Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
AXIUM INTERNATIONAL, INC.,
DIVERSITY MSP, INC., AS BUYER,
CHIMES INC., AS SELLER
AND
COMPUTER HORIZONS CORP.
Dated as of October 18, 2006
TABLE OF CONTENTS
ARTICLE I
ASSETS TO BE PURCHASED AND ASSUMPTION OF OBLIGATIONS...........................1
Section 1.1(a) Description of Assets.......................................1
Section 1.2 Assumption of Certain Liabilities..............................4
Section 1.3 Non-Assignment of Certain Property.............................4
Section 1.4 Liabilities Not Assumed........................................4
ARTICLE II
PURCHASE PRICE.................................................................5
Section 2.1 Consideration..................................................5
Section 2.2 Prorations.....................................................5
ARTICLE III
CLOSING........................................................................5
Section 3.1 Closing........................................................5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.................................................6
Section 4.1 Representations and Warranties of Axium and Buyer..............6
Section 4.2 Representations and Warranties of Seller and CHC...............8
ARTICLE V
COVENANTS.....................................................................17
Section 5.1 Conduct of Business...........................................17
Section 5.2 Notice of Default.............................................18
Section 5.3 Confidentiality...............................................19
Section 5.4 Preservation of Books and Records.............................19
Section 5.5 CHC Shareholders Meeting......................................19
Section 5.6 Additional Covenants..........................................20
Section 5.7 Sales and Transfer Taxes......................................20
Section 5.8 Transferred Employees.........................................20
Section 5.9 Noncompete....................................................21
Section 5.10 Superior Offer...............................................21
Section 5.11 Name Change..................................................22
Section 5.12 Conversion to LLC............................................22
Section 5.13 Transition Services Agreement................................22
Section 5.14 No Amendment of Financing....................................22
ARTICLE VI
CONDITIONS TO CLOSING.........................................................23
Section 6.1 Conditions to Obligations of Seller and CHC...................23
Section 6.2 Conditions to the Obligations of Buyer and Axium..............24
ARTICLE VII
INDEMNIFICATION...............................................................26
Section 7.1 Indemnification of Axium and Buyer............................26
Section 7.2 Indemnification of CHC and Seller.............................26
Section 7.3 Method of Asserting Claims....................................26
Section 7.4 Exclusive Remedy..............................................28
ARTICLE VIII
TERMINATION OF AGREEMENT......................................................28
Section 8.1 Termination...................................................28
Section 8.2 Effect of Termination.........................................29
Section 8.3 Termination Payment...........................................29
Section 8.4 Expenses......................................................29
Section 8.5 Payment.......................................................30
Section 8.6 Waiver........................................................30
ARTICLE IX
MISCELLANEOUS.................................................................30
Section 9.1 Notices.......................................................30
Section 9.2 Entire Agreement..............................................31
Section 9.3 Binding Effect, Benefits, Assignments.........................31
Section 9.4 Applicable Law................................................31
Section 9.5 Jurisdiction..................................................31
Section 9.6 Further Assurances............................................32
Section 9.7 Counterparts..................................................32
Section 9.8 Headings......................................................32
Section 9.9 Severability..................................................32
Section 9.10 Publicity and Disclosures....................................32
Section 9.11 Amendment....................................................32
Section 9.12 Knowledge of Seller or CHC...................................33
