EXHIBIT 10.44
ACQUISITION AGREEMENT
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THIS IS AN ACQUISITION AGREEMENT ("Agreement") dated May 21, 1998 by and
among Xxxxxx Telecom, Inc., a corporation organized under the laws of the State
of Delaware ("Buyer"), and Automated Concepts, Inc., a corporation organized
under the laws of New York ("Seller").
BACKGROUND
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Seller has been engaged principally in the following businesses in the
Northern Virginia and Washington, DC metro area (the "Business"): recruiting
and supplying technical personnel, who are employed by Seller or contracted by
Seller, to customers on a temporary or project basis ("Temporary Technical
Services"). Seller desires to sell and transfer to Buyer, and Buyer desires to
purchase from Seller, the ongoing employee and customer relationships and the
other assets of the Business described in Section 1.1 below, upon the terms set
forth in this Agreement.
TERMS
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In consideration of the mutual covenants, representations and warranties
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE TRANSACTION
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1.1 SALE AND PURCHASE OF ASSETS. Seller hereby sells, transfers and
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assigns to Buyer and Buyer hereby buys, has transferred and assigned to it from
Seller:
1.1.1 Seller's contracts, arrangements or rights to provide Temporary
Technical Services to all current and past customers of the Business as attached
in Schedule D (past customers include any customers during a one (1) year period
prior to the effective date);
1.1.2 the right, but not the obligation, to employ without
interference by Seller, all of the current employees of Seller's Reston, VA
branch who are on the bench or assigned to such customers of the Business
(attached to this Agreement as Schedule A is a list of all such employees, who
will be referred to in this Agreement as the "Transferred Billable Employees";
Schedule A also sets forth the name of the customer to whom each employee is
assigned, if applicable, the employee's pay rate and the billing rate with
respect to each employee);
1.1.3 the rights, but not the obligation, to employ, without
interference by Seller, all of the recruiters, salespeople, and administrative
staff of the Seller's Reston, VA branch, (attached to this Agreement as Schedule
B is a list of all such employees who will be referred to in this Agreement as
the "Transferred Staff Employees"; Schedule B also sets forth the hire date,
salary, and commission or bonus plan).
1.1.4 all Independent Contractor Agreements currently in force in the
Seller's Reston, VA branch and listed in Schedule C attached ("Independent
Contractors"); and
1.1.5 all current files and records (in paper and electronic form)
which deal with (a) all current, past and prospective customers of the Business,
and (b) all current, past and prospective employees of the Business (including
all resume files) and; (c) all current, past and prospective independent
contractors of the Business.
All of the foregoing are referred to herein collectively as the "Assets".
Assets expressly exclude all assets not listed in this Section 1.1. The
effective date and time of the sale, transfer and assignment of the Assets shall
be the close of business on May 29, 1998 (the "Effective Date").
1.2 ASSUMPTION OF LIABILITIES. Buyer does not assume and will not
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discharge or be liable for any debts, liabilities or obligations of Seller
whether due or to become due, absolute, contingent, known or unknown, or
otherwise, including, without limitation, any: (a) liabilities or obligations
of Seller to its creditors, landlords, customers or stockholders, (b) sales or
income tax or other liabilities or obligations of Seller, or (c) wages,
benefits, payroll taxes withholdings, accrued vacation, workers' compensation
awards or rate adjustments, severance benefits or any other payment or
obligation due to or in respect of any employee of Seller attributable to the
period of time prior to the Effective Date.
1.3 PURCHASE PRICE. The aggregate purchase price for the Assets (the
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"Purchase Price") will be equal to the sum of the following amounts: (a) Twenty
Five Thousand ($25,000.00) Dollars multiplied by the number of Successfully
Transferred Billable Employees and Independent Contractors. A "Successfully
Transferred Billable Employee" shall be a person who (i) is a Transferred
Billable Employee identified on Schedule A, (ii) assigned and billable to a
customer on the Effective Date, or for whom there is an agreement with a
customer pursuant to which the employee will become assigned and billable within
one week of the Effective Date and (iii) remains a billable employee of Buyer
as of July 15, 1998; (b) forty (40%) percent of the Gross Profit for each
Successfully Transferred Billable Employee and Independent Contractor for the
first year after the Effective Date; and (c) sixty (60%) percent of the Gross
Profit for each employee who is on the bench at the Effective Date and becomes
employed by Buyer (these employees do not qualify as a Successfully Transferred
Billable Employees), for the first year after the Effective Date. The Purchase
Price will be paid by Buyer to Seller as follows:
(A) Wire transfer at closing for the estimated amount of clause 1.3(a)
above (Transferred Employees who have signed up with Buyer and Independent
Contractors multiplied by Twenty Five ($25,000.00) Dollars).
