EXHIBIT 2.15
AGREEMENT OF PURCHASE AND SALE OF ASSETS
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This Agreement of Purchase and Sale of Assets (this "Agreement") is entered
into and effective as of September 17, 1997, by and between LITIGATION RESOURCES
OF AMERICA-NORTHEAST, INC., a New York corporation (the "Buyer"), LITIGATION
RESOURCES OF AMERICA, INC., a Texas corporation (the "Parent"), XXXXXX X. DINE,
INC., a New York corporation ("EPD"), and XXXXXX X. DINE TEMPORARY ATTORNEYS,
L.L.C., a New York limited liability company ("EPD Temp") (EPD and EPD Temp may
be hereinafter collectively referred to as the "Sellers" or singularly as a
"Seller"), joined by XXXXXX X. XXXXXX, an individual resident of New York and a
director, officer and shareholder of each of the Sellers ("Xxxxxx") and XXXXXX
XXXXXX, an individual resident of New York and a director, officer and
shareholder of each of the Sellers ("Xxxxxx"). Buyer, Parent, Sellers, Xxxxxx
and Xxxxxx are hereinafter sometimes referred to collectively as the "Parties"
or singularly as a "Party."
W I T N E S S E T H :
WHEREAS, the Sellers are the owners of various assets associated with the
EPD Business and the EPD Temp Business (as hereinafter defined);
WHEREAS, the Buyer desires to purchase all or substantially all of the
Assets (as hereinafter defined) owned by the Sellers and used in the EDP
Business and the EDP Temp Business, and the Sellers desire to sell such Assets
to the Buyer;
WHEREAS, in connection with the purchase and sale of the Assets, the
Parties desire to set forth in this Agreement the terms and conditions with
respect to the transfer of such Assets;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
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As used herein, the following terms shall have the following meanings:
ACCOUNTS PAYABLE. The term "Accounts Payable" shall mean all accounts
payable of each Seller generated in connection with the operations of each
Business prior to the Effective Date and reflected on the Financial Statements
as of the Effective Date in a manner consistent with each Seller's past
practices and the manner in which such information has been provided to Buyer.
ACCOUNTS RECEIVABLE. The term "Accounts Receivable" shall mean all
accounts receivable of each Seller generated in connection with the operations
of each Business prior to the Effective Date and reflected on the Financial
Statements as of the Effective Date in a manner consistent with each Seller's
past practices and the manner in which such information has been provided to
Buyer as more fully specified on Schedule 3.35.
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ACQUIRED CASH. The term "Acquired Cash" shall have the meaning set forth in
Section 2.1.
ADDITIONAL TAX LIABILITY. The term "Additional Tax Liability shall have the
meaning contained in Section 2.3 of this Agreement.
AFFILIATE. The term "Affiliate" of a person shall mean, with respect to
that person, a person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or is acting as agent on behalf of, or as an officer or director of that person.
As used in the definition of Affiliate, the term "control" (including the terms
"controlling," "controlled by," or "under common control with") means the
possession, direct or indirect, of management and policies of a person whether
through the ownership of voting securities, by contract, through the holding of
a position as a director or officer of such person, or otherwise. As used in
this definition, the term "person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, an incorporated
organization, or a government or political subdivision thereof.
ANCILLARY AGREEMENTS. The term "Ancillary Agreements" shall have the
meaning set forth in Section 3.11.
ASSETS. The term "Assets" shall have the meaning set forth in Section 2.1.
ART WORK. The term "Art Work" shall have the meaning as contained in
Section 2.1(l).
ASSUMED LIABILITIES. The term "Assumed Liabilities" shall have the meaning
as contained in Section 2.4.
BALANCE SHEET REPORT. The term "Balance Sheet Report" means the balance
sheet of each of the Sellers as of a given date showing the assets, liabilities
and equity of each Seller, prepared by each Seller in accordance with GAAP on a
consistent basis as with prior time periods and further adjusted to exclude
Excluded Assets and Retained Liabilities.
XXXXXX EMPLOYMENT AGREEMENT. The term "Xxxxxx Employment Agreement" shall
have the meaning as contained in Section 6.2(g).
XXXX OF SALE. The term "Xxxx of Sale" shall have the meaning set forth in
Section 6.2(h).
BOOKS AND RECORDS. The term "Books and Records" shall have the meaning set
forth in Section 2.1(c).
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BUSINESS OR BUSINESSES. The term "Business" or "Businesses" shall
singularly mean the EPD Business or the EPD Temp Business or collectively mean
the EPD Business and the EPD Temp Business.
BUSINESS AREA. The term "Business Area" shall mean the metropolitan area of
the city of New York, New York, and the States of New Jersey and Connecticut.
BUYER INDEMNIFIED PARTIES. The term "Buyer Indemnified Parties" shall have
the meaning set forth in Section 7.1A.
BUYER OBLIGATIONS. The term "Buyer Obligations" shall have the meaning set
forth in Section 8.2.
CASH PURCHASE PRICE. The term "Cash Purchase Price" shall have the meaning
set forth in Section 2.3.
CLOSING. The term "Closing" shall mean the consummation of the events and
transactions to take place on the Closing Date.
CLOSING DATE. The term "Closing Date" shall mean September 17, 1997.
CLOSING DATE BALANCE SHEET REPORT. The term "Closing Date Balance Sheet
Report" shall mean a Balance Sheet Report prepared as of the Closing Date.
CONTRACTS. The term "Contract" shall have the meaning as contained in
Section 2.1(b).
CUSTOMERS. The term "Customers" shall have the meaning as contained in
Section 3.22.
DAMAGES. The term "Damages" shall have the meaning set forth in Section
7.1A.
EARNOUT. The term "Earnout" shall have the meaning set forth in Section
2.3.
EFFECTIVE DATE. The term "Effective Date" shall mean 12:01 a.m. on the
"Closing Date."
EMPLOYEE. The term "Employee" shall mean any employee of either Seller who,
as of the Effective Date, is employed or otherwise performs work or provides
services in connection with the operation of either Business, including those,
if any, on disability, sick leave, layoff or leave of absence, who, in
accordance with such Seller's applicable policies, are eligible to return to
active status.
EPD BUSINESS. The term "EPD Business" shall mean the business of EPD as
presently conducted consisting of the job placement of attorneys on a permanent
basis.
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EPD TEMP BUSINESS. The term "EPD Temp Business" shall mean the business of
EPD Temp consisting of the placement of attorneys and paralegals for contract
work in a temporary basis.
EPD TEMP DIVISION. The term "EPD Temp Division" shall mean the separate
operating division of Buyer established to conduct the EPD Temp Business
following the Closing.
EPD TEMP BUSINESS DIVISION EBITDA. The term "EPD Temp Division EBITDA"
shall mean the earnings of the EPD Temp Division before interest, taxes,
depreciation and amortization, and without any general corporate overhead
charges of the Buyer or its Affiliates except those directly traceable to the
EPD Temp Division of the Buyer, all as determined in accordance with accrual
basis GAAP consistently applied (it being agreed that revenues with respect to a
placement shall be recognized when an offer is accepted). All revenues produced
by the Buyer, the Parent, or its Affiliates involving the temporary placement of
attorneys and paralegals within the Business Area shall be credited to the EPD
Temp Division of the Buyer; provided, that the Parties shall negotiate in good
faith appropriate adjustments to the foregoing calculation of EPD Temp Division
EBITDA if any temporary placement of attorneys business are acquired by the
Buyer, the Parent or its Affiliates in the Business Area.
EQUIPMENT. The term "Equipment" shall have the meaning as contained in
Section 2.1(a).
ERISA. The term "ERISA" shall have the meaning as contained in Section
3.15.
EXCLUDED ASSETS. The term "Excluded Assets" shall have the meaning as
contained in Section 2.2.
EXCLUDED CASH. The term "Excluded Cash" shall mean all cash of the Sellers
that exists as of the Effective date other than Acquired Cash.
FINAL NET WORKING CAPITAL. The term "Final Net Working Capital" shall have
the meaning as contained in Section 2.5.
GAAP. The term "GAAP" shall mean generally accepted accounting principles
of the Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.
GENERAL INTANGIBLES. The term "General Intangibles" shall have the meaning
contained in Section 2.1(g).
GUARANTEED NET WORKING CAPITAL. The term "Guaranteed Net Working Capital"
shall mean $200,000.
INTELLECTUAL PROPERTY. The term "Intellectual Property" shall have the
meaning as contained in Section 2.1(e).
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IRC. The term "IRC" shall mean the Internal Revenue Code.
NET TRADE ACCOUNTS RECEIVABLE. The term "Net Trade Accounts Receivable"
shall mean those Accounts Receivable listed on Schedule 3.35.
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NET WORKING CAPITAL. The term "Net Working Capital" shall mean Net Working
Capital Assets minus Net Working Capital Liabilities.
NET WORKING CAPITAL ASSETS. The term "Net Working Capital Assets" shall
mean cash plus Net Trade Accounts Receivable; provided, however that the amount
of cash must be at least equal to the amount of Net Trade Accounts Receivable.
NET WORKING CAPITAL LIABILITIES. The term "Net Working Capital
Liabilities" shall mean commissions payable to employees of the Sellers plus
Payroll Taxes Payable.
NOTE. The term "Note" shall have the meaning set forth in Section 2.3(ii).
NOTICE OF ACTION. The term "Notice of Action" shall have the meaning set
forth in Section 7.1C.
NOTICE OF ELECTION. The term "Notice of Election" shall have the meaning
set forth in Section 7.1C.
OFFSET. The term "Offset" shall have the meaning set forth in Section 8.2.
OFFSET CLAIM. The term "Offset Claim" shall have the meaning set forth in
Section 8.2.
OWNER. The term "Owner" shall mean Xxxxxx and Xxxxxx, the owners of the
Sellers.
PARENT SHARES. The term "Parent Shares" shall have the meaning as contained
in Section 2.3(iii).
PARENT SHARES VALUE. The term "Parent Shares Value" shall mean $8.50 per
Parent Share; provided however, that if the Parent has successfully consummated
a public offering of its shares of common stock, then it shall mean the average
public trading price of each Parent Share over the five (5) most recent business
days.
PAYROLL TAXES PAYABLE. The term "Payroll Taxes Payable" shall mean any
taxes payable to a governmental entity in connection with the payment of
commissions.
PECKS. The term "Pecks" shall mean Pecks Management Partners Ltd., a New
York limited partnership.
