1
EXHIBIT 2.1
2
PURCHASE AGREEMENT
MADE AS OF
NOVEMBER 15, 1998,
BETWEEN
CONCAP, INC.,
BUYER,
AND
XXXXXXX HOLDING COMPANY, LLC,
SELLER
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TABLE OF CONTENTS
Page
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1. DEFINITIONS. 1
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1.1. "APPLICABLE CONTRACT" 1
1.2. "BEST EFFORTS" 1
1.3. "BREACH" 1
1.4. "BUYER" 1
1.5. "BUYER'S STOCK" 1
1.6. "CLOSING" 1
1.7. "CLOSING DATE" 2
1.8. "CONSENT" 2
1.9. "CONTEMPLATED TRANSACTIONS" 2
1.10. "CONTRACT" 2
1.11. "DAMAGES" 2
1.12. "DISCLOSURE SCHEDULE" 2
1.13. "ENCUMBRANCE" 2
1.14. "ENVIRONMENTAL REQUIREMENTS" 2
1.15. "ERISA" 2
1.16. "FACILITIES" 3
1.17. "GAAP" 3
1.18. "GOVERNMENTAL AUTHORIZATION" 3
1.19. "GOVERMANTAL BODY" 3
1.20. "IRC" 3
1.21. "IRS" 3
1.22. "KNOWLEDGE" 3
1.23. "LEGAL REQUIREMENT" 4
1.24. "OPERATING INCOME" 4
1.25. "ORDER" 5
1.26. "ORDINARY COURSE OF BUSINESS" 5
1.27. "ORGANIZATIONAL DOCUMENTS" 5
1.28. "PERSON" 5
1.29. "PLAN" 6
1.30. "PROCEEDING" 6
1.31. "RELATED PERSON" 6
1.33. "REPRESENATIVE" 6
1.34. "SECURITIES ACT" 6
1.35. "SELLER" 6
1.36. "TAX RETURN" 6
1.37. "THREATENED" 6
2. TRANSFER OF INTEREST; REIMBURSEMENT AMOUNT; CLOSING. 6
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2.1. INTEREST. 6
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2.2. BUYER'S STOCK. 6
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2.3. CLOSING. 6
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2.4. CLOSING OBLIGATIONS. 7
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3. REPRESENTATIONS AND WARRANTIES OF SELLER. 7
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3.1. ORGANIZATION AND GOOD STANDING. 8
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3.2. AUTHORITY; NO CONFLICT. 8
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3.3. CAPITALIZATION. 9
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3.4. FINANCIAL STATEMENTS. 9
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3.5. BOOKS AND RECORDS. 10
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3.6. TITLE TO PROPERTIES; ENCUMBRANCES. 10
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3.7. NO UNDISCLOSED LIABILITIES. 11
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3.8. TAXES. 11
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3.9. NO MATERIAL ADVERSE CHANGE. 11
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3.10. EMPLOYEE BENEFITS MATTERS. 12
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3.11. COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS. 13
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3.12. LEGAL PROCEEDINGS; ORDERS. 14
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3.13. ABSENCE OF CERTAIN CHANGES AND EVENTS. 15
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3.14. CONTRACTS; NO DEFAULTS. 16
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3.15. INSURANCE. 17
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3.16. ENVIRONMENTAL MATTERS. 18
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3.17. EMPLOYEE MATTERS. 18
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3.18. INTELLECTUAL PROPERTY RIGHTS OF SELLER. 18
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3.19. CERTAIN PAYMENTS. 20
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3.20. DISCLOSURE. 20
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3.21. BROKERS OR FINDERS. 21
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3.22. FAIRNESS OPINION. 21
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4. REPRESENTATIONS AND WARRANTIES OF BUYER. 21
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4.1. ORGANIZATION AND GOOD STANDING. 21
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4.2. AUTHORITY. 21
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4.3. INVESTMENT INTENT. 21
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4.4. CERTAIN PROCEEDINGS. 21
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4.5. BROKERS OR FINDERS. 21
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5. COVENANTS OF SELLER PRIOR TO CLOSING DATE. 22
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5.1. ACCESS AND INVESTIGATION. 22
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5.2. OPERATION OF THE BUSINESS OF SELLER. 22
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5.3. NEGATIVE COVENANT. 22
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5.4. REQUIRED APPROVALS. 22
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5.5. NOTIFICATION. 23
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5.6. NO NEGOTIATION. 23
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5.7. BANK ACCOUNT SIGNATURE AUTHORITY. 23
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6. COVENANTS OF BUYER PRIOR TO CLOSING DATE. 23
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6.1. APPROVALS OF GOVERNMENTAL BODIES/THIRD PARTY CONSENTS. 23
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7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. 24
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7.1. ACCURACY OF REPRESENTATIONS. 24
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7.2. SELLER'S PERFORMANCE. 24
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7.3. CONSENTS. 24
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7.4. ADDITIONAL DOCUMENTS. 24
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7.5. NO PROCEEDINGS. 25
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7.6. NO CLAIM REGARDING INTEREST OWNERSHIP OR SALE PROCEEDS. 25
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7.7. NO PROHIBITION. 25
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7.8. EMPLOYMENT AGREEMENT. 25
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8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. 25
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8.1. ACCURACY OF REPRESENTATIONS. 25
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8.2. BUYER'S PERFORMANCE. 25
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8.3. CONSENTS. 25
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8.4. ADDITIONAL DOCUMENTS. 26
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8.5. NO INJUNCTION. 26
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9. TERMINATION. 26
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9.1. TERMINATION EVENTS. 26
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9.2. EFFECT OF TERMINATION. 26
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10. INDEMNIFICATION; REMEDIES. 27
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10.1. AGREEMENT BY SELLER TO INDEMNIFY. 27
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10.2. AGREEMENTS BY BUYER TO INDEMNIFY. 28
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10.3. MATTERS INVOLVING THIRD PARTIES. 29
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11. POST-CLOSING AGREEMENTS. 29
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11.1. CONSISTENCY IN REPORTING. 29
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11.2. FUNDING OF SELLER BY BUYER. 30
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11.3. PERFORMANCE OF SELLER. 30
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11.4. REMEDIES FOR BREACH OF AGREEMENT BY BUYER. 30
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11.5. REMEDIES FOR BREACH OF AGREEMENT BY SELLER. 30
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12. GENERAL PROVISIONS. 31
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12.1. EXPENSES. 31
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12.2. PUBLIC ANNOUNCEMENTS. 31
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12.3. CONFIDENTIALITY. 31
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12.4. NOTICES. 32
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12.5. JURISDICTION; SERVICE OF PROCESS. 32
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12.6. FURTHER ASSURANCES. 32
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12.7. WAIVER. 32
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12.8. ENTIRE AGREEMENT AND MODIFICATION. 33
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12.9. DISCLOSURE SCHEDULE. 33
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12.10. ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS. 33
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12.11. SEVERABILITY. 34
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12.12. SECTION HEADINGS; CONSTRUCTION. 34
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12.13. TIME OF ESSENCE. 34
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12.14. GOVERNING LAW. 34
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12.15. COUNTERPARTS. 34
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DRAFT: FOR DISCUSSION PURPOSES ONLY
STOCK PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of November 15, 1998, by
CONCAP, Inc., a Texas corporation, ("Buyer"), and Xxxxxxx Holding Company, LLC,
d/b/a Temporary Help Connection, a Michigan company ("Seller").
