STOCK PURCHASE AGREEMENT
AMONG
IPS ASSOCIATES, INC. EMPLOYEE STOCK OWNERSHIP PLAN,
RED & BLUE, INC.
AND
EPICEDGE, INC.
JANUARY 1, 2001
TABLE OF CONTENTS
Page
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1. DEFINITIONS.........................................................1
2. PURCHASE AND SALE OF TARGET SHARES..................................5
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION...........6
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET................9
5. PRE-CLOSING COVENANTS..............................................23
6. POST-CLOSING COVENANTS.............................................25
8. CONDITIONS TO OBLIGATION TO CLOSE..................................26
9. REMEDIES FOR BREACHES OF THIS AGREEMENT............................28
10. TAX MATTERS........................................................31
11. ESCROW.............................................................32
12. TERMINATION........................................................32
13. MISCELLANEOUS......................................................33
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STOCK PURCHASE AGREEMENT
Agreement entered into as of January 1, 2001, by and among RED & BLUE,
INC., a Delaware corporation (the "BUYER"), IPS Associates, Inc. Employee Stock
Ownership Plan (the "ESOP") and EPICEDGE, INC., a Texas corporation (the
"SELLER"). The Buyer, the ESOP and the Seller are referred to collectively
herein as the "Parties."
The Seller owns all of the outstanding shares of Class A and Class B
common stock, no par value (the "TARGET SHARES"), of IPS Associates, Inc., a
California corporation (the "TARGET").
This Agreement contemplates two transactions in which (i) the ESOP
will purchase from the Seller, and the Seller will sell to the ESOP, 191,126
Target Shares, in exchange for 607,023 shares of the Seller's common stock (the
"SELLER'S COMMON STOCK"); and (ii) the Buyer will purchase from the Seller, and
the Seller will sell to the Buyer, 2,726,822 Target Shares in exchange for cash
and 143,323 shares of the Seller's Common Stock owned by the Buyer, subject to
certain conditions.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"AFFILIATED GROUP" means any affiliated group within the meaning of
Code Section 1504.
"BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or is reasonably likely to
form the basis for any specified consequence.
"BUYER" has the meaning set forth in the preface above.
"CLOSING" has the meaning set forth in Section 2(c) below.
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"CLOSING DATE" has the meaning set forth in Section 2(c) below.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth in Code
Section 1563.
"COST OF SALES" means the direct costs of rendering services to
clients, excluding labor costs and overhead. The cost of obtaining services from
individual independent contractors, referred to by the parties as "freelancers,"
shall be excluded from the Cost of Sales.
"DISCLOSURE SCHEDULE" has the meaning set forth in Section 4 below.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"ESOP" has the meaning set forth in the preface above.
"FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4(g)
below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"GROSS PROFIT" means the difference between Net Sales and directly
attributable Costs of Sales calculated in accordance with the standard
accounting principles currently employed by the Buyer and exclusive of any sales
or similar taxes.
"INDEMNIFIED PARTY" has the meaning set forth in Section 8(c) below.
"INDEMNIFYING PARTY" has the meaning set forth in Section 8(c) below.
"INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof (including all goodwill
associated therewith), and all applications, registrations and renewals in
connection therewith, (c) all copyrightable works, all copyrights and all
applications, registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), and (g) all other proprietary
rights.
"KNOWLEDGE OF THE SELLER" means the actual knowledge of the Seller
after reasonable investigation.
"LIABILITY" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"LISTED CLIENTS" means the current and prospective clients of the
Target as of the date of this Agreement as listed on Exhibit A.
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"LISTED RECEIVABLES" means the specific accounts receivable of the
Target listed on Exhibit B.
"MATERIAL ADVERSE EFFECT" means any event, condition, development or
occurrence causing, resulting in or having (or with the passage of time likely
to cause, result in or have) a material adverse effect on the financial
condition, business, assets, prospects or results of operations of the Target,
taken as a whole.
"MERGER AGREEMENT" means the Agreement and the Plan of Merger dated as
of June 6, 2000 among Seller, EDG Acquisition Corporation, the Target and
certain stockholders of the Target, as amended on June 30, 2000.
"MOST RECENT BALANCE SHEET" means the balance sheet contained within
the Financial Statements.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Section 3(37).
"NET SALES" shall mean the full amount charged to clients by the
Target for services rendered and products supplied, excluding sales taxes and
after deducting any discounts or credits to which the client is entitled.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice since June 6, 2000, the date the
parties entered into the Merger Agreement (the "MERGER DATE").
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PROFITS AFTER TAX" means net income after all expenses and all taxes.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Section
406 and Code Section 4975.
"PURCHASE PRICE" has the meaning set forth in Section 2(b) below.
"RED & BLUE, INC." has the meaning set forth in the preface above.
"REPORTABLE EVENT" has the meaning set forth in ERISA Section 4043.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"SELLER" has the meaning set forth in the preface above.
"SELLERS' CLOSING COSTS" means the aggregate amount of all
professional fees and out-of-pocket transaction costs incurred by the Seller in
connection with this Agreement on or prior to the Closing Date.
"SELLERS' COMMON STOCK" has the meaning set forth in the preface
above. "TANGIBLE NET WORTH" means the amount by which tangible assets exceed
liabilities. Tangible assets means all assets other than goodwill, intellectual
property rights and other assets which are generally deemed to be intangible
assets under GAAP.
