ASSET PURCHASE AGREEMENT
AGREEMENT made this day of , 1997 by and between RCM TECHNOLOGIES, INC.
("Buyer") a Nevada corporation, on the one hand and PROGRAMMING RESOURCES
UNLIMITED, INC., a Pennsylvania corporation and XXXXXX/XXXX ASSOCIATES, INC., a
Pennsylvania corporation (individually a "Seller" and collectively the
"Sellers") and the shareholder of Sellers identified in paragraph 1 below (the
"Seller Shareholder") on the other.
RECITALS
A. Sellers desire to sell and Buyer desires to purchase certain
of the assets of Sellers as more particularly described
herein, upon the terms and subject to the conditions herein
set forth.
B. The Board of Directors of Buyer, and of each Seller have
approved this Agreement by resolutions duly adopted.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and intending to be legally bound hereby the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. When used in this Agreement, the following
words or phrases have the meanings set forth below:
"Affiliate" shall mean a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with another Person or beneficially owns or has the power to vote
or direct the vote of 10% or more of any class of voting stock or of any form of
voting equity interest of such other Person in the case of a Person that is not
a corporation. For purposes of this definition, "control", including the terms
"controlling" and "controlled", means the power to direct or cause the direction
of the management and policies of a Person, directly or indirectly, whether
through the ownership of securities or partnership or other ownership interests,
by contract or otherwise.
"Agreement" shall have the meaning ascribed to it in the
preamble hereto.
"Assets" shall have the meaning ascribed to it in Section
2.1 hereof.
"Buyer" shall have the meaning ascribed to it in the
preamble hereto.
"Closing" and "Closing Date" shall have the respective
meanings set forth in Article V hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Condition: shall mean, as to a Person, the financial
condition, business, results of operations, prospects and/or
properties or other Assets of such Person.
"Consent or Filing" shall have the meaning set forth in
Section 6.3 hereof.
"Contract" shall mean a contract, indenture, bond, note,
mortgage, deed of trust, lease, agreement or commitment, whether written or
oral, including, without limitation, an insurance contract.
"Environmental Claim" shall mean any written notice by a
Person alleging actual or potential Liability, including, without limitation,
potential Liability for any investigatory cost, cleanup cost, governmental
response cost, natural resources damage, property damage, personal injury or
penalty, arising out of, based on or resulting from (a) the presence, transport,
disposal, discharge or release of any Material of Environmental Concern at any
location, whether or not owned by Seller, as the case may be, or (b)
circumstances forming the basis of any violation or alleged violation of any
Environmental Law.
"Environmental Law" shall mean all federal, state, local and
foreign Laws relating to pollution or protection of human health or the
environment, including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, including, without limitation, Laws
relating to emissions, discharges, releases or threatened releases, or the
presence of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, existence, treatment, storage,
disposal, transport, recycling, reporting or handling of Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated hereunder.
"ERISA Affiliate" shall mean, with respect to a Seller, any
trade or business that together with a Seller would be deemed a "single
employer" within the meaning of Section 4001(a)(14) of ERISA.
"Financial Statements" shall mean statements of financial
condition and statements of operations and changes in stockholders'
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equity, and the footnotes, schedules, exhibits and other
attachments thereto.
"GAAP" shall mean generally accepted accounting
principles.
"Governmental Entity" shall mean a court, legislature,
governmental agency, commission or administrative or regulatory authority or
instrumentality, domestic or foreign.
"Xxxxxx" shall mean Xxxxxxx X. Xxxxxx, individually owning all
(100%) of the capital stock of Programming Resources Unlimited, Inc. and Xxxxxxx
X. Xxxxxx and Xxxxxx Xxxxxx, collectively owning 100% of the capital stock of
Xxxxxx/Xxxx Associates, Inc.
"IRS" shall mean the Internal Revenue Service.
"Insurance" shall have the meaning set forth in Section
2.1.5 hereof.
"Intellectual Property" shall mean marks, names, trademarks,
service marks, patents, patent rights, assumed names, logos, copyrights, trade
names, inventions, protected formulae, computer software, as well as related
documentation and manuals, policy forms, training materials and underwriting
manuals and all applications for registration of such items with any
Governmental Entity, licenses and research and development relating thereto.
"Knowledge" shall mean the knowledge of the relevant Person,
after due inquiry by the appropriate officer or officers.
"Law" shall mean a law, ordinance, rule or regulation enacted
or promulgated, or an Order issued or rendered, by any Governmental Entity.
"Liability" shall mean a liability, obligation, claim or cause
of action of any kind or nature whatsoever, whether absolute, accrued,
contingent or other and whether known or unknown.
"License" shall mean a license, certificate of authority,
permit or other authorization to transact an activity or business issued or
granted by a Governmental Entity.
"Lien" shall mean a lien, mortgage, deed to secure debt,
pledge, security interest, lease, sublease, charge, levy or other encumbrance of
any kind.
"Losses" shall mean losses, claims, damages, costs, expenses,
Liabilities and judgments, including, without limitation, court costs and
attorneys' fees.
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"Materials of Environmental Concern" shall mean chemicals,
pollutants, contaminants, wastes, toxic or hazardous substances or petroleum and
petroleum products.
"Net Operating Income" (NOI) shall mean subsequent to the
Closing Date and with respect to the ongoing business formerly conducted by
Sellers, gross revenue (billed services at invoice value reduced by customer
discounts, returns and allowances) minus cost of services and sales and general
administrative expenses including all compensation and benefits of Xxxxxxx
Xxxxxx but excluding only RCM corporate cost, Taxes and the salaries of new
sales and recruiting personnel as determined in accordance with generally
accepted accounting principles.
"Officers' Certificate" shall mean, with respect to any
Person, a certificate executed by the President or an appropriate Vice President
of such Person, as attested by the Secretary or an Assistant Secretary of such
Person.
"Order" shall mean an order, writ, ruling, judgment,
injunction or decree of, or any stipulation to or agreement with, any
arbitrator, mediator or Governmental Entity.
"Permitted Liens" shall mean as to each Seller, (i) all Liens
approved in writing by the Buyer, (ii) statutory Liens arising out of operation
of Law with respect to a Liability incurred in the ordinary course of business
of each Seller and which is not delinquent and can be paid without interest or
penalty, or (iii) such Liens and other imperfections of title as do not
materially detract from the value or impair the use of the property subject
thereto.
"Person" shall mean an individual, corporation, partnership,
association, joint stock company, Governmental Entity, business trust,
unincorporated organization or other legal entity.
"Proceedings" shall mean actions, suits, hearings, claims and
other similar proceedings.
"Reorganization Proposal" shall have the meaning set
forth in Section 8.8 hereof.
"Required Filings and Approvals" shall mean the filing of such
applications, registrations, declarations, filings, authorizations, Orders,
consents and approvals as may be required to be made or obtained prior to
consummation of the transactions contemplated hereby under the insurance Laws of
any jurisdiction.
"Seller" and "Sellers" shall have the meaning ascribed
to them in the preamble hereto.
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"Seller Adverse Effect" shall mean a material adverse effect
on the Condition of either Seller, taken as a whole, other than resulting from
general economic or financial conditions which do not affect Sellers uniquely.
"Sellers Benefit Plans" shall have the meaning set forth in
Section 6.13(b) hereof.
"Sellers' Unaudited Financial Statements" shall mean the
unaudited Financial Statements of each Seller for the year ended December 31,
1996.
"Sellers' Property" shall mean any property on which either
Seller holds a Lien or any facility which is owned or leased by either Seller or
in the management of which either Seller actively participates.
"Seller Shareholder" shall mean Xxxxxxx X. Xxxxxx.
"SEC" shall mean the Securities and Exchange Commission.
"Subsidiary" of a Person means any Person with respect to whom
such specified Person, directly or indirectly, beneficially owns 50% or more of
the equity interests in, or holds the voting control of 50% or more of the
equity interests in, such Person.
"Tax" or "Taxes" shall mean all income, gross income, gross
receipts, premium, sales, use, transfer, franchise, profits, withholding,
payroll, employment, excise, severance, property and windfall profit taxes, and
all other taxes, assessments or similar charges of any kind whatsoever thereon
or applicable thereto, together with any interest and any penalties, additions
to tax or additional amounts, in each case imposed by any taxing authority,
domestic or foreign, upon Sellers, including, without limitation, all such
amounts imposed as a result of being a member of an affiliated or combined
group.
"Tax Returns" or "Returns" shall mean all Tax returns,
declarations, reports, estimates, information returns and statements required to
be filed under federal, state, local or foreign Laws.