Exhibit A - Xxxx of Sale
Exhibit B - [Intentionally Omitted]
Exhibit C - Buyer's Solvency Certificate
Exhibit D - IP Assignment
Exhibit E - Seller's Solvency Certificate
Exhibit F - Transition Services Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of October 18, 2006 by and among AXIUM INTERNATIONAL, INC., a Delaware
corporation ("AXIUM"), DIVERSITY MSP, INC., a California corporation ("BUYER"),
CHIMES, INC., a Delaware corporation ("SELLER") and Computer Horizons Corp., a
New York corporation ("CHC").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing business process
outsourcing services and work-force procurement and management services (the
"BUSINESS");
WHEREAS, Buyer desires to purchase and Seller desires to sell substantially
all of the Seller's assets, upon the terms and subject to the conditions set
forth in this Agreement; and
WHEREAS, the respective Boards of Directors of Axium and Buyer and the
respective Boards of Directors of Seller and CHC deem it advisable and in the
best interest of their respective shareholders that Buyer acquire the assets and
assume the liabilities of Seller described in and on the terms and subject to
the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
ARTICLE I
ASSETS TO BE PURCHASED AND ASSUMPTION OF OBLIGATIONS
Section 1.1 (a) DESCRIPTION OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined),
Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer
shall purchase, acquire and take assignment and delivery from Seller, all of
Seller's right and title to and interest in and to its business assets,
properties, rights (contractual or otherwise) and claims (other than the
Excluded Assets specified in SECTION 1.1(B)) free and clear of liens and
encumbrances (the "PROPERTY"). Nothing contained herein shall require the
physical delivery of the Property. The Property shall include, without
limitation, all of Seller's right, title and interest in and to the following:
(i) All of Seller's inventory, raw materials, packaging
materials, machinery, obsolete inventory, equipment, tooling, parts, furniture,
supplies, vehicles, office equipment and other tangible personal property (the
"PERSONAL PROPERTY"), including, without limitation, the Personal Property
listed on SCHEDULE 1.1(A)(I) hereto;
(ii) All of Seller's industrial and intellectual property
rights, including, without limitation, patents, patent rights, patent
applications, inventions, trade secrets, processes, formulas, customer lists,
proprietary rights, proprietary knowledge, computer software, websites, URLs,
domain names, trademarks, names, service marks, brand marks, brand names, trade
names, source or object code, copyrights, trade secrets relating to or arising
from any proprietary process, symbols and logos related to the Business and all
applications therefor, registrations thereof and licenses and sublicenses or
agreements in respect thereof, which Seller owns or has the right to use or to
which Seller is a party and all filings, registrations or issuances of any of
the foregoing with or by any federal, state, local or foreign regulatory,
administrative or governmental office including, without limitation, those
listed on SCHEDULE 1.1(A)(II) and the goodwill appurtenant thereto
(collectively, the "PROPRIETARY RIGHTS");
(iii) All leases of equipment, machinery or other tangible
personal property to which Seller is a party, as listed on SCHEDULE 1.1(A)(III)
hereto (the "PERSONAL PROPERTY LEASES");
(iv) All contracts, agreements, contract rights, license
agreements, customer contracts, distribution agreements, franchise rights and
agreements, purchase and sales orders, quotations and executory commitments,
instruments, royalty agreements, third party guaranties, indemnifications,
arrangements and understandings, whether oral or written, to which Seller is a
party (whether or not legally bound thereby), including without limitation those
listed on SCHEDULE 1.1(A)(IV) hereto (the "CONTRACTS");
(v) All franchises, licenses, permits, consents,
authorizations, approvals and certificates of any regulatory, administrative or
other Governmental Authority (as defined herein) (to the extent the same are
transferable by Seller to Buyer), as listed on SCHEDULE 1.1(A)(V) hereto (the
"PERMITS");
(vi) All of Seller's rights under all of its leases for
its facilities together with all buildings, structures, installations, fixtures
and all other improvements, appurtenant thereto or situated thereon and all
other rights, interests and appurtenances of Seller pertaining thereto (the
"OFFICE LEASES");
(vii) All of Seller's accounts receivable as listed on
SCHEDULE 1.1(A)(VII) (the "RECEIVABLES");
