Exhibit 2.3
ASSET PURCHASE AGREEMENT
By and Among
XXXX, XXXXXX & ASSOCIATES, INC., and
ONSTAFF ACQUISITION CORP.,
On the One Hand, and
XXXXXXXXXXXX.XXX,
XXXXXXX X. XXXXX,
XXXXXXX XXXXXXXX
GRANTOR RETAINED ANNUITY TRUST DATED APRIL 23, 2001,
XXXXX XXXXXX XXXXXXXX
GRANTOR RETAINED ANNUITY TRUST DATED APRIL 23, 2001,
XXXXXXX AND XXXXX XXXXXXXX
2001 IRREVOCABLE GIFT TRUST DATED APRIL 23, 2001,
XXXXXXXX LIVING TRUST DATED March 27, 2001,
XXXX XXXXXX
and
XXXXXXX XXXXXXXX, as Seller Representative,
On the Other Hand
Dated as of August 9, 2002
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS .......................................................... 1
1.01. Definitions ....................................................... 1
1.02. Index of Other Defined Terms ...................................... 7
ARTICLE II. TRANSFER OF ASSETS .................................................. 8
2.01. Transfer of Assets by Seller ...................................... 8
2.02. Excluded Assets ................................................... 10
2.03. Assumption of Liabilities ......................................... 10
2.04. Excluded Liabilities .............................................. 10
2.05. Assignment of Contracts and Rights ................................ 11
2.06. Closing ........................................................... 12
2.07. [Intentionally Omitted] ........................................... 14
2.08. Total Consideration Allocation .................................... 14
2.09. [Intentionally Omitted] ........................................... 14
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER ........................... 14
3.01. Corporate Existence and Power ..................................... 14
3.02. Authorization ..................................................... 14
3.03. Capital Stock; Subsidiaries ....................................... 15
3.04. Governmental Authorization ........................................ 15
3.05. Non-Contravention ................................................. 15
3.06. Financial Statements; Undisclosed Liabilities ..................... 15
3.07. Absence of Certain Changes ........................................ 16
3.08. Properties; Leases; Tangible Assets ............................... 18
3.09. Sufficiency of and Title to the Transferred Assets ................ 19
3.10. Affiliates ........................................................ 19
3.11. Litigation ........................................................ 19
3.12. Contracts ......................................................... 20
3.13. Permits; Required Consents ........................................ 21
3.14. Compliance with Applicable Laws ................................... 21
3.15. Employment Agreements; Change in Control; and Employee
Benefits ........................................................ 21
3.16. Labor and Employment Matters ...................................... 23
3.17. Intellectual Property ............................................. 24
3.18. Advisory Fees ..................................................... 24
3.19. Environmental Compliance .......................................... 25
3.20. Insurance ......................................................... 25
3.21. Tax Matters ....................................................... 25
3.22. Clients ........................................................... 27
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3.23. Books and Records ................................................. 27
3.24. Warranties ........................................................ 27
3.25. Bank Accounts ..................................................... 27
3.26. Certain Business Practices ........................................ 27
3.27. Complete Disclosure ............................................... 28
3.28. No Other Representations .......................................... 28
ARTICLE IV. CERTAIN REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES ............. 28
4.01. Understanding that Shares will Be Issued without Registration ..... 28
4.02. Accredited Investor ............................................... 29
4.03. Receipt of Information; Access to Information ..................... 29
4.04. Authority Relative to this Agreement .............................. 29
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER .................... 30
5.01. Corporate Existence and Power ..................................... 30
5.02. Corporate Authorization ........................................... 30
5.03. Governmental Authorization ........................................ 30
5.04. Non-Contravention ................................................. 30
5.05. Parent SEC Filings; No Material Adverse Effect .................... 31
5.06. No Other Representations .......................................... 31
ARTICLE VI. COVENANTS OF SELLER .................................................. 31
6.01. Compliance with Terms of Required Contractual Consents ............ 31
6.02. Confidentiality ................................................... 31
6.03. Change of Name .................................................... 32
6.04. Administration of Accounts ........................................ 32
6.05. Specific Performance .............................................. 32
6.06. Taxes ............................................................. 32
6.07. COBRA ............................................................. 33
ARTICLE VII. COVENANTS OF BUYER AND PARENT ....................................... 33
7.01. Confidentiality ................................................... 33
7.02. Specific Performance .............................................. 34
7.03. Pre-paid Rent ..................................................... 34
ARTICLE VIII. COVENANTS OF ALL PARTIES .......................................... 34
8.01. Further Assurances ................................................ 34
8.02. Certain Filings ................................................... 34
8.03. Public Announcements .............................................. 34
8.04. Specific Performance .............................................. 35
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ARTICLE IX. INDEMNIFICATION ................................................... 35
9.01. Seller Parties' Agreement to Indemnify ......................... 35
9.02. Parent's and Buyer's Agreement to Indemnify .................... 36
9.03. Survival of Representations, Warranties and Covenants .......... 37
9.04. Claims for Indemnification ..................................... 38
9.05. Defense of Claims .............................................. 38
9.06. Limitations on Remedies ........................................ 39
9.07. Nature of Payments ............................................. 39
9.08. Right of Set-Off ............................................... 39
9.09. Appointment of the Seller Representative ....................... 40
9.10. Deductibles, Caps and Set-Off Rights ........................... 40
ARTICLE X. MISCELLANEOUS ...................................................... 41
10.01. Notices ........................................................ 41
10.02. Amendments; No Waivers ......................................... 42
10.03. Expenses ....................................................... 42
10.04. Successors and Assigns ......................................... 42
10.05. Governing Law .................................................. 43
10.06. Counterparts; Effectiveness .................................... 43
10.07. Entire Agreement ............................................... 43
10.08. Captions ....................................................... 43
10.09. Severability ................................................... 43
10.10. Construction ................................................... 43
10.11. Arbitration .................................................... 44
10.12. Cumulative Remedies ............................................ 44
10.13. Third Party Beneficiaries ...................................... 45
10.14. Knowledge ...................................................... 45
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EXHIBITS
EXHIBIT A Financial Statements
EXHIBIT B Form of Employment Agreement with Xxxxxxx Xxxxx
EXHIBIT C Form of Opinion of Counsel to Seller and Shareholders
EXHIBIT D Form of Opinion of Counsel to Buyer and Parent
EXHIBIT E Form of Noncompetition and Nonsolicitation Agreement
EXHIBIT F Form of Guaranty
EXHIBIT G Form of Escrow Agreement
EXHIBIT H Form of Employment Agreement with Xxxxxxx Xxxxxxxx
SCHEDULES
Schedule 2.02 Excluded Assets
Schedule 3.01 Qualifications to do Business
Schedule 3.03 Ownership Table and Related Agreements
Schedule 3.05 Non-Contravention
Schedule 3.06(b) Financial Statements
Schedule 3.06(c) Undisclosed Liabilities
Schedule 3.07(a) Absence of Certain Changes
Schedule 3.08(a) Encumbrances on Property
Schedule 3.08(d) Leases
Schedule 3.08(e) Detractions on Real Property
Schedule 3.08(f) Regulatory Proceedings
Schedule 3.10 Affiliates
Schedule 3.11 Litigation
Schedule 3.12(a) Scheduled Contracts
Schedule 3.12(b) Limitations on Enforceability of Contracts
Schedule 3.12(c) Significant Clients
Schedule 3.13(a) Permits
Schedule 3.13(b) Required Consents
Schedule 3.14 Compliance with Applicable Laws
Schedule 3.15(a) Employment Agreements
Schedule 3.15(b) Benefit Plans
Schedule 3.15(c) Employee Pension Benefit Plans
Schedule 3.16(a) Labor and Employment Matters
Schedule 3.16(b) Labor Disputes
Schedule 3.17(a) Intellectual Property Rights
Schedule 3.17(b) Actions Affecting Intellectual Property
Schedule 3.17(c) Ownership of Intellectual Property Rights
Schedule 3.19(a) Environmental Permits
Schedule 3.19(b) Compliance with Environmental Laws
Schedule 3.19(c) Continuing Compliance with Environmental Laws
Schedule 3.20 Insurance Policies
Schedule 3.21 Tax Matters
Schedule 3.22 Clients
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Schedule 3.24 Warranties
Schedule 3.25 Bank Accounts
Schedule 5.04 Non-Contravention
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of
August 9, 2002, is by and among Xxxx, Xxxxxx & Associates, Inc., a Delaware
corporation ("Parent") and OnStaff Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Parent ("Buyer"), on the one hand,
xxxXxxxxxxxxxxx.xxx, a California corporation ("Seller"), Xxxxxxx X. Xxxxx, an
individual ("Xxxxx"), Xxxxxxx Xxxxxxxx Grantor Retained Annuity Trust dated
4/23/01 (the "Matt Annuity Trust"), Xxxxx Xxxxxx Xxxxxxxx Grantor Retained
Annuity Trust dated 4/23/01 (the "Xxxxx Annuity Trust"), Xxxxxxx and Xxxxx
Xxxxxxxx 2001 Irrevocable Gift Trust dated 4/23/01 (the "Gift Trust"), Xxxxxxxx
Living Trust dated 3/27/01 (the "Living Trust"), Xxxx Xxxxxx ("Prince," and
collectively, with Xxxxx, the Matt Annuity Trust, the Xxxxx Annuity Trust, the
Gift Trust and the Living Trust, the "Shareholders" and individually, a
"Shareholder"), and Xxxxxxx Xxxxxxxx, as a representative of the Seller (the
"Seller Representative") and the Shareholders (collectively, the "Seller
Parties"), on the other hand.
R E C I T A L S
A. WHEREAS, Seller is engaged in the business of sourcing and
delivering human capital and providing temporary staff and personnel; and
B. WHEREAS, Seller desires to sell and transfer to Buyer
substantially all of its assets (other than the Excluded Assets, as defined
below) in consideration of Buyer's obligations hereunder.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows.
ARTICLE I.
DEFINITIONS
1.01. Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such other Person, through the ownership of all or part of any
Person.
"Ancillary Agreements" means the Escrow Agreement, the
Noncompetition and Nonsolicitation Agreements, the Xxxxx Employment Agreement,
the Xxxxxxxx Employment Agreement, the Xxxx of Sale, the Assignment and
Assumption Agreement and the Registration Rights Agreement.
"Applicable Law" means, with respect to any Person, any domestic
or foreign, federal, state or local statute, law, ordinance, policy, guidance,
rule, administrative interpretation,
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regulation, order, writ, injunction, directive, judgment, decree or other
requirement of any Governmental Authority (including any Environmental Law)
applicable to such Person or any of its Affiliates or Plan Affiliates or any of
their respective properties, assets, officers, directors, employees, consultants
or agents (in connection with such officer's, director's, employee's,
consultant's or agent's activities on behalf of such Person or any of its
Affiliates or Plan Affiliates).
"Assignment and Assumption Agreement" means that certain
Assignment and Assumption Agreement dated the date hereof by and between Seller
and Buyer.
"Associate" or "Associated With" means, when used to indicate a
relationship with any Person, (a) any other Person of which such Person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities issued by such other
Person, (b) any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, and (c) any relative or spouse of such Person, or any
relative of such spouse who has the same home as such Person or who is a
director or officer of such Person or any Affiliate thereof.
"Benefit Arrangement" means any benefit arrangement that is not an
Employee Benefit Plan, including, without limitation, (i) each employment or
consulting agreement, (ii) each arrangement providing for insurance coverage or
workers' compensation benefits, (iii) each incentive bonus or deferred bonus
arrangement, (iv) each arrangement providing termination allowance, severance or
similar benefits, (v) each equity compensation plan, (vi) each deferred
compensation plan and (vii) each compensation policy and practice maintained by
Seller or any ERISA Affiliate of Seller covering the employees, former
employees, directors and former directors of Seller and the beneficiaries of any
of them.
"Benefit Plan" means an Employee Benefit Plan or Benefit
Arrangement.
"Xxxx of Sale" means that certain Xxxx of Sale dated the date
hereof executed by Seller.
"Business" means the business as currently conducted by Seller.
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco, California are authorized or
required by law to close.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended, as set forth in Section 4980B of the Code and part of Title
I of ERISA.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" means all contracts, agreements, options, leases,
licenses, sales and accepted purchase orders, commitments and other instruments
of any kind, whether written or oral, to which Seller is a party on the Closing
Date, including the Scheduled Contracts.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties,
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charges and amounts paid in settlement (net of insurance proceeds actually
received), including (i) interest on cash disbursements in respect of any of the
foregoing at the Reference Rate in effect from time to time, compounded
quarterly, from the date each such cash disbursement is made until the Person
incurring the same shall have been indemnified in respect thereof and (ii)
reasonable costs, fees and expenses of attorneys, accountants and other agents
of such Person.
"Debt" means any indebtedness of Seller, whether or not
contingent, in respect of borrowed money or evidenced by bonds, notes,
debentures or other similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing
capitalized lease obligations or the balance deferred and unpaid of the purchase
price of any property, except any such balance that constitutes an accrued
expense or account payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit) would appear as a Liability upon a
balance sheet of Seller prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of Seller (whether or not
such indebtedness is assumed by Seller) and, to the extent not otherwise
included, any guaranty by Seller of any indebtedness of any other Person.
"Employee Benefit Plan" means any employee benefit plan, as
defined in Section 3(3) of ERISA, that is sponsored by or contributed to Seller
or any ERISA Affiliate thereof covering employees or former employees of Seller.
"Employee Pension Benefit Plan" means any employee pension benefit
plan, as defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA,
other than a Multiemployer Plan.
"Environmental Laws" means all Applicable Laws relating to
Hazardous Substances, toxic torts, occupational health and safety, or the
environment, including without limitation, the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA"), the Clean Air Act, the Water Pollution Control Act,
the Safe Drinking Water Act, and the Toxic Substances Control Act ("TSCA"), and
any requirements promulgated pursuant to these Applicable Laws or any analogous
foreign, state or local Applicable Laws.
"Environmental Liabilities" means all Liabilities of a Person
(whether such Liabilities are owed by such Person to Governmental Authorities,
third parties, or otherwise) whether currently in existence or arising hereafter
which arise under or relate to any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" of any Person means any other Person that,
together with such Person as of the relevant measuring date under ERISA, was or
is required to be treated as a single employer under Section 414 of the Code.
"Escrow Agent" means Comerica Bank - California.