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PUBLIC OFFERING. The term "Public Offering" means the sale by the Parent of
any of its securities for cash in an underwritten public offering registered on
the appropriate form with the Securities and Exchange Commission.
PUBLIC OFFERING PRICE. The term "Public Offering Price" shall refer to the
initial share price of the common stock of Parent Shares at the time and on the
date of the initial Public Offering of the Parent Shares by Parent.
PURCHASE PRICE. The term "Purchase Price" shall mean the consideration
payable to the Seller for the Assets as set forth or contemplated in Section
2.3.
REGISTRATION RIGHTS AGREEMENT. The term "Registration Rights Agreement"
shall have the meaning as contained in Section 6.2(m).
RETAINED LIABILITIES. The term "Retained Liabilities" shall have the
meaning contained in Section 7.1X.
XXXXXXX INDEMNIFIED PARTIES. The term "Sellers Indemnified Parties" shall
have the meaning set forth in Section 7.1X.
XXXXXXX INDEMNITORS. The term "Sellers Indemnitors" shall have the meaning
set forth in Section 7.1A.
SELLERS' FINANCIAL STATEMENTS. The term "Sellers' Financial Statements"
shall mean the internally compiled financial statements of the Sellers as more
fully defined in Section 3.15 herein.
SELLERS' NAMES. The term "Sellers' Names" shall have the meaning set forth
in Section 2.1(j).
SHAREHOLDERS' AGREEMENT. The term "Shareholders' Agreement" shall have the
meaning set forth in Section 6.2(j) .
XXXXXX EMPLOYMENT AGREEMENT. The term "Xxxxxx Employment Agreement" shall
have the meaning as contained in Section 6.2(f).
STOCK PLEDGE AGREEMENT. The term "Stock Pledge Agreement" shall have the
meaning as contained in Section 6.2(n).
SUBORDINATION AGREEMENTS. The term "Subordination Agreements" shall mean
those certain Subordination Agreements of even date herewith entered into among
Sellers and any of the Company, the Parent, Affiliates, and holders of Senior
Indebtedness (as such item is defined in the Note).
TRADE PAYABLES. The term "Trade Payables" shall mean all of the accounts
payable of either Business incurred in the ordinary course of business existing
as of the Effective Date, as set forth on the Closing Date Balance Sheet Report.
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ARTICLE II
PURCHASE OF ASSETS AND PURCHASE PRICE
2.1 SALE OF ASSETS. Subject to the terms and conditions set forth in this
Agreement, the Sellers agree to sell, convey, transfer, assign and deliver to
the Buyer, and the Buyer hereby agrees to purchase from the Sellers on the
Effective Date, all assets owned by Sellers and used in or derived from the
Businesses (other than those specifically excluded under Section 2.2 below)
including the following (such assets to be referred to herein as the "Assets"):
(a) All office equipment, service equipment, supplies, computer
hardware, computer software, data processing equipment, motor vehicles, and
tools (the "Equipment"), including the Equipment described on Schedule
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2.1(a);
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(b) All contracts, leases, documents, franchises, licenses,
instruments, agreements and other written or oral agreements relating to
the Business of either Seller to which either Seller is a party or by which
Seller or any of the Assets may be bound as well as all rights, privileges,
claims and options relating to the foregoing (the "Contracts"), including
the Contracts described on Schedule 2.1(b);
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(c) All customer and supplier files and databases, customer and
supplier lists, accounting and financial records, invoices, and other books
and records relating principally to either Business (the "Books and
Records"), including the Books and Records described on Schedule 2.1(c);
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(d) Employee files for those employees actually hired by Buyer;
(e) All right, title and interest of each Seller, in, to and under
all service marks, trademarks, trade and assumed names, principally related
to the Businesses together with the right to recover for infringement
thereon, if any (the "Intellectual Property"), and other marks and/or names
described on Schedule 2.1(e);
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(f) All advertising materials and all other printed or written
materials related to the conduct of either Business;
(g) All of each Seller's general intangibles, claims, rights of set
off, rights of recoupment, goodwill, patents, inventions, trade secrets and
royalty rights and other proprietary intangibles, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, which are
used in the Businesses, and remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions (the "General Intangibles"), including the General
Intangibles described on Schedule 2.1(g);
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(h) All goodwill and going concern value and all other intangible
properties related to the Businesses;
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(i) The Net Trade Accounts Receivable;
(j) The exclusive right to use the name "Xxxxxx X. Dine, Inc.",
"Xxxxxx X. Dine Temporary Attorneys, L.L.C.", any similar names or
derivatives thereof, and any past or present assumed names or trade names
in connection with Buyer's use of the Purchased Assets (the "Sellers'
Names");
(k) Such amount of cash such that Net Working Capital as of the
Closing Date is equal to the amount of Two Hundred Thousand Dollars
($200,000) (the "Acquired Cash"); and
(l) All art work listed on Schedule 2.1(l) (the "Art Work").
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2.2 EXCLUDED ASSETS. Sellers are not selling and Buyer is not purchasing
any of the following excluded assets related to the Business ("Excluded
Assets"): (i) deposits related to IRC Section 444, (ii) Excluded Cash, (iii)
those certain commissions more fully described on Schedule 2.2 to be received
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by EPD on certain specified placements, (iv) all notes receivable and all
accounts receivable of the Businesses other than those constituting Net Trade
Accounts Receivable, (v) any tax refunds in respect of periods ending on or
prior to the Effective Date, (vi) any art work other than the Art Work, (vii)
insurance to the extent specified in Section 3.23, and (viii) cash investments,
cash deposits, right to receive cash refunds, and other cash equivalents, with
the exception of the Acquired Cash provided for in 2.1(k) above, all as more
specifically described on Schedule 2.2. Notwithstanding anything to the
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contrary contained herein, if Buyer receives collections on the Accounts
Receivable other than those constituting Net Trade Accounts Receivable, then
Buyer shall remit any such collections of these Accounts Receivable to Sellers
on a weekly basis and provide an accounting with respect thereto. Should
Sellers or Owners receive payment on any of the Net Trade Accounts Receivable or
any accounts receivable generated by Buyer from its operation of the Business,
Sellers and Owners shall remit such payments on a weekly basis to Buyer together
with providing an accounting with respect thereto.
2.3 PURCHASE PRICE. Upon the terms and subject to the conditions
contained herein and as consideration for the sale of the Assets and the
performance by the Sellers of various other matters as provided herein, the
Buyer shall pay the Sellers the aggregate amount of the following at the Closing
or subsequent to the Closing in the time set forth herein (the "Purchase
Price"):
(i) A cash sum in the amount of Six Million Dollars ($6,000,000)
(the "Cash Purchase Price"), paid by the wire transfer of immediately
available funds; and
(ii) A subordinated promissory note in the amount of Two Million and
No/100 Dollars ($2,000,000.00) which shall be subordinated as provided
therein (the "Note"); The Note shall bear interest at an annual rate of Six
and Three-Eighths Percent (6.375%), and shall provide for equal monthly
payments of accrued interest and a final payment of principal and all
accrued and unpaid interest on the eighth
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anniversary of the Closing Date, subject to certain limitations imposed by
the Subordination Agreements;
(iii) Seventy-Six Thousand Four Hundred Seventy-One (76,471) shares
of the common stock of Parent, $.01 par value per share (the "Parent
Shares"), as will constitute an agreed upon value of Six Hundred Fifty
Thousand and Three and 50/100 Dollars ($650,003.50) at the Parent Shares
Value;
(iv) An amount of cash equal to the amount of the Additional
Tax Liability; and
(v) The Earnout.
The Additional Tax Liability shall be determined as follows. Within
ninety (90) days after the Closing, Sellers shall furnish written evidence to
Buyer of the additional amount (the "Additional Tax Liability") which Sellers
must receive so that, after giving effect to any taxes thereon, the aggregate
amount received by the Owners after the Sellers pay all taxes legally required
to be paid (including income, sales and transfer taxes) in respect of the
Purchase Price and the Owners pay all taxes upon receipt of such amount
following the liquidation of the Sellers is equal to the aggregate amount which
would have been received by the Owners on an after-tax basis if the transactions
contemplated hereby had been structured as a sale of equity in the Sellers by
the Owners for the Purchase Price (exclusive of the Additional Tax Liability)
rather than a sale of assets by the Sellers followed by the liquidation of the
Sellers. Buyer shall review the calculation of such Additional Tax Liability
within thirty (30) days after receipt thereof and notify Sellers of any
discrepancy. If there is a discrepancy, and Buyer and Sellers cannot solve such
discrepancy within thirty (30) days thereafter, then Sellers and Buyers shall
mutually agree on an independent certified public accounting firm acceptable to
both, if any, to review such calculation and make a determination. Such
accounting firm's conclusion as to the Additional Tax Liability shall be
conclusive. Sellers and Buyer shall share equally in the expenses of retaining
such accounting firm unless such accounting firm determines that another
allocation is more equitable. Upon such final determination, Buyer shall within
ten (10) days thereafter, pay the entire amount of such Additional Tax Liability
to Sellers. An example of the calculation of the Additional Tax Liability is
attached as Schedule 2.3.
The Earnout shall be determined as follows. The Buyer and the Buyer's
accountants shall determine EPD Temp Division EBITDA, if any, for the twelve
(12) month time period beginning on October 1, 1997 and ending September 30,
1998 (the "1998 Earnout Period"), and likewise for the next two consecutive
twelve (12) month periods of October 1, 1998 through September 30, 1999 (the
"1999 Earnout Period"), and October 1, 1999 through September 30, 2000 (the
"2000 Earnout Period"). Such determination shall be made within thirty (30)
days after each September 30 date, and the results thereof forwarded to Sellers
together with supporting documentation. Sellers shall review the calculation of
such EPD Temp Division EBITDA within thirty (30) days after receipt thereof and
notify Buyer of any discrepancy. If there is a discrepancy, and Buyer and
Sellers cannot solve such discrepancy within thirty (30) days thereafter, then
Sellers and Buyers shall mutually agree on an
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independent certified public accounting firm acceptable to both, if any, to
review such calculation and make a determination. Such accounting firm's
conclusion as to the EPD Temp Division EBITDA shall be conclusive. Sellers and
Buyer shall share equally in the expenses of retaining such accounting firm
unless such accounting firm determines that another allocation is more
equitable. Upon such final determination, Buyer shall within ten (10) days
thereafter, pay Sellers fifteen percent (15%) of the EPD Temp Division EBITDA
for each of the 1998 Earnout Period and the 1999 Earnout Period, and shall pay
Sellers twenty percent (20%) of the EPD Temp Division EBITDA for the 2000
Earnout Period; provided however, that the Buyer shall pay Sellers thirty-three
percent (33%) of the EPD Temp Division EBITDA for the 1998 Earnout Period if the
Note has not been paid in full prior to the first anniversary after the
Effective Date, and shall pay Sellers twenty-five percent (25%) of the EPD Temp
Division EBITDA for the 1999 Earnout Period if the Note has not been paid in
full prior to the second anniversary after the Effective Date (all of the
foregoing payments being herein referred to as the "Earnout"). The Buyer and the
Parent shall operate its businesses and the businesses of their Affiliates in
good faith so as not to unduly limit Sellers' rights hereunder.
