STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of the 1st day of August, 1997, by and among ACI TELECENTRICS,
INCORPORATED ("Buyer"), a Minnesota corporation, and ENCYCLOPAEDIA BRITANNICA,
INC. ("Seller"), a New York corporation. Buyer and Seller are referred to
collectively as the "Parties."
WITNESSETH:
WHEREAS, Seller owns beneficially and of record all of the outstanding
shares of capital stock of ENCYCLOPAEDIA BRITANNICA COMMUNICATIONS CORPORATION
("Company"), an Illinois corporation; and
WHEREAS, Company provides outbound and inbound telemarketing services
and operates two calling centers, one in Lombard, Illinois and the other in
Merrillville, Indiana (such activities of Company being hereinafter referred to
as the "Business"); and
WHEREAS, subject to the terms and conditions contained herein, Seller
desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the
outstanding shares of capital stock of Company (the "Shares").
NOW THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, and subject to the terms
and conditions set forth herein, the Parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1.) Purchased Shares. Upon the terms and subject to the conditions
set forth in this Agreement, and in reliance on the representations and
warranties contained herein, effective as of the Closing Date (as defined in
this Agreement), Buyer hereby agrees to purchase from Seller, and Seller hereby
agrees to sell to Buyer, the Shares at the Purchase Price specified in Section
2.1(a).
1.2.) Excluded Assets. On or prior to the Closing Date, Seller shall
cause Company to transfer and assign to Seller, by way of a dividend or
otherwise, all of Company's right, title and interest in and to the assets
designated as excluded assets on Schedule 1.2 (the "Excluded Assets"). In the
event Seller is unable to effect such transfer and assignment of any of the
Excluded Assets prior to the Closing Date, Seller shall, and Buyer shall cause
Company to, cooperate to effect such transfer and assignment following the
Closing Date.
1.3.) Excluded Liabilities. Seller agrees to assume all liabilities of
Company arising out of the conduct of the Business prior to the Closing Date
(the "Excluded Liabilities"), provided that the aggregate Excluded Liabilities
that Seller shall assume and be responsible for (whether under Section 1.3,
under Section 6.2, under Section 6.4, under the Assignment and Assumption
Agreement,
or otherwise) and the aggregate liability of Seller under Section 7.1 shall not
exceed, in the aggregate, the Purchase Price. The Excluded Liabilities shall
include all liabilities of the Company of whatever nature whatsoever arising
with regard to the operation of the Business prior to the Closing Date, whether
fixed or contingent, known or unknown, determined or determinable, due or not
yet due, including without limitation (i) any liabilities and obligations
growing out of or relating to relationships and dealings with competitors,
customers, suppliers, employees (including but not limited to any sexual
harassment, any workers compensation, or any Equal Employment Opportunity
Commission claims), or licensees, or any other action or inaction of Company or
its predecessors in interest prior to the Closing Date; (ii) any payroll,
employee vacation, sick leave, pro-rated pension or other Employee Plans (as
hereinafter defined) or benefits, or other employee expenses accrued to the
Closing Date; (iii) any lease, license, and utility payments pro-rated to the
Closing Date, and (iv) any liability for income taxes or sales or use taxes
arising out of business operations prior to the Closing Date. Notwithstanding
the foregoing, Excluded Liabilities do not include any Included Liabilities (as
hereinafter defined). Only the liabilities designated as included liabilities on
Schedule 1.3 (the "Included Liabilities") shall be assumed and owed by Buyer.
1.4.) Tax Election. Seller and Buyer agree to make or cause to be made
a timely, effective and irrevocable election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended (the "Code") in form and substance
satisfactory to Buyer and Seller, with respect to Company and to file such
election in the manner required by applicable Treasury Regulations. Prior to the
Closing Date, Seller and Buyer shall agree on a list of assets to which the
Modified Aggregate Deemed Sale Price (as defined under applicable Treasury
Regulations) of the assets of the Company shall be allocated. Such allocation
shall be determined by Buyer, after taking into account the applicable Treasury
Regulations and the fair market value of such assets. Buyer shall prepare for
Seller's review and approval, and each shall file an IRS Form 8023-A (and
comparable state forms). Each of the Parties agrees to file such forms required
to be filed by it pursuant to Section 338(h)(10) of the Code and any regulations
promulgated thereunder and any comparable provisions of state law (the
"Reports"). Seller and Buyer agree to cooperate, and Buyer agrees to cause
Company to cooperate, in the preparation and filing of all Reports relating to
the Company consistent with the requirements of Section 338(h)(10) of the Code
and any regulations promulgated thereunder and any comparable provisions of
state law, and consistent with the allocation of the Modified Aggregate Deemed
Sale Price, as determined above. Seller and Buyer agree that any tax liability
arising out of the deemed sale pursuant to the foregoing election pursuant to
Section 338(h)(10) of the Code shall be for the sole account of Seller.
ARTICLE 2
PURCHASE PRICE
2.1.) Purchase Price.
a. Payment to Seller. Buyer shall pay to Seller the following
consideration (collectively, the "Purchase Price") in exchange for the
Shares: (i) $1,250,000 (the "Closing Payment") payable in immediately
available funds at Closing by wire transfer to an account
specified by Seller; and (ii) the quarterly payments described in
paragraph (b) below (each an "Earn-Out Payment", cumulatively the
"Total Earn-Out Payment").
b. Earn-Out Payment. The Total Earn-Out Payment shall be
calculated as follows based upon revenues of Buyer, Company, and any
affiliates of Buyer earned in accordance with generally accepted
accounting principles ("GAAP", in accordance with past practice and net
of any appropriate reserves and allowances consistent with past
practice) during the Earn-Out Period from (i) the current and
prospective Company clients listed on Schedule 2.1(b) and (ii) any new
clients developed by Xxxxx Xxxxxx which are in the insurance business
or located in the Chicago metropolitan area and which enter into an
agreement for telemarketing services with Buyer, Company or any
affiliate of Buyer prior to June 30, 1998 (the "Earn-Out Revenues").
The "Earn-Out Period" is the period from January 1, 1998 through
December 31, 1998. The amount of the Total Earn-Out Payment shall be as
follows: (i) if Earn-Out Revenues are less than $5,000,000, no Total
Earn-Out Payment shall be payable; (ii) if Earn-Out Revenues are equal
to or greater than $5,000,000 and less than $6,000,000, the Total
Earn-Out Payment shall be $500,000; (iii) if Earn-Out Revenues are
equal to or greater than $6,000,000 and less than $7,000,000, the Total
Earn-Out Payment shall be $750,000; (iv) if Earn-Out Revenues are equal
to or greater than $7,000,000 and less than $8,000,000, the Total
Earn-Out Payment shall be $1,000,000; (v) if Earn-Out Revenues are
equal to or greater than $8,000,000 and less than $9,000,000, the Total
Earn-Out Payment shall be $1,250,000; (vi) if Earn-Out Revenues are
equal to or greater than $9,000,000 and less than $10,000,000, the
Total Earn-Out Payment shall be $1,500,000; and (vii) if Earn-Out
Revenues are equal to or greater than $10,000,000, the Total Earn-Out
Payment shall be $1,750,000. The maximum Total Earn-Out Payment shall
not exceed $1,750,000.
