ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT is entered into as of August 31, 1998
("Agreement") by and among APPLIED INTELLIGENCE GROUP, INC., 00000 Xxxxxx Xxxx,
Xxxxxx, Xxxxxxxx 00000-0000 ("Seller"), and THE NETPLEX GROUP, INC., a New York
corporation, 0000 Xxxxxxxxxx Xxxxx, Xxxxx Xxxxx, XxXxxx, Xxxxxxxx 00000
("Netplex").
RECITALS
WHEREAS, Seller desires to sell to Netplex all of the Assets (as
hereinafter defined) relating to the delivery of its technical consulting
services and solutions business to the retail industry;
WHEREAS, Netplex desires to acquire said Assets, and in connection
therewith, Seller will receive from Netplex (i) $3,000,000 in cash (the "Cash
Consideration"); (ii) One Million Dollars ($1,000,000) in value of Netplex
Preferred Stock (as defined below), and (iii) certain earn-out compensation
payments (the "Earn-Out Payments") as described in the Earn-Out Agreement as
provided for herein.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and the agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1. "Accounts Receivable" shall mean the accounts receivable of
Seller arising from the operation of the Business.
1.2 "Agreement Documents" shall mean this Agreement and the various
Schedules, Exhibits, attachments, and other documents, of which the exchange or
execution between Netplex and Seller is contemplated by this Agreement to occur
at or before the Closing, except as to such documents subsumed in the
definitions hereinafter provided.
1.3. "Assets" shall mean all the assets of Seller used in the
operation of the Business as a going concern, except for the ChainLink software
product, Accounts Receivable earned prior to Closing, and cash of the Business,.
1.4. The "Business" shall mean the technical consulting services and
solutions business of Seller which provides such services and solutions to the
retail and distribution industries, but not including the Seller's viaLink and
iJob businesses.
1.5. "Business Records" shall mean all business records of Seller
relating to the Business, including, but not limited to, all books of account,
customer contracts, customer lists, supplier and vendor lists, employee
personnel files, file materials, logs, consultants' reports, budgets, financial
reports and sales, operating and business plans, and customer files relating to
or used or held for use in the operation of the Business.
1.6. "Contracts" shall mean oral and written agreements and
contracts of Seller relating to the Business to the extent identified on
Schedule 4.14 attached to this Agreement, including, without limitation, notes
receivable, license agreements, assignment agreements, purchase orders, sales
orders, warranties, rights to discounts, joint venture agreements, partnership
agreements, maintenance agreements, sales representative agreements, service
agreements, distribution agreements, leases of real property and automobiles and
agreements for leased equipment.
1.7. "Fixed Assets and Tangible Personal Property" shall mean all
fixed assets and tangible personal property of Seller used in the Business ,
including, without limitation, all machinery, including essential replacement
parts, equipment, supplies, tools, tooling, furniture, fixtures, hardware and
spare parts.
1.8. "Intangible Property" shall mean all intangible property and
assets of Seller used in the Business (whether owned, used, registered in the
name of, or licensed by Seller or in which Seller otherwise has an interest) .
Without limiting the generality of the foregoing, any intangible property not
used in the Business, such as the iJob(TM) and viaLink(R) software products and
all associated intellectual property, are specifically excluded from this
definition.
1.9. "Inventory" shall mean all inventory of raw materials, finished
goods, supplies, project deliverables and repair materials of Seller relating to
the Business.
1.10. "AIG Marks" shall mean such tradenames, trademarks, logos or
graphic designs representing or relating to the Business, except such items
relating to Chainlink, and any part of Seller's business or other operations
which are not part of the Assets.
1.11. "Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
governmental authority whether federal, state or local, or any other person
relating to the Business.
1.12. "Affiliate" shall mean any Person who is controlled by, or is
under common control with, a Party hereto. The term "control" (including, with
correlative meaning, the terms "controlled by" and "under common control with"),
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
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1.13. "Closing" shall mean the actual transaction at which the
Seller receives the consideration and other documents required to be given by
Netplex hereunder, and at which Netplex receives the documents required to be
given by Seller hereunder. Closing shall take place in Oklahoma City, Oklahoma.
1.14. "Closing Date" shall mean September 30, 1998 or such other
date as may be mutually agreed to by the parties.
1.15. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.16. "Knowledge" as to any party hereto shall mean the knowledge of
such party or any officer or director of such party after due investigation.
1.17. "Laws" shall mean the statutes, laws, rules, regulations,
ordinances, codes, directives, writs, injunctions, decrees, judgments, and
orders of any governmental (whether foreign, federal, state, local, or
otherwise) legislative, regulatory or administrative agency, court or other
governmental body, promulgated generally and not specifically directed to both
of the parties to this Agreement.
1.18. "Liabilities" shall mean liabilities, obligations or
commitments of any nature, absolute, accrued, contingent or otherwise, known or
unknown, whether matured or unmatured.
1.19. "Liens" shall mean mortgages, deeds of trust, collateral
assignments, security interests, conditional or other sales agreements, claims,
options, restrictions, liens, pledges, hypothecations, easements, rights of way,
encumbrances and adverse interests or other defects of title of any kind,
provided that "Liens" shall not mean liens for taxes not yet due and payable.
1.20. "Material Adverse Effect" shall mean, with respect to any
Person, any condition, occurrence or effect, which is materially adverse to the
value of the business, properties, assets, liabilities, capitalization,
stockholders' equity, financial condition, operations, licenses or other
franchises or results of operations of such Person, considered as a whole.
1.21. "Netplex Common Stock" shall mean the shares of Netplex common
stock, par value $.001 per share.
1.22. "Netplex Preferred Stock" shall mean the shares of Netplex
preferred stock, Class B, par value $.01 per share. The Certificate of
Designation which sets forth the rights and preferences of the Netplex Preferred
Stock is attached hereto as Exhibit A.
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1.23. "Person" shall mean any person or entity, whether an
individual, trustee, corporation, general partnership, limited partnership,
limited liability company, trust, unincorporated organization, business
association, firm, joint venture, governmental agency or authority.
1.24. "Taxes" shall mean any federal, state, local, foreign or other
tax, levy, fee, assessment or other government charge, including any penalties,
additions and interest with respect thereto.
1.25. "Work in Progress" shall mean, as to the Contracts being
transferred to Netplex under this Agreement as of the Closing Date, any
continuing or uncompleted obligation to provide goods and/or services to
Seller's customer(s), which obligations will be transferred to Netplex and
assumed thereby hereunder, to the extent the same are identified on Schedule
4.14.
ARTICLE 2
ASSET SALE AND PURCHASE
Netplex and Seller hereby agree that, subject to the terms and conditions
hereinafter set forth, (i) Seller shall sell, assign, transfer and otherwise
convey the Business and the Assets, free and clear of all Liens, Contracts and
Liabilities, except as have been, or will be, identified on schedules to this
Agreement; (ii) Netplex agrees to purchase, assume, and otherwise receive the
Assets; (iii) and Netplex agrees to pay to Seller the consideration set forth
herein for the Assets conveyed to Netplex.
ARTICLE 3
CLOSING
3.1. Consideration to Seller:
3.1.1. At Closing, Netplex shall deliver and pay to Seller (i)
the Cash Consideration of Three Million Dollars ($3,000,000) in certified funds
or bank wire transfer to an account designated by Seller; (ii) a stock
certificate representing the number of shares of Netplex Preferred Stock as
calculated below; (iii) the Certificate of Designation of the Preferred Shares.
3.1.2. The number of shares of Netplex Preferred Stock which
Seller shall receive from Netplex at Closing shall be calculated by dividing one
million (1,000,000) by the average reported closing price of the Netplex Common
Stock on the NASDAQ SmallCap Market for the twenty (20) days immediately prior
to September 1, 1998.
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3.1.3. At Closing, Seller and Netplex shall deliver to each
other the executed Earn-Out Agreement in the form substantially as set forth in
Exhibit B hereto, and such other Agreements Documents as are provided for by
this Agreement, all of which are incorporated by reference as if fully set forth
herein.
3.1.4. At Closing, Netplex shall deliver to Seller such other
documents as are reasonably necessary to effect the transactions contemplated by
this Agreement.
3.2. Consideration to Netplex. At Closing, Seller shall, subject to
the terms, covenants, and conditions of this Agreement, convey, transfer and
deliver to Netplex by an executed xxxx of sale, assignments, assignments of
contracts, and such other documents as are reasonably required to perfect the
transfer of the Business and the Assets to Netplex free and clear of all Liens,
Contracts and Liabilities, except to the extent identified on Schedule 3.2
hereto, which Schedule identifies the Liens, Contracts and Liabilities Netplex
agrees to assume
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Netplex as follows, which
representations and warranties have been relied upon by Netplex in entering into
this Agreement:
4.1. Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma, and is
qualified or registered to do business in each jurisdiction where it is required
to do so. Seller has full corporate power and authority to carry on its business
as now conducted and to enter into and to perform this Agreement. The address of
Seller's principal office, all of Seller additional places of business, and the
locations of all tangible personal property included in the Assets are listed on
Schedule 4.1. Except as set forth on Schedule 4.1, during the past five (5)
years, Seller has not been known by or used any corporate, partnership,
fictitious or other name in the conduct of the Business or in connection with
the use or operation of the Assets.
4.2. Corporate Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been, or will be prior to the Closing, duly authorized by Seller's board of
directors and shareholders.
4.3. Binding Agreement. This Agreement has been duly executed by
Seller and delivered to Netplex and constitutes the valid and binding agreement
of Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by
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bankruptcy, insolvency or other laws affecting creditors' rights generally and
the exercise of judicial discretion in accordance with general equitable
principles.
4.4. Subsidiaries and Affiliates. Except as set forth on Schedule
4.4, Seller does not own any capital stock or other equity securities of any
other corporation and does not have any other type of ownership interest in any
other corporation, partnership, joint venture or other business organization or
entity which relates to or is integral to the operation of the Business.
4.5. No Breach. Except as set forth in Schedule 4.5 or otherwise in
the Agreement Documents, the execution, delivery and performance of this
Agreement by Seller will not violate or conflict with Seller's Articles of
Incorporation or Bylaws or any Law to which Seller, or the Assets are subject,
or by which Seller or the Assets may be bound, or (with or without giving notice
or the lapse of time or both) breach or conflict with any contract, agreement,
or other commitment to which Seller is a party or by which Seller may be bound,
or result in the imposition of any Lien on the Assets other than such Liens as
have been identified on a Schedule to this Agreement.
