Exhibit 2
STOCK PURCHASE AGREEMENT
DATED JULY 15, 2002
BY AND AMONG
BARRISTER GLOBAL SERVICES NETWORK, INC.
(A DELAWARE CORPORATION),
ADVANTAGE INNOVATION, INC.
(A LOUISIANA CORPORATION),
AND
THE SHAREHOLDERS
OF
ADVANTAGE INNOVATION, INC.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of July 15, 2002,
is by and among BARRISTER GLOBAL SERVICES NETWORK, INC., a Delaware corporation
having an address at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000-0000 (the
"Buyer"); the individuals whose names and signatures are set forth on the
signature page of this Agreement (hereinafter referred to individually as
"Seller" and collectively as "Sellers"); and ADVANTAGE INNOVATION, INC., a
Louisiana corporation having an address at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, Xxxxxxxxx 00000 (the "Corporation").
RECITALS:
---------
WHEREAS, Sellers own all of the issued and outstanding shares
of stock of the Corporation; and
WHEREAS, Buyer desires to purchase from Sellers, and Sellers
desire to sell to Buyer, all of the shares of the Corporation upon the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, Buyer,
Sellers and the Corporation agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 DEFINED TERMS. As used in this Agreement, the terms below
shall have the following meanings:
(a) "ACCOUNTS RECEIVABLE" means all accounts receivable,
notes receivable and other amounts payable to the Corporation, whether arising
in the ordinary course of business or otherwise.
(b) "AFFILIATE" means as to any Person, any other Person
which directly or indirectly controls or is under common control with, or is
controlled by such Person.
(c) "AGGREGATE PAYMENT AMOUNT" means the total purchase
price for the purchase of the Shares by the Buyer from the Sellers equaling the
sum of the Preliminary Payment Amount and the Earn Out Payments.
(d) "AGREEMENT" means this Stock Purchase Agreement,
together with the Schedules and Exhibits attached to this Agreement and the
certificates and instruments to be executed and delivered in connection with
this Agreement.
(e) "APPLICABLE CONTRACT" means any Contract (a) under
which the Corporation has or may acquire any rights, (b) under which the
Corporation has or may become subject to any obligation or liability, or (c) by
which the Corporation or any of the assets owned or used by it is or may become
bound.
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(f) "BUSINESS" means all business conducted by the
Corporation on the date of this Agreement.
(g) "BUSINESS RECORDS" means all originals and copies of
all operating data and records of the Corporation or otherwise relating to the
Business on whatever media and wherever located including, without limitation,
financial, accounting and bookkeeping books and records, purchase and sale
orders and invoices, sales and sales promotional data, advertising materials,
marketing analyses, past and present price lists, past and present customer
service and credit files, personnel records and other records pertaining to the
Business.
(h) "CLOSING DATE" means July 15, 2002, except that if all
of the conditions to Closing set forth in ARTICLES 7 and 8 of this Agreement
shall not have been satisfied or waived on or prior to such date, "Closing Date"
shall mean the third business day after the satisfaction or waiver of all such
conditions to Closing, or on such other date as the parties may agree.
(i) "CONTRACT" means any agreement, contract, obligation,
promise, or undertaking that is legally binding.
(j) "CURRENT REAL PROPERTY" means all real property and
improvements currently leased by the Corporation.
(k) "CODE" means the Internal Revenue Code of 1986, as
amended to date.
(l) "EFFECTIVE TIME" means 5:00 p.m. New Orleans time on
the Closing Date.
(m) "ENCUMBRANCE" means any restriction, charge, lien,
pledge, option, easement, security interest, right-of-way, encumbrance or other
similar right of any Person.
(n) "ENVIRONMENTAL, HEALTH AND SAFETY LIABILITIES" means
any cost, damages, expense, liability, obligation or other responsibility
arising from the requirements for compliance with or arising from the violation
of any applicable Environmental Law or Occupational Safety and Health Law and
consisting of or relating to:
(i) any actions required to be taken to comply with
applicable Governmental Requirements relating to environmental, health or safety
matters or conditions (including on-site or off-site contamination, occupational
safety and health and regulation of chemical substances or products);
(ii) fines, penalties, judgments, awards, settlements,
legal or administrative Proceedings, damages, losses, claims, demands and
response, investigative, remedial or inspection costs and expenses resulting
from any requirements under any Environmental Law or Occupational Safety and
Health Law;
(iii) financial responsibility under any Environmental
Law or Occupational Safety and Health Law for cleanup costs or corrective
action, including any
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investigation, cleanup, removal, containment or other remediation or response
actions ("CLEANUP") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Authority or any other Person with authority to
require such Cleanup); or
(iv) any other compliance, corrective, investigative
or remedial measures required under the applicable Environmental Law or
Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended.
(o) "ENVIRONMENTAL LAWS" means any applicable
statutes, ordinances, directives or other laws, any rules or regulations,
orders, Governmental Requirements, and any licenses, Permits, orders, judgments,
notices or other requirements issued pursuant thereto, enacted, promulgated or
issued by any Governmental Authority, relating to pollution or protection of
public health or the environment (including, but not limited to, any air,
surface water, groundwater, land surface or sub-surface strata, whether outside,
inside or under any structure), or to the identification, reporting, generation,
manufacture, processing, distribution, use, handling, treatment, storage,
disposal, labeling, deposit, transporting, presence, Release or threatened
Release of, any Hazardous Substances, pollutants, contaminants, wastes or any
other substances or materials. Without limiting the generality of the foregoing,
Environmental Laws shall include in the United States, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, the
Toxic Substances Control Act, as amended, the Hazardous Materials Transportation
Act, as amended, the Resource Conservation and Recovery Act, as amended, the
Clean Water Act, as amended, the Safe Drinking Water Act, as amended, and the
Clean Air Act, and all analogous laws enacted, promulgated or lawfully issued by
any Governmental Authority.
(p) "ERISA" means the Employment Retirement Income
Security Act of 1974, as amended.
(q) "GAAP" means generally accepted accounting
principles in the United States.
(r) "GOVERNMENTAL AUTHORITY" means any federal, state,
local or foreign government, or any political subdivision of any of the
foregoing, or any court, agency or other entity, body, organization or group,
exercising any executive, legislative, judicial, quasi-judicial, regulatory or
administrative function of government.
(s) "GOVERNMENTAL REQUIREMENT" means any rule,
regulation, code, plan, injunction, judgment, order, decree, ruling or charge of
any Governmental Authority.
(t) "HAZARDOUS SUBSTANCES" means any pollutants,
contaminants, substances, chemicals, carcinogens, wastes and any ignitable,
corrosive, reactive, toxic or other hazardous substances or materials, whether
solids, liquids or gases (including, but not limited to, petroleum and its
derivatives, PCBs, asbestos, radioactive materials, waste waters, sludge, slag
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and any other substance, material or waste), as defined in or regulated by any
Environmental Laws or as determined by any Governmental Authority.
(u) "INDEBTEDNESS" means, without duplication with
respect to any Person, (i) all indebtedness of such Person for borrowed money
(including all accrued interest and accumulated amortization), (ii) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables created in the ordinary course of business),
(iii) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (iv)
all obligations of such Person as lessee under leases that have been or should
be, in accordance with GAAP, recorded as capital leases, (v) all obligations,
contingent or otherwise, of such Person under acceptance, letter of credit or
similar facilities, (vi) Indebtedness of others referred to in clauses (i)
through (v) above guaranteed directly or indirectly in any manner by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Indebtedness or to advance or supply funds
for the payment or purchase of such Indebtedness, (B) to purchase, sell or lease
(as lessee or lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such Indebtedness or to
assure the holder of such Indebtedness against loss, (C) to supply funds to or
in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such Indebtedness
against loss, or (D) otherwise to assure a creditor against loss in respect of
such Indebtedness, and (vii) all Indebtedness referred to in clauses (i) through
(v) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Encumbrance on
property (including, without limitation, accounts and contract rights) owned by
such Person, even though such person has not assumed or become liable for the
payment of such Indebtedness.
(v) "INVENTORY" means all raw materials,
work-in-process, and finished goods inventory of the Corporation.
(w) "MATERIAL ADVERSE EFFECT" means, with respect to
any Person, any effect, event, circumstance, or condition which, when considered
with all other effects, events, circumstances, or conditions, would be
reasonably likely to result in Damages having the effect of materially and
adversely affecting the business, assets, properties, results of operations or
financial condition of such Person and its subsidiaries taken as a whole;
provided, however, that in no event shall any of the following constitute a
Material Adverse Effect: any effect resulting from compliance by the Corporation
with the terms of this Agreement or the transactions contemplated thereby or the
announcement thereof.
(x) "OCCUPATIONAL SAFETY AND HEALTH LAW" means any
Governmental Requirement designed to provide safe and healthful working
conditions and to reduce occupational safety and health hazards, including
without limitation, the Occupational Safety and Health Act, as amended.
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(y) "ORGANIZATIONAL DOCUMENTS" means (a) the articles
or certificate of incorporation and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (e)
any amendment to any of the foregoing.
(z) "PERMITS" means all licenses, permits and other
authorizations used in the Business.
(aa) "PERSON" means any Governmental Authority,
individual, corporation, partnership, trust or other entity.
(bb) "PROCEEDING" means any action, order, writ,
injunction, judgment, decree, claim, suit, litigation, dispute, grievance,
arbitral action, investigation or other proceeding.
(cc) "REAL PROPERTY" means all real property which the
Corporation now owns or leases or which it previously owned or leased at any
time including, without limitation, the Current Real Property.
(dd) "RELEASE" means any spillage, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment.
(ee) "REPRESENTATIVE" means any officer, director,
principal, attorney, accountant, agent, employee or other representative of any
Person.
(ff) "SHARES" means all of the shares of Common Stock,
no par value, of the Corporation, that are issued and outstanding on the date of
this Agreement.
(gg) "TAKEOVER PROPOSAL" means any proposal for a
merger or other business combination involving the Corporation or any proposal
or offer to acquire in any manner, directly or indirectly, an equity interest
in, or voting securities of, or a substantial portion of the assets of the
Corporation, other than the transactions contemplated by this Agreement.
(hh) "TANGIBLE PERSONAL PROPERTY" means all tangible
personal property used to conduct the Business, including, without limitation,
fixtures, vehicles, computers, modems, printers, fax machines, file cabinets,
desks, calculators, telephone systems, counters, safes and security systems,
together with any transferable manufacturer or vendor warranties related
thereto.
(ii) "TAX" means any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance,
start-up, occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, intangible property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
or other
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tax of any kind whatsoever, including any interest, penalty or addition thereto,
whether disputed or not.
(jj) "TAX RETURN" means any return, declaration,
report, claim for refund, or information return or statement relating to Taxes
or Employee Plans, including any schedule or attachment thereto, and any
amendment thereof.
1.2 OTHER DEFINED TERMS. The following terms have meanings
defined in the Sections set forth below:
Term Section
---- -------
Accounting Firm 2.4
Benefit Arrangements 4.22(k)
Xxxxxx Employment Agreement 7.6
Business Day 11.3
Buyer Indemnified Persons 9.1(b)
Clean Up 1.1(o)(iii)
Closing 3.1
COBRA 4.22(h)
Confidential Material 6.5
Copyrights 4.12(a)(iii)
Corporation's Lease 4.10
Corporate Records 10.1
Damages 9.1(b)
Disclosing Party 6.5
Division 2.4(b)
Due Diligence Review 6.2
Earn Out Determination Date 2.5
Earn Out Payments 2.3 (a)
Earn Out Periods 2.3 (a)
EBITDA 2.4(a)
Employee Plans 4.22(a)
Employment Letters 7.6
ERISA Affiliate 4.22(e)
Financial Statements 4.9
Indemnified Party 9.1(b)
Indemnifying Party 9.1(b)
Intellectual Property Assets 4.12(a)
Interim Financial Statements 4.9
Knowledge 1.5
Marks 4.12(a)(i)
Notice 11.3
Notice Periods 9.6(a)(ii)
Omni 4.10
Patents 4.12(a)(ii)
Pension Plans 4.22(a)
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Preliminary Payment Amount 2.2(a)(i)
Property Taxes 9.4.1(b)
Recipient 6.5
Sellers' Accounting Representative 2.4
Sellers' Deductible Basket 9.7(a)
Sellers' Indemnified Persons 9.1(b)
Straddle Period 9.4.1(b)
Subsidiary 4.1
Tax Claim 9.4.2(a)
Trade Secrets 4.12(a)(iv)
Transfer Taxes 9.4.3
Working Capital 6.6
Welfare Plans 4.22(a)
1.3 USAGE OF TERMS. Except where the context otherwise
requires, words importing the singular number include the plural number and vice
versa.
1.4 REFERENCES TO ARTICLES, SECTIONS, EXHIBITS AND SCHEDULES.
All references in this Agreement to Articles, Sections (and other subdivisions),
Exhibits and Schedules refer to the corresponding Articles, Sections (and other
subdivisions), Exhibits and Schedules of or attached to this Agreement, unless
the context expressly, or by necessary implication otherwise requires.
1.5 KNOWLEDGE. For purposes of this Agreement, an individual
will be deemed to have "Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter; or
(b) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting
a reasonably comprehensive investigation concerning the existence of such fact
or other matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, or manager of such Person or
any subsidiary thereof (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter. Without limiting the foregoing, the
Corporation will be deemed to have "Knowledge" of a particular fact or other
matter if any of the following individuals has knowledge of such fact or matter:
any of the Sellers or Xxxxx X. Xxxxxx.
ARTICLE 2
PURCHASE AND SALE OF SHARES
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2.1 TRANSFER OF SHARES. Subject to the terms and conditions
contained in this Agreement, on the Closing Date, Sellers shall sell, convey,
transfer, assign and deliver to Buyer, and Buyer shall acquire from Sellers, the
Shares, free and clear of all Encumbrances. The total
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consideration payable by Buyer to Sellers for the purchase of the Shares will be
equal to the Aggregate Payment Amount.
2.2 AGGREGATE PAYMENT AMOUNT.
(a) PAYMENT OF AGGREGATE PAYMENT AMOUNT. Buyer shall pay
the Aggregate Payment Amount to Sellers, as follows:
(i) On the Closing Date, Buyer shall pay to Sellers an
amount equal to $1,200,000 (the "PRELIMINARY PAYMENT AMOUNT") by wire transfer
of immediately available funds to the Corporation's attorneys' client escrow
account which account number shall be provided at least three (3) days prior to
the Closing Date.