Buyer shall make a quarterly Earn-Out Payment, if any is owing under the
following calculations, on the last business day of the first calendar month
following the quarters ending March 29, June 28, September 27, and December 31,
1998, respectively. Each of the first three such quarterly Earn-Out Payments
shall be equal to the product of (i) the percentage of the Earn-Out Period that
has elapsed as of the end of the applicable quarter, and (ii) the Deemed Total
Earn-Out Payment, less all Earn-Out Payments already received by Seller. The
Deemed Total Earn-Out Payment is the Total Earn-Out Payment that would be
payable for the entire Earn-Out Period if the Earn-Out Revenues earned for the
entire Earn-Out Period were equal to 90% of the Earn-Out Revenues that are
projected to be earned (based on a straight line extrapolation of current
Earn-Out Revenues through the remainder of the Earn-Out Period) for the entire
Earn-Out Period. The last quarterly Earn-Out Payment shall be equal to the Total
Earn-Out Payment computed on the basis of actual Earn-Out Revenues earned during
the Earn-Out Period, less the amount of Earn-Out Payments previously received by
Seller. Buyer shall pay interest of 12% per annum, payable on demand, on any
portion of any Earn-Out Payment that is not paid when due.
Example:
If Buyer has Earn-Out Revenues of $2.25 million during the first
quarter of 1998, the projected Earn-Out Revenues for the Earn-Out
Period would be $9 million (4 times $2.25 million). The Deemed Total
Earn-Out Payment would be $1,250,000 (based on Earn-Out
Revenues of $8.1 million, which is 90% of the projected $9,000,000
Earn-Out Revenues). Therefore, the Earn-Out Payment due on April 30,
1998 would be $312,500 (one-fourth of the $1,250,000 payment due for
the year if total Earn-Out Revenues equaled $8.1 million). If at the
end of the second quarter, Earn-Out Revenues totaled $4.25 million, the
projected Earn-Out Revenues for the Earn-Out Period would be $8.5
million, and the Deemed Total Earn-Out Payment would be $1,000,000
(based on Earn-Out Revenues of $7.65 million, which is 90% of the
projected $8,500,000 Earn-Out Revenues). Therefore, the Earn-Out
Payment due on July 31, 1998 would be $187,500, which is the difference
between $500,000 (one-half of the Earn-Out Payment that would be due
for the year based on Earn-Out Revenues of $7,650,000), less the
$312,500 first quarter payment. If the Deemed Total Earn-Out Payment in
any quarter is less than the total quarterly Earn-Out Payments
previously paid by Buyer to Seller, Seller shall promptly refund such
overpayment, plus interest at 12% per annum.
On the last business day of the first calendar month following the end of each
calendar quarter, Buyer shall provide Seller with quarterly statements of
Earn-Out Revenues earned during the Earn-Out Period, prepared on the basis of
Buyer's own books and records. Within 90 days following the end of the Earn-Out
Period, Buyer shall cause Buyer's accountants, at Buyer's expense, to conduct a
review of the Earn-Out Revenues and provide Seller with a letter as to the
amount of the Earn-Out Revenues.
Upon receipt of such letter, Seller shall have 20 business days in which to give
Buyer written notice of any objections with respect to the calculation of the
Earn-Out Revenues. During such 20 business day period, Buyer shall make
available to Seller all records reasonably requested by Seller in order to
confirm the calculation of Earn-Out Revenues. Failure to give timely written
notice to Buyer specifically describing the basis of each such objection shall
result in such objection being forever waived. If a timely objection is made,
and such objection cannot be resolved by the Parties within 10 business days,
then such dispute shall be submitted to Xxxxx Xxxxxxx, or such other national
accounting firm mutually agreed upon by the Parties (the "Resolving Accounting
Firm"), for final resolution. The Resolving Accounting Firm shall present its
determination and resolution of the dispute within 20 business days after the
submission of such objection to the Resolving Accounting Firm, and Buyer and
Seller agree that the determination and resolution by such firm shall be binding
and conclusive among the Parties. The fees of the Resolving Accounting Firm
shall be borne one-half by Buyer and one-half by Seller; provided, however, that
if a party to the dispute takes a position which the Resolving Accounting Firm
concludes is without material basis, the Resolving Accounting Firm may direct
that all of its fees shall be borne by the party taking such position.
If Earn-Out Revenues were understated by an amount that would result in a
greater Total Earn-Out Payment, then Buyer shall pay the amount of the Earn-Out
Payment not yet paid, plus interest at 12% per annum from the date of Buyer's
underpayment, on demand. If Earn-Out Revenues were overstated by an amount that
would result in a lesser Total Earn-Out Payment, then Seller shall refund the
amount overpaid, plus interest at 12% per annum from the date of Buyer's
overpayment, on demand.
2.2.) Security for Earn-Out Payment. In order to secure Buyer's
obligation to make the Earn-Out Payments, Buyer will provide Seller at all times
from the Closing Date until the payment in full of the Total Earn-Out Payment
with either (i) a $500,000 letter of credit issued by Riverside Bank or other
reputable bank for the benefit of Seller, in form and substance reasonably
satisfactory to Seller (the "LOC"), or (ii) a pledge agreement for $500,000 of
cash or securities of Buyer held at Xxxx Xxxxxxxx Incorporated, in form and
substance reasonably satisfactory to Seller. Buyer agrees to pay to Seller $1000
per day on or after August 6, 1997, that Buyer is not in compliance with the
preceding sentence. Buyer shall have the option to reduce the amount of the LOC
and/or of such pledge in increments of $125,000 following the last business day
of the first calendar month following the end of each calendar quarter during
the Earn-Out Period; provided that Buyer has paid all Earn-Out Payments due on
or prior to such date.
2.3.) Operation of Company. Buyer shall manage the Company in
accordance with Buyer's legal duty to exercise reasonable business judgment in
the best interests of Company and shareholders. Buyer shall have no liability to
Seller for actions of the Company taken by Buyer during the Earn-Out Period in
the exercise of Buyer's reasonable business judgment. However, Buyer agrees not
to manage or permit Company or any of Buyer's affiliates to manage, any customer
relationships or contracts, project scheduling, or invoicing of Buyer, Company
or any of Buyer's affiliates in a manner inconsistent with their normal and
customary practices or in a manner calculated (i) to move from 1998 to 1997
revenues which otherwise would be recorded in 1998 in the ordinary course of
business, or (ii) to move from 1998 to 1999 or later years revenues which
otherwise would be recorded in 1998 in the ordinary course of business.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, which
representations and warranties shall be true as of the Closing Date and shall
survive closing for a period of 2 years.
3.1.) Organization. Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois, has all
requisite power and authority, corporate and otherwise, to own its properties
and assets and conduct the Business. Company does not own any capital stock in
any other legal entity and Company is not a shareholder, partner or joint
venturer with any other person or legal entity.
3.2.) Qualification. Except as set forth on Schedule 3.2, Company is
qualified to do business and is in good standing as a foreign corporation in all
jurisdictions in which the failure to be so qualified would have an adverse
effect on the business or financial condition of Company. A list of such
jurisdictions is set forth on Schedule 3.2. Company has not received notice from
any state where it has not qualified claiming that the Company should be
qualified in that state.
3.3.) Corporate Authority. Seller has all requisite corporate power and
authority to execute, perform and carry out the provisions of this Agreement.
This Agreement has been duly authorized, executed, and delivered by Seller, and
assuming due authorization, execution and
delivery of this Agreement by Buyer, constitutes a legal, valid and binding
agreement of Seller, enforceable against Seller in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles ("Enforceability
Limitations"). No further proceeding on the part of Seller is necessary to
authorize this Agreement and the transactions contemplated hereby. Neither the
execution and delivery of this Agreement by Seller nor compliance by Seller with
its terms and provisions will violate (i) any provision of the certificate of
incorporation or bylaws of Seller, (ii) any contract, permit or license of
Seller, or (iii) any law, statute, regulation, injunction, order or decree of
any government agency or authority or court to which Seller or any of Seller's
assets are subject. Neither Company nor Seller are subject to any charter,
mortgage, lien, lease, agreement, contract, instrument, law, rule, regulation,
order, judgment or decree, or any other restriction of any kind or character,
which would prevent the consummation of the transactions contemplated in this
Agreement.