(B) Final adjustment for clause 1.3(a) above settled on July 15, 1998.
(C) Twelve (12) monthly payments by check within thirty (30) days of
month end for clause 1.3(b) and clause 1.3(c) above.
1.4 CLOSING. The closing under this Agreement will take place at an agreed
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upon time and place. At such closing: (a) the Purchase Price required at
Closing per clause 1.3 above will be wire transferred from Buyer to Seller; (b)
Seller will deliver to Buyer the items described in Section 1.1.5 above; (c)
the parties will provide executed copies of the Federal Predecessor/Successor
Election, in the form attached hereto as Exhibit A; and (d) eeach party will
deliver such other documents as may be reasonably required to be delivered by
the parties hereto pursuant to this Agreement or reasonably necessary to carry
out the intent of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
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As a material inducement to Buyer to enter into and perform this Agreement)
Seller hereby represents and warrants to Buyer as follows:
2.1 ORGANIZATION AND EXISTENCE. Seller is a corporation duly incorporated,
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validly existing and in good standing under the laws of New York and is duly
authorized to do business in Virginia.
2.2 CORPORATE POWER AND AUTHORITY: DUE EXECUTION. AUTHORIZATION AND
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ENFORCEABILITY. Seller has all requisite power and authority to own the Assets
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and to enter into this Agreement and perform Seller's obligations hereunder.
This Agreement has been duly executed and delivered) on behalf of Seller, by a
duly elected officer of Seller. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of Seller, and this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
2.3 THIS AGREEMENT DOES NOT VIOLATE LAWS OR OTHER AGREEMENTS. The
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execution, delivery and performance of this Agreement does not and will not (a)
contravene any provision of the certificate of incorporation or bylaws of
Seller, or (b) to the best of Seller's knowledge, conflict with, result in a
breach of, constitute a default under, or permit a termination of, any contract
or commitment of Seller or any judgment or order of any governmental or
regulatory authority or any applicable law, rule or regulation.
2.4 TITLE: ABILITY TO TRANSFER: CONSENTS. To the best of its knowledge,
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Seller has good and marketable title to all the Assets, subject to no security
interests, mortgages, pledges, liens, encumbrances or charges. There are no
restrictions on Seller's ability to transfer to Buyer all of the Assets, and
Seller's execution of this Agreement will fully effect such transfer, except any
required consents by customers to transfer currently active customer contracts.
No consent, approval or authorization of, or registration or filing with, any
person or governmental or regulatory authority is required in connection with
the execution of this Agreement or the consummation of the transactions
contemplated hereby.
2.5 OBLIGATIONS TO EMPLOYEES. Seller has paid to its employees all wages,
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compensation, vacation pay, holiday pay, accrued paid leave or time off and
benefits due or owing, or which shall become due or owing, for services rendered
to Seller and its customers for the period up to and including the Effective
Date.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date hereof, Seller has
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no liability or obligation of any nature relating to the Business or the Assets,
whether due or to become due, absolute, contingent or otherwise, including
liabilities for or in respect of taxes or penalties, except for liabilities
which are disclosed on Schedule E attached hereto.
2.7 FILES AND RECORDS. The files and records of Seller which are being
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transferred hereunder are complete and accurate, and reflect all those entries
and matters which are customarily set forth in such files and records.
2.8 DISCLOSURE. No representation or warranty by Seller in this Agreement,
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nor any schedule or document furnished or to be furnished to Buyer by Seller
pursuant hereto or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or fails or
will fail to state a material fact necessary to make the statements contained
therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to Seller as follows:
3.1 ORGANIZATION AND EXISTENCE. Buyer is a corporation duly incorporated,
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validly existing and in good standing under laws of the State of Delaware.
3.2 CORPORATE POWER AND AUTHORITY: DUE EXECUTION. AUTHORIZATION AND
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ENFORCEABILITY. Buyer has all requisite corporate power and authority to enter
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into this Agreement and perform Buyer's obligations hereunder. This Agreement
has been duly executed and delivered, on behalf of Buyer, by a duly elected
officer of Buyer. The execution, delivery and performance of this Agreement by
Buyer have been duly authorized by all necessary corporate action on the part of
Buyer, and this Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
ARTICLE 4
CERTAIN ADDITIONAL COVENANTS
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4.1 RELEASE OF BUYER FROM RESTRICTIVE COVENANTS IN SELLER'S EMPLOYMENT AND
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CONSULTING AGREEMENTS. The employment and consulting agreements between Seller
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and its employees and consultants typically contain covenants restricting such
persons from directly or indirectly becoming employed by or acting as a
consultant for Seller's customers for a period of time following the termination
of their employment or consulting arrangement with Seller. Seller hereby
releases, and agrees not to enforce such provisions against, Buyer or any of its
present and past employees and consultants in the event that any such employee
or consultant is hired or retained by Buyer.