2.4 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, the Buyer agrees that on the Closing Date, it will
not assume any liabilities of either Seller except for the Net Working Capital
Liabilities, and those liabilities that may arise from any of the Contracts
("Assumed Liabilities"). Buyer specifically excludes and does not assume any
liabilities relating to or arising out of the Accounts Payable except to the
extent they constitute Net Working Capital Liabilities, any of either Seller's
tax obligations, tax claims, tax charges, tax fines or any related tax
liabilities, regardless of the source, cause or origin of such tax liabilities.
In addition, Buyer specifically excludes and does not assume any liabilities
relating to or arising out of IRC Section 444, nor does it assume any
liabilities of the Business that are not otherwise specifically assumed or
included in the Net Working Capital Liabilities.
2.5 DETERMINATION OF FINAL NET WORKING CAPITAL. The amount of the
Net Working Capital as of the Closing Date (the "Final Net Working Capital")
shall be prepared by the Seller, as promptly as possible after the Closing upon
a determination of the components of the Net Working Capital Liabilities, and
deducting same from the Net Trade Accounts Receivable and Acquired Cash. Seller
and/or Seller's accountants shall then review and certify their determination of
the Final Net Working Capital, and deliver its calculations thereof with
supporting data to Buyer within fifteen (15) days after the Closing Date. Buyer
and/or the Buyer's accountants shall review the Seller's determination of Final
Net Working Capital (including any corresponding work papers of Seller's
accountants) and report to the Seller in writing within fifteen (15) days of
receipt thereof of any discrepancy between the Seller's calculation of Final Net
Working Capital and the Buyer's calculation of Final Net Working Capital. If
Seller and/or Seller's accountants and Buyer and/or Buyer's accountants cannot
resolve such discrepancy to their mutual satisfaction within thirty (30) days
after Seller's accountants receipt of such reported discrepancy, another
independent public accounting firm acceptable to the Seller and the Buyer shall
be retained to review the work papers and make a determination of the Final Net
Working Capital. Such firm's conclusions as to the carrying values to appear on
the Closing Date Reports for purposes of determining the Final Net Working
Capital of the Seller shall be conclusive. The Seller and the Buyer shall share
equally in the expenses of retaining such accounting firm, unless the accounting
firm determines that another allocation is more
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equitable. The Buyer shall pay the expenses of the Buyer's accountants, if any,
and the Seller shall pay the expenses of Seller's accountants, if any.
2.6 ADJUSTMENT OF PURCHASE PRICE. After the Closing Date, the Purchase
Price set forth in Section 2.3 shall be adjusted as follows: If the Final Net
Working Capital as finally determined pursuant to Section 2.5 shall be more than
the Guaranteed Net Working Capital, then the Buyer shall pay Seller within ten
(10) days thereafter the entire amount of such difference in cash. If the Final
Net Working Capital of Seller as finally determined pursuant to Section 2.5
shall be less than the Guaranteed Net Working Capital, then the Seller shall pay
Buyer within ten (10) days thereafter the entire amount of such difference in
cash. If and to the extent a liability constituting an Assumed Liability is
discharged or extinguished for no consideration by the Buyer, then the Buyer
shall promptly remit the amount so discharged or extinguished to Sellers.
2.7 ALLOCATION OF PURCHASE PRICE. For all federal, state and local tax
purposes, the Purchase Price shall be allocated among the various Assets in the
manner indicated in Schedule 2.7 hereto subject to adjustment pursuant to
the determination of Final Net Working Capital. None of the Parties shall file
any tax return or report or take any position with any taxing agency or
authority which is inconsistent with the foregoing allocation, except to the
extent mandated by a court of law or the appropriate taxing agency or authority
in a determination binding upon one Party provided that such Party has given
written notice and reasonable opportunity to the other Party to contest and
appeal such determination, at the other Party's expense, on behalf of both
Parties and such determination has nevertheless become final. Within ninety (90)
days after the Closing Date, the Parties shall prepare for filing with the
Internal Revenue Service a Form 8594 in accordance with the foregoing
allocation.
2.8 TAXES. Buyer shall be liable for the payment of all sales and use
taxes arising out of the sale and transfer or removal of the Assets, if any, and
the assumption of the Assumed Liabilities. On or before the Effective Date, the
Sellers agree to furnish to the Buyer certificates from the state taxing
authorities, and any related certificates that the Buyer may reasonably request,
as evidence that all sales and use tax liabilities of the Sellers accruing
before the Effective Date have been fully provided for or satisfied. The Buyer
shall not be responsible for any business, occupation, withholding or similar
tax, or any taxes of any kind of the Sellers, related to any period before the
Effective Date. The Buyer shall be responsible for all such taxes for any period
commencing on or after the Effective Date.
2.9 TITLE TO ASSETS AND RISK OF LOSS. Title to the Assets and risk of loss
or damage to the Assets by casualty (whether or not covered by insurance) will
pass to the Buyer immediately upon completion of the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
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Each Seller hereby represents and warrants, except as otherwise set
forth on the Schedules attached hereto, that:
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3.1 TITLE TO ASSETS. Up until the Effective Date, the Sellers have good
and indefeasible title to the Assets free and clear of restrictions or
conditions to transfer or assignment, mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights-of-way, covenants, conditions
or restrictions, except with respect to those Assets subject to lease and as
otherwise disclosed on Schedule 3.1. The Sellers are in possession of all
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property leased to them from others. Except for the Excluded Assets, the Assets
constitute all of the material property, whether real, personal, mixed, tangible
or intangible, that are used in the Businesses by the Sellers.
3.2 TAX RETURNS. Within the times and in the manner prescribed by law,
including extensions permitted thereunder, the Sellers have filed and will file
all federal, state and local tax returns required by law and has paid and will
pay all taxes, assessments and penalties, if any, due and payable in connection
with the Businesses through the Effective Date. There are no pending, or to
Sellers' knowledge, threatened disputes as to taxes of any nature payable by
either Seller.
3.3 CONTRACTS, LEASES, AND AGREEMENTS. Schedule 2.1(b) lists all of
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the material contracts, leases, agreements, and other written or oral
arrangements relating to the Businesses to which either Seller is a party, or by
which either Seller or the Assets are bound. As of the Effective Date, each of
the Contracts is valid and in full force and effect, and there has not been any
default by either Seller or, to the best of either Seller's knowledge, by any
other party to any of the Contracts, or any event that with notice or lapse of
time or both, would constitute a default by either Seller or, to the best of
either Seller's knowledge, any other party to any of the Contracts. Except as
shall be disclosed in Schedule 2.1(b), each Contract is assignable to the Buyer
without the consent of any other party. The Sellers will use commercially
reasonable efforts to obtain and deliver at Closing all of the requisite
consents relating to the items set forth on Schedule 2.1(b). Neither Seller has
---------------
received notice that any party to any of the Contracts intends to cancel or
terminate any of the Contracts or exercise or not exercise any options that they
might have under any of the Contracts. In the event any of the Contracts are, or
are later determined to be, non-assignable, and the other party to any such
Contracts refuses to consent to the assignment of same, then the applicable
Seller shall subcontract to the Buyer or its designee, if the Buyer so desires,
the remaining work on such Contracts, and the applicable Seller shall forward to
the Buyer or its designee all proceeds of such Contracts received by such
Seller; provided, however, that such Seller shall be reimbursed for any
reasonable out-of-pocket expenses incurred by it.
3.4 EQUIPMENT. All of the material Equipment owned or leased by the
Sellers is described on Schedule 2.1(a) attached hereto. Except as disclosed o n
---------------
Schedule 2.1(a), none of the Equipment will be, at the Effective Date, held
---------------
under any security agreement, conditional sales contract, or other title
retention or security arrangement or is located other than in the possession of
the Sellers except for Equipment that is out of Sellers' possession at certain
job sites and/or with certain Sellers' agent(s). To the best of each Seller's
knowledge, the Equipment is in good operating condition and repair, ordinary
wear and tear excepted.
3.5 INVENTORY. Sellers do not own any inventory nor do they utilize any
inventory in their respective Businesses.
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3.6 LICENSES. Schedule 2.1(b) to this Agreement contains a schedule
---------------
of all material licenses owned by Sellers or in which they have any rights or
licenses in connection with the Businesses, together with a brief description of
each. To the best of each Seller's knowledge, neither Seller has infringed, and
is not now infringing, on any license belonging to any other person, firm, or
corporation. Each Seller owns or holds adequate licenses or other rights to use,
all licenses necessary for the Business as now conducted by it except where
failure to own or hold such licenses will not cause a material adverse effect on
the Businesses, taken as a whole, and to the best of each Seller's knowledge,
that use does not conflict with, infringe on or otherwise violate any rights of
others. Except as set forth on Schedule 2.1(b), all of such licenses are fully
assignable to Buyer. Each Seller shall use its reasonable best efforts to
transfer title to all such licenses to Buyer. In the event any of the licenses
are non-assignable and/or non-transferrable, such Seller shall sublicense or
otherwise grant the use or make available the use of any such license which
Buyer requests until Buyer obtains an assignment or transfer of such license or
a new license in Buyer's own name.
3.7 EMPLOYMENT CONTRACTS. Except as set forth in Schedule 3.7, Sellers do
not have any employment contracts and collective bargaining agreements to which
it is a party or by which they are bound relating to any Employee. No Employees
are represented by any labor organization, and, as of the date hereof, no labor
organization or group of Employees has made a written demand to either Seller
for recognition, or filed a petition with the National Labor Relations Board, or
announced its intention to hold an election of a collective bargaining
representative. There is no pending, or to the best knowledge and reasonable
belief of each Seller, threatened, labor dispute, strike or work stoppage
affecting or potentially affecting the Businesses.