(viii) All causes of action, judgments, claims or demands of
whatever kind or description which Seller has or may have against any other
person or entity as listed on SCHEDULE 1.1(A)(VIII) hereto (the "CAUSES OF
ACTION");
(ix) Seller's marketing and sales materials;
(x) Seller's backlog (sales orders which have not yet
been processed);
(xi) All of Seller's customer or client lists, files,
documentation, records and related documentation, including, without limitation,
those listed on SCHEDULE 1.1(A)(XI) hereto;
(xii) All of Seller's security deposits, prepaid expenses,
and other miscellaneous assets, including, without limitation, those listed on
SCHEDULE 1.1(A)(XII) hereto;
(xiii) All of Seller's goodwill;
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(xiv) All of Seller's other tangible and intangible assets,
other than the Excluded Assets;
(xv) All of the cash held by Seller (i) as restricted cash
received by Seller and held in client-specific bank accounts, listed on SCHEDULE
1.1(A)(XV) hereto, to be used to make payments to vendors of the applicable
client ("VENDOR RESTRICTED FUNDS") and (ii) to be disbursed to Seller's vendors
in accordance with the client payment terms ("VENDOR CASH"); and
(xvi) All right, title and interest in and to all of the
securities of Seller's subsidiaries, including, without limitation, (A) Chimes
(Canada), Inc., a corporation organized under the laws of Nova Scotia, Canada,
(B) Chimes Servicing Corp., a corporation organized under the laws of the State
of Delaware, (C) Chimes Netherlands B.V., a private limited liability company
organized under the laws of the Netherlands, (D) Chimes (UK) Limited, a private
company organized under the laws of England and Wales, and (E) Chimes (Puerto
Rico) Inc., a corporation organized under the laws of Puerto Rico.
(b) Notwithstanding the foregoing, the following assets are
being retained by Seller and/or CHC, are expressly excluded from the purchase
and sale contemplated hereby, and, as such, are not included in the Property
(the "EXCLUDED ASSETS"):
(i) Seller's stock record books and corporate record
books containing minutes of meetings of directors and stockholders, and any
other records that relate exclusively to Seller's organization or stock
capitalization (collectively, the "CORPORATE RECORDS")
(ii) Except as related to warranty obligations assumed by
Buyer as set forth in Section 1.2(d), all insurance policies, including, without
limitation, all rights to receive proceeds of insurance policies and all rights
of offset, counterclaims and insurance coverage thereunder;
(iii) all cash, bank accounts, certificates of deposit,
commercial paper, annuities, treasury notes and bills and other marketable
securities other than Vendor Restricted Funds and Vendor Cash;
(iv) any and all income tax credits and refunds for the
period ending on the Closing Date;
(v) all severance, pension, retirement and other employee
benefit plans;
(vi) all rights of Seller with respect to the claims,
refunds, causes of action, rights of recovery, rights of set-off and all other
rights and assets of every kind and nature related to the Excluded Liabilities
(as defined below);
(vii) all monies to be received by, and all other rights
of, Seller and/or CHC under this Agreement, including, without limitation the
Purchase Price (as defined herein) and the other agreements, documents, and
instruments executed or delivered in connection with this Agreement; and
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(viii) the right to receive mail and other communications
addressed to Seller and/or CHC relating to any of the assets described in the
foregoing clauses (i) through (vi) or the Excluded Liabilities.
Section 1.2 ASSUMPTION OF CERTAIN LIABILITIES. On the Closing Date (as
hereinafter defined), Buyer shall, subject to SECTION 1.4 hereof, assume and
hereby agrees to pay, perform and discharge when due, all accrued debts,
liabilities, obligations and commitments of Seller except for the Excluded
Liabilities (as defined herein) including, without limitation, the following:
(a) all accounts payable (the "ACCOUNTS PAYABLE");
(b) all accrued liabilities relating to the Property as shown on
the balance sheet dated June 30, 2006 to the extent not satisfied, and those
accruing since that date in the ordinary course of business consistent with past
practice;
(c) all debts, liabilities, obligations and commitments arising
under the Permits, Personal Property Leases, Office Leases and Contracts
transferred to Buyer; and
(d) all warranty obligations.
The liabilities of Seller being assumed by Buyer are hereinafter collectively
referred to as the "ASSUMED LIABILITIES."