(ii) The Earn Out Payment(s), if any, (as hereinafter
defined) shall be paid by Buyer to the Sellers no later than ten days after each
Earn Out Determination Date (as hereinafter defined) in cash, or if requested by
any Seller, by wire transfer to an account specified by such Seller at least
three (3) days prior to the date payment is due.
(b) ALLOCATION OF THE AGGREGATE PAYMENT AMOUNT. The
Aggregate Payment Amount will be allocated among the Sellers in accordance with
their respective percentage ownership of the Corporation as stated in SCHEDULE
2.2(B).
2.3 EARN OUT PAYMENTS.
(a) Buyer shall pay Sellers two Earn Out Payments, if due
as provided herein, no later than ten (10) days after each Earn Out
Determination Date, one Earn Out Payment to be paid with respect to each of the
two consecutive 12-month periods following the Closing Date (the "Earn Out
Periods"), the first 12-month period to commence with the first day of the month
following the month in which the Closing occurs, as follows:
(i) If the Division's EBITDA for the 12-month period
is less than $200,000, the Sellers will not be entitled to an Earn Out Payment
with respect to that period.
(ii) If the Division's EBITDA for the 12-month period
is at least $200,000 but less than or equal to $399,999, the Earn Out Payment
with respect to such period will be $500,000.
(iii) If the Division's EBITDA for the 12-month period
is at least $400,000 but less than or equal to $599,999, the Earn Out Payment
with respect to such period will be $750,000
(iv) If the Division's EBITDA for the 12-month period
is at least $600,000 but less than or equal to $699,999, the Earn Out Payment
with respect to such period will be $1,000,000.
(v) If the Division's EBITDA for the 12-month period
is at least $700,000 or more, the Earn Out Payment for such year will be
$1,250,000.
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(b) "EBITDA" shall be calculated in the manner set forth
in Section 2.4. The Earn Out Payments shall be paid and disputes resolved as
provided in Section 2.5. Certain remedies of the Sellers with respect to a
default in the payment of the Earn Out Payments are set forth in Section 2.6.
Certain post-Closing covenants relating to the Earn Out Payments are set forth
in Section 10.3.
(c) Notwithstanding anything herein to the contrary, if
any of the following events occurs after the Closing or during the Earn Out
Periods, $1,000,000 shall be immediately due to Sellers with respect to each
Earn Out Period that has not been completed, and shall be paid within ten (10)
days following the expiration of any cure period, as applicable:
(i) Xxxx X. Xxxxxx, III's ("Xxxxxx") employment is
terminated without Cause or for "Good Reason", as defined in his employment
agreement (it being understood that Sellers are relying on Xxxxxx' continued
involvement with the Business in agreeing that a portion of the Purchase Price
will be paid based on the performance of the Division during the Earn Out
Periods).
(ii) Buyer breaches any of its covenants contained in
Section 10.3 and, after notice by Sellers, Buyer fails to cure such breach, if
such breach is curable, within thirty (30) days of such notice.
(iii) Buyer breaches any of its obligations under
Xxxxxx' employment agreement, and, after notice by Xxxxxx, Buyer fails to cure
such breach, if such breach is curable, within thirty (30) days of such notice.
(iv) Buyer sells any portion of the Business, or
merges or consolidates it or combines it with any other business in any manner
(other than to form the Division), or liquidates or ceases to conduct any
portion of the Business.
For example, if Xxxxxx' employment is terminated
without Cause on December 31, 2002, Buyer shall immediately pay to Sellers
$2,000,000.
(d) No action or inaction by any employee of the Division
after the Closing shall affect Sellers' right to receive the Earn Out Payments
if the EBITDA targets are achieved. For example, if Xxxxxx is terminated for
Cause as defined in his employment agreement, dies or becomes disabled for a
period of longer than 90 days, Sellers shall nevertheless be entitled to the
Earn Out Payments if the EBITDA targets are achieved. Sellers hereby designate
Xxxxxx X. Xxxxxx, Xx. to act on behalf of the Sellers to appoint a successor to
Xxxxxx should Xxxxxx' employment terminate for any reason prior to expiration of
the Earn Out Periods, provided that such appointment shall be subject to Buyer's
written consent which shall not be unreasonably withheld.
2.4 CALCULATION OF EBITDA. For purposes of determining the
Earn Out Payments, EBITDA shall be calculated in accordance with the following:
(a) EBITDA means, for the applicable period, the net
income (or net loss) as determined by GAAP before subtracting interest, taxes,
depreciation and amortization attributable to the Division as described below.
In determining EBITDA, any extraordinary
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items, or gain or loss arising from the sale, exchange or other disposition of
capital assets will be excluded from the calculation of EBITDA. In determining
EBITDA, Damages and Taxes actually paid by Sellers to indemnify Buyer's
Indemnified Persons pursuant to this Agreement shall not be deducted in
determining net income.
(b) After the Closing, the Corporation will be operated as
a Division of Buyer (the "Division"). It is understood and agreed by the parties
that after the Closing and until the end of the Earn Out Periods, Buyer will
give the Division the right to handle all new business in which revenue is to be
received on a per-incident or per-service call basis as well as all technical
deployment project business to be performed. A technical deployment project
includes the receipt of revenue by the Corporation on a per-unit, per-user or
total job basis for a project in which the Corporation agrees to install,
upgrade, replace, and/or perform preventative maintenance on a group of computer
equipment (including hardware and/or software). Revenue associated with such
work that the Division chooses to handle shall be included at the rate bid by
Division in the calculation of EBITDA in determining the Earn Out Payments.
Division understands Buyer may uplift their price as required to cover sales
commissions and Buyer handling of customer's calls, this uplift is not included
in calculation of EBITDA for the Division.
In the event that the C.E.O. of Buyer and President of
the Division determine and agree that a particular piece of business, e.g. a
certain opportunity, should be managed outside of the Division, as long as both
parties agree, the business can be managed outside the Division, and therefore
the Division would not receive this revenue in the calculation of EBITDA in
determining the Earn Out Payments. Both parties understand and agree that the
goal is to maximize the business success of the Division and to ultimately
maximize the earn out of the Sellers.
The Division recognizes that Buyer has employees whose
sole job duties are computer repair. These employees will be utilized to run
service calls, when available, by the Division when the Division is
overseeing/managing all business in which revenue is to be received on a
per-incident or per-service call basis as well as technical deployment project
business to be performed under the models described above.
The Division also recognizes that the Buyer has
information technology solutions that must be integrated to provide customers
more timely updates on per-incident or per-service call basis as well as
technical deployment project business. Buyer will provide these solutions to the
Division as part of the transaction, and the Division is required to implement
these solutions within 90 days of Closing to provide the most timely and
customer focused service experience to all Corporation's customers.
(c) The Corporation has some customers with which it has
contracts under the business model used by Buyer and has some prospects for
additional work using such model. A list of these customers and prospects is
contained on Schedule 2.4(c). After the Closing and during the Earn Out Periods,
these customers and prospects will be the customers and prospects of the
Division, except that any that are also current customers or end-users of Buyer
shall also remain the customer of Buyer. However, Buyer shall have a right of
first
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refusal to perform all business in which revenue is to be received pursuant to
its business model, other than with respect to the customers and prospects on
SCHEDULE 2.4(c).
(d) The Division shall have priority with respect to all
work assignments given to technicians that are on its technician list but not on
Buyer's technician list as of the Closing. At the Closing, the Buyer shall
deliver its technician list to Sellers and the Corporation shall deliver its
technician list to Buyer.
(e) In computing EBITDA, no deduction shall be made for
any non-Division related management fees or director fees, or general overhead
expenses, corporate allocated costs or other intercompany charges of whatever
kind or nature that are not consistent with current practices of the Corporation
as of the date of Closing; provided, that no later than 45 days after the
Closing, the Corporation will provide a full-time employee responsible for
management of the Corporation's/Division's financial matters who will act as a
liaison with Buyer's corporate finance department, and the expenses associated
with such employee shall count as a Division expense in determining EBITDA. In
addition, travel expenses incurred as a result of required attendance of
Division employees at Buyer staff meetings, or other requirements imposed by
Buyer on Division employees, will be charged to Buyer and not included in
determining EBITDA; however, any travel initiated by the Division relating to
improving the Division's financial performance or operations, including joint
sales calls with Buyer, will be charged to the Division in determining EBITDA.
The monthly statements provided to Sellers pursuant to paragraph (g) below shall
include, among other things, detail regarding travel expenses charged to the
Division. In calculating EBITDA, amounts charged to the Division relating to
Xxxxxx' compensation shall include benefits, base salary and sales commissions
not exceeding 7.5% of revenues over $4 million in either Earn Out Period. Any
discretionary bonuses granted by Buyer will not be charged to the Division. In
addition, no increases in compensation or benefits to Division employees above
that recorded for the 12 months ended March 31, 2002 shall be charged to the
Division, except with Xxxxxx' written consent.
(f) Buyer will keep separate financial records and shall
prepare separate financial statements for the Division, as if it were a separate
entity, and shall not change the twelve month period used in preparing such
financial statements. EBITDA shall be calculated consistent with the manner used
in calculating EBITDA in the Financial Statements.
(g) Division will provide Buyer the Division financial
data required by Buyer within five (5) business days after the end of each
month. Buyer will provide monthly reports of the Division's financial
performance to Sellers, including a calculation of EBITDA pursuant to this
Agreement for such month, within 10 business days after the end of each month.
Sellers hereby designate Xxxxxx and Xxxxxx X. Xxxxxx, Xx. ("Xxxxxx") as their
representatives for the purpose of receiving such reports.
2.5 EARN OUT PAYMENT DETERMINATION.
(a) If Sellers become entitled to an Earn Out Payment,
such payment must be paid by Buyer in cash (or if requested by any Seller, by
wire transfer to an account specified by Seller at least three (3) days prior to
the date payment is due) no later than 10 days
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following date of determination of the Earn Out Payment pursuant to this Section
(the "Earn Out Determination Date"). No later than 45 days following the end of
each of the two 12-month periods with respect to which an Earn Out Payment may
be due, Buyer will deliver to Sellers financial statements (including a balance
sheet as of the end of such period and income statement for such period) of the
Division and a statement setting forth in reasonable detail the calculation by
Buyer of EBITDA in accordance with this Agreement and the amount of the Earn Out
Payment, if any, for the period.
(b) Sellers shall have 45 days from the date of delivery
of such statement to review same with representatives of their choosing at
Sellers' cost. After the Closing and until such time as all Earn Out Payments
due hereunder are paid, Buyer shall afford Sellers and their representatives,
upon reasonable notice, full access during normal business hours to the books,
records, facilities and employees of the Division, including the Division's
financial records and personnel, for the purpose of monitoring compliance with
this Agreement and the calculation of EBITDA hereunder. In addition, Buyer shall
provide on a timely basis all information reasonably requested by Sellers or
Sellers' representatives necessary or useful in performing such calculation.
Sellers shall be permitted to make copies of any such books, records, statements
and information at Sellers' expense. Sellers agree, and agree to cause their
representatives, to keep such books, records, statements and information
confidential under a written agreement reasonably satisfactory to Buyer prior to
their access to such information.
(c) Any time after Buyer's delivery of a statement
containing the amount of an Earn Out Payment, Sellers may give notice to Buyer
of their acceptance of Buyer's calculation, and the Earn Out Payment shall be
paid no later than 10 days thereafter. If Buyer and Sellers cannot reach
agreement on the amount of any Earn Out Payment within 10 days following the
45-day review period, then the parties shall promptly jointly engage one of the
"big four" accounting firms or any other accounting firm which the parties agree
to which has no business dealings with Sellers or Buyer (the "Accounting Firm")
to act as arbitrator to resolve as expeditiously as possible the dispute
regarding the Earn Out Payment. The Accounting Firm shall set forth its
determination in a written statement delivered to Buyer and Sellers, and the
Earn Out Payment shall be paid no later than 10 days thereafter. All
determinations made by the Accounting Firm with respect to an Earn Out Payment
shall be final, conclusive and binding on the parties. Each party shall be
responsible for one-half of the fees and expenses of the Accounting Firm
incurred in connection with the resolution of the dispute, as well as all of its
own fees and expenses. Sellers hereby appoint Xxxxxx X. Xxxxxx, Xx. as their
representative for the purposes of conducting all negotiations relating to the
Earn Out Payment.
2.6 CERTAIN REMEDIES OF SELLERS. If Buyer does not pay the
Earn Out Payments if and when due as provided in this Agreement, then in
addition to all other remedies available to Sellers, including the right to
bring an action for the payment of such Earn Out Payments, Sellers shall have
the following rights:
(a) All non-competition agreements and non-solicitation of
customers and employees agreements between any Seller (as a Seller or employee
of Buyer or in any other capacity) and Buyer shall terminate and be of no
further force and effect (including those executed by Xxxxxx, Xxxxxx X. Xxxxxx,
Xx. and Xxxxx X. Xxxxxx in connection with this
12
Agreement). All confidentiality agreements relating to Buyer's confidential
information shall remain in place.
(b) At the option of any Seller having an employment
agreement with Buyer, Seller may terminate such employment agreement, and such
termination shall be deemed a termination without Cause by Buyer or a
termination for good reason by such employee under such agreement.
(c) Each Seller will be entitled to compete with Buyer,
either alone or with others and through any form of business enterprise. Each
Seller shall be entitled to obtain a copy of and to use the technician list of
the Corporation delivered to Buyer at the Closing, the Corporation's customer
list as of the Closing, and all other confidential information and intellectual
property and know how of the Corporation existing as of the Closing; provided,
that Sellers shall not be entitled to use the name "Advantage Innovation". In
addition, Sellers shall have the exclusive right to own and use all telephone
numbers (including "800" numbers), fax numbers, e-mail and website addresses
owned or used by the Corporation prior to the Closing, and such property shall
be conveyed by Buyer to Sellers at no charge within 48 hours of request by
Xxxxxx or Xxxxxx X. Xxxxxx, Xx.
ARTICLE 3
CLOSING
-------
3.1 CLOSING. The closing of the transactions contemplated in
this Agreement (the "Closing") will be held at 9:00 a.m. local time on the
Closing Date at the offices of Jones, Walker, Waechter, Poitevent, Carrere &
Xxxxxxx, L.L.P., 000 Xx. Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxx or at such other
place as agreed to by Sellers and Buyer. The Closing shall be effective as of
the Effective Time.