"TARGET" has the meaning set forth in the preface above.
"TARGET SHARES" has the meaning set forth in the preface above.
"TAX" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" has the meaning set forth in Section 8(c) below.
2. PURCHASE AND SALE OF TARGET SHARES.
(a) BASIC TRANSACTION. On the Closing Date and subject to the terms
and conditions of this Agreement, the ESOP and the Buyer agree to purchase from
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the Seller, and the Seller agrees, to sell to the ESOP and the Buyer, all of its
Target Shares for the consideration specified in Section 2(b).
(b) PURCHASE PRICE. The purchase transactions contemplated by this
Agreement will be carried out in two steps. First, the ESOP will purchase from
the Seller, and the Seller will sell to the ESOP, 191,126 Target Shares in
exchange for 607,023 shares of the Seller's Common Stock. Second, the Buyer
will: (i) pay the Seller cash in an amount equal to $6,150,000 (less any amount
owed by Seller to IPS for any inter-company loan or advance, as set forth in
Section 2(b) of the Disclosure Schedule); and (ii) deposit 143,323 shares of the
Seller's Common Stock into an escrow account with Sheppard, Mullin, Xxxxxxx &
Xxxxxxx LLP ("Escrow Account"), as consideration for the Target Shares, and the
Seller will sell 2,726,822 Target Shares to the Buyer for such consideration.
The combined consideration paid by the ESOP and the Buyer pursuant to Section
2(b)(i) and (ii) is hereafter referred to as the "PURCHASE PRICE."
(c) THE CLOSING. The closing of the purchase transactions contemplated
by this Agreement (the "CLOSING") shall take place at the offices of Sheppard,
Mullin, Xxxxxxx & Hampton LLP in San Francisco, California, commencing at 9:00
a.m. following the satisfaction or waiver of all conditions to the obligations
of the Parties to consummate the transactions contemplated hereby (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date or location as the ESOP, Buyer and the Seller
may determine (the "CLOSING DATE").
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the ESOP and the Buyer the various certificates, instruments and
documents referred to in Section 7(a) below, (ii) the Buyer will deliver to the
Seller the various certificates, instruments and documents referred to in
Section 7(b) below, (iii) the Seller will deliver to the ESOP and the Buyer
stock certificates representing all of the Target Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (iv) the ESOP and the
Buyer will deliver to the Seller (or deposit in to the Escrow Account as
appropriate) the consideration required by Section 2(b) above to be paid at the
Closing.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller,
represents and warrants to the ESOP and the Buyer that the statements contained
in this Section 3(a) are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a) with respect to Target, except as set forth in
Annex A attached hereto.
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(i) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions. The
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any shareholder, government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
(ii) NONCONTRAVENTION.
(iii) Neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (a) violate
any constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government, governmental
agency, or court to which the Seller is subject, or (b) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is bound or to which
any of its assets is subject.
(iv) BROKERS' FEES. The Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
(v) TARGET SHARES. The Seller holds of record and owns
beneficially the number of Target Shares set forth in Section 4(b) of the
Disclosure Schedule, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims and demands. The Seller has no option or other right to acquire
any Target Shares or other securities of the Target except as set forth in
Section 4(b) of the Disclosure Schedule. The Seller is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require the Seller to sell, transfer, or otherwise dispose of any capital stock
of the Target (other than this Agreement). The Seller is not a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Target.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to the Seller that the statements contained in this Section 3(b)
are correct and complete as of the Closing Date.
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(i) ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
(ii) AUTHORIZATION OF TRANSACTION. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions. The Buyer need not give any notice
to, make any filing with, or obtain any authorization, consent, or approval of
any government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(iii) NONCONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its certificate of incorporation or bylaws or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject.
(iv) BROKERS' FEES. Other than certain consideration owed to
Prestwick Partners, Inc., the Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(v) SELLER'S COMMON STOCK. The Buyer holds of record and owns
beneficially the Seller's Common Stock, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act and state
securities laws), Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. The Buyer is not a party
to any option, warrant, purchase right, or other contract or commitment that
could require the Buyer to sell, transfer, or otherwise dispose of any of the
Seller's Common Stock (other than this Agreement). The Buyer is not a party to
any voting trust, proxy, or other agreement or understanding with respect to the
Seller's Common Stock.
(vi) INVESTMENT. The Buyer is not acquiring the Target Shares
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE TARGET. The Seller
represents and warrants to the ESOP and the Buyer that the statements contained
in
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this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the disclosure schedule
delivered by the Seller to the ESOP and the Buyer on the date hereof and
initialed by the ESOP and the Buyer and the Seller (the "Disclosure Schedule").
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
requires such a list or has to do with the existence of the document or other
item itself). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
4.
(a) ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Target is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and of each other jurisdiction, if any, where such
qualification is required. The Target has full corporate power and authority and
all licenses, permits, and authorizations necessary to carry on the businesses
in which it is engaged and to own and use the properties owned and used by it
except for such failures to obtain such licenses, permits and authorizations
that could not reasonably be expected to have a Material Adverse Effect. Section
4(a) of the Disclosure Schedule lists the directors and officers of the Target.