3.4.) Title to Shares of Stock of Company. Seller owns one hundred
percent (100%) of all classes of all equity securities of Company which are
issued and outstanding, free and clear from all liens, claims and third party
interests whatsoever
3.5.) Financial Information.
a. Financial Statements. Seller has furnished Buyer true and
complete copies of (i) Company's unaudited balance sheet as of, and
statement of operations for Company's fiscal year ended, September 30,
1996 and (ii) a pro forma balance sheet for Company as of June 30, 1997
(the "June 30 Balance Sheet") (collectively the "Financial
Statements"). Except as set forth in Schedule 3.5(a) and subject to any
year-end adjustments, the absence of required footnotes and the
qualifications and explanations set forth in the Financial Statements,
the Financial Statements have been prepared in conformance with GAAP
applied on a basis consistent with prior periods and fairly present in
all material respects the financial condition of Company as of the
represented dates thereof and the results of Company's operations for
the periods covered thereby. For purposes of this Agreement, the
Financial Statements shall be deemed to include any notes thereto.
b. Company's Books and Records. Except as set forth on
Schedule 3.5(b), Company's books of account and records (including
customer files, employment records and tax records) are complete, true
and correct in all respects.
c. No Adverse Changes. Except as set forth in Schedule 3.5(c),
since September 30, 1996, there has not been any (a) change or
circumstance that would have a material adverse effect on the business
or operation of Company; (b) damage, destruction or loss, whether
covered by insurance or not, that would have a material adverse effect
on the operations or business of Company; (c) change by Company in
accounting methods or principles used for financial reporting purposes,
except as required by a change in GAAP and concurred with by Company's
independent public accountants; or (d) agreement, whether in writing or
otherwise, to take any action described or referenced in this Section
3.5(c).
3.6.) Tax Reports, Returns and Payment. Except as set forth in Schedule
3.6, Company has timely filed all foreign, federal and applicable state and
local governmental tax or assessment reports and returns of every kind required
to be filed by Company with relation to the Business as of the Closing Date,
including, without limitation, income tax, sales and use tax, real estate tax,
personal property tax and unemployment tax, and has duly paid all taxes and
other charges (including interest and penalties) due to or claimed to be due by
any taxing authorities or is contesting such claims in good faith.
3.7.) Title to Assets. Except as set forth in Schedule 3.7, Company has
good and marketable title to all assets that it owns, a valid and binding
leasehold interest in all tangible personal property or real property that it
leases in the Business, and a valid and binding royalty-free license perpetually
to use all intangible property that is used in the Business and not owned by
Company (the "Assets"), in all cases, free and clear of liens, claims, and
encumbrances ("Liens"). Except as set forth in Schedule 3.7, at Closing, the
Assets shall include, by way of example and not of limitation, the following:
a. All fixed assets, equipment, office equipment, supplies,
furniture, and other tangible assets and property used in the Business;
b. All leasehold interests and improvements used in the
Business;
c. All customer lists and client records related to the
Business, and computer software programs used in the Business and all
such computer software programs are set forth on Schedule 3.7 (c);
d. All personal property leases ("Equipment Leases") for any
equipment used in the operation of the Business (and any related
maintenance agreements), which Equipment Leases are identified on
Schedule 3.7(d) hereto;
e. All customer contracts ("Customer Contracts") relating to
the Business, which Customer Contracts are identified in Schedule
3.7(e) hereto;
f. All software (and any related maintenance agreements) and
other similar license agreements and other contracts ("Other
Contracts") relating to the Business, which Other Contracts are
identified in Schedule 3.7(f) hereto;
g. All records, files, and information relating to past or
current employees of the Company.
h. All Company insurance licenses and other Company licenses
and permits relating to the Business ("Company Licenses and Permits"),
which Company Licenses and Permits are set forth on Schedule 3.7(h).
3.8.) Tangible Personal Property. Except as set forth in Schedule 3.8,
all tangible personal property owned or leased in the Business is in good repair
and operating condition, ordinary wear and tear excepted.
3.9.) Licenses and Permits. Except as set forth in Schedule 3.9,
Company and Company's employees possess all necessary governmental permits,
licenses and approvals required to conduct the Business in its present form and
at its present location, and without limiting the generality of the foregoing,
those Company employees who solicit insurance business as part of their
telemarketing duties hold valid insurance agent licenses from all necessary
jurisdictions to conduct the Business in its present form and at its present
location. All employee permits, licenses and approvals currently held by
Company's employees ("Employee Licenses and Permits") and Company Licenses and
Permits are listed on Schedule 3.9. Except as set forth in Schedule 3.9, all of
the Employee Licenses and Permits and the Company Licenses and Permits are valid
and in good standing and neither Company nor Company's employees have received
any notice that the Employee Licenses and Permits or the Company Licenses and
Permits will be terminated by action of any governmental authority or otherwise.
No Company Licenses and Permits will cease to be valid or to remain in full
force and effect as a result of the sale of the Shares, and except as disclosed
in Schedule 3.9, the sale of the Shares does not require any consents or notices
with respect to the Company Licenses and Permits.
3.10.) Contracts.
a. Contracts and Consents. Schedule 3.10(a) contains
an accurate and complete list of all contracts, commitments,
and binding arrangements (the "Contracts") to which Company is
a party or by which Company is bound in effect of the Closing
Date. Except as specifically set forth in Schedule 3.10(a), no
such Contracts will cease to remain in full force and effect
as a result of the sale of the Shares, and the sale of the
Shares does not require any consents or notices with respect
to the Contracts.
b. Employee Plans.
(i) Existence of Plans. Schedule 3.10(b)(i)
is an accurate and complete list of all Employee
Plans of Company. "Employee Plans" means any pension,
retirement, disability, medical, dental, or other
health insurance plan, life insurance or other death
benefit plan, profit sharing, deferred compensation,
stock option, bonus or other incentive plan, vacation
benefit plan, severance plan, or other employee
benefit plan or arrangements including, without
limitation, any "pension plan" as defined in Section
3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and any "welfare plan"
as defined in Section 3(1) of ERISA, whether or not
any of the foregoing is funded, (x) to which Company
is a party or by which Company is bound; or (y) with
respect to which Company has made any payments or
contributions since January 1, 1997, or may otherwise
have any liability (including any such plan or other
arrangement formerly maintained by Company).
(ii) Administration of Employee Plans.
Except as set forth in Schedule 3.10 (b)(ii), each
Employee Plan in existence has been administered in
all material respects in accordance with its terms
and provisions and as amended in accordance with the
terms and provisions of ERISA; each of such Employee
Plans complies in all material respects with all
requirements of law applicable thereto.
(iii) Absence of Certain Events Respecting
Employee Plans. Except as set forth in Schedule
3.10(b)(iii), since April 30, 1997, Company has not
instituted or agreed to institute any new Employee
Plan, or made or agreed to make any change in any
Employee Plan.
c. Union and Employment Contracts and Other Employment
Matters.
(i) Except as set forth in Schedule 3.10(c)(i)(A),
Company is not a party to any collective bargaining agreement
or any other written employment agreement, nor is Company a
party to any other contract or understanding (oral or written)
that contains any severance pay liabilities or obligations,
except for accrued, unused vacation pay or accrued and unused
sick leave pay. Written descriptions of Company's employee
benefits are attached as Schedule 3.10(c)(i)(B).