4.6. Consents and Approvals. Except as set forth on Schedule 4.6
hereto, no filing or registration with, no permit, authorization, consent or
approval of, and no notice to, any federal, state or local government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign, or other public body or authority or
any other person is necessary or required in connection with the execution and
delivery of this Agreement by Seller or for the consummation by Seller of the
transactions contemplated by this Agreement.
4.7. Permits. Schedule 4.7 contains a true and complete list of all
Permits. Seller has all Permits required to conduct the Business as now being
conducted. All Permits are valid and in full force and effect. Except as set
forth on Schedule 4.7(a) or elsewhere in the Agreement Documents, no notice to,
declaration, filing or registration with, approval or permit from, any domestic
or foreign governmental or regulatory body or 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 and the consummation of the
transactions contemplated hereby. Notwithstanding anything to the contrary in
the foregoing, Seller makes no representation as to whether any of said Permits
may be assumed, acquired, continued, or renewed by Netplex at or after the
Closing. It is specifically agreed and understood between the Parties hereto
that such Permits, to the extent such Permits cannot be transferred, are not
included in the Assets.
4.8. Compliance with Laws. Except as set forth in Schedule 4.8, Seller
has, to the best Knowledge of Seller, complied in all material respects with all
of the Laws applicable to
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the Business and the Assets, including, without limitation, all applicable Laws
relating to health and sanitation, environmental protection and occupational
safety the violation of which would have a Material Adverse Effect on its
Business or the Assets.
4.9. Title to and Sufficiency of the Assets. Seller has good and
marketable title to all of the Assets free and clear of all Liens, except for
Liens described on Schedule 4.9. The Assets onstitute all of the assets, rights
and properties that are used in the operation of the Business as it is now
conducted.
4.10. Fixed Assets and Tangible Personal Property. Schedule 4.10
contains a true and complete list of the Fixed Assets and Tangible Personal
Property which are being sold pursuant to this greement. Except as set forth on
Schedule 4.10, the Fixed Assets and Tangible Personal Property, are in good
operating condition and repair (reasonable wear and tear excepted), are
performing satisfactorily and are suitable for their intended uses.
4.11. Inventory. Schedule 4.11 contains a true and complete list of all
Inventory as of August 31, 1998 which is being sold pursuant to this Agreement.
Except as otherwise set forth on Schedule 4.11 and subject to Liens identified
in any of the Agreement Documents, all Inventory reflected on the Seller Balance
Sheet (as defined below), or acquired since the date of the Seller Balance
Sheet, was acquired and has been maintained in the ordinary course of business;
is of good and merchantable quality; consists substantially of a quality,
quantity and condition useable, leasable or saleable in the ordinary course of
business; is valued at reasonable amounts based on the ordinary course of
business and consistent with past practice; and is not subject to any write-down
or write-off. Seller is not under any liability or obligation with respect to
the return of Inventory in the possession of wholesalers, retailers or other
customers.
4.12. Intangible Property and AIG Marks. Schedule 4.12 contains a true
and complete list of the Intangible Property and AIG Marks to be conveyed to
Netplex pursuant to this Agreement. Seller has delivered to Netplex copies of
all documents (if any) establishing Seller's rights to use the Intangible
Property and AIG Marks, and any restrictions thereof. To the best of Seller's
Knowledge and except as otherwise identified in this Agreement or the Agreement
Documents, Seller has, and after Closing, Netplex will have, the right to use
all Intangible Property and AIG Marks, free and clear of any royalty or other
payment obligations. Except as set forth on Schedule 4.12 or in the documents
heretofore described in this section, to the best of Seller's Knowledge,
Seller's use of the Intangible Property does not conflict with, violate or
infringe any intellectual property or other rights of any other Person, no one
has claimed any such violation or infringement, and to Seller's best Knowledge,
no Person is currently violating or infringing any of Seller's intellectual
property or other rights with respect to the Intangible Property in any way that
would have a Material Adverse Effect on the Business.
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4.13. Protection of Intellectual Property. To the best of Seller's
Knowledge, all employees and consultants of Seller who have worked on or
contributed to the development of Seller's technology, trademarks, trade names,
copyrights and other intellectual property rights have effectively conveyed to
Seller all rights such employees or consultants may have had in such
intellectual property.
4.14. Contracts. Schedule 4.14 contains a true and complete list (and,
in the case of oral agreements, contracts or leases, a summary of the material
terms) of all Contracts and Works in Progress dated on or after January 1, 1996
or which represent Contracts of Seller and/or Works in Progress to be
transferred to Netplex pursuant to this Agreement. To Seller's best Knowledge,
the Contracts are valid, binding and enforceable by Seller in accordance with
their respective terms and are in full force and effect. To Seller's best
Knowledge, Seller has delivered to Netplex true and complete copies of the
Contracts and all amendments thereto, other than those oral agreements
summarized on Schedule 4.14. The Contracts are subject to any Liens and/or
Liabilities set forth on Schedule 4.14. Seller has complied in all material
respects with all of the Contracts and neither it nor any other party thereto is
in default, or has been notified of a threat of a default or any dispute, under
any of the Seller Contracts. The execution, delivery and performance of this
Agreement by Seller will not constitute a default or breach under any of the
Contracts, except as set forth in Schedule 4.14.
4.15. Litigation. Except as described on Schedule 4.15, there is no
litigation, proceeding (arbitral or otherwise), claim or investigation of any
nature pending or, to Seller's best Knowledge, threatened against Seller, the
Business or the Assets. There are no writs, injunctions, decrees, arbitration
decisions, unsatisfied judgments or similar orders outstanding against Seller
with respect to the Business or the Assets.
4.16. Seller Financial Statements.
(a) Schedule 4.16(a) sets forth true, correct and complete copies of (i) the
audited balance sheet of Seller as of December 31, 1997
(the "Seller Balance Sheet"); (ii) the statement of
income of Seller for the one year period ended December
31, 1997 (collectively with the balance sheet described
in Subsection (i) hereof, the "Seller Annual
Financials"); (iii) the unaudited balance sheet of Seller
as of June 30, 1998 and the statement of income of Seller
for the period January 1 through June 30, 1998 (the
"Seller Quarterly Financials"); and (iv) the unaudited
balance sheet of Seller as of August 31, 1998 and the
statement of income for the interim period from July 1,
1998 through August 31, 1998 (the "Seller Monthly
Financials" and, together with the Seller Annual
Financials and the Seller Quarterly Financials, the
"Seller Financial Statements"). The Seller Financial
Statements have been prepared in accordance with
generally
8
accepted accounting principles consistently applied, and
present fairly and accurately the financial condition of
Seller at the respective dates thereof.
(b) Schedule 4.16(b) sets forth true, correct and complete copies of (i) the
unaudited balance sheet of the Business as of December
31, 1997 (the "Business Balance Sheet"); (ii) the
unaudited statement of income of the Business for the one
year period ended December 31, 1997 (collectively with
the balance sheet described in Subsection (i) hereof, the
"Business Annual Financials"); (iii) the unaudited
balance sheet of the Business as of June 30, 1998 and the
statement of income of the Business for the period
January 1 through June 30, 1998 (the "Business Quarterly
Financials"); and (iv) the unaudited balance sheet of the
Business as of August 31, 1998 and the statement of
income for the interim period from July 1, 1998 through
August 31, 1998 (the "Business Monthly Financials" and,
together with the Business Annual Financials and the
Business Quarterly Financials, the "Business Financial
Statements"). It is specifically agreed and understood by
the Parties hereto that the Business Balance Sheet was
prepared for the purposes of this Agreement with Seller's
best efforts to fairly and accurately present the
financial condition and the results of the operations of
the Business at the respective dates thereof, and such
Business Balance Sheet was not necessarily calculated or
kept by Seller in the ordinary course of its business.
4.17. Absence of Material Adverse Changes. Since December 31, 1997,
there have been no changes or conditions constituting a Material Adverse Effect
on the Assets or Business which have not been disclosed in writing to Netplex.
4.18. Liabilities. Except as disclosed on Schedule 4.18 attached hereto
or disclosed elsewhere in the Agreement Documents, Seller has no material
Liabilities of any nature relating to the Business, including without
limitation, Tax liabilities due or to become due, except iabilities that are
reflected and reserved against on the Seller Financial Statements or otherwise
disclosed pursuant to this Agreement.
4.19. Tax Matters. Neither Seller, nor any entity to whose liabilities
Seller has succeeded, has filed or been included in a consolidated, unitary, or
combined tax return with another Person. Except as disclosed on Schedule 4.19
hereto: (a) Seller has filed all tax returns and reports ("Seller Tax Returns")
required to have been filed by or for it (except for those tax returns and
reports for which it has obtained an extension, which it will file in a timely
manner); (b) Seller has paid or made adequate provision for all Taxes payable by
Seller, and there is no Tax due and payable, the non-payment of which would
adversely affect any of the Assets or the
9
use thereof, or could cause Netplex to incur any liability; (c) no unpaid Tax
deficiency has been asserted against or with respect to Seller by any taxing
authority; (d) Seller is in compliance with, and its Business Records contain
all information and documents necessary to comply with, all applicable
information reporting and Tax withholding requirements; (e) Seller has not
granted, nor is it subject to, any waiver of the period of limitations for the
assessment of Tax for any currently open taxable period; and (f) Seller has not
entered into, and holds no asset subject to, a "safe harbor lease" subject to
former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended before
the Tax Reform Act of 1986, and the regulations thereunder; (g) all material
information set forth in the Seller Tax Returns is accurate and complete; (h)
the Seller Balance Sheet fully and properly reflects, as of the date thereof,
the Liabilities of Seller for all accrued taxes, additions to tax, penalties,
and interest; (i) for periods ending after the date of the most recent Seller
Financial Statements, the books and records of Seller fully and properly reflect
its liability for all accrued taxes, additions to tax, penalties and interest;
(j) Seller has not made or entered into, and holds no asset subject to, a
consent filed pursuant to Section 341(f) of the Code and the regulations
thereunder; and (k) Seller is not required to include in income any amount for
an adjustment pursuant to Section 481 of the Code or the regulations thereunder.
Schedule 4.19 describes all material tax elections, consents, and agreements
affecting Seller, and lists all types of taxes paid and tax returns filed by
Seller. Seller is not a "foreign person" for purposes of Section 1445 of the
Code.