Section 1.3 NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that the
assignment hereunder of any of the Permits, Personal Property Leases, Office
Leases or Contracts shall require the consent of any other party (or in the
event that any of the same shall be nonassignable) (each, a "CONSENT CONTRACT"),
neither this Agreement nor any action taken pursuant to its provisions shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof; PROVIDED, HOWEVER, that
in each such case, Seller shall use its good faith commercially reasonable
efforts to obtain the consent of such other party to an assignment to Buyer
without being obligated to pay any fees or to make any other payments to any
party to obtain any such consent. If such consent is not obtained, (i) such
Consent Contract shall not be deemed assigned at Closing, (ii) Buyer shall act
as Seller's agent to perform Seller's obligations thereunder and shall so
perform, and (iii) Seller and/or CHC, at Buyer's expense, shall cooperate with
Buyer in any reasonable arrangement designed to provide for Buyer the full
benefits of any such Consent Contract including, without limitation,
enforcement, for the account and benefit of Buyer, of any and all rights of
Seller against any other person with respect to any such Consent Contract. When
such consents to the transfer, conveyance and assignment of a Consent Contract
have been obtained, if ever, such Consent Contract shall thereupon automatically
be transferred, conveyed and assigned to Buyer, and the obligations and
liabilities of Seller under such Consent Contract shall automatically cease to
be excluded from the Xxxx of Sale (as hereinafter defined) by reason of this
SECTION 1.3, without the payment of any additional consideration.
Section 1.4 LIABILITIES NOT ASSUMED. With the exception of the Assumed
Liabilities, Buyer shall not, by execution and performance of this Agreement or
otherwise, assume or otherwise be responsible for any debt, liability,
obligation or commitment of any nature of Seller, whether relating to the
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Business, any of Seller's other assets, operations, businesses or activities, or
claims of such liability or obligation, matured or unmatured, liquidated or
unliquidated, fixed or contingent, or known or unknown, whether arising out of
occurrences prior to, at or after the Closing Date. The liabilities of Seller
not being assumed by Buyer are hereinafter collectively referred to as the
"EXCLUDED LIABILITIES."
ARTICLE II
PURCHASE PRICE
Section 2.1 CONSIDERATION. Upon the terms and subject to the conditions
set forth in this Agreement, in consideration for the sale, assignment and
transfer of the Property, Buyer shall:
(a) assume the Assumed Liabilities at the Closing as provided in
SECTION 1.2 hereof pursuant to a xxxx of sale, assignment and assumption
agreement in the form of EXHIBIT A hereto (the "XXXX OF SALE"); and
(b) at the Closing pay to Seller in cash by wire transfer of
immediately available funds in accordance with Seller's written instructions to
Buyer, the sum of EIGHTY MILLION DOLLARS ($80,000,000) (the "PURCHASE PRICE").
Section 2.2 PRORATIONS. The following prorations relating to the
Property will be made as of the Closing Date, with Seller liable to the extent
that such items relate to any time period up to and including the Closing Date
and Buyer liable to the extent that such items relate to periods subsequent to
the Closing Date:
(a) Real and personal property taxes and assessments relating to
the Property and the Business;
(b) Water, sewer and other similar types of taxes, and
installments on special benefit assessments;
(c) Electric, gas, telephone and utility charges;
(d) Charges under maintenance and service contracts and fees
under licenses transferred to or assumed by Buyer; and
(e) Prepaid expenses of Seller or CHC to the extent that the
benefit thereof will be available to Buyer after the Closing Date.