(ii) Except as set forth in Schedule 3.10(c)(ii),
Company has no obligations to Company's directors, officers,
employees or agents other than obligations arising in the
ordinary course of business on account of wages, salaries,
benefits and commissions for prior services performed or
business produced.
(iii) During the last three (3) years Company has
experienced no work stoppages, walkouts or strikes or, to
Seller's knowledge, attempts by its employees to organize a
union.
(iv) Except as set forth in Schedule 3.10(c)(iv)
hereto, there have been no employee or ex-employee lawsuits or
claims, or any claims of unfair labor practices or the like,
filed against Company in the past three (3) years.
d. No Breach of Contracts. Except as set forth in Schedule
3.10(d), (i) Company has performed all obligations required to be
performed by Company to date under each Contract to which Company is a
party or by which Company is bound; (ii) neither Company, nor to
Seller's knowledge, any other party is in default under any Contracts
of any kind to which Company is a party or by which Company is bound;
and (iii) no event has occurred which, after the giving of notice or
the lapse of time or otherwise, would constitute a default under, or
result in a breach of, by Company, or to Seller's knowledge, any other
party, any Contracts to which Company is a party or by which Company is
bound.
e. Binding Effect. Assuming due authorization, execution and
delivery by each person other than Company, and except as set forth in
Schedule 3.10(e), each Contract disclosed in the Schedules is valid and
binding upon the Company, and to Seller's knowledge, the other parties
thereto in accordance with its respective terms, subject to
Enforceability Limitations; and except as set forth on Schedule
3.10(e), the transaction contemplated by this Agreement will not result
in the violation or breach of any such Contract, subject to
Enforceability Limitations.
3.11.) Contracts with Related Parties. Except as set forth in Schedules
3.10(c)(i)(A) and 3.11, there are no Contracts between Company and any of its
employees, agents, officers, directors or shareholders.
3.12.) Employee Information.
a. Employee List. Schedule 3.12(a) is an accurate and complete
list of the names, positions, titles, and salary rates for all
employees of Company, together with summary of the bonuses, additional
compensation and other employee benefits, if any, paid within one year
of the Closing Date or payable to such persons as of the date of this
Agreement.
b. Terminated Employees. Schedule 3.12(b) is a true and
accurate list of all employees of Company whose employment has
terminated either voluntarily or involuntarily in the twelve (12) month
period preceding the Closing Date.
c. Compliance with Employment Laws. Except as set forth in
Schedule 3.12(c), Company has complied with all applicable federal and
state laws relating to the employment of labor, including the
provisions thereof relating to wages, hours, collective bargaining and
the payment of withholding and social security taxes, and has not
received notice from any governmental authority that it is liable for
any arrears of wages, or any tax or penalties, for failure to comply
with any of the foregoing.
3.13.) Insurance. Seller and Company have maintained insurance policies
relating to the Business which are listed in Schedule 3.13.
3.14.) Litigation and Related Matters.
a. Except as set forth on Schedule 3.14(a), there is no
pending, or to Seller's knowledge threatened litigation, proceeding, or
to Seller's knowledge, investigation against Company. Neither the
matters identified in Schedule 3.14(a), nor any existing judgment,
order, decree, or other legal action to which the Company is subject
affecting the operation of the Business would prevent, impede, or make
illegal the consummation of the transactions contemplated in this
Agreement or would require Company to change its normal business
practice or would have a material adverse effect on the Business as it
is currently conducted (except that as a result of item 2 on Schedule
3.14(a) Company no longer engages in telemarketing in Alabama for
Providian and may further curtail its telemarketing in Alabama).
b. Except as set forth in Schedule 3.14(b), no legal actions
have been commenced against Company within the two years prior to the
Closing Date.
3.15.) Customers. Schedule 3.15 lists the customers of Company with
annual revenues of $10,000 or more for each of the past three fiscal years.
Except as set forth in Schedule 3.15, Seller has no information indicating that
any significant customers intend to cease doing business with Company or reduce
the amount of business they do with Company.
3.16.) Laws and Regulations. Except as set forth in Schedule 3.16,
Company has complied, and is in compliance, in all respects with applicable
laws, statutes, orders, rules, regulations and requirements promulgated by
governmental authorities relating to the operation of the Business, including
without limitation the Telephone Consumer Protection Act of 1991, the
Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994, and all
applicable laws and regulations of
states, counties and municipalities relating to the telemarketing business.
Except as set forth in Schedule 3.16, Company's employees who have insurance
licenses have complied, and are in compliance, with applicable laws, statutes,
orders, rules, regulations and requirements promulgated by governmental or other
authorities with respect to such insurance licenses.
3.17.) Copies of Documents. True, complete and correct copies of all
written Contracts have been delivered to Buyer, and there are no amendments to
or modifications of, or agreements of the Parties relating to, any such
Contracts, which have not been delivered to Buyer. True, complete and correct
copies of all other documents that are referred to in the Schedules have been
made available to Buyer prior to Closing.
3.18.) No Finders. No act of Company or Seller prior to Closing has
given or will give rise to any valid claim against Buyer for a brokerage
commission, finder's fee or other like payment in connection with the
transactions contemplated herein.
3.19.) Completeness of Disclosures. The information which Company has
provided to Buyer has been provided from materials and data developed by Company
for use in its day-to-day business operations. Although Company endeavors to
obtain and prepare the most accurate information reasonable for its business,
such information by its nature can be incomplete and inaccurate in a number of
respects. Except for information set forth in the Schedules and for documents
provided to Buyer in response to due diligence requests, none of such
information has been specifically assembled for Buyer. None of the information
furnished to Buyer has been independently audited or otherwise independently
verified for Buyer. Therefore such information may contain inaccuracies or be
incomplete in certain respects. Subject to the foregoing qualification, to
Seller's knowledge, none of the representations or warranties made by Seller in
this Agreement and none of the Schedules, contains any untrue statement of a
material fact or omits any material fact the omission of which would result in
the statements made being misleading, provided, that no representation or
warranty is made with respect to the Confidential Offering Memorandum previously
provided to Buyer. To Seller's knowledge, the Schedules to this Agreement where
provided by or on behalf of Company completely and correctly present the
information required by this Agreement to be set forth in them.
3.20.) Restrictions. Except as disclosed in Schedule 3.20, Seller
represents and warrants that during the period from June 30, 1997 to the Closing
Date (except as Buyer otherwise has consented in writing):
a. The Business has been conducted only in the usual and
ordinary manner.
b. Company has timely paid and discharged all bills and
monetary obligations and timely and properly performed all of its
obligations and commitments under all existing contracts and agreements
pertaining to or affecting Company, the Business or any of its
properties or assets. Company, except in the ordinary course of
business, has not terminated any contracts or agreements pertaining to
or affecting Company, the Business or any of its properties or assets.
c. Company has not disposed of or conveyed any interest of any
kind in or to the assets used in the Business, except in the ordinary
course of business, and has used
reasonable efforts to preserve the Business and to keep available to
Company the services of Company's present employees, and not to impair
relationships with suppliers, customers and others having business
relations with Company.
3.21.) Consents and Approvals. Except as set forth in Schedule 3.21, no
consent or authorization of, or filing or registration with, any governmental
authority or any other third party is required in connection with the execution,
delivery or performance by Seller of this Agreement or the consummation by
Seller of the transactions contemplated hereby or thereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, which
representations and warranties shall be true as of the Closing Date, and shall
survive the Closing for a period of two years:
4.1.) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota.
