafter sometimes collectively referred to as the "Executed
Agreements"), the performance by SS&L and any or all of the Sellers (to the
extent that they are parties thereto) of their respective obligations under the
Executed Agreements, and the consummation of the transactions contemplated by
the Executed Agreements, have been duly and validly authorized by all necessary
corporate action on the part of SS&L and by the Sellers, and
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SS&L has all necessary corporate power with respect thereto. The Executed
Agreements are, or when executed and delivered by the delivering parties shall
be, the valid and binding obligations of the delivering parties, enforceable in
accordance with their respective terms, except to the extent that enforceability
may be limited by the operation of bankruptcy, insolvency or similar laws, and,
as to the availability of equitable remedies, subject to general principles of
equity and the discretion of the court having jurisdiction thereof. Except as
set forth on Schedule 2.1(c) hereto, neither the execution and delivery by SS&L
and any or all of the Sellers (to the extent that they are parties thereto) of
the Executed Agreements, nor the consummation of the transactions contemplated
thereby, nor the performance by SS&L and any or all of the Sellers (to the
extent that they are parties thereto) of their respective obligations under the
Executed Agreements, shall (nor with the giving of notice or the lapse of time
or both would) (i) conflict with or result in a breach of any provision of the
Articles of Incorporation or By-Laws of SS&L, (ii) give rise to a default, or
any right of termination, cancellation or acceleration, or otherwise result in a
loss of contractual benefits to SS&L, under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which SS&L or any Seller is a party or by which it
or any of its properties or assets may be bound, (iii) violate any order, writ,
injunction, decree, law, statute, rule or regulation applicable to SS&L or any
of the Sellers or any of their respective properties or assets, (iv) result in
the creation or imposition of any lien, claim, restriction, charge or
encumbrance upon any of the properties or assets of SS&L, or (v) interfere with
or otherwise materially and adversely affect the ability of SS&L to carry on its
business as now conducted.
(d) INTERESTS IN OTHER ENTITIES. Except as set forth
in Schedule 2.1(d) hereto, SS&L does not (i) own, directly or indirectly, of
record or beneficially, any shares of voting stock or other equity securities of
any other corporation or entity, (ii) have any ownership interest, direct or
indirect, of record or beneficially, in any entity, or (iii) have any
obligation, direct or indirect, present or contingent, to purchase or subscribe
for any interest in, advance or loan monies to, or in any way make investments
in, any person or entity, or to share any profits or capital investments in
other persons or entities, or both.
(e) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY
CONSENTS. Except as set forth in Schedule 2.1(e) hereto, no approval, consent,
compliance, exemption, authorization or other action by, or notice to or filing
with, any governmental authority or any other entity, and no lapse of a waiting
period, is necessary or required to be obtained by SS&L or any Seller in
connection with the execution, delivery or performance by any of them, of this
Agreement, any of the Executed Agreements or the transactions contemplated
hereby.
(f) PROJECTIONS. SS&L has delivered to Buyer a set of
projections (the "Projections"), a copy of which its attached hereto as Schedule
2.1(f), which the Sellers have been advised are material to Buyer in its
decision to enter into this Agreement and purchase the SS&L Stock hereunder. The
Projections are based on the best estimates of SS&L and the Sellers derived from
reasonable expectations at the time the Projections were made, and SS&L believes
that Buyer is justified in relying thereon, there being, however, no guarantee
of the achievement of the Projections.
(g) FINANCIAL STATEMENTS. SS&L has delivered to Buyer
true and complete copies of its unaudited balance sheets as of December 31,
1996, and related statements
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of income, retained earnings and cash flows for the period then ending (the
"1996 Financial Statements"), true and complete copies of its unaudited balance
sheets as of December 31, 1997, and related statements of income, retained
earnings and cash flows for the period then ending and true and complete copies
of its unaudited balance sheet as of March 31, 1998 (the "Interim Balance
Sheet"), and related statements of income, retained earnings and cash flows for
the period then ending (collectively, with the Interim Balance Sheet, the
"Interim Financial Statements"). All of such financial statements, including any
notes thereto, were prepared on the basis set forth in Schedule 2.1(g), applied
on a consistent basis throughout the periods involved subject, in respect of the
Interim Financial Statements, to normal year-end audit adjustments, none of
which are material (except as may be otherwise expressly stated in said
financial statements and notes thereto or in Schedule 2.1(g) hereto) and such
financial statements fairly present the financial position of SS&L at the dates
thereof and the results of its operations for the periods as indicated. The
books and records of SS&L are in all material respects complete and correct,
have been maintained in accordance with good business practices, and accurately
reflect the basis for the financial condition and results of operations of SS&L
as set forth in the financial statements referred to herein.
(h) ABSENCE OF UNDISCLOSED LIABILITIES. SS&L does not
have any liabilities, commitments or obligations, whether accrued, absolute,
contingent or otherwise which have not been (i) in the case of liabilities,
commitments and obligations of a type customarily reflected on the corporate
balance sheet of SS&L, reflected on the Interim Balance Sheet, incurred,
consistent with past practice, in the ordinary course of business since the date
of the Interim Balance Sheet and which are not material either individually or
in the aggregate or (ii) in the case of all other types of liabilities and
obligations, described in Schedule 2.1(h) hereto.
(i) ABSENCE OF CERTAIN CHANGES. Except as and to the
extent set forth in Schedule 2.1(i) hereto, since December 31, 1997, SS&L has
not:
(i) suffered any material adverse change in
its working capital, condition (financial or otherwise), assets, liabilities,
business, operations or prospects;
(ii) incurred any material liabilities or
obligations except items incurred in the ordinary course of business and
consistent with past practice, none of which exceeds $50,000 (counting
obligations or liabilities arising from one transaction or a series or similar
transactions, and all periodic installments or payments under any lease or other
agreement providing for periodic installments or payments, as a single
obligation or liability), or experienced any increase in, or change in any
assumption underlying or methods of calculating, any bad debt, contingency or
other reserves;
(iii) paid, discharged or satisfied any
claim, liabilities or obligations (absolute, accrued, contingent or otherwise)
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities and obligations
reflected or reserved against in the Interim Balance Sheet or incurred in the
ordinary course of business and consistent with past practice since the date of
the Interim Balance Sheet;
(iv) permitted or allowed any of its
property or assets (real, personal or mixed, tangible or intangible) to be
subjected to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind;
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(v) written off as uncollectible any notes
or accounts receivable, except for write-offs in the ordinary course of business
and consistent with past practice, none of which are material;
(vi) canceled any debts or waived any claims
or rights of substantial value, or sold, transferred, or otherwise disposed of
any of its properties or assets (real, personal or mixed, tangible or
intangible), except in the ordinary course of business and consistent with past
practice;
(vii) disposed of or permitted to lapse any
rights to use any Toll Free Telephone Number listed on Schedule 2.1(q) hereof,
patent, trademark, trade name or copyright, or disposed of or disclosed (except
as necessary in the conduct of its business) to any person any trade secret,
formula, process or know-how;
(viii) granted any general increase in the
compensation of officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any increase
in the compensation payable or to become payable to any officer or employee,
and, unless otherwise set forth in Schedule 2.1(i), no such increase is
customary on a periodic basis or is required by agreement or understanding;
(ix) made any single capital expenditure or
commitment in excess of $10,000 for additions to property, plant, equipment or
intangible assets or made aggregate capital expenditures and commitments in
excess of $50,000 (on a consolidated basis), for additions to property, plant,
equipment or intangible assets;
(x) declared, paid or set aside for payment
any dividend or other distribution in respect of its capital stock;
(xi) made any change in any method of
accounting or accounting practice;
(xii) paid, loaned or advanced any amount
to, or sold, transferred or leased any properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or arrangement
with, any of its officers, directors, debtholders, the Sellers or employees or
any "affiliate" or "associate" of any of its officers, directors, noteholders,
the Sellers or employees (as such terms are defined in Rule 405 promulgated
under the Securities Act and as used herein "Associate" and "Affiliate"), except
for compensation to officers and employees at rates not materially exceeding the
rates of compensation paid during the year ended December 31, 1997;
(xiii) paid any amount in respect of
indebtedness for borrowed money except for regularly scheduled payments of
principal and interest in accordance with the terms thereof; or
(xiv) agreed, whether in writing or
otherwise, to take any action described in this Section unless such action is
specifically excepted from this Section or described in Schedule 2.1(i).
