Contract
EXECUTION
COPY
PURCHASE
AGREEMENT dated
as
of July 6, 2007 by and among,
Innovative Health Strategies, Inc. (f/k/a IHS of SC, Inc.),
a South
Carolina corporation ("IHS"),
AWAC.MD, Inc., a South Carolina corporation ("AWAC"),
iProcert, LLC, a Georgia limited liability company ("iProcert",
and
together with IHS and AWAC, the "Companies",
and
each individually, a "Company"),
the
shareholders and members of the Companies listed on Schedule I hereto
(the
"Sellers",
and
each individually, a "Seller"),
inVentiv
Health, Inc., a Delaware corporation ("Parent"),
and
AWAC LLC,
a
Georgia limited liability company (“Purchaser”).
The
Companies, the Sellers, Parent and Purchaser are sometimes referred to herein
collectively as the "Parties"
and
each individually as a "Party."
WHEREAS,
the
Sellers own (i) all of the outstanding capital stock of IHS and AWAC and
(ii)
all of the membership interests of iProcert;
WHEREAS,
each
Seller desires to sell to Purchaser, and Purchaser is willing to purchase
from
such Seller, such capital stock and membership interests of IHS and iProcert,
respectively, subject to the terms and conditions of this
Agreement;
WHEREAS,
AWAC owns certain assets used in the operation of the Business;
WHEREAS,
AWAC desires to sell to Purchaser all of its assets, including its assets
used
in the operation of the Business;
WHEREAS,
in order to induce the Sellers and AWAC to enter into this Agreement, Parent
is
executing a guaranty of Purchaser’s obligations hereunder simultaneously with
the execution of this Agreement;
WHEREAS,
in order to induce Purchaser and Parent to enter into this Agreement, Xx.
Xxxx
X. Xxxxxxxx, Xx. ("Xx.
Xxxxxxxx")
is
entering into an employment agreement with IHS (the “Employment
Agreement”)
simultaneously with the execution of this Agreement; and
WHEREAS,
certain terms used in this Agreement are defined in Section 10.1.
NOW,
THEREFORE, in consideration of the mutual covenants, representations and
warranties made herein and other good and valuable consideration, the receipt
and sufficiency of which hereby are acknowledged, the Parties agree as
follows:
ARTICLE
I
PURCHASE
AND SALE TRANSACTION
Section
1.1. Purchase
and Sale Transaction.
(a) Sale
of Equity Securities.
On and
subject to the terms and conditions of this Agreement, at the closing of
the
transactions contemplated hereby (the “Closing”),
each
Seller will sell, assign, transfer and deliver to Purchaser, and Purchaser
will
purchase from such Seller, (i) the capital stock of IHS (the “Capital
Stock”)
and
(ii) the membership interests in iProcert (the “Membership
Interests”,
and
together with the Capital Stock, the “Equity
Securities”),
in
each case, set forth opposite such Seller's name on Schedule I hereto and
constituting all of the outstanding capital stock of IHS and all of the
membership interests in iProcert owned by such Seller.
(b) Sale
of AWAC Assets.
On and
subject to the terms and conditions of this Agreement, at the Closing, AWAC
will
sell, assign, transfer, convey, and deliver to Purchaser and Purchaser shall
purchase and acquire from AWAC, all right, title, and interest of AWAC in
and to
all of its assets, properties and rights of whatever kind, tangible and
intangible (including goodwill), whether accrued, contingent or otherwise,
including, without limitation, all of its assets, properties and rights used
in
the operation of the Business but excluding AWAC's minute books, corporate
seal
and similar items (collectively, the “AWAC
Assets”),
free
and clear from all Liens, other than Permitted Encumbrances, and Purchaser
shall
assume the AWAC Assumed Liabilities (as defined below in Section 1.10). At
the
Closing, the AWAC Assets shall be transferred or otherwise conveyed to Purchaser
free and clear of all Liens, other than Permitted Encumbrances, pursuant
to a
Xxxx of Sale, Assignment and Assumption Agreement in the form of Exhibit
A
(the
“Xxxx
of Sale”)
(c) Required
Consents.
Notwithstanding anything to the contrary in this Agreement, this Agreement
shall
not constitute an agreement to assign or transfer any AWAC Asset or interest
therein as to which (i) an assignment or transfer thereof or an attempt to
make
such an assignment or transfer without a Consent (a “Required
Consent”)
would
constitute a breach or violation thereof or of applicable Law, or would
adversely affect the rights or obligations thereunder to be assigned or
transferred to or for the account of Purchaser and (ii) all such Required
Consents shall not have been obtained with respect to such AWAC Asset or
interest therein prior to the Closing. Any transfer or assignment to Purchaser
by AWAC of any such AWAC Asset or interest therein (a “Delayed
Asset”),
and
any assumption by Purchaser of any corresponding Assumed AWAC Liability (a
“Delayed
Liability”),
shall
be made subject to all such Required Consents in respect of such Delayed
Asset
being obtained. If there are any Delayed Assets, AWAC shall use its reasonable
best efforts to obtain all Required Consents in respect thereof as promptly
as
practicable following the Closing, and shall obtain such Required Consents
without any further cost to Purchaser or any of its Affiliates. Until all
Required Consents with respect to each Delayed Asset have been obtained,
(a)
AWAC shall hold the Delayed Asset on behalf of Purchaser, (b) AWAC shall
cooperate with Purchaser for no additional consideration in any lawful
arrangement (including subleasing or subcontracting, or performance thereunder
by AWAC as Purchaser’s agent) to provide Purchaser with all of the benefits of
or under any such Delayed Asset, (c) to the extent of any benefits received
by
or for the account of Purchaser under clause (b) above, Purchaser shall assume
and perform any corresponding Delayed Liabilities and (d) AWAC shall otherwise
enforce and perform for the account of Purchaser and as directed by Purchaser
any other rights of AWAC arising from such Delayed Asset. At such time and
on
each occasion after the Closing Date as all Required Consents with respect
to a
Delayed Asset have been obtained, such Delayed Asset shall automatically
be
transferred and assigned by AWAC to Purchaser for no additional consideration
without the need for any further act on the part of any Party.
Section
1.2. Purchase
Price; Allocation.
(a) On
the
Closing Date (as defined below): (i) the Net Closing Amount shall be paid
by
electronic funds transfer to an account specified in writing by the
Representative to Purchaser no later than three business days prior to the
Closing for allocation among the Sellers, AWAC and the participants in the
Phantom Equity Plan in accordance with Schedule I to this Agreement and Schedule
I to the Phantom Equity Plan, (ii) Purchaser shall cause to be delivered
to the
transfer agent (the "Transfer
Agent")
for
the common stock, par value $0.001 per share, of Parent (“Parent
Common Stock”)
irrevocable instructions to issue in the names of Sellers, AWAC and the
participants in the Phantom Equity Plan (allocated in accordance with Schedule
I
to this Agreement and Schedule I to the Phantom Equity Plan, as set forth
in
written instructions from the Representative to Purchaser) a number of
unregistered shares of Parent Common Stock equal to the quotient of (x)
[***] divided
by (y) the Fair Market Value of one share of Parent Common Stock as of the
Closing Date (the
“Initial
Shares”),
(iii)
Purchaser shall deliver [***] (the "Escrowed
Cash")
to The
Bank of New York, as escrow agent (the "Escrow
Agent"),
and
shall cause the Transfer Agent to deliver the Initial Shares to the Escrow
Agent, pursuant to an escrow agreement (the "Escrow
Agreement"),
in
substantially the form annexed hereto as Exhibit
B.
The
Escrowed Cash and the Initial Shares shall be held in escrow until the
[***] anniversary of
the
Closing Date as more fully set forth in the Escrow Agreement. The consideration
specified in the second preceding sentence (as the same may be adjusted in
accordance with Section 1.4) and the amounts payable or distributable to
Sellers, AWAC and the participants in the Phantom Equity Plan pursuant to
Section 1.5 is referred to as the "Purchase
Consideration"
and the
aggregate amount of the Purchase Consideration is referred to herein as the
"Purchase
Price".
Except
as set forth in the Phantom Equity Plan, neither any Seller nor AWAC shall
pay
or transfer any portion of the Purchase Price or any rights therein to any
Person who provides services to the Business at the time of or at any time
following the Closing. Consideration provided pursuant to the Phantom Equity
Plan is fully vested as of the date hereof. Such consideration is not in
lieu
of, and shall not reduce, any compensation to which the participants are
entitled in respect of services and shall be made at the times provided for
in
the Phantom Equity Plan irrespective of whether such beneficiaries continue
to
render services to the any of the parties hereto or their
affiliates.
(b)
On the
Closing Date, IHS shall have adopted the Closing Date Bonus Plan and shall
make
the Closing Date payments provided for under such plan. Payments pursuant
to the
Closing Date Bonus Plan are fully vested as of the date hereof in respect
of
pre-Closing services provided by the beneficiaries of the Closing Date Bonus
Plan. Such payments are not in lieu of any other compensation to which the
beneficiaries are entitled in respect of services and shall be made at the
times
provided for in the Closing Date Bonus Plan irrespective of whether such
beneficiaries continue to render services to the any of the parties hereto
or
their affiliates. Neither any Seller nor AWAC shall provide any consideration
to
any Person who provides services to the Business at the time of or at any
time
following the Closing in respect of services related, directly or indirectly,
to
the Business.
(c) Three
(3)
business days prior to the Closing Date, the Representative shall prepare
and
deliver to Purchaser (i) a good faith estimated unaudited balance sheet of
the
Companies as of the Closing Date determined in accordance with GAAP and (ii)
a
statement setting forth (A) Estimated Closing Working Capital Amount, (B)
the
estimated Indebtedness as of the Closing Date (“Estimated
Indebedness”)
and
(C) a schedule (the “Closing
Transaction Expense Schedule”)
setting forth a good faith, itemized estimate (“Estimated
Transaction Expenses”)
of all
Transaction Expenses.
(d)
The
portion of the Purchase Price allocable to each of AWAC and iProcert shall
be
allocated among the AWAC Assets and the assets of iProcert, respectively, in the
manner required by Section 1060 of the Code and regulations thereunder.
Purchaser shall deliver to Seller an initial draft of such allocation (the
"Purchase
Price Allocation"),
and
an allocation of the Purchase Price among the Companies (the "Entity
Allocation"),
within seventy five (75) days after the Closing. Purchaser and Seller shall
work
together in good faith and shall agree on final allocations within sixty
(60)
days after delivery of the initial draft by Purchaser. The portion of the
Purchase Price, if any, allocated to one or more covenants set forth in a
Transaction Document shall not be offered by any Party as evidence, or otherwise
taken into account, in connection with a determination of the damages arising
from a breach of any such covenant. Purchaser, on the one hand, and Sellers
or
AWAC, as applicable, on the other, shall file on a timely basis with the
IRS
substantially identical initial and supplemental IRS Forms 8594 consistent
with
such allocations and which gives effect to any adjustment of the Purchase
Price
determined in accordance with Section 1.4 hereof or any amounts payable or
distributable to Sellers pursuant to Section 1.5 below. Purchaser, on the
one
hand, and Sellers and AWAC, on the other, agree, for all Tax purposes, to
report
the transactions effected pursuant to the Transaction Documents in a manner
consistent with the terms of this Agreement (including the Entity Allocation
and
Purchase Price Allocation agreed upon by Purchaser, Sellers and AWAC pursuant
to
this Section 1.2(c)) and none of them shall take a position on any Tax return,
before any Tax authority or in any judicial proceeding that is, in any manner,
inconsistent with such allocation without the consent of the others or unless
specifically required pursuant to a determination by an applicable Tax
authority. The Parties shall promptly advise one another of the existence
of any
Tax audit, controversy or litigation related to any allocation
hereunder.
Section
1.3. Closing
Date.
Subject
to the satisfaction of the conditions set forth in this Section 1.3 and Sections
6.1 and 6.2 (or the waiver thereof by the Party entitled to waive such
conditions), the Closing shall take place at the offices of Akerman Senterfitt
LLP, 000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000. The Closing
shall
be effective as of 12:01 a.m. on July 1, 2007 (the “Closing
Date”).
On
July 6, 2007, as part of the Closing, (i) each Seller will deliver to Purchaser
such evidence of ownership of the Equity Securities by such Seller, as is
reasonably satisfactory to Purchaser accompanied by a duly executed stock
power
or assignment, as applicable, assigning such Equity Securities to Purchaser
and
otherwise in good form for transfer, (ii) Purchaser shall deliver the Purchase
Consideration in accordance with Section 1.2 and (iii) the Parties shall
make
the deliveries described in Article VI. Purchaser shall not be required to
purchase any Equity Securities or the AWAC Assets unless all Equity Securities
and the AWAC Assets are properly tendered in accordance with the terms of
this
Agreement.
Section
1.4. Purchase
Price Adjustment.
The
Purchase Price shall be subject to adjustment after the Closing Date as follows:
(a) Within
60
days after the Closing Date, Purchaser shall prepare and deliver to the
Representative a statement (the “Closing
Statement”)
(i)
setting forth the amount of Indebtedness as of the Closing Date (“Closing
Indebtedness”)
and
the amount of Transaction Expenses as determined by Purchaser (“Closing
Transaction Expenses”)
and
(ii) calculating the Working Capital (as defined below) of the Business,
in the
aggregate, as of the Closing Date (the “Closing
Working Capital Amount”).
For
purposes of this Agreement, “Working
Capital”
shall
mean the current assets of the Companies as of the Closing Date (including
accounts receivable (net of allowance for doubtful accounts and restricted
cash)
and work in process), exclusive of deferred tax assets, less (x) the current
liabilities of the Companies as of the Closing Date (including all GAAP
accruals, whether or not traditionally reflected on the Companies' balance
sheet
as a current liability), (y) the total of all amounts payable under the Closing
Date Bonus Plan and (z) all other Liabilities of the Companies as of the
Closing
Date, but excluding the Indebtedness (including the current portion thereof)
and
all other Excluded Liabilities (except to the extent IHS or iProcert is liable
therefor), and shall be calculated in accordance with GAAP and the accounting
policies and procedures employed in the preparation of Parent's publicly
filed
financial statements. Purchaser shall provide the Representative, and a single
accounting firm for the Representative, reasonable access to all (i) work
papers
and written procedures used to prepare the Closing Statement and (ii) Books
and
Records and personnel to the extent reasonably necessary to enable the
Representative and such accounting firm to conduct a sufficient review of
the
Closing Statement and verify the statements and calculations reflected thereon.
If the Representative disputes any amount as shown on the Closing Statement,
the
Representative shall deliver to the Purchaser within 30 days after receipt
of
the Closing Statement a statement (the “Dispute
Notice”)
setting forth the Representative's calculation of such amount and describing
in
reasonable detail the basis for the determination of such different amount.
The
parties shall use reasonable efforts to resolve such differences within a
period
of 30 days after the Representative has given the Dispute Notice. If the
parties
resolve such differences, the Closing Statement agreed to by the parties
shall
be deemed to be the “Final
Closing Statement.”
(b) If
Purchaser and the Representative do not reach a final resolution on the Closing
Statement within 30 days after the Representative has given the Dispute Notice,
unless Purchaser and the Representative mutually agree to continue their
efforts
to resolve such differences, the Neutral Accountant shall resolve such
differences, pursuant to an engagement agreement among the Purchaser, the
Representative and the Neutral Accountant (which Purchaser and the
Representative agree to execute promptly), in the manner provided below.
Purchaser and the Representative shall each be entitled to make a presentation
to the Neutral Accountant, pursuant to procedures to be agreed to among
Purchaser, the Representative and the Neutral Accountant (or, if they cannot
agree on such procedures, pursuant to procedures determined by the Neutral
Accountant), regarding such party’s determination of the amounts to be set forth
on the Closing Statement; and the Neutral Accountant shall be required to
resolve the differences between Purchaser and the Representative and determine
the amounts to be set forth on the Closing Statement within 20 days after
the
engagement of the Neutral Accountant. The Closing Statement determined by
the
Neutral Accountant shall be deemed to be the Final Closing Statement. Such
determination by the Neutral Accountant shall be conclusive and binding upon
the
parties, absent fraud or manifest error. Nothing in this Section 1.4(b) shall
be
construed to authorize or permit the Neutral Accountant to:
(i) determine
any questions or matters whatsoever under or in connection with this Agreement
except for the resolution of differences between Purchaser and the
Representative regarding the determination of the Final Closing Statement;
or
(ii) resolve
any such differences by making an adjustment to the Closing Statement that
is
outside of the range defined by amounts as finally proposed by the Purchaser
and
the Representative.
Purchaser,
on the one hand, and the Representative, on behalf of Sellers and AWAC, shall
each pay one half of the fees and expenses of the Neutral
Accountant.
(c)
(i)
(A) If
the
Net Adjustment Amount is positive, Purchaser shall promptly, but no later
than
five business days after the final determination of the Net Adjustment Amount,
pay the Net Adjustment Amount to the Representative for distribution to the
Sellers, AWAC and the participants in the Phantom Equity Plan in accordance
with
Schedule I to this Agreement and Schedule I to the Phantom Equity Plan and
(B) if the Net Adjustment Amount is negative, the Representative (on behalf
of the Sellers, AWAC and the participants in the Phantom Equity Plan) shall
promptly, but no later than five business days after such final determination,
pay the Net Adjustment Amount to Purchaser.
Section
1.5. Earnout
Payments.
(a)
[***]
Sellers and AWAC shall be entitled to additional consideration from Purchaser
(any such additional consideration an “Earnout
Amount”)
determined as follows:
(i)
[***]
(ii)
[***]
[***]
shall be delivered to the Representative for allocation among and delivery
to
the Sellers, AWAC and the participants in the Phantom Equity Plan in accordance
with Schedule I to this Agreement and Schedule I to the Phantom Equity Plan.
At
Purchaser’s option, up to [***]
may
be satisfied by the issuance to Sellers, AWAC and the participants in the
Phantom Equity Plan of unregistered shares of Parent Common Stock (allocated
in
accordance with Schedule I to this Agreement and Schedule I to the Phantom
Equity Plan, which allocation shall be set forth in written instructions
from
the Representative to Purchaser) having an aggregate Fair Market Value equal
to
such portion of such Earnout Amount. For purposes of the preceding sentence,
Fair Market Value will be determined as of the [***] Final Earnout Amount
Determination Date. The shares of Parent Common Stock issued in satisfaction
of
any portion of an Earnout Amount are referred to as “Earnout
Shares”
and,
together with the Initial Shares, as the “Parent
Shares”.
In no
event will any Parent Shares be issued hereunder if the issuance of such
Parent
Shares would cause (A) the sum of (1) the total number of Parent Shares issued
pursuant to this Agreement, (2) the number of shares of Parent Common Stock,
if
any, owned by Sellers, AWAC and the participants in the Phantom Equity Plan
immediately prior to the Closing and (3) the shares of Parent Common Stock,
if
any, issued to Sellers, AWAC and the participants in the Phantom Equity Plan
pursuant to employment-related incentive grants to exceed 19.9% of the number
of
shares of Parent Common Stock outstanding immediately prior to the Closing
or
(B) the voting power of the securities described in the preceding clauses
(A)(1)
through (3) to exceed 19.9% of the voting power of the voting securities
of
Parent outstanding immediately prior to the Closing. [***] Sellers and AWAC
acknowledge and agree that neither Purchaser nor any other Person makes any
guarantee or representation to Sellers nor to AWAC that any Earnout Amount
will
be realized. Any Earnout Amount that is paid in cash or Earnout Shares to
Sellers or AWAC or their designees shall be treated as a component of the
Purchase Price.