RECITALS:
Seller desire to sell, and Buyer desires to purchase, one hundred percent
(100%) interest of Seller's corporation (the "Interest"), for the consideration
and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1.:
1.1. "Applicable Contract" - any Contract (i) under which Seller has or
may acquire any rights; (ii) under which Seller has or may become subject to any
obligation or liability or (iii) by which Seller or any of the assets owned or
used by it is or may become bound.
1.2. "Best Efforts" - the efforts that a prudent Person desirous of
achieving a result would reasonably use in similar circumstances to ensure that
such result is achieved as expeditiously as possible; provided, however, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement and the
Contemplated Transactions.
1.3. "Breach" - a "Breech" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (i) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision or
(ii) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence or circumstance.
1.4. "Buyer" - as defined in the first paragraph of this Agreement.
1.5. "Buyer's Stock" - 900,000 restricted shares of Seller's capital
stock.
1.6. "Closing" - as defined in Section 2.4.
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1.7. "Closing Date" - the date and time as of which the Closing actually
takes place.
1.8. "Consent" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
1.9. "Contemplated Transactions" - all of the transactions contemplated
by this Agreement, including:
A. The transfer of the Interest by Seller to Buyer;
B. The execution, delivery, and performance of the Closing Obligations
set forth in Section 2.5;
C. The performance by Buyer and Seller of their respective covenants
and obligations under this Agreement;
D. Buyer's acquisition and ownership of the Interest and exercise of
control over the Seller; and
E. The transfer of Buyer's Stock to Seller.
1.10. "Contract" - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
1.11. "Damages" - any loss, liability, claim, damages (including, without
limitation, incidental and consequential damages), expense (including, without
limitation, costs of investigation and defense and reasonable attorneys' fees)
or diminution of value, whether or not involving a third party.
1.12. "Disclosure Schedule" - the disclosure schedule delivered by Seller
to Buyer concurrently with the execution and delivery of this Agreement.
1.13. "Encumbrance" - any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
1.14. "Environmental Requirements" - means federal, state and local laws
relating to pollution or protection of the environment, including laws or
provisions relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials, substances, or wastes
into air, surface water, groundwater, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials, substances, or wastes.
1.15. "ERISA" - the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
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1.16. "Facilities" - any real property, leaseholds, or other interests
currently or formerly owned or operated by Seller and any buildings, plants,
structures, or equipment (including motor vehicles) currently or formerly owned
or operated by Seller.
1.17. "GAAP" generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the financial statements
referred to in Section 3.4. were prepared.
1.18. "Governmental Authorization" - any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
1.19. "Governmental Body" - any:
A. Nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
B. Federal, state, local, municipal, foreign, or other government;
C. Governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
D. Multi-national organization or body; or
E. Body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
1.20. "IRC" - the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
1.21. "IRS" - the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
1.22. "Knowledge" - 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 given his position with Seller could be
expected to discover or otherwise become aware of such fact or other matter.
C. 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 within the last
five (5) years, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
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1.23. "Legal Requirement" - any federal, state, local, municipal,
foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
1.24. "Operating Income" - means the net income of Seller determined in
accordance with GAAP before income taxes and after all other charges except:
A. Unless otherwise approved by Buyer, any general and administrative
expense (i.e., allocation of Seller's general corporate overhead) attributable
to the Seller and all subsidiaries of Seller that is not directly related to the
operation of Seller in the Ordinary Course of Business; provided, however,
Operating Income shall include reimbursement by Seller of expenses at a fair
market price mutually agreed to by Buyer and Seller for expenses previously
incurred by Seller, but that have for administrative convenience or efficiency
reasons been centralized with Buyer; and
B. Any amortization of goodwill of Seller and all Subsidiaries of
Seller.
C. In the event that certain expenses incurred by the Seller are for
the principal or partial benefit of Seller or other subsidiaries of Seller, then
the parties hereto shall endeavor to track and determine in a fair and equitable
manner that portion of such expenses that should fairly and reasonably be
allocated to Seller or such other subsidiaries of Seller, and therefore not
included in arriving at Operating Income for purposes of this Agreement.
1.25. "Order" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
1.26. "Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
A. Such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
B. Such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and
C. Such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day-to-day operations of other Persons that are in the same
line of business as such Person.
1.27. "Organizational Documents" - (i) the Articles or Certificate of
Incorporation and the Bylaws of a corporation; (ii) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person and (iii) any amendment to any of the foregoing.
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1.28. "Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
1.29. "Plan" - as defined in Section 3.10.1.
1.30. "Proceeding" - any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
1.31. "Related Person" - with respect to a particular individual:
A. Each other member of such individual's Family;
B. Any Person that is directly or indirectly controlled by such
individual or one (1) or more members of such individual's Family;
C. Any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
D. Any Person with respect to which such individual or one (1) or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
A. Any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
B. Any Person that holds a Material Interest in such specified Person;
C. Each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
D. Any Person in which such specified Person holds a Material
Interest;
E. Any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
Any Related Person of any individual described in clause B. or C.
For purposes of this definition, (i) the "Family" of an individual
includes (1) the individual; (2) the individual's spouse and former spouses; (3)
any other natural person who is related to the individual or the individual's
spouse within the second degree and (4) any other natural person who resides
with such individual and (2) "Material Interest" means direct or indirect
beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934) of voting securities or other voting interests representing at least
[five percent (5%)] of the
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outstanding voting power of a Person or equity securities or other equity
interests representing at least [five percent (5%)] of the outstanding equity
securities or equity interests in a Person.
1.32. "Representative" - with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
1.33. "Securities Act" - the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
1.34. "Seller" - as defined in the first paragraph of this Agreement.
1.35. "Subsidiary" - with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one (1) or more of its
Subsidiaries; [when used without reference to a particular Person, "Subsidiary"
means a Subsidiary of Seller].
1.36. "Tax Return" - any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
1.37. "Threatened" - a claim, Proceeding, dispute, action, or other
matter will be deemed to have been "Threatened" if any demand or statement has
been made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken, or
otherwise pursued in the future.
2. TRANSFER OF INTEREST; REIMBURSEMENT AMOUNT; CLOSING.
2.1. Interest. In exchange for the transfer of Buyer's Stock, as set
forth in Section 2.2, and subject to the terms and conditions of this Agreement,
at the Closing, Seller will transfer the Interest to Buyer.
2.2. Buyer's Stock. In exchange for the transfer of the Interest as set
forth in Section 2.1, and subject to the terms and conditions of this Agreement,
at the Closing, Buyer shall transfer to Seller the Buyer's Stock.