3.8 COMPLIANCE WITH LAWS. Each Seller has complied with, and is not in
violation of, applicable federal, state or local statutes, laws, and regulations
(including, without limitation, any applicable building or other law, ordinance
or regulation) that affect, or are likely to affect, directly or indirectly, any
of the Assets or the Businesses, except where the failure to so comply would not
have a material adverse effect on the Businesses, taken as a whole.. Each Seller
has all permits, licenses, and authorizations necessary to the conduct of the
Businesses in the manner and in the areas in which the Business is presently
conducted, and all such permits, licenses, or other authorizations are valid and
in full force and effect, except where the failure to possess such permits,
licenses or other authorizations would not have a material adverse effect on the
Businesses, taken as a whole. There are not any uncured violations, known to
Sellers, of federal, state or municipal laws, ordinances, orders, regulations or
requirements affecting any portion of the Assets or the Businesses which would
have a material adverse effect on the Businesses, taken as a whole.
3.9 LITIGATION. Except as disclosed in Schedule 3.9, there is no suit,
------------
action, arbitration or legal, administrative or other proceeding or governmental
investigation pending or, to the best of each Seller's knowledge, threatened
against or affecting either Seller, the Assets, or the Businesses that could
result in a material adverse effect on the Businesses, taken as a whole.
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3.10 NO BREACH OR VIOLATION. As of the Effective Date and except as set
forth on Schedule 3.10, the consummation of the transactions contemplated by
this Agreement will not result in or constitute any of the following: (i) a
default or an event that, with notice or lapse of time or both, would be a
default, breach or violation, or give rise to a right of modification,
termination, cancellation or acceleration of any obligation or to a loss of a
benefit under, except for third party consents described in this Agreement or
any schedule prepared and delivered in connection herewith, of any lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, security agreement, concession, franchise, permit or
other agreement, instrument or arrangement by which the Assets, the Businesses
or either Seller may be affected, or to which the Assets, the Businesses or
either Seller may be bound, (ii) the creation or imposition of any lien, charge,
or encumbrance on any of the Assets or the Businesses, or (iii) a breach of any
term or provision of this Agreement, except for breaches and violations that
could not reasonably be expected to have a material adverse effect on the
Businesses, taken as a whole.
3.11 AUTHORITY. Each Seller has the full right, power, legal capacity and
authority to execute, deliver and perform its obligations under this Agreement
and all agreements ancillary to this Agreement which are part of the underlying
transaction made the basis of this Agreement and executed in connection herewith
("Ancillary Agreements"), and no approvals or consents of any other person or
entity, other than the Sellers, are necessary in connection herewith.
3.12 PERSONNEL. Schedule 3.12 sets forth a complete and accurate list of
-------------
the names, addresses, hire dates, dates of birth and job descriptions of all
Employees employed by each Seller in connection with the Businesses, current
rates of compensation including, if determined, bonuses payable to each
following Closing. At or after Closing, each Seller shall deliver such
additional information as the Buyer shall reasonably request with respect to
such Employees.
3.13 VALID AND BINDING OBLIGATIONS. Upon execution and delivery, each
of this Agreement, the Ancillary Agreements and each document, instrument and
agreement to be executed by each Seller in connection herewith, will constitute
the legal, valid, and binding obligation of each Seller, enforceable in
accordance with its terms, except as limited by bankruptcy laws, insolvency
laws, and other similar laws affecting the rights of creditors generally.
3.14 FINANCIAL STATEMENTS. The financial statements of Sellers consist of
unaudited financial statements that have been compiled by the independent
certified public accounting firm of Landau & Company, CPAs PC for the fiscal
years ended March 31, 1996 and 1997 of EDP and the three (3) months ended June
30, 1997 for EPD and as to EDP Temp the six month period ended June 30, 1997
(collectively, the "Sellers' Financial Statements"). The Sellers' Financial
Statements have been prepared in accordance with GAAP in the case of EPD and
with the income tax basis of accounting in the case of EPD Temp consistently
applied and fairly present in all material respects the financial condition and
results of operations of the Sellers as at the dates and for the periods then
ended.
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3.15 EMPLOYEE BENEFITS. Except as provided in Schedule 3.15, Sellers have
-------------
no pension, profit-sharing, bonus, deferred compensation, percentage
compensation, severance pay, retirement, insurance, or other employee benefit
plans, including "employee benefit plans" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
3.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in Schedule
--------
3.16(a) with regard to the Businesses and the Assets, since June 30, 1997,
-------
there has been no:
(i) material adverse change in the condition, financial or
otherwise, of the Sellers, the Assets or the Businesses;
(ii) waiver of any material right of or claim held by either
Seller;
(iii) material loss, destruction or damage to any property of either
Seller, whether or not insured;
(iv) material change in the personnel of either Seller or the terms
or conditions of their compensation or employment;
(v) acquisition or disposition of any material assets (or any
contract or arrangement therefor), nor any other transaction by the Sellers
otherwise than for value and in the ordinary course of business;
(vi) transaction or disbursement of funds or assets by either
Seller except in the ordinary course of business;
(vii) capital expenditure by either Seller exceeding $15,000 except
in the ordinary course of business;
(viii) change in accounting methods or practices (including, without
limitation, any change in depreciation or amortization policies or rates)
by either Seller;
(ix) re-valuation by either Seller of any of its Assets;
(x) amendment, modification or termination of any Contract or
license to which either Seller is a party, except in the ordinary course of
business;
(xi) mortgage, pledge or other encumbrance of any of the Assets;
(xii) any litigation or facts or circumstances that could result in
litigation that, if adversely determined, might reasonably be expected to
have a material adverse effect on the Sellers, the Sellers' financial
condition, the Sellers' prospects, the Businesses or the Assets;
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(xiii) increase in salary or other compensation payable or to become
payable by either Seller to any of its officers, directors or employees, or
the declaration, payment or commitment or obligation of any kind for the
payment, by either Seller, of a bonus or other additional salary or
compensation to any such person;
(xiv) loan by either Seller to any person or entity, or guaranty by
either Seller of any loan;
(xv) other event or condition of any character that has or might
reasonably be expected to have a material adverse effect on the Businesses,
Assets or financial condition of either Seller; or
(xvi) agreement by either Seller to do any of the things described
in the preceding clauses (i) through (xv).
Except as disclosed in Schedule 3.16(b), there have been no contractual
----------------
commitments by either Seller to spend more than $25,000 per contractual
commitment over a continuous 12-month period.
3.17 CONSENTS AND APPROVALS. Except as set forth on Schedule 3.17, no
--------------
consent, approval or authorization of, or filing or registration with, any
governmental or regulatory authority, or any other person or entity, is required
to be made or obtained by either Seller in connection with the execution,
delivery or performance of this Agreement by Sellers or the consummation of the
transactions contemplated hereby by Sellers.
3.18 BROKERS. Neither of the Sellers nor any of Sellers' Affiliates has
employed any broker, agent, or finder, or incurred any liability for any
brokerage fees, agent's fees, commission or finder's fees in connection with the
transactions contemplated herein, except to the extent such fees or commissions
are borne exclusively by the Sellers or the Owners and do not constitute Assumed
Liabilities .
3.19 SALE OF ASSETS. For purposes of determining whether a sales and use
tax charge is applicable, the sale of the Assets includes the sale of
substantially all tangible property of the Sellers to be sold in bulk to the
Buyer, and intangible assets, as shown in Schedules 2.1(a), 2.1(b), 2.1(c),
2.1(e), 2.1(g) and 2.1(l). For the purpose of determining the amount of sales
tax due, the sale of the Assets includes the sale of substantially all tangible
personal property of the Sellers included in property sold in bulk to the Buyer,
outside the ordinary course of business, and does not include any property
intended for resale or property exempt from sales tax.
3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither Seller nor any agent of
either Seller, nor to either Seller's best knowledge, any other person acting on
either Seller's behalf, has, directly or indirectly, within the past five years,
given or agreed to give any gift or similar benefit to any customer, supplier,
government employee of the United States or any state or foreign government, or
other person who is or may be in a position to help or hinder the Business which
(1)
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would subject such Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (2) if not given in the past, would have
an adverse effect on the Businesses, or (3) if not continued in the future,
would have a material adverse effect on the Businesses or the Assets, or which
would subject the Sellers to suit or penalty in a private or governmental
litigation or proceeding.
3.21 LIENS ON ASSETS. Except as set forth on Schedule 3.21, all liens or
-------------
security interests of any third party as to any of the Assets have been removed
on or before the Effective Date, and the Sellers have furnished evidence thereof
to Buyer.
3.22 CUSTOMERS. To the best of each Seller's knowledge, Schedule 3.22
contains a true and correct list of all material customers of the Businesses
since January 1, 1997 (the "Customers"). Neither Sellers has any information,
nor is either Seller aware of any facts, indicating that any of the material
Customers intend to cease doing business with either Seller.
3.23 INSURANCE POLICIES. Schedule 3.23 to this Agreement is a description
of all insurance policies held by each Seller concerning the Businesses and
Assets. Notwithstanding anything herein to the contrary, none of the Sellers'
insurance will be included in the Assets.
3.24 INTEREST IN CUSTOMERS, SUPPLIERS AND COMPETITORS. Except as set forth
in Schedule 3.24, neither of the Sellers, nor any Affiliate, spouse or child of
either Seller, has any direct or indirect interest in any competitor, supplier
or customer of any of them, has any direct or indirect interest in any
competitor, supplier or customer of either Seller, or in any person from whom or
to whom either Seller leases any property, or in any other person with whom
either Seller is doing business.
3.25 ADVERSE INFORMATION. Neither Seller has any actual knowledge of any
change contemplated in any applicable laws, ordinances or restrictions, or any
judicial or administrative action (or any event, fact or circumstance) which
will or could be reasonably expected to, have a material adverse effect on the
Sellers or their condition, financial or otherwise, the Assets, or the
condition, value or operation thereof.
3.26 ORGANIZATION. EPD is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, has all necessary
powers to own its properties and to operate its business as now owned and
operated by it, and is qualified to do business in the states specified on
Schedule 3.26. EPD Temp is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of New York, has all
necessary powers to own its properties and to operate its business as now owned
and operated by it, and is qualified to do business in the states specified on
Schedule 3.26.
3.27 CONDITION. All of the Assets are in good operating condition and
repair, ordinary wear and tear excepted, and, as applicable, good working order.