(b)
Purchaser shall at its expense deliver to Representative within 90 days after
the completion of:
[***]
[***]
(c)
Purchaser shall provide Representative and the accounting firm selected by
Representative on behalf of the Sellers and AWAC with reasonable access to
all
books and records and working papers to the extent reasonably necessary to
enable Representative and such accounting firm to verify such calculations
after
the delivery thereof.
(d) Such
calculations shall be binding on the parties to this Agreement unless
Representative, within 30 days after the delivery of the calculations by
Purchaser to Representative, notifies Purchaser in writing that it objects
to
any item or computation in connection with the calculations and specify in
reasonable detail the basis for such objection. If Representative delivers
such
a notice and Representative and Purchaser are unable to agree upon the
calculations within 20 days after any notice of objection has been given
by
Representative to Purchaser, then at the election of either Purchaser or
Representative, the dispute shall be submitted to the Neutral Accountant
for a
final determination in accordance with the procedures set forth in Section
1.4(b), which determination shall be final and binding upon the parties,
absent
fraud or manifest error. Sellers and AWAC on the one hand and Purchaser on
the
other hand shall each bear one-half of the fees, costs and expenses of the
Neutral Accountant in the event such an election is made.
(e) For
purposes of this Agreement:
(i)
the
“Average
EBIT”
shall
equal [***]
[***]
(iii)
the
"Final
Average EBIT Amount"
shall
mean the
Initial Average EBIT Amount, or such other amount as shall have been agreed
to
by Purchaser and Representative following a timely notice of objection as
contemplated under this Section 1.5(e), or such other amount as determined
by
the Neutral Accountant; and
[***]
(f)
[***]
the portion of an Earnout Amount that is satisfied by the issuance of shares
of
Parent Common Stock shall be delivered to Sellers, AWAC and the participants
in
the Phantom Equity Plan promptly after irrevocable instructions are given
by
Parent to its transfer agent to issue shares of Parent Common Stock to Sellers,
AWAC and the participants in the Phantom Equity Plan in accordance with Schedule
I to this Agreement and Schedule I to the Phantom Equity Plan and (y) Parent
shall not be required to give such instructions until the third business
day
after Representative has notified Purchaser in writing of the address to
which
such shares of Parent Common Stock are to be delivered.
(g) [***] (the
“Earnout
Period”),
the
Business shall be conducted as a going concern and in accordance with applicable
Law and the operating standards set forth on Exhibit
C
hereto.
(h) In
the
event of a merger, consolidation or other transaction prior to the Final
Earnout
Amount Determination Date (a “Conversion
Transaction”)
as a
result of which substantially all of the outstanding shares of Parent Common
Stock are converted into the right to receive, in whole or in part, equity
securities, if such equity securities are traded on the New York Stock Exchange,
the American Stock Exchange, The Nasdaq Stock Market or another securities
exchange or interdealer quotation system reasonably acceptable to the
Representative (“Listed
Equity Securities”),
(i)
any issued Parent Shares, including shares held pursuant to the Escrow
Agreement, shall be eligible to participate in any Conversion Transaction
on the
same basis as other outstanding shares of Parent Common Stock and (ii) any
portion of the Earnout Amount that would otherwise be permitted to be satisfied
through the issuance of Parent Common Stock shall thereafter be permitted
to be
satisfied through the issuance of such Listed Equity Securities. For such
purpose, such Listed Equity Securities shall be valued at their aggregate
Fair
Market Value as of the Final Earnout Amount Determination Date.
[***]
(i) [***]
Section
1.6. Lock-Up
Agreement.
During
the applicable Restricted Period neither the Representative, the Sellers,
AWAC
nor and the participants in the Phantom Equity Plan shall sell, pledge, hedge
or
otherwise dispose of any economic interest in any of the Parent Shares
(including by entering into any covered or uncovered short transaction) except
pursuant to and in accordance with the terms of a Conversion Transaction,
in
which event the restrictions contained in this Section 1.6 shall apply to
any
Listed Equity Securities issued in exchange for Parent Shares. “Restricted
Period”
means
(i) with respect to the Initial Shares, the period ending on the first
anniversary of the Closing Date and (ii) with respect to the Earnout Shares,
if
any, the period ending on the first anniversary of the [***] Final Earnout
Amount Determination Date.
Section
1.7. Transferability;
Resale Registration; Registration Procedures; Rule 144; Legending of Parent
Shares
(a)
(i)
The
Sellers and AWAC acknowledge that the Parent Shares are being acquired pursuant
to an exemption from registration under the Securities Act of 1933, as amended
(the “Securities
Act”)
and
that the Parent Shares may be transferred only pursuant to an effective
registration statement or an exemption from registration under the Securities
Act. Each Seller and AWAC represents that it is familiar with Rule 144 under
the
Securities Act. Neither any Seller nor AWAC shall be permitted to transfer
any
Parent Shares in the absence of an effective registration statement unless
such
Seller or AWAC, as the case may be, if reasonably requested by Parent, has
furnished an opinion of counsel reasonably satisfactory to Parent that such
disposition does not require registration of such Parent Shares under the
Securities Act. Parent shall use its commercially reasonable efforts to cause
opinions required by the Transfer Agent in connection with the transfer of
Parent Shares by any Seller or AWAC to be provided to the Transfer Agent
by
counsel for Parent so long as such Seller or AWAC, as the case may be, and
the
broker involved in the transfer has furnished any certification reasonably
requested by such counsel, and neither any Seller nor AWAC shall be required
to
provide a duplicative opinion.
(ii)
[***]
(iii)
In
connection with the obligations of Parent with respect to a Resale Document,
Parent shall:
(A)
prepare and file with the SEC, as specified in this Agreement, a Resale Document
that complies as to form in all material respects with the requirements of
the
SEC and includes all financial statements required by the SEC to be filed
therewith;
(B)
prepare and file with the SEC such amendments and post-effective amendments
to
the Resale Registration
Statement as
may be
necessary to keep the Resale Registration
Statement effective
for the Applicable Period, respond as promptly as practicable to any comments
received from the SEC with respect to the Resale Document or any amendment
thereto, and
comply with the provisions of the Securities Act with respect to the disposition
of all Parent Shares covered by the Resale Document in accordance with the
sellers’ intended method of disposition set forth in the Resale
Document;
(C)
furnish to the Sellers and AWAC, without charge, such
number of copies of the Resale Document, and any amendments thereto, as such
persons reasonably may request in order to facilitate the public sale or
other
disposition of the Parent Shares and Parent consents to such use;
(D)
use
commercially reasonable efforts to register
or qualify the Parent Shares covered by the Resale Document under the securities
or blue sky laws of such jurisdictions as the Sellers and AWAC may request
to
keep such registration or qualification effective during the Applicable Period,
provided,
however,
that
Parent shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is
not
so qualified or to consent to general service of process in any such
jurisdiction;
(E)
notify the Sellers and AWAC promptly (i) when a Resale Registration
Statement has
become effective and when any post-effective amendments thereto become
effective, (ii) of the issuance by the SEC or any state securities authority
of
any stop order suspending the effectiveness of a Resale Registration
Statement or
the
initiation of any proceedings for that purpose, (iii) of the happening of
any
event during the period a Resale Registration
Statement is
effective as a result of which the Resale Document contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (iv)
upon the occurrence of any such event, use commercially reasonable efforts
to
prepare promptly a supplement or post-effective amendment to the Resale
Registration
Statement or
the
prospectus or any document incorporated therein by reference or file any
other
required document so that, as thereafter delivered to the purchasers of the
Parent Shares, such prospectus will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(F)
use
its commercially reasonable efforts to obtain
the withdrawal of any order suspending the effectiveness of a Resale
Registration Statement or any part thereof as promptly as possible;
(G)
use
commercially reasonable efforts to list all Parent Shares on each securities
exchange or quotation system on which the Parent Common Stock is then listed;
and
(H)
pay,
or cause to be paid, the expenses of the registration, provided that Parent
shall not be required to pay any counsel or other advisory fees or expenses,
or
any underwriting discounts or commissions, incurred by Sellers or
AWAC.
(iv)
Parent covenants that, so long as it is subject to the reporting requirements
of
the Securities Exchange Act of 1934 (the “Exchange
Act”),
it
will timely file reports required to be filed by it under the Exchange Act
so as
to enable the Sellers and AWAC to sell such Parent Shares pursuant to Rule
144
under the Securities Act. Parent further covenants that so long as the Sellers
or AWAC own any of such Parent Shares, Parent shall upon request furnish
a
written statement that it has complied with the reporting requirements of
the
Exchange Act and such other reports and documents so filed by Parent as may
be
reasonably requested by the Sellers or AWAC in availing themselves of any
rule
or regulation permitting the selling of such Parent Shares without registration.
In connection with any sale, transfer or other disposition by the Sellers
or
AWAC of any Parent Shares pursuant to the Resale Document or Rule 144 under
the
Securities Act, the Company shall cooperate with the Sellers and AWAC to
facilitate the timely preparation and delivery of certificates representing
Parent Shares to be sold and not bearing any legend, and enable certificates
for
such Parent Shares to be for such number of shares as the Sellers and AWAC
may
reasonably request at least two (2) business days prior to any sale of such
Parent Shares.
(b)
It is
understood that the certificates evidencing the Parent Shares may bear a
legend
to the following effect:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO OR AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT.
The
certificates evidencing the Parent Shares may also bear any legends required
by
applicable blue sky laws.
(c)
(i)
Parent may, at its option, but without any obligation to do so, include in
any
non-underwritten registration of shares of Parent Common Stock any or all
Parent
Shares issued or to be issued for the account of the Sellers and AWAC hereunder.
The inclusion of any Parent Shares that are subject to the restrictions set
forth in Section 1.6 in a registration statement filed by Parent, or a
prospectus supplement or amendment thereto, shall not affect the operation
of
Section 1.6 except as otherwise agreed by Parent in its sole discretion.
For so
long as any Parent Shares are included in an effective registration statement
and during the period when Sellers and AWAC can make sales under such
registration statement, the Sellers and AWAC agree not to dispose of such
Parent
Shares in a transaction that would require the filing of a Form 144. Any
Parent
Shares not included in an effective registration statement or, during the
period
when Sellers and AWAC cannot make sales under such registration statement,
are
so included may, subject to Section 1.6, be disposed of in a transaction
under
Rule 144 provided that the requirements of the rule are met and the applicable
seller is not in possession of material, nonpublic information.
(ii)
(A)
Parent will indemnify and hold harmless, to the fullest extent permitted
by law,
the Sellers and AWAC, their officers, directors and agents, affiliates,
advisors, brokers and employees, each person who controls any Seller or AWAC
(within the meaning of Section 15 of the Securities Act or Section 20 of
the
Exchange Act) and the officers, directors, agents, affiliates, advisors,
brokers
and employees of any such controlling person, from and against all losses,
claims, damages or liabilities, as incurred, arising out of or based upon
any
untrue or alleged untrue statement of a material fact contained in a Resale
Document arising out of or based upon any omission or alleged omission to
state
therein a material fact required to be stated therein or necessary to make
the
statements therein not misleading, or arising out of any violation by Parent
of
any rule or regulation promulgated under the Securities Act applicable to
Parent
and relating to any action or inaction required by Parent in connection with
any
such registration, except to the extent the same are based upon information
with
respect to any Seller or AWAC furnished in writing to Parent by such Seller
or
AWAC expressly for use therein; and Parent will reimburse each such Person
for
any legal or other expenses reasonably incurred in connection with investigating
any such claim that is asserted or overtly threatened; provided,
however,
that
Parent will not be liable to such Seller or AWAC to the extent that any such
losses, claims, damages or liabilities arise out of or are based upon an
untrue
statement or alleged untrue statement or omission or alleged omission made
in
any preliminary prospectus contained in a Resale Registration Statement if
either (x)(i) such Seller or AWAC failed to send or deliver a copy of the
applicable prospectus and prospectus supplement, if any, with or prior to
the
delivery of written confirmation of the sale by such Seller or AWAC of a
Parent
Share to the person asserting the claim from which such losses, claims, damages
or liabilities arise and (ii) the prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission
or
(y) such untrue statement or alleged untrue statement or such omission or
alleged omission is corrected in an amendment or supplement to the prospectus
previously furnished by or on behalf of Parent with copies of the prospectus
as
so amended or supplemented delivered by Parent, and such Seller or AWAC
thereafter fails to deliver such prospectus as so amended or supplemented
prior
to or concurrently with the sale of a Parent Share to the person asserting
the
claim from which such losses, claims, damages or liabilities arise; provided,
further,
however,
that
the indemnity agreement contained in this Section 1.7(c)(ii)(A) will not
apply
to amounts paid in settlement of any such losses, claims, damages or liabilities
if such settlement is effected without the consent of Parent (which consent
will
not be unreasonably withheld). The rights of the Sellers and AWAC hereunder
will
not be exclusive of the rights of the Sellers and AWAC under any other agreement
or instrument.
(B)
Each
Seller and AWAC will indemnify and hold harmless, to the fullest extent
permitted by law, Parent and its Affiliates (including, from and after the
Closing, the Companies (other than AWAC)), the officers, directors and agents,
affiliates, advisors, brokers and employees of each such Person, each
underwriter of securities covered by a Resale Document, each person who controls
any such Person (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act), and the officers, directors, agents,
affiliates, advisors, brokers and employees of any such underwriter or
controlling person, from and against all losses, claims, damages or liabilities,
as incurred, arising out of or based upon any untrue or alleged untrue statement
of a material fact contained in a Resale Document, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but only to the extent the same are contained in information with respect
to
such holder furnished in writing to Parent by such Seller or AWAC, as
applicable, expressly for use therein; and each Seller and AWAC will reimburse
each such Person for any legal or other expenses reasonably incurred in
connection with investigating any such claim that is asserted or overtly
threatened; provided,
however,
that
the indemnity agreement contained in this Section 1.7(c)(ii)(B) will not
apply
to amounts paid in settlement of any such losses, claims, damages or liabilities
if such settlement is effected without the consent of such Seller or AWAC,
as
applicable (which consent will not be unreasonably withheld). The rights
of
Parent and its Affiliates hereunder will not be exclusive of the rights of
Parent and its Affiliates under any other agreement or instrument. In no
event
will the liability of any Seller or AWAC hereunder be greater in amount than
the
dollar amount of proceeds (net of payment of all expenses and underwriters'
discounts and commissions) received by such Seller or AWAC, as applicable,
upon
the sale of the Parent Shares giving rise to such indemnification
obligation.
(d) Upon
the
execution of an undertaking by each participant in the Phantom Equity Plan
to
comply with the obligations and agreements of each Seller and AWAC pursuant
to
this Section 1.7, such participant shall be entitled to the benefits of the
covenants granted to the Sellers and AWAC pursuant to this Section
1.7.
Section
1.8. Authority
of Representative.
Each
Seller and AWAC hereunder irrevocably appoints the Representative to represent
it and act as its attorney-in-fact and agent with respect to any and all
matters
relating to, arising out of, or in connection with, the Transaction Documents,
including for purposes of (i) any action taken or omitted on behalf of such
Seller or AWAC thereunder, (ii) any adjustment, disposition, settlement or
other
handling of any amounts or claims under Sections
1.4 and 1.5
and all
rights or obligations arising under Article VIII, (iii) effecting service
of
process and (iv) effecting any waiver or amendment of a Transaction Document.
Except to the extent otherwise explicitly set forth herein or in any other
Transaction Documents, all actions, omissions, notices, communications and
determinations by or on behalf of a Seller or on behalf of AWAC shall be
given
or made by the Representative and all such actions, omissions, notices,
communications and determinations by the Representative pursuant or with
respect
to any provision of a Transaction Document shall conclusively be deemed to
have
been authorized by, and shall be binding upon and made on behalf of such
Seller
or AWAC. Parent and Purchaser shall be entitled to rely on any action or
decision of Representative as the act, omission, notice, communication or
determination of each Seller and AWAC. The Sellers and AWAC hereby agree
to
jointly and severally indemnify and hold harmless the Representative from
and
against (i) any Losses incurred without gross negligence or willful misconduct
on the part of the Representative and arising out of or in connection with
the
acceptance, performance or nonperformance of his duties hereunder and (ii)
any
related out-of-pocket costs and expenses (including reasonable attorneys'
fees).
If the person serving as the Representative dies or becomes legally disabled,
an
individual selected by a majority-in-interest of the rights to allocations
of
consideration pursuant to Schedule I will be elected as the successor
Representative. The Representative shall have sole responsibility for allocating
the Purchase Consideration among Sellers, AWAC and the participants in the
Phantom Equity Plan and neither Parent, Purchaser nor any of their affiliates
(including, following the Closing, IHS and iProcert) shall have any obligation
or liability therefore whatsoever. Notwithstanding the preceding sentence,
IHS
shall be responsible for reporting payments of cash and stock to the
participants in the Phantom Equity Plan as compensation for tax purposes
and
shall comply with applicable income and payroll tax withholding obligations
in
respect of such compensation income.
Section
1.9. Assumption
of Assumed AWAC Liabilities.
Subject
to the terms and conditions set forth herein, at the Closing, Purchaser shall
assume and agree to pay and discharge when due solely the following liabilities
and obligations of AWAC (collectively, the “Assumed
AWAC Liabilities”)
(i)
liabilities and obligations of AWAC under Contracts included in the AWAC
Assets
that, by the terms of such Contracts, arise after the Closing (other than
by
virtue of a default or violation of any Contract occurring prior to the
Closing), relate to periods following the Closing and are to be observed,
paid,
discharged, or performed as the case may be, at any time after the Closing,
and
(ii) the ordinary course operating liabilities of AWAC's business. Purchaser
shall not be responsible for any Liabilities, obligations or commitments
of
AWAC, including any Tax Liabilities (whether or not incurred in the ordinary
course of business) that are not specifically set forth in the immediately
preceding sentence (collectively, the “Excluded
Liabilities”).
Section
1.10. Xxxx
Brothers Payments.
The
Companies and Xxxx Brothers & Company, LLC (“Xxxx
Brothers”)
are
parties to that certain engagement letter dated as of November 9, 2006 (the
“Engagement
Letter”),
pursuant to which the Companies are obligated to pay certain commissions
and
fees to Xxxx Brothers (“Xxxx
Fees”)
in the
event the transactions contemplated by this Agreement are consummated. Such
Xxxx
Fees are payable upon (i) payment of the Net Closing Amount to Sellers and
AWAC,
and (ii) payment of any Earnout Amounts to the Sellers and AWAC. Prior to
the
date hereof, Xxxx Brothers, the Companies and the Sellers have entered into
an
agreement pursuant to which Xxxx Brothers has (a) agreed that all Xxxx Fees
shall be payable by Sellers and AWAC and not IHS or iProcert and (b) waived
any
and all claims against IHS, iProcert and Purchaser in connection with the
Engagement Letter and the transactions contemplated hereby.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES REGARDING THE SELLERS
Each
Seller (other than with respect to Section 2.5(b)) and AWAC (with respect
to
Section 2.5(b)) represents and warrants to Purchaser that the following
statements are correct and complete as of the date hereof and as of the Closing
Date.