4.20. Insolvency Proceedings. Neither Seller nor any of the Seller's
Assets being transferred under this Agreement is the subject of any pending or,
to Seller's best Knowledge, threatened, insolvency proceedings of any character.
Seller has not made an assignment for the benefit of creditors or taken any
action with a view to or that would constitute a valid basis for the institution
of any such insolvency proceedings. Seller is not insolvent and will not become
insolvent as a result of entering into this Agreement.
4.21. Employee Benefit Plans.
(a) Schedule 4.21 hereto includes a complete and correct schedule of (i)
all employee pension benefit plans (as defined in Section 3(2) of
ERISA) and employee welfare benefit plans (as defined in Section 3(1)
of ERISA) of Seller and any other Person or entity that together with
Seller, is treated as a single employer under Code Section 414(b), (c),
(m) or (o) (each such Person or entity being referred to herein as an
"ERISA Affiliate"), (ii) all plans, programs, agreements and
arrangements that provide benefits to employees of Seller or any ERISA
Affiliate as a result of the transactions contemplated by this
Agreement or that provide for the payment of separation, severance,
termination or similar benefits to such employees, (iii) all trust
agreements established for the purposes of funding any compensation or
benefit plan, program, agreement or arrangement, in each case currently
maintained for the benefit of, or relating to, any current or former
employee, officer, director or independent contractor of Seller or any
ERISA Affiliate, and (iv) all other plans, programs, contracts or
arrangements pertaining to or including any current or former employee,
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officer, director or independent contractor of Seller or any ERISA
Affiliate (these plans, programs, agreements and arrangements together
with all other employee benefit plans, programs, agreements and
arrangements of Seller or any ERISA Affiliate (including, but not
limited to, all "employee benefit plans" within the meaning of Section
3(3) of ERISA) for the benefit of, or relating to, any current or
former employee, officer, director or independent contractor of Seller
or any ERISA Affiliate, being collectively referred to herein as the
"Seller Plans"). Neither Seller nor any ERISA Affiliate maintains or
participates in, nor has Seller or any ERISA Affiliate ever maintained
or participated in, any defined benefit plans or any "multiemployer
plans" as defined in Section 3(37) of ERISA. Except as set forth in
Schedule 4.21 hereto, neither Seller nor any ERISA Affiliate has ever
maintained or participated in any other employee benefit plans or other
like plans, programs or arrangements under which Seller or any ERISA
Affiliate has any obligation to any of their current or former
employees, officers, directors, or independent contractors, nor has
Seller or any ERISA Affiliate made any commitments or agreements to
establish or extend any such plans, programs or arrangements for their
benefit.
(b) Seller has previously provided to Netplex true, correct and complete
copies of (i) each Seller Plan (or, in the case of any unwritten Seller
Plan, a description thereof), (ii) actuarial reports and financial
statements prepared in connection therewith for the 3 previous years,
(iii) each trust agreement and/or insurance contract with respect to
each Seller Plan, (iv) annual reports on Form 5500 filed with the
Internal Revenue Service with respect to each Seller Plan (if required)
for the 3 previous years, (v) the most recent summary plan description
for each Plan for which such summary plan description is required; and
(vi) all IRS determination letters obtained for any Seller Plan.
(c) To the Knowledge of Seller, each Seller Plan is now and has been
operated, administered and maintained in all material respects in
compliance with its terms and the requirements of all applicable law,
including, without limitation, ERISA and the Code. All contributions
required to be made to any Seller Plan have been made on or before
their due dates and no Seller Plan has incurred a funding deficiency
under Section 412 of the Code. No legal action, suit or claim is
pending or, to the Knowledge of Seller, threatened with respect to any
Seller Plan (other than claims for benefits in the ordinary course).
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(d) Each Seller Plan that is intended to be qualified under Section 401(a)
of the Code or Section 401(k) of the Code has received a favorable
determination letter from the Internal Revenue Service that the form of
such Seller Plan is so qualified and each trust established in
connection with any Seller Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the Internal Revenue Service that it is so
exempt from federal income taxation. No such determination letter has
been revoked nor has revocation of any such determination letter been
threatened, nor has any such Seller Plan been amended since the date of
its most recent determination letter or application therefor in any
respect that would adversely affect its qualified status or materially
increase its costs (provided that for purposes of this sentence the
term "materially" shall mean, with regard to each occurrence, an amount
in excess of $10,000.00 or $100,000.00 in the aggregate).
(e) To the Knowledge of Seller, there has been no prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the
Code) or other breach of fiduciary responsibility with respect to any
Seller Plan that could give rise to any tax or penalty under Section
4975 of the Code, Title I of ERISA or other applicable law.
(f) With respect to each Seller Plan which is a group health plan (as
defined in Code Section 4980B and ERISA Section 607), Seller and each
ERISA Affiliate have taken all necessary actions to satisfy the notice
and benefit requirements under Code Section 4980B and Part 6 of Title I
of ERISA with respect to employees, former employees and independent
contractors of Seller and any ERISA Affiliate (and their spouses and
dependent children) who have had a "qualifying event" as defined in
Code Section 4980B and ERISA Section 603 with respect to any such
Seller Plan on or before the Closing, or as a result of the instant
transaction. Except as set forth in Schedule 4.21 hereto, there are
currently no employees, former employees or independent contractors of
Seller or any ERISA Affiliate (or their spouses and dependent children)
(i) who have elected continuation coverage under Code Section 4980B or
Part 6 of Title I or ERISA, or (ii) who are eligible to elect such
continuation coverage with respect to any of Seller' or any ERISA
Affiliate's group health plans for a "qualifying event" (as defined
above) that occurred prior to the date of this Agreement.
(g) Except as set forth in Schedule 4.21, there is no material debt,
liability, claim or obligation resulting (or which may result) from any
claim incurred or asserted under any Seller Plan, or which, to the
Knowledge of Seller, may be incurred or asserted before, on or after
the Closing under any Seller Plan, by any employees, former employees
or independent contractors of Seller or any ERISA Affiliate (or
12
their covered dependents), whether as retirees, disabled persons or
otherwise, which is not fully and totally funded for by a separate
trust or insurance policy or fully and totally reserved for on the
Financial Statements as of the Closing (in which case, the amount of
such debt, liability, claim or obligation and the actuarial methods and
assumptions are stated in Schedule 4.18).
(h) Notwithstanding anything to the contrary in this Agreement, Netplex is
not acquiring any interest in any Employee Benefit Plan or insurance
policies of Seller.
4.22. Employees. Seller has provided Netplex with a complete and
accurate list of all employees of Seller employed in the Business, showing for
each: name, current job title or description, current salary level (including
any bonus or deferred compensation arrangements) and any bonus, commission or
other remuneration paid or payable since December 31, 1997 (other than any
bonuses paid to salespersons in the ordinary course of the Business), and
describing any existing contractual arrangement with such employee. Except as
set forth in Schedule 4.22 hereto, Seller has not maintained, does not maintain
and has not announced to the employees listed on Schedule 4.22 any plan to
maintain any written or other policy with respect to severance or termination
pay. Except as set forth in Schedule 4.22 and other than usual and customary
wage and salary or employment practices, since December 31, 1997, Seller has
made no commitments or agreements to increase the wages or to modify the
conditions or terms of employment of any of the employees listed on said
Schedule. There are no collective bargaining agreements applicable to the
Business and there have been no union organizing efforts conducted with respect
to such employees or any work stoppages experienced by Seller during the last
three years.
4.23. Insurance. Schedule 4.23 lists all insurance policies (by policy
number, insurer, location or property insured, annual premium, premium payment
dates, expiration date and type of coverage) held by Seller relating to the
business, properties and employees of the Business, copies of which have been
provided to Netplex. All such insurance policies are in full force and effect
and in such amounts and provide coverages that are reasonable and customary in
light of the business, operations and properties of Business.
4.24. Environmental Matters.
(a) As used in this Agreement "Hazardous Material" shall mean: (i) any
"hazardous substance" as now defined pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss. 9601(14); (ii) any "pollutant or contaminant" as defined in
42 U.S.C. ss. 9601(33); (iii) any material now defined as "hazardous
waste" pursuant to 40 C.F.R. Part 261; (iv) any petroleum, including
crude oil and any fraction thereof; natural or
13
synthetic crude oil and any fraction thereof; (v) natural or synthetic
gas usable for fuel; (vi) any "hazardous chemical" as defined pursuant
to 29 C.F.R. Part 1910; (vii) any asbestos, polychlorinated biphenyl,
or isomer of dioxin, or any material or thing containing or composed of
such substance or substances; (viii) any infectious organism or
biological or medical waste; or (ix) any other substance, regardless of
physical form, that is subject to any Environmental Laws.
(b) As used in this Agreement, "Environmental Laws" shall mean any
statutes, regulations, requirements, orders, ordinances, rules of
liability or standards of conduct of any foreign, federal, state, local
government, or common law relating to the protection of human health,
plant life, animal life, natural resources, the environment or property
from the presence in the environment of any solid, liquid, gas, odor or
any form of energy, from whatever source, including, without
limitation, any emissions, discharges, releases, or threatened releases
of Hazardous Material into the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface or building structures), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
generation, disposal, transport or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances
or wastes.
(c) To the knowledge of Seller, except as set forth on Schedule 4.24, (i)
there are no environmental conditions related to the Seller Real
Property Leases (as defined herein) or Seller' business and other
assets of Seller that could have a Material Adverse Effect on Seller,
including any such conditions relating to the use, treatment, storage,
release or disposal of any Hazardous Material; (ii) Seller has not
manufactured, processed, distributed, used, treated, stored, disposed
of, transported or handled any Hazardous Material in a manner that
could have a Material Adverse Effect on Seller; (iii) there is no
ambient air, surface water, groundwater or land contamination or
contamination within building structures, within, under, originating
from or relating to any real property which is the subject of the
Seller Real Property Leases, or any other location related to the
Seller Real Property Leases such that the contamination affects such
other locations and none of such properties has been used for the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any Hazardous Material in a manner
that could have a Material Adverse Effect on Seller; and (iv) Seller
has no obligation or liability, known or unknown, matured or not
matured, absolute or contingent, assessed or unassessed, imposed or
based upon the failure to comply with any provision under any federal,
state or local law, rule, or regulation or common law, or under any
code, order, decree, judgment or injunction applicable to Seller, and
Seller has not received any notice, or request for information issued,
promulgated, approved or entered
14
thereunder, or under the common law, or any tort, nuisance or absolute
liability theory, relating to public health or safety, worker health or
safety, or pollution, damage to or protection of the environment,
including, without limitation, the Environmental Laws, where such
obligation or liability could have a Material Adverse Effect on Seller.