The Seller has delivered to the ESOP and to the Buyer correct and complete
copies of the articles of incorporation and bylaws of the Target (as amended to
date). Since the Merger Date, the minute books (containing the records of
meetings of the stockholders, the board of directors and any committees of the
board of directors), the stock certificate book and the stock record books of
the Target are accurate and complete. The Target is not in default under or in
violation of any provision of its articles of incorporation or bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of the Target
consists of 20,000,000 Target Shares. All of the issued and outstanding Target
Shares have been duly authorized, are validly issued, fully paid and
nonassessable, and are held of record by the Seller. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Target to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Target. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the Target.
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(c) NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target is subject or any provision of
the articles of incorporation or bylaws of the Target, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any material agreement, contract, lease, license,
instrument, or other arrangement to which the Target is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). The Target does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) BROKERS' FEES. The Target has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) TITLE TO ASSETS. The Target has good and defensible Title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) SUBSIDIARIES. Except as set forth in Section 4(f) of the
Disclosure Schedule, the Target neither controls directly or indirectly nor has
any direct or indirect equity participation in any corporation, partnership,
trust, limited liability company or other business association.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit C are the balance
sheet, statement of operations and statement of stockholders' equity of the
Target as of and for the period ended December 31, 2000 (the "FINANCIAL
STATEMENTS"). The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Target as
of such date and the results of operations of the Target for such period, are
correct and complete, and are consistent with the books and records of the
Target (which books and records are correct and complete).
(h) EVENTS SUBSEQUENT TO MERGER AGREEMENT. Except as set forth in
Section 4(h) of the Disclosure Schedule, since the Merger Agreement was signed
on June 6, 2000, there has not been any material adverse change in the business,
financial
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condition, operations, results of operations, or future prospects of the Target.
Without limiting the generality of the foregoing, since that date:
(i) the Target has not sold, leased, transferred, or assigned any
of its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(ii) other than licenses relating to the provision of services by
the Target to its clients, the Target has not entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases
and licenses) either involving more than $50,000 or outside the Ordinary Course
of Business;
(iii) no party (including the Target) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases and licenses) involving more
than $50,000 to which the Target is a party or by which it is bound;
(iv) the Target has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) the Target has not made any capital expenditure (or series of
related capital expenditures) either involving more than $50,000 or outside the
Ordinary Course of Business;
(vi) the Target has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans and acquisitions) either involving
more than $50,000 or outside the Ordinary Course of Business;
(vii) the Target has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or capitalized lease obligation either involving more than
$25,000 singly or $50,000 in the aggregate;
(viii) the Target has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of Business;
(ix) the Target has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims) either
involving more than $50,000 or outside the Ordinary Course of Business;
(x) the Target has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
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(xi) there has been no change made or authorized in the articles
of incorporation or bylaws of the Target;
(xii) the Target has not issued, sold, or otherwise disposed of
any of its capital stock, or granted any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
(xiii) the Target has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(xiv) the Target has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property involving more than
$25,000 singly or $50,000 in the aggregate;
(xv) the Target has not made any loan to, or entered into any
other transaction with, any of its directors, officers and employees outside the
Ordinary Course of Business;
(xvi) the Target has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(xvii) the Target has not granted any increase in the base
compensation of any of its directors, officers and employees outside the
Ordinary Course of Business;
(xviii) the Target has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(xix) the Target has not made any other change in employment
terms for any of its directors, officers and employees outside the Ordinary
Course of Business;
(xx) the Target has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving the Target; and
(xxii) the Target has not committed to any of the foregoing.
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(i) LIABILITIES. The Target has no Liability (and there is no Basis
for any present or future action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand against the Target giving rise to any
Liability), except for (i) Liabilities set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) or listed in Section 4(i) of
the Disclosure Schedule, and (ii) Liabilities which have arisen after December
31, 2000, in the Ordinary Course of Business (none of which results from, arises
out of, relates to, is in the nature of, or was caused by any breach of
contract, breach of warranty, tort, infringement, or violation of law).
(j) LEGAL COMPLIANCE. Since the Merger Date, the Target has complied
with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against the Target alleging any
failure so to comply.
(k) TAX MATTERS.
(i) The Target has not yet filed a United States federal or any
state income Tax Return for the year ended December 31, 2000, and no such Tax
Return has become due. Since the Merger Date, the Target has filed all other Tax
Returns that it was required to file. All such Tax Returns were correct and
complete in all material respects. Since the Merger Date, all Taxes accrued and
due by the Target (whether or not shown on any Tax Return) have been paid. The
Target currently is not the beneficiary of any extension of time within which to
file any Tax Return. Since the Merger Date, no claim has ever been made by an
authority in a jurisdiction where the Target does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Target that arose in connection with any
failure (or alleged failure) to pay any Tax.
(ii) Since the Merger Date, the Target has withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder, or other
third party.
(iii) To the Knowledge of the Seller, neither the Seller nor any
director or officer (or employee responsible for Tax matters) of the Target
expects any authority to assess any additional Taxes for any period since the
Merger Date. There is no dispute or claim concerning any Tax Liability of the
Target incurred since the Merger Date either (a) claimed or raised by any
authority in writing to either the Seller or the Target, or (b) as to which the
Seller and the directors and officers (and employees responsible for Tax
matters) of the Target has Knowledge based upon contact with any agent of such
authority. Section 4(k) of the Disclosure Schedule lists all federal, state,
local and foreign income Tax Returns filed with respect to the Target
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for all taxable periods since the Merger Date. None of Target's Tax Returns have
been audited, and none are currently the subject of audit. The Seller has
delivered to the Buyer correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies assessed against or
agreed to by the Target since the Merger Date.