4.2 RESTRICTIVE COVENANTS. For a period of one (1) year from and after the
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Effective Date, Seller will not, directly or indirectly: (a) solicit, employ or
in any other fashion hire any of the Transferred Billable Employees or any other
person who was a billable employee of Seller's Reston, VA office during the year
prior to the Effective Date, or any of the Transferred Staff Employees, or (b)
solicit, interfere with or attempt to entice away from Buyer any person, firm or
corporation which was a customer of Seller's Reston, VA office during the one-
(1) year period prior to the Effective Date including those listed in Schedule
D, or (c) own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be connected as a stockholder, partner
or otherwise with, any entity which at any relevant time during such period
engages in either of the Businesses within ninety (90) miles from downtown
Washington, DC. Notwithstanding the foregoing, this Section 4.2 shall not apply
to Seller's Systems Integration Services performed in the restricted territory
that arise as a result of Systems Integration Services performed by Seller in
other regions.
4.3 SELLER'S ACKNOWLEDGEMENT. Seller specifically acknowledges and agrees
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that the restrictive covenants contained in this Section are reasonable and
necessary to protect the legitimate interests of Buyer and that Buyer would not
have entered into this Agreement in the absence of such restrictive covenants.
Seller agrees that Buyer's remedies at law for any breach or threat of breach by
Seller of the provisions of this Section will be inadequate, and that Buyer
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which Buyer may be entitled at law or
equity. In the event of litigation regarding the covenant not to compete, the
prevailing party in such litigation shall, in addition to any other remedies the
prevailing party may obtain in such litigation, be entitled to recover from
the other party its reasonable legal fees and out of pocket costs incurred by
such party in enforcing or defending its rights hereunder. The length of time
for which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which
Buyer seeks to enforce this covenant.
Provided that the Purchase Price is paid by Buyer the restrictive covenants
contained in this Section are covenants independent of any other provision of
this Agreement and the existence of any claim which Seller may allege against
Buyer whether based on this Agreement or otherwise, will not prevent the
enforcement of this covenant. Should any provision of this Section be adjudged
to any extent invalid by any competent tribunal, such provision will be deemed
modified to the extent necessary to make it enforceable.
4.4 RETENTION PROGRAM. Buyer will implement a Retention Program for all
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Transferred Billable Employees whereby a $3,000 (three thousand dollar) bonus
will be paid within six months after the Effective Date for all such employees
remaining employed by Buyer, at such time. The Buyer will be responsible for
one hundred (100%) percent of the cost.
4.5 COSTS AND EXPENSES; SALES AND TRANSFER TAXES AND FEES. Buyer will pay
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all of its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including all accounting and legal fees and
settlement charges. All applicable sales, transfer, documentary, use, filing
and other taxes and fees that may be due or payable as a result of this
conveyance, assignment, transfer or delivery of the Assets, whether levied on
Seller or Buyer, shall be borne by Seller.
4.6 FORWARDING OF RECEIPTS RELATING TO SERVICES PROVIDED BY OTHER
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PARTY. Seller will promptly forward to Buyer all payments received from any
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customer for services provided to such customer by Buyer on and after the
Effective Date. Buyer will promptly forward to Seller all payments received
from any customer for services provided to such customer by Seller prior to the
Effective Date. Buyer will take all reasonable action requested by Seller to
assist Seller in collecting all accounts receivable arising prior to the
closing.
4.7 FORWARDING OF MAIL AND TELEPHONE CALLS. With respect to mail or faxes
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received at Seller's offices and telephone calls made to Seller's offices during
the ninety (90) day period following the Effective Date, Seller will arrange for
such communications to be forwarded to Buyer, at the location to be furnished by
Buyer, if such communications (a) relate to the Assets and (b) are from
customers concerning new business or relate to Transferred Billable or
Transferred Staff Employees or other existing or prospective employees of Buyer.
4.8 BROKERAGE. If in connection with this Agreement or the transactions
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contemplated hereunder any claims are made for a broker's commission or finder's
fee arising directly or indirectly by, through or on account of any act or
agreement of Seller, or Buyer, the party whose act or agreement gives rise to
such claim will defend, indemnify and hold the other harmless from any and all
liabilities and expenses arising therefrom.