Section
2.1. Authorization
of Transactions.
Such
Seller (or, if a minor, the Representative on such Seller’s behalf) has full
power and authority to execute and deliver this Agreement and the other
Transaction Documents and to perform such Seller's obligations hereunder
and
thereunder. This Agreement and each other Transaction Document constitutes
the
valid and legally binding obligation of such Seller, enforceable in accordance
with its terms and conditions.
Section
2.2. Conflicts;
Consents of Third Parties.
The
execution and delivery by such Seller of this Agreement and the other
Transaction Documents to which such Seller is a party, the consummation of
the transactions contemplated hereby or thereby, and compliance by such
Seller with the provisions hereof or thereof will not (i) conflict with,
violate, result in the breach or termination of, or constitute a default
under
any Contract to which such Seller is a party or by which such Seller
or such Seller's properties or assets is bound, or require a Consent from
any Person in order to avoid any such conflict, violation, breach, termination
or default; (ii) violate any Law or any Order by which such Seller is bound;
(iii) result in the creation of any Lien upon the properties or assets of
such Seller; or (iv) if such Seller is other than an individual, conflict
with,
or result in the breach of, any provision of the certificate of
incorporation or bylaws or comparable organizational documents
(collectively, “Organizational
Documents”)
of
such Seller. No governmental franchise, easement, permit, right, application,
filing, registration, license or other authorization (each a “Permit”),
Order, waiver, declaration or filing with, or notification to any Person,
including without limitation any Governmental Body, is required on the part
of
such Seller in connection with the execution, delivery and performance of
this
Agreement or the other Transaction Documents to which it is a party, or the
compliance by such Seller with any of the provisions hereof or
thereof.
Section
2.3. Broker’s
Fees.
Except
as set forth in Section 1.10, such Seller has no liability or obligation
to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which any Company or the
Purchaser could become liable or obligated. Such Seller shall be solely
responsible for any obligations described in this Section 2.3 or Section
1.10
and will indemnify and hold the Purchaser Indemnitees (as defined below)
harmless from and against any Losses (as defined below) resulting from or
arising out of or any such obligations or matters.
Section
2.4. Equity
Securities.
Such
Seller holds of record and owns beneficially the Membership Interests and
shares
of Capital Stock set forth next to such Seller's name on Schedule I free
and
clear of any Lien. Such Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that could require such Seller to
sell,
transfer, or otherwise dispose of any membership interest of iProcert or
any
capital stock of IHS (other than this Agreement). Such Seller is not a party
to
any voting trust, proxy, or other agreement or understanding with respect
to the
voting of any membership interest of iProcert or any capital stock of
IHS.
Section
2.5 Private
Placement.
(a)
Such Seller is an “accredited investor” within the meaning of Rule 501 under the
Securities Act and has sufficient knowledge and experience in investing in
companies similar to Parent in terms of Parent's market capitalization and
other
relevant factors so as to be able to evaluate the risks and merits of his
investment in Parent and he is able financially to bear the risks thereof.
Such
Seller has had an opportunity to discuss the terms of the offering and sale
of
the Parent Shares and Parent's business, management and financial affairs
with
Parent's management and to obtain any additional information regarding the
foregoing which Parent possesses or can acquire without unreasonable effort
or
expense. The Parent Shares to be issued to such Seller are being acquired
for
such Seller’s own accounts and not with a view to, or the intention of, any
distribution in violation of the Securities Act or any applicable state
securities laws. Such Seller understands that (i)
the
Parent Shares have not been registered under the Securities Act by reason
of the
issuance of the Shares in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
505
or 506 promulgated under the Securities Act, (ii)
the
Parent Shares must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration,
(iii)
the
Parent Shares will bear a legend to such effect and (iv)
Parent
will issue stop transfer instructions to its transfer agent to such
effect.
(b)
AWAC
is an “accredited investor” within the meaning of Rule 501 under the Securities
Act and has sufficient knowledge and experience in investing in companies
similar to Parent in terms of Parent's market capitalization and other relevant
factors so as to be able to evaluate the risks and merits of his investment
in
Parent and he is able financially to bear the risks thereof. AWAC has had
an
opportunity to discuss the terms of the offering and sale of the Parent Shares
and Parent's business, management and financial affairs with Parent's management
and to obtain any additional information regarding the foregoing which Parent
possesses or can acquire without unreasonable effort or expense. The Parent
Shares to be issued to AWAC are being acquired for AWAC’s own accounts and not
with a view to, or the intention of, any distribution in violation of the
Securities Act or any applicable state securities laws. AWAC understands
that
(v)
the
Parent Shares have not been registered under the Securities Act by reason
of the
issuance of the Shares in a transaction exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) thereof or Rule
505
or 506 promulgated under the Securities Act, (vi)
the
Parent Shares must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act or is exempt from such registration,
(vii)
the
Parent Shares will bear a legend to such effect and (viii)
Parent
will issue stop transfer instructions to its transfer agent to such
effect.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES REGARDING THE COMPANIES
The
Companies and the Sellers represent and warrant to Purchaser jointly and
severally that, except as set forth in the Disclosure Schedule attached hereto
(the “Disclosure
Schedule”),
the
following statements are correct and complete as of the date hereof and as
of
the Closing Date. The Disclosure Schedule makes explicit reference to the
particular representation or warranty as to which exception is taken, which
in
each case shall constitute the representation and warranty as to which such
exception shall apply, provided that the disclosures in the Disclosure Schedule
that are set forth expressly therein with particularity will apply to all
representations and warranties. The inclusion of an item in the Disclosure
Schedule as an exception to the representation or warranty shall not be deemed
an admission by the Sellers or the Company that such item represents a material
exception or fact, event or circumstance or that such item is reasonably
likely
to result in a Material Adverse Effect.
Section
3.1. Organization
and Good Standing.
Each of
the Companies is a corporation or limited liability company, as the case
may be,
duly organized, validly existing and in good standing under the laws of the
state of its organization and has all requisite corporate (or equivalent)
power
and authority to own, lease and operate its properties and to carry on its
business. Each of the Companies is duly qualified or authorized to do business
as a foreign corporation and is in good standing under the laws of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized would not have a Company Material
Adverse Effect. Section 3.1 of the Disclosure Schedule sets forth a true,
correct and complete list of each jurisdiction in which each of the Companies
is
qualified or authorized to do business as a foreign corporation.
Section
3.2. Authorization
and Enforceability.
Each
Company has all requisite power and authority to execute and deliver this
Agreement and each other Transaction Document to which it is a party, and
to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by each Company of each of the Transaction Documents
to
which it is a party have been duly authorized by all necessary corporate
(or
equivalent) action on the part of the Company. This Agreement and the other
Transaction Documents have been duly and validly executed and delivered by
each
Company and constitute legal, valid and binding obligations of each Company,
enforceable against such Company in accordance with their respective terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and
similar laws affecting creditors’ rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
Section
3.3. Capitalization;
Subsidiaries.
The
authorized capital stock of IHS consists of 100,000 shares of Common Stock,
par
value $1.00 per share, of which 200 shares are issued and outstanding and
no
shares are held in treasury. The authorized capital stock of AWAC consists
of
100,000 shares of Common Stock, par value $1.00 per share, of which 200 shares
are issued and outstanding and no shares are held in treasury. 200 membership
interests of the iProcert are issued and outstanding. All outstanding shares
of
Common Stock of IHS and AWAC have been duly and validly authorized and issued,
are fully paid and nonassessable, and all such shares are held of record
and
owned beneficially by the Sellers in the proportions set forth on Schedule
I.
All outstanding membership interests of iProcert have been duly and validly
authorized and issued, are fully paid and nonassessable, and all such membership
interests are held of record and owned beneficially by the Sellers in the
proportions set forth on Schedule I. No shares of Common Stock of IHS or
AWAC or
membership interests of iProcert have been issued in violation of any preemptive
rights. None of the Companies has any outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, preemptive rights or other contracts or commitments that could require
any Company to issue, sell, or otherwise cause to become outstanding any
of its
capital stock or membership interests, as applicable, or securities convertible
or exchangeable for, or any options, warrants, or rights to purchase, any
of
such capital stock or membership interests, as applicable. There are no
outstanding obligations of any Company to repurchase, redeem or otherwise
acquire any of its capital stock or membership interests. There are no
outstanding or authorized appreciation, phantom equity, profit participation
or
similar rights with respect to any Company. Section 3.3 of the Disclosure
Schedule sets forth any direct or indirect interest in any corporation,
partnership, joint venture or other Person owned by any Company.
Section
3.4. Company
Records.
(a)
Each
of the Companies has delivered to Purchaser true, correct and complete copies
of
the certificate of incorporation or other applicable charter documents
(certified by the Secretary of State or other appropriate official of the
applicable jurisdiction of organization) and by-laws (certified by the
secretary, assistant secretary or other appropriate officer) of such
Company.
(b)
The
minute books of each of the Companies previously made available to Purchaser
contain complete and accurate records in all material respects of all meetings
and reflect all other corporate action of the members and board of directors
of
each such Company. The ownership records of the Companies previously made
available to Purchaser are true, correct and complete. All stock transfer
taxes
levied or payable with respect to all transfers of interests of each of the
Companies prior to the date hereof have been paid and appropriate transfer
tax
stamps affixed where required.
(c)
Each
of the Companies maintains and will continue to maintain a standard system
of
accounting established and administered in accordance with GAAP. The books,
records and accounts of each of the Companies accurately and fairly reflect,
in
reasonable detail, the transactions and the assets and liabilities of such
entity with respect to its business. None of the Companies has engaged in
any
material transaction with respect to its business, maintained any bank account
for its business or used any of its funds, except for transactions, bank
accounts and funds which have been and are reflected in all material respects
in
its normally maintained books, records and accounts.
Section
3.5. Conflicts;
Consents of Third Parties.
The
execution and delivery by each Company of this Agreement and the other
Transaction Documents to which it is a party, the consummation of the
transactions contemplated hereby or thereby, and compliance by each Company
with
the provisions hereof or thereof will not (i) conflict with, or result in
the
breach of, any provision of the Organizational Documents of any Company;
(ii) conflict with, violate, result in the breach or termination of, or
constitute a default under any Contract to which any Company is a party or
by
which any Company or its properties or assets is bound, or require a Consent
from any Person in order to avoid any such conflict, violation, breach,
termination or default; (iii) violate any Law or any Order by which any Company
is bound; or (iv) result in the creation of any Lien upon the properties or
assets of any Company, excluding from the foregoing clauses (ii) and (iii)
such
conflicts, breaches, terminations, defaults, violations, Liens or other matters
that would not have a Company Material Adverse Effect. No Permit, Order,
waiver,
declaration or filing with, or notification to any Person, including without
limitation any Governmental Body, is required on the part of any Company
in
connection with the execution, delivery and performance of this Agreement
or the
other Transaction Documents to which it is a party, or the compliance by
any
Company with any of the provisions hereof or thereof.
Section
3.6. Financial
Statements.
Included in Section 3.6 of the Disclosure Schedule are (i) the audited
balance sheets of the Companies as at December 31, 2004, 2005 and 2006 and
the
related audited statements of income and of cash flows of the Companies for
the
years then ended and (ii) the unaudited balance sheet of the Companies (the
“Balance
Sheet”)
as at
May 31, 2007 (the “Balance
Sheet Date”)
and
the related statements of income and cash flows of the Companies for the
5-month
period then ended and for the comparable periods in the prior year (such
audited
and unaudited statements, including the related notes and schedules thereto,
are
referred to herein as the “Financial
Statements”).
The
Financial Statements have been prepared from the books and records of the
Companies and fairly present in all material respects the financial position
and
results of operations, shareholders’ equity and cash flows of the Companies as
at the dates and for the periods reflected thereon in accordance with GAAP
applied on a consistent basis throughout the periods indicated, except as
may be
indicated in the notes thereto and except, in the case of the unaudited
financial statements, for the failure of the unaudited financial statements
to
include the footnotes required by GAAP, and subject to normal year-end audit
adjustments. The financial forecasts for the Companies for the fiscal years
2007
and 2008 included in Section 3.6 of the Disclosure Schedule (the “Projections”)
were
prepared based upon assumptions that management believes to be reasonable
and
reflect management’s good faith best estimate of the projected operating
performance of the Companies for such periods. Purchaser acknowledges and
agrees
that (i) neither the Companies nor the Sellers make any guarantee or
representation that the results estimated in the Projections will be realized,
(ii) the factors upon which the assumptions and estimate were based may change
from the date hereof and (iii) the results estimated in the Projections may
differ materially from actual results.
Section
3.7. No
Undisclosed Liabilities.
No
Company has any material Liabilities except (a) to the extent specifically
reflected and accrued for or specifically reserved against in the Balance
Sheet
and (b) for Liabilities incurred subsequent to the Balance Sheet Date in
the
ordinary course of business consistent with past custom and practice.
Section
3.8. Absence
of Certain Developments.
Since
December 31, 2006 (and, with respect to clause (e) below, December 31,
2005):
(a) there
has
not been any Company Material Adverse Change nor has there occurred any event
which is reasonably likely to result in a Company Material Adverse
Change;
(b) there
has
not been any damage, destruction or loss, whether or not covered by insurance,
with respect to the property and assets of any Company having a replacement
cost
of more than $10,000 for any single loss or $25,000 in the aggregate for
any
related losses;
(c) none
of
the Companies has made any change in the rate of compensation, commission,
bonus
or other direct or indirect remuneration payable, or paid or agreed or orally
promised to pay, conditionally or otherwise, any bonus, incentive, retention
or
other compensation, retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any director, officer, employee, distributor or
agent
of any Company, other than increases in the ordinary course of business
consistent with past practice in the base salaries of employees of any Company
other than officers or senior managers;
(d) none
of
the Companies has entered into any employment, deferred compensation, severance
or similar agreement (nor amended any such agreement);
(e) there
has
not been any change by any Company in accounting or Tax reporting principles,
methods or policies or any settlement of any Tax controversy;
(f) none
of
the Companies has conducted its business other than in the ordinary course
consistent with past practice;
(g) none
of
the Companies has entered into any other material transaction;
(h) none
of
the Companies has hired employees or engaged independent contractors to provide
services for clients of any Company other than in the ordinary course of
business consistent with, and at a level consistent with, past
practice;
(i) none
of
the Companies has breached any Contract in any material respect;
(j) none
of
the Companies has failed to promptly pay and discharge current Liabilities
except where disputed in good faith in an appropriate manner;
(k) none
of
the Companies has made any loans, advances or capital contributions to, or
investments in, any Person or paid any fees or expenses to any Affiliate
of any
Company other than intercompany transactions in the ordinary course of business
consistent with past practice;
(l) none
of
the Companies has mortgaged, pledged or subjected to any Lien any of its
assets,
or acquired any assets or sold, assigned, transferred, conveyed, leased or
otherwise disposed of any assets of any Company except for assets acquired
or
sold, assigned, transferred, conveyed, leased or otherwise disposed of in
the
ordinary course of business consistent with past practice;
(m) none
of
the Companies has discharged or satisfied any Lien, or paid any obligation
or
Liability, except in the ordinary course of business consistent with past
practice;
(n) none
of
the Companies has canceled or compromised any debt or claim or amended,
canceled, terminated, relinquished, waived or released any Contract or right
except in the ordinary course of business consistent with past practice and
which, in the aggregate, are not material to any Company;
(o) none
of
the Companies has made or committed to make any capital expenditures or capital
additions or improvements in excess of $50,000 individually or in the aggregate,
except as set forth in the Disclosure Schedule, or otherwise in the ordinary
course of business consistent with past practices;
(p) none
of
the Companies has entered into any prepaid services transactions with any
of its
customers or otherwise accelerated revenue recognition or the sales of its
services for periods prior to the Closing;
(q) except
for the iProcert Operating Agreement, none of the Companies has amended any
of
its Organizational Documents;
(r) none
of
the Companies has issued any equity securities or any security exercisable
or
exchangeable for or convertible into equity securities of such Company;
and
(s) none
of
the Companies has entered into any agreements to do or perform in the future
any
actions referred to in this Section 3.8 which have not been consummated as
of
the date hereof.
Section
3.9. Taxes.
(a) Each
Company has timely filed with the appropriate taxing authorities all Tax
Returns
that it has been required to file. All such Tax Returns are true, correct
and
complete in all material respects. All Taxes owed by each Company (whether
or
not shown on any Tax Return) have been paid. Adequate reserves have been
established on the Financial Statements to provide for the payment of any
Taxes
which are not yet due and payable with respect to any Company for taxable
periods or portions thereof ending on or before December 31, 2006. None of
the
Companies is the beneficiary of any extension of time within which to file
any
Tax Return. No written claim has ever been made by an authority with respect
to
a Company in a jurisdiction where such Company does not file Tax Returns
that it
is or may be subject to taxation by that jurisdiction. There are no Liens
on any
of the assets of any Company that have arisen in connection with any failure
(or
alleged failure) to pay any Tax.
(b) Each
Company has withheld and paid to the appropriate taxing authority or other
Governmental Body all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) None
of
the Companies has waived or extended any statute of limitations in respect
of
Taxes or agreed to any extension of time with respect to the assessment,
payment
or collection of any Tax.
(d) To
the
extent that any Company incurs Taxes after the date hereof with respect to
periods or portions thereof ending on or prior to the Closing Date, such
Company
shall pay all such Taxes on or prior to the Closing Date in compliance with
all
applicable laws and regulations, or if such Taxes are not yet due and payable
on
such date, the amount of such Taxes shall be accrued for purposes of preparation
of the Closing Statement.
(e) None
of
the properties or assets of any Company is property which, for Tax purposes,
is
required to be treated as owned by another Person. None of the Companies
is an
obligor on, and none of its assets have been financed directly or indirectly
by,
any tax-exempt bonds. No property or assets of any Company is “tax-exempt use
property” within the meaning of Section 168(h) of the Code.
(f) No
deficiency or proposed adjustment which has not been settled or otherwise
resolved for any amount of Taxes has been asserted or assessed by any taxing
authority or other Governmental Body against any Company. There has not been,
within the past five calendar years, an audit, examination or written notice
of
potential examination of any Tax Returns filed by any Company.
(g) There
is
no action, suit, examination, investigation, Governmental Body proceeding,
or
audit or claim for refund in progress, pending, proposed or, to the Knowledge
of
the Companies, threatened against or with respect to any Company regarding
Taxes.
(h) None
of
the Companies has agreed to or been required to make any adjustment pursuant
to
Section 481(a) of the Code or any corresponding provision of state, local
or
foreign law by reason of any change in accounting method initiated by it
or on
its behalf; no taxing authority has proposed any such adjustment or change
in
accounting method; and none of the Companies has an application pending with
any
taxing authority requesting permission for any change in accounting method.