3.2 STOCK CERTIFICATES AND INSTRUMENTS OF ASSIGNMENT. To
effect the transfer referred to in Section 2.1 on the Closing Date, Sellers will
deliver to Buyer, each certificate representing any of the Shares held by
Sellers and all stock powers or other instruments of assignment reasonably
requested by Buyer. Such instruments of assignment will be in form and
substance, and will be executed and delivered in a manner, reasonably
satisfactory to Buyer.
3.3 CERTIFICATES AND AGREEMENTS. Buyer and Sellers will
deliver the certificates, agreements and other items described in ARTICLES 7 and
8 of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE CORPORATION
-------------------------------------------------------------
Sellers and the Corporation, jointly and severally, represent
and warrant to Buyer that the following are true, correct and complete on the
date of this Agreement:
4.1 ORGANIZATION AND GOOD STANDING. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Louisiana. SCHEDULE 4.1 sets forth each jurisdiction where the
Corporation is qualified to do business and each trade name or assumed name used
by the Corporation in the conduct of the Business. The
13
Corporation is duly qualified to do business in, and is in good standing under
the laws of, each jurisdiction in which such qualification is necessary under
the applicable law, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. The Corporation has full
corporate power and authority to conduct its business as it is presently being
conducted and to own and lease its properties and assets.
The Corporation's only subsidiary, JSB/ABP Interests,
L.L.C., is a limited liability company, organized, validly existing and in good
standing under the laws of the State of Louisiana (the "Subsidiary"). The
Corporation is the sole member of the Subsidiary and owns all of the
Subsidiary's membership interests.
Prior to the Closing, all membership interests in the
Subsidiary will be distributed to Xxxxxx X. Xxxxxx, Xx. or an entity owned by
him. The Subsidiary's only asset is a vehicle and the Subsidiary has no
liabilities.
4.2 AUTHORITY; AUTHORIZATION; BINDING EFFECT. Sellers and the
Corporation have all necessary power and authority and have taken all action
necessary to execute and deliver this Agreement and the instruments to be
executed and delivered pursuant hereto, to consummate the transactions
contemplated by this Agreement and to perform their obligations under this
Agreement. This Agreement has been duly executed and delivered by each of the
Sellers and the Corporation and constitutes a legal, valid and binding
obligation of Sellers and the Corporation enforceable against Sellers and the
Corporation in accordance with its terms, except as enforcement may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors rights generally and (ii) the discretion
of the appropriate court with respect to specific performance, injunctive relief
or other forms of equitable remedies.
4.3 NO CONFLICTS, VIOLATIONS OR PROCEEDINGS. Except as set
forth on Schedule 4.3, the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof do not and will not result in (i) a violation of
or conflict with any provision of the Organizational Documents of the
Corporation, (ii) a breach of, or a default under, any material term or
provision of any Contract, license, franchise, Permit, authorization or
concession relating to the Business to which any of the Sellers or the
Corporation is a party or by which any of them is bound, (iii) a violation by
Sellers or the Corporation in any material respect of any Governmental
Requirement or (iv) an imposition of any Encumbrance on any of the Shares. There
is no pending or, to the Knowledge of Sellers or the Corporation, threatened
Proceeding against, relating to or affecting the transactions contemplated by
this Agreement.
4.4 NO CONSENTS OR APPROVALS. Except as set forth on Schedule
4.4, no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority or any other Person is required to
be made or obtained by Sellers or the Corporation in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated by this Agreement.
4.5 [RESERVED]
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4.6 TITLE TO SHARES. On the Closing Date, Sellers shall own
all of the Shares issued in their respective names free of any Encumbrance and
subject to no restrictions with respect to transferability, other than
restrictions generally applicable under federal or state securities laws.
4.7 CAPITALIZATION.
(a) SCHEDULE 4.7(a) sets forth the authorized, issued and
outstanding shares of capital stock of the Corporation, the legal and beneficial
ownership thereof and any Encumbrances thereon. All of the Shares are duly
authorized, validly issued, fully paid and nonassessable. All voting rights with
respect to the Corporation are vested in the Shares.
(b) Except for the Shares and except as set forth in
SCHEDULE 4.7(b), (i) there are no outstanding shares of capital stock of the
Corporation, or outstanding securities convertible into or exchangeable or
exercisable for shares of capital stock of the Corporation, (ii) there are no
bonds, debentures, notes, or other indebtedness having the right to vote on any
matters on which the Corporation's shareholders may vote, (iii) there are no
outstanding options, warrants, rights, Contracts, commitments, understandings or
arrangements by which the Corporation is bound to issue, repurchase or otherwise
acquire or retire any capital stock of the Corporation, (iv) there are no voting
agreements, voting trusts, buy-sell agreements, options or rights or obligations
relating to the shareholders or the capital stock of the Corporation, and (v)
except for certain provisions of this Agreement, the Non-Compete Agreement
attached as EXHIBIT B, the Xxxxxx Employment Agreement and the Employment
Letters, there are no agreements between Sellers and the Corporation which will
survive the Closing.
4.8 CORPORATE RECORDS. To the Knowledge of Sellers and the
Corporation, the minute books of the Corporation are accurate in all material
respects and contain a complete and accurate record of all meetings and actions
of shareholders and directors and of any executive committee or other committee
of the shareholders or board of directors and there are no other records of any
other corporate proceedings. The stock record book of the Corporation is
complete and accurate in all material respects and contains a complete and
accurate record of all share transactions for the Corporation from the date of
its incorporation. To the Knowledge of Sellers and the Corporation, the minute
books of the Subsidiary are accurate in all material respects and contain a
complete and accurate record of all meetings and actions of the manager or the
members and there are no other records of any other proceedings. True and
complete copies of the Business Records, the minute book and stock record book
of the Corporation and the Subsidiary have been made available for review by
Buyer.
4.9 FINANCIAL STATEMENTS. The Corporation and Sellers have
delivered to Buyer (a) draft copies of audited financial statements of the
Corporation for each of the years in the two-year period ended March 31, 2002
(consisting of a balance sheet, statement of profit and loss, and cash flow
statement) (the "Financial Statements"), and (b) draft copies of unaudited
interim financial statements of the Corporation (consisting of a balance sheet
and a statement of profit and loss) for the two-month period ended May 31, 2002
(the "Interim Financial Statements"). Except as set forth on SCHEDULE 4.9, the
Financial Statements and the Interim Financial Statements fairly present the
financial condition and the results of operations of the Corporation in
accordance with GAAP as of their respective dates and for the periods then
15
ended, except that the Interim Financial Statements do not contain footnotes and
the Interim Financial Statements are subject to customary year-end adjustments
applied on a basis consistent with the Corporation's past experience. The books
and records of the Corporation fairly reflect the assets, liabilities and
operations of the Corporation and the Financial Statements and the Interim
Financial Statements are in conformity therewith. The Corporation has no
liabilities or obligations of any nature, whether absolute, accrued, contingent,
known, matured, unmatured or otherwise that are required to be disclosed in the
Financial Statements and Interim Financial Statements in accordance with GAAP
that are not so disclosed, except (i) liabilities and obligations reflected or
reserved for in the Financial Statements and the Interim Financial Statements,
(ii) liabilities as otherwise specifically disclosed in this Agreement, (iii)
liabilities which in the aggregate will not have a Material Adverse Effect on
the business or financial condition of the Corporation, or (iv) liabilities and
obligations incurred between March 31, 2002 and the Closing Date in the ordinary
course of business of the Corporation, consistent with past practice, and as
permitted by this Agreement.
4.10 CURRENT REAL PROPERTY. The Corporation does not own any
real property, has not owned any real property since the date of its
incorporation and leases the Current Real Property from Sealy SHV/NO, LP
pursuant to a valid and binding lease dated April 17, 2000, as amended by
Amendment No. 1 thereto dated October 15, 2001, attached hereto at SCHEDULE 4.10
(as amended, the "Corporation's Lease"). Except as set forth on SCHEDULE 4.10,
(i) the Corporation enjoys peaceful and undisturbed possession of the Current
Real Property it leases and is not in default under the Corporation's Lease,
(ii) the Corporation has not caused any labor to be performed or material to be
furnished for the Current Real Property for which a mechanic's or materialman's
lien or liens, or any other lien, has been or could be claimed by any Person,
(iii) the Current Real Property is in compliance with all Governmental
Requirements (including without limitation all zoning, subdivision and other
applicable land use ordinances and by-laws) and all existing covenants,
conditions, restrictions and easements, and the current use of the Current Real
Property does not constitute a non-conforming use under the applicable zoning
ordinances and by-laws, (iv) neither Sellers nor the Corporation has received
any notice of any default or breach under, any Encumbrance affecting any of the
Current Real Property, (v) the Corporation has not assigned, transferred,
conveyed, mortgaged, deed in trust or granted any other security interest in the
Corporation's Lease, and (vi) to the Knowledge of Sellers and the Corporation,
except for the Co-Tenancy Agreement dated as of January 1, 2002 by and between
the Corporation and Omni-Tech Services, Inc., a Louisiana corporation ("Omni"),
there are no leases, subleases, licenses, concessions or other agreements,
written or oral, granting to any Person other than the Corporation the right to
use or occupy any portion of the Current Real Property.
4.11 CONDITION AND SUFFICIENCY OF ASSETS. To the Knowledge of
Sellers and the Corporation, the Tangible Personal Property and the buildings
and structures used in the Business are structurally sound, are in good
operating condition and repair and are adequate for the uses to which they are
being put, and none of such Tangible Personal Property or buildings or
structures is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that do not exceed $5,000 individually or $10,000 in the
aggregate. To the Knowledge of Sellers and the Corporation, the Tangible
Personal
16
Property and the buildings and structures of the Corporation are sufficient for
the continued conduct of the Business after the Closing in substantially the
same manner as conducted prior to the Closing. The Tangible Personal Property is
free and clear of all Encumbrance and will be so at Closing, except for (i)
liens for Taxes not yet due and payable or for Taxes that a taxpayer is
contesting in good faith through appropriate proceedings or (ii) other liens
arising in the ordinary course of business (not including any mechanic's lien)
that were not incurred in connection with any Indebtedness and which will not
materially impair Buyer's operation of the Business and ownership of the
Corporation.
4.12 INTELLECTUAL PROPERTY.
(a) INTELLECTUAL PROPERTY ASSETS. The term "Intellectual
Property Assets" includes to the extent owned or used by the Corporation:
(i) the names "Advantage Innovation, Inc.," and
"Advantage Innovation" and all fictional business names, trading names,
registered and unregistered trademarks, service marks, and applications used in
the Business (collectively, "MARKS");
(ii) all patents, patent applications and inventions
and discoveries that may be patentable ("PATENTS");
(iii) all copyrights in published and unpublished
works ("COPYRIGHTS"); and
(iv) all know-how, trade secrets, confidential
information, customer lists, proprietary software, proprietary technical
information, proprietary data, and proprietary process technology (collectively,
"TRADE SECRETS"), owned, used, or licensed by the Corporation as licensee or
licensor.
(b) AGREEMENTS. SCHEDULE 4.12(b) contains a complete and
accurate list and summary description, including any royalties paid to, or
received by, the Corporation, of all Contracts relating to the Intellectual
Property Assets to which the Corporation is a party or by which the Corporation
is bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $5,000 in the aggregate under which the Corporation is the licensee. There
are no outstanding or, to the Knowledge of the Corporation or Sellers, no
threatened disputes or disagreements with respect to any such Contract.
(c) KNOW-HOW NECESSARY FOR THE BUSINESS.
(i) The Corporation is the owner of all right, title,
and interest in and to all material Intellectual Property Assets necessary for
the operation of the Corporation's Business as it is currently conducted, free
and clear of all Encumbrances and other adverse claims, and has the right to use
all of the Intellectual Property Assets without payment to any third party.
(ii) Except as set forth in SCHEDULE 4.12(c), all
former and current employees of the Corporation have executed written Contracts
with the Corporation that assign to the Corporation all rights to any
inventions, improvements, discoveries, or information relating to the Business
of the Corporation. To the Knowledge of the Corporation or Sellers, no
17
employee of the Corporation has entered into any Contract that restricts or
limits in any way the scope or type of work in which the employee may be engaged
or requires the employee to transfer, assign, or disclose information concerning
his work to anyone other than the Corporation.
(d) TRADEMARKS.
(i) SCHEDULE 4.12(d) contains a complete and accurate
list and summary description of all Marks. Except as set forth on SCHEDULE
4.12(D), the Corporation is the owner of all right, title, and interest in and
to each of the Marks, free and clear of all Encumbrances and other adverse
claims.
(ii) Except as set forth on SCHEDULE 4.12(d), all
Marks that have been registered with the United States Patent and Trademark
Office are currently in compliance with all formal legal requirements (including
the timely post-registration filing of affidavits of use and incontestability
and renewal applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days after the
Closing Date.
(iii) No Xxxx has been or is now involved in any
opposition, invalidation, or cancellation Proceeding and, to the Knowledge of
the Corporation or Sellers, no such action is threatened with the respect to any
of the Marks.
(iv) To the Knowledge of the Corporation or Sellers,
there is no potentially interfering trademark or trademark application of any
third party with respect to any Marks.
(v) To the Knowledge of the Corporation or Sellers, no
Xxxx is infringed or has been challenged or threatened in any way. None of the
Marks used by the Corporation infringes or is alleged to infringe any trade
name, trademark, or service xxxx of any third party.
(e) PATENTS.
(i) The Corporation owns no Patents.
(f) TRADE SECRETS.
(i) The Corporation has taken all reasonable
precautions to protect the secrecy, confidentiality, and value of their Trade
Secrets.
(ii) The Corporation has good title and an absolute
(but not necessarily exclusive) right to use the Trade Secrets. The Trade
Secrets are not part of the public knowledge or literature, and, to the
Knowledge of the Corporation or the Sellers, have not been used, divulged, or
appropriated either for the benefit of any Person (other than the Corporation)
or to the detriment of the Corporation. No Trade Secret is subject to any
adverse claim or has been challenged or threatened in any way.
18
(g) OTHER MATTERS. The consummation of the transactions
contemplated by this Agreement will not result in the loss of or impairment of
any of the Corporation's rights in the Intellectual Property Assets. Except as
set forth on SCHEDULE 4.12(G), no shareholder, director, officer or employee of
the Corporation owns, directly or indirectly, in whole or in part, any right in
the Intellectual Property Assets that the Corporation has used or the use of
which is necessary for the Business as now conducted.