2.3. Closing. The purchase and sale (the "Closing") provided for in this
Agreement will take place at the offices of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P., at
1600 Atlanta Financial
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Center, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, at 10:00 a.m. (local
time) on November 15, 1998, or at such other time and place as the parties may
agree. Except as otherwise provided in Section 9., failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.3. will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
2.4. Closing Obligations. At the Closing:
A. Seller will deliver to Buyer:
(i) Certificates. Certificates or agreements representing
the Interest, duly executed for transfer to Buyer;
(ii) Opinion of Counsel. Buyer shall have received an opinion
dated the Closing Date from _______________, counsel for Seller, substantially
in the form of EXHIBIT A attached hereto;
(iii) Good Standing Certificate. Seller shall have delivered to
Buyer a certificate evidencing the good standing of Seller as of a recent
practicable date;
(iv) Certificate. A certificate substantially in the form of
EXHIBIT B hereto, executed by Seller representing and warranting to Buyer that
each of Seller's representations and warranties in this Agreement was accurate
in all respects as of the date of this Agreement and is accurate in all respects
as of the Closing Date as if made on the Closing Date (giving full effect to any
supplements to the Disclosure Schedule that were delivered by Seller to Buyer
prior to the Closing Date in accordance with Section 5.5.); and
(v) Mutual Release. Seller shall have delivered to Buyer a
mutual release, executed by Seller, substantially in the form of EXHIBIT C
B. Buyer will deliver to Seller:
(i) Certificates. Certificates representing Buyer's Stock,
duly endorsed (or accompanied by duly executed stock powers) for transfer to
Seller;
(ii) Certificate. A certificate in the form of EXHIBIT D hereto
executed by Buyer to the effect that, except as otherwise stated in such
certificate, each of Buyer's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing Date; and
(iii) Mutual Release. Buyer shall have delivered to Seller a
Mutual Release, executed by Buyer, substantially in the form of EXHIBIT C.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
3.1. Organization and Good Standing.
A. SCHEDULE 3.1 of the Disclosure Schedule contains a complete and
accurate list of Seller's name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each member and the percentage held by each).
Seller is a corporation duly organized, validly existing, and in
good standing under the laws of Michigan, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under Applicable Contracts.
Seller is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, requires such qualification.
B. Seller has delivered to Buyer copies of the Organizational
Documents of Seller, as currently in effect.
3.2. Authority; No Conflict.
A. This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Upon the execution and delivery by Seller of the closing documents set forth in
Section 2.4A (collectively, the "Seller's Closing Documents"), the Seller's
Closing Documents will constitute the legal, valid, and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
Seller has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and the Seller's Closing
Documents and to perform his obligations under this Agreement and the Seller's
Closing Documents.
B. Except as set forth in SCHEDULE 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) Contravene, conflict with, or result in a violation of (1)
any provision of the Organizational Documents of Seller or (2) any resolution
adopted by the board of directors or the stockholders of Seller;
(ii) Contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions
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or to exercise any remedy or obtain any relief under, any Legal Requirement or
any Order to which Seller or Seller, or any of the assets owned or used by
Seller, may be subject;
(iii) Contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Seller or that otherwise relates to the business
of, or any of the assets owned or used by, Seller;
(iv) Cause Buyer or Seller to become subject to, or to become
liable for the payment of, any Tax;
(v) Cause any of the assets owned by Seller to be reassessed
or revalued by any taxing authority or other Governmental Body;
(vi) Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vii) Result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Seller.
Except as set forth in SCHEDULE 3.2 of the Disclosure Schedule, Seller is
or will be required to give any notice to or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions.
3.3 Capitalization. Seller is and will be on the Closing Date the
record and beneficial owners and holders of the Interest, free and clear of all
Encumbrances.
With the exception of the Interest (which is owned by Seller), all of the
outstanding equity securities and other equity of Seller are owned of record and
beneficially by Seller, free and clear of all Encumbrances. No legend or other
reference to any purported Encumbrance appears upon any certificate representing
equity of Seller.
All of the outstanding equity of Seller have been duly authorized and
validly dispursed and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity or other securities of
Seller, including, but not limited to, options, warrants, convertible
securities, redemption rights, registration rights and the like.
None of the outstanding equity or other securities of Seller were issued
in violation of the Securities Act or any other Legal Requirement.
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3.4. Financial Statements. Seller has delivered to Buyer, as set forth
on SCHEDULE 3.4:
A. Unaudited balance sheets of Seller as of December 31, 1997, and
as of May 31, 1998, together with the related statements of income, changes in
equity and cash flow (collectively, the "Financial Statements") for the periods
referred to in such financial statements.
B. The Financial Statements were prepared in accordance with this
Agreement and with GAAP consistently applied.
The Financial Statements and notes, if any, fairly present the financial
condition and the results of operations, changes in stockholders' equity, and
cash flow of Seller as at the respective dates of and for the periods referred
to in such Financial Statements, all in accordance with GAAP, subject, in the
case of interim Financial Statements, to normal recurring year-end adjustments
(the effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes.
No financial statements of any Person, other than Seller, are required by
GAAP to be included in the Financial Statements of Seller.
3.5. Books and Records. The books of account, minute books, stock record
books, and other records of Seller, all of which have been made available to
Buyer, are complete and correct and have been maintained in accordance with
sound business practices.
The minute books of Seller contain accurate and complete records of all
meetings held of, and corporate action taken by, the members, the Boards of
Directors, and committees of the Boards of Directors of Seller, and no meeting
of any such members, Board of Directors, or committee has been held for and no
material action has been taken at any meeting for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of Seller.
3.6. Title to Properties; Encumbrances. Seller owns (with good and
marketable title in the case of real property, subject only to the Encumbrances
permitted by this Section) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that they purport to own
located in the facilities owned or operated by Seller or reflected as owned in
the books and records of Seller, including all of the properties and assets
reflected in the Closing Date Financial Statements (except for assets held under
capitalized leases disclosed or not required to be disclosed in SCHEDULE 3.6 of
the Disclosure Schedule).
All material properties and assets reflected in the Closing Date
Financial Statements are free and clear of all Encumbrances and are not, in the
case of real property, subject to any rights of way, building use restrictions,
exceptions, variances, reservations, or limitations of any nature except, with
respect to all such properties and assets:
A. Mortgages or security interests shown on the Closing Date
Financial Statements as securing specified liabilities or obligations, with
respect to which no default (or event that, with notice or lapse of time or
both, would constitute a default) exists;
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B. Liens for current taxes not yet due; and
C. With respect to real property:
(i) Minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of Seller; and
(ii) Zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject thereto.
All buildings, plants, and structures owned by Seller lie wholly within
the boundaries of the real property owned by Seller and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person. All property and assets of the Seller shall be in the possession and
control of Seller at Closing, including but not limited to, all Facilities.
3.7. No Undisclosed Liabilities. Except as set forth in SCHEDULE 3.7 of
the Disclosure Schedule, Seller has no liabilities or obligations of any nature
(whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations reflected or reserved against
in the Closing Date Financial Statements and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
3.8. Taxes.
Except as set forth on SCHEDULE 3.8 to the Disclosure Schedule, Seller
has timely filed all tax returns and reports required to be filed by it,
including, without limitation, all federal, state and local tax returns, and has
paid in full or made adequate provision by the establishment of reserves for all
taxes and other charges which have become due or which are attributable to the
conduct of Seller's business prior to Closing. Seller will continue to make
adequate provision for all such taxes and other charges for all periods through
the Closing Date.
Except as set forth on SCHEDULE 3.8 to the Disclosure Schedule, Seller
have no Knowledge of any tax deficiency proposed or threatened against Seller.
There are no tax liens upon any property or assets of Seller.
Except as set forth on SCHEDULE 3.8 to the Disclosure Schedule, Seller
has made all payments of estimated taxes when due in amounts sufficient to avoid
the imposition of any penalty.
Except as set forth on SCHEDULE 3.8 to the Disclosure Schedule, all taxes
and other assessments and levies which Seller was required by law to withhold or
to collect have been duly withheld and collected, and have been paid over to the
proper governmental entity.
