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EXHIBIT 10.16
STOCK PURCHASE AGREEMENT
DATED FEBRUARY 27, 1998,
AND EFFECTIVE AS OF FEBRUARY 1, 1998,
BY AND AMONG
ABR INFORMATION SERVICES, INC.,
A FLORIDA CORPORATION,
XXXXXXXX, XXXXXX & ASSOCIATES, LTD.
AN ARIZONA CORPORATION,
AND
XXXXXX X. XXXXXXXX,
XXXXXXX X. XXXXXX AND
XXXX XXXX,
AS SHAREHOLDERS
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES......................................... 1
2. PURCHASE PRICE - PAYMENT............................................ 1
2.1. Purchase Price............................................. 1
2.2. Payment of Purchase Price.................................. 4
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF
COMPANY AND SHAREHOLDERS............................................ 6
3.1. Corporate.................................................. 6
3.2. Shareholders............................................... 8
3.3. No Violation............................................... 8
3.4. Financial Statements....................................... 8
3.5. Tax Matters................................................ 9
3.6. Accounts Receivable........................................ 10
3.7. Absence of Certain Changes................................. 10
3.8. Absence of Undisclosed Liabilities......................... 12
3.9. No Litigation.............................................. 12
3.10. Compliance With Laws and Orders............................ 13
3.11. Title to and Condition of Properties....................... 15
3.12. Insurance.................................................. 16
3.13. Contracts and Commitments.................................. 18
3.14. Labor Matters.............................................. 19
3.15. Employee Benefit Plans..................................... 20
3.16. Employment Matters......................................... 24
3.17. Trade Rights............................................... 25
3.18. Major Customers and Suppliers.............................. 26
3.19. Service Warranty and Liability............................. 26
3.20. Bank Accounts.............................................. 27
3.21. Affiliates' Relationships to Company....................... 27
3.22. Assets Necessary to Business............................... 27
3.23. No Brokers or Finders...................................... 27
3.24. Year 2000 Compliance....................................... 27
3.25 Systems Performance........................................ 28
3.26. Disclosure................................................. 29
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................. 29
4.1. Corporate.................................................. 29
4.2. Authority.................................................. 29
4.3. No Brokers or Finders...................................... 30
4.4. Disclosure................................................. 30
4.5. Investment Intent.......................................... 30
5. COVENANTS........................................................... 30
5.1. Employment and Noncompetition Agreements;
Consulting Agreement....................................... 30
5.2. Noncompetition; Confidentiality............................ 30
5.3. General Releases........................................... 32
5.4. Credited Service........................................... 32
5.5. Capital Contribution....................................... 32
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6. INDEMNIFICATION..................................................... 32
6.1. By Shareholders............................................ 32
6.2. By Buyer................................................... 33
6.3. Indemnification of Third-Party Claims...................... 33
6.4. Payment.................................................... 34
6.5. Limitations on Indemnification............................. 35
6.6. No Waiver.................................................. 36
7. CLOSING............................................................. 36
7.1. Documents to be Delivered by Company and
Shareholders............................................... 36
7.2. Documents to be Delivered by Buyer......................... 38
7.3. Delivery of Buyer Loan..................................... 38
8. TERMINATION......................................................... 39
9. RESOLUTION OF DISPUTES.............................................. 39
9.1. Arbitration................................................ 39
9.2. Arbitrators................................................ 39
9.3. Procedures; No Appeal...................................... 40
9.4. Authority.................................................. 40
9.5. Entry of Judgment.......................................... 40
9.6. Confidentiality............................................ 40
9.7. Continued Performance...................................... 40
9.8. Tolling.................................................... 40
10. MISCELLANEOUS....................................................... 40
10.1. Disclosure Schedule........................................ 40
10.2. Further Assurance.......................................... 41
10.3. Disclosures and Announcements.............................. 41
10.4. Assignment; Parties in Interest............................ 41
10.5. Law Governing Agreement.................................... 42
10.6. Amendment and Modification................................. 42
10.7. Notice..................................................... 42
10.8. Expenses................................................... 44
10.9. Entire Agreement........................................... 44
10.10. Counterparts; Facsimile Signatures......................... 44
10.11. Headings................................................... 45
10.12. Glossary of Terms.......................................... 45
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DISCLOSURE SCHEDULE
Schedule 3.1.(c) - Foreign Corporation Qualification
Schedule 3.1.(e) - Directors and Officers of the Company
Schedule 3.1.(f) - Shareholder List
Schedule 3.3 - Violation, Conflict, Default
Schedule 3.4 - Financial Statements
Schedule 3.5.(b) - Tax Returns (Exceptions to
Representations)
Schedule 3.5.(c) - Tax Audits
Schedule 3.5.(e) - Tax, Other
Schedule 3.6 - Accounts Receivable (Aged Schedule)
Schedule 3.7 - Certain Changes
Schedule 3.8 - Off-Balance Sheet Liabilities
Schedule 3.9 - Litigation Matters
Schedule 3.10.(a) - Non-Compliance with Laws
Schedule 3.10.(b) - Licenses and Permits
Schedule 3.10.(c) - Environmental Matters (Exceptions
to Representations)
Schedule 3.11 - Liens
Schedule 3.11.(c) - Real Property
Schedule 3.12 - Insurance
Schedule 3.13.(b) - Personal Property Leases
Schedule 3.13.(d) - Significant Sales Commitments
Schedule 3.13.(g) - Collective Bargaining Agreements
Schedule 3.13.(h) - Loan Agreements, etc.
Schedule 3.13.(i) - Guarantees
Schedule 3.13.(l) - Material Contracts
Schedule 3.14 - Labor Matters
Schedule 3.15.(a) - Employee Plans/Agreements
Schedule 3.16 - Employment Compensation
Schedule 3.17 - Trade Rights
Schedule 3.18.(a) - Major Customers
Schedule 3.18.(b) - Major Suppliers
Schedule 3.18.(c) - Sales Representatives
Schedule 3.19 - Service Warranty, Warranty Expense
and Liability Claims
Schedule 3.20 - Bank Accounts
Schedule 3.21.(a) - Contracts with Affiliates
Schedule 3.21.(c) - Obligations of and to Affiliates
Schedule 3.24 - Year 2000 Noncompliance
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated February 27, 1998,
and effective as of February 1, 1998, by and among ABR Information Services,
Inc., a Florida corporation ("Buyer"), Xxxxxxxx, Xxxxxx & Associates, Ltd., an
Arizona corporation ("Company"), and Xxxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and
Xxxx Xxxx (individually "Shareholder" and together the "Shareholders").
RECITALS
1. Company is engaged in the business of providing qualified
and non-qualified pension administration services and flexible spending account
administration services to third parties (the "MMA Business"). Shareholders own
all of the issued and outstanding shares (the "Shares") of capital stock of
Company.
2. Company's facilities consist solely of leased offices at
0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Facilities").
3. Buyer desires to purchase the Shares from Shareholders and
Shareholders desire to sell the Shares to Buyer, upon the terms and conditions
herein set forth.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, effective as of
the Effective Date (as hereinafter defined) Shareholders shall sell to Buyer and
Buyer shall purchase from Shareholders all of the Shares.
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price.
2.1.(a) Amount. The aggregate purchase price (the "Purchase
Price") payable for the Shares shall be the sum of (a) TWO MILLION NINE
HUNDRED THOUSAND DOLLARS ($2,900,000), payable to the Shareholders as
hereinafter provided, and (b) a contingent payment (the "Contingent
Payment") based on the MMA Business' net earnings before income taxes
("EBIT") for the twelve-month period commencing as of the Effective
Date (the "Contingent Payment Period"), payable one-half (1/2) to
Xxxxxx X. Xxxxxxxx and one-half (1/2) to Xxxxxxx X. Xxxxxx.
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2.1.(b) Calculation of Contingent Payment. The Contingent
Payment shall equal (i) TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000),
in the event the MMA Business' EBIT for the Contingent Payment Period
equals or exceeds $500,000 and is less than $900,000, or (ii) FIVE
HUNDRED THOUSAND DOLLARS ($500,000), in the event the MMA Business'
EBIT for the Contingent Payment Period equals or exceeds $900,000. No
Contingent Payment shall be due or payable in the event the MMA
Business' EBIT for the Contingent Payment Period is less than $500,000.
The Contingent Payment shall be paid by Buyer to Shareholders as
follows: 50% to Xxxxxx X. Xxxxxxxx, 50% to Xxxxxxx X. Xxxxxx, and 0% to
Xxxx Xxxx.
2.1.(c) Calculation of EBIT. The calculation of the MMA
Business' EBIT for the Contingent Payment Period shall include revenue
received from qualified and non-qualified pension and existing flexible
spending account administration services but shall not include revenue
received from COBRA administration services or other services not
performed by Company as of the date hereof but offered by Buyer or any
of its subsidiaries or affiliates. Except as expressly provided herein,
the calculation of EBIT shall be made in accordance with generally
accepted accounting principles applied on a consistent basis, subject
to the following adjustments:
(i) Any depreciation or amortization adjustments
resulting solely from the transactions contemplated by this
Agreement shall not be included for purposes of calculating
EBIT for the Contingent Payment Period.
(ii) Notwithstanding Company's actual expenses
for the Contingent Payment Period relating to items and
functions (such as property and casualty insurance, errors and
omissions insurance, health and welfare programs and human
resource functions) that Company and Buyer mutually agree
shall be provided by Buyer or another subsidiary thereof,
Company shall accrue as an expense for purposes of calculating
EBIT for the Contingent Payment Period the same dollar amount
as it accrued in the twelve months preceding the Effective
Date with respect to such items and functions.
(iii) To the extent that any employee of Company
shall be required to travel, at Buyer's request, to any of
Buyer's offices outside of Arizona, Buyer shall make and pay
for directly all necessary travel and lodging arrangements.
(iv) The calculation of EBIT for the Contingent
Payment Period shall not exclude any expense
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item (or series of related items) relating to personnel
matters or exceeding $10,000 annually, unless such exclusion
has been preapproved in writing by Buyer.
(v) Company shall review with Buyer on a monthly
basis any and all expense items Company intends to exclude for
purposes of calculating EBIT for the Contingent Payment
Period.
(vi) In calculating EBIT for the Contingent
Payment Period, the first $1,000 per month of otherwise
excludable miscellaneous general and administrative expenses
(other than agreed upon personnel costs) shall be included in
making such calculation.