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(j) TAX MATTERS. Except as set forth in Schedule
2.1(j) hereto, SS&L has filed with the appropriate governmental agencies all
Federal, state, local or foreign tax returns and reports required to be filed by
it ("Returns"), has paid in full or made adequate provision for the payment of,
all taxes of every nature, including, but not limited to, income, sales,
franchise and withholding taxes ("Taxes"), together with interest, penalties,
assessments and deficiencies owed by it (whether or not shown on any Returns),
and all such Returns were correct and complete in all respects. SS&L is not
currently the beneficiary of any extension of time within which to file any
Returns. The Sellers have previously provided Buyer with true and complete
copies of all such Returns filed within the past 5 years. The provisions for
income and other Taxes reflected on the Interim Balance Sheet are adequate for
all accrued and unpaid taxes of SS&L as of the date of the Interim Balance
Sheet, whether (i) incurred in respect of or measured by income of SS&L for any
periods prior to the close of business on that date, or (ii) arising out of
transactions entered into, or any state of facts existing, on or prior to that
date. The provision for Taxes reflected on the books of account of SS&L is
adequate for all Taxes of said entity which accrued since the date of the
Interim Balance Sheet. There are no filed or other known tax liens upon any
property or assets of SS&L. SS&L has not waived any statute of limitations in
respect of Taxes or executed or filed with any governmental authority any
agreement extending the period for the assessment or collection of any Taxes,
and it is not a party to any pending or, to SS&L's or any Seller's best
knowledge, threatened action or proceeding by any governmental authority for the
assessment or collection of Taxes. To the best knowledge of SS&L and the
Sellers, no issue has arisen in any examination of SS&L by any governmental
authority that if raised with respect to any other period not so examined would,
if upheld, result in a material deficiency for any other period not so examined.
There is no unresolved written claim by a governmental authority in any
jurisdiction where SS&L does not file Returns that SS&L is or may be subject to
taxation by such jurisdiction. There has been no examination or audit with
respect to Taxes with respect to any year. SS&L is not required to make any
adjustment pursuant to Section 481 of the Internal Revenue Code of 1986, as
amended (the "Code"), by reason of a change in accounting method or otherwise
and, to the best knowledge of SS&L and the Sellers, neither the Internal Revenue
Service nor any other governmental authority has proposed any such adjustment or
change in accounting method in respect of SS&L, which proposal is currently
pending and SS&L does not have an application pending with any governmental
authority requesting permission for any change in accounting method that relates
to its business and/or operations. SS&L has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, Seller or other third party. SS&L is
a "small business corporation" within the meaning of Section 1361(b) of the Code
and expects to continue to qualify as a small business corporation within the
meaning of such Section at all times until the Closing Date. SS&L does not have
liability or any potential or deferred liability for Taxes under Section
1371(d)(2), Section 1374 or Section 1375 of the Code. SS&L has never filed any
consolidated, combined or unitary Return for any period ending on or prior to
the Closing Date.
(k) LITIGATION. Except as set forth in Schedule
2.1(k) hereto, there are no suits or actions, or administrative, arbitration or
other proceedings or governmental investigations, pending, or to the best
knowledge of SS&L and the Sellers, threatened against or affecting, or which may
affect, SS&L or any of its properties, assets or businesses or the transactions
contemplated hereby. To the best knowledge of SS&L and the Sellers, there are no
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outstanding judgments, orders, stipulations, injunctions, decrees or awards
against SS&L which are not satisfied.
(l) COMPLIANCE WITH APPLICABLE LAW. SS&L is, and at
all times since its formation has been in compliance in all material respects
with all Federal, state, local and foreign laws, statutes, ordinances,
regulations, and administrative rulings (collectively "Laws"), promulgated by
any governmental or regulatory authority applicable to SS&L or to the conduct of
the business or operations of SS&L or to the use of its properties and assets,
including, without limitation, all environmental Laws and all Laws relating to
the Toll Free Telephone Numbers. SS&L has not received, and does not know of the
issuance or threatened issuance of, any notices of violation or alleged
violation of any laws by SS&L. Neither SS&L nor the Sellers know of any pending
or proposed legislation applicable to SS&L or to the conduct of business or
operations of SS&L which, if enacted, could have a material adverse effect on
the business, results of operations, financial position or prospects of SS&L or
the value of its properties or assets.
(m) PERMITS. A list of all permits, approvals,
licenses, certificates, franchises, authorizations, consents and orders
("Permits") necessary to the operation of the business of SS&L in the manner in
which it is presently conducted is set forth on Schedule 2.1(m) hereto. All such
Permits are valid and remain in full force and effect. SS&L has not engaged in
any activity which would cause revocation or suspension of any such Permits and
no action or proceeding looking to or contemplating the revocation or suspension
of any thereof is pending or threatened. No additional Permits will be required
to permit SS&L to continue its business substantially in the manner it is
presently conducted after the consummation of the transactions contemplated
hereby.
(n) TITLE TO PROPERTIES. SS&L does not own any real
property. Except as set forth in Schedule 2.1(n) hereto, SS&L has good title to
all of the properties and assets (personal and mixed, tangible and intangible)
reflected on the Interim Balance Sheet or thereafter acquired or which it
purports to own (except properties or assets sold or otherwise disposed of in
the ordinary course of business consistent with past practice subsequent to the
date of the Interim Balance Sheet which in the aggregate did not have a book
value in excess of $50,000), free and clear of all mortgages, liens, pledges,
charges or encumbrances of any nature whatsoever, except those referred to in
the Interim Balance Sheet. Schedule 2.1(n) also contains an accurate list
setting forth all (i) real property leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by SS&L and (ii) significant personal property leased by or to
SS&L or subject to a title retention or conditional sales agreement or other
security device. All leases listed in Schedule 2.1(n) are valid, binding and
enforceable in accordance with their terms, and are in full force and effect,
except to the extent that enforceability may be limited by the operation of
bankruptcy, insolvency or similar laws and, as to the availability of equitable
remedies, subject to the general principles of equity and the discretion of the
court having jurisdiction thereof; to the best of the Sellers' knowledge, there
are no material existing defaults by SS&L thereunder; no material event of
default has occurred which (whether with or without notice, lapse of time or
both) would constitute a material default by SS&L thereunder; and all lessors
under such leases have consented (where such consent is necessary) to the
consummation of the transactions contemplated by this Agreement without
requiring modification of the rights and obligations of SS&L under such leases.
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(o) ACCOUNTS RECEIVABLE; FIXED ASSETS.
