EXHIBIT 10.17
AGREEMENT OF PURCHASE AND SALE OF ASSETS
This Agreement of Purchase and Sale of Assets (this "Agreement") is entered
into and effective as of September 8, 1997 by and among LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC., an Illinois corporation (the "Buyer"), LITIGATION
RESOURCES OF AMERICA, INC., a Texas corporation and the parent of Buyer (the
"Parent"), and XXXXX X. XXXXXXX & ASSOCIATES, a Minnesota general partnership
(the "Seller") and Xxxxx X. Xxxxxxx, a resident of Minnesota, individually
("KAK"), and Xxxxxx X. Xxxxxxx, a resident of Minnesota, individually ("JMK")
(KAK and JMK being collectively referred to sometimes as the "Partners").
Buyer, Parent, Seller and the Partners are hereinafter sometimes referred to
collectively as the "Parties" or singularly as a "Party."
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Seller is the owner of various assets associated with the
Business (as hereinafter defined);
WHEREAS, the Buyer desires to purchase all of the Assets (as hereinafter
defined) owned by the Seller and used in the Business (such purchase of the
Assets being sometimes herein referred to as the "Acquisition") , and the Seller
desires to sell such Assets to the Buyer;
WHEREAS, in connection with the purchase and sale of the Assets, the Parties
desire to set forth in this Agreement the terms and conditions with respect to
the transfer of such Assets; and
WHEREAS, the parties understand that the Parent or its Affiliates may enter
into other agreements similar or dissimilar to this Agreement (the "Other
Agreements") for the acquisition by the Parent or such Affiliates of the assets
or stock of other entities (collectively, the "Other Acquired Businesses," and
each of those entities, individually, an "Other Acquired Business"), which Other
Agreements will be among those entities and their equity owners, the Parent and
Affiliates of the Parent;
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements, representations and warranties contained in this Agreement, and
other good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
ACCOUNTS PAYABLE. The term "Accounts Payable" shall mean all of the
accounts payable of the Business existing as of the Effective Date.
ACCOUNTS PAYABLE REPORT. The term "Accounts Payable Report" shall mean a
report prepared as of the time specified which shows accounts payable of the
Business by service provider and age of each Account Payable.
ACCOUNTS RECEIVABLE. The term "Accounts Receivable" shall mean all of the
accounts receivable of the Business existing as of the Effective Date.
ACCOUNTS RECEIVABLE REPORT. The term "Accounts Receivable Report" shall
mean a report prepared as of the time specified which shows Accounts Receivable
of the Business by customer and age of each Account Receivable.
AFFILIATE. The term "Affiliate" of a person shall mean, with respect to
that person, a person who directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or is acting as agent on behalf of, or as an officer or director of that person.
As used in the definition of Affiliate, the term "control" (including the terms
"controlling," "controlled by," or "under common control with") means the
possession, direct or indirect, of management and policies of a person whether
through the ownership of voting securities, by contract, through the holding of
a position as a director or officer of such person, or otherwise. As used in
this definition, the term "person" means an individual, a corporation, a limited
liability company, a partnership, an association, a joint stock company, a
trust, an incorporated organization, or a government or political subdivision
thereof.
ANCILLARY AGREEMENTS. The term "Ancillary Agreements" shall have the
meaning set forth in Section 3.2.
ASSETS. The term "Assets" shall have the meaning set forth in Section 2.1.
ASSUMED LIABILITIES. The term "Assumed Liabilities" shall have the meaning
as contained in Section 2.6.
BALANCE SHEET REPORT. The term "Balance Sheet Report" means the cash basis
balance sheet of the Seller as of a given date showing the assets, liabilities
and equity of the Seller adjusted to include Accounts Receivable, Accounts
Payable and accrued liabilities and further adjusted to exclude Excluded Assets
and Retained Liabilities, prepared by the Seller on a consistent basis as with
prior time periods.
XXXX OF SALE. The term "Xxxx of Sale" shall have the meaning set forth in
Section 6.3(xi).
BOOKS AND RECORDS. The term "Books and Records" shall have the meaning set
forth in Section 2.1(c).
-2-
BUSINESS. The term "Business" shall mean the court reporting and litigation
support business of the Seller as presently conducted.
BUYER INDEMNIFIED PARTIES. The term "Buyer Indemnified Parties" shall have
the meaning set forth in Section 7.1A.
CAPITAL STOCK means, with respect to: (a) any corporation, any share, or
any depositary receipt or other certificate representing any share, of an equity
ownership interest in that corporation; and (b) any other Entity, any share,
membership or other percentage interest, unit of participation or other
equivalent (however designated) of an equity interest in that Entity.
CASH PURCHASE PRICE. The term "Cash Purchase Price" shall have the meaning
set forth in Section 2.3(a).
CLOSING. The term "Closing" shall have the meaning set forth in
Section 6.1.
CLOSING DATE. The term "Closing Date" shall have the meaning set forth in
Section 6.1.
CLOSING DATE ACCOUNTS PAYABLE REPORT. The term "Closing Date Accounts
Payable Report" shall mean an Accounts Payable Report prepared as of the Closing
Date.
CLOSING DATE ACCOUNTS RECEIVABLE REPORT. The term "Closing Date Accounts
Receivable Report" shall mean an Accounts Receivable Report prepared as of the
Closing Date.
CLOSING DATE BALANCE SHEET REPORT. The term "Closing Date Balance Sheet
Report" shall mean a Balance Sheet Report prepared as of the Closing Date.
CLOSING DATE REPORTS. The term "Closing Date Reports" shall have the
meaning set forth in Section 2.4.
CLOSING MEMORANDUM. The term "Closing Memorandum" shall mean the form of
closing memorandum to be prepared by the Buyer and the Parent and approved by
the Seller (which approval will not be unreasonably withheld) for the Closing
under this Agreement in which are included the forms of certificates of
Partners, opinions of counsel and certain other documents to be delivered at the
Closing as provided herein.
CODE. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
CONTRACTS. The term "Contracts" shall have the meaning as contained in
Section 2.1(b).
CUSTOMERS. The term "Customers" shall have the meaning as contained in
Section 3.28.
DAMAGES. The term "Damages" shall have the meaning set forth in
Section 7.1A.
EFFECTIVE DATE. The term "Effective Date" shall mean 12:01 a.m. on the
"Closing Date."
-3-
EMPLOYEE. The term "Employee" shall mean any employee of the Seller who, as
of the Effective Date, is employed or otherwise performs work or provides
services in connection with the operation of the Business, including those, if
any, on disability, sick leave, layoff or leave of absence, who, in accordance
with the Seller's applicable policies, is eligible to return to active status,
but shall not include any independent contractor providing court reporting
services to Seller from time to time.
EMPLOYMENT AGREEMENTS. The term "Employment Agreements" shall have the
meaning ascribed to it in Section 3.20.
ENTITY. The term "Entity" shall mean any sole proprietorship,
corporation, partnership of any kind having a separate legal status, limited
liability company, business trust, unincorporated organization or association,
mutual company, joint stock company or joint venture.
ENVIRONMENTAL, HEALTH & SAFETY LAWS The term "Environmental, Health &
Safety Laws" shall mean all laws (including rules and 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.
EQUIPMENT. The term "Equipment" shall have the meaning as contained in
Section 2.1(a).
ERISA. The term "ERISA" shall have the meaning as contained in
Section 3.20.
EXCHANGE ACT. The term "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
EXCLUDED ASSETS. The term "Excluded Assets" shall have the meaning as
contained in Section 2.2.
EXPIRATION DATE. The term "Expiration Date" shall have the meaning set forth
in the introductory paragraph to Article III.
FINAL NET WORTH. The term "Final Net Worth" means total assets minus total
liabilities, as reflected on the Closing Date Balance Sheet Report.
FINAL PROSPECTUS. The term "Final Prospectus shall mean the prospectus
included in the Registration Statement at the time it becomes effective, except
that if the prospectus first furnished to the Underwriter after the Registration
Statement becomes effective for use in connection with the IPO differs from the
prospectus included in the Registration Statement at the time it becomes
effective (whether or not that prospectus so furnished is required to be filed
with the SEC pursuant to Securities Act Rule 424(b)), the prospectus so first
furnished is the "Final Prospectus."
FINANCIAL STATEMENTS. The term "Financial Statements" shall mean the
balance sheet, income statement and statement of changes of financial position
of the Seller.
-4-
GAAP. The term "GAAP" shall mean generally accepted accounting principles
of the Accounting Principles Board of the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board that are applicable
from time to time.
GOVERNMENTAL APPROVAL. The term "Governmental Approval" shall mean at any
time any authorization, consent, approval, permit, franchise, certificate,
license, implementing order or exemption of, or registration or filing with, any
Governmental Authority, including any certification or licensing of a natural
person to engage in a profession or trade or a specific regulated activity, at
that time.
GOVERNMENTAL AUTHORITY. The term "Governmental Authority" shall mean (a)
any national, state, county, municipal or other government, domestic or foreign,
or any agency, board, bureau, commission, court, department or other
instrumentality of any such government, or (b) any Person having the authority
under any applicable Governmental Requirement to assess and collect Taxes for
its own account.
GOVERNMENTAL REQUIREMENT. The term "Governmental Requirement" shall mean at
any time (a) any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, writ, edict, award, authorization or other
requirement of any Governmental Authority in effect at that time or (b) any
obligation included in any certificate, certification, franchise, permit or
license issued by any Governmental Authority or resulting from binding
arbitration, including any requirement under common law, at that time.
GUARANTEED NET WORTH. The term "Guaranteed Net Worth" shall mean the amount
of $163,092, less the net book value, as of June 30, 1997, of the Excluded
Assets.
INTELLECTUAL PROPERTY. The term "Intellectual Property" shall have the
meaning as contained in Section 2.1(e).
IPO. The term "IPO" shall mean the first time a registration statement filed
under the Securities Act and respecting a primary offering by the Parent to the
public of Parent Shares is declared effective under the Securities Act and the
shares registered by that registration statement are issued and sold by the
Parent (otherwise than pursuant to the exercise by the Underwriter of any over-
allotment option).
IPO CLOSING. The term "IPO Closing" shall mean the delivery to the
Underwriters of Parent Shares and payment therefor pursuant to the IPO.
IPO CLOSING DATE. The term "IPO Closing Date" shall mean the date on which
the Parent first receives payment for the Parent Shares it sells to the
Underwriter in the IPO.
IPO PRICE. The term "IPO Price" shall mean the price per share of Parent
Shares which is set forth as the "price to public" on the cover page of the
Final Prospectus.
-5-
LEASED ASSETS. The term "Leased Assets" shall have the meaning ascribed
thereto in Section 3.6.
LITIGATION. The term "Litigation" shall mean any action, case, proceeding,
claim, grievance, suit or investigation or other proceeding conducted by or
pending before any Governmental Authority or any arbitration proceeding.
MATERIAL. The term "Material" shall mean, as applied to any Entity or the
Business, material to the business, operations, property or assets, liabilities,
financial condition or results of operations of that Entity and its Subsidiaries
considered as a whole or the Business, as the case may be.
MATERIAL ADVERSE EFFECT. The term "Material Adverse Effect" shall mean, with
respect to the consequences of any fact or circumstance (including the
occurrence or non-occurrence of any event) to the Business, that such fact or
circumstance has caused, is causing or will cause, directly, indirectly or
consequentially, singly or in the aggregate with other facts and circumstances,
Material Damages.
NET WORTH. The term "Net Worth" means the dollar amount of total assets
minus the total liabilities of the Seller as of a given time period as
determined by the Balance Sheet Report as of such time period.
NOTICE OF ACTION. The term "Notice of Action" shall have the meaning set
forth in Section 7.1C.
NOTICE OF ELECTION. The term "Notice of Election" shall have the meaning
set forth in Section 7.1C.
ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of Business" shall
mean the ordinary course of Seller's Business consistent with past custom and
practice (including with respect to quantity and frequency).
