ASSET ACQUISITION AGREEMENT
March , 2000
The parties to this agreement are ______________, a ____________
corporation ("Transferor"), the parties listed on exhibit I (collectively, the
"Stockholders"), TISI Holdings, Inc., a Delaware corporation ("XXXX"), which is
a wholly-owned subsidiary of TOIC (hereafter defined) and The Official
Information Company, a Delaware corporation ("TOIC").
Transferor operates the business of pre-employment investigation and
screening (the "Business"). [Transferor also operates the business of civil
recovery and refund checking (the "Excluded Business")]. The parties have agreed
upon the transfer to XXXX of substantially all of Transferor's business and
assets relating to the Business, on the terms set forth in this agreement. The
affiliates of Transferor listed on exhibit II (the "Affiliates") have entered
into acquisition agreements with XXXX on the date hereof (the "Affiliate
Acquisition Agreements") whereby either the assets or stock of each of the
Affiliates will be transferred to XXXX on the terms set forth in the respective
Affiliate Acquisition Agreements.
TOIC owns all of the outstanding shares of capital stock of Total
Information Services, Inc., an Oklahoma corporation ("TISI"), which, among other
things, conducts a business similar to the Business. In connection with the
transactions contemplated by this agreement, TOIC is transferring and
contributing all of such shares of TISI to XXXX.
Accordingly, it is agreed as follows:
1. Transfer and Acquisition of Assets.
1.1 Assets to be Transferred and Acquired. At the closing referred
to in section 3, Transferor shall assign and transfer to XXXX, and XXXX shall
acquire from Transferor, all of Transferor's business and assets as they exist
on the Closing Date referred to in section 3, but excluding solely the Excluded
Assets referred to in section 1.2 (the assets to be sold and assigned to XXXX
being referred to collectively as the "Assets"). The Assets include, but are not
limited to, the following (subject to section 1.2):
(a) the databases (and all of Transferor's rights to the
information contained therein) used in connection with the Business and all
computer software and all trademarks, trade names, patents, trade secrets and
logos (including registrations and applications for registration of any of them)
now or previously used by Transferor in connection with the Business, including
those listed on schedule 4.11, together with the good will of the business
associated with those trademarks, trade names, patents, trade secrets and logos;
all of Transferor's rights in copyrights that relate to the Business (including
registrations and
-1-
applications for registration of any copyrights); and all other intangible
property and proprietary rights that relate to the Business;
(b) all of Transferor's rights under agreements, commitments,
orders and leases, to the extent that they relate to the Business and remain
unperformed or unfulfilled on, or by their terms continue after, the Closing
Date, including, but not limited to all of Transferor's rights under (i) the
agreements, commitments, orders and leases listed on schedule 4.8 (except as
otherwise provided on that schedule), (ii) all other agreements, commitments and
orders that were entered into prior to the date of this agreement in the
ordinary course of business and were not required to be referred to on schedule
4.8 and (iii) all other agreements, commitments and orders that are entered into
after the date of this agreement in the ordinary course of business and
consistent with section 6.2;
(c) all of Transferor's office supplies, stationery, forms,
labels, and similar supplies that relate to, or are used in, the Business;
(d) all files and other records and data relating to the
operations of the Business;
(e) all equipment (including computers and office equipment),
vehicles, furniture, fixtures, supplies, leasehold improvements and improvements
on land, and all other tangible personal property and fixed assets, wherever
located, that are owned by Transferor and used in or relate to the Business;
(f) all of Transferor's accounts receivable arising out of
the operation of the Business;
(g) all of Transferor's prepaid expenses, deposits and other
current assets relating to the Business;
(h) all of Transferor's claims against third parties arising
out of the operation of the Business;
(i) all of Transferor's rights to the post office boxes,
telephone numbers and facsimile numbers used in the Business;
(j) all real property, easements, rights-of-way and leasehold
and other interests in real property, buildings and improvements owned, leased
or used by Transferor in connection with the Business, including, but not
limited to, to properties listed on schedule 4.4(c); and
(k) all of Transferor's rights with respect to Internet
domain names and web sites and the content of web sites that relate to the
Business.
-2-
1.2 Excluded Assets. The following assets shall be retained by
Transferor and shall not be assigned or transferred to XXXX (the "Excluded
Assets"):
(a) all cash, cash investments, certificates of deposit,
commercial paper, treasury bills and notes, money market accounts and other
marketable securities except to the extent required to maintain current assets
at a level equal to current liabilities, as contemplated under section 2.3;
(b) Transferor's rights under any agreement, commitment or
order as to which consent to assignment is required but has not been obtained or
which is indicated on schedule 4.8 as not being assigned to XXXX , subject to
any benefit given to XXXX under section 6.4;
(c) the assets referred to on schedule 1.2(c), [which
schedule will refer to income tax returns and financial statements, minute books
and stock records; assets relating to Transferor's other lines of business
[including the Excluded Business], if any];
(d) all loans or other receivables due from any Stockholder
or affiliate thereof; and
(e) all the shares of capital stock held by Transferor in
United States Mutual Association, Inc.
2. Purchase Price.
2.1 Amount of Consideration. As full consideration for the Assets:
(a) at the closing, XXXX shall pay to Transferor, by wire
transfer of immediately available funds, the sum of $______, subject to
adjustment as provided in section 2.3, which shall be payable as follows: (i)
$_______ to Transferor, (ii) $_____ into a trust account established by
Transferor and the Affiliates pursuant to an agreement of even date herewith, as
more fully described on exhibit III, and (iii) $_____ to the escrow agent under
an escrow agreement in the form of exhibit IV ("Escrow Agreement");
(b) at the closing, XXXX shall cause to be issued to
Transferor ____ shares of Class B Non-Voting Common Stock of XXXX and ____
shares of Class C Non-Voting Common Stock of XXXX as more fully described on
exhibit V (collectively, the "XXXX Shares");
(c) at the closing, XXXX shall assume, and agree to pay,
perform and discharge solely (the "Assumed Liabilities"):
(i) all accounts payable and accrued expenses incurred
in the ordinary course of business, solely if and to the extent reflected or
reserved for on the Closing Balance Sheet;
-3-
(ii) all obligations under the agreements, commitments
and orders relating to the Business that are assigned to XXXX pursuant to
section 1.1, in each case to the extent that they relate to the period after the
Closing Date or are liabilities fully reserved on the Closing Balance Sheet;
(iii) any Unknown Report Claim (as defined in
section 4.6); and
(iv) all other obligations or liabilities disclosed to
XXXX in a schedule hereto, fully reserved on the Closing Balance Sheet or
otherwise specifically disclosed to XXXX through the delivery of a written
statement prior to the date hereof describing such liability, but in no event
any liability described in section 2.4(c), (d), (f) or (g).
2.2 Distributions. Transferor and the Stockholders acknowledge
that they have instructed XXXX to make the cash payments and to cause the XXXX
Shares to be issued in the manner provided in section 2.1 and XXXX bears no
responsibility with respect to the further distribution of such payments or XXXX
Shares.
2.3 Working Capital Minimum.
(a) Within 90 days of the Closing Date, XXXX shall cause to
be delivered to Transferor a statement of assets and liabilities of Transferor,
reflecting the Assets and the Assumed Liabilities (the "Closing Balance Sheet")
prepared on an accrual basis in accordance with generally accepted accounting
principles as of the close of business on the Closing Date. If the sum of the
current liabilities of Transferor shown on the Closing Balance Sheet is greater
than the sum of the current assets of Transferor shown on the Closing Balance
Sheet, Transferor shall pay in cash to XXXX the amount that the sum of the
current liabilities exceeds the sum of the current assets (the "Adjustment
Amount"), with such payment to be made within 30 days of the final determination
of the Adjustment Amount. In the event that the sum of the current assets of
Transferor shown on the Closing Balance Sheet is greater than the sum of the
current liabilities of Transferor shown on the Closing Balance Sheet, XXXX shall
pay in cash to Transferor the amount that the sum of the current assets exceeds
the sum of the current liabilities (the "Reverse Adjustment Amount") with such
payment to be made within 30 days of the final determination of the Reverse
Adjustment Amount.
(b) Within 30 days after the Transferor's receipt of the
Closing Balance Sheet, Transferor may deliver to XXXX a written statement
setting forth any disagreements of Transferor with any of the information
contained in the Closing Balance Sheet that affects the determination of the
Adjustment Amount (or the Reverse Adjustment Amount). If Transferor does not
submit such a statement within the 30-day period, then the Adjustment Amount (or
the Reverse Adjustment Amount), if any, as determined in accordance with the
Closing Balance Sheet, shall be final and binding on the parties. If XXXX and
Transferor do not resolve the disagreements within 15 days after delivery of the
written statement by Transferor, a firm of independent certified public
accountants, whose decisions on the matter shall be binding and whose fees and
expenses shall be borne 50% by Transferor and 50% by XXXX , shall be designated
by agreement between them; if they fail to agree on the firm to decide the
matter
-4-
within an additional 10 days, the accountants shall be selected by the president
of the American Institute of Certified Public Accountants. Each party shall
allow the other party reasonable access to all information reasonably requested
by such other party to prepare the Closing Balance Sheet or the Transferor's
statement hereunder, as the case may be.