(i) The accounts receivable reflected on the
Interim Balance Sheet are good and collectible in the ordinary course of
business at the aggregate recorded amounts thereof, , less the amount written
off consistent with past practice as set forth in Schedule 2.1(o)(i) hereto, and
are not subject to any offsets. The accounts receivable of SS&L which were
thereafter added are good and collectible in the ordinary course of business at
the aggregate amounts recorded on the books of account, less the amount written
off consistent with past practice, and are not subject to any offsets.
(ii) Schedule 2.1(o)(ii) hereto contains a
complete and accurate list of all items of machinery, equipment and other fixed
assets of SS&L (the "Equipment") having a book value in excess of $100. To the
best of the Sellers' knowledge, each such item of Equipment is in good operating
condition, normal wear and tear excepted, and is fit for its intended use. To
the best of the Sellers' knowledge, each such item has been maintained, in all
material respects, in accordance with its manufacturer's recommended maintenance
practice and with prudent business practice and no such maintenance has been
deferred.
(p) INTELLECTUAL PROPERTY. Schedule 2.1(p) hereto
lists all licenses, patents, copyrights, or trademarks owned or used by SS&L in
the conduct of its business and all applications therefor (the "Intellectual
Property"). No officer or director, Seller or employee of SS&L nor any of their
Affiliates or Associates has any ownership or other interest in any of the
Intellectual Property. To the best knowledge of SS&L and the Sellers, none of
the Intellectual Property is being infringed upon by, or infringes, any
licenses, patents, copyrights, trademarks or other intellectual property rights
of any other person or entity. Except as set forth in Schedule 2.1(p), the
validity of the Intellectual Property and the title thereto of SS&L have not
been questioned in any litigation or governmental inquiry or proceeding to which
SS&L, is a party, and, to the best knowledge of SS&L and the Sellers, no such
litigation, governmental inquiry or proceeding is threatened. The conduct of the
business of SS&L as presently conducted does not conflict with valid licenses,
trademarks, trademark rights, trade names, trade name rights, service marks or
patents of others in any way likely to affect adversely, in any material
respect, the Intellectual Property.
(q) TOLL FREE TELEPHONE NUMBERS. Schedule 2.1(q)
hereto sets forth a complete list of all Toll Free Telephone Numbers owned or
used by SS&L in the conduct of its business. No officer or director, Seller or
employee of SS&L nor any of their Affiliates or Associates has any ownership or
other interest in the Toll Free Telephone Numbers. SS&L has not warehoused,
brokered or hoarded (as those terms are defined in the Second Report and Order
and Further Notice of Proposed Rulemaking in CC Docket No. 95-155, Released
April 11, 1997, by the Federal Communications Commission ("FCC")) any of the
Toll Free Telephone Numbers in violation of any applicable FCC rules or
regulations.
(r) INSURANCE. Schedule 2.1(r) hereto contains a
complete and correct list and copies of all policies of insurance in which SS&L
or its officers or directors (in such capacity) is an insured party, beneficiary
or loss payable payee. Such policies are in full force and effect and in the
reasonable judgment of SS&L and the Sellers provide the type and amount of
coverage reasonably required for the business of SS&L.
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(s) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule
2.1(s) hereto contains a complete and correct list showing (i) the name of each
bank in which SS&L has an account or safe deposit box and the names of all
persons authorized to draw thereon or have access thereto, and (ii) the names of
all persons, if any, holding powers of attorney from SS&L.
(t) EMPLOYEE ARRANGEMENTS; ERISA. SS&L has (i) no
union, collective bargaining, employment, management, severance or consulting
agreements to which SS&L is a party or is otherwise bound, and (ii) no
compensation plans, bonus plans, deferred compensation agreements, pension and
retirement plans, profit-sharing plans, stock purchase and stock option plans.
Schedule 2.1(t) hereto contains a complete and correct list and copies of SS&L's
hospitalization, insurance plans or arrangements providing for benefits for
employees of SS&L. Such Schedule also lists the names and compensation of all
persons employed by SS&L. SS&L has no employee benefits plans established or
maintained by SS&L which are qualified for Federal income tax exemption under
Sections 401 and 501 of the Code.
(u) CERTAIN BUSINESS MATTERS. Except as set forth in
Schedule 2.1(u) hereto (i) SS&L is not a party to or bound by any
distributorship, dealership, sales agency, franchise or similar agreement which
relates to the sale, distribution or servicing of the Toll Free Telephone
Numbers or services related thereto, (ii) SS&L does not have any sole-source
supplier of significant goods or services (other than utilities) with respect to
which practical alternative sources are not available on comparable terms and
conditions, (iii) there are not pending and, to SS&L's and the Sellers' best
knowledge there are not threatened, any labor negotiations involving or
affecting SS&L and, to SS&L's and the Sellers' best knowledge, no organizing
activities involving union representation exist in respect of any of its
employees, (iv) SS&L neither gives nor is bound by any express warranties
relating to its services and, to the best knowledge of SS&L and the Sellers,
there has been no assertion of any breach of warranties which could have a
material adverse effect on the business or condition (financial or otherwise) of
SS&L and, to the best knowledge of SS&L and the Sellers, there are no known
claims or complaints by a client representing at least five (5%) percent of the
revenue of SS&L with respect to any product sold or services provided by SS&L,
(v) SS&L is not a party to or bound by any agreement which limits its freedom to
compete in any line of business or with any person or entity, and (vi) SS&L is
not a party to or bound by any agreement or involved in any transaction in which
any officer, director, debtholder or Seller, or any Affiliate or Associate of
any such person has, or had when made, a direct or indirect material interest.
(v) CONTRACTS. Schedule 2.1(v) hereto contains a
complete and correct list of any and all material contracts, commitments,
obligations and undertakings, written or oral, to which SS&L is a party or
otherwise bound, other than contracts, commitments, obligations and undertakings
with customers of SS&L producing less than $25,000 in revenue per year. True and
complete copies of all written contracts, commitments, obligations and
undertakings set forth in Schedule 2.1(v) hereto have been furnished to Buyer,
and except as expressly stated in Schedule 2.1(v), each of them is in full force
and effect, no person or entity which is a party thereto or otherwise bound
thereby is, to the best knowledge of SS&L and the Sellers, in material default
thereunder, and no event, occurrence, condition or act exists which, with the
giving of notice or the lapse of time or both, would give rise to a default or
right of cancellation thereunder, and SS&L is not in material default thereunder
and no event, occurrence, condition or act exists by or
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on behalf of SS&L which, with the giving of notice or the lapse of time or both
would give rise to a material default by SS&L thereunder, and to SS&L's and the
Sellers' best knowledge, there have been no threatened cancellations thereof and
there are no outstanding disputes thereunder. To the best of SS&L's and the
Sellers' knowledge there is no reason why any the contracts listed on Schedule
2.1(v) could not be continued between Buyer and SS&L's contractual partners on
the same terms and conditions as currently apply. Neither SS&L nor any Seller
has any reason to believe that any of SS&L's contractual partners will terminate
its relationship with SS&L as a result of the acquisition of SS&L by Buyer.
(w) BROKERS. No agent, broker, person or firm acting
on behalf of SS&L or the Sellers or under the authority of any of the foregoing,
is or shall be entitled to a brokerage commission, finder's fee, or other like
payment in connection with any of the transactions contemplated hereby, from
SS&L or any of the Sellers.
(x) DISCLOSURE. No representation or warranty made by
SS&L or the Sellers herein or in any of the Executed Agreements contains any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading.