PARENT SHARES. The term "Parent Shares" shall mean any of the shares of
common stock of the Parent.
PBGC. The term "PBGC" shall mean the Pension Benefits Guaranty Corporation.
PERSON. The term "Person" shall mean any natural person, Entity, estate,
trust, union or employee organization or Governmental Authority.
PRICING. The term "Pricing" shall have the meaning set forth in Section 6.1.
PUBLIC OFFERING. The term "Public Offering" means the sale by the Parent of
any of its securities for cash in an underwritten public offering registered on
the appropriate form with the Securities and Exchange Commission.
-6-
PUBLIC OFFERING PRICE. The term "Public Offering Price" shall refer to the
price to the public of the Parent Shares pursuant to the initial Public Offering
of the Parent Shares by Parent.
PURCHASE PRICE. The term "Purchase Price" shall mean the consideration
payable to the Seller for the Assets as set forth or contemplated in
Section 2.3.
REGISTRATION RIGHTS AGREEMENT. The term "Registration Rights Agreement"
shall have the meaning set forth in Section 6.2(x).
REGISTRATION STATEMENT. The term "Registration Statement" shall mean the
registration statement, including (a) each preliminary prospectus included
therein prior to the date on which that registration statement is declared
effective under the Securities Act (including any prospectus filed with the SEC
pursuant to Securities Act Rule 424(b)), (b) the Final Prospectus and (c) any
amendments and all supplements and exhibits thereto, filed by the Parent with
the SEC to register shares of the Parent Shares under the Securities Act for
public offering and sale in the IPO.
RETAINED LIABILITIES. The term "Retained Liabilities" shall mean all
liabilities of the Seller other than the Assumed Liabilities.
SCHEDULE OF ACCRUED LIABILITIES. The term "Schedule of Accrued Liabilities"
shall mean a schedule of all accrued liabilities of the Business prepared for
the period and as of the date specified.
SEC. The term "SEC" means the Securities & Exchange Commission or any
successor Governmental Authority.
SECURITIES ACT. The term "Securities Act" shall mean the Securities Act of
1933, as amended.
SELLER INDEMNIFIED PARTIES. The term "Seller Indemnified Parties" shall
have the meaning set forth in Section 7.1B.
STOCK PLEDGE AGREEMENT. The term "Stock Pledge Agreement" shall have the
meaning set forth in Section 6.3(xiii).
SUBSIDIARY. The term "Subsidiary," of any specified Person at any time,
shall mean any Entity a majority of the Capital Stock of which is at that time
owned or controlled, directly or indirectly, by the specified Person.
UNDERWRITER. The term "Underwriter" shall mean collectively (a) the
investment banking firms that prospectively may enter into the Underwriting
Agreement and (b) from and after the IPO Pricing Date, the investment banking
firms party to the Underwriting Agreement.
UNDERWRITING AGREEMENT. The term "Underwriting Agreement" shall mean the
underwriting agreement to be entered into between the Parent and the Underwriter
with respect to the IPO.
-7-
ARTICLE II
PURCHASE OF ASSETS AND PURCHASE PRICE
2.1 SALE OF ASSETS. Subject to the terms and conditions set forth in this
Agreement, the Seller agrees to sell, convey, transfer, assign and deliver to
the Buyer, and the Buyer agrees to purchase from the Seller on the IPO Closing
Date, all assets owned by Seller and used in or derived from the Business (other
than those specifically excluded under Section 2.2 below) including the
following (such assets to be referred to herein as the "Assets"):
(a) All office equipment, service equipment, supplies, computer
hardware, computer software, data processing equipment, and tools (the
"Equipment"), including the Equipment described on SCHEDULE 2.1(A), but
specifically excluding the Excluded Assets;
(b) All contracts, leases, documents, franchises, Licenses,
instruments, agreements and other written or oral agreements relating to
the Business of Seller to which Seller is a party or by which Seller or any
of the Assets may be bound as well as all rights, privileges, claims and
options relating to the foregoing (the "Contracts"), including the
Contracts described on SCHEDULE 2.1(B);
(c) All customer and supplier files and databases, customer and
supplier lists, accounting and financial records, invoices, and other books
and records relating principally to the Business (the "Books and Records"),
including the Books and Records described on SCHEDULE 2.1(C);
(d) Employee files for those Employees actually hired by Buyer;
(e) All right, title and interest of Seller, in, to and under all
service marks, trademarks, trade and assumed names, principally related to
the Business together with the right to recover for infringement thereon,
if any (the "Intellectual Property"), and other marks and/or names
described on SCHEDULE 2.1(E);
(f) All advertising materials and all other printed or written
materials related to the conduct of the Business;
(g) All of the Seller's general intangibles, claims, rights of set
off, rights of recoupment, goodwill, patents, inventions, trade secrets and
royalty rights and other proprietary intangibles, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, which are
used in the Business, and remedies against infringements thereof, and
rights to protection of interests therein under the laws of all
jurisdictions (the "General Intangibles"), including the General
Intangibles described on SCHEDULE 2.1(G);
(h) All goodwill and going concern value and all other intangible
properties related to the Business;
-8-
(i) All of Seller's Accounts Receivable, including notes receivable,
trade receivables, and intercompany receivables relating to the Business.
(j) All raw materials, work in process, finished goods, consigned
goods, and other inventories relating to the Business, as more fully
described on SCHEDULE 2.1(J) (the "Inventory"); and
(k) The exclusive right to use the name "Xxxxx X. Xxxxxxx &
Associates, any similar name or derivative thereof, and any past or present
assumed names or trade names in connection with the Business or Seller's
use of the Assets (the "Seller's Names").
2.2 EXCLUDED ASSETS. Seller is not selling and Buyer is not purchasing
any of the following excluded assets related to the Business ("Excluded
Assets"): (i) cash, (ii) cash investments, cash deposits, right to receive cash
refunds, and other cash equivalents, (iii) motor vehicles used in the Business,
and (iv) assets of any employee benefit plan described on SCHEDULE 3.20, all as
more specifically described on SCHEDULE 2.2.
2.3 PURCHASE PRICE. Upon the terms and subject to the conditions
contained herein and as consideration for the sale of the Assets and the
performance by the Seller of various other matters as provided herein, the Buyer
shall pay or deliver to the Seller, on the IPO Closing Date and as soon as
practicable after the IPO Closing, the aggregate amount $3,575,348, payable by
delivery of the following consideration (collectively the "Purchase Price"):
(a) Subject to the provisions of Section 2.4, a Cash Sum in the amount
of Dollars $2,502,744 (the "Cash Purchase Price"), paid by the wire
transfer of immediately available funds; and
(b) Such number of whole Parent Shares on the IPO Closing Date as,
when multiplied by 90% of the IPO Price, will most nearly approximate, but
not exceed, $1,072,604 and cash in the amount equal to the excess of
$1,072,604 over the product of that number of Parent Shares multiplied by
the IPO Price.
2.4 DETERMINATION OF FINAL NET WORTH. Each of the Closing Date Balance
Sheet Report, the Closing Date Accounts Receivable Report, the Closing Date
Accounts Payable Report, the Closing Date Schedule of Accrued Liabilities and
the Closing Date Income Statement (collectively, the "Closing Date Reports") of
the Seller shall be prepared by the Seller, as promptly as possible after the
Closing. Seller's accountants shall then review and certify the Closing Date
Reports, and deliver them to Buyer and Buyer's accountants within 30 days after
the IPO Closing Date. The Buyer's accountants shall review the Closing Date
Reports (including any corresponding work papers of Seller's accountants) and
report to the Seller's accountants in writing within 30 days of receipt thereof
of any discrepancy between the Seller's accountants certification and the
Buyer's accountants results of review. If Seller's accountants and Buyer's
accountants cannot resolve such discrepancy within 30 days after Seller's
accountants receipt of such reported discrepancy, then they shall so notify the
Seller and the Buyer, and the Seller and the Buyer shall attempt to resolve the
-9-
discrepancy within 15 days of such notice. If the Seller and the Buyer cannot
resolve the discrepancy to their mutual satisfaction, another independent public
accounting firm acceptable to the Seller and the Buyer shall be retained to
review the Closing Date Reports. Such firm's conclusions as to the carrying
values to appear on the Closing Date Reports for purposes of determining the
Final Net Worth of the Seller shall be conclusive. The Seller and the Buyer
shall share equally in the expenses of retaining such independent accounting
firm. The Buyer shall pay the expenses of the Buyer's accountants for their
review of the Closing Date Reports, and the Seller shall pay the expenses of
Seller's accountants for their review of the Closing Date Reports.
2.5 ADJUSTMENT OF PURCHASE PRICE. After the IPO Closing Date, the
Purchase Price set forth in Section 2.3, shall be adjusted as follows: (i) if
the Final Net Worth of the Seller as finally determined pursuant to Section 2.4
shall be more than the Guaranteed Net Worth, then the cash portion of the
Purchase Price shall be increased by the amount of such excess and (ii) if the
Final Net Worth of the Seller as finally determined pursuant to Section 2.4
shall be less than the Guaranteed Net Worth, then the cash portion of the
Purchase Price shall be decreased by the amount of such deficiency. In the event
that the Final Net Worth is more than the Guaranteed Net Worth, the Buyer shall
within 15 days pay the amount of such excess in cash to the Seller. In the
event that the Final Net Worth is less than the Guaranteed Net Worth, the Seller
shall within 15 days refund the amount of such deficiency in cash to Buyer.
2.6 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions contained herein, the Buyer agrees that on the Closing Date, it will
not assume (i) any liabilities of Seller (except for those liabilities listed as
current liabilities on Seller's Balance Sheet dated June 30, 1997, subject,
however, to adjustments for changes in liabilities occurring in the ordinary
course of Seller's business following June 30, 1997 through the Closing Date, as
determined under Section 2.4 and set forth on the Closing Date Reports ("Assumed
Liabilities")), (ii) any liabilities of Seller associated with the Excluded
Assets, or (iii) any liabilities described on SCHEDULE 3.22. Buyer
specifically excludes and does not assume any liabilities relating to or arising
out of any of Seller's tax obligations, tax claims, tax charges, tax fines or
any related tax liabilities, regardless of the source, cause or origin of such
tax liabilities.
2.7 ALLOCATION OF PURCHASE PRICE. For all federal, state and local tax
purposes, the Purchase Price shall be allocated among the various Assets in the
manner indicated in SCHEDULE 2.7 hereto subject to adjustment pursuant to the
Closing Date Reports; provided, however, that the Purchase Price allocated to
fixed assets shall not exceed their book value. None of the Parties shall file
any tax return or report or take any position with any taxing agency or
authority which is inconsistent with the foregoing allocation, except to the
extent mandated by a court of law or the appropriate taxing agency or authority
in a determination binding upon one Party provided that such Party has given
written notice and reasonable opportunity to the other Party, at its expense, to
contest and appeal such determination on behalf of both Parties and such
determination has nevertheless become final. Within ninety (90) days after the
Closing Date, the Parties shall prepare for filing with the Internal Revenue
Service a Form 8594 in accordance with the foregoing allocation.
2.8 TAXES. Seller shall be liable for the payment of all sales and use
taxes arising out of the sale and transfer or removal of the Assets, if any, and
the assumption of the Assumed Liabilities.
-10-
The Buyer shall not be responsible for any business, occupation, withholding or
similar tax, or any taxes of any kind of the Seller, related to any period
before the Effective Date.
2.9 TITLE TO ASSETS AND RISK OF LOSS. Title to the Assets and risk of
loss or damage to the Assets by casualty (whether or not covered by insurance)
will pass to the Buyer immediately upon completion of the Closing and payment of
the purchase price.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and the Partners jointly and severally represent and warrant that all
of the following representations and warranties in this Article III are true at
the date of this Agreement and shall be true at the time of Closing and the IPO
Closing Date, and that such representations and warranties shall survive the IPO
Closing Date for a period of two years (the last day of such period being the
"Expiration Date"), except that (i) the warranties and representations set forth
in Section 3.24 hereof shall survive until such time as the limitations period
has run for all tax periods ended on or prior to the IPO Closing Date, which
shall be deemed to be the Expiration Date for Section 3.24, and (ii) solely for
purposes of determining whether a claim for indemnification under Section 7.1
hereof has been made on a timely basis, and solely to the extent that in
connection with the IPO, the Seller or the Partners actually incur liability
under the Securities Act, the Exchange Act, or any other federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period, which shall
be deemed to be the Expiration Date for such purposes.