2.4 Limitation on Assumption of Liabilities. Except as provided in
section 2.1(c), XXXX shall not assume, and shall not have any liability for, any
liability or obligation of Transferor, and Transferor shall pay, perform and
discharge all such liabilities and obligations. Without limiting the generality
of the preceding sentence, XXXX shall not assume or be responsible for (a) any
liability or obligation arising out of any claim, litigation or proceeding, or
any lease, commitment or other agreement, relating to the operation of the
Business or the Real Property (as hereafter defined) or the occurrence of any
event or the existence of any condition prior to the Closing Date, except to the
extent provided in section 2.1(c), (b) any liability or obligation to any
employee of Transferor for compensation or benefits (including vacation and
severance pay) incurred or accrued on or prior to the Closing Date, except to
the extent provided in section 2.1(c), (c) any deferred compensation obligation
or any liability or obligation of Transferor arising out of or in connection
with any employee benefit plan maintained by, contributed to or sponsored by an
ERISA Affiliate (as defined in section 4.15(a)) or any Plan (as defined in
section 4.15(a)), or any other liability or obligations for employee
post-retirement life insurance or health care benefits to employees of
Transferor who do not become active employees of XXXX or an affiliate of XXXX,
(d) any liability or obligation of Transferor or the Stockholders for taxes of
any kind, (e) any payable or other liability to any Stockholder or other
affiliate of Transferor (other than accrued payroll obligations incurred in the
ordinary course and fully accrued on the Closing Balance Sheet), (f) any
indebtedness for borrowed money or other financial indebtedness, including
indebtedness to a bank, and any interest or penalties with respect to
obligations for borrowed money, (g) legal, accounting, brokerage or finders
fees, sales, income or other taxes or other expense of Transferor in connection
with this agreement or the transactions contemplated hereby or (h) any other
liability or obligation of any kind relating to the operations of the Business,
or the occurrence of any event on or before the Closing Date, whether that
liability is known or determined as of the Closing Date or unknown or
undetermined as of that date, except to the extent provided in section 2.1(c).
2.5 Cancellation of Affiliate Payables and Receivables.
Immediately prior to the closing, any payable or other liability to, or
receivable or other asset due from, a Stockholder, any affiliate of a
Stockholder, or any Affiliate will be canceled without any cost or adverse
consequence to Transferor.
3. Closing. The closing under this agreement shall take place at the
offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on
March 15, 2000. The date on which the closing is held is referred to in this
agreement as the "Closing Date". At the closing, the parties shall execute and
deliver the documents referred to in section 8. If the closing has not occurred
on or prior to June 30, 2000, either party may terminate this agreement by
notice to the other; upon such termination, neither party shall have any
liability arising out of this agreement other than any liability resulting from
its breach of or misrepresentation under this agreement prior to termination.
-5-
4. Representations and Warranties by Transferor and Stockholders.
Transferor and the Stockholders jointly and severally represent and warrant to
XXXX and TOIC that, as of the date hereof:
4.1 Transferor's Organization, Authority and Ownership. Transferor
is a corporation duly organized, validly existing and in good standing under the
law of the State of ________________ and has the full corporate power and
authority to enter into and to perform this agreement and to carry on its
business as it currently is being conducted. Transferor is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
listed on schedule 4.1, which is each jurisdiction in which it owns, leases or
operates property or is otherwise required to be qualified, except where the
failure to be so qualified would not have a material adverse effect on the
Business. The Stockholders own of record and beneficially, in the aggregate, all
outstanding capital stock of Transferor, and no other party has any equity or
other similar interest in Transferor. Transferor does not have any equity or
other similar interests in any entity (other than United States Mutual
Association, Inc.).
4.2 Authorization of Agreement. The execution, delivery and
performance of this agreement by Transferor have been duly authorized by all
requisite corporate action of Transferor. This agreement constitutes, and the
Escrow Agreement, stockholders agreement and employment agreements referred to
in sections 2.1(a)(iii), 6.8 and 6.9 (the "Closing Documents") when executed at
the closing will constitute, the valid and binding obligation of Transferor and
each Stockholder and is enforceable against Transferor and each Stockholder in
accordance with its respective terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Consents of Third Parties. Subject to receipt of the consents
and approvals referred to on schedule 4.3, the execution, delivery and
performance of this agreement and Closing Documents by Transferor and each
Stockholder will not (i) conflict with the certificate of incorporation or
by-laws of Transferor; (ii) conflict with, or result in the breach or
termination of, or constitute a default under, any agreement, lease, commitment,
order or other instrument (including, without limitation, those listed on
schedule 4.8), or any order, judgment or decree, to which Transferor or any
Stockholder is a party or by which Transferor or any Stockholder is bound; (iii)
constitute a violation by Transferor or any Stockholder of any law or regulation
applicable to it or him; or (iv) result in the creation of any lien, charge or
encumbrance upon any of the properties or assets to be sold to XXXX under this
agreement. Except as set forth on schedule 4.3, no consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority is required on the part of Transferor or any Stockholder or their
respective affiliates in connection with the execution, delivery and performance
of this agreement. In this regard, the Transferor and each Stockholder have
executed and delivered to XXXX the affidavit attached to this agreement as
Exhibit VI.
-6-
4.4 Title to Assets and Related Matters; Condition of Assets.
(a) Transferor has, and at the closing XXXX will receive,
valid title to all of the assets intended to be sold to XXXX pursuant to this
agreement, free and clear of any claim, lien, or encumbrance, except for the
lien, if any, of current taxes not yet due and payable, and any other lien
disclosed on schedule 4.4(a). The Assets include all of the assets reflected on
the balance sheet as of December 31, 1999 referred to in section 4.5, except for
the Excluded Assets and items sold, transferred or otherwise disposed of since
that balance sheet date in the ordinary course of business and substantially
consistent with past practice.
(b) Except for the Excluded Assets, the Assets include all of
the assets (tangible and intangible) necessary for, or used in, the conduct of
the Business in the manner in which it has been conducted by Transferor and
those assets (together with TISH's replacements for the Excluded Assets) will be
sufficient to enable XXXX to conduct the Business in the manner in which it has
been conducted by Transferor. Except for the Excluded Assets, no assets,
tangible or intangible, of Transferor or any affiliate of Transferor are being
used in the Business that are not being sold and transferred to XXXX under this
agreement.
(c) Schedule 4.4(c) contains a list of all real properties
owned or leased by Transferor with respect to the Business. Transferor enjoys
peaceful and undisturbed possession under all real property leases covering
premises used in the conduct of the Business, and all such real property leases
are valid and subsisting and in full force and effect. Except as set forth on
schedule 4.4(c), all improvements on the real properties used by Transferor in
connection with the Business are in accordance in all material respects with all
applicable laws, ordinances, regulations and orders, including, but not limited
to, those applicable to zoning, environment and the establishment and
maintenance of working conditions for labor. All of the buildings and structures
leased to or owned by Transferor in connection with the Business are, in all
material respects, in good condition and are adequate and suitable for their
present uses and purposes, and, except as otherwise disclosed on schedule
4.4(c), the transactions contemplated by this agreement will not adversely
affect the right of XXXX to use those properties for the same purpose and to the
same extent after the Closing Date as they were being used by Transferor prior
to the date of this agreement. To Transferor's and Stockholders' knowledge,
there are no interior or exterior material structural defects or other material
defects in the improvements or any material defect in the plumbing, electrical,
mechanical, heating, ventilating or air-conditioning systems or other systems.
To Transferor and Stockholder's knowledge, all such systems are, in all material
respects, in good working order, and all roofs and basements are, in all
material respects, in good condition and free of leaks.
With respect to the real property owned by Transferor, (i)
Transferor has delivered to XXXX a copy of any title insurance policies and
surveys for such property in Transferor's possession, (ii) Transferor has good
and marketable fee simple title thereto and owns all improvements (including
buildings and other structures) thereon, subject only to liens and encumbrances
set forth on schedule 4.4(c) and such other liens as do not materially interfere
with the operation of the real property or adversely affect the marketability or
value of the real property, (iii) Transferor has full and exclusive right, power
and authority to convey fee simple
-7-
title to the properties owned by Transferor. To the Transferor's or the
Stockholders' knowledge, except as disclosed on Schedule 4.4(c), there are no:
(A) pending or contemplated annexation, condemnation or similar proceedings
affecting, or which may affect, the real property, (B) proposed or pending
proceedings to change or redefine the zoning of the real property, (C) proposed
changes in roads which may adversely affect ingress to or egress from the real
property, or (D) proposed or pending special assessments affecting the real
property or any penalties or interest due with respect to real estate taxes
assessed against the real property that are payable by Transferor as all taxes
applicable to the real property have been paid in full, except taxes for the
current year, which are not yet due and payable.
(d) Schedule 4.4(d) contains a complete list of all equipment
(including computers and office equipment), furniture, vehicles, and other
tangible assets used in the Business that had an original cost for any
individual item of more than $1,000.
(e) To Transferor's and Stockholders' knowledge, all of the
tangible assets to be purchased by XXXX under this agreement are, in all
material respects, in good operating condition and in good condition of
maintenance and repair, subject to normal wear and tear, and are suitable for
continued use in the normal course of business.
4.5 Financial Statements. Schedule 4.5 contains financial
statements consisting of (i) balance sheets of Transferor as of December 31,
1997 and December 31, 1998 and the related statements of income and cash flows
for the 12 month periods then ended, including all related notes thereto [with
the report of _______]; and (ii) a balance sheet of Transferor as of December
31, 1999 and the related statements of income and cash flows for the 12 month
period then ended. Except as set forth on schedule 4.5, all such financial
statements have been prepared on an accrual basis or a cash basis, as indicated
in such financial statements, and fairly present the financial position (on a
cash or accrual basis, as applicable) of the Business as of the dates indicated
and the results of operations of the Business for the periods indicated. All
such financial statements have been prepared in accordance with Transferor's
books and records and show all income and expenses attributable to the Business
during the respective periods covered by them. All of Transferor's books of
account relating to the Business have been exhibited or made available to XXXX ,
and those books of account accurately record all transactions of the Business
during the respective periods covered by them. All of the accounts receivable
reflected on the balance sheet as of December 31, 1999 arose from, and all of
the accounts receivable as of the Closing Date will have arisen from, bona fide
transactions in the ordinary course of business and, except as disclosed on
schedule 4.5, none of them is or will be subject to any defense, counterclaim or
setoff and all of such accounts receivable shall be collectible within 90 days
after such obligations arose in their full recorded amounts, subject to any
reserves therefor reflected on the balance sheet as of December 31, 1999 or the
Closing Balance Sheet, respectively.