4.13 COMPLIANCE WITH LAWS; PERMITS. Except as set forth in
SCHEDULE 4.13, the Corporation at all times during the last three (3) years has
duly complied with, and is in compliance with, all applicable Governmental
Requirements, except for such non-compliance that would not have a Material
Adverse Effect on the Business. Except as set forth in SCHEDULE 4.13, the
Corporation has not received any notice to the effect that, or otherwise been
advised that, the Corporation is not in compliance with any Governmental
Requirement. Except as set forth in SCHEDULE 4.13, the Permits set forth on
SCHEDULE 4.13 constitute all material permits, consents, licenses, franchises,
authorizations and approvals of any Governmental Authority or other Person (a)
which are used in the operation of the Business and (b) which are necessary to
conduct the Business as presently conducted, other than those the failure of
which to obtain would not have a Material Adverse Effect on the Business, assets
or financial condition of the Corporation. All of the Permits are valid and in
full force and effect, no violations thereof have been issued or are anticipated
and no Proceeding is pending, or to the Knowledge of the Corporation threatened,
to revoke or limit any of them. Except as set forth on SCHEDULE 4.13, the
consummation of the transactions contemplated by this Agreement do not and will
not violate or render any of the Permits invalid, require any amendment or
reissuance of any of the Permits or require the consent of the Governmental
Authority which has issued any of the Permits.
4.14 LITIGATION. Except as set forth in SCHEDULE 4.14, there
is no Proceeding pending nor, to the Knowledge of the Corporation and Sellers,
threatened against or relating to, nor is there any order, decree or judgment in
effect against, (i) the Corporation or its properties, assets or business, or
(ii) its officers, directors or employees in their capacity as such.
4.15 TAX MATTERS.
(a) Except as set forth on SCHEDULE 4.15, the Corporation
has filed all Tax Returns relating to the Business and the Employee Plans that
it was required to file either separately or as a member of a group of
corporations or other entities pursuant to applicable Governmental Requirements.
All such Tax Returns were correct and complete in all material respects and each
Tax Return was filed by the applicable due date required by the Code or on
permitted extension. Except as set forth on SCHEDULE 4.15, all Taxes owed by the
Corporation (whether or not shown on any Tax Return) and due prior to the date
hereof have been paid in full.
(b) The Corporation has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or other third
party.
(c) Except as set forth on SCHEDULE 4.15, there are no
federal, state, local or foreign tax liens or other Encumbrances upon any of the
properties or assets of the
19
Corporation or the Shares that arose in connection with any failure (or alleged
failure) to pay any Tax, and there are no unpaid Taxes which are or could become
a lien on the properties or assets of the Corporation or the Shares, except for
current Taxes not yet due and payable.
(d) The Corporation has delivered, or will deliver upon
execution of this Agreement, copies of all federal and state tax returns and
reports filed by the Corporation for the fiscal years ended December 31, 1999
and 2000. The Corporation and/or Sellers will deliver to Buyer the 2001 and
Final tax returns upon filing the same with the Internal Revenue Service and the
Corporation shall pay for all costs associated with the preparation of such
returns, which costs shall be accrued on the closing financial statements of the
Corporation.
(e) SCHEDULE 4.15 contains a complete and accurate list of
all audits of all Tax Returns of the Corporation relating to tax periods ended
on or after December 31, 1996, including a reasonably detailed description of
the nature and outcome of each audit. All deficiencies proposed as a result of
such audits have been paid, reserved against, settled, or, as described in
SCHEDULE 4.15 are being contested in good faith by appropriate proceedings.
SCHEDULE 4.15 describes all adjustments to the United States federal income Tax
Returns filed by the Corporation or any group of corporations or other entities
including the Corporation for all taxable years ended on or after December 31,
1996, and the resulting deficiencies proposed by the IRS. The Corporation has
not given any waiver or extensions of any statute of limitations relating to the
payment of Taxes of the Corporation or for which the Corporation may be liable.
(f) There exists no proposed tax assessment against the
Corporation except as disclosed in SCHEDULE 4.15. No consent to the application
of Section 341(f)(2) of the Code has been filed with respect to any property or
assets held, acquired, or to be acquired by the Corporation. There is no Tax
sharing agreement that will require any payment by the Corporation after the
date of this Agreement.
4.16 SUPPLIERS. The Corporation has delivered complete copies
to Buyer of substantially all Applicable Contracts with suppliers from whom the
Corporation ordered raw materials, supplies, merchandise and other goods since
January 1, 2000.
4.17 EMPLOYEES.
(a) SCHEDULE 4.17(a) identifies all employees of the
Business.
(b) The Corporation is in material compliance with all
applicable Governmental Requirements respecting employment practices, terms and
conditions of employment, management-labor relations and wages and hours which
are in effect as of the date of this Agreement. The Corporation is not a party
to any labor agreement with any labor organization. The Corporation has not been
served or received written notice regarding any pending unfair labor practice,
charge or complaint against the Corporation, and to the Knowledge of Sellers and
the Corporation, no such claim is threatened before any Governmental Authority.
There is no labor strike or labor disturbance pending or, to the Knowledge of
the Corporation, threatened against the Corporation nor is any grievance
currently being asserted except as set forth in SCHEDULE 4.17(b). The
Corporation has not experienced a work stoppage or work slowdown at any time
during the three (3) years immediately preceding the date of this
20
Agreement. To the Knowledge of the Corporation, there is no organizational
campaign being conducted and there is no dispute as to the representation of any
employees of the Corporation. To the Knowledge of the Corporation, the
Corporation has good business relations with its employees and there is no
reason to believe that the transactions contemplated by this Agreement will
adversely affect such business relations. Except as set forth on SCHEDULE
4.17(b), the Corporation has complied in all material respects with, and is
currently in compliance in all material respects with, all Governmental
Requirements relating to any of its employees or consultants (including, without
limitation, any Occupational Safety and Health Law). Except as set forth on
SCHEDULE 4.17(b), the Corporation has not received, within the past three years,
any written notice of failure to comply with any such Governmental Requirement.
(c) Except as set forth on SCHEDULE 4.17(c) and except for
advances to employees for business related expenses in the ordinary course of
business under credit cards or otherwise, there is no amount in excess of $1,000
owing to the Corporation from any current or former director, officer, employee
or consultant or owing by the Corporation to any current or former director,
officer, employee or consultant, excluding reimbursements for business related
expenses.
4.18 CUSTOMERS. Schedule 4.18(a) sets forth the names and
addresses of the top ten (10) customers of the Corporation that ordered services
from the Corporation since January 1, 2000 and the dollar amount that each such
customer purchased from the Corporation during each of the last three (3) fiscal
years. No customer of the Business, since January 1, 2002 has given the
Corporation written notice of termination or intent to terminate a material
portion of its business with the Corporation and the Corporation is not aware of
any customers of the Business that have threatened to terminate a material
portion of their business with the Corporation.
4.19 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in SCHEDULE 4.19, the Corporation,
and its assets, properties and operations are now and, at all times prior to the
Closing Date, have been in compliance, in all material respects, with all
Environmental Laws. To Sellers' Knowledge, there has been and is no Release or
threatened Release of any Hazardous Substance at, on, under, in, to or from any
of the Current Real Property or any of the other Real Property whether as a
result of or in connection with the operations and activities at any such Real
Property or otherwise, except as disclosed in SCHEDULE 4.19.
(b) Neither the Corporation nor Sellers have received any
notice of alleged, actual or potential responsibility for, or any inquiry or
investigation regarding, the presence, Release or threatened Release of any
Hazardous Substance at any location, whether at the Real Property or otherwise,
which Hazardous Substances were allegedly manufactured, used, generated,
processed, treated, stored, disposed or otherwise handled at or transported from
the Real Property or otherwise, except as set forth in SCHEDULE 4.19.
(c) Neither the Corporation nor Sellers have received any
notice of any other claim, demand or action by any Person alleging any actual or
threatened injury or damage to any Person, property, natural resource or the
environment arising from or relating to the presence, Release or threatened
Release of any Hazardous Substances at, on, under, in, to or
21
from the Real Property or in connection with any operations or activities
thereat, except as set forth on SCHEDULE 4.19. Neither the Real Property nor any
operations or activities thereat is or has been the subject of any judicial or
administrative Proceeding, order, consent, agreement or any Encumbrance relating
to any Environmental Laws.
(d) To Sellers' Knowledge, there (i) are no underground
storage tanks presently located at the Real Property and there have been no
Releases of any Hazardous Substances from any underground storage tanks or
related piping at the Real Property, (ii) are no PCBs located at, on or in the
Real Property and (iii) are no asbestos or friable asbestos-containing material
located at, on or in the Real Property.
(e) The Corporation has delivered to Buyer or its
Representatives copies of all information which has been supplied by or on
behalf of the Corporation since January 1, 1995 to any Governmental Authority
having the duties of regulation, registration, authorization or enforcement of
or under any Environmental Laws.
4.20 ACCOUNTS RECEIVABLE. All Accounts Receivable of the
Corporation that are reflected on the accounting records of the Corporation as
of the Closing Date are recorded in accordance with GAAP, represent or will
represent valid obligations arising from sales actually made or services
actually performed in the ordinary course of business and the respective
reserves shown on the Interim Financial Statements or on the accounting records
of the Corporation as of the Closing Date are calculated consistent with GAAP
and with past practice and, in the case of the reserve as of the Closing Date,
will be so calculated. There is no contest, claim, or right of set-off of a
material nature which has been asserted by any account debtor, other than
warranty obligations incurred in the ordinary course of business, under any
Contract with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
4.21 BANK ACCOUNTS. Schedule 4.21 contains true, complete and
correct lists of all bank accounts and safe deposit boxes maintained by the
Corporation, and all persons entitled to draw thereon, to withdraw therefrom or,
with access thereto.
4.22 EMPLOYEE BENEFITS PLANS.
(a) Attached hereto as SCHEDULE 4.22(a)(1), is a list
identifying each "employee pension benefit plan," as defined in Section 3(2) of
ERISA, including any "multiemployer plan," as defined in Section 3(37) of ERISA,
(the "PENSION PLANS") and as SCHEDULE 4.22(a)(2), a list identifying each
"employee welfare benefit plan," as defined in Section 3(1) of ERISA, (the
"WELFARE PLANS") that, in either case, are maintained, administered or
contributed to by the Corporation, or which cover any employee or former
employee of the Corporation. Collectively, the Pension Plans and the Welfare
Plans shall hereafter be referred to as the "EMPLOYEE PLANS." Except as
otherwise identified on SCHEDULE 4.22(a)(1) and SCHEDULE 4.22(a)(2) and on
SCHEDULE 4.22(k), (i) no Employee Plan or Benefit Arrangement (as defined in
SECTION 4.22(k) of this Agreement) is maintained, administered or contributed to
by any entity other than the Corporation, and (ii) no Employee Plan is
maintained under any trust arrangement which covers any employee benefit
arrangement which is not an Employee Plan.
22
(b) The Corporation has delivered or will deliver to Buyer
true and complete copies of (i) the Employee Plans (and related trust agreements
and other funding arrangements, if any, and adoption agreements, if any), (ii)
any amendments to the Employee Plans, (iii) written interpretations of the
Employee Plans to the plan administrator of such Plan, (iv) material employee
communications by the plan administrator of any Employee Plan (including, but
not limited to, summary plan descriptions and summaries of material
modifications as defined under ERISA), (v) the three most recent annual reports
(e.g., the complete Form 5500 series) prepared in connection with each Employee
Plan (if any such report was required), including all attachments (including
without limitation the actuarial valuation reports) and (vi) the three most
recent actuarial valuation reports prepared in connection with each Employee
Plan (if any such report was required).
(c) Each Employee Plan has been maintained in compliance
in all material respects with its terms and the requirements prescribed by any
and all statutes, orders, rules and regulations, including but not limited to,
ERISA and the Code, which are applicable to such Employee Plan.
(d) The Corporation has received no service or other
written notice of, and to the Knowledge of the Corporation and Sellers, there
are no threatened claims, suits or other Proceedings by any employees, former
employees or plan participants or the actual or alleged beneficiaries, spouses
or representatives of any of them, against any Employee Plan, the assets held
thereunder, the trustee of any such assets, or the Corporation relating to any
of the Employee Plans, any other employee benefit plans, contracts or
arrangements, other than ordinary and usual claims for benefits by participants
or beneficiaries. Furthermore, the Corporation has received no service or other
written notice of, and to the Knowledge of the Corporation and Sellers, there
are no threatened suits, investigations or other Proceedings by any federal,
state, local or other Governmental Authority of or against any Employee Plan,
the trustee of any assets held thereunder, or the Corporation relating to any of
the Employee Plans, any other employee benefit plans, contracts or arrangements.
If Sellers or the Corporation learns or is notified that any of the actions
described in this subsection are initiated prior to the Closing Date, Sellers
shall notify the Buyer of such action prior to the date of Closing.
(e) No liability has been incurred by the Corporation or
by a trade or business, whether or not incorporated, which is deemed to be under
common control or affiliated with the Corporation within the meaning of Section
4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code (an "ERISA
AFFILIATE") for any tax, penalty or other liability with respect to any Employee
Plan and, to the Knowledge of the Corporation and Sellers, such Plans do not
expect to incur any such liability prior to the date of Closing. The
Corporation, for all periods ending on or prior to the date of this Agreement,
has administered, and between the date of this Agreement and the date of
Closing, will administer each Employee Plan in compliance in all material
respects with the reporting, disclosure, fiduciary and all other requirements
applicable thereto under ERISA, the Code or any other applicable law.
(f) The Corporation and Sellers have not engaged in any
transaction or acted or failed to act in a manner that violates the fiduciary
requirements of Section 404 of ERISA with respect to any Employee Plans, and
will not so engage, act or fail to act prior to the date of Closing. The
Corporation and the Sellers have not engaged in any "prohibited
23
transaction" within the meaning of Section 406(a) or 406(b) of ERISA, or of
Section 4975(c) of the Code with respect to any Employee Plan. Furthermore, to
the Knowledge of the Corporation and Sellers, no other "party in interest," as
defined in Section 3(14) of ERISA, or "disqualified person," as defined in
Section 4975(e)(2) of the Code, has engaged in any such "prohibited
transaction."