3.1 ORGANIZATION. Seller is a partnership duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has all
necessary partnership powers to own its Assets and properties and to operate the
Business as now owned and operated by it, and is not qualified, nor required to
be qualified, to do business in any other state.
3.2 AUTHORITY. Seller has the full right, power, legal capacity and
authority to execute, deliver and perform Seller's obligations under this
Agreement and all agreements ancillary to this Agreement which are part of the
underlying transaction made the basis of this Agreement and executed in
connection herewith, including but not limited to the Exhibits hereto
("Ancillary Agreements"). The sale of the Assets and the execution, delivery
and performance of this Agreement and the Ancillary Agreements by Seller have
been duly authorized by all of the Partners.
3.3 CONSENTS AND APPROVALS; NO BREACH OR DEFAULT. Except as set forth on
SCHEDULE 3.3(A), no consent, approval or authorization of, or filing or
registration with, any Governmental Authority, or any other Person or Entity, is
required to be made or obtained by Seller in connection with the execution,
delivery or performance of this Agreement, or the consummation by Seller of the
transactions contemplated hereby. Except as set forth on SCHEDULE 3.3(B),
neither the execution and delivery of this Agreement or the Ancillary Agreements
by Seller, nor the consummation of the transactions contemplated herein by
Seller, will (a) violate any constitution,
-11-
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any Governmental Authority to which Seller is, or the
Assets are, 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, promissory note, conditional
sales contract, partnership agreement or other arrangement to which Seller or
any of Seller's Affiliates is a party, or by which Seller is bound, or to which
the Assets are subject, or (c) conflict with or violate the articles or
agreement of partnership or other charter documents of Seller.
3.4 VALID AND BINDING OBLIGATION. Upon execution and delivery, this
Agreement and each document, instrument or agreement to be executed by Seller,
or any Partner, in connection herewith, will constitute the legal, valid, and
binding obligation of Seller and/or each Partner which is a party thereto,
enforceable against Seller and/or each such Partner in accordance with its
terms, except as same may be limited by applicable bankruptcy laws, insolvency
laws, or other similar laws affecting the rights of creditors generally.
3.5 TITLE TO ASSETS. Except as set forth on SCHEDULE 3.5(A), Seller has
good, indefeasible and marketable title to the Assets, free and clear of
restrictions or conditions to transfer or assignment, or mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights-of-way,
covenants, conditions or restrictions. Seller shall, subject to the exceptions
set forth on SCHEDULE 3.5(B) deliver to Buyer at Closing good, indefeasible and
marketable title to the Assets, free and clear of restrictions or conditions to
transfer or assignment, or mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights-of-way, covenants, conditions or
restrictions.
3.6 POSSESSION OF ASSETS; LEASED ASSETS. Seller is in possession of all
of the Assets, and all of the assets leased to Seller from others. All assets
leased to Seller from others and used in the Business, whether real, personal or
mixed, are described on SCHEDULE 3.6 and SCHEDULE 3.14(B) attached hereto (the
"Leased Assets"). The Assets and the Leased Assets constitute all of the
property, whether real, personal, mixed, tangible, or intangible, that is owned
or used in the Business by Seller, other than the Excluded Assets. Seller does
not own legal or equitable title to any assets or interests in assets except the
Assets and the Leased Assets. Seller shall deliver to Buyer on the Closing Date,
possession of and/or control or dominion over all of the Assets and the Leased
Assets, including without limitation all of Seller's accounts receivable,
property, plant and equipment, other personal property, contract rights and
general intangibles, Customer and supplier lists, and assumed and trade names.
3.7 CONDITION. All of the Assets and the Leased Assets are in good
operating condition and repair for their intended use, ordinary wear and tear
excepted.
3.8 CONTRACTS AND LEASES. All of the contracts, leases, documents,
instruments, agreements, and other written or oral arrangements to which Seller
is a party or by which Seller or the Assets may be bound are set forth on
SCHEDULE 2.1(B). Except as set forth on SCHEDULE 2.1(B), all of the Contracts
are valid and in full force and effect, and there has not been any
-12-
default by Seller or any third party to any of said Contracts, or any event,
fact or circumstance which with notice or lapse of time or both, would
constitute a default by Seller or any other party to any of the Contracts.
Seller has not received notice that any party to any of the Contracts intends to
cancel or terminate any of the Contracts or exercise or not exercise any options
that such party might have under any of the Contracts.
3.9 EQUIPMENT. All of the equipment owned by Seller is set forth on
SCHEDULE 2.1(A).
3.10 ACCOUNTS RECEIVABLE. All of the Accounts Receivable of Seller as
set forth in the Books and Records of Seller and all papers and documents
relating thereto, are genuine and in all respects what they purport to be, and
each such Account Receivable is valid and subsisting and is owed by the account
debtor named in such Account Receivable. The amount of each Account Receivable
represented as owing as of the date indicated (a) is the correct amount actually
and unconditionally owing as of the date indicated, (b) is not subject to any
set-offs, credits, disputes, defenses, deductions or countercharges, and (c) to
the best knowledge of Seller, will be paid in the Ordinary Course of Business.
None of the Accounts Receivable has been paid outside of the Ordinary Course of
Business, and neither Seller nor any of its Affiliates has made any efforts to
collect any of the Accounts Receivable outside of the Ordinary Course of
Business.
3.11 INVENTORIES. Except as set forth on Schedule 2.1(j), Seller does
not have any raw materials, work in process, finished goods or other inventory.
3.12 LICENSES. All licenses and sublicenses owned by Seller or in which
Seller has any rights (collectively, the "Licenses"), together with a brief
description of each, are set forth on SCHEDULE 2.1(B). Seller has not
infringed, and is not now infringing, on any license belonging to any other
Person or Entity. Seller owns and holds adequate licenses necessary for the
Business as now conducted by it, and that use does not, and will not, conflict
with, infringe on or otherwise violate any rights of others. Buyer is hereby
acquiring, and will continue to enjoy the use and benefit of, the Licenses.
3.13 INTELLECTUAL PROPERTY. All of the Intellectual Property of
Seller is set forth on SCHEDULE 2(E). The Intellectual Property constitutes all
of the intellectual property necessary to the lawful conduct of the Business
without any infringement or conflict with the rights of others, and no adverse
claims have been asserted against the Intellectual Property, Seller or the
Business with respect thereto.
3.14 REAL PROPERTY; LEASED REAL PROPERTY. Except as set forth in
SCHEDULE 3.14(A) with respect to real property owned by Seller, and SCHEDULE
3.14(B) with respect to real property leased by Seller (such real property being
hereinafter referred to collectively as the "Real Property"), Seller neither
owns nor leases any real property or improvements or interests therein. Except
for Seller, there are no parties in possession of any portion of the Real
Property as lessees, tenants at will or at sufferance, trespassers or otherwise.
The heating, electrical, plumbing and other building equipment, as of the
Closing, will be adequate in quantity and quality for normal operations of the
Business, as presently conducted.
-13-
3.15 SUBSIDIARIES. Seller does not own, and has never previously
owned, directly or indirectly, any interest or investment (whether equity or
debt) in any corporation, partnership, business, trust, or other Entity.
3.16 INSURANCE. Attached hereto as SCHEDULE 3.16 is a true, complete and
accurate list of all insurance policies maintained by Seller. The Seller has
maintained and now maintains insurance protection against all liabilities,
claims and risks against which, with respect to the Business and the Assets, it
is customary to insure in the Ordinary Course of Business.
3.17 BANKING. The names and addresses of all banks or other financial
institutions in which Seller has an account, deposit or safe deposit box, with
the names of all Persons authorized to draw on these accounts or deposits or
having access to these boxes, are set forth on SCHEDULE 3.17 attached hereto.
3.18 POWERS OF ATTORNEY. No Person or Entity holds a general or special
power of attorney from Seller.
3.19 PERSONNEL. Attached hereto as SCHEDULE 3.19 (A) is a list of the
names, addresses, hire dates, dates of birth and job descriptions of all
Employees of Seller, stating their rates of compensation including, if
determined, bonuses payable to each. Attached hereto as SCHEDULE 3.19 (B) is a
list of the names, addresses, dates of birth and services provided by all
independent contractors used by Seller during the preceding one (1) year,
stating their rates and methods of compensation.
3.20 EMPLOYEE BENEFITS. SCHEDULE 3.20 is a true, correct and complete list
of each "employee benefit plan," within the meaning of Section 3(3) of Employee
Retirement Income Security Act of 1974, as amended ("ERISA") which has ever been
maintained or sponsored by Seller or any of its Affiliates. Each such employee
benefit plan (and each related trust, insurance contract, or fund) is in full
force and effect, and complies in form and in operation in all respects with the
applicable requirements of ERISA, the Code, and other applicable laws. Neither
Seller nor any other party is in default under any of the plans, there have been
no claims of default, and there are no facts, conditions or circumstances which
if continued, or on notice, will result in a default, under any plan. None of
the plans will, by its terms or under applicable law, become binding upon or
become an obligation of the Buyer. No assets of any plan are being transferred
to Buyer or to any plan of Buyer. Seller does not contribute to, and has never
contributed to, and has never been required to contribute to, any multiemployer
plan, and Seller does not have, and has never had, any liability (including
withdrawal liability) under any multiemployer plan.
3.21 EMPLOYMENT AGREEMENTS. SCHEDULE 3.21 is a list of all employment
agreements, consulting agreements, collective bargaining agreements, and
agreements providing for Partner indemnification or other agreements or
arrangements providing for employee or other remuneration, severance payments or
benefits to which Seller or any of its Affiliates is a party or by which Seller
or any of its Affiliates is bound (collectively, the "Employment Agreements").
Buyer will not have any duty, liability or obligation with respect to any of the
Employment
-14-
Agreements. Except as set forth on SCHEDULE 3.21, no Employees are represented
by any labor organization.
3.22 LIABILITIES. Seller does not have any liabilities, obligations or
commitments of any nature, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, except (a) liabilities which are adequately
disclosed or accrued against in the Balance Sheet Reports, (b) liabilities which
have been incurred in the Ordinary Course of the Business since June 30, 1997,
and in accordance with standard, customary and historical practices and
experiences of Seller, and (c) liabilities expressly set forth, as to the nature
and amount thereof, on SCHEDULE 3.22. Buyer shall not incur any duty, liability
or obligation with respect to any liabilities set forth on SCHEDULE 3.22. In no
event shall the Buyer be liable for (or have paid any) legal, accounting or
other costs or expenses incurred by Seller in connection with any of the
transactions contemplated in this Agreement.
3.23 LITIGATION. Except as set forth on SCHEDULE 3.23, there is no
suit, action, arbitration or legal, administrative or other proceeding or
governmental investigation pending or threatened against or affecting Seller,
its Affiliates, the Assets, the Leased Assets or the Business.
3.24 TAX MATTERS. Seller has filed all tax returns that Seller was
required to file, and all such tax returns were correct and complete in all
respects. All taxes owed by Seller (whether or not shown on any tax return)
have been paid. Seller is not the beneficiary of any extension of time within
which to file any tax return, and Seller 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. Seller has withheld and paid all taxes
required to have been withheld or paid in connection with amounts paid or owing
to any Employee, independent contractor, creditor, Partner, or other third
party. Neither Seller nor any Partner (or Employee responsible for tax matters)
of Seller has reason to believe that any authority might assess any additional
taxes for any period for which tax returns have been filed. There is no dispute
or claim concerning any tax liability of Seller.