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"Escrow Agreement" means the Escrow Agreement dated as of the
Closing Date by and among Buyer, Seller and the Escrow Agent.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fiscal Year" means a twelve month period commencing on January 1
of each calendar year.
"GAAP" means generally accepted accounting principles in the
United States as in effect on the date hereof and applied on a consistent basis.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Group Health Plan" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"Hazardous Substance" means any substance or material: (i) the
presence of which requires investigation or remediation under any Applicable
Law; or (ii) that is defined as a "hazardous waste" or "hazardous substance"
under any Applicable Law; or (iii) that is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic or mutagenic or otherwise
hazardous and is regulated by any Governmental Authority having or asserting
jurisdiction over Seller; or (iv) the presence of which causes a nuisance,
trespass or other tortious condition; (v) the presence of which poses a hazard
to the health or safety of Persons; or (vi) without limitation, that contains
gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated biphenols
(PCBs) or asbestos.
"Indemnifying Party" means: (1) with respect to any Buyer
Indemnitee asserting a claim under Sections 9.01 or 10.11, Seller Parties; and
(2) with respect to any Seller Indemnitee asserting a claim under Sections 9.02
or 10.11, Buyer and Parent.
"Indemnitee" means: (1) each of Parent, Buyer and their respective
Affiliates with respect to any claim for which a Seller Party is an Indemnifying
Party under Sections 9.01 or 10.11; and (2) Seller and its respective Affiliates
with respect to claims for which Parent or Buyer is an Indemnifying Party under
Sections 9.02 or 10.11.
"IRS" means the Internal Revenue Service.
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether known
or unknown, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise and whether
or not the same is required to be accrued on the financial statements of such
Person or is disclosed on any schedule to this Agreement.
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"Lien" means, with respect to any asset, any mortgage, title
defect or objection, lien, pledge, charge, security interest, hypothecation,
restriction, encumbrance or charge of any kind in respect of such asset.
"Material Adverse Effect" means a change in, or effect on, the
operations, affairs, prospects, financial condition, results of operations,
assets, Liabilities, reserves or any other aspect of Seller or the Business that
results in a material adverse effect on, or a material adverse change in any of
Seller, the Business or the Transferred Assets.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) and 4001(a)(3) of ERISA.
"Multiple Employer Plan" means any Employee Benefit Plan sponsored
by more than one employer, within the meanings of Section 4063 or 4064 of ERISA
or Section 413(c) of the Code.
"Parent Common Stock Price" means the average of the closing
prices of a share of Parent Common Stock during the thirty (30) trading days
ending on the date which is two (2) trading days prior to the Closing Date.
"Permitted Liens" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due, or for Taxes
the validity of which are being contested in good faith by appropriate
proceedings; (ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Persons and other Liens
imposed by Applicable Law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith; (iii) Liens relating to
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or to
secure the performance of leases, trade contracts or other similar agreements;
(iv) Liens and Encumbrances specifically identified in the 2002 Balance Sheet;
and (v) Liens securing executory obligations under any Lease that constitutes an
"operating lease" under GAAP; provided, however, that, with respect to each of
clauses (i) through (v), to the extent that any such Lien on any Transferred
Asset arose prior to the Closing Date and relates to, or secures the payment of,
a Liability that is required to be accrued for under GAAP, such Lien shall not
be a Permitted Lien unless all Liabilities served thereby have been fully
accrued as Debt on the 2002 Balance Sheet. Notwithstanding the foregoing, no
Lien arising under the Code or ERISA with respect to the operation, termination,
restoration or funding of any Benefit Plan sponsored by, maintained by or
contributed to by Seller or any of its ERISA Affiliates or arising in connection
with any excise tax or penalty tax with respect to such Benefit Plan shall be a
Permitted Lien.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust, estate or other entity or organization,
including a Governmental Authority.
"Plan Affiliate" means, with respect to any Person, any employee
benefit plan or arrangement sponsored by, maintained by or contributed to by
such Person, and with respect to any employee benefit plan or arrangement, any
Person sponsoring, maintaining or contributing to such plan or arrangement.
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"Prohibited Transaction" means a transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA, respectively.
"Reference Rate" means seven percent (7%) per annum.
"Registration Rights Agreement" means that certain Registration
Rights Agreement between Parent and Seller dated as of the date hereof.
"Related Purchase Agreements" means (i) that certain Asset
Purchase Agreement dated the date hereof by and among Parent and Buyer, on the
one hand, and Healthcare Staffing Resources, Inc. and the Shareholders
(excluding Prince) and the Seller Representative, on the other hand, and (ii)
that certain Asset Purchase Agreement dated the date hereof by and among Parent
and Buyer, on the one hand, and OnStaff, and the Shareholders (excluding Prince)
and the Seller Representative, on the other hand.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, (i) any
corporation as to which more than 10% of the outstanding stock having ordinary
voting rights or power (and excluding stock having voting rights only upon the
occurrence of a contingency unless and until such contingency occurs and such
rights may be exercised) is owned or controlled, directly or indirectly, by such
Person and/or by one or more of such Person's Subsidiaries and (ii) any
partnership, joint venture or other similar relationship between such Person (or
any Subsidiary thereof) and any other Person (whether pursuant to a written
agreement or otherwise).
"Tax," including "Taxes," means (A) all taxes imposed of any
nature including federal, state, local or foreign net income tax, alternative or
add-on minimum tax, profits or excess profits tax, franchise tax, gross income,
adjusted gross income or gross receipts tax, employment related tax (including
employee withholding or employer payroll tax, FICA or FUTA), real or personal
property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty,
any withholding or back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, environmental tax, intangibles tax or
occupation tax, together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Authority (domestic or foreign)
responsible for the imposition of any such tax, (B) any Liability for payment of
amounts described in clause (A) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing, tax indemnity or tax allocation agreement or any other express or
implied agreement to indemnify any other Person.
"Tax Return" means all returns, reports, forms or other
information required to be filed with respect to any Tax.
"U.S. Government" means the United States Government, including
any agencies, commissions, branches, instrumentalities and departments thereof.
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1.02. Index of Other Defined Terms. In addition to those terms
defined above, the following terms shall have the respective meanings given
thereto in the sections indicated below:
Defined Term Section
"2002 Balance Sheet" 3.06(a)
"AAA" 10.11(a)
"Additional Tax Gross Up Amount" 2.09(b)
"Agreement" Preamble
"Annual Statements" 3.06(a)
"Assumed Liabilities" 2.03
"Buyer" Preamble
"Buyer Deductible" 9.02(b)
"Buyer Indemnitees" 9.01(a)
"Closing" 2.06(a)
"Closing Date" 2.06(a)
"Contracts" 2.01(c)
"Xxxxx Annuity Trust" Preamble
"Disputing Parties" 10.11(a)
"Disputing Party" 10.11(a)
"Distributions" 3.07(h)
"Employment Agreements" 3.15(a)
"Encumbrances" 3.08(a)
"Equipment" 2.01(a)
"Escrowed Shares" 2.06(b)(ii)
"Xxxxx" Preamble
"Xxxxx Employment Agreement" 2.06(d)
"Excluded Assets" 2.02
"Excluded Liabilities" 2.04
"Financial Statements" 3.06(a)
"Gift Trust" Preamble
"Insurance Policies" 3.20
"Intellectual Property" 3.17(a)
"Interim Statements" 3.06(a)
"Inventory" 2.01(b)
"Xxxxxxxx Employment Agreement" 2.06(d)
"Labor Laws" 3.16(d)
"Leased Real Property" 3.08(d)
"Leases" 3.08(d)
"Living Trust" Preamble
"Matt Annuity Trust" Preamble
"Other Documents" 4.03(a)
"Parent" Preamble
"Parent Common Stock" 2.06(b)(ii)
"Parent SEC Reports" 5.05(a)
"Permits" 3.13(a)
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Defined Term Section
"Proceedings" 3.11
"Real Property" 3.08(c)
"Required Consents" 3.13(b)
"Required Contractual Consent" 3.13(b)
"Required Governmental Approval" 3.13(b)
"Scheduled Contracts" 3.12(a)
"Seller" Preamble
"Seller Common Stock" 3.03(a)
"Seller Deductible" 9.01(b)
"Seller Indemnitees" 9.02
"Seller Parties" Preamble
"Seller Representative" Preamble
"Shareholder(s)" Preamble
"Shares" 2.06(b)(ii)
"Significant Clients" 3.23
"Tax Gross Up Amount" 2.09
"Transferred Assets" 2.01
ARTICLE II.
TRANSFER OF ASSETS
2.01. Transfer of Assets by Seller. Upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees to purchase from Seller
and Seller agrees to sell or cause to be sold to Buyer at the Closing, free and
clear of all Liens, other than Permitted Liens, all the assets, properties,
rights, licenses, permits, contracts, causes of action, claims, operations and
businesses of Seller of every kind and description as the same shall exist on
the Closing Date (other than the Excluded Assets), wherever located, whether
tangible or intangible, real, personal or mixed, that are owned by, leased by or
in the possession of Seller, whether or not reflected on the books and records
of Seller (the collective assets, properties, rights, licenses, permits,
contracts, causes of action, claims, operations and businesses to be transferred
to Buyer by Seller pursuant hereto are referred to collectively herein as the
"Transferred Assets") and including, without limitation, all right, title and
interest of Seller in, to and under:
(a) all machinery, equipment, furniture, office equipment,
computer equipment (including all hardware and software), communications
equipment, vehicles, storage tanks, spare and replacement parts, fuel and other
tangible property (and interests in any of the foregoing) of Seller
(collectively, the "Equipment");
(b) all items of inventory notwithstanding how classified in
the financial records of Seller, including all raw materials, work-in-process,
finished goods, supplies, spare parts and samples (collectively, the
"Inventory");
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(c) all contracts, agreements, options, leases, licenses,
sales and purchase orders, commitments and other instruments of any kind,
whether written or oral, to which Seller is a party on the Closing Date,
including the Scheduled Contracts (as defined below) (collectively, the
"Contracts");
(d) all prepaid deposits, charges and expenses of Seller,
including any such deposits, charges and expenses with respect to ad valorem
taxes, leases and rentals and utilities;
(e) all rights of Seller to insurance proceeds with respect to
claims for Damages to the Transferred Assets occurring prior to the Closing
Date, unless such proceeds reimburse Seller for the previously completed repair
or restoration of such Transferred Assets;
(f) all of Seller's rights, claims, credits, causes of action
or rights of set-off against third parties relating to the Business or the
Transferred Assets, whether liquidated or unliquidated, fixed or contingent,
including claims pursuant to all warranties, representations and guarantees made
by suppliers, manufacturers, contractors and other third parties in connection
with products or services purchased by or furnished to Seller for use in the
Business or affecting any of the Transferred Assets;
(g) all of Seller's licensed products or processes, patents,
copyrights, trademarks, trade names, service marks, service names, designs,
know-how, processes, trade secrets, inventions, and other proprietary data,
including without limitation, all information relating to Seller's clients;
(h) all transferable franchises, licenses, permits or other
authorizations issued or granted by any Governmental Authority that are owned
by, granted to or held or used by Seller, whether or not utilized in the
Business;
(i) to the extent available, all books, records, files and
papers of the Business, whether in hard copy or computer format, including,
without limitation, invoices, sales and promotional literature, manuals and
data, sales and purchase correspondence, lists of present and former suppliers
and customers, personnel and employment records of present and, to the extent
lawful, former employees, documentation developed or used for accounting,
marketing, or any other purpose related to the conduct of the Business at any
time prior to the Closing, and to the extent available, copies of all corporate
minutes and other corporate records of Seller;
(j) all goodwill associated with Seller, the Business or the
Transferred Assets;
(k) except as specifically provided in Section 2.02, all other
assets and properties of Seller which exist on the Closing Date, whether
tangible or intangible, real or personal; and
(l) all accounts receivable relating to services rendered by
Seller or its employees (and for all purposes of this Agreement, the parties
hereto agree that all the employees of Elegant Lighting shall be considered
employees of Seller) on or after August 5, 2002.
9
2.02. Excluded Assets. Buyer expressly understands and agrees that
the assets and properties set forth on Schedule 2.02 (the "Excluded Assets")
shall be excluded from the Transferred Assets.
2.03. Assumption of Liabilities. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, Buyer agrees, effective at the time
of Closing, to assume, perform and timely pay and discharge the following
Liabilities (subject to the conditions below and excluding the Excluded
Liabilities, the "Assumed Liabilities"):
(i) all Contracts (including Scheduled Contracts);
(ii) all current accounts payable, payroll or accrued
expenses of Seller incurred or accrued in the ordinary course of business on or
after August 5, 2002;
(iii) accrued vacation of Seller's employees;
(iv) severance compensation provided in paragraph 7 under
the Compensation and Benefits section of the Letter of Employment to Xxxxx
Xxxxxxxxx, dated January 14, 2002 from Seller, in the mutually agreed amount of
One Hundred Fifty Thousand Dollars ($150,000) in cash; and
(v) all Liabilities arising from and after the Closing
which arise out of or relate in any way to Buyer's ownership or operation of the
Transferred Assets after the Closing;
provided, however, that the assumption by Buyer of the Assumed Liabilities will
be limited as follows: any Liability set forth in subsections (i), (ii), (iii)
and (v) of this Section 2.03 shall constitute an Assumed Liability only to the
extent that it arises out of Seller's normal conduct of the Business.