(y) AFFILIATED TRANSACTIONS. Except as set forth in
Schedule 2.1(y) hereto, no Seller (i) is a party to any agreement, transaction
or arrangement (oral or written) with or involving SS&L or any Associate or
Affiliate of SS&L or any of the Sellers, or (ii) has any claim, monetary or
otherwise, of any sort against SS&L.
(z) CLAIMS AGAINST SS&L. Except as set forth in
Schedule 2.1(z) hereto, SS&L has no debts, obligations or liabilities owing to
the Sellers and, to the best knowledge of SS&L, nothing exists that could give
rise to a claim by the Sellers of any such debts, obligation or liability of
SS&L to the Sellers.
(aa) DISCLOSURE SCHEDULES. All schedules to this
Agreement are integral parts to this Agreement. Nothing in a schedule shall be
deemed adequate to disclose an exception to a representation or warranty made
herein, unless the schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. The Sellers
are responsible for preparing and arranging the schedules corresponding to the
lettered and numbered paragraphs contained herein.
2.2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS. Each of the
Sellers severally represents and warrants to, and covenants and agrees with
Buyer, with respect to such Seller, as follows:
(a) CAPACITY; VALIDITY. Such Seller has the legal
capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed by such Seller and constitutes a valid and binding obligation of such
Seller enforceable against him in accordance with its terms.
(b) TITLE TO SECURITIES. Such Seller holds of record
and owns beneficially (or will own beneficially on the Closing Date) the number
of shares of the SS&L
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Stock set forth opposite his or her name on Schedule 1.1 hereto, free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), taxes, liens, charges, claims,
demands, security interests, options, warrants, purchase rights, contracts,
commitments or other encumbrances. Such Seller is not a party to any option,
warrant, purchase right or other agreement or understanding that could require
such Seller to sell, transfer or otherwise dispose of any shares of the SS&L
Stock. Such Seller is not a party to any voting trust, proxy or other agreement
or understanding with respect to the voting of any shares of the SS&L Stock. The
sale and transfer of such shares of SS&L Stock to Buyer as provided herein shall
vest Buyer with good and marketable title to the SS&L Stock, free and clear of
all liens, charges, claims and encumbrances.
(c) RIGHTS TO TOLL FREE TELEPHONE NUMBERS. Such
Seller does not own or possess any rights in or to the Toll Free Telephone
Numbers listed on Schedule 2.1(q) hereto.
2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to, and covenants and agrees with, the Sellers as
follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own, lease
and operate its properties and to carry on its business as presently conducted
by it and is qualified in each other jurisdiction in which qualification is
required for it to own, lease and operate its properties and carry on its
business as presently conducted by it, except to the extent that failure to so
qualify would not have a material adverse effect on the financial condition,
business or operations of Buyer.
(b) AUTHORITY. The execution and delivery by Buyer of
this Agreement and of each of the other Executed Agreements to which it shall be
a party, the performance by Buyer of its obligations under this Agreement or
such Executed Agreements and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of Buyer, and Buyer has all necessary corporate
power with respect thereto. This Agreement and the Executed Agreements are, or
when executed and delivered by Buyer shall be, the valid and binding obligations
of Buyer, enforceable in accordance with their respective terms, except to the
extent that enforceability may be limited by the operation of bankruptcy,
insolvency or similar laws and, as to the availability of equitable remedies,
subject to general principles of equity and the discretion of the court having
jurisdiction thereof. Neither the execution and delivery by Buyer of the
Executed Agreements, nor the consummation of the transactions contemplated
thereby, nor the performance by Buyer of its obligations under the Executed
Agreements, shall (nor with the giving of notice or the lapse of time or both
would) (i) conflict with or result in a breach of any provision of the Articles
of Incorporation or By-Laws of Buyer, (ii) violate any order, writ, injunction,
decree, law, statute, rule or regulation or (iii) interfere with or otherwise
materially and adversely affect the ability of Buyer to carry on its business as
now conducted.
(c) INVESTMENT INTENT. The SS&L Stock is being
acquired by Buyer for investment purposes only and not with a view to the
distribution or resale thereof. Buyer has
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no present intention to sell or otherwise dispose of the SS&L Stock, except in
compliance with the provisions of the Securities Act.
(d) BROKERS. No agent, broker, person or firm acting
on behalf of Buyer or under its authority is or shall be entitled to a brokerage
commission, finder's fee, or other like payment in connection with any of the
transactions contemplated hereby.
3. COVENANTS
3.1 COVENANTS OF THE SELLERS AND SS&L. The Sellers and SS&L
jointly and severally covenant and agree to perform or take any and all such
actions to effectuate the following from the date hereof until the Closing Date
or the termination of this agreement, whichever shall first occur:
(a) INVESTIGATION BY BUYER. Buyer may, prior to the
Closing Date, through its representatives (including its counsel, accountants
and consultants) make such investigations of the properties, offices and
operations of SS&L and such audit of the financial condition of SS&L as it deems
necessary or advisable in connection with the transactions contemplated hereby,
including, without limitation, any investigation enabling it to familiarize
itself with such properties, offices, operations and financial condition,
provided that no unreasonable interference with the normal business operations
of SS&L be thereby caused; such investigation shall not, however, affect SS&L's
or the Sellers' representations, warranties and agreements hereunder provided
that Buyer notifies the Sellers of any fact it discovers in such investigation
which it believes is in conflict with the representations and warranties made by
SS&L and/or the Sellers hereunder. SS&L and the Sellers shall permit Buyer and
its authorized representatives to have, after the date hereof, full access to
the premises and to all books and records and tax returns of SS&L and Buyer
shall have the right to make copies thereof and excerpts therefrom. SS&L and the
Sellers shall furnish Buyer with such financial and operating data and other
information with respect to SS&L as Buyer may from time to time reasonably
request.
(b) CARRY ON IN ORDINARY COURSE. Except with Buyer's
prior written consent, SS&L shall, and each Seller shall cause SS&L to, carry on
its business diligently and substantially in the same manner as heretofore
conducted, and shall not (i) enter into or agree to enter into any extraordinary
transaction, contract, lease or commitment, (ii) declare any dividends, nor make
any distributions or payments to the Sellers other than employment compensation,
(iii) redeem any shares of SS&L Stock or issue any capital stock or enter into
any agreement which grants a right to acquire any of SS&L's capital stock, (iv)
increase the compensation of any employee of SS&L, other than ordinary year-end
increases or enter into any severance agreement or employment agreement with any
employee of SS&L; (v) loan or advance any amounts to any officer, director,
Seller or employee of SS&L or enter into any agreement with any of the foregoing
or any person related to any of the foregoing, (vi) acquire or dispose of any
assets, other than in the ordinary course of business, and (vii) encumber or
commit to encumber any of its assets, (viii) take any action, or suffer any
action to be taken, which could cause any of the representations or warranties
of any Sellers or SS&L contained herein not to be true and correct on and as of
the Closing Date, or (ix) enter into any agreement to take any of the foregoing
actions.
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(c) OTHER TRANSACTIONS. SS&L and the Sellers shall
not, and shall cause SS&L's directors, officers, employees, agents and
Affiliates or Associates not to, directly or indirectly, solicit or initiate the
submission of proposals from, or solicit, encourage, entertain or enter into any
arrangement, agreement or understanding with, or engage in any negotiations
with, or furnish any information to, any person, other than Buyer or a
representative thereof, with respect to the acquisition of all or any part of
the business or assets of SS&L or any of its securities. Should SS&L or any of
its Affiliates or Associates, during such period, receive any offer or inquiry
relating to such acquisition, or obtain information that such an offer is likely
to be made, they will provide Buyer with immediate written notice thereof, which
notice will include the identity of the prospective offeror and the price and
terms of any offer.
