STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is made as of this _____ day of ______________,
2000, by, between and among XXXXXXX XXXXXXX ("X. Xxxxxxx") and XXXXX XXXXX ("X.
Xxxxx") (X. Xxxxxxx hereinafter referred as "Seller No. 1", and X. Xxxxx
hereinafter referred to as "Seller No. 2") and XXXXXXX COMPUTER RESOURCES, INC.,
a Delaware corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller No. 1 owns all of the issued and outstanding shares of Val Tech
Computer Systems, Inc., an Alabama corporation, which is engaged in the leasing
of computer systems and peripheral equipment doing business throughout the State
of Alabama and adjoining states:
WHEREAS, Seller No. 1 owns all the issued and outstanding voting common shares
and Seller No. 2 owns all the issued and outstanding non-voting common shares of
TheLinc Corporation, a Nevada corporation, which is a full service provider of a
variety of e-consulting and integrated network development, support and
management services for installed voice and data systems to large and medium
sized commercial, governmental and other professional customers throughout the
State of Alabama and adjoining states, as follows:
X. Xxxxxxx - 700,000 voting common shares
X. Xxxxx - 300,000 non-voting common
shares
Total - 1,000,000 shares
WHEREAS, Seller No. 1 desires to sell and Purchaser desires to purchase all the
Company No. 1 Shares owned by Seller No. 1, and Seller No. 1 and Seller No. 2
desire to sell and Purchaser desires to purchase all of the Company No. 2 Shares
owned by Seller Xx. 0 xxx Xxxxxx Xx. 0, xxx Xxxxxx Xx. 0 and Seller No. 2 and
Purchaser desire to engage in the other transactions provided for herein.
NOW, THEREFORE, in and for the consideration of the mutual promises and
undertakings herein contained, and subject to the terms and conditions
hereinafter set forth, the Parties agree as follows:
ARTICLE I
1. Xxxxxxxxxxx.Xx used herein the following terms shall have the following
-----------
meanings, respectively:
1.01 Accounts Receivable: All notes and accounts receivable held by Company
-------------------
No. 1 or Company No. 2 or of which Company No. 1 or Company No. 2 is
the beneficial holder and all notes, bonds and other evidences of
indebtedness of and rights to receive payments from any Person held by
Company No. 1 or Company No. 2.
1.02 Acquisition: The purchase and sale of all the Company No. 1 Shares and
-----------
all the Company No. 2 Shares upon the terms and provisions, and subject
to the conditions, set forth in this Agreement.
1.03 Affiliate: Shall have the meaning ascribed to such term in Rule 405
---------
promulgated under the Securities Act of 1933, as amended.
1.04 Affiliate Receivables: Any account or note receivable or other payment
---------------------
obligation owing to Company No. 1 or Company No. 2 by any officer,
director, employee or Affiliate of Company No. 1 or Company No. 2.
1.05 Agreement: This Stock Purchase Agreement.
---------
1.06 Applicable Law. All applicable provisions of all (i) constitutions,
---------------
treaties, statues, laws (including common law), rules, regulations,
ordinances, codes or order of any Governmental Authority and (ii)
orders, decisions, injunctions, judgments, awards and decrees of or
agreements with any Governmental Authority.
1.07 Book Value No. 1: The shareholders' equity of Company No. 1 as of the
-----------------
Closing Date as reported in Closing Balance Sheet No. 1, determined in
accordance with Section 3.01.
1.08 Book Value No. 2: The shareholders' equity of Company No. 2 as of the
-----------------
Closing Date as reported in Closing Balance Sheet No. 2, determined in
accordance with Section 3.01.
1.09 Book Value Report(s): Shall have the meaning defined in Section 3.01.
---------------------
1.10 Business No. 1. The operations of Company No. 1 involving generally
----------------
the leasing of personal computers and peripherals.
1.11 Business No. 2. The operations of Company No. 2 involving generally
----------------
the sale of goods, or the provision of services (including repair and
maintenance services), relating to personal computers, client services,
computer networks, communication equipment, other equipment related
thereto, such as computer monitors, peripherals and all other
individual components, operating systems and application software and
other software (including software created for use on the Internet)
created for use in tie-in arrangements, customer service and internal
management systems for sales, delivery and support and any other
business operations of Company No. 2.
1.12 Business Day. "Business Day" shall mean a day other than a Saturday,
-------------
Sunday or other day on which commercial banks in Cincinnati, Ohio are
authorized or required to close.
1.13 Closing: The consummation of the Acquisition on the Closing Date at
-------
the place of Closing hereinafter specified in accordance with the terms
and conditions hereof.
1.14 Closing Balance Sheet No. 1: The balance sheet of Company No. 1 at
------------------------------
the date of the Closing.
1.15 Closing Balance Sheet No. 2: The balance sheet of Company No. 2 at
------------------------------
the date of the Closing.
1.16 Closing Date: The date on which the Closing shall take place,
-------------
determined in accordance with Article XV.
1.17 Code: The Internal Revenue Code of 1986, as amended.
----
1.18 Company No. 1: Val Tech Computer Systems, Inc., an Alabama
---------------
corporation.
1.19 Company No. 2: TheLinc Corporation, a Nevada corporation.
---------------
1.20 Company No. 1's and Company No. 2's Accountant: Company No. 1's and
--------------------------------------------------
Company No. 2's accountant shall mean Warren, Averett, Xxxxxxxxx &
Marino, LLC.
1.21 Company No. 1 Personnel: Shall mean current or former employees,
--------------------------
officers, directors or consultants of Company No. 1.
1.22 Company No. 2 Personnel: Shall mean current or former employees,
--------------------------
officers, directors or consultants of Company No. 2.
3
1.23 Company No. 1 Shares: All the issued and outstanding common shares,
-----------------------
with a par value of $1.00 per share, of Company No. 1.
1.24 Company No. 2 Voting Shares: All the issued and outstanding voting
-------------------------------
common shares, at 1/10th of 1 ($.001) par value, of Company No. 2.
1.25 Company No. 2 Non-Voting Shares: All the issued and outstanding
-----------------------------------
non-voting common shares, at 1/10th of 1 par value, of Company No. 2.
1.26 Contracts. Shall have the meaning defined in Section 4.09(a).
---------
1.27 Consent. 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.
1.28 Court: A Court is any federal, state, municipal, domestic, foreign or
-----
any other governmental tribunal or an arbitrator or person with similar
power or authority.
1.29 Disclosure Schedule: The schedule dated as of the date hereof,
--------------------
prepared pursuant to Article IV, copies of which have been signed by
Seller No. 1 and Seller No. 2, as applicable, and delivered to
Purchaser.
1.30 NPBT of Company No. 2. The net profit before taxes of Company No. 2,
-----------------------
without incorporating any gains or losses realized on the disposition
of assets other than in the ordinary course of business. The NPBT of
Company No. 2 for all applicable periods under Section 2.05 will be
determined in accordance with GAAP.
1.31 NPBT Threshold. Shall have the meaning set forth in Section 2.03.
---------------
1.32 Employee Benefit Plans: Shall mean all pension, annuity, retirement,
------------------------
stock option, stock purchase, savings, profit sharing or deferred
compensation plans or agreements, any retainer, consultant, bonus,
group insurance, welfare, health and disability plan, fringe benefit or
other incentive or benefit contract, plan, or commitment or arrangement
applicable to Company No. 1 Personnel or Company No. 2 Personnel.
1.33 Employees: With respect to Company No. 1, shall mean all full-time and
---------
part-time employees of Company No. 1. With respect to Company No. 2,
shall mean all full-time and part-time employees of Company No. 2.
1.34 Employee Contracts: All employment contracts, consulting agreements,
-------------------
and collective bargaining agreements or related agreements with respect
to Employees of Company No. 1 or Company No. 2.
4
1.35 Environmental Laws: Shall mean all federal, state or local judgments,
-------------------
decrees, orders, laws, licenses, ordinances, rules or regulations
pertaining to environmental matters, including, without limitation,
those arising under the Resource Conservation and Recovery Act (42
U.S.C. Sec.1801, et seq.) ("RCRA"), the Comprehensive Environmental
-------
Response, Compensation and Liability Act of 1980, as amended, (42
U.S.C. Sec.9601, et seq.) ("CERCLA"), the Superfund Amendment and
-------
Reauthorization Act of 1986 ("XXXX"), the Federal Clean Water Act (33
U.S.C. Sec.1251, et seq.), the Federal Clean Air Act (33 U.S.C.
-------
Sec.7401, et seq.), the Toxic Substances Control Act (15 U.S.C.
-------
Sec.7401, et seq.) the Federal Insecticide, Fungicide and Rodenticide
-------
Act (7 U.S.C. Sec.136, et seq.) and the Occupational Safety and Health
Act (29 U.S.C. Sec.651, et seq.).
1.36 Environmental Liabilities and Costs: All Losses, whether direct or
--------------------------------------
indirect, known or unknown, current or potential, past, present or
future, imposed by, under or pursuant to Environmental Laws, including,
without limitation, all Losses related to Remedial Actions, and all
fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of: (i)
the ownership or operation of Business No. 1 or Business No. 2, the
Leased Real Property or any other real properties, assets, equipment or
facilities, by Company No. 1 or Company No. 2, as applicable, or any of
their respective predecessors or Affiliates; (ii) the environmental
conditions existing on the Closing Date on, under, above, or about any
Leased Real Property or any other real properties, assets, equipment or
facilities currently or previously owned, leased or operated by Company
No. 1 or Company No. 2, as applicable, or any of their respective
predecessors or Affiliates; and (iii) expenditures necessary to cause
any Leased Real Property or any aspect of Business No. 1 or Business
No. 2 to be in compliance with any and all requirements of
Environmental Laws as of the Closing Date, including, without
limitation, all Environmental Permits issued under or pursuant to such
Environmental Laws, and reasonably necessary to make full economic use
of any Leased Real Property.
1.37 Environmental Permits: Any federal, state and local permit, license,
----------------------
registration, consent, order, administrative consent order,
certificate, approval or other authorization with respect to Company
No. 1 or Company No. 2 necessary for the conduct of Business No. 1
and/or Business No. 2 as currently conducted or previously conducted
under any Environmental Law.
1.38 ERISA: The Employee Retirement Income Security Act of 1974, as
-----
amended.
1.39 GAAP: Generally accepted accounting principles in effect in the United
----
States consistently applied throughout the periods involved.
5
1.40 Governmental Approval: Any Consent of, with or from any Governmental
----------------------
Authority.
1.41 Governmental Authority: Any nation or government, any state or other
-----------------------
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, without limitation, any government
authority, agency, department, board, commission or instrumentality of
the United States, any State of the United States or any political
subdivision thereof, and any tribunal or arbitrator(s) of competent
jurisdiction, and any self-regulatory organization.
1.42 Hazardous Materials: Shall mean any hazardous waste, as defined by 42
--------------------
U.S.C. Sec.6903(5), any hazardous substances or wastes as defined by 42
U.S.C. Sec.9601(14), any pollutant or contaminant as defined by 42
U.S.C. Sec.9601(33) or any toxic substances or wastes, oil or hazardous
material or other chemicals or substances regulated by any public or
Governmental Authority.
1.43 Indemnifying Party: Shall have the meaning defined in Section
-------------------
12.06(a).
1.44 Intellectual Property: Any and all United States and foreign: (a)
----------------------
patents (including reexaminations, design patents, industrial designs
and utility models) and patent applications (including docketed patent
disclosures awaiting filing, provisional applications, reissues,
divisions, continuations, continuations-in-part and extensions), patent
disclosures awaiting filing determination, inventions and improvements
thereto; (b) trademarks, service marks, trade names, trade dress,
logos, business and product names, slogans, and registrations and
applications for registration thereof; (c) copyrights (including
software) and registrations thereof including Company No. 1's and/or
Company No. 2's name; (d) inventions, processes, designs, formulae,
trade secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f)
intellectual property rights similar to any of the foregoing; (g)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media); and (h) the Internet address and website
of Company No. 1 and/or Company No. 2, respectively.
1.45 Inventories: All inventories of raw materials, work in process,
-----------
finished products, goods, spare parts, office and other supplies,
including any of such inventories held at any location controlled by
Company No. 1 and/or Company No. 2 or at any other location (pursuant
to conditional sales agreements, consignment arrangements or in any
bailment or otherwise) and any such items previously purchased and in
transit to Company No. 1 or Company No. 2 at any such locations.
6
1.46 Leased Real Property: Shall mean all interests leased pursuant to the
---------------------
Leases.
1.47 Leases: Shall mean all real property leases, subleases, licenses and
------
occupancy agreements pursuant to which Company No. 1 and/or Company No.
2 is the lessee, sublessee, licensee or occupant which relate to or are
being used in Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0 and which are
described on Disclosure Schedule 4.09.
1.48 Lien: With the exception of Permitted Liens, a mortgage, pledge,
----
hypothecation, right of others, claim, security interest, encumbrance,
lease, sublease, license, occupancy agreement, adverse claim or
interest, easement, covenant, encroachment, burden, title defect, title
retention agreement, voting trust agreement, interest, equity, option,
lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including, without limitation,
such that may arise under any Contracts.
1.49 Line of Credit Indebtedness No. 1: Includes any indebtedness incurred,
---------------------------------
incurable, or accrued pursuant to any of Company No. 1's financing
arrangements, agreements, letters of credit and a line of credit with
Regions Bank and any of its successors and assigns, all as set forth on
Disclosure Schedule 1.49. Disclosure Schedule 1.49 shall set forth the
principal balance and all accrued interest of such items on the date
hereof.
1.50 Line of Credit Indebtedness No. 2: Includes any indebtedness incurred,
---------------------------------
incurable, or accrued pursuant to any of Company No. 2's financing
arrangements, agreements, letters of credit and a line of credit with
Deutsche Financial Services Corporation and any of its successors and
assigns, all as set forth on Disclosure Schedule 1.50. Disclosure
Schedule 1.50 shall set forth the principal balance and all accrued
interest of such items on the date hereof.
1.51 Losses. Any and all losses, liabilities, damages, obligations and
------
expenses arising as a result of the designated action or inaction, and
all actions, suits, proceedings, demands, assessments, judgments, costs
and expenses (including, without limitation, attorney's fees and other
expenses incurred in investigating or defending any claim, action, suit
or proceeding and any and all amounts paid in settlement thereof) with
respect to the designated action or inaction.
7
1.52 Notes: The two-year subordinated promissory notes payable to Seller
-----
No. 1 and Seller No. 2 as more particularly described in Section
2.07(b).
1.53 Other Sellers Documents: The agreements and other documents and
-------------------------
instruments described in Sections 2.07, 6.01, 7.01 and 8.01.
1.54 Party or Parties: Purchaser or Seller No. 1 or Seller No. 2, or any of
----------------
them.
1.55 Party to Be Indemnified: as defined in Section 12.06(a).
--------------------------
1.56 Permitted Liens. Shall mean and include any (i) matters described in
----------------
detail and by item in Disclosure Schedule 1.57(i) to this Agreement and
(ii) liens arising by operation of Applicable Law for taxes,
assessments, labor, materials, and obligations not yet due or which are
being contested in good faith, which contested items are set forth in
detail in Disclosure Schedule 1.58(ii). The phrase "Permitted Liens"
shall also include (a) liens imposed by mandatory provisions of
Applicable Law such as carriers, materialmens, mechanics,
warehousemens, landlords and other like liens arising in the ordinary
course of business, securing obligations not yet due or which are being
contested in good faith, which contested items are set forth in
Disclosure Schedule 1.58, (b) liens arising in the ordinary course of
business from pledges or deposits to secure public or statutory
obligations, deposits to secure (or in lieu of) surety, stay, appeal or
customs bonds and deposits to secure the payment of Taxes, and (c) good
faith deposits in connection with bids, tenders, contracts or leases.
1.57 Person: Any natural person, firm, partnership, association,
------
corporation, company, limited liability company, limited partnership,
trust, business trust, Governmental Authority or other entity.
1.58 Post Closing Date: Shall have the meaning defined in Section 3.01.
-------------------
1.59 Purchase Price No. 1: The total consideration paid by Purchaser to
-----------------------
Seller No. 1 for the Company No. 1 Shares as provided in Section 2.02.
1.60 Purchase Price No. 2. The total consideration paid by Purchaser to
-----------------------
Seller No. 1 and Seller No. 2 for the Company No. 2 Shares as provided
in Section 2.03.
8
1.61 Pro Forma NPBT of Company No. 1. The net profit before taxes of
-------------------------------------
Company No. 1 for the period commencing January 1, 2000 and ending
January 5, 2001, without incorporating any gains or losses realized on
the disposition of assets other than in the ordinary course of
business. The determination of Pro Forma NPBT of Company No. 1 shall be
made in accordance with the procedures set forth in Section 3.02.
1.62 Pro Forma NPBT of Company No. 2. The net profit before taxes of
-------------------------------------
Company No. 2 for the period commencing January 1, 2000 and ending
January 5, 2001, without incorporating any gains or losses realized on
the disposition of assets other than in the ordinary course of
business. In addition, the sum of Ninety-Five Thousand Dollars
($95,000.00) shall be added to such total as an adjustment to Pro Forma
NBPT of Company No. 2 as agreed to by the Parties. The determination of
Pro Forma NPBT of Company No. 2 shall be made in accordance with the
procedures set forth in Section 3.02.
1.63 Remedial Action: All actions required to (i) clean up, remove, treat
----------------
or in any way remediate any Hazardous Materials; (ii) prevent the
release of Hazardous Materials so that they do not migrate or endanger
or threaten to endanger public health or welfare or the environment; or
(iii) perform studies, investigations and care related to (i) and (ii)
above.
1.64 Spare Parts: All replacements, components, devices, equipment and
------------
other similar items owned or held by Company No. 1 or Company No. 2 for
use in connection with the repair, replacement, modification,
customization or installation of goods and products applicable to
Business No. 1 or Business No. 2.
1.65 Subsidiary: Each corporation or other Person in which a Person owns or
----------
controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or
other equity interest or conferring the power to name the majority of
the members to the board of directors or other governing body of the
corporation or other Person or otherwise direct the management or
policies thereof.