(g) No Employee Plan provides benefits, including without
limitation, death, disability, or medical benefits (whether or not insured),
with respect to current or former employees of the Corporation beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law, (ii) death, disability or retirement benefits under any Pension
Plan, (iii) deferred compensation benefits accrued as liabilities on the
Financial Statements of the Corporation, or (iv) benefits, the full cost of
which is borne by the current or former employee (or his or her beneficiary).
(h) The Welfare Plans that are group health plans (as
defined for the purposes of Section 4980B of the Code and Part 6 of Subtitle B
of Title I of ERISA, and all regulations thereunder ("COBRA")) have complied in
all material respects at all times, and will continue to comply in all material
respects through the date of Closing, with requirements of COBRA to provide
health care continuation coverage to qualified beneficiaries who have elected,
or may elect to have, such coverage. The Corporation, or its agents who
administer any of the Welfare Plans, have complied in all material respects at
all times and will continue to comply in all material respects through the date
of Closing, with the notification and written notice requirements of COBRA. The
Corporation has received no service or other written notice of, and to the
Knowledge of the Corporation and Sellers, there are no threatened claims, suits,
or other Proceedings by any employee, former employee, participants or by the
beneficiary, dependent or representative of any such Person, involving the
failure of any Welfare Plan or of other group health plan ever maintained by the
Corporation to comply with the health care continuation coverage requirements of
COBRA.
(i) The Corporation has no Pension Plans.
(j) The Corporation and its ERISA Affiliates have not
been, nor will they become through the date of the Closing, liable to contribute
to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(k) SCHEDULE 4.22(k) contains a list identifying each
employment, severance or similar contract, arrangement or policy (exclusive of
any such contract which is terminable within thirty (30) days without liability
to the Sellers and the Corporation), and each plan or arrangement providing for
insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental employment benefits, vacation
benefits, retirement benefits, deferred compensation, bonuses, profit-sharing,
stock options, stock appreciation rights, or other forms of incentive
compensation or post-retirement compensation or benefit which (i) is not an
Employee Plan, (ii) has been entered into or maintained, as the case may be, by
Sellers or the Corporation, and (iii) covers any employee or former employee of
the Corporation. Such contracts, plans and arrangements are hereinafter referred
to collectively as the "BENEFIT ARRANGEMENTS". True and complete copies or
descriptions of the Benefit Arrangements have been
24
or will be delivered to Buyer. Each Benefit Arrangement has been maintained in
substantial compliance with the requirements prescribed by any and all statutes,
orders, rules and regulations which are applicable to such Benefit Arrangements.
(l) There has been no amendment to, written interpretation
or announcement (whether or not written) by the Corporation relating to, or
change in employee participation or coverage under, any Employee Plan or Benefit
Arrangement that would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of expense incurred in
respect of such Employee Plan or Benefit Arrangement for the most recent plan
year with respect to Employee Plans or the most recent fiscal year with respect
to Benefit Arrangements.
(m) There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Corporation that, individually
or in aggregate, could give rise to the payment by the Corporation, directly or
indirectly, of any amount that would not be deductible pursuant to the terms of
Section 280G of the Code.
4.23 INVENTORY. All Inventory of the Business, whether or not
reflected in the Financial Statements or Interim Financial Statements, is owned
by the Corporation and consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items of
below-standard quality, all of which have been written off or written down to
net realizable value in the Financial Statements or Interim Financial Statements
or on the accounting records of the Corporation as of the Closing Date, as the
case may be. All Inventories not written off have been priced at the lower of
cost or net realizable value. The quantities of each item of Inventory (whether
raw materials, work-in-process or finished goods) are not excessive, but are
reasonable in the present circumstances of the Corporation.
4.24 INSURANCE.
(a) The Corporation has delivered to Buyer true and
complete copies of all policies of insurance to which the Corporation is a party
or under which the Corporation or any officer or director thereof, is or has
been covered at any time within the five (5) years immediately preceding the
date of this Agreement.
(b) Schedule 4.24(b) describes:
(i) any self-insurance arrangement by or affecting the
Corporation, including but not limited to any self insured retention, captive
insurance programs or other self insured risks, or any reserves established
thereunder;
(ii) any Contract or arrangement in the nature of
insurance, other than a policy of insurance, for the transfer or sharing of any
risk by the Corporation; and
(iii) all obligations of the Corporation to provide
insurance coverage to third parties (for example, under leases or service
agreements), and identifies the policy under which such coverage is provided.
(c) SCHEDULE 4.24(c) sets forth, by year, for the current
policy year and each of the five (5) preceding policy years:
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(i) a summary of the loss experience under each policy
of insurance;
(ii) a statement describing each claim under a
workers' compensation policy of insurance and, for all other policies of
insurance, each claim for an amount in excess of $10,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type
of insurance, and period of coverage; and
(C) the amount and a brief description of the
claim.
(iii) a statement describing the loss experience for
all claims that were self-insured or not insured, including the number and
aggregate cost of such claims.
(d) Except as set forth on SCHEDULE 4.24(d):
(i) All policies of insurance to which the Corporation
is a party or that provide coverage to the Corporation or any officer or
director thereof are valid, outstanding, and enforceable;
(ii) The Corporation has not received (A) any refusal
of coverage or any notice that a defense will be afforded with reservation of
rights, or (B) any notice of cancellation or any other indication that any
policy of insurance is no longer in full force or effect or that the issuer of
any policy of insurance is not willing or able to perform its obligations
thereunder;
(iii) The Corporation has paid all premiums due, and
has otherwise performed all of its obligations, under each policy of insurance
to which it is a party or that provides coverage to the Corporation or any
officer or director thereof; and
(iv) The Corporation has given notice to the insurer
of all claims that may be insured thereby.
4.25 BROKERS. Except as set forth on SCHEDULE 4.25, none of
the Sellers nor the Corporation has entered into, nor will they enter into, any
Contract with any Person which may or could result in the obligation of Buyer or
the Corporation to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
4.26 MATERIAL CONTRACTS. Except as listed on SCHEDULE 4.26 and
except for any Contract required to be disclosed in another Schedule, the
Corporation is not a party to any Contract, whether oral or written, express or
implied, that is legally binding and:
(a) which involves performance of services or the delivery
of goods to the Corporation of an amount or value in excess of $10,000;
26
(b) which was not entered into in the ordinary course of
business and that involves expenditures or receipt by the Corporation of an
amount or value in excess of $25,000;
(c) which is for capital expenditures in excess of
$10,000;
(d) which is a guaranty, warranty or similar undertaking
by the Corporation;
(e) which is a power of attorney;
(f) which restricts or purports to restrict the Business
of the Corporation in connection with the manufacture or sale of any product or
in any geographic territory; or
(g) which involves a licensing arrangement with respect to
trademarks, patents, copyrights or other intellectual property.
Without limiting the foregoing, SCHEDULE 4.26 lists all Applicable Contracts
between (i) Sellers (and/or any Affiliate of Sellers) and (ii) the Corporation
that are not otherwise disclosed herein or in another schedule hereto.
Except as set forth on SCHEDULE 4.26, the Corporation is not
in default as of the date hereof, and will not be in default as of the Closing
Date, under, pursuant to, or with respect to any Applicable Contract that is
disclosed on SCHEDULE 4.26, is required to be disclosed on SCHEDULE 4.26 or is
required to be disclosed in another Schedule.
4.27 ABSENCE OF CERTAIN CHANGES. Except as set forth on
SCHEDULE 4.27 and except as permitted by Section 6.4(b), since March 31, 2002,
there has not been:
(a) any change in the business, financial condition or
operations of the Corporation that has had a Material Adverse Effect;
(b) any damage, destruction or loss in excess of $10,000,
whether covered by insurance or not, affecting the assets or properties of the
Corporation;
(c) any declaration or payment or setting aside full
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the capital stock of the Corporation, or direct or
indirect redemption, purchase or other acquisition of any shares of capital
stock of the Corporation;
(d) any increase in the compensation or granting of
bonuses payable or to become payable by the Corporation to any officer or
employee except in the ordinary course of the Corporation's business;
(e) except in the ordinary course of business, any sale or
transfer by the Corporation of any Tangible Personal Property, Intellectual
Property Assets or Real Property,
27
any mortgage or pledge or creation of any Encumbrance relating to any such
property, any lease of real property or equipment or any cancellation of any
debt or claim;
(f) any other transaction not in the ordinary course of
business or not otherwise consistent with the past practices of the Corporation;
(g) any change in accounting methods or principles of the
Corporation;
(h) any amendment to the Organizational Documents of the
Corporation; or
(i) any agreement, whether oral or written, to do any of
the foregoing.
4.28 PRODUCTS; PRODUCT WARRANTIES.
(a) A form of each product warranty relating to any
products manufactured or sold by the Corporation at any time during the
three-year period preceding the date of this Agreement is attached to or set
forth on SCHEDULE 4.28. Except as provided in any of such standard product
warranties and as otherwise set forth on SCHEDULE 4.28(a), the Corporation has
not sold any products or services which are subject to an extended warranty of
the Corporation beyond 24 months and which warranty has not yet expired.
(b) Except as set forth on SCHEDULE 4.28(b), to the
Knowledge of Sellers and the Corporation, there are no defects in design,
materials, manufacture or otherwise in any products manufactured, distributed or
sold by the Corporation during the past five (5) years which could give rise to
any claims in excess of historical warranty expenses.
(c) The Corporation has made available to Buyer for review
all information available to the Corporation regarding all warranty occurrences
and all other unreimbursed repair, maintenance and replacement occurrences
affecting the Corporation at anytime during the past three (3) years.
4.29 MATERIAL MISSTATEMENTS OR OMISSIONS. No representation or
warranty by Sellers or the Corporation in this Agreement, or in any document,
exhibit, statement, certificate, document or schedule furnished to Buyer
pursuant to this Agreement, or in connection with the transactions contemplated
by this Agreement, taken together as a whole, contains or will contain at the
Closing Date any untrue statement of a material fact, or intentionally omits or
will omit to state any material fact necessary to make the statements or facts
contained therein not misleading. Except as otherwise disclosed in this
Agreement or any schedule hereto, Sellers and the Corporation do not have actual
knowledge of any fact or condition specific to the Corporation or the Business
(and not related to the economy or the industry in general) which is materially
adverse to the operations or prospects of the Corporation or the Business.
4.30 INAPPLICABILITY OF REPRESENTATIONS TO FORMATION OF THE
DIVISION. As used in this Agreement, the phrase "transactions contemplated by
this Agreement" or words of similar import shall not be deemed to include
actions taken after the Closing to operate the Corporation as a Division of
Buyer, including, without limitation, the liquidation or merger of the
28
Corporation, and no representation or warranty herein, including without
limitation Sections 4.3 and 4.4, shall be deemed to address such transaction(s).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to Sellers and the
Corporation that the following are true, correct and complete on the date
hereof, and shall be true, correct and complete as of the Closing Date:
5.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer is duly qualified to do business and is in good
standing in each jurisdiction in which such qualification is necessary under the
applicable law as a result of the conduct of its business or the ownership of
its properties. Buyer has all necessary power and authority to execute and
deliver this Agreement, to consummate the transactions contemplated by this
Agreement and to perform its obligations under this Agreement.
5.2 AUTHORITY; AUTHORIZATION; BINDING EFFECT. Buyer has all
necessary power and authority and has taken all action necessary to execute and
deliver this Agreement and the instruments to be executed and delivered pursuant
hereto, to consummate the transactions contemplated by this Agreement and to
perform its obligations under this Agreement. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforcement may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors
rights generally and (ii) the discretion of the appropriate court with respect
to specific performance, injunctive relief or other forms of equitable remedies.
5.3 NO CONFLICTS, VIOLATIONS OR PROCEEDINGS. The execution and
delivery of this Agreement, the consummation of the transactions contemplated by
this Agreement and the performance by Buyer of its obligations under this
Agreement do not and will not result in (i) a violation of or a conflict with
any provision of the Organizational Documents of Buyer, (ii) a breach of, or a
default under, any term or provision of any Contract, license, franchise,
permit, authorization or concession to which Buyer is a party or by which it is
bound or (iii) a violation by Buyer of any Governmental Requirements. There is
no pending or, to the Knowledge of Buyer, threatened or anticipated Proceeding
against, relating to or affecting the transactions contemplated by this
Agreement.
5.4 NO CONSENTS OR APPROVALS. Except as set forth on Schedule
5.4, no consent, approval or authorization of, or declaration, filing or
registration with, any Governmental Authority or any other Person is required to
be made or obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the transaction
contemplated hereby.
5.5 NO BROKERS. Buyer has not entered into and will not enter
into any agreement, arrangement or understanding with any Person which will
result in the obligation of
29
Sellers to pay any finder's fee, brokerage commission or similar payment in
connection with the transaction contemplated hereby.
5.6 INVESTMENT. The Shares being acquired by Buyer pursuant to
this Agreement are being acquired for Buyer's own account as principal, for
investment and not with a view to resale or distribution of any such Shares.
5.7 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or
warranties by Buyer in this Agreement, or in any document, exhibit, statement,
certificate, document or schedule furnished to Sellers pursuant to this
Agreement, or in connection with the transaction contemplated by this Agreement,
contains or will contain any untrue statement of a material fact, or
intentionally omits or will omit to state any material fact necessary to make
the statements or facts contained therein not misleading.
5.8 NO OTHER REPRESENTATIONS. Buyer is relying exclusively on
the representations and warranties in this Agreement in deciding to purchase the
Shares.
ARTICLE 6
COVENANTS PRIOR TO CLOSING
--------------------------
Sellers and the Corporation on the one hand, and Buyer on the
other hand, each covenant with the other as follows:
6.1 CONDUCT OF BUSINESS PRIOR TO CLOSING. Prior to Closing,
the Corporation shall continue to carry on the Business in the ordinary course
and substantially in accordance with past practice and will not take any action
inconsistent therewith or with the consummation of the transactions contemplated
hereby, except as expressly provided for in this Agreement. The Corporation
shall promptly inform Buyer of any material changes in the Business.
6.2 INVESTIGATION BY PARTIES. Sellers and Buyer acknowledge
and agree that between the date of this Agreement and the Closing Date, Buyer,
and each Representative of Buyer, shall continue to conduct a due diligence
review with respect to the Corporation and the Business (the "Due Diligence
Review"). In connection with the Due Diligence Review, Sellers and Corporation
shall, upon reasonable prior notice, (i) cooperate with Buyer, and each
Representative of the Buyer, (ii) provide all information, and all documents and
other tangible items containing or relating to such information, reasonably
requested by Buyer, any Representative of Buyer or any financial institution and
(iii) permit each Representative of Buyer to inspect any part of the business
and operations of the Corporation. Buyer shall conduct its Due Diligence Review
in a manner so as not to unreasonably disrupt the business and operations of the
Corporation. During Buyer's Due Diligence Review, Buyer and each Representative
of Buyer shall not contact any customers, suppliers, sales representative or
distributors of the Corporation without the prior written approval of Sellers.