"Treasury Regulations" shall mean the regulations promulgated
by the Secretary of the Treasury pursuant to the Code and any statute
predecessor and successor thereto.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Assets To Be Purchased. Upon the terms and subject to
the conditions set forth in this Agreement, Sellers shall sell,
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transfer, convey and assign to the Buyer, and the Buyer shall purchase and
acquire from Sellers, at the Closing on the Closing Date, the temporary staffing
business of each Seller as a going concern, including, without limitation by
reason of specification, the following assets of Seller:
2.1.1 the right, title and interest of Sellers in and to all
fixed assets set forth on Schedule 2.1.1 hereto, including all computer
equipment, software, office equipment and furniture used by Seller in the
conduct of their business (collectively, the "Fixed Assets");
2.1.2 All of Sellers' right, title and interest in and to the
names "Programming Resources Unlimited, Inc." and "Xxxxxx/Xxxx Associates, Inc."
and all variations thereof, and all trademarks, servicemarks, trade names,
service names and logos incorporating the names "Programming Resources
Unlimited, Inc." and "Xxxxxx/Xxxx Associates, Inc." or any variation thereof and
all goodwill related thereto (collectively, the "Trade Names");
2.1.3 all of Sellers' books and records, including, without
limitation by reason of specification, all client and customer lists, all
employee lists, all applicant data bases, all files, all books of accounts and
ledgers and all other instruments and documents relating to the assets and
businesses being acquired by the Buyer pursuant to this Agreement (collectively,
the "Customer Material") but excluding their corporate records, provided the
Buyer shall preserve Sellers' books and records for a period of five (5) years
and will allow Sellers or their authorized representative access to them during
regular business hours;
2.1.4 all of Sellers' leases and rental agreements, all
unperformed commitments and obligations owing to Sellers, and all other
instruments, contracts and agreements of Sellers (collectively the "Contracts");
2.1.5 all policies of insurance maintained by Sellers
and the proceeds thereof (collectively, the "Insurance")'
2.1.6 all prepayments on behalf of Seller including all
prepaid payroll and other statutory taxes except as provided in Section 2.2.3
hereof; and
2.1.7 all intangible property rights and proprietary
information of Sellers relating to Sellers' operation of the temporary staffing
businesses being acquired by the Buyer pursuant to this Agreement (collectively,
the "Proprietary Information").
All of the above described assets are hereinafter sometimes
collectively referred to as the "Assets".
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2.2 Excluded Assets. Notwithstanding anything contained in
this Agreement to the contrary, the following assets of Sellers are
excluded from the Assets and are not being purchased and sold
hereunder:
2.2.1 all cash, cash equivalents and bank accounts of
Sellers;
2.2.2 all accounts receivable of Sellers earned by
Sellers prior to the Closing Date;
2.2.3 all prepaid income or other taxes of Sellers and any
income or other tax refunds to which Sellers may be or may become entitled for
all periods prior to the Closing Date;
2.2.4 all claims and causes of action of Sellers arising prior
to the Closing Date against third parties and all payments or other sums of
money payable or which may become payable with respect thereto.
ARTICLE III
PURCHASE PRICE; PAYMENT; ALLOCATION
3.1 Purchase Price. The purchase price for the Assets (the "Purchase
Price") is $900,000.00 subject to the following adjustment: if the aggregate Net
Operating Income of Sellers for the period January 1, 1996 through December 31,
1996, after deduction of $120,000.00 for Xxxxxx'x compensation, but excluding
factoring, adjusted interest, penalties, accounting, depreciation, legal fees
and permanent placement commissions earned by Xxxxxx, does not equal
$170,000.00, then the Purchase Price shall be reduced by $5.00 for each one
dollar that the Net Operating Income is less than $170,000.00.
3.2 Payment. Subject to the terms and conditions of this
Agreement, on the Closing Date Buyer shall pay to Sellers the
Purchase Price as follows:
$600,000.00 by wire transfer of immediately
available funds to a bank
account designated by Sellers;
$300,000.00 in three (3) annual
installments of $100,000.00
each payable within sixty (60)
days of the first, second and
third anniversaries of the
Closing Date, provided the Net
Operating Income of Sellers'
ongoing operations is not less
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than $170,000 for any such
twelve (12) month period.
(a) In the event the aggregate Net Operating Income of Sellers
is less than $170,000.00 (the "Baseline Amount") for any year (as hereafter
defined) in which a payment is due (the "Shortfall") then the amount payable to
Sellers for such period shall be reduced by $5.00 for each one dollar of
Shortfall.
(b) As used in this Section 3.2 the term "year" shall mean the
period commencing on the Closing Date and ending twelve (12) months thereafter,
provided that if the twelve (12) month period ends during a current pay period
then the ending date shall be extended to coincide with the end of the then
current pay period.
3.3 Earn Out Payments.
For the three (3) year period immediately following the
Closing Date, if the aggregate NOI of Sellers for any year (as defined in
Section 3.2(b) hereof) exceeds $170,000.00 then twenty five percent (25%) of the
amount over and above and in excess of $170,000.00 shall be accrued as
additional consideration (the "Earn Out") and within sixty (60) days following
the first, second and third anniversaries of the Closing Date such accrued
amount shall be paid to Sellers, provided that if any such anniversary shall
occur during a current pay period then the anniversary date shall be extended to
the close of such current pay period.
3.4 Change of Control.
Following a Change of Control as defined in paragraph 8 of the
Employment Agreement bearing even date herewith between Buyer and Seller
Shareholder:
(a) all sums payable pursuant to Section 3.2 hereof to the
extent not already paid shall be immediately due and payable to Sellers free of
any requirement that the Net Operating Income exceed the Baseline Amount; and
(b) all sums payable pursuant to Section 3.3 hereof shall be
immediately due and payable in an amount equal to that payable for the year
immediately preceding the year the Change of Control occurred multiplied by the
number of years remaining in the Earn Out period.
ARTICLE IV
ASSUMPTION OF OBLIGATIONS AND LIABILITIES
4.1 Liabilities and Obligations Assumed. As of the Closing,
the Buyer shall assume and timely pay, perform and discharge only
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those obligations and liabilities of Sellers relating to the temporary staffing
businesses being acquired by the Buyer pursuant to this Agreement identified in
Schedule 4.1, (the "Assumed Liabilities") but excluding therefrom the debts,
obligations and liabilities being retained by Sellers (the "Excluded
Liabilities") as provided in Section 4.2 hereof.
4.2 Excluded Liabilities and Obligations. Except for the Assumed
Liabilities as provided in Section 4.1 hereof, Sellers shall retain and timely
pay, perform and discharge all debts, liabilities and obligations of Sellers
relating to the Assets and the temporary staffing businesses conducted by
Sellers, including, without limitation by reason of specification, the
following:
4.2.1 all liabilities and obligations to all employees of
Sellers other than vacation and sick pay accrued since January 1, 1997 for the
full time non-billable office employees;
4.2.2 all liabilities and obligations of Sellers with respect
to any claim, demand, cause of action, suit, proceeding, judgment, loss,
liability, damage or expense against Sellers;
4.2.3 all obligations and liabilities of Sellers to third
parties under the leases, rental agreements, licenses, registrations, and other
contracts set forth on Schedule 4.2.3 hereto to the extent such obligations and
liabilities first became accrued and payable prior to the Closing Date and are
not reflected in Sellers' Financial Statements;
4.2.4 all accounts payable of Sellers;
4.2.5 any other debt, liability or obligation of
Sellers;
4.2.6 all income taxes, payroll taxes, statutory federal,
state and local taxes and any taxes which may become due by virtue of a change
in Sellers' accounting method or as a result of the sale contemplated by this
Agreement.
ARTICLE V
THE CLOSING
5.1 Time and Place. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be at 11.30 a.m. on March 21, 1997 (the
"Closing Date") at the offices of Xxxxxxx & Bach, P.C., 0000 Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxxxxxxx, XX.