4.6 Undisclosed Liabilities. Except to the extent reflected on the
balance sheet as of December 31, 1999 referred to in section 4.5 or reflected in
the notes to that balance sheet or otherwise disclosed on a schedule to this
agreement, Transferor does not, and on the Closing Date will not, have any
liability or obligation of any kind relating to the Business,
-8-
whether accrued, absolute, contingent or otherwise, other than (a) liabilities
and obligations under orders, commitments, agreements and leases entered into in
the ordinary course of business (which, to the extent required by section 4.8,
are referred to on schedule 4.8) and (b) other liabilities and obligations that
arose in the ordinary course of the Business and are not material in amount.
Notwithstanding the foregoing, any liability resulting from a claim asserted by
any individual against XXXX after the closing with regard to a negative report
issued by Transferor in the ordinary course of business prior to the closing
shall not be considered an undisclosed liability (but shall instead be deemed an
"Assumed Liability" for all purposes of this Agreement), so long as such
assertion of a claim was not known by Transferor to exist prior to the closing
("Unknown Report Claim").
4.7 Absence of Certain Changes. Since December 31, 1999,
Transferor has operated the Business in the ordinary course and consistent with
past practices, and, except as set forth on schedule 4.7:
(a) Transferor has not entered into any transaction or
incurred any liability or obligation with respect to the Business that was
unusual in nature or amount or was entered into or incurred other than in the
ordinary course of business;
(b) there has not been any material adverse change in the
condition (financial or otherwise) or prospects of the Business, or in the
assets to be acquired by XXXX pursuant to this agreement;
(c) Transferor has not sold or transferred any assets (other
than Excluded Assets) relating to or used in the Business other than in the
ordinary course of business and other than assets that have been replaced with
other assets of equal or greater value;
(d) Transferor has not (i) granted or agreed to grant any
general increase in any rate or rates of salaries or compensation to employees
or agents of the Business or any specific increase in the salary or compensation
to any such employee or agent whose total salary and compensation after such
increase would be at an annual rate in excess of $30,000, (ii) increased or
amended any benefits of those employees or agents, (iii) amended, adopted or
terminated any Plan, or (iv) entered into any employment, bonus, deferred
compensation or any other agreement with any employee or agent;
(e) Transferor has not made any material change in the manner
in which the Business has been operated or the accounting principles or
practices employed by Transferor in connection with the Business, and no person
who performed substantial services with respect to the Business during the
twelve months preceding the date of this agreement is currently employed by or
performing substantial services for any affiliate of Transferor;
(f) Transferor has not taken any action to accelerate
collection of accounts receivable or to defer payment of liabilities, except in
the ordinary course consistent with past practices; and
-9-
(g) to Transferor's and the Stockholders' knowledge,
Transferor has not amended, terminated, canceled or compromised any material
claim relating to the Business, or waived or allowed to lapse or terminate any
other rights of substantial value to the Business.
4.8 Lists of Agreements, etc. Schedule 4.8 contains, with respect
to the Business, a true and complete list of: (a) all commitments and agreements
for the purchase of materials or supplies or the receipt of services that
involve an expenditure by Transferor of more than $10,000 for any one commitment
or two or more related commitments; (b) all agreements relating to
pre-employment investigation and screening services; (c) all leases or other
rental agreements under which Transferor is lessee or lessor; (d) all license
agreements under which Transferor is either licensee or licensor; (e) all
collective bargaining agreements and all employ ment and consulting agreements
and agreements with independent contractors that provide for compensation in
excess of $10,000 a year; (f) all agreements between Transferor and any
affiliate of Transferor (or any entity in which any of them has a material
interest); (g) all commitments and other agreements limiting Transferor's
freedom to engage in any line of business or to compete with any other person;
and (h) all other agreements, commitments and orders to which Transferor is a
party or by which it is bound that involve more than $10,000 or are otherwise
material to the Business or the Assets. True and complete copies of the
agreements, commitments and leases referred to on schedule 4.8 (if in written
form and summaries thereof if in oral form) have been delivered or made
available to XXXX .
4.9 Status of Agreements. Except as set forth on schedule 4.9, all
leases, commitments and other agreements of Transferor were entered into in
connection with and in the ordinary course of the Business and on an arm's
length basis. Each of the agreements, commitments, orders and leases referred to
in section 4.8 is presently in full force and effect in accordance with its
terms and Transferor is not in default, and, to the knowledge of Transferor and
the Stockholders, no other party is in default, under any agreement, commitment,
order or lease referred to in section 4.8 and each of those agreements,
commitments, orders and leases is valid and binding upon and enforceable against
each of the parties thereto in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general. To Seller's and
Stockholder's knowledge, no party to any of the agreements, commitments, orders
or leases referred to in section 4.8 has made, asserted in writing or has any
defense, setoff or counterclaim under any of those agreements, commitments,
orders or leases or has exercised any option granted to it to cancel or
terminate its agreement, to shorten the term of its agreement, or to renew or
extend the term of its agreement, and Transferor has not received any written
notice to that effect.
4.10 Litigation; Compliance with Laws. Except as set forth on
schedule 4.10, within the past three years there has not been, and there is not
currently, any claim, litigation, proceeding or governmental investigation
pending or, to the knowledge of Transferor or the Stockholders, threatened, or
any order, injunction or decree outstanding against or relating to Transferor
with respect to the Business or any of the Assets. Subject to the last sentence
of section 4.6, neither Transferor nor the Stockholders know of any basis for
future claims, litigations, proceedings or investigations against Transferor
with respect to the Business or any of the Assets. Transferor is not in
violation, in any material respect, of any law, regulation,
-10-
ordinance, or any other requirement of any governmental body or court, including
the Fair Credit Reporting Act, arising out of the operation of the Business
(including, without limitation, the use of the databases and any information
contained therein and related software) and no written notice has been received
by Transferor or any of its officers, directors or stockholders alleging any
such violation.
4.11 Intellectual Property. Schedule 4.11 contains a true and
complete list of the trademarks, trade names, copyrights, patents, trade
secrets, logos, computer software, databases, web sites, domain names and e-mail
addresses (collectively, "Intellectual Property"), used by Transferor in the
Business. Schedule 4.11 also contains a true and complete list of all patent,
copyright, trademark, database and domain name registrations or registration
applications that have been obtained or filed by Transferor anywhere in the
world. Except as set forth on schedule 4.11, Transferor owns or possesses
adequate licenses or other rights to use , free and clear of any claims, liens
or encumbrances, each of the items of Intellectual Property listed on schedule
4.11 (including, without limitation, any information contained in the
databases), and they constitute all the Intellectual Property necessary for the
continued operation of the Business in a manner consistent with past practices.
Schedule 4.11 identifies which items of Intellectual Property are owned by
Transferor and which items are used by Transferor under license. Except as set
forth on schedule 4.11, (a) to the knowledge of Transferor and the Stockholders
(i) there is no violation by others of any right of Transferor with respect to
its Intellectual Property, and (ii) Transferor is not, in connection with the
Business, infringing upon any Intellectual Property or other rights of any third
party, including, without limitation, by Transferor's use of the Intellectual
Property; (b) no proceedings are pending or threatened, and no claim has been
received by Transferor or the Stockholders alleging any such violation; (c) no
royalty or similar fee of any kind is payable by Transferor for the use of any
of the Intellectual Property; and (d) Transferor has not granted any person or
entity any interest, as licensee or otherwise, in or to any one or more items of
the Intellectual Property.
4.12 Labor Matters. Except as set forth on schedule 4.12, with
respect to the Business (a) Transferor is in compliance, in all material
respects, 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 Transferor pending before the National Labor
Relations Board, any state labor relations board or any court or tribunal and,
to the knowledge of Transferor, none is or has been threatened in writing; (c)
there is no labor strike, dispute, request for representation, slowdown or
stoppage actually pending against or affecting Transferor and, to the knowledge
of Transferor and the Stockholders, none is or has been threatened in writing;
(d) no grievance which might have a material adverse effect on the conduct of
the Business or any arbitration proceeding arising out of or under any
collective bargaining agreement is pending and, to the knowledge of Transferor
and the Stockholders, none is or has been threatened in writing; and (e) there
is no xxxxxxx compensation or similar claim pending or threatened. Except as set
forth on schedule 4.12, to the knowledge of Transferor and the Stockholders,
there has been no sexual harassment or similar claim against any employee of the
Business and no employee of the Business has at any time within the three years
preceding the date of this agreement asserted in writing against Transferor or
any of its employees any claim of discrimination.
-11-
4.13 Environmental Matters. With respect to the ownership and
operation of the Business and any currently or formerly owned, operated or used
real property, to the knowledge of the Stockholders, except as set forth on
schedule 4.13:
(a) Transferor and all of the real property owned, leased or
used by Transferor (the "Real Property") is in compliance in all material
respects with all federal, state and local laws and regulations relating to
injury to or pollution or protection of human health or the environment (the
"Environmental Laws"), including the common law, environmental permits and laws
and regulations relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes, substances, petroleum
and petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, generation, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern;
(b) there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, but not limited to,
the release, emission, discharge or disposal or threatened release of any
Material of Environmental Concern, that could form the basis of any material
claim against Transferor or the Real Property or could reasonably be expected to
constitute a material violation by Transferor (or, after the closing, XXXX) or
is reasonably likely to require investigation, remediation or monitoring under
the Environmental Laws, and neither Transferor nor any Stockholder has received
any written notice of actual or potential liability under the Environmental
Laws; and
(c) there are no underground storage tanks located on the
Real Property, there are no friable asbestos-containing materials in or on the
Real Property and no polychlorinated biphenyls (PCBs) are used or stored by
Transferor at the Real Property.