None
of the Companies will be required (A) as a result of a change in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment under Section 481(c) of the Code in taxable income
for
any taxable period (or portion thereof) beginning after the Closing or (B)
as a
result of any “closing agreement,” as described in Section 7121 of the Code, to
include any item of income or exclude any item of deduction from any taxable
period (or portion thereof) beginning after the Closing.
(i) None
of
the Companies has been a member of an affiliated group (as defined in Section
1504 of the Code), or filed or been included in a combined, consolidated
or
unitary income Tax Return, and none of the Companies is a partner, member,
owner
or beneficiary of any entity treated as a partnership or a trust for Tax
purposes. None of the Companies has liability for Taxes of any person under
Treasury Regulations Section 1.1502-6 or similar state or local laws, as
a
successor or transferee, by contract or otherwise.
(j) None
of
the Companies is a party to or bound by any Tax allocation or Tax sharing
agreement and has no contractual obligation to indemnify any other Person
with
respect to Taxes.
(k) None
of
the Companies is nor has been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable
period
specified in Section 897(c)(1)(A)(ii) of the Code.
(l) True,
correct and complete copies of all income and sales Tax Returns filed by
or with
respect to the Companies for taxable periods ending on or after December
31,
2003 have been furnished or made available to Purchaser.
(m) None
of
the Companies has participated in any reportable transaction as contemplated
in
Treasury Regulations Section 1.6011-4.
(n) None
of
the Companies has taken any action that could defer a liability for Taxes
of
such Company from any taxable period ending on or before the Closing Date
to any
taxable period ending after such date.
(o) None
of
the Companies is required to include any item of income for any taxable period
ending after the Closing as a result of an installment sale or open transaction
entered into on or prior to Closing Date.
(p) Except
for the distribution by IHS of the capital stock of AWAC to its shareholders on
January 1, 2000, none of the Companies has distributed any equity or had
any
equity distributed in transaction that could be governed in whole or part
by
Section 355 or 361 of the Code.
(q) None
of
the Companies is subject to Tax, nor does it have a permanent establishment,
in
any foreign jurisdiction.
(r) None
of
the Companies has any pending ruling requests filed by it or on its behalf
with
any taxing authority or Governmental Body.
(s) None
of
the Companies has ever been a personal holding company within the meaning
of
Section 542 of the Code.
(t)
iProcert has never elected to be taxed as a corporation pursuant to Treasury
Regulations Section 301.7701-3, has never been a publicly traded partnership
within the meaning of Section 7704(b) of the Code and has since inception
been
treated as a partnership for federal and state income tax purposes.
Section
3.10. Real
Property.
None of
the Companies owns in fee any real property or interest in real property.
Section 3.10 of the Disclosure Schedule sets forth a complete list of all
real
property and interests in real property leased by any Company (individually,
a
“Real
Property Lease”
and
the
real properties specified in such leases being referred to herein individually
as a “Company
Property”
and
collectively as the “Company
Properties”)
as
lessee. The Company Property constitutes all interests in real property
currently used or currently held for use in connection with the Business
or
which are necessary for the continued operation of the Business as the Business
is currently conducted. The applicable Company has a valid and enforceable
leasehold interest under each of the Real Property Leases, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought
in a
proceeding at law or in equity). None of the Companies has received any written
notice of any material default or event that with notice or lapse of time,
or
both, would constitute a material default under any of the Real Property
Leases
and the applicable Company and, to the Company's Knowledge, each other party
thereto is in compliance with all obligations of such party thereunder. The
Companies have delivered or otherwise made available to Purchaser complete
copies of the Real Property Leases, together with all amendments, modifications
or supplements, if any, thereto.
Section
3.11. Tangible
Personal Property; Title; Sufficiency of Assets.
(a) Section
3.11 of the Disclosure Schedule lists all leases of personal property
(“Personal
Property Leases”)
involving annual payments in excess of $10,000 relating to personal property
used by any Company or to which any Company is a party or by which the
properties of any Company are bound. The Companies have delivered or otherwise
made available to the Purchaser complete copies of the Personal Property
Leases,
together with all amendments, modifications or supplements thereto.
(b) Each
Company has a valid leasehold interest under each of the Personal Property
Leases under which it is a lessee, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity), and there is no material default under any Personal Property Lease
by
any Company, or, to the Knowledge of the Companies, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice
or
both would constitute a material default thereunder, and each Company, and
to
the Knowledge of the Companies, each other party thereto is in compliance
with
all obligations of such Company or such other party, as the case may be,
thereunder.
(c) Each
Company has good and marketable title to all its assets as of the date hereof
(which include, without limitation, all of the assets reflected in the Balance
Sheet), free and clear of any and all Liens other than the Permitted
Encumbrances. All tangible personal property included in such assets, and
all of
the items of tangible personal property used by any Company under the Personal
Property Leases, are in working order and in a state of good maintenance
and
repair (ordinary wear and tear excepted) and are suitable for the purposes
used.
The assets of the Companies include all assets, rights and interests used
in or
reasonably required for the continued conduct of the Business by the Companies
as currently conducted.
Section
3.12. Intellectual
Property.
(a) The
Companies own, free and clear from all Liens (other than Permitted Encumbrances)
or otherwise possess legally enforceable rights to use all of the Intellectual
Property reasonably necessary to the conduct of business of the Companies
as
currently conducted. The Intellectual Property owned by the Companies
(“Owned
Intellectual Property”)
and
the Intellectual Property licensed to the Companies comprise all of the
Intellectual Property that is used or reasonably required for the continued
conduct of in the business of the Companies as currently conducted.
(b) Section
3.12(b)(i) of the Disclosure Schedule sets forth a true, complete and correct
list of all Owned Intellectual Property for which a registration or application
has been filed with a Governmental Body, including patents, trademarks, service
marks and copyrights, issued by or registered with, or for which any application
for issuance or registration thereof has been filed with, any Governmental
Body.
Section 3.12(b)(ii) of the Disclosure Schedule sets forth a complete and
correct
list of all trademarks, service marks and other trade designations that are
Owned Intellectual Property and not otherwise identified in Section 3.12(b)(i)
of the Disclosure Schedule. Section 3.12(b)(iii) of the Disclosure Schedule
also
sets forth a complete and correct list of all written or oral licenses and
arrangements (other than ordinary course licenses of commercially available
software), (A) pursuant to which the use by any Person of Intellectual
Property is permitted by any Company or (B) pursuant to which the use by
any Company of Intellectual Property is permitted by any Person (collectively,
the “Intellectual
Property Licenses”).
The
Intellectual Property Licenses are in full force and effect.
(c) The
continued operation of the Business as presently conducted does not interfere
with, infringe upon, misappropriate, or otherwise come into conflict with,
any
intellectual property rights of third parties except as would not reasonably
be
expected to have a Company Material Adverse Effect.
(d) There
is
no claim or demand of any Person pertaining to, or any proceeding which is
pending or, to the Knowledge of the Companies, threatened, that challenges
the
rights of any Company in respect of any Owned Intellectual Property, or claims
that any default exists under any Intellectual Property License.
(e) All
of
the copyrights in any of the products of any Company (including but not limited
to any works of authorship incorporated in or distributed with such products)
are owned by or licensed to such Company and, if licensed, are subject to
Intellectual Property Licenses that are in full force and effect.
(f) None
of
the Companies has created any Intellectual Property under contract with U.S.
government customers.
(g) Section
3.12(g) of the Disclosure Schedule lists all employees of the Companies and
all
other Persons who have been involved in the development of Owned Intellectual
Property, including computer programs and software (including source code,
object code and databases). Except as specified in Section 3.12(g) of the
Disclosure Schedule, all such employees and other Persons have entered into
confidentiality and assignment of inventions agreements substantially in
the
form included in Section 3.12 of the Disclosure Schedule.
Section
3.13. Contracts.
(a)
Section 3.13 of the Disclosure Schedule sets forth all of the following types
of
Contracts to which any Company is a party or by which it is bound and
categorizes such Contracts by the types described below: (i) Contracts relating
to the employment of any Person, or any bonus, deferred compensation, pension,
profit sharing, stock option, employee stock purchase, retirement, retention,
severance, or change of control arrangement; (ii) Contracts other than those
described in clause (i) with any current or former officer, director or employee
of any Company, or any Affiliate of any Company or any such Person; (iii)
Contracts with any employee or labor union or association representing any
employee; (iv) Contracts relating to capital expenditures other than
Contracts not exceeding $25,000 individually or $50,000 in the aggregate;
(v)
Contracts entered into within the last five years relating to the acquisition
or
disposition of any equity interests in or, except in the ordinary course
of
business, assets of any Person; (vi) joint venture or partnership agreements;
(vii) Contracts limiting the ability of any Company to engage in any line
of
business or to compete with any Person or to conduct business in any
geographical area or to solicit any Person for employment; (viii) Contracts
relating to the confidentiality or limitation on use of any information;
(ix)
Contracts relating to any Indebtedness of any Company (other than accounts
payable to trade creditors in the ordinary and usual course of business
consistent with past custom and practice), including credit facilities,
promissory notes, security agreements, and other credit support arrangements;
(x) Contracts relating to any loan (other than accounts receivable from trade
debtors in the ordinary and usual course of business consistent with past
custom
and practice) or advance to (other than ordinary course travel allowances
to the
employees of any Company), or investments in, any Person; (xi) Contracts
relating to any guarantee or other contingent Liability in respect of any
Indebtedness or obligation of any Person (other than the endorsement of
negotiable instruments for collection in the ordinary and usual course of
business consistent with past custom and practice); (xii) all customer Contracts
pursuant to which aggregate payments exceeding $10,000 are to be made to
the
Companies; (xiii) any license agreement relating in whole or in part to
Intellectual Property (other than standard “off-the-shelf” or “shrink-wrap”
license agreements); and (xiv) all other material Contracts. There are no
outstanding powers of attorney executed on behalf of any Company.
(b) Complete
copies of the items required to be set forth in Section 3.13 of the Disclosure
Schedule have previously been furnished to Parent. All of the Companies'
Contracts (including all Real Property Leases) shall, following the Closing,
remain enforceable by the applicable Company and, to the Knowledge of the
Company, binding on the other parties thereto, without the Consent of any
third
party. None of the Companies is in material default, nor has any event occurred
which, with the giving of notice or the passage of time or both, would
constitute a material default, under any Contract or any other obligation
owed
by any Company, and, to the Knowledge of the Company, no event has occurred
which, with the giving of notice or the passage of time or both, would
constitute a material default by any other party to any such Contract. Each
of
the Contracts disclosed in Section 3.13 of the Disclosure Schedule is in
full
force and effect, is valid and enforceable in accordance with its terms and,
to
the Knowledge of the Companies, is not subject to any claims, charges, setoffs
or defenses.
Section
3.14. Employee
Benefits.
(a) Section
3.14 of the Disclosure Schedule sets forth a complete and correct list of
(i)
all “employee benefit plans,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
and
any other pension plans or employee benefit agreements, arrangements, programs
or payroll practices (including without limitation severance pay, other
termination benefits or compensation, vacation pay, company awards, salary
continuation for disability, sick leave, retirement, deferred compensation,
bonus or other incentive compensation, stock purchase arrangements or policies,
hospitalization, medical insurance, life insurance and scholarship programs)
under which any Company has any material liability, whether contingent or
otherwise (“Employee
Benefit Plans”).
Section 3.14 of the Disclosure Schedule identifies, in separate categories,
Employee Benefit Plans that are (i) subject to Section 4063 and 4064 of
ERISA (“Multiple
Employer Plans”),
(ii)
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) (“Multiemployer
Plans”)
or
(iii) “benefit plans”, within the meaning of Section 5000(b)(1) of the Code
providing continuing benefits after the termination of employment (other
than as
required by Section 4980B of the Code or Part 6 of Title I of ERISA or similar
state or local law).
(b) No
Employee Benefit Plan is (i) a defined benefit plan subject to Title IV of
ERISA, (ii) a Multiemployer Plan or (iii) a Multiple Employer Plan.
(c) Each
of
the Employee Benefit Plans intended to qualify under Section 401 of the Code
(“Qualified
Plans”)
and
has received a determination letter from the IRS to such effect and the trusts
maintained thereto are exempt from federal income taxation under Section
501 of
the Code and nothing has occurred or is expected to occur with respect to
the
operation of any such plan which would reasonably be expected to cause the
loss
of such qualification or exemption.
(d) All
material contributions and premiums required by Law or by the terms of any
Employee Benefit Plan or any agreement relating thereto have been timely
paid.
(e) There
has
been no material violation of or material failure to comply with ERISA or
the
Code with respect to the filing of applicable returns, reports, documents
and
notices regarding any of the Employee Benefit Plans with the DOL, the IRS,
the
PBGC or any other Governmental Body or the furnishing of such notices or
documents to the participants or beneficiaries of the Employee Benefit
Plans.
(f) True,
correct and complete copies of the following documents, with respect to
each of the Employee Benefit Plans, have been delivered to or made available
to
Purchaser: (A) any plans and related trust documents (all amendments thereto),
investment management agreements, administrative service contracts, group
annuity contracts, insurance contracts, collective bargaining agreements
and
employee handbooks, (B) the most recent Forms 5500 for the past three years
and
schedules thereto, (C) the most recent financial statements and actuarial
valuations for the past three years, (D) the most recent IRS determination
letter, (E) the most recent summary plan descriptions (including letters
or
other documents updating such descriptions) and (F) written descriptions
of all
non-written agreements relating to the Employee Benefit Plans.
(g) There
are
no pending Legal Proceedings which have been asserted or instituted or, to
the
Knowledge of the Companies, threatened against any of the Employee Benefit
Plans, the assets of any such plans or of any related trust or any Company,
the
plan administrator or any fiduciary of the Employee Benefit Plans with respect
to the operation of such plans (other than routine benefit claims), and there
are no facts or circumstances which could form the basis for any such Legal
Proceeding. No Employee Benefit Plan is under audit or investigation by the
IRS,
DOL, or any other Government Body and no such completed audit, if any, has
resulted in the imposition of Tax, interest, or penalty.
(h) Except
as
disclosed in Section 3.14 of the Disclosure Schedule, each of the Employee
Benefit Plans complies in all material respects with its terms and all
provisions of applicable Law, including ERISA and the Code, and all reporting
requirements have been satisfied on a timely basis.
(i) Each
Company which maintains a “group health plan” within the meaning of Section
5000(b)(1) of the Code and each plan sponsor or administrator is in material
compliance with the COBRA reporting, disclosure, notice, election, and other
benefit continuation and coverage requirements of Section 4980B of the Code
or
Part 6 of Title I of ERISA and the applicable regulations thereunder and
any
comparable state laws.
(j) None
of
the Companies, nor to the knowledge of the Companies, a “party in interest” or
“disqualified person” with respect to the Employee Benefit Plans has engaged in
a “prohibited transaction” within the meaning of Section 4975 of the Code or
Section 406 of ERISA which has subjected or could subject any Company,
Purchaser, Parent or any trustee, administrator or other fiduciary to a material
tax penalty on such prohibited transaction.
(k) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming
due to
any employee; (ii) increase any benefits otherwise payable under any Employee
Benefit Plan; or (iii) result in the acceleration of the time of payment
or
vesting of any such benefits.
(l) No
security issued by any Company forms or has formed any part of the assets
of any
Employee Benefit Plan.
(m) The
consummation of the transactions contemplated by this Agreement will not
give
rise to any liability for termination of any agreements related to any Employee
Benefit Plan.
(n) No
amounts payable under any Employee Benefit Plan or any other agreement will
fail
to be deductible for federal income tax purposes by virtue of Section 280G
of
the Code.
(o) Each
Employee Benefit Plan that purports to provide benefits which qualify for
tax-favored treatment under Sections 79, 105, 106, 117, 120, 125, 127, 129,
and
132 of the Code satisfies the requirements of said Section(s).
(p) Each
Employee Benefit Plan or any other agreement that purports to defer income
complies with Section 409A of the Code.
(q) Each
Employee Benefit Plan, its related trust and insurance agreement may be
unilaterally amended or terminated on no more than 90 days notice.
Section
3.15. Labor.
(a) None
of
the Companies is or has been a party to any labor or collective bargaining
agreement.
(b) No
labor
organization or group of employees of any Company has made a pending demand
for
recognition, and there are no representation proceedings or petitions seeking
a
representation proceeding presently pending or, to the Knowledge of the
Companies, threatened to be brought or filed, with the National Labor Relations
Board or other labor relations tribunal. There is no organizing activity
involving any Company pending or, to the Knowledge of the Companies, threatened
by any labor organization or group of employees of any Company.
(c) There
are
no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii)
grievances or other labor disputes pending or, to the Knowledge of any Company,
threatened against any Company. There are no unfair labor practice charges,
grievances or complaints pending or, to the Knowledge of the Companies,
threatened by or on behalf of any employee or group of employees of any
Company.
(d) There
are
no complaints, charges or claims against any Company pending or, to the
Knowledge of the Companies, threatened which would reasonably be expected
to be
brought or filed, with any public or Governmental Body based on, arising
out of,
in connection with, or otherwise relating to the employment or termination
of
employment by any Company, of any individual.
(e) Each
of
the Companies is in compliance in all material respects with all Laws and
Orders
relating to the employment of labor, including all such Laws and orders relating
to wages, hours, the Worker Adjustment and Retraining Notification Act and
any
similar state, local or foreign “plant closing” Law (“WARN”),
collective bargaining, discrimination, civil rights, safety and health, worker’s
compensation, payment of overtime wages and the collection and payment of
withholding and/or social security taxes and any similar tax.
(f) To
the
Knowledge of the Companies, no executive, key employee, or group of employees
currently has any plans to terminate employment with any Company independently
of or as a result of this Agreement.
Section
3.16. Litigation.
Except
as set forth in Section 3.16 of the Disclosure Schedule, there is no suit,
action, proceeding, investigation, complaint or claim pending or, to the
Knowledge of the Companies, threatened against any Company (or pending or
threatened against any of the officers, directors or key employees of any
Company in relation to any Company or its business) before any court or other
Governmental Body or any arbitral tribunal, nor is there any basis for any
such
suit, action, proceeding, investigation, complaint or claim. None of the
Companies has received any written opinion or memorandum or legal advice
from
legal counsel retained by any Company to the effect that it is exposed, from
a
legal standpoint, to any material Liability. None of the Companies is engaged
in
any legal action to recover monies due it or for damages sustained by it.
Section 3.16 of the Disclosure Schedule sets forth a list of all closed
litigation matters to which any Company was a party during the five (5) years
preceding the date hereof, the date such litigation was commenced or concluded,
and the nature of the resolution thereof (including amounts paid in settlement
or judgment). None of the Companies is subject to any Order of any Governmental
Body.
Section
3.17. Compliance
with Laws; Permits.
Each
Company is, and has at all times been, in compliance with all Laws applicable
to
it or the operation, use, occupancy or ownership of its assets or properties
or
the conduct of its business, except where such failure to comply would not
reasonably be expected to have a Company Material Adverse Effect. None of
the
Companies has received notice (written or oral) from any Governmental Body
of,
and has no Knowledge of, any failure to comply with any Law. Each Company
holds
all Permits necessary under Law for the conduct of such Company's business
as
currently conducted or proposed to be conducted, and none of the operations
of
any Company are being conducted in violation of any Permit held by any of
the
Companies, except where the failure to have such Permit would not reasonably
be
expected to have a Company Material Adverse Effect. There is no investigation
by
a Governmental Body pending against or, to the Knowledge of the Companies,
threatened against any Company.