4.2.) Corporate Authority. Buyer has all requisite corporate power and
authority to execute, perform and carry out the provisions of this Agreement.
This Agreement has been duly authorized, executed, and delivered by Buyer, and
assuming due authorization, execution and delivery of this Agreement by Seller,
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms, subject to Enforceability Limitations. No
further proceeding on the part of Buyer is necessary to authorize this Agreement
and the transactions contemplated hereby. Neither the execution and delivery of
this Agreement by Buyer nor compliance by Buyer with its terms and provisions
will violate (i) any provision of the articles of incorporation or bylaws of
Buyer, (ii) any contract, permit or license of Buyer, or (iii) any law, statute,
regulation, injunction, order or decree of any government agency or authority or
court to which Buyer or any of Buyer's assets are subject. Buyer is not subject
to any charter, mortgage, lien, lease, agreement, contract, instrument, law,
rule, regulation, order, judgment or decree, or any other restriction of any
kind or character, which would prevent the consummation of the transactions
contemplated in this Agreement.
4.3.) Financing. Buyer has internal resources or financing commitments
from responsible financial institutions available in connection with the
acquisition of the Shares which are in an aggregate amount sufficient to
consummate the transactions contemplated hereby and to perform its obligations
hereunder.
4.4.) Consents and Approvals. No consent or authorization of, or filing
or registration with, any governmental authority or any other third party is
required in connection with the execution, delivery or performance by Buyer of
this Agreement or the consummation by Buyer of the transactions contemplated
hereby.
4.5.) Purchase for Investment. Buyer understands that the Shares have
not been registered under the Securities Act of 1933, as amended (the "Act"), or
any applicable state
securities laws, and therefore the Shares may not be sold or otherwise
transferred unless they are registered under the Act and any applicable state
securities laws or unless exemptions from such registrations are available.
4.6.) Litigation. There is no pending or, to Buyer's knowledge,
threatened litigation, proceeding, or to Buyer's knowledge, investigation
against Buyer nor is Buyer subject to any existing judgment, order, decree or
other legal action that would prevent, impede or make illegal the consummation
of the transactions contemplated in this Agreement.
4.7.) Finders. No act of Buyer has given or will give rise to any valid
claim against Seller for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated herein
4.8.) Buyer's Due Diligence. Buyer was advised by counsel and other
representatives in connection with this Agreement, and it and its
representatives have been permitted full and complete access to the books and
records, facilities, equipment, contracts and other documents, properties and
assets of Company, and Buyer has had a full opportunity to meet with the
officers and employees of Company to discuss the business of Company and such
other matters relating to Company and the consummation of the transactions
contemplated by this Agreement as Buyer has elected to review. The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Article 3 of this Agreement or the right of Buyer to rely thereon.
ARTICLE 5.
CLOSING
5.1.) Closing. The closing of the transaction contemplated by this
Agreement ("Closing") shall be held at the offices of Xxxxx, Xxxxx & Xxxxx, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx on August 1, 1997, at 10:00 a.m., or at
such later date or time as the Parties may mutually agree upon in writing. Such
date of Closing shall be referred to herein as the "Closing Date."
5.2.) Documents to be Delivered by Seller. Seller agrees to deliver the
following, duly executed as appropriate, to Buyer at the Closing:
a. Certificates representing the Shares held by Seller duly
endorsed for transfer to Buyer, and certificates representing the
transferred Shares in the name of Buyer, prepared for signatures.
b. A certificate from the Secretary or an Assistant Secretary
of the Seller, in a form satisfactory to Buyer and Buyer's counsel,
setting forth the resolutions adopted by the Board of Directors of the
Seller authorizing the execution of this Agreement and all documents to
be executed in connection herewith and the taking of any and all
actions necessary to consummate the transactions contemplated hereby.
c. All corporate records of Company including all minutes of
shareholder and director meetings, bylaws, and stock register.
d. A certificate executed by Seller stating that (i) the
representations and warranties made by Seller as set forth in this
Agreement are true, complete and correct as of the Closing Date; and
(ii) all obligations of Seller under this Agreement required to have
been performed or complied with before or as of the Closing Date have
been performed or complied with as required in this Agreement.
e. The June 30 Balance Sheet.
f. An assignment and assumption agreement in the form attached
hereto as Exhibit 5.2(f) duly executed by Seller and Company (the
"Assignment and Assumption Agreement").
g. An amendment to Company's Articles of Incorporation, in a
form complete and adequate for filing, changing Company's name to ACI
Telecentrics of Illinois, Inc.
h. A Certificate of Good Standing for the Company as of a date
within 5 calendar days of the Closing Date from the Secretary of State
of the State of Illinois.
i. An opinion from Xxxxx, Xxxxx & Xxxxx substantially in the
form of Exhibit 5.2(i).
j. An opinion from Xxxxxxx X. Xxxx, Esq., substantially in the
form of Exhibit 5.2(j).
k. The resignations of all officers and all members of the
Board of Directors of the Company.
l. An assignment instrument conveying to Seller the Excluded
Assets.
m. A list of all Company bank accounts and safe deposit
arrangements, and forms of all documents necessary to change Company's
banking accounts, safe deposit arrangements, and borrowing
authorizations and the persons authorized to sign thereon.
5.3.) Documents Delivered by Buyer. Buyer agrees to deliver the
following, duly executed as appropriate, to Seller at the Closing:
a. Immediately available funds from Buyer to Seller in the
amount of the Closing Payment by wire transfer to the account
designated by Seller.
b. A certificate executed by Buyer stating that (i) the
representations and warranties made by Buyer as set forth in this
Agreement are true, complete and correct as of the Closing Date; and
(ii) all obligations of Buyer under this Agreement required to have
been performed or complied with before or as of the Closing Date have
been performed or complied with as required in this Agreement
c. A certificate from the Secretary or an Assistant Secretary
of the Buyer, in a form satisfactory to Seller and Seller's counsel,
setting forth the resolutions adopted by the Board of Directors of the
Buyer authorizing the execution of this Agreement and all
documents to be executed in connection herewith and the taking of any
and all actions necessary to consummate the transactions contemplated
hereby.
d. A Letter of Credit or a pledge agreement executed by Buyer
and Xxxx Xxxxxxxx Incorporated in the amount of $500,000.00, in
compliance with Section 2.2.
e. An opinion from Xxxxxxxxxx & Xxxxx, P.A., substantially in
the form of Exhibit 5.3(e).
ARTICLE 6.
POST CLOSING OBLIGATIONS
6.1.) Further Documents and Assurances. At any time and from time to
time after the Closing Date, each Party shall, upon request of the other Party,
execute, acknowledge and deliver all such further and other assurances and
documents, and will take such action consistent with the terms of this
Agreement, as may be reasonably requested to carry out the transactions
contemplated herein and to permit each party to enjoy its rights and benefits
hereunder. At any time and from time to time after the Closing Date, Buyer and
Seller also agree to cooperate with, and furnish information to, each other in
connection with the filing of any tax report or return and any audit or tax
dispute arising in connection therewith. From and after the Closing, the Parties
shall cooperate with each other with respect to the defense of any claims or
litigation made or commenced by third parties, provided that the Party
requesting cooperation shall reimburse the other Party for the other Party's
reasonable out-of-pocket costs and expenses of furnishing such cooperation.