4.14 ERISA.
(a) Schedule 4.14 contains a true and complete list of all
"employee benefit plans," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
bonus, profit sharing, pension, severance, savings, deferred compensation,
fringe benefit, insurance, welfare, post-retirement benefit, health, life, stock
option, stock purchase, restricted stock, tuition refund, service award, company
car, scholarship, relocation, disability, accident, sick, vacation, individual
employment, consulting, compensation, incentive, commission, payroll practices,
retention, change in control, noncompetition, or other plan, agreement, policy,
trust fund, or arrangement (whether written or unwritten, insured or
self-insured) established, maintained, sponsored, or contributed to (or with
respect to which any obligation has been undertaken) by Transferor or any entity
that would be deemed a "single employer" with the Transferor under section
414(b), (c) (m) or (o) of the Internal Revenue Code of 1986, as amended (the
"Code") or section 4001 of ERISA (an "ERISA Affiliate") on behalf of any
employee, consultant, director or shareholder of Transferor (whether current,
former or retired) or their beneficiaries (each a "Plan" and, collectively, the
"Plans"). With respect to each Plan, to the extent applicable, true and complete
copies of the plan and documents (including amendments) and summary plan
description, IRS Form 5500, if any, IRS
-12-
determination letter and other material documents relating to the Plan have been
delivered to XXXX . None of the Company, any ERISA Affiliate, or any of their
respective predecessors has ever contributed to, contributes to, has ever been
required to contribute to, or otherwise participated in or participates in or in
any way, directly or indirectly, has or could reasonably be expected to have any
liability with respect to any plan subject to Section 412 of the Code, Section
302 of ERISA or Title IV of ERISA, including, without limitation any,
"multiemployer plan" (within the meaning of Sections (3)(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code), or any single employer pension plan.
(b) Each Plan complies in all material respects and has been
maintained and operated in all material respects in compliance with its terms
and applicable law, including, without limitation, ERISA and the Code. With
respect to each of the Plans, except as set forth on schedule 4.14: (i) each
Plan intended to qualify under Section 401(a) of the Code is qualified and has
received a determination letter from the IRS to the effect that the Plan is
qualified under Section 401 of the Code and any trust maintained pursuant
thereto is exempt from federal income taxation under Section 501 of the Code and
nothing has occurred or is expected to occur through the Closing Date that
caused or could cause the loss of such qualification or exemption or the
imposition of any penalty or tax liability; (ii) all payments required by any
Plan, any collective bargaining agreement or other agreement, or by law with
respect to all periods through the closing shall have been made prior to the
Closing Date to the extent due and payable on the Closing Date (on a pro rata
basis where such payments are otherwise discretionary at year end) or provided
for by the Company as applicable, by full accruals as if all targets required by
such Plan had been or will be met at maximum levels) on its financial
statements; (iii) no claim, lawsuit, arbitration or other action has been
threatened, asserted or instituted against the Plans (other than non-material
routine claims for benefits, and appeals of such claims), any trustee or
fiduciaries thereof, the Company, any ERISA Affiliate, any director, officer, or
employee thereof, or any of the assets of any trust of the Plans and the Company
is unaware of any facts that could reasonably be expected to give rise to any
such claim, lawsuit, arbitration, or other action; (iv) no "prohibited
transaction," within the meaning of Section 4975 of the Code and Section 406 of
ERISA, has occurred or is expected to occur with respect to the Plan; (v) no
Plan is under audit or investigation by the IRS, U.S. Department of Labor, or
any other governmental authority and no such completed audit, if any, has
resulted in the imposition of any tax or penalty and (vi) with respect to each
Plan that is funded mostly or partially through an insurance policy, neither the
Company nor any ERISA Affiliate has any liability in the nature of retroactive
rate adjustment, loss sharing arrangement or other actual or contingent
liability arising wholly or partially out of events occurring on or before the
Closing Date.
(c) Except as provided in schedule 4.14(c), the consummation
of the transactions contemplated by this agreement will not give rise to any
liability including, without limitation, liability for severance pay,
unemployment compensation, termination pay, or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of compensation
or benefits due to any employee, director or shareholder of Transferor (whether
current, former, or retired) or their beneficiaries solely by reason of such
transaction or by reason of a termination of employment following such
transaction. No amounts payable under any Plan
-13-
will fail to be deductible for federal income tax purposes by virtue of Sections
280G or 162(m) of the Code.
(d) Neither the Company nor any ERISA Affiliate maintains,
contributes to, or in any way provides for any benefits of any kind whatsoever
(other than under Section 4980B of the Code, the Federal Social Security Act, or
a plan qualified under Section 401(a) of the Code) to any current or future
retiree or terminee. No event, condition, or circumstance exists that could
result in an increase of the benefits provided under any Plan based on the Plan
documents from the level of benefits for the most recent fiscal year ended
before the Closing Date; and none of Transferor, any ERISA Affiliate or officer
or employee thereof, has made any legally binding promises or commitments to
create any additional plan, agreement or arrangement, or to modify or change any
existing Plan. Neither the Company nor any ERISA Affiliate has any unfunded
liabilities pursuant to any Plan that is not intended to be qualified under
Section 401(a) of the Code. No event, condition, or circumstance exists that
could reasonably be expected to prevent the amendment or termination of any
Plan.
4.15 Brokers and Finders. Neither Transferor nor any Stockholder
has employed any broker or finder or incurred any liability (on its behalf or on
behalf of others, including XXXX) for any investment banking fees, brokerage
fees or commissions or finders fees in connection with the transactions
contemplated by this agreement.
4.16 Transactions with Affiliates. Except as set forth on
schedule 4.16, Transferor is not, and since December 31, 1998, has not, engaged,
with respect to the Business, in any transaction with any officer or director of
Transferor, any of their family members, or any entity in which any of them has
an interest.
4.17 Permits and Licenses. Transferor has, and is in compliance,
in all material respects, with, all permits, licences, franchises and other
authorizations ("Licenses") necessary for the conduct of the Business, and all
such Licenses are valid and in full force and effect. All Licenses held by
Transferor that are material to the Business are listed on schedule 4.17.
4.18 Taxes. Transferor has timely filed all federal, state and
other tax returns required by law to be filed by it, and each of those tax
returns is correct and complete in all respects. Transferor has paid, or made
provision in its financial statements referred to in section 4.5 for payment of,
all of its taxes accrued through the date of those financial statements, except
that any accrued but unpaid taxes for 1999 and beyond are not reflected in
financial statements prepared on a cash basis. There are no claims pending or
threatened in writing against Transferor for past due taxes. All taxes that are
or were required by law to be withheld or collected by Transferor have been duly
withheld or collected and paid to the proper tax authority. Since its
incorporation, Transferor has been an S corporation within the meaning of the
Code.
4.19 Insurance.
-14-
(a) Schedule 4.19(a) contains a complete list of all
insurance policies relating to the Business under which Transferor is currently
an insured, a named insured or otherwise the principal beneficiary of coverage.
True and complete copies of all of those policies have been delivered or made
available to XXXX. Transferor has not received any notice that any of those
insurance policies are not in full force and effect. Transferor is not in breach
or default (including any breach or default with respect to the payment of
premiums or the giving of notice), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default or permit
termination or modification, under any those insurance policies. Transferor has
not received any written notice of cancellation or intent to cancel any of those
insurance policies. Transferor has paid all premiums due and payable with
respect to those insurance policies.
(b) Schedule 4.19(b) sets forth a list of all claims of
Transferor relating to the Business that are pending with any insurance company.
4.20 Employees.
(a) Schedule 4.20 is a true and complete list of all current
employees of Transferor or any of its affiliates who perform, or who at any time
during the twelve months preceding the date of this agreement performed,
substantial services with respect to the Business, which list identifies the
name and position of each such employee, and the following compensation
information for fiscal years 1997, 1998 and 1999: (a) annual base salary, (b)
annual bonus, (c) commissions, (d) perquisites, (e) severance, (f) all other
items of compensation and (g) date of birth and date of hire.
(b) Except as set forth on schedule 4.14, Transferor does not
have any severance policy and no employee of the Business is entitled to any
severance payment, either by law or by agreement, upon the termination of his or
her employment. No employee of the Business is represented by any union or other
collective bargaining agent and there are no collective bargaining or other
labor agreements with respect to those employees.
(c) Except as set forth on schedule 4.20, no employee has
threatened in writing, nor to the knowledge of Transferor or the Stockholders,
intends to terminate his or her employment.
4.21 Year 2000 Compliance. Except as set forth on schedule 4.21,
the computer systems (including all work stations and other components) used in
the Business both before and after the beginning of the year 2000, (i) are
capable of recognizing, processing, managing, representing, interpreting, and
manipulating correctly date related data for dates earlier and later than
January 1, 2000, including, but not limited to, calculating, comparing, sorting,
storing, tagging, and sequencing, without resulting in or causing logical or
mathematical errors or inconsistencies in any user-interface functionalities,
data storage, data fields, calculations, reports, processing, or any other input
or output, (ii) have the ability to provide date recognition for any data
element represented without a date, or whose year is represented by only two
digits and the ability to automatically function into and beyond the year 2000
without human
-15-
intervention, (iii) correctly interpret data, dates and time into and beyond the
year 2000, (iv) have the ability not to produce non-compliance in existing
information, nor otherwise corrupt such data, and (v) have the ability to
successfully interface with internal and external applications or systems that
have not yet achieved year 2000 compliance during the time in which the systems
and such applications and systems co-exist.