6.3 CONSENTS AND BEST EFFORTS. As soon as practicable, Buyer,
Sellers and the Corporation, as applicable, will commence all reasonable action
required hereunder to obtain all consents, approvals and agreements of, and to
give all notices and make all filings with, any Person as may be necessary (a)
to authorize, approve or permit the full and complete sale,
30
conveyance, assignment or transfer of the Shares, free and clear of any
Encumbrances, by a date early enough to allow the sale hereunder to be
consummated by the Closing Date and (b) to obtain consents from any Person who
is a party to a material Contract with the Corporation, the terms of which give
such Person a right to terminate such contract as a result of the transactions
provided for in this Agreement. Buyer, Sellers and the Corporation agree to use
commercially reasonable best efforts to satisfy all conditions precedent to
their respective obligations to consummate the transactions contemplated by this
Agreement.
6.4 CERTAIN PROHIBITED TRANSACTIONS.
(a) Except as otherwise approved by Buyer, required by any
Governmental Authority, as provided for in SECTION 6.4(b), or otherwise provided
for in this Agreement, during the period beginning as of date of this Agreement
and ending on the Closing Date, the Corporation and Sellers shall not:
(i) issue any equity securities of the Corporation,
including options to purchase such securities;
(ii) merge, consolidate or acquire the stock or asset
of any other corporation, partnership or other business organization or division
thereof;
(iii) declare or pay any dividend or make any
distribution to shareholders of the Corporation in cash, property or other
assets, provided, however, that the foregoing sentence will in no way prohibit
the Corporation from paying the Sellers their salaries as employees of the
Corporation at their current salary amounts as of the date of this Agreement;
(iv) except for any bonuses granted or management fees
due prior to March 31, 2002, or relating to a period prior to and including
March 31, 2002, and listed on SCHEDULE 6.4(a)(iv), grant any increase in the
salary or other compensation to an employee of the Corporation, grant any bonus
to any employee of the Corporation, enter into any employment agreement with or
make any loan to an executive officer or other employee of the Corporation or
enter into any material transaction of any other nature with any employee of the
Corporation;
(v) except in the ordinary course of business,
mortgage, pledge or otherwise encumber or sell, transfer or otherwise dispose of
a material portion of the assets of the Corporation other than as contemplated
by this Agreement or in the ordinary course of business substantially in
accordance with past practices;
(vi) increase, terminate, amend or otherwise modify
any of the Corporation's Employee Plans;
(vii) enter into or terminate any material Applicable
Contract, or make any material change in any of its material Applicable
Contracts, other than in the ordinary course of business and consistent with
past practice;
(viii) borrow any money, enter into any agreement or
commitment to borrow any money, issue any debt securities of the Corporation or
otherwise take
31
any action which will materially increase the Indebtedness of the Corporation
over the Indebtedness of the Corporation as of the date of this Agreement; or
(ix) do any other act which would cause any
representation or warranty of the Corporation or Sellers in this Agreement to be
or become untrue in any material respect.
(b) PERMITTED TRANSACTIONS. Prior to the Closing Date, the
Sellers shall cause the Corporation to take all necessary action to (i) transfer
title to the vehicles and other assets listed on SCHEDULE 6.4(b)(i) to the
Persons listed on SCHEDULE 6.4(b)(i), provided that such Persons shall assume
all liabilities and debts associated with such vehicles and other assets; (ii)
forgive the debts of the Sellers listed on SCHEDULE 6.4(b)(ii) which are owed to
the Corporation and cancel any promissory notes evidencing such debts; (iii)
transfer the Corporation's membership interest in JSB/ABP Interests, L.L.C., of
which the Corporation is the sole member, to the Person(s) listed on SCHEDULE
6.4(b)(iii); and (iv) grant bonuses to the Persons and in the amounts set forth
on SCHEDULE 6.4(b)(iv). The Corporation shall pay one-half (50%) of each such
bonus within three days of the Closing and the remaining one-half of each such
bonus shall be paid within 30 days of the Closing, provided that such remaining
one-half of each bonus shall be paid only if the Working Capital requirements of
Section 6.6 are satisfied as of the Closing Date.
6.5 CONFIDENTIALITY.
(a) CONFIDENTIAL MATERIAL. For purposes hereof, the term
"Confidential Material" shall mean any and all information provided to a party
to this Agreement (the "Recipient") by or on behalf of another party to this
Agreement (the "Disclosing Party"), and shall include, but shall not be limited
to, all financial, marketing, supplier and customer information, and information
regarding business plans and concepts in whatsoever form, whether prior to or
after the execution and delivery of this Agreement and whether or not marked
"confidential." All Confidential Material transmitted by a party to this
Agreement shall remain the sole property of such party.
(b) USE OF CONFIDENTIAL MATERIAL. The parties to this
Agreement hereby agree that all Confidential Material disclosed by a Disclosing
Party in connection with the transactions contemplated by this Agreement will be
kept confidential by the Recipient in accordance with the terms and conditions
of this SECTION 6.5 and not disclosed to any Person without the written approval
of the Disclosing Party, except that the Recipient may disclose the Confidential
Material or portions thereof to those of its Representatives who (a) need to
know such information for the purpose of evaluating or completing the
transactions contemplated in this Agreement and (b) have agreed to be bound by
the confidentiality provisions of this SECTION 6.5. The Recipient of any
Confidential Material will be responsible for any breach of this SECTION 6.5 by
any of its Representatives. In the event transactions contemplated by this
Agreement are not consummated for any reason whatsoever, the parties agree that
the confidentiality provisions of this Agreement shall survive for a period of
five (5) years from the date of this Agreement.
32
(c) PUBLICLY KNOWN EXCEPTION. Notwithstanding any other
provision of this Agreement, a Recipient shall not be required to maintain as
confidential or be restricted in its use of any Confidential Material which was
publicly known at the date of disclosure.
(d) PROCEDURES TO PROTECT CONFIDENTIAL MATERIAL. For the
purpose of protecting Confidential Material received from a Disclosing Party, a
Recipient, in addition to, and without limiting the generality of, the
provisions of this SECTION 6.5, will use all reasonable efforts to protect the
confidentiality thereof, including, without limitation, efforts commensurate
with those it employs for the protection of its own confidential and proprietary
information.
(e) EQUITABLE REMEDIES. The parties to this Agreement
hereby agree that a failure by a Recipient to comply with any provision of this
SECTION 6.5 will cause irreparable harm to the Disclosing Party providing
Confidential Material and that the Disclosing Party will be entitled to
equitable relief including specific performance, an injunction, a restraining
order or other equitable relief in order to enforce any provision of this
SECTION 6.5, which right will be in addition to, and not in lieu of, any other
remedy to which the Disclosing Party is entitled under applicable law
(including, but not limited to, monetary damages).
6.6 WORKING CAPITAL. Upon execution of this Agreement and
until the Closing Date, the Corporation shall at all times maintain working
capital no less than $150,000 (the "Working Capital"). For purposes of this
Section 6.6, the Working Capital of the Corporation will be equal to the amount
of the current assets of the Corporation minus the current liabilities of the
Corporation.
ARTICLE 7
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
The obligations of Sellers to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions (any of which may, in
Sellers' absolute and sole discretion, be waived in whole or in part in
writing):
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, and
Buyer shall have performed all agreements and covenants required hereby to be
performed by it prior to or at the Closing Date.
7.2 CONSENTS. All consents, approvals and waivers necessary to
permit Sellers to transfer the Shares to Buyer as contemplated hereby shall have
been obtained, unless the failure to obtain any such consent, approval or waiver
would not have a Material Adverse Effect upon Sellers.
7.3 NO PROCEEDINGS. No Proceeding by any Person shall have
been instituted or threatened which questions the validity or legality of the
transaction contemplated hereby and which could reasonably be expected to affect
materially the right or ability of Sellers to transfer the Shares to Buyer.
33
7.4 CERTIFICATES. Buyer will furnish Sellers with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article 7 as may be reasonably requested by
Sellers.
7.5 CORPORATE DOCUMENTS. Sellers shall have received from
Buyer (a) resolutions adopted by the board of directors of Buyer approving this
Agreement and the transactions contemplated hereby, which remain effective as of
the Closing Date, and (b) a list of the officers of Buyer executing this
Agreement and any agreement contemplated by this Agreement, certified by the
Secretary or an Assistant Secretary of Buyer.
7.6 OTHER AGREEMENTS AND DELIVERIES. At or before the Closing,
Buyer shall have executed and/or delivered (a) to Xxxx X. Xxxxxx, III, the
Employment Agreement attached hereto as EXHIBIT A (the "Xxxxxx Employment
Agreement"), (b) to Xxxxx X. Xxxxxx and Xxxxx X. Xxxxxxx, employment letters
pursuant to which the Corporation will employ such persons after the Closing
Date (the "Employment Letters") and (c) to Sellers, a list of all contracted
technicians used by Buyer as of the Closing in Buyer's business pursuant to
Section 2.4(d).
7.7 PRELIMINARY PAYMENT AMOUNT. Buyer must have, concurrently
with the Closing, paid the Preliminary Payment Amount in accordance with Section
2.2.
ARTICLE 8
CONDITIONS TO BUYER'S OBLIGATIONS
---------------------------------
The obligations of Buyer to consummate the transaction
provided for hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions (any of which may, in Buyer's absolute
and sole discretion, be waived in whole or in part in writing):
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Sellers and the Corporation contained in this
Agreement must be true and correct in all material respects at and as of the
Closing Date, and Sellers and the Corporation must have performed all agreements
and covenants required hereby to be performed by each of them prior to or at the
Closing Date.
8.2 CONSENTS. All consents, approvals and waivers necessary to
permit Sellers to transfer the Shares to Buyer as contemplated hereby must have
been obtained, except for consents which in the aggregate if not obtained would
not have any Material Adverse Effect on the Business.
8.3 NO PROCEEDINGS. No Proceeding by any Person will have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be expected to
affect materially the right or ability of Buyer to own or operate the Business
after the Closing.
8.4 CERTIFICATES. Sellers and the Corporation will furnish
Buyer with such certificates to evidence compliance with the conditions set
forth in this Article 8 as may be reasonably requested by Buyer.
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8.5 DUE DILIGENCE. The results of Buyer's continuing due
diligence review will not have revealed any material variance from the
representations and warranties set forth in Article 4 hereto that would have a
Material Adverse Effect on the Business, assets or financial condition of the
Corporation.
8.6 [RESERVED]
8.7 RESIGNATIONS. Buyer must have received resignations from
the directors of the Corporation and such officers as it may request, in form
and substance satisfactory to Buyer.
8.8 CORPORATE DOCUMENTS. Buyer must have received from Sellers
and the Corporation (a) resolutions adopted by the board of directors and
shareholders of the Corporation approving this Agreement and the transactions
contemplated hereby and (b) a list of the officers of the Corporation executing
this Agreement and each agreement contemplated by this Agreement, certified by
the Secretary or Assistant Secretary of the Corporation, evidencing the
authority of the officer executing this Agreement on behalf of the Sellers.
8.9 OTHER AGREEMENTS. At or before the Closing, (a) Xxxxxx X.
Xxxxxx, Xx. and Xxxxx X. Xxxxxx will have executed and delivered to Buyer the
Non-Compete Agreement attached as EXHIBIT B, (b) Xxxx X. Xxxxxx, III will have
executed and delivered to Buyer the Xxxxxx Employment Agreement, (c) Xxxxx X.
Xxxxxx and Xxxxx X. Xxxxxxx will have executed and delivered to Buyer the
Employment Letters and (d) the Corporation will deliver a list of all
technicians used by the Corporation in the Business as of the Closing pursuant
to Section 2.4(d).
8.10 OPINION LETTER. Buyer will have received an opinion from
Jones, Walker, Waechter, Poitevent, Carrere and Xxxxxxx, L.L.P., counsel to
Xxxxxx X. Xxxxxx, Xx. and the Corporation, in substantially the form attached
hereto as EXHIBIT C.
8.11 WORKING CAPITAL. Following the execution of this
Agreement and until and including the Closing Date, the Corporation shall have
at all times maintained Working Capital in compliance with Section 6.6.
8.12 TERMINATION STATEMENTS. Sellers shall have delivered to
Buyer UCC termination statements from First Bank and Trust, terminating all
liens against the Corporation's assets.
ARTICLE 9
INDEMNIFICATION; REMEDIES; DISPUTE RESOLUTION
---------------------------------------------
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION; DEFINITIONS.
(a) All representations, warranties, covenants and
obligations in this Agreement, and any certificate or other document delivered
pursuant to this Agreement will survive the Closing through the respective dates
set forth in Section 9.6. The right to indemnification, payment of Damages or
other remedy based on such representations, warranties, covenants and
obligations will not be affected by any investigation conducted with respect to,
or any Knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the
35
accuracy or inaccuracy of or compliance with, any such representation, warranty,
covenant or obligation; provided, however, if as of the Closing Buyer has actual
knowledge of a breach of any representation, warranty, covenant or obligation
and notwithstanding chooses to close this Agreement, Sellers shall not be
obligated to indemnify the Buyer Indemnified Persons in connection therewith to
the extent of Buyer's actual knowledge of the scope of the breach.
(b) For purposes of this ARTICLE 9, the following terms
have the meanings specified or referred to in this SECTION 9.1(b):
"BUYER INDEMNIFIED PERSONS" means Buyer, the
Corporation (after the Closing) and their respective Representatives.
"SELLER INDEMNIFIED PERSONS" means each of the Sellers
and its Representatives.
"DAMAGES" means any loss, liability, claim, damage,
expense (including costs of investigation and defense and reasonable attorneys'
fees and expenses) of any kind whatsoever, whether or not involving a
third-party claim.
"INDEMNIFIED PARTY" means any Person entitled to
indemnification under this ARTICLE 9.