4.9 FURTHER ASSURANCES: COOPERATION. On and after the date hereof, either
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party will execute and deliver such further instruments of conveyance and
transfer and take such further action as the other party may reasonably request
to effectively and smoothly convey and transfer the Assets and Seller's Business
to Buyer.
4.10 CONTINUED OCCUPANCY. Transferred Staff and Transferred Billable
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Employees will be allowed to occupy the Seller's Washington, DC branch current
office space and will be provided with telephones and computers in the same
manner as they are today for a period not to exceed thirty (30) days after the
Effective Date. Seller will bear such Occupancy Cost.
4.11 CLIENT CONSULTS. Prior to the Effective Date, the Seller will notify
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the current customers of the Business and present them with an Assignment
Agreement. Prior to and subsequent to the Effective Date, Seller will assist
Buyer in obtaining consent of customers to the transfer of such customer
contracts to Buyer.
4.12 TRANSITION ASSISTANCE. Xxxx Xxxxxxxxxxx, technical manager of Seller's
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Reston, VA branch will be available full time until July 10, 1998 to assist the
Buyer in the acquisition and transition of the Business. Xxxxx Xxxxxxxx,
Administrative Manager of Seller's Reston, VA branch will also be available as
needed until July 31, 1998 to assist the Buyer in the acquisition and transition
of the Business. Any costs related to this Section 4.12 will be borne solely ny
Seller.
4.13 EARNOUT PAYMENT. Gross Profit for purposes of Purchase Price payment
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under Section 1.3 is defined as Net Revenue less all direct costs of a billable
consultant. Direct Cost includes salary, bonus paid in ordinary course of
business, benefits, payroll taxes, travel expenses, vacation, and subcontractor
fees for supplying technical consultants, but shall exclude any retention bonus
paid pursuant to paragraph 4.4. Thirty (30) days after each month end for a one
(1) year period after the Effective Date, Buyer will supply the Seller with a
schedule which indicates monthly and cumulative net revenue, direct cost, Gross
Profit, and the Purchase Price payable to the Seller for each Consultant
pursuant to 1.3(b) and 1.3(c) monthly payment. The monthly payments will be
calculated by multiplying the cumulative Gross Profit less the previous months
cumulative Gross Profit by the applicable earnout percentages of forty (40%)
percent or sixty (60%) percent. Buyer shall make Earnout Payments related to
any Successfully Transferred Billable Employee of Independent Contractor if the
employee is terminated by Buyer and then re-hired during the 12 month period
following the effective date. Should a dispute arise concerning an Earnout
Payment, Buyer shall provide to Seller documentation and reasonable access to
recors to substantiate the Earnout Payment calculation.
4.14 PAYROLL REGISTER Seller will provide to Buyer, within 2 weeks after
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Closing, the year-to-date payroll register through the Closing Date.
4.15 ENFORCEMENT OF STAFF NON-COMPETE AGREEMENTS. Seller agrees to
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enforce, for the benefit of Buyer, all non-compete provisions contained in
employment agreement of the staff employees at Seller's Reston, VA branch who
are not being hired by Buyer.
4.16 SETTLEMENT OF DISPUTES. Any controversy or claim arising out of or
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related to the Purchase Price shall be finally resolved by arbitration pursuant
to the commercial arbitration rules of the American Arbitration Association.
Any such arbitration shall take place in Newark, New Jersey, before three (3)
arbitrators, one (1) of which shall be appointed by Buyer, one (1) by Seller,
and the third by the arbitrators; provided, however, that the parties may by
mutual agreement designate a single arbitrator. The parties further agree that
(I) the arbitrators shall be empowered to include arbitration costs and attorney
fees in the award to the prevailing parties in such proceedings and (ii) the
award in such proceedings shall be final and binding on the parties. The
arbitrators shall apply the law of the State of New Jersey exclusive of
conflicts of laws principles, to any dispute. Judgment on the arbitrators'
award may be entered in any court having the requisite jurisdiction. Nothing in
this Agreement shall require the arbitration of disputes between the parties
that arise from actions, suits or proceedings instituted by third parties. Each
party irrevocably submits to the jurisdiction and venue of the arbitration
described in the foregoing and to the jurisdiction and venue of the Federal and
State courts sitting in New Jersey for the enforcement of any judgment on
arbitrators' award and waives any objection it may have with respect to the
jurisdiction of such arbitration's or such courts or the inconvenience of such
forums or venues.