(vii) In the event Buyer (or any subsidiary
thereof) generates new qualified and non-qualified pension
administration services business (but excluding new flexible
spending account business) for Company during the Contingent
Payment Period, and/or Company generates new COBRA
administration services business (or other new business for
similar administrative services not performed by Company as of
the date hereof), Buyer and Company agree to make a reasonable
allocation of sales and other reasonable costs associated with
obtaining such new business for purposes of calculating
Company's EBIT for the Contingent Payment Period.
(viii) The imputed interest expense on the Buyer
Loan (as hereinafter defined) shall be included in the
calculation of EBIT for the Contingent Payment Period.
(ix) The reasonable accounting fees and other
fees and expenses incurred by the Company in connection with
the preparation of the audited financial statements of the
Company as set forth in Section 3.4 below, and the reasonable
legal fees and expenses incurred by Company in connection with
the transactions contemplated hereby, shall be borne by
Company, but shall not be included for purposes of calculating
EBIT for the Contingent Payment Period.
2.1.(d) Buyer Loan. Buyer agrees to loan to Company on the
Closing Date the sum of (i) $176,361.11 plus (ii) the amount necessary
to provide Company with available cash as of the Closing Date of
$50,000. The loan described in this Section 2.1(d) is referred to
herein as the "Buyer Loan." The proceeds of the Buyer Loan shall be
used by Company solely to pay off in full at the Closing Company's
obligations under its revolving line of credit loan and variable rate
single pay
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loan with Biltmore Investors Bank, N.A. and to provide Company with
available cash immediately following Closing of $50,000. The Buyer Loan
shall be repaid in full by Company to Buyer during the Contingent
Payment Period. To the extent it is repaid after such time, the unpaid
principal balance as of the end of the Contingent Payment Period shall
be charged in full against EBIT for the Contingent Payment Period.
2.1.(e) Interest on Buyer Loan. The calculation of Company's
EBIT for the Contingent Payment Period shall include an imputed
interest expense to Company equal to interest calculated on the
outstanding principal balance of the Buyer Loan which remains unpaid
from time to time, at the rate announced from time to time by
NationsBank, N.A. (or its successor) as its prime rate. Interest on the
Buyer Loan calculated under this Section 2.1(e) shall commence on the
date the Buyer Loan is made to the Company and continue until the Buyer
Loan is repaid in full.
2.2. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer as follows:
2.2.(a) Cash to Shareholders. At the Closing, Buyer shall
deliver to the Shareholders the sum of Two Million Three Hundred Twenty
Thousand Dollars ($2,320,000), to be allocated among the Shareholders
as follows: Six Hundred Seventy-Six Thousand Six Hundred Sixty-Six and
67/100 Dollars ($676,666.67) to Xxxxxx X. Xxxxxxxx; Six Hundred
Seventy-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars
($676,666.67) to Xxxxxxx X. Xxxxxx; and Nine Hundred Sixty-Six Thousand
Six Hundred Sixty-Six and 66/100 Dollars ($966,666.66) to Xxxx Xxxx.
2.2.(b) Purchase Price Holdback.
(i) Subject to the terms and conditions of this
Section 2.2(b), Buyer is withholding payment of a portion of
the Purchase Price equal to Five Hundred Eighty Thousand
Dollars ($580,000) (the "Holdback Amount") in order to secure
the indemnification obligations of Company and Shareholders
under this Agreement. For purposes hereof, "Holdback Period"
shall mean the period commencing on the date hereof and ending
four (4) months from the date hereof, subject to extension as
hereinafter provided.
(ii) If, prior to the expiration of the Holdback
Period, Buyer determines to assert a claim for indemnification
under Article 6 of this Agreement, then Buyer shall give each
of Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx written notice of
such claim (for purposes of this Section 2.2(c), a "Claim
Notice"),
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specifying in reasonable detail the basis therefor and the
amount and calculation thereof. If Xxxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxx do not deliver to Buyer a joint written
notice of an objection to the claim for indemnification within
twenty (20) days after receipt of the Claim Notice relating
thereto, Buyer shall be entitled to offset the dollar amount
of its claim (as set forth in the Claim Notice) against the
Holdback Amount. If Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx
shall timely deliver to Buyer such joint written notice of
objection, then Buyer shall not be entitled to an offset
against the Holdback Amount with respect to the claim set
forth in the Claim Notice until: (x) Buyer, Xxxxxx X. Xxxxxxxx
and Xxxxxxx X. Xxxxxx have executed joint written instructions
referring to such Claim Notice and directing Buyer to make an
offset against the Holdback Amount; or (y) Buyer has received
a copy of a judgment, decree or order of a court, or copy of
an arbitration award, adjudicating the dispute with respect to
such claim for indemnification; whereupon Buyer shall offset
against the Holdback Amount such amount as provided therein.
(iii) If Buyer has not delivered a Claim Notice to
each of Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx prior to the
expiration of the Holdback Period, or if any and all Claim
Notices delivered to each of Xxxxxx X. Xxxxxxxx and Xxxxxxx X.
Xxxxxx during the Holdback Period have been resolved pursuant
to subsection (ii) above, then Buyer shall deliver to Xxxxxx
X. Xxxxxxxx and Xxxxxxx X. Xxxxxx the portion of the Holdback
Amount equal to (x) $580,000, less (y) any amounts offset by
Buyer as provided herein, plus (z) any interest earned with
respect to such amount at an imputed rate of 5.25% per annum.
Buyer shall deliver such amount, one-half (1/2) to Xxxxxx X.
Xxxxxxxx and one-half (1/2) to Xxxxxxx X. Xxxxxx, promptly
after the expiration of the Holdback Period, unless one or
more Claim Notice(s) have not been finally resolved pursuant
to subsection (ii) above, in which case Buyer shall retain
such disputed amount(s) as calculated pursuant to Section
2.2.(b)(ii) above until: (a) Buyer, Xxxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxx have executed joint written instructions
referring to such Claim Notice(s) and directing Buyer as to
the disbursement of the remainder of the Holdback Amount; or
(b) Buyer has received a copy of a judgment, decree or order
of a court, or copy of an arbitration award, adjudicating the
dispute with respect to such Claim Notice(s); whereupon Buyer
shall disburse the remainder of the Holdback Amount as
provided therein.
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2.2.(c) Contingent Payment. The initial calculation of the
Contingent Payment shall be made by Buyer, which shall deliver its
calculation within thirty (30) days following the first anniversary of
the Effective Date to each of Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx
for their review and comment. If Buyer, Xxxxxx X. Xxxxxxxx and Xxxxxxx
X. Xxxxxx are able to agree in writing upon the amount of the Continent
Payment within fifteen (15) days following delivery of the initial
calculation to each of Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx, then
Buyer shall pay such amount. Such payment of the Contingent Payment, if
any, shall be made, one-half (1/2) to Xxxxxx X. Xxxxxxxx and one-half
(1/2) to Xxxxxxx X. Xxxxxx, within sixty (60) days following the first
anniversary of the Effective Date. In the event Buyer, Xxxxxx X.
Xxxxxxxx and Xxxxxxx X. Xxxxxx cannot agree on the amount of the
Contingent Payment within sixty (60) days following the first
anniversary of the Effective Date, then the determination of the
Contingent Payment shall be submitted to binding arbitration in
accordance with Article 9 of this Agreement.
2.2.(d) Method of Cash Payment. All payments under this
Section 2.2 shall be made in the form of a bank check payable to the
order of the recipient or, at the recipient's option, by wire transfer
of immediately available funds to an account designated by the
recipient not less than 48 hours prior to the time for payment
specified herein.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF COMPANY AND
SHAREHOLDERS
Company and Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which was true and correct on
the Effective Date (other than Section 3.2(b)), remains true as of the Closing
Date, shall be unaffected by any investigation heretofore or hereafter made by
or on behalf of Buyer, or any knowledge of Buyer other than as specifically
disclosed in the Disclosure Schedule delivered to Buyer at the time of the
execution of this Agreement, and shall survive the Closing of the transactions
provided for herein. Regardless of the foregoing, the representations and
warranties set forth in Section 3.2 are made severally by each Shareholder, with
respect to such Shareholder only.
3.1. Corporate.
3.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Arizona.
3.1.(b) Corporate Power. Company has all requisite corporate
power and authority to own, operate and lease its
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properties and to carry on its business as and where such is now being
conducted.
3.1.(c) Qualification. Company is duly licensed or qualified
to do business as a foreign corporation, and is in good standing, in
each jurisdiction wherein the character of the properties owned or
leased by it, or the nature of its business, makes such licensing or
qualification necessary. The states in which Company is licensed or
qualified to do business are listed in Schedule 3.1.(c).
3.1.(d) Subsidiaries. Company does not own any interest in
any corporation, partnership or other entity.
3.1.(e) Corporate Documents, etc. The copies of the Articles
of Incorporation and By-Laws of the Company, including any amendments
thereto, which have been delivered by Shareholders to Buyer are true,
correct and complete copies of such instruments as presently in effect.
The corporate minute book and stock records of the Company which have
been furnished to Buyer for inspection are true, correct and complete
and accurately reflect all material corporate action taken by the
Company. The directors and officers of the Company are listed in
Schedule 3.1.(e).
3.1.(f) Capitalization of the Company. The authorized capital
stock of the Company consists entirely of Ten Thousand (10,000) shares
of common stock, par value $1.00 per share. No shares of such capital
stock are issued or outstanding except for One Hundred Fifty (150)
shares of common stock of the Company which are owned of record and
beneficially by Shareholders in the respective numbers set forth in
Schedule 3.1.(f). All such shares of capital stock of the Company are
validly issued, fully paid and nonassessable. There are no (a)
securities convertible into or exchangeable for any of the Company's
capital stock or other securities, (b) options, warrants or other
rights to purchase or subscribe to capital stock or other securities of
the Company or securities which are convertible into or exchangeable
for capital stock or other securities of the Company, or (c) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or
other equity securities of the Company, any such convertible or
exchangeable securities or any such options, warrants or other rights.
3.2. Shareholders.
3.2.(a) Power. Each Shareholder has full power, legal right
and authority to enter into, execute and deliver this Agreement and the
other agreements, instruments and
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documents contemplated hereby (such other documents sometimes referred
to herein as "Ancillary Instruments"), and to carry out the
transactions contemplated hereby.