Section
3.18. Environmental
Matters.
(a)
The
operations of each Company are in compliance in all material respects with
all
applicable Environmental Laws and all Permits issued pursuant to Environmental
Laws or otherwise (“Environmental
Permits”);
(b)
Each
Company has obtained and currently maintains all Environmental Permits required
under all applicable Environmental Laws necessary to operate the
Business;
(c)
No
Company is the subject of any outstanding written Order or Contract with
any
Governmental Entity or other Person respecting (i) Environmental Laws,
(ii) Remedial Action or (iii) any Release or threatened Release of a
Hazardous Material;
(d)
No
Company has received any written communication alleging either that it may
be in
violation of any Environmental Law or Environmental Permit or that it may
have
any liability under any Environmental Law;
(e)
No
Company has incurred, assumed or undertaken any current contingent liability
in
connection with any Release of any Hazardous Materials into the indoor or
outdoor environment (whether on-site or off-site) and there are no facts,
circumstances or conditions relating to, arising out of or attributable to
it
that could give rise to liability under Environmental Laws, except as would
not
reasonably be expected to have a Company Material Adverse Effect;
(f)
To
the Knowledge of the Company, there is not located at any of the properties
of
any Company any (i) underground storage tanks, (ii) asbestos-containing material
or (iii) equipment containing polychlorinated biphenyls; and
(g)
Each
Company has provided to Parent all environmentally related audits, studies,
reports, analyses, and results of investigations that have been performed
with
respect to the currently or previously owned, leased or operated properties
of
such Company that are within the possession or control of such
Company.
Section
3.19. Insurance.
Section
3.19 of the Disclosure Schedule includes a correct and complete list and
description, including policy number, coverage and deductible, of all insurance
policies owned by each Company, complete copies of which policies have
previously been delivered to Purchaser. Such policies are in full force and
effect, all premiums due thereon have been paid and no Company is in default
thereunder. No Company has received any notice of cancellation or intent
to
cancel or increase or intent to increase premiums with respect to such insurance
policies. Section 3.19 of the Disclosure Schedule also contains a list of
all
pending claims and any claims in the past two (2) years with any insurance
company by any Company and any instances within the previous two (2) years
of a
denial of coverage of any Company by any insurance company.
Section
3.20. Receivables;
Payables.
(a) The
accounts receivable of each Company reflected in the Final Closing Statement
have arisen in bona fide arm's-length transactions in the ordinary and usual
course of business consistent with past custom and practice, and, subject
to the
allowance for doubtful accounts set forth in the Final Closing Statement,
all
such receivables are valid and binding obligations of the account debtors
without any counterclaims, setoffs or other defenses thereto and are collectible
in the ordinary and usual course of business consistent with past custom
and
practice. All such reserves, allowances and discounts were and are adequate
and
consistent in extent with the reserves, allowances and discounts previously
maintained by the Companies in the ordinary and usual course of business
consistent with past custom and practice and determined in accordance with
GAAP.
All work-in-process or accrued billing reflected in the Final Closing Statement
has been performed pursuant to a customer order or contract therefor and
shall
become accounts receivable in due course, which shall be collectible for
the
full amount in the ordinary and usual course of business consistent with
past
custom and practice at the full recorded amount thereof.
(b) All
accounts payable of each Company reflected on the Financial Statements and/or
Final Closing Statement are the result of bona fide transactions in the ordinary
course of business and have been paid or are not yet due and payable, except
for
accounts payable that are being disputed in good faith in an appropriate
manner.
Section
3.21. Related
Party Transactions.
Except
as described in Section 3.21 of the Disclosure Schedule, no Company has loaned
or borrowed any amounts from and does not have outstanding any Indebtedness
or
other similar obligations to or owing from any Affiliate of any Company.
No
Company nor any Affiliate of any Company nor any officer or employee of any
of
them (i) owns any direct or indirect interest of any kind in, or controls
or is
a director, officer, employee or partner of, or consultant to, or lender
to or
borrower from or has the right to participate in the profits of, any Person
which is (A) a competitor, supplier, customer, landlord, tenant, creditor
or
debtor of any Company, (B) engaged in a business related to the business
of any
Company, or (C) a participant in any material transaction to which any Company
is a party or (ii) is a party to any Contract with any Company. No Company
has
any Contract or understanding with any officer, director, employee or
shareholder of any Company, or any Affiliate of any such Person that relates,
directly or indirectly, to the subject matter of any Transaction Document
or the
consideration payable thereunder or that contains any terms, provisions or
conditions relating to any Company’s entry into or performance of any
Transaction Document (including any terms, provisions or conditions the
consequences of which are dependent upon any of the matters addressed by
Section
1.5).
Section
3.22. Customers;
Projects.
Section
3.22 of the Disclosure Schedule is a complete and correct list of all clients
and customers of each Company as of April 30, 2007. Except as set forth on
Section 3.22 of the Disclosure Schedule, since December 31, 2006, no client
or
customer has cancelled or otherwise terminated, reduced, or threatened to
cancel
or terminate or reduce, its relationship with any Company.
Section
3.23. No
Misrepresentation.
No
representation or warranty of any Company and/or any Seller contained in
this
Agreement or any other Transaction Document or in any Schedule hereto or
thereto
or in any certificate or other instrument furnished to Purchaser pursuant
to the
terms hereof or thereof contains any untrue statement of a material fact
or
omits to state a material fact necessary to make the statements contained
herein
or therein not misleading.
Section
3.24. Financial
Advisors.
Except
as described in Section 1.10, no Company has any Liability or obligation
to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement. Sellers and AWAC shall be solely
responsible for any obligations described in this Section 3.24 (including
Section 1.10) and will jointly and severally indemnify and hold the Purchaser
Indemnitees harmless from and against any Losses resulting from or arising
out
of or any such obligations or matters.
Section
3.25. Disclaimer
of Additional Representations and Warranties.
Except
as set forth in the Transaction Documents, Sellers and the Companies make
no
representation or warranty, express or implied, at law or in equity, in respect
of the Companies, or any of their respective assets, liabilities or operations,
including with respect to merchantability or fitness for any particular purpose,
and any such other representations or warranties are hereby expressly
disclaimed.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF PURCHASER
Purchaser
represents and warrants to the Sellers and AWAC that the following statements
are correct and complete as of the date hereof.
Section
4.1. Organization.
(a)
Purchaser is a limited liability company duly organized, validly existing
and in
good standing under the laws of the State of Delaware. Purchaser is duly
qualified or authorized to do business as a foreign company and is in good
standing under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business
or the
ownership of its properties requires such qualification or authorization,
except
where the failure to be so qualified or authorized would not have a material
adverse effect on the business or assets of Purchaser.
(b) Purchaser
is a wholly-owned Subsidiary of Parent. Purchaser has conducted no material
operations.
Section
4.2. Authorization
of Transaction.
The
execution, delivery and performance of the Transaction Documents to which
Purchaser is a party have been duly authorized by all necessary action by
or on
behalf of Purchaser. Purchaser has full power and authority to execute and
deliver this Agreement and each other Transaction Document to which it is
a
party, and to perform its obligations hereunder and thereunder. This Agreement
and each Transaction Document to which Purchaser is or will be a party has
been
or will be duly and validly executed and delivered and constitutes the valid
and
legally binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally and subject, as to enforceability, to general principles
of
equity (regardless of whether enforcement is sought in a proceeding at law
or in
equity). Purchaser is not required to give any notice to, make any filing
with,
or obtain any authorization, consent, or approval of any Governmental Body
in
order to consummate the transactions contemplated by this Agreement and each
such Transaction Document.
Section
4.3. Non-contravention.
Neither
the execution and the delivery by Purchaser of this Agreement and the other
Transaction Documents to which it is a party, nor the consummation of the
transactions contemplated hereby and thereby on the part of Purchaser, will
(i)
conflict with, or result in the breach of, any provision of the Organizational
Documents of the Purchaser; (ii) conflict with, violate, result in the
breach or termination of, or constitute a default under any Contract to which
the Purchaser is a party or by which the Purchaser or its properties or assets
is bound, or require a Consent from any Person in order to avoid any such
conflict, violation, breach, termination or default; (iii) violate any Law
or
any Order by which the Purchaser is bound; or (iv) result in the creation
of any
Lien upon the properties or assets of the Purchaser, excluding from the
foregoing clauses (ii), (iii), and (iv), such conflicts, breaches, terminations,
defaults, violations, Liens or other matters that would not have a Material
Adverse Effect on the Purchaser. No Order, Permit or waiver, or declaration
or
filing with any Governmental Body is required on the part of Purchaser in
connection with the execution, delivery and performance of this Agreement
or the
other Transaction Documents to which it is a party, or the compliance by
Purchaser with any of the provisions hereof or thereof.
Section
4.4. Brokers’
Fees.
Purchaser has no Liability or obligation to pay any fees or commissions to
any
broker, finder or agent with respect to the transactions contemplated by
this
Agreement. Purchaser shall be solely responsible for any obligations described
in this Section 4.4 and will jointly and severally indemnify and hold the
Sellers harmless from and against any Losses resulting from or arising out
of or
any such obligations or matters.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent
represents and warrants to the Sellers and AWAC that the following statements
are correct and complete as of the date hereof and as of the Closing Date.
Section
5.1. Organization.
Parent
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware. Parent is duly qualified or authorized to
do
business as a foreign corporation and is in good standing under the laws
of each
jurisdiction in which it owns or leases real property and each other
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified or authorized would not have a material adverse
effect on the business or assets of Parent.
Section
5.2. Authorization
of Transaction.
The
execution, delivery and performance of the Transaction Documents to which
Parent
is a party have been duly authorized by all necessary action by Parent. Parent
has full power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party, and to perform its
obligations hereunder and thereunder. This Agreement and each Transaction
Document to which Parent is a party has been or will be duly and validly
executed and delivered and constitutes the valid and legally binding obligation
of Parent, enforceable against Parent in accordance with its terms, subject
to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws
affecting creditors’ rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Parent is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Body in order to
consummate the transactions contemplated by this Agreement and each other
Transaction Document.
Section
5.3. Non-contravention.
Neither
the execution and the delivery by Parent of this Agreement and each other
Transaction Document to which it is or will be a party, nor the consummation
of
the transactions contemplated hereby and thereby on the part of Parent, will
(i)
conflict with, or result in the breach of, any provision of the Organizational
Documents of the Parent; (ii) conflict with, violate, result in the breach
or termination of, or constitute a default under any Contract to which the
Parent is a party or by which the Parent or its properties or assets is bound,
or require a Consent from any Person in order to avoid any such conflict,
violation, breach, termination or default; (iii) violate any Law or any Order
by
which the Parent is bound; or (iv) result in the creation of any Lien upon
the properties or assets of the Parent, excluding from the foregoing
clauses (ii), (iii), and (iv), such conflicts, breaches, terminations, defaults,
violations, Liens or other matters that would not have a Material Adverse
Effect
on the Parent. No Order, Permit or waiver, or declaration or filing with
any
Governmental Body is required on the part of Parent in connection with the
execution, delivery and performance of this Agreement or the other Transaction
Documents to which it is a party, or the compliance by Parent with any of
the
provisions hereof or thereof.
Section
5.4. Status
of the Shares.
The
Parent Shares have been duly authorized and, when issued in accordance with
the
terms of this Agreement, will be validly issued, fully paid and nonassessable
shares of Parent Common Stock and
will
be free and clear of all Liens created by or through Parent. The issuance
and
delivery of the Parent Shares is not subject to any preemptive right of
shareholders of Parent that has not been waived or to any right of first
refusal
or other right in favor of any person that has not been waived. No shareholder
vote of the Parent or any of its Affiliates is required to issue the Parent
Common Stock.
Section
5.5. SEC
Documents.
Since
December 31, 2006, Parent has filed all required reports, schedules, forms,
statements and other documents with the SEC (such documents being referred
to
herein collectively as the “Parent
SEC Documents”).
As of
their respective dates, the Parent SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Securities Exchange
Act of 1934, as amended (the “Exchange
Act”),
as
the case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to the Parent SEC Documents, and none of the Parent SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Parent included in the Parent SEC
Documents, as of their respective dates, complied in all material respects
with
applicable accounting requirements and the published rules and regulations
of
the SEC with respect thereto, were prepared in accordance with GAAP (except,
in
the case of unaudited statements, as permitted by Form 10 Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated
in
the notes thereto) and fairly present the financial position of Parent and
its
consolidated subsidiaries as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case
of
unaudited statements, to normal year end audit adjustments and other adjustments
described therein).
Section
5.6. Brokers’
Fees.
Parent
has no Liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement.
Parent shall be solely responsible for any obligations described in this
Section
5.6 and will jointly and severally indemnify and hold the Sellers harmless
from
and against any Losses resulting from or arising out of or any such obligations
or matters.
Section
5.7. Litigation.
There
is no action, suit or proceeding, claim, arbitration or investigation against
Parent or any of its Affiliates pending or as to which Parent or any such
Affiliate has received written notice of assertion which, individually or
in the
aggregate, is reasonably likely to have a Material Adverse Effect on Parent
and
its Affiliates, taken as a whole, or a material adverse effect on the ability
of
Parent or its Affiliates to consummate the transactions contemplated by this
Agreement.
Section
5.8. Purchase
Price.
At the
Closing, Parent shall have the financial resources available to fund the
payment
of the Net Closing Amount.
Section
5.9. No
Undisclosed Liabilities.
Except
as disclosed in the Parent SEC Documents filed prior to the date hereof,
and
except for liabilities incurred in the ordinary course of business consistent
with past practice, Parent and its Affiliates do not have any liabilities,
either accrued, contingent or otherwise (whether or not required to be reflected
in the financial statements in accordance with GAAP), and whether due or
to
become due, which individually or in the aggregate, are reasonably likely
to
have a Material Adverse Effect on the Parent and its Affiliates, taken as
a
whole.
Section
5.10. Compliance
with Laws.
Parent
and each of its Affiliates has complied with, is not in violation of, and
has
not received any notices of violation with respect to, any federal, state
or
local or foreign statute, law or regulation with respect to the conduct of
its
business, or the ownership or operation of the business, except for failures
to
comply or violations which, individually or in the aggregate, have not had
and
are not reasonably likely to have a Material Adverse Effect on the Parent
and
its Affiliates, taken as a whole.
ARTICLE
VI
CONDITIONS
TO CLOSING
Section
6.1. Conditions
Precedent to Obligations of Purchaser at the Closing.
The
obligation of Parent and Purchaser to consummate the transactions contemplated
by this Agreement is subject to the fulfillment, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived
by
Parent and Purchaser in whole or in part to the extent permitted by applicable
Law):
(a) all
representations and warranties of any Company and/or any Seller contained
herein
shall be true and correct in all material respects on and as of the Closing
Date
provided,
however,
that
for purposes of the foregoing clause representations and warranties that
contain
materiality qualifiers (or the like) shall be true and correct in all
respects;
(b) each
Company and each Seller shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to
be
performed or complied with by such Company or such Seller on or prior to
the
Closing Date;
(c) there
shall not have been or occurred any Company Material Adverse Change since
December 31, 2006;
(d) no
Legal
Proceedings shall have been instituted or threatened or claim or demand made
against any Company, any Seller, Parent or Purchaser seeking to restrain
or
prohibit or to obtain substantial damages with respect to the consummation
of
the transactions contemplated hereby;
(e) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby;
(f) any
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976,
as amended (the “HSR
Act”),
applicable to the transactions contemplated by this Agreement shall have
expired
or been terminated;
(g) the
Employment Agreement shall be in full force and effect and the employee party
thereto shall not have become employed by any Person other than any Company
or
indicated that he does not intend to continue employment with the applicable
Company following the Closing;
(h) Each
Seller shall have delivered to Purchaser the following:
(i) certificates
representing all shares of Capital Stock, endorsed in blank or
with
stock powers duly executed to transfer all such Capital Stock to
Purchaser;
(ii) assignments
representing all issued and outstanding Membership Interests owned by such
Seller, executed
to transfer all Membership Interests to Purchaser;
(iii) a
copy of
IRS Form W-9 duly and properly executed by such Seller;
(iv) an
affidavit described in Section 1445(b)(2) of the Code from such Seller in
form
and substance reasonably satisfactory to Purchaser; and
(v) such
other documents, instruments or certificates as shall be reasonably requested
by
Purchaser or its counsel.
(i) The
Representative shall have delivered to Purchaser the following:
(i) a
certificate executed by the Representative dated the Closing Date to the
effect
that each of the conditions specified in Section 6.1(a) through (c) is satisfied
in all respects;
(ii) a
legal
opinion of King & Spalding, counsel for the Company, in the form of
Exhibit
D
hereto;
(iii) a
certificate of the secretary of each Company certifying to (A) such Company’s
attached Organizational Documents, (B) the adoption of resolutions of such
Company and its shareholders or members, as applicable, and (C) the incumbency
of the officers signing the Transaction Documents on behalf of such Company
(together with their specimen signatures);
(iv) good
standing certificates for each Company certified by the Secretary of State
of
the state of organization of each Company, as of a recent date;
(v) all
Consents listed on Schedule II;
(vi) a
duly
executed estoppel certificate with respect to each Real Property Lease in
form
and substance satisfactory to Purchaser and its counsel;
(vii)
letters
in form and substance reasonably satisfactory to Purchaser from all holders
of
Indebtedness of each Company that would be reflected on such Company’s
consolidated balance sheet as of the Closing Date or that is secured by any
of
such Company's assets confirming that, upon payment of amounts specified in
such letters, such Indebtedness will be fully paid and satisfied and all
related
Liens will be released, and providing Purchaser with the authority to file
appropriate UCC termination statements and other evidences of lien release
with
respect thereto (including any such filings to be made with the United States
Patent and Trademark Office);
(viii) confirmation
that there is no Indebtedness owing from directors, officers, employees or
members of any Company as of the time of the Closing; and
(ix) such
other documents, instruments or certificates as shall be reasonably requested
by
Purchaser or its counsel;
(j)
all the
directors and officers of each Company other than AWAC shall have resigned
effective as of the Closing, except that Xx. Xxxxxxxx shall continue to serve
as
a director of IHS and iProcert (and shall be elected to the Board of Directors
of Purchaser) and shall continue to serve as the President and Chief Executive
Officer of IHS and iProcert (and shall be elected as the President and Chief
Executive Officer of Purchaser) (all current directors and officers of the
Companies being listed on Schedule III), and individuals designated by Purchaser
shall have been elected or appointed as directors and officers of the Companies
(other than AWAC), effective as of the Closing; and
(k) AWAC
shall have delivered to Purchaser (i) the duly executed Xxxx of Sale and
(ii)
certificates of title to all motor vehicles included in the AWAC Assets (if
any), duly endorsed for transfer to Purchaser as of the Closing
Date.