(d) CONSENTS. Provided that there is no material cost
to, or obligations of, the Sellers and provided that Buyer provides all
reasonable cooperation, the Sellers shall cause SS&L to, and SS&L shall, use all
reasonable efforts to obtain in writing, prior to the Closing Date, all
consents, approvals, waivers, authorizations and orders necessary or reasonably
required in order to permit it to effectuate this Agreement and to consummate
the transactions contemplated hereby (collectively, "Consents"). All such
Consents will be in writing and copies thereof will be delivered to Buyer
promptly after SS&L's receipt thereof but no later than immediately prior to
Closing.
(e) SUPPLEMENTAL DISCLOSURE. The Sellers and SS&L
agree that, with respect to their representations and warranties made in this
Agreement, they will have a continuing obligation to promptly supplement or
amend the schedules hereto with respect to any matter hereafter discovered
which, if existing or known at the date of this Agreement and on the Closing
Date, would have been required to be set forth or described in the schedules
hereto.
(f) PUBLIC ANNOUNCEMENTS. The Sellers and Buyer agree
that they will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and any press release or any public statement
shall be subject to mutual agreement of the parties, except as may be required
by the disclosure obligations of Buyer under applicable securities laws.
4. CONDITIONS TO CLOSING
4.1 CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligation
of Buyer to close under this Agreement is subject to the satisfaction of
following conditions any of which may be waived by Buyer in writing at or prior
to Closing:
(a) DUE DILIGENCE. Buyer shall have completed to its
satisfaction its business, legal, tax and accounting due diligence.
(b) AGREEMENTS AND CONDITIONS. On or before the
Closing Date, the Sellers and SS&L shall have complied with and duly performed
all agreements and conditions on their part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Closing Date.
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(c) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers and SS&L contained in this
Agreement, or otherwise made in connection with the transactions contemplated
hereby, shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
(d) LOSS, DAMAGE OR DESTRUCTION. Between the date
hereof and the Closing Date there shall not have been any loss, damage or
destruction to or of any of the assets, property or business of SS&L in excess
of $25,000 in the aggregate, whether or not covered by insurance, nor shall the
assets, properties, business or prospects of SS&L have been adversely affected
in any way as a result of any fire, accident, or other casualty, war, civil
strife, riot or act of God or the public enemy or otherwise.
(e) NO LEGAL PROCEEDINGS. No court or governmental
action or proceeding shall have been instituted or threatened to restrain or
prohibit the transactions contemplated hereby, and on the Closing Date there
will be no court or governmental actions or proceedings pending or threatened
against or affecting SS&L which involve a demand for any judgment or liability,
whether or not covered by insurance, and which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of SS&L.
(f) CERTIFICATE. Buyer shall have received a
certificate dated the Closing Date and executed by the Sellers and an authorized
officer of SS&L to the effect that the conditions expressed in Sections 4.1(b),
4.1(c), 4.1(d) and 4.1(e) have been fulfilled.
(g) CONSENTS. Buyer shall have received all Consents
necessary to effectuate this Agreement and to consummate the transactions
contemplated hereby.
(h) EMPLOYMENT AGREEMENTS. Buyer shall have entered
into an Employment Agreement with Xxxxx X. Xxxxx, II, in form and substance
satisfactory to Buyer.
(i) [Intentionally omitted.]
(j) ESCROW AGREEMENT. The Sellers and the Escrow
Agent shall have entered into the Escrow Agreement.
(k) RESIGNATIONS OF OFFICERS AND DIRECTORS. Buyer
shall have received resignations effective as of the Closing Date from all of
the executive officers and each of the members of the board of directors of
SS&L.
(l) CERTIFICATES OF STATUS. Buyer shall have received
certificates from the Secretary of State of Florida and of each jurisdiction set
forth in Schedule 2.1(a) hereto, providing that SS&L has filed its most recent
annual report, has not filed articles of dissolution and is in good standing in
each such jurisdiction.
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(m) OPINION OF COUNSEL. The Sellers shall have
furnished Buyer with a favorable opinion of Williams, Parker, Xxxxxxxx, Xxxxx &
Xxxxxx, counsel for SS&L and the Sellers, dated as of the Closing Date, and in
form and substance reasonably satisfactory to Buyer.
(n) GENERAL RELEASE OF SS&L BY THE SELLERS. Each of
the Sellers shall have fully released and discharged SS&L from any and all
obligations owing to them by SS&L and all claims, actions or suits that they now
have or may hereafter have against SS&L in form and substance satisfactory to
Buyer and its counsel.
(o) OSB ACQUISITION. Simultaneously with the Closing,
Buyer shall have acquired all of the issued and outstanding capital stock of
Operators Standing By, Inc., a Florida corporation ("OSB").
4.2 CONDITIONS OF THE SELLERS' AND SS&L'S OBLIGATIONS TO
CLOSE. The obligations of the Sellers and SS&L to close under this Agreement are
subject to the following conditions any of which may be waived by SS&L in
writing at or prior to Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the
Closing Date, Buyer shall have complied with and duly performed all agreements
and conditions on its part to be complied with and performed pursuant to or in
connection with this Agreement on or before the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement, shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
(c) CLOSING CERTIFICATE. The Sellers shall have
received a certificate dated the Closing Date and executed by an authorized
officer of Buyer to the effect that the conditions contained in Section 4.2(a)
and (b) have been fulfilled.
(d) ESCROW AGREEMENT. Buyer and the Escrow Agent
shall have entered into the Escrow Agreement.
(e) OSB ACQUISITION. Simultaneously with the Closing,
Buyer shall have acquired all of the issued and outstanding capital stock of
OSB.
(f) RELEASE OF GUARANTIES. Xxxxx X. Xxxxx shall have
received a written release or termination of each of the guaranties set forth on
Schedule 2.1(y) hereto.
5. TAX MATTERS
5.1 TAX RETURNS. Buyer shall prepare and file, or cause to be
prepared and filed, all Returns for SS&L that are due after the Closing Date,
including, without limitation, Returns relating to period(s) ending on or prior
to the Closing Date which are due after the Closing Date except the income tax
returns described in the following sentence. Notwithstanding the preceding
sentence, Sellers' Rep shall prepare and file, or cause to be prepared and
filed, all U.S.
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Federal, state and local income tax Returns of SS&L for all period(s) ending on
or prior to the Closing Date and no such Returns shall subsequently be amended
or refiled without the prior written consent of Buyer, which consent shall not
be unreasonably withheld. Sellers' Rep shall permit Buyer to review and comment
on each Return prepared by or on behalf of the Sellers in accordance with the
preceding sentence prior to filing and shall make such revisions to such Returns
as are reasonably requested by Buyer. Buyer shall cause all such Returns to be
signed by an authorized officer of SS&L to permit timely filing thereof
(including permitted extensions).
5.2 TAX ELECTION. Buyer may require the Sellers to join in
making the election permitted by Section 338(h)(10) of the Code (the "Election")
with respect to SS&L. If Buyer elects to do so, the following procedure shall be
followed:
(a) Not later than six months after the Closing Date,
Buyer shall deliver to the Sellers' Rep the following:
(i) A notice signed by Buyer stating Buyer's
intent to make the Election and requesting the Sellers to join in the Election.