4.22 Customers. Schedule 4.22 contains a complete list of the
twenty largest customers (measured by dollar volume in each case) of Transferor
during each of the last three fiscal years and during the first month of the
current fiscal year, showing, with respect to each, the name and address, dollar
volume involved, and the percentage of each of Transferor's lines of business
which each such customer represented. The Transferor is not required to provide
any bonding or other financial security arrangements in connection with any
transactions with any customers in the ordinary course of its business. Except
as set forth on schedule 4.22, Transferor is not and within the last two years
has not been engaged in any material disputes with its customers. To
Transferor's and the Stockholders' knowledge, except as set forth on schedule
4.22, there has been no loss or threatened loss of any material customer nor is
Transferor nor the Stockholders aware of any material customer which is
considering termination, nonrenewal or any adverse modification of its
arrangements with the Transferor before the closing or with XXXX after the
closing.
4.23 No Misrepresentation. No representation or warranty by
Transferor and the Stockholders in this agreement (including the schedules and
exhibits to this agreement) contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained in
this agreement (including the schedules and exhibits to this agreement) not
misleading.
5. Representations and Warranties by XXXX. XXXX and TOIC jointly and
severally represent and warrant to Transferor and the Stockholders that, as of
the date hereof:
5.1 XXXX 's Organization. XXXX is a corporation duly organized,
validly existing and in good standing under the law of the State of Delaware and
has full corporate power and authority to enter into and to perform this
agreement. XXXX is a wholly owned subsidiary of TOIC and was formed for the
purpose of consummating the transactions contemplated under this agreement and
the Affiliate Acquisition Agreements and has conducted no other business prior
to the date hereof. XXXX has delivered to Transferor a true and correct copy of
the certificate of incorporation and bylaws of XXXX. The capitalization of XXXX
immediately after the closing is set forth on schedule 5.1.
5.2 Authorization of Agreement. The execution, delivery and
performance of this agreement and the Closing Documents by XXXX and TOIC have
been duly authorized by all requisite corporate action of XXXX and TOIC. This
agreement constitutes, and the Closing Documents when executed will constitute,
the valid and binding obligation of XXXX and TOIC enforceable against each of
them in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
-16-
5.3 Consents of Third Parties. The execution, delivery and
performance of this agreement by XXXX or TOIC will not (i) conflict with the
certificate of incorporation or by-laws of XXXX or TOIC, (ii) conflict with,
result in the breach or termination of, or constitute a default under, any
lease, agreement, commitment or other instrument, or any order, judgment or
decree, to which XXXX or TOIC is a party by which it is bound, or (iii)
constitute a violation by XXXX or TOIC of any law or regulation applicable to
it. No consent, approval or authorization of, or designation, declaration or
filing with, any governmental authority is required on the part of XXXX or TOIC
in connection with the execution, delivery and performance of this agreement.
5.4 Brokers and Finders. Neither XXXX nor TOIC has employed any
broker or finder or incurred any liability (on its behalf or on behalf of
others, including Transferor) for any investment banking fees, brokerage fees or
commissions or finders fees in connection with the transactions contemplated by
this agreement, except for Veronis, Suhler & Associates, Inc. (the fees and
costs of which shall be paid by XXXX or TOIC).
5.5 TISI.
(a) Simultaneously with the closing, TOIC shall transfer to
XXXX all of the outstanding shares of capital stock of TISI.
(b) TISI is a corporation duly organized, validly existing
and in good standing under the law of the State of Oklahoma and has the full
corporate power and authority to carry on its business as it currently is being
conducted.
(c) Schedule 5.5(c) contains financial statements consisting
of (i) balance sheets of TISI as of December 31, 1997 and December 31, 1998, and
the related statements of income and cash flows for the 12 month periods then
ended, including all related notes thereto, and (ii) a proforma balance sheet of
TISI as of December 31, 1999 and the related proforma statement of income and
cash flow for the 12 month period then ended (after giving effect to pending and
completed acquisitions). Except as set forth on schedule 5.5(c), all such
financial statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial position of TISI as of the dates indicated and the results of
operations of TISI for the periods indicated. All such financial statements have
been prepared in accordance with TISI's books and records and show all income
and expenses attributable to TISI's business during the respective periods
covered by them. Except as set forth on schedule 5.5(c), as of December 31,
1999, TISI had not incurred any material liability other than as disclosed or
reserved for on its proforma financial statements as of December 31, 1999 or in
connection with contracts and other commitments, obligations and liabilities
entered into or incurred in the ordinary course of business. Since December 31,
1999, there has been no material adverse change in the financial condition of
TISI.
(d) Except as set forth on schedule 5.5(d), there is no
claim, litigation, proceeding or governmental investigation pending or, to the
best of the knowledge of XXXX, threatened, or any order, injunction or decree
outstanding against or relating to TISI or XXXX which will or is likely to have
a material adverse effect on XXXX, XXXX and their subsidiaries
-17-
taken as a whole. XXXX does not know of any basis for future claims,
litigations, proceedings or investigations against TISI or XXXX which is likely
to have a material adverse effect on XXXX, XXXX and their subsidiaries taken as
a whole. Neither TISI nor XXXX is in violation, in any material respect, of any
law, regulation, ordinance, or any other requirement of any governmental body or
court, including the Fair Credit Reporting Act, arising out of the operation of
its business, and no notice has been received by TISI or XXXX or any of their
respective officers or directors alleging any such violation, in any case where
such violation or alleged violation is likely to have a material adverse effect
on XXXX, XXXX and their subsidiaries taken as a whole.
(e) At the closing, the XXXX Shares to be issued will be duly
authorized and validly issued fully paid and nonassessable and free and clear of
all claims, liens and encumbrances, and the percentage ownership of each of the
shareholders shall be as provided on schedule 5.1.
5.6 Year 2000 Compliance. The computer systems (including all work
stations and other components) used in TISI's business, before and after the
beginning of the year 2000, (i) are capable of recognizing, processing,
managing, representing, interpreting, and manipulating correctly date related
data for dates earlier and later than January 1, 2000, including, but not
limited to, calculating, comparing, sorting, storing, tagging, and sequencing,
without resulting in or causing logical or mathematical errors or
inconsistencies in any user-interface functionalities, data storage, data
fields, calculations, reports, processing, or any other input or output, (ii)
have the ability to provide date recognition for any data element represented
without a date, or whose year is represented by only two digits and the ability
to automatically function into and beyond the year 2000 without human
intervention, (iii) correctly interpret data, dates and time into and beyond the
year 2000, (iv) have the ability not to produce non-compliance in existing
information, nor otherwise corrupt such data, and (v) have the ability to
successfully interface with internal and external applications or systems that
have not yet achieved year 2000 compliance during the time in which the systems
and such applications and systems co-exist.
5.7 No Misrepresentation. No representation or warranty by XXXX or
TOIC in this agreement (including the schedules and exhibits to this agreement)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in this agreement (including the
schedules and exhibits to this agreement) not misleading.
6. Further Agreements of the Parties; Nondisclosure and
Confidentiality.
6.1 Access to Information. Prior to the closing, XXXX and its
representatives may, upon reasonable request during normal business hours, make
such investigation of the Real Property, assets and operations of the Business
as it may desire, and Transferor shall give to XXXX and to its counsel,
accountants and other representatives, upon reasonable notice, full access
during normal business hours throughout the period prior to the closing to all
of the Real Property, assets, books, commitments, agreements, records and files
of Transferor relating to the Business and the Real Property and Transferor
shall furnish to XXXX during that period all
-18-
documents and copies of documents and information concerning the Business and
the Real Property as XXXX reasonably may request. XXXX shall hold, and shall
cause its representatives to hold, all such information and documents and all
other information and documents delivered pursuant to this agreement
confidential and, if the transactions contemplated by this agreement are not
consummated for any reason, shall return to Transferor all such information and
documents and any copies as soon as practicable, and shall not disclose or use
any such information (that has not previously been disclosed by a party other
than XXXX ) to any third party unless required to do so pursuant to a request or
order under applicable laws and regulations or pursuant to a subpoena or other
legal process. XXXX 's obligations under this section shall survive the
termination of this agreement.
6.2 Conduct of the Business Pending the Closing. Until the
closing, Transferor and the Stockholders shall operate the Business in the
ordinary course in a manner consistent with past practices and:
(a) Transferor shall promptly notify XXXX in writing of, and
furnish any information that XXXX reasonably may request with respect to, (i)
any claim, litigation, proceeding or governmental investigation threatened in
writing by or against Transferor relating to the Business or any material
development with respect to any such claim, litigation, proceeding or
governmental investigation, (ii) the occurrence of any event or the existence of
any state of facts that would result in any of the Transferor's representations
and warranties not being true as of the Closing Date, and (iii) any other
occurrence of any kind materially adversely affecting the Business or the
Assets;
(b) Transferor shall not (i) grant or agree to grant any
general increase in the rates of salaries or compensation of its employees, or
any specific increase to any such employee whose total salary or compensation
after the increase would be at an annual rate in excess of $30,000, or any
increase or amend any benefits of employees or agents of the Business
(including, without limitation, increase in the pension, retirement or other
employment benefits of the employees of the Business, (ii) amend, adopt or
terminate any Plans or (iii) enter into any employment, bonus, deferred
compensation or any other agreement with any employee or agent;
(c) Transferor shall use reasonable efforts, consistent with
its past practices, (i) to preserve the business organization of the Business
intact and to preserve the goodwill and business of those having business
relations with the Business, (ii) to retain the services of the employees of the
Business, and (iii) to preserve all trademarks, trade names, logos and
copyrights and related registrations of the Business;
(d) Transferor shall not (i) enter into or renew any
agreement, commitment or lease which, if entered into prior to the date of this
agreement, would have been required to be included in schedule 4.8, (ii) cause
or take any action to allow any lease, agreement or commitment relating to the
Business to lapse (other than in accordance with its terms), to be modified in
any material adverse respect, or otherwise to become impaired in any manner,
(iii) amend, terminate,
-19-
cancel or compromise any material claim relating to the Business, or waive or
allow to lapse or terminate any other rights of substantial value to the
Business, or (iv) make or commit to make any capital expenditures which,
individually or in the aggregate, involve payments in excess of $50,000;
(e) except in the ordinary course and substantially
consistent with past practice, Transferor shall not (i) enter into any
transaction or voluntarily incur any liability or obligation that is material to
the Business or (ii) sell or transfer any of the assets used in the Business,
other than assets that have worn out or been replaced with other assets (other
than Excluded Assets) of equal or greater value or assets that are no longer
needed in the operation of the Business;
(f) Transferor shall not make any material change in the
manner in which the Business is operated or the accounting principles or
practices employed in connection with the Business;
(g) Transferor shall duly comply, in all material respects,
with all laws, ordinances, orders, injunctions and decrees applicable to the
operation of the Business;
(h) Transferor shall maintain all of the tangible assets used
in the Business in customary repair, maintenance and condition, except to the
extent of normal wear and tear, and Transferor shall replace any items of
equipment at time intervals consistent with past practices;
(i) Transferor shall maintain insurance on the tangible
assets used in the Business and on the Business in accordance with past
practices;
(j) Transferor shall not take any action to accelerate
collection of accounts receivable or to defer payment of liabilities, except in
the ordinary course consistent with past practices; and
(k) Transferor may make cash distributions to its
Stockholders provided such distributions do not result, as of the closing, in
current liabilities exceeding current assets.