(d) Seller possesses and is in compliance in all material respects with all
permits, licenses, certificates, franchises and other authorizations
relating to the Environmental Laws necessary to conduct Seller's
business or required by environmental regulations.
4.25. Seller Real Property Leases. Schedule 4.25 lists the real
property leases to which Seller is a party. Seller has a valid leasehold
interest in all real property it uses or occupies pursuant to real property
leases included within the Contracts (the "Seller Real Property Leases").
Seller's leasehold interest in all Seller Real Property Leases is free and clear
of all Liens, except for (i) easements and other rights or restrictions of
record that do not materially impair the use or value of the Seller Real
Property Leases as they are now used by Seller, and (ii) except for Liens set
forth on Schedule 4.9. To the best of Seller's Knowledge, the buildings,
improvements and fixtures that are included in the Seller Real Property Leases
are in good operating condition and repair (reasonable wear and tear excepted),
free of structural defects and are suitable for their intended uses. To the best
of Seller's Knowledge, the real property which is the subject of the Seller Real
Property Leases, the improvements located thereon, and the furniture, fixtures
and equipment relating thereto (including plumbing, heating, air conditioning
and electrical systems), conform to any and all applicable health, fire, safety,
zoning, environmental, land use and building laws, ordinances and regulations.
Seller is current with respect to all rental payments under the Seller Real
Property Leases and is not in default under any of the Seller Real Property
Leases. In addition, with respect to all Liens listed on Schedule 4.9, to
Seller's Knowledge, there are no facts or circumstances which would give rise to
a claim under the Seller Real Property Leases in connection with any such Lien.
Seller owns no real property and has no other interests therein, other than its
leasehold interests in the Seller Real Property Leases.
4.26. Brokers. Other than Ampton Investments, Inc., Seller has not
dealt with, or made any arrangements or agreements with any third party in
connection with the transactions contemplated by this Agreement so as to give
rise to any claims for brokerage commissions, finders fees or similar
compensation.
4.27. No Other Agreements to Merge or Sell. Seller has no legal
obligation, absolute or contingent, to any other Person to sell the Assets or
the Business (in whole or in part), or effect any merger, consolidation or other
reorganization of Seller, or to enter into any agreement with respect thereto.
15
4.28. Financing Statements. Except as set forth on Schedule 4.28, all
of the Assets are and have been located in the State of Oklahoma since the
Assets were acquired by Seller. To Seller's best Knowledge, all Uniform
Commercial Code financing statements, if any, filed by any person with respect
to the Assets are listed on Schedule 4.28.
4.29. Transactions with Certain Persons; Interest in Customers,
Suppliers or Competitors. To Seller's best Knowledge, except as set forth on
Schedule 4.29, no officer, director or employee of Seller nor any member of any
such person's immediate family ("Interested Person") is, or has within the past
five (5) years been, a party to any transaction with Seller relating to the
Business, other than for services as officers, directors or employees of Seller,
or transactions in the ordinary course of business, which transaction provides
or provided for: (a) furnishing of services by such Interested Person, (b)
rental of real or personal property from such Interested Person, or (c) payments
to such Interested Person or a corporation, partnership, trust or other entity
in which any such Interested Person has a controlling interest as a shareholder,
officer, director, trustee or partner. No Interested Person has any direct or
indirect controlling interest in any competitor, supplier or customer of the
Business or in any Person from whom or to whom Seller leases any Real Property
or personal property, or in any other Person with whom Seller is doing business.
4.30. Accounts Receivable. Schedule 4.30 contains a true and complete
aging report of all of the Accounts Receivable relating to the Business as of
August 31, 1998. All Accounts Receivable relating to the Business, except as set
forth on Schedule 4.30, represent bona fide claims of Seller against debtors for
sales, services performed or other charges arising on or before August 31, 1998,
and all the goods delivered and services performed which gave rise to said
accounts were delivered or performed in accordance with the applicable orders,
contracts or customer requirements. The Accounts Receivable are subject to no
defenses, counterclaims or rights of setoff and are fully collectible in the
ordinary course of Seller's business without cost in collection efforts
therefor, except as set forth on Schedule 4.30 and except to the extent of the
appropriate reserves for bad debts on the Accounts Receivable as set forth in
the Seller Financial Statements.
4.31. Material Misstatements Or Omissions. No representations or
warranties by Seller in this Agreement, nor in any of the Agreement Documents,
contain or will contain any untrue statement of a material fact, or omit or will
omit to state any material fact necessary to make the statements or facts
contained therein not misleading.
4.32. Acquisition for Own Account. The Netplex Preferred Stock to be
acquired by Seller hereunder will be acquired for investment for Seller's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "1933 Act"), and Seller has no present intention of selling,
granting any participation in, or otherwise distributing the same.
17
4.33. Restricted Securities. Seller understands that the shares of
Netplex Preferred Stock are characterized as "restricted securities" under the
1933 Act inasmuch as they are being acquired from Netplex in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, Seller
represents that it is familiar with Rule 144 of the Securities and Exchange
Commission ("SEC"), as presently in effect, and understands such resale
limitations imposed thereby and by the 1933 Act.
4.34. Legends. Seller understands that the instruments and certificates
evidencing the shares of Netplex Preferred Stock will bear the legend
substantially as set forth below:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF
ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed by Netplex from any certificate
or instrument evidencing the Shares upon delivery to Netplex of an opinion by
counsel, reasonably satisfactory to Netplex, that a registration statement under
the 1933 Act is at that time in effect with respect to the legended security or
that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which
Netplex issued the Shares.
4.35. No Owned Software or Patents. Except as set forth on Schedule
4.35, or transferred as part of the Assets, Seller owns no software or patents
which are used or required for use in the operation of the Business as it is
presently being conducted.
4.36. No Customer Complaints. To Seller's Knowledge and except as set
forth on Schedule 4.36, there are no currently pending complaints from customers
of the Business which are substantially likely to have a Material Adverse Effect
on the Business, and no
17
customer of the Business with any pending complaint or claim has threatened to
file suit against or refused to pay Seller for products or services sold to a
customer in the ordinary course of the Business.
4.37. Business Records. Seller has delivered, or will deliver, to
Netplex copies of all of the Business Records and copies of all customer lists
and accounts of Seller. The customer list as set forth in Schedule 4.37 is a
complete list of all current customers of Seller relating to the Business as of
August 31, 1998.
4.38. Year 2000 Compliance. Seller's "RSA," "Chainlink" and "IDP"
software products ("Compliant Products"), subject to the disclaimer below, will
not produce errors processing date data in connection with the year change from
December 31, 1999 to January 1, 2000 when used with accurate date data in
accordance with the documentation for the Compliant Products, provided all other
products (including, without limitation, other software, firmware, hardware, and
operating systems) used with it properly exchange date data with the Seller's
Compliant Products. Said Compliant Products will recognize the year 2000 as a
leap year. DISCLAIMER: The foregoing statement refers to the Seller's identified
Compliant Products as delivered by Seller, and does not apply to user initiated
modifications, user customizable features or third party add-on features or
products, including items such as macros and custom programming and formatting
features, and further does not constitute a warranty or extend the terms of any
existing warranty. The warranties for the Compliant Products, if any, are set
forth in the license agreement(s) that were signed by Seller's customer in
conjunction with the licensing of the Compliant Product. Except as to the
Compliant Products, no representation or warranty is made by Seller concerning
the compatibility or functionality of any other program or software product
included in any way in the Assets, including, without limitation, any items of
software, operating systems, or hardware with which the Compliant Products may
interact, nor does Seller make or extend any warranty or representation
concerning "year-2000 compliance" of any kind with regard to any product or item
created or provided by any third party, whether owned or licensed, that is to be
transferred to Netplex as an Asset pursuant to this Agreement, or any other item
of software created or provided by Seller.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF NETPLEX
Netplex hereby represents and warrants to Seller as follows, which
representations and warranties have been relied upon by Seller in entering into
this Agreement:
5.1. Organization. Netplex is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and is
qualified or registered to do business in each jurisdiction where it is required
to do so. Netplex has full corporate power and
18
authority to carry on its business as now conducted and to enter into and to
perform this Agreement.
5.2. Corporate Authorization. The execution and delivery of this
Agreement, the issuance of the Netplex Preferred Stock as provided herein and
the consummation of all the transactions contemplated hereby have been duly
authorized by all requisite corporate action with respect to Netplex, including,
without limitation, approval by Netplex's board of directors.
5.3. Binding Agreement. This Agreement has been duly executed by
Netplex and delivered to Seller and constitutes the valid and binding agreement
of Netplex, enforceable against Netplex in accordance with its respective terms,
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally and the exercise of judicial discretion in
accordance with general equitable principles.
5.4. No Breach. The execution, delivery and performance of this
Agreement by Netplex and the issuance of any Netplex stock pursuant to this
Agreement and the Agreement Documents will not violate Netplex's Certificate of
Incorporation, as amended, or Bylaws or any Law to which Netplex is subject or
by which Netplex may be bound, or (with or without giving notice or the lapse of
time or both) breach or conflict with any contract, agreement, or other
commitment to which either of Netplex is a party or by which Netplex is or may
be bound, or result in the creation or imposition of any Lien against or upon
the Shares or any of the assets or properties owned or leased by either of
Netplex or the Business.
5.5. Litigation; Compliance with Law. Other than as disclosed in its
public filings, there is no litigation, proceeding (arbitral or otherwise),
claim or investigation of any nature, pending or, to Netplex's best Knowledge,
threatened, against Netplex that reasonably could be expected to adversely
affect Netplex's ability to perform in accordance with the terms of this
Agreement. Neither Netplex nor any officer, director, partner or employee of
Netplex has been permanently or temporarily enjoined or barred by any legal
judgment from engaging in or continuing any conduct or practice in connection
with the activities of Netplex as currently conducted; and there is not in
existence any legal judgment requiring Netplex to take any action of any kind
with respect to the assets or properties owned or leased by it, or its
activities, or to which Netplex or its activities, properties or assets are
otherwise subject or by which they are otherwise bound or affected. The conduct
by Netplex of its activities as currently conducted does not violate or infringe
any Laws currently in effect, or, to the Knowledge of Netplex, proposed to
become effective; and Netplex has not received any notice of any violation by
Netplex of any Laws applicable to Netplex or their respective activities as
currently conducted; and Netplex does not know of any basis for the allegation
of any such violation.