2.04. Excluded Liabilities. Neither Parent nor Buyer assumes, and
shall not at any time hereafter (including on or after the Closing Date) become
liable for, any Liabilities of Seller, any of its Affiliates or any Plan
Affiliate, other than the Assumed Liabilities (the "Excluded Liabilities"); in
furtherance of and not in limitation of the foregoing, the Excluded Liabilities
shall include, but are not limited to, the following:
(a) any Liability of Seller or any of its Affiliates or
Plan Affiliates of any of the foregoing, whether currently in existence or
arising hereafter, that is not attributable to, or that does not arise out of,
Seller's normal conduct of the Business;
(b) any Liability whether presently in existence or
arising hereafter which is attributable to an Excluded Asset;
(c) any Environmental Liability imposed on Seller whether
presently in existence or arising hereafter;
10
(d) any Liability the existence of which constitutes a
breach of any representation or warranty or covenant hereunder which would be
indemnifiable to Parent and Buyer pursuant to Section 9.01 hereof.;
(e) any Liability whether currently in existence or arising
hereafter relating to fees, commissions or expenses owed to any broker, finder,
investment banker, attorney, accountant or other intermediary, consultant or
advisor employed by any of the Seller Parties or any of its or his Affiliates or
Plan Affiliates in connection with the transactions contemplated hereby or
otherwise;
(f) all Debt (other than current accounts payable or accrued
expenses as set forth in Section 2.03(ii));
(g) any Liability of Seller or any of its shareholders or
any of their Affiliates for any Taxes, including without limitation, (i) any
Liability for any Taxes with respect to the Transferred Assets attributable to
any period prior to the Closing and (ii) any Taxes relating to or arising from
Seller's issuance of its Series B common stock;
(h) any Liability, whether currently in existence or arising
hereafter, owed by Seller to any of its Associates or Affiliates;
(i) any Liability incurred by Seller with respect to any of
Seller's employees or former employees, agents, consultants or independent
contractors, including but not limited to, worker's compensation, severance,
salary, bonuses or other benefits and Liabilities arising pursuant to Seller's
employment agreements with Xxxxx, Xxxxxxx Xxxx and Xxxxx Xxxxxxxxx (other than
the obligation to pay severance to Mr. Mossesson pursuant to the terms and
conditions of his employment agreement with Seller);
(j) any Liability arising from, arising out of, based on or
relating to any of Seller's Benefit Plans, whether arising before, on or after
the Closing Date;
(k) any Liability for indebtedness of Seller, including
without limitation, any principal, interest or other amount owing in respect of
any such indebtedness;
(l) any negative cash balances, book overdrafts, held checks
or similar liabilities of Seller;
(m) any Liability for payroll or similar Taxes relating to
Seller's arrangement with Elegant Lighting; and
(n) all current accounts payable, payroll or accrued
expenses of Seller, incurred or accrued in the ordinary course of business prior
to August 5, 2002.
2.05. Assignment of Contracts and Rights.
(a) With respect to any Contract and any claim, right or
benefit arising thereunder or resulting therefrom, promptly after the date
hereof, to the extent requested by Buyer, Seller will use its best efforts to
obtain the written consent of the other parties to any such
11
Contract for the assignment thereof to Buyer or written confirmation from such
parties confirming that such consent is not required in form and substance
reasonably satisfactory to Buyer.
(b) If (i) such consent, waiver or confirmation is not
obtained with respect to any such Contract and (ii) Buyer shall elect to
consummate the Closing, Seller and Buyer shall cooperate in an arrangement
reasonably satisfactory to Buyer and Seller under which Buyer would obtain, to
the extent practicable, the claims, rights and benefits and assume the
corresponding obligations thereunder in accordance with this Agreement,
including subcontracting, sub-licensing or sub-leasing to Buyer, or under which
Seller would enforce for the benefit of Buyer, with Buyer assuming Seller's
obligations, any and all claims, rights and benefits of Seller against a third
party thereto. Seller will promptly pay to Buyer when received all monies
received by Seller under any Transferred Asset or any claim, right or benefit
arising thereunder not transferred to Buyer pursuant to this Section 2.05.
2.06. Closing.
(a) The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Xxxxxx, Xxxx &
Xxxxxxxx LLP, 0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, on the date
hereof (the "Closing Date").
(b) At the Closing, Parent and/or Buyer shall deliver to
Seller the following:
(i) by wire transfer (to a bank account designated by
Seller in writing at least three (3) Business Days prior to the Closing Date),
Two Hundred Nine Thousand Two Hundred Sixty Nine Dollars ($209,269) in
immediately available funds; and
(ii) one or more stock certificates for an aggregate
number of duly authorized, validly issued, fully-paid and nonassessable shares
of common stock, par value $0.001 per share, of Parent ("Parent Common Stock")
equal to Four Thousand Seven Hundred Four (4,704) (the "Shares"); provided,
however, a certificate representing one-third (1/3) of the Shares ("Escrowed
Shares") registered in the name of Seller shall be delivered to the Escrow Agent
to be held and distributed by the Escrow Agent in accordance with the Escrow
Agreement. Neither Parent nor Buyer shall have any responsibility for the
allocation of the Shares among the Shareholders or other equityholders of
Seller. Seller shall deliver to the Escrow Agent stock powers or other
assignments of interest duly executed in blank for the Escrowed Shares.
(c) Buyer shall deliver to Seller such customary instruments
of assumption as may be reasonably requested by Seller to evidence such
assumption of the Assumed Liabilities; provided, however, that no such document
shall expand in any way any of Buyer's obligations to assume anything other than
the Assumed Liabilities.
(d) At the Closing, Seller shall deliver to Parent and/or
Buyer:
(i) such bills of sale, certificates of title,
endorsements, consents, assignments and other good and sufficient instruments of
conveyance and assignment of such rights as the parties and their respective
counsel shall deem reasonably necessary or
12
appropriate to vest in Buyer all of Seller's right, title and interest in, to
and under the Transferred Assets;
(ii) a copy of the resolutions of the board of
directors of Seller and a copy of the resolutions of the Shareholders, each
authorizing the execution and delivery of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, both certified by the Secretary of Seller;
(iii) a copy of the resolutions of the board of
directors of Seller terminating Seller's Benefit Plans, including Seller's
401(k) plan;
(iv) written releases of any and all Liens on the
Transferred Assets and executed termination statements with respect to any
security interests filed by any creditor of Seller pursuant to the Uniform
Commercial Code;
(v) a signed opinion of counsel to Seller, dated the
Closing Date, in substantially the form attached hereto as Exhibit C;
(vi) all Required Consents for the transactions
contemplated by this Agreement;
(vii) an employment agreement substantially in the form
attached hereto as Exhibit B executed by Xxxxxxx X. Xxxxx (the "Xxxxx Employment
Agreement");
(viii) an employment agreement substantially in the form
attached hereto as Exhibit H executed by Xxxxxxx Xxxxxxxx (the "Xxxxxxxx
Employment Agreement");
(ix) terminations of any agreements between any
Affiliate of Seller and Seller, if requested by Parent or Buyer, at no cost;
(x) a Noncompetition and Nonsolicitation Agreement
substantially in the form attached hereto as Exhibit E executed by Xxxxx Xxxxxx
Xxxxxxxx;
(xi) a fully executed Escrow Agreement substantially
in the form attached hereto as Exhibit G;
(xii) Guaranties in the form attached hereto as Exhibit
F executed by each of Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxx Xxxxxxxx;
(xiii) Agreement executed by Seller and Xxxxxxx Xxxxxxxx
rescinding that certain Executive Deferred Compensation Agreement dated as of
June 28, 2002 by and between Seller and Xxxxxxx Xxxxxxxx;
(xiv) Agreement executed by Seller and Xxxxx rescinding
that certain Executive Deferred Compensation Agreement dated as of June 28, 2002
by and between Seller and Xxxxx;
13
(xv) Agreements or other documents in form reasonably
satisfactory to Parent evidencing the termination of Seller's employment
agreements with Xxxxx, Xxxxxxx Xxxx and Xxxxx Xxxxxxxxx;
(xvi) Amendment to the Living Trust; and
(xvii) Agreement with Elegant Lighting in form
reasonably satisfactory to Parent.
2.07. [Intentionally Omitted].
2.08. Total Consideration Allocation. The parties agree to
allocate the consideration paid for the Transferred Assets under this Agreement
among the Transferred Assets in accordance with Section 1060 of the Code as
mutually agreed to by the parties within one hundred and eighty (180) days after
the Closing. If Buyer and Seller are unable to agree, the final allocation of
such consideration among the Transferred Assets shall be determined by an
independent party mutually agreed to by Parent and the Seller Representative
(the "Selected Firm") and the Selected Firm's determination of the allocation
shall be final and binding upon the parties hereto for purposes of this
Agreement. Buyer and Seller and the shareholders of Seller shall use such
mutually agreed-to allocations in preparing any filings required pursuant to
Section 1060 of the Code or any similar provisions of state or local law, shall
report the tax consequences of the transactions contemplated by this Agreement
in a manner consistent with such allocations on all relevant tax returns and
shall not take any position inconsistent therewith.
2.09. [Intentionally Omitted]
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller represents and warrants,
as of the date of this Agreement and as of the Closing Date, to Buyer as
follows:
3.01. Corporate Existence and Power. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California, and has all corporate power and all governmental licenses,
governmental authorizations, governmental consents and governmental approvals
required to carry on the Business as now conducted and to own and operate the
Transferred Assets as now owned and operated. Seller is not required to be
qualified to conduct business in any jurisdiction other than: (a) the
jurisdictions set forth in Schedule 3.01, in which jurisdictions Seller is duly
qualified to do business and in good standing, and (b) such jurisdictions where
the failure to be so qualified, whether singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
3.02. Authorization. The execution, delivery and performance by
Seller of this Agreement and the consummation by Seller of the transactions
contemplated hereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly and validly executed by Seller and constitutes the
14
legal, valid and binding agreement of Seller, enforceable against it in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
3.03. Capital Stock; Subsidiaries.
(a) The entire authorized capital stock of Seller consists
of 10,000 shares, no par value, of common stock (the "Seller Common Stock"), of
which 143.896 shares of Seller Common Stock are issued and outstanding. The
Shareholders are the sole owners of all of the outstanding capital stock of the
Seller, and their respective ownership of the Seller Common Stock are set forth
on Schedule 3.03. Except as set forth on Schedule 3.03, there are no outstanding
obligations, options, warrants, convertible securities, phantom stock, stock
appreciation rights or other rights, agreements, arrangements or commitments of
any kind relating to the capital stock of Seller or obligating Seller to issue
or sell any shares of capital stock of, or any other interest in, Seller. Except
as set forth on Schedule 3.03, there are no outstanding contractual obligations
of Seller to repurchase, redeem or otherwise acquire any shares of Seller Common
Stock or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any other Person. Except as set forth on
Schedule 3.03, there are no voting trusts, shareholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or
transfer of any of the Seller Common Stock.
(b) Seller has no Subsidiaries.
3.04. Governmental Authorization. The execution, delivery and
performance by the Seller Parties of this Agreement require no action by,
consent or approval of, or filing with, any Governmental Authority. To the best
knowledge of Seller, there are no facts relating to the identity or
circumstances of Seller that would prevent or materially delay obtaining any of
the Required Consents.
3.05. Non-Contravention. Except as set forth on Schedule 3.05, the
execution, delivery and performance by the Seller Parties of this Agreement does
not and will not (a) contravene or conflict with the Articles of Incorporation
or Bylaws of Seller, true and correct copies of which have been delivered to the
Buyer by Seller; (b) assuming receipt of the Required Consents and compliance
with the matters referred to in Section 3.04 hereof, contravene or conflict with
or constitute a violation of any provision of any Applicable Law binding upon or
applicable to Seller, the Business or any of the Transferred Assets; or (c)
result in the creation or imposition of any Lien on any of the Transferred
Assets, other than Permitted Liens.
3.06. Financial Statements; Undisclosed Liabilities.
(a) Attached hereto as Exhibit A are true and complete
copies of (i) the balance sheets and related statements of operations and
retained earnings for Seller for the years ended December 31, 2001, 2000 and
1999, in each case prepared by Frankel, Lodgen, Lacher, Golditch, Sardi & Xxxxxx
and (ii) the balance sheet and related statements of income and cash flow for
Seller for the year ended December 31, 2001 prepared by Seller in accordance
with GAAP (collectively, (i) and (ii) the "Annual Statements"), and the balance
sheets and
15
related statements of operations for the five (5) months ended May 31, 2002
(collectively, the "Interim Statements" and, together with the Annual
Statements, the "Financial Statements"). The May 31, 2002 balance sheet is
referred to herein as the "2002 Balance Sheet."
(b) Except as set forth on Schedule 3.06(b), each of
the Financial Statements (i) has been prepared based on the books and records of
Seller in accordance with GAAP and Seller's normal accounting practices,
consistent with past practice and with each other, and present fairly the
financial condition, results of operations of Seller as of the dates indicated
or for the periods indicated; (ii) contains and reflects all necessary
adjustments, accruals, provisions and allowances for a fair presentation of its
financial condition and the results of its operations for the periods covered by
such financial statement; (iii) to the extent applicable, contains and reflects
adequate provisions for all reasonably anticipated liabilities for all Taxes,
federal, state, local or foreign, with respect to the periods then ended and all
prior periods; and (iv) with respect to contracts and commitments for the sale
of goods or the provision of services by Seller, contains and reflects adequate
reserves for all reasonably anticipated losses and costs and expenses in excess
of expected receipts.
(c) Except as set forth on Schedule 3.06(c), there
are no Liabilities of Seller other than: (i) any Liability accrued as a
Liability on the 2002 Balance Sheet; (ii) Liabilities specifically disclosed and
expressly identified as such in the schedules to this Agreement; and (iii)
Liabilities incurred since the date of the 2002 Balance Sheet in Seller's
ordinary course of business consistent with past practice.