To the knowledge of each Seller, the buildings, fixtures, and improvements
leased by either Seller, including but not limited
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to the plumbing, electrical, air conditioning, heating and ventilating systems,
are in good condition, ordinary wear and tear excepted, and, as applicable, good
working order.
3.28 INTELLECTUAL PROPERTY. All of the material Intellectual Property
owned by either Seller is described on Schedule 2.1(e) attached hereto. The
applicable Seller is the sole owner of all of the Intellectual Property, free
and clear of any liens, encumbrances, restrictions, or legal or equitable claims
of others. Each Seller has registered all trade names, trademarks, and service
marks in all jurisdictions necessary to evidence and protect its ownership
thereof, and to permit such Seller to conduct its business in the manner in
which it is currently conducted, or otherwise has all rights or licenses
necessary to use the same. Each Seller has all patents or patent applications
and copyrights registered in all jurisdictions necessary to evidence and protect
the ownership thereof and to permit such Seller to conduct its business in the
manner in which it is currently conducted, or otherwise has all rights or
licenses necessary to use same. None of the Intellectual Property infringes upon
any patents, trade or assumed names, trademarks, service marks, or copyrights
belonging to any other person or other entity. Neither Seller is a party to any
license, agreement, or arrangement, whether as licensor, licensee, or otherwise,
with respect to any of the Intellectual Property. Neither Seller has a license
or a right to use any other patents, service marks, trademarks, trade and
assumed names, trade secrets and royalty rights and other proprietary
intangibles in connection with either Business, other than the Intellectual
Property.
3.29 POWERS OF ATTORNEY. No person or other entity holds a general or
special power of attorney from either Seller.
3.30 NO SEVERANCE PAYMENTS. Except as set forth in Schedule 3.30, neither
-------------
Seller will owe a severance payment or similar obligation to any of its
Employees, officers, or directors, as a result of the transactions contemplated
by this Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the transactions
contemplated hereby, nor in the event of the subsequent termination of their
employment.
3.31 EMPLOYEES. Except as set forth in Schedule 3.31 or as has occurred in
-------------
the ordinary course of business, since June 30, 1997, neither Seller has, nor
has it agreed to do in any unusual or extraordinary amount or manner, any of the
following acts with respect to its Employees in the Businesses: (i) grant any
increase in salaries payable or to become payable by it, (ii) increase benefits,
(iii) modify any collective bargaining agreement to which it is a party or by
which it may be bound, or (iv) declare any bonuses for any of its Employees.
3.32 TAXES. Each Seller has paid, and shall pay when due, or contest in
good faith, and shall be responsible for paying for, all federal, state, and
local taxes and charges of any kind whatsoever related thereto, which relate to
or arise from the period on or prior to the Closing Date, whether such taxes and
charges shall be due and payable before or after the Closing Date. All federal,
state and local taxes and charges of any kind whatsoever relating to the
ownership of the Assets shall be prorated as of the Closing Date.
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3.33 HIRING OF EMPLOYEES. As of the Closing Date, each Seller shall
permit Buyer to offer employment to all of the Employees. At or prior to
Closing, each Seller shall have paid or accrued in the Closing Date Balance
Sheet Report all compensation and benefits to which such Employees are entitled
by reason of their previous employment with such Seller on such date. Each
Seller shall use such Seller's best efforts to assist Buyer in any reasonable
manner in the hiring by Buyer of the Employees that Buyer desires to hire. Each
Seller shall be solely responsible and liable for all severance pay, if any, to
the extent that any of the Employees are not offered employment with Buyer or do
not accept an offer of employment. Under no circumstances shall either Seller,
the Owners or any of either Seller's Affiliates be permitted to employ or offer
employment to any of the Employees after the Closing Date, without the prior
written consent of Buyer, for a period of five (5) years.
3.34 OPERATIONS OF THE SELLER. Except as disclosed in Schedule 3.34,
since June 30, 1997:
(i) each Seller has used commercially reasonable efforts to preserve the
business organization of such Seller intact, to keep available to the Businesses
the Employees, and to preserve its present relationships with suppliers,
customers and others having business relationships with it;
(ii) each Seller has maintained its existing insurance as to the
Businesses and the Assets, and otherwise maintained and operated the Businesses,
in all material respects, in a good and businesslike manner in accordance with
good and prudent business practices;
(iii) neither Seller has entered into any agreement or instrument which
would bind Buyer, either Seller or the Assets after Closing, other than in the
ordinary course of business, or which would be outside the normal scope of
maintaining and operating the Businesses and the Assets in the ordinary course
of business;
(iv) each Seller has performed all of such Seller's material obligations
under all contracts and commitments applicable to such Seller, the Businesses,
or the Assets, and has maintained the Seller's books of account and records
relating to the Businesses in the usual, regular and customary manner;
(v) each Seller has paid all bills and other payments due with respect to
the ownership, use, insurance, operation and maintenance of the Businesses or
the Assets in the usual, regular and customary manner consistent with its prior
practices, and has taken all action necessary or prudent to prevent liens or
other claims for the same from being filed or asserted against any part of the
Assets; and
(vi) all revenues received by either Seller relating to the Businesses
have been deposited in such Seller's account relating to the Businesses.
3.35 NOTES AND ACCOUNTS RECEIVABLE. All notes and Net Trade Accounts
Receivable are listed on Schedule 3.35, are properly recorded on each
-------------
Accounts Receivable Report delivered to the Buyer, reflected properly on the
Sellers' books and records and are valid Accounts. Subject to
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Section 6.8, all Net Trade Accounts Receivable shall be collected by Buyer on or
prior to sixty (60) days after the Closing Date.
3.36 FULL DISCLOSURE. This Agreement, the Schedules and Exhibits hereto,
and all other documents and written information furnished by the Sellers to the
Buyer pursuant hereto or in connection herewith, are true, complete and correct,
and do not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made herein and therein not
misleading. To the best of each Seller's knowledge, there are no facts or
circumstances relating to the Assets or the Businesses which adversely affect or
might reasonably be expected to adversely affect the Assets, the Businesses or
the ability of each Seller to perform this Agreement or any of each Seller's
obligations hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
--------------------------------------------------
Each of Buyer and Parent represents and warrants, except as otherwise set
forth on the Schedules attached hereto, that:
4.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all the necessary corporate powers to own its properties and to carry on its
business as now owned and operated by it. The Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has all the necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it.
4.2 AUTHORITY. Each of Buyer and Parent, as applicable, has the right,
power, legal capacity, and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements to which it is a party. The execution,
delivery and performance of this Agreement and any Ancillary Agreements to which
it is a party by Buyer and Parent, as applicable, have been duly authorized by
all necessary corporate action.
4.3 VALID AND BINDING OBLIGATIONS. Upon execution and delivery, each of
this Agreement and the Ancillary Agreements to which it is a party will
constitute the legal, valid, and binding obligation of Buyer or Parent, as
applicable, enforceable in accordance with its terms, except as limited by
bankruptcy laws, insolvency laws, and other similar laws affecting the rights of
creditors generally.
4.4 ISSUANCE OF THE PARENT SHARES. The Parent Shares shall, upon issuance
and delivery, be duly authorized, validly issued, fully paid and non-assessable.
4.5 BROKERS. Neither Buyer nor any of its respective Affiliates,
officers, directors, or employees, has employed any broker, agent, or finder, or
incurred any liability for any brokerage fees, agent's fees, commissions or
finder's fees in connection with the transactions contemplated herein,
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except for the fee payable to The Gulfstar Group, Inc., which fee shall be paid
solely by Buyer or its Affiliates in connection with this transaction.
4.6 CONSENTS AND APPROVALS. Except to the extent they have otherwise
been obtained on or prior to the Closing,
(a) No consent, approval or authorization of, or filing or
registration with, any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by Buyer or Parent in
connection with the execution, delivery and performance of this Agreement
and the Ancillary Agreements to which it is a party and the consummation of
the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement or the
Ancillary Agreements to which it is a party nor the consummation of the
transactions contemplated hereby or thereby will (i) violate any provision
of the Articles of Incorporation or Bylaws of either Buyer or Parent or
(ii) conflict with, or result (immediately or upon the giving of notice or
the passage of time or both) in any violation of or any default under, or
give rise to a right of modification, termination, cancellation or
acceleration of any obligation or to a loss of a benefit under, any
mortgage, indenture, lease, instrument, permit, concession, franchise,
license or other agreement which either the Buyer or Parent or its
properties or assets is a party to, beneficiary of, or bound by, or violate
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to either the Buyer or Parent or its properties or assets, other
than such conflicts, violations, or defaults or possible modifications,
terminations, cancellations or accelerations which individually or in the
aggregate do not and will not have a material adverse effect on the Buyer
or the Parent, taken as a whole.
4.7 FINANCIAL STATEMENTS. Buyer has delivered to Seller the unaudited
consolidated balance sheet, unaudited consolidated income statement, and
unaudited consolidated cash flow statement of Parent for the six month period
ended June 30, 1997 (the "Parent Financial Statements"). Each of the Parent
Financial Statements (i) fairly represents the financial position of Parent and
its consolidated subsidiaries as of each respective Parent Financial Statements
date, and the results of their operations for the respective periods indicated,
and (ii) were true and correct in all material respects as of the respective
dates thereof, subject to finalization of purchase accounting adjustments in
accordance with GAAP.
4.8 ASSUMED LIABILITIES. Buyer shall assume the Assumed Liabilities as
defined in Section 2.4 herein.
4.9 ABSENCE OF CERTAIN CHANGES. Since June 30, 1997, there have been no
(a) material adverse changes in the business, financial condition, assets,
operations or prospects of Parent, (b)
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amendments, modifications or terminations of any material contract applicable to
Parent, (c) any changes in the accounting methods or practices of Parent, (d)
any litigation or facts or circumstances that could result in litigation that,
if adversely determined, might reasonably be expected to have a material adverse
effect on Parent or on its business, financial condition or prospects, or (e)
other event or condition of any character that has or might reasonably be
expected to have a material adverse effect on the business, financial condition,
assets, operations or prospects of Parent.
4.10 CAPITALIZATION. The entire authorized capital stock, the issued and
outstanding shares and the treasury shares of the Parent is accurately set forth
in Schedule 4.10 together with the changes thereto contemplated by the
-------------
acquisition of the Sellers. All of the issued and outstanding shares of the
Parent have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the respective parties as set forth in
Schedule 4.10. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Parent to issue, sell, or
otherwise cause to become outstanding any of its capital stock except those set
forth in Schedule 4.10. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Parent except as set forth in Schedule 4.10. There are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of the Parent.