3.2.(b) Validity. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed
and delivered each Ancillary Instrument will be, the legal, valid and
binding obligation of such Shareholder, enforceable in accordance with
its terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and
by general equitable principles.
3.2.(c) Title. Each Shareholder has, and Buyer is receiving,
good and marketable title to the Shares to be sold by such Shareholder
hereunder, free and clear of all Liens (as defined in Section 3.12)
including, without limitation, voting trusts or agreements, proxies,
marital or community property interests.
3.3. No Violation. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by Company and Shareholders of the transactions contemplated hereby
and thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or decree
(collectively, "Orders") of any court, arbitrator, department, commission,
board, bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), or (c) subject to
obtaining the consents referred to in Schedule 3.3, will violate or conflict
with, or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien upon any of the assets of Company (or the Shares) under, any term or
provision of the Articles of Incorporation or By-Laws of Company or of any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which Company or any Shareholder is a party or by which
Company or any Shareholder or any of its or their assets or properties may be
bound or affected.
3.4. Financial Statements. Included as Schedule 3.4 are true and
complete copies of the financial statements of Company consisting of a balance
sheet of Company as of December 31, 1997, and the related statements of income
and cash flows for the year then ended (including the notes contained therein or
annexed thereto), which financial statements have been reported on, and are
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accompanied by, the signed, unqualified opinions of Xxxxxx & Xxxxxxxxxx, P.C.,
independent auditors for Company for such year. The audited balance sheet of the
Company as of December 31, 1997 is hereinafter referred to as the "Recent
Balance Sheet." All of such financial statements (including all notes and
schedules contained therein or annexed thereto) are true, complete and accurate,
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, have been prepared in accordance with the books
and records of Company, and fairly present, in accordance with generally
accepted accounting principles, the assets, liabilities and financial position,
the results of operations and cash flows of Company as of the dates and for the
years and periods indicated. In addition to the foregoing, at or before the
Closing, Xxxxxx X. Xxxxxxxx will make a contribution to capital of Company of
$43,356 by forgiving indebtedness in such amount reflected on the Recent Balance
Sheet. Company has a tangible net worth (i.e., stockholders' equity) as of the
Effective Date and the Closing Date (in each case after giving effect to the
foregoing contributions to capital) of a minimum of $529,510.
3.5. Tax Matters.
3.5.(a) Provision For Taxes. The provision made for taxes on
the Recent Balance Sheet is sufficient for the payment of all federal,
state, foreign, county, local and other income, ad valorem, excise,
profits, franchise, occupation, property, payroll, sales, use, gross
receipts and other taxes (and any interest and penalties) and
assessments, whether or not disputed, at the date of the Recent Balance
Sheet and for all years and periods prior thereto. Since the date of
the Recent Balance Sheet, Company has not incurred any taxes other than
taxes incurred in the ordinary course of business consistent in type
and amount with past practices of Company.
3.5.(b) Tax Returns Filed. Except as set forth on Schedule
3.5.(b), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of Company have been
timely filed and when filed were true and correct in all material
respects, and the taxes shown as due thereon were paid or adequately
accrued. True and complete copies of all tax returns or reports filed
by Company for each of its six most recent fiscal years have been
delivered to Buyer. Company has duly withheld and paid all taxes which
it is required to withhold and pay relating to salaries and other
compensation heretofore paid to the employees of Company (whether
leased employees or otherwise).
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3.5.(c) Tax Audits. The federal and state income tax returns
of Company have been audited by the Internal Revenue Service and
appropriate state taxing authorities for the periods and to the extent
set forth in Schedule 3.5.(c), and Company has not received from the
Internal Revenue Service or from the tax authorities of any state,
county, local or other jurisdiction any notice of underpayment of taxes
or other deficiency which has not been paid nor any objection to any
return or report filed by Company. There are outstanding no agreements
or waivers extending the statutory period of limitations applicable to
any tax return or report.
3.5.(d) No Consolidated Group. Company has never been a
member of an affiliated group of corporations that filed a consolidated
tax return. Company does not have any liability for the taxes of any
person or entity under Sections 1.1502-6 or 1.1502-78 of Title 26 of
the Code of Federal Regulations (or any similar provisions of state,
local or foreign income tax laws).
3.5.(e) Other. Except as set forth in Schedule 3.5.(e), since
its incorporation Company has not (i) filed any consent or agreement
under Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), (ii) applied for any tax ruling, (iii) entered into a
closing agreement with any taxing authority, (iv) filed an election
under Section 338(g) or Section 338(h)(10) of the Code (nor has a
deemed election under Section 338(e) of the Code occurred), except as
contemplated hereby, (v) made any payments, or been a party to an
agreement (including this Agreement) that under any circumstances could
obligate it to make payments that will not be deductible because of
Section 280G of the Code, or (vi) been a party to any tax allocation or
tax sharing agreement. The Company is not a "United States real
property holding company" within the meaning of Section 897 of the
Code.
3.6. Accounts Receivable. All accounts receivable of Company
reflected on the Recent Balance Sheet, and all accounts receivable accrued in
the normal course of business since the date thereof, represent arm's length
sales actually made in the ordinary course of business; are collectible (net of
the reserve shown on the Recent Balance Sheet for doubtful accounts) in the
ordinary course of business without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in dispute.
Schedule 3.6 contains an aged schedule of accounts receivable included in the
Recent Balance Sheet.
3.7. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.7, since the date of the Recent Balance Sheet there has not
been:
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3.7.(a) No Adverse Change. Any adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of Company;
3.7.(b) No Damage. Any loss, damage or destruction, whether
covered by insurance or not, affecting the Company, its properties or
the MMA Business;
3.7.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee, leased employee or agent of Company (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement or other plan or commitment), or any bonus
or other employee benefit granted, made or accrued;
3.7.(d) No Labor Disputes. Any labor dispute or disturbance,
other than routine individual grievances which are not material to the
business, financial condition or results of operations of Company.
3.7.(e) No Commitments. Any commitment or transaction by
Company (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business consistent
with past practice;
3.7.(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of
Company's capital stock; any redemption, purchase or other acquisition
by Company of any capital stock of Company, or any security relating
thereto; or any other payment to any shareholder of Company as such a
shareholder;
3.7.(g) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of Company;
3.7.(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by Company;
3.7.(i) No Liens. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of Company;
3.7.(j) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any contract, or any waiver of
material rights thereunder, other than in the ordinary course of
business;
3.7.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel and
entertainment in accordance with past
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practice) to any person including, but not limited to, any Affiliate
(for purposes of this Agreement, the term "Affiliate" shall mean and
include: all Shareholders, directors and officers of Company; the
spouse of any such person; any person who would be the heir or
descendant of any such person if he or she were not living; and any
entity in which any of the foregoing has a direct or indirect interest,
except through ownership of less than 5% of the outstanding shares of
any entity whose securities are listed on a national securities
exchange or traded in the national over-the-counter market);
3.7.(l) Credit. Any grant of credit to any customer or
distributor on terms or in amounts more favorable than those which have
been extended to such customer or distributor in the past, any other
change in the terms of any credit heretofore extended, or any other
change of Company's policies or practices with respect to the granting
of credit; or
3.7.(m) No Unusual Events. Any other event or condition not
in the ordinary course of business of Company other than those
contemplated by this Agreement.
3.8. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet, or in Schedule 3.8,
Company does not have any liabilities, commitments or obligations (secured or
unsecured, and whether accrued, absolute, contingent, direct, indirect or
otherwise), other than commercial liabilities and obligations incurred since the
date of the Recent Balance Sheet in the ordinary course of business and
consistent with past practice and none of which has or will have a material
adverse effect on the business, financial condition or results of operations of
Company. Except as and to the extent described in the Recent Balance Sheet or in
Schedule 3.8, neither Company nor any Shareholder has knowledge of any basis for
the assertion against Company of any liability and there are no circumstances,
conditions, happenings, events or arrangements, contractual or otherwise, which
may give rise to liabilities, except commercial liabilities and obligations
incurred in the ordinary course of Company's business and consistent with past
practice.
3.9. No Litigation. Except as set forth in Schedule 3.9 there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether civil,
criminal or administrative ("Litigation"), pending or threatened against
Company, its directors (in such capacity), its business or any of its assets,
nor does Company or any Shareholder know, or have grounds to know, of any basis
for any Litigation. Schedule 3.9 also identifies all Litigation to which Company
or any of its directors (in such capacity) have been parties since January 1,
1992. Except as set forth in Schedule
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3.9, neither Company nor its business or assets is subject to any Order of any
Government Entity.
3.10. Compliance With Laws and Orders.
3.10.(a) Compliance. Except as set forth in Schedule 3.10.(a),
Company (including each and all of its operations, practices,
properties and assets) is in compliance with all applicable Laws and
Orders, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, product warranties, zoning,
building and sanitation, employment, retirement and labor relations,
product advertising and the Environmental Laws as hereinafter defined.
Except as set forth in Schedule 3.10.(a), Company has not received
notice of any violation or alleged violation of, and is subject to no
Liability for past or continuing violation of, any Laws or Orders. All
reports and returns required to be filed by Company with any Government
Entity have been filed, and were accurate and complete when filed.
Without limiting the generality of the foregoing:
(i) The operation of Company's business as it is
now conducted does not, nor does any condition existing at any
of the Facilities, in any manner constitute a nuisance or
other tortious interference with the rights of any person or
persons in such a manner as to give rise to or constitute the
grounds for a suit, action, claim or demand by any such person
or persons seeking compensation or damages or seeking to
restrain, enjoin or otherwise prohibit any aspect of the
conduct of such business or the manner in which it is now
conducted.
(ii) Company has made all required payments to
its unemployment compensation reserve accounts with the
appropriate governmental departments of the states where it is
required to maintain such accounts, and each of such accounts
has a positive balance.
(iii) Company has delivered to Buyer copies of all
reports of Company for the past five (5) years required under
the federal Occupational Safety and Health Act of 1970, as
amended, and under all other applicable health and safety laws
and regulations. The deficiencies, if any, noted on such
reports have been corrected.