3.07. Absence of Certain Changes. Except as set forth on
Schedule 3.07, since the date of the 2002 Balance Sheet, the Business has been
conducted in the ordinary course consistent with past practice, and there has
not been:
(a) to Seller's best knowledge, any event,
occurrence, state of circumstances or facts or change in Seller, the Transferred
Assets or the Business that has had or that may be reasonably expected to have,
either alone or together, a Material Adverse Effect;
(b) to Seller's best knowledge, (i) any change in any
Liability of Seller reflected in the 2002 Balance Sheet or that should be
reflected as a Liability on the 2002 Balance Sheet that has had or may be
reasonably expected to have a Material Adverse Effect or (ii) any incurrence,
assumption or guarantee of any indebtedness for borrowed money by Seller in
connection with the Business, any of the Transferred Assets or otherwise;
(c) any (i) payments by Seller in respect of Debt of
Seller or in satisfaction of any Liabilities of Seller related to the Business,
other than in the ordinary course of business consistent with past practice, or
the guarantee by Seller of the Debt of any other Person; or (ii) creation,
assumption or sufferance of the existence of (whether by action or omission) any
Lien on any Transferred Asset, other than Permitted Liens;
(d) any commitment made, or any Contract entered
into, by Seller (including the acquisition or disposition of any Transferred
Assets), or any waiver, amendment, termination or cancellation of any Contract
by Seller, or any relinquishment of any rights
16
thereunder by Seller, or of any other right or debt owed to Seller, other than
in each such case actions taken in the ordinary course of business consistent
with past practice;
(e) any (i) grant of any severance, continuation or
termination pay to any director, officer, stockholder or employee of Seller or
any Associate of any of the foregoing, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer, stockholder or employee of
Seller or any Associate of any of the foregoing, (iii) increase in benefits
payable or potentially payable under any severance, continuation or termination
pay policies or employment agreements with any director, officer, stockholder or
employee of Seller or any Associate of any of the foregoing, (iv) increase in
compensation, bonus or other benefits payable or potentially payable to
directors, officers, stockholders or employees of Seller or any Associate of any
of the foregoing, (v) change in the terms of any bonus, pension, insurance,
health or other Benefit Plan of Seller, or (vi) representation of Seller to any
employee or former employee of any of the foregoing that Buyer would assume,
continue to maintain or implement any Benefit Plan after the Closing Date;
(f) any loan to or guarantee or assumption of any loan or
obligation on behalf of any stockholder, director, officer or employee of Seller
or to any Associate of Seller, except reasonable travel advances and expenses
occurring in the ordinary course of business consistent with past practice;
(g) any change by Seller in its accounting principles,
methods or practices or in the manner it keeps its books and records or any
change by Seller of its current practices with regards to sales, receivables,
payables or accrued expenses, other than those changes resulting from Deloitte &
Touche LLP's audit of Seller's financial statements;
(h) any distribution, dividend, bonus or other payment by
Seller to any officer, director, stockholder or Affiliate of Seller
(collectively, "Distributions");
(i) the entering into of any Contract or other arrangement
between Seller and any officer, director, stockholder or Affiliate of Seller;
(j) any (i) single capital expenditure or commitment in
excess of Fifteen Thousand Dollars ($15,000) for additions to property, plant,
equipment or intangible capital assets, (ii) capital expenditures or commitments
in an aggregate amount in excess of Thirty Thousand Dollars ($30,000) for
additions to property, plant, equipment or intangible capital assets or capital
expenditures, (iii) sale, assignment, transfer, lease or other disposition of or
agreement to sell, assign, transfer, lease or otherwise dispose of any asset or
property having a value of Ten Thousand Dollars ($10,000) in the aggregate;
(k) to Seller's best knowledge, any labor dispute or any
activity or proceeding by a labor union or representative thereof to organize
any employees of Seller, who were not subject to a collective bargaining
agreement at the date of the 2002 Balance Sheet, or any lockouts, strikes,
slowdowns, work stoppages or threats thereof by or with respect to any such
employees; or
17
(l) any payment, discharge or satisfaction of any Liabilities
of Seller, other than payments, discharges or satisfactions in the ordinary
course of business consistent with past practice.
3.08. Properties; Leases; Tangible Assets.
(a) Seller has good and valid title to or, in the case of
leased properties or properties held under license, good and valid leasehold or
license interests in, all of its properties, including all such properties
(real, personal or mixed, tangible or intangible (including the Intellectual
Property Rights)) reflected on the 2002 Balance Sheet. Except as disclosed in
Schedule 3.08(a), Seller holds title to each such property and asset free and
clear of all Liens, adverse claims or any other rights of others or other
adverse interests of any kind, including leases, chattel mortgages, conditional
sales contracts, collateral security arrangements and other title or interest
retention arrangements (collectively, "Encumbrances"), except Permitted Liens.
(b) All material tangible properties and assets (other than
inventory) included in the Transferred Assets are in reasonably serviceable
operating condition and repair and are adequate for the uses to which they are
put, and no material properties or assets necessary for the conduct of the
Business in substantially the same manner as the Business has heretofore been
conducted are in need of replacement, maintenance or repair, except for routine
replacement, maintenance and repair.
(c) Seller owns no real property.
(d) Schedule 3.08(d) sets forth all personal property leases
to which Seller is a party or by which it is bound and that are necessary for
the conduct of the Business in substantially the same manner as the Business has
heretofore been conducted and all real property leases (such Schedule 3.08(d)
describing separately those leases relating to real property (the "Leased Real
Property") and those leases relating to personal property and indicating where
appropriate those leases that have been recorded for tax, protection of title or
interest, or other purposes) entered into by Seller (the "Leases"). With respect
to the Leases, there exist no material defaults by Seller or, to the best
knowledge of Seller, any default or threatened default by any third party
thereunder, that has affected or could reasonably be expected to affect the
rights and privileges thereunder of Seller or result in any Liability of Seller.
Except as disclosed in Schedule 3.08(d), each Lease is a legal, valid and
binding obligation of Seller, and, to the best knowledge of Seller, each other
party thereto, enforceable against each such party thereto in accordance with
its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and subject to general principles of equity. Except as provided in Schedule
3.08(d), the transfer of the Transferred Assets contemplated by this Agreement
will not result in any default, penalty or modification to any Lease, nor will
any consents thereto be required.
(e) Except as disclosed in Schedule 3.08(e), (i) to Seller's
best knowledge, the current use and operation of all Leased Real Property is in
compliance with all Applicable Laws (including, without limitation, laws
relating to parking, zoning and land use) and public and private covenants and
restrictions, (ii) Seller has not received written notice
18
of non-compliance with any Applicable Laws and (iii) to Seller's best knowledge,
the utilities, access and parking for each such Leased Real Property are
adequate for the current use and operation of each such Leased Real Property.
(f) Except as disclosed in Schedule 3.08(f), to Seller's best
knowledge, there are no zoning, building code, occupancy restriction or other
land-use regulation proceedings or, to the best knowledge of Seller, any
proposed change in any Applicable Laws, which could detrimentally affect the use
or operation of any Leased Real Property, nor has Seller received any written
notice of any special assessment proceedings affecting the Leased Real Property,
or applied for any change to the zoning or land use status of the Leased Real
Property.
(g) Seller has obtained all licenses, permits, approvals,
easements and rights of way (and all such items are currently in full force and
effect) required from any Governmental Authority having jurisdiction over each
Leased Real Property or from private parties for the current use and operation
of each Leased Real Property, other than those the absence of which would not
affect the use or operation of such Leased Real Property in the manner currently
used or operated by Seller.
3.09. Sufficiency of and Title to the Transferred Assets. Upon
consummation of the transactions contemplated by this Agreement, Seller will
have sold, assigned, transferred and conveyed to Buyer, free and clear of all
Liens or Encumbrances, other than Permitted Liens, good and marketable title to
or other right to use all of the Transferred Assets, which constitute all of the
properties and assets now held or employed by Seller in connection with the
Business and necessary for the conduct of the Business, other than the Excluded
Assets.
3.10. Affiliates. Except as set forth in Schedule 3.10, none of (i)
Seller, (ii) to the best knowledge of Seller, any stockholder of Seller or any
Affiliate of any such stockholder or any Associate of any such stockholder or
Affiliate or (iii) any officer or director of Seller (or any immediate family
member of any such officer or director):
(a) now has or is or at any time subsequent to June 30, 2002
had, either directly or indirectly, an equity or debt interest in any Person
which furnishes or sells, or during such period furnished or sold, services or
products to Seller, or purchases, or during such period purchased, from Seller
any goods or services, or otherwise does, or during such period did, business
with Seller; provided, however, that no Person identified in clauses (i), (ii)
or (iii) of this Section 3.10 shall be deemed to have such an interest solely by
virtue of the ownership of less than one percent (1%) of the outstanding voting
stock or debt securities of any publicly-held company, the stock or debt
securities of which are traded on a national stock exchange or quoted on the
National Association of Securities Dealers Automated Quotation System; or
(b) was a party to any contract, commitment or agreement to
which Seller is, or during such period was, a party or under which any of them
is or was obligated or bound or to which any of their properties may be or may
have been subject.
3.11. Litigation. Except as disclosed in Schedule 3.11, (i) there are
no actions, suits, claims, hearings, arbitrations, proceedings (public or
private) or governmental
19
investigations that have been brought by or against any Governmental Authority
or any other Person (collectively, "Proceedings") pending or, to the best
knowledge of Seller, threatened, against or by Seller, the Business or any of
the Transferred Assets or which seek to enjoin or rescind the transactions
contemplated by this Agreement; and (ii) there are no existing orders, judgments
or decrees of any Governmental Authority naming Seller as an affected party or
otherwise affecting any of the Transferred Assets or the Business.
3.12. Contracts.
(a) Schedule 3.12(a) sets forth a complete list of all
existing contracts, commitments and obligations (whether written or oral) of
Seller and the Business that are material to Seller, including without
limitation, the following (collectively with the Leases and the Employment
Agreements, the "Scheduled Contracts"):
(i) each agreement or arrangement of Seller that
requires the payment or incurrence of Liabilities, or the rendering of services,
by Seller, subsequent to the date of this Agreement, of more than Ten Thousand
Dollars ($10,000);
(ii) all Contracts relating to, or evidences of, or
guarantees of, or providing security for, Debt or the deferred purchase price of
property (whether incurred, assumed, guaranteed or secured by any asset);
(iii) all license, sale, distribution, commission,
marketing, agent, franchise, technical assistance or similar agreements relating
to or providing for the marketing and/or sale of the products or services to
which Seller is a party or by it is otherwise bound;
(iv) all acquisition, partnership, joint venture,
teaming arrangements or other similar Contracts, arrangements or agreements
entered into by the Company since its incorporation; and
(v) each agreement, arrangement, contract, commitment
or obligation of Seller restricting or otherwise affecting the ability of Seller
to compete in the Business or otherwise in any jurisdiction.
(b) Seller has made true and correct copies of all such
Scheduled Contracts available to Buyer. To the best knowledge of Seller, no
notice of material default arising under any Scheduled Contract has been
delivered to or by Seller. Except as disclosed in Schedule 3.12(b), each
Scheduled Contract is a legal, valid and binding obligation of Seller and each
other party thereto, enforceable against each such party thereto in accordance
with its terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and subject to general principles of equity, and neither Seller nor, to Seller's
best knowledge, the other party thereto is in default thereunder. Except as
provided in Schedule 3.12(b), the transfer of the Transferred Assets
contemplated by this Agreement will not result in any default, penalty or
modification to any Scheduled Contract.
(c) Schedule 3.12(c) sets forth a list (by name, address and
Persons to contact) of the twelve (12) largest (determined by aggregation of
revenues generated from such Persons by all of Seller's and its Affiliates'
offices) clients of Seller for the six quarters ended
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June 30, 2002, together with the approximate dollar amount of services provided
to such Persons during said period and a summary description of the services
provided.
3.13. Permits; Required Consents.
(a) To Seller's best knowledge, Schedule 3.13(a) sets forth
all approvals, authorizations, certificates, consents, licenses, orders and
permits and other similar authorizations of all Governmental Authorities (and
all other Persons) necessary for the operation of the Transferred Assets or the
Business in substantially the same manner as currently operated or affecting or
relating in any way to the Business (the "Permits").
(b) Schedule 3.13(b) lists (i) each governmental or other
registration, filing, application, notice, transfer, consent, approval, order,
qualification and waiver known by Seller to be required under Applicable Law to
be obtained by Seller by virtue of the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby to avoid the loss of
any Permit or otherwise (each, a "Required Governmental Approval"), and (ii)
each Scheduled Contract with respect to which the consent of the other party or
parties thereto must be obtained by Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the invalidity of such Scheduled Contract, the termination
thereof, a breach or default thereunder or any other change or modification to
the terms thereof (each, a "Required Contractual Consent" and, together with the
Required Governmental Approvals, the "Required Consents").
3.14. Compliance with Applicable Laws. Except as set forth in
Schedule 3.14, Seller has not violated or infringed, nor is it in violation or
infringement of, any material Applicable Law or any order, writ, injunction or
decree of any Governmental Authority.
3.15. Employment Agreements; Change in Control; and Employee
Benefits.
(a) Except as set forth on Schedule 3.15(a), there are no
employment, consulting, severance pay, continuation pay, termination pay or
indemnification agreements or other similar agreements of any nature whatsoever
(collectively, "Employment Agreements") between Seller, on the one hand, and any
current or former stockholder, officer, director, employee or Affiliate of
Seller or any consultant or agent of Seller, on the other hand, that are
currently in effect. Except as set forth on Schedule 3.15(a), there are no
Employment Agreements or any other similar agreements to which Seller is a party
under which the transactions contemplated by this Agreement (i) will require any
payment by Seller, Buyer, or any consent or waiver from any stockholder,
officer, director, employee or Affiliate of Seller, any of their respective
Associates or any consultant or agent of Seller or Buyer or (ii) will result in
any change in the nature of any rights of any stockholder, officer, director,
employee or Affiliate of Seller, or any of their respective Associates or any
consultant or agent of Seller under any such Employment Agreement or other
similar agreement.
(b) Schedule 3.15(b) sets forth all Benefit Plans of Seller.
Seller has made true and correct copies of all governing instruments and related
agreements pertaining to such Benefit Plans available to Buyer, including, in
the case of any Benefit Plan not set forth in writing, a written description
thereof.
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(c) Except as set forth on Schedule 3.15(c), neither Seller
nor any of its ERISA Affiliates sponsors or, within the last five (5) years has
sponsored, maintained, contributed to, or incurred an obligation to contribute
to, any Employee Pension Benefit Plan.
(d) Neither Seller nor any of its ERISA Affiliates sponsors or
has ever sponsored, maintained, contributed to, or incurred an obligation to
contribute to any Multiemployer Plan or to a Multiple Employer Plan.
(e) No individual shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under any Benefit Plan,
including the right to receive any parachute payment, as defined in Section 280G
of the Code, or become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated by this Agreement.
(f) No Employee Benefit Plan has participated in, engaged in
or been a party to any non-exempt Prohibited Transaction, and neither Seller nor
any of its ERISA Affiliates has had asserted against it any claim for taxes
under Chapter 43 of Subtitle D of the Code and Section 5000 of the Code, or for
penalties under ERISA Section 502(c), (i) or (l), with respect to any Employee
Benefit Plan nor, to the best knowledge of Seller, is there a basis for any such
claim. No officer, director or employee of Seller has committed a material
breach of any responsibility or obligation imposed upon fiduciaries by Title I
of ERISA with respect to any Employee Benefit Plan.
(g) Other than routine claims for benefits, there is no claim
pending or, to the best knowledge of Seller, threatened, involving any Benefit
Plan by any Person against such plan, Seller, or any of its ERISA Affiliates.