Except as set forth in SCHEDULE 3.8 to the Disclosure Schedule, the
federal and state income tax returns and local returns, if any, of Seller have
never been audited by the income tax authorities, nor are any such audits in
process. Except as set forth in SCHEDULE 3.8, to the Disclosure Schedule there
are no outstanding agreements or waivers extending the statute of limitations
applicable to any federal or state income tax returns of Seller for any period.
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3.9. No Material Adverse Change. Since October 16, 1996, there has not
been any material adverse change in the business, operations, properties,
prospects, assets, or condition of Seller, and no event has occurred or
circumstance exists that may result in such a material adverse change.
3.10. Employee Benefits Matters.
3.10.1 SCHEDULE 3.10.1 lists all plans, programs, and similar
agreements, commitments or arrangements, whether oral or written, maintained by
or on behalf of Seller or any other party that provide benefits or compensation
to, or for the benefit of, current or former employees of Seller ("Plan" or
"Plans"). Except as set forth on SCHEDULE 3.10.1 to the Disclosure Schedule only
current and former employees of Seller participate in the Plans. Copies of all
Plans and, to the extent applicable, all related trust agreements, actuarial
reports, and valuations for the most recent year, all summary plan descriptions,
prospectuses, Annual Report Form 5500s or similar forms (and attachments
thereto) for the most recent year, all Internal Revenue Service determination
letters, and any related documents requested by Buyer, including all amendments,
modifications and supplements thereto, have been delivered to Buyer, and all of
the same are or will be true, correct and complete.
3.10.2 With respect to each Plan to the extent applicable:
A. No litigation or administrative or other proceeding is
pending or threatened involving such Plan;
B. To the Knowledge of Seller, such Plan has been
administered and operated in substantial compliance with, and has been amended
to comply with all applicable laws, rules, and regulations, including, without
limitation, ERISA, the Internal Revenue Code, and the regulations issued under
ERISA and the Internal Revenue Code;
C. Seller and its predecessors, if any, have made and as
of the Closing Date will have made or accrued, all payments and contributions
required, or reasonably expected to be required, to be made under the provisions
of such Plan or required to be made under applicable laws, rules and
regulations, with respect to any period following, such amounts to be determined
using the ongoing actuarial and funding assumptions of the Plan;
D. Such Plan is fully funded in an amount sufficient to
pay all liabilities accrued (including liabilities and obligations for health
care, life insurance and other benefits after termination of employment) and
claims incurred to the date hereof;
E. On the Closing Date such Plan will be fully funded in
an amount sufficient to pay all liabilities accrued (including liabilities and
obligations for health care, life insurance and other benefits after termination
of employment) and claims incurred to the Closing Date, or adequate reserves
will be set up on Seller's books and records, or paid-up insurance will be
provided, therefor; and
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F. Such Plan has been administrated and operated only in
the ordinary and usual course and in accordance with its terms, and there has
not been in the year prior hereto any increase in the liabilities of such Plan
beyond increases typically experienced by employers similar to Seller.
3.11. Compliance With Legal Requirements; Governmental Authorizations.
A. Except as set forth in SCHEDULE 3.11 of the Disclosure Schedule:
(i) Seller is, and at all times since October 16, 1996,, has
been, in full compliance with each Legal Requirement that is or was applicable
to it or to the conduct or operation of its business or the ownership or use of
any of its assets;
(ii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) (1) may constitute or result in a violation by
Seller of, or a failure on the part of Seller to comply with, any Legal
Requirement or (2) may give rise to any obligation on the part of Seller to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and
(iii) Seller has not received, at any time since October 16,
1996, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of, or failure to comply with, any Legal
Requirement or (2) any actual, alleged, possible, or potential obligation on the
part of Seller to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature.
B. SCHEDULE 3.11 Except as set forth in SCHEDULE 3.11 of the
Disclosure Schedule:
(i) Seller is, and at all times since October 16, 1996, has
been, in full compliance with all of the terms and requirements of any
applicable Governmental Authorization;
(ii) No event has occurred or circumstance exists that may
(with or without notice or lapse of time) (1) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any applicable Governmental Authorization or (2) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any applicable Governmental
Authorization;
(iii) Seller has not received, at any time since October 16,
1996, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding (1) any actual, alleged,
possible, or potential violation of or failure to comply with any term or
requirement of any Governmental Authorization or (2) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Governmental Authorization; and
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(iv) All applications required to have been filed for the
renewal of the Governmental Authorizations have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other filings required
to have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
The Seller has obtained any Governmental Authorizations necessary to
permit Seller to lawfully conduct and operate their businesses in the manner
they currently conduct and operate such businesses and to permit Seller to own
and use their assets in the manner in which they currently own and use such
assets.
3.12. Legal Proceedings; Orders.
A. Except as set forth in SCHEDULE 3.12 of the Disclosure Schedule,
there is no pending Proceeding:
(i) That has been commenced by or against Seller or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, Seller; or
(ii) That challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Seller, (i) no such Proceeding has been Threatened
and (ii) no event has occurred or circumstance exists that may give rise to or
serve as a basis for the commencement of any such Proceeding. Seller have
delivered to Buyer copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in SCHEDULE 3.12 of the Disclosure Schedule.
The Proceedings listed in SCHEDULE 3.12 of the Disclosure Schedule will not have
a material adverse effect on the business, operations, assets, condition, or
prospects of Seller.
B. Except as set forth in SCHEDULE 3.12 of the Disclosure Schedule:
(i) There is no Order to which any of Seller, or any of the
assets owned or used by Seller, is subject;
(ii) Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, Seller; and
(iii) No officer, director, agent, or employee of Seller is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of Seller.
C. Except as set forth in SCHEDULE 3.12 of the Disclosure Schedule:
(i) Seller is, and at all times since October 16, 1996, has
been, in full compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject;
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(ii) No event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which Seller,
or any of the assets owned or used by Seller, is subject; and
(iii) Seller has not received, at any time since October 16,
1996, any notice or other communication (whether oral or written) from any
Governmental Body or any other Person regarding any actual, alleged, possible,
or potential violation of, or failure to comply with, any term or requirement of
any Order to which Seller, or any of the assets owned or used by Seller, is or
has been subject.
3.13. Absence of Certain Changes and Events. Except as set forth in
Schedule 3.13 of the Disclosure Schedule, since October 16, 1996, Seller has
conducted its business only in the Ordinary Course of Business and there has not
been any:
A. Change in Seller's ownership; grant of any option or right to
purchase any Interest of Seller; issuance of any security convertible into such
Interest; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by Seller of any Interest; or declaration or payment of any
dividend or other distribution or payment in respect of any Interest in Seller;
B. Amendment to the Organizational Documents of Seller;
C. Payment or increase by Seller of any bonuses, salaries, or other
compensation to any stockholder, director, officer, or (except in the Ordinary
Course of Business) employee or entry into any employment, severance, or similar
Contract with any director, officer, or employee;
D. Adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of Seller;
E. Damage to or destruction or loss of any asset or property of
Seller, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of Seller,
taken as a whole;
F. Entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement or (ii) any Contract or transaction
involving a total remaining commitment by or to Seller of at least Five Thousand
and No/100 Dollars ($5,000.00);
G. Sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of Seller or
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of Seller, including the sale, lease, or other disposition of
any of the Software and Intangibles;
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H. Cancellation or waiver of any claims or rights with a value to
Seller in excess of Five Thousand and No/100 Dollars ($5,000.00);
I. Material change in the accounting methods used by Seller; or
J. Agreement, whether oral or written, by Seller to do any of the
foregoing.