5.2 Deliveries by Sellers. At the Closing and against the
deliveries to be made by the Buyer pursuant to Section 5.3 hereof,
Sellers shall deliver the following to the Buyer:
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5.2.1 a certified copy of resolutions of the Board of
Directors and stockholders of each Seller authorizing the making, execution and
delivery of this Agreement and each of the agreements and instruments executed
in connection herewith or delivered pursuant hereto and the consummation of the
transactions contemplated hereby certified as true, correct and complete as of
the Closing Date by the Secretaries of Sellers;
5.2.2 the opinion of Klehr, Harrison, Xxxxxx, Xxxxxxxxx &
Xxxxxx, counsel to Sellers, in substantially the form of Schedule 5.2.2 hereto;
5.2.3 one or more instruments of assignment, acceptance,
consent and release pursuant to which Sellers shall assign to the Buyer all of
Sellers' right, title and interest in, to and under the Trade Name, the Customer
Material, the Contracts, the Insurance and the Proprietary Information;
5.2.4 a xxxx of sale pursuant to which Sellers transfer to the
Buyer all of Sellers' right, title and interest in and to the Fixed Assets;
5.2.5 one or more instruments of assignment and
acceptance pursuant to which Sellers assign to the Buyer the
Assumed Liabilities;
5.2.6 executed consents to assignment from each of the parties
to each of the Contracts other than Sellers to the extent a consent to the
assignment of such Contract by Sellers to the Buyer is required by the terms of
such Contract or is otherwise required by Law;
5.2.7 the Employment Agreement between the Buyer and Xxxxxx in
substantially the form of Appendix A hereto duly executed by Xxxxxx;
5.2.8 a copy duly executed by Seller of any Officers'
Certificate specified in Section 9.1 hereof;
5.2.9 a good standing certificate with respect to each Seller
issued by the Secretary of State of Pennsylvania within ten (10) days prior to
the Closing Date; and
5.2.10 such other documents as are reasonably requested by the
Buyer in connection with the consummation of the transactions contemplated
hereto.
5.3 Deliveries by the Buyer. At the Closing and against the
deliveries to be made by Sellers pursuant to Section 5.2 hereof,
the Buyer shall deliver to Sellers the following:
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5.3.1 the Purchase Price as provided in Section 3.1
hereof;
5.3.2 a certified copy of resolutions of the Board of
Directors of the Buyer authorizing the making, execution and delivery of this
Agreement and each of the agreements executed in connection herewith or
delivered pursuant hereto and the consummation of the transactions contemplated
hereto certified as true, correct and complete as of the Closing Date by the
Secretary of the Buyer;
5.3.3 the opinion of Xxxxxxx & Xxxx, P.C., counsel to
the Buyer, in substantially the form of Schedule 5.3.3 hereto;
5.3.4 fully executed counterparts to any of the instruments to
be delivered by Seller pursuant to Section 5.2 hereof that require execution by
the Buyer;
5.3.5 a copy duly executed by the Buyer of any Officers'
Certificate specified in Section 9.2 hereof;
5.3.6 the Employment Agreement between the Buyer and Xxxxxx in
substantially the form of Appendix A hereto duly executed by the Buyer; and
5.3.7 such other documents as are reasonably requested by
Seller in connection with the consummation of the transactions contemplated
hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers and Xxxxxx jointly and severally represent and warrant to the
Buyer, subject only to the exceptions that are set forth in the schedules
hereto, as follows:
6.1 Organization and Qualification.
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Pennsylvania and
has the requisite corporate power and authority to conduct its business as it is
currently being conducted. Each Seller is duly qualified to do business, and is
in good standing, in the respective jurisdictions where the character of its
assets owned or leased or the nature of its business makes such qualification
necessary, except for failures to be so qualified or in good standing which
would not have a Seller Adverse Effect.
(b) Copies of the Charter and Bylaws of each Seller have
heretofore been delivered to the Buyer, and all such copies are accurate and
complete as of the date hereof.
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6.2 Authorization. Each Seller has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved and authorized by the Board of Directors and stockholders of each
Seller. No other corporate proceedings on the part of either Seller are
necessary to authorize this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each Seller
and, assuming this Agreement is a legal, valid and binding obligation of the
Buyer, constitutes a legal, valid and binding agreement of each Seller
enforceable against each Seller in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, rehabilitation, liquidation,
conservation, dissolution, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any Proceeding therefor may be brought.
6.3 Consents and Approvals of Government Agencies. No consent,
approval, Order or authorization of, or registration, application, declaration
or filing with any person is required with respect to either Seller in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
6.4 No Violation. The execution, delivery and performance of this
Agreement by each Seller and the consummation of the transactions contemplated
hereby will not (i) violate any provision of the Charter or the Bylaws or
similar organizational documents of either Seller, (ii) violate, conflict with,
result in a breach of any provision of, constitute a default or an event which,
with notice or lapse of time or both, would constitute a default under, result
in the termination of or accelerate the performance required by, result in a
right of termination or acceleration under, or result in the creation of any
Lien upon any of the Assets of either Seller under any of the terms, conditions
or provisions of any Contract to which either Seller is a party or to which it
or any of the Assets may be subject.
6.5 Financial Statements. Sellers have previously delivered to the
Buyer true and complete copies of each Seller's Unaudited Financial Statements.
Each of Seller's Unaudited Financial Statements, including those Financial
Statements to be delivered by Sellers pursuant to Section 8.10 hereof, was and,
as to Financial Statements of Sellers not yet provided, will be prepared in
accordance with GAAP, and each presents and, as to each Seller's Unaudited
Financial Statements not yet provided, will present, fairly in all material
respects the financial condition, results of operations and changes in
stockholders' equity of each Seller as of
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the dates or for the periods covered thereby, in conformity with
GAAP.
6.6 Conduct of Business. Schedule 6.6 hereof lists all claims which are
pending, or to the Knowledge of Sellers threatened against either Seller and
correctly sets forth the circumstances thereof. No insurance carrier listed
therein has denied coverage of any claim listed opposite its name or accepted
investigation of any such loss or defense of any such claim under a reservation
of rights. The reserves established by Seller as of December 31, 1996 are
adequate to cover Sellers' liability, net of insurance coverage, for all such
claims.
6.7 Absence of Certain Changes or Events. Since December 31, 1996
Sellers have conducted their businesses only in the ordinary course, consistent
with past practice, and there has not been, occurred or arisen (i) any event,
change or development which individually or in the aggregate would have a Seller
Adverse Effect, (ii) any amendment or termination of any agreement or waiver or
relinquishment of any right of material value to either Seller, (iii) any
changes in the Articles of Incorporation or Bylaws of either Seller, and (iv)
any damage, destruction or loss whether covered by insurance or not which would
have a Seller Adverse Effect.
6.8 No Undisclosed Liabilities. Since December 31, 1996, Seller has not
incurred any Liabilities other than (i) Liabilities incurred in the ordinary
course of business consistent with past practice, or (ii) Liabilities that,
individually or in the aggregate, would not be material to either Seller taken
as a whole. Neither Seller has any Liabilities of any nature fixed or contingent
that will not be shown or otherwise provided for in each Seller's Financial
Statements.
6.9 Taxes and Tax Returns. All Tax Returns (i) required to be filed by
each Seller have been timely filed taking into account any extensions of time
for filing such Tax Returns; (ii) at the time filed were and, as to Tax Returns
not yet filed, will be, true, complete and, to the Knowledge of each Seller,
correct and each Seller has timely paid all Taxes due and payable for periods
covered by such Tax Returns, except to the extent, if any, that adequate
provisions has been made and adequate reserves have been made as reflected in
each Seller's Unaudited Financial Statements for the payment of Taxes due and
payable for periods covered by such Tax Returns; (iii) the accruals and reserves
reflected in each Seller's Unaudited Financial Statements are adequate in all
material respects to cover all Taxes accrued through the dates therein for those
and any prior periods in accordance with GAAP; (iv) there are no Liens for Taxes
upon the assets of either Seller except for Liens for Taxes not yet due; (v) to
the Knowledge of Sellers, there are no outstanding deficiencies, assessments or
written proposals for the assessment of Taxes proposed, asserted or
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assessed against either Seller; (vi) all tax years for which Tax Returns were
required to be filed by each Seller are closed by the applicable statute of
limitations for all periods through December 31, 1992; (vii) neither Seller has
executed any power of attorney with respect to Taxes that is currently in
effect; (viii) neither Seller has made, is not obligated to make, or is not a
party to any contract that could obligate it to make, any payments that would
not be deductible under Section 280G of the Code; and (ix) all monies required
to be collected or withheld by Sellers for income taxes, social security and
other payroll taxes have been collected or withheld and either paid to the
appropriate governmental agencies or will, at Closing, be paid to such agencies.
6.10 Litigation. There are no Proceedings or investigations pending
nor, to the Knowledge of each Seller, threatened, against, relating to,
involving or otherwise affecting either Seller that individually or in the
aggregate would reasonably be expected to have a Seller Adverse Effect. Neither
Seller is subject to any Order, except for Orders which, individually or in the
aggregate, would not have a Seller Adverse Effect.
6.11 Compliance with Law.
(a) Neither Seller is in violation in any material respect or,
with notice or lapse of time or both, would be in violation in any material
respect of any term or provision of any Law applicable to them or any of their
assets except for violations which would not have a Seller Adverse Effect.