There is no pending or, to the best knowledge of Seller, threatened, proceeding
involving any Employee Benefit Plan before the IRS, the United States Department
of Labor or any other Governmental Authority.
(h) There is no violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any Benefit Plan that
could have a Material Adverse Effect.
(i) Each Benefit Plan has at all times prior hereto been
maintained in all material respects, by its terms and in operation, in
accordance with ERISA and the Code. In accordance with Applicable Law, each
Benefit Plan can be amended or terminated at any time, without consent from any
other party and without liability other than for benefits accrued as of the date
of such amendment or termination. Seller and its ERISA Affiliates have made full
and timely payment of all amounts required to be contributed under the terms of
each Benefit Plan and Applicable Law or required to be paid as expenses under
such Benefit Plan, and Seller and its ERISA Affiliates shall continue to do so
through the Closing.
(j) With respect to any Group Health Plans maintained by
Seller or its ERISA Affiliates, whether or not for the benefit of Seller's
employees, Seller and its ERISA Affiliates have complied in all material
respects with the provisions of Part 6 of Title I of ERISA and Sections 4980B,
9801 and 9802 of the Code. Seller is not obligated to provide health care
benefits of any kind to its retired employees pursuant to any Employee Benefit
Plan, including
22
without limitation, any Group Health Plan, or pursuant to any agreement or
understanding, other than as required by Applicable Law.
(k) Seller has made available to the Buyer a copy of (i) the
three (3) most recently filed Federal Form 5500 series and accountant's opinion,
if applicable, for each Employee Benefit Plan, (ii) the most recent IRS
determination letter obtained with respect to each Benefit Plan intended to be
qualified under Section 401(a) of the Code or exempt under Section 501(a) of the
Code and (iii) the most recently prepared financial statements of each Benefit
Plan.
(l) Each Benefit Plan intended to be qualified under Section
401(a) of the Code has been determined to be so qualified by the IRS. Each trust
established in connection with any Benefit Plan which is intended to be exempt
from Federal income taxation under Section 501(a) of the Code has been
determined to be so exempt by the IRS. Since the date of each most recent
determination referred to in this Section 3.15(l), no event has occurred and no
condition or circumstance has existed that has adversely affected, or is likely
to adversely affect, the qualified status of any Benefit Plan.
3.16. Labor and Employment Matters.
(a) Except as set forth on Schedule 3.16(a), no collective
bargaining agreement exists that is binding on Seller and, except as described
on Schedule 3.16(a), no petition has been filed or proceedings instituted by an
employee or group of employees with any labor relations board seeking
recognition of a bargaining representative. Schedule 3.16(a) describes any
organizational effort that, to the best knowledge of Seller, is currently being
made or threatened or has been made since January 1, 2001 by or on behalf of any
labor union to organize any employees of Seller.
(b) Except as set forth on Schedule 3.16(b), (i) there is no
labor strike, slow down or stoppage pending or, to the best knowledge of Seller,
threatened, against or directly affecting Seller; (ii) no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claims therefor exist; and (iii) neither Seller nor
any of its respective Affiliates has received any notice or has any knowledge of
any threatened labor or employment dispute, controversy or grievance or any
other unfair labor practice proceeding or breach of contract claim or action
with respect to claims of, or obligations to, any employee or group of employees
of Seller.
(c) If required under the Workers Adjustment and Retraining
Notification Act or other applicable state law regulating plant closing or mass
layoffs, Seller and its Affiliates have timely caused there to be filed or
distributed, as appropriate, all required filings and notices with respect to
employment losses occurring through the Closing Date.
(d) Seller and its Affiliates have complied and are currently
complying, in respect of all employees of Seller and its Affiliates, with all
Applicable Laws respecting employment and employment practices and the
protection of the health and safety of employees, from whatever source such law
may be derived, including, without limitation, statutes, ordinances, laws,
rules, regulations, policies, standards, judicial or administrative
23
precedents, judgments, orders, decrees, awards, citations, licenses, official
interpretations and guidelines ("Labor Laws"), except for such instances which
would not, in the aggregate, result in a Material Adverse Effect.
(e) All individuals who are performing or have performed
services for Seller or any of its Affiliates and who are or were classified by
Seller or any of its Affiliates as "independent contractors" qualify for such
classification under Section 530 of the Revenue Act of 1978 or Section 1706 of
the Tax Reform Act of 1986, as applicable, except for such instances which would
not, in the aggregate, result in a Material Adverse Effect.
3.17. Intellectual Property.
(a) Schedule 3.17(a) sets forth a complete and correct list of
each patent, patent application and docketed invention, trademark, trade name,
trademark or trade name registration or application, copyright or copyright
registration or application for copyright registration, servicemark, brand xxxx
or brand name or any pending application related thereto, or any trade secret,
proprietary know-how, programs or processes or any similar rights, and each
license or licensing agreement for any of the foregoing relating to any
Transferred Asset or the Business or held by Seller (the "Intellectual
Property").
(b) Except as disclosed in Schedule 3.17(b), Seller has not
during the three years preceding the date of this Agreement been a party to any
Proceeding, nor to the best knowledge of Seller is any Proceeding threatened, in
any case, as to which there is a reasonable possibility of a determination
adverse to Seller, that involved or may involve a claim of infringement brought
by any Person (including any Governmental Authority) with respect to the
Intellectual Property. Except as disclosed in Schedule 3.17(b), the Seller's use
of the Intellectual Property is not subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof by Seller, or
restricting the licensing thereof by Seller to any Person. Except as disclosed
in Schedule 3.17(b), to Seller's best knowledge, the current use of such
Intellectual Property by Seller does not conflict with, infringe upon or violate
any patent, patent license, patent application, trademark, tradename, trademark
or tradename registration, copyright, copyright registration, service xxxx,
brand xxxx or brand name or any pending application relating thereto, or any
trade secret, know-how, programs or processes, or any similar rights, of any
Person.
(c) Except as set forth in Schedule 3.17(c), Seller either
owns the entire right, title and interest in, to and under, or has acquired an
express license to use or, in connection with the acquisition of Equipment or
Inventory, has acquired an implied license to use, any and all patents,
trademarks, tradenames, brand names and copyrights which are material to the
conduct of the Business in the manner that the Business has heretofore been
conducted. No other inventions, processes, computer programs, know-how,
formulae, trade secrets, patents, chip designs, mask works, trademarks, trade
names, brand names, copyrights, licenses or applications for any of the
foregoing are reasonably necessary for the unimpaired continued operation of the
Business in the manner that the Business has heretofore been conducted.
3.18. Advisory Fees. Except for Barrington Associates, there is no
investment banker, broker, finder or other intermediary or advisor that has been
retained by or is authorized
24
to act on behalf of Seller, who is entitled to any fee, commission or
reimbursement of expenses from Seller, Buyer or any of their respective
Affiliates or Associates upon consummation of the transactions contemplated by
this Agreement or otherwise.
3.19. Environmental Compliance.
(a) Except as disclosed in Schedule 3.19(a), Seller has
obtained all approvals, authorizations, certificates, consents, licenses, orders
and permits or other similar authorizations of all Governmental Authorities, or
from any other Person, that are required under any Environmental Law. Schedule
3.19(a) sets forth all material permits, licenses and other authorizations
issued under any Environmental Law relating to Seller, the Business or the
Transferred Assets.
(b) Except as disclosed in Schedule 3.19(b), Seller is in
compliance with all terms and conditions of all Permits of all Governmental
Authorities (and all other Persons) required under all Environmental Laws that
are used in the Business or that relate to Seller or the Transferred Assets.
Seller is also in compliance in all material respects with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws.
(c) Except as set forth in Schedule 3.19(c), there are no past
or present events, conditions, circumstances, incidents, actions or omissions
imposed on Seller relating to or in any way affecting Seller, the Business or
the Transferred Assets that violate, or may violate after the Closing, any
Environmental Law, or that may give rise to any Environmental Liability, or
otherwise form the basis of any claim, action, demand, suit, Proceeding,
hearing, study or investigation (i) under any Environmental Law, (ii) based on
or related to the manufacture, processing, distribution, use, treatment, storage
(including without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any
Hazardous Substance or (iii) resulting from exposure to workplace hazards.
(d) Seller has delivered to Buyer all environmental documents,
studies and reports in its possession or under its control relating to: (i) any
facilities or real property ever owned, operated or leased by Seller; or (ii)
any Environmental Liability of Seller or the Business.
3.20. Insurance. Schedule 3.20 sets forth a complete and correct list
of all insurance policies of any kind currently in force or in force at any time
subsequent to December 31, 2000 with respect to the Business (the "Insurance
Policies"), including all "occurrence based" liability policies regardless of
the periods to which they relate. Schedule 3.20 also sets forth for each such
Insurance Policy the type of coverage, the name of the insureds, the insurer,
the premium, the expiration date, the period to which it relates, the
deductibles and loss retention amounts and the amounts of coverage.
3.21. Tax Matters.
Except as set forth on Schedule 3.21:
(a) Seller has duly and timely filed all Tax Returns required
to be filed with respect to the Transferred Assets, and such Tax Returns are
complete and accurate and
25
correctly reflect the Tax liability required to be reported thereon. Such Tax
Returns do not contain (and were not required to contain in order to avoid the
imposition of a penalty) a disclosure statement under Section 6662 of the Code
(or any predecessor provision or comparable provision of state, local or foreign
law).
(b) Seller and the shareholders of Seller have timely paid all
Taxes that have become due and payable with respect to the Transferred Assets
prior to the Closing Date, and have adequately provided in the Financial
Statements for all Taxes accrued through the date of such Financial Statements
that were not yet due and payable as of the date thereof; all Taxes of Seller
accrued with respect to the Transferred Assets following the end of the most
recent period covered by the Financial Statements have been accrued in the
ordinary course of business of Seller. Seller has not taken any action not in
accordance with past practice that would have the effect of deferring a measure
of Tax with respect to the Transferred Assets (including but not limited to
income, sales, gross receipts or payroll) from a period (or portion thereof)
ending on or prior to the Closing to a period (or portion thereof) beginning
after the Closing; and no election has been made with respect to Taxes of Seller
in any Tax Return that has not been provided to Buyer.
(c) No claim for assessment or collection of Taxes with
respect to the Transferred Assets has been or is presently being asserted
against Seller or its shareholders; no rationale underlying a claim for Taxes
with respect to the Transferred Assets has been asserted previously by any
taxing authority that reasonably could be expected to be asserted in any other
period; and Seller is not a party to any action, proceeding, audit or
investigation by any taxing authority nor does Seller have knowledge of any such
threatened action, proceeding, audit or investigation.
(d) There are no Taxes of Seller or the shareholders of Seller
or deficiencies in Taxes or claims for Taxes against Seller or the shareholders
of Seller for any taxable period that could become a liability of, or which
could be assessed or collected against Buyer as a result of or after the
transfer of assets contemplated by this Agreement.
(e) The Transferred Assets are subject to no Liens for Taxes
other than Liens for current Taxes not yet due and payable on the Transferred
Assets or which are being contested in good faith.
(f) All amounts that are required to be collected or withheld
by Seller, or with respect to Taxes of Seller or the shareholders of Seller,
have been duly collected or withheld and all such amounts that are required to
be remitted to any taxing authority have been duly remitted.
(g) None of the Transferred Assets is property that is
required to be treated as owned by any other Person pursuant to the "safe harbor
lease" provisions of former Section 168(f)(8) of the Code and in effect
immediately prior to the enactment of the Tax Reform Act of 1986 and none of the
Transferred Assets is "tax exempt use property" within the meaning of Section
168(h) of the Code.
26
(h) Seller is not a party to or bound by any obligation under
any Tax sharing, Tax allocation, Tax indemnity or similar agreement or
arrangement.
(i) At all times during Seller's existence through the Closing
Date, Seller has been and will be an "S corporation," as such term is defined in
Section 1361(a)(1) of the Code (and comparable provisions of state, local or
foreign law), and neither Seller nor any of its shareholders has taken any
action that would cause, or would result in, the termination of such S
corporation status. None of the income or gain of Seller recognized prior to or
in connection with the Closing has been or will be subject to Section 1374 or
1375 of the Code.
3.22. Clients. Schedule 3.22 sets forth (i) the ten (10) largest
clients by gross revenues to Seller during the last fiscal year (the
"Significant Clients"). Since December 31, 2001, no Significant Client has: (a)
stopped or expressly stated its intention to stop doing business with Seller,
(b) reduced or expressly stated its intention to materially reduce, its business
with Seller or (c) changed or expressly stated its intention to change,
materially the terms and conditions on which it is prepared to do business with
Seller. No Significant Client has given Seller notice or expressly stated that,
as a result of the transactions contemplated by this Agreement, it will: (x) not
do business with Seller (y) reduce substantially its business with Seller, or
(z) change the terms and conditions on which it is prepared to do business with
Seller. Seller has no knowledge of any facts, conditions or events that would
give rise to a material claim by Seller against any of its Significant Clients
or any material claim by a Significant Client against Seller.
3.23. Books and Records. Seller has maintained books and records
which, in reasonable detail, accurately and fairly reflect all material
transactions entered into by Seller or to which Seller is a party. Seller has
not engaged in any transaction, maintained any bank account or used any
corporate funds, except for transactions, bank accounts and funds which have
been and are reflected in its normally maintained books and records.
3.24. Warranties. Schedule 3.24 sets forth a summary of the material
terms of all unexpired service warranties and guarantees given by Seller to any
client. Except as described on Schedule 3.24, (i) no claims are pending or, to
Seller's best knowledge, are threatened under the service warranties of Seller
thereof, and (ii) to Seller's best knowledge, there exists no event or
circumstance which after notice or the passage of time on both, could create or
result in liabilities or obligations under any of the service warranties of
Seller.
3.25. Bank Accounts. Schedule 3.25 sets forth a true and complete
list of all bank accounts, safe deposit boxes and lock boxes of Seller,
including the names in which such accounts or boxes are held and identification
of all Persons authorized to draw thereon or have access thereto.
3.26. Certain Business Practices. To the extent applicable to Seller
and its officers, directors, employees and representatives, Seller and its
officers, directors, employees and representatives have complied in all material
respects with the U.S. Foreign Corrupt Practices Act or any similar such law in
any foreign jurisdiction. Neither Seller nor any of its officers, directors,
employees or representatives has, directly or indirectly, used funds or other
assets (regardless of form or description of such payment) of Seller, or made
any promise or
27
undertaking in such regard, for any illegal payments to or for the benefit of
any Person, to secure favorable treatment of a contract or the Business or for
the establishment or maintenance of a secret or unrecorded fund; and there have
been no false or fictitious entries made in the books or records of Seller
relating to any such illegal payment or secret or unrecorded fund.