ARTICLE 5
INDEMNIFICATION
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5.1 INDEMNIFICATION BY SELLER. Seller hereby jointly and severally agrees
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to indemnify and hold harmless Buyer and its officers, directors, employees and
affiliates from and against:
(a) any loss, liability, claim, obligation, damage or deficiency
arising out of or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Seller contained in this
Agreement or in any document furnished or to be furnished to Buyer evidencing
the transfer of the Assets hereunder;
(b) any and all liabilities of any nature relating to any of the Assets
or Transferred Billable and Transferred Staff Employees (whether such
liabilities are due or to become due, whether accrued, absolute, contingent or
otherwise) existing on the Effective Date or arising out of any transactions
entered into, or any state of facts existing, prior to such date; and
(c) any actions, judgments, fines, penalties, costs and expenses
(including reasonable attorneys' fees and all other expenses incurred in
investigating, preparing or defending any litigation or proceeding, commenced or
threatened) incident to any of the foregoing or the enforcement of this Section.
5.1.2 Seller agrees that Buyer shall have the right to set-off any claim for
indemnification it may have hereunder against Seller against any obligation
Buyer may have to Seller hereunder.
5.2 INDEMNIFICATION BY BUYER. Buyer hereby agrees to indemnify and hold
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harmless Seller and its respective officers, directors, employees and affiliates
from and against: (limit to Purchase Price)
5.2.1 any loss, liability, claim, obligation, damage or deficiency arising
out of or resulting from any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Buyer contained in this Agreement
or in any document furnished or to be furnished to Seller in connection with the
transactions contemplated hereby;
5.2.2 any and all liabilities of any nature relating to any of the Assets or
Transferred Billable and Transferred Staff Employees if such liabilities arise
out of a transaction entered into following the Effective Date; and
5.2.3 any actions judgments, fines, penalties, costs and expenses (including
reasonable attorneys' fees and all other expenses incurred in investigating,
preparing or defending any litigation or proceeding, commenced or threatened)
incident to any of the foregoing or the enforcement of this Section.
ARTICLE 6
MISCELLANEOUS
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6.1 NATURE AND SURVIVAL OF REPRESENTATIONS. All statements contained in
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any certificate or other document delivered by or on behalf of Seller pursuant
hereto, or in connection with the transactions contemplated hereby, shall be
deemed representations and warranties by the party which delivered or furnished
the certificate or document. All representations, warranties and agreements
made by
any party to this Agreement, or pursuant hereto, shall survive the closing of
this transaction for a period of two (2) years with respect to all matters
except for taxes, for which such representations, warranties and agreements
shall survive for a period equal to the statute of limitations applicable
thereto, plus sixty days. Seller acknowledges that its representations and
warranties in this Agreement shall not be affected or mitigated by any
investigation conducted by Buyer or its representatives prior to the date
hereof.
6.2 NOTICES. All notices, requests, demands and other communications
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hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or, if mailed, when mailed by Federal Express or comparable
overnight courier service, to the other party at the following addresses (or to
such other address as shall be given in writing by any party to the other):
6.2.1 If to Seller:
Xxxxxx International, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
6.2.2 If to Buyer:
Automated Concepts, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxx Xxxxxx
6.3 SUCCESSORS AND ASSIGNS. This Agreement, and all rights and powers
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granted hereby, will bind and inure to the benefit of the parties hereto and
their respective successors and assigns. No party hereto may assign any of its
rights or obligations hereunder.
6.4 GOVERNING LAW. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New Jersey.
6.5 AMENDMENT AND WAIVER. The parties hereto may by mutual agreement amend
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this Agreement in any respect, and any party, as to such party, may (a) extend
the time for the performance of any of the obligations of any other party, (b)
waive any inaccuracies in representations by any other party, and (c) waive
compliance by any other party with any of the agreements contained herein and
performance of any obligations by such other party. To be effective, any such
amendment or waiver must be in writing and be signed by all parties to this
Agreement.
6.6 HEADINGS. The headings preceding the text of the articles and sections
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hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
6.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or
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more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument
6.8 ENTIRE AGREEMENT. This Agreement and the Schedules hereto, each of
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which is incorporated herein, set forth all of the promises, covenants,
representations, warranties, agreements, conditions and undertakings among the
parties hereto with respect to the subject matter hereof, and supersede all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
IN WITNESS WHEREOF, the parties have duly executed this Acquisition Agreement on
the date first set forth above.
AUTOMATED CONCEPTS, INC. XXXXXX TELECOM, INC.
By: ______________________________ By: _________________________________
Xxxxxx Xxxxxxxx Xxxxxxx X. Xxxxxxxxxx
Title: CFO Title: Sr. Vice President-Finance, and
Treasurer, Chief Financial Officer