(iv) Since the Merger Date, the Target has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(v) Since the Merger Date, the Target has not filed a consent
under Code Section 341(f) concerning collapsible corporations. Since the Merger
Date, the Target has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under Code
Section 280G. Since the Merger Date, the Target has not been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). To the
Knowledge of the Seller, the Target is not a party to any Tax allocation or
sharing agreement. Since the Merger Date, the Target (a) has not been a member
of an Affiliated Group filing a consolidated federal income Tax Return, and (b)
has no Liability for the Taxes of any Person other than the Target) under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
(vi) The unpaid Taxes of the Target did not, as of December 31,
2000, exceed the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income) set
forth on the face of the Most Recent Balance Sheet (rather than in any notes
thereto).
(l) REAL PROPERTY. The Target owns no real property. Section 4(l) of
the Disclosure Schedule lists and describes briefly all real property leased or
subleased to the Target. The Seller has delivered to the ESOP and the Buyer
correct and complete copies of the leases and subleases listed in Section 4(l)
of the Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 4(l) of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby;
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(iii) the Target is not, and to the Knowledge of the Seller, the
other party to the lease or sublease is not, in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification, or acceleration thereunder;
(iv) to the Knowledge of the Seller, no party to the lease or
sublease has repudiated any provision thereof;
(v) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease; and
(vi) since the Merger Date, the Target has not assigned,
transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in
the leasehold or subleasehold.
(m) INTELLECTUAL PROPERTY.
(i) The Target owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for the
operation of the business of the Target as presently conducted. Each item of
Intellectual Property owned or used by the Target immediately prior to the
Closing hereunder will be owned or available for use by the Target on
substantially the same terms and conditions immediately subsequent to the
Closing hereunder. Since the Merger Date, the Target has taken all commercially
reasonable actions to maintain and protect each item of Intellectual Property
that it owns or uses.
(ii) To the Knowledge of the Seller, the Target has not
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of third parties, and, to the
Knowledge of the Seller, none of the directors, officers or employees of the
Target has since the Merger Date received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Target must license or refrain from
using any Intellectual Property rights of any third party). To the Knowledge of
the Seller, no third party has interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual Property rights of the
Target since the Merger Date.
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies
each patent or registration that has been issued to the Target with respect to
any of its Intellectual Property, identifies each pending patent application or
application for registration which the Target has made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which the Target has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). Section 4(m)(iii)
of the Disclosure Schedule also identifies each
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trade name or unregistered trademark used by the Target in connection with its
business. Except as otherwise set forth in Section 4(1)(iii) of the Disclosure
Schedule, with respect to each item of Intellectual Property required to be
identified in Section 4(l)(iii) of the Disclosure Schedule:
(A) the Target possesses all right, Title and interest in
and to the item, free and clear of any Security Interest, license or other
restriction;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened which challenges the legality, validity, enforceability,
use, or ownership of the item; and
(D) since the Merger Date, the Target has never agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section 4(m)(iv) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that the Target uses
pursuant to license, sublicense, agreement, or permission. The Seller has
delivered to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date), other than
"shrink wrap" licenses for any off-the-shelf software. Except as otherwise set
forth in Section 4(m)(iv) of the Disclosure Schedule, with respect to each item
of Intellectual Property required to be identified in Section 4(m)(iv) of the
Disclosure Schedule:
(A) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect;
(B) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable, and in full force and effect
on substantially the same terms following the Closing;
(C) to the Knowledge of the Seller, no party to the license,
sublicense, agreement or permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration thereunder;
(D) to the Knowledge of the Seller, no party to the license,
sublicense, agreement, or permission has repudiated any provision thereof;
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(E) with respect to each sublicense, the representations and
warranties set forth in subsections (a) through (d) above are true and correct
with respect to the underlying license;
(F) the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge;
(G) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand is pending or, to the Knowledge of the
Seller is threatened which challenges the legality, validity, or enforceability
of the underlying item of Intellectual Property;
(H) the Target has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or permission; and
(I) To the Knowledge of the Seller, since the Merger Date,
the Target has not interfered with, infringed upon, misappropriated, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the operation of its business as presently conducted.
(n) CONTRACTS. Section 4(n) of the Disclosure Schedule lists the
following contracts and other agreements to which the Target is a party:
(i) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $50,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services, the performance of which will
extend over a period of more than one year, result in a material loss to the
Target, or involve consideration in excess of $50,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$50,000 or under which it has imposed a Security Interest on any of
its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with the Seller and its Affiliates (other than
the Target);
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(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers and employees outside the Ordinary
Course of Business;
(xi) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the Target;
or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $50,000.
Except as noted on the Disclosure Schedule, the Seller has delivered to the ESOP
and to the Buyer a correct and complete copy of each written agreement listed in
Section 4(n) of the Disclosure Schedule (as amended to date) and a written
summary setting forth the terms and conditions of each oral agreement referred
to in Section 4(n) of the Disclosure Schedule. With respect to each such
agreement: (a) the agreement is legal, valid, binding and enforceable against
the Target and, to the Knowledge of the Seller, the other party thereto, and in
full force and effect; (b) the agreement will continue to be legal, valid,
binding and enforceable against the Target and, to the Knowledge of the Seller,
the other party thereto, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (c) the
Target is not, and to the Knowledge of the Seller no other party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under such agreement; and (d) to the Knowledge of the Seller, no
party has repudiated any provision of the agreement.