6.2.) Payment of Debts and Liabilities. Seller shall pay all Excluded
Liabilities as they become due and payable, provided that the aggregate Excluded
Liabilities that Seller shall assume and be responsible for (whether under
Section 1.3, under Section 6.2, under Section 6.4, under the Assignment and
Assumption Agreement, or otherwise) and the aggregate liability of Seller under
Section 7.1 shall not exceed, in the aggregate, the Purchase Price. If Seller
contests any of the Excluded Liabilities, Seller shall cooperate in reasonable
good faith with Company after the Closing to minimize to the extent reasonably
practicable any adverse effect that such contest may have on Company's
post-closing relationship with the creditor. Seller shall be responsible for
continuing any negotiations or proceedings regarding such contested claims and
for payment of any amount finally determined to be due and shall indemnify the
Company with respect thereto in accordance with Section 7.1(c) herein, provided
that the aggregate Excluded Liabilities that Seller shall assume and be
responsible for (whether under Section 1.3, under Section 6.2, under Section
6.4, under the Assignment and Assumption Agreement, or otherwise) and the
aggregate liability of Seller under Section 7.1 shall not exceed, in the
aggregate, the Purchase Price.
6.3.) Accounts Receivable and Unbilled Work as of the Closing Date.
Seller and Buyer shall cause Company to distribute and/or assign to Seller as of
the Closing Date all accounts receivable of Company and the rights to payment
for all unbilled time for Company services
performed prior to the Closing Date, and Buyer acknowledges that Seller
thereupon shall be the sole owner thereof.
a. After the Closing, Buyer shall cause Company to prepare
invoices in due course for unbilled work performed up to the Closing,
and Company in its reasonable discretion may include such unbilled work
in invoices that cover both pre-closing and post-closing work. If
invoices cover both pre-closing and post-closing work, any amounts
collected pursuant to such invoices shall be allocated to Seller and
Company as designated by the client (which Buyer shall not, and Buyer
shall not permit Company to, instruct or encourage clients so to do),
and if not so designated, on a first in, first out basis. Seller shall
have the responsibility to collect all receivables outstanding as of
the Closing Date and Buyer shall cooperate and shall cause Company to
cooperate in reasonable good faith to assist Seller with such
collection. Buyer shall cooperate, and shall cause Company to
cooperate, with Seller in the collection of any receivables outstanding
as of the Closing Date. Buyer shall grant, and shall cause Company to
grant, powers of attorney allowing Seller to endorse checks made
payable to Buyer or Company that represent payments for receivables
outstanding as of the Closing Date. Seller shall not undertake legal
proceedings with respect to any receivables without first consulting
with Buyer and giving Buyer a reasonable opportunity to effect an
amicable settlement of such dispute acceptable to both the customer and
Seller.
b. Buyer shall cause Company to collect all invoices that it
prepares hereunder after the Closing. Within 15 days after the end of
each calendar month, Buyer shall cause Company to give Seller a report
concerning Company's collections on any such invoices, or any portion
thereof, relating to unbilled work performed prior to the Closing Date
and shall remit such amounts to Seller promptly following delivery of
such report. Buyer shall cause Company to remit at such time any
collections that Company may receive relating to receivables
outstanding as of the Closing Date.
As needed after the Closing, Buyer agrees to provide Company with sufficient
working capital to pay all post-Closing obligations and liabilities of Company
as the same come due.
6.4.) Prorations. Promptly following the Closing, the Parties shall
account to each other for all lease, utility, telephone, employment, tax, and
other continuing obligations and operating expenses to the end that Seller shall
pay for all such expenses attributable to the period up to and excluding the
Closing Date and Buyer shall pay for all expenses attributable to the period
thereafter, provided that the aggregate Excluded Liabilities that Seller shall
assume and be responsible for (whether under Section 1.3, under Section 6.2,
under Section 6.4, under the Assignment and Assumption Agreement, or otherwise)
and the aggregate liability of Seller under Section 7.1 shall not exceed, in the
aggregate, the Purchase Price.
6.5.) Audit of Financial Statements. Seller will reasonably cooperate
with Buyer's auditors in conducting an audit of Company's Financial Statements
as necessary to satisfy Buyer's obligations to file audited financial statements
of Company in accordance with applicable Securities and Exchange Commission
Rules. Buyer shall pay the cost of such audit and any reasonable out of
pocket costs and expenses of Seller in connection therewith and approved by
Buyer (such approval not to be unreasonably withheld). At Buyer's request,
Seller will furnish in advance a reasonable estimate of such expenses.
6.6.) Buyer's Preservation of Books and Records; Access.
a. For a period of seven (7) years after the Closing Date,
Buyer shall preserve and retain, or cause Company to preserve and
retain, all corporate, accounting, legal, employment, auditing and
other books and records of Company (including any documents relating to
any governmental or non-governmental actions, suits, proceedings or
investigations) relating to the conduct of the business and operations
of Company prior to the Closing Date. Notwithstanding the foregoing,
during such period, Buyer may dispose of any such books and records
which are offered to, but not accepted by, Seller.
b. After the Closing Date, Buyer shall cause Company to permit
Seller and its authorized representatives to have reasonable access to,
and to inspect and copy (at Seller's expense), all materials referred
to in Section 6.6(a), and materials relating to the collection of
amounts described in Section 6.3, and to meet with officers and
employees of Buyer and Company on a mutually convenient basis in order
to obtain explanations with respect to such materials and to obtain
additional information and to call such officers and employees as
witnesses.
6.7.) Seller's Preservation of Books and Records; Access.
a. For a period of seven (7) years after the Closing Date,
Seller shall preserve and retain all corporate, accounting, legal,
employment, auditing and other documents, books and records of Company
(including any documents relating to any governmental or
non-governmental actions, suits, proceedings or investigations, and
including any such documents, books or records maintained in a software
data base) relating to the conduct of the business and operations of
Company prior to the Closing Date, to the extent that such documents,
books or records are segregatable from the other documents, books and
records of Seller and its affiliates. Notwithstanding the foregoing,
during such period, Seller may dispose of any such documents, books or
records which are offered to, but not accepted by, Buyer.
b. After the Closing Date, Seller shall permit Buyer and its
authorized representatives to have reasonable access to, and to inspect
and copy (at Buyer's expense), all materials referred to in Section
6.7(a) that, upon Buyer's reasonable request, Seller has had the
opportunity to segregate from the documents, books and records of
Seller and its affiliates, and to meet with officers and employees of
Buyer on a mutually convenient basis in order to obtain explanations
with respect to such materials and to obtain additional information and
to call such officers and employees as witnesses.
6.8.) Trademarks.
a. After the Closing Date, neither Buyer nor Company shall
have any right, title or interest in or to any of Seller's trade names,
trademarks, service names or service marks (including, without
limitation, "Encyclopedia Britannica", "Britannica", "Britcom", "EB",
"EBCC" and any variations or derivations thereof). Buyer shall not use,
and Buyer shall not permit Company to use, any such trade names,
trademarks, service names or service marks.
b. Buyer acknowledges that Seller and its affiliates would be
irreparably harmed by any breach of this Section 6.8 and that any
relief under Article 7 will be inadequate to compensate Seller or such
affiliates for any such breach. Accordingly, Buyer (on behalf of itself
and its affiliates) agrees that, in addition to any relief available
under Article 7, Seller and its affiliates shall be entitled, without
the necessity of proving actual damages or posting any bond, to
injunctive relief against Buyer (or its affiliates) in the event of any
breach or threatened breach by Buyer (or its affiliates) of its
covenants and agreements in this Section 6.8 and Buyer (on behalf of
itself and its affiliates) consents to the entry thereof.