6.3 Other Action. No party to this agreement shall take any action
that would result in any of its representations and warranties not being true as
of the Closing Date. Each of the parties to this agreement shall use its best
efforts to cause the fulfillment at the earliest practicable date of all of the
conditions to the obligations of the parties to consummate the transactions
under this agreement.
6.4 Consents. Transferor and the Stockholders shall use their best
efforts to obtain at the earliest practicable date, in form and substance
reasonably satisfactory to XXXX, all consents and approvals required to assign
to XXXX the rights of Transferor under any agreement, commitment or order that
requires consent to assignment (including, but not limited to, those set
-20-
forth on schedule 4.3), without any condition adverse to XXXX or the operation
of the Business after the Closing Date, but if any consent is not obtained (and,
accordingly, pursuant to section 1.2 is excluded from the sale pursuant to this
agreement), Transferor and the Stockholders shall use their best efforts to keep
the agreement in effect and to give XXXX the benefit of the agreement to the
same extent as if it had been assigned to XXXX, and XXXX shall perform the
obligations under the agreement relating to the benefit obtained by XXXX.
Nothing in this agreement shall be construed as an attempt to assign any
agreement or other instrument that by its terms is nonassignable without the
consent of the other party.
6.5 Expenses. XXXX and Transferor shall bear their own respective
expenses incurred in connection with this agreement and in connection with all
obligations required to be performed by each of them under this agreement.
6.6 Sales Taxes. Transferor shall pay any sales or transfer taxes
payable in connection with the sale of the Assets pursuant to this agreement.
6.7 Covenants Against Competition, Solicitation and Disclosure.
(a) To accord to XXXX the full value of its acquisition,
during the Noncompete Term, as defined below, Transferor and the Stockholders
shall not, directly or indirectly, engage, or be interested in (as owner,
stockholder, partner, member, manager, lender, agent or otherwise) or provide
any services to any business or entity that engages, anywhere in the United
States, in the operation of pre-employment investigation and screening services,
except pursuant to any employment, consulting or transition services agreements
entered into between the Stockholders and XXXX.
(b) During the Noncompete Term, Transferor and the
Stockholders shall not, directly or indirectly, employ or solicit for employment
or consulting, on its own behalf or on behalf of any other person or entity, or
otherwise encourage the resignation of, any employee of Transferor who provided
substantial services to the Business at any time during the one year period
ending on the Closing Date.
(c) Transferor and the Stockholders shall not at any time
hereafter disclose to anyone, or use in competition with the Business, any
information relating to the Business, which is known or becomes known to
Transferor or the Stockholders, including, without limitation, trade secrets,
know-how, financial statements and data, contracts (whether oral or written),
customer and advertiser lists, rate schedules, pricing policies, marketing plans
and strategies, and business acquisition plans ("Confidential Information")[and
shall not provide to anyone in competition with the Business any information
derived from Transferor's operation of the Excluded Business]. Confidential
Information shall not include information which Transferor or the Stockholders
can demonstrate has become generally available to the public other than as a
result of a disclosure by Transferor or the Stockholders.
(d) Transferor and the Stockholders acknowledge that the
remedy at law for breach of the provisions of this section 6.7 will be
inadequate and that, in addition to any
-21-
other remedy XXXX may have, it shall be entitled to an injunction restraining
any breach or threatened breach, without any bond or other security being
required and without the necessity of showing actual damages. If any court
construes any covenant in this section 6.7 to be unenforceable in any respect,
the court may reduce the duration or area to the extent necessary so that the
provision is enforceable, and the provision, as reduced, shall then be
enforceable.
(e) "Noncompete Term" shall mean the later of the three year
period after the Closing Date or, with respect to each Stockholder, the three
year period after the termination of such Stockholder's employment with XXXX
pursuant to an employment agreement referred to in section 6.9.
6.8 Stockholders' Agreement. At the closing, XXXX, TOIC and the
Stockholders shall execute and deliver a stockholders' agreement in the form of
exhibit VII.
6.9 Employment Agreements. At the closing, XXXX and the
Stockholders shall execute and deliver employment agreements in the form of
exhibit VIII.
6.10 Escrow Agreement. At the closing, XXXX and the Stockholders
shall execute and deliver the Escrow Agreement.
6.11 Transfer of TISI. Simultaneously or prior to the closing,
TOIC shall transfer all of the outstanding shares of TISI to XXXX and ensure the
completion of all the actions and transactions described in schedule 6.11.
[6.12 License. Transferor and the Stockholders hereby agree to
provide to XXXX periodically (but in no event less frequently than monthly) all
incident or theft information arising in connection with the Excluded Business
(the "Licensed Data") and hereby grant to XXXX a perpetual, non-exclusive,
royalty free, worldwide license to use the Licensed Data in connection with the
Business, but only to the extent that Transferor and/or the Stockholders have
the right to so license all or a portion of the Licensed Data. During the
Noncompete Term, Transferor and the Stockholders agree not to use, or license to
any other party to use, the Licensed Data to a third party in connection with
any business competitive with the Business. Transferor and the Stockholders will
use commercially reasonable efforts to obtain the consent of the owner of any
Licensed Data (to the extent Transferor or the Stockholders are not the owner)
to allow such data to be licensed to XXXX pursuant hereto.]
6.13 Interim Financial Statements. Transferor shall promptly (but,
in any event, not later than the date such statements customarily are completed
by Transferor) deliver to XXXX copies of any monthly or quarterly financial
statements or other reports relating to the Business that may be prepared by
Transferor during the period from the date of this agreement to the Closing
Date. All such financial statements shall be prepared from the books and records
of the Business and shall show all income and expenses attributable to the
Business and shall fairly present the financial position and results of
operations of the Business as of and for the periods indicated. Transferor shall
also furnish to XXXX any other information concerning the financial and
operating condition of the Business as XXXX from time to time reasonably may
request.
-22-
6.14 Further Assurances. At any time and from time to time after
the Closing Date each party shall, without further consideration, execute and
deliver to the other such other instruments of transfer and assumption and shall
take such other action as the other may reasonably request to carry out the
transfer of the operations, rights and assets and assumption of liabilities
contemplated by this agreement.
6.15 Post-Closing Services. For a period of [six] months after the
closing, each of the Stockholders who is not otherwise entering into employment
or consulting agreements with XXXX at the closing agrees to continue to work for
the Business on a basis and in a manner consistent with past practices with
respect to that Stockholder, in order to transfer the Business to XXXX (without
any obligation to incur expenses), subject to the supervision and instructions
of the officers of XXXX, and such Stockholders shall receive the same salary and
benefits as they had received immediately prior to the date of this agreement
[as described on schedule 6.15]. During such period, the Stockholders who are
entering into employment or consulting agreements with XXXX at the closing agree
to comply with the provisions of such employment and consulting agreements. At
TISH's option, the Stockholders' services under this agreement may be terminated
at any time on 5 business days' prior notice, subject, however, to the terms of
any employment or consulting agreements.
7. Conditions to Closing.
7.1 Conditions Precedent to Obligations of XXXX and TOIC. TISH's
and TOIC's obligation to consummate the transactions under this agreement is
subject to the fulfillment, prior to or at the closing, of each of the following
conditions (any or all of which may be waived by XXXX and TOIC):
(a) all representations and warranties of Transferor and the
Stockholders to XXXX and TOIC shall be true and correct in every material
respect as of the time of the closing, with the same effect as though those
representations and warranties had been made again at and as of that time;
(b) Transferor and the Stockholders shall have performed and
complied with all obligations and covenants required by this agreement to be
performed or complied with by them prior to or at the closing;
(c) XXXX and TOIC shall have been furnished with a
certificate (dated the Closing Date and in form and substance reasonably
satisfactory to XXXX) executed by an officer of Transferor, certifying to the
fulfillment of the conditions specified in sections 7.1(a) and 7.1(b);
(d) the transactions contemplated by each Affiliate
Acquisition Agreement shall be consummated at the closing;
(e) XXXX and TOIC shall have been furnished with an opinion
of Jenner & Block, counsel to Transferor and the Stockholders, in the form of
exhibit IX;
-23-
(f) Transferor and the Stockholders shall have duly received,
without any condition adverse to the Business, XXXX or TOIC, all consents and
approvals listed on schedule 4.3, each in form and substance reasonably
satisfactory to XXXX ;
(g) there shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in an action or
proceeding against the consummation of the transactions pursuant to this
agreement; and
(h) Transferor or the Stockholders, as the case may be, shall
have duly executed and delivered to XXXX the agreements referred to in sections
2.1(a) (Escrow Agreement), 6.8 (stockholders' agreement) and 6.9 (employment
agreements), and such agreements shall be in full force and effect;
(i) Merchants Security Exchange ("MSE") shall have duly
authorized the sale by United States Mutual Association, Inc. contemplated by
the Affiliate Acquisition Agreement relating thereto; and
(j) MSE and XXXX shall have entered into a services agreement
on terms acceptable to XXXX .