(o) NOTES AND ACCOUNTS RECEIVABLE. A list of all notes and accounts
receivable of the Target is set forth in Section 4(o) of the Disclosure
Schedules. Such accounts receivable are reflected properly on the Target's books
and records and except as otherwise noted in Section 4(o) of the Disclosure
Schedule, are valid receivables subject to no setoffs or counterclaims, are
current and collectible at the face amount thereof, and will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the
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Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Target.
(p) POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of the Target.
(q) INSURANCE. Section 4(q) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Target has been a party, a named
insured, or otherwise the beneficiary of coverage at any time since the Merger
Date:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (a) the policy is legal, valid,
binding, enforceable, and in full force and effect; (b) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
substantially the same terms following the consummation of the transactions
contemplated hereby; (c) neither the Target nor any other party to the policy is
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (d) no party to the policy
has repudiated any provision thereof. The Target has been covered since its
formation by insurance in scope and amount customary and reasonable for the
business in which it has engaged during the aforementioned period. Section 4(q)
of the Disclosure Schedule describes any self-insurance arrangements affecting
the Target.
(r) LITIGATION. Section 4(r) of the Disclosure Schedule sets forth
each instance in which the Target (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge, or (ii) is a party or, to the
Knowledge of the Seller, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation
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of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations set forth in
Section 4(r) of the Disclosure Schedule could reasonably be expected to result
in any material adverse change in the business, financial condition, operations,
results of operations, or reasonably anticipatable future prospects of the
Target. The Seller does not believe that any such action, suit, proceeding,
hearing, or investigation is reasonably likely to be brought or threatened
against the Target.
(s) EMPLOYEES. To the Knowledge of the Seller, no executive, key
employee, or group of employees has any plans to terminate employment with the
Target. Since the Merger Date, the Target has not been a party to or bound by
any collective bargaining agreement, nor since the Merger Date has the Target
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Since the Merger Date, the Target has not
committed any unfair labor practice. Since the Merger Date, the Seller does not
have any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Target.
(t) EMPLOYEE BENEFITS.
(i) Section 4(t) of the Disclosure Schedule lists each Employee
Benefit Plan that the Target maintains or to which the Target contributes.
(A) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has complied since the Merger Date, in form and in
operation in all respects with the applicable requirements of ERISA, the Code,
and other applicable laws.
(B) All required reports and descriptions (including Form
5500 Annual Reports, Summary Annual Reports and Summary Plan Descriptions) that
were due after the Merger Date have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
SubTitle B of Title 1 of ERISA and of Code Section 4980B applicable to events
occurring on or after the Merger Date have been met with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(C) All contributions (including all employer contributions
and employee salary reduction contributions) which were due after the Merger
Date have been paid to each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and practice
of the Target. All premiums or other payments for all periods beginning on the
Merger Date
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and ending on or before the Closing Date have been paid with respect to each
such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(D) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, if any,
the most recent Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which implement each such
Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Target
maintains or has ever maintained or to which it contributes, has ever
contributed, or has ever been required to contribute since the Merger Date:
(A) Neither the Target nor any member of a Controlled Group
of Corporations of which the Target is a member contributes to, has contributed
to or been required to contribute to any Employee Benefit Plan that is subject
to Section 412 of the Code, Section 302 of ERISA, or Title IV of ERISA.
(B) There have been no Prohibited Transactions with respect
to the Employee Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any such Employee Benefit Plan. No
action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the Knowledge of the
Seller, threatened. The Seller has no Knowledge of any Basis for any such
action, suit, proceeding, hearing, or investigation.
(iii) The Target does not contribute to, never has contributed
to, and, to the Knowledge of the Seller, never has been required to contribute
to any Multiemployer Plan and has no Liability (including withdrawal Liability)
under any Multiemployer Plan.
(iv) The Target does not maintain and, to the Knowledge of the
Seller, has never maintained and does not contribute, and, to the Knowledge of
the Seller, has never contributed, and never has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Section 4980B).
(u) GUARANTIES. The Target is not a guarantor and is not otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person. The Seller has guaranteed certain obligations of the Target as described
on Exhibit D (the
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"GUARANTEED OBLIGATIONS"). The description of the Guaranteed Obligations set
forth on Exhibit D is true and correct and, without limiting the foregoing, in
no case does the amount of any of the Guaranteed Obligations exceed the amount
shown for such obligation on Exhibit D.
(v) ENVIRONMENT HEALTH, AND SAFETY.
(i) Since the Merger Date, the Target has complied with all
Environmental, Health and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against the Target alleging any failure so to comply. Without limiting
the generality of the preceding sentence, since the Merger Date, the Target has
obtained and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health and Safety Laws (collectively,
"Requirement") except where the failure to obtain such permits, licenses and
authorization or the failure to comply with such Requirements would not
reasonably be expected to have a Material Adverse Effect.