3.25 COMPLIANCE WITH LAWS. Seller has complied with, and is not in
violation of, applicable federal, state or local ordinances, statutes, laws,
rules, restrictions and regulations (including, without limitation, any
applicable Environmental, Health & Safety Laws) that affect, or are likely to
affect, directly or indirectly, the Business, the Assets, the Leased Assets, the
Real Property or the Customers, suppliers or financial prospects of Seller.
There are not any uncured violations of federal, state or local laws,
ordinances, statutes, orders, rules, restrictions, regulations or requirements
affecting any portion of the Business, the Real Property, the Assets or the
Leased Assets, and neither any of the Assets, the Leased Assets or the Real
Property, nor the operation thereof nor the conduct of the Business, violates
any applicable federal, state or municipal laws, ordinances, orders, regulations
or requirements. Seller has not received notice of any past, present or future
event, condition, circumstance, activity, practice, incident, action or plan
which may interfere with or prevent compliance or continued compliance with the
Environmental, Health & Safety Laws or which may give rise to any common law or
legal liability, or otherwise form the basis of any claim, action, demand,
lawsuit, proceeding, hearing,
-15-
study or investigation, based on, related to, or alleging any violation of the
Environmental Health & Safety Laws.
3.26 FINANCIAL STATEMENTS. The Financial Statements (a) are true,
complete, and correct in all material respects, (b) fairly and accurately
present the financial position of Seller as of the periods described therein,
and the results of the operations of Seller for the periods indicated, and (c)
have been prepared consistently and in accordance with the Seller's historical
customs and practices.
3.27 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
SCHEDULE 3.27, since June 30, 1997.
(A) there has been no: (i) material adverse change in the financial
condition, assets, liabilities, business or prospects of Seller; (ii) loss,
destruction or damage to any property of Seller, whether or not insured;
(iii) labor trouble, pending or threatened, involving Seller, or change in
the personnel of Seller or the terms or conditions of their employment or
other engagement; nor (iv) other event or condition of any character that
has or could have a Material Adverse Effect on the Business;
(B) Seller and its Affiliates have used their best efforts to
preserve the business organization of Seller intact, to maintain the
goodwill of the Business, to keep available to the Business the Employees
and the independent contractors, and to preserve the present relationships
of Seller with its suppliers, Customers, regulatory authorities and others
having business relationships with it;
(C) Seller has maintained and operated the Business in the Ordinary
Course of Business and in accordance with industry practices and Seller's
historical policies;
(D) Seller has not issued or sold, nor directly or indirectly
redeemed or acquired, any of its securities;
(E) Seller has not declared, set aside nor paid a dividend or other
distribution, nor made any payment of any type to the holders of any equity
interest in Seller or any of its Affiliates, other than ordinary salary or
expenses which have been paid in the Ordinary Course of Business and fully
disclosed to Buyer;
(F) Seller has neither waived nor released any Material right of or
material claim held by it, nor discounted any of its Accounts Receivable,
nor revalued any of its Assets or liabilities;
-16-
(G) Seller has not acquired nor disposed of any assets having a value
of $5,000 individually or $15,000 in the aggregate, and has not entered
into any contract, commitment or arrangement therefor, and has not entered
into any other transaction, other than for value in the Ordinary Course of
Business and in accordance with industry practices;
(H) Seller has not changed the salary or other compensation payable
or to become payable by Seller to any of its Partners, Employees,
independent contractors, agents or other personnel, and has not declared,
made or committed to any kind of payment of a bonus or other additional
salary or compensation to any such Person;
(I) Seller has not made a loan to any Person or Entity, and has not
guarantied any loan, in an amount in excess of $5,000 individually or
$15,000 in the aggregate;
(J) Seller has not amended nor terminated any material contract,
agreement, permit or license to which Seller is a party, or by which Seller
or any of the Assets or Leased Assets are bound;
(K) Seller has maintained all debt and lease instruments, and has
not entered into any new or amended debt or lease instruments;
(L) Seller has not entered into any agreement or instrument which
would constitute an encumbrance, mortgage or pledge of the Assets, or which
would bind Buyer or the Assets after Closing, in an amount in excess of
$5,000 individually or $15,000 in the aggregate;
(M) Seller has provided to Buyer any and all books, records,
contracts, and other documents or data pertaining to the ownership, use,
insurance, operation, renovation and maintenance of the Assets, the Leased
Assets and the Business;
(N) Seller has performed all of Seller's obligations under all
contracts and commitments applicable to Seller, the Assets and the Leased
Assets, and has maintained Seller's books of account and records in the
usual, regular and customary manner;
(O) Seller has complied with all statutes, laws, ordinances and
regulations applicable to Seller, the Assets, the Leased Assets and the
conduct of the Business;
(P) Seller has paid all bills and other payments due with respect to
the ownership, use, insurance, operation and maintenance of the Business,
the Assets
-17-
and the Leased Assets, as and when such bills or other payments were due,
and has taken all action necessary or prudent to prevent liens or other
claims for the same from being filed or asserted against any part of the
Assets or the Leased Assets; provided however, Seller has not made any
expenditures outside the Ordinary Course of Business, nor any capital
expenditures, in excess of $5,000 individually or $15,000 in the aggregate;
(Q) Seller has not made any material changes in its management,
operations, accounting or business practices or methods (including without
limitation, any change in depreciation or amortization policies or rates);
and
(R) all revenues or cash or other receipts from all sources in all
media received by Seller have been deposited in Seller's account.
3.28 CUSTOMERS. SCHEDULE 3.28 to this Agreement is a true, complete
and correct list of all Customers of Seller, together with summaries of the
services provided to each Customer during the one (1) year preceding the Closing
Date. For purposes of this Section 3.28 "Customer" means a customer or client
of the Seller located in the State of Minnesota during the one year preceding
the Closing Date. Except as indicated in SCHEDULE 3.28, Seller does not have
any information, nor is it aware of any facts or circumstances, indicating that
any of these Customers intend not to do business with Buyer to the same volume
and extent, and on the same terms, as they have historically done business with
Seller.
3.29 INTERESTS IN CUSTOMERS, SUPPLIERS AND COMPETITORS. No Partner or
Affiliate or employee (nor any former partner or Affiliate or employee) of
Seller, nor any relative of any of them, has any direct or indirect interest in
any competitor, supplier or Customer of Seller, nor any Person or Entity who has
done business with Seller in the one (1) year preceding the Closing Date.
3.30 PARTNERSHIP DOCUMENTS. Seller has furnished to Buyer for its
examination (i) a true, complete and correct copy of Seller's Articles or
Agreement of Partnership and all other written agreements between the Partners,
all as amended to date; (ii) true, complete and correct copies of the contents
of the partnership or minute books of Seller (including proceedings of audit and
other committees), each of which contains all records for all proceedings,
consents, actions and meetings of the Partners since its date of formation.
3.31 BULK SALE WARRANTY FOR SALES TAX PURPOSES. Prior to Closing, Seller
has never sold a substantial or significant part of its assets in any single
transaction or series of transactions. The transaction contemplated herein is
the sale of the entire operating assets of a business, and a sale outside the
ordinary course of Seller's business, and therefor no sales tax is due upon the
Closing of the purchase of the Assets.
-18-
3.32 DISCLOSURE. Seller has provided to Buyer actual copies of all
Contracts, documents concerning all litigation and administrative proceedings,
employee benefit plans, Licenses, insurance policies, lists of suppliers,
Customers, Employees and independent contractors, and corporate records relating
to Seller or its assets and liabilities, the Business and the Real Property, and
such information covers all material commitments and liabilities of Seller. In
addition, (a) Buyer has been kept fully informed with respect to all material
developments in the business of Seller since the June 30, 1997, (b) management
of Seller has not made any material business decisions, nor taken any material
actions, since the June 30, 1997 of which Buyer has not been advised, and (c)
Buyer and its agents have been granted unlimited access to the books and records
of Seller (whether retained electronically, on disc or on paper).
3.33 FULL DISCLOSURE. This Agreement, the schedules and exhibits
hereto, and all other documents and written information furnished by Seller or
its Partners to Buyer or its representatives pursuant hereto or in connection
herewith, are true, complete and correct, and do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made herein and therein not misleading. There are no facts
or circumstances relating to the Business or Seller's liabilities, prospects,
operations or financial condition, or the Assets, which materially and adversely
affect or, so far as the Seller can now reasonably foresee, will materially and
adversely affect, the Business, Seller or the assets, liabilities, prospects,
operations or financial condition thereof, or the ability of the Seller to
perform this Agreement or the obligations of Seller hereunder.
3.34 BROKERS. Except for The GulfStar Group, Inc. none of the Seller,
the Partners nor any of their respective Affiliates has employed any broker,
agent, or finder, or incurred any liability for any brokerage fees, agent's
fees, commissions or finder's fees in connection with the transactions
contemplated herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Parent and Buyer jointly and severally represent and warrant that all
of the following representations and warranties in this Article IV are true at
the date of this Agreement and shall be true at the time of Closing and the IPO
Closing Date, and that such representations and warranties shall survive the IPO
Closing Date until the Expiration Date, except that solely for purposes of
determining whether a claim for indemnification under Section 7.1 hereof has
been made on a timely basis, and solely to the extent that in connection with
the IPO, the Seller actually incurs liability under the Securities Act, the
Exchange Act, or any other federal or state securities laws, the representations
and warranties set forth herein shall survive until the expiration of any
applicable limitations period, which shall be deemed to be the Expiration Date
for such purposes.
4.1 ORGANIZATION. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Illinois and has
all the necessary corporate powers to
-19-
own its properties and to carry on its business as now owned and operated by it.
The Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and has all the necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it.
4.2 AUTHORITY. Each of Buyer and Parent, as applicable, has the right,
power, legal capacity, and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements to which it is a party. The execution,
delivery and performance of this Agreement and any Ancillary Agreements by Buyer
and Parent, as applicable, have been duly authorized by all necessary corporate
action.
4.3 CAPITAL STOCK OF PARENT AND BUYER. The respective designations and
numbers of outstanding shares and voting rights of each class of outstanding
capital stock of the Parent and the Buyer are as follows: (i) immediately prior
to the Closing Date and the IPO Date, the authorized capital stock of Parent
will consist of 100,000,000 shares of common stock, $.01 par value per share
("Parent Shares") of which the number of issued and outstanding shares will be
set forth in the Registration Statement, and 10,000,000 shares of preferred
stock, $1.00 par value, of which the number of issued and outstanding shares
will be set forth in the Registration Statement, all of which will be fully paid
and non-assessable except as otherwise set forth in the Registration Statement,
and (ii) as of the date of this Agreement, the authorized capital stock of Buyer
consists of 10,000 shares of common stock, no par value, all of which are issued
and outstanding.
4.4 TRANSACTIONS IN CAPITAL STOCK; ORGANIZATION ACCOUNTING. Except for
the Other Agreements and except as set forth in the Registration Statement, (i)
no option, warrant, call, conversion right or commitment of any kind exists
which obligates the Parent or the Buyer to issue any of their respective
authorized but unissued capital stock, and (ii) neither the Parent nor the Buyer
has any obligation (contingent or otherwise) to purchase, redeem or otherwise
acquire any of its equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof. SCHEDULE 4.4 includes
complete and accurate copies of all stock option or stock purchase plans,
including a list of all outstanding options, warrants or other rights (excluding
the Other Agreements) to acquire Parent Shares.
4.5 COMMON STOCK. At the time of issuance thereof and delivery to the
Seller, the Parent Shares to be delivered to the Seller pursuant to this
Agreement will constitute valid and legally issued Parent Shares, fully paid and
nonassessable, and with the exception of restrictions upon resale (a) set forth
in Section 9.3 hereof and (b) contained in the Stock Pledge Agreement, will be
identical in all substantive respects (which do not include the form of
certificate upon which it is printed or the presence or absence of a CUSIP
number on any such certificate) to the Parent Shares issued and outstanding as
of the date hereof by reason of the provisions of the Texas Business Corporation
Act. Except as provided in the previous sentence, the Parent Shares issued and
delivered to the Seller shall at the time of such issuance and delivery be free
and clear of any liens, claims or encumbrances of any kind or character. The
Parent Shares to be issued to the Seller pursuant to this Agreement will not be
registered under the 1933 Act, except as provided in Registration Rights
Agreement.