(ii) A completed Form 8023-A signed by the
Buyer.
(iii) A copy of form 1120S that Buyer
proposes be filed by SS&L with respect to the period from January 1, 1998
through the Closing Date (the "1998 Period"), either as the initially filed
return, or as an amended return.
(iv) A copy of all work papers upon which
the form 1120S is based.
(b) Within 30 days after receipt of the items
described in subparagraph (i) above, the Seller shall deliver to Buyer the
following:
(i) A notice signed by the Sellers stating
whether or not, based upon information available to the Sellers at the time, he
accepts the accuracy, completeness, and form of presentation of Form 1120S
prepared by Buyer, with a reasonably detailed explanation of any non-acceptance.
(ii) A detailed calculation of the Sellers'
estimate of the Additional Tax and Expenses, as defined below, to which the
Sellers would be subjected if the Election is made. For this purpose,
"Additional Tax" shall mean the difference between the amount of the Sellers'
federal and Florida income tax liability, were the Election to be made, and the
amount of such liability were the Election not to be made. The Sellers' tax
liability arising from the sale of stock of SS&L, were the Election not to be
made, shall be based upon the consideration stated in this contract (including
all amounts paid or payable to the Sellers pursuant to this paragraph), the
Sellers' stock basis as conclusively determined by the Sellers' certified public
accountant, and a twenty percent capital gains tax rate. "Expenses" as used
above, means all out-of-pocket third party legal and accounting expenses which
the Sellers, as of the date of the calculation, reasonably expect to incur in
connection with the actions that the Sellers shall then
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have taken, and expect to take in the exercise of reasonable prudence, as a
direct consequence of the filing of the Election.
(c) Within 20 days after the receipt by Buyer of the
items described in Section 5.2(b) above, Buyer shall deliver to the Sellers the
following:
(i) A notice signed by Buyer stating whether
or not Buyer accepts the determination of the Additional Tax and Expenses stated
by the Sellers in the notice described in Section 5.2(b)(ii) above.
(ii) If Buyer accepts the calculation a
cashier's check in the amount of the Additional Tax and Expense specified by the
Sellers in the calculation of Section 5.2(b)(ii).
(iii) An agreement in form satisfactory to
the Sellers whereunder Buyer indemnifies the Sellers against all Additional Tax
and Expenses which the Sellers may incur prior to the final determination and
payment of the Additional Tax and the Sellers agree to reimburse Buyer to the
extent the Additional Taxes and Expenses specified in Section 5.2(b)(ii) shall
exceed the actual amount of Additional Taxes and Expenses incurred by the
Sellers. In the event that Buyer does not indemnify the Sellers in time for the
Sellers to pay the Additional Taxes on a timely basis, Buyer shall pay any
interest and penalties resulting therefrom.
(d) Within 20 days after the receipt by Buyer of the
items described in Section 5.2(b) above, Buyer and the Sellers shall attempt to
agree on a form of security, satisfactory to Buyer and the Sellers, to secure
the agreement set forth in Section 5.2(c)(iii) above, in an amount equal to 50%
of the amount paid under Section 5.2(b)(ii). In the event that the parties are
unable to agree, the Sellers shall not be required to join in making the
Election.
(e) If the security described in Section 5.2(d) has
been agreed to, within 5 days after the receipt by the Sellers of the items
described in Section 5.2(c) above, in form satisfactory to Seller, but in no
event later than eight months after the Closing Date, the Sellers shall execute
and deliver to Buyer the Form 8023-A.
(f) In the event that a dispute arises between Buyer
and the Sellers as to the accuracy, completeness or method of presentation of
tax returns, calculations, etc. under Sections 5.2(a) and (b) above, the parties
shall consult with each other in an attempt to resolve the dispute. If the
dispute cannot be thus resolved, the dispute shall be resolved by binding
arbitration to be carried out by a national accounting firm mutually acceptable
to Buyer and the Sellers at Buyer's expense. The Sellers' Expenses incurred in
connection with the resolution of such dispute. If the parties are unable to
agree on the selection of an arbitrator within 5 days of the notice of dispute,
Xxxxxx Xxxxxxxx shall be the arbitrator.
(g) Notwithstanding anything contained herein to the
contrary, if the Election is made, the Sellers shall have no liability for any
federal, state or local income tax, or any other kind of tax, imposed upon SS&L
under Section 1374 of the Code or otherwise, as a consequence of the Election,
nor any Expense incurred in connection therewith, nor will any
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representation, warranty or covenant hereunder be deemed to be breached by any
such tax liability, and Buyer shall indemnify the Sellers against any and all of
the foregoing.
(h) Each party shall provide all reasonable
cooperation to the other party hereunder to implement the foregoing procedure
and to attempt to permit the timely filing of Form 8023-A if the Buyer intends
to make the Election.
(i) If the Sellers' Form 1040 for 1998 is audited by
Internal Revenue Service and any issue concerning the amount of tax arising from
the Election is raised as an issue, the Sellers shall promptly notify Buyer, and
Buyer shall have the opportunity to participate in and/or undertake the defense
of such item according to the procedures set forth in Section 6 hereof relating
to indemnification.
(j) Buyer shall pay to the Sellers, within 15 days
after the Sellers shall give Buyer written notice, any and all amounts for which
the Sellers become obligated as Additional Tax and Expense. The Sellers shall
pay to Buyer within 15 days after Buyer shall give the Sellers written notice,
any and all amounts to the extent the Additional Taxes and Expenses paid to the
Sellers shall exceed the actual amount of Additional Taxes and Expenses incurred
by the Sellers. Any amounts due under this Section 5.2 not timely paid shall
bear interest at 10% per annum.
5.3 TRANSFER TAXES. Notwithstanding anything to the contrary
contained herein, the Sellers, jointly and severally, shall assume and pay all
sales, use, privilege, transfer, stock transfer, real property transfer,
documentary, gains, stamp, duties, recording and similar Taxes and fees
(including any penalties, interest or additions) imposed upon any party hereto
incurred in connection with any of the transactions contemplated by this
Agreement (collectively, "Transfer Taxes") and shall, at their own expense,
accurately file all necessary Returns and other documentation with respect to
any Transfer Tax other than Returns which Buyer is responsible for filing under
applicable law. The Sellers agree to timely sign and deliver such certificates
or forms as may be necessary or appropriate to establish a lawful exemption from
(or otherwise lawfully reduce), or file Returns with respect to, such Transfer
Taxes.
5.4 AMENDMENTS.
(a) The Sellers shall not (and shall not cause or
permit SS&L to) amend, refile or otherwise modify any Return relating in whole
or in part to SS&L with respect to any taxable year or period ending on or
before the Closing Date without the prior written consent of Buyer, which
consent shall not be unreasonably withheld or delayed.
(b) Buyer and each of the Sellers shall (i) assist
the other party in preparing any Returns which such other party is responsible
for preparing and filing in accordance with Section 5.1 above, (ii) cooperate
fully in preparing for any audits of, or disputes with taxing authorities
regarding, any Returns of SS&L, and (iii) make available to the other party and
to any taxing authority as reasonably requested all information, records and
documents relating to Taxes of SS&L.