3.10.(b) Licenses and Permits. Company has all licenses,
permits, approvals, authorizations and consents of all Government
Entities and all certification organizations required for the conduct
of the business (as presently
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conducted and as proposed to be conducted) and operation of the
Facilities. All such licenses, permits, approvals, authorizations and
consents are described in Schedule 3.10.(b), are in full force and
effect and will not be affected or made subject to loss, limitation or
any obligation to reapply as a result of the transactions contemplated
hereby. Except as set forth in Schedule 3.10.(b), Company (including
its operations, properties and assets) is and has been in compliance
with all such permits and licenses, approvals, authorizations and
consents.
3.10.(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws relating
to emissions, discharges, generation, storage, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic,
hazardous or petroleum or petroleum-based substances or wastes
("Waste") into the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata) or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Waste including,
without limitation, the Clean Water Act, the Clean Air Act, the
Resource Conservation and Recovery Act, the Toxic Substances Control
Act and the Comprehensive Environmental Response Compensation Liability
Act ("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws". Without
limiting the generality of the foregoing provisions of this Section
3.10, to the best of Shareholders' knowledge, Company is in full
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulations,
code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder. Except as
set forth in Schedule 3.10.(c), there is no Litigation nor any demand,
claim, hearing or notice of violation pending or, to the best of
Shareholders' knowledge, threatened against Company relating in any way
to the Environmental Laws or any Order issued, entered, promulgated or
approved thereunder. Except as set forth in Schedule 3.10.(c), there
are no past or present (or, to the best of Company's and the
Shareholders' knowledge, future) events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which may
interfere with or prevent compliance or continued compliance with the
Environmental Laws or with any Order issued, entered, promulgated or
approved thereunder, or which may give rise to any liability,
including, without limitation, liability under CERCLA or similar state
or local Laws, or otherwise form the basis of any Litigation, hearing,
notice of violation, study or investigation, based on or related to the
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manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Waste.
3.11. Title to and Condition of Properties.
3.11.(a) Marketable Title. Company has good and marketable
title to all of Company's assets, business and properties, including,
without limitation, all such properties (tangible and intangible)
reflected in the Recent Balance Sheet, free and clear of all mortgages,
liens, (statutory or otherwise) security interests, claims, pledges,
licenses, equities, options, conditional sales contracts, assessments,
levies, easements, covenants, reservations, restrictions,
rights-of-way, exceptions, limitations, charges or encumbrances of any
nature whatsoever (collectively, "Liens") except those described in
Schedule 3.11 and, in the case of real property, Liens for taxes not
yet due or which are being contested in good faith by appropriate
proceedings (and which have been sufficiently accrued or reserved
against in the Recent Balance Sheet), municipal and zoning ordinances
and easements for public utilities, none of which interfere with the
use of the property as currently utilized. None of Company's assets,
business or properties are subject to any restrictions with respect to
the transferability thereof; and the Company's title thereto will not
be affected in any way by the transactions contemplated hereby.
3.11.(b) Condition. All property and assets owned or utilized
by Company are in good operating condition and repair, free from any
defects (except such minor defects as do not interfere with the use
thereof in the conduct of the normal operations of Company), have been
maintained consistent with the standards generally followed in the
industry and are sufficient to carry on the business of Company as
conducted during the preceding 12 months. All buildings, plants and
other structures owned or otherwise utilized by Company are in good
condition and repair and have no structural defects or defects
affecting the plumbing, electrical, sewerage, or heating, ventilating
or air conditioning systems.
3.11.(c) Real Property. Schedule 3.11.(c) sets forth all real
property owned, used or occupied by Company (the "Real Property"),
including a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which Company has
notice or knowledge) granted on or appurtenant to or otherwise
affecting such Real Property, the zoning classification thereof, and
all plants, buildings or other structures located thereon. Schedule
3.11.(c) also sets forth, with respect to each parcel of Real Property
which is leased, the material terms of such lease.
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There are now in full force and effect duly issued certificates of
occupancy permitting the Real Property and improvements located thereon
to be legally used and occupied as the same are now constituted. All of
the Real Property has permanent rights of access to dedicated public
highways. No fact or condition exists which would prohibit or adversely
affect the ordinary rights of access to and from the Real Property from
and to the existing highways and roads and there is no pending or
threatened restriction or denial, governmental or otherwise, upon such
ingress and egress. There is not (i) any claim of adverse possession or
prescriptive rights involving any of the Real Property, (ii) any
structure located on any Real Property which encroaches on or over the
boundaries of neighboring or adjacent properties or (iii) any structure
of any other party which encroaches on or over the boundaries of any of
such Real Property. None of the Real Property is located in a flood
plain, flood hazard area, wetland or lakeshore erosion area within the
meaning of any Law, regulation or ordinance. No public improvements
have been commenced and to Company's and Shareholders' knowledge none
are planned which in either case may result in special assessments
against or otherwise materially adversely affect any Real Property. No
portion of any of the Real Property has been used as a landfill or for
storage or landfill of hazardous or toxic materials. Neither Company
nor any Shareholder has notice or knowledge of any (i) planned or
proposed increase in assessed valuations of any Real Property, (ii)
Order requiring repair, alteration, or correction of any existing
condition affecting any Real Property or the systems or improvements
thereat, (iii) condition or defect which could give rise to an order of
the sort referred to in "(ii)" above, (iv) underground storage tanks,
or any structural, mechanical, or other defects of material
significance affecting any Real Property or the systems or improvements
thereat (including, but not limited to, inadequacy for normal use of
mechanical systems or disposal or water systems at or serving the Real
Property), or (v) work that has been done or labor or materials that
has or have been furnished to any Real Property during the period of
six (6) months immediately preceding the date of this Agreement for
which liens could be filed against any of the Real Property.
3.11.(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the assets of Company is subject to any Order to be
sold or is being condemned, expropriated or otherwise taken by any
Government Entity with or without payment of compensation therefor, nor
to the best of Company's and Shareholders' knowledge has any such
condemnation, expropriation or taking been proposed.
3.12. Insurance. Set forth in Schedule 3.12 is a complete and
accurate list and description of all policies of fire,
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liability, errors and omissions, electronic data processing, workers
compensation, health and other forms of insurance presently in effect with
respect to the business and properties of Company, true and correct copies of
which have heretofore been delivered to Buyer. Schedule 3.12 includes, without
limitation, the carrier, the description of coverage, the limits of coverage,
retention or deductible amounts, amount of annual premiums, retroactive date of
coverage, date of expiration and the date through which premiums have been paid
with respect to each such policy, and any pending claims in excess of $5,000.
All such policies are valid, outstanding and enforceable policies and provide
insurance coverage for the properties, assets and operations of Company, of the
kinds, in the amounts and against the risks customarily maintained by
organizations similarly situated; and no such policy (nor any previous policy)
provides for or is subject to any currently enforceable retroactive rate or
premium adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events arising prior to the date
hereof. Schedule 3.12 indicates each policy as to which (a) the coverage limit
has been reached or (b) the total incurred losses to date equal 75% or more of
the coverage limit. No notice of cancellation or termination has been received
with respect to any such policy, and neither Company nor any Shareholder has
knowledge of any act or omission of Company which could result in cancellation
of any such policy prior to its scheduled expiration date. Company has not been
refused any insurance with respect to any aspect of the operations of the
business nor has its coverage been limited by any insurance carrier to which it
has applied for insurance or with which it has carried insurance during the last
three years. Company has duly and timely made all claims it has been entitled to
make under each policy of insurance. There is no claim by Company pending under
any such policies as to which coverage has been questioned, denied or disputed
by the underwriters of such policies, and neither Company nor any of the
Shareholders knows of any basis for denial of any claim under any such policy.
Company has not received any written notice from or on behalf of any insurance
carrier issuing any such policy that insurance rates therefor will hereafter be
substantially increased (except to the extent that insurance rates may be
increased for all similarly situated risks) or that there will hereafter be a
cancellation or an increase in a deductible (or an increase in premiums in order
to maintain an existing deductible) or nonrenewal of any such policy. Such
policies are sufficient in all material respects for compliance by Company with
all requirements of law and with the requirements of all material contracts to
which Company is a party. All general liability policies maintained by or for
the benefit of Company since its inception have been "occurrence" policies and
not "claims made" policies.
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3.13. Contracts and Commitments.
3.13.(a) Real Property Leases. Except as set forth in Schedule
3.11.(c), Company has no leases of real property.
3.13.(b) Personal Property Leases. Except as set forth in
Schedule 3.13.(b), Company has no leases of personal property involving
consideration or other expenditure in excess of $5,000 or involving
performance over a period of more than three months.
3.13.(c) Purchase Commitments. Company has no purchase
commitments for inventory items or supplies that, together with amounts
on hand, constitute in excess of three months normal usage, or which
are at an excessive price.
3.13.(d) Sales Commitments. Except as set forth in Schedule
3.13.(d), Company has no sales contracts or commitments to customers
which aggregate in excess of $ 25,000 to any one customer (or group of
affiliated customers). Company has no sales contracts or commitments
except those made in the ordinary course of business, at arm's length,
and no such contracts or commitments are for a sales price which would
result in a loss to the Company.
3.13.(e) Contracts With Affiliates and Certain Others. Company
has no agreement, understanding, contract or commitment (written or
oral) with any Affiliate or any employee, agent, consultant,
distributor, dealer or franchisee that is not immediately cancelable by
Company without liability, penalty or premium of any nature or kind
whatsoever.
3.13.(f) Powers of Attorney. The Company has not given a power
of attorney, which is currently in effect, to any person, firm or
corporation for any purpose whatsoever.
3.13.(g) Collective Bargaining Agreements. Except as set forth
in Schedule 3.13.(g), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or other
collective bargaining groups. Copies of all such agreements have
heretofore been delivered to Buyer.
3.13.(h) Loan Agreements. Except as set forth in Schedule
3.13.(h), Company is not obligated under any loan agreement, promissory
note, letter of credit, or other evidence of indebtedness as a
signatory, guarantor or otherwise.
3.13.(i) Guarantees. Except as disclosed on Schedule 3.13.(i),
Company has not guaranteed the payment or performance of any person,
firm or corporation, agreed to
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indemnify any person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any person.
3.13.(j) Contracts Subject to Renegotiation. Company is not a
party to any contract with any governmental body which is subject to
renegotiation.