-20-
4.6 VALID AND BINDING OBLIGATIONS. Upon execution and delivery, each of
this Agreement and the Ancillary Agreements will constitute the legal, valid,
and binding obligation of Buyer or Parent, as applicable, enforceable in
accordance with its terms, except as limited by bankruptcy laws, insolvency
laws, and other similar laws affecting the rights of creditors generally.
4.7 BROKERS. Except for The GulfStar Group, Inc. neither Buyer nor any of
its respective Affiliates, officers, directors, or employees, has employed any
broker, agent, or finder, or incurred any liability for any brokerage fees,
agent's fees, commissions or finder's fees in connection with the transactions
contemplated herein.
4 .8 CONSENTS AND APPROVALS. No consent, approval or authorization of, or
filing or registration with, any governmental or regulatory authority, or any
other Person or Entity, is required to be made or obtained by Buyer in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
ARTICLE V
COVENANTS OF THE PARTIES
Buyer and Seller covenant and agree as follows:
5.1 CONDUCT OF THE BUSINESS. Except as otherwise permitted by this
Agreement or consented to by Buyer in writing, Seller shall through the IPO
Closing Date conduct the Business in the ordinary course in substantially the
same manner as heretofore, using its best efforts to preserve intact its present
business organization, to keep available the services of its Employees, and to
preserve its relationships with Customers, suppliers and others having business
dealings with it.
5.2 CERTAIN CHANGES. Except as otherwise permitted by this Agreement or
consented to by Buyer in writing, Seller shall not: (a) subject any of the
Assets to any lien or encumbrance; (b) dispose of any of the Assets; or (c)
grant any increase in compensation or benefits to any Employee; (d) materially
modify any of the liabilities, or (e) with respect to the Business, perform any
act outside the Ordinary Course of Business except as otherwise contemplated by
this Agreement.
5.3 NOTICE. Seller will notify Buyer immediately in writing if (i) any of
Seller's representations or warranties set forth in this Agreement are or become
untrue prior to the IPO Closing Date, (ii) Seller fails to fully perform all of
the covenants of Seller set forth in this Agreement, or (iii) there occurs any
Material adverse development in the Business or Seller's market position, sales,
profit trends, labor regulations, litigation or insurance claims or otherwise.
5.4 RECORDS. From the date of execution of this Agreement until the
Closing, Seller shall permit Buyer the right, during normal business hours, to
inspect any documents, Books and Records or other information pertaining to the
Assets.
-21-
5.5 U.C.C. SEARCHES. Within five (5) days from the date of execution
hereof, Buyer, at Buyer's sole cost and expense, shall deliver to Seller current
searches of all Uniform Commercial Code financing statements filed with the
Office of the Secretary of State of Minnesota and in any other state, or county
in which the Seller has an office, against Seller. Any and all liens, pledges,
mortgages, security interests and encumbrances affecting the Assets, regardless
of whether same are disclosed in such lien searches, shall be released and
discharged by Seller at or prior to Closing.
5.6 BULK SALES. It may not be practicable to comply or attempt to comply
with the procedures of the "Bulk Sales Act" or similar law in any or all of the
states in which the Assets are situated or of any other state which may be
asserted to be applicable to the transactions contemplated hereby. Accordingly,
to induce Buyer to waive any requirements for compliance with any or all of such
laws, Seller hereby agrees that except for the Assumed Liabilities, the
indemnity provisions of Article VII hereof shall apply to any damages of Buyer
arising out of or resulting from the failure of Buyer or Seller to comply with
any such laws or any similar law which may be asserted to be applicable.
5.7 NON-COMPETITION AGREEMENT. The Seller agrees that, for the period
beginning on the Closing Date and continuing for three (3) years following the
Closing Date, neither KAK, individually, JMK, individually, nor any of their
Affiliates, shall, either directly or indirectly, individually or separately,
for themselves or as a shareholder, owner, partner, joint venturer, promoter,
consultant, manager, independent contractor, agent, or in some similar capacity
for any reason whatsoever:
A. Enter into, engage in, or be connected with any business or
business operation or activity which consists in whole or in part of the
Business within the following Counties: Washington, Dakota, Xxxxxx,
Hennepin, Ramsey, Anoka and Xxxxxx (the "Seven Counties");
B. Call upon any customer whose account is or was serviced in whole
or in part by the Seller in relation to the Business or the Buyer with the
intent of selling or attempting to sell to any such customer any services
similar to the services provided by the Buyer; and
C. Intentionally divert, solicit or take away any customer, supplier
or employee of the Buyer, or the patronage of any customer or supplier of
the Buyer, or otherwise interfere with or disturb the relationship existing
between the Buyer and any of its customers, suppliers, or employees,
directly or indirectly.
In the event the Buyer ceases operation of the Business other than in a
merger, consolidation, sale of assets or similar transaction, or upon the filing
of a bankruptcy or receivership proceeding against the Buyer, or upon the
appointment of a liquidator for the Buyer,
-22-
the provisions of this Section 5.7 will not be applicable to the conduct of
Seller subsequent thereto.
Notwithstanding anything to the contrary contained herein, it is understood
and agreed that the foregoing provisions contained in this Section 5.7 shall not
apply to an individual named in Section 5.7 (i.e., KAK and JMK) if that
particular individual executes a Consulting Agreement as of the Closing Date
with the Buyer. It is mutually understood and agreed that if any of the
provisions relating to the scope, time or territory in this Section 5.7 are more
extensive than is enforceable under applicable law or are broader than necessary
to protect the goodwill and legitimate business interests of the Buyer, then the
Parties agree that they will reduce the degree and extent of such provisions by
whatever minimal amount is necessary to bring such provisions within the ambit
of enforceability under applicable law.
The Parties acknowledge that the remedies at law for breach of Seller's
covenants contained in this Section 5.7 are inadequate, and they agree that the
Buyer shall be entitled, at its election, to injunctive relief (without the
necessity of posting bond against such breach or attempted breach), and to
specific performance of said covenants in addition to any other remedies at law
or equity that may be available to the Buyer.
5.8 TERMINATION OF EMPLOYMENT OF SELLER'S EMPLOYEES. Buyer anticipates
extending an offer of employment to substantially all of the Employees of the
Seller on substantially the same terms and conditions as the Employees currently
are employed by Seller. Notwithstanding the foregoing, nothing herein shall
imply or guarantee employment of any Employee of Seller by Buyer. If Seller's
Employees desire employment with Buyer, they will be interviewed in conjunction
with the applicants from other sources and given strong consideration for
available positions with Buyer, at the wages, hours, and conditions of
employment established by Buyer prior to hiring any Employees. Seller agrees to
use its best efforts to make available the Employees to the Buyer that Buyer
desires to hire for the purpose of operating the Business. Notwithstanding
anything to the contrary contained herein, Buyer agrees that it will offer to
employ substantially all of Seller's Employees. Nothing shall prohibit Buyer
from terminating any of Seller's Employees subsequent to their employment by
Buyer.
5.9 COOPERATION IN CONNECTION WITH THE IPO. The Seller and each Partner
will (a) provide the Parent and the Underwriter with all the Information
concerning Seller and such Partner which is reasonably requested by the Parent
and the Underwriter from time to time in connection with effecting the IPO and
(b) cooperate with the Parent and the Underwriter and their respective
representatives in the preparation and amendment of the Registration Statement
(including the Financial Statements) and in responding to the comments of the
SEC staff, if any, with respect thereto, to the extent that any of the foregoing
concern or reasonably relate to the Seller or any Partner. The Seller and each
Partner agrees promptly to (a) advise the Parent if, at any time during the
period in which a prospectus relating to the IPO is required to be delivered
under the Securities Act, any information contained in the then current
Registration Statement prospectus concerning the
-23-
Seller or such Partner becomes incorrect or incomplete in any material respect
and (b) provide the Parent with the information needed to correct or complete
that information.
5.10 ADDITIONAL FINANCIAL STATEMENTS. Seller shall promptly furnish to
Buyer a copy of all Financial Statements for each additional month end period
beyond June 30, 1997 as soon as same is regularly prepared by Seller in the
Ordinary Course of Business. All such additional Financial Statements shall be
subject to the same representations and warranties as contained in Section 3.26
of this Agreement. The Parties acknowledge and agree that Buyer shall be
permitted to conduct at its sole cost and expense an audit of Seller for the
fiscal years ended 1994, 1995 and 1996 in connection with the IPO. Buyer shall
pay Seller's reasonable costs incurred in preparing such monthly financial
statements.
5.11 SUPPLEMENTAL INFORMATION. The Seller and each Partner agrees that,
with respect to the representations and warranties of that party contained in
this Agreement, that party will have the continuing obligation through the IPO
Closing to provide the Parent promptly with such additional supplemental
Information (collectively, the "Supplemental Information"), in the form of (a)
amendments to then existing Schedules or (b) additional Schedules, as would be
necessary, in the light of the circumstances, conditions, events and states of
facts then known to the Seller or such Partner, to make each of those
representations and warranties true and correct as of the Closing and on the IPO
Closing Date. For purposes only of determining whether the conditions to the
obligations of the Parent and Buyer which are specified in Section 6.3 have been
satisfied, the Schedules as of the Closing and on the IPO Closing Date shall be
deemed to be the Schedules and the Investor Representation Letter as of the date
hereof as amended or supplemented by the Supplemental Information provided to
the Parent prior to the Effective Date pursuant to this Section 5.11; provided,
however, that if the Supplemental Information so provided discloses the
existence of circumstances, conditions, events or states of facts which, in any
combination thereof, (a) have had a Material Adverse Effect or (b), in the sole
judgment of the Parent (which shall be conclusive for purposes of this Section
5.11 and 8.3(a)(iv), but not for any purpose of Article VII, are having or will
have a Material Adverse Effect, the Parent will be entitled to terminate this
Agreement pursuant to Section 8.3(a)(iv); and provided, further, that if the
Parent is entitled to terminate this Agreement pursuant to Section 8.3(a)(iv),
but elects not to do so, it will be entitled to treat as Buyer Indemnified
Losses (which treatment will not prejudice the right of the Seller or such
Partner to contest Damage claims made by the Parent in respect of those Buyer
Indemnified Losses) all Damages to the Business which are attributable to the
circumstances, conditions, events and state of facts first disclosed herein
after the date hereof in the Supplemental Information. The Parent will provide
the Seller and each Partner with copies of the Registration Statement, including
all pre-effective amendments thereto, promptly after the filing thereof with the
SEC under the Securities Act.
5.12 INSURANCE. Seller shall assist, and shall cause its Affiliates to
assist, Buyer in transferring to Buyer any insurance applicable to the Assets or
the Leased Assets which Buyer elects to maintain in effect.
-24-
5.13 CONFIDENTIALITY. Seller will not, and will not permit any of its
Affiliates to, disclose any information of a confidential or proprietary nature
concerning the Assets or the Business to any third parties, and in no event
shall Seller use, or allow any of its Affiliates to use, such confidential or
proprietary information for its or his own benefit or to the detriment of Buyer
or the Business. No public or private announcement shall be made of the
transactions contemplated herein, nor the terms hereof, by Seller or any of its
Affiliates, without the prior written approval of Buyer as to timing, form and
content.