1.66 Tax or Taxes: Any federal, state, provincial, local, foreign or other
-------------
income, alternative, minimum, any taxes under Section 1374 of the Code,
any taxes under Section 1375 of the Code, 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), real property, personal property, ad valorem, intangibles, 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 (including
all interest and penalties thereon and additions thereto whether
disputed or not).
9
1.67 Tax Return: 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.
1.68 Vendor Receivables: Any amounts owing to Company No. 1 or Company No.
-------------------
2 from vendors of goods and products used in Business No. 1 or Business
No. 2 resulting from discounts for prompt payment, volume discounts,
promotional programs or similar vendor special pricing and term
arrangements.
1.69 Year-End Financials No. 1: The audited financial statements of Company
-------------------------
No. 1 for the twelve-month periods ending December 31, 1999 and
December 31, 1998.
1.70 Year-End Financials No. 2: The audited financial statements of Company
-------------------------
No. 2 for the twelve-month periods ending December 31, 1999 and
December 31, 1998.
ARTICLE II
2. Purchase of Company No. 1 Shares and Purchase Price No. 1.
-------------------------------------------------------------------
2.01 Purchase of Company No. 1 Shares. Seller No. 1 agrees to sell and
-------------------------------------
transfer the Company No. 1 Shares to Purchaser, and Purchaser agrees to
purchase the Company No. 1 Shares from Seller No. 1, on the Closing
Date.
2.02 Purchase Price No. 1. The Purchase Price No. 1 for the Company No. 1
----------------------
Shares shall be One Million Dollars ($1,000,000.00), adjusted as
follows:
(a) To the extent that the Book Value No. 1 as reported on the
Closing Balance Sheet No. 1 is less than $539,616.00, the
Purchase Price No. 1 for the Company No. 1 Shares shall be
decreased on a dollar-for-dollar basis to the extent of such
deficit. To the extent that the Book Value No. 1 as reported on
the Closing Balance Sheet No. 1 is greater than $539,616.00, the
Purchase Price No. 1 for the Company No. 1 Shares shall be
increased on a dollar-for-dollar basis to the extent of such
increase. The determination of Book Value No. 1 shall be made in
the manner provided in Section 3.01.
10
(b) In the event that Pro Forma NPBT of Company No. 1 and Company No.
2 for the period commencing January 1, 2000 and ending January 5,
2001 is less than One Million Six Hundred Eighty-Three Thousand
Eight Hundred Seventy-One Dollars ($1,683,871.00) in the
aggregate, the Purchase Price No. 1 shall be decreased on a
dollar-for-dollar basis equal to that Company No. 1's share
(which percentage shall be determined by the contribution of
Company No. 1 and Company No. 2 to the year 2000 Pro Forma NPBT,
respectively) of the difference between One Million Six Hundred
Eighty-Three Thousand Eight Hundred Seventy-One Dollars
($1,683,871.00) and the total of such Pro Forma NPBT of Company
No. 1 and Company No. 2. The determination of Pro Forma NPBT of
Company No. 1 and Company No. 2 shall be made in the manner
provided for in Section 3.02 hereof. Any adjustment to the
Purchase Price No. 1 under this Section shall be paid to
Purchaser from the cash held in escrow as set forth in Section
2.07(b), and if such amount is insufficient, then from the cash
paid to Seller No. 1 at closing.
2.03 Purchase of Company No. 2 Voting Shares and Company No. 2 Non-Voting
-----------------------------------------------------------------------
Shares and Purchase Price No. 2. Seller No. 1 agrees to sell and
-------------------------------------
transfer Company No. 2 Voting Shares to Purchaser, and Seller No. 2
agrees to sell and transfer Company No. 2 Non-Voting Shares to
Purchaser, and Purchaser agrees to purchase the Company No. 2 Voting
Shares and the Company No. 2 Non-Voting Shares from Seller No. 1 and
Seller No. 2, respectively, on the Closing Date.
2.04 Purchase Price No. 2. The Purchase Price No. 2 for the Company No. 2
----------------------
Voting Shares and the Company No. 2 Non-Voting Shares shall be Four
Million Two Hundred Ninety Thousand Forty Dollars ($4,290,040.00), plus
any amount that may be paid pursuant to Section 2.05, adjusted as
follows:
(a) To the extent that the Book Value No. 2 as reported on the
Closing Balance Sheet No. 2 is less than $421,089.00, the
Purchase Price No. 2 shall be decreased on a dollar-for-dollar
basis to the extent of such deficit. To the extent that the Book
Value No. 2 as reported on the Closing Balance Sheet No. 2 is
greater than $421,089.00, the Purchase Price No. 2 shall be
increased on a dollar-for-dollar basis to the extent of such
excess. The determination of the Book Value No. 2 shall be made
in the manner provided in Section 3.01.
11
(b) In the event that Pro Forma NPBT of Company No. 1 and Company No.
2 for the period commencing January 1, 2000 and ending January 5,
2001 is less than One Million Six Hundred Eighty-Three Thousand
Eight Hundred Seventy-One Dollars ($1,683,871.00) in the
aggregate, the Purchase Price No. 2 shall be decreased on a
dollar-for-dollar basis equal to that Company No. 2's share
(which percentage shall be determined by the contribution of
Company No. 1 and Company No. 2 to the year 2000 Pro Forma NPBT,
respectively) of the difference between One Million Six Hundred
Eighty-Three Thousand Eight Hundred Seventy-One Dollars
($1,683,871.00) and the total of such Pro Forma NPBT of Company
No. 1 and Company No. 2. The determination of Pro Forma NPBT of
Company No. 1 and Company No. 2 shall be made in the manner
provided for in Section 3.02 hereof. Any adjustment to Purchase
Price No. 2 under this Section shall be made to the Notes issued
under Section 2.07(b).
2.05 Potential Adjustment to Purchase Price No. 2.
--------------------------------------------------
If the NPBT of Company No. 2 (as hereinafter defined as Purchaser's
Birmingham, Alabama Division) commencing upon the Closing Date and
thereafter during fiscal years 2001, 2002, 2003, 2004 and 2005 exceed
the applicable NPBT Threshold for such year set forth below:
NPBT Threshold
---------------
Fiscal Year 2001 (e.g.
January 6, 2001 to January
5, 2002) - $2,083,871.00
Fiscal Year 2002 - $2,333,871.00
Fiscal Year 2003 - $2,583,871.00
Fiscal Year 2004 - $2,833,871.00
Fiscal Year 2005 - $3,083.871.00
12
Purchaser shall pay to Seller No. 1 and Seller No. 2 according to the
percentages set forth in Section 2.07(a), by bank check or wire transfer within
one hundred twenty (120) days following the end of the fiscal year, an amount
equal to fifty percent (50%) of the NPBT of Purchaser's Birmingham, Alabama
Division in excess of the NPBT Threshold for the applicable year or portion
thereof, subject to a cumulative limitation of Five Million Six Hundred Thousand
Dollars ($5,600,000.00) during such aggregate period. Any NPBT shortfall in any
year shall not be offset against any excess NPBT in any subsequent year(s)
hereunder, it being the intent of the parties that the NPBT Threshold set forth
herein shall apply to each applicable year separately, subject, however, to the
cumulative limitation of Five Million Six Hundred Thousand Dollars
($5,600,000.00) during such aggregate period. Such cash payment by Purchaser
shall be additional Purchase Price for Company No. 2 Shares. Commencing January
6, 2001, 1.5% MAS royalty fee and a .3% Adfund fee on gross sales by Purchaser's
Birmingham, Alabama Division shall be made incident to said determination. For
each subsequent year described above in this paragraph for which Purchaser may
be required to pay additional Purchase Price, the parties shall, in good faith,
agree upon the MAS and Adfund royalty fee to be charged hereunder based on the
level of services and support being provided by Purchaser to Purchaser's
Birmingham, Alabama Division. Provided, however, such MAS royalty fee shall be
1.5% and the Adfund royalty fee shall be .3% if the parties are unable to come
to an agreement for each subsequent year.
For purposes of this Section 2.05, the term "Purchaser's Birmingham,
Alabama Division" shall mean Business No. 2 acquired by Purchaser from Seller
No. 1 and Seller No. 2 under this Agreement. In addition, commencing January 6,
2001, Purchaser's existing Birmingham, Alabama and Montgomery, Alabama branches
shall be included within the definition of "Purchaser's Birmingham, Alabama
Division". In addition, "Purchaser's Birmingham, Alabama Division" shall also
include the northern panhandle of the State of Florida, as described on Exhibit
A, excluding any revenues generated in the entire State of Florida from state
and local governmental contracts originated with the state/local governments in
Tallahassee, Florida. In addition, "Purchaser's Birmingham, Alabama Division
shall include any revenues generated by such division from existing customers of
Company No. 2 located outside the territory set forth above, which customers are
set forth on Exhibit A, attached hereto. In the event that during the term of
this Section 2.05, Purchaser would cause Company No. 2 to merge into Purchaser
or any Affiliate of Purchaser, the term "Purchaser's Birmingham Division" shall
also include such entity into which Company No. 2 is merged to the extent of
such entity's Birmingham, Alabama Division. It being the intent of the parties
to exercise good faith in the implementation of this provision in the event of
the merger of Company No. 2 into Purchaser or any of its Affiliates during the
term of this Agreement. The earn-out set forth in this Section 2.05 shall not
apply to Company No. 1. Seller No. 1 shall use his best efforts to effectuate
the relocation of Company No. 2's current Birmingham, Alabama location and
Purchaser's current Birmingham, Alabama branch location into a new location
located in the Greater Birmingham, Alabama area by the conclusion of the first
quarter of 2001. Purchaser and Seller No. 1 shall use their best efforts to
effectuate the implementation of Purchaser's ASTEA Accounting and Software
System at Company No. 2 within ninety (90) days of the Closing.
13
The NPBT of Company No. 2 shall be determined by the
internally-generated financial statements of Company No. 2 determined
in the manner set forth above in accordance with generally accepted
accounting principles, consistently applied. Said determination of NPBT
of Company No. 2 shall be subject to verification as described below.
In addition, for purposes of determining NPBT of Company No. 2 for any
particular year, except as noted above, no item of income or expense
will be allocated by Purchaser to Company No. 2 unless such items are
reasonably calculated to contribute to the increase in profits of
Company No. 2, it being the intent of the parties that Purchaser shall
exercise the utmost good faith with respect to allocations of income
and expense to Company No. 2. Incident to the determination of NPBT of
Company No. 2, no compensation of any executive or other employee of
Purchaser or its respective affiliates who do not work directly for
Company No. 2 shall be allocated to such division.
Within ninety (90) days after the end of each fiscal year or period
described herein, Purchaser will deliver to Seller No. 1 and Seller No.
2 a copy of the report of NPBT prepared by Purchaser for the subject
period along with any supporting documentation reasonably requested by
Seller No. 1 and Seller No. 2. Within thirty (30) days following
delivery to Seller No. 1 and/or Seller No. 2 of such report, Seller No.
1 and Seller No. 2 shall have the right to object in writing to the
results contained in such determination. If timely objection is not
made by Seller No. 1 and Seller No. 2 to such determination, such
determination shall become final and binding for purposes of this
Agreement. If timely objection is made by Seller No. 1 and Seller No. 2
to Purchaser and Seller No. 1 and Seller No. 2 and Purchaser are able
to resolve their differences in writing within thirty (30) days
following the expiration of the thirty-day (30-day) period, then such
determination shall become final and binding as it regards to this
Agreement. If timely objection is made by Seller No. 1 and Seller No. 2
to Purchaser and Seller No. 1 and Seller No. 2 and Purchaser are unable
to resolve their differences in writing within thirty (30) days
following the expiration of the thirty-day (30-day) period, then all
disputed matters pertaining to the report shall be submitted to and
reviewed by an arbitrator (the "Arbitrator") which shall be an
independent accounting firm selected by Purchaser and Seller No. 1 and
Seller No. 2. If Purchaser and Seller No. 1 and Seller No. 2 are unable
to agree promptly on an accounting firm to serve as the Arbitrator,
each shall select by no later than the 30th day following the
expiration of the sixty-day (60-day) period, an accounting firm, and
the two selected accounting firms shall be instructed to select
promptly another independent accounting firm, such newly selected firm
to serve as the Arbitrator. The Arbitrator shall consider only the
14
disputed matters pertaining to the determination and shall act promptly
to resolve all disputed matters, and its decision with respect to all
disputed matters shall be final and binding upon Seller No. 1 and
Seller No. 2 and Purchaser. Expenses of the Arbitration shall be borne
one-half ( ) by Purchaser and one-half ( ) by Seller No. 1 and Seller
No. 2. Each party shall be responsible for its own attorney and
accounting fees. The Parties agree that neither Company No. 1's nor
Company No. 2's Accountant nor Purchaser's accountant shall serve as a
selector of the Arbitrator or as an Arbitrator hereunder. In the event
that a dispute arises concerning the NPBT determination for any
applicable year hereunder, Purchaser agrees to pay any undisputed
amount hereunder to Seller No. 1 and Seller No. 2 within the time
period set forth above.
2.06 Payment of Purchase Price for Company No. 1 Shares.
----------------------------------------------------------
(a) One Million Dollars ($1,000,000.00) shall be payable at Closing
in cash or by bank or certified checks or wire transfer of
Purchaser which amount shall be paid to Seller No. 1.
2.07 Payment of Purchase Price No. 2 for Company No. 2's Voting Shares and
-----------------------------------------------------------------------
for Company No. 2's Non-Voting Shares.
-----------------------------------------
(a) One Million Six Hundred Forty-Five Thousand Twenty Dollars
($1,645,020.00) shall be payable at Closing in cash or by bank or
certified checks or wire transfer of Purchaser which amount shall
be prorated among Seller No. 1 and Seller No. 2 according to the
following percentages:
X. Xxxxxxx - 70%
X. Xxxxx - 30%
(b) By certified or bank cashier's check or by wire transfer to
Xxxxxxxxx & Dreidame Co., L.P.A., the amount of One Hundred
Ninety Thousand Dollars ($190,000.00), which amount is an advance
payment by Purchaser to Seller No. 1 and Seller No. 2 for a
portion of the amount projected in good faith by the parties to
be owed to Seller No. 1 and Seller No. 2 pursuant to the
provisions of Section 2.04(a), which advance payment shall be
held pursuant to the terms of the Escrow Agreement attached
hereto as Exhibit B, and which amount, or any portion thereof,
when distributed by the Escrow Agent to Seller No. 1 and Seller
No. 2 by the Escrow Agent shall be credited against the amount
ultimately determined to be owed to Seller No. 1 and Seller No. 2
by Purchaser, to the extent applicable, pursuant to the
provisions of Section 3.01 upon the conclusion of the
determination of the Book Value No. 2.
15
(c) Two Million Six Hundred Forty-Five Thousand Twenty Dollars
($2,645,020.00) in the aggregate, as may be adjusted upward or
downward as set forth in Sections 3.01 and 3.02 shall be payable
in the form of the Notes of Purchaser, attached hereto as Exhibit
C (the "Notes") which Notes shall be prorated among the Sellers
according to the percentages set forth in Section 2.07(a) above.
Such Notes shall bear interest at the prime rate of Chase
Manhattan Bank, as of the Closing Date. Interest under said Notes
shall be payable quarterly in arrears with the first interest
payment being due and payable ninety (90) days from the Closing.
One-half ( ) of the outstanding principal balance of said Notes
shall be payable in full on the first annual anniversary date of
the Closing of the transaction and the remaining principal
balance of such Notes shall be payable in full on the second
annual anniversary of the Closing of the transaction. All
obligations of Purchaser thereunder will be subordinated and made
junior in right of payment to the extent and the manner provided
in subordination agreements to be executed by Deutsche Financial
Services Company, Purchaser and Seller No. 1 and Seller No. 2,
respectively. Copies of the Subordination Agreements to be
executed by Seller No. 1 and Seller No. 2, respectively, are
attached hereto as Exhibit D and D-1.
2.08 Sale of Certain Assets of Company No. 1 and Company No. 2 at Closing.
----------------------------------------------------------------------
At Closing, Company No. 1 and Company No. 2 shall sell to Shareholder
No. 1 the assets described in Exhibit E attached hereto. The Purchase
Price for such assets shall be their fair market value as set forth on
Exhibit E and shall be paid for by cash or by the assumption of
liabilities relating to such assets, as more particularly set forth in
Exhibit E.
ARTICLE III
3. Post-Closing Adjustments.
-------------------------
16
3.01 Within sixty (60) days after the Closing (the "Post Closing Date"),
Seller No. 1 will deliver to Purchaser a copy of the Closing Balance
Sheet No. 1 prepared by Company No. 1's Accountant, along with any
supporting documentation, reasonably requested by Purchaser reflecting
Company No. 1's calculation of Book Value No. 1 and the determination
of any deficit or excess in Book Value No. 1 in accordance with
Section 2.02(a) (the "Book Value Report No. 1"). The cost of the
preparation of such Closing Balance Sheet No. 1 shall be borne
one-half ( ) by Seller No. 1 and one-half ( ) by Purchaser. Within
fifteen (15) days following delivery to Purchaser of the Book Value
Report No. 1, Purchaser shall have the right to object in writing to
the results contained therein. If timely objection is not made by
Purchaser to the Book Value Report No. 1, the Book Value Report No. 1
shall become final and binding for purposes of this Agreement. If
timely objection is made by Purchaser to the Book Value Report No. 1,
and Seller No. 1 and Purchaser are able to resolve their differences
in writing within five (5) days following the expiration of such
fifteen (15) day period, then the Book Value Report No. 1 as resolved
shall become final and binding as it relates to this Agreement. If
timely objection is made by Purchaser to the Book Value Report No. 1,
and Seller No. 1 and Purchaser are unable to resolve their differences
in writing within such period, then all disputed matters pertaining to
the Book Value Report No. 1 shall be submitted to and reviewed by an
Arbitrator according to the process and procedure set forth in Section
2.05 above. Expenses of the Arbitration shall be borne one-half ( ) by
Purchaser and one-half ( ) by Seller No. 1. Each party shall be
responsible for its own attorneys and accounting fees. Any net
reduction in Purchase Price No. 1 as a result of said adjustment shall
be made in the manner set forth in Section 2.02(a) and shall be paid
by bank check or wire transfer by the Escrow Agent to Purchaser to the
extent of Seller No. 1's interest in the Escrow Account, and if such
amount is insufficient, then by bank check or wire transfer by Seller
No. 1 to Purchaser for any remaining amount within ten (10) days after
the final determination of any amount owing is made. Any increase in
the Purchase Price No. 1 as a result of said adjustment shall be made
in the manner set forth in Section 2.02(b) and shall be made by
Purchaser paying to Seller No. 1 by bank check or wire transfer such
excess within ten (10) days after the final determination of any
amount owing is made.