Section
6.2. Conditions
Precedent to Obligations of the Sellers at the Closing.
The
obligations of the Sellers to consummate the transactions contemplated by
this
Agreement are subject to the fulfillment, prior to or on the Closing Date,
of
each of the following conditions (any or all of which may be waived by the
Representative in whole or in part to the extent permitted by applicable
Law):
(a) all
representations and warranties of Purchaser and Parent contained herein shall
be
true and correct in all material respects on and as of the Closing Date (except
to the extent expressly made as of an earlier date) provided,
however,
that
for purposes of the foregoing clause representations and warranties that
contain
materiality qualifiers (or the like) shall be true and correct in all
respects;
(b) Purchaser
and Parent shall have performed and complied in all material respects with
all
obligations and covenants required by this Agreement to be performed or complied
with by Purchaser or Parent, as applicable, on or prior to the Closing Date;
(c) the
Purchaser shall have delivered to the Representative a certificate executed
by
an officer of Purchaser dated the Closing Date, to the effect that each of
the
conditions specified in Section 6.2(a) and (b) is satisfied in all
respects.
(d) no
Legal
Proceedings shall have been instituted or threatened or claim or demand made
against the Company, any Seller, Parent or Purchaser seeking to restrain
or
prohibit or to obtain substantial damages with respect to the consummation
of
the transactions contemplated hereby;
(e) the
Parent Guaranty shall be in full force and effect;
(f) there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation
of
the transactions contemplated hereby;
(g) any
waiting period under the HSR Act applicable to the transactions contemplated
by
this Agreement shall have expired or been terminated;
(h) Purchaser
shall have delivered to the Representative an opinion of Akerman Senterfitt
LLP,
counsel for Purchaser and Parent, in the form of Exhibit
E;
(i) there
shall not have been or occurred any material adverse change in the assets,
financial condition or results of operation of Parent or Purchaser since
December 31, 2006; and
(j) Purchaser
shall have delivered to AWAC the duly executed Xxxx of Sale.
ARTICLE
VII
COVENANTS
Section
7.1. General.
If any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any
other
party reasonably may request.
Section
7.2. No
Solicitation.
During
the Closing Period, each Company and Sellers shall, and shall cause their
respective employees, directors, agents and Affiliates to, immediately suspend
any existing negotiations or discussions relating to any sale, joint venture
or
other transfer of actual or beneficial ownership of any securities, operations
or any assets of any Company (other than goods and services sold in the ordinary
course of business) (collectively, an “Acquisition
Transaction”),
and
none of the Companies shall, and each Company and each Seller shall cause
its
employees, directors, agents and Affiliates not to, (i) solicit any
proposals or offers relating to an Acquisition Transaction or
(ii) negotiate or engage in discussions with any third party concerning any
proposal or offer for an Acquisition Transaction.
Section
7.3. Conduct
of the Business.
Except
as otherwise expressly permitted by this Agreement or as otherwise consented
to
by Parent and Purchasers in writing, each Company and the Sellers shall refrain
from taking or omitting any action which, if taken or omitted prior to the
date
hereof, would cause the representations in Section 3.8 to be untrue in any
material respect.
Section
7.4. Information.
Each
Company and each Seller shall (and shall cause its accountants, counsel,
consultants, employees and agents to) give Parent and Purchaser and their
respective accountants, counsel, consultants, employees and agents, reasonable
access during normal business hours to, and furnish them with all documents,
records, work papers and information with respect to, all properties, assets,
books, contracts, commitments, reports and records of, each Company, as Parent
and Purchaser shall from time to time reasonably request. In addition, each
Company and each Seller shall permit Parent and Purchaser, and their
accountants, counsel, consultants, employees and agents, reasonable access
to
such personnel of such Company during normal business hours as may be reasonably
necessary in connection with their review of the properties, assets and business
affairs of such Company and the above-mentioned documents, records and
information. Parent and Purchaser shall have the right, upon giving reasonable
advance notice, to enter upon and inspect the properties of the
Companies.
Section
7.5. Maintenance
of Properties; Damage and Destruction.
(a)
During the Closing Period, each Company shall (i) use commercially
reasonable efforts to maintain its assets in the condition and state of repair
normally maintained by it in the conduct of its business, keep in service
its
officers and employees and preserve the goodwill of the Business;
(ii) maintain its books, accounts and records in the ordinary course of
business; (iii) comply in all material respects with all Contractual
obligations; and (iv) comply in all material respects with all applicable
Laws.
(b)
If a
material portion of the assets and properties of any Company shall be
substantially damaged or destroyed by fire or other cause on or prior to
the
Closing Date, the Representative shall promptly notify Purchaser and furnish
to
Purchaser a statement of the amount of insurance, if any, payable on account
thereof. In the event of damage or destruction of a portion of the assets
and
properties of any Company having a Company Material Adverse Effect or that
may
reasonably be expected to have a Company Material Adverse Effect, Purchaser
may
elect to terminate this Agreement.
Section
7.6. HSR
Filing.
The
Companies and Parent have each filed a premerger notification and report
form
under the HSR Act with respect to the transactions contemplated by this
Agreement. Parent shall pay all filing fees related to the premerger
notification and report form under the HSR Act. Each Party shall bear its
own
counsel fees and all other expenses relating to their respective premerger
notification and report forms under the HSR Act. Each of the Parties agrees
to
use commercially reasonable efforts to promptly respond to any request for
additional information pursuant to Section (e)(1) of the HSR Act. Nothing
contained in this Agreement shall be construed so as to require Parent, any
Company or any of their respective Subsidiaries or Affiliates, to sell, license,
dispose of, or hold separate, or to operate in any specified manner, any
of
their respective assets or businesses (or to agree to any of the foregoing).
Section
7.7. Litigation
Support.
Following the Closing, in the event and for so long as any Party actively
is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i)
any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstances, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing
Date
involving any Company, each of the other Parties will cooperate reasonably
with
such Party and such Party’s counsel in the contest or defense, make available
their personnel, and provide such testimony and access to their books and
records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending
Party
(unless the contesting or defending Party is entitled to indemnification
therefor hereunder).
Section
7.8. Confidentiality.
From
and after the date hereof (unless this Agreement is terminated in accordance
with its terms), each Seller and AWAC (each, an "Obligated
Party")
will,
and will cause such Obligated Party's Affiliates to, hold in strict confidence,
and will not, and will cause such Obligated Party's Affiliates not to, disclose
to any third party or use for any purpose, any and all information with respect
to each Company, its business, the Transaction Documents or the transactions
contemplated thereby, any information received by any Obligated Party regarding
the Purchaser or the Parent, or any information regarding the Party’s
negotiations (collectively, “Confidential
Information”).
Notwithstanding the foregoing, each Obligated Party may, and may permit such
Obligated Party's Affiliates to, disclose Confidential Information (i) if
compelled to disclose the same by judicial or administrative process or by
other
requirements of Law (but subject to the following provisions of this Section),
(ii) if the same hereafter is in the public domain through no fault of such
Obligated Party, or (iii) if the same is later acquired by such Obligated
Party
from another source that is not under an obligation to another Person to
keep
such information confidential. In addition, any Obligated Party may disclose
Confidential Information (i) in the ordinary course of business consistent
with
past practices in connection with such Obligated Party’s post-Closing employment
and duties with IHS or iProcert, subject to the applicable policies and
procedures of such Companies, Purchaser and Parent, and (ii) to his attorneys
and financial advisors so long as such attorneys and financial advisors are
advised of the confidential nature of such Confidential Information.
"Confidential Information" shall not include information regarding the
post-Closing operations of AWAC, if any, that are undertaken in compliance
with
this Agreement. If such Obligated Party or any of such Obligated Party's
Affiliates is requested or required (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) to disclose any Confidential
Information, such Obligated Party shall provide Purchaser with prompt written
notice of any such request or requirement so that Obligated Party may seek
a
protective order or other appropriate remedy and/or waive compliance with
the
provisions of this Section. If, in the absence of a protective order or other
remedy or the receipt of a waiver by Purchaser, such Obligated Party or such
Affiliate, as the case may be, nonetheless, based on the advice of outside
counsel, is required to disclose Confidential Information to any tribunal
or in
accordance with applicable Law, such Obligated Party or such Affiliate, without
liability hereunder, may disclose that portion of such information which
such
counsel advises such Obligated Party or such Affiliate it is legally required
to
disclose. Each Obligated Party acknowledges and agrees that money damages
would
not be an adequate remedy for any breach of his agreements contained in this
Section 7.8 and that in addition to any other remedies available to
Purchaser, Purchaser shall be entitled to the remedies of injunction, specific
performance and other equitable relief for any threatened or actual breach
of
this Section 7.8.
Section
7.9. Non-Competition.
As a
material inducement to Parent and Purchaser to enter into this Agreement,
Xx.
Xxxxxxxx agrees as follows:
(j) During
the Non-Competition Period, Xx. Xxxxxxxx will not, and Xx. Xxxxxxxx will
cause
his Affiliates not to, engage or participate, directly or indirectly, as
principal, agent, executive, director, proprietor, joint venturer, trustee,
employee, employer, consultant, stockholder, partner or in any other capacity
whatsoever, in the conduct or management of, or own any stock or any other
equity investment in or debt of, or provide any services of any nature
whatsoever to or in respect of (1) any business that is competitive with
the
Business or (2) any Person that is (or was) a customer or client of any Company
at any time during the Non-Competition Period or during the two years prior
to
the date of this Agreement (a "Covered
Client"),
provided that (x) nothing herein shall prevent Xx. Xxxxxxxx from making passive
investments in up to 5% of the common stock of any publicly traded company
and
(y) the preceding clause (2) shall not prevent Xx. Xxxxxxxx from providing
services in any capacity to a Covered Client if (A) the job or service to
be
performed or provided by Xx. Xxxxxxxx for or to such Covered Client does
not
include the provision of any of the products or services provided by any
Company
at any time during the two years prior to the date of commencement of the
services to be provided to the Covered Client, (B) Xx. Xxxxxxxx will not
have
direct or indirect responsibility for, and will not exercise any managerial
function with respect to, personnel providing such products or services and
(C)
the job or service to be performed or provided by Xx. Xxxxxxxx does not involve
the use or disclosure by Xx. Xxxxxxxx of any Confidential Information (as
defined below).
(k) During
the Non-Competition Period, Xx. Xxxxxxxx will not, and the Xx. Xxxxxxxx will
cause his Affiliates not to, for or such Affiliate’s own benefit or for the
benefit of any Person other than any Company, (i) solicit, or assist any
person
or entity to solicit, any officer, director, executive or employee of any
Company to leave his or her employment, (ii) hire or cause to be hired any
person who is then, or who will have been at any point in time during the
Non-Competition Period, an officer, a director, an executive or an employee
of
any Company, or (iii) engage any Person who is then, or who will have been
at
any point in time during the Non-Competition Period, an officer, director,
executive or employee of any Company as a partner, contractor, sub-contractor
or
consultant.
(l) During
the Non-Competition Period, Xx. Xxxxxxxx will not, and Xx. Xxxxxxxx will
cause
his Affiliates not to, (i) solicit, or assist any person or entity other
than
any Company to solicit, any Person that is a client or customer of any Company,
or has been a client or customer of any Company during the prior twelve (12)
months, to provide any services competitive with those provided by any Company
or (ii) interfere with any of the business relationships of any
Company.
(m) Xx.
Xxxxxxxx acknowledges that (i) the markets served by the Companies are national
in scope and are not dependent on the geographic location of the executive
personnel or the businesses by which they are employed; and (ii) the above
covenants are manifestly reasonable on their face, and the parties expressly
agree that such restrictions have been designed to be reasonable and no greater
than is required for the protection of Purchaser and are a significant element
of the consideration hereunder.
(n) If
the
final judgment of a court of competent jurisdiction declares that any term
or
provision of this Section 7.9 is invalid or unenforceable, the parties agree
that the court making the determination of invalidity or unenforceability
shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable
that
comes closest to expressing the intention of the invalid or unenforceable
term
or provision, and this Agreement shall be enforceable as so modified after
the
expiration of the time within which the judgment may be appealed.
(o) Xx.
Xxxxxxxx agrees and acknowledges that in order to assure Parent and Purchaser
that each of the Companies will retain the value of its operations, it is
necessary that Xx. Xxxxxxxx undertake not to utilize his special knowledge
of
such business operations and Xx. Xxxxxxxx'x relationships with customers
to
compete with Purchaser. Xx. Xxxxxxxx further acknowledges that:
(i)
Xx.
Xxxxxxxx is engaged in, is knowledgeable about, and provides services in
connection with all aspects of the Companies’ business;
(ii)
Xx.
Xxxxxxxx will continue to occupy a position of trust and confidence with
the
Companies and is familiar with, and will continue to become familiar with,
the
Companies' trade secrets and with other Confidential Information (as defined
in
Section 7.8) concerning the Business;
(iii)
the
agreements and covenants contained in Section 7.8 and this Section 7.9 are
essential to protect the value and goodwill of the Business; and
(iv)
the
provisions contained in Section 7.8 and this Section 7.9 are integral to
the
transactions contemplated hereby and that Parent and Purchaser would not
enter
into the transactions without the protections afforded by Section 7.8 and
this
Section 7.9.
Section
7.10. Names
and Logos.
From
and after the Closing, the Obligated Parties and Xx. Xxxxxxxx will not, and
will
cause their Affiliates not to, use any names or logos incorporating “AWAC”,
“AWAC.MD”, “Innovative Health Strategies”, “IHS”, “iProcert” or any derivatives
thereof. Within five (5) business days after Closing, AWAC shall change its
corporate name to remove any reference to “AWAC” “AWAC.MD” or any other trade
name used in the Business. Each Seller and AWAC shall file any consents or
other
documents required by the South Carolina Secretary of State to permit Purchaser
to change its name to AWAC LLC or any derivative thereof and shall cooperate
with Purchaser to ensure that such name is made available to Purchaser upon
Purchaser’s submission of appropriate documents amending Purchaser’s
registration as a foreign limited liability company in any jurisdiction where
Purchaser is so registered. Each Obligated Party and Xx. Xxxxxxxx shall file
any
consents or other documents required in any jurisdiction to permit Purchaser
to
use an assumed name including AWAC or any derivative thereof and shall cooperate
with Purchaser to ensure that such name is made available to Purchaser upon
Purchaser’s submission of appropriate documents. The covenants contained in this
Section 7.10 shall survive the expiration of the Non-Competition
Period.
Section
7.11. Corporate
Existence.
AWAC
hereby agrees that it will (and each Seller agrees that he will cause AWAC
to)
(i) not commence any dissolution of its corporate existence, liquidation
or
winding up, or commence a voluntary proceeding under Title 11 of the United
States Code, until at least one year from the Closing Date and (ii) timely
object to the commencement of any involuntary proceeding filed under Title
11 of
the United States Code or to any action seeking the appointment of a receiver
or
trustee in respect of it or its assets if such petition, proceeding or action
is
commenced prior to the first anniversary of the Closing Date.
Section
7.12. Mail;
Payments.
From
and after the Closing, Sellers and AWAC agree to refer to Purchaser all
customer, supplier, employee or other inquiries or correspondence relating
to
the AWAC Assets or the conduct of the Business after the Closing Date. Sellers
and AWAC further agree to promptly remit to Purchaser all payments and invoices
received after the Closing Date that relate to the AWAC Assets, the AWAC
Assumed
Liabilities or the conduct of the Business after the Closing Date.
Section
7.13. Private
Escapes.
Prior
to the Closing, the Private Escapes membership shall have been transferred
from
IHS to Xx. Xxxxxxxx personally or his designee unaffiliated with the Business.
ARTICLE
VIII
INDEMNIFICATION
Section
8.1. Indemnity
Obligations of the Sellers and AWAC.
(a) The
Sellers and AWAC covenant and agree jointly and severally to defend, indemnify
and hold harmless Purchaser and its Affiliates (including Parent and, following
the Closing, IHS and iProcert) and the respective officers, directors,
employees, agents, advisers and representatives of the foregoing (collectively,
the “Purchaser
Indemnitees”),
from
and against, and to pay or reimburse Purchaser Indemnitees for, any and all
claims, liabilities, obligations, losses, fines, costs, proceedings or damages
(whether absolute, accrued, conditional or otherwise and whether or not
resulting from third party claims), including all reasonable fees and
disbursements of counsel incurred in the investigation or defense of any
of the
same or in asserting any of their respective rights hereunder (collectively,
“Losses”),
based
on, resulting from, arising out of or relating to:
ARTICLE
I (i)any
misrepresentation or breach of any warranty of any Company or any Seller
contained in the Transaction Documents other than the representations and
warranties contained in Article II of this Agreement; provided that in
determining whether any such misrepresentation or breach occurred, any
materiality qualifiers and Company Material Adverse Effect qualifier contained
in any representation or warranty herein shall be disregarded;
ARTICLE
II (ii)any
failure of any Company or any Seller to perform any covenant or agreement
made
or contained in the Transaction Documents or fulfill any obligation in respect
thereof;
ARTICLE
III (iii)
except (A) as specifically set forth on the Final Closing Statement and (B)
obligations of any Company to be paid or performed after the Closing Date
under
the Contracts disclosed in the Disclosure Schedule (except to the extent
such
obligations, but for a breach or default by any Company, would have been
paid,
performed or otherwise discharged on or prior to the Closing Date or to the
extent the same arise out of any such breach or default), any Liabilities
of any
Company or any of its Affiliates of any kind or nature whatsoever caused
by any
transaction, status, event, condition, occurrence or situation existing,
arising
or occurring on or prior to the Closing Date (including the Retained
Liabilities);
ARTICLE
IV (iv)
the matters disclosed or required to be disclosed in Section 3.16 of the
Disclosure Schedule;
ARTICLE
V (v)
the
Xelon 419 plan in which Xx. Xxxxxxxx participated (including any Loss arising
from the disallowance of a tax deduction and any related interest or penalties);
or
ARTICLE
VI (vi)
any
Indebtedness or Transaction Expenses that are not reflected on the Final
Closing
Statement (or otherwise paid by Purchaser and deducted from payments made
to the
Sellers and AWAC).
ARTICLE
VII The
Sellers and AWAC shall not be required to indemnify Purchaser Indemnitees
with
respect to any claim for indemnification (other than a claim for indemnification
based on a breach of the representations and warranties contained in Sections
3.1, 3.2, 3.9, 3.11(c), 3.14, or 3.24) resulting from or arising out of matters
described in clause (i) above pursuant to this Section 8.1(a) (and not
resulting from or arising out of matters described in clauses (ii) through
(vi) above) unless and until the aggregate amount of all such claims against
the
Sellers and AWAC exceeds [***] (the “Threshold
Amount”),
in
which case the Sellers shall be required to indemnify Purchaser Indemnitees
for
the full amount of such claims including the Threshold Amount; provided,
however, that for purposes of calculating whether the Threshold Amount has
been
satisfied, claims less than [***]
shall not be counted. Claims thereafter may be asserted regardless of amount.