3.13.(k) Burdensome or Restrictive Agreements. Company is not
a party to nor is it bound by any agreement, deed, lease or other
instrument which is so burdensome as to materially affect or impair the
operation of Company. Without limiting the generality of the foregoing,
Company is not a party to nor is it bound by any agreement requiring
Company to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting Company from competing in
any business or geographical area or soliciting customers or otherwise
restricting it from carrying on its business anywhere in the world.
3.13.(l) Other Material Contracts. Company has no lease,
contract or commitment of any nature involving consideration or other
expenditure in excess of $ 5,000, or involving performance over a
period of more than three months, or which is otherwise individually
material to the operations of Company, except as explicitly described
in Schedule 3.13.(l).
3.13.(m) No Default. Company is not in default under any
lease, contract or commitment, nor has any event or omission occurred
which through the passage of time or the giving of notice, or both,
would constitute a default thereunder or cause the acceleration of any
of Company's obligations or result in the creation of any Lien on any
of the assets owned, used or occupied by Company. No third party is in
default under any lease, contract or commitment to which Company is a
party, nor has any event or omission occurred which, through the
passage of time or the giving of notice, or both, would constitute a
default thereunder or give rise to an automatic termination, or the
right of discretionary termination, thereof.
3.14. Labor Matters. Except as set forth in Schedule 3.14, within
the last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule 3.14,
(a) Company is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice; (b) there is no unfair labor
practice charge or complaint against Company pending or threatened; (c) there is
no labor strike, dispute, request for
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representation, slowdown or stoppage actually pending or threatened against or
affecting Company nor any secondary boycott with respect to products of Company;
(d) no question concerning representation has been raised or is threatened
respecting the employees of Company; (e) no grievance which might have a
material adverse effect on Company, nor any arbitration proceeding arising out
of or under collective bargaining agreements, is pending and no such claim
therefor exists; and (f) there are no administrative charges or court complaints
against Company concerning alleged employment discrimination or other employment
related matters pending or threatened before the U.S. Equal Employment
Opportunity Commission or any Government Entity.
3.15. Employee Benefit Plans.
3.15.(a) Disclosure. Schedule 3.15.(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee
manuals, and all written or binding oral statements of policies,
practices or understandings relating to employment, which are provided
to, for the benefit of, or relate to, any persons employed by Company
or any persons who provide services to the Company pursuant to a
leasing arrangement with a third-party lessor (collectively, the
"Company Employees"). The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to Buyer. Each of the Employee Plans/Agreements is
identified on Schedule 3.15.(a), to the extent applicable, as one or
more of the following: an "employee pension benefit plan" (as defined
in Section 3(2) of ERISA), a "defined benefit plan" (as defined in
Section 414 of the Code), an "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA), and/or as a plan intended to be
qualified under Section 401 of the Code. No Employee Plan/Agreement is
a "multiemployer plan" (as defined in Section 4001 of ERISA), and
neither the Company nor any third-party lessor through which the
Company obtains employees has
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ever contributed nor been obligated to contribute to any such
multiemployer plan.
3.15.(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without limitation,
the Employee Plans/Agreements) that is subject to the provisions of
Title IV of ERISA and with respect to which the Company or any of its
assets may, directly or indirectly, be subject to any Liability,
contingent or otherwise, or the imposition of any Lien (whether by
reason of the complete or partial termination of any such plan, the
funded status of any such plan, any "complete withdrawal" (as defined
in Section 4203 of ERISA) or "partial withdrawal" (as defined in
Section 4205 of ERISA) by any person from any such plan, or otherwise):
(i) no such plan has been terminated so as to
subject, directly or indirectly, any assets of Company to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA;
(ii) no proceeding has been initiated or
threatened by any person (including the Pension Benefit
Guaranty Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of Company to any liability, contingent
or otherwise, or the imposition of any lien under Title IV of
ERISA, whether to the PBGC or to any other person or otherwise
on account of the termination of any such plan;
(iv) if any such plan were to be terminated as of
the Closing Date, no assets of Company would be subject,
directly or indirectly, to any liability, contingent or
otherwise, or the imposition of any lien under Title IV of
ERISA;
(v) no "reportable event" (as defined in Section
4043 of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302
of ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code, respectively), whether or
not waived; and
(vii) no such plan is a multiemployer plan or a
plan described in Section 4064 of ERISA.
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3.15.(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection
with which the Company or any of its assets or any Employee
Plan/Agreement, directly or indirectly, could be subject to any
liability under ERISA, the Code or any other Law or Order applicable to
any Employee Plan/Agreement, or under any agreement, instrument, Law or
Order pursuant to or under which Company has agreed to indemnify or is
required to indemnify any person against liability incurred under any
such Law or Order.
3.15.(d) Full Funding. The funds available under each Employee
Plan/Agreement which is intended to be a funded plan exceed the amounts
required to be paid, or which would be required to be paid if such
Employee Plan/Agreement were terminated, on account of rights vested or
accrued as of the Closing Date (using the actuarial methods and
assumptions then used by Company's actuaries in connection with the
funding of such Employee Plan/Agreement).
3.15.(e) Controlled Group; Affiliated Service Group; Leased
Employees. Company is not and never has been a member of a controlled
group of corporations as defined in Section 414(b) of the Code or in
common control with any unincorporated trade or business as determined
under Section 414(c) of the Code. Company is not and never has been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code. Company has no liability, actual or contingent,
under Title IV of ERISA.
3.15.(f) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company to date have
been made and all amounts properly accrued to date as liabilities of
Company which have not been paid have been properly recorded on the
books of Company and are reflected in the Recent Balance Sheet; (ii)
Company has complied with, and each such Employee Plan/Agreement
conforms in form and operation to, all applicable laws and regulations,
including but not limited to ERISA and the Code, in all respects and
all reports and information relating to such Employee Plan/Agreement
required to be filed with any governmental entity have been timely
filed; (iii) all reports and information relating to each such Employee
Plan/Agreement required to be disclosed or provided to participants or
their beneficiaries have been timely disclosed or provided; (iv) each
such Employee Plan/Agreement which is intended to qualify under Section
401 of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to such qualification, its
related trust has been
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determined to be exempt from taxation under Section 501(a) of the Code,
and nothing has occurred since the date of such letter that has or is
likely to adversely affect such qualification or exemption; (v) there
are no actions, suits or claims pending (other than routine claims for
benefits) or threatened with respect to such Employee Plan/Agreement or
against the assets of such Employee Plan/Agreement; and (vi) no
Employee Plan/Agreement is a plan which is established and maintained
outside the United States primarily for the benefit of individuals
substantially all of whom are nonresident aliens.
3.15.(g) Post-Retirement Benefits. No Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company employees beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii) death
or retirement benefits under any Employee Plan/Agreement that is an
employee pension benefit plan, (iii) deferred compensation benefits
accrued as liabilities on the books of Company (including the Recent
Balance Sheet), (iv) disability benefits under any Employee Plan/
Agreement that is an employee welfare benefit plan and which have been
fully provided for by insurance or otherwise or (v) benefits in the
nature of severance pay.
3.15.(h) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee or former employee
or (iii) result in any prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code for which an exemption is not
available.
3.15.(i) Delivery of Documents. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required
under ERISA, with respect to each such Employee Plan/Agreement
for the last two years;
(ii) a copy of the summary plan description,
together with each summary of material modifications, required
under ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement
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is embodied entirely in an insurance policy to which Company
is a party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded
through a trust or any third party funding vehicle (other than
an insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter
received from the Internal Revenue Service with respect to
each Employee Plan/Agreement that is intended to be a
"qualified plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual report
has been filed and delivered to Buyer pursuant to clause (i) of this
Section 3.15.(i), no material adverse change has occurred with respect
to the matters covered by the latest such annual report since the date
thereof.
3.15.(j) Future Commitments. Company has no announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.16. Employment Matters.
3.16.(a) Compensation. Schedule 3.16 contains a true and
correct list of all persons (whether employees of Company or employees leased
from third-party lessors) to whom Company is paying, directly or indirectly,
compensation, including bonuses and incentives, at an annual rate in excess of
Ten Thousand Dollars ($10,000) for services rendered or otherwise; and in the
case of salaried persons such list identifies the current annual rate of
compensation for each such person and in the case of hourly or commission
persons identifies certain reasonable ranges of rates and the number of persons
falling within each such range.
3.16.(b) Leasing Matters. With respect to any persons who
provide services to the Company pursuant to a leasing arrangement between the
Company and a third-party lessor:
(i) Company does not have any liabilities,
commitments or obligations (secured or unsecured, and whether
accrued, absolute, contingent, direct, indirect or otherwise)
with respect to such persons or the services rendered by such
persons, or to the third-party lessor with respect to such
persons or services, other than payment of the normal leasing
fee charged by the third party lessor in the ordinary course
of business and consistent with past practice and which
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will not have a material adverse effect on the business,
financial condition or result of operations of Company.
(ii) Company is not obligated, pursuant to the
terms of a written contract or other understanding, to
continue to obtain services through an employee leasing
arrangement with a third-party lessor, and Company may
terminate any such employee leasing arrangement at any time
without liability, penalty or further (including retroactive)
assessments other than payment of the normal leasing fee for
services performed through the termination date as charged by
the third-party lessor in the ordinary course of business and
consistent with past practice and which will not have a
material adverse effect on the business, financial condition
or result of operations of Company.
3.17. Trade Rights. Schedule 3.17 lists all Trade Rights (as defined
below) in which Company now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 3.17 have been properly registered,
all pending registrations and applications have been properly made and filed and
all annuity, maintenance, renewal and other fees relating to registrations or
applications are current. In order to conduct the business of Company, as such
is currently being conducted or proposed to be conducted, Company does not
require any Trade Rights that it does not already have. Company is not
infringing and has not infringed any Trade Rights of another in the operation of
the business of Company, nor is any other person infringing the Trade Rights of
Company. Company has not granted any license or made any assignment of any Trade
Right listed on Schedule 3.17, nor does Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There is no
Litigation pending or threatened to challenge Company's right, title and
interest with respect to its continued use and right to preclude others from
using any Trade Rights of Company. All Trade Rights of Company are valid,
enforceable and in good standing, and there are no equitable defenses to
enforcement based on any act or omission of Company. The consummation of the
transactions contemplated hereby will not alter or impair any Trade Rights owned
or used by Company. As used herein, the term "Trade Rights" shall mean and
include: (i) all trademark rights, business identifiers, trade dress, service
marks, trade names and brand names, all registrations thereof and applications
therefor and all goodwill associated with the foregoing; (ii) all copyrights,
copyright registrations and copyright applications, and all other rights
associated with the foregoing and the underlying works of authorship; (iii) all
patents and patent applications, and all international proprietary rights
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associated therewith; (iv) all contracts or agreements granting any right,
title, license or privilege under the intellectual property rights of any third
party; (v) all inventions, mask works and mask work registrations, know-how,
discoveries, improvements, designs, trade secrets, shop and royalty rights,
employee covenants and agreements respecting intellectual property and
non-competition and all other types of intellectual property; and (vi) all
claims for infringement or breach of any of the foregoing.