Within sixty (60) days after the Closing Date, Seller No. 1 and Seller
No. 2 will deliver to Purchaser a copy of the Closing Balance Sheet
No. 2 prepared by Company No. 2's Accountant, along with any
supporting documentation, reasonably requested by Purchaser reflecting
Company No. 2's calculation of Book Value No. 2 and the determination
of any deficit or excess in Book Value No. 2 in accordance with
Section 2.04(a) (the "Book Value Report No. 2"). The cost of the
preparation of such Closing Balance Sheet No. 2 shall be borne
one-half ( ) by Seller No. 1 and Seller No. 2 and one-half ( ) by
Purchaser. Within fifteen (15) days following delivery to Purchaser of
the Book Value Report No. 2, Purchaser shall have the right to object
in writing to the results contained therein. If timely objection is
not made by Purchaser to the
17
Book Value Report No. 2, the Book Value Report No. 2 shall become final
and binding for purposes of this Agreement. If timely objection is made
by Purchaser to Book Value Report No. 2, and Seller No. 1 and Seller
No. 2 and Purchaser are able to resolve their differences in writing
within five (5) days following the expiration of such fifteen (15) day
period, then the Book Value Report No. 2 as resolved shall become final
and binding as it relates to this Agreement. If timely objection is
made by Purchaser to the Book Value Report No. 2, and Seller No. 1 and
Seller No. 2 and Purchaser are unable to resolve their differences in
writing within such period, then all disputed matters pertaining to the
Book Value Report No. 2 shall be submitted to and reviewed by the
18
Arbitrator according to the process and procedure set forth in Section
2.05 above. Expenses of the Arbitration shall be borne one-half ( ) by
Purchaser and one-half ( ) by Seller No. 1 and Seller No. 2. Each party
shall be responsible for its own attorneys and accounting fees. Any net
reduction in the Purchase Price No. 2 as a result of said adjustment
shall be made in the manner set forth in Section 2.04(a) and shall be
paid by bank check or wire transfer by the Escrow Agent to Purchaser
from the funds held in escrow, and if such amount is insufficient, then
by Seller No. 1 and Seller No. 2 to Purchaser in proportion to such
individual's ownership of Company No. 2's Shares for any remaining
amount within ten (10) days after the final determination of any amount
owing is made. Any increase in Purchase Price No. 2 as a result of said
adjustment shall be made in the manner set forth in Section 2.04(a) and
shall be made by Purchaser paying to Seller No. 1 and Seller No. 2 in
proportion to Seller No. 1's and Seller No. 2's ownership of Company
No. 2 Shares, by bank check or wire transfer such excess within ten
(10) days after the final determination of any amount owing is made.
3.02 Within ninety (90) days after January 5, 2001, Seller No. 1 will
deliver to Purchaser a determination of Pro Forma NPBT of Company No.
1 prepared by Company No. 1's Accountant for the period commencing
January 1, 2000 and ending on the Closing Date, along with any
supporting documentation, reasonably requested by Purchaser. The Pro
Forma NPBT of Company No. 1 shall be prepared using the same
accounting methods, policies, practices and procedures with consistent
classifications, judgments, estimations and methodologies as used in
the preparation of its December 31, 1999 audited Financial Statements.
Within ninety (90) days after January 5, 2001, Purchaser will deliver
to Seller No. 1 a determination of Company No. 1's NPBT for the period
commencing on the Closing Date and ending January 5, 2001. Within
thirty (30) days following delivery of such reports, the parties shall
have the right to object in writing to the results contained in such
determination. If timely objection is not made by any party of such
determination, such determination shall become final and binding. If
timely objection is made by any party, and Purchaser and Seller No. 1
are able to resolve their differences in writing within ten (10) days
following the expiration of the NPBT objection period, then such
determination as resolved shall become final and binding as it relates
to this Agreement. If timely objection is made by either party, and
Seller No. 1 and Purchaser are unable to resolve their differences in
writing within ten (10) days following the expiration of the NPBT
objection period, then all disputed matters relating to the report
shall be submitted to and reviewed by an Arbitrator according to the
process and procedure set forth in Section 3.01 above. The expenses of
the arbitration shall be borne one-half ( ) by Purchaser and one-half
( ) by Seller No. 1. Each party shall be responsible for its own
attorney and accounting fees. Any net reduction in the Purchase Price
No. 1 and Purchase Price No. 2 as a result of said adjustment shall be
made according to the percentages and in the manner set forth in
Section 2.02(b) and within ten (10) days after the final determination
of any amount owing is made. The parties agree to implement any
adjustments to any interest payments that may have been made prior to
the date of such determination to reflect the adjustment set forth
above.
19
Within ninety (90) days after January 5, 2001, Seller No. 1 and Seller
No. 2 will deliver to Purchaser a determination of the Pro Forma NPBT
of Company No. 2 prepared by Company No. 2's Accountant for the period
commencing January 1, 2000 and ending on the Closing Date, along with
any supporting documentation, reasonably requested by Purchaser. The
Pro Forma NPBT of Company No. 2 shall be prepared using the same
accounting methods, policies, practices and procedures with consistent
classifications, judgments, estimations and methodologies as used in
the preparation of its December 31, 1999 audited Financial Statements.
Within ninety (90) days after January 5, 2001, Purchaser will deliver
to Seller No. 1 and Seller No. 2 a determination of Company No. 2's
NPBT for the period commencing on the Closing Date and ending January
5, 2001. Within thirty (30) days following delivery of such reports,
the parties shall have the right to object in writing to the results
contained in such determination. If timely objection is not made by any
party of such determination, such determination shall become final and
binding. If timely objection is made by any party, and Purchaser and
Seller No. 1 and Seller No. 2 are able to resolve their differences in
writing within ten (10) days following the expiration of the NPBT
objection period, then such determination as resolved shall become
final and binding as it relates to this Agreement. If timely objection
is made by either party, and Seller No. 1 and Seller No. 2 and
Purchaser are unable to resolve their differences in writing within ten
(10) days following the expiration of the NPBT objection period, then
all disputed matters relating to the report shall be submitted to and
reviewed by an Arbitrator according to the process and procedure set
forth in Section 3.01 above. The expenses of the arbitration shall be
borne one-half ( ) by Purchaser and one-half ( ) by Seller No. 1 and
Seller No. 2. Each party shall be responsible for its own attorney and
accounting fees. Any net reduction in the Purchase Price No. 2 as a
result of said adjustment shall be made according to the percentages
and in the manner set forth in Section 2.04(b) and shall be reflected
by decreasing the face amount of the Notes set forth in Section 2.07(b)
in proportion to Seller No. 1's and Seller No. 2's ownership of the
Company No. 2 Shares within ten (10) days after the final determination
of any amount owing is made. The parties agree to implement any
adjustments to any interest payments that may have been made prior to
the date of such determination to reflect the adjustment set forth
above.
The parties acknowledge that pursuant to the provisions of Sections
2.02(b) and 2.04(b), the Pro Forma NPBT threshold requirement of
$1,683,871.00 for the 2000 Fiscal Year will be predicated on the Pro
Forma NPBT of both Company No. 1 and Company No. 2 on an aggregate
basis.
20
ARTICLE IV
4. Representations of Seller No. 1 and Seller No. 2. Except as set forth
------------------------------------------------
in the Disclosure Schedule attached hereto, which identifies the
specific sections to which each such disclosure relates, Seller No. 1
as to Company No. 1 and Seller No. 1 and Seller No. 2, jointly and
severally, as to Company No. 2 (except for representations and
warranties made by an individual Seller which only relate to that
specific Seller (i.e. such as ownership of Company No. 2 Shares),
which are made severally only), represent, warrant and covenant to
Purchaser that the following statements are true as of the date
hereof:
4.01 Organization and Good Standing.
---------------------------------
(a) Except as disclosed in Disclosure Schedule 4.01(a), Company No. 1
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Alabama and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being
conducted, and is duly licensed, authorized and qualified to do
business and in good standing in all jurisdictions in which the
conduct of its business or the ownership or leasing of its
properties require it to be so licensed, author-ized or
qualified. Copies of Company No. 1's Articles of Incorporation
and By-Laws and any amendments thereto (certified to be correct
by the Secretary of Company No. 1) have been delivered to
Purchaser and are complete and correct as of the date hereof.
Disclosure Schedule 4.01(a) correctly lists, with respect to
Company No. 1, each jurisdiction, if any, in which it is
qualified to do business as a foreign corporation.
(b) Except as disclosed in Disclosure Schedule 4.01(b), Company No. 2
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as it is now being
conducted, and is duly licensed, authorized and qualified to do
business and in good standing in all jurisdictions in which the
conduct of its business or the ownership or leasing of its
properties require it to be so licensed, author-ized or
qualified. Copies of Company No. 2's Articles of Incorporation
and By-Laws and any amendments thereto (certified to be correct
by the Secretary of Company No. 2) have been delivered to
Purchaser and are complete and correct as of the date hereof.
Disclosure Schedule 4.01(b) correctly lists, with respect to
Company No. 2, each jurisdiction, if any, in which it is
qualified to do business as a foreign corporation.
4.02 Capitalization.
--------------
21
(a) The authorized capital stock of Company No. 1 consists solely of
One Thousand (1,000) common shares, par value of $1.00 per share,
of which 1,000 shares are issued and outstanding. Company No. 1
has -0- treasury shares. Seller No. 1 owns 1,000 shares of the
common stock of Company, which represents One Hundred Percent
(100%) of the issued and outstanding common shares.
Company No. 1 has no authorized or outstanding preferred stock or
any other class of stock. The Company No. 1 Shares have been duly
authorized and validly issued and are fully paid and
nonassessable. The Company No. 1 Shares have been issued in
compliance with all applicable federal and state securities laws
and no past or present holder thereof is entitled to any right of
rescission in respect thereof and no documentary taxes or other
taxes were required with respect to the issuance or transfer of
such Company No. 1 Shares. There are no existing subscriptions,
options warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements relating to the
issuance, sale or transfer of any capital stock of Company No. 1
or any securities convertible into or exchangeable for any such
capital stock.
(b) The authorized capital stock of Company No. 2 consists solely of
Twenty-Five Million (25,000,000) common shares, consisting of
Fifteen Million (15,000,000) of voting common shares, par value
of 1/10th of 1% ($.001) and ten million (10,000,000) non-voting
common shares, par value of 1/10th of 1% ($.001), of which
700,000 voting shares are issued and outstanding and 300,000
non-voting shares are issued and outstanding. Company No. 2 has
-0- treasury shares. The issued and outstanding common voting and
non-voting shares of Company No. 2 are held by the following
persons in the following numbers:
Name of Shareholder Number of Shares Held
--------------------- ------------------------
X. Xxxxxxx - 700,000 voting shares
X. Xxxxx - 300,000 non-voting shares
Company No. 2 has no authorized or outstanding preferred stock or
any other class of stock. The Company No. 2 Voting Shares and the
Company No. 2 Non-Voting Shares have been duly authorized and
validly issued. The Company No. 2 Voting Shares and the Company
No. 2 Non-Voting Shares have been issued in compliance with all
applicable federal and state securities laws and no past or
present holder thereof is entitled to any right of rescission in
respect thereof and no documentary taxes or other taxes were
required with respect to the issuance or transfer of such Company
No. 2 Voting Shares and Company No. 2 Non-Voting Shares. There
22
are no existing subscriptions, options warrants, calls, rights,
contracts, commitments, understandings, restrictions or
arrangements relating to the issuance, sale or transfer of any
capital stock of Company No. 2 or any securities convertible into
or exchangeable for any such capital stock.
4.03 Title to Shares.
-----------------
(a) Seller No. 1 owns the number of Company No. 1 Shares set forth in
Section 4.02(a) above hereof, free and clear of all Liens. The
transfer of the Company No. 1 Shares to Purchaser will convey
good and marketable title to the Company No. 1 Shares, free and
clear of all Liens.
(b) Seller No. 1 owns the number of Company No. 2 Voting Shares set
opposite his name in Section 4.02(b) and Seller No. 2 owns the
number of Company No. 2 Non-Voting Shares set opposite his name
in Section 4.02(b) above hereof, free and clear of all Liens. The
transfer of the Company No. 2 Voting Shares and the Company No. 2
Non-Voting Shares to Purchaser will convey good and marketable
title to the Company No. 2 Voting Shares and the Company No. 2
Non-Voting Shares, free and clear of all Liens.
4.04 Subsidiaries. Company No. 1 has no subsidiaries and Company No. 2 has
------------
no subsidiaries.
4.05 Authority. This Agreement is a valid and binding obligation of Seller
---------
No. 1 and Seller No. 2, enforceable in accordance with its terms except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally, or by the availability of equitable
remedies or the application of general equitable principles. Except as
set forth in Disclosure Schedule 4.05, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will:
(i) violate, or conflict with, or require any Consent under, or
result in a breach of any provisions of, or constitute a
default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by,
or result in the creation of any Lien upon any of the
properties or assets of Company No. 1 or Company No. 2 under
any of the terms, conditions or provisions of the Articles
of Incorporation or Bylaws of Company No. 1 or Company No. 2
or of any note, bond, mortgage, indenture, deed of trust,
license, agreement or other instrument or obligation to
which Company No. 1, or Company No. 2, or Seller No. 1 or
Seller No. 2 is a party, or by which Company No. 1 or
Company No. 2 or Seller No. 1 or Seller No. 2 or any of
their properties or assets may be bound or affected; or
23
(ii) violate any order, writ, injunction or decree applicable to
Seller No. 1 or Seller No. 2 or Company No. 1 or Company No.
2 or any of their properties or assets or, to the knowledge
of Seller No. 1 or Seller No. 2, violate any statute, rule
or regulation applicable to Seller No. 1 or Seller No. 2 or
Company No. 1 or Company No. 2 or any of their properties or
assets; or
(iii) constitute a default or event that, with notice or lapse of
time, or both, would be a default, breach, or violation of
any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust or
other agreement, instrument or arrangement to which Company
No. 1 or Company No. 2 is a party or by which it is bound;
or
(iv) constitute an event that would permit any party to terminate
any agreement or to accelerate the maturity of any
indebtedness or other obligation of Company No. 1 or Company
No. 2; or
(v) no Consent by, notice to or registration with any
Governmental Authority is required on the part of Seller No.
1 or Seller No. 2 or Company No. 1 or Company No. 2 prior or
subsequent to the Closing Date in connection with the
execution, delivery and performance by Seller No. 1 or
Seller No. 2 of this Agreement or the consummation of any of
the transactions contemplated hereby.
4.06 Closing Balance Sheet.
-----------------------
(a) The Closing Balance Sheet No. 1, which shall be attached hereto
as Exhibit F on the Post-Closing Date, will reflect only the
assets and liabilities of Company No. 1 as of the Closing Date
and will not include any assets or liabilities of any corporation
or entity except Company No. 1. As of the Closing Date, Company
No. 1 will not have any liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due),
including without limitation, any tax liabilities of the nature
required by GAAP to be reflected or reserved against in the
Closing Balance Sheet No. 1, which are not accurately and fully
reflected or reserved against in the Closing Balance Sheet
No. 1.
24
(b) The Closing Balance Sheet No. 2, which shall be attached hereto
as Exhibit F-1 on the Post-Closing Date, will reflect only the
assets and liabilities of Company No. 2 as of the Closing Date
and will not include any assets or liabilities of any corporation
or entity except Company No. 2. As of the Closing Date, Company
No. 2 will not have any liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due),
including without limitation, any tax liabilities of the nature
required by GAAP to be reflected or reserved against in the
Closing Balance Sheet No. 2, which are not accurately and fully
reflected or reserved against in the Closing Balance Sheet No. 2.
4.07 (a) Year End Financials No. 1. The Year End Financials No. 1 have
-----------------------------
been provided to Purchaser, are in accordance with the books and
records of Company No. 1, and have been prepared in accordance
with GAAP as applied by Company No. 1 on a consistent basis
throughout the periods covered by such statements and fairly
represent the financial condition of Company No. 1 as of the
respective dates and the results of operations of Company No. 1
for the period then ended. Except as stated in the Year End
Financials No. 1 or as otherwise set forth in Disclosure Schedule
4.07(a), there have been no unusual accounting practices engaged
in which have affected the amount or trend of net income of
Company No. 1, or any unusual or nonrecurring transactions,
during the periods reflected in the Year End Financials No. 1.
(b) Absence of Undisclosed Liability. Except as to the extent
-----------------------------------
specifically reflected in the Year End Financials No. 1 or
otherwise set forth in Disclosure Schedule 4.07(b), and except
for trade payables, liabilities and contractual obligations
arising in the ordinary course of business since the date of
Company No. 1's 1999 audited financial statements, Company No. 1
does not have any other liabilities of any nature, whether
accrued, absolute or contingent, or otherwise, and whether due,
or to become due of the nature required by GAAP to have been
reflected or reserved against in financial statements.
(c) No Liabilities as Guarantor. Except as set forth in Disclosure
------------------------------
Schedule 4.07(c), Company No. 1 is not directly or indirectly
obligated to guaranty or assume any debt, dividend, or other
obligation of any person, corporation, association, partnership,
or other entity, except endorsements made in the ordinary course
of business in connection with the deposit of items for
collection.