ARTICLE VI
THE CLOSING
6.1 PRICING. At or prior to Pricing, the Parties shall take all actions
necessary to (a) complete the Acquisition (including the execution and delivery
of this Agreement and the Ancillary Agreements which shall be placed in escrow
under the control of the Parent for release to the Parties on the IPO Date), and
(b) effect the delivery of the Parent Shares referred to in Section 2.3 hereof,
provided however, that such actions shall not include the actual completion of
the Acquisition or the delivery of the Common Stock and funds referred to in
Section 2.3 hereof, each of which actions shall only be taken upon the IPO
Closing Date as herein provided. For purposes of this Article VI, the term
"Pricing" shall mean the date of determination by Parent and the Underwriter of
the public offering price of the Parent Shares in the IPO; the Parties
contemplate that the Pricing shall take place on the Closing Date. The Escrow
Agreement relating to this Agreement and the Ancillary Agreements shall provide
that in the event that there is no IPO Closing Date, and this Agreement
automatically terminates as provided in Section 8.3(b)(ii), the Agreement and
the Ancillary Agreements shall not be delivered to the Parties. The taking of
the actions described in clauses (a) and (b) above (the "Closing") shall take
place on the closing date (the "Closing Date") at the offices of Xxxxx, Xxxxx &
Xxxxxx Incorporated, 0 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000. On the
IPO Closing Date, all transactions contemplated by this Agreement, including the
delivery of the Parent Shares, the wire transfer of the cash portion of the
Purchase Price which Seller is entitled to receive pursuant to Section 2.3
hereof, and the closing of the IPO shall occur and be completed. Except as
otherwise provided in Section 8.3 hereof, during the period from the Closing
Date to the IPO Closing Date, this Agreement may only be terminated by the
Parties if the Underwriting Agreement is terminated pursuant to the terms
thereof.
6.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of the
Seller with respect to actions to be taken on the Closing Date are subject to
the satisfaction or waiver on or prior to the Closing Date of all of the
following conditions other than the conditions set forth in this Section 6.2(i)
and (viii) that cannot be satisfied prior to the IPO Closing Date. The
obligations of the Seller with respect to actions to be taken on the IPO Closing
Date are subject to the satisfaction or waiver on or prior to the IPO Closing
Date of the conditions set forth in this Section 6.2(i) and (viii). As of (a)
the Closing Date if any such conditions have not been satisfied other than the
conditions set forth in this Section 6.2(i) and (viii) that cannot be satisfied
prior to the IPO Closing Date or (b) the IPO Closing Date, if any such
conditions have not been satisfied, the Seller shall have the right to terminate
this Agreement, or in the alternative, waive any condition not so satisfied. Any
act or
-25-
action of the Seller in consummating the Closing on the Closing Date to the
extent set forth in the first sentence of Section 6.1 shall constitute a waiver
of any conditions not so satisfied other than the conditions set forth in this
Section 6.2(i) and (viii) that cannot be satisfied prior to the IPO Closing
Date. However, no such waiver shall be deemed to affect the survival of the
representations and warranties of Parent and Buyer contained in Article IV
hereof.
(i) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All
representations and warranties of the Parent and the Buyer contained in
Article IV shall be true and correct in all material respects as of the
Closing Date and the IPO Closing Date as though such representations and
warranties had been made as of that time; all of the terms, covenants and
conditions of this Agreement to be complied with and performed by the
Parent and the Buyer on or before the Closing Date and the IPO Closing Date
shall have been duly complied with and performed in all material respects;
and certificates to the foregoing effect dated the Closing Date and the IPO
Closing Date, respectively, and signed by each of the Parent and the Buyer
shall have been delivered to the Seller.
(ii) NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the Acquisition or the IPO and no governmental
agency or body shall have taken any other action or made any request of the
Parent or the Buyer as a result of which the management of the Seller deems
it inadvisable to proceed with the transactions hereunder.
(iii) OPINION OF COUNSEL. The Seller shall have received an opinion
from counsel for the Parent dated the Closing Date, in the form attached as
Exhibit F-1 hereto.
(iv) REGISTRATION STATEMENT. The Registration Statement, as amended
to cover the offering, issuance and sale by Parent of such number of Parent
Shares at the IPO Price (which need not be set forth in the Registration
Statement when it becomes effective under the Securities Act) as shall
yield aggregate cash proceeds to the Parent from that sale (net of
Underwriter's discount or commissions) in at least the amount (the "Minimum
Cash Amount") that is sufficient, when added to the funds, if any,
available from other sources (if any, and as set forth in the Registration
Statement when it becomes effective under the Securities Act)(the "Other
Financing Sources") to enable the Parent to pay or otherwise deliver on the
IPO Closing Date (i) the total cash portion of the Purchase Price then to
be delivered pursuant to Article II; (ii) the total cash portion of the
acquisition consideration then to be delivered pursuant to the Other
Agreements as a result of the consummation of the acquisition transactions
contemplated thereby, and (iii) the total amount of indebtedness of the
Seller, each Other Acquired Business and the Parent which the Registration
Statement discloses at the time it becomes effective under the Securities
Act will be repaid with proceeds received by the Parent from the IPO and
Other Financing Sources.
(v) CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of
the transactions
-26-
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit
the Acquisition.
(vi) GOOD STANDING CERTIFICATES. Parent and the Buyer each shall
have delivered to the Seller certificates, dated as of a date no later than
ten days prior to the Closing Date, duly issued by the Texas and Minnesota
Secretaries of State, respectively, and in each state in which the Parent
and Buyer is authorized to do business, showing that each of the Parent and
the Buyer is in good standing and authorized to do business and that all
state franchise and/or income tax returns and taxes for the Parent and the
Buyer, respectively, for all periods prior to the Closing have been filed
and paid.
(vii) NO MATERIAL ADVERSE CHANGE. No event or circumstance shall
have occurred with respect to the Parent or the Buyer which would
constitute a Material Adverse Effect.
(viii) CLOSING OF IPO. The closing of the sale of the Parent Shares
to the Underwriters in the IPO shall have occurred simultaneously with the
IPO Closing Date hereunder.
(ix) SECRETARY'S CERTIFICATE. The Seller shall have received a
certificate or certificates, dated the Closing Date and signed by the
secretary of each of the Parent and the Buyer, certifying the truth and
correctness of attached copies of the Parent's and the Buyer's respective
resolutions of their boards of directors and, if required, the stockholders
of the Parent and the Buyer approving the Parent's and the Buyer's entering
into this Agreement and the consummation of the transactions contemplated
hereby.
(x) CONSULTING AGREEMENT. The Buyer shall have entered into a
Consulting Agreement with KAK in the form attached as Exhibit A
("Consulting Agreement").
(xi) REGISTRATION RIGHTS AGREEMENT. Parent shall have entered into
the Registration Rights Agreement with the Seller in the form attached as
Exhibit B ("Registration Rights Agreement").
6.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PARENT AND THE BUYER. The
obligations of the Parent and the Buyer with respect to actions to be taken on
the Closing Date are subject to the satisfaction or waiver on or prior to the
Closing Date of all of the following conditions other than the conditions set
forth in this Section 6.3(i) and (vii) that cannot be satisfied prior to the IPO
Closing Date. The obligations of Parent and Buyer with respect to actions to be
taken on the IPO Closing Date are subject to the satisfaction or waiver on or
prior to the IPO Closing Date of all of the following conditions. As of (a) the
Closing Date if any such conditions other than the conditions set forth in this
Section 6.3(i) and (vii) that cannot be satisfied prior to the IPO Closing Date
have not been satisfied or (b) as of the IPO Closing Date, if any such
conditions have not been satisfied, Parent and Buyer shall have the right to
terminate this Agreement, or waive any such
-27-
condition, but no such waiver shall be deemed to affect the survival of the
representations and warranties contained in Article III hereof.
(i) REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATION. All
the representations and warranties of the Seller and the Partners contained
in this Agreement shall be true and correct in all material respects as of
the Closing Date and the IPO Closing Date with the same effect as though
such representations and warranties had been made on and as of such date;
all of the terms, covenants and conditions of this Agreement to be complied
with or performed by the Seller or the Partners on or before the Closing
Date or the IPO Closing Date, as the case may be, shall have been duly
performed or complied with in all Material respects; and the Seller and the
Partners shall have delivered to the Buyer certificates dated the Closing
Date and the IPO Closing Date, respectively, and signed by them to such
effect.
(ii) NO LITIGATION. No action or proceeding before a court or any
other governmental agency or body shall have been instituted or threatened
to restrain or prohibit the Acquisition or the IPO and no governmental
agency or body shall have taken any other action or made any request of
Parent as a result of which the management of Parent deems it inadvisable
to proceed with the transactions hereunder.
(iii) OPINION OF COUNSEL. Parent shall have received an opinion
from Counsel to the Seller, dated the Closing Date, substantially in the
form attached as Exhibit F-2 hereto.
(iv) REGISTRATION STATEMENT. The Registration Statement, as amended
to cover the offering, issuance and sale by Parent of such number of Parent
Shares at the IPO Price (which need not be set forth in the Registration
Statement when it becomes effective under the Securities Act) as shall
yield aggregate cash proceeds to the Parent from that sale (net of
Underwriter's discount or commissions) in at least the Minimum Cash Amount.
(v) CONSENTS AND APPROVALS. All necessary consents of and filings
with any governmental authority or agency relating to the consummation of
the transactions contemplated herein shall have been obtained and made; all
consents and approvals of third parties shall have been obtained; and no
action or proceeding shall have been instituted or threatened to restrain
or prohibit the Acquisition.
(vi) NO MATERIAL ADVERSE CHANGE. No event or circumstance shall have
occurred with respect to the Seller which would constitute a Material
Adverse Effect, and the Seller shall not have suffered any Material loss or
damages to any of its properties or assets, whether or not covered by
insurance, which change, loss or damage Materially affects or impairs the
ability of the Seller to conduct its business.
(vii) CLOSING OF IPO. The closing of the sale of the Parent Shares
to the Underwriters in the IPO shall have occurred simultaneously with the
IPO Closing Date hereunder.
-28-
(viii) CERTIFICATE. The Buyer shall have received a certificate or
certificates, dated the Closing Date and signed by the Partners, certifying
the truth and correctness of attached copies of the Seller's partnership
agreement and consent to the consummation of the transactions contemplated
hereby.
(ix) CONSULTING AGREEMENT. KAK shall have entered into the
Consulting Agreement.
(x) REGISTRATION RIGHTS AGREEMENT. Seller shall have entered into
the Registration Rights Agreement.
(xi) XXXX OF SALE. Seller shall have delivered to the Buyer
instruments of assignment and transfer or bills of sale signed by the
Seller as the Buyer reasonably requests, including the Xxxx of Sale
attached as Exhibit C ("Xxxx of Sale").
(xii) INVESTOR REPRESENTATION LETTER. Seller and each of the
Partners shall have delivered to the Parent at or prior to the signing of
the Registration Statement an Investor Representation Letter in the form
attached as Exhibit D, with respect to the acquisition of the Parent Shares
to be issued to Seller.
(xiii) STOCK PLEDGE AGREEMENT. Seller shall have delivered to Buyer
a Stock Pledge Agreement in the form attached as Exhibit E ("Stock Pledge")
as well as the Parent Shares issuable to the Seller at the Closing
(complete with stock powers executed in blank).
(xiv) SATISFACTION. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this
Agreement or incidental hereto and all other related legal matters shall
have been approved by counsel to the Parent.
6.4 FURTHER ASSURANCES. At and after the Closing, each of the Parties
shall take all appropriate action and execute all documents of any kind which
may be reasonably necessary or desirable to carry out the transactions
contemplated hereby. The Seller, at any time at or after the Closing, will
execute, acknowledge and deliver any further bills of sale, assignments and
other assurances, documents and instruments of transfer, reasonably requested by
the Buyer, and will take any other action consistent with the terms of this
Agreement that may reasonably be requested by the Buyer, for the purpose of
assigning and confirming to the Buyer, all of the Assets. The Buyer shall
notify the Seller promptly, and in no event more than ten (10) business days
after the Buyer's receipt, of any tax inquiries or notifications thereof which
relate to any period prior to the Effective Date, and the Seller shall prepare
and deliver responses to such inquiries as the Seller deems necessary or
appropriate. In addition, the Seller shall make available the books and records
of the Business during reasonable business hours and take such other actions as
are reasonably requested by the Buyer to assist the Buyer in the operation of
the Business.