(ii) The Target has no Liability (and since the Merger Date, the
Target has not handled or disposed of any substance, arranged for the disposal
of any substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the Basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against the Target
giving rise to any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health, and
Safety Law.
(w) TRANSACTION IS FAIR. The Seller's board of directors has
unanimously concluded that the value of the consideration to be received by the
Seller under the terms and conditions of this Agreement is reasonably equivalent
to the value of all of the issued and outstanding common stock of the Target and
that the transaction is fair from a financial point of view, to the Seller.
(x) DISCLOSURE. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
period between the execution of this Agreement and the earlier of the Closing or
termination of this Agreement.
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(a) GENERAL. Each of the Parties will use its best commercially
reasonable efforts to take all action and to do all things reasonably necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below).
(b) NOTICES AND CONSENTS. The Seller will cause the Target to give any
notices to third parties, and will cause the Target to use its best commercially
reasonable efforts to obtain any third party consents, that the ESOP and the
Buyer may request in connection with the matters referred to in Section 4(c)
above. Each of the Parties will (and the Seller will cause the Target to) give
any notices to, make any filings with, and use its best commercially reasonable
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Sections
3(a)(ii), 3(b)(iii) and 4(c) above.
(c) OPERATION OF BUSINESS. The Seller will not cause or permit the
Target to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business without the prior written consent of the
Buyer, which sent shall not be unreasonably withheld. Without limiting the
generality of the foregoing, the Seller will not cause or permit the Target to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase or otherwise acquire any of its
capital stock, or (ii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section 4(h) above.
(d) PRESERVATION OF BUSINESS. The Seller will cause the Target to keep
its business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, customers and employees.
(e) FULL ACCESS. The Seller will permit, and the Seller will cause the
Target to permit, representatives of the ESOP and the Buyer to have full access
at all reasonable times, upon reasonable notice from Buyer to Seller and in a
manner so as not to interfere with the normal business operations of the Target,
to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Target (collectively
"Confidential Information") provided, however, that Buyer will keep such
information confidential and shall not disclose any Confidential Information to
any third party, other than to counsel to Buyer or other Authorized agents of
the Buyer solely for purposes of the transactions contemplated by this
Agreement.
(f) CLIENTS. Subject to prior agreement as to timing and in
conjunction with the Target, the Seller will permit, and the Seller will cause
the Target
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to permit, representatives of the ESOP and the Buyer to speak or meet with the
Target's clients prior to the Closing.
(g) NOTICE OF DEVELOPMENTS. The Seller will give prompt written notice
to the ESOP and the Buyer of any material adverse development causing a breach
of any of the representations and warranties in Section 4 above. Each Party will
give prompt written notice to the others of any material adverse development
causing a breach of any of its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(g), however, shall
be deemed to amend or supplement Annex I, Annex II, or the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
The Seller acknowledges and agree that from and after the Closing the Buyer will
be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Target.
(b) LITIGATION SUPPORT. In the event and for so long as any Party is
actively contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand, arising out of, or relating
to or in connection with (i) any transaction contemplated under this Agreement,
or (ii) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction involving the Target occurring after the Merger Date and on or prior
to the Closing Date, each of the other Parties will cooperate with it and its
counsel in the contest or defense, make available their personnel, and provide
such testimony and access to their books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under Section 8 below).
(c) TRANSITION. The Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Target from maintaining
substantially the same business relationships with the Target after the Closing
as it maintained with the Target prior to the Closing. The Seller will refer all
customer inquiries relating to the business of the Target to the Buyer from and
after the Closing.
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7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATIONS OF THE ESOP AND THE BUYER. The
obligation of the ESOP and the Buyer to consummate the transactions to be
performed by them in connection with the Closing is subject to satisfaction of
the following conditions:
(i) the representations and warranties set forth in Section 3(a)
and Section 4 above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) the Seller shall have performed and complied with all of the
covenants hereunder in all material respects through the Closing;
(iii) the Target shall have procured all of the third party
consents specified in Section 5(b) above;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
(b) cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (c) affect adversely the right of the Buyer to own the
Target Shares and to control the Target, or (d) affect adversely the right of
the Target to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller's board of directors shall have received an
opinion from a reputable and nationally recognized independent third party
financial appraiser that the value of the consideration to be received by Seller
under the terms and conditions of this Agreement is reasonably equivalent to the
value of all the issued and outstanding common stock of the Target, and that the
transaction is fair from a financial point of view to the Seller;
(vi) the Seller and the Target shall have received all other
authorizations, consents, and approvals of governments and governmental agencies
referred to in Sections 3(a)(ii) and 4(c) above;
(vii) the Seller shall have delivered to the Buyer a document
pursuant to which Xxxx Xxxxxx resigns as director of the Target;
(viii) the Seller shall have provided written confirmation to the
Buyer, that all vested stock options issued by the Seller to the employees of
the Target shall remain exercisable for a 90-day period following the Closing
Date;
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(ix) the Buyer shall be reasonably satisfied with the results of
its due diligence investigation of the Target;
(x) the lender to the ESOP and the trustee of the ESOP shall not
object or otherwise take any steps to stop or materially modifythe terms and
conditions of the transactions contemplated by this Agreement;
(xi) the Seller shall have identified and disclosed to the ESOP
an the Buyer in Section 2(b) of the Disclosure Schedule all intercompany loans
or advances made between Seller and IPS;
(xii) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified above in Section 7(a)(i)-xi)
is satisfied in all respects;
(xiii) the Buyer shall have received an opinion from Jenkens &
Xxxxxxxxx, counsel to the Seller, reasonably acceptable to the Buyer and the
ESOP in form and substance as set forth in Exhibit E attached hereto, addressed
to the Buyer and the ESOP, and dated as of the Closing Date; and
(xiv) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Buyer.