Without limiting the generality of the foregoing, Sellers have filed or caused
to be filed all reports, statements, documents, registrations, filings or
submissions which were required by any such Law to be filed by them and all such
filings complied with all such Laws when filed except for failures to file or to
comply which would not have a Seller Adverse Effect. Sellers hold all permits,
Licenses, variances, exemptions and orders which are required to be held by them
to operate their businesses substantially in the manner in which they operated
as of the date hereof.
(b) Sellers are not parties to any Contract with or other
undertaking to, or subject to any Order by, or a recipient of any supervisory
letter or other oral or written communication of any kind from, any Governmental
Entity which (i) materially and adversely affects or would reasonably be
expected to affect materially and adversely the conduct of their businesses,
including without limitation, their sales or trade practices and policies, or
its management; or (ii) would have a Seller Adverse Effect; nor, to the
Knowledge of Sellers, have Sellers been advised by any Governmental Entity that
it is contemplating issuing or requesting any such Order, Contract or other
communication.
6.12 Employee Agreements. Schedule 6.12 lists all plans,
contracts and arrangements, oral or written, including but not
14
limited to employee benefit plans, whereunder Sellers have any obligations,
other than obligations to make current wage or salary payments terminable on
notice of 30 days or less, to or on behalf of their officers, employees or their
beneficiaries or whereunder any of such persons owes money to Sellers.
6.13 Employee Benefit Plans' ERISA.
(a) Sellers have not entered into any collective bargaining
agreement; there is no labor strike, dispute, slowdown or work stoppage or
lockout pending, or, to the Knowledge of Sellers, threatened against or
affecting Sellers; to the Knowledge of Sellers, no union organizational campaign
is in progress with respect to the employees of Sellers; there is no unfair
labor practice, charge or complaint pending or, to the Knowledge of Sellers,
threatened, before the National Labor Relations Board against Sellers and no
charges with respect to or relating to Sellers are pending before the Equal
Employment Opportunity Commission.
(b) Schedule 6.13 contains a true and complete list of each
"employee benefit plan" as defined in Section 3(3) of ERISA, and each other
employee benefit plan, welfare plan, program, agreement, policy or arrangement,
sponsored, maintained or contributed to or required to be contributed to by
Sellers or by any ERISA Affiliate that, together with Sellers would be deemed a
"single employer" within the meaning of Section 4001(a)(14) of ERISA, within six
years prior to the Closing Date (the "Sellers Benefit Plans").
(c) With respect to each Seller Benefit Plans, Sellers have
heretofore delivered to the Buyer true and complete copies of (i) the Plan
documents, if any, including all amendments thereto, as currently constituted on
the date hereof, (ii) the annual reports and actuarial reports for the last
three most recently completed plan years, (iii) the most recent Summary Plan
Description and Summary of Material Modifications, if applicable, and all
material employee communications for each plan, (iv) any trust or other fund
agreement, including all amendments thereto, relating thereto as in effect on
the date hereof and the latest financial statements thereof, (v) all Contracts
relating to any Seller Benefit Plan with respect to which Sellers or any ERISA
Affiliate may have any liability, and (vi) with respect to each Seller Benefit
Plans that is intended to be qualified under Section 401 of the Code, the most
recent determination letter received from the IRS.
(d) Neither Sellers nor any ERISA Affiliate has any formal
plan or commitment, whether legally binding or not, to create any additional
Seller Benefit Plans or modify or change any
15
existing Seller Benefit Plans, other than as required by the Code, ERISA or
regulations or other requirements of the IRS or the Department of Labor issued
thereunder.
(e) Except as set forth in Schedule 6.13, neither Seller nor
any ERISA Affiliate maintains or contributes to or has ever maintained or
contributed to any Seller Benefit Plan which is subject to Title IV of ERISA or
Section 412 of the Code.
(f) Neither Seller nor any ERISA Affiliate is, or ever has
been, obligated to make contributions to or is, or has ever been, other subject
to a "multiemployer pension plan" as defined in Section 3(37) of ERISA.
(g) To the Knowledge of Sellers, there has been no prohibited
transaction, as described in Section 406 of ERISA or Section 4975 of the Code,
with respect to any Seller Benefit Plan, and Sellers have not incurred any
liability for any excise tax pursuant to Section 4975 of the Code and, to the
Knowledge of Sellers, no fact or event exists that would give rise to such
liability with respect to the filing of reports with respect to any Seller
Benefit Plan.
(h) Full payment has been made of amounts which Sellers or any
ERISA Affiliate is required to pay to each Seller Benefit Plan through the date
hereof, and all amounts properly accrued through the Closing Date with respect
to any Seller Benefit Plan have been properly recorded in the Sellers' Unaudited
Financial Statements and will be properly recorded on any Financial Statements
of Seller delivered pursuant to Section 8.8 hereof.
(i) To the Knowledge of Sellers, each Seller Benefit Plan has
been operated and administered in all material respects in accordance with its
terms and applicable Laws. There are no pending and to the Knowledge of Sellers
threatened or anticipated, claims with respect to any Seller Benefit Plan other
than claims for benefits made in the ordinary course. To the Knowledge of
Sellers, each Seller Benefit Plan which is intended to be qualified within the
meaning of Section 401(a) of the Code is so qualified and Sellers are not aware
of any facts or circumstances to the contrary, other than as set forth in
Schedule 6.13.
(j) No Seller Benefit Plan provides benefits with respect to
current or former employees of Sellers or any ERISA Affiliate beyond their
retirement or other termination of service, except as otherwise required by Law,
other than agreements with current or former employees as in effect prior to
December 31, 1996 consistent with past practice which in the aggregate are not
material to the Condition of Sellers taken as a whole.
(k) With respect to each Seller Benefit Plan that is
funded wholly or partially through an insurance policy, to the
16
Knowledge of Sellers, there will be no material liability of Sellers or any
ERISA Affiliate, as of the Closing Date, under any such insurance policy or
ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Closing Date.
(l) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of
Sellers to severance pay, unemployment compensation (except for unemployment
insurance benefits) or any other similar payment, (ii) accelerate the time of
payment or vesting or increase the amount of compensation due any such employee
or officer, (iii) result in any employment-related expense or liabilities, or
(iv) result in any prohibited transaction described in Section 406 of ERISA or
Section 4975 of the Code for which an exemption is not available.
6.14 Assets. Except for Assets disposed of since December 31, 1996 in
arms' length transactions at prices reasonably believed to be fair market value
in the ordinary course of business and consistent with past practice: (i)
Sellers have good title to all Assets that are disclosed or otherwise reflected
in the Sellers' Unaudited Financial Statements, and all such Assets are owned by
Seller, free and clear of all Liens other than Permitted Liens; (ii) Sellers own
good and indefeasible title to, or has a valid leasehold interest in or have a
valid right under contract to use, all personal property that is material to the
Permitted Liens; and, in the aggregate, all such personal property is, in all
material respects, suitable and adequate for its current uses; and (iii) Sellers
have the right to use, free and clear of any royalty or other payment
obligations, claims of infringement or alleged infringement or other Liens other
than Permitted Liens and other than with respect to licensing and maintenance
fees; all Intellectual Property that is material to the conduct of their
businesses, all of which is listed in Schedule 6.14; and are not in material
conflict with or violation or infringement of, nor have Sellers received any
notice of any such conflict with or violation or infringement of, any asserted
rights of any other Person with respect to any Intellectual Property.
6.15 Environmental Matters.
(a) Sellers are, and, to the Knowledge of Sellers, all
Properties of Seller including, with respect to any Sellers' Property, all
owners or operators thereof, are in substantial compliance with all applicable
Environmental Laws. Sellers have not received any communication, written or
oral, that alleges that Seller or any Seller Property including, with respect to
any Sellers' Property, any owner or operator thereof, is not in such compliance,
and, to the Knowledge of Sellers, there are no
17
circumstances that may prevent or interfere with such compliance in
the future.
(b) There is no Environmental Claim pending against Sellers or
any Seller Property or, to the Knowledge of Sellers, threatened against Sellers
or any Sellers' Property, or any Person whose Liability for any Environmental
Claims Sellers have or may have retained or assumed either contractually or by
operation of Law, except for Environmental Claims which, individually or in the
aggregate, would not have a Seller Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge, disposal or presence of any Material of
Environmental Concern, that, to the Knowledge of Sellers, could form the basis
of any Environmental Claim against Sellers, any Sellers' Property or any Person
whose Liability for many Environmental Claim Sellers have or may have retained
or assumed either contractually or by operation of Law.