5.6. Brokers. Other than Zanett Securities Corporation, Buyer has
not dealt with, or made any arrangements or agreements with any third party in
connection with the
19
transactions contemplated by this Agreement so as to give rise to any claims for
brokerage commissions, finders fees or similar compensation..
5.7. Capitalization. Netplex has authorized and outstanding the
capital stock set forth on Schedule 5.7. Except as set forth on Schedule 5.7,
there are not outstanding any options, warrants, rights (including conversion or
preemptive rights) or agreements for the purchase or acquisition from Netplex of
any shares of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of Netplex's capital stock.
5.8. Certificate of Incorporation; Certificate of Designation.
Schedule 5.8 includes true, complete and current copies of Netplex's
Certificates of Incorporation, as amended, and Netplex's Certificate of
Designation, respectively, to be filed with the Secretary of State of the State
of New York.
5.9. Consents and Approvals. Except as set forth on Schedule 5.9
hereto, no filing or registration with, no permit, authorization, counsel or
approval of, and no notice to, any federal, state or local government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign, or other public body or authority or
any other Person is necessary or required in connection with the execution and
delivery of this Agreement by Netplex or for the consummation by Netplex of the
transactions contemplated by this Agreement.
5.10. Valid Issuance of Preferred Shares. The Preferred Shares, when
issued and delivered in accordance with the terms of this Agreement for the
consideration provided for herein, will be duly and validly issued, fully paid
and nonassessable and shall not be subject to, or bound or affected by, any
proxies, voting agreements, or other restrictions on the incidents of ownership
or Liens of any nature.
5.11. Permits of Netplex. Netplex represents and warrants that, at
its expense, it has or shall obtain at or prior to Closing all Permits required
to conduct the Business as now being conducted. In the event Netplex is required
to obtain any Permit other than by receipt of the same from Seller, Netplex
shall bear the cost of obtaining it. Until the expiration of nine quarters after
the Closing, all Permits shall be maintained by Netplex as valid and in full
force and effect until December 31, 2000. Except as set forth on Schedule 5.11,
no notice to, declaration, filing or registration with, approval or permit from,
any domestic or foreign governmental or regulatory body or authority, or any
other Person or entity, is required to be made or obtained by Netplex in
connection with the execution, delivery or performance of this Agreement and the
consummation of the transactions contemplated hereby.
20
5.12. Compliance with Laws. Netplex has and shall continue until
December 31, 2000 to comply in all material respects with all of the Laws
applicable to the Business and the Assets, including, without limitation, all
applicable Laws relating to health and sanitation, employment and employment
benefits, equal opportunity, discrimination, environmental protection and
occupational safety, the violation of which would have a Material Adverse Effect
on the Business or the Assets.
5.13 Absence of Material Adverse Changes. Since December 31, 1997,
there have been no changes or conditions constituting a Material Adverse Effect
on Netplex which has not been disclosed in writing to Seller.
ARTICLE 6
COVENANTS OF SELLER
Between the date of this Agreement and the Closing, Seller hereby
covenants:
6.1. Maintenance of the Business. Seller shall conduct the Business
and use the Assets only in the ordinary course of business, consistent with past
practices, which shall include compliance in all respects with all Laws,
regulations and administrative orders of any federal, state or local
governmental authority that are applicable to Seller with respect to the Assets
or Business, with the intent of preserving the ongoing operations of the Assets
and Business and which shall also include, without limitation, not selling,
transferring or disposing of any assets or properties currently owned by Seller,
as applicable, nor making any distributions of cash or other property to
shareholders or incurring any indebtedness for borrowed money without Netplex's
consent, other than accounts payable consistent with past practices.
6.2. Adverse Developments. Seller shall promptly notify Netplex of
any materially adverse developments that occur prior to Closing with respect to
the Assets or the operation of the Business. Seller shall keep Netplex informed
of all material operational matters and business developments with respect to
the Business and its markets, including any competitive changes.
6.3. Access. Seller will provide Netplex, its counsel, accountants,
financing sources and other representatives ("Netplex's Representatives") with
access to the Business Records, to the Assets, and to the officers, employees,
agents and accountants of each with respect to matters relating to the Business
during normal business hours, upon reasonable notice
21
and at a mutually agreeable time; provided that such access does not materially
disrupt the operations of the Business, and Seller will provide Netplex's
Representatives with such information concerning the Assets and the Business as
they reasonably may request for the purpose of allowing Netplex to perform a due
diligence review of Seller. Seller shall instruct its representatives to
cooperate fully with the review by Netplex's Representatives of the Business
Records.
6.4. Financial Statements and Other Reports. Between the date of
this Agreement and the Closing, as soon as the same are available, Seller will
provide Netplex with copies of the Business' regularly prepared sales reports
and any regularly prepared periodic financial statements or reports.
6.5. No Negotiations. Seller will refrain, and will cause each other
Person acting for or on behalf of Seller, to refrain, from taking, directly or
indirectly, any action (a) to merge, consolidate, or combine, or to permit any
other Person to merge, consolidate or combine, with Seller in a manner which
affects the Business; and (b) to seek or encourage any offer or proposal from
any Person to acquire the Business or any Assets (other than in the ordinary
course of business consistent with past practices).
6.6. Third Party Consents. Seller shall use its best efforts to
obtain any third party consents required for performance under this Agreement
and the consummation of the transactions contemplated hereby.
6.7. Satisfaction of Conditions. Seller shall in good faith use its
reasonable best efforts to satisfy all conditions to its obligations to close
and consummate the transactions contemplated by this Agreement.
ARTICLE 7
COVENANTS OF NETPLEX
Between the date of this Agreement and the Closing, Netplex hereby
covenants:
7.1. Adverse Developments. Netplex shall promptly notify Seller of
any materially adverse developments that occur prior to Closing with respect to
the operation of its business.
7.2. Access. Netplex will provide Seller, its counsel, accountants,
financing sources and other representatives ("Seller's Representatives") with
access to its business records, and to its officers, employees, agents and
accountants with respect to matters relating to its business during normal
business hours, upon reasonable notice and at a mutually agreeable time;
22
provided that such access does not materially disrupt the operations of
Netplex's business, and Netplex will provide Seller's Representatives with such
information concerning its business as they reasonably may request for the
purpose of allowing Seller to perform a due diligence review of Netplex. Netplex
shall instruct its representatives to cooperate fully with the review by
Seller's Representatives.
7.3. Financial Statements and Other Reports. Between the date of
this Agreement and the Closing, as soon as the same are available, Netplex will
provide Seller with copies of its regularly prepared sales reports and any
regularly prepared periodic financial statements or reports.
7.4. Third Party Consents. Netplex shall use its best efforts to
obtain any third party consents required for performance under this Agreement
and the consummation of the transactions contemplated hereby.
7.5. Financial Statements and Other Reports. Between the date of
this Agreement and the Closing, as soon as the same are available, Netplex will
provide Seller with copies of Netplex's regularly prepared periodic financial
statements or reports.
7.6. Third Party Consents. Netplex shall obtain any and all third
party consents required for performance under this Agreement and the
consummation of the transactions contemplated hereby.
7.7. Satisfaction of Conditions. Netplex shall in good faith use its
reasonable best efforts to satisfy all conditions to its obligations to close
and consummate the transactions contemplated by this Agreement.
ARTICLE 8
OTHER COVENANTS
8.1. Governmental Consents. Promptly following the execution of this
Agreement, Seller and Netplex shall proceed to prepare and file with the
appropriate governmental authorities such requests for approvals or waivers,
reports or notifications as may be required in connection with this Agreement.
Notwithstanding anything to the contrary in the foregoing, Seller's obligations
under this section 8.1 shall be construed under and limited to any requests,
waivers, reports or notifications as a required specifically by Oklahoma or
federal law.
8.2. Confidentiality. Netplex and Seller shall each keep
confidential and not, directly or indirectly, reveal, report, publish, disclose
or transfer any information obtained by it with respect to the others in
connection with this Agreement and the negotiations preceding this Agreement
(the "Confidential Information"). Each will use such Confidential Information
solely
23
in connection with the transactions contemplated by this Agreement, and if the
transactions contemplated hereby are not consummated for any reason, each shall
return to the others, without retaining any copies thereof, any schedules,
documents or other written information obtained from the other in connection
with this Agreement and the transactions contemplated hereby and shall cause all
of its officers, employees, agents, accountants, attorneys and other
representatives to whom it may have disclosed such Confidential Information to
do the same. Notwithstanding the foregoing limitation, neither party shall be
required to keep confidential or return any Confidential Information that (a) is
known or available through other lawful sources, not bound by a confidentiality
agreement with the disclosing party, (b) is or becomes publicly known or
generally known in the industry through no fault of the receiving party or its
agents, (c) is required to be disclosed pursuant to Law (provided the other
parties are given reasonable prior notice), and (d) is developed by the
receiving party independently of the disclosure by the disclosing party. This
Section 8.2 shall survive the termination of this Agreement.
8.3. No Inconsistent Action. Each of Netplex and Seller shall not
take any action which is materially inconsistent with its obligations under this
Agreement or that would hinder or delay the consummation of the transactions
contemplated by this Agreement.
8.4. Non-competition by Seller.
(a) For a period of four (4) years after the Closing Date, Seller and
any of its subsidiaries, Affiliates, successors or assigns (except as
hereinafter stated) shall not, directly or indirectly, alone, or as a
partner, partial owner, consultant, or agent (of any other corporation,
partnership or other business organization), engage in the delivery of
technology consulting services and solutions to the retail and
distribution industries other than as is reasonably necessary for the
sale, licensing, installation, integration, use, implementation and
support of viaLink products and services. Seller and Netplex agree that
the viaLink business is defined as substantially building, marketing
and implementing proprietary software products, information content and
related services to facilitate electronic commerce. If Seller sells,
assigns, or otherwise disposes of its viaLink business to a buyer who
is not under the control of Seller, and such Buyer is already in
competition with Netplex or any of its Affiliates, then this Section
8.4(a) shall not apply.