The Buyer and the ESOP may waive any condition specified in this Section 7(a) if
it executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the
Seller to consummate the transactions to be performed by the Seller in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties set forth in Section 3(b)
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, ruling, or charge would (a)
prevent consummation of any of the transactions contemplated by this Agreement,
or (b) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
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(iv) the Buyer shall have received all other authorizations,
consents, and approvals of governments and governmental agencies referred to in
Sections 3(a)(ii), 3(b)(ii) and 4(c) above; (v) the Buyer shall have delivered
to the Sellers a certificate to the effect that each of the conditions specified
above in Section 7(b)(i)-(iv) is satisfied in all respects; and
(vi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to the
Seller.
The Seller may waive any condition specified in this Section 7(b) if the Seller
executes a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of one year thereafter.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER AND ITS
AFFILIATES. Subject to Section 11(a) below, if the Seller breaches (or if any
third party alleges facts that, if true, would mean the Seller has breached) any
of its representations, warranties and covenants contained herein, the Seller
agrees to indemnify the Buyer and each of its Affiliates from and against the
entirety of any Adverse Consequences the Buyer and/or any of its Affiliates may
suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach); PROVIDED, HOWEVER, that the Seller will have indemnity
obligations hereunder only if the Adverse Consequences suffered by the Buyer in
the aggregate exceed $50,000, and if such obligations do exceed $50,000 in the
aggregate the Seller will have indemnity obligations for all such Adverse
Consequences up to a total of $1,000,000 in the aggregate until the first
anniversary of the Closing Date.
(c) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify Buyer with respect to any
matter (a "Third Party Claim") which may give rise to a claim for
indemnification against Seller under this Section 8, then the Buyer shall
promptly notify the Seller thereof in writing; provided, however, that no delay
on the part of the Buyer in
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notifying Seller shall relieve the Seller from any obligation hereunder unless
(and then solely to the extent) the Seller thereby is prejudiced.
(ii) Seller will have the right to defend the Buyer against the
Third Party Claim with counsel of its choice reasonably satisfactory to the
Buyer so long as (a) the Seller notifies the Buyer in writing within 15 days
after the Buyer has given notice of the Third Party Claim that the Seller will
indemnify the Buyer from and against the entirety of any Adverse Consequences
the Buyer may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim, (b) the Seller provides the Buyer with
evidence reasonably acceptable to the Buyer that the Seller will have the
financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (c) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief likely
to affect the continuing business interests of the Buyer, and (d) the Seller
conducts the defense of the Third Party Claim actively and diligently.
(iii) So long as the Seller is conducting the defense of the
Third Party Claim in accordance with Section 8(c)(ii) above, (a) the Buyer may
retain separate co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (b) the Buyer will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Seller (not to be withheld
unreasonably), and (c) the Seller will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Buyer (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 8(c)(ii) above
is or becomes unsatisfied, however, (a) the Buyer may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in good faith (and the Buyer need not consult with, or
obtain any consent from, any Seller in connection therewith), (b) the Seller
will reimburse the Buyer promptly and periodically for the costs of defending
against the Third Party Claim (including attorneys' fees and expenses), and (c)
the Seller will remain responsible for any Adverse Consequences the Buyer may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Section 8.
(d) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall take into
account the time cost of money (using ten percent (10%) as the discount rate) in
determining Adverse Consequences for purposes of this Section 8. All
indemnification payments under this Section 8 shall be deemed adjustments to the
Purchase Price.
(e) OFFSET AGAINST FUTURE PAYMENTS. To the extent that any amounts
remain payable under Section 2(b) above, Buyer shall have the option of
offsetting all
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or any part of any Adverse Consequences it may suffer (in lieu of
seeking any indemnification to which it is entitled under this Section 8) by
notifying the Seller that the Buyer is reducing any amount it may otherwise be
required to pay under Section 2(b).
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant. The Seller hereby agrees that it will not make any claim
for indemnification against the Target by reason of the fact that it was a
shareholder or agent of the Target or was serving at the request of the Target,
a partner, trustee, director, officer, employee, or agent of the Target (whether
such claim is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such claim is pursuant to
any statute, charter document, bylaw, agreement, or otherwise) with respect to
any action, suit, proceeding, complaint, claim, or demand brought by the Buyer
against such Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
9. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Seller for certain tax matters following the
Closing Date:
(a) TAX PERIODS ENDING ON OR AFTER DECEMBER 31, 2000. Buyer shall
prepare or cause to be prepared and filed or cause to be filed all Tax Returns
for the Target for all periods ending on or after December 31, 2000, which are
filed after the Closing Date. Buyer shall permit Seller to review and comment on
each such Tax Return described in the preceding sentence prior to filing. Seller
shall reimburse Buyer for Taxes of the Target incurred after the Merger Date and
before the Closing Date within fifteen (15) days after payment by Buyer or the
Target of such Taxes to the extent such Taxes are not accrued on the Most Recent
Balance Sheet.