-29-
6.5 CONFIDENTIAL INFORMATION. After the Closing and except as otherwise
specifically permitted in this Agreement, each party to this Agreement agrees,
on behalf of itself and its Affiliates, to use reasonable efforts not to
divulge, communicate, use to the detriment of any other party to this Agreement
or its Affiliates or for the benefit of any other Person or Persons, any
confidential information or trade secrets of such other party with respect to
the Assets or the Business, including personnel information, secret processes,
know-how, customer lists, formulae, or other technical data; provided however,
if any party to this Agreement or any of its Affiliates is compelled to disclose
such information to any tribunal, regulatory or governmental authority or agency
or else stand liable for contempt or suffer other censure and penalty, such
party may so disclose such information without any liability hereunder.
6.6 ASSIGNMENT OF CONTRACTS. On or before the Effective Date, Seller
shall have delivered to Buyer all of the Contracts presently in force and shall
have effected a valid assignment of all of Seller's rights and obligations
thereunder.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION.
A. BY THE SELLER AND THE PARTNERS. Subject to Section 7.1(E)
hereof, the Seller and each of the Partners, individually, jointly and
severally, (collectively herein "Seller Indemnitors") shall indemnify, save,
defend and hold harmless the Parent and Buyer and their respective shareholders,
directors, officers, partners, agents and employees (collectively, the "Buyer
Indemnified Parties") from and against any and all costs, lawsuits, losses,
liabilities, deficiencies, claims and expenses, including interest, penalties,
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing (collectively referred to herein as "Damages"), (i)
incurred in connection with or arising out of or resulting from or incident to
any breach of any covenant, breach of warranty as of the Effective Date, or the
inaccuracy of any representation as of the Effective Date, made by the Seller in
or pursuant to this Agreement or the Ancillary Agreements, or any other
agreement contemplated hereby or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by the Seller or the Partners under this
Agreement, (ii) based upon, arising out of, or otherwise in respect of any
liability or obligation of the Business or relating to the Assets (a) relating
to any period prior to the Effective Date, other than those Damages based upon
or arising out of the Assumed Liabilities, or (b) arising out of facts or
circumstances existing prior to the Effective Date, other than those Damages
based upon or arising out of the Assumed Liabilities; provided however, that the
Seller Indemnitors shall not be liable for any such Damages to the extent, if
any, such Damages result from or arise out of a breach or violation of this
Agreement by any Buyer Indemnified Parties, and (iii) any liability under the
Securities Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a Material fact relating to the Seller or the
Partners, and provided to Parent or its counsel by the Seller or the Partners,
contained in the Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising
-30-
out of or based upon any omission or alleged omission to state therein a
Material fact relating to the Seller or the Partners required to be stated
therein or necessary to make the statements therein not misleading, provided
however, that such indemnity shall not inure to the benefit of Parent and Buyer
to the extent such untrue statement (or alleged untrue statement) was made in,
or omission (or alleged omission) occurred in, any preliminary prospectus and
Seller or a Partner provided, in writing, corrected information to Parent and
Parent's counsel for inclusion in the Final Prospectus, and such information was
not included or properly delivered and provided further, that no Partner shall
be liable for any indemnification obligation pursuant to this Section 7.1 to the
extent attributable to a breach of any representation, warranty or agreement
made herein by any other Partner.
B. BY THE BUYER. Subject to Section 7.1(E) hereof, the Parent and
Buyer shall indemnify, save, defend and hold harmless the Seller and the
Partners (collectively, the "Seller Indemnified Parties") from and against any
and all Damages (i) incurred in connection with or arising out of or resulting
from or incident to any breach of any covenant, breach of warranty as of the
Effective Date, or the inaccuracy of any representation as of the Effective
Date, made by the Buyer or Parent in or pursuant to this Agreement, the
Ancillary Agreements, or any other agreement contemplated hereby or in any
schedule, certificate, exhibit, or other instrument furnished or to be furnished
by the Buyer under this Agreement, (ii) based upon, arising out of or otherwise
in respect of any liability or obligation of the Business or relating to the
Assets (a) relating to any period on and after the Effective Date, other than
those Damages based upon or arising out of the Retained Liabilities, or (b)
arising out of facts or circumstances existing on and after the Effective Date,
other than those Damages based upon or arising out of the Retained Liabilities;
provided, however, that the Buyer shall not be liable for any such Damages to
the extent, if any, such Damages result from or arise out of a breach or
violation of this Agreement by any Seller Indemnified Party, (iii) under the
Securities Act, the Exchange Act or other federal or state law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a Material fact relating to Parent, Buyer or any
Other Acquired Business contained in any preliminary prospectus, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission (or alleged omission) to state therein a Material fact relating to
Parent or Buyer or any of the Other Acquired Businesses required to be stated
therein or necessary to make the statements therein not misleading.
C. DEFENSE OF CLAIMS. If any lawsuit or enforcement action is filed
against any Party entitled to the benefit of indemnity hereunder, written notice
thereof describing such lawsuit or enforcement action in reasonable detail and
indicating the amount (estimated, if necessary) or good faith estimate of the
reasonably foreseeable estimated amount of Damages (which estimate shall in no
way limit the amount of indemnification the indemnified Party is entitled to
receive hereunder), shall be given to the indemnifying Party as promptly as
practicable (and in any event within ten (10) days, after the service of the
citation or summons) ("Notice of Action"); provided that the failure of any
indemnified Party to give timely notice shall not affect its rights to
indemnification hereunder to the extent that the indemnified Party demonstrates
that the amount the indemnified Party is entitled to recover exceeds the actual
damages to the indemnifying Party caused by such failure to so notify within ten
(10) days and so long as the indemnifying Party is not materially prejudiced by
the failure
-31-
to receive such notice. The indemnifying Party may elect to compromise or defend
any such asserted liability and to assume all obligations contained in this
Section 7.1 to indemnify the indemnified Party by a delivery of notice of such
election ("Notice of Election") within ten (10) days after delivery of the
Notice of Action. Upon delivery of the Notice of Election, the indemnifying
Party shall be entitled to take control of the defense and investigation of such
lawsuit or action and to employ and engage attorneys of its own choice to handle
and defend the same, at the indemnifying Party's sole cost, risk and expense,
and such indemnified Party shall cooperate in all reasonable respects, at the
indemnifying Party's sole cost, risk and expense (except with respect to the
fees and expenses of the indemnified Party's attorney, which shall be borne by
the indemnified Party) with the indemnifying Party and such attorneys in the
investigation, trial, and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the indemnified Party may, at its own
cost, risk and expense, participate in such investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom. If the Notice of
Election is delivered to the indemnified Party, the indemnified Party shall not
pay, settle or compromise such claim without the indemnifying Party's consent,
which consent shall not be unreasonably withheld. If the indemnifying Party
elects not to defend the claim of the indemnified Party or does not deliver to
the indemnified Party a Notice of Election within ten (10) days after delivery
of the Notice of Action, the indemnified Party may, but shall not be obligated
to, defend, compromise or settle (exercising reasonable business judgment) the
claim or other matter on behalf, for the account, and at the risk, of the
indemnifying Party.
D. THIRD PARTY CLAIMS. The provisions of this Section 7.1 are not
limited to matters asserted by the Parties, but cover Damages incurred in
connection with third party claims. The indemnity hereunder is in addition to
any and all rights and remedies of the Parties in connection herewith.
E. LIMITATION ON INDEMNIFICATION. Notwithstanding the other
provisions of this Section 7.1, Seller Indemnitors shall not be liable to Buyer
Indemnified Parties, and Parent and Buyer shall not be liable to Seller
Indemnified Parties, for the first $25,000 in aggregate Damages suffered by such
indemnified Parties; provided, however, that once any such indemnified Parties
have suffered Damages aggregating in excess of $25,000, the indemnifying Party
shall reimburse the indemnified Parties for the full amount of such Damages,
including the $25,000 in Damages initially excluded. In no event shall the
aggregate Damages payable by an indemnifying Party to indemnified Parties exceed
the Purchase Price.
7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Parties made herein
and at the time of the Closing or in writing delivered pursuant to the
provisions of this Agreement shall survive the consummation of the transactions
contemplated hereby and any examination on behalf of the Parties until the
Expiration Date.
-32-
ARTICLE VIII
TERMINATION AND REMEDIES
8.1 SPECIFIC PERFORMANCE; REMEDIES. Each of the Parties hereby agrees
that the transactions contemplated by this Agreement are unique, and that each
Party shall have, in addition to any other legal or equitable remedy available
to it, the right to enforce this Agreement by decree of specific performance.
If any legal action or other proceeding is brought for the enforcement of this
Agreement or because of an alleged dispute, breach, default or misrepresentation
in connection with any of the provisions of this Agreement, the successful or
prevailing Party or Parties shall be entitled to recover reasonable attorneys'
fees and other costs incurred in that action or proceeding in addition to any
other remedies to which it, he or they may be entitled at law or equity. The
rights and remedies granted herein are cumulative and not exclusive of any other
right or remedy granted herein or provided by law.
8.2 OFFSET; REMEDIES. To the extent not otherwise prohibited by
applicable law, all amounts due and owing by the Buyer to the Seller under this
Agreement, the Ancillary Agreements, or any other document, instrument, or
agreement executed in connection herewith shall be subject to offset by the
Buyer to the extent of any Damages incurred by any breach by the Seller, under
this Agreement by KAK under the Consulting Agreement, or any document,
instrument, or agreement executed in connection herewith. In the event Buyer
elects to offset any Damages incurred as a result of any such breach, Buyer
shall furnish Seller notice containing detailed information about the breach,
the magnitude of the damages that Buyer has or reasonably expects to incur, and
whether the offset is against the Parent Shares pledged under the Stock Pledge
Agreement or otherwise (the act of offsetting by Buyer shall be referred to as
an "Offset"). The Seller acknowledges and agrees that but for the right of
Offset contained in this Agreement, the Buyer would not have entered into this
Agreement or any of the transactions contemplated herein. If any legal action
or other proceeding is brought for the enforcement of this Agreement, the
Consulting Agreement, or any document, instrument, or agreement executed in
connection herewith, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the Consulting Agreement, or any document, instrument, or agreement executed in
connection herewith, the successful or prevailing Party or Parties shall be
entitled to recover other remedies to which it or they may be entitled at law or
equity. The rights and remedies granted herein are cumulative and not exclusive
of any other right or remedy granted herein or provided by law. Buyer shall not
effect an Offset hereunder without giving Seller at least 10 days advance
written notice of its intent to do so. Seller agrees that any Offset made that
would otherwise be deducted from the Purchase Price initially paid at the
Closing shall be made against the Parent Shares issuable to the Seller hereunder
and not against the cash portion of the Purchase Price.
8.3 TERMINATION. Termination of This Agreement. (a) This Agreement may
be terminated at any time prior to the Closing solely:
(i) by the mutual written consent of the Parent and the Seller;
-33-
(ii) by the Seller, on the one hand, or by the Parent, on the other
hand, if the transactions contemplated by this Agreement to take place at
the Closing shall not have been consummated by December 31, 1997, unless
the failure of such transactions to be consummated results from the willful
failure of the Party seeking to terminate this Agreement to perform or
materially adhere to any agreement required hereby to be performed or
adhered to by it prior to or at the Closing or thereafter on the IPO
Closing Date;
(iii) by the Seller, on the one hand, or by the Parent, on the other
hand, if a Material breach or default shall be made by the other Party in
the observance or in the due and timely performance of any of the
covenants, agreements or conditions contained herein; or
(iv) by the Parent if it is entitled to do so as provided in
Section 5.11.
(b) This Agreement may be terminated after the Closing solely:
(i) by the Parent or the Seller if the Underwriting Agreement is
terminated pursuant to its terms after the Closing and prior to the
consummation of the IPO; or
(ii) automatically and without action on the part of any party hereto
if the IPO is not consummated within ten (10) New York City business days
after the date of the Closing.