4.11 FULL DISCLOSURE. No representation or warranty of the Buyer or Parent
in this Article IV or in any other Article of this Agreement or in the Ancillary
Agreements to which it is a party or any schedule, exhibit, certificate or other
document furnished or to be furnished by the Buyer or Parent to the Seller
pursuant to this Agreement or any Ancillary Agreements to which it is a party,
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements made herein
or therein not misleading. To the best of Buyer and Parent's knowledge, there
are no facts or circumstances relating to the business, financial condition,
assets, operations or prospects of Buyer or Parent which adversely affect or
might reasonably be expected to adversely affect the business, financial
condition, assets or operations of Buyer or Parent, or the ability of Buyer or
Parent to perform this Agreement or the Ancillary Agreements to which it is a
party or any of Buyer or Parent's obligations thereunder.
ARTICLE V
COVENANTS OF THE PARTIES
------------------------
Buyer and Sellers covenant and agree as follows:
5.1 RECORD RETENTION. From and after the Closing, Buyer shall permit
Sellers, the Owners and their representatives the right, during normal business
hours, to inspect any documents, books, records or other information pertaining
to the Assets, the Businesses and/or the operations of the Sellers, the Buyer
and the Buyer's Affiliates to the extent reasonably necessary for any reason
whatsoever including, but not limited to, verification of the Purchase Price and
the Earnout. For a period of three (3) years following the Closing Date, Buyer
agrees
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not to destroy any files or records which are subject to this Section 5.1
without giving reasonable notice to the Sellers, and within fifteen (15)
business days of receipt of such notice, the Buyer may cause to be delivered to
Sellers the records intended to be destroyed, at the Sellers' expense.
5.2 BULK SALES. It may not be practicable to comply or attempt to comply
with the procedures of [Division 6] of the [New York] Commercial Code (the "New
York Bulk Sales Act"). Accordingly, to induce Buyer to waive any requirements
for compliance with any or all of such laws, Sellers hereby agree that except
for the Assumed Liabilities, the indemnity provisions of Article VII hereof
shall apply to any damages of Buyer arising out of or resulting from the failure
of Buyer or Sellers to comply with the New York Bulk Sales Laws, to the extent
if any that such laws are applicable to the transactions contemplated by this
Agreement.
5.3 TERMINATION OF EMPLOYMENT OF EITHER SELLER'S EMPLOYEES. Buyer agrees
that it shall extend an offer of employment to all of the Employees of each
Seller on substantially the same terms and conditions as the Employees currently
are employed by such Seller. Each Seller agrees to use its best efforts to make
available the Employees to the Buyer. Nothing shall prohibit Buyer from
terminating any of either Seller's Employees subsequent to their employment by
Buyer.
5.4 NAME CHANGE AND REQUALIFICATION DOCUMENTS. At or promptly after the
Closing, (i) EPD will execute, deliver and file, or cause to be executed,
delivered and filed, all necessary or reasonably requested amendments to EPD's
articles of incorporation, and such other documents as may be required to change
EPD's name to "EPD Liquidating Company", and (ii) EPD Temp will execute, deliver
and file, or cause to be executed, delivered and filed, all necessary or
reasonably requested amendments to EPD Temp's articles of incorporation, and
such other documents as may be required to change EPD Temp's name to "EPD Temp
Liquidating Company, LLC" In addition, Sellers hereby consent to an Affiliate of
Buyer incorporating or changing its corporate name to "Xxxxxx X. Dine, Inc.",
"Xxxxxx X. Dine Temporary Attorneys, L.L.C.", or any name substantially similar
thereto, or filing such assumed name certificates as Buyer deems reasonable,
necessary or appropriate. In addition, at or prior to Closing, Sellers and its
Affiliates shall execute and deliver such assignments, terminations and
cancellations of assumed and trade names as Buyer may request. Sellers shall
cooperate with Buyer in connection with all filings relating to the use of
Sellers' name or names and with any filings that Buyer may desire to make in
order to effect such name change or otherwise protect such name.
ARTICLE VI
THE CLOSING
6.1 CLOSING. Payment of the Purchase Price required to be made by the
Buyer to the Sellers and the transfer of the Assets by the Sellers and the other
transactions contemplated hereby shall take place on the Closing Date at the
offices of Xxxxx, Xxxxx & Xxxxxx Incorporated, 0 Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000 or by fax or express delivery unless the time or location
is changed by mutual agreement of the Parties. At the Closing, (a) the Sellers
will deliver
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to the Buyer the various certificates, instruments, and documents referred to in
Section 6.2 below, (b) the Buyer will deliver to the Sellers the various
certificates, instruments, and documents referred to in Section 6.3 below, and
(c) the Buyer will deliver to the Sellers the Purchase Price specified in
Section 2.3 above.
6.2 CONDITIONS TO OBLIGATIONS OF THE BUYER. The obligation of the Buyer to
proceed with the Closing and consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties of each Seller hereunder shall
be true and correct in all material respects at and as of the Closing Date;
(b) each Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, or (iii) affect adversely in any material
respect the rights in and to the Assets (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(d) the Sellers shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in Section 6.2(a) -
(c) is satisfied in all respects;
(e) the Buyer shall have received from counsel to the Sellers an
opinion in form and substance acceptable to Buyer, addressed to the Buyer,
and dated as of the Closing Date containing such assumptions and
qualifications as may be reasonably acceptable to Buyer's legal counsel;
(f) Xxxxxx, individually, shall have entered into a separate
Employment Agreement with Buyer in a form reasonably acceptable to Buyer
(the "Xxxxxx Employment Agreement");
(g) Xxxxxx, individually, shall have entered into a separate
Employment Agreement with Buyer in a form acceptable to Buyer (the "Xxxxxx
Employment Agreement");
(h) The Sellers shall have delivered to Buyer instruments of
assignment and transfer or bills of sale signed by Sellers as the Buyer
shall reasonably request, including the Xxxx of Sale in a form reasonably
acceptable to Buyer and its counsel (the "Xxxx of Sale");
(i) The Sellers shall have delivered to Buyer affidavits or other
reliable evidence reasonably satisfactory to Buyer and its counsel of
Seller's authority to sell the Assets;
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(j) The Sellers shall have each entered into a certain First Amended
and Restated Shareholders' Agreement dated as of May 14, 1997 (the
"Shareholders' Agreement") on terms and conditions reasonably satisfactory
to Buyer and its counsel;
(k) Xxxxx X. Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Buyer and its counsel;
(l) Xxxxx X. Xxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Buyer and its counsel;
(m) Xxxxxxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Buyer and its counsel;
(n) Xxxxx Xxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Buyer and its counsel;
(o) Xxxxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Buyer and its counsel;
(p) Each Seller shall have entered into with Parent a Registration
Rights Agreement in a form similar to those previously entered into by
similarly situated shareholders of Parent and reasonably acceptable to
Buyer and its counsel (the "Registration Rights Agreement");
(q) Sellers shall have each entered into a Stock Pledge Agreement in
a form reasonably acceptable to Buyer and its counsel (the "Stock Pledge
Agreement");
(r) Sellers shall have delivered to Buyer all other items required or
requested to be delivered hereunder, including the Subordination
Agreements, such requested items to be reasonably necessary or reasonably
appropriate to facilitate consummation of the transactions contemplated
hereby; and
(s) All actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
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The Buyer may waive any condition specified in Section 6.2 if it executes a
writing so stating at or prior to the Closing Date.
6.3 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of the Sellers
to proceed with Closing and consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the following
conditions:
(a) the representations and warranties of Buyer and Parent hereunder
shall be true and correct in all material respects at and as of the Closing
Date;
(b) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, or
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(d) each of Buyer and Parent shall have delivered to the Sellers a
certificate to the effect that each of the conditions applicable to it
which are specified above in Section 6.3(a)-(c) is satisfied in all
respects;
(e) the Sellers shall have received from counsel to the Buyer an
opinion in form and substance acceptable to Sellers, addressed to the
Sellers, and dated as of the Closing Date containing such assumptions and
qualifications as may be reasonably acceptable to Sellers' legal counsel;
(f) the Buyer shall have paid the Purchase Price required by Section
2.3, including delivery of the Note and issuance by Parent of the Parent
Shares;
(g) the Buyer shall have entered into the Xxxxxx Employment Agreement
in a form reasonably acceptable to Sellers and their legal counsel;
(h) the Buyer shall have entered into the Xxxxxx Employment Agreement
in a form reasonably acceptable to Sellers and their legal counsel;
(i) the Buyer shall have entered into the Shareholders' Agreement
with Sellers in a form reasonably acceptable to Sellers and their legal
counsel;
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(j) The Buyer shall have caused Parent to enter into the Registration
Rights Agreement with Sellers in a form similar to those previously entered
into by similarly situated shareholders of Parent;
(k) The Buyer shall have entered into the Stock Pledge Agreement in a
form reasonably acceptable to Sellers and their legal counsel;
(l) Xxxxx X. Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to Sellers and their legal counsel;
(m) Xxxxx X. Xxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Sellers and their legal counsel;
(n) Xxxxxxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Sellers and their legal counsel;
(o) Xxxxx Xxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Sellers and their legal counsel;
(p) Xxxxxx Xxxxxx shall have entered into an Assumption of
Obligations and a Stock Option Agreement on terms and conditions reasonably
acceptable to the Sellers and their legal counsel; and
(q) All actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby, and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Sellers.
The Sellers may waive any condition specified in this Section 6.3 if each Seller
executes a writing so stating at or prior to the Closing.
6.4 INSURANCE, CONTRACTS AND AD VALOREM TAXES. The Buyer shall be
obligated to make all premium payments necessary to continue the existing
insurance on the Businesses commencing as of the Effective Date, and Sellers
shall cooperate with Buyer in: (i) continuing such insurance in effect also
naming Buyer as an additional loss payee for such time as may be reasonably
necessary until Buyer can procure its own insurance which Buyer shall use
commercially reasonable efforts to procure, (ii) pursuing any claims thereunder,
and (iii) in assigning and delivery to Buyer any proceeds payable thereunder.