3.18. Major Customers and Suppliers.
3.18.(a) Major Customers. Schedule 3.18.(a) contains a list of
the twenty (20) largest customers of Company for each of the two (2)
most recent fiscal years (determined on the basis of the total dollar
amount of net sales) showing the total dollar amount of net sales to
each such customer during each such year. Neither Company nor any
Shareholder has any knowledge or information of any facts indicating,
nor any other reason to believe, that any of the customers listed on
Schedule 3.18.(a) will not continue to be customers of the business of
Company after the Closing at substantially the same level of purchases
as heretofore.
3.18.(b) Major Suppliers. Schedule 3.18.(b) contains a list of
the ten (10) largest suppliers to Company for each of the two (2) most
recent fiscal years (determined on the basis of the total dollar amount
of purchases) showing the total dollar amount of purchases from each
such supplier during each such year. Neither Company nor any
Shareholder has any knowledge or information of any facts indicating,
nor any other reason to believe, that any of the suppliers listed on
Schedule 3.18.(b) will not continue to be suppliers to the business of
Company after the Closing and will not continue to supply the business
with substantially the same quantity and quality of goods at
competitive prices.
3.18.(c) Sales Representatives. Schedule 3.18.(c) contains a
list of all sales representatives of Company, together with true,
correct and complete copies of all sales representative contracts and
policy statements, and a description of all substantial modifications
or exceptions.
3.19. Service Warranty and Liability. Schedule 3.19 contains a true,
correct and complete copy of Company's standard warranty or warranties for sales
of Services (as defined below) and, except as stated therein, there are no
warranties, commitments or obligations with respect to the provision of such
Services. Schedule 3.19 sets forth the estimated aggregate annual cost to
Company of meeting warranty or liability obligations or commitments for
customers for each of the five (5) preceding fiscal years. Schedule 3.19
contains a description of all liability claims and similar Litigation relating
to services rendered, which are presently
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pending or which to Company's or any Shareholder's knowledge are threatened, or
which have been asserted or commenced against Company within the last five (5)
years, in which a party thereto either requests injunctive relief or alleges
damages (whether or not covered by insurance). The provision of such services by
the Company meets and complies with all governmental laws and regulations
currently in effect. As used in this Section 3.19, the term "Services" means any
and all services currently or at any time previously rendered, provided or sold
by Company, or by any predecessor of Company under any brand name or xxxx under
which services are or have been rendered, provided or sold by Company.
3.20. Bank Accounts. Schedule 3.20 sets forth the names and
locations of all banks, trust companies, savings and loan associations and other
financial institutions at which the Company maintains a safe deposit box, lock
box or checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
3.21. Affiliates' Relationships to Company.
3.21.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company and any Affiliate are
described on Schedule 3.21.(a).
3.21.(b) No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with Company or
is competitive with Company's business, or (ii) any property, asset or
right which is used by Company in the conduct of its business.
3.21.(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company to any Affiliate, are listed on
Schedule 3.21.(c).
3.22. Assets Necessary to Business. Company presently has and at the
Closing will have good, valid and marketable title to all property and assets,
tangible and intangible, and all leases, licenses and other agreements,
necessary to permit Buyer to carry on the business of Company as presently
conducted.
3.23. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, Shareholders or agents have retained, employed
or used any broker or finder in connection with the transaction provided for
herein or in connection with the negotiation thereof.
3.24. Year 2000 Compliance. Except as set forth in Schedule 3.24. to
the best of Shareholders' knowledge: (a) the computer
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source codes, programs and other software of the Company (including machine
readable code, printed listings of code, databases, documentation and related
property and information of Company used or under development for use in the MMA
Business) (collectively, "Software") accurately determine chronological dates
and accurately perform all calculations, data manipulations, sorting and
transmission of date data regardless of whether the date represents or
references different centuries (For example, when the actual date changes from
12/31/1999 to 1/1/2000, the Software will accurately determine that 1/1/2000 is
the new date and determine that an individual born in 1948 is 52 years old and
not -48 [i.e., 00-48 = -48], or otherwise incorrectly perform the age
calculation); (b) the Software provides that all date related user interface
functionalities and data fields permit the entry of a four digit year (i.e., the
years 1965, 2065 and 3065 could all be entered by the user without the need of a
manual override) and such date data will result in accurate calculations, data
manipulations, sorting and transmission of all data, including the date data;
(c) the entry of a date equal to or greater than 01/01/2000 into the Software
will not affect any calculation that produces or uses time spans such that the
results of the calculation are incorrect (i.e., such as an interest
calculation); and (d) the integrity of calculations performed utilizing the
Software will not be affected by date data for dates on or after 01/02/2000, and
calculations using previously generated data (on or before 12/31/1999) will also
maintain calculation integrity.
3.25. Systems Performance. The Software and related systems owned or
used by Company perform in accordance with the written specifications previously
delivered to Buyer. The Software and related system components are capable of
interconnecting and/or interfacing with each other, and they deliver the
functionality needed to meet the information systems requirements of the MMA
Business as they are presently conducted. No Shareholder will cause any
unplanned interruption of the operations of, or accessibility to, the Software
or related systems (or any system component) through any device, method or means
including, without limitation, the use of any "virus," "lockup," "time bomb" or
"key lock" device or program, or disabling code, which has the potential or
capability of causing any unplanned interruption of the operations of, or
accessibility of, the Software or related systems (or any system component) to
Buyer, or any user authorized by Buyer, or which could alter, destroy or inhibit
the use of the Software or related systems (or any system component), or the
data contained therein (collectively, "Disabling Devices"), which could block
access to or prevent the use of the Software or any system (or system component)
by Buyer or any authorized user. No Shareholder has placed, nor is any
Shareholder aware of, any Disabling Device on any Software or system component
owned or used by Company.
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3.26. Disclosure. No representation or warranty by Company and/or
the Shareholders in this Agreement, nor any statement, certificate, schedule,
document or exhibit hereto furnished or to be furnished by or on behalf of
Company or Shareholders pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading. All statements and information
contained in any certificate, instrument, Disclosure Schedule or document
delivered by or on behalf of Company and/or Shareholders shall be deemed
representations and warranties by the Company and the Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which was true and correct on the Effective Date (other
than Section 4.2), remains true as of the Closing Date, shall be unaffected by
any investigation hereafter made by Shareholders or any notice to Shareholders,
and shall survive the Closing of the transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
4.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and instruments to
be executed and delivered by Buyer pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes, and
when executed and delivered, the other documents and instruments to be executed
and delivered by Buyer pursuant hereto will constitute, valid and binding
agreements of Buyer, enforceable in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable principles.
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4.3. No Brokers or Finders. Except for Broadview Associates LLC,
neither Buyer nor any of its directors, officers, employees or agents has
retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation thereof.
4.4. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of Buyer pursuant to this Agreement
or in connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a material
fact necessary to make the statements contained therein not misleading.
4.5. Investment Intent. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
5. COVENANTS
5.1. Employment and Noncompetition Agreements; Consulting
Agreement. Contemporaneously with the execution of this Agreement, Shareholders
shall cause each of Xxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx to execute and
deliver to Company an Employment and Noncompetition Agreement, substantially in
the form of Exhibit A hereto, and Xxxx Xxxx to execute and deliver to Company a
Consulting Agreement, substantially in the form of Exhibit B hereto.
5.2. Noncompetition; Confidentiality. As an inducement to Buyer to
execute this Agreement and complete the transactions contemplated hereby, and in
order to preserve the goodwill associated with the business of Company being
acquired pursuant to this Agreement, and in addition to and not in limitation of
any covenants contained in any agreement executed and delivered pursuant to
Section 5.1 hereof, each Shareholder hereby covenants and agrees as follows:
5.2.(a) Covenant Not to Compete. For a period of three (3)
years (two (2) years in the case of Xxxxxx X. Xxxxxxxx and one (1) year
in the case of Xxxx Xxxx) from the Closing Date, no Shareholder will
directly or indirectly:
(i) engage in, continue in or carry on any
business which competes with Company or the MMA Business or is
substantially similar thereto, including owning or controlling
any financial interest in any corporation, partnership, firm
or other form of business organization which is so engaged;
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(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Company or Buyer (or any of its
subsidiaries) in any aspect with respect to the MMA Business,
including, but not limited to, advertising or otherwise
endorsing the products of any such competitor; soliciting
customers or otherwise serving as an intermediary for any such
competitor; loaning money or rendering any other form of
financial assistance to or engaging in any form of business
transaction on other than an arm's length basis with any such
competitor;
(iii) offer employment to an employee of Company
or the MMA Business, without the prior written consent of
Buyer; or
(iv) engage in any practice the purpose of which
is to evade the provisions of this covenant not to compete or
to commit any act which adversely affects the Company or the
MMA Business;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount
which shall not exceed 5% of the outstanding shares of any such
corporation. The parties agree that the geographic scope of this
covenant not to compete shall extent to and cover the following states:
Arizona. The parties agree that a Buyer may sell, assign or otherwise
transfer this covenant not to compete, in whole or in part, to any
subsidiary of Buyer or to any person, corporation, firm or entity that
purchases all or part of the business of the Company. In the event a
court of competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended
and/or limited but only to the extent necessary to render the same
valid and enforceable in such jurisdiction.
5.2.(b) Covenant of Confidentiality. No Shareholder shall at
any time subsequent to the Closing, except as explicitly requested by
Buyer, (i) use for any purpose, (ii) disclose to any person, or (iii)
keep or make copies of documents, tapes, discs or programs containing,
any confidential information concerning Company. For purposes
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hereof, "confidential information" shall mean and include, without
limitation, all Trade Rights in which Company has an interest, all
customer lists and customer information, and all other information
concerning Company's processes, apparatus, equipment, packaging,
products, marketing and distribution methods, not previously disclosed
to the public directly by Company.