ARTICLE III
CLOSING
Section 3.1 CLOSING. Unless this Agreement is earlier terminated
pursuant to Article VIII, the consummation of the transactions contemplated by
this Agreement, including the purchase and sale of the Property and the
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assumption of the Assumed Liabilities (the "CLOSING"), shall take place at the
offices of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP, Park Avenue Tower, 00
Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 within three (3) business days after
the date on which the conditions set forth in Article VI are satisfied or
waived, unless another time or place shall be agreed to by the parties (the date
on which such closing occurs being herein referred to as the "CLOSING DATE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF AXIUM AND BUYER. Axium and
Buyer hereby jointly and severally represent and warrant to Seller and CHC as of
the date hereof and as of the Closing Date that:
(a) CORPORATE ORGANIZATION; REQUISITE AUTHORITY. Axium is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite power and authority to carry
on its business as now being conducted and as contemplated to be conducted
immediately following the Closing. Buyer is a corporation, duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite power and authority to carry on its business as now being
conducted and as contemplated to be conducted immediately following the Closing.
Complete and correct copies of the Certificate of Incorporation of Axium and all
amendments thereto, certified by the Secretary of State of the State of Delaware
and the bylaws of Axium and all amendments thereto have been previously
delivered to Seller. Complete and correct copies of the Articles of
Incorporation of Buyer and all amendments thereto, certified by the Secretary of
State of the State of California and the bylaws of Buyer and all amendments
thereto have been previously delivered to Seller.
(b) AUTHORIZATION; VALIDITY. Each of Axium and Buyer has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement, the Transition Services Agreement, the Xxxx of
Sale and the Solvency Certificate (as such terms are defined herein), and all
other agreements, documents and instruments required to be executed by Axium or
Buyer pursuant hereto (collectively, the "BUYER AGREEMENTS") and to consummate
the transactions contemplated hereby and thereby. All necessary corporate action
has been taken by Axium and Buyer with respect to the execution, delivery and
performance by Axium and Buyer of this Agreement and the applicable Buyer
Agreements and the consummation of the transactions contemplated hereby and
thereby, and no further corporate authorization will be necessary to authorize
the execution and delivery by Axium or Buyer of, and the performance of either
Axium's or Buyer's obligations under, this Agreement or the applicable Buyer
Agreements. Each of Axium and Buyer has delivered to Seller a copy of the
resolutions of its Board of Directors approving the execution and delivery of
this Agreement and the applicable Buyer Agreements and the consummation of all
of the transactions contemplated hereby and thereby, duly certified by an
authorized officer of Axium or Buyer, as applicable.
(c) EXECUTION AND DELIVERY. This Agreement has been duly
executed and delivered by Axium and Buyer and this Agreement constitutes, and
when executed and delivered the Buyer Agreements will constitute, legal, valid
and binding obligations of Axium and Buyer, enforceable against Axium or Buyer,
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as applicable, in accordance with their respective terms, except (i) as such
enforceability may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, (ii) as such obligations are subject to general principles of equity
and (iii) as rights to indemnity may be limited by federal or state securities
laws or by public policy.
(d) GOVERNMENTAL CONSENTS. Except pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), no action, waiver or consent by any federal, state, municipal or other
governmental department, commission or agency ("GOVERNMENTAL AUTHORITY") is
necessary to make this Agreement and the applicable Buyer Agreements, as
appropriate, valid instruments binding upon Axium and Buyer in accordance with
their respective terms and neither Axium nor Buyer is required to submit any
notice, report or other filing with any Governmental Authority in connection
with the execution, delivery or performance of this Agreement or any of the
Buyer Agreements.