3.27. Complete Disclosure. No representation or warranty by the
Seller in this Agreement, and no exhibit, schedule, statement, certificate, or
other writing furnished to the Buyer, Parent or its advisors pursuant to this
Agreement or the Ancillary Agreements to which it is a party, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein and therein not
misleading.
3.28. No Other Representations. Seller shall not be deemed to have
made to Parent and Buyer any representation or warranty other than as made by
Seller in this Article III.
ARTICLE IV.
CERTAIN REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, each of the Seller Parties,
jointly and severally, hereby represents and warrants, as of the date of this
Agreement and as of the Closing Date, to Buyer as follows:
4.01. Understanding that Shares will Be Issued without Registration.
Each of the Seller Parties understands that the Shares will be issued without
registration under the Securities Act, in reliance upon exemptions from
registration under the Securities Act including, without limitation, the safe
harbor provided by Regulation D promulgated under Section 4(2) of the Securities
Act. Each of the Seller Parties further understands that such exemptions depend
in part upon, and such shares will be issued in reliance on, the representations
and warranties made by the Seller Parties in this Article IV.
(a) Each of the Seller Parties will acquire the Shares for
their own respective accounts for investment purposes only and not with a view
to resale or other distribution thereof, in whole or in part; and none of the
Seller Parties will assign, sell, hypothecate or otherwise transfer the Shares
unless (i)(a) a registration statement is in effect under the Securities Act
with respect to such Shares or (b) an applicable exemption from registration is
available and a written opinion of counsel acceptable to Buyer is obtained to
the effect that no such registration is required pursuant to the application of
such exemption (except that no opinion of counsel shall be necessary if the sale
is made in a routine transaction under Rule 144 promulgated under the Securities
Act), and (ii) they have complied with all applicable holding periods imposed by
the Securities Act (and the regulations thereunder) and this Agreement.
(b) Each of the Seller Parties acknowledges, agrees and is
aware that: (i) no United States federal or state or any foreign agency has
passed upon the accuracy, validity or completeness of this Agreement or made any
finding or determination as to the fairness of an
28
investment in the Shares; (ii) there may be restrictions on the transferability
of the Shares; (iii) the Shares have not been registered under the Securities
Act or under the securities laws of any other jurisdiction; (iv) an offer or
sale of any of the Shares by any of the Seller Parties in the absence of
registration under the Securities Act will require the availability of an
exemption thereunder; and (v) a restrictive legend is or shall be placed on the
certificates representing the Shares and a notation shall be made in the
appropriate records of Parent indicating that the Shares are subject to
restrictions on transfer.
4.02. Accredited Investor. Each of the Seller Parties qualifies as an
"accredited investor" within the meaning of Rule 501 under the Securities Act.
4.03. Receipt of Information; Access to Information. Each of the
Seller Parties acknowledges that he, she or it:
(a) has been furnished with the Certificate of Incorporation
and Bylaws of Parent, the Parent SEC Reports and any documents that may have
been made available upon its, his or her request (collectively, the "Other
Documents"), and are capable of understanding and evaluating the risks of
acquiring the Shares;
(b) has been given the opportunity to ask questions of, and
receive answers from, Buyer and/or Parent and their respective officers
concerning the terms and conditions of the acquisition of the Shares and other
matters pertaining to an investment in the Shares, has been given the
opportunity to obtain such additional information necessary to evaluate the
merits and risks of acquiring the Shares to the extent Buyer or Parent possesses
such information, and has received all documents and information that each of
them has requested relating to an investment in the Shares;
(c) has not relied upon any representations or other
information (whether oral or written) from Buyer or Parent or their respective
directors, officers or Affiliates, or from any other Persons, other than the
representations of Buyer and Parent made in this Agreement and the Other
Documents;
(d) is familiar with the nature of and risks attendant to
investments in the business of Parent and securities in general and has
carefully considered and has, to the extent he, she or it believes such
discussion necessary, discussed with his, her or its respective professional
legal, financial and tax advisers the suitability of an investment in the Shares
for his, her or its respective financial and tax situations and has determined
that the Shares are a suitable investment for him, her or it; and
(e) has made, and is solely responsible for making, his, her
or its respective own independent evaluations of the economic and other risks
involved in his, her or its respective investments in the Shares and his, her or
its own respective independent decisions to make such investments.
4.04. Authority Relative to this Agreement. Each of the Seller
Parties has all requisite legal right, power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which they are
signatories and to perform their respective obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. This
29
Agreement has been, and the Ancillary Agreements to which the Seller Parties are
signatories will be, duly and validly executed and delivered by the Seller
Parties and, assuming that this Agreement constitutes, and the Ancillary
Agreements to which they are signatories will constitute when signed, the legal,
valid and binding obligations of the other parties hereto and thereto, each such
agreement constitutes or will constitute the legal, valid and binding obligation
of the Seller Parties, as the case may be, enforceable in accordance with its
terms subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws (including court decisions) and
doctrines affecting the rights of creditors generally and general equitable
principles.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, each of Parent and Buyer
hereby, jointly and severally, represents and warrants to each of the Seller
Parties as follows:
5.01. Corporate Existence and Power. Parent and Buyer are
corporations duly incorporated, validly existing and in good standing under the
laws of the State of Delaware, and Parent and Buyer have all corporate power to
enter into this Agreement and consummate the transactions contemplated hereby.
Each of Parent and Buyer is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary
to carry on its business as now conducted, except for those jurisdictions where
in the aggregate the failure to be so qualified is not, and is not reasonably
expected to become, material.
5.02. Corporate Authorization. The execution, delivery and
performance by Parent and Buyer of this Agreement and the consummation by Parent
and Buyer of the transactions contemplated hereby are within the corporate
powers of Parent and Buyer and have been duly authorized by all necessary
corporate action on the part of Parent and Buyer. This Agreement constitutes the
legal, valid and binding agreement of Parent and Buyer, enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and subject to general principles of equity.
5.03. Governmental Authorization. The execution, delivery and
performance by Parent and Buyer of this Agreement require no action by, consent
or approval of, or filing with, any Governmental Authority other than any
actions, consents, approvals or filings otherwise expressly referred to in this
Agreement.
5.04. Non-Contravention. The execution, delivery and performance by
Parent and Buyer of this Agreement does not (a) contravene or conflict with the
Certificate of Incorporation or Bylaws of Parent or Buyer, (b) except as set
forth on Schedule 5.04, contravene or constitute a material default under any
agreement to which Parent or Buyer is a party or (c) assuming compliance with
the matters referred to in Section 5.03, contravene or conflict with
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or constitute a violation of any provision of any Applicable Law binding upon or
applicable to Parent or Buyer.
5.05. Parent SEC Filings; No Material Adverse Effect.
(a) Parent has filed all forms, reports and documents required
to be filed with the SEC since January 1, 2001, and has heretofore delivered or
made available to the Seller Parties, in the form filed with the SEC, (i) its
Annual Report on Form 10-K for the fiscal year ended December 30, 2001, (ii) its
Quarterly Reports on Form 10-Q for the periods ended March 31, 2002, and (iii)
all proxy statements relating to Parent's meetings of stockholders (whether
annual or special) held since January 1, 2001, (iv) all Forms 8-K filed by
Parent with the SEC since January 1, 2001, (v) all other reports or registration
statements filed by Parent with the SEC since January 1, 2001, and (vi) all
amendments and supplements to all such reports and registration statements filed
by Parent with the SEC since January 1, 2001 (collectively, the "Parent SEC
Reports"). The Parent SEC Reports were prepared in substantial compliance as to
form with the requirements of the Securities Act or the Exchange Act, as the
case may be, and did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) Since January 1, 2002, there has been no Material Adverse
Effect on Parent or its Subsidiaries, taken as a whole, and since the date of
Parent's last filing with the SEC, no event has occurred which would require any
filing by Parent with the SEC regarding any such event.
5.06. No Other Representations. Neither Parent nor Buyer shall be
deemed to have made to any of the Seller Parties any representation or warranty
other than as made by Parent and Buyer in this Article V.
ARTICLE VI.
COVENANTS OF SELLER
Seller hereby agrees that:
6.01. Compliance with Terms of Required Contractual Consents. On and
after the Closing Date, Seller shall comply at its own expense with all
conditions and requirements applicable to it set forth in each Required
Contractual Consent to the extent necessary such that all Required Contractual
Consents will remain effective and enforceable against the Persons giving such
Required Contractual Consents, assuming continued compliance with the terms
thereof by Buyer.
6.02. Confidentiality. Seller will, and will cause its respective
employees, officers, directors, shareholders, outside advisors, agents,
Affiliates and representatives to, treat any data and information obtained with
respect to Buyer or any of its Affiliates from any representative, officer,
director, or employee of Buyer, or from any books or records of Buyer in
connection with this Agreement, confidentially and with commercially reasonable
care and discretion, and will not disclose any such information to third
parties; provided, however, that the
31
foregoing shall not apply to (i) information in the public domain or that
becomes public through disclosure by any party other than Seller or its
Affiliates or representatives, so long as such information is not made public by
such other party in breach of a confidentiality obligation, (ii) information
that may be required to be disclosed by Applicable Law provided Seller
immediately gives Buyer notice of any request or demand for such confidential
information upon receipt of such request or demand along with a copy of any
written correspondence, pleading or other communication concerning the request
or demand, (iii) any information that is disclosed by Seller or its respective
Affiliates, on a confidential basis, to any of their respective agents,
accountants or attorneys in correction with or related to the consummation of
the transactions contemplated hereby; or (iv) information required to be
disclosed to obtain any Required Consents. Each of the parties to this Agreement
agree to be responsible for the breach of any obligation of confidentiality
under this Agreement by and of their agents, accountants, attorneys and any
prospective lenders or investors.
6.03. Change of Name. Seller will amend its articles of incorporation
within ten (10) Business Days of the Closing Date so as to change its corporate
name to a name dissimilar to the name by which the Business as conducted by
Seller is known and will file as promptly as practicable, but in any event
within sixty (60) days after the Closing, in all jurisdictions in which it is
qualified to do business, any documents necessary to reflect such change in its
corporate name or to terminate its qualification therein. At the request of
Buyer, Seller shall consent to Buyer adopting a name that is similar or
identical to Seller's name at the Closing.
6.04. Administration of Accounts. All payments and reimbursements
made in the ordinary course by any third party in the name of or to Seller or
any Affiliate of Seller in connection with or arising out of the Transferred
Assets, the Business or the Assumed Liabilities after the Closing Date shall be
held by Seller or such Affiliate in trust for the benefit of Buyer and,
immediately upon receipt by Seller or any such Affiliate of any such payment or
reimbursement, Seller shall pay, or cause to be paid, over to Buyer the amount
of such payment or reimbursement without right of set off.
6.05. Specific Performance. The parties hereto recognize and agree
that in the event of a breach by Seller of this Article VI, money damages would
not be an adequate remedy to Buyer or its Affiliates for such breach and, even
if money damages were adequate, it would be impossible to ascertain or measure
with any degree of accuracy the damages sustained by Buyer or its Affiliates
therefrom. Accordingly, if there should be a breach or threatened breach by
Seller of the provisions of this Article VI, Buyer and its Affiliates shall be
entitled to seek an injunction restraining Seller from any breach without
showing or proving actual damage sustained by Buyer or its Affiliates, as the
case may be. Nothing in the preceding sentence shall limit or otherwise affect
any remedies that Buyer may otherwise have under Applicable Law.
6.06. Taxes.
(a) Each party hereof shall (i) provide the other parties
hereof with such assistance as may reasonably be requested in connection with
the preparation of any Tax Return with respect to the Transferred Assets and the
conduct of any audit or other examination by any taxing authority or in
connection with judicial or administrative proceedings relating to any liability
for Taxes with respect to the Transferred Assets and (ii) retain and provide the
other
32
parties hereof with all records or other information that may be relevant to the
preparation of any Tax Returns with respect to the Transferred Assets, or the
conduct of any audit or examination, or other Tax Proceeding with respect to the
Transferred Assets. The parties shall retain all relevant documents, including
prior year's Tax Returns, supporting work schedules and other records or
information that may be relevant to such returns as required by Applicable Law.
(b) Seller shall provide Buyer with all tax clearance
certificates or similar documents that may be required by any state or local
taxing authority in order to relieve Buyer of any obligations to withhold any
portion of the consideration paid for the Transferred Assets hereunder.
(c) All sales, value added, use, transfer, registration, stamp
and similar Taxes imposed in connection with the sale of the Transferred Assets
shall be borne by Buyer.
(d) Pursuant to Section 1445(b)(2) of the Code, Seller shall
furnish Buyer an affidavit, stating under penalty of perjury the Seller's United
States taxpayer identification number and that the Seller is not a foreign
person.
6.07. COBRA. Seller shall offer COBRA continuation coverage to all
"M & A qualified beneficiaries" (as such term is defined in Treasury Regulation
section 54.4980B-9, Q&A 4) affected by the asset purchase described in this
Agreement, and Seller shall maintain a Group Health Plan to provide such COBRA
coverage during the entire period of coverage mandated by COBRA for such M & A
qualified beneficiaries.
ARTICLE VII.
COVENANTS OF BUYER AND PARENT
7.01. Confidentiality.
Parent and Buyer will, and will cause their respective
employees, officers, directors, shareholders, outside advisors, agents,
Affiliates and representatives to, treat any agreements, data and information
obtained with respect to Seller from any representative, officer, director or
employee of Seller, or from any books or records of Seller in connection with
this Agreement, confidentially and with commercially reasonable care and
discretion, and will not disclose any such information to third parties;
provided, however, that the foregoing shall not apply to (i) information in the
public domain or that becomes public through disclosure by any party other than
Parent, Buyer or their respective Affiliates or representatives, so long as such
other party is not in breach of a confidentiality obligation, (ii) information
that may be required to be disclosed by Applicable Law, provided Parent or Buyer
promptly gives Seller notice of any request or demand for such confidential
information upon receipt of such request or demand, along with a copy of any
written correspondence, pleading or other communication concerning the request
or demand, (iii) information required to be disclosed to obtain any Required
Consents, (iv) any information that is disclosed by Parent or Buyer or their
respective Affiliates, on a confidential basis, to any of their respective
agents, accountants, attorneys or financial advisors or (v) any information that
is disclosed by Parent or Buyer after the Closing shall have occurred. The
parties to this Agreement agree to be responsible for the breach of any
obligation
33
of confidentiality under this Agreement by and of their agents, accountants,
attorneys and financial advisors.