5.2.(c) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this Section
5.2 are necessary to protect the legitimate continuing interests of
Buyer in acquiring the Shares, and that any violation or breach of
these provisions will result in irreparable injury to Buyer for which a
remedy at law would be inadequate and that, in addition to any relief
at law which may be available to Buyer for such violation or breach and
regardless of any other provision contained in this Agreement, Buyer
shall be entitled to injunctive and other equitable relief as a court
may grant after considering the intent of this Section 5.2.
5.3. General Releases. Contemporaneously with the execution of this
Agreement, each Shareholder shall deliver a general release to Buyer, in
substantially the form attached hereto as Exhibit C.
5.4. Credited Service. In the event Company's employees or leased
employees become eligible to participate in Buyer's 401(k) plan and health and
welfare benefit programs, Buyer covenants and agrees that the persons set forth
in Schedule 3.16 shall receive credit for their years of service with Company
(as an employee or leased employee) with respect to such participation.
5.5. Capital Contribution. Contemporaneously with the execution of
this Agreement, Xxxxxx X. Xxxxxxxx will make a contribution of capital to
Company in the amount of $43,356 by forgiving indebtedness in such amount
reflected on the Recent Balance Sheet.
6. INDEMNIFICATION
6.1. By Shareholders. Subject to the terms and conditions of this
Article 6, each Shareholder, jointly and severally, hereby agrees to indemnify,
defend and hold harmless Buyer, its directors, officers, employees and
controlled and controlling persons (hereinafter "Buyer's Affiliates") and the
Company from and against all Claims asserted against, resulting to, imposed
upon, or incurred by Buyer, Buyer's Affiliates or the Company, directly or
indirectly, by reason of, arising out of or resulting from (a) the
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inaccuracy or breach of any representation or warranty of any Shareholder or
Company contained in or made pursuant to this Agreement, (b) the breach of any
covenant of any Shareholder or the Company contained in this Agreement, (c) the
litigation matters referred to in Schedule 3.9, or (d) the conduct of the MMA
Business or operations of the Company prior to the Closing. Regardless of the
foregoing, however, breaches of representations and warranties contained in
Section 3.2 hereof shall be subject only to several indemnification by the
respective Shareholders who shall have made and breached such representations
and warranties. As used in this Article 6, the term "Claim" shall include (i)
all debts, liabilities and obligations; (ii) all losses, damages (including,
without limitation, consequential damages), judgments, awards, settlements,
costs and expenses (including, without limitation, interest (including
prejudgment interest in any litigated matter), penalties, court costs and
attorneys fees and expenses); and (iii) all demands, claims, suits, actions,
costs of investigation, causes of action, proceedings and assessments, whether
or not ultimately determined to be valid.
6.2. By Buyer. Subject to the terms and conditions of this Article
6, Buyer hereby agrees to indemnify, defend and hold harmless each Shareholder
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement.
6.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
6.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim, and the Indemnifying
Party will undertake the defense thereof by representatives chosen by
it. Failure to give such notice shall not affect the Indemnifying
Party's duty or obligations under this Article 6, except to the extent
the Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them and in
the possession or under the control of the Indemnified Party, for the
use of the Indemnifying Party and its representatives in defending any
such Claim, and shall in other respects give reasonable cooperation in
such defense.
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6.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party's defense, compromise,
settlement or consent to judgment therein.
6.3.(c) Indemnified Party's Rights. Anything in this Section
6.3 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend,
compromise or settle such Claim, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all
Liability in respect of such Claim.
6.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 6, which payment may be
accomplished in whole or in part, at the option of the Indemnified Party, by the
Indemnified Party setting off any amount owed to the Indemnifying Party by the
Indemnified Party. To the extent set-off is made by an Indemnified Party in
satisfaction or partial satisfaction of an indemnity obligation under this
Article 6 that is disputed by the Indemnifying Party, upon a subsequent
determination by final judgment not subject to appeal that all or a portion of
such indemnity obligation was not owed to the Indemnified Party, the Indemnified
Party shall pay the Indemnifying Party the amount which was set-off and not owed
together with interest from the date of set-off until the date of such payment
at an annual rate equal to the average annual rate in effect as of the date of
the set-off, on those three maturities of United States Treasury obligations
having a remaining life, as of such date, closest to the period from the date of
the set-off to the date of such judgment. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
pay promptly on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required to be paid by it, the amount
so determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the
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Indemnifying Party shall post and pay the cost of the security or bond to stay
execution of the judgment pending appeal. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such third party Claim.
6.5. Limitations on Indemnification. Except for any willful or
knowing breach or misrepresentation, as to which claims may be brought without
limitation as to time or amount:
6.5.(a) Time Limitation. No claim or action shall be brought
under this Article 6 for breach of a representation or warranty after
the lapse of three (3) years following the Closing. Regardless of the
foregoing, however, or any other provision of this Agreement:
(i) There shall be no time limitation on claims
on actions brought for breach of any representation or
warranty made by Shareholders or Company in or pursuant to
Sections 3.1, 3.2, 3.9, 3.10, 3.12 and 3.17, and Shareholders
hereby waive all applicable statutory limitation periods with
respect thereto.
(ii) Any claim or action brought for breach of
any representation or warranty made by Shareholders with
respect to tax or ERISA matters may be brought at any time
until the underlying tax or ERISA obligation is barred by the
applicable period of limitation under federal and state laws
relating thereto (as such period may be extended by waiver).
(iii) Any claim made by a party hereunder by
delivering written notice of the claim to the Indemnifying
Party or Parties, by filing a suit or action in a court of
competent jurisdiction or a court reasonably believed to be of
competent jurisdiction or by a demand for arbitration in
accordance with Article 9 hereof for breach of a
representation or warranty prior to the termination of the
survival period for such claim shall be preserved despite the
subsequent termination of such survival period.
(iv) If any act, omission, disclosure or failure
to disclosure shall form the basis for a claim for breach of
more than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving.
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6.5.(b) Amount Limitations.
(i) Basket. Buyer, Buyer's Affiliates and
Company shall not be entitled to indemnification under this
Article 6 for breach of representation or warranty unless the
aggregate of the Shareholders' indemnification obligations to
Buyer, Buyer's Affiliates and Company pursuant to this Article
6 (but for this Section 6.5.(b)) exceeds $25,000; but in such
event, Buyer, Buyer's Affiliates and Company shall be entitled
to indemnification in full for all breaches of representations
and/or warranties.
(ii) Cap. The aggregate amount of the
indemnification obligations of Shareholders pursuant to this
Article 6 shall not exceed the aggregate Purchase Price
(including any Contingent Payment) as set forth in Section
2.1.; provided, further, that the aggregate indemnification
obligation of a particular Shareholder pursuant to this
Article 6 shall not exceed the portion of the aggregate
Purchase Price (including the Contingent Payment, if any)
payable to such Shareholder as determined in accordance with
Sections 2.1 and 2.2 hereto.
6.6. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing, and regardless of
whether such breach, violation or failure is deemed to be "material" for
purposes of Section 9.2.
7. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall take place
contemporaneously with the execution and delivery of this agreement at the
offices of Xxxxxx & Xxxxxx, P.C., 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx X, Xxxxx 000,
Xxxxxxx, Arizona, at 2:00 P.M. on February 27, 1998, or at such other hour and
place as the parties hereto shall agree upon in writing. The date hereof is
referred to in this Agreement as the "Closing Date". Unless otherwise indicated,
the transactions contemplated hereby shall be deemed for all purposes to be
effective as of February 1, 1998, which date shall be referred to herein as the
"Effective Date."
7.1. Documents to be Delivered by Company and Shareholders. At the
Closing, Company and Shareholders shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
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7.1.(a) Stock Certificate(s). Stock certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached, in either case as of the Effective Date.
7.1.(b) Opinion of Counsel. A written opinion of Xxxxxx &
Xxxxxx, P.C., counsel to Company and Shareholders, dated as of the
Closing Date, addressed to Buyer, substantially in the form of Exhibit
D hereto.
7.1.(c) Consents and Approvals. Executed originals of all
approvals, consents and waivers that are required to effect the
transactions contemplated hereby.
7.1.(d) Estoppel Certificates. An estoppel certificate or
status letter from the landlord under each lease of Real Property,
which estoppel certificate or status letter will certify: (i) the lease
is valid and in full force and effect; (ii) the amounts payable by
Company under the lease and the date to which the same have been paid;
(iii) whether there are, to the knowledge of said landlord, any
defaults thereunder, and, if so, specifying the nature thereof; and
(iv) a statement that the transactions contemplated by this Agreement
will not constitute a default under the lease.
7.1.(e) Employment and Noncompetition Agreements; Consulting
Agreement. The Employment and Noncompetition Agreements and Consulting
Agreement referred to in Section 5.1, duly executed by the persons
referred to in such Section.
7.1.(f) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and the Shareholders of Company,
authorizing and approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
7.1.(g) Articles; By-Laws. A copy of the By-Laws of Company
certified by the secretary of Company, and a copy of the Articles of
Incorporation of Company certified by the Secretary of State of the
state of incorporation of Company.
7.1.(h) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or otherwise
on behalf of another person) any document executed and delivered to
Buyer pursuant to the terms hereof.
7.1.(i) General Releases. The General Releases referred to in
Section 5.3, duly executed by the persons referred to in such Section.
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7.1.(j) Resignations. The resignations of Xxxxxx X. Xxxxxxxx,
Xxxxxxx X. Xxxxxx and Xxxx Xxxx as officers of the Company, and Xxxxxx
X. Xxxxxxxx, Xxxxxxx X. Xxxxxx and Xxxx Xxxx as directors of the
Company, effective as of the Closing and in form satisfactory to
Buyer's counsel.
7.1.(k) Affidavit. An affidavit from Company and each
Shareholder in form and substance satisfactory to Buyer, to the effect
that Company is not a "foreign person," "foreign corporation," "foreign
partnership," "foreign trust" or "foreign estate" under Section 1445 of
the Code, and containing all such other information as is required to
comply with the requirements of such Section.