(b) COOPERATION ON TAX MATTERS.
(i) Buyer, the Target and the Seller shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 9 and any audit, litigation
or other proceeding with respect to Taxes incurred after the Merger Date and
before the Closing Date. Such cooperation shall include the retention and (upon
the other party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
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(ii) Buyer and the Seller further agree, upon request, to use
their best commercially reasonable efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be necessary
to mitigate, reduce or eliminate any Tax incurred after the Merger Date and
before the Closing Date that could be imposed (including, but not limited to,
with respect to the transactions contemplated hereby).
(iii) Buyer and the Seller further agree, upon request, to
provide the other party with all information that either Party may be required
to report pursuant to Section 6043 of the Code and all Treasury Department
Regulations promulgated thereunder pertaining to the period between the Merger
Date and the Closing Date.
(c) TAX SHARING AGREEMENTS. All tax sharing agreements or similar
agreements with respect to or involving the Target shall be terminated as of the
Closing Date and, after the Closing Date, the Target shall not be bound thereby
or have any liability thereunder.
10. ESCROW. Pursuant to the provisions set forth in Section 2(b)(ii), the
Buyer will cause 143,323 shares of the Seller's Common Stock to be deposited
into an Escrow Account maintained at Sheppard, Mullin, Xxxxxxx & Hampton LLP.
The shares are to be held in the Escrow Account until the earlier of: (a) the
completion of an audit of the December 31, 2000 financial statements of the
Target by an auditor mutually acceptable to the Buyer and the Seller; or (b) six
months from the Closing Date. In the event that the net equity, revenues or net
earnings of the Target for the period ended December 31, 2000 differs by more
than $500,000 from the Financial Statements required by Section 4(g) and
included hereto as Exhibit C, the Buyer may set off (the "Set Off") against the
shares of the Seller's Common Stock in the Escrow Account at a value based upon
the closing price of the Seller's Common Stock on the American Stock Exchange on
the day before the Set Off. Immediately thereafter, the Seller shall take all
reasonable steps to prepare and file with the SEC a Form S-3 resale registration
statement covering all of the Set Off Shares.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. Certain of the Parties may terminate
this Agreement as provided below:
(i) the ESOP, the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the ESOP or the Buyer may terminate this Agreement by giving
written notice to the Seller on or before the Closing if there has been a
material adverse change in the assets, business, financial condition or
reasonably anticipatable future prospects of the Target after the date of this
Agreement but before the Closing.
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(iii) the ESOP or the Buyer may terminate this Agreement by
giving written notice to the Seller at any time prior to the Closing (a) in the
event the Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the ESOP or the Buyer has
notified the Seller of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach or (b) if the Closing shall not
have occurred on or before February 5, 2001, by reason of the failure of any
condition precedent under Section 7(a) hereof (unless the failure results
primarily from the ESOP or the Buyer breaching any representation, warranty, or
covenant contained in this Agreement); and
(iv) the Seller may terminate this Agreement by giving written
notice to the ESOP and the Buyer at any time prior to the Closing (a) in the
event the ESOP or the Buyer has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect, the Seller has
notified the ESOP or the Buyer of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach, or (b) if the
Closing shall not have occurred on or before February 5, 2001, by reason of the
failure of any condition precedent under Section 7(b) hereof (unless the failure
results primarily from the Seller breaching any representation, warranty, or
covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
12. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Buyer and the Seller;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party prior to making
the disclosure).
(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
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(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the Buyer.
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Seller: EpicEdge, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attn:
With a copy to: Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: L. Xxxxxx Xxxxxx, Esq.
If to the Buyer: Xxxxxxx Xxxx
and
Xxxxxx X. Xxxxxxx
Prestwick Partners, Inc.
c/o IPS Associates
0000 Xxxxxxx
Xxx Xxxxxx, XX
With a copy to: A. Xxxx Xxxxxx, Esq.
Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP
Four Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
If to the ESOP: Xxxxx Fargo Bank, N.A.
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c/o Xx. Xxxxx Xxxxx
000 Xxxxxxxx Xxxxxxxxx
X0000-000
Xxx Xxxxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) GOVERNING LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the domestic laws of the State of California
without giving effect to any choice or conflict of law provision or rule
(whether of the State of California or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
California. Each of the Parties submits to the jurisdiction of any state or
federal court sitting in San Francisco, California, in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) EXPENSES. The Buyer and the Sellers will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
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(l) CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a Part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event 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 agrees that
the other Parties 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 action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter in addition to any other remedy to which they may be
entitled, at law or in equity.
(o) POST CLOSING OBLIGATIONS OF SELLER. At the conclusion of the
Closing, the Buyer will hold 325,000 shares of the Seller's Common Stock. For a
period of one year after the Closing, the Buyer shall have a one time demand
registration right pursuant to which the Buyer may request the registration of
such shares. Upon receipt of such request, the Seller shall take all reasonable
steps to prepare and file with the SEC a resale registration statement covering
all such shares of Common Stock.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.
RED & BLUE, INC.
By: __________________________________
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Title:___________________________________
IPS ASSOCIATES, INC. EMPLOYEE STOCK OWNERSHIP PLAN
By: ___________________________________
Title:__________________________________
EPICEDGE, INC.
By: ___________________________________
Title: __________________________________
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