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5.5 NOTICES. Each of the Sellers and Buyer shall (and shall
cause their respective Affiliates to): provide timely notice to the other in
writing of any notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination, suit, dispute or other claim delivered, sent,
commenced or initiated to or against SS&L by any taxing authority with respect
to taxable periods for which the other may have a liability hereunder and
furnish the other with copies of all correspondence received from any taxing
authority in connection with any Tax audit or information request with respect
to any such taxable period.
6. INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS. The representations and
warranties of the Sellers in this Agreement or in any document delivered
pursuant hereto shall survive the Closing Date for a period of three years and
shall then terminate; PROVIDED, HOWEVER, that (i) any such representation and
warranty shall survive the time it would otherwise terminate only with respect
to claims of which notice has been given as provided in this Agreement prior to
such termination and (ii) such time limitation shall not apply to the
representations and warranties set forth in Section 2.2(b) hereof, which shall
survive indefinitely, and Sections 2.1(h), 2.1(j), 2.1(l) and 2.1(n) hereof,
which shall survive until the expiration of the applicable statute of
limitations.
6.2 INDEMNITORS; INDEMNIFIED PERSONS. For purposes of this
Section 6, each party which, pursuant to this Section 6, shall agree to
indemnify any other person or entity shall be referred to, as applicable, as the
"Indemnitor", and each such person and entity who is entitled to be indemnified
by any Indemnitor shall be referred to as the "Indemnified Person" with respect
to such Indemnitor.
6.3 INDEMNITY OF SELLERS. The Sellers and, with respect only
to claims made hereunder by Buyer prior to the Closing, SS&L, hereby jointly and
severally agree to indemnify, hold harmless and reimburse Buyer and its
directors, officers, agents and employees from and against any and all claims,
liabilities, losses, damages and expenses incurred by such Indemnified Persons
(including reasonable attorneys' fees and disbursements) which shall be caused
by or related to or shall arise out of any breach or alleged breach of any
representation, warranty, covenant or agreement of SS&L or Sellers contained in
this Agreement and shall reimburse such Indemnified Persons for all costs and
expenses (including reasonable attorneys' fees and disbursements) as they shall
be incurred, in connection with paying, investigating, preparing for or
defending any action, claim, investigation, inquiry or other proceeding, whether
or not in connection with pending or threatened litigation, which shall be
caused by or related to or shall arise out of such breach or alleged breach,
whether or not any such Indemnified Person shall be named as a party thereto and
whether or not any liability shall result therefrom. The Sellers and SS&L
further agree that they shall not, without the prior written consent of Buyer
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder unless such settlement, compromise or consent shall
include an unconditional release of each Indemnified Person under this Section
6.3 from all liability arising out of such claim, action, suit or proceeding.
6.4 INDEMNITY OF BUYER. Buyer hereby agrees to indemnify, hold
harmless and reimburse the Sellers and SS&L and SS&L's directors, officers,
agents and employees from and against any and all claims, liabilities, losses,
damages and expenses incurred by them
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(including reasonable attorneys' fees and disbursements) which shall be caused
by or related to or shall arise out of any breach or alleged breach of any
representation, warranty, covenant or agreement of Buyer contained in this
Agreement and shall reimburse such Indemnified Persons for all costs and
expenses (including reasonable attorneys' fees and disbursements) as shall be
incurred, in connection with paying investigating, preparing for or defending
any action, claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, which shall be caused by or
related to or shall arise out of such breach or alleged breach, whether or not
such Indemnified Persons shall be named as a party thereto and whether or not
any liability shall result therefrom. Buyer further agrees that it shall not,
without the prior written consent of the Sellers' Rep and SS&L, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder unless such settlement, compromise or consent shall include an
unconditional release of the Sellers and SS&L under this Section 6.4 from all
liability arising out of such claim, action, suit or proceeding.
6.5 LIMITATION ON INDEMNIFICATION. The indemnification
obligations provided for by Sections 6.3 and 6.4 hereof shall not come into
effect until the Indemnified Persons shall have suffered damages by reason of
all matters and actions covered by Sections 6.3 and 6.4 hereof exceeding an
aggregate threshold of $25,000.
6.6 PROCEDURES FOR INDEMNIFICATION; DEFENSE. Promptly after
receipt by an Indemnified Person of notice of the commencement of any action or
proceeding with respect to which indemnification may be sought hereunder, such
Indemnified Person shall notify the Indemnitor of the commencement of such
action or proceeding, but failure to so notify the Indemnitor shall not relieve
the Indemnitor from any liability which the Indemnitor may have hereunder or
otherwise, unless the Indemnitor shall be materially prejudiced by such failure.
If the Indemnitor shall so elect, the Indemnitor shall assume the defense of
such action or proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall pay the fees and
disbursements of such counsel. In the event, however, that such Indemnified
Person shall reasonably determine in its judgment that having common counsel
would present such counsel with a conflict of interest or alternative defenses
shall be available to an Indemnified Person or if the Indemnitor shall fail to
assume the defense of the action or proceeding in a timely manner, then such
Indemnified Person may employ separate counsel to represent or defend it in any
such action or proceeding and the Indemnitor shall pay the reasonable fees and
disbursements of such counsel; PROVIDED, HOWEVER, that the Indemnitor shall not
be required to pay the fees and disbursements of more than one separate counsel
for all Indemnified Persons in any jurisdiction in any single action or
proceeding. In any action or proceeding the defense of which the Indemnitor
shall assume, the Indemnified Person shall have the right to participate in such
litigation and to retain its own counsel at such Indemnified Person's own
expense except as otherwise provided above in this Section 6.5, so long as such
participation does not interfere with the Indemnitor's control of such
litigation.
6.7 TAX INDEMNITY. The Sellers, jointly and severally, shall
indemnify and hold harmless and reimburse Buyer from and against all Federal,
state and local income Taxes, imposed upon SS&L for any taxable year ending on
or prior to the Closing Date, except to the extent such Taxes shall be incurred
as a result of the Code Section 338(h)(10) election.
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7. NON-COMPETITION; CONFIDENTIALITY
7.1 NON-COMPETITION. Following the Closing Date and for a
period of three (3) years thereafter, no Seller shall, directly or indirectly,
(a) engage in any business or activity that competes with the business in which
SS&L is then engaged anywhere in the United States, other than the captive call
center business (the "Business"); (b) enter the employ of any person or entity
engaged in any business or activity that competes with the Business or render
any consulting or other services to any person or entity for use in or with the
effect of competing with the Business; or (c) have an interest in any business
or activity that competes with the Business, in any capacity, including, without
limitation, as an investor, partner, Seller, officer, director, principal,
agent, employee, or creditor; PROVIDED, HOWEVER, that nothing herein shall
prevent the purchase or ownership by any Seller of less than 3% of the
outstanding equity securities of any class of securities of a company registered
under Section 12 of the Securities and Exchange Act of 1934, as amended, nor the
Seller's ownership of any amount of the Buyer's equity securities, nor the
Seller's employment by Buyer or an affiliate of Buyer.
7.2 NO COMPETING INTERESTS. Each Seller hereby represents and
warrants to Buyer that he has no ownership or other interest in any business or
activity that competes, directly or indirectly, with the Business except for
ownership of stock of and other activities in connection with SS&L.
7.3 NON-DISRUPTION. Following the Closing Date and for a
period of five (5) years thereafter, no Seller shall, directly or indirectly,
interfere with, disrupt or attempt to disrupt any present or prospective
relationship then known to the Sellers, contractual or otherwise, between SS&L
or any of its Affiliates, on the one hand, and any of its customers, suppliers
or employees, on the other hand.