(e) NO CONFLICTS; ABSENCE OF DEFAULT. Neither the execution,
delivery and performance of this Agreement or any of the applicable Buyer
Agreements by Axium or Buyer, nor the consummation by Axium and Buyer of the
transactions contemplated hereby and thereby, nor compliance by Axium and Buyer
with the provisions hereof and thereof will (i) conflict with or violate Axium's
or Buyer's Certificate of Incorporation or Articles of Incorporation, as the
case may be, or bylaws or (ii) conflict with or violate any law, administrative
regulation or rule or court order, writ, judgment or decree (a "LAW" or "LAWS")
applicable to Axium or Buyer except for any such conflict or violation which
would not reasonably be expected to have a material adverse effect on Axium's or
Buyer's financial condition or ability to consummate the transactions
contemplated by this Agreement (a "BUYER MATERIAL ADVERSE EFFECT") or (iii)
breach, conflict with, violate or cause a default under any material contract,
license or agreement, permit, instrument or obligation to which either Axium or
Buyer or any of their assets is or may be bound. Neither the execution and
delivery of this Agreement and the applicable Buyer Agreements, nor the
consummation of the transactions contemplated hereby and thereby, will require
any consent, waiver, approval, exemption, registration, declaration, license,
authorization or permit of, or filing with or notification to, any other person
or entity. There are no corporate, contractual, statutory or other restrictions
of any kind upon the power and authority of Axium or Buyer to execute and
deliver this Agreement and the applicable Buyer Agreements and to consummate the
transactions contemplated hereunder and thereunder.
(f) BROKER. No broker, finder or investment banker is entitled
to any brokerage or finder's fee or other commission from Axium or Buyer in
connection with the transactions contemplated hereby based upon the arrangements
made by or on behalf of Axium or Buyer.
(g) LITIGATION. There is no suit, action or administrative or
other legal proceeding, nor any order, decree or judgment in progress, pending
or in effect, or to the knowledge of Axium or Buyer, threatened against Axium or
Buyer in connection with or relating to the transactions contemplated by this
Agreement, or any other agreement to be executed by Axium or Buyer pursuant
hereto, and Axium and Buyer do not know or have any reason to be aware of any
basis for the same.
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(h) SOLVENCY. Each of Axium and Buyer is Solvent (as defined
below). Neither Axium nor Buyer will fail to be Solvent as a result of the
execution and delivery of this Agreement or any of the other agreements,
documents, or instruments to which it is a party or as a result of the
transactions contemplated hereunder.
"SOLVENT" shall mean, when used with respect to any person or entity, that
at the time of determination:
(i) it is then able and expects to be able to pay its
debts as they mature; and
(ii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
(i) FINANCING. Buyer has received financing commitments from
GoldenTree Asset Management, LP and such commitments shall provide adequate
financing to consummate the transactions contemplated hereby, by the Buyer
Agreements and by the Seller Agreements, as applicable.
(j) NO DEFAULT. Neither Axium nor Buyer is in default with
respect to any indebtedness, note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which Axium or Buyer is a party or by which it is
bound, and neither Axium nor Buyer has received any notice or demands with
respect to the same, which default or demand would cause a Buyer Material
Adverse Effect.
Section 4.2 REPRESENTATIONS AND WARRANTIES OF SELLER AND CHC. Each of
the following representations and warranties by CHC and Seller to Buyer is
qualified by all of the Seller's disclosure schedules annexed hereto, which set
forth certain disclosures concerning the Seller and its business. Seller and CHC
hereby represent and warrant to Buyer as of the date hereof and as of the
Closing Date that:
(a) CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO CONDUCT
BUSINESS. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own, operate or lease the Property and to carry on the Business as
now being conducted. CHC is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York. Complete and correct
copies of the Certificate of Incorporation of Seller and all amendments thereto,
certified by the Secretary of State of the State of Delaware, and the bylaws of
Seller and all amendments thereto have been previously delivered or made
available to Buyer. Seller is duly qualified or licensed to do business and is
in good standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of the Property or the transaction of business by the
Business requires it to be so qualified or licensed, except where the failure to
be so qualified or licensed would not in the aggregate reasonably be expected to
have a Seller Material Adverse Effect. As used in this Agreement, "SELLER
MATERIAL ADVERSE EFFECT" means a material adverse effect on the business,
financial condition or results of operations of the Business or the ability of
Seller to consummate the transactions contemplated by this Agreement, except in
each case for any such effects resulting from, arising out of, or relating to
(a) legal, accounting or investment banking fees for the negotiation,
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preparation and execution of this Agreement, (b) the entry into or announcement
of this Agreement and the other transactions contemplated hereby, (c) any change
in or interpretations of (i) GAAP or (ii) any Law, (d) any change in interest
rates or general economic conditions in the industries or markets in which
Seller or any of its subsidiaries operates or affecting United States or foreign
economies in general or United States or foreign financial, banking or
securities markets, (e) any action taken by Buyer or any of its Affiliates, or
(f) any natural disaster or act of God.