(d) Without in any way limiting the generality of the
foregoing, to the Knowledge of Sellers, (i) Schedule 6.15 identifies all
underground storage tanks and the capacity and contents of such tanks currently
or formerly located on property owned or leased by Sellers; (ii) there is no
friable asbestos contained in or forming part of any building or structure owned
or leased by Sellers; and (iii) no polychlorinated biphenyls are used or stored
at any Sellers' Property.
6.16 Contracts.
(a) Except as set forth in Schedule 6.16, neither Seller is a
party to or bound by: (i) any contract for the sale or purchase of real property
to or from any third party; (ii) any contract for the lease or sublease of real
or personal property from or to any third party which provides for annual
rentals in excess of $1,000, or any group of contracts for the lease or sublease
of real or personal property from or to third parties which provides in the
aggregate for annual rentals in excess of $1,000; (iii) any contract or group of
contracts for the purchase or sale or lease of equipment, computer software,
lists of clients, customers or similar information, merchandise, supplies, other
materials or personal property or for the furnishing or receipt of services
which calls for performance over a period of more than 60 days and involves more
than the sum individually or in the aggregate of $1,000; (iv) any license
agreement involving the use of copyrights, franchises, licenses, trademarks,
servicemarks or other information owned by Sellers or others; (v) any broker's
representative, sales, agency or advertising contract which is not terminable on
notice of 30 days or less; (vi) any contract involving the borrowing or lending
of money or the guarantee of the obligations of officers, directors,
stockholders or employees of
18
Sellers or others; (vii) any Contracts with the stockholders of Sellers; or
(viii) any other Contract, whether or not made in the ordinary course of
business, which is material to the business or assets of Sellers. No outstanding
purchase commitment by Sellers is in excess of its ordinary business
requirements or at a price in excess of market price. Copies of all Contracts
and agreements listed in Schedule 6.16 have been made available by Sellers to
the Buyer.
(b) Except as set forth in Schedule 6.16, none of such
Contracts and agreements will expire or be terminated or be subject to
modification of terms or conditions by reason of the consummation of the
transactions contemplated by this Agreement. Sellers are not in default in any
material respect under the terms of any such contract nor are they in default in
the payment of any insurance premiums due to insurance carriers nor any
principal of or interest on any indebtedness for borrowed money nor has any
event occurred which with the passage of time or giving of notice would
constitute such a default by Sellers and, to the Knowledge of Sellers, no other
party to any such contract is in default in any material respect thereunder nor
has any such event occurred with respect to such party. Without the prior
written consent of the Buyer, Sellers will not make any changes or modifications
in any of the foregoing, nor incur any further obligations or commitments, nor
make any further additions to its properties, except in each case in the
ordinary course of business and as contemplated by this Agreement.
6.17 Insurance. Schedule 6.17 contains a true and complete list as of
the date hereof all liability, property, workers compensation, directors and
officers liability and other Insurance Contracts that insure the business,
affairs or properties, or the officers, directors, employees or agents, of
Sellers or affect or relate to the ownership, use, or operations of Sellers'
assets and that have been issued to Sellers including, without limitation, the
names and addresses of the insurers, the expiration dates thereof, any
deductible amounts in respect thereof and the annual premiums and payments terms
thereof and a description of all claims thereunder in excess of $5,000 per
incident since January 1, 1995 through the date of this Agreement. All such
insurance is in full force and effect on the date of this Agreement. All notices
of reportable incidents with respect to such insurance occurring since January
1, 1995 have been given in writing to the appropriate carriers except where the
failure to give such notice would not prevent recovery under such insurance.
6.18 Conflicts; Sensitive Payments. There are (i) no material
situations involving the interests of the stockholders of Sellers,
except as listed in Schedules 6.16 or 6.18, or, to the Knowledge of
the President of Sellers, any officer or director of Sellers which
may be generally characterized as a "conflict of Interest",
including, but not limited to, the leasing of property to or from
19
Sellers or direct or indirect interests in the business of competitors,
suppliers or customers of Sellers; and (ii) no situations involving illegal
payments or payments of doubtful legality from corporate funds of Sellers to
governmental officials or others which may be generally characterized as a
"sensitive payment".
6.19 Corporate Name. Sellers own and possess, to the exclusion of the
stockholders of Sellers and their affiliates, all rights to the use of the name
"Programming Resources Unlimited, Inc." and "Xxxxxx/Xxxx Associates, Inc." and
any name confusingly similar thereto in the operation of Sellers' present
business or any other business similar to or competitive with that being
conducted by Sellers, including, but not limited to, the right to use such name
in advertising.
6.20 Trademarks and Proprietary Rights. All Intellectual Property owned
or used or registered in the name of or licensed to Sellers are listed and
briefly described in Schedule 6.20. Other than as disclosed in Schedule 6.20, no
proceedings have been instituted or are pending or threatened or, to the
Knowledge of the President of Sellers, contemplated which challenge the validity
of the ownership by Sellers of any of such Intellectual Property. Sellers have
not licensed anyone to use any of the foregoing Intellectual Property or any
other technical know-how or other proprietary rights of Sellers and the
President of Sellers has no Knowledge of the infringing use of any of such
Intellectual Property or the infringement of any such copyrights by any person.
Sellers own all Intellectual Property and other technical know-how and other
proprietary rights now used in the conduct of their businesses and have not
received any notice of conflict with the asserted rights of others.
6.21 Brokers and Finders. Sellers have not employed any broker, finder,
consultant or intermediary who would be entitled to a broker's finder's or
similar fee or commission in connection with or upon the consummation of the
transactions contemplated by this Agreement.
6.22 Certain Information. The representations and warranties of Sellers
and Xxxxxx contained herein and the information provided by Sellers and Xxxxxx
herein and in the Schedules and in the future pursuant hereto, and any
certificates executed and delivered by an officer of Sellers pursuant hereto, do
not and will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements herein or
therein not misleading in light of the circumstances under which they were made.
The information provided by Sellers and Xxxxxx contained herein and in the
Schedules fairly presents and will fairly present the information purported to
be shown herein and therein and is and will be accurate in all material
respects.
20
6.23 Transfer of Assets. All Assets necessary to conduct
Seller's temporary staffing business are being transferred
hereunder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to Sellers as follows:
7.1 Organization and Standing.
(a) Buyer is a corporation duly organized, validly existing
and in good standing under the Laws of the State of New Jersey, and has the
requisite corporate power and authority to conduct its business as it is
currently being conducted. Buyer is duly qualified to do business and is in good
standing in the respective jurisdictions where the character of its assets owned
or leased or the nature of its business makes such qualification necessary.
(b) Copies of the Articles of Incorporation and Bylaws of the
Buyer have heretofore been delivered or made available to Sellers, and all such
copies are accurate and complete as of the date hereof.
7.2 Authorization. Buyer has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
approved and authorized by the Board of Directors of the Buyer. No other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Buyer and, assuming this Agreement is
a legal, valid and binding obligation of Sellers, constitutes a legal, valid and
binding agreement of the Buyer enforceable against it in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
rehabilitation, liquidation, conservation, dissolution, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally; and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
Proceeding therefor may be brought.
7.3 Consents and Approvals of Government Agencies. No consent,
approval, Order or authorization of, or registration, application, declaration
or filing with any Person is required with respect to the Buyer in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
21
7.4 No Violation. The execution, delivery and performance of this
Agreement by the Buyer and the consummation of the transactions contemplated
hereby will not (i) violate any provision of the Articles of Incorporation or
the Bylaws or similar organizational documents of the Buyer; (ii) violate,
conflict with, result in a breach of any provision of, constitute a default or
an event which, with notice or lapse of time or both, would constitute a default
under, result in the termination of or accelerate the performance required by,
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the assets of the Buyer under any of the terms,
conditions or provisions of an Contract to which the Buyer is a party or to
which it or any of its assets may be subject; or (iii) constitute a breach or
violation of or default under any License that is material to the business of
the Buyer or Law to which the Buyer is subject.
ARTICLE VIII
CERTAIN COVENANTS
8.1 Conduct of Business Pending the Closing. Sellers covenant and agree
that, prior to the Closing Date, unless the Buyer shall otherwise agree in
writing or as otherwise expressly permitted or contemplated by this Agreement or
required by Law:
(a) Sellers' businesses shall be conducted only in the
ordinary course in substantially the same manner as heretofore conducted, and,
except as otherwise provided herein, Sellers shall use all reasonable efforts to
preserve intact their present business organizations, keep available the
services of their present officers and employees and preserve relationships with
customers, agents, brokers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing businesses shall not be impaired
in any material respect;
(b) Sellers shall not open any new, or expand the amount of
space of any existing, office in or from which any sales or other business
activities are conducted, or close any such office, which in any case would be
material to the Condition of Sellers.