7.2 Conditions Precedent to Obligations of Transferor and the
Stockholders. Transferor's and the Stockholders' obligations to consummate the
transactions under this agreement is subject to the fulfillment, prior to or at
the closing, of each of the following conditions (any or all of which may be
waived by Transferor or the Stockholders):
(a) all representations and warranties of XXXX and TOIC shall
be true and correct in every material respect as of the time of the closing,
with the same effect as though those representations and warranties had been
made again at and as of that time;
(b) XXXX and TOIC shall have performed and complied with all
obligations and covenants required by this agreement to be performed or complied
with by them prior to or at the closing;
(c) Transferor and the Stockholders shall have been furnished
with a certificate (dated the Closing Date and in form and substance reasonably
satisfactory to Transferor or the Stockholders) executed by an officer of XXXX ,
certifying to the fulfillment of the conditions specified in sections 7.2(a) and
7.2(b);
(d) the transactions contemplated by each Affiliate
Acquisition Agreement shall be consummated at the closing;
(e) Transferor and the Stockholders shall have been furnished
with an opinion of Xxxxx X. Xxxxx, Esq., general counsel to XXXX , in the form
of exhibit X;
-24-
(f) there shall not be in effect any injunction or
restraining order issued by a court of competent jurisdiction in an action or
proceeding against the consummation of the transactions pursuant to this
agreement;
(g) XXXX or TISI shall have duly executed and delivered to
Transferor or the Stockholders, as the case may be, the agreements referred to
in section 7.1(h);
(h) the conditions set forth in sections 7.1(i) and 7.1(j)
shall be fulfilled; and
(i) the other transactions set forth on schedule 6.11 have
been completed.
8. Documents to be Delivered at Closing.
8.1 Documents to Be Delivered by Transferor and the Stockholders.
At the closing, Transferor and the Stockholders shall deliver to XXXX the
following:
(a) such bills of sale, assignments or other instruments of
transfer and assignment as shall be effective to vest in XXXX title (in
accordance with section 4.4) to the assets being sold and assigned under this
agreement;
(b) a copy of resolutions of the board of directors of
Transferor authorizing the execution, delivery and performance of this agreement
by Transferor, and a certificate of its secretary or assistant secretary, dated
the Closing Date, that such resolutions were duly adopted and are in full force
and effect;
(c) the certificate referred to in section 7.1(c);
(d) the opinion referred to in section 7.1(e); and
(e) the agreements referred to in sections 2.1(a), 6.8
and 6.9.
8.2 Documents To Be Delivered by XXXX. At the closing, XXXX shall
deliver to Transferor and the Stockholders the following:
(a) the wire transfer of funds referred to in section 2.1;
(b) certificates representing the number of shares of Class B
Non-Voting Common Stock and Class C Non-Voting Common Stock of XXXX referred to
in section 2.1.
(c) instruments pursuant to which XXXX assumes the
obligations and liabilities to be assumed by it under section 2.1(c);
-25-
(d) a copy of resolutions of the board of directors of XXXX
and TOIC authorizing the execution, delivery and performance of this agreement
by XXXX and TOIC, and a certificate of its secretary or assistant secretary,
dated the Closing Date, that such resolutions were duly adopted and are in full
force and effect;
(e) the certificate referred to in section 7.2(c);
(f) the opinion referred to in section 7.2(e); and
(g) the agreements referred to in section 2.1(a), 6.8
and 6.9.
9. Survival of Representations and Warranties; Indemnification.
9.1 Survival.
(a) All representations, warranties and agreements by
Transferor and the Stockholders shall survive the closing (but only for the
respective periods set forth in section 9.3 below) notwithstanding any
investigation at any time by or on behalf of XXXX or TOIC, and shall not be
considered waived by TISH's or TOIC's consummation of the acquisition
contemplated by this agreement with knowledge of any breach or misrepresentation
by Transferor and the Stockholders.
(b) All representations, warranties and agreements by XXXX
and TOIC shall survive the closing (but only for the respective periods set
forth in section 9.3 below) notwithstanding any investigation at any time by or
on behalf of Transferor and the Stockholders, and shall not be considered waived
by Transferor's and the Stockholders' consummation of the acquisition
contemplated by this agreement with knowledge of any breach or misrepresentation
by XXXX or TOIC.
9.2 Indemnification; Exclusive Remedy.
(a) Subject to the other sections of this Article 9,
Transferor and the Stockholders shall, jointly and severally, indemnify and hold
harmless XXXX and TOIC against all loss, liability, damage or expense (including
reasonable fees and expenses of counsel, whether involving a third party or
between the parties to this agreement) XXXX or TOIC may suffer, sustain or
become subject to as a result of (i) any breach of any warranty of Transferor
and the Stockholders contained in this agreement, or any misrepresentation by
Transferor and the Stockholders (determined without regard to any materiality,
material adverse effect or knowledge qualifiers), or any claim by a third party
which, without regard to the merits of the claim, would constitute such a breach
or misrepresentation, (ii) any breach of any covenant or other agreement of
Transferor or the Stockholders contained in this agreement or any claim by a
third party which, without regard to the merits of the claim, would constitute
such a breach, (iii) Transferor's or the Stockholders' failure to pay, perform
or discharge when due any of Transferor's and the Stockholders' obligations,
liabilities, agreements or commitments not expressly assumed by XXXX as an
Assumed Liability pursuant to this agreement (including, but
-26-
not limited to, any liability with respect to any claim, litigation or
proceeding arising out of the operation of the Business prior to the Closing
Date which was not disclosed on a schedule to this agreement), (iv) any claims
made by MSE or any person claiming to have an interest in the capital stock or
assets of Transferor arising out of the transactions contemplated by this
agreement (but not any claims relating to any business or other relationship
between MSE and XXXX or TOIC or any of their affiliates, which are unrelated to
the transactions contemplated by this agreement)[, or (v) any claims or
liabilities with respect to the Excluded Business].
(b) Subject to the other sections of this Article 9, XXXX and
TOIC shall, joint and severally, indemnify and hold harmless Transferor and the
Stockholders against all loss, liability, damage or expense (including
reasonable fees and expenses of counsel, whether involving a third party or
between the parties to this agreement) Transferor and the Stockholders may
suffer, sustain or become subject to as a result of (i) any breach of any
warranty contained in this agreement or any misrepresentation by XXXX or TOIC,
or any claim by a third party which, without regard to the merits of the claim,
would constitute such a breach or misrepresentation, (ii) any breach of covenant
or other agreement contained in this agreement by XXXX or TOIC, or any claim by
a third party which, without regard to the merits of the claim, would constitute
such a breach or (iii) TISH's failure to pay, perform and discharge when due any
of the Assumed Liabilities.
(c) Except for the ability to seek injunctive or similar
equitable relief to enforce affirmative covenants, the remedy of XXXX, TOIC and
their affiliates against the Stockholders and Transferor pursuant to this
agreement, any documents or instruments pursuant to this agreement, or at law,
equity or otherwise, is limited solely to the indemnification provided in this
section 9 and is the only remedy of any of them against the Stockholders or
Transferor, and XXXX and TOIC, for themselves and their affiliates, hereby
expressly waive all rights and remedies whatsoever, whether by statute, rule,
regulation, in tort or otherwise, against the Stockholders except for the right
of indemnification under this section 9.2, provided that the foregoing shall not
apply to (x) claims of fraud, (y) the covenants set forth in sections 6.7, 6.12,
6.14 and 6.15 and (z) the employment and consulting agreements. XXXX and TOIC,
for themselves and their affiliates, acknowledge that (i) neither the Transferor
nor the Stockholders have made any representations or warranties other than as
expressly set forth in section 4 hereof, (ii) XXXX, TOIC and their affiliates
have made their own independent examination, investigation, analysis and
evaluation of Transferor and the Stockholders and have undertaken such due
diligence as they have deemed adequate, which examination, investigation,
analysis, evaluation and due diligence shall not limit or diminish in any manner
the representations and warranties and obligations of Transferor and the
Stockholders under this agreement, and (iii) damages of XXXX, TOIC and their
affiliates, if any, may be greater than the funds in escrow pursuant to the
Escrow Agreement.
(d) Transferor and the Stockholders acknowledge that (i)
neither XXXX nor TOIC have made any representations or warranties other than as
expressly set forth in section 5 hereof, and (ii) Transferor and the
Stockholders have made their own independent examination, investigation,
analysis and evaluation of XXXX and TOIC and have undertaken such due diligence
as they have deemed adequate, which examination, investigation, analysis,
evaluation and due
-27-
diligence shall not limit or diminish in any manner the representations and
warranties and obligations of XXXX and TOIC under this agreement.
9.3 Notices of Claims. No party shall be liable for
misrepresentation or breach of warranty except to the extent that notice of a
claim is given by another party in writing on or prior to April 30, 2001, except
that, (a) for misrepresentation or breach of warranty under sections 4.2, 4.4(a)
and 4.15 notice of a claim must be given in writing to Transferor or the
Stockholders within ten (10) years after the Closing Date, (b) with respect to
misrepresentation or breach of warranty relating to taxes and ERISA, notice of a
claim must be given in writing to Transferor or the Stockholders no later than
three months after the expiration of the statute of limitation applicable to the
tax involved, (c) with respect to misrepresentation or breach of warranty under
section 4.13, notice of a claim must be given in writing to Transferor within
six years after the Closing Date, and (d) for misrepresentation or breach of
warranty under sections 5.2, 5.4 and 5.5(e) notice of a claim must be given in
writing to XXXX or TOIC within ten (10) years after the Closing Date. Prompt
written notice upon assertion of a claim that may be indemnified must be given
to the party liable for misrepresentation or breach of warranty, but the failure
to provide such notice shall not relieve or otherwise affect the obligation of
the party liable to provide indemnification hereunder, except to the extent that
any Losses (as hereinafter defined) directly resulted from or were caused by
such failure.