25
(d) Year End Financials No. 2. The Year End Financials No. 2 have
-----------------------------
been provided to Purchaser, are in accordance with the books and
records of Company No. 2, and have been prepared in accordance
with GAAP as applied by Company No. 2 on a consistent basis
throughout the periods covered by such statements and fairly
represent the financial condition of Company No. 2 as of the
respective dates and the results of operations of Company No. 2
for the period then ended. Except as stated in the Year End
Financials No. 2 or as otherwise set forth in Disclosure Schedule
4.07(d), there have been no unusual accounting practices engaged
in which have affected the amount or trend of net income of
Company No. 2, or any unusual or nonrecurring transactions,
during the periods reflected in the Year End Financials No. 2.
(e) Absence of Undisclosed Liability. Except as to the extent
-----------------------------------
specifically reflected in the Year End Financials No. 2 or
otherwise set forth in Disclosure Schedule 4.07(e), and except
for trade payables, liabilities and contractual obligations
arising in the ordinary course of business since the date of
Company No. 2's 1999 audited financial statements, Company No. 2
does not have any other liabilities of any nature, whether
accrued, absolute or contingent, or otherwise, and whether due,
or to become due of the nature required by GAAP to have been
reflected or reserved against in financial statements.
(f) No Liabilities as Guarantor. Except as set forth in Disclosure
------------------------------
Schedule 4.07(f), Company No. 2 is not directly or indirectly
obligated to guaranty or assume any debt, dividend, or other
obligation of any person, corporation, association, partnership,
or other entity, except endorsements made in the ordinary course
of business in connection with the deposit of items for
collection.
(g) Absence of Material Change. Except as set forth in Disclosure
---------------------------
Schedule 4.07(g) or as otherwise set forth in this Agreement or
the Exhibits hereto, since December 31, 1999, there has not been:
(i) any change in the condition (financial or otherwise),
properties, business, operations or prospects of Company No.
1 or Company No. 2 which is materially adverse, singly or in
the aggregate;
(ii) any material loss, damage or destruction in the nature of a
casualty loss or otherwise, whether covered by insurance or
not, adversely affecting any property or asset of Company
No. 1 or Company No. 2;
26
(iii)an actual or any threatened strike or other material labor
trouble or material dispute;
(iv) any loss or, to the best knowledge of Seller No. 1 and/or
Seller No. 2, any threatened loss of any governmental
permit, license, qualification, special charter or
certificate of authority held or enjoyed or formerly held or
enjoyed by Company No. 1 or Company No. 2 which loss has had
or upon occurrence would have a material effect, singly or
in the aggregate, on the condition (financial or otherwise),
properties, business, operations or prospects of Company No.
1 or Company No. 2;
(v) to the knowledge of Seller No. 1 or Seller No. 2, any
statute, regulation, order, ordinance or other law the
adoption, amendment or rescission of which have a material
effect, singly or in the aggregate, on the condition
(financial or otherwise), properties, business, operations
or prospects of Company No. 1 or Company No. 2;
(vi) any indebtedness, liability or obligation (whether absolute,
accrued, contingent or otherwise) incurred by Company No. 1
or Company No. 2, or other transaction entered into by
Company No. 1 or Company No. 2, other than in the ordinary
course of business and consistent with past practice, or any
guarantee of any indebtedness, liability or obligation made
by Company No. 1 or Company No. 2;
(vii)any declaration, setting aside or payment of any dividend
or other distributions in respect of any capital stock of
Company No. 1 or Company No. 2;
(viii)any issuance, sale, combination or reclassification of any
capital stock or other securities of Company No. 1 or
Company No. 2;
(ix) any issuance or grant of any option, warrant or other right
in respect of any capital stock or other securities of
Company No. 1 or Company No. 2;
(x) any direct or indirect redemption, purchase or other
acquisition of any capital stock or other securities of
Company No. 1 or Company No. 2;
(xi) any obligation, liability, Lien or encumbrance paid,
discharged or satisfied by Company No. 1 or Company No. 2
other than in the ordinary course of business;
27
(xii)any mortgage, Lien, pledge, charge or encumbrance (except
for liens for current taxes not yet due and payable),
created, incurred or assumed by Company No. 1 or Company No.
2 other than in the ordinary course of business;
(xiii)except in the ordinary course of business, any sale,
transfer or other disposition of any tangible asset of
Company No. 1 or Company No. 2, any cancellation of any debt
or claim of Company No. 1 or Company No. 2 or any
disposition of any intangible properties, assets or rights
of Company No. 1 or Company No. 2;
(xiv)any salary or wage increase granted or committed to be
made, other than normal merit or cost-of-living increases
pursuant to Company's general prevailing practices, with
respect to any officer, director, employee or agent of
Company No. 1 or Company No. 2, or any bonus, incentive or
deferred compensation, profit sharing, retirement, pension,
group insurance, death benefit or other fringe benefit plan
or trust agreement entered into or amended or any employment
or consulting agreement entered into or amended or altered;
(xv) any termination (whether by discharge, retirement or
otherwise) of any officer, director, employee or agent of
Company No. 1 or Company No. 2 or any notice to so terminate
given or received by any of the foregoing;
(xvi)any loan made, increased or forgiven to any officer,
director, employee or agent of Company No. 1 or Company No.
2 or to any member of any of their families;
(xvii)any capital expenditure, addition or improvement made or
committed to be made by Company No. 1 or Company No. 2 in
excess of $10,000.00, respectively, with respect to any
single expenditure, addition or improvement or in excess of
$20,000.00, respectively, with respect to all such
expenditures, additions and improvements;
(xviii)any failure on the part of Company No. 1 or Company No. 2
to operate its business in the ordinary course or to use its
best efforts to preserve its business organization intact,
to retain the services of its employees and to preserve its
goodwill and relationships with suppliers, creditors and
others having business relationships with it;
28
(xix)any known material loss of business, termination or
discontinuance of any relationship or dispute between
Company No. 1 or Company No. 2 and any customer or supplier;
(xx) any loss, amendment, termination or waiver of any material
right of Company No. 1 or Company No. 2 other than in the
ordinary course of business;
(xxi)any known write-off as uncollectible of any notes or
accounts receivable, or any portions thereof, in excess of
$10,000.00 with respect to any single note or account or in
excess of $20,000.00 with respect to all such write-offs;
Purchaser acknowledges that on or before Closing, Company No. 1 and/or
Company No. 2 shall have paid off all outstanding liabilities due to
its current or past shareholders, in the respective amounts as set
forth on Disclosure Schedule 4.07(g).
4.08 Assets.
------
(a) Except as provided in Disclosure Schedule 4.08(a), Company No. 1
has good and marketable title to all of its assets and
properties, real, personal or otherwise, including, but not
limited to, those assets and properties reflected in Company No.
1's December 31, 1999 financial statements, except only for
assets subsequently disposed of in the ordinary course of
business, free and clear of all Liens, except (a) as specifically
reflected thereon, (b) the Line of Credit Indebtedness No. 1, or
(c) for Permitted Liens. To the best knowledge of Seller No. 1,
all of Company No. 1's tangible and other operating assets,
property and equipment are in good operating condition and
repair, normal wear and tear excepted, free of structural or
material mechanical defects and conform with all applicable laws
and regulations. Without limiting the generality of the
foregoing, specific representations are set forth in the
following subparagraphs of this Section 4.08(a).
(b) Except as provided in Disclosure Schedule 4.08(b), Company No. 2
has good and marketable title to all of its assets and
properties, real, personal or otherwise, including, but not
limited to, those assets and properties reflected in Company No.
2's December 31, 1999 financial statements, except only for
assets subsequently disposed of in the ordinary course of
business, free and clear of all Liens, except (a) as specifically
reflected thereon, (b) the Line of Credit Indebtedness No. 2, or
(c) for Permitted Liens. To the best knowledge of Seller No. 1
and Seller No. 2, all of Company No. 2's tangible and other
operating assets, property and equipment are in good operating
condition and repair, normal wear and tear excepted, free of
structural or material mechanical defects and conform with all
applicable laws and regulations. Without limiting the generality
of the foregoing, specific representations are set forth in the
following subparagraphs of this Section 4.08(b).
29
4.08.1 Accounts Receivable. All Accounts Receivable of Company No. 1 which
--------------------
have arisen in connection with the Business No. 1 or otherwise and
which are reflected on Company No. 1's December 31, 1999 financial
statements, and all such receivables which will have arisen since
December 31, 1999 have arisen only from bona fide transactions in the
ordinary course of business and represent valid, collectible and
existing claims. Except as set forth on Disclosure Schedule 4.08.1,
and subject to customer credits, the payment of each Account
Receivable will not, as of the Closing Date, be subject to any known
defense, counterclaim or condition (other than Company No. 1's
performance in the ordinary course of business) whatsoever. Disclosure
Schedule 4.08.1 hereto accurately lists, as of a date within five (5)
days of execution of this Agreement, and will list, as of a date
within five (5) days of the Closing Date, all receivables arising out
of or relating to Business No. 1, the amount owing and the aging of
such Accounts Receivable. Seller No. 1 has provided Purchaser the
opportunity to review complete and correct copies of all instruments,
documents and agreements evidencing such Accounts Receivable and of
all
instruments, documents or agreements, if any, creating security therefor.
4.08.2 Accounts Receivable. All Accounts Receivable of Company No. 2 which
--------------------
have arisen in connection with the Business No. 2 or otherwise and
which are reflected on Company No. 2's December 31, 1999 financial
statements, and all such receivables which will have arisen since
December 31, 1999 have arisen only from bona fide transactions in the
ordinary course of business and represent valid, collectible and
existing claims. Except as set forth on Disclosure Schedule 4.08.2,
and subject to customer credits, the payment of each Account
Receivable will not, as of the Closing Date, be subject to any known
defense, counterclaim or condition (other than Company No. 2's
performance in the ordinary course of business) whatsoever. Disclosure
Schedule 4.08.2 hereto accurately lists, as of a date within five (5)
days of execution of this Agreement, and will list, as of a date
within five (5) days of the Closing Date, all receivables arising out
of or relating to Business No. 2, the amount owing and the aging of
such Accounts Receivable. Seller No. 1 and Seller No. 2 have provided
Purchaser the opportunity to review complete and correct copies of all
instruments, documents and agreements evidencing such Accounts
Receivable and of all instruments, documents or agreements, if any,
creating security therefor.
30
4.08.3 Vendor Receivables. All Vendor Receivables of Company No. 1 which
-------------------
have arisen in connection with Business No. 1 or otherwise and which
are reflected on Company No. 1's December 31, 1999 financial
statements and all such Vendor Receivables which have arisen since
December 31, 1999 have arisen only from bona fide transactions in the
ordinary course of business and represent valid, collectible and
existing claims. Except as set forth in Disclosure Schedule 4.08.3,
the payment of each Vendor Receivable will not, as of the Closing
Date, be subject to any known defense, counterclaim or condition
whatsoever. Disclosure Schedule 4.08.3 hereto accurately lists, as of
a date within five (5) days of the execution of this Agreement, and
will list, as of a date within five (5) days of the Closing Date, all
Vendor Receivables arising out of or relating to Business No. 1, the
amount owing and the aging of such Vendor Receivables. Seller No. 1
has provided Purchaser the opportunity to review complete and correct
copies of all instruments, documents and agreements evidencing such
Vendor Receivables and of all instruments, documents and agreements,
if any, creating security therefor.
4.08.4 Vendor Receivables. All Vendor Receivables of Company No. 2 which
-------------------
have arisen in connection with Business No. 2 or otherwise and which
are reflected on Company No. 2's December 31, 1999 financial
statements and all such Vendor Receivables which have arisen since
December 31, 1999 have arisen only from bona fide transactions in the
ordinary course of business and represent valid, collectible and
existing claims. Except as set forth in Disclosure Schedule 4.08.4,
the payment of each Vendor Receivable will not, as of the Closing
Date, be subject to any known defense, counterclaim or condition
whatsoever. Disclosure Schedule 4.08.4 hereto accurately lists, as of
a date within five (5) days of the execution of this Agreement, and
will list, as of a date within five (5) days of the Closing Date, all
Vendor Receivables arising out of or relating to Business No. 2, the
amount owing and the aging of such Vendor Receivables. Seller No. 1
and Seller No. 2 has provided Purchaser the opportunity to review
complete and correct copies of all instruments, documents and
agreements evidencing such Vendor Receivables and of all instruments,
documents and agreements, if any, creating security therefor.
4.08.5 Inventory. Except as specifically described on Disclosure Schedule
---------
4.08.5, all inventory reflected on the December 31, 1999 financial
statements consists of items of quality and quantity which are usable
or saleable in the ordinary course of Business No. 1 of Company No. 1
in the conduct of its Business No. 1, and items of below standard
quality and items not usable or saleable in the ordinary course of
Company No. 1's business have been written-down in value in accordance
with good business practices to estimated net realizable market value
or adequate reserves have been provided therefor. The values at which
the Inventories are carried on the December 31, 1999 financial
statement reflect the normal valuation policy of Company No. 1 in
setting inventory at the lower of cost or market, all in accordance
with GAAP. Except as set forth on Disclosure Schedule 4.08.5, since
December 31, 1999, Inventories have been maintained at normal and
adequate levels for the continuation of the Business No. 1 in its
normal course. Since December 31, 1999, no change has occurred in such
Inventories which affect or will affect the usability or salability
31
thereof, no write-downs or write-ups of the value of such Inventories
has occurred and no additional amounts have been reserved with respect
to such Inventories. Disclosure Schedule 4.08.5 lists the location of
all Inventories together with a brief description of the type and
amount at each location.
4.08.6 Inventory. Except as specifically described on Disclosure Schedule
---------
4.08.6, all inventory reflected on the December 31, 1999 financial
statements consists of items of quality and quantity which are usable
or saleable in the ordinary course of Business No. 2 of Company No. 2
in the conduct of its Business No. 2, and items of below standard
quality and items not usable or saleable in the ordinary course of
Company No. 2's business have been written-down in value in accordance
with good business practices to estimated net realizable market value
or adequate reserves have been provided therefor. The values at which
the Inventories are carried on the December 31, 1999 financial
statement reflect the normal valuation policy of Company No. 2 in
setting inventory at the lower of cost or market, all in accordance
with GAAP. Except as set forth on Disclosure Schedule 4.08.6, since
December 31, 1999, Inventories have been maintained at normal and
adequate levels for the continuation of the Business No. 2 in its
normal course. Since December 31, 1999, no change has occurred in such
Inventories which affect or will affect the usability or salability
thereof, no write-downs or write-ups of the value of such Inventories
has occurred and no additional amounts have been reserved with respect
to such Inventories. Disclosure Schedule 4.08.6 lists the location of
all Inventories together with a brief description of the type and
amount at each location.
4.08.7 Real Property. Company No. 1 owns no real property. Company No. 2
--------------
owns no real property.
4.08.8 Dealer Agreements. A list of Company No. 1's dealer agreements are
------------------
set forth in Disclosure Schedule 4.08.8.
4.08.9 Dealer Agreements. A list of Company No. 2's dealer agreements are
------------------
set forth in Disclosure Schedule 4.08.9.
32
4.08.10 Intellectual Property.
----------------------
(a) Title. Disclosure Schedule 4.08.10(a) contains a complete and
-----
correct list and a brief description of all Intellectual Property
described in Section 1.45(a), 1.45(b) and 1.45(c) that is owned
by Company No. 1 or Company No. 2, respectively, and primarily
related to, used in, held for use in connection with, or
necessary for the conduct of, or otherwise material to Business
No. 1 or Business No. 2 (the "Owned Intellectual Property").
Company No. 1 or Company No. 2 owns or has the exclusive right to
use pursuant to license, sublicense, agreement or permission all
of its Intellectual Property, free from any Liens (other than
Permitted Lines). No Affiliate of Seller No. 1 or Seller No. 2
owns or has any interest in or with respect to any Company No. 1
or Company No. 2 Intellectual Property and Company No. 1
Intellectual Property and Company No. 2 Intellectual Property
comprise all of the Intellectual Property necessary for Company
No. 1 or Company No. 2 to conduct and operate Business No. 1 and
Business No. 2, respectively, following the Closing as now being
conducted by Company No. 1 or Company No. 2.
(b) No Infringement. To the knowledge of Seller No. 1 or Seller No.
---------------
2, the conduct of Business No. 1 or Business No. 2, as
applicable, does not infringe or otherwise conflict with any
rights of any Person in respect of any Intellectual Property. To
the knowledge of Seller Xx. 0 xx Xxxxxx Xx. 0, xxxx of the
Company No. 1 Intellectual Property or the Company No. 2
Intellectual Property is being infringed or otherwise used or
available for use, by any other Person.
(c) Licensing Arrangements. Disclosure Schedule 4.08.10(c) sets forth
-----------------------
all agreements, arrangements or laws (i) pursuant to which
Company No. 1 or Company No. 2 has leased or licensed
Intellectual Property, or the use of Intellectual Property as
otherwise permitted (through non-assertion, settlement or similar
agreements or otherwise) to, any other Person and (ii) pursuant
to which Company No. 1 or Company No. 2 has had Intellectual
Property material to the operation Business No. 1 or Business No.
2 licensed to it, or has otherwise been permitted to use
Intellectual Property material to the operation of Business No. 1
or Business No. 2 (through non-assertion, settlement or similar
agreements or otherwise), excluding software licensed by Company
No. 1 or Company No. 2 for internal purposes, together with a
brief description of the Intellectual Property covered thereby.
All of the agreements or arrangements set forth in Disclosure
Schedule 4.08.10(c), (x) are in full force and effect in
accordance with their terms and no default exists thereunder by
33
Company No. 1 or Company No. 2, as applicable, or to the
knowledge of Seller No. 1 or Seller No. 2, or other parties
thereto (y) are free and clear of all Liens other than Permitted
Liens, and (z) except as set forth on Disclosure Schedule
4.08.10(c), do not contain any change in control or other terms
or conditions that will become applicable or inapplicable as a
result of the consummation of the transactions contemplated by
this Agreement. Seller No. 1 or Seller No. 2, as applicable, has
delivered to Purchaser true and complete copies of all licenses
and arrangements (including amendments) set forth on Disclosure
Schedules 4.08.10(c).