7.02. Specific Performance. The parties hereto recognize and agree
that in the event of a breach by Parent or Buyer of this Article VII, money
damages would not be an adequate remedy to Seller for such breach and, even if
money damages were adequate, it would be impossible to ascertain or measure with
any degree of accuracy the damages sustained by Seller therefrom. Accordingly,
if there should be a breach or threatened breach by Parent or Buyer of the
provisions of this Article VII, Seller shall be entitled to seek an injunction
restraining Parent and Buyer from any breach without showing or proving actual
damage sustained by Seller. Nothing in the preceding sentence shall limit or
otherwise affect any remedies that Seller may otherwise have under Applicable
Law.
7.03. Pre-paid Items. Parent agrees to promptly reimburse Seller for
any rent or license fees (pro rated by the number of days in the applicable
month) paid by Seller prior to the date hereof pursuant to leases relating to
Leased Real Property or an agreement with Xxxxxxx.xxx for any period after the
date hereof.
ARTICLE VIII.
COVENANTS OF ALL PARTIES
8.01. Further Assurances. Parent, Buyer and Seller Parties agree to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be reasonably necessary or
desirable (including, without limitation, obtaining the Required Consents) in
order to consummate or implement expeditiously the transactions contemplated by
this Agreement, including Seller's receipt of any amounts comprising or payable
in respect of any Transferred Assets and Buyer's receipt of any amounts
comprising or payable in respect of any Excluded Assets. Notwithstanding the
foregoing, no party hereto shall have any obligation to expend any funds or to
incur any other obligation in connection with the consummation of the
transactions contemplated hereby (including, by way of illustration only, any
payment in connection with obtaining the Required Consents) other than normal
out-of-pocket expenses (such as fees and expenses of counsel and accountants)
reasonably necessary to consummate such transactions.
8.02. Certain Filings. The parties hereto shall cooperate with one
another in determining whether any action by or in respect of, or filing with,
any Governmental Authority is required or reasonably appropriate, or any action,
consent, approval or waiver from any party to any Contract is required or
reasonably appropriate, in connection with the consummation of the transactions
contemplated by this Agreement. Subject to the terms and conditions of this
Agreement, in taking such actions or making any such filings, the parties hereto
shall furnish information required in connection therewith and seek timely to
obtain any such actions, consents, approvals or waivers.
8.03. Public Announcements. The parties hereto agree that a mutually
agreed upon press release will be issued upon the execution of this Agreement.
Further, the parties may, on a confidential basis, advise and release
information regarding the existence and content of this
34
Agreement or the transactions contemplated hereby to their respective Affiliates
or any of their agents, accountants, attorneys and prospective lenders or
investors in connection with or related to the transactions contemplated by this
Agreement.
8.04. Specific Performance. The parties hereto recognize and agree
that in the event of a breach by one party hereto of this Article VIII, money
damages would not be an adequate remedy to the other party for such breach and,
even if money damages were adequate, it would be impossible to ascertain or
measure with any degree of accuracy the damages sustained by the non-breaching
party therefrom. Accordingly, if there should be a breach or threatened breach
by one party of provisions of this Article VIII, the non-breaching party shall
be entitled to seek an injunction restraining the breaching party from any
breach without showing or proving actual damage sustained by the non-breaching
party.
ARTICLE IX.
INDEMNIFICATION
9.01 Seller Parties' Agreement to Indemnify.
(a) Each of the Seller Parties shall, jointly and severally,
indemnify and hold harmless Parent, Buyer and their respective Affiliates
(collectively, the "Buyer Indemnitees") in respect of any and all Damages
incurred by any Buyer Indemnitee as a result of:
(i) any inaccuracy or misrepresentation in or breach of
any representation, warranty, covenant or agreement made in this Agreement by
any of the Seller Parties;
(ii) any Environmental Liability imposed upon any of the
Seller Parties relating to the Business or Seller, whether presently in
existence or arising hereafter from acts, events, conditions or circumstances
existing or occurring on or before the Closing Date (in the case of this clause
(ii) regardless of whether such Environmental Liability arises out of or
constitutes a breach of any representation, warranty or covenant in this
Agreement made by any of the Seller Parties);
(iii) any Liabilities in connection with the Proceedings
described in Schedule 3.11 hereto;
(iv) any Liabilities for Taxes of Seller or any
shareholder of Seller, or any predecessor in interest or any Affiliate of any of
them with respect to any period, and any Liabilities for Taxes relating to the
Transferred Assets with respect to any pre-Closing tax period (in the case of
this clause (iv), regardless of whether such Liabilities for Taxes arise out of
or constitute a breach of any representation, warranty or covenant in this
Agreement made by Seller at any time);
(v) any Excluded Liabilities;
35
(vi) acts or omissions of the Seller Representative
(other than Damages arising solely from claims brought by the Seller
Representative on behalf of the Seller Parties after Closing in the Seller
Representative's capacity as agent for the Seller Parties);
(vii) the violation, conflict, breach of or default under
(or omission or commission of any action, condition or event which, after notice
or lapse of time or both, would result in any such violation, conflict or breach
of or default under) any Contract, Permit or law by any of the Seller Parties
prior to the Closing Date;
(viii) [Intentionally Omitted];
(ix) the enforcement of this Section 9.01; or
(x) Seller's failure to qualify to transact business as
a foreign corporation in good standing in the States of Georgia, Louisiana and
Virginia.
(b) Seller Parties shall have no obligation under Section
9.01(a) unless and until the aggregate amount of Damages incurred under Section
9.01(a) hereof and Section 9.01(a) of each of the Related Purchase Agreements
exceeds Two Hundred Fifty Thousand Dollars ($250,000) (the "Seller Deductible"),
whereupon the Seller Parties shall be liable to indemnify the Buyer Indemnitees
for all amounts of Damages over the Seller Deductible; provided, however, that
Damages incurred by any Buyer Indemnitee as a result of any misrepresentation,
breach or inaccuracy of any representations or warranties made by any of the
Seller Parties relating to Sections 3.02, 3.03(a), 3.09, 3.21, and 4.04 or
pursuant to Sections 9.01(a)(v) [Excluded Liabilities] or 9.01(a)(viii) shall
not be subject to the Seller Deductible, and the Buyer Indemnitees shall be
indemnified for any and all Damages as a result of any such misrepresentation,
breach or inaccuracy of any such representations or warranties in such Sections
or pursuant to such Sections 9.01(a)(v) [Excluded Liabilities] or 9.01(a)(viii);
provided, further, (A) the maximum liability of the Seller Parties to indemnify
the Buyer Indemnitees under Section 9.01(a) hereof and Section 9.01(a) of each
of the Related Purchase Agreements shall equal One Million Five Hundred Thousand
Dollars ($1,500,000), and (B) none of the foregoing limit or the Seller
Deductible shall apply with respect to any claim based upon a breach of any of
the representations, warranties, covenants, agreements and obligations set forth
in Sections 3.02, 3.03(a), 3.09, 3.21 and 4.04 of this Agreement or pursuant to
Sections 9.01(a)(v) [Excluded Liabilities] or 9.01(a)(viii) or arising out of
fraud or willful misrepresentation or misconduct.
9.02. Parent's and Buyer's Agreement to Indemnify.
(a) Each of Parent and Buyer shall, jointly and severally,
indemnify and hold harmless the Seller Parties (collectively, the "Seller
Indemnitees") in respect of any and all Damages incurred by any Seller
Indemnitee as a result of:
(i) any inaccuracy or misrepresentation in or breach of
any representation, warranty, covenant or agreement made by Parent and Buyer in
this Agreement; and
(ii) any Assumed Liabilities; or
36
(iii) the enforcement of this Section 9.02.
(b) Neither Parent or Buyer shall have any obligation under
Section 9.02(a) unless and until the aggregate amount of Damages incurred under
Section 9.02(a) hereof and Section 9.02(a) of each of the Related Purchase
Agreements exceeds One Hundred and Fifty Thousand Dollars ($150,000) (the "Buyer
Deductible"), whereupon Parent and Buyer shall be liable to indemnify the Seller
Indemnitees for all amounts of Damages over the Buyer Deductible; provided,
however, that Damages incurred by any Buyer Indemnitee as a result of any
misrepresentation, breach or inaccuracy of any representations or warranties
made by Parent or Buyer relating to Section 5.02 or pursuant to Section
9.02(a)(ii) [Assumed Liabilities] or a claim arising out of fraud or willful
misrepresentation or misconduct shall not be subject to the Buyer Deductible,
and the Seller Indemnitees shall be indemnified for any and all Damages as a
result of any such misrepresentation, breach or inaccuracy of any such
representations or warranties in such Section or pursuant to such Section
9.02(a)(ii) [Assumed Liabilities] or pursuant such claim arising out of fraud or
willful misrepresentation or misconduct.
9.03. Survival of Representations, Warranties and Covenants.
(a) All representations, warranties, covenants, agreements and
obligations of each Indemnifying Party contained in this Agreement, and all
claims of any Buyer Indemnitee or Seller Indemnitee in respect of any breach of
any representation, warranty, covenant, agreement or obligation of any
Indemnifying Party contained in this Agreement shall survive the Closing and
shall expire on the eighteenth month anniversary of the Closing Date, except
that:
(i) covenants or obligations of any of the Seller
Parties, Parent or Buyer which by their terms are to be performed after the
Closing shall survive the Closing and not expire unless otherwise provided in
this Agreement;
(ii) the representations and warranties set forth in
Sections 3.02, 3.03(a), 3.09 and 4.04 of this Agreement and all claims of any
Buyer Indemnitee in respect of any breach of any such representation or warranty
against any of the Seller Parties as Indemnifying Party shall survive the
Closing Date and shall not expire;
(iii) the representations and warranties set forth in
Section 3.21 of this Agreement and all claims of any Buyer Indemnitee in respect
of any breach of any such representation or warranty or in respect of the Seller
Parties' indemnification obligations under Section 9.01(a)(iv) of this Agreement
against any of the Seller Parties as Indemnifying Party shall survive the
Closing Date and shall not expire until thirty (30) days after the expiration of
any applicable statute of limitations, including extensions thereof;
(iv) the representations and warranties set forth in
Section 3.17 of this Agreement and all claims of any Buyer Indemnitee in respect
of any breach of such representation or warranty against any of the Seller
Parties as Indemnifying Party shall survive the Closing Date and shall not
expire until the third anniversary of the Closing Date; and
37
(v) all claims of any Buyer Indemnitee against any of
the Seller Parties as an Indemnifying Party in respect of any claim arising out
of fraud or willful misrepresentation or misconduct shall survive the Closing
Date and shall not expire until thirty (30) days after the expiration of any
applicable statute of limitations, including extensions thereof.
(b) Notwithstanding anything herein to the contrary,
indemnification for claims for which written notice as provided in Section 9.04
has been given prior to the expiration of the representation, warranty,
covenant, agreement or obligation upon which such claim is based shall not
expire, and claims for indemnification may be pursued, until the final
resolution of such claim in accordance with Section 10.11.
9.04. Claims for Indemnification. If any Indemnitee shall believe
that such Indemnitee is entitled to indemnification pursuant to this Article IX
in respect of any Damages, such Indemnitee shall give the appropriate
Indemnifying Parties prompt written notice thereof. Any such notice shall set
forth in reasonable detail and to the extent then known the basis for such claim
for indemnification. The failure of such Indemnitee to give notice of any claim
for indemnification promptly, but within the periods specified by Section
9.03(a) or (b), as the case may be, shall not adversely affect such Indemnitee's
right to indemnity hereunder except to the extent that such failure adversely
affects the right of the Indemnifying Parties to assert any reasonable defense
to such claim. Each such claim for indemnity shall expressly state that the
Indemnifying Parties shall have only the twenty (20) Business Day period
referred to in the next sentence to dispute or deny such claim. The Indemnifying
Parties shall have twenty (20) Business Days following its receipt of such
notice either (y) to acquiesce in such claim and their respective
responsibilities to indemnify the Indemnitee in respect thereof in accordance
with the terms of this Article IX by giving such Indemnitee written notice of
such acquiescence or (z) to object to the claim by giving such Indemnitee
written notice of the objection. If the Indemnifying Parties do not object
thereto within such twenty (20) Business Day period, such Indemnifying Parties
shall be deemed to have acquiesced in such claim and their respective
responsibilities to indemnify the Indemnitee in respect thereof in accordance
with the terms of this Article IX.
9.05. Defense of Claims. In connection with any claim which may give
rise to indemnity under this Article IX resulting from or arising out of any
claim or Proceeding against an Indemnitee by a Person that is not a party
hereto, the Indemnifying Parties may (unless such Indemnitee elects not to seek
indemnity hereunder for such claim), upon written notice sent at any time to the
relevant Indemnitee, assume the defense of any such claim or Proceeding. If the
Indemnifying Parties assume the defense of any such claim or Proceeding, the
Indemnifying Parties shall select counsel reasonably acceptable to such
Indemnitee to conduct the defense of such claim or Proceeding, shall take all
reasonable steps necessary in the defense or settlement thereof and shall at all
times diligently and promptly pursue the resolution thereof. If the Indemnifying
Parties shall have assumed the defense of any claim or Proceeding in accordance
with this Section 9.05, the Indemnifying Parties shall be authorized to consent
to a settlement of, or the entry of any judgment arising from, any such claim or
Proceeding, without the prior written consent of such Indemnitee; provided,
however, that:
38
(i) the Indemnifying Parties shall pay or cause to be paid all
amounts arising out of such settlement or judgment either concurrently with the
effectiveness thereof or shall obtain and deliver to such Indemnitees prior to
the execution of such settlement a general release executed by the Person not a
party hereto, which general release shall release such Indemnitee from any
liability in such matter;
(ii) the Indemnifying Parties shall not be authorized to encumber
any of the assets of any Indemnitee or to agree to any restriction that would
apply to any Indemnitee or to its conduct of business; and
(iii) a condition to any such settlement shall be a complete release
of such Indemnitee and its directors, stockholders, officers, employees,
consultants, agents and their respective Affiliates with respect to such claim.