The Sellers' and AWAC’s maximum liability (exclusive of liabilities based on
claims for indemnification based on a breach of the representations and
warranties contained in Sections 3.1, 3.2, 3.9, 3.11(c), 3.14 or 3.24) to
Purchaser Indemnitees under clause (i) above (and not resulting from or arising
out of matters described in clauses (ii) through (vi) above) shall not exceed
[***]
(b) Each
Seller and AWAC covenants and agrees severally to defend, indemnify and hold
harmless the Purchaser Indemnitees from and against, and to pay or reimburse
Purchaser Indemnitees for, any and all Losses based on, resulting from, arising
out of or relating to any misrepresentation or breach of any warranty of
such
Seller or AWAC, as the case may be, contained in Article II of this Agreement;
provided that in determining whether any such misrepresentation or breach
occurred, any dollar amount thresholds, materiality qualifiers and Company
Material Adverse Effect qualifier contained in any representation or warranty
herein shall be disregarded.
(c) The
Sellers’ and AWAC’s maximum liability for Losses based on, resulting from,
arising out of or relating to (i) a breach of the representations and warranties
contained in Sections 3.1, 3.2, 3.11(c), 3.14 or 3.24, or (ii) any
misrepresentation or breach of any warranty of such Seller in Article II
pursuant to Section 8.1(b), shall be [***]
Section
8.2. Indemnity
Obligations of Purchaser.
Purchaser covenants and agrees to defend, indemnify and hold harmless the
Sellers and AWAC from and against any and all Losses based on, resulting
from,
arising out of or relating to:
ARTICLE
VIII (i)any
misrepresentation or breach of warranty of Purchaser or Parent contained
in the
Transaction Documents; provided that in determining whether any such
misrepresentation or breach occurred, any materiality qualifiers contained
in
any representation or warranty herein shall be disregarded;
ARTICLE
IX (ii)any
failure of any Purchaser or Parent to perform any covenant or agreement made
or
contained in the Transaction Documents or fulfill any other obligation in
respect thereof; or
Purchaser
shall not be required to indemnify the Sellers or AWAC with respect to any
claim
for indemnification (other than a claim for indemnification based on a breach
of
the representations and warranties contained in Sections 4.1, 4.2, 5.1 or
5.2)
resulting from or arising out of matters described in clause (i) above
pursuant to this Section 8.2 (and not resulting from or arising out of matters
described in clause (ii) above) unless and until the aggregate amount of
all claims against Purchaser exceeds the Threshold Amount, in which case
Purchaser shall be required to indemnify the Sellers and AWAC for the full
amount of such claims including the Threshold Amount. Claims thereafter may
be
asserted regardless of amount. Purchaser’s maximum liability (exclusive of
liabilities based on claims for indemnification based on a breach of the
representations and warranties contained in Sections 4.1, 4.2, 5.1 or 5.2)
to
the Sellers and AWAC under clause (i) above (and not resulting from or arising
out of matters described in clause (ii) above) shall not exceed [***]
Section
8.3. Indemnification
Procedures.
(a)
Third
Party Claims.
In the
case of any claim asserted by a third party against a party entitled to
indemnification under this Agreement (the “Indemnified Party”), notice shall be
given by the Indemnified Party to the party required to provide indemnification
(the “Indemnifying Party”) as soon as practicable after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought. If
the
Indemnifying Party acknowledges that the third party claim is within the
scope
of the indemnification obligations of the Indemnifying Party, the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any third party claim or any litigation with
a
third party resulting therefrom; provided, however, that (a) the counsel
for the Indemnifying Party who shall conduct the defense of such claim or
litigation shall be subject to the approval of the Indemnified Party (which
approval shall not be unreasonably withheld or delayed), (b) the
Indemnified Party may participate in such defense at such Indemnified Party’s
expense (which shall not be subject to reimbursement hereunder except as
provided below), and (c) the failure by any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except and only to the extent
that such Indemnifying Party is actually damaged as a result of such failure
to
give notice. Except with the prior written consent of the Indemnified Party,
no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides
for
injunctive or other nonmonetary relief affecting the Indemnified Party or
that
does not include as an unconditional term thereof the giving by each claimant
or
plaintiff to such Indemnified Party of a general release from any and all
liability with respect to such claim or litigation. If the Indemnified Party
shall in good faith determine that the conduct of the defense of any claim
subject to indemnification hereunder or any proposed settlement of any such
claim by the Indemnifying Party might be expected to affect adversely the
ability of the Indemnified Party to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to
the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and
assume
control over the defense, settlement, negotiations or litigation relating
to any
such claim at the sole cost of the Indemnifying Party; provided, however,
that
if the Indemnified Party does so take over and assume control, the Indemnified
Party shall not settle such claim or litigation without the prior written
consent of the Indemnifying Party, such consent not to be unreasonably withheld
or delayed. If the Indemnifying Party does not accept the defense of any
matter
as above provided within thirty (30) days after receipt of the notice from
the
Indemnified Party described above, the Indemnified Party shall have the full
right to defend against any such claim or demand at the sole cost of the
Indemnifying Party and shall be entitled to settle or agree to pay in full
such
claim or demand. In any event, the Indemnifying Party and the Indemnified
Party
shall reasonably cooperate in the defense of any claim or litigation subject
to
this Article VIII and the records of each shall be reasonably available to
the
other with respect to such defense.
(b)
Non-Third
Party Claims.
With
respect to any claim for indemnification hereunder which does not involve
a
third party claim, the Indemnified Party will give the Indemnifying Party
written notice of such claim. The Indemnifying Party may acknowledge and
agree
by notice to the Indemnified Party in writing to satisfy such claim within
twenty (20) days of receipt of notice of such claim from the Indemnified
Party.
If the Indemnifying Party shall dispute such claim, the Indemnifying Party
shall
provide written notice of such dispute to the Indemnified Party within such
20-day period, setting forth in reasonable detail the basis of such dispute.
Upon receipt of notice of any such dispute, the Indemnified Party and the
Indemnifying Party shall use reasonable efforts to resolve such dispute within
thirty (30) days of the date such notice of dispute is received. If the
Indemnifying Party shall fail to provide written notice to the Indemnified
Party
within twenty (20) days of receipt of notice from the Indemnified Party that
the
Indemnifying Party either acknowledges and agrees to pay such claim or disputes
such claim, the Indemnifying Party shall be deemed to have acknowledged and
agreed to pay such claim in full and to have waived any right to dispute
such
claim. Once (a) the Indemnifying Party has acknowledged and agreed to pay
any
claim pursuant to this Section 8.3, (b) any dispute under this Section 8.3
has
been resolved in favor of indemnification by mutual agreement of the
Indemnifying Party and the Indemnified Party, or (c) any dispute under this
Section 8.3 has been finally resolved in favor of indemnification by order
of a
court of competent jurisdiction or other tribunal (including an arbitrator
contemplated by this agreement) having jurisdiction over such dispute, then
the
Indemnifying Party shall pay the amount of such claim to the Indemnified
Party
within twenty (20) days of the date of acknowledgement by the Indemnifying
Party
or final resolution in favor of indemnification, as the case may be, to such
account and in such manner as is designated in writing by the Indemnified
Party.
Section
8.4. Expiration
of Representations and Warranties.
[***]
provided,
however,
that
(i) the representations and warranties stated in Sections 3.9, 3.14 and
3.18 shall survive the Closing for the period ending on the date that is
30 days
after the expiration of the applicable statute of limitations period and
(ii)
the representations and warranties stated in Article II and in Sections 3.1,
3.2, 3.11(c), 3.24, 4.1, 4.2, 5.1 and 5.2 shall survive
indefinitely.
Section
8.5. Exclusive
Remedy.
Absent
fraud or criminal activity and except as provided under Sections 7.8 and
7.9 and in Article IX, the indemnifications provided for in this Article
VIII
shall be the sole and exclusive post-Closing remedies available to any party
against any other party for any claims under or based upon this
Agreement.
Section
8.6. Set
Off.
Subject
to the limitations set forth in Sections 8.1 and 8.4, if a Seller shall have
any
Liability to Purchaser or any other Purchaser Indemnitee, including Parent
or
any of its Subsidiaries (pursuant to this Article VIII, Article IX or
otherwise), Purchaser or such other Purchaser Indemnitee, as the case may
be,
shall be entitled, in addition to any other right or remedy they may have,
to
exercise rights of set-off against any payments or securities payable or
deliverable to the Sellers in connection with the Transaction Documents or
otherwise, including without limitation pursuant to Section 1.5 of this
Agreement.
ARTICLE
IX
CERTAIN
TAX MATTERS
Section
9.1. Taxable
Periods That Begin Before and End After the Closing Date.
For
purposes of this Agreement, (a) in the case of any taxable period of any
Company
that commences prior to and includes (but does not end on) the Closing Date
(a
“Straddle
Period”),
the
amount of any Taxes based on or measured by income or receipts of any Company
for the Pre-Closing Tax Period shall be determined based on an interim closing
of the books as of the close of business on the Closing Date and the amount
of
other Taxes of any Company for a Straddle Period which relate to the Pre-Closing
Tax Period shall be deemed to be the amount of such Tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of days
in
the taxable period ending on the Closing Date and the denominator of which
is
the number of days in such Straddle Period; and (b) the amount of Taxes of
any
Company for the Pre-Closing Tax Period, whether with respect to a Straddle
Period or not, shall also be determined as if the taxable period of any
partnership or other pass-thru entity in which such Company holds a beneficial
interest terminated as of the close of business on the Closing
Date.
Section
9.2. Tax
Returns; Tax Sharing Agreements.
(a) The
Representative will prepare any income Tax Returns of the Companies for taxable
periods ending on or before the Closing Date. The Representative shall permit
Purchaser to review and comment on each such Tax Return prior to filing (other
than Tax Returns of AWAC) and shall make such revisions to such Tax Returns
as
are reasonably requested by Purchaser. Parent will prepare or cause to be
prepared and file or cause to be filed all other Tax Returns of the Companies
(other than AWAC) which are filed after the Closing Date. The Sellers agree
jointly and severally to remit to the applicable Company the amount of any
Taxes
due with respect to taxable periods ending on or before the Closing Date
and the
amount of any Taxes allocable to the Pre-Closing Tax Period under Section
9.1
with respect to a Straddle Period Tax Return within the later of 10 days
of
Parent or the applicable Company’s request therefor or 10 days prior to the date
on which the Tax liability is required to be satisfied, except to the extent
that the liability for such Taxes was taken into account in determining the
Closing Working Capital Amount.
(b)
All
Tax sharing agreements or similar agreements with respect to or involving
any
Company shall be terminated as of the Closing Date and, after the Closing
Date,
the Companies shall not be bound thereby or have any liability
thereunder.
Section
9.3. [Intentionally
Omitted]
Section
9.4. Tax
Indemnity.
(a) The
Sellers and AWAC will jointly and severally indemnify and hold Parent, Purchaser
and the Companies (other than AWAC) and each of their respective successors
and
assigns (each, a “Tax
Indemnitee”)
harmless against all Losses attributable to (i) (A) any Taxes of AWAC and
(B)
any Taxes of IHS or iProcert for any Pre-Closing Tax Period, (ii) Taxes of
any
member of an affiliated, consolidated, combined or unitary group of which
any
Company (or any predecessor) is or was a member on or prior to the Closing
Date,
including pursuant to Section 1.1502-6 of the Treasury Regulations or any
analogous or similar state, local or foreign income Tax law or regulation,
(iii)
Taxes of any Person other than any Company that are imposed on any Company
as a
transferee or successor, by contract, or otherwise, which Taxes related to
and
result from an event or transaction occurring prior to the Closing and (iv)
any
breach of the covenants in this Article IX; provided,
however,
that in
any such case the Sellers will be liable only to the extent that such Taxes
exceed the amount, if any, reserved for such Taxes as reflected in Final
Closing
Statement. The limitations on indemnification contained in Article VIII will
not
apply to any claim for indemnification under this Article IX. If a Party
has any
indemnification obligations with respect to any Loss under both this Article
IX
and Article VIII, the indemnification obligations under this Article IX will
control and be their exclusive obligation. Subject to Section 9.4(b), the
Sellers shall reimburse Parent, Purchaser and the Companies for any Losses
which
are the responsibility of any Sellers pursuant to this Section 9.4(a) within
ten
days after the later of (i) the incurrence of such Losses or (ii) Parent
or any
Company’s request thereof.
(b)
After
the Closing, Parent shall inform the Representative within fifteen (15) days
of
its receipt of any notice of any Tax audit, assessment, adjustment, examination
or proceeding (“Tax
Contest”)
relating in whole or in part to Taxes for which a Tax Indemnitee may be entitled
to indemnity from the Sellers and AWAC hereunder; provided,
however,
that
the failure of Parent to provide such notice shall not affect the Sellers'
nor
AWAC’s indemnity obligations under Section 9.4(a) except to the extent that the
Seller or AWAC is materially prejudiced. If the Representative notifies Parent
within thirty (30) days following receipt of notice of such Tax Contest that
the
Representative intends to exercise his contest rights under this Section
9.4(b),
the Representative shall have the right to control such Tax Contest at his
expense and to employ counsel of his choice. Parent shall have the right
to
participate in any such Tax Contest at its own expense, shall be entitled
to
control the disposition of any issue in any such Tax Contest that does not
affect a potential liability of the Sellers or AWAC, and shall be entitled
to
jointly control with the Representative the defense and disposition of any
issue
in any such Tax Contest that relates to any Straddle Period. Parent shall
control any other Tax Contests. With respect to a Tax Contest which the
Representative is entitled to control, the Representative shall have the
right
to determine all issues relating to the Tax Contest except that the
Representative shall not settle any Tax Contest without the prior consent
of
Parent (which consent may not be unreasonably withheld). Parent shall deliver
to
Representative any power of attorney reasonably required to allow the
Representative and his counsel to represent Parent and the Companies in
connection with any Tax Contest that the Representative is entitled to control
hereunder and shall use its reasonable efforts to provide the Representative
with such assistance as may be reasonably requested by the Representative
in
connection with any such Tax Contest. The Parties each agree to consult with
and
to keep the other Parties hereto informed on a regular basis regarding the
status of any Tax Contest to the extent that such Tax Contest could affect
a
liability of such other Party (including indemnity obligations hereunder).
(c)
To
the extent allowable under applicable law, all amounts payable under Article
VIII and this Section 9.4 will be treated for Tax purposes as adjustments
to the Purchase Price.
(d) Parent,
the Companies and the Sellers shall cooperate fully, as and to the extent
reasonably requested by one another, in connection with the preparation and
filing of Tax Returns and any audit, litigation or other proceeding with
respect
to Taxes. Such cooperation shall include the retention and (upon another’s
request) the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Parent and the Companies on the one hand,
and the Sellers on the other, agree (i) to retain all books and records with
respect to Tax matters pertinent to the Companies relating to any taxable
periods, and (ii) to give the other party reasonable written notice prior
to
transferring, destroying or discarding any such books and records and, if
so
requested, the Parent, the Companies, or the Seller, as the case may be,
shall
allow the requesting party to take possession of such books and records.
The
parties hereto agree, upon request, to use reasonable efforts to obtain any
certificate or other document from any taxing authority or any other Person
as
may be necessary to mitigate, reduce or eliminate any Tax that could otherwise
be imposed.
(e)
Any
refund of Taxes received by Purchaser, IHS or iProcert that relates to a
pre-Closing Tax of any Company period shall be for the account of the Sellers
and shall be paid over to the Representative within 10 days after receipt
thereof except to the extent such refund was taken into account as an asset
in
determining the Closing Working Capital Amount.
ARTICLE
X
MISCELLANEOUS
Section
10.1. Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section 10.1:
“Affiliate”
means,
with respect to any Person, any other Person directly or indirectly controlling,
controlled by or under common control with such Person, and in the case of
any
natural Person shall include all relatives and family members of such Person.
For purposes of this definition, a Person shall be deemed to control another
Person if such first Person and/or any relatives or family members of such
First
Person directly or indirectly owns or holds five percent (5%) or more of
the
ownership interests in such other Person.
“Books
and Records”
means
all books and records of each Company, including manuals, price lists, mailing
lists, lists of customers, sales and promotional materials, purchasing
materials, documents evidencing intangible rights or obligations, personnel
records, accounting records and litigation files (regardless of the media
in
which stored), in each case relating to or used in the Business.
“Business”
means
the Companies’ business as conducted or proposed to be conducted as of the date
hereof, including, without limitation, all activities involving the provision
of
cost containment and medical consulting solutions to third party administrators,
ERISA self-funded plans, fully-insured plans, employer groups, managing general
underwriters and insurance carriers.
“Closing
Date Bonus Plan”
means
the bonus plan annexed to Schedule I to this Agreement.
“Closing
Period”
means
the period from the date of the Agreement through the Closing Date.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended.
“Company
Material Adverse Change”
or
“Company
Material Adverse Effect”
means
a
Material Adverse Change or a Material Adverse Effect with respect to the
Companies, taken as a whole.
“Consent”
means
any consent, approval, authorization, waiver, permit, grant, franchise,
concession, agreement, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any Person,
including any Governmental Body.
“Contract”
means
any contract, agreement, indenture, note, bond, loan, mortgage, license,
instrument, lease, commitment or other arrangement or agreement.
“Disposition”
[***]
“EBIT”
means,
for any Applicable EBIT Period, [***]
“Environmental
Law”
means
any foreign, federal, state or local statute, regulation, ordinance, or rule
of
common law as now or hereafter in effect in any way or any other legally
binding
requirement relating to the environment, natural resources or protection
of
human health and safety including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601
et seq.),
the
Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.),
the
Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the
Clean Water Act (33 U.S.C. § 1251 et seq.),
the
Clean Air Act (42 U.S.C. § 7401 et seq.)
the
Toxic Substances Control Act (15 U.S.C. § 2601 et seq.),
the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136
et seq.),
and
the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
and
the regulations promulgated pursuant thereto.
“Estimated
Closing Working Capital Amount”
means
an amount estimated by the Representative in good faith to equal the Working
Capital of Purchaser, HIS and iProcert immediately following effectiveness
of
the Closing.
“Fair
Market Value”
means,
as to the Parent Common Stock, (i) the average closing price of the Parent
Common Stock as quoted on NASDAQ over a period of 20 consecutive trading
days
the latest of which shall be the second trading day prior to the date as
of
which "Fair Market Value" is being determined and (ii) as to other securities
for purposes of Section 1.5(e), the average closing price of the security
being
valued as quoted on the relevant exchange or interdealer quotation system
over a
period of 20 consecutive trading days the latest of which shall be the second
trading day prior to the date as of which "Fair Market Value" is being
determined.
“Final
Closing Working Capital Amount”
means
the Closing Working Capital Amount set forth in the Final Closing
Statement.
“Final
Indebtedness”
means
the Closing Indebtedness set forth in the Final Closing Statement.
“Final
Transaction Expenses”
means
the Closing Transaction Expenses set forth in the Final Closing
Statement.
“GAAP”
means
United States generally accepted accounting principles as in effect from
time to
time.
“Governmental
Approval”
means
any Consent of, with or to any Governmental Body.
“Governmental
Body”
means
any government or governmental or regulatory authority or body thereof, or
political subdivision thereof, whether federal, state, local or foreign,
or any
agency, instrumentality or authority thereof, or any court or arbitrator
(public
or private).