(d) No Intellectual Property Litigation. To Seller No. 1's and/or
--------------------------------------
Seller No. 2's knowledge, no claim or demand of any Person has
been made nor is there any proceeding that is pending, or to the
knowledge of Seller No. 1 and/or Seller No. 2, threatened, nor is
there to Seller No. 1's or Seller No. 2's knowledge, a reasonable
basis therefor, which (i) challenges the rights of Company No. 1
or Company No. 2, as applicable, in respect of any of the
Intellectual Property, (ii) asserts that Company No. 1 or Company
No. 2 is infringing or otherwise in conflict with, or is, except
as set forth in Disclosure Schedule 4.08.10(d), required to pay
any royalty, license fee, charge or other amount with regard to,
any Intellectual Property, or (iii) claims that any default
exists under any agreement or arrangement regarding Intellectual
Property. None of Company No. 1's Intellectual Property or
Company No. 2's Intellectual Property is subject to any
outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency, or has been
the subject of any litigation within the last five years, whether
or not resolved in favor of Company No. 1 or Company No. 2.
(e) Due Registration, etc. Company No. 1 or Company No. 2,
------------------------
respectively, have no Intellectual Property that has been
registered with, filed and/or issued by, as the case may be, the
United States Patent and Trademark Office, United States
Copyright Office or such other filing offices, domestic or
foreign.
(f) Use of Name and Xxxx. Except as set forth in Disclosure Schedule
-----------------------
4.08.10(f), there are no restrictions or limitations pursuant to
any order, decisions, injunctions, judgements, awards or decrees
of any Governmental Authority on Purchaser's right to use the
names and marks set forth on Disclosure Schedule 4.08.10(a) in
the conduct of the Business No. 1 or Business No. 1 as presently
carried on by Company No. 1 or Company No. 2, respectively.
4.08.11 Motor Vehicles. Disclosure Schedule 4.08.11 sets forth a
---------------
complete list of all motor vehicles owned by Company No. 1 or
Company No. 2.
34
4.09 Contracts.
---------
(a) Disclosure Schedule 4.09 contains a complete and correct list of
all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described
below (x) by which Company No. 1 or Company No. 2, or under which
Company No. 1 or Company No. 2, as applicable, or any of their
respective assets, businesses or operations receive benefits, or
(y) to which Company No. 1 or Company No. 2 is a party or by
which Company No. 1 or Company No. 2 is bound in connection with
Business No. 1 or Business No. 2 (the "Contracts").
(i) leases, licenses, permits, franchises, insurance policies,
Governmental Approvals and other contracts concerning or
relating to the Leased Real Property in Seller No. 1's or
Seller No. 2's or Company No. 1's or Company No. 2's
possession;
(ii) employment, bonuses, vacations, pensions, profit sharing,
retirement, stock options, stock purchases, employee
discounts or other employee benefits, consulting, agency,
collective bargaining or other similar contracts,
agreements, and other instruments and arrangements relating
to or for the benefit of current, future or former
employees, officers, directors, sales representatives,
distributors, dealers, agents, independent contractors or
consultants which involves aggregate annual payments in
excess of $15,000;
(iii)loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust,
bonds, notes, guarantees, and other agreements and
instruments relating to the borrowing of money or obtaining
of or extension of credit;
(iv) brokerage or finder's agreements;
(v) joint venture, partnership and similar contracts involving a
sharing of profits or expenses, including, but not limited
to, joint research and development and joint marketing
contracts;
(vi) asset purchase agreements and other acquisition or
divestiture agreements, including, but not limited to, any
agreements relating to the sale, lease or disposal of any
assets owned by Company No. 1 or Company No. 2 (other than
sales of Inventory in the ordinary course of business) or
involving continuing indemnity or other obligations;
35
(vii)orders and other contracts for the purchase or sale of
Inventories, materials, supplies, products or services open
or as to which any liability exists as of the date hereof,
each of which involves aggregate payments in excess of
$15,000;
(viii)contracts with respect to which the aggregate amount that
could reasonably expected to be paid or received thereunder
in the future exceeds $15,000;
(ix) sales agency, manufacturer's representative, marketing or
distributorship agreements;
(x) contracts, agreements or arrangements with respect to the
representation of Business No. 1 or Business No. 2 in
foreign countries;
(xi) master lease agreements providing for the leasing of either
(a) personal property primarily used in, or held for use
primarily in connection with, Business Xx. 0 xxx/xx Xxxxxxxx
Xx. 0, xxx (x) other personal property;
(xii)contracts, agreements or commitments with any director,
officer, employee, or Affiliate of Company No. 1 or Company
No. 2 or of Seller No. 1 or Seller No. 2, or with any holder
of more than five percent (5%) of any class of capital stock
of Company No. 1 or Company No. 2 outstanding other than
employment contracts; and
(xiii)any other contracts, agreements or commitments that are
material to Business No. 1 or Business No. 2.
(b) Seller No. 1 and Seller No. 2, as applicable, have delivered to
Purchaser complete and correct copies of all written Contracts,
together with all amendments thereto, and accurate descriptions
of all material terms of all oral Contracts, set forth or
required to be set forth in Disclosure Schedule 4.09.
(c) Neither Company No. 1 nor Company No. 2 have received notice of
any plan or intention of any party to any Contract to exercise
any right to cancel or terminate any Contract. To the best
knowledge of Seller No. 1 or Seller No. 2, as applicable, there
does not exist under any Contract any event of default or event
or condition that, after notice or lapse of time or both, would
constitute a violation, breach or event of default thereunder on
the part of Company No. 1 or Company No. 2 or, to the best
knowledge of Seller No. 1 or Seller No. 2, any other party
thereto, except as set forth in Disclosure Schedule 4.09 and
36
except for such events or conditions that, individually and in
the aggregate, (i) has not had or resulted in, and will not have
or result in a material effect on Company No. 1 or Company No. 2
or of its respective assets, and (ii) has not and will not
materially impair the ability of Company No. 1 or Company No. 2
to perform its obligations under this Agreement and under the
Other Sellers Documents. Except as set forth in Disclosure
Schedule 4.09, no consent of any third party is required under
any Contract as a result of or in connection with, and the
enforceability of any Contract will not be affected in any manner
by the execution, delivery and performance of this Agreement or
any of the Other Sellers Documents or the consummation of the
transactions contemplated thereby.
(d) Company No. 1 has no outstanding power of attorney relating to
the Business No. 1. Company No. 2 has no outstanding power of
attorney relating to the Business No. 2.
4.10 Labor Disagreements. In connection with the operation of Business No.
--------------------
1 of Company No. 1 or Business No. 2 of Company No. 2, or any other
business previously operated by Company No. 1 or Company No. 2, (i)
Company No. 1 or Company No. 2 are not engaged in any unfair labor
practice; (ii) Company No. 1 or Company No. 2 have not been notified of
any unfair labor practice charge or complaint against Company No. 1 or
Company No. 2 pending and, to the knowledge of Seller No. 1 or Seller
No. 2, no such charge or complaint is threatened before the National
Labor Relations Board, any state labor relations board or any court or
tribunal; (iii) except as set forth on Disclosure Schedule 4.10,
neither Company No. 1 nor Company No. 2 have been notified of any
charge or claim filed at or with the Equal Employment Opportunity
Commission, any state agency having similar jurisdiction or any court
or tribunal, actually pending and, to the knowledge of Seller No. 1 or
Seller No. 2, no such charge or claim is threatened against Company No.
1 or Company No. 2 in connection with the operation of Business No. 1
of Company No. 1 or Business No. 2 of Company No. 2; (iv) there is no
labor strike, dispute, request for representation, slowdown or stoppage
actually pending against or affecting Company No. 1 or Company No. 2
and, to the knowledge of Seller No. 1 or Seller No. 2, none is or has
been threatened; (v) neither Company No. 1 nor Company No. 2 have been
notified of any grievance which might have a material effect on the
conduct of the operations of Business No. 1 of Company No. 1 or of
Business No. 2 of Company No. 2; (vi) neither Company No. 1 nor Company
No. 2 have any labor contracts or collective bargaining agreements with
respect to any Company No. 1 Personnel and/or Company No. 2 Personnel;
(vii) no labor organization or group of employees of Company No. 1 or
Company No. 2 have made a demand for recognition or certification, and,
to Seller No. 1's knowledge or Seller No. 2's knowledge, there are no
representation or certification proceedings or petitions seeking a
37
representation proceeding presently pending or threatened in writing to
be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority, and (viii) neither Company
No. 1 nor Company No. 2 have been notified of any organizing activities
involving Company No. 1 or Company No. 2, respectively, pending with
any labor organization or group of employees of Company No. 1 or
Company No. 2.
4.11 Employee Benefit Information.
------------------------------
(i) Except as set forth on Disclosure Schedule 4.11(i), neither
Company No. 1 nor Company No. 2 maintain, or is required to
contribute to and have no liabilities with respect to any
Employee Benefit Plans and no Company No. 1 Personnel or Company
No. 2 Personnel or dependent of such Company No. 1 Personnel or
Company No. 2 Personnel is entitled to any benefits except as
provided for by the provisions of such Employee Benefit Plans or
by applicable law.
(ii) Seller No. 1 and Seller No. 2, as applicable, have provided
Purchaser with (a) copies of all Employee Benefit Plans or in the
case of any unwritten plan, a written description thereof, (b)
copies of any annual, financial or actuarial reports and Internal
Revenue Service determination letters relating to such Employee
Benefit Plans and (c) copies of the most recent summary plan
descriptions (whether or not required to be furnished under
ERISA) and all material employee communications relating to such
Employee Benefit Plans and distributed to Company Personnel No. 1
and Company Personnel No. 2.
(iii) Except as set forth on Disclosure Schedule 4.11(iii), the events
contemplated by this Agreement (either alone or together with any
other event) will not (a) entitle any Company No. 1 Personnel or
Company No. 2 Personnel to severance pay, unemployment
compensation, or other similar payments under any Employee
Benefit Plan or law, (b) accelerate the time of payment or
vesting or increase the amount of benefits due under any Employee
Benefit Plan or compensation to any Company No. 1 Personnel or
Company No. 2 Personnel, (c) result in any payments (including
parachute payments) under any Employee Benefit Plan or law,
becoming due to any Company No. 1 Personnel or Company No. 2
Personnel, or (d) terminate or modify or give a third party a
right to terminate or modify the provisions or terms of any
Employee Benefit Plan.
38
(iv) TheLinc Corporation Employee Savings Plan (the "401(k) Plan") is
qualified under Sections 401(a) and 401(k) of the Code and the
related trust is exempt from Tax under Section 501(a) of the Code
and Company No. 1 and Company No. 2 have no other employees'
savings plans qualified under Section 401(a) or any other Section
of the Code. The Internal Revenue Service has issued a
determination letter that the prototype plan to which the 401(k)
Plan relates is so qualified and nothing, to Seller No. 1's and
Seller No. 2's knowledge, have occurred since the date of such
letter to cause the letter to be no longer valid or effective
assuming the plan is amended on a timely basis to comply with
changes to the Code, or other legislative, regulatory or
administrative requirements subject to the remedial amendment
period applicable to such Act. All contributions due with respect
to the periods ending on or before the Closing Date to the 401(k)
Plan have been timely made, and a pro rata portion of the
contributions (including matching contributions) for the plan
year in which the Closing Date occurs shall have been made on or
prior to the Closing Date for the period ending on the Closing
Date.
(v) Neither Company No. 1 nor Company No. 2 nor any entity that is or
was at any time treated as a single employer with Company No. 1
or Company No. 2 under Section 414(b), (c), (m) or (o) of the
Code have at any time (a) maintained, contributed to or been
required to contribute to any plan under which more than one
employer makes contributions (within the meaning of Section
4064(a) of ERISA) or any plan that is a multi-employer plan as
defined in Section 3(37) of ERISA, (b) incurred or expects to
incur any liability to the Pension Benefit Guaranty Corporation
or otherwise under Title IV or ERISA (other than the payment of
premiums none of which are overdue) or (c) incurred or expects to
incur liability in connection with an "accumulated funding
deficiency" within the meaning of Section 412 of the Code whether
or not waived.
(vi) To the best knowledge of Seller No. 1 and/or Seller No. 2,
Company No. 1 and Company No. 2 have, in the conduct of the
affairs of Business Xx. 0 xx Xxxxxxx Xx. 0 xxx xx Xxxxxxxx Xx. 0
of Company No. 2, as applicable, complied in all material
respects with all applicable laws, rules and regulations relating
to the employment of labor, including those relating to wages,
hours, terms and conditions of employment, collective bargaining
and the payment of social security and similar Taxes.
39
(vii) Company No. 1 and Company No. 2 have not and prior to the
Closing Date will not have suffered a "plant closing" or "mass
layoff" within the meaning of the Worker Adjustment and
Retraining Notification Act ("WARN").
(viii)To Seller No. 1's knowledge and Seller No. 2's knowledge,
Company No. 1 and Company No. 2, as applicable, have complied in
all material respects with the Consolidated Omnibus Budget
Reconciliation Act of 1984.
4.12 Burdensome Obligations. Except for agreements described in the
-----------------------
Disclosure Statement Exhibit 4.12, neither Company No. 1 nor Company
No. 2 is a party to any so-called requirements or similar type of
contract limiting its freedom or latitude in the purchase of its
inventory, equipment or other items. Neither Company No. 1 nor Company
No. 2 is subject to or bound by any contract or other obligation
whatsoever which materially adversely affects its business, properties
or prospects, except as expressly disclosed in this Agreement.
4.13 Lawful Operations. To the best of Seller No. 1's knowledge and Seller
------------------
No. 2's knowledge, the businesses conducted and properties owned or
leased by Company No. 1 and Company No. 2, as applicable, conform with
all Applicable Laws and all permits and licenses, if any, that are
required to enable Company No. 1 to operate its Business No. 1 and that
are required to enable Company No. 2 to operate its Business No. 2,
have been obtained.
4.14 Legal Proceedings; Claims. Except as set forth in the Disclosure
---------------------------
Schedule 4.14, there are no decrees or order of any regulatory agency,
court or public authority materially affecting the operations of
Company No. 1 and Company No. 2, and neither Company No. 1 nor Company
No. 2 is a party to any litigation or other judicial or administrative
proceedings. Except as set forth in Disclosure Schedule 4.14, to Seller
No. 1's knowledge and Seller No. 2's knowledge, neither Company Xx. 0
xxx Xxxxxxx Xx. 0 xxx Xxxxxx Xx. 0 nor Seller No. 2 is a party to any
litigation or other judicial, administrative or other proceeding
pending or known by Seller No. 1 or Seller No. 2 to be threatened which
would affect Company No. 1's, Company No. 2's, Seller No. 1's or Seller
No. 2's ability to perform this Agreement or would materially affect
the assets or operations of Company No. 1 or Company No. 2; and, to the
best of Seller No. 1's knowledge and Seller No. 2's knowledge, there
are no claims in existence or threatened against Company No. 1 and/or
Company No. 2 or any of their respective properties which may result in
litigation. There are no known existing violations of any Federal,
State, local or foreign laws or regulations which might materially
affect the properties, assets, business, financial condition or
corporate status of Company No. 1 and/or Company No. 2; and neither
Company No. 1 nor Company No. 2 is in default with respect to any order
or decree of any court or administrative regulatory agency.
40
4.15 Taxes.
-----
A. Company No. 1 has:
(i) Except as set forth in Disclosure Schedule 4.16.A, prepared
in accordance with reasonable interpretations of all
Applicable Laws, and timely filed all Tax Returns required
to be filed or sent by it with respect to any Taxes; copies
of all Company No. 1 federal and state income Tax Returns
have been provided to Purchaser;
(ii) timely paid all Taxes that are shown as due and payable on
said Tax Returns;
(iii)established on its books and records reserves that are
adequate for the payment of all Taxes not yet due and
payable;
(iv) complied with all Applicable Laws, rules and regulations
relating to the payment and withholding of Taxes and have
timely and properly withheld from employee wages and paid
over to the proper Governmental Authorities all amounts
required to be so withheld and paid over under all
Applicable Laws, except amounts that are not yet due and
payable. There are no liens for Taxes upon the assets of
Company No. 1 except for Liens for Taxes not yet due.
Company No. 1 is not a party to any agreement providing for
the allocation, sharing or indemnification of Taxes;
(v) that, except as reflected or reserved against in the Balance
Sheet of Company No. 1 as of April 30, 2000, Company No. 1
as of such date had no deferred tax liabilities of any
nature and Seller No. 1 represents and warrants that he does
not know, nor does he have any reasonable grounds to know,
of any basis for any deferred tax liability in any amount
not fully reflected or reserved against in the Balance Sheet
No. 1 of Company No. 1 as of April 30, 2000;
(vi) that all deductions taken on all the Company No. 1's tax
returns have been properly deducted by Company No. 1
pursuant to pertinent provisions of the Internal Revenue
Code.
To Seller No. 1's knowledge, Company No. 1 is not currently under
audit by any Governmental Authority for any Taxes and has not
extended the statute of limitations relating to the filing of a
Tax Return or the payment of any Taxes.
41
B. Company No. 2 has:
(i) Except as set forth in Disclosure Schedule 4.16.B, prepared
in accordance with reasonable interpretations of all
Applicable Laws, and timely filed all Tax Returns required
to be filed or sent by it with respect to any Taxes; copies
of all Company No. 2 federal and state income Tax Returns
have been provided to Purchaser;
(ii) timely paid all Taxes that are shown as due and payable on
said Tax Returns;
(iii)established on its books and records reserves that are
adequate for the payment of all Taxes not yet due and
payable;
(iv) complied with all Applicable Laws, rules and regulations
relating to the payment and withholding of Taxes and have
timely and properly withheld from employee wages and paid
over to the proper Governmental Authorities all amounts
required to be so withheld and paid over under all
Applicable Laws, except for amounts that are not yet due and
payable. There are no liens for Taxes upon the assets of
Company No. 2 except for Liens for Taxes not yet due.
Company No. 2 is not a party to any agreement providing for
the allocation, sharing or indemnification of Taxes;
(v) that, except as reflected or reserved against in the Balance
Sheet of Company No. 2 as of April 30, 2000, Company No. 2
as of such date had no deferred tax liabilities of any
nature and Seller No. 1 and Seller No. 2 represent and
warrant that they do not know, nor do they have any
reasonable grounds to know, of any basis for any deferred
tax liability in any amount not fully reflected or reserved
against in the Balance Sheet No. 2 of Company No. 2 as of
April 30, 2000;
(vi) that all deductions taken on all the Company No. 2's tax
returns have been properly deducted by Company No. 2
pursuant to pertinent provisions of the Internal Revenue
Code.