"INDEMNIFYING PARTY" means any Person required to
indemnify another Person under this ARTICLE 9.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS. If the
Closing occurs, Sellers, jointly and severally, will indemnify and hold harmless
the Buyer Indemnified Persons, for, and will pay to the Buyer Indemnified
Persons the amount of, any Damages, arising, directly or indirectly, from or in
connection with:
(a) any breach of any representation or warranty made by
Sellers and/or the Corporation in this Agreement as if such representation or
warranty were made on and as of the Closing Date or in any other agreement,
certificate or written document delivered in connection therewith;
(b) any breach by Sellers of any covenant or obligation of
Sellers in this Agreement;
(c) any business conducted by the Corporation prior to the
Closing, other than the Business currently conducted by the Corporation and any
business conducted by the Corporation involving the repair, upgrade, maintenance
or installation of computers, or the separation of the businesses of Omni and
the Corporation in December 2001;
(d) any Environmental Health and Safety Liabilities
related to the operation of the Business prior to the Closing; and/or
(e) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
made by any such
36
Person with Sellers or the Corporation (or any Person acting on their behalf or
on behalf of the Corporation for which they are responsible) in connection with
any of the transactions contemplated by this Agreement.
9.3 [INTENTIONALLY OMITTED]
9.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER - TAX
MATTERS.
9.4.1 GENERAL.
(a) In addition to the provisions of SECTION 9.2, Sellers,
jointly and severally, will indemnify each Buyer Indemnified Person and hold
them harmless from (i) all liability for Taxes that may be imposed or assessed
against the Corporation or the assets of the Corporation based on income
attributable to (1) the operation of the Business on or before the Closing Date
and (2) all other activities of the Corporation, including, without limitation,
the ownership or use of property on or before the Closing Date, reduced without
duplication by the actual payment of Taxes prior to the Closing Date and any
reserves with respect to Taxes set forth on or reflected in the Financial
Statements, Interim Financial Statements or the closing balance sheet delivered
pursuant to Section 10.5; (ii) all liability (as a result of Treasury Regulation
ss. 1.1502-6 or otherwise) for Taxes of any Person (other than the Corporation)
with which the Corporation is or has been affiliated or has filed or has been
required to file a consolidated, combined or unitary Tax Return; and (iii)
subject to the last sentence of Section 9.4.2(c), all liability for reasonable
legal, accounting, consulting or similar fees and expenses for any item
attributable to any item in clauses (i) or (ii) of this sentence.
(b) In the case of any taxable period that includes (but
does not end on) the Closing Date (a "STRADDLE PERIOD"):
(i) real, personal and intangible property Taxes
("PROPERTY TAXES") of the Corporation attributable to all taxable periods ending
on or before the Closing Date will be equal to the amount of such property Taxes
for the entire Straddle Period multiplied by a fraction, the numerator of which
is the number of days during the Straddle Period that are in all taxable periods
ending on or before the Closing Date and the denominator of which is the number
of days in the Straddle Period; and
(ii) the Taxes of the Corporation (other than Property
Taxes) attributable to all taxable periods straddling the Closing Date will be
computed as if such taxable period ended as of the close of business on the
Closing Date and, in the case of any Taxes attributable to the ownership by the
Corporation of any equity interest in any non-U.S. corporation, partnership or
other "flow through" entity, as if a taxable period of such corporation,
partnership or other "flow through" entity ended as of the closing of business
on the Closing Date.
9.4.2 TAX INDEMNIFICATION PROCEDURES.
(a) If a claim is made by any Governmental Authority,
which, if successful, would result in an indemnity payment to any Indemnified
Person pursuant to SECTION 9.4.1, then the Corporation shall give notice to
Sellers in writing of such claim within thirty (30)
37
days after receipt of such a claim (a "TAX CLAIM"); provided, however, the
failure to give such notice will not affect the indemnification provided
pursuant to SECTION 9.4.1 except to the extent that Sellers have been actually
prejudiced as a result of such failure.
(b) With respect to any Tax Claim relating to a taxable
period ending on or prior to the Closing Date, Seller will control all
Proceedings and may make all decisions taken in connection with such Tax Claim
(including selection of counsel) and, without limiting the foregoing, may in its
sole discretion pursue or forego any and all administrative appeals,
Proceedings, hearings and conferences with any Governmental Authority with
respect thereto, and may, in its sole discretion, either pay the Tax claimed and
xxx for a refund where applicable law permits such refunded suits or contest the
Tax Claim in any permissible manner; provided, however, that Sellers must first
consult in good faith with Buyer before taking any action with respect to the
conduct of a Tax Claim.
(c) Sellers and Buyer will jointly control and participate
in all Proceedings taken in connection with any Tax Claim relating to Taxes of
the Corporation for a Straddle Period. Neither Sellers nor Buyer shall settle
any such Tax Claim without the prior written consent of the other parties. Each
party shall pay its own expenses with respect to any such Tax Claim.
(d) Buyer will control all Proceedings with respect to any
Tax Claim relating to a taxable period beginning after the Closing Date.
(e) Buyer and the Corporation on the one hand, and Sellers
on the other, shall reasonably cooperate in contesting any Tax Claim, which
cooperation will include the retention and, upon request, the provision to the
requesting Person of records and information which are reasonably relevant to
such Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided hereunder
or to testify at Proceedings relating to such Tax Claim.
9.4.3 TRANSFER AND SIMILAR TAXES. Sellers must pay and will
hold each Buyer Indemnified Person harmless from all transfer, documentary,
sales, use, registration and similar Taxes (including all applicable real estate
transfer or gains taxes and state transfer taxes, and related fees, including
any penalties interest and additions to Tax) related to the sale of the Shares
("TRANSFER TAXES"). The procedures set forth in SECTION 9.4.1 shall also apply
to Transfer Taxes.
9.5 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. If the
Closing occurs, Buyer agrees to indemnify and hold harmless the Seller
Indemnified Persons, and will pay to Seller Indemnified Persons the amount of
any Damages arising, directly or indirectly, from or in connection with:
(a) any breach of any representation or warranty made by
Buyer in this Agreement or any other certificate or document delivered by Buyer
pursuant to this Agreement;
(b) any breach by Buyer of any covenant or obligation of
Buyer in this Agreement; and/or
38
(c) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
made by such Person with Buyer (or any Person acting on its behalf) in
connection with any of the transactions contemplated by this Agreement.
9.6 TIME LIMITATIONS.
(a) If the Closing occurs, Sellers will have no liability
(for indemnification or otherwise) with respect to:
(i) any representation or warranty unless notice is
given to Sellers in accordance with SECTION 9.9 or SECTION 9.10 prior to the
expiration of the following periods:
(A) for the representations and warranties set
forth in SECTION 4.1 (Organization and Good Standing of the Corporation), within
four (4) years after the Closing Date; and
(B) for all other representations and warranties
set forth in ARTICLE 4, within two (2) years and one hundred eighty (180) days
following the Closing Date; and
(ii) any covenant or obligation to be performed and
complied with prior to the Closing Date, unless within two (2) years and one
hundred eighty (180) days following the Closing Date, Buyer notifies Seller of a
claim in accordance with SECTION 9.9 or SECTION 9.10. Seller shall have no
liability for indemnification or reimbursement (x) under SECTION 9.2 not based
upon any representation or warranty, (y) under SECTION 9.4, or (z) with respect
to any covenant or obligation to be performed and complied with after the
Closing Date, unless notice is given to Sellers in accordance with SECTION 9.9
or SECTION 9.10 prior to the expiration of the periods ("NOTICE PERIODS") set
forth below:
(A) For SECTION 9.2 (i.e., indemnity claims not
based on a breach of any representation or warranty),
(B) for SECTION 9.4 or
(C) for indemnity claims with respect to any
covenant to be performed and complied with after the Closing Date, the Notice
Period shall commence on the Closing Date and continue until 60 days after the
applicable statute of limitations.
(b) If the Closing occurs, Buyer will have no liability
(for indemnification or otherwise) with respect to any representation or
warranty, or covenant or obligation to be performed and complied with prior to
the Closing Date, unless on or before two (2) years and one hundred eighty (180)
days following the Closing Date, Sellers notify Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Sellers.
9.7 LIMITATIONS ON AMOUNT - SELLERS.
39
(a) Collectively, the Sellers will have no liability (for
indemnification or otherwise) until Buyer has suffered Damages in excess of a
$50,000 aggregate threshold, at which point Sellers will be obligated to
indemnify Buyer from and against such Damages in excess of $50,000 (the
"Sellers' Deductible Basket"). The limitations of this SECTION 9.7(a) will not,
however, apply to any breach of any of Sellers' representations and warranties
of which any Seller had actual knowledge at any time prior to the date on which
any such representation and warranty was made or any intentional breach by
Sellers of any covenant or obligation, and Sellers will be jointly and severally
liable for all Damages with respect to such breaches; provided that the
limitations of this Section 9.7 shall not apply to the indemnification and
payment obligations of Sellers under Section 9.4 of this Agreement.
(b) Following the application of the Sellers' Deductible
Basket, the amount of Damages (for indemnification or otherwise), which are
payable by an individual Seller shall be limited and shall not exceed the amount
of the Aggregate Payment Amount received by such Seller pursuant to SECTION
2.2(b). As to any individual Seller, the limitation of this SECTION 9.7(b) will
not, however, apply to any breach of any of the Sellers' representations and
warranties of which such Seller had actual knowledge at any time prior to the
date on which any such representation and warranty was made or any intentional
breach by such Seller of any covenant or obligation, and such Seller will be
liable for all Damages with respect to such breaches.
9.8 LIMITATIONS ON AMOUNT - BUYER. Buyer will have no
liability (for indemnification or otherwise) with respect to the matters
described in SECTION 9.5(a) until Sellers shall have suffered Damages in excess
of a $50,000 threshold, at which point Buyer will be obligated to indemnify
Sellers from and against such Damages in excess of $50,000. However, this
SECTION 9.8 will not apply to any breach of any of Buyer's representations and
warranties of which Buyer had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional breach by Buyer of
any covenant or obligation, and Buyer will be liable for all Damages with
respect to such breaches.
9.9 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Party under
SECTION 9.2 or SECTION 9.4 of notice of the commencement of any Proceeding
against it, such Indemnified Party will, if a claim is to be made against an
Indemnifying Party under such Section, give notice to the Indemnifying Party of
the commencement of such claim, but the failure to notify the Indemnifying Party
will not relieve the Indemnifying Party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party demonstrates
that the defense of such action is prejudiced by the Indemnifying Party's
failure to give such notice.
(b) If any Proceeding referred to in SECTION 9.9(a) is
brought against an Indemnified Party and it gives notice to the Indemnifying
Party of the commencement of such Proceeding, the Indemnifying Party will,
unless the claim involves Taxes, be entitled to participate in such Proceeding
and, to the extent that it wishes (unless (i) the Indemnifying Party is also a
party to such Proceeding and the Indemnified Party determines in good faith that
joint representation would be inappropriate, or (ii) the Indemnifying Party
fails to provide reasonable assurance to the Indemnified Party of its financial
capacity to defend such Proceeding and
40
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel satisfactory to the Indemnified Party and, after
notice from the Indemnifying Party to the Indemnified Party of its election to
assume the defense of such Proceeding, the Indemnifying Party will not, as long
as it diligently conducts such defense, be liable to the Indemnified Party under
this SECTION 9.9 for any fees of other counsel or any other expenses with
respect to the defense of such Proceeding, in each case subsequently incurred by
the Indemnified Party in connection with the defense of such Proceeding, other
than reasonable costs of investigation. If the Indemnifying Party assumes the
defense of a Proceeding, (A) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification; (B) no compromise or settlement of such claims
may be effected by the Indemnifying Party without the Indemnified Party's
consent unless (i) there is no finding or admission of any violation of legal
requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the Indemnified Party, and (ii) the sole
relief provided is monetary damages that are paid in full by the Indemnifying
Party; and (C) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If notice
is given to an Indemnifying Party of the commencement of any Proceeding and the
Indemnifying Party does not, within ten business days after the Indemnified
Party's notice is given, give notice to the Indemnified Party of its election to
assume the defense of such Proceeding, the Indemnifying Party will be bound by
any determination made in such Proceeding or any compromise or settlement
effected by the Indemnified Party.
(c) Notwithstanding the foregoing, if an Indemnified Party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its Affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the Indemnifying Party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
9.10 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS. A claim for
indemnification under SECTIONS 9.2, 9.4 and/or 9.5 (as applicable) for any
matter not involving a third-party claim may be asserted by notice to the party
from whom indemnification is sought which notice will set forth in reasonable
detail the basis for such claim to the extent they are known by such party.
9.11 MISCELLANEOUS.
(a) If an Indemnified Party actually receives any
insurance proceeds following an indemnification payment by an Indemnifying Party
pursuant to this ARTICLE 9 and the proceeds relate to the same event or events
for which such indemnification payment was made, the Indemnified Party must
return the indemnification payment to such Indemnifying Party up to the actual
amount of insurance proceeds received by the Indemnified Party in respect of
such same event or events net of any co-payment, deductible, retroactive premium
adjustment and increased premiums resulting from the payment of such insurance
proceeds.
41
(b) The parties agree that, except in the case of fraud,
their sole and exclusive remedy for, under or in connection with this Agreement,
including any violations or any breach of this Agreement, is a claim under and
in accordance with the provisions of this ARTICLE 9.
(c) Upon notice to the Sellers, the Buyer may offset the
amount of any Damages to which it may become entitled from Sellers under this
ARTICLE 9 (provided such amount is finally determined by a court having
jurisdiction or by agreement of the parties), against the Earn Out Payments that
would otherwise be payable by the Buyer to the Sellers pursuant to this
Agreement. Neither the exercise of nor the failure to exercise this right of
offset will constitute an election of remedies or limit the buyer in any manner
in the enforcement of any other remedies that Buyer may have available to it.
ARTICLE 10
COVENANTS AFTER THE CLOSING
---------------------------
10.1 BOOKS AND RECORDS. Sellers will deliver the Corporation's
original minute books and stock record books to Buyer (the "Corporate Records")
at the Closing. For a period of three (3) years following the Closing Date,
Buyer shall afford Sellers and its Representatives, during normal business
hours, reasonable access to the Corporate Records with respect to the period
prior to the Closing Date to the extent that such access may be reasonably
required by Sellers to facilitate (a) the preparation by Sellers of Tax Returns
as they may be required to file with respect to its operation of the Business
prior to Closing or in connection with any audit, amended return, claim for
refund or any Proceeding with respect thereto, (b) the investigation, litigation
and final disposition of any claims which may have been or may be made against
Sellers in connection with its operation of the Business prior to Closing, (c)
the payment of any indemnity under this Agreement or (d) any other reasonable
purpose. At any time after the Closing Date to the extent permitted by law,
Buyer may dispose of, alter or destroy any such Corporate Records upon giving
sixty (60) days' prior notice to Sellers to permit Sellers, at their expense, to
examine, duplicate or repossess such Corporate Records.