3.14. Contracts; No Defaults.
A. Except as set forth in SCHEDULE 3.17(A) of the Disclosure
Schedule:
(i) Seller (and no Related Person of Seller) has not or may not
acquire any rights under, and Seller has not or may not become subject to any
obligation or liability under, any Contract that relates to the business of, or
any of the assets owned or used by, Seller; and
(ii) To the Knowledge of Seller, no officer, director, agent,
employee, consultant, or contractor of Seller is bound by any Contract that
purports to limit the ability of such officer, director, agent, employee,
consultant, or contractor to (1) engage in or continue any conduct, activity, or
practice relating to the business of Seller or (2) assign to Seller or to any
other Person any rights to any invention, improvement, or discovery.
B. Except as set forth in SCHEDULE 3.17(B) of the Disclosure
Schedule, each material Contract is in full force and effect and is valid and
enforceable in accordance with its terms.
C. Except as set forth in SCHEDULE 3.17(C) of the Disclosure
Schedule:
(i) Seller is, and at all times since October 16, 1996, has been,
in full compliance with all applicable terms and requirements of each Contract
under which such Seller has or had any obligation or liability or by which such
Seller or any of the assets owned or used by such Seller is or was bound;
(ii) Each other Person that has or had any obligation or
liability under any Contract under which Seller has or had any rights is, and at
all times since October 16, 1996, has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give Seller or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) Seller has not given to or received from any other Person,
at any time since October 16, 1996, any notice or other communication (whether
oral or written) regarding any actual, alleged, possible, or potential violation
or breach of, or default under, any Contract.
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F. There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to Seller
under current or completed Contracts with any Person and no such Person has made
written demand for such renegotiation.
G. The Contracts relating to the sale, design, manufacture, or
provision of products or services by Seller have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.15. Insurance.
A. Seller have delivered to Buyer:
(i) True and complete copies of all policies of insurance to
which Seller is a party or under which Seller, or any director of Seller, is or
has been covered at any time within the two (2) years preceding the date of this
Agreement;
(ii) True and complete copies of all pending applications for
policies of insurance; and
(iii) Any statement by the auditor of Seller's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
B. Except as set forth on SCHEDULE 3.15(B) of the Disclosure
Schedule:
(i) All policies to which Seller is a party or that provide
coverage to Seller, Seller, or any director or officer of an Seller:
(1) Are valid, outstanding, and enforceable;
(2) Taken together in the reasonable judgment of Seller,
provide adequate insurance coverage for the assets and the operations of Seller
for all risks to which Seller are normally exposed;
(3) Are sufficient for compliance with all Legal Requirements
and Contracts to which Seller is a party or by which it is bound;
(4) Will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(5) Do not provide for any retrospective premium adjustment
or other experienced-based liability on the part of Seller.
(ii) Neither Seller nor Seller has received (1) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights or (2) any notice of cancellation or any other indication that any
insurance policy is no longer in full force or effect or
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will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder.
(iii) Seller has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which Seller
is a party or that provides coverage to Seller or director thereof.
(iv) Seller has given notice to the insurer of all claims that
may be insured thereby.
3.16. Environmental Matters. Except as set forth in SCHEDULE 3.16 of the
Disclosure Schedule, at all times since October 16, 1996, Seller has obtained
and is in compliance with all permits, licenses and other authorizations
required to do business by Environmental Requirements. To each Seller's
Knowledge, there are no conditions, circumstances, activities, practices,
incidents, or actions (collectively, "Conditions") resulting from the conduct of
its business which Conditions may reasonably form the basis of any claim or suit
against Seller based on or related to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling by Seller, or the
emission, discharge, release or threatened release by Seller into the
environment, of any pollutant, contaminant, or hazardous or toxic materials,
substances or wastes.
3.17. Employee Matters.
Except as set forth on SCHEDULE 3.17, at all times since October 16,
1996, Seller has complied in all respects with all Legal Requirements relating
to employment, equal employment opportunity, nondiscrimination, immigration,
wages, hours, benefits, collective bargaining, the payment of social security
and similar taxes, occupational safety and health and plant closing.
Except as set forth on SCHEDULE 3.17, Seller is not liable for the
payment of any compensation, Damages, taxes, fines, penalties, or other amounts,
however, designated, for failure to comply with any of the foregoing Legal
Requirements.
3.18. Intellectual Property Rights of Seller.
A. Definitions. As used in this Agreement, and in addition to any
other terms defined in this Agreement, the following terms shall have the
following meanings.
(i) "Software" means any computer program, operating system,
applications system, firmware or software of any nature, whether operational,
under development or inactive, including all object code, source code, technical
manuals, compilation procedures, execution procedures, flow charts, programmers
notes, user manuals and other documentation thereof, whether in machine-readable
form, programming language or any other language or symbols and whether stored,
encoded, recorded or written on disk, tape, film, memory device, paper or other
media of any nature.
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(ii) "Owned Software" means all Software owned by Seller, whether
purchased from a third party, developed by or on behalf of Seller, currently
under development or otherwise.
(iii) "Customer Software" means all Software, other than the
Owned Software, that is, directly or through Distributors, either (x) offered or
provided to customers of Seller or (y) used by Seller to provide information or
services to customers of Seller for a fee.
(iv) "Seller Software" means the Owned Software and the Customer
Software.
(v) "Other Software" means all Software, other than Seller
Software, that is licensed by Seller from third parties or otherwise used by
Seller for any purpose whatsoever.
(vi) "Intangible" means:
(1) Patents, patent applications, patent disclosures, all
re-issues, divisions, continuations, renewals, extensions and
continuation-in-parts thereof and improvements thereto;
(2) Trademarks, service marks, trade dress, logos, trade
names, and corporate names and registrations and applications for Registration
thereof and all goodwill associated therewith;
(3) Copyrights, Registrations thereof and applications for
Registration thereof;
(4) Maskworks, Registrations thereof and applications for
Registration thereof;
(5) Trade secrets and confidential business information
(including ideas, formulas, compositions, inventions, whether patentable or
unpatentable and whether or not reduced to practice, know-how, manufacturing and
production processes and techniques, research and development information,
drawings, flow charts, processes, ideas, specifications, designs, plans,
proposals, technical data, copyrightable works, financial, marketing, and
business data, pricing and cost information, business and marketing plans, and
customer and supplier lists and information);
(6) Other proprietary rights;
(7) All income, royalties, Damages and payments due at
Closing or thereafter with respect to the Owned Software, Customer Software,
Other Software, or other Intangibles and all other rights thereunder including,
without limitation, Damages and payments for past, present or future
infringements or misappropriations thereof, the right to xxx and recover for
past, present or future infringements or misappropriations thereof;
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(8) All rights to use all of the foregoing forever; and
(9) All other rights in, to, and under the foregoing in all
countries.
B. Ownership and Right to License.
(i) Except as set forth in SCHEDULE 3.18 of the Disclosure
Schedule, to the Knowledge of the Seller, at all times since October 16, 1996,
Seller has good and marketable title to the Owned Software and Intangibles
attributable to the Owned Software, and have the full right to use all of the
Customer Software and Other Software, and Intangibles attributable thereto, as
used or required to operate Seller's businesses as currently conducted and as
contemplated in the future in accordance with Seller's written business plans,
free and clear of any liens, claims, charges or encumbrances which would affect
the use of such Software in connection with the operation of Seller's business
as currently conducted and as contemplated in the future in accordance with
Seller's written business plans.