To Seller No. 1's and Seller No. 2's knowledge, Company No. 2 is
not currently under audit by any Governmental Authority for any
Taxes and has not extended the statute of limitations relating to
the filing of a Tax Return or the payment of any Taxes.
42
C. Seller No. 1 and Seller No. 2 represent that:
(i) there has been no consent filed with the Internal Revenue
Service under Section 341(f) of the Code; and
(ii) Seller No. 1 shall be responsible for his federal, state and
local income taxes relating to or arising from his ownership
of Company 1 Shares, and Seller No. 1 and Seller No. 2 shall
be responsible for his federal, state and local income taxes
relating to or arising from their ownership of Company No. 2
Shares.
4.16 Environmental Compliance.
-------------------------
(i) To Seller No. 1's knowledge or Seller No. 2's knowledge, as
applicable, neither Company No. 1 nor Company No. 2 is in
violation, or alleged to be in violation, of any Environmental
Laws which would have a material effect on Business No. 1 or
Business No. 2;
(ii) Neither Company No. 1 nor Company No. 2 have received a notice,
complaint, order, directive, claim or citation from any third
party, including without limitation any federal, state or local
governmental authority, (A) that Company No. 1 or Company No. 2
have has been identified by the Unites States Environmental
Protection Agency ("EPA") as a potentially responsible party
under CERCLA with respect to a site listed on the National
Priorities List, 40 CFR Part 000 Xxxxxxxx X, or the CERCLA
Information System; (B) that any Hazardous Materials which
Company No. 1 or Company No. 2 have generated, stored,
transported or disposed of has been released at any site at which
a federal, state or local agency has conducted or has ordered
that any person conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law or has
named Company No. 1 or Company No. 2 as a potentially responsible
party; or (C) that Company No. 1 or Company No. 2 is or shall be
named party to any claim, action, cause of action, complaint, or
legal or administrative proceeding (in each case, contingent or
otherwise) arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Materials.
(iii) To the knowledge of Seller No. 1 or Seller No. 2, as applicable,
(A) no portion of the property of Company No. 1 or Company No. 2
have been used for the handling, processing, storage or disposal
of Hazardous Materials except in compliance in all material
respects with applicable Environmental Laws; and no underground
tank or other underground storage receptacle containing or
formerly containing any Hazardous Materials is located on any
portion of any of the properties currently or formerly owned,
operated or leased by Company No. 1 or Company No. 2 or any of
their respective Affiliates during Company No. 1's or Company No.
2's or any of their respective Affiliate's ownership, operation
or lease of the properties; (B) in the course of any activities
43
conducted by Company No. 1 or Company No. 2 or operators of
Company No. 1's or Company No. 2's properties, no Hazardous
Materials have been generated or are being used on the property
except in compliance in all material respects with applicable
Environmental Laws; (C) there have been no releases (i.e., any
past or present releasing, spilling, leaking, leaching, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous
Materials on, upon, into or from the property currently or
formerly owned, operated or leased by Company No. 1 or Company
No. 2 or any of their respective Affiliates during or prior to
Company No. 1's or Company No. 2's or any of their respective
Affiliate's ownership, operation or lease, which releases would
have a material effect on the value of any of the property or
adjacent properties or the environment; and (D) in addition any
Hazardous Materials, that have been generated or stored by
Company No. 1 or Company No. 2 or any of their respective
Affiliates on any of the currently or formerly owned, operated or
leased property of Company No. 1 or Company No. 2 have been
transported off site only by carriers having an identification
number issued by the EPA and treated or disposed of only by
treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws, which transporters
and facilities have been and are operating in material compliance
with such permits and applicable Environmental Laws or, if any
transporter or facility has not been or is not in material
compliance, such failure would not have a material effect on
Company No. 1 or Company No. 2 or any of their respective
Affiliates.
(iv) Seller No. 1 and Seller No. 2, as applicable, have provided to
Purchaser all environmentally related audits, studies, reports,
analyses (including soil and groundwater analysis), and results
of investigations that have been performed with respect to the
currently or previously owned, leased, or operated properties of
Company No. 1 or Company No. 2 or any of their respective
Affiliates, and that are in the possession of Company No. 1 or
Company No. 2, any of their respective Affiliates or Seller No. 1
or Seller No. 2.
(v) To the knowledge of Seller No. 1 or Seller No. 2, there is not
now nor have there been located at any of the properties of
Company No. 1 or Company No. 2, whether owned or leased asbestos
containing material or equipment containing polychlorinated
biphenyls in violation of any applicable Environmental Law.
44
(vi) Company No. 1 and/or Company No. 2 currently holds, and at all
times has held, all required federal, state, and local permits,
licenses, certificates and approvals necessary to Company No. 1's
Business No. 1 or Company No. 2's Business No. 2 ("Environmental
Permits"). Neither Company No. 1 nor Company No. 2 have been
notified by any relevant Governmental Authority that any
Environmental Permit will be modified, suspended, canceled or
revoked, or cannot be renewed in the ordinary course of business,
which modification, suspense, cancellation, revocation or
non-renewal could affect in any material way the manner in which
Company No. 1 operates Company No. 1's Business No. 1 or the
manner in which Company No. 2 operates Company No. 2's Business
No. 2.
4.17 Insurance. Company No. 1 or Company No. 2 maintain policies of fire,
---------
extended coverage, liability and other forms of insurance covering
Business No. 1 and/or Business No. 2, as applicable, properties and
assets in amounts and against such losses and risks as are generally
maintained for comparable businesses and properties, and valid policies
for such insurance will be outstanding and duly in force through and on
the Closing Date. Attached hereto as Disclosure Schedule 4.17 is a
complete list of all insurance policies owned by Company No. 1 or
Company No. 2, indicating risks insured against, carrier, policy
number, amount of coverage, premiums and expiration dates.
4.18 Books and Records. The books of account of Company No. 1 and Company
-------------------
No. 2 substantially reflect all of their respective known material
items of income and expense and all their respective known material
assets, liabilities and accruals. The respective corporate minute books
of Company No. 1 or Company No. 2 are substantially complete as to the
records of substantially all substantial proceedings of incorporators,
shareholders and directors, and there are no substantial and material
minutes or records of the proceedings of any of said person not
included therein. The share ledgers and share certificate books contain
a complete and accurate record of all issuances and transfers of shares
in Company No. 1 and Company No. 2.
4.19 Certain Interests. Except as set forth in Disclosure Schedule 4.19,
------------------
Seller No. 1 and Seller No. 2 do not, directly or indirectly, own any
interest in any corporation, firm or enterprise engaged in a business
competitive with Company No. 1 or Company No. 2, except (i) Company No.
1 Shares or Company No. 2 Shares, or (ii) any passive investment by
Seller No. 1 or Seller No. 2 in the stock of any publicly held
corporation which is not in excess of five percent of the issued and
outstanding capital stock of such corporations.
45
4.20 Officers and Directors; Certain Payments. Disclosure Schedule 4.20 is
-----------------------------------------
a true and complete list showing (a) the names of all officers and
directors of Company No. 1 and Company No. 2 and the directorships and
officerships in Company No. 1 and Company No. 2 held by each; (b) the
names and address of each financial institution in which Company No. 1
or Company No. 2 has an account, safe deposit box or investment
account, the names of all persons authorized to draw thereon or to have
access thereto, and the nature of such authorization; and (c) the names
of all persons holding tax or other powers of attorney from Company No.
1 or Company No. 2 and a summary statement of the terms thereof.
4.21 Commissions or Brokers Fees. Neither Company No. 1 nor Company No. 2
-----------------------------
nor Seller No. 1 nor Seller No. 2 has incurred any liability to any
person for financial advice, finder's fees or brokerage commission with
respect to the transactions contemplated by this Agreement, which
liability may be asserted against Company Xx. 0, Xxxxxxx Xx. 0,
Xxxxxxxxx or any affiliate of Purchaser.
4.22 Assets Necessary to the Business. Company No. 1 and/or Company No. 2
----------------------------------
own, lease, license, or have the right to use all assets and properties
(tangible and intangible) necessary to carry on Business No. 1 and
Business No. 2, as applicable, and operations as presently conducted.
Such assets and properties are all of the assets and properties
necessary to carry on the Business Xx. 0 xx Xxxxxxx Xx. 0 xxx xxx
Xxxxxxxx Xx. 0 of Company No. 2, as applicable, as presently conducted
and, except as set forth in Disclosure Schedule 4.22, neither Seller
No. 1 nor Seller No. 2 (other than through their ownership of stock in
Company No. 1 or Company No. 2, as applicable) nor any member of their
respective families owns or leases or has any interest in any assets or
properties presently being used to carry on the Business No. 1 of
Company No. 1 or the Business No. 2 of Company No. 2.
4.23 Absence of Certain Business Practices. Neither Company No. 1 nor
-----------------------------------------
Company No. 2, nor any officer, employee or agent of Company No. 1 nor
Company No. 2 , nor any other Person acting on its or their behalf,
has, directly or indirectly, within the past five years given or agreed
to give any gift, bribe, rebate or kickback or otherwise provide any
similar benefit to any customer, supplier, governmental employee or any
other Person who is or may be in a position to help or hinder Company
No. 1 or Business No. 1 or Company No. 2 or Business No. 2 (or assist
Company No. 1 or Company No. 2 in connection with any actual or
proposed transaction relating to Business No. 1 or Business No. 2, as
applicable, or any other business previously operated by Company No. 1
or Company No. 2) (i) which might have subjected Company No. 1 or
Company No. 2 to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) which if not given in the
past, might have had a material effect on Company No. 1 or Company No.
46
2 or their respective assets, (iii) which if not continued in the
future, might have a material effect on Company No. 1 or Company No. 2
or its respective assets or subject Company No. 1 or Company No. 2 to
suit or penalty in any private or governmental litigation or
proceeding, (iv) for any of the purposes described in Section 162(c) of
the Code or (v) for the purpose of establishing or maintaining any
concealed fund or concealed bank account.
4.24 Transactions with Affiliates. Except as disclosed on Disclosure
------------------------------
Schedule 4.24, there is no lease, sublease, contract, agreement or
other arrangement of any kind whatsoever entered into by Company No. 1
or Company No. 2 with Seller No. 1 or Seller No. 2, or with any
Affiliate of Seller No. 1 or Seller No. 2, except such of the foregoing
which may be terminated at Closing by Purchaser without further
liability. Prior to Closing, all indebtedness owed by Seller No. 1 or
Seller No. 2 to Company No. 1 or Company No. 2 shall be repaid.
4.25 Territorial Restrictions. Except as described in Disclosure Schedule
-------------------------
4.25, neither Company No. 1 nor Company No. 2 is restricted by any
written agreement or understanding with any other Person (excluding
Applicable Laws of Governmental Authorities) from carrying on Business
No. 1 or Business No. 2 anywhere in the world. Neither Purchaser nor
any of its affiliates will, as a result of its acquisition of Company
No. 1 Shares or of Company No. 2 Shares, become restricted in carrying
on Business No. 1 or Business No. 2 anywhere in the world as a result
of any Contract or other agreement to which Company No. 1 or Company
No. 2 is a party or by which it is bound.
4.26 Customers. Disclosure Schedule 4.26 includes a correct list of the
---------
twenty-five (25) largest customers for Company No. 1 and Company No. 2
each, for each of the past two (2) fiscal years and the amount of
business done by Company No. 1 and Company No. 2 with each such
customer for each year. Neither Seller No. 1 nor Seller No. 2 have any
knowledge or information, and are aware of any facts indicating that
any of the customers will or intend to (a) cease doing business with
Company No. 1 or Company No. 2; (b) materially alter the amount of
business they are presently doing with Company No. 1 or Company No. 2;
or (c) not do business with Company No. 1 or Company No. 2 after the
Closing Date.
4.27 Suppliers. Disclosure Schedule 4.27 sets forth the names of and
---------
description of contractual arrangements (whether or not binding or in
writing) with the fifteen (15) largest suppliers of Company No. 1 and
Company No. 2 each and any sole suppliers of significant goods or
services (other than electricity, gas, telephone or water) to Company
No. 1 or Company No. 2 with respect to which practical alternative
sources of supply are not readily available on comparable terms and
47
conditions. Neither Seller No. 1 nor Seller No. 2 have any knowledge or
information, or are aware of any facts indicating that any of the
suppliers of Company No. 1 or of Company No. 2 will or intend to (a)
cease doing business with Company No. 1 or Company No. 2; (b)
materially alter the amount of business they are presently doing with
Company No. 1 or Company No. 2; or (c) not do business with Company No.
1 or Company No. 2 after the Closing Date.
4.28 Product Liability. Except as set forth in Disclosure Schedule 4.28
------------------
and for warranties under Applicable Law,
(a) there are no warranties, express or implied, written or oral,
with respect to the products of Business No. 1 or Business No. 2;
(b) to Seller No. 1's knowledge or Seller No. 2's knowledge, there
are no pending or threatened claims with respect to any warranty;
and
(c) Neither Company Xx. 0 xxx Xxxxxx Xx. 0 xxx Xxxxxx Xx. 0 nor
Company No. 2 have, or will not have, any liability in excess of
any amount reserved for or reflected on Closing Balance Sheet No.
1 or the Closing Balance Sheet No. 2, after the Closing, with
respect to any such warranty, whether known or unknown, absolute,
accrued, contingent, or otherwise and whether due or to become
due.
4.29 Disclosure. No representation or warranty made by Seller No. 1 or
----------
Seller No. 2 in this Agreement and no exhibit, certificate or documents
furnished or to be furnished by Seller No. 1 or Seller No. 2 pursuant
hereto contains or will contain any known untrue statement of a
material fact or omits or will omit any known material fact necessary
in order to make the statements contained therein not misleading.
Seller No. 1 and/or Seller No. 2 have no knowledge of any factors
materially affecting the future prospects of Company No. 1's Business
No. 1 or Company No. 2's Business No. 2 which have not been disclosed
in this Agreement and the Disclosure Schedule.
4.30 Miscellaneous. Any disclosure that is made by Seller No. 1 or Seller
-------------
No. 2 in the Disclosure Schedule under the terms of this Agreement that
are designated as pertaining to a particular Section of the Disclosure
Schedule shall constitute a disclosure for any other Section of the
Disclosure Schedule to the extent applicable.
48
ARTICLE V
5. Representations of Purchaser. Purchaser represents, warrants and
------------------------------
covenants to Seller No. 1 as to Company No. 1, and to Seller No. 1 and
Seller No. 2 as to Company No. 2, that the following statements are
true as of the date hereof.
5.01 Organization. Purchaser is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware
and has all the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now
being conducted.
5.02 Authority. This Agreement is a valid and binding obligation of
---------
Purchaser, enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally, or by the availability of equitable
remedies or the application of general equitable principles. Except as
set forth in Disclosure Schedule 5.02, neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will:
(i) violate, or conflict with, or require any Consent under, or
result in a breach of any provisions of, or constitute a default
(or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation
of any Lien upon any of the properties or assets of Purchaser
under any of the terms, conditions or provisions of the Articles
of Incorporation or Bylaws of Purchaser or of any note, bond,
mortgage, indenture, deed of trust, license, agreement or other
instrument or obligation to which Purchaser is a party, or by
which Purchaser or any of its properties or assets may be bound
or affected, or
(ii) violate any order, writ, injunction or decree applicable to
Purchaser or any of its properties or assets or, to the knowledge
of Purchaser, violate any statute, rule or regulation applicable
to Purchaser or any of its properties or assets; or
(iii) constitute a default or event that, with notice or lapse of
time, or both, would be a default, breach, or violation of any
lease, license, promissory note, conditional sales contract,
commitment, indenture, mortgage, deed of trust or other
agreement, instrument or arrangement to which Purchaser is a
party or by which it is bound; or
(iv) constitute an event that would permit any party to terminate any
agreement or to accelerate the maturity of any indebtedness or
other obligation of Purchaser.
49
(v) no Consent by, notice to or registration with any Governmental
Authority is required on the part of Purchaser prior or
subsequent to the Closing Date in connection with the execution,
delivery and performance by Purchaser of this Agreement or the
consummation of any of the transactions contemplated hereby.
5.03 Commissions or Brokers' Fees. Purchaser has not incurred any liability
----------------------------
to any person for financial advice, finder's fees or brokerage
commission with respect to the transactions contemplated by this
Agreement, which liability may be asserted against Seller No. 1 or
Seller No. 2, Company No. 1 or Company No.2.
ARTICLE VI
6.01 Release by Seller No. 1 and Seller No. 2. Seller No. 1 and Seller No.
-----------------------------------------
2, as of the Closing Date, shall release and discharge Company No. 1
and Company No. 2 from all actions, claims or demands of every kind and
nature which Seller No. 1 or Seller No. 2 have or may have against
Company No. 1 and/or Company No. 2 whether based upon contract or
otherwise, arising before the execution of this Agreement. Nothing
contained herein shall constitute a release of any rights of Seller No.
1 or Seller No. 2 arising under this Agreement, of any claims under any
Employee Benefit Plans currently maintained by Company No. 1 or Company
No. 2, or with respect to anything which may occur after the Closing
Date.
ARTICLE VII
7.01 Covenants Not to Compete. As inducement for and in consideration of
---------------------------
Purchaser entering into this Agreement, Seller No. 1 and Seller No. 2
shall each enter into a non-competition agreement. Such non-competition
agreements are set forth in Exhibits G and G-1 attached hereto and made
a part hereof.
ARTICLE VIII
8.01 Employment Agreement. Upon the Closing Date, Purchaser shall enter
---------------------
into an Employment Agreement with X. Xxxxxxx, and an Employment
Agreement with X. Xxxxx. Copies of said Employment Agreements are
attached hereto and made a part hereof as Exhibit H and H-1.