(c) Sellers shall not (i) amend their Articles of
Incorporation or Bylaws; (ii) incur any indebtedness for borrowed money; (iii)
make any material change in any method of accounting or accounting practice or
policy; (iv) agree to any merger, consolidation, sale of all or substantially
all of its assets or any similar reorganization, arrangement or business
combination; (v) enter into any Contract that might materially and adversely
affect Sellers' ability to perform their obligations under this Agreement; (v)
enter into any Contract limiting the ability of Sellers to engage in any
business, to compete with any Person, to do business with any Person or in any
location or to employ any
22
Person; (vii) directly or indirectly guarantee or agree to guarantee, other than
the endorsement of negotiable instruments for collection in the ordinary course
of business and consistent with past practice, any obligation of any Person in
respect of indebtedness for borrowed money or other financial obligations of any
Person; or (viii) modify any Contract in existence as of the date hereof with
respect to any of the foregoing;
(d) Sellers shall not (i) increase in any manner the
compensation of any director, officer or employee, except in the ordinary course
of business and consistent with past practice or pursuant to the terms of
agreements or plans as currently in effect; (ii) pay or agree to pay any
pension, severance, retirement allowance or other employee benefit not required
by any existing Seller Benefit Plan, agreement or arrangement as currently in
effect to any director, officer or employee, whether past or present, which
payments in the aggregate would be material to the Condition of Seller; (iii)
except as required by the terms of any plan or Contract as currently in effect,
adopt or commit itself to enter into any additional pension, profit-sharing,
bonus, incentive, deferred compensation, group insurance, severance pay,
retirement or other employee benefit plan or Contract, or any employment or
consulting agreement with or for the benefit of any Person which cannot be
terminated by Sellers upon notice of 30 days or less without penalty or premium;
(iv) enter into, adopt or increase any indemnification or hold harmless
arrangements with any director, officer or other employee or agent of any
Person; (v) enter into any Contract with any officer or director of Sellers
having terms less favorable to Sellers than could have been obtained from an
unaffiliated Person in an arm's length transaction' or (vi) amend any plan or
Contract referred to in clause (iii) hereof;
(e) other than in the ordinary course of business and
consistent with past practice, Sellers shall not make any capital expenditures
or commitments for capital expenditures which individually exceed $2,000 or
which in the aggregate exceed $5,000 or make any expenditures or commitments for
expenditures for the purchase of any products or services which in one or a
series of related transactions exceed $2,000 or which in the aggregate exceeds
$5,000;
(f) other than in the ordinary course of business and
consistent with past practice, Sellers shall not waive any rights with a value
in excess of $2,000 or make any payment, direct or indirect, of any liability in
excess of $5,000 before the same comes due in accordance with its terms;
(g) Sellers shall not sell, lease, mortgage, encumber or
otherwise grant any interest in any of its assets which are material to the
Condition of Seller except for Permitted Liens and Liens securing obligations
that are not individually in excess of
23
$2,000 or which in the aggregate are not in excess of $5,000 and do
not materially detract from the value or impair the use of the
Assets subject thereto;
(h) Sellers shall not purchase, or otherwise acquire (i) any
equity interest in any Person which interest represents more than 10% of the
outstanding equity in such Person; or (ii) any Assets of any other Person other
than acquisitions in the ordinary course of business for a purchase price not in
excess of $2,000, individually, or $5,000 in the aggregate;
(i) Sellers shall at all times up to and including the Closing
Date maintain their existing insurance coverage of all types in effect or
procure substantially similar substitute insurance policies with financially
sound and reputable insurance companies in at least such amounts and against
such risks as are currently covered by such policy, provided such policies are
available at commercially reasonable rates; and
(j) Sellers shall not agree in writing or otherwise to
take any of the actions prohibited by the foregoing clauses (a)
through (i).
8.2 Reasonable Efforts. Upon the terms and subject to the conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and do, or cause to be done, and to
assist and cooperate with the other party hereto in doing, all things necessary,
proper or advisable under applicable Laws to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement.
8.3 Access and Information; Non-Disclosure.
(a) Sellers shall afford to the Buyer and the Buyer's
accountants, counsel and other representatives full access during normal
business hours from the date hereof through the period immediately prior to the
Closing Date to all of Sellers' assets, books, contracts, commitments and
records, including, without limitation, Tax Returns and accountants' work
papers, and, during such period, Sellers shall furnish promptly to the Buyer (i)
a copy of each material report, schedule and other document filed or received by
Sellers pursuant to the requirements of Law, including, without limitation, (i)
Financial Statements; (ii) material correspondence with Governmental Entities;
and (iii) all such other information concerning Sellers' business, assets and
personnel as the Buyer may reasonably request.
(b) To the extent that an examination of such books and
records establishes that the aggregate NOI of both Sellers for the period
January 1, 1996 to December 31, 1996 is less than $170,000.00 the Purchase Price
described in Section 3.1 hereof
24
shall be reduced by the amount of $5.00 for each one dollar that the NOI for
that period is less than $170,000.00.
(c) Each of Sellers and the Buyer agree that it shall not use
for any purpose other than in connection with the transactions contemplated by
this Agreement or disclose to any third party, except with the prior written
consent of the other party, any material confidential trade secrets, proprietary
information or other information provided in connection with this Agreement or
the consummation of the transactions contemplated hereby; provided, however,
that this provision shall not preclude such entities from (i) the disclosure of
such information which presently is known generally to the public or which
subsequently has come into the public domain, other than by way of disclosure in
violation of this Agreement; or (ii) the disclosure of such information required
by Law or court order, provided that, to the extent practicable, prior to such
disclosure required by Law or court order, the disclosing party will give the
other party prior written notice of the nature of the Law or order requiring
disclosing and the disclosure to be made in accordance therewith. If for any
reason whatsoever the transactions contemplated by this Agreement are not
consummated, each party shall, upon request from the other party, promptly
return to the other party all books, records and documents, including all
copies, if any, thereof furnished by or on behalf of such other party.
8.4 Independent Contractors. If, with respect to any period prior to
the Closing, any governmental authority (i) challenges the status as independent
contractors of any of Seller's contractors; or (ii) asserts the applicability to
Sellers' employees or contractors of statutes, ordinances or regulations
regulating to wages, working conditions and hours of employment, then after any
final determination (with Sellers having an opportunity to participate in any
agency examindation or determination) any payroll or other taxes and any
interest or penalties attributable thereto and any liability for additional
employee compensation and any fines or penalties connected therewith shall be
the obligation of Sellers and the Seller Shareholder.
8.5 Permanent Placements. Schedule 8.5 contains the names of not more
than forty (40) persons who are clients of Sellers eligible for permanent
placement. If, within the thirty (30) day period following the Closing, any of
the persons whose names appear on Schedule 8.5 are placed for permanent
employment then Xxxxxx/Xxxx Associates, Inc. shall receive all compensation
arising from or connected with such permanent placement provided, however, that
during such thirty (30) day period Buyer shall not be obligated to pay the draw
of Xxxx Xxxx.
8.6 Notification of Certain Other Matters. Sellers shall
promptly notify the Buyer of and provide the Buyer with all
information relating to: (i) any Proceedings or investigations
25
commenced or, to Seller's Knowledge, threatened against, relating to or
involving or otherwise affecting Sellers, which, if pending on the date hereof,
would have been required to have been disclosed in writing pursuant to Section
6.10 hereof or which relate to the execution of this Agreement or the
consummation of the transactions contemplated hereby; (ii) any notice of, or
other communication relating to, a default or event which, with notice or lapse
of time or both, would become a default, received by Sellers subsequent to the
date of this Agreement and prior to the Closing Date, under any Contract of a
type required to be disclosed pursuant to Section 6.16 hereof to which Sellers
are a party or to which Sellers or any of their Assets may be subject or bound;
(iii) any notice or other communication from or to any Person alleging that the
consent of such Person is or may be required in connection with the execution of
this Agreement or the consummation of the transactions contemplated hereby; (iv)
any notice or other communication from or to any Governmental Entity in
connection with this Agreement or the transactions contemplated hereby; and (v)
any change or other event which may have a material adverse effect on the
Condition of Seller, or the occurrence of any event or development which, so far
as reasonably can be foreseen at the time of its occurrence, could result in any
such change other than general economic or financial conditions which do not
affect Sellers uniquely.
8.7 Supplemental Disclosure. Sellers shall have the continuing
obligation promptly to notify the Buyer with respect to any matter hereafter
arising or discovered which, if existing or known at the date hereof, would have
caused a representation or warranty not to be true or would otherwise have been
required to be disclosed in the Schedules.