(ii) To the Knowledge of Seller, no rights of any third party not
previously obtained are necessary to market, license, sell, modify, update,
and/or create derivative works for any Software as to which Seller take any such
action in their respective businesses as currently conducted and as contemplated
in the future in accordance with Seller's written business plans.
(iii) To the Knowledge of Seller, none of the Software or
Intangibles or their respective past or current uses by or through Seller have
violated or infringed upon, or is violating or infringing upon, any Software,
patent, copyright, trade secret or other Intangible of any Person. To the
knowledge of Seller, Seller has adequately maintained all trade secrets and
copyrights with respect to such Software.
To the Knowledge of Seller, Seller has performed all obligations imposed
upon them with regard to the Customer Software and Other Software which are
required to be performed by them on or prior to the date hereof, and Seller nor,
to the Knowledge of Seller, any other party, is in breach of or default
thereunder in any respect, nor to the Seller's Knowledge is there any event
which with notice or lapse of time or both would constitute a default
thereunder.
3.19. Certain Payments. Since October 16, 1996,, neither Seller nor any
director, officer, agent, or employee of Seller, nor to Seller's Knowledge any
other Person associated with or acting for or on behalf of Seller, has directly
or indirectly:
A. Made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business; (ii) to pay for favorable treatment for business
secured; (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of Seller or any affiliate of Seller or (iv) in
violation of any Legal Requirement.
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B. Established or maintained any fund or asset that has not been
recorded in the books and records of Seller.
3.20. Disclosure.
A. No representation or warranty of Seller in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
B. No notice given pursuant to Section 5.5. will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
C. There is no fact known to Seller that has specific application to
Seller or Seller (other than general economic or industry conditions) and that
materially adversely affects or, as far as Seller can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of Seller (on a consolidated basis) that has not been set
forth in this Agreement or the Disclosure Schedule.
3.21. Brokers or Finders. Seller and its agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3.22. Fairness Opinion. The Board of Directors of Seller has received the
opinion of ____________, dated as of the Closing Date, to the effect that, as of
the date of such opinion, the terms of the Contemplated Transactions are fair,
from a financial point of view, to Seller's shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
4.1. Organization and Good Standing. Buyer is a Texas corporation.
4.2. Authority. This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the closing documents set forth in
Section 2.5.B (collectively, the "Buyer's Closing Documents"), the Buyer's
Closing Documents will constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their respective terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and the Buyer's Closing Documents and to perform its
obligations under this Agreement and the Buyer's Closing Documents.
4.3. Investment Intent. Buyer is acquiring the Interest for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act.
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4.4. Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's Knowledge, no such Proceeding has been
Threatened.
4.5. Brokers or Finders. Buyer and its agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement and will
indemnify and hold Seller harmless from any such payment alleged to be due by or
through Buyer as a result of the action of Buyer or its officers or agents.
5. COVENANTS OF SELLER PRIOR TO CLOSING DATE.
5.1. Access and Investigation. Between the date of this Agreement and the
Closing Date, Seller will, and will cause Seller and its Representatives to:
A. Afford Buyer and its Representatives and prospective lenders and
their Representatives (collectively, "Buyer's Advisors") full and free access to
Seller's personnel, properties (including subsurface testing), contracts, books
and records, and other documents and data;
B. Furnish Buyer and Buyer's Advisors with copies of all such
contracts, books and records, and other existing documents and data as Buyer may
reasonably request; and
C. Furnish Buyer and Buyer's Advisors with such additional
financial, operating, and other data and information as Buyer may reasonably
request.
5.2. Operation of the Business of Seller. Between the date of this
Agreement and the Closing Date, Seller will:
A. Conduct the business of Seller only in the Ordinary Course of
Business;
B. Use its Best Efforts to preserve intact the current business
organization of Seller, keep available the services of the current officers,
employees, and agents of Seller, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Seller;
X. Xxxxxx with Buyer concerning operational matters of a material
nature; and
D. Otherwise report periodically to Buyer concerning the status of
the business, operations, and finances of Seller.
5.3. Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not without the prior consent of Buyer, take any affirmative action, or fail to
take any reasonable action within their or
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its control, as a result of which any of the changes or events listed in Section
3.13. is likely to occur.
5.4. Required Approvals. As promptly as practicable after the date of
this Agreement, Seller will, and will cause Seller to, make all filings required
by Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will, and will cause Seller to:
A. Cooperate with Buyer with respect to all filings that Buyer
reasonably elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions; and
B. Cooperate with Buyer in obtaining all required Consents.
5.5. Notification. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Buyer in writing if Seller becomes aware of
any fact or condition that causes or constitutes a Breach of any of Seller's
representations and warranties as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition.
Should any such fact or condition require any change in the Disclosure
Schedule if the Disclosure Schedule were dated the date of the occurrence or
discovery of any such fact or condition, Seller will promptly deliver to Buyer a
supplement to the Disclosure Schedule specifying such change. During the same
period, each Seller will promptly notify Buyer of the occurrence of any Breach
of any covenant of Seller in this Section 5. or of the occurrence of any event
that may make the satisfaction of the conditions in Section 7. impossible or
unlikely.
5.6. No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Section 9., Seller will not, and will cause its
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of Seller, or any of the Interest of Seller, or any merger,
consolidation, business combination, or similar transaction involving Seller.
5.7. Bank Account Signature Authority. Seller shall cause Xxxxx Xxxxx and
Xxxxx Xxxxxxxx to have signing authority on all accounts.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE.
6.1. Approvals of Governmental Bodies/Third Party Consents. As promptly
as practicable after the date of this Agreement, Buyer will, and will cause each
of its Related
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Persons to, make all filings required by Legal Requirements to be made by them
to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and
will cause each Related Person to:
A. Cooperate with Seller with respect to all filings that Seller is
required by Legal Requirements to make in connection with the Contemplated
Transactions; and
B. Cooperate with Seller in obtaining all consents identified in
SCHEDULE 3.2 of the Disclosure Schedule; provided that this Agreement will not
require Buyer to dispose of or make any change in any portion of its business or
to incur any other burden to obtain a Governmental Authorization.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
Buyer's obligation to purchase the Interest and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1. Accuracy of Representations.
A. All of Seller's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedule.
B. Each of Seller's representations and warranties in Article 3.
must have been accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the Disclosure
Schedule.
7.2. Seller's Performance.
A. All of the covenants and obligations that Seller is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and complied with in
all material respects.
B. Each document required to be delivered pursuant to Section 2.4.
must have been delivered, and each of the other covenants and obligations in
Section 5. must have been performed and complied with in all respects.
C. The results of any investigation performed by Buyer in connection
with Section 5.1. shall be satisfactory to Buyer in its sole discretion.
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7.3. Consents. Each of the Consents identified in SCHEDULE 3.2 of the
Disclosure Schedule must have been obtained and must be in full force and
effect.
7.4. Additional Documents. Seller shall deliver such other documents as
Buyer may reasonably request for the purpose of (i) evidencing the accuracy of
any of Seller's representations and warranties; (ii) evidencing the performance
by Seller of, or the compliance by Seller with, any covenant or obligation
required to be performed or complied with by such Seller; (iii) evidencing the
satisfaction of any condition referred to in this Section 7. or (iv) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
7.5. No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (i) involving any challenge to, or seeking
Damages or other relief in connection with, any of the Contemplated Transactions
or (ii) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
7.6. No Claim Regarding Interest Ownership or Sale Proceeds. There must
not have been made or Threatened by any Person any claim asserting that such
Person (i) is the holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any ownership Interest of Seller, (ii) is
entitled to all or any portion of the Purchase Price payable for the Interest.