50
8.02 Termination of Employment Agreements. Upon the Closing Date, Company
--------------------------------------
No. 2 shall terminate any current employment arrangement with X. Xxxxx
and its current employment arrangement with X. Xxxxxxx including, but
not limited to, its obligations to pay him a percentage of the profits
of Company No. 2 pursuant to corporate action taken on the 5th day of
January, 1998. Upon the Closing Date, Company No. 1 shall terminate any
current employment arrangement, if any, it may have with X. Xxxxxxx.
ARTICLE IX
9.01 Amendment to Lease Agreement. At Closing, Company No. 1 and Company
-------------------------------
No. 2 will enter into an amendment to its current Lease with Valentz
Properties, LLC, for the real estate located at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx. Such amendment shall contain a provision which
will enable Company No. 1 and Company No. 2 to cancel the current Lease
upon six (6) months' prior written notice to Valentz Properties, LLC,
at any time commencing after January 1, 2001. In the event Company No.
1 and Company No. 2 exercise their right to terminate said Lease,
Company No. 1 and Company No. 2 shall have the right to vacate the
Leased Premises prior to the expiration of such six month period, as
long as Company No. 1 and Company No. 2 continue to make all rental
payments required under said Lease, as amended, during such six month
period, as due. A copy of such Amendment to Lease is attached hereto as
Exhibit I.
ARTICLE X
10.1 Covenants of Seller No. 1 and Seller No. 2.
--------------------------------------------------
10.01.1 Further Actions.
----------------
Seller No. 1 and Seller No. 2 will, as promptly as practicable, file or
supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by them
or Company No. 1 or Company No. 2 pursuant to Applicable Law in
connection with this Agreement, the Other Sellers Documents and the
consummation of the other transactions contemplated hereby.
10.01.2 Further Assurances. Following the Closing, Seller No. 1 and Seller
-------------------
No. 2 shall, and shall cause each of their Affiliates and Company No. 1
and Company No. 2 to, as applicable, from time to time, execute and
deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or
otherwise reasonably requested by Purchaser, to confirm and assure the
rights and obligations provided for in this Agreement and in the Other
Sellers Documents and render effective the consummation of the
transactions contemplated thereby. Without limiting the generality of
51
the foregoing, the parties specifically contemplate closing the
transactions contemplated herein prior to the time that full compliance
by Seller No. 1 and Seller No. 2 with the conditions precedent set
forth in Section 13.01.2 will be practicable. As a result,
notwithstanding the Closing, this Section 10.01.2 shall require prompt
delivery thereafter by Seller No. 1 and Seller No. 2 of the consents,
instruments and agreements called for herein, including in Section
13.01.2.
10.01.3 Liability for Transfer Taxes. Seller No. 1 and Seller No. 2 shall be
----------------------------
responsible for the timely payment of, and shall indemnify and hold
harmless Purchaser and their Affiliates against, all sales, income,
use, value added, documentary, stamp, and any other taxes and fees
attributable or arising out of the sale of Company No. 1 Shares by
Seller No. 1 and the Company No. 2 Shares by Seller No. 1 and Seller
No. 2 to Purchaser. Seller No. 1 represent to Purchaser that there will
be no tax liability to Company No. 1 arising out of the sale of the
Company No. 1 Shares. Seller No. 1 and Seller No. 2 represent to
Purchaser that there will be no tax liability to Company No. 2 arising
out of the sale of the Company No. 2 Shares.
ARTICLE XI
11.01 Covenants of Purchaser.
------------------------
11.01.1 Further Actions.
----------------
Purchaser will, as promptly as practicable, file or supply, or cause to
be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to applicable law in
connection with this Agreement, the Other Sellers Documents and the
consummation of the other transactions contemplated hereby.
11.01.2 Tax Elections. Purchaser will not file any election under Section
--------------
338 of the Code with respect to this Agreement or the transactions
contemplated herein.
11.01.3 Further Assurances. Following the Closing, Purchaser shall, and
-------------------
shall cause each of its Affiliates and Company to, from time to time,
execute and deliver such additional instruments, documents, conveyances
or assurances and take such other actions as shall be necessary, or
otherwise reasonably requested by Seller No. 1 or Seller No. 2, to
confirm and assure the rights and obligations provided for in this
Agreement and in the Other Sellers Documents and render effective the
consummation of the transactions contemplated thereby. Without limiting
the generality of the foregoing, the parties specifically contemplate
closing the transactions contemplated herein prior to the time that
52
compliance by Purchaser with the conditions precedent set forth in
Section 13.02.8 relating to the releases of either Seller No. 1 and/or
Seller No. 2 of their guaranties of any of the Line of Credit
Indebtedness No. 1 and/or the Line of Credit Indebtedness No. 2 will be
practicable. As a result, notwithstanding the Closing, this Section
11.01.3 shall require prompt delivery thereafter by Purchaser of the
instruments and agreements called for herein, including that contained
in Section 13.02.8.
ARTICLE XII
12.01 Survival of Representations and Warranties. The Parties acknowledge
--------------------------------------------
and agree that all the representations, covenants, warranties and
agreements contained in this Agreement or in any agreement, instrument,
exhibit, certificate, schedule or other document delivered in
connection herewith, shall survive the Closing and shall be binding
upon the party giving such representation, covenant, warranty or
agreement and shall be fully enforceable to the extent provided for in
Sections 12.04 and 12.05 hereof, at law or in equity, for the period
beginning on the date of Closing and ending two (2) years there-after,
except for the representations, warranties and agreements designated
and identified in Section 4.01, 4.02, 4.03, 4.05, 4.08 through 4.08.11,
4.15, 4.16, 5.01 and 5.02, which shall survive the Closing and shall
terminate in accordance with the statutes of limitation governing
written contracts and Exhibits G and G-1, H and H-1 and I, which shall
terminate as provided therein.
12.02 Reliance Upon and Enforcement of Warranties and Agreements of Seller
----------------------------------------------------------------------
No. 1 and Seller No. 2. Seller No. 1 and Seller No. 2 hereby agree
--------------------------
that, notwithstanding any right of Purchaser to fully investigate the
affairs of Company No. 1 and/or Company No. 2, as applicable, and
notwithstanding knowledge of facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation,
Purchaser has the right to rely fully upon the representations,
covenants, warranties and agreements of Seller No. 1 and/or Seller No.
2, as applicable, contained in this Agreement and upon the accuracy of
any document, schedule, certificate or exhibit given or delivered to
Purchaser pursuant to the provisions of this Agreement.
12.03 Reliance Upon and Enforcement of Representations, Warranties and
----------------------------------------------------------------------
Agreements of Purchaser. Purchaser hereby agrees that, notwithstanding
------------------------
any right of Seller No. 1 or Seller No. 2 to fully investigate the
affairs of Purchaser and notwithstanding knowledge of facts determined
or determinable by Seller No. 1 or Seller No. 2 pursuant to such
investigation or right of investigation, Seller No. 1 and Seller No. 2,
as applicable, have the right to rely fully upon the representations,
covenants, warranties and agreements of Purchaser contained in this
Agreement and upon the accuracy of any document, certificate or exhibit
given or delivered to Seller No. 1 and/or Seller No. 2 pursuant to the
provisions of this Agreement.
53
12.04 Indemnification by Seller No. 1 and Seller No. 2.
--------------------------------------------------------
(a) Seller No. 1 shall indemnify Purchaser against and hold it
harmless from any Losses resulting from or arising out of any
inaccuracy in or breach of any representation, warranty, covenant
or obligation made or incurred by Seller No. 1 herein or in any
other agreement, instrument or document delivered by Seller No. 1
pursuant to the terms of this Agreement as pertains to Company
No. 1. Subject to the limitations in Section 12.10 hereof, any
amounts to which Purchaser, its successors or assigns, is
entitled to indemnification pursuant to the provisions of this
Section shall be offset against the amount payable to Seller No.
1 under the Note given to Seller No. 1 for his interest in
Company No. 2 (including proceeding against Seller No. 1 for any
amounts that may have been previously paid to Seller No. 1 under
the Notes). Provided, however, the offset in any one year may not
exceed the aggregate amount of principal and interest due on said
applicable subordinated promissory note for said year and
then against any amounts payable to Seller No. 1 under Section
2.07.
(b) Seller No. 1 and Seller No. 2, jointly and severally, shall
indemnify Purchaser against and hold it harmless from any Losses
resulting from or arising out of any inaccuracy in or breach of
any representation, warranty, covenant or obligation made or
incurred by Seller No. 1 or Seller No. 2 herein or in any other
agreement, instrument or document delivered by Seller No. 1
and/or Seller No. 2 pursuant to the terms of this Agreement as
pertains to Company No. 1 and/or Company No. 2. Subject to the
limitations in Section 12.10 hereof, any amounts to which
Purchaser, its successors or assigns, is entitled to
indemnification pursuant to the provisions of this Section shall
be offset against the amount payable to Seller No. 1 or Seller
No. 2 under the Notes (including proceeding against Seller No. 1
and/or Seller No. 2 for any amounts that may have been previously
paid to Seller No. 1 or Seller No. 2 under the Notes). Provided,
however, the offset in any one year may not exceed the aggregate
amount of principal and interest due on said applicable
subordinated promissory notes for said year and then against any
amounts payable to Seller No. 1 or Seller No. 2 under Section
2.07.
12.05 Indemnification by Purchaser. Purchaser agrees to defend, indemnify
------------------------------
and hold harmless Seller No. 1 and Seller No. 2 from, against and in
respect of any and all Losses resulting from or arising out of an
inaccuracy in or other breach of any representation, warranty,
covenant, or obligation made or incurred by Purchaser herein or in any
other agreement, instrument or document delivered by Purchaser pursuant
to the terms of this Agreement.
54
12.06 Notification of and Participation in Claims.
------------------------------------------------
(a) No claim for indemnification shall arise until notice thereof is
given to the party from whom indemnity is sought (the
"Indemnifying Party"). Such notice shall be sent to the
Indemnifying Party within ten (10) days after the party asserting
such right to indemnity (the "Party to be Indemnified") has
received notification of such claim, but failure to notify the
Indemnifying Party shall in no event prejudice the rights of the
Party to be Indemnified under this Agreement, unless the
Indemnifying Party shall be prejudiced by such failure and then
only to the extent of such prejudice. In the event that any legal
proceeding shall be instituted or any claim or demand is asserted
by any third party in respect of which Seller No. 1 and/or Seller
No. 2 on the one hand, or Purchaser on the other hand, may have
an obligation to indemnify the other, the Party to be Indemnified
shall give or cause to be given to the Indemnifying Party written
notice thereof and the Indemnifying Party shall have the right,
at its option and expense, to participate in the defense of such
proceeding, claim or demand, but not to control the defense,
negotiation or settlement thereof, which control shall at all
times rest with the Party to be Indemnified, unless the
Indemnifying Party irrevocably acknowledges in writing full and
complete responsibility for and agrees to provide indemnification
of the Party to be Indemnified, in which case such Indemnifying
Party may assume such control through counsel of its choice and
at its expense. In the event the Indemnifying Party assumes
control of the defense, the Indemnifying Party shall not be
responsible for the legal costs and expenses of the Party to be
Indemnified in the event the Party to be Indemnified decides to
join in such defense. The Parties agree to cooperate fully with
each other in connection with the mitigation, defense,
negotiation or settlement of any such third party legal
proceeding, claim or demand.
(b) If the Party to be Indemnified is also the party controlling the
defense, negotiation or settlement of any matter, and if the
Party to be Indemnified determines to compromise the matter, the
Party to be Indemnified shall immediately advise the Indemnifying
Party of the terms and conditions of the proposed settlement. If
the Indemnifying Party agrees to accept such proposal, the Party
to be Indemnified shall proceed to conclude the settlement of the
matter, and the Indemnifying Party shall immediately indemnify
the Party to be Indemnified pursuant to the terms of Sections
12.04 and 12.05 hereunder, subject to the limitations set forth
elsewhere in this Section 12. If the Indemnifying Party does not
agree within fourteen (14) days to accept the settlement (said
55
14-day period to begin on the first business day following the
date such party receives a complete copy of the settlement
proposal), the Indemnifying Party shall immediately assume
control of the defense, negotia-tion or settlement thereof, at
that Indemnifying Party's expense. Thereafter, the Party to be
Indemnified shall be indemnified in the entirety for any
liability arising out of the ultimate defenses, negotiation or
settlement of such matter.
(c) If the Indemnifying Party is the party controlling the defense,
negotiation or settlement of any matter, and the Indemnifying
Party determines to compromise the matter, the Indemnifying Party
shall immediately advise the Party to be Indemnified of the terms
and conditions of the proposed settlement and irrevocably
acknowledge in writing full and complete responsi-bility for, and
agree to provide, indemnification of the Party to be Indemnified.
If the Party to be Indemnified agrees to accept such proposal,
the Indemnifying Party shall proceed to conclude the settlement
of the matter and immediately indemnify the Party to be
Indemnified pursuant to the terms of Sections 12.04 or 12.05
hereunder. If the Party to be Indemnified does not agree within
fourteen (14) days to accept the settlement (said 14-day period
to begin on the first business day following the date such Party
receives a complete copy of the settlement proposal), the Party
to be Indemnified shall immediately assume control of the
defense, negotiation or settlement thereof, at the Party to be
Indemnified's expense. If the final amount paid to resolve the
claim is less than the amount of the original proposed settlement
made by the Indemnifying Party, then the Party to be Indemnified
shall receive such indemnification pursuant to Sections 12.04 or
12.05 hereof, including any and all expenses incurred by the
Party to be Indemnified incurred in connection with the defense,
negotiation or settlement of such matter. If the amount finally
paid to resolve the claim is equal to or greater than the amount
of the original proposed settlement proposed by the Indemnifying
Party, then the Indemnifying Party shall provide indemnification
pursuant to Sections 12.04 and 12.05 for the amount of the
original settlement proposal submitted by the Indemnifying Party,
and the Party to be Indemnified shall be responsible for all
amounts in excess of the original settlement proposal submitted
by the Indemnifying Party and all costs and expenses incurred by
the Party to be Indemnified in connection with such defense,
negotiation or settlement.
12.07 Provisions of General Application. With respect to any right of
------------------------------------
indemnification arising under this Agreement, the following provisions
shall apply:
56
(a) Procedures. The Party to be Indemnified and the Indemnifying
----------
Party agree to cooperate in the defense of any third party claim
or action subject to this Section 12, to permit the cooperation
and participation of the other parties in any such claim or
action, and to promptly notify the other parties of the
occurrence of any indemnified event or any material developments
or amounts due respecting any indemnification event.
(b) No Implications. Neither the rights of any Party to
----------------
indemnification from another Party nor the obligations of any
Party to indemnify another Party, under this Agreement, shall in
any way imply or create, and each Party specifically disclaims,
any responsibility whatsoever by such Party for any other Party's
liabilities to any other person or entity or Governmental
Authority.
(c) Insurance. Prior to enforcing any claim for indemnification
---------
against the Indemnifying Party under this Agreement, the Party to
be Indemnified shall administratively file in good faith with any
insurers all forms and submissions required by applicable
policies for the proceeds or other benefits of insurance
coverage, if any, applicable to the claim or event from which
such indemnification right arose. In the event that insurance
proceeds are paid to the Party to be Indemnified respecting an
event to which an indemnification right applies hereunder, such
indemnification right shall apply only to the extent that the
amount of damages indemnified against exceeds such insurance
proceeds actually paid to the Party to be Indemnified; provided
however, that collection by judicial or legal process of such
insurance proceeds shall not be a condition precedent to
asserting or collecting such indemnification claims under this
Agreement. If the Indemnifying Party incurs indemnity costs or
pays indemnity damages under this Agreement, and the Party to be
Indemnified subsequently receives insurance proceeds for the same
claim or event, then the Party to be Indemnified shall refund
such indemnity costs or damage payments to the Indemnifying Party
from such insurance proceeds to the extent that the Party to be
Indemnified has received benefits from both sources (i.e.,
payments of indemnity damages from the Indemnifying Party and
such insurance proceeds) in excess of the amount of indemnifiable
damages incurred by or asserted against the Party to be
Indemnified.
(d) Mitigation. The Party to be Indemnified shall use its good faith
----------
efforts to mitigate any claim or loss by any third party
hereunder and the Indemnifying Party shall be entitled to
participate in and coordinate such mitigation with the Party to
be Indemnified.
57
12.08 Assignment and Accounting for Benefits. To the extent that the
------------------------------------------
Indemnifying Party shall have actually paid indemnity damages to or on
behalf of the Party to be Indemnified, the Party to be Indemnified
shall make a non-exclusive assignment (to the extent permitted under
applicable law) to the Indemnifying Party (as their interest may
appear) of the remedies, rights and claims, if any, of the Party to be
Indemnified against any and all third parties for the same liability,
including, but not limited to, remedies, rights and claims against (i)
liability insurers and other insurance companies, and (ii) any other
person which has indemnified the Party to be Indemnified for such
liability. The parties shall cooperate reasonably in the pursuit of any
such remedies, rights and claims.
12.09 Exclusive Remedy. Anything contained in this Agreement or the Other
-----------------
Seller Documents to the contrary notwithstanding, the indemnification
rights set forth in this Section 12, all of which are subject to the
terms, limitations, and restrictions of this Section 12, shall be the
exclusive remedy after Closing against Seller No. 1 and/or Seller No. 2
and/or Purchaser for monetary damages sustained as a result of a breach
of a representation, warranty, covenant, or agreement under this
Agreement. Such limitations set forth in this Section 12 shall not
impair the rights of any of the parties: (a) to seek non-monetary
equitable relief, including (without limitation) specific performance
or injunctive relief to redress any default or breach of this
Agreement; or (b) to seek enforcement, collection, damages, or such
non-monetary equitable relief to redress any subsequent default or
breach of any employment agreement, non-competition agreement, lease
agreement, transfer document, assumption, consent, or agreement to be
delivered at Closing hereunder. In connection with the seeking of any
non-monetary equitable relief, each of the Parties acknowledges and
agrees that the other Parties hereto would be damaged irreparably in
the event that any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the Parties hereto agrees that the other
Party hereto shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
competent court having jurisdiction over the Parties.