(b) For a period of four (4) years after the Closing Date, Seller and
any of its subsidiaries, Affiliates, successors or assigns shall not,
directly or indirectly, alone, or as a partner, partial owner,
consultant, or agent of any other corporation, partnership or other
business organization,
24
knowingly solicit the employment of, or knowingly hire, any employee of
Netplex, or any Netplex subsidiary, or intentionally cause any such
employee to terminate the employee's relationship with Netplex or any
Netplex subsidiary, without the prior written approval of Netplex.
(c) For a period of four (4) years after the Closing Date, Seller and
any of its subsidiaries, Affiliates, successors or assigns (except as
hereinafter stated) shall not, directly or indirectly, alone, or as a
partner, partial owner, consultant or agent (of any other corporation,
partnership or other business organization), knowingly solicit any of
the accounts of Netplex relating to the retail and distribution
industries unless such solicitation is undertaken on behalf of a
business venture which does not engage in the delivery of information
technology services and solutions to the retail and distribution
industries other than as is reasonably necessary for the sale,
licensing, installation, integration, use, implementation and support
of viaLink products and services. Seller and Netplex agree that the
viaLink business is defined as substantially building, marketing and
implementing proprietary software products, information content and
related services to facilitate electronic commerce. If Seller sells,
assigns, or otherwise disposes of its viaLink business to a buyer who
is not under the control of Seller, and such Buyer is already in
competition with Netplex or any of its Affiliates, then this Section
8.4(c) shall not apply.
(d) The parties agree that any breach of this Section 8.4 of this
Agreement may cause irreparable injury to Netplex and that money
damages may not provide an adequate remedy. Accordingly, Netplex shall,
in addition to other remedies provided by law, be entitled to such
equitable and injunctive relief as may be necessary to enforce the
provisions of this Section 8.4 against Seller or any of its
subsidiaries or Affiliates, or any person or entity participating in
such breach or threatened breach. Nothing contained herein shall be
construed as prohibiting Netplex from pursuing any other and additional
remedies available to it, at law or in equity, for such breach or
threatened breach including any recovery of damages from Seller or any
other person or entity participating in such breach or threatened
breach.
8.5. Piggyback Registration. Seller understands that Netplex is
under no obligation to register any of the Netplex Preferred Stock sold
hereunder. However, Netplex, at its
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sole cost and expense, agrees to either: (i) include in its next registration
statement, or (ii) register no later than 12 months after Closing, whichever
first occurs, sufficient Netplex Common Stock to permit the conversion of the
Netplex Preferred Stock and to maintain effectiveness of such registration
statement until such time as the Netplex Common Stock underlying the Netplex
Preferred Stock may be sold pursuant to Rule 144(k) of the SEC upon conversion
of the Netplex Preferred Stock to Netplex Common Stock.
8.6 Compensation of Broker - Netplex. If Netplex has or is alleged
to have any liability to any Person who has or claims to have acted on Netplex's
behalf as a finder, broker, intermediary or otherwise in connection with this
Agreement or the transactions contemplated hereby, then Netplex shall be totally
responsible for payment of any amounts due to the Person and shall fully
indemnify and hold Seller harmless from any claim, expense (including attorney's
fees) and Liabilities to such Person arising out of or related to such Person's
claims.
8.7. Compensation of Broker - Seller. If Seller has or is alleged to
have any liability to any Person who has or claims to have acted on Seller's
behalf as a finder, broker, intermediary or otherwise in connection with this
Agreement or the transactions contemplated hereby, then Seller shall be totally
responsible for payment of any amounts due to the Person and shall fully
indemnify and hold Netplex harmless from any claim, expense (including
attorney's fees) and Liabilities to such Person arising out of or related to
such Person's claims.
8.8. Schedules. The parties shall have completed and/or updated the
schedules attached to this Agreement so that such schedules are complete and
accurate as of the Closing Date.
8.9. Assignment of Assets and Contracts. The parties shall assist
each other in good faith in securing the consent of any third parties to the
transfer and/or assignment of any Assets and Contracts.
8.10. Earned Compensation. All compensation which represents payment
of any amounts earned by Seller for any previously completed work for any
customer or any Contract obligations for which payment was earned at any time
prior to Closing shall be Seller's. If such compensation is received by Netplex
or the Business after the Closing, it shall promptly be accounted for and paid
or delivered to Seller and shall not be included in any calculation of earnings
or expenses for the business for any period subsequent to the Closing. Any
compensation collected by Seller which represents payment for Work in Progress
earned after Closing through continuation or completion of such work by the
Business after the Closing shall be paid to Netplex. Compensation due to either
Party under this section, or any other compensation due to either Party due to
audit adjustments, credits for
26
prepaid assets, credits for prepaid expenses, vacation liabilities or other
amounts agreed to by the parties, to the extent such amounts to be received are
known at or before the Closing, are set forth on Schedule 8.10.
8.11. Receipt of Payments/Property. If one party for any reason
receives any payment or property which belongs to the other party, the party
receiving the funds or property shall immediately notify the other, and shall
immediately forward such funds or property to the other party.
8.12. Sales and Transfer Taxes. Seller shall any sales and transfer
taxes relating to the sale and transfer of the Assets, and shall hold Netplex
harmless therefrom.
8.13. Filings. If required by Law, Seller shall comply with any Bulk
Sales Act or similar requirements necessary to consummate the transactions
contemplated herein.
8.14. Material Misstatements Or Omissions. No representations or
warranties by Netplex in this Agreement, nor any document, exhibit, statement,
certificate or Schedule heretofore or hereinafter furnished to Seller pursuant
hereto, or in connection with the transactions contemplated hereby, including,
without limitation, the Agreement Documents, contain or will contain any untrue
statement of a material fact, or omit or will omit to state any material fact
necessary to make the statements or facts contained therein not misleading.
8.15. Compliance With Constituent Agreements. Netplex shall comply
with all terms and provisions and shall meet all of Netplex's obligations
contained in the Earn-Out Agreement, the Certification of Designation, and each
and all of the Agreement Documents, the breach or default of any of which shall
constitute a material breach of this Agreement.
8.16. Adverse Developments. Netplex shall promptly notify Seller of
any materially adverse developments that occur subsequent to Closing with
respect to the Assets or the operation of the Business until all compensation
due to Seller under the Agreement Documents has been paid. Seller shall keep
Netplex informed of all material operational matters and business developments
with respect to the Business and its markets, including any competitive changes
during such time.
8.17. Access. Netplex will provide Seller, its counsel, accountants,
financing sources and other representatives ("Seller's Representatives") with
access to the Business Records and ssets during normal business hours, upon
reasonable notice and at a mutually agreeable time; provided that such access
does not materially disrupt the operations of the Business, and Netplex will
provide Seller's Representatives with such information concerning the Business
Records, Assets and Business as they reasonably may request for the purposes of
(i) allowing Seller to reasonably audit the Business while any compensation due
under the
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Agreement Documents remains due; and (ii) to defend, counter, or respond to any
claim, complaint, or litigation matter which may arise involving Seller and any
Person.
8.18. In addition to Netplex's other confidentiality obligations as
set forth in this Agreement or any of the Agreement Documents, Netplex adopts,
assumes, and shall remain bound by any and all agreements of Seller or
provisions contained in the Contracts or elsewhere disclosed in the Agreement
Documents that provide for any continuing obligation of Seller to maintain or
protect the confidentiality of any information of any customer, client, or other
Person with whom Seller has had any commercial dealings. This Section 8.16 shall
survive termination of this Agreement.
8.19. Netplex shall not impair the rights or the value of the
Netplex Preferred Stock to be issued to Seller by the Agreement or the Agreement
Documents.
ARTICLE 9
CONDITIONS PRECEDENT TO CLOSING
9.1. Conditions Precedent to Each Party's Obligation to Effect the
Closing. The respective obligations of each party to consummate the Agreement
are subject to the satisfaction at or prior to the Closing of the following
conditions precedent:
(a) This Agreement, the Agreement Documents, and the transactions
contemplated hereby shall have been authorized and approved by the
each Party's Board of Directors and shareholders in accordance
with all applicable Laws and regulations.
(b) No order, decree or injunction shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or
any governmental authority which prohibits the Closing; provided,
however, that the parties hereto shall use their best efforts to
have any such order, decree or injunction vacated or reversed.
(c) No action, claim, suit or proceeding seeking to enjoin, restrain,
or prohibit the consummation of this Agreement shall be pending
before any court or any other governmental authority; provided,
however, that this condition may not be invoked by a party if any
such action, suit, or proceeding was solicited or encouraged by,
or instituted as a result of any act or omission of such party.
(d) Netplex and each of Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxx, and Xxxxx
Xxxxx shall have executed employment agreements in substantially
the form attached as Exhibit C hereto (the "Employment
Agreements").
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(e) The parties shall have obtained all required regulatory approvals
in connection with this Agreement and the transactions
contemplated herein.
(f) The parties shall have obtained consent from Seller's lessor and
Netplex shall have entered into a sublease with Seller, on terms
mutually satisfactory to both Parties, for a portion of the real
property currently used in the Business.
(g) Subject to the terms of this Agreement, All Contracts and Works in
Progess shall have been assigned to Netplex or the same shall have
been modified, amended or novated so that Netplex has been
substituted for Seller.
(h) All Agreement Documents shall have been completed and/or executed
by the Parties.
(i) The parties shall have entered into a Remarketing Agreement for
Seller's ChainLink software product, on terms mutually
satisfactory to both Parties.
(j) The parties shall have entered into an agreement for office
support and other administrative services to be provided by Seller
to Netplex, on terms mutually satisfactory to both Parties.
(k) The parties shall have entered into a computer equipment lease
agreement, on terms mutually satisfactory to both Parties.
(l) The closing or closings of a financing transaction with First
Union Bank pursuant to which First Union Bank loans to Netplex up
to 80% of Netplex's accounts receivable and the sale of equity
securities to Zanett Securities for $1,500,000 and the receipt of
said proceeds of the sale transaction, or any similar financing
arrangement.
(m) The Parties mutually agree as to which Liens, Liabilities and
Contracts regarding the Assets, if any, will be assumed by
Netplex.
(n) The parties acknowledge that at the time of signing this
Agreement, the Schedules and Exhibits have not been completed and
annexed to the Agreement. In the event that any qualification of a
representation which is reflected on a Schedule is unacceptable to
either party, that Party shall have the right to terminate this
Agreement.