“Hazardous
Material”
means
any substance, material or waste which is regulated by the United States,
the
foreign jurisdictions in which any Company conducts business, or any state,
local or foreign governmental authority including, without limitation, petroleum
and its by-products, asbestos, and any material or substance which is defined as
a “hazardous waste,” “hazardous substance,” “hazardous material,” “restricted
hazardous waste,” “industrial waste,” “solid waste,” “contaminant,” “pollutant,”
“toxic waste” or “toxic substance” under any provision of Environmental
Law.
“Indebtedness”
of any
Person means, without duplication, (i) the principal, accreted value, accrued
and unpaid interest, prepayment and redemption premiums or penalties (if
any),
unpaid fees or expenses and other monetary obligations in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced
by
notes, debentures, bonds or other similar instruments for the payment of
which
such Person is responsible or liable; (ii) all obligations of such Person
issued
or assumed as the deferred purchase price of property, all conditional
sale
obligations of such Person and all obligations of such Person under any
title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the ordinary course of business consistent
with
past custom and practice (other than the current liability portion of any
indebtedness for borrowed money)); (iii) all obligations of such Person
under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction; (v) all obligations of such
Person under interest rate or currency swap transactions (valued at the
termination value thereof); (vi) all
obligations of the type referred
to
in clauses (i) through (v)
of any
Persons for the payment of which such Person is responsible or liable,
directly
or indirectly, as obligor, guarantor, surety or otherwise, including guarantees
of such obligations; and (vii)
all
obligations of the type referred to in clauses (i) through
(vi)
of
other Persons secured by (or for which the holder of such obligations has
an
existing right, contingent or otherwise, to be secured by) any Lien on
any
property or asset of such Person (whether or not such obligation is assumed
by
such Person). Notwithstanding the foregoing, "Indebtedness"
shall
not include any amount that is an Excluded Liability except to the extent
that
IHS or iProcert is liable therefor.
“Initial
Cash Purchase Price”
means [***]
“Intellectual
Property”
means
(a) all inventions (whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names,
and
corporate names, together with all translations, adaptations, derivations,
and
combinations thereof and including all goodwill associated therewith, and
all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations
and
renewals in connection therewith, (d) all mask works and all applications,
registrations and renewals in connection therewith, (e) all trade secrets
and
confidential information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g)
all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
“IRS”
means
the United States Internal Revenue Service.
“Knowledge”
or
words of similar effect, regardless of case, means, with respect to the
Companies, the actual subjective knowledge of (i) Xx. Xxxxxxxx, (ii) Xxxxx
Xxxxx, and (iii) Xxxxx Xxxxx, in each case, after conducting such investigation
as such person determines in good faith to be appropriate under the
circumstances.
“Law”
means
any federal, state, local or foreign law (including common law), statute,
code,
ordinance, rule, regulation or other requirement.
“Legal
Proceeding”
means
any judicial, administrative or arbitral actions, suits, proceedings (public
or
private), claims or governmental proceedings.
“Liability”
means
any liability (whether known or unknown, whether asserted or unasserted,
whether
absolute or contingent, whether accrued or unaccrued, whether liquidated
or
unliquidated, and whether due or to become due), including any liability
for
Taxes.
“Lien”
means
any lien (including any Tax lien), pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction or any other encumbrance, restriction or
limitation whatsoever.
“Material
Adverse Effect”
or
“Material
Adverse Change”
with
respect to a Party means any change or effect that is materially adverse
to the business, properties, results of operations, prospects or condition
(financial or otherwise) of the Party or to the ability of the Party to
consummate timely the transactions contemplated hereby; provided that none
of
the following shall be deemed to constitute, and none of the following shall
be
taken into account in determining whether there has been, a Material Adverse
Effect or Material Adverse Change: any adverse change, event, development,
or
effect arising from or relating to (1) general business or economic conditions,
(2) national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to
the
declaration of a national emergency or war, or the occurrence of any military
or
terrorist attack upon the United States, or any of its territories, possessions,
or diplomatic or consular offices or upon any military installation, equipment
or personnel of the United States, (3) financial, banking, or securities
markets
(including any disruption thereof and any decline in the price of any security
or any market index), (4) changes in United States generally accepted accounting
principles or (5) the taking of any action contemplated by this Agreement
and
the other agreements contemplated hereby.
“Net
Adjustment Amount”
means
an amount equal to the following:
the
sum
of (a) any amount by which the Final Closing Working Capital Amount exceeds
the Estimated Closing Working Capital Amount, (b) any amount by which
Estimated Indebtedness exceeds Final Indebtedness and (c) any amount by
which Estimated Transaction Expenses exceeds Final Transaction Expenses,
minus
the
sum
of (i) any amount by which the Estimated Closing Working Capital Amount
exceeds the Final Closing Working Capital Amount, (ii) any amount by which
Final
Indebtedness exceeds Estimated Indebtedness and (iii) any amount by which
Final
Transaction Expenses exceed Estimated Transaction Expenses.]
“Net
Closing Amount”
means
the Initial Cash Purchase Price less the sum of (i) Escrowed Cash, (ii)
Estimated Indebtedness, and (iii) Estimated Transaction Expenses and adjusted
as
follows:
(a)
if
the Estimated Closing Working Capital Amount is less than [***], the Net
Closing
Amount will be reduced by an amount equal to the absolute value of such
difference; and
(b)
if
the Estimated Closing Working Capital Amount is greater than [***], the Net
Closing Amount will be increased by an amount equal to such
difference.
“Neutral
Accountant”
means
(i) Xxxxx Xxxxxxxx LLP, or if Xxxxx Xxxxxxxx LLP is not independent in the
reasonable determination of Purchaser or the Representative, then (ii) an
independent auditing firm of nationally or regionally recognized standing
selected by the mutual agreement of Purchaser and the Representative within
15
days of the date on which the Neutral Accountant is proposed to begin serving
or, if Purchaser and the Representative are unable to agree within such period,
an independent auditing firm of nationally or regionally recognized standing
selected jointly by two other such firms, one of which shall be specified
by
Purchaser and one of which shall be specified by the Representative, within
15
days after the expiration of such period.
“Non-Competition
Period”
means
the period from the Closing Date through the fifth anniversary thereof.
“Order”
means
any order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award.
“Permitted
Encumbrances”
means
(i) statutory liens for current Taxes, assessments or other governmental
charges
not yet delinquent or the amount or validity of which is being contested
in good
faith by appropriate proceedings and that are set forth on Schedule V, provided
an appropriate reserve has been established therefor; (ii) mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
ordinary course of business that are not material to the business, operations
and financial condition of the property so encumbered or any Company and
that
are set forth on Schedule V; (iii) zoning, entitlement and other land use
and
environmental regulations by any Governmental Body, provided that such
regulations have not been violated; and (iv) such other imperfections in
title,
charges, easements, restrictions and encumbrances which do not materially
detract from the value of or materially interfere with the present use of
the
assets subject thereto or affected thereby and that are set forth on Schedule
V.
“Person”
means
any individual, corporation, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, Governmental Body
or
other entity.
“Phantom
Equity Plan”
means
The Phantom Common Stock Plan annexed to Schedule I to this
Agreement.
“Pre-Closing
Tax Period”
means
any taxable period ending on or before the Closing Date and the portion,
ending
on the Closing Date, of any Straddle Period.
“Release”
means
any release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, migration or leaching into the indoor or outdoor
environment, or into or out of any property.
“Representative”
means
Xx. Xxxx X. Xxxxxxxx, Xx. or such other person as is appointed as the
Representative pursuant to Section 1.9.
“SEC”
means
the Securities and Exchange Commission.
“Subsidiary”
means,
as to any Person, any other Person of which a 50% or more of the outstanding
voting securities or other equity interests are owned, directly or indirectly,
by such Person.
“Tax”
or
“Taxes”
shall
mean means any federal, state, provincial, local or foreign income, alternative
minimum, accumulated earnings, personal holding company, franchise, capital
stock, net worth, capital, profits, windfall profits, gross receipts, value
added, sales, use, goods and services, excise, customs duties, transfer,
conveyance, mortgage, registration, stamp, documentary, recording, premium,
severance, environmental (including taxes under Section 59A of the Code or
any analogous or similar provision of any state, local or foreign law or
regulation), real property, personal property, ad valorem, intangibles,
unclaimed property, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers’ compensation,
payroll, health care, withholding, estimated or other similar tax, duty or
other
governmental charge or assessment or deficiencies thereof, and including
any
interest, penalties or additions to tax attributable to the
foregoing.
“Tax
Return”
means
any return, report, declaration, form, claim for refund or information return
or
statement relating to Taxes, including any schedule or attachment thereto,
and
including any amendment thereof.
“Transaction
Documents”
means,
with respect to any Person, this Agreement together with any other agreements,
instruments, certificates and documents executed by such Person in connection
herewith or therewith or in connection with the transactions contemplated
hereby
or thereby (including without limitation any Employment Agreement executed
by
such Person).
“Transaction
Expenses”
means
the aggregate amount of all out-of-pocket fees and expenses, payable by any
Company in connection with the negotiation, preparation or execution of this
Agreement or any other Transaction Documents or any documents or agreements
contemplated hereby or thereby or the consummation of the transactions
contemplated hereby or thereby, including, without duplication, (i) any
fees and expenses incurred to obtain necessary or appropriate waivers, consents
or approvals of any Governmental Body or third parties; (ii) any fees or
expenses associated with obtaining the release and termination of any Liens
(other than Permitted Encumbrances); (iii) all brokers’ or finders’ fees;
(iv) fees and expenses of counsel, advisors, consultants, investment
bankers, accountants, and auditors and experts with respect to services they
perform for or on behalf of, or that are otherwise incurred for the account
of,
any Company relating to this Agreement, or the Transaction Documents, or
the
transactions contemplated hereby or thereby; (v) all sale, “stay-around,”
retention, change-of-control or similar bonuses or payments to current or
former
directors, officers, employees and consultants paid as a result of or in
connection with the transactions contemplated hereby; (vi) any Tax payments
or Tax-related indemnification or gross-up payments for which the Company
is
obligated with respect of any of the foregoing and (vii) any cost incurred
or
committed to be incurred by any Company to purchase D&O insurance "tail
coverage" for the benefit of the pre-Closing directors of the Company, but
excluding the Specified Liabilities. Notwithstanding the foregoing,
"Transaction
Expenses"
will
not include (x) any amount that is an Excluded Liability except to the extent
that IHS or iProcert is liable therefor, (y) to the extent included in the
calculation of Working Capital, any payments under the Closing Date Bonus
Plan
or (z) any payments contemplated pursuant to the terms of the Agreement to
be
made to the participants in the Phantom Equity Plan.
“Treasury
Regulations”
means
the regulations promulgated under the Code, including temporary and proposed
regulations.
Section
10.2. Publicity.
No
party shall issue any press release or make any other public announcement
relating to the subject matter of this Agreement without the prior written
consent of Parent.
Section
10.3. Payment
of Sales, Use or Similar Taxes; Transfer Taxes.
The
Sellers shall be responsible for and pay in a timely manner all sales, use,
value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
(“Transfer
Taxes”),
arising out of or in connection with or attributable to the transactions
effected pursuant to the Transaction Documents. Each party hereto shall prepare
and timely file all Tax Returns required to be filed in respect of Transfer
Taxes that are the primary responsibility of such party under applicable
Law;
provided,
however,
that
such party’s preparation of any such Tax Returns shall be subject to the other
party’s approval, which approval shall not be unreasonably withheld or
delayed.
Section
10.4. Expenses.
Except
as otherwise provided in this Agreement, each party shall bear all costs
and
expenses incurred by such party in connection with the negotiation and execution
of this Agreement and each other Transaction Document, whether or not the
transactions contemplated hereby and thereby are consummated.
Section
10.5. Specific
Performance.
The
Sellers and the Companies acknowledge and agree that the breach of this
Agreement would cause irreparable damage to Purchaser and that Purchaser
will
not have an adequate remedy at law. Therefore, the obligations of the Sellers
and the Companies under this Agreement, including, without limitation, the
Sellers' obligations to sell the Equity Securities to Purchaser and AWAC’s
obligation to sell the AWAC Assets to Purchaser, shall be enforceable by
a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith (without the requirement of the posting of a bond or other surety).
Such remedies shall, however, be cumulative and not exclusive and shall be
in
addition to any other remedies which any party may have under this Agreement
or
otherwise.
Section
10.6. Submission
to Jurisdiction; Consent to Service of Process.
The
Parties hereby irrevocably submit to the non-exclusive jurisdiction of any
federal or state court located in New York, New York over any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby and each Party hereby irrevocably agrees that all claims in respect
of
such dispute or any suit, action or proceeding related thereto may be heard
and
determined in such courts. The Parties hereby irrevocably waive, to the fullest
extent permitted by applicable Law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such
court
or any defense of inconvenient forum for the maintenance of such dispute.
Each
of the Parties agrees that a judgment in any such dispute may be enforced
in
other jurisdictions by suit on the judgment or in any other manner provided
by
law.
Section
10.7. Entire
Agreement; Amendments and Waivers.
This
Agreement (including the schedules and exhibits hereto) represents the entire
understanding and agreement between the Parties with respect to the subject
matter hereof and can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference
to
this Agreement signed by Purchaser, in the case of an amendment, supplement,
modification or waiver sought to be enforced against Purchaser or Parent,
or the
Representative, in the case of an amendment, supplement, modification or
waiver
sought to be enforced against any Seller or any Company. No action taken
pursuant to this Agreement, including without limitation, any investigation
by
or on behalf of any Party, shall be deemed to constitute a waiver by the
Party
taking such action of compliance with any representation, warranty, covenant
or
agreement contained herein. The waiver by any Party of a breach of any provision
of this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach. No
failure on the part of any Party to exercise, and no delay in exercising,
any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such Party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
Section
10.8. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of New York without regard to conflicts of law principles
thereof.
Section
10.9. Table
of Contents and Headings.
The
table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
Section
10.10. Notices.
All
notices and other communications under this Agreement shall be in writing
and
shall be deemed given when delivered personally or mailed by certified mail,
return receipt requested, to the parties (and shall also be transmitted by
facsimile to the Persons receiving copies thereof) at the following addresses
(or to such other address as a party may have specified by notice given to
the
other party pursuant to this provision):
If
to the
Companies:
Innovative
Health Strategies, Inc./AWAC.MD
0000
Xxxxxxxx Xxxx, Xxxxx 00
Xxxxxxxx,
Xxxxxxx 00000
Attn:
Xx.
Xxxx X. Xxxxxxxx, Xx.
Telecopier:
706-855-1107
With
a
copy to:
King
& Spalding
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxx
X. Xxxxxx, Xx.
Telecopier:
000-000-0000
If
to the
Representative or any Seller, to the Representative or such Seller in care
of:
Innovative
Health Strategies, Inc./AWAC.MD
0000
Xxxxxxxx Xxxx, Xxxxx 00
Xxxxxxxx,
Xxxxxxx 00000
Attn:
Xx.
Xxxx X. Xxxxxxxx, Xx.
Telecopier:
706-855-1107
With
a
copy to:
King
& Spalding
0000
Xxxxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxx
X. Xxxxxx, Xx.
Telecopier:
000-000-0000
If
to
Parent, to:
000
Xxxxxxxxxx Xxxx
Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Chief Executive Officer
With
a
copy to:
Akerman
Senterfitt LLP
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
If
to
Purchaser, to:
AWAC
LLC
in
care
of inVentiv Health Inc.
000
Xxxxxxxxxx Xxxx
Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attention:
Chief Executive Officer
With
a
copy to:
Akerman
Senterfitt LLP
000
Xxxxxxx Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile:
(000) 000-0000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Any
such
notice or communication shall be deemed to have been received (i) when
delivered, if personally delivered or transmitted by electronic mail, with
receipt acknowledgment by the recipient by return electronic mail, (ii) when
sent, if sent by facsimile on a business day during normal business hours
(or,
if not sent on a business day during normal business hours, on the next business
day after the date sent by facsimile), (iii) on the next business day after
dispatch, if sent by nationally recognized, overnight courier guaranteeing
next
business day delivery, and (iv) on the 5th
business
day following the date on which the piece of mail containing such communication
is posted, if sent by mail.
Section
10.11. Severability.
If any
provision of this Agreement is invalid or unenforceable, the balance of this
Agreement shall remain in effect.
Section
10.12. Assignment
of Works.
Each
Seller agrees that all Work Product belongs in all instances to the Companies.
To the extent any Seller previously had or retained any right, title or interest
of any kind or nature whatsoever in any Work Product, such Seller hereby
assigns
all such right, title and interest to the applicable Company and agrees to
take
any such action as may be reasonably requested by Purchaser or Parent following
the Closing to confirm such Company's (or, with respect to AWAC, Purchaser’s)
exclusive right, title and interest in and to the Work Product. For purposes
hereof, “Work
Product”
means
all inventions, innovations, improvements, technical information, systems,
software developments, methods, designs, analyses, drawings, reports, service
marks, trademarks, trade names, logos and all similar or related information
(whether patentable or unpatentable) which relates to any business conducted
or
proposed to be conducted by any Company as of the date hereof.
Section
10.13. Binding
Effect; Assignment.
This
Agreement shall not be assigned by any Seller or any Company, and neither
any
Seller’s or any Company’s obligations hereunder, or any of them, shall be
delegated, without the consent of Parent. Subject to the preceding sentence,
this Agreement shall be binding upon and inure to the benefit of the parties
and
their respective successors and assigns. Except as provided in Article IX,
nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party to this Agreement.
Section
10.14. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which together will constitute one and the
same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a mutually executed
counterpart to the Agreement.
Section
10.15. Headings.
The
section headings contained in this Agreement are inserted for convenience
only
and shall not affect in any way the meaning or interpretation of this Agreement.
*
* *
Signatures
on following page
IN
WITNESS WHEREOF, this Purchase Agreement has been executed by or on behalf
of
each of the Parties as of the day first written above.
INNOVATIVE
HEALTH STRATEGIES, INC.
By /s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx.
Title:
President
AWAC.MD,
INC.
By /s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx.
Title:
President
IPROCERT,
LLC
By /s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx.
Title:
Manager
INVENTIV
HEALTH, INC.
By /s/
XXXXX BASSIN___________________
Name:
Xxxxx Xxxxxx
Title:
Chief Financial Officer and Secretary
AWAC
LLC
By /s/
XXXXX BASSIN___________________
Name:
Xxxxx Xxxxxx
Title:
Vice President and Secretary
MEMBERS:
/s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx.
/s/
XXXXX X. RICHARDS_____________
Name:
Xxxxx X. Xxxxxxxx
/s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx., as custodian for Xxxx Xxxxxxx Xxxxxxxx, III, under
the
Georgia Uniform Gift to Minors Act
/s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx., as custodian for Xxxxxxx Xxxxxxxx Xxxxxxxx, under
the
Georgia Uniform Gift to Minors Act
/s/
XXXX X. XXXXXXXX, XX.___________
Name:
Xxxx X. Xxxxxxxx, Xx., as custodian for Alana Xxxxx Xxxxxxxx, under
the Georgia Uniform Gift to Minors Act