Buyer shall indemnify and hold harmless Sellers from any Damages (as
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hereinafter defined) as a result of Sellers continuing such insurance in effect
for the Buyer. Buyer shall refund to Sellers any insurance premium payments that
have been prepaid, and any other amounts which have been prepaid, including a
pro rata refund of any amounts in respect of Contracts which cover periods
subsequent to the Effective Date. Sellers shall reimburse Buyer any amounts that
Buyer is required to pay in respect of Contracts which cover periods prior to
Effective Date. With regard to ad valorem taxes on the Assets for the 1997 tax
year, the Sellers and the Buyer agree that the taxes to be paid shall be
prorated as of the Effective Date.
6.5 FURTHER ASSURANCES. At and after the Closing, each of the Parties
shall take all appropriate action and execute all documents of any kind which
may be reasonably necessary or desirable to carry out the transactions
contemplated hereby. The Sellers, at any time at or after the Closing, will
execute, acknowledge and deliver any further bills of sale, assignments and
other assurances, documents and instruments of transfer, reasonably requested by
the Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by the Buyer, for the purpose of
assigning and confirming to the Buyer, all of the Assets. The Buyer shall notify
the Sellers promptly, and in no event more than ten (10) business days after the
Buyer's receipt, of any tax inquiries or notifications thereof which relate to
any period prior to the Effective Date, and the Sellers shall prepare and
deliver responses to such inquiries as the Sellers deem necessary or
appropriate. In addition, the Sellers shall make available the books and records
of the Businesses during reasonable business hours and take such other actions
as are reasonably requested by the Buyer to assist the Buyer in the operation of
the Businesses.
6.6 CONFIDENTIAL INFORMATION. After the Closing and except as otherwise
specifically permitted in this Agreement, each party to this Agreement agrees,
on behalf of itself and its Affiliates, to use reasonable efforts not to
divulge, communicate, use to the detriment of any other party to this Agreement
or its Affiliates or for the benefit of any other person or persons, any
confidential information or trade secrets of such other party with respect to
the Assets or the Businesses, including personnel information, secret processes,
know-how, customer lists, formulae, or other technical data; provided, if any
party to this Agreement or any of its Affiliates is compelled to disclose such
information to any tribunal, regulatory or governmental authority or agency or
else stand liable for contempt or suffer other censure and penalty, such party
may so disclose such information without any liability hereunder.
6.7 ASSIGNMENT OF CONTRACTS. On or before the Effective Date, each Seller
shall have delivered to Buyer all of the Contracts presently in force and shall
have used commercially reasonable efforts to effect a valid assignment of all of
each Seller's rights and obligations thereunder.
6.8 ACCOUNTS RECEIVABLE. In the event that Buyer collects any of the
Accounts Receivable other than the Net Trade Accounts Receivable, Buyer shall
promptly remit such collections to Sellers on a weekly basis. In the event that
Sellers collect any of the Net Trade Accounts Receivable, Sellers shall promptly
remit such collections to Buyer on a weekly basis. Buyer shall have the right
after the expiration of sixty (60) days after the Effective Date to furnish
written notice to Sellers as to any Net Trade Accounts Receivable that are
remaining unpaid. Within five (5) days after its receipt of such written notice,
Sellers shall remit to Buyer an amount of cash equal to
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such shortfall in collections by Buyer on the Net Trade Accounts Receivable, at
which time Buyer shall assign all unpaid Net Trade Accounts Receivable to
Sellers. Any collections on such uncollected Net Trade Accounts Receivable
collections that have been assigned to Sellers shall be for the Sellers'
account, and Buyer shall promptly remit such collections it receives to Sellers
on a weekly basis. The provisions of Section 7.1E shall not be applicable to any
shortfall in Net Trade Accounts Receivable Collections.
ARTICLE VII
INDEMNIFICATION
---------------
7.1 INDEMNIFICATION.
A. BY THE SELLERS AND SELLERS' SHAREHOLDERS. Subject to Section
7.1(E) hereof, each Seller and each Owner, jointly and severally, (collectively
herein "Sellers Indemnitors") shall indemnify, save, defend and hold harmless
the Buyer and Buyer's shareholders and the directors, officers, partners, agents
and employees of each (collectively, the "Buyer Indemnified Parties") from and
against any and all costs, lawsuits, losses, liabilities, deficiencies, claims
and expenses, including interest, penalties, attorneys' fees and all amounts
paid in investigation, defense or settlement of any of the foregoing
(collectively referred to herein as "Damages"), (i) incurred in connection with
or arising out of or resulting from or incident to any breach of any covenant,
breach of warranty as of the Effective Date, or the inaccuracy of any
representation as of the Effective Date, made by either Seller in or pursuant to
this Agreement or any other agreement contemplated hereby or in any schedule,
certificate, exhibit, or other instrument furnished or to be furnished by either
Seller or its Affiliates under this Agreement, or (ii) based upon, arising out
of, or otherwise in respect of any liability or obligation of the Business or
relating to the Assets relating to any period prior to the Effective Date, other
than those Damages based upon or arising out of the Assumed Liabilities;
provided, however, that neither Seller shall be liable for any such Damages to
the extent, if any, such Damages result from or arise out of a breach or
violation of this Agreement by any Buyer Indemnified Parties.
B. BY THE BUYER AND THE PARENT. Subject to Section 7.1(E) hereof,
the Buyer and Parent shall indemnify, save, defend and hold harmless each
Seller, each Seller's successors in interest or heirs, Xxxxxx and Xxxxxx and
their respective heirs and personal representatives (collectively, the "Sellers
Indemnified Parties") from and against any and all Damages (i) incurred in
connection with or arising out of or resulting from or incident to any breach of
any covenant , breach of warranty as of the Effective Date, or the inaccuracy of
any representation as of the Effective Date, made by the Buyer and/or Parent in
or pursuant to this Agreement or any other agreement contemplated hereby or in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by the Buyer and/or Parent under this Agreement, or (ii) based upon,
arising out of or otherwise in respect of any liability or obligation of the
Business or relating to the Assets (a) relating to any period on and after the
Effective Date, other than those Damages based upon or arising out of the
liabilities or obligations of the Businesses occurring on or accruing as of the
Effective Date other than Assumed Liabilities (the "Retained Liabilities"), or
(b) arising out of facts or circumstances existing on and after the Effective
Date, other than those Damages based upon or
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arising out of the Retained Liabilities; provided, however, that neither Buyer
nor Parent shall be liable for any such Damages if such Damages result from or
arise out of a breach or violation of this Agreement by any Sellers Indemnified
Parties.
C. DEFENSE OF CLAIMS. If any lawsuit or enforcement action is filed
against any Party entitled to the benefit of indemnity hereunder, written notice
thereof describing such lawsuit or enforcement action in reasonable detail and
indicating the amount (estimated, if necessary) or good faith estimate of the
reasonably foreseeable estimated amount of Damages (which estimate shall in no
way limit the amount of indemnification the indemnified Party is entitled to
receive hereunder), shall be given to the indemnifying Party as promptly as
practicable (and in any event within ten (10) days, after the service of the
citation or summons) ("Notice of Action"); provided that the failure of any
indemnified Party to give timely notice shall not affect its rights to
indemnification hereunder to the extent that the indemnified Party demonstrates
that the amount the indemnified Party is entitled to recover exceeds the actual
damages to the indemnifying Party caused by such failure to so notify within ten
(10) days and so long as the indemnifying Party is not materially prejudiced by
the failure to receive such notice. The indemnifying Party may elect to
compromise or defend any such asserted liability and to assume all obligations
contained in this Section 7.1 to indemnify the indemnified Party by a delivery
of notice of such election ("Notice of Election") within ten (10) days after
delivery of the Notice of Action. Upon delivery of the Notice of Election, the
indemnifying Party shall be entitled to take control of the defense and
investigation of such lawsuit or action and to employ and engage attorneys of
its own choice to handle and defend the same, at the indemnifying Party's sole
cost, risk and expense, and such indemnified Party shall cooperate in all
reasonable respects, at the indemnifying Party's sole cost, risk and expense,
except with respect to the fees and expenses of the indemnified Party's
attorney, which shall be borne by the indemnified Party, with the indemnifying
Party and such attorneys in the investigation, trial, and defense of such
lawsuit or action and any appeal arising therefrom; provided, however, that the
indemnified Party may, at its own cost, risk and expense, participate in such
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. If the Notice of Election is delivered to the indemnified
Party, the indemnified Party shall not pay, settle or compromise such claim
without the indemnifying Party's consent, which consent shall not be
unreasonably withheld. If the indemnifying Party elects not to defend the claim
of the indemnified Party or does not deliver to the indemnified Party a Notice
of Election within ten (10) days after delivery of the Notice of Action, the
indemnified Party may, but shall not be obligated to defend, provided that in no
circumstance shall the indemnified Party compromise or settle the claim or other
matter on behalf or for the account of the indemnifying Party without the
consent of the indemnifying Party, which shall not be unreasonably withheld.
D. THIRD PARTY CLAIMS. The provisions of this Section 7.1 are not
limited to matters asserted by the Parties, but cover Damages incurred in
connection with third party claims. The indemnity hereunder is in addition to
any and all rights and remedies of the Parties in connection herewith.
E. LIMITATION ON INDEMNIFICATION. Notwithstanding the other
provisions of this Section 7.1, Sellers Indemnitors shall not be liable to Buyer
Indemnified Parties, and Buyer and Parent shall not be liable to Sellers
Indemnified Parties, for the first $100,000 in aggregate Damages
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suffered by such indemnified Parties; provided, however, that once any such
indemnified Parties have suffered Damages aggregating in excess of $100,000, the
indemnifying Party shall reimburse the indemnified Parties for the full amount
of such Damages, including only $50,000 of the first $100,000 in Damages
initially excluded. In no event shall the aggregate Damages payable by an
indemnifying Party to indemnified Parties exceed the Purchase Price.
Notwithstanding anything to the contrary contained herein, the provisions of
this Section 7.1E shall not be applicable to any of the provisions contained in
Article II of this Agreement nor to Sections 4.4, 4.10, or 6.8 of this
Agreement.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements contained in this
Agreement shall survive the Closing hereunder and continue in full force and
effect for two (2) years thereafter.
ARTICLE VIII
REMEDIES
--------
8.1 SPECIFIC PERFORMANCE; REMEDIES. Each of the Parties hereby agrees
that the transactions contemplated by this Agreement are unique, and that each
Party shall have, in addition to any other legal or equitable remedy available
to it, the right to enforce this Agreement by decree of specific performance. If
any legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing Party or Parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or proceeding
in addition to any other remedies to which it, he or they may be entitled at law
or equity. The rights and remedies granted herein are cumulative and not
exclusive of any other right or remedy granted herein or provided by law.