9.2. Conditions Precedent to Obligations of Netplex. The obligations
of Netplex to consummate the Agreement are subject to the satisfaction or waiver
at or prior to the Closing of the following conditions precedent;
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(a) The representations and warranties of Seller contained in Article
4 that are qualified as to materiality shall be true and correct
and the representations and warranties of Seller contained in
Article 4 that are not qualified as to materiality shall be true
and correct in all material respects in each case when made, and
at and as of the Closing, with the same force and effect as if
those representations and warranties had been made at and as of
such time (with such exceptions if any, necessary to give effect
to events or transactions expressly permitted herein).
(b) Seller shall, in all material respects, have performed all
obligations and complied with all covenants contemplated herein
that are required by this Agreement to be performed or complied
with by Seller on or before the Closing.
(c) Netplex shall have received a certificate of the President or Vice
President of Seller, in form satisfactory to counsel for Netplex,
certifying fulfillment of the matters referred to in paragraphs
(a) and (b), respectively, and (d), (e), (f), (g) and (i) of this
Section 9.2.
(d) Seller shall have obtained all necessary consents of third parties
to the transactions contemplated by this Agreement, including
without limitation, any governmental consents or approvals and any
consents required to prevent a default under any Contract as a
result of the transactions contemplated in this Agreement.
(e) Netplex shall have completed and been satisfied with the results
of its due diligence review of Seller as being consistent with the
representations and warranties contained herein.
(f) All necessary agreements and approvals by the holders of the
shares of Seller Capital Stock shall have been obtained in order
to consummate this Agreement.
(g) Seller shall not have suffered any material adverse change with
respect to its financial condition or its properties since
December 31, 1997 (regardless of whether such material adverse
change shall have been reflected on the updated Disclosure
Schedules to be delivered to Netplex by Seller at the Closing);
and
(h) Netplex shall have received good standing certificates with
respect to Seller in Oklahoma, and in each other jurisdiction
where Seller is qualified as a foreign corporation.
(i) Seller shall have changed its corporate name in Oklahoma and in
each other jurisdiction where Seller is qualified as a foreign
corporation.
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(j) Seller shall have delivered to Netplex copies of all Business
Records and all current customer lists and accounts of the
Business.
(k) Netplex shall have (i) extended offers of employment to each
Person listed on Schedule 4.22 at the compensation rates set forth
in said Schedule and with an effective date of hire equal to the
Closing Date; (ii) offered to such Person the usual and customary
benefits provided by Netplex to its employees; (iii) for purposes
of determining vacation and sick leave benefits, credited such
employee's prior service as an employee of Seller toward such
employee's entitlement to any such benefits as an employee of
Netplex; (iv) provided vested vacation and/or sick leave benefits
equal to any such benefit accrued and unused while such employee
was employed with Seller prior to the Effective Date hereof; and
(v) complied with all applicable Laws regarding the hiring of said
Employees, including, without limitation, any Laws relating to
employee benefits.
(l) All of Seller's employees involved in the operation of the
Business shall have been offered employment as in (j) above and
shall have accepted such offer of employment with Netplex.
(m) Netplex shall have received an opinion of Seller's outside
counsel, in form satisfactory to counsel for Netplex, to the
effect all necessary approvals of shareholders and/or the Board of
Directors of Seller have been obtained for the transaction.
9.3. Conditions Precedent to the Obligations of Seller. The
obligation of Seller to consummate the Agreement is subject to the satisfaction
or waiver at or prior to the Closing of the following conditions precedent:
(a) The representations and warranties of Netplex contained in Article
5 shall have been true and correct in all material respects when
made, and as of the Closing with the same force and effect as if
those representations and warranties had been made at and as of
such time (with such exceptions, if any, necessary to give effect
to events or transactions expressly permitted herein).
(b) Netplex shall, in all material respects, have performed all
obligations and complied with all covenants contemplated herein
that are required by this Agreement to be performed or complied
with by Netplex on or before the Closing;
(c) Seller shall have received certificates of the President or Vice
President of Netplex, in form satisfactory to counsel for Seller,
certifying fulfillment of the matters referred to in paragraphs
(a) and (b), respectively, and (d), (e), and (f) of this Section
9.3.
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(d) Netplex shall have obtained all necessary consents of third
parties to the transactions contemplated by this Agreement,
including without limitation, any governmental consents or
approvals and any consents required to prevent a default or breach
under any contract as a result of the transactions contemplated in
this Agreement.
(e) All necessary agreements and approvals by the holders of the
shares of Netplex stock shall have been obtained in order to
consummate this Agreement.
(f) Netplex shall not have suffered any material adverse change with
respect to its financial condition or its properties since
December 31, 1997; and
(g) Seller shall have received good standing certificates with respect
to Netplex in New York, and in each other jurisdiction where
Netplex is qualified as a foreign corporation.
(h) Seller shall have received an opinion of Netplex's outside
counsel, in form satisfactory to counsel for Seller, to the effect
that the Certificate of Designation of the Preferred Stock of
Netplex fully complies with all applicable Laws and that all
necessary approvals of shareholders and/or the Board of Directors
of Netplex have been obtained both for the Certificate of
Designation and for the transactions contemplated hereby.
(i) Seller shall have received a fairness opinion concerning the
contemplated transactions from Xxxxxxx & Co., Inc.
(j) To the extent Netplex expressly agrees to do so in accordance with
the terms and conditions as set forth in the Agreement or a
Schedule to this Agreement, Netplex expressly shall have assumed,
adopted and accepted as its own obligations all Liabilities to
Seller's customers contained in all Contracts, Works in Progress,
and in any of the Agreement Documents, whether express or implied
by law, relating to the Contracts or the Assets, to the extent
identified on a Schedule to this Agreement.
(k) The Certificate of Designation, its approval, and all necessary
filings related thereto shall be satisfactory to Seller; or
Netplex, in a form satisfactory to Seller, has agreed to issue to
Seller an equivalent number of shares of Netplex Common Stock upon
similar terms and conditions a those relating to the Netplex
Preferred Stock.
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ARTICLE 10
TERMINATION; AMENDMENT; WAIVER
10.1. Termination. This Agreement may be terminated without
liability of any Party, each to the other, and the Closing contemplated hereby
may be abandoned at any time notwithstanding approval thereof by the
shareholders of Seller, but prior to the Closing:
(a) by mutual written consent of Seller and Netplex;
(b) by Netplex, or Seller, if the Closing shall not have occurred on
or before September 30, 1998 (provided that the right to terminate
this Agreement under this Section 9.1 shall not be available to
any party whose failure to fulfill any obligation under this
Agreement has been the cause of or has resulted in the failure of
the Closing to occur on or before such date); or
(c) by either Party, if prior to the Closing, the Board of Directors
of either Party shall have withdrawn, or modified in a manner
adverse to the other Party, its approval or recommendation of the
Agreement, or shall have recommended another offer or shall have
resolved to do any of the foregoing;
(d) by Netplex or Seller, if any court of competent jurisdiction in
the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Agreement and
such order, decree, ruling or other action shall have become final
and nonappealable;
(e) by Netplex or Seller if there shall be pending any suit, action or
proceeding, which has a reasonable possibility of success, or
there shall be pending by any other Person any suit, action or
proceeding, which has a substantial likelihood of success, (i)
seeking to restrain or prohibit the consummation of the Agreement
or the performance of any of the other transactions contemplated
by this Agreement, or (ii) which otherwise is reasonably likely to
have a Material Adverse Effect on the business, properties,
assets, condition (financial or otherwise), results of operations
or prospects of Seller.
(f) by Netplex or Seller, if there shall be pending any suit, action
or proceeding which has a reasonable possibility of success, or
there shall be pending by any other Person any suit, action or
proceeding, which has a
33
substantial likelihood of success, (i) seeking to prohibit or
limit the ownership or operation by Seller, Netplex of a material
portion of the Business or Assets, (ii) seeking to impose material
limitations on the ability of Netplex to exercise full rights of
ownership of the Assets, or (iii) seeking to prohibit Netplex from
effectively controlling in any material respect the Business.
10.2. Effect of Termination. If this Agreement is so terminated and
the Agreement is not consummated, this Agreement shall forthwith become void and
have no effect, without any liability on the part of any party or its directors,
officers or shareholders, other than the provisions of this Section 10.2 and the
provisions of this Agreement which are indicated herein as surviving such
termination. Nothing contained in this Section 10.2 shall relieve any party from
liability for any breach of this Agreement.
10.3. Amendment. This Agreement may not be amended except by an
instrument in writing signed by both Parties.
10.4. Extension; Waiver. At any time prior to the Closing, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate
or writing delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE 11
INDEMNIFICATION
11.1. From and after the Closing, Seller shall indemnify, defend,
protect and hold harmless Netplex, from and against all losses, liabilities,
obligations, damages, deprivation of benefits, costs and expenses (including
reasonable attorneys' fees) (collectively hereinafter "Losses"), which result
from or arise in connection with: (a) any breach of any warranty made by Seller
in the Agreement or any representation in any of the Agreement Documents, not
being true when made or when required by this Agreement to be true in all
material respects, or in any certificate or other instrument delivered by or on
behalf of Seller pursuant thereto not being true when made or when required by
this Agreement to be true in all material respects; or (b) any breach of any
covenant set forth in this Agreement or any Agreement Documents to be performed
(prior to or after the Closing) by Seller; or (c) the Liabilities of Seller
which are not assumed or acquired by Netplex pursuant to this Agreement or the
Agreement Documents.
34
The parties anticipate that a claim for indemnification may be made
under any or all of subsections (a) through (c) above; in any such case, each
such clause and sub-clause shall be independently effective to provide Netplex
with a right to indemnification.
11.2. From and after the Closing, Netplex, shall indemnify, defend,
protect and hold harmless Seller, from and against all Losses as defined in
Section 11.1, which result from, or arise in connection with: (a) any breach of
any warranty made by Netplex in the Agreement or any representation in any of
the Agreement Documents, not being true when made or when required by this
Agreement to be true in all material respects, or in any certificate or other
instrument delivered by or on behalf of Netplex pursuant thereto not being true
when made or when required by this Agreement to be true in all material
respects; (b) any breach of any covenant set forth in this Agreement or the
Agreement Documents to be performed (prior to or after the Closing) by Netplex;
or (c) any of the Liabilities assumed by Netplex pursuant to this Agreement or
the Agreement Documents .
The parties anticipate that a claim for indemnification may be made
under any or all of subsections (a) through (c) above; in any such case, each
such clause and sub-clause shall be independently effective to provide Seller
with a right to indemnification.