8.8 No Solicitations. Sellers shall not nor shall it authorize or
permit any of their officers, directors or employees or any investment banker,
financial advisor, attorney, accountant, actuary or other Person retained by
them or on their behalf to: (a) solicit or encourage, including, without
limitation, by way of furnishing information, or take any action to facilitate
or pursue, any inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any Reorganization Proposal; or (b) agree to,
approve or endorse any Reorganization Proposal. As used in this Agreement,
"Reorganization Proposal" shall mean any proposal for, or to discuss, a merger,
consolidation, sale of all or substantially all of the Assets, arrangement or
other reorganization, arrangement or business combination involving Seller or
any proposal or offer for, or to discuss, the acquisition in any manner of a
substantial equity interest in, or a substantial portion of the Assets or
temporary staffing business of, Sellers other than the transactions contemplated
by this Agreement.
8.9 Publicity. So long as this Agreement is in effect, the
parties hereto shall not, and shall use their best efforts to cause
their Affiliates not to, issue or cause the publication of any
26
press release or other public announcement with respect to this Agreement or the
transactions contemplated hereby without the prior consent of the other party,
which consent shall not be unreasonable withheld or delayed. So long as this
Agreement is in effect, each of the parties hereto shall promptly notify the
other party of any announcements which are made and any communications received
from non-Affiliated Persons, in either case, with respect to this Agreement or
the transactions contemplated hereby. Each party agrees to consult with the
other regarding communications with respect to this Agreement or the
transactions contemplated hereby.
8.10 Taxes and Closing Costs. Document recording fees and other taxes
arising from or relating to the sale and transfer of the Assets shall be shared
equally by Sellers and the Buyer, provided, however, that Sellers shall be
responsible for the payment of all local, state and federal income taxes with
respect to the sale and transfer of the Assets to the Buyer. Personal property
and ad valorem taxes paid or payable with respect to the Assets for the taxable
year or period which includes the Closing Date shall be prorated between Sellers
and the Buyer at the Closing as of the Closing Date. Sellers shall, as soon as
reasonably practicable, prepare for the Buyer's review and approval of all tax
reports required to be filed by Sellers with respect to taxes to be paid in
whole or in part by the Buyer pursuant to this Section 8.11, shall file all such
tax reports with the appropriate taxing authorities and shall remit all sums
received from the Buyer for taxes to be paid by the Buyer to the appropriate
taxing authorities.
8.11 Further Assurances. On and after the Closing, each party hereby
shall take such other actions and execute such other documents as may be
reasonably requested by the other party hereto from time to time to effectuate
or confirm the transfer of the Assets to the Buyer in accordance with the terms
of this Agreement and to effectuate or confirm the assumption of the Assumed
Liabilities by the Buyer in accordance with the terms of this Agreement.
ARTICLE IX
CONDITIONS
9.1 Conditions to Obligation of the Buyer to Purchase the Assets and
Assume the Assumed Liabilities. The obligation of the Buyer to purchase the
Assets and assume the Assumed Liabilities shall be subject to the fulfillment at
or prior to the Closing Date of the following additional conditions:
(a) Sellers shall have performed and complied in all material
respects with all obligations and agreements required to be performed and
complied with by them under this Agreement at or prior to the Closing Date, and
the Buyer shall have received
27
Officers' Certificates from each of the Sellers as to the
satisfaction of this condition;
(b) The representations and warrants of Sellers and the Seller
Shareholder contained in this Agreement shall be true and correct in all
material respect at and as of the date of this Agreement and at and as of the
Closing Date as if made at and as of such date and time, except as otherwise
contemplated or permitted by this Agreement, it being understood that the truth
and correctness of any such representations and warranties made as of a
specified date shall be determined only as of such specified date, and the Buyer
shall have received an Officers' Certificate from each of the Sellers and a
certificate from the Seller Shareholder as to the satisfaction of this
condition;
(c) Buyer shall have obtained the approval of its
principal lender to this Agreement and the transactions
contemplated hereby;
(d) From the date of this Agreement through the Closing Date,
there shall not have occurred any Seller Adverse Effect or any event that would
reasonably be expected to result in a Seller Adverse Effect;
(e) Not later than the Closing Date, Sellers shall have
changed their fictitious corporate names so that, as changed, such name shall
not include the words "Programming", "Resources", "Xxxxxx" or "Xxxx";
(f) There shall be no pending or threatened litigation
initiated by a private party seeking to restrain, prevent, rescind or change the
terms of this Agreement or the purchase of the Assets and the assumption of the
Assumed Liabilities or to obtain damages in connection with this Agreement or
the consummation hereof, which, in the reasonable opinion of the Buyer, makes it
inadvisable to proceed with this Agreement or with the purchase of the Assets
and the assumption of the Assumed Liabilities or, which, in the reasonable
opinion of the Buyer, might materially and adversely affect the condition
(financial or otherwise), Assets, liabilities earnings or business of Sellers;
(g) At the Closing Sellers shall have tendered to the
Buyer the documents specified in Section 5.2 hereof.
9.2 Conditions to Obligation of Sellers to Sell the Assets. The
obligation of Sellers to sell the Assets shall be subject to the fulfillment at
or prior to the Closing Date of the following additional conditions:
(a) The Buyer shall have performed and complied in all
material respects with all obligations and agreements required to be performed
and complied with by it under this Agreement at or
28
prior to the Closing Date, and Sellers shall have received an Officers'
Certificate from the Buyer as to the satisfaction of this condition;
(b) The representations and warranties of the Buyer contained
in this Agreement shall be true and correct in all material respects at and as
of the date of this Agreement and at and as of the Closing Date as if made at
and as of such date and time, except as otherwise contemplated or permitted by
this Agreement, it being understood that the truth and correctness of any such
representations and warranties made as of a specified date shall be determined
only as of such specified date, and Sellers shall have received an Officers'
Certificate from the Buyer as to the satisfaction of this condition;
(c) There shall be no pending or threatened litigation
initiated by a private party seeking to restrain, prevent, rescind or change the
terms of this Agreement or the sale of the Assets or to obtain damages in
connection with this Agreement or the consummation thereof or with the sale of
the Assets, which, in the reasonable opinion of Sellers, makes it inadvisable to
proceed with this Agreement or with the sale of the Assets;
(d) At Closing, Buyer shall have to tendered to Sellers
payment of the Purchase Price as specified in Section 3.1 hereof;
and
(e) At the Closing, the Buyer shall have tendered to
Sellers the documents specified in Section 5.3 hereof.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the
purchase and sale of the Assets abandoned at any time prior to the
Closing Date:
(a) by mutual consent of Seller and the Buyer; or
(b) by either of the Sellers or the Buyer by one day's written
notice to the Buyer or Sellers, as the case may be, if the Closing shall not
have been consummated on or before May 1, 1997; provided that the right to
terminate this Agreement under this Section 10.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the purchase and sale of the Assets
to have been consummated on or before such date.
10.2 Effect of Termination. In the event of the termination
of this Agreement by either of the Sellers or the Buyer, as
provided in Section 10.1 hereof, this Agreement shall thereafter
29
become void and there shall be no Liability on the part of any party hereto
against any other party hereto, or their respective directors, officers of
agents, except that (i) any such termination shall be without prejudice to the
rights of any party hereto arising out of the willful breach by any other party
of any covenant or agreement contained in this Agreement; (ii) Sections 8.3(c),
12.1, 12.2 and 12.3 shall continue in full force and effect notwithstanding such
termination; and (iii) each of the parties hereto shall provide the other party
hereto with a copy of any proposed public announcement regarding the occurrence
of such termination and an opportunity to comment thereon prior to its
dissemination.
ARTICLE XI
AMENDMENT, WAIVER AND INDEMNIFICATION
11.1 Amendment. This Agreement may be amended or modified in
whole or in part any time by an agreement in writing executed in
the same manner as this Agreement.
11.2 Extension; Waiver. At any time prior to the Closing
Date, either party hereto may:
(a) extend the time for the performance of any of the
obligations or other acts of the other party hereto;
(b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant
hereto; and
(c) waive compliance with any of the agreements or
conditions contained herein.
Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party by its President. The failure of any party hereto to enforce at any
time any provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way to affect the validity of this Agreement or any
part hereof or the right of such party hereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
11.3 Survival of Obligations. All certifications, representations and
warranties made hereby by Sellers and the Buyer and their obligations to be
performed pursuant to the terms hereof, shall survive the Closing Date
hereunder, notwithstanding any notice of any inaccuracy, breach or failure to
perform not waived in writing and notwithstanding the consummation of the
transactions contemplated herein with knowledge of such inaccuracy, breach or
30
failure. All representations and warranties contained herein shall terminate
upon the first anniversary of the Closing Date except that the representations
and warranties contained in Sections 6.9 and 8.4 hereof shall expire four years
after the Closing Date or with respect to any dispute with the IRS upon the
earlier to occur of (x) such dispute's final resolution and the payment of all
taxes, interests and penalties arising therefrom and (y) the expiration of the
applicable statute of limitations.