8.2 OFFSET; REMEDIES. To the extent not otherwise prohibited by
applicable law, (i) all amounts due and owing by the Buyer to the Sellers under
this Agreement, the Note, the Parent Shares, the Earnout or any document,
instrument, or agreement executed in connection herewith, except for the Xxxxxx
Employment Agreement and the Xxxxxx Employment Agreement shall be subject to
offset by the Buyer to the extent of any Damages incurred by Buyer that have
triggered an indemnification obligation of either Seller under Section 7.1.A. In
the event Buyer elects to offset any such Damages, Buyer shall furnish the
applicable Seller notice containing detailed information with respect to such
Damages, the specific obligation of such Seller that triggered such Damages and
such other information as may be reasonably appropriate in respect of such
Seller's consideration of such claim (an "Offset Claim"). The applicable Seller
shall have twenty (20) days after receipt of such information to dispute any
such Offset Claim, and shall so notify Buyer of the basis for such dispute. If
the Parties are unable to resolve such dispute within fifteen (15) days, the
Offset Claim shall be submitted to arbitration, as further described in Section
9.14. If the applicable Seller agrees to pay such Offset Claim or fails to
contact Buyer within such twenty (20) day period, and pending final resolution
of any Offset Claim which has been submitted to arbitration, the offset shall be
applied as follows (the act of offsetting by Buyer shall be referred to as an
"Offset"): (a) First against the Note until the full amount of Note, both
principal and interest, has been repaid, (b) then, against the Earnout; and (c)
then against the Parent Shares. In order to secure the Buyer's offset rights
against
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the Parent Shares, Buyer and Sellers shall execute the Stock Pledge Agreement.
Upon issuance, the Parent Shares shall have a restrictive legend typed on the
back thereof specifying that the Parent Shares are subject to a right of offset
as specified in this Agreement. The Sellers acknowledge and agree that but for
the right of Offset contained in this Agreement, the Buyer would not have
entered into this Agreement or any of the transactions contemplated herein.
Notwithstanding anything contained herein to the contrary, the offset rights of
Buyer hereunder shall terminate in the manner set forth in Section 7.2.
ARTICLE IX
MISCELLANEOUS
9.1 FEES. Except as expressly set forth herein to the contrary, each
Party shall be responsible for all costs, fees and expenses (including attorney
and accountant fees and expenses) paid or incurred by such Party in connection
with the preparation, negotiation, execution, delivery and performance of this
Agreement, or otherwise in connection with the transaction contemplated hereby.
9.2 MODIFICATION OF AGREEMENT. This Agreement may be amended or modified
only in writing signed by all of the Parties.
9.3 NOTICES. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or telefaxed with receipt of
transmission confirmed during regular business hours during a business day to
the appropriate location described below, or three (3) business days after
posting thereof by United States first-class, registered or certified mail,
return receipt requested, with postage and fees prepaid and addressed as
follows:
IF TO SELLERS: Xxxxxx X. Dine, Inc.
Attn: Xx. Xxxxxx Xxxxxx, President
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
Telefax: (000)000-0000
Xxxxxx X. Dine Temporary Attorneys, L.L.C.
Attn: Xx. Xxxxxx Xxxxxx, President
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
Telefax: (000)000-0000
IF TO XXXXXX: Xx. Xxxxxx X. Xxxxxx
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000)000-0000
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Telefax: (000)000-0000
Copy to: Xxxxxx X. Xxxxx
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
IF TO XXXXXX: Xx. Xxxxxx Xxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000)000-0000
Copy to: Xxxxxx X. Xxxxxxxxxx
000 0/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
IF TO BUYER: Litigation Resources of America-Northeast, Inc.
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chief Executive Officer
Telephone: (000) 000-0000
Telefax: (000) 000-0000
IF TO PARENT: Litigation Resources of America, Inc.
0000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Copy to: J. Xxxxxxxx Xxxxx
Xxxxx, Xxxxx & Xxxxxx Incorporated
Nine Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Any addressee at any time by furnishing notice to the other addressees in the
manner described above may designate additional or different addresses for
subsequent notices or communications.
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9.4 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not invalidate or affect the enforceability of any other
provision of this Agreement.
9.5 ENTIRE AGREEMENT; BINDING EFFECT. This Agreement and any Ancillary
Agreements set forth the entire agreement among the Parties with respect to the
subject matter hereof. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and assigns.
9.6 WAIVER. No delay in the exercise of any right under this Agreement
shall waive such rights. Any waiver, to be enforceable, must be in writing.
9.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
9.8 ASSIGNMENT. The Sellers shall not assign this Agreement or any
interest herein except to the Owners or their Permitted Transferees (as defined
in the Shareholders Agreement) in which event the Sellers shall remain
secondarily liable. Notwithstanding the preceding sentence, the Sellers may
assign all or part of the Earnout to the Owners and/or to any Employees which at
the time of the assignment are employed by Buyer and any Permitted Transferees
of an Owner or such Employee. Buyer shall not be permitted to assign this
Agreement except in connection with the sale or other transfer of all or
substantially all of the business of the EPD Division of the Company or the EPD
Temp Division of the Company.
9.9 HEADINGS. Headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
9.10 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached to this
Agreement or to be delivered by the Sellers, upon review and approval by the
Buyer, are and shall be hereby incorporated in and made a part of this
Agreement. All Schedules to this Agreement must be delivered no later than four
(4) days prior to Closing, in order to provide the Buyer ample time to review
and evaluate the items described therein and disclosed thereby. Although the
Schedules remain subject to the review and approval of the Buyer, no such review
or approval shall constitute a waiver by the Buyer of any breach or default
caused by the inaccuracy or incompleteness of any Schedule, the accuracy and
completeness of the Schedules being the sole responsibility of the Sellers.
9.11 RIGHTS AND LIABILITIES OF PARTIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the Parties and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
Party to this Agreement, nor shall any provision give any third person any right
of subrogation or action over against any Party to this Agreement.
9.12 SURVIVAL. Subject to Section 7.2, this Agreement, including but not
limited to all covenants, warranties, representations and indemnities contained
herein, shall survive the Closing,
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and the Xxxx of Sale and all other documents, instruments or agreements relating
to the Assets and the transactions contemplated herein shall not be deemed
merged therein.
9.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which shall constitute one and the same agreement.
9.14 ARBITRATION. If a dispute arises out of or relates to this Agreement,
or the breach thereof, and if such dispute cannot be settled through
negotiation, the Parties agree first to try in good faith to settle the dispute
by mediation under the Commercial Mediation Rules of the American Arbitration
Association, before resorting to arbitration, litigation, or some other dispute
resolution procedure as required by this Section 9.14. Failing an adequate
resolution by mediation, any controversy or claim arising out of or relating to
this Agreement or the transactions contemplated hereby, including any
controversy or claim arising out of or relating to the Parties' decision to
enter into this Agreement, shall be settled by binding arbitration. There shall
be one arbitrator to be mutually agreed upon by the Parties involved in the
controversy and to be selected from the National Panel of Commercial Arbitrators
(or successor panel, if any). If within 45 days after service of the demand for
arbitration the Parties are unable to agree upon such an arbitrator who is
willing to serve, then an arbitrator shall be appointed by the American
Arbitration Association in accordance with its rules. Except as specifically
provided in this Section 9.14, the arbitration shall be conducted in accordance
with the Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator shall not render an award of punitive damages. Any arbitration
hereunder shall be held in New York, New York. Expenses related to the
arbitration, including counsel fees, shall be borne by the Party incurring such
expenses, unless the arbitrator determines another allocation is more equitable.
The fees of the arbitrator and of the American Arbitration Association, if any,
shall be divided equally among the Parties involved in the controversy, unless
the arbitrator determines another allocation is more equitable. Judgment upon
the award rendered by the arbitrator (which may, if deemed appropriate by the
arbitrator, include equitable or mandatory relief with respect to performance of
obligations hereunder) may be entered in any court of competent jurisdiction.
Nothing in this Section 9.14 shall restrict any Parties' ability to seek
injunctive or other equitable relief in any court of competent jurisdiction
prior to initiating mediation or arbitration. In the event that such injunctive
or equitable relief is sought by any Party, such Party is specifically entitled
to enforce the appropriate provisions of the Agreement in obtaining such relief
in any court of competent jurisdiction and, thereafter, submit the remaining
controversy, dispute or claim to arbitration in accordance with this Section.
Any proceeding for such injunctive or other equitable relief shall be held in
New York, New York.
9.15 DRAFTING. All Parties hereto acknowledge that each Party was actively
involved in the negotiation and drafting of this Agreement and that no law or
rule of construction shall be raised or used in which the provisions of this
Agreement shall be construed in favor or against any Party hereto because one is
deemed to be the author thereof.
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IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement in multiple counterparts effective as of the date first written above.
BUYER:
------
LITIGATION RESOURCES OF AMERICA-
NORTHEAST, INC., a New York corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx, Chief Executive Officer
SELLERS:
--------
XXXXXX X. DINE, INC., a New York corporation
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
Title:President
XXXXXX X. DINE TEMPORARY ATTORNEYS, L.L.C.,
a New York limited liability company
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
Title: President
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------------
Xxxxxx Xxxxxx
Title: President
PARENT:
LITIGATION RESOURCES OF AMERICA, INC.,
a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx, Chief Executive Officer and
President
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XXXXXX:
-------
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------------
XXXXXX X. XXXXXX, Individually
XXXXXX:
-------
/s/ Xxxxxx Xxxxxx
--------------------------------------------------
XXXXXX XXXXXX, Individually
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Schedules:
2.1(a) Equipment
2.1(b) Contracts
2.1(c) Books and Records
2.1(e) Intellectual Property
2.1(g) General Intangibles
2.1(l) Art Work
2.2 Excluded Assets
2.3 Purchase Price
2.7 Allocation of Purchase Price
3.1 Encumbrances on Assets
3.7 Employment Contracts
3.9 Litigation
3.10 Breaches or Violations
3.12 Personnel
3.15 Employee Benefits
3.16(a) Certain Changes or Events
3.16(b) Certain Commitments
3.17 Consents and Approvals
3.21 Liens
3.22 Customers
3.23 Insurance Policies
3.24 Interest in Customers, Suppliers and Competitors
3.26 Organization
3.30 Severance Payments
3.31 Employees
3.34 Operations of Seller
3.35 Notes and Accounts Receivable
4.9 Capitalization
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