(b) AUTHORIZATION; VALIDITY. Seller has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement,
and the Transition Services Agreement, the Xxxx of Sale, the IP Assignment (as
such term is defined herein), and all other agreements, documents and
instruments required to be executed by Seller pursuant hereto (collectively, the
"SELLER AGREEMENTS"), and to consummate the transactions contemplated hereby and
thereby. CHC has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby. All necessary corporate action has been taken
by Seller with respect to the execution, delivery and performance by Seller of
this Agreement and the Seller Agreements and the consummation of the
transactions contemplated hereby and thereby, and no further corporate
authorization will be necessary to authorize the execution and delivery by
Seller and the performance of its obligations under this Agreement or the Seller
Agreements. All necessary corporate action has been taken by CHC with respect to
the execution, delivery and performance by CHC of this Agreement and the
consummation of the transactions contemplated hereby, and no further corporate
authorization will be necessary to authorize the execution and delivery by CHC
and the performance of its obligations under this Agreement (other than the
requisite approval of the transactions contemplated hereby by the shareholders
of CHC in accordance with CHC'S Certificate of Incorporation and the New York
Business Corporation Law ("NYBCL")).
(c) EXECUTION AND DELIVERY. (i) This Agreement has been duly
executed and delivered by Seller and this Agreement constitutes, and when
executed and delivered the Seller Agreements will constitute, legal, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms, and (ii) this Agreement has been duly executed and
delivered by CHC and constitutes a legal, valid and binding obligation of CHC
enforceable against CHC in accordance with its terms; except, in both cases, (x)
as such enforceability may be limited by or subject to any bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (y) as such obligations are subject to general
principles of equity and (z) as rights to indemnity may be limited by federal or
state securities laws or by public policy.
(d) GOVERNMENTAL CONSENTS; PERMITS. Except pursuant to the HSR
Act and as set forth on SCHEDULE 4.2(D), no action, waiver or consent by any
Governmental Authority is necessary to make this Agreement and the Seller
Agreements, as appropriate, valid instruments binding upon Seller in accordance
with their respective terms and Seller is not required to submit any notice,
report or other filing with any Governmental Authority in connection with the
execution, delivery or performance of this Agreement or any of the Seller
Agreements, except where the failure to do so would not have a Seller Material
Adverse Effect. The Permits listed on SCHEDULE 1.1(A)(V) are all of the permits
necessary to sell the products and services of the Business being sold as of the
date hereof.
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(e) CONFLICTS; ABSENCE OF DEFAULT. Neither the execution,
delivery or performance of this Agreement or any of the Seller Agreements by
Seller, nor the execution, delivery or performance of this Agreement by CHC, nor
the consummation by Seller or CHC of the transactions contemplated by such
documents to which it is a party, nor compliance by Seller or CHC with any of
the provisions of such documents to which it is a party will (i) in the case of
Seller, conflict with or violate Seller's Certificate of Incorporation or
bylaws, and in the case of CHC, conflict with or violate CHC's Certificate of
Incorporation or bylaws; (ii) conflict with or violate any Law applicable to the
Business or any of the Property, which would have a Seller Material Adverse
Effect; or (iii) breach, conflict with, violate or cause a default under any
material contract, license or agreement, permit, instrument, or obligation (the
"SELLER CONTRACTS") to which Seller or any of its assets is or may be bound,
except for any such breach, conflict, violation or default which would not
reasonably be expected to cause a Seller Material Adverse Effect. Neither the
execution and delivery of this Agreement and the Seller Agreements, in the case