11.3. Whenever any claim shall arise for indemnification hereunder,
the party entitled to such indemnification (the "Indemnitee") shall notify the
party from whom indemnification is sought (the "Indemnitor") of such claim in
writing promptly and in no case later than ninety (90) days after such
Indemnitee has received actual written notice of the facts constituting the
basis for such claim; each Indemnitee shall also so notify the Indemnitor
promptly and in no case later than fifteen (15) days after the commencement of
any legal proceedings with respect to any such claim. The failure to notify the
Indemnitor will not relieve the Indemnitor from any liability which it may have
to any Indemnitee to the extent the Indemnitor is not prejudiced as a proximate
result of such failure. Such notice shall specify, in reasonable detail, the
facts known to such Indemnitee giving rise to the indemnification sought . Such
notice shall also include photocopies of all relevant communications received
from third party claimants and their attorneys.
11.4. If the facts giving rise to any indemnification provided for
in this Agreement shall involve any actual or threatened claim or demand by any
person other than a party to the Agreement or its successors or permitted
assigns (a "Third Party") against any Indemnitee, the Indemnitor shall be
entitled, upon its election, by written notice given to the Indemnitee as soon
as reasonably practicable and in any case within thirty (30) days after the date
on which notice of the claim or demand is given to the Indemnitor (without
prejudice to the right of such Indemnitee to participate at its expense through
counsel of its own choosing), to assume the defense of such claim and any
litigation resulting therefrom at its expense and through counsel of its own
choosing; provided, however, that if by reason of the claim of such
35
Third Party a Lien, attachment, garnishment or execution is placed upon any of
the property or assets of such Indemnitee, the Indemnitor, if it desires to
exercise its right to defend such claim or litigation, shall furnish an
indemnity bond or other form of security reasonably satisfactory to the
Indemnitee to obtain the prompt release of such Lien, attachment, garnishment or
execution. If the Indemnitor assumes the defense of any such claim or
litigation, it shall take all steps reasonably necessary in the defense or
settlement of such claim or litigation. In any such suit, action or proceeding,
the Indemnitee shall have the right to control its own defense through its own
counsel, but the fees and expenses of such counsel shall be at its own expense
unless (i) the parties shall have mutually agreed to the retention of such
counsel or (ii) the named parties to such suit, action or proceeding (including
any impleaded parties) shall include an Indemnitee and an Indemnitor and the
representation of both parties by the same counsel would present a conflict of
interest as reasonably determined by counsel to the Indemnitee, in which event
the Indemnitor shall pay such counsel's fees and expenses. If the Indemnitor has
timely assumed defense, the Indemnitor shall not be liable for any settlement
effected without its consent, which consent shall not be unreasonably withheld
or delayed. The Indemnitor may settle any claim without the consent of any
Indemnitee, but only if the sole relief awarded is money damages that are paid
in full by the Indemnitor and either (i) the consent to the entry of any
judgment or settlement includes as an unconditional term thereof the giving to
the Indemnitee of a release from all liability in respect to such claim or
litigation or (ii) the litigation against the Indemnitee is dismissed with
prejudice; otherwise, the Indemnitor may not settle any claim against an
Indemnitee without the consent of the Indemnitee, which consent shall not
unreasonably withheld or delayed. The parties shall cooperate in the defense of
any such claim or litigation. If the Indemnitor does not timely assume the
defense of any such claim or litigation, the Indemnitee may defend against such
claim or litigation in such manner as it may deem appropriate and may settle
such claim or litigation, after giving written notice thereof to the Indemnitor,
on such terms as such Indemnitee may deem appropriate; and the Indemnitor will
promptly reimburse such Indemnitee for the Losses incurred as a result of such
settlement. If no settlement of such claim or litigation is made, the Indemnitor
shall promptly reimburse such Indemnitee for the amount of any judgment rendered
with respect to such claim or such litigation and for all expenses, legal and
other, incurred by such Indemnitee in connection with any such judgment for
which the Indemnitee has been so reimbursed pursuant hereto; provided, however,
that if such judgment is appealable and such Indemnitee notifies the Indemnitor
of its intention not to appeal, the Indemnitor may prosecute such appeal, at its
sole cost and expense and subject to the obligations set forth herein.
11.5. Each amount determined to be payable by an Indemnitor to an
Indemnitee under the terms hereof ("Indemnity") shall be paid in cash to the
Indemnitee within thirty (30) days after the date on which the Indemnitor is
notified in writing of the amount of such Indemnity, as finally determined in
accordance with the terms hereof. Each such notice shall contain an itemization
of the damages, expenses, costs and liabilities comprising the Indemnity,
certified to be true and correct by the Indemnitee or its legal representative.
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11.6. Indemnification Threshold. Neither party shall have any
indemnification payment obligations under this Agreement unless and until all
such obligations exceed One Thousand Dollars ($1,000) in aggregate, and then
only to the extent that such obligations exceed One Thousand Dollars ($1,000) in
the aggregate.
ARTICLE 12
MISCELLANEOUS
12.1. Further Assurances. From time to time at or after the Closing,
at the request of the other, Seller and Netplex, as necessary, will execute and
deliver such other instruments and take such other action as is reasonably
necessary to consummate, complete and carry out the purposes of the transactions
contemplated hereby.
12.2. Benefit and Assignability. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person or entity shall have any
right (whether third party beneficiary or otherwise) hereunder. This Agreement
may not be assigned by any party without the prior written consent of the other
party.
12.3. Notices. All notices demands and other communications
pertaining to this Agreement ("Notices") shall be in writing addressed as
follows:
If to Seller:
Xxxxxx X. Xxxxx, Vice President
viaLink
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxxx & Associates, P.C.
000 Xxxxxx X. Xxxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
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If to Netplex:
The Netplex Group, Inc.
Attention: Xxxx X. Xxxxx, President
0000 Xxxxxxxxxx Xxxxx, 0xx Xxxxx
XxXxxx, Xxxxxxxx 00000
with a copy to:
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
Xxxxxx Price Xxxxxxx & Day
22nd Floor
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Notices shall be deemed given five (5) business days after being mailed by
certified or registered United States mail, postage prepaid, return receipt
requested, or on the first business day after being sent, prepaid, by nationally
recognized overnight courier that issues a receipt or other confirmation of
delivery to the appropriate recipient of such Notice. Any party may change the
address to which Notices under this Agreement are to be sent to it by giving
written notice of a change of address in the manner provided in this Agreement
for giving Notice.
12.4. Waiver. Unless otherwise specifically agreed in writing to the
contrary: (a) the failure of any party at any time to require performance by the
other of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (b) no waiver by any party of any default by any
other shall be valid unless in writing and acknowledged by an authorized
representative of the nondefaulting party, and no such waiver shall be taken or
held to be a waiver by such party of any other preceding or subsequent default;
and (c) no extension of time granted by any party for the performance of any
obligation or act by any other party shall be deemed to be an extension of time
for the performance of any other obligation or act hereunder.
12.5. Entire Agreement. This Agreement and the Agreement Documents
as defined herein constitutes the entire agreement between the parties with
respect to the subject matter hereof and referenced herein, and supersedes and
terminates any prior agreements or representations between the parties (written
or oral) with respect to the subject matter hereof. This Agreement may not be
altered or amended except by an instrument in writing signed by the party
against whom enforcement of any such change is sought.
12.6. Counterparts; Facsimile. This Agreement may be signed in any
number of counterparts with the same effect as if the signature on each such
counterpart were on the same
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instrument. This Agreement and any counterparts may be executed by facsimile
with the same effect as if the signature were an original.
12.7. Construction. The headings of the Articles and Sections of
this Agreement are for convenience only and in no way modify, interpret or
construe the meaning of specific provisions of the Agreement.
12.8. Agreement Documents. The Agreement Documents are a material
part of this Agreement.
12.9. Severability. In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality, and enforceability of the remaining
provisions will not in any way be affected or impaired. Any illegal or
unenforceable term shall be deemed to be void and of no force and effect only to
the minimum extent necessary to bring such term within the provisions of
applicable Laws and such term, as so modified, and the balance of this Agreement
shall then be fully enforceable.
12.10. Choice of Law. The obligations, representations, covenants
and warranties entered into by the Parties under this Agreement shall be
construed and governed by the Laws of the State of Oklahoma, without regard for
the choice of law rules of that State.
12.11. Survival and Limitation of Actions. The representations,
warranties and covenants of Seller and Netplex contained in the Agreement
Documents shall survive the consumation of the transactions contemplated hereby.
Any claims or causes of action for breach or default, or for indemnification,
under this Agreement or any of the Agreement Documents, must be commenced by
either party hereto no later two years after such Party discovers or reasonably
should have discovered the existence of any such claim or cause of action. For
any action between the parties not otherwise subsumed in the foregoing, such
action may be commenced no later than within the time permitted by the statute
of limitations provided by applicable Law.
12.12. Public Statements. Prior to the Closing, neither Seller nor
Netplex shall, without the prior written approval of the other party, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except that (a) Seller and Netplex shall issue a
mutually agreeable press release promptly after the signing of this Agreement;
and (b) Seller and Netplex shall be permitted to make public announcements to
the extent required by Law, in which case the other party shall be so advised as
far in advance as possible.
12.13. Attorneys' Fees. If either party initiates any litigation
against the other party involving this Agreement, the prevailing party in such
action shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and other costs and
39
expenses incurred by the prevailing party in respect of that litigation,
including any appeal, and such reimbursement may be included in the judgment or
final order issued in that proceeding.
12.14. Expenses. Seller shall be responsible for the legal,
accounting and other expenses incurred by Seller in connection with this
Agreement and the transactions contemplated hereby. Netplex shall be responsible
for the legal, accounting and other expenses incurred by Netplex in connection
with this Agreement and the transactions contemplated hereby.
12.15. Counsel. Each party has been represented by its own counsel
in connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law that
would otherwise be applicable in connection with the interpretation of this
Agreement, including, but not limited to, any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
12.16. De Minimus violations. Any act, omission, or
misrepresentation which does not materially result in any measurable damage or
liability to either party shall not be deemed or considered a breach or default
of this Agreement by either party.
12.17 Remedies Nonexclusive. The rights and remedies provided to the
Parties in this Agreement are in addition to and not in lieu of any other right
or remedy which may exist at law or in equity according to applicable Laws.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE NETPLEX GROUP, INC.
By:
Name:
Title:
APPLIED INTELLIGENCE GROUP, INC.
By:
Name:
Title:
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