9.4 Basket. Neither Transferor or the Stockholders nor XXXX shall
be liable for misrepresentation or breach of warranty under this agreement
unless and until the aggregate amount of losses, liabilities, damages and
expenses incurred by an indemnified party ("Losses") as a result of all
misrepresentations and breaches of warranty under this agreement, together with
all such Losses incurred by such party or its affiliates under the Affiliate
Acquisition Agreements, exceeds $75,000 in the aggregate (in which event it
shall be liable for the full amount of all Losses). No claim shall be asserted
by a party against another party unless such claim, when aggregated with other
claims asserted at the same time, involve at least $10,000 of claimed Losses.
This provision shall not apply to any misrepresentation or breach of warranty
under sections 4.4(a), 4.18, 5.5(e) or to claims asserted under sections
9.2(a)(ii), (iii), (iv) or (v) or 9.2(b)(ii) or (iii). In calculating the amount
of the loss, liability, damage or exposure to XXXX or Transferor for
misrepresentation or breach of warranty by the other which is indemnified under
section 9.2, all materiality, material adverse effect and knowledge qualifiers
set forth in a representation or warranty that has been misrepresented or
breached shall be disregarded.
9.5 Cap on Liability. Notwithstanding anything to the contrary in
this agreement, the aggregate liability of Transferor, the Stockholders and the
Affiliates to XXXX for misrepresentation or breach of warranty under this
agreement and the Affiliate Acquisition Agreements shall be limited to
$3,000,000 ("Cap"); provided that such Cap shall not apply to breach of sections
4.2, 4.4(a), 4.18 nor to any claim asserted under section 9.2(a)(ii), (iii),
(iv) or (v) or to breach of, or any claim asserted under, the comparable
provisions of the Affiliate Acquisition Agreements. All claims shall be first
asserted against any amounts held in escrow pursuant to the Escrow Agreement
(the "Escrow"), and any claims to which the Cap applies may only be asserted
against funds held in the Escrow, there being no recourse against the
Stockholders directly for such claims, except that in the event that any amounts
held in the
-28-
Escrow are reduced or reserved against to pay Non-Cap Claims (as defined below),
the Stockholders shall be jointly and severally liable for claims to which the
Cap applies up to the amount that was paid or reserved against in connection
with the Non-Cap Claims. "Non-Cap Claims" shall mean claims for indemnification
under this agreement and the Affiliate Acquisition Agreements that are not
subject to the Cap.
9.6 Third Party Claims.
(a) If any party entitled to be indemnified pursuant to
section 9.2 (an "Indemnified Party") receives notice of the assertion by any
third party or any claim or of the commencement by any such third person of any
action (any such claim or action, an "Indemnifiable Claim") with respect to
which another party hereto (an "Indemnifying Party") is or may be obligated to
provide indemnification, the Indemnified Party shall promptly notify the
Indemnifying Party in writing (the "Claim Notice") of the Indemnifiable Claim;
provided, that the failure to provide such notice shall not relieve or otherwise
affect the obligation of the Indemnifying Party to provide indemnification
hereunder, except to the extent that any Losses directly resulted from or were
caused by such failure.
(b) The Indemnifying Party shall have thirty (30) days after
receipt of the Claim Notice to undertake, conduct and control, through counsel
of its own choosing, and at its expense, the settlement or defense thereof, and
the Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided that (i) the Indemnifying Party shall permit the Indemnified
Party to participate in such settlement or defense through counsel chosen by the
Indemnified Party (subject to the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld), provided that the fees and expenses
of such counsel shall not be borne by the Indemnifying Party, and (ii) the
Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified Party's consent (which consent shall not be unreasonably withheld).
So long as the Indemnifying Party is vigorously contesting any such
Indemnifiable Claim in good faith, the Indemnified Party shall not pay or settle
such claim without the Indemnifying Party's consent, which consent shall not be
unreasonably withheld.
(c) If the Indemnifying Party does not notify the Indemnified
Party within thirty (30) days after receipt of the Claim Notice that it elects
to undertake the defense of the Indemnifiable Claim described therein, the
Indemnified Party shall have the right to contest, settle or compromise the
Indemnifiable Claim in the exercise of its reasonable discretion; provided, that
the Indemnified Party shall notify the Indemnifying Party of any compromise or
settlement of any such Indemnifiable Claim.
10. Miscellaneous.
10.1 Entire Agreement. This agreement (including the exhibits and
schedules hereto, which shall be deemed an integral part of this agreement)
contains, and is intended as, a complete statement of all of the terms of the
arrangements between the parties with respect to the matters provided for,
supersedes any previous agreements and understandings between the
-29-
parties with respect to those matters (including, but not limited to, the letter
of intent dated August 9, 1999), and cannot be changed or terminated orally.
10.2 Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.3 Headings. The section headings of this agreement are for
reference purposes only and are to be given no effect in the construction or
interpretation of this agreement.
10.4 Notices. All notices and other communications under this
agreement shall be in writing and shall be deemed given when delivered
personally or mailed by registered mail, return receipt requested or faxed to
the parties at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
(a) If to Transferor and the Stockholders, addressed to them at:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------------
Fax Number:
--------------------------
with a copy to:
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------------
Fax Number:
--------------------------
(b) If to XXXX or TOIC, addressed to it at:
The Official Information Company
000 Xxxx 00xx Xxxxxx,
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Fax Number: (000) 000-0000
-30-
with a copy to:
Xxxxxx X. Xxxxxxxxxxx, Esq.
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
10.5 Separability. If any provision of this agreement is held to
be invalid or unenforceable, the balance of this agreement shall remain in
effect.
10.6 Waiver. Any party may waive compliance by another with any of
the provisions of this agreement. No waiver of any provision shall be construed
as a waiver of any other provision. Any waiver must be in writing and must be
signed by the party waiving the provision.
10.7 Assignment. XXXX may assign its rights under this agreement
simultaneously with or after the closing to any subsidiary or affiliate of XXXX
that has assumed (in a writing reasonably satisfactory in form and substance to
Transferor or the Stockholders) TISH's obligations under this agreement, but no
such assignment shall relieve XXXX of its obligations under this agreement. XXXX
may designate any subsidiary or other affiliate to receive the Assets and assume
the Assumed Liabilities at the closing hereunder; provided that no such
designation shall relieve XXXX of its obligations under this agreement. In
addition, XXXX, or any subsidiary or affiliate of XXXX to whom this agreement
has been assigned in whole or in part, may assign its rights under this
agreement to its lenders. This agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
permitted assigns.
10.8 Arbitration.
(a) Any dispute or controversy arising under or in connection
with this agreement other than under the provisions of section 2.3(b), shall be
settled exclusively by arbitration to be held in the City of Chicago in
accordance with the rules of the American Arbitration Association then in
effect; provided that any claim of breach with regard to section 6.7 may, at the
option of XXXX, be enforced in court. The arbitral tribunal shall be composed of
three arbitrators, one of which shall be appointed by XXXX, one of which shall
be appointed by Transferor and one of which shall be appointed by the
arbitrators appointed by XXXX and Transferor. As part of their award, the
arbitrators shall make a fair allocation between the parties of the fee and
expenses of the American Arbitration Association and the cost of any transcript,
taking into account the merits of their claims and defenses. Either party shall
be entitled to the pre-trial discovery it would have been entitled to if the
proceeding had been brought in a New York court under the Civil Practice Law and
Rules. Judgment may be entered on the arbitrators' award in any court having
jurisdiction, and the parties irrevocably consent to the jurisdiction of the
Chicago courts for that purpose. The parties waive personal service in
connection with any such arbitration; any process or other papers under this
provision may be served by registered mail, return receipt requested, or by
personal service, provided a reasonable time for appearance or response is
allowed. The arbitrators may grant injunctive or other relief.
-31-
(b) The courts of the State of Illinois in Xxxx County and
the United States District Court for the Northern District of Illinois shall
have jurisdiction over the parties with respect to any dispute or controversy
arising under or in connection with section 6.7 and, by execution and delivery
of this agreement, each of the parties to this agreement submits to the
jurisdiction of those courts, including but not limited to, the in personam and
subject matter jurisdiction of those courts, waives any objection to such
jurisdiction on the grounds of venue or forum non conveniens, the absence of in
personam or subject matter jurisdiction and any similar grounds, consents to
service of process by mail (in accordance with section 10.4) or any other manner
permitted by law, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with section 6.7. These consents to jurisdiction shall not
be deemed to confer rights on any person other than the parties to this
agreement.
10.9 No Third Party Beneficiaries. This agreement does not create,
and shall not be construed as creating, any rights in favor of any person not a
party to this agreement.
10.10 Publicity. Neither XXXX nor Transferor, nor their respective
affiliates, shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
agreement without the consent of the other party, which consent shall not be
unreasonably withheld or delayed, except as may be required by law or the
regulations or policies of any securities exchange, in which case the party
required to make the release or statement shall allow the other party reasonable
time to comment on such release or statement in advance of such issuance.
10.11 Guarantee of TOIC. TOIC hereby guarantees the full and
timely performance of all covenants and obligations of XXXX hereunder.
10.12 Counterparts. This agreement may be executed in
counterparts, which together shall constitute the same instrument.
TISI HOLDINGS, INC.
By:
------------------------------
Name:
Title:
THE OFFICIAL INFORMATION COMPANY
By:
------------------------------
Name:
Title:
[Transferor]
-32-
By:
------------------------------
Name:
Title:
---------------------------------
[Stockholder]
---------------------------------
[Stockholder]
-33-