7.4 CONFIDENTIALITY. No Seller shall use for his own behalf or
divulge to any other person or entity any confidential information or trade
secrets of or relating to Buyer in any manner whatsoever (except as authorized
and required in connection with the Seller's relationship with Buyer or any of
its affiliates during the term of such relationship or except as may be required
under legal process by subpoena or other court order; PROVIDED, HOWEVER, that
the Seller shall give Buyer prompt prior written notice thereof in order to
contest such requirement or order). As used herein, confidential information
shall consist of all information, knowledge or data relating to Buyer or any of
its Affiliates (including, without limitation, all information relating to
inventions, procedures and operations, processes and methods, financial
information, customer and prospective customer lists, prices and trade
practices) which is not in the public domain or otherwise published or publicly
available, except for information which such Seller can demonstrate by written
records was previously known to him, or is now, or becomes in the future, public
knowledge, other than through acts or omissions of such Seller, is lawfully
obtained by such Seller from sources independent of Buyer, or is subsequently
developed by the Seller independent of confidential information or trade secrets
of or relating to Buyer in connection with this transaction.
7.5 REMEDIES UPON BREACH. The Sellers acknowledge and agree
that (a) Buyer shall be irreparably injured in the event of a breach by a Seller
of any of their obligations under this Section 7; (b) monetary damages shall not
be an adequate remedy for such breach; (c)
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Buyer shall be entitled to injunctive relief, in addition to any other remedy
which it may have, in the event of any such breach; and (d) the existence of any
claims which a Seller may have against Buyer, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Buyer of any of its
rights under this Agreement.
8. MISCELLANEOUS PROVISIONS
(a) CONFIDENTIALITY. SS&L, the Sellers and Buyer
agree not to, directly or indirectly, without the prior written consent of the
other, use or disclose to any person, firm or corporation, any of the terms of
this Agreement, except as may be required by the disclosure obligations of Buyer
under applicable securities laws or as may be required to be disclosed to the
attorneys and/or accountants of the parties hereto in connection with the
transactions contemplated hereby.
(b) NOTIFICATION. Each party hereto shall give the
other party or parties hereto prompt written notice of (i) the existence of any
fact or the occurrence of any event which constitutes, or with the giving of
notice or the passage of time or both would constitute, a breach of any
representation or warranty of the party giving such notice made herein or
pursuant hereto and (ii) the taking of any action by the party giving such
notice that would breach or violate, or constitute a default under, any
agreement or covenant of such party made herein or pursuant hereto. The giving
of any such notice shall not affect, modify or limit in any way any
representation, warranty, agreement or covenant of the parties made herein or
pursuant hereto.
(c) EXECUTION IN COUNTERPARTS. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same document.
(d) NOTICES. All notices, requests, demands and other
communications which are required or may be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed duly given when delivered by
hand, telecopied or posted in the United States mail by registered or certified
mail with postage pre-paid, return receipt requested, (i) if to Buyer, to
Teleservices Acquisition Corporation, c/x Xxxxxxx, Calamari & Xxxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq., facsimile
number: (000) 000-0000; and (ii) if to the Sellers, to 0000 Xxxxxxxx Xxxxxxxxx,
Xxxxxxxx, Xxxxxxx 00000, Attention: Xx. Xxxxx X. Xxxxx, facsimile number: (941)
906-9099, or to such other address(es) as shall be specified by like notice to
the other parties.
(e) AMENDMENTS. This Agreement may be amended or
modified at any time prior to the Closing Date, but only by a written instrument
executed by all of the parties hereto.
(f) ENTIRE AGREEMENT. This Agreement (together with
the other agreements, certificates, instruments and documents delivered pursuant
hereto) constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof, and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof.
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(g) APPLICABLE LAW. This Agreement and the legal
relations among the parties hereto shall be governed by and construed in
accordance with the internal laws of the State of New York. The parties hereby
consent to the exclusive jurisdiction of Federal and New York State courts
located in the County of New York and agree that service of process by certified
mail, return receipt requested, shall constitute personal service for all
purposes hereof.
(h) TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date by any of the following:
(i) By mutual written agreement of Buyer and
the Sellers;
(ii) By either Buyer or the Sellers, if the
Closing has not occurred within 30 days of the date hereof, upon written notice
by such terminating party, provided that at the time such notice is given a
material breach of this Agreement by such terminating party shall not be the
principal reason for the Closing's failure to occur;
(iii) Subject to the provisions of Section
8(i) hereof, by Buyer, by written notice to the Sellers and SS&L, if there has
been a material violation or breach of any of the Sellers' or SS&L's covenants
or agreements made herein or in connection herewith or if any representation or
warranty of the Sellers or SS&L made herein or in connection herewith proves to
be materially inaccurate or misleading; or
(iv) Subject to the provisions of Section
8(i) hereof, by the Sellers, by written notice to Buyer, if there has been a
material violation or breach of any of Buyer's covenants or agreements made
herein or in connection herewith or if any representation or warranty of Buyer
made herein or in connection herewith proves to be materially inaccurate or
misleading.
(i) EFFECTS OF TERMINATION. If this Agreement is
terminated as provided in Section 8(h) hereof, then this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party hereto (or any of their respective stockholders, officers,
directors or employees), except based on the agreements contained in Section 6.3
and 6.4 hereof; provided, HOWEVER, that if Buyer terminates this Agreement
pursuant to Section 8(h)(iii) hereof, or the Sellers terminate this Agreement
pursuant to Section 8(h)(iv) hereof, the non-terminating party shall remain
liable for any breach hereof.
(j) HEADINGS. The headings contained herein are for
the sole purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions of this
Agreement.
(k) FEES AND DISBURSEMENTS. Buyer shall pay its own
expenses, and the fees and disbursements of the counsel, accountants or auditors
retained by it in connection with the preparation, execution and delivery of
this Agreement and the fees and expenses and disbursements of the counsel to
SS&L and the Sellers shall be paid by the Sellers.
(l) ASSIGNMENT. This Agreement may not be assigned by
SS&L or any Seller without the prior written consent of Buyer. This Agreement
may not be assigned by
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Buyer, except for an assignment by Buyer to any Affiliate, without the prior
written consent of the Sellers' Rep.
(m) BINDING EFFECT; BENEFITS. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
(n) SEVERABILITY. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(o) RECORDS RETENTION. On the Closing Date the
Sellers shall deliver to the Buyer all books, records and other documents
("Books and Records") pertaining to the business of SS&L, including, without
limitation,
(i) all instruments, documents and evidences
of title of any of the assets of SS&L and the SS&L Stock;
(ii) all books of account, ledgers, minute
books and other records of SS&L;
(iii) any and all other documents, records
and writing of any kind whatsoever which on the Closing Date shall be possessed
by the Sellers or SS&L for use to any extent or in any manner in connection with
the business of SS&L.
Buyer shall permit the Sellers or their duly authorized representatives at any
time and from time to time between the hours of 9:00 a.m. and 5:00 p.m., local
time, on weekdays excepting holidays, or upon reasonable prior written notice,
during the period of six (6) years following the Closing to examine, inspect,
photocopy and/or copy such Books and Records then in the possession of Buyer as
shall pertain to the operation of the SS&L business for the period ending on the
Closing Date.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement the day and year first above written.
TELESERVICES ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Title: Chairman
SWEET, XXXXXX & XXXXX, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Title: President
SELLERS:
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx, II
---------------------------------------
Xxxxx X. Xxxxx, II
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
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