Such Indemnitee shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. Each
Indemnitee shall, and shall cause each of its Affiliates, officers, employees,
consultants and agents to, cooperate fully with the Indemnifying Parties in the
defense of any claim or Proceeding being defended by the Indemnifying Parties
pursuant to this Section 9.05. If the Indemnifying Parties do not assume the
defense of any claim or Proceeding resulting therefrom in accordance with the
terms of this Section 9.05, such Indemnitee may defend against such claim or
Proceeding in such manner as it may reasonably deem appropriate, including
settling such claim or Proceeding after giving notice of the same to the
Indemnifying Parties, on such terms as such Indemnitee may reasonably deem
appropriate. If the Indemnifying Parties seek to question the manner in which
such Indemnitee defended such claim or Proceeding or the amount of or nature of
any such settlement, the Indemnifying Parties shall have the burden to prove by
a preponderance of the evidence that such Indemnitee did not defend such claim
or Proceeding in a reasonably prudent manner.
9.06. Limitation on Remedies. The remedies of the Buyer Indemnitees
and Seller Indemnitees under this Article IX shall be their exclusive remedy for
any breach of this Agreement, except that nothing set forth in this Article IX
shall be deemed to prohibit or limit any Buyer Indemnitee's or Seller
Indemnitee's right at any time before, on or after the Closing Date, to seek
injunctive or other equitable relief for the failure of any Indemnifying Party
to perform any covenant or agreement contained herein.
9.07. Nature of Payments. Any payment under this Article IX shall be
treated for tax purposes as an adjustment of the total consideration paid for
the Transferred Assets under this Agreement to the extent such characterization
is proper and permissible under relevant Tax authorities, including court
decisions, statutes, regulations and administrative promulgations.
9.08. Right of Set-Off. Parent or Buyer, after recovery against the
escrow contemplated by the Escrow Agreement, shall have the right to set-off all
or any part of any Damages Buyer or Parent may suffer by notifying the Seller
Representative that Buyer or Parent is reducing the amount of any Earnout due to
any of the Seller Parties; provided, however, Parent's and Buyer's right to
set-off pursuant to this Section 9.08 and Section 9.08 in each of the Related
Purchase Agreements shall not exceed Nine Hundred and Fifty Thousand Dollars
($950,000).
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9.09. Appointment of the Seller Representative.
(a) In order to efficiently administer the defense and/or
settlement of any claims for indemnity by a Buyer Indemnitee pursuant to this
Article IX, the Seller Representative is hereby appointed to serve as the
representative of the Seller and the Shareholders. The Seller Representative
shall have full power and authority to make, on behalf of the Seller Parties,
all decisions relating to the defense and/or settlement of any claims for which
any Buyer Indemnitee may claim to be entitled to indemnity pursuant to this
Article IX and otherwise to act on behalf of the Seller Parties in all respects
with respect to this Agreement, including, without limitation, the amendment or
termination thereof. All decisions and actions by the Seller Representative
shall be binding upon all of the Seller Parties, and no Seller Party shall have
the right to object to, dissent from, protest or otherwise contest the same.
(b) Each of the Seller Parties agree that (i) the provision of
this Section 9.09 are independent and severable, are irrevocable and coupled
with an interest and shall be enforceable notwithstanding any rights or remedies
any Seller Party may have in connection with the transactions contemplated by
this Agreement, (ii) the remedy at law for any breach of the provisions of this
Section 9.09 would be inadequate, and (iii) the provisions of Section 9.01 and
this Section 9.09 shall be binding upon the Seller Parties and the successors
and assigns of each of the Seller Parties.
(c) Any notice or communication delivered by Parent or Buyer
to the Seller Representative shall, as between Parent and Buyer, on the one
hand, and the Seller Parties, on the other, be deemed to have been delivered to
all of the Seller Parties. Parent and Buyer shall be entitled to rely
exclusively upon any communication or writings given or executed by the Seller
Representative in connection with any claims for indemnity or set-off and shall
not be liable in any manner whatsoever for any action taken or not taken in
reliance upon the actions taken or not taken or communications or writings given
or executed by the Seller Representative. Parent and Buyer shall be entitled to
disregard any notices or communications given or made by the Seller Parties in
connection with any claims for indemnity or set-off unless given or made through
the Seller Representative.
9.10. Deductibles, Caps and Set-Off Rights. Each of the parties
hereof agree and acknowledge that the Seller Deductible, the Buyer Deductible,
the limitation on liabilities set forth in Section 9.01(b) hereof and the
maximum amount subject to set-off set forth in Section 9.08 hereof shall be
applied against Damages arising under this Agreement and each of the Related
Purchase Agreements. For example, if Buyer or Parent has indemnifiable Damages
(in the circumstances where the Seller Deductible is applicable) pursuant to
this Agreement of One Hundred Thousand Dollars ($100,000) and indemnifiable
Damages of One Hundred Thousand Dollars ($100,000) under each of the Related
Purchase Agreements, then Buyer and Parent shall be deemed to have
indemnification rights under Section 9.01 hereof for Three Hundred Thousand
Dollars ($300,000) less the Seller Deductible in the amount of Two Hundred and
Fifty Thousand Dollars.
40
ARTICLE X.
MISCELLANEOUS
10.01. Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, two Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through an overnight
delivery service in circumstances to which such service guarantees next day
delivery, the day following being so sent:
If to Seller:
Boardnetwork
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Xxxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Weinstock, Manion, Xxxxxxx, Shore & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
If to Buyer:
Xxxx, Xxxxxx & Associates, Inc.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000-0000
Attn: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx, Esq.
Telecopier No.: (000) 000-0000
41
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
10.02. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent occurrence. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law.
10.03. Expenses. All costs and expenses incurred in connection with
this Agreement and in closing and carrying out the transactions contemplated
hereby shall be paid by the party incurring such cost or expense. Without
limiting the generality of the immediately preceding sentence, the fees, costs
and expenses of the accountants, attorneys and financial advisors (including,
without limitation, Barrington Associates, Weinstock, Manion, Xxxxxxx, Shore &
Xxxxxxx, and Frankel, Lodgen, Lacher, Golditch, Sardi & Xxxxxx) to Seller and
its Affiliates in connection with the preparation or negotiation of, or
consummation of the transactions contemplated by, this Agreement shall be borne
by Seller and/or the Shareholders and none of such fees, costs or expenses shall
be paid or assumed by Buyer. Without limiting the generality of the second
immediately preceding sentence, the fees, costs and expenses of the accountants,
attorneys and financial advisors (including, without limitation, Xxxxxx, Xxxx &
Xxxxxxxx LLP, Deloitte & Touche LLP and Xxxxxx X. Xxxxx & Co.) to Buyer in
connection with the preparation or negotiation of, or consummation of the
transactions contemplated by, this Agreement shall be borne by the Buyer and
Parent and none of such fees, costs or expenses shall be paid by Seller. This
section shall survive any termination of this Agreement.
10.04. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party hereto may assign either this Agreement or any
of its rights, interests or obligations hereunder without the prior written
approval of each other party, except that Buyer may assign its rights hereunder
to Parent or its other Affiliates without the prior written approval of any of
the Seller Parties, so long as Buyer and Parent remain responsible for
satisfying their respective obligations, liabilities, covenants and agreements
hereunder.
42
10.05. Governing Law and Forum. This Agreement shall in all respects
be interpreted, construed and governed by and in accordance with the laws of the
State of California, disregarding any conflict of laws provisions which may
require the application of the law of another jurisdiction. In the event that
arbitration is unavailable with respect to any action to enforce or that arises
out of or in any way relates to any of the provisions of this Agreement, or in
the event any action is brought to enforce the provisions of Section 10.11
hereof, such action shall be brought and prosecuted exclusively in a Federal or
state court located in Los Angeles County, California, and the parties hereto
hereby consent to the jurisdiction of any such court and to the service of
process by registered mail, return receipt requested, or by any other manner
provided by the laws of such State.
10.06. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts and the signatures delivered by telecopy, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other parties hereto.
10.07. Entire Agreement. This Agreement (including the Schedules and
Exhibits referred to herein which are hereby incorporated by reference and the
other agreements executed simultaneously herewith) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement, including, without limitation, the letter of intent between Buyer and
Seller dated as of June 26, 2002, as supplemented and amended. Neither this
Agreement nor any provision hereof is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder. The parties agree and
acknowledge that notwithstanding anything to the contrary in this Agreement,
Seller is not making any representations and warranties that are not expressly
provided in this Agreement.
10.08. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
10.09. Severability. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by an
arbitrator or a court of competent jurisdiction to be invalid, unenforceable or
void, the remainder of this Agreement and such provisions as applied to other
Persons, places and circumstances shall remain in full force and effect only if,
after excluding the portion deemed to be unenforceable, the remaining terms
shall provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
10.10. Construction. The parties hereto intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract
43
from or mitigate the fact that the party is in breach of the first
representation, warranty or covenant.
10.11. Arbitration.
(a) Any dispute or difference between or among the parties
(such parties being referred to individually as a "Disputing Party," and,
together, as the "Disputing Parties") arising out of this Agreement or the
transactions contemplated hereby which the parties are unable to resolve
themselves shall be submitted to and resolved by arbitration as herein provided.
Any Disputing Party may request the American Arbitration Association (the "AAA")
to designate one arbitrator, who shall be qualified as an arbitrator under the
standards of the AAA, who shall be a retired or former judge of any appellate or
trial court of the State of California, any United States appellate court or the
United States District Court for any California District, who is, in any such
case, not affiliated with any party in interest to such arbitration, and who has
substantial professional experience with regard to corporate legal matters.
(b) The arbitrator shall consider the dispute at issue in Los
Angeles County, California, at a mutually agreed upon time within sixty (60)
days (or such longer period as may be acceptable to the Disputing Parties or as
directed by the arbitrator) of the designation of the arbitrator. The
arbitration proceeding shall be held in accordance with the rules for commercial
arbitration of the AAA in effect on the date of the initial request by the
Disputing Party, that gave rise to the dispute to be arbitrated (as such rules
are modified by the terms of this Agreement or may be further modified by mutual
agreement of the Disputing Parties) and shall include an opportunity for the
parties to conduct discovery in advance of the proceeding. Notwithstanding the
foregoing, the Disputing Parties shall agree that they will attempt, and they
intend that they and the arbitrator should use its best efforts in that attempt,
to conclude the arbitration proceeding and have a final decision from the
arbitrator within one hundred twenty (120) days from the date of selection of
the arbitrator; provided, however, that the arbitrator shall be entitled to
extend such one hundred twenty (120) day period for a total of two one hundred
twenty (120) day periods. The arbitrator shall deliver a written award with
respect to the dispute to each of the parties, who shall promptly act in
accordance therewith. Each Disputing Party to such arbitration agrees that any
award of the arbitrator shall be final, conclusive and binding and that they
will not contest any action by any other party thereto in accordance with an
award of the arbitrator. It is specifically understood and agreed that any party
may enforce any award rendered pursuant to the arbitration provisions of this
Section 10.11 by bringing suit in any court of competent jurisdiction.
(c) All costs and expenses attributable to the arbitrator
shall be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
10.12. Cumulative Remedies. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
44
10.13. Third Party Beneficiaries. Except as specifically provided in
Article IX with respect to indemnification provided to the Indemnitees
identified therein, no provision of this Agreement shall create any third party
beneficiary rights in any Person, including any employee of Buyer or employee or
former employee of Seller or any Affiliate thereof (including any beneficiary or
dependent thereof).
10.14. Knowledge. Whenever used in this Agreement, "to the best
knowledge" of Seller or any variations thereof shall in all cases be understood
as comprising the actual knowledge and belief of Xxxxxxx X. Xxxxx and Xxxxxxx
Xxxxxxxx after reasonable inquiry of Seller's employees and representatives and
reasonable review of Seller's files, books and records.
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
SELLER PARTIES:
XXXXXXXXXXXX.XXX,
a California corporation
By: /s/ Xxxxx Xxxxxx Xxxxxxxx
-------------------------------------
Name: ___________________________________
Title: __________________________________
XXXX XXXXXX, an individual
/s/ Xxxx Xxxxxx
-----------------------------------------
XXXXXXX X. XXXXX, an individual
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
XXXXXXX XXXXXXXX GRANTOR RETAINED
ANNUITY TRUST DATED 4/23/01
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: ___________________________________
XXXXX XXXXXX XXXXXXXX GRANTOR RETAINED
ANNUITY TRUST DATED 4/23/01
By: /s/ Xxxxx Xxxxxx Xxxxxxxx
-------------------------------------
Name: ___________________________________
XXXXXXX AND XXXXX XXXXXXXX 2001
IRREVOCABLE GIFT TRUST DATED 4/23/01
By: /s/ Xxxx Xxxxxx
-------------------------------------
Name: ___________________________________
SIGNATURE PAGE TO XXXXXXXXXXXX.XXX ASSET PURCHASE AGREEMENT
XXXXXXXX LIVING TRUST DATED 3/27/01
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Name: ___________________________________
SELLER REPRESENTATIVE:
/s/ Xxxxxxx Xxxxxxxx
-----------------------------
Xxxxxxx Xxxxxxxx
By signing below, the undersigned acknowledges that she has read the
foregoing Asset Purchase Agreement, is aware that her spouse has agreed to sell
substantially all of the assets of Seller, and consents to such a sale and
agrees to be bound by the terms of the foregoing Asset Purchase Agreement.
/s/ Xxxxxx Xxxx Xxxxx
-----------------------------------------
Xxxxxx Xxxx, spouse of Xxxxxxx X. Xxxxx
By signing below, the undersigned acknowledges that she has read the
foregoing Asset Purchase Agreement, is aware that her spouse has agreed to sell
substantially all of the assets of Seller, and consents to such a sale and
agrees to be bound by the terms of the foregoing Asset Purchase Agreement.
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx, spouse of Xxxx Xxxxxx
SIGNATURE PAGE TO XXXXXXXXXXXX.XXX ASSET PURCHASE AGREEMENT
47
BUYER:
ONSTAFF ACQUISITION CORP.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxx
-----------------------------------
Title: __________________________________
PARENT:
XXXX, XXXXXX & ASSOCIATES, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: ___________________________________
Title: __________________________________
SIGNATURE PAGE TO XXXXXXXXXXXX.XXX ASSET PURCHASE AGREEMENT