7.7. No Prohibition. Neither the consummation nor the performance of any
of the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer or any Person affiliated with Buyer to
suffer any material adverse consequence under, (i) any applicable Legal
Requirement or Order or (ii) any Legal Requirement or Order that has been
published, introduced, or otherwise proposed by or before any Governmental Body.
7.8. Employment Agreement. On or before the Closing Date, Xxxxx Trotel &
Xxxxx Xxxxxxxxxxx shall have entered into an employment agreement with Seller.
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE.
Seller's obligation to sell the Interest and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1. Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and must be
accurate in all material respects as of the Closing Date as if made on the
Closing Date.
8.2. Buyer's Performance.
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A. All of the covenants and obligations that Buyer is required to
perform or to comply with pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and obligations
(considered individually), must have been performed and complied with in all
material respects.
B. Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.5.
8.3. Consents. Each of the Consents identified in SCHEDULE 3.2 of the
Disclosure Schedule must have been obtained and must be in full force and
effect.
8.4. Additional Documents. Buyer must have caused the following documents
to be delivered to Seller such other documents as Seller may reasonably request
for the purpose of (i) enabling their counsel to provide the opinion referred to
in Section 2.5.A.(iii); (ii) evidencing the accuracy of any representation or
warranty of Buyer; (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be performed or
complied with by Buyer; (iv) evidencing the satisfaction of any condition
referred to in this Section 8. or (v) otherwise facilitating the consummation of
any of the Contemplated Transactions.
8.5. No Injunction. There must not be in effect any Legal Requirement or
any injunction or other Order that (i) prohibits the sale of the Interest by
Seller to Buyer and (ii) has been adopted or issued, or has otherwise become
effective, since the date of this Agreement.
9. TERMINATION.
9.1. Termination Events.
This Agreement may, by notice given prior to or at the Closing, be
terminated:
A. By either Buyer or Seller if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived;
B. (i) By Buyer if any of the conditions in Section 7. have not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date;
(ii) By Seller, if any of the conditions in Section 8. have not
been satisfied of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Seller to comply with
their obligations under this Agreement) and Seller has not waived such condition
on or before the Closing Date; or
C. By mutual consent of Buyer and Seller; or
D. By either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its
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obligations under this Agreement) on or before November 15, 1998, or such later
date as the parties may agree upon.
9.2. EFFECT OF TERMINATION. Each party's right of termination under
Section 9.1. is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1., all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Sections 12.1. and 12.3. will survive; provided,
however, that if this Agreement is terminated by a party because of the Breach
of the Agreement by the other party or because one (1) or more of the conditions
to the terminating party's obligations under this Agreement is not satisfied as
a result of the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES.
10.1. AGREEMENT BY SELLER TO INDEMNIFY. Seller (the "Seller Indemnifying
Party"), agrees that they will indemnify and hold Buyer harmless in respect of
the aggregate of all indemnifiable Damages of Buyer.
For this purpose, "indemnifiable Damages" of Buyer means the aggregate of
all Damages incurred or suffered by Buyer resulting from:
A. Any inaccurate representation or warranty made by Seller in or
pursuant to this Agreement;
B. Any default in the performance of any of the covenants or
agreements made by Seller in this Agreement; or
C. The failure of any Seller to pay, discharge or perform any
liability or obligation of Seller or of Seller resulting from the operation of
Seller's business prior to the Closing Date.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable Damages", Buyer shall have the right to be put in
the same financial position as it would have been had each of the
representations and warranties of Seller been true and correct and had each of
the covenants of Seller been performed in full.
The amount of any indemnifiable Damages otherwise payable to Buyer
hereunder shall be reduced if the indemnifiable Damages incurred by Buyer will
provide Buyer with income tax deductions or credits. The amount of the reduction
shall be the amount of the actual cash tax savings realized by Buyer as a result
of such deductions or credits, discounted to its present value as of the date of
the payment of the indemnifiable Damages from the date such indemnifiable
Damages were incurred by Buyer at the rate of interest charged on such date by
the Internal Revenue Service on underpayment of taxes.
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The foregoing obligation of Seller Indemnifying Party to indemnify Buyer
shall be subject to each of the following principles or qualifications:
1. Each of the representations and warranties made by Seller in this
Agreement or pursuant hereto, shall survive for a period of one (1) year after
the Closing; provided, however, that the representations and warranties made by
Seller to the extent they relate to Seller's title to the Interest shall survive
forever and that the representations and warranties made by Seller and
Shareholder in Section 3.8. hereof ("Taxes") shall in each case survive until
the first (1st) anniversary of the later of:
A. The date on which applicable period of limitation on
assessment or refund of tax has expired; or
B. The date on which the applicable taxable year (or portion
thereof) has been closed.
No claim for the recovery of indemnifiable Damages may be asserted by
Buyer against Seller Indemnifying Party or their successors in interest after
such representations and warranties shall be thus extinguished; provided,
however, that claims first asserted in writing within the applicable period
shall not thereafter be barred.
10.2. AGREEMENTS BY BUYER TO INDEMNIFY. Buyer (the "Buyer Indemnifying
Party"), agrees to indemnify and hold Seller (the "Seller Indemnified Party")
harmless in respect of the aggregate of all indemnifiable Damages of any of
Seller Indemnified Parties.
For this purpose, "indemnifiable Damages" of the of Seller Indemnified
Party means the aggregate of all Damages incurred or suffered by the Seller
Indemnified Party resulting from:
A. Any inaccurate representation or warranty made by Buyer or
pursuant to this Agreement; or
B. Any default in the performance of any of the covenants or
agreements made by Buyer in this Agreement.
Without limiting the generality of the foregoing, with respect to the
measurement of "indemnifiable Damages", the Seller Indemnified Party shall have
the right to be put in the same financial position as they would have been had
each of the representations and warranties of Buyer Indemnifying Party been true
and correct and had each of the covenants of Buyer Indemnifying Party been
performed in full.
The amount of any indemnifiable Damages otherwise payable to any Seller
Indemnified Party hereunder shall be reduced if the indemnifiable Damages
incurred by Seller Indemnified Party will provide such Party with income tax
deductions or credits. The amount of the reduction shall be the amount of the
actual cash tax savings realized by Seller Indemnified Party as a result of such
deductions or credits discounted to its present value as of the date of the
payment of the indemnifiable Damages from the date such indemnifiable Damages
were incurred
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by Seller Indemnified Party at the rate of interest charged on such date by the
Internal Revenue Service on underpayment of taxes.
The foregoing obligation of Buyer Indemnifying Party to indemnify Seller
Indemnified Party shall be subject to each of the following principles or
qualifications:
10.2.1. Each of the representations and warranties made by Buyer in
Article 4 of this Agreement shall survive for a period of one (1) year after the
Closing Date, and thereafter all such representations and warranties shall be
extinguished.
No claim for the recovery of indemnifiable Damages pursuant to clause (i)
of Section 10.2. may be asserted by Seller Indemnified Party against Buyer
Indemnifying Party or its successors in interest after such representations and
warranties shall be thus extinguished; provided, however, that claims first
asserted in writing within the applicable period shall not thereafter be barred.