11.4 Indemnification.
(a) If the Closing occurs then, commencing with the Closing
Date and continuing until the first anniversary of the Closing Date, Sellers and
Seller Shareholder jointly and severally agree to indemnify and hold harmless
Buyer and its respective successors and assigns (collectively, the "Indemnified
Persons") from and against any and all (x) liabilities, losses, costs,
deficiencies or damages ("Loss") and (y) reasonable attorneys' and accountants'
fees and expenses, court costs and all other reasonable out-of-pocket expenses
("Expense") incurred by any Indemnified Person, in each case net of any
insurance proceeds received and retained by such Indemnified Person, in
connection with or arising from (i) any claim that Sellers did not convey to the
Buyer good and marketable title to the Assets pursuant to this Agreement; (ii)
any breach by Sellers of any of their covenants in, or any failure of Sellers to
perform any of their obligations under, this Agreement; (iii) any Liability of
Sellers not assumed by the Buyer; or (iv) any material breach of any warranty or
the material inaccuracy of any representation of Sellers contained or referred
to in this Agreement or in any certificate delivered by or on behalf of Sellers
pursuant hereto.
Notwithstanding the foregoing Sellers and Seller Shareholder shall not
be liable to Buyer for any Loss or Expense except to the extent such Loss and/or
Expense exceeds in the aggregate the sum of $9,000.00.
(b) If an Indemnified Person believes that any Indemnified
Person has suffered or incurred any Loss or incurred any Expense, the
Indemnified Person shall so notify Sellers promptly in writing describing such
Loss or Expense, the amount thereof, if known, and the method of computation of
such Loss or Expense, all with reasonable particularity and containing a
reference to the provision of this Agreement or any certificate delivered
pursuant hereto in respect of which such Loss or Expense shall have occurred. If
any action at law or suit in equity is instituted by or against a third party
with respect to which any Indemnified Person intends to claim any liability or
expense as Loss or Expense under this Section 11.4, such Indemnified Person
shall promptly notify Sellers of such action or suit.
31
(c) The Indemnified Persons shall have the right to conduct
and control, through counsel of their choosing, any third party claim, action or
suit and may compromise or settle the same, provided that any of the Indemnified
Persons shall give Sellers advance notice of any proposed compromise or
settlement. The Indemnified Persons shall permit Sellers to participate in the
defense of any such action or suit through counsel chosen by them, provided that
the fees and expenses of such counsel shall be borne by Sellers. Any compromise
or settlement with respect to a claim for money damages effected after Sellers,
by notice to the Indemnified Persons, shall have disapproved such compromise or
settlement, shall discharge Sellers from liability with respect to the subject
matter thereof, and no amount in respect thereof shall be claimed as Loss or
Expense under this Section 11.4.
(d) Subject to the limitations set forth in subsection (a),
the amount of any Loss or Expense for which Buyer is entitled to indemnification
hereunder may be set off by Buyer against first the annual installments
described in Section 3.2 hereof and then against the Earn Out described in
Section 3.3 hereof, but if such amounts are less than the amount of the Loss
and/or Expenses then the Sellers and Seller Shareholder shall remain liable for
any such deficiency.
(e) Buyer agrees to indemnify and hold harmless Sellers and
Seller Shareholder and their heirs, administrators, successors and assigns, from
and against any Loss and/or Expense incurred by Sellers or Seller Shareholder
arising out of (i) any material breach of any warranty or the material
inaccuracy of any representation of Buyer contained or referred to in this
Agreement or in any certificate delivered by or on behalf of Buyer pursuant
hereto; or (ii) any claim asserted against Sellers or Seller Shareholder arising
out of a transaction or occurrence subsequent to the Closing Date with respect
to the ongoing business formerly conducted by Sellers.
11.5 Indemnification For Individual Guarantees. Schedule 11.5 contains
a complete list of all office leases, equipment leases and auto leases, the
performance of which have been guaranteed by Xxxxxx (the "Guarantees"). Buyer
agrees to indemnify and hold harmless Xxxxxx of and from any Loss or Expense
with respect to or arising out of the Guarantees.
(a) The procedures described in Section 11.4(b) and (c)
shall control the method of indemnification pursuant to this
Section 11.5.
32
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices or other communications required or permitted
hereunder shall be in writing and shall be given by confirmed telex or telecopy
or registered mail or overnight courier, postage prepaid, addressed as follows:
If to the Buyer, to:
RCM Technologies, Inc.
0000 XxXxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxx, President
with a copy to:
Xxxxxxx & Bach, P.C.
0000 Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esquire
If to Sellers, to:
Programming Resources Unlimited, Inc.
Xxxxxx/Xxxx Associates, Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Klehr, Harrison, Xxxxxx, Branzburg & Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx, Esquire
If to Xxxxxx, to:
Xxxxxxx X. Xxxxxx
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other party in writing in accordance herewith.
33
12.2 Expenses. Except as otherwise provided herein, each party hereto
shall pay its own expenses including, without limitation, legal and accounting
fees and expenses incident to its negotiation and preparation of this Agreement
and to its performance and compliance with the provisions contained herein.
12.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey
without regard to its rules on conflicts of law.
12.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided that the rights of Sellers herein may not be assigned and the
rights of the Buyer may be assigned only (a) to such other business organization
which shall succeed to substantially all of the assets, liabilities and business
of the Buyer; or (b) to a wholly owned subsidiary of the Buyer, in which event
such assignment shall not relieve the Buyer, of any of its respective
obligations to Sellers under this Agreement. Nothing in this Agreement,
expressed or implied, is intended to confer upon any other Person any rights or
remedies of any nature under or by reason of this Agreement.
12.5 Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement but this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions or
provisions had never been contained herein unless the deletion of such provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated herein to be unreasonable or materially and
adversely frustrate the objectives of the parties as expressed in this
Agreement.
12.6 Execution in Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by each of the parties and delivered to each of the other
parties.
12.7 Titles and Headings. Titles and headings to Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
12.8 Entire Agreement; Statements as Representations. This Agreement,
together with the Employment Agreement, the Schedules and the exhibits hereto
and any documents delivered pursuant to Articles V and IX hereof, contains the
entire understanding of the parties hereto with regard to the subject matter
contained herein. All statements contained in this Agreement or in any schedule,
34
certificate, list or other document delivered pursuant to this Agreement shall
be deemed representations and warranties as such terms are used in this
Agreement.
12.9 Specific Performance. Each of the parties hereto acknowledges and
agrees that the other party hereto would be irreparably damaged in the event any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, each of the parties
hereto agrees that they each shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having subject
matter jurisdiction, in addition to any other remedy to which Seller or the
Buyer may be entitled, at law or in equity.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf all as of the date first above written.
RCM TECHNOLOGIES, INC.
By:
XXXX XXXXX, President
PROGRAMMING RESOURCES UNLIMITED, INC.
By:
XXXXXXX X. XXXXXX, President
XXXXXX/XXXX ASSOCIATES, INC.
By:
XXXXXXX X. XXXXXX, President
XXXXXXX X. XXXXXX
[NSB\04257HAM.AGR]
35
SCHEDULE 2.1.1
[Schedule of Fixed Assets]
36
SCHEDULE 4.1
[Schedule of Liabilities assumed by Buyer]
37
SCHEDULE 4.2.3
[Schedule of Sellers' Obligations to Third Parties]
38
SCHEDULE 5.2.2
[Opinion of Seller's Counsel]
39
SCHEDULE 5.3.3
[Opinion of Buyer's Counsel]
40
SCHEDULE 6.6
Schedule of claims pending or threatened against
Sellers and any insurance applicable thereto]
41
SCHEDULE 6.12
[Schedule of all Employee contracts]
42
SCHEDULE 6.13
[Schedule of Employee Benefit Plans]
43
SCHEDULE 6.14
[Schedule of Intellectual Property]
44
SCHEDULE 6.15
[Schedule of underground storage tanks]
45
SCHEDULE 6.17
[Schedule of all insurance policies]
46
SCHEDULE 6.18
[Schedule of Sensitive Payments]
47
SCHEDULE 6.20
[Schedule of trade marks]
48
SCHEDULE 8.5
[Permanent Placements]
49