6.9.) Employee Obligations.
a. From and after the Closing Date, Buyer shall cause Company
to continue to employ all of the employees of the Company ("Continuing
Employees") other than those employees of Company whom Buyer identifies
prior to such date who will not be Continuing Employees. Buyer and
Seller acknowledge that the Continuing Employees are employees at will
and that the foregoing covenant of Buyer is subject to the exercise of
discretion of Buyer and Company in making personnel decisions in the
ordinary course. Buyer shall be responsible for any liability, cost or
expense arising as a result of Company's or Buyer's termination of any
Continuing Employees, including any liability under the Worker
Adjustment and Retraining Notification Act or similar state or local
law.
b. Effective on the Closing Date, Buyer agrees that Company or
Buyer shall be liable for (i) all benefits payable under all employee
benefit plans established or maintained by Company after the Closing
Date, (ii) Company's workers' compensation obligations with respect to
injuries incurred by the Continuing Employees on or after the Closing
Date; and (iii) all benefits payable under all employee benefit plans
established, maintained or made available by Company after the Closing
Date for the benefit of Company employees. Continuing Employees (and
their eligible dependents) shall be given credit under the employee
benefit plans, programs, policies and arrangements that are established
or made available for their service with Company and Seller prior to
the Closing Date for purpose of (i) eligibility to participate and
vesting, and (ii) satisfying any waiting periods, evidence of
insurability requirements or the application of any pre-existing
condition limitations. Buyer shall cause Company to reimburse Seller
for the employer cost of medical coverage for employees, and their
eligible dependents, for the balance of the calendar month beginning on
the Closing Date and for payroll for all employees of Company for any
days in the payroll period in which the Closing Date
occurs including and after the Closing Date during which such employees
continue to be employed.
c. Seller shall provide severance pay to employees identified
by Buyer to Seller on or prior to the Closing Date as not being
Continuing Employees and to Continuing Employees identified by Buyer
whose employment will be terminated by Company or Buyer within 30 days
of the Closing Date.
d. It is understood and agreed that all provisions contained
in this Agreement with respect to employee benefit plans or employee
compensation are included for the sole benefit of the respective
parties hereto and do not and shall not create any right in any other
person, including any participant in any employee benefit or
compensation plan or any beneficiary thereof or any employee.
6.10.) Removal of Signs. Seller shall remove any signs or other
markings which contain the name "Encyclopedia Britannica", "Britannica",
"Britcom", "EB", "EBCC", and any variations or derivations thereof, from Company
real property prior to Closing. Seller agrees to reimburse Buyer within 30 days
for the cost of removing any such signs or other markings not removed from
Company real property prior to Closing.
ARTICLE 7
INDEMNIFICATION
7.1.) Indemnification of Buyer and Company by Seller. Subject to
Section 7.2., Seller shall indemnify Buyer and Company against and hold Buyer
and Company harmless from any and all damages, losses, costs and expenses,
(including reasonable attorney fees) (collectively, "Losses"), suffered or
incurred by Buyer or Company arising out of any of the following:
a. Any inaccuracy in or breach of any representation or
warranty made by Seller in Article 3; provided that any claim with
respect to Section 3.6 must be asserted by Buyer or Company in writing
not later than the expiration of the applicable statute of limitations
and Seller shall have no liability for any such claim first asserted in
writing thereafter and any claim with respect to any other
representation or warranty made by Seller must be asserted by Buyer or
Company in writing not later than the date occurring two years after
the Closing Date and Seller shall have no liability for any such claim
first asserted in writing thereafter; and
b. Any breach by Seller of any covenant of Seller in this
Agreement; provided, however, that, with respect to breaches on or
prior to the Closing Date, any claim must be asserted by Buyer or
Company in writing not later than the date occurring two years after
the Closing Date and Seller shall have no liability for any such claim
first asserted in writing thereafter.
c. Seller's failure to pay any Excluded Liabilities.
7.2.) Limitation of Seller's Indemnity to Buyer and Company. Except as
provided in Section 7.3, notwithstanding any other provision of this Agreement:
a. Buyer and Company shall have the right to payment by Seller
under Section 7.1(a) and (b) only if, and only to the extent that,
Buyer and Company together shall have incurred indemnifiable Losses in
excess of $25,000.
b. The aggregate Excluded Liabilities that Seller shall assume
and be responsible for (whether under Section 1.3, under Section 6.2,
under Section 6.4, under the Assignment and Assumption Agreement, or
otherwise) and the aggregate liability of Seller under Section 7.1
shall not exceed, in the aggregate, the Purchase Price.
c. In no event shall Seller have any liability to Buyer or
Company for special, speculative, indirect or consequential damages,
including for lost profits.
d. The sole and exclusive liability and responsibility of
Seller to Buyer and Company under or in connection with this Agreement
or the transactions contemplated hereby (including for any breach or
inaccuracy of any representation or warranty or for any breach of any
covenant or for any other reason), and the sole and exclusive remedy of
Buyer or Company with respect to any of the foregoing, shall be as set
forth in Sections 7.1 and 7.3, as limited by this Section 7.2. To the
extent that Buyer or Company has any indemnifiable Losses for which it
may assert any other right to indemnification, contribution or recovery
from Seller (whether under this Agreement or under common law or any
statute (including the Comprehensive Environmental Response
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601 et
seq., and any similar state statute) or otherwise), Buyer hereby
agrees, and agrees to cause Company to agree, that its assertion of any
such right shall be treated solely as a claim for indemnification
hereunder and therefor shall be subject to the restrictions and
limitations herein.
7.3.) Additional Indemnity. Seller shall indemnify Buyer and Company
against and hold Buyer and Company harmless from any and all Losses suffered or
incurred by Buyer or Company arising out of any (a) claims by Company employees
arising out of any actions, omissions, or other circumstances taken or occurring
prior to the Closing Date, or (b) claims from any governmental entity for unpaid
taxes arising with respect to operation of the Business prior to the Closing
Date. This Section 7.3 shall not be subject to the limitations in Section 7.2(a)
or (b) (but shall be subject to the limitations in Section 7.2(c) and (d)) and
shall not be subject to any other limitations in this Agreement which impose a
deductible or a maximum on Seller's indemnification liability or which impose a
time limit (other than as provided in Section 7.5) on Buyer's or Company's right
to demand and obtain indemnification.
7.4.) Indemnification of Seller by Buyer. Buyer shall indemnify Seller
against and hold Seller harmless from any and all Losses, up to, in the
aggregate, the Purchase Price, suffered or incurred by Seller arising out of any
of the following:
a. Any inaccuracy in or breach of any representation or
warranty made by Buyer in Article 4; provided that any claim with
respect to any representation or warranty must be asserted by Seller in
writing not later than the date occurring two years after the Closing
Date and Buyer shall have no liability for any such claim first
asserted in writing thereafter; and
b. Any breach by Buyer of any covenant of Buyer in this
Agreement; provided that, with respect to breaches on or prior to the
Closing Date, any claim must be asserted in writing by Seller not later
than the date occurring two years after the Closing Date and Buyer
shall have no liability for any such claim first asserted in writing
thereafter.
7.5.) Claims.
a. Any notice of a claim for indemnification shall specify the
facts alleged to constitute a breach and the representations,
warranties and covenants alleged to have been breached and shall be
accompanied by an estimate of the amount of Losses due to such breach.