10.3. Matters Involving Third Parties. If any third party shall notify
Buyer or Seller (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 10., then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent that) the Indemnifying Party thereby is
Damaged.
If any Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then:
A. The Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice satisfactory to the Indemnified
Party;
B. The Indemnified Party may retain separate co-counsel at its
sole cost and expense (except that the Indemnifying Party will be responsible
for the fees and expenses of the separate co-counsel to the extent the
Indemnified Party concludes that the counsel the Indemnifying Party has selected
has a conflict of interest);
C. The Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld or delayed
unreasonably); and
D. The Indemnifying Party will not consent to the entry of any
judgment with respect to the matter, or enter into any settlement which does not
include a provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld or delayed unreasonably).
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If no Indemnifying Party notifies the Indemnified Party within fifteen
(15) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against, or enter into any settlement with respect to, the matter in
any manner it may deem appropriate.
11. POST-CLOSING AGREEMENTS.
11.1. Consistency in Reporting. Each party hereto agrees that: (i) the
transaction is intended to qualify as a tax-free transaction under the I.R.C.;
(ii) the transaction shall be reported for Federal income tax purposes as a
tax-free transaction; (iii) for purposes of all financial statements, tax
returns and reports, and communications with third parties, the transactions
contemplated in this agreement and ancillary or collateral transactions will be
treated as a tax-free transaction; and (iv) if the characterization of any
transaction contemplated in this agreement or any ancillary or collateral
transaction is challenged, each party hereto will testify, affirm and ratify
that the characterization contemplated in such agreement was with the
characterization intended by the party; provided, however, that nothing herein
shall be construed as giving rise to any obligation if the reporting position is
determined to be incorrect by final decision of a court of competent
jurisdiction.
11.2. Funding of Seller by Buyer. Buyer agrees to fund Seller in the
manner set forth in the "THC Twelve (12) Month Budget commencing December 1,
1998," a copy of which is attached hereto as EXHIBIT F. Buyer will provide
receivable financing of up to seventy-five percent (75) for approved,
creditworthy, accounts (as evidenced by the lenders and lending institution,
based upon the reasonable and necessary standards of the industry). Accounts
deemed to be non-creditworthy will be reviewed by Buyer and Seller, on an
individual basis in an attempt to find alternative financing. Should said review
find the account(s) to be non-financeable, the account(s) would be rejected by
Seller and not be considered as revenue.
11.3. Performance of Seller. Seller asserts that the "THC Twelve (12)
month Budget" (EXHIBIT F) is sound and that the projected revenues and profits
are reasonable and will be attained. Based on the limited operating history of
THC, monthly performance reviews will be conducted by Buyer and should Seller
fail to achieve at least eighty-five percent (85%) of the revenues and profits,
cumulative year to date as projected per EXHIBIT F, notwithstanding that the
foregoing would constitute a breach of this agreement, changes and adjustments
may be implemented by Buyer to reduce Seller's funding requirements and Buyer's
capital exposure.
11.4. Remedies for Breach of Agreement by Buyer. Should Buyer breach any
term or condition of this Section, the following shall, at the option of Seller,
occur:
A. Buyer shall execute a stock swap with the former members of
Seller, whereby such members shall return all Buyer Stock to Buyer, and shall
receive one hundred percent (100%) of that Interest, of Seller. Buyer shall
guarantee that Seller shall be returned to the Shareholders in the same or
greater net worth determined in accordance with standard account principles, as
of the date of Buyer's acquisition of Seller. Any deficiency shall be funded by
Buyer as a capital contribution to Seller.
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B. These remedies shall not be exclusive.
11.5. Remedies for Breach of Agreement by Seller. Should Seller breach
any term or condition of this Section, the following shall, at the option of
Buyer, occur:
A. Seller and the former members of Seller shall execute a stock
swap with Buyer, whereby such members shall return all Buyer Stock to Buyer, and
shall receive one hundred percent (100%) of the Interest, of Seller. Buyer shall
not guarantee that Seller shall be returned to the members in the same or
greater net worth determined in accordance with standard accounting principles,
as of the date of Buyer's acquisition of Seller. Any outstanding notes or unpaid
loans to Seller by Buyer, unless otherwise agreed upon by both parties, will
immediately become due and payable.
B. These remedies shall not be exclusive.
12. GENERAL PROVISIONS.
12.1. Expenses. Except as otherwise expressly provided in this Agreement,
each party to this Agreement will bear its respective expenses incurred in
connection with the preparation, execution, and performance of this Agreement
and the Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.
Seller will cause Seller not to incur any out-of-pocket expenses in
connection with the Contemplated Transactions. In the event of termination of
this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
12.2. Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer determines. Unless consented
to by Buyer in advance or required by Legal Requirements, prior to the Closing
Seller shall, and shall cause Seller to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
Seller and Buyer will consult with each other concerning the means by
which Seller's employees, customers, and suppliers and others having dealings
with Seller will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
12.3. Confidentiality. Between the date of this Agreement and the Closing
Date, Buyer and Seller will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer and Seller to
maintain in confidence, and not use to the detriment of another party or an
Seller any written, oral, or other information obtained in confidence from
another party or an Seller in connection with this Agreement or the Contemplated
Transactions, unless:
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A. Such information is already known to such party or to others not
bound by a duty of confidentiality or such information becomes publicly
available through no fault of such party;
B. The use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions; or
C. The furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request. Whether or not the Closing takes place, Seller waives, and
will upon Buyer's request cause Seller to waive, any cause of action, right, or
claim arising out of the access of Buyer or its representatives to any trade
secrets or other confidential information of Seller.
12.4. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (i) delivered by hand (with written confirmation of receipt); (ii)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested or (iii) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Seller:
Xxxxxxx Holding Corporation d/b/a Temporary Help Connection
With a copy to:
Buyer: CONCAP, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
With a copy to: Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
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12.5. Jurisdiction; Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of DeKalb, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Georgia, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
12.6. Further Assurances. The parties agree (i) to furnish upon request
to each other such further information; (ii) to execute and deliver to each
other such other documents and (iii) to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying out the
intent of this Agreement and the documents referred to in this Agreement.
12.7. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
To the maximum extent permitted by applicable law:
A. No claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one (1) party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party;
B. No waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and
C. No notice to or demand on one (1) party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.8. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter
(including the Letter of Intent between Buyer and Seller dated September 14,
1998) and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
12.9. Disclosure Schedule.
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A. The disclosures in the Disclosure Schedule, and those in any
Supplement thereto, must relate only to the representations and warranties in
the Section of the Agreement to which they expressly relate and not to any other
representation or warranty in this Agreement.
B. In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Schedule (other than an
exception expressly set forth as such in the Disclosure Schedule with respect to
a specifically identified representation or warranty), the statements in the
body of this Agreement will control.
12.10. Assignments, Successors and No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties, which will not be unreasonably withheld, except that Buyer
may assign any of its rights under this Agreement to any Subsidiary of Buyer.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
12.11. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.12. Section Headings; Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.13. Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
12.14. Governing Law. This Agreement will be governed by the laws of the
State of Georgia without regard to conflicts of laws principles.
12.15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER: SELLER:
By:
--------------------------- ------------------------------
Title: Title:
------------------------ ------------------------
Date: Date:
------------------------- -------------------------
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SCHEDULES
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EXHIBITS
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
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