8.4 LIABILITIES IN EVENT OF TERMINATION. If this Agreement is
terminated pursuant to Section 8.3, there shall be no liability or obligation on
the part of any Party hereto except to the extent that such liability is based
on the breach by that Party of any of its representations, warranties or
covenants set forth in this Agreement.
ARTICLE IX
COVENANTS OF BUYER AND SELLER AFTER CLOSING
9.1. FINAL NET WORTH ADJUSTMENT. Within 30 days after the IPO Closing
Date, the Buyer and Seller shall adjust the Purchase Price of the Assets as set
forth in Sections 2.4 and 2.5, and the Buyer shall deliver to Seller, or Seller
shall deliver to Buyer, cash equal to the differential between the Guaranteed
Net Worth and the Final Net Worth, if any.
9.2. PREPARATION AND FILING OF TAX RETURNS.
(i) The Seller shall file or cause to be filed all federal income
tax returns of the Seller for all taxable periods that end on or before the
IPO Closing Date, and shall permit the Parent to review all such tax
returns prior to such filings.
(ii) Parent shall file or cause to be filed all separate tax returns
of, or that include, any Other Acquired Business for all taxable periods
ending after the IPO Closing Date.
-34-
(iii) Each Party shall, and shall cause its Subsidiaries and
Affiliates to, provide to each of the other Parties hereto such cooperation
and information as any of them reasonably may request in filing any tax
return, amended tax return or claim for refund, determining a liability for
taxes or a right to refund of taxes or in conducting any audit or other
proceeding in respect of taxes. Such cooperation and information shall
include providing copies of all relevant portions of relevant tax returns,
together with relevant accompanying schedules and relevant work papers,
relevant documents relating to rulings or other determinations by taxing
authorities and relevant records concerning the ownership and tax basis of
property, which such Party may possess. Each Party shall make its
employees reasonably available on a mutually convenient basis at its cost
to provide explanation of any documents or information so provided.
Subject to the preceding sentence, each Party required to file tax returns
pursuant to this Agreement shall bear all costs of filing such tax returns.
9.3 RESTRICTIVE LEGEND. The Seller consents to the imprinting on all
certificates representing Parent Shares issued to it as part of the Purchase
Price of the following legend:
THE SHARES OF COMMON STOCK REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, NOR THE
SECURITIES LAWS OF ANY STATE. SUCH SHARES MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME, EXCEPT UPON (1) SUCH
REGISTRATION, OR (2) DELIVERY TO THE ISSUER OF SUCH SHARES OF AN OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER, THAT REGISTRATION IS NOT
REQUIRED FOR SUCH TRANSFER, OR (3) THE SUBMISSION TO THE ISSUER OF SUCH
SHARES OF OTHER EVIDENCE, REASONABLY ACCEPTABLE TO THE ISSUER, TO THE
EFFECT THAT ANY SUCH SALE, PLEDGE, HYPOTHECATION OR TRANSFER WILL NOT BE IN
VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE, OR ANY RULES OR REGULATIONS
PROMULGATED THEREUNDER.
9.4 PLEDGE OF PARENT SHARES. Seller shall deliver all Parent Shares
acquired from the Buyer as part of the Purchase Price to Buyer to be held
pursuant to the terms of the Stock Pledge Agreement.
9.5 TRANSFER OF PARENT SHARES. Following the Closing, Seller anticipates
transferring the Parent Shares acquired hereunder to KAK and JMK in connection
with the dissolution of the Seller or otherwise. The Buyer and Parent hereby
agree to consent to such transfer and to enter into amendments to the
Registration Rights Agreement and the Stock Pledge Agreement to reflect that KAK
and JMK have become the holders of the Parent Shares previously issued to Seller
hereunder.
-35-
ARTICLE X
MISCELLANEOUS
10.1 FEES. Except as expressly set forth herein to the contrary, each
Party shall be responsible for all costs, fees and expenses (including attorney
and accountant fees and expenses) paid or incurred by such Party in connection
with the preparation, negotiation, execution, delivery and performance of this
Agreement, or otherwise in connection with the transaction contemplated hereby.
10.2 MODIFICATION OF AGREEMENT. This Agreement may be amended or modified
only in writing signed by all of the Parties.
10.3 NOTICES. All notices, consents, demands or other communications
required or permitted to be given pursuant to this Agreement shall be deemed
sufficiently given when delivered personally or telefaxed with receipt of
transmission confirmed during regular business hours during a business day to
the appropriate location described below, or three (3) business days after
posting thereof by United States first-class, registered or certified mail,
return receipt requested, with postage and fees prepaid and addressed as
follows:
IF TO SELLER: Xxxxx X. Xxxxxxx & Associates
000 Xxxxxxxxx Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
IF TO SELLER'S PARTNERS: Xxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Xxxxxx X. Xxxxxxx
000 Xxxxxxxxx Xxxxx
0000 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
With a copy to: Xxxxxxx Estate Planning
Attn: Xxxxx X. Xxxxxxx, P.A.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Phone: 612/000-0000
Fax: 612\000-0000
-36-
IF TO BUYER OR PARENT: Litigation Resources of America-Midwest, Inc.
Litigation Resources of America, Inc.
650 First City Tower, 0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Phone: 713/000-0000
Fax: 713/000-0000
With a copy to: Xxxx X. Xxxxx
Xxxxx, Xxxxx & Xxxxxx Incorporated
Nine Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Phone: 713/000-0000
Fax: (000) 000-0000
Any addressee at any time by furnishing notice to the other addressees in the
manner described above may designate additional or different addresses for
subsequent notices or communications.
10.4 SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement shall not invalidate or affect the enforceability of any other
provision of this Agreement.
10.5 ENTIRE AGREEMENT; BINDING EFFECT. This Agreement and the Ancillary
Agreements set forth the entire agreement among the Parties with respect to the
subject matter hereof. This Agreement shall be binding upon and shall inure to
the benefit of the Parties and their respective successors and assigns.
10.6 WAIVER. No delay in the exercise of any right under this Agreement
shall waive such rights. Any waiver, to be enforceable, must be in writing.
10.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
10.8 ASSIGNMENT. The Seller shall not assign this Agreement or any
interest herein .
10.9 HEADINGS. Headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement.
10.10 SCHEDULES AND EXHIBITS. All Schedules and Exhibits attached to
this Agreement or to be delivered by the Seller, upon review and approval by the
Buyer, are and shall be hereby incorporated in and made a part of this
Agreement. All Schedules to this Agreement must be delivered no later than four
(4) days prior to Closing, in order to provide the Buyer ample time to review
and evaluate the items described therein and disclosed thereby. Although the
Schedules remain subject to the review and approval of the Buyer, no such review
or approval shall constitute a waiver
-37-
by the Buyer of any breach or default caused by the inaccuracy or incompleteness
of any Schedule, the accuracy and completeness of the Schedules being the sole
responsibility of the Seller.
10.11 RIGHTS AND LIABILITIES OF PARTIES. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any Persons other than the Parties, the Buyer
Indemnified Parties and their respective successors and assigns, nor is anything
in this Agreement intended to relieve or discharge the obligation or liability
of any third Persons to any Party to this Agreement, nor shall any provision
give any third Person any right of subrogation or action over against any Party
to this Agreement.
10.12 SURVIVAL. Subject to Section 7.2, this Agreement, including but
not limited to all covenants, warranties, representations and indemnities
contained herein, shall survive the Closing, and the Xxxx of Sale and all other
documents, instruments or agreements relating to the Assets and the transactions
contemplated herein shall not be deemed merged therein.
10.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall have the force and effect of an original, and
all of which shall constitute one and the same agreement.
10.14 ARBITRATION. If a dispute arises out of or relates to this
Agreement or the Ancillary Agreements, or the breach thereof, and if such
dispute cannot be settled through negotiation, the Parties agree first to try in
good faith to settle the dispute by mediation under the Commercial Mediation
Rules of the American Arbitration Association, before resorting to arbitration,
litigation, or some other dispute resolution procedure as required by this
Section 10.14. Failing an adequate resolution by mediation, any controversy or
claim arising out of or relating to this Agreement or the transactions
contemplated hereby, including any controversy or claim arising out of or
relating to the Parties' decision to enter into this Agreement, shall be settled
by binding arbitration. There shall be one arbitrator to be mutually agreed
upon by the Parties involved in the controversy and to be selected from the
National Panel of Commercial Arbitrators (or successor panel, if any). If
within 45 days after service of the demand for arbitration the Parties are
unable to agree upon such an arbitrator who is willing to serve, then an
arbitrator shall be appointed by the American Arbitration Association in
accordance with its rules. Except as specifically provided in this Section
10.14, the arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitrator shall
not render an award of punitive damages. Any arbitration hereunder shall be
held in Houston, Texas. Expenses related to the arbitration, including counsel
fees, shall be borne by the Party incurring such expenses except to the extent
otherwise provided in Section 10.15 herein. The fees of the arbitrator and of
the American Arbitration Association, if any, shall be divided equally among the
Parties involved in the controversy. Judgment upon the award rendered by the
arbitrator (which may, if deemed appropriate by the arbitrator, include
equitable or mandatory relief with respect to performance of obligations
hereunder) may be entered in any court of competent jurisdiction.
-38-
10.15 ATTORNEYS' FEES. If any litigation is instituted to enforce or
interpret the provisions of this Agreement or the transactions described herein,
the prevailing Party in such action shall be entitled to recover its reasonable
attorneys' fees from the other Party hereto.
10.16 DRAFTING. All Parties hereto acknowledge that each Party was
actively involved in the negotiation and drafting of this Agreement and that no
law or rule of construction shall be raised or used in which the provisions of
this Agreement shall be construed in favor or against any Party hereto because
one is deemed to be the author thereof.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement in multiple counterparts effective as of the date first written above.
BUYER:
LITIGATION RESOURCES OF
AMERICA-MIDWEST, INC.,
an Illinois corporation
/s/ XXXXXXX X. XXXXXX
By: __________________________________
Xxxxxxx X. Xxxxxx,
Chairman and Chief Executive Officer
PARENT:
LITIGATION RESOURCES OF AMERICA, INC.,
a Texas corporation
/s/ XXXXXXX X. XXXXXX
By: __________________________________
Xxxxxxx X. Xxxxxx,
Chairman and Chief Executive Officer
SELLER:
XXXXX X. XXXXXXX & ASSOCIATES,
a Minnesota Partnership
/s/ XXXXX X. XXXXXXX
By: __________________________________
Xxxxx X. Xxxxxxx,
General Partner
-39-
SELLER'S PARTNERS
/s/ XXXXX X XXXXXXX
__________________________________
Xxxxx X. Xxxxxxx, Individually
/s/ XXXXXX X. XXXXXXX
__________________________________
Xxxxxx X. Xxxxxxx, Individually
-40-
Schedules
---------
2.1(a) - Equipment
2.1(b) - Contracts
2.1(c) - Books and Records
2.1(e) - Intellectual Property
2.1(g) - General Intangibles
2.1(j) - Inventory
2.2 - Excluded Assets
2.7 - Allocation of Purchase Price
3.3(A) - Consents and Approvals
3.3(B) - Breaches or Defaults
3.5 - Exceptions to Title
3.6 - Leased Personal Property
3.14(A) - Owned Real Property
3.14(B) - Leased Real Property
3.16 - Insurance Policies
3.17 - Banking
3.19(A) - Employees
3.19(B) - Independent Contractors
3.20 - Employee Benefit Plans
3.21 - Employment Agreements
3.22 - Liabilities
3.23 - Litigation
3.27 - Certain Changes or Events
3.28 - Customers
Exhibits
--------
A Consulting Agreement
B Registration Rights Agreement
C Xxxx of Sale
D Investor Representation Letter
E Stock Pledge Agreement
F-1 Legal Opinion
F-2 Legal Opinion
-41-