10.2 FURTHER ASSURANCES. Both before and after the Closing
Date, each party will cooperate in good faith with the other and will take all
appropriate action and execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder.
10.3 OPERATION OF THE CORPORATION/DIVISION POST-CLOSING.
(a) Buyer agrees for the benefit of Sellers that following
the Closing it will cause the Corporation's/Division's business to continue to
be operated in substantially the same manner as prior to the Closing, as if the
Corporation continued to be a stand-alone business, except as expressly provided
in this Agreement. In addition, Buyer shall not take any action inconsistent
with such operation of the Division's business that would interfere with the
ability of Sellers to achieve the Earn Out Payments. However, should the
Division realize two (2) consecutive quarters of losses, Buyer may take any
action it reasonably deems appropriate to improve the Division's results without
violating any terms of this Agreement. Sellers shall nevertheless be entitled to
the Earn Out Payments if the EBITDA targets are achieved.
42
(b) Unless terminated pursuant to his employment
agreement, Xxxx X. Xxxxxx, III, after the Closing and at least for the duration
of the Earn Out Periods, shall be President of the Division and Vice President
of Buyer. During such period, he alone shall be responsible for managing the
business and affairs of the Division, in compliance with legal requirements and
Buyer company policy, and he shall have no other significant responsibilities.
He shall have the authority to approve all ordinary business expenses of the
Division up to $10,000 per expense. He shall have sole authority with respect to
the employment, termination of employment and compensation and benefits of the
individuals who are employees of the Corporation as of the Closing. Buyer shall
not add employees to the Division without his written consent.
10.4 LEASE. After the Closing, Buyer will cause the
Corporation and Division to perform all obligations, satisfy all conditions, and
comply with all other terms and conditions of the Corporation's Lease. Buyer
will cause the Corporation's Lease to terminate on April 30, 2005 and will not
permit the Corporation/Division to exercise any option to extend the term of the
Corporation's Lease, either as set forth in Section 27 of the Corporation's
Lease or as may be set forth in any amendment to the Corporation's Lease entered
into after the Closing Date. Notwithstanding anything to the contrary herein,
Buyer will indemnify and hold harmless Xxxxxx X. Xxxxxx, Xx. and Xxxxx X.
Xxxxxx, guarantors under the Corporation's Lease, for, and will pay to such
indemnified persons as incurred the amount of, any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees and expenses) of any kind whatsoever, whether or not involving a
third-party claim, arising, directly or indirectly, from or in connection with a
breach by Buyer of this Section 10.4 except for obligations of Omni pursuant to
the Co-Tenancy Agreement dated January 1, 2002.
10.5 CLOSING FINANCIAL STATEMENTS. For the purpose of
determining Working Capital as of the Closing and tax accruals for purposes of
Section 9.4.1, within twenty-one (21) days of Closing, a closing balance sheet
and income statement will be prepared by Sellers and Corporation as of the date
of Closing and will be delivered to Buyer. Said closing balance sheet and income
statement will include all revenues for services performed prior to Closing and
the required payables and accruals for all expenses associated with the Business
prior to Closing, including but not limited to, wages, fringe benefits, bonuses,
taxes, amounts owed for contract labor and professional services. Buyer shall
have fourteen (14) days to review and either accept or reject such balance sheet
and income statement. If Buyer disputes any portion of such balance sheet and
income statement, Buyer and Sellers shall meet to resolve such dispute.
10.6 FINAL FINANCIAL STATEMENTS AND INTERIM FINANCIAL
STATEMENTS. Sellers shall deliver copies of the Interim Financial Statements and
the final Financial Statements to Buyer on or before July 19, 2002.
ARTICLE 11
MISCELLANEOUS
-------------
11.1 TERMINATION. This Agreement may be terminated upon ten
(10) days prior written notice at any time prior to Closing without liability of
any party to any other party:
(a) by mutual written consent of Buyer and Sellers;
43
(b) by Buyer, if Closing has not occurred on or before
July 31, 2002 as a result of the nonfulfillment of any of the conditions to
Buyer's obligation to perform contained in ARTICLE 8 of this Agreement after
written notice of such nonfulfillment and reasonable opportunity to cure;
(c) by Sellers, if Closing has not occurred on or before
July 31, 2002 as a result of the nonfulfillment of any of the conditions to
Sellers' obligation to perform contained in ARTICLE 7 of this Agreement after
written notice of such nonfulfillment and reasonable opportunity to cure; or
(d) by Sellers on the one hand, or Buyer, on the other
hand, upon ten (10) days prior written notice if the other party has breached
any material covenant to be performed by it pursuant to this Agreement and
failed to cure any such breach within five (5) business days after receipt of
such notice. Termination of this Agreement shall not affect in any way the
continuing obligations of the parties hereto pursuant to SECTIONS 6.5 AND 11.7.
11.2 ASSIGNMENT. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by Sellers or the Corporation on the
one hand, or Buyer on the other hand, without the prior written consent of the
other parties except that Buyer may assign its right to purchase the Shares to
an Affiliate. No assignment of this Agreement by Buyer will relieve Buyer of any
of its obligations hereunder. Subject to the foregoing, this Agreement will be
binding upon and inure to the benefit of Sellers, the Corporation and Buyer and
their respective successors and assigns, and no other Person will have any right
or obligation under this Agreement.
11.3 NOTICES. Any and all notices, designations, consents,
offers, acceptances or other communications provided for herein (each a
"Notice") will be given in writing by hand delivery, by overnight courier,
telegram or telecopy which will be addressed, or sent, to the respective
addresses as follows (or such other address as any party may specify to the
other parties by Notice):
(a) If to Sellers or the Corporation, before the Closing,
addressed to:
Advantage Innovation, Inc.
Attn: Xxxx X. Xxxxxx, III
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P.
Attn: Xxxxxx X. Xxxxxxxx, Esq.
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
44
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Sellers after the Closing, address to:
Xxxx X. Xxxxxx, III
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxx X. Xxxxxx, Xx.
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxx
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxx
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxx X. Xxxxxxx
000 Xxxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy in any case to:
Jones, Walker, Waechter, Poitevent,
Carrere & Xxxxxxx, L.L.P.
Attn: Xxxxxx X. Xxxxxxxx, Esq.
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
45
(b) If to Buyer, addressed to:
Barrister Global Services Network, Inc.
Attn: Xxxxxxx X. Xxxx
President and Chief Executive Officer
Xxxxxxx X. Xxxxxxxx, Esq.
General Counsel
000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxx LLP
Attn: Xxxx X. Xxx, Esq.
Xxxx X. Xxxxxxx, Esq.
Xxx X&X Xxxxx, Xxxxx 0000
Xxxxxxx, Xxx Xxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
All Notices will be deemed effective and received (a) if given
by hand delivery, upon delivery, (b) if given by facsimile, on the next business
day after such facsimile is transmitted to the facsimile number specified above
and receipt thereof is confirmed, (c) if given by overnight courier, on the
third business day immediately following the day on which such Notice is
delivered to a reputable overnight courier service; or (d) if given by telegram,
on the next business day after such Notice is delivered at the address specified
above. A "BUSINESS DAY" is one on which banks are open for normal banking
business (excluding Saturdays) in the location of the notice recipient.
11.4 CHOICE OF LAW. This Agreement will be construed,
interpreted and the rights of the parties determined in accordance with the laws
of the State of New York (without reference to the choice of law provisions of
New York law) except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity was incorporated will govern.
11.5 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all Exhibits and Schedules hereto, constitutes the entire
agreement between Sellers, the Corporation and Buyer pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of Sellers, the Corporation and Buyer.
No supplement, modification or waiver of this Agreement will be binding unless
executed in writing by the party to be bound thereby. No waiver of any provision
of this Agreement will be deemed or will constitute a waiver of any other
provision of this Agreement (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided in such
writing.
46
11.6 MULTIPLE COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument. Any party may
execute this Agreement by facsimile signature and the other party will be
entitled to rely on such facsimile signature as evidence that this Agreement has
been duly executed by such party. Any party executing this Agreement by
facsimile signature will immediately forward to the other party an original
signature page by overnight mail.
11.7 EXPENSES. Except as otherwise specified in this
Agreement, Sellers (and not the Corporation) will pay their own, and Buyer will
pay its own, legal, accounting and other expenses incident to the negotiation
and preparation of this Agreement and the consummation of the transactions
contemplated hereby; provided, however, that Buyer shall pay all expenses
associated with securing audited financial statements for the Corporation and
any other cost directly associated with Buyer's compliance with federal or state
securities laws.
11.8 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability will not affect any other provision of this
Agreement or any other such instrument.
11.9 TITLES. The titles, captions or headings of the articles
and sections of this Agreement 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.
11.10 PUBLIC STATEMENTS.
(a) Buyer, Sellers and the Corporation agree to cooperate,
prior to the Closing in preparing language for and issuing any press releases or
otherwise making public statements with respect to the transactions contemplated
by this Agreement.
(b) Neither Sellers nor the Corporation shall issue any
press release or make any public statement regarding the transaction
contemplated hereby (i) prior to the Closing Date, or (ii) after the Closing
prior to the release of any press releases by Buyer; without the prior approval
of Buyer, except as may be required by law and, in any such event, only after
consultation with Buyer.
(c) After the Closing, Buyer and the Corporation shall
jointly notify all customers of the Business that the transactions contemplated
by this Agreement have occurred.
47
IN WITNESS WHEREOF, the Corporation and Buyer have caused this
Agreement to be duly executed on their respective behalf by their respective
duly authorized officers, and the Sellers have duly executed this Agreement, as
of the day and year indicated at the beginning of this Agreement. Any individual
signing on behalf of a corporation represents and warrants that he has power and
authority to bind the corporation.
BARRISTER GLOBAL SERVICES NETWORK, INC.
BY:____________________________________
NAME:
TITLE:
ADVANTAGE INNOVATION, INC.
BY:____________________________________
XXXX X. XXXXXX, III
CHIEF EXECUTIVE OFFICER
---------------------------------------
XXXX X. XXXXXX, III
---------------------------------------
XXXXXX X. XXXXXX, XX.
---------------------------------------
XXXXX X. XXXXXX
---------------------------------------
XXXXX X. XXXXXX
---------------------------------------
XXXXX X. XXXXXXX
48
SCHEDULES
---------
SCHEDULE DESCRIPTION
---------------------------- -------------------------------------------------
Schedule 2.2(b) Allocation of Aggregate Payment Amount
---------------------------- -------------------------------------------------
Schedule 2.4(c) Current and Prospective Customers of Corporation
Under Buyer's Business Model
---------------------------- -------------------------------------------------
Schedule 4.1 Organization
---------------------------- -------------------------------------------------
Schedule 4.3 Conflicts
---------------------------- -------------------------------------------------
Schedule 4.4 Consents and Approvals
---------------------------- -------------------------------------------------
Schedule 4.7(a) Capitalization
---------------------------- -------------------------------------------------
Schedule 4.7(b) Shares
---------------------------- -------------------------------------------------
Schedule 4.9 Financial Statements
---------------------------- -------------------------------------------------
Schedule 4.10 Current Real Property
---------------------------- -------------------------------------------------
Schedule 4.12(b) Intellectual Property Contracts
---------------------------- -------------------------------------------------
Schedule 4.12(c) Employee Intellectual Property Exceptions
---------------------------- -------------------------------------------------
Schedule 4.12(d) Trademarks
---------------------------- -------------------------------------------------
Schedule 4.12(g) Intellectual Property Not Owned by Corporation
---------------------------- -------------------------------------------------
Schedule 4.13 Compliance with Laws; Permits
---------------------------- -------------------------------------------------
Schedule 4.14 Litigation
---------------------------- -------------------------------------------------
Schedule 4.15 Tax Matters
---------------------------- -------------------------------------------------
Schedule 4.17(a) Employees as of July 8, 2002
---------------------------- -------------------------------------------------
Schedule 4.17(b) Employee Matters Compliance
---------------------------- -------------------------------------------------
Schedule 4.17(c) Employee Contracts
---------------------------- -------------------------------------------------
Schedule 4.18(a) Customers
---------------------------- -------------------------------------------------
Schedule 4.19 Environmental Matters
---------------------------- -------------------------------------------------
Schedule 4.21 Bank Accounts
---------------------------- -------------------------------------------------
Schedule 4.22(a)(1) Pension Plans
---------------------------- -------------------------------------------------
Schedule 4.22(a)(2) Welfare Plans
---------------------------- -------------------------------------------------
Schedule 4.22(k) Employee Benefits
---------------------------- -------------------------------------------------
Schedule 4.24(b) Insurance
---------------------------- -------------------------------------------------
Schedule 4.24(c) Insurance Claims
---------------------------- -------------------------------------------------
Schedule 4.24(d) Insurance Exceptions
---------------------------- -------------------------------------------------
Schedule 4.25 Brokers
---------------------------- -------------------------------------------------
Schedule 4.26 Material Contracts
---------------------------- -------------------------------------------------
Schedule 4.27 Absence of Changes
---------------------------- -------------------------------------------------
Schedule 4.28 Form of Product Warranty
---------------------------- -------------------------------------------------
Schedule 4.28(a) Extended Product Warranty
---------------------------- -------------------------------------------------
Schedule 4.28(b) Warranty Exceptions
---------------------------- -------------------------------------------------
Schedule 5.4 Consents and Approvals of Buyer
---------------------------- -------------------------------------------------
Schedule 6.4(a)(iv) Bonuses and Management Fees Due by the
Corporation Upon the Closing
---------------------------- -------------------------------------------------
Schedule 6.4(b)(i) Vehicles and Other Assets of the Corporation to
be Transferred Effective Upon the Closing
---------------------------- -------------------------------------------------
Schedule 6.4(b)(ii) Debts of the Shareholders to the Corporation to
be Forgiven Effective Upon the Closing
---------------------------- -------------------------------------------------
Schedule 6.4(b)(iii) Corporation LLC Interest to be Transferred Prior
to Closing
---------------------------- -------------------------------------------------
Schedule 6.4(b)(iv) Bonuses Granted and Accrued by the Corporation
Prior to the Closing
---------------------------- -------------------------------------------------