Any right to indemnification shall only apply to Losses with respect to
which the Party seeking indemnification shall have notified the other
Party as set forth herein within the applicable time period set forth
in Section 7.1 or 7.4, as the case may be.
b. If any Party (the "Indemnitee") is subject to any action,
suit, proceeding or demand at any time instituted against or made upon
it (a "Claim") for which it may seek indemnification hereunder from the
other Party (the "Indemnitor"), the Indemnitee shall notify the
Indemnitor of such Claim as soon as reasonably practicable after
becoming aware of such Claim (specifying in reasonable detail the
nature and amount of the claim together with such information as may be
necessary for the Indemnitor to determine that the limitations in
Section 7.2 have been satisfied or do not apply). Upon receipt of such
notice, the Indemnitor shall be entitled to participate in and, at its
option, assume the defense of such Claim with counsel reasonably
satisfactory to the Indemnitee, and in the case of such an assumption
the Indemnitor shall have the authority to negotiate, compromise and
settle such Claim for the Indemnitee; provided that the Indemnitor
shall not compromise or settle any such Claim without the prior written
consent of the Indemnitee (which shall not be unreasonably withheld) if
such compromise or settlement would expose the Indemnitee to any
additional loss, obligation or restriction.
c. The Indemnitee shall retain the right to employ its own
counsel at its own expense to participate in the defense of any Claim,
the defense of which has been assumed by the Indemnitor. The Indemnitee
shall cooperate in all respects in the defense of the Claim, including
refraining from taking any position adverse to the Indemnitor.
d. The Indemnitee shall not compromise or settle any Claim
without the prior written consent of the Indemnitor (which shall not be
unreasonably withheld).
7.6.) Treatment of Indemnity and Tax Benefits. Any indemnification
pursuant to this Article 7 shall be net of (i) any actual Federal, state or
local income tax benefit specifically arising from the facts and circumstances
giving rise to the Loss, realizable by the indemnified party by an actual
reduction in taxes payable, or by the receipt of a refund of taxes previously
paid, by the indemnified party; provided, however, that if the Internal Revenue
Service (or other relevant governmental authority) subsequently determines that
such benefits were overestimated or underestimated by $25,000 or more, such
amount shall promptly be paid to the indemnified party by the indemnifying party
in the case of an overestimate of benefits, or to the indemnifying party by the
indemnified party, in the case of an underestimate of benefits, and (ii) any
insurance proceeds received or to be received by the indemnified party with
respect to the Loss. The tax benefit shall be determined in good faith by the
indemnified party and shall apply to the earliest year reasonably permissible.
All payments pursuant to this Article 7 shall be deemed to be, and shall be
treated by Buyer, Seller and Company as, adjustments to the Purchase Price.
7.7.) Right of Setoff. Notwithstanding anything in this Agreement to
the contrary, the Buyer and Company shall be entitled, in the Buyer and
Company's sole discretion, to setoff any due but unpaid indemnification
obligation of Seller hereunder against any amounts required to be paid by the
Buyer or Company to Seller.
7.8.) Knowledge of Incorrect Representation or Warranty.
Notwithstanding anything herein to the contrary, no Party shall have any
liability for any inaccuracy in or breach of any representation or warranty by
such Party of which the officers of such Party did not have knowledge and should
not have had knowledge on or before the Closing Date if the other Party or any
of its officers, employees, counsel or other representatives had actual
knowledge on or before the Closing Date of the facts as a result of which such
representation or warranty was inaccurate or breached.
ARTICLE 8.
GENERAL
8.1.) Counterparts. This Agreement may be executed in counterparts and
by different Parties on different counterparts with the same effect as if the
signatures thereto were on the same instrument. This Agreement shall be
effective and binding upon all Parties to this Agreement at such time as all
Parties have executed a counterpart of this Agreement.
8.2.) Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given, when
received, if personally delivered, and, three business days after deposited, if
placed in the U.S. mails for delivery by registered or certified mail, return
receipt requested, postage prepaid, addressed to the address of the respective
party as stated under such party's signature space on this Agreement. Addresses
may be changed by written notice given pursuant to this Section.
8.3.) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties to this Agreement and their successors and
permitted assigns. This Agreement
may not be assigned by operation of law or otherwise, by either Party without
the express written consent of the other Party which shall not be unreasonably
withheld.
8.4.) Expenses. Except as otherwise provided herein, each party hereto
shall each bear and pay for its own costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereby, including,
without limitation, all fees and disbursements of lawyers, accountants,
financial consultants, brokers or finders incurred through the Closing Date.
8.5.) Headings and Construction. The descriptive headings of the
several Articles and Sections of this Agreement and of the several Schedules to
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement. This Agreement shall not be construed against either party since
each party has negotiated its provisions and contributed to its drafting.
8.6.) Entire Agreement; Modification and Waiver. This Agreement,
together with the Schedules and the related written agreements specifically
referred to herein, represents the entire agreement among the Parties concerning
the subject matter hereof and supersedes all prior agreements, whether written
or oral, relating thereto. No purported amendment, modification or waiver of any
provision hereof shall be binding unless set forth in a written document signed
by both Parties (in the case of amendments or modifications) or by the Party to
be charged thereby (in the case of waivers). Any waiver shall be limited to the
provision hereof and the circumstance or event specifically made subject thereto
and shall not be deemed a waiver of any other term hereof or of the same
circumstance or event upon any recurrence thereof.
8.7.) Publicity and Confidentiality. Seller and Buyer agree, and Buyer
agrees to cause Company, to hold the terms of this Agreement confidential for a
period of six months after the Closing Date, except that each Party may disclose
the terms of this Agreement as required under applicable law and make disclosure
to their advisors who agree to maintain the same in confidence; provided, that
after the Closing Date, either Party may disclose the existence of this
Agreement and the transactions contemplated hereby at any time and may disclose
the terms and provisions of this Agreement (i) for the purpose of enforcing its
rights hereunder or (ii) to any person or entity considering purchasing assets
or securities of such Party if such person or entity agrees to the
confidentiality provisions. The covenants in this Section 8.7 are in addition to
the existing Confidentiality Agreement dated as of April 17, 1997 between Buyer
and Seller, which shall remain in full force and effect.
8.8.) Governing Law. This Agreement and the legal relations between the
Parties shall be governed by and construed in accordance with the laws of the
State of Illinois.
8.9.) Attorneys Fees. In an action to enforce a party's rights
hereunder, the prevailing party shall be entitled to recover its costs and
expenses (including reasonable attorneys' fees) from the other party.
8.10.) Survival of Representations, Warranties and Agreements. The
representations, warranties and agreements contained in this Agreement shall
survive the Closing and remain in full force and effect until the date occurring
two years after the Closing Date, and neither Buyer nor Seller shall have any
liability with respect to claims first asserted in connection therewith
thereafter.
8.11.) Benefit. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the Parties to this Agreement or
their respective successors and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
8.12.) Disclaimer of Warranties. Neither Seller nor any of its
affiliates makes any representations or warranties with respect to any
projections, forecasts or forward-looking information provided to Buyer. There
is no assurance that any projected or forecasted results will be achieved.
Except as to those matter expressly covered by the representations and
warranties in Article 3, Seller is selling the Shares (and the business and
assets of Company represented thereby) on an "as is, where is" basis and
disclaims all other warranties, representations and guarantees whether express
or implied. Seller makes no representation or warranty as to merchantability or
fitness for any particular purpose and no implied warranties whatsoever.
Each of the Parties hereto has caused this Stock Purchase Agreement to
be executed in the manner appropriate to each, all as of the day and year first
above written.
ACI TELECENTRICS, INCORPORATED
By:_________________________________________________
Its: Vice President and Chief Financial Officer
Notice information:
ACI TELECENTRICS, INCORPORATED
Lake Pointe Corporate Centre
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx
with a copy to:
Xxxxxxxxxx & Xxxxx, P.A.
1100 International Centre
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx
ENCYCLOPAEDIA BRITANNICA, INC.
By:_________________________________________________
Its: Vice President and Treasurer
Notice Information:
Encyclopaedia Britannica, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