58
12.10 Limitation on Liability.
-------------------------
(a) Notwithstanding anything contained herein to the contrary, no
claims for indemnification shall be made by Purchaser against
Seller No. 1 relating to Company No. 1 until such time as all
claims hereunder exceed Ten Thousand Dollars ($10,000.00) and
then indemnification shall be made only to the extent such claim
or claims exceed Ten Thousand Dollars ($10,000.00) in the
aggregate. Notwithstanding anything contained herein to the
contrary, no claims for indemnification shall be made by
Purchaser against Seller No. 1 or Seller No. 2 relating to
Company No. 2 until such time as all claims hereunder exceed
Forty Thousand Dollars ($40,000.00), and then indemnification
shall be made only to the extent such claim or claims exceed
Forty Thousand Dollars ($40,000.00) in the aggregate.
Notwithstanding anything contained herein to the contrary, in the
event that the basket amount relating to Company No. 1 or Company
No. 2 is not utilized, any unused amount can be allocated to the
other entity, it being the intent of the Parties to provide a
total aggregate basket amount hereunder of Fifty Thousand Dollars
($50,000.00).
(b) In addition, notwithstanding anything contained herein to the
contrary, the maximum aggregate liability that Seller No. 1 and
Seller No. 2 may be collectively required to pay Purchaser under
this Section 12 shall be limited to an amount equal to the total
consideration paid hereunder by Purchaser to Seller No. 1 for the
Company No. 1 Shares, to Seller No. 1 for the Company No. 2
Shares (including any amounts that may be paid under Section
2.05) and to Seller No. 2 for the Company No. 2 Non-Voting Shares
(including any amounts that may be paid under Section 2.05).
(c) Notwithstanding anything contained in this Agreement to the
contrary, the maximum amount that Purchaser may be collectively
required to pay to Seller No. 1 and/or Seller No. 2 under this
Section 12 as a result of any and all breaches shall be limited
to the total consideration that may be paid under Sections 2.02,
2.03, 2.04 and 2.05 of this Agreement by Purchaser to Seller No.
1 and Seller No. 2.
ARTICLE XIII
13. Conditions Precedent to the Obligations of Each Party. The
------------------------------------------------------------
obligations of the Parties to consummate the transactions contemplated
hereby shall be subject to the fulfillment, on or prior to the Closing
Date, of the following conditions:
59
1. No Injunction, Etc. The consummation of the transaction
---------------------
contemplated hereby shall not have been restrained, enjoined or
otherwise prohibited by any Applicable Law, including any order,
injunction, decree or judgment of any Court or other Governmental
Authority. No Court or other Governmental Authority shall have
determined any Applicable Law to make illegal the consummation of
the transactions contemplated hereby or by the other Sellers
Documents, and no proceeding with respect to the application of
any such Applicable Law to such effect shall be pending.
13.01 Conditions Precedent to Purchaser's Obligations. The obligations of
-------------------------------------------------
Purchaser to consummate the transactions contemplated hereby shall be
subject to the fulfillment (or waiver by Purchaser, in its sole
discretion) on or prior to the Closing Date of the following additional
conditions, which Seller No. 1 and Seller No. 2, as applicable, agree
to use reasonable good faith efforts to cause to be fulfilled:
1. Consents. Seller No. 1 and Seller No. 2, as applicable, shall
--------
have obtained all Consents necessary to consummate the
transactions contemplated hereby, unless the failure to obtain
any such Consent would not materially adversely affect Company
No. 1 or Company No. 2 or its respective assets.
2. Transfer Documents and Other Miscellaneous Matters Regarding
-----------------------------------------------------------------
Company No. 1. Seller No. 1 shall have delivered to Purchaser, at
-------------
or before the Closing, the following documents, all of which
shall be in form and substance reasonably acceptable to Purchaser
and its counsel:
(i) A certificate or certificates for all of Company No. 1
Shares. Such certificate(s) shall be in form for transfer,
duly endorsed in blank by Seller No. 1, or with appropriate
duly executed stock transfer powers attached;
(ii) Opinion letter of Sirote & Permutt, P.C., counsel for Seller
No. 1, in respect of Company No. 1, addressed to Purchaser
and dated the Closing Date;
iii) All minute books, stock certificates and transfer books,
contracts, policies of insurance, tax returns, records of
every kind and nature and all other documents and writings
belonging or relating to Company No. 1 and its corporate
organization, business and assets;
60
(iv) Certificates, dated as of the most recent practicable date,
of the Secretary of State of Alabama as to the good standing
of Company No. 1;
(v) The Disclosure Schedule;
(vi) Copies of the Certificate of Incorporation and By-Laws of
Company No. 1, certified as true and correct by an officer
of Company No. 1;
(vii)Such resignations of officers and directors of Company No.
1 as Purchaser may request;
(viii)Such documentation of Company No. 1 and Company No. 2 as
may be required to transfer to X. Xxxxxxx the assets set
forth in Exhibit E, and the payment of all consideration and
the assumption of any liabilities set forth in Exhibit E by
X. Xxxxxxx pursuant to documentation that is mutually
acceptable to counsel for such parties;
(ix) The ByLaws of Company No. 2 shall be amended to delete the
restrictions on transfers of shares contained in Article 11
of the ByLaws of Company No. 2; and
(x) Such other documents which Purchaser reasonably deems
necessary to effectuate this Agreement.
3. Transfer Documents and Other Miscellaneous Matters Regarding
-----------------------------------------------------------------
Company No. 2. Seller No. 1 and Seller No. 2 shall have delivered
-------------
to Purchaser, at or before the Closing, the following documents,
all of which shall be in form and substance reasonably acceptable
to Purchaser and its counsel:
(i) A certificate or certificates for all of Company No. 2
Voting Shares and all of Company No. 2 Non-Voting Shares.
Such certificate(s) shall be in form for transfer, duly
endorsed in blank by Seller No. 1 and Seller No. 2, or with
appropriate duly executed stock transfer powers attached;
(ii) Opinion letter of Sirote & Permutt, P.C., counsel for Seller
No. 1 and Seller No. 2, as respects Company No. 2, addressed
to Purchaser and dated the Closing Date;
iii) All minute books, stock certificates and transfer books,
contracts, policies of insurance, tax returns, records of
every kind and nature and all other documents and writings
belonging or relating to Company No. 2 and its corporate
organization, business and assets;
61
(iv) Certificates, dated as of the most recent practicable date,
of the Secretary of State of Nevada as to the good standing
of Company No. 2;
(v) The Disclosure Schedule;
(vi) Copies of the Certificate of Incorporation and By-Laws of
Company No. 2, certified as true and correct by an officer
of Company No. 2;
(vii)Such resignations of officers and directors of Company No.
2 as Purchaser may request; and
(viii)Such other documents which Purchaser reasonably deems
necessary to effectuate this Agreement.
4. Certain Employment Agreements. X. Xxxxxxx and X. Xxxxx shall have
-------------------------------
entered into the Employment Agreements described in Section 8.01.
5. Covenant Not to Compete Agreements. X. Xxxxxxx and X. Xxxxx shall
----------------------------------
have entered into the Covenant Not to Compete Agreements in the
form set forth in Exhibits G and G-1.
6. Subordination Agreement. Seller No. 1 and Seller No. 2 shall have
----------------------
entered into the Subordination Agreements set forth in Exhibits D
and D-1.
7. Cancellation and Termination of Employment Agreements. Company
--------------------------------------------------------
No. 1 and Company No. 2 and X. Xxxxxxx and X. Xxxxx shall enter
into respective agreements in form and content satisfactory to
Purchaser's counsel canceling and terminating certain Employment
Agreements between such individuals and Company No. 1 and/or
Company No. 2.
8. Amendment to Lease. The current Lease between Company No. 1 and
--------------------
Company No. 2 and Valentz Properties, LLC shall be amended to
implement the provisions contained in Article IX of this
Agreement.
9. Seller No. 1 and Seller No. 2 shall have executed any and all
documentation necessary to cancel any existing buy-sell
agreements between the shareholders.
62
13.02 Conditions and Obligations of Seller No. 1 and Seller No. 2. The
----------------------------------------------------------------
obligation of Seller No. 1 and Seller No. 2 to consummate the
transactions contemplated hereby shall be subject to the fulfillment
(or waiver by Seller No. 1 or Seller No. 2 in their sole discretion),
on or prior to the Closing Date, of the following additional
conditions, which Purchaser agrees to use reasonable good faith efforts
to cause to be fulfilled:
1. Consents and Approvals. Purchaser have obtained all Consents
------------------------
necessary to consummate the transactions contemplated hereby.
2. Consideration and Other Miscellaneous Deliveries - Company No. 1.
-----------------------------------------------------------------
Purchaser shall have delivered to Seller No. 1 at or before the
Closing, as regards Company No. 1, the following documents, all
of which shall be in form and substance acceptable to Seller No.
1 and his counsel:
(i) A certified or cashiers checks or wire transfer for the
aggregate amount to be paid to Seller No. 1 at the Closing
pursuant to Section 2.04(a) hereof;
(ii) Certified copies of the corporation actions taken by
Purchaser authorizing the execution, delivery and
performance of this Agreement;
(iii)A Certificate of Good Standing for Purchaser from the
Secretary of State of Delaware dated no earlier than
forty-five (45) days prior to the Closing Date; and
(iv) Opinion letter of Xxxxxxxxx & Dreidame Co., L.P.A., counsel
for Purchaser, addressed to Seller No. 1 and dated the
Closing Date.
3. Consideration and Other Miscellaneous Deliveries - Company No. 2.
-----------------------------------------------------------------
Purchaser shall have delivered to Seller No. 1 and Seller No. 2
at or before the Closing, as regards Company No. 2, the following
documents, all of which shall be in form and substance acceptable
to Seller No. 1 and Seller No. 2 and their respective counsel:
(i) A certified or cashiers check or wire transfer for the
aggregate amount to be paid to each Seller at the Closing
pursuant to Section 2.07(a) hereof;
(ii) A certified or cashiers check or wire transfer for the
aggregate amount to be paid to the Escrow Agent pursuant to
Section 2.07(b) hereof;
(iii) The Notes as set forth in Section 2.07(c);
63
(iv) Certified copies of the corporation actions taken by
Purchaser authorizing the execution, delivery and
performance of this Agreement;
(v) A Certificate of Good Standing for Purchaser from the
Secretary of State of Delaware dated no earlier than
forty-five (45) days prior to the Closing Date;
(vi) Opinion letter of Xxxxxxxxx & Dreidame Co., L.P.A., counsel
for Purchaser, addressed to Seller No. 1 and Seller No. 2
and dated the Closing Date.
4. Certain Employment Agreements. X. Xxxxxxx and X. Xxxxx shall have
-----------------------------
entered into the employment agreement described in Section 8.01.
5. Covenant Not to Compete Agreements. Seller No. 1 and Seller No. 2
-----------------------------------
have entered into the Covenant Not to Compete Agreements set
forth in Exhibits G and G-1.
6. Subordination Agreement. Seller No. 1 and Seller No. 2 shall have
-----------------------
entered into the Subordination Agreement set forth in Exhibit D
and D-1.
7. Line of Credit Indebtedness. Simultaneous with the closing, or as
---------------------------
soon thereafter as reasonably possible, Purchaser shall take all
necessary steps to procure the releases of Seller No. 1 or Seller
No. 2 of any of their guarantees of any of the Line of Credit
Indebtedness No. 1 or Line of Credit Indebtedness No. 2.
8. Other Seller Documents. Purchaser shall have entered into each of
----------------------
the Other Seller Documents to which it is a party.
ARTICLE XIV
14.01 Closing. The Closing of the sale and purchase of Company No. 1 Shares
-------
and Company No. 2 Voting Shares and the Company No. 2 Non-Voting Shares
(the "Closing") shall take place on November 7, 2000 at the offices of
Xxxxxxxxx & Dreidame, Cincinnati, Ohio, or at such other time and/or
place as the parties may mutually agree upon. The Closing shall be
deemed effective as of the day of Closing. The day on which the Closing
actually occurs is herein sometimes referred to as the Closing Date.
64
ARTICLE XV
15. General Provisions.
-------------------
15.01 Further Documents. The Parties will, upon request at any time before
------------------
or after Closing, execute, deliver and/or furnish all such documents
and instruments, and do or cause to be done all such acts and things,
as may be reasonably necessary to carry out the purpose and intent of
this Agreement.
15.02 Publicity. Neither Seller No. 1, nor Seller No. 2, nor Company No. 1,
---------
nor Company No. 2, nor Purchaser shall make any public announcements
concerning this transaction without the prior written consent of the
other Parties hereto. Nothing herein contained shall restrict Company
No. 1 or Company No. 2 or Purchaser from communicating with its
employees concerning this transaction. Each Party shall keep such
communication confidential, and shall use its best efforts to prevent
its respective employees from disseminating such information to the
public. Nothing herein contained shall prohibit any disclosure that is
required by law or a court of competent jurisdiction.
15.03 Expenses. Except to the extent otherwise specifically provided
--------
herein, Purchaser will bear and pay all of its expenses incident to the
transactions contemplated by this Agreement which are incurred by
Purchaser or its representatives and Seller No. 1 and Seller No. 2
shall bear and pay all of the expenses incident to the transactions
contemplated by this Agreement which were incurred by Seller No. 1 or
Seller No. 2 or their representatives.
15.04 Notices. All notices and other communications required by this
-------
Agreement shall be in writing and shall be deemed given if delivered by
hand or mailed by registered mail or certified mail, return receipt
requested, to the appropriate party at the following address (or at
such other address for a party as shall be specified by notice pursuant
hereto):
(a) If to Purchaser, to:
Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxx III, Esq.
Xxxxxxxxx & Dreidame Co., L.P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000-0000
65
(b) If to Seller No. 1, to:
Xxxxxxx Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxxx Xxxx, Esq.
Sirote & Permutt, P.C.
0000 Xxxxxxxx Xxxxxx Xxxxx
P.O. Box 55727
Birmingham, Alabama 35255-5727
(c) If to Seller No. 1 or Seller No. 2, as regards Company No. 2,
to:
Xxxxxxx Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to:
Xxxxxxx Xxxx, Esq.
Sirote & Permutt, P.C.
0000 Xxxxxxxx Xxxxxx Xxxxx
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000-0000
15.05 Binding Effect. Except as may be otherwise provided herein, this
---------------
Agreement and all provisions hereof shall be binding upon and shall
inure to the benefit of the Parties hereto and their respective heirs,
legal representatives, successors and assigns. Except as otherwise
provided in this Agreement, no Party shall assign its rights or
obligations hereunder prior to Closing without the prior written
consent of the other Party.
15.06 Headings. The headings in this Agreement are intended solely for the
--------
convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
15.07 Schedules and Exhibits. Schedules and exhibits referred to in this
------------------------
Agreement constitute and integral part of this Agreement as if fully
rewritten herein. Any disclosure made on any Schedule or Exhibit
delivered pursuant hereto shall be deemed to have been disclosed for
purposes of any other Schedule or Exhibit required hereby.
15.08 Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of
which constitute together one and the same document.
66
15.09 Governing Law. This Agreement shall be construed in accordance with
--------------
and governed by the laws of the State of Alabama.
15.10 Severability. If any provision of this Agreement shall be held
------------
unenforceable, invalid or void to any extent for any reason, such
provision shall remain in force and effect to the maximum extent
allowable, if any, and the enforceability or validity of the remaining
provisions of this Agreement shall not be affected thereby.
15.11 Waivers, Remedies Accumulated. No waiver of any right or option
-------------------------------
hereunder by any Party shall operate as a waiver of any other right or
option, for the same right or option with respect to any subsequent
occasion for its exercise, or of any right to damages. No waiver by any
Party or any breach of this Agreement or of any representation or
warranty contained herein shall be held to constitute a waiver of any
other breach or a continuation of the same breach. All remedies
provided in this Agreement are in addition to all of the remedies
provided by law. No waiver of any of the provisions of this Agreement
shall be valid and enforceable unless such waiver is in writing and
signed by the party granting the same.
67
15.12 Entire Agreement. This Agreement and the agreements, instruments and
-----------------
other documents to be delivered hereunder constitute the entire
understand and agreement concerning the subject matter hereof. All
negotiations between the Parties hereto are merged into this Agreement,
and there are no representations, warranties, covenants, understanding
or agreements, oral or otherwise, in relation thereto between the
Parties other than those incorporated herein and to be delivered
hereunder. Except as otherwise expressed or contemplated by this
Agreement, nothing expressed or implied in this Agreement is intended
or shall be construed so as to grant or refer on any person, firm or
corporation other than the Parties hereto any rights or privileges
hereunder. No supplement, modification or amendment of this Agreement
shall be binding unless executed in writing by the Parties hereto.
15.13 Business Records. Seller No. 1 shall be permitted to retain copies of
----------------
such books and records relating to the business of Company No. 1 as
relates to the accounting and tax matters of the business, and have
access to all original copies of records so delivered to Purchaser at
reasonable times, for any reasonable business purpose, for a period of
six years after the Closing Date. Seller Xx. 0 xxx/xx Xxxxxx Xx. 0
xxxxx xx permitted to retain copies of such books and records relating
to the business of Company No. 2 as relates to the accounting and tax
matters of the business, and have access to all original copies of
records so delivered to Purchaser at reasonable times, for all
reasonable business purpose, for a period of six years after the
Closing Date.
15.14 Construction of Agreement. In the event this Agreement is interpreted
-------------------------
by any court of competent jurisdiction, no Party shall be deemed the
drafter of this Agreement and such court of law shall not construe this
Agreement or any provision thereof against any Party as the drafter
thereof.
15.15 Knowledge. Whenever in this Agreement the terms "knowledge" or "best
---------
knowledge" are used with respect to any Party, it shall mean the actual
knowledge of the Party, or the officers and directors of the Party or
Company No. 1 or Company No. 2, as applicable.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
68
PURCHASER:
XXXXXXX COMPUTER RESOURCES, INC.
By: _______________________________
69
SELLER - COMPANY NO. 1:
___________________________________
XXXXXXX XXXXXXX
SELLERS - COMPANY NO. 2:
___________________________________
XXXXXXX XXXXXXX
___________________________________
XXXXX XXXXX
70