7.1.(l) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at the Closing pursuant to
this Agreement and such other certificates of authority and documents
as Buyer may reasonably request.
7.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to Shareholders the following documents, in each case duly
executed or otherwise in proper form:
7.2.(a) Cash Purchase Price. To Shareholders, bank checks (or
wire transfers) as required by Section 2.2(a) hereof.
7.2.(b) Opinion of Counsel. A written opinion of Xxxxx &
Lardner, counsel to Buyer, dated as of the Closing Date, addressed to
Company, in substantially the form of Exhibit E hereto.
7.2.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
7.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company or Shareholders by Buyer pursuant to the terms hereof.
7.2.(e) Other Documents. All other documents, instruments or
writings required to be delivered to Company at the Closing pursuant to
this Agreement and such other certificates of authority and documents
as Company may reasonably request.
7.3. Delivery of Buyer Loan. At the Closing, Buyer shall deliver to
Company the Buyer Loan as provided in Section 2.1.(d).
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8. TERMINATION
This Agreement may be terminated without further liability of any party
at any time prior to the Closing: (a) by mutual written agreement of Buyer and
all of the Shareholders; or (b) by Buyer or any Shareholder (i) if the Closing
shall not have occurred by 11:59 p.m. Eastern time on the date hereof, provided
the terminating party has not, through breach of a representation, warranty or
covenant, prevented the Closing from occurring at or before such time, or (ii)
if any Government Entity shall have issued a final and non-appealable Order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement.
9. RESOLUTION OF DISPUTES
9.1. Arbitration.
9.1.(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or any contract or agreement entered into
pursuant hereto or the performance by the parties of its or their terms
shall be settled by binding arbitration held in Maricopa County,
Arizona in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as specifically
otherwise provided in this Article 9. Notwithstanding the foregoing,
Buyer may, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened
violation of the covenants of any Shareholder under Section 5.2 of this
Agreement, or any covenants of confidentiality or covenants not to
compete contained in any Employment and Noncompetition Agreement or
Consulting Agreement delivered pursuant to Section 5.1 hereof.
9.1.(b) No party shall be required to submit to arbitration
hereunder unless all persons who are not parties to this Agreement, but
who are necessary parties to a complete resolution of the controversy,
submit to the arbitration process on the same terms as the parties
hereto. Without limiting the generality of the foregoing, no claim
under Article 6 for the indemnification of a third-party claim shall be
subject to arbitration under this Article 9 unless the third party
bringing such claim against the indemnitee shall agree in writing to
the application of this Article 9 to the resolution of such claim.
9.2. Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed $250,000, then the panel to be appointed shall consist of
three neutral arbitrators; otherwise, one neutral arbitrator.
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9.3. Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the circumstances and
shall resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The
arbitrator(s) shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any party so requests within 10 days after the decision.
Thereafter, the decision of the arbitrator(s) shall be final, binding, and
nonappealable with respect to all persons, including (without limitation)
persons who have failed or refused to participate in the arbitration process.
9.4. Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
9.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Buyer and each Shareholder hereby submit to the in personam
jurisdiction of the Federal and State courts in Florida, for the purpose of
confirming any such award and entering judgment thereon.
9.6. Confidentiality. All proceedings under this Article 9 and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties.
9.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 9 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party and to the right of setoff
provided in Section 6.4 hereof.
9.8. Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Article 9 are pending. The parties will
take such action, if any, required to effectuate such tolling.
10. MISCELLANEOUS
10.1. Disclosure Schedule. The Schedules have been compiled in a bound
volume (the "Disclosure Schedule"), executed by Shareholders and dated and
delivered to Buyer on the date of this Agreement. Information set forth in the
Disclosure Schedule
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specifically refers to the article and section of this Agreement to which such
information is responsive and such information shall not be deemed to have been
disclosed with respect to any other article or section of this Agreement or for
any other purpose. The Disclosure Schedule includes a table of contents and/or
index to all of the information and documents contained therein. The Disclosure
Schedule shall not vary, change or alter the language of the representations and
warranties contained in this Agreement and, to the extent the language in the
Disclosure Schedule does not conform in every respect to the language of such
representations and warranties, such language in the Disclosure Schedule shall
be disregarded and be of no force or effect.
10.2. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company and Shareholders will execute and deliver
to Buyer such documents and take such other action as Buyer may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
10.3. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by Buyer, Company or Shareholders
shall be subject to the approval of the other parties in all essential respects,
except that approval of the Shareholders or Company shall not be required as to
any statements and other information which Buyer may submit to the Securities
and Exchange Commission, the Nasdaq Stock Market ("Nasdaq") or Buyer's
stockholders or be required to make pursuant to any rule or regulation of the
Securities and Exchange Commission or Nasdaq, or otherwise required by law.
10.4. Assignment; Parties in Interest.
10.4.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without
consent of any other party, (i) merge Company with and into Buyer
and/or any subsidiary of Buyer, or (ii) cause one or more subsidiaries
of Buyer to carry out all or part of the transactions contemplated
hereby; provided, however, that Buyer shall, nevertheless, remain
liable for all of its obligations, and those of any such subsidiary, to
Shareholders hereunder.
10.4.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
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10.5. Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Arizona, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.
10.6. Amendment and Modification. Buyer and Shareholders may amend,
modify and supplement this Agreement in such manner as may be agreed upon in
writing between Buyer and all the Shareholders personally.
10.7. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
(a) If to Buyer, to:
ABR Information Services, Inc.
00000 X.X. Xxxxxxx 00 Xxxxx
Xxxx Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. XxxXxxxxxx
Chairman of the Board,
President and
Chief Executive Officer
Facsimile: (000) 000-0000
(with a copy to)
Xxxxx & Lardner
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile: (000) 000-0000
or to such other person or address as Buyer shall furnish to Shareholders in
writing.
(b) If to Shareholders, to:
Xxxxxx X. Xxxxxxxx
0000 Xxxx Xxxx Xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
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Xxxxxxx X. Xxxxxx
0000 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
Xxxx Xxxx
0000 Xxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
(with a copy to)
Xxxx X. Xxxxxxx III
Xxxxxx & Xxxxxx, P.C.
Tower B, Suite 720
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
or to such other person or address as any Shareholder shall furnish to Buyer and
the remaining Shareholders in writing.
(c) If to Company, to:
Xxxxxxxx, Xxxxxx & Associates, Ltd.
0000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
(with a copy to)
Xxxx X. Xxxxxxx
Xxxxx & Xxxxxxx
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
Any notice to Company given after Closing shall also be given in the same manner
to Buyer.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such failure or
refusal. Any
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party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this Section.
10.8. Expenses.
10.8.(a) Brokerage. Except as to Broadview Associates LLC,
which shall be compensated by Buyer, Shareholders and Buyer each
represent and warrant to each other that there is no broker involved or
in any way connected with the transfer provided for herein on their
behalf respectively (and Shareholders represent and warrant that there
is no broker involved on behalf of Company) and each agrees to hold the
other harmless from and against all other claims for brokerage
commissions or finder's fees in connection with the execution of this
Agreement or the transactions provided for herein.
10.8.(b) Expenses to be Paid by Shareholders. Shareholders
shall pay, and shall indemnify, defend and hold Buyer and Company
harmless from and against, any sales, use, excise, transfer or other
similar tax imposed with respect to the transactions provided for in
this Agreement, and any interest or penalties related thereto.
10.8.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its counsel
and other agents in connection with the transactions contemplated
hereby.
10.8.(d) Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of the
arbitrator as set forth in Section 10.4) the prevailing party in any
action brought with respect to or to enforce any right or remedy under
this Agreement shall be entitled to recover from the other party or
parties all reasonable costs and expenses of any nature whatsoever
incurred by the prevailing party in connection with such action,
including without limitation attorneys' fees and prejudgment interest.
10.9. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements, representations
or warranties between the parties other than those set forth or provided for
herein.
10.10. Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Agreement and the Ancillary Instruments may be effective upon the execution and
delivery by any party of facsimile copies of signature pages hereto and thereto
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duly executed by such party; provided, however, that any party delivering a
facsimile signature page covenants and agrees to deliver promptly after the date
hereto two (2) original copies to the other parties hereto.
10.11. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
10.12. Glossary of Terms. The following sets forth the location of
certain definitions of capitalized terms defined in the body of this Agreement:
"Act" - Section 3.26
"Affiliate" - Section 3.7.(k)
"Ancillary Instruments" - Section 3.2.(a)
"Buyer's Affiliates" - Section 6.1
"Buyer Shares" - Section 2.2(b)
"CERCLA" - Section 3.10.(c)
"Claim" - Section 6.1
"Closing" - Preamble to Article 9
"Closing Date" - Section 7
"Code" - Section 3.5.(e)
"Common Stock" - Section 2.2(b)
"Company Employees" - Section 3.15.(a)
"Contingent Payment" - Section 2.1
"Disclosure Schedule" - Article 10
"Employee Plans/Agreement(s)" - Section 3.15.(a)
"Environmental Laws" - Section 3.10.(c)
"ERISA" - Section 3.15.(a)
"Facilities" - Second Recital
"Government Entities" - Section 3.3
"Indemnified Party" - Section 6.3.(a)
"Indemnifying Party" - Section 6.3.(a)
"Laws" - Section 3.3
"Lien" - Section 3.11.(a)
"Litigation" - Section 3.9
"Orders" - Section 3.3
"PBGC" - Section 3.15.(b)(ii)
"Purchase Price" - Section 2.1
"Real Property" - Section 3.11.(c)
"Recent Balance Sheet" - Section 3.4
"Services" - Section 3.19
"Settlement Date" - Section 2.2.(c)
"Shares" - First Recital
"Trade Rights" - Section 3.17
"Waste" - Section 3.10.(c)
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
BUYER:
ABR INFORMATION SERVICES, INC.,
a Florida corporation
By:
---------------------------------------
Title:
--------------------------------------
COMPANY:
XXXXXXXX, XXXXXX & ASSOCIATES, LTD.,
an Arizona corporation
By:
---------------------------------------
Title:
---------------------------------
SHAREHOLDERS:
--------------------------------------------
Xxxxxx X. Xxxxxxxx, Individually
--------------------------------------------
Xxxxxxx X. Xxxxxx, Individually
--------------------------------------------
Xxxx Xxxx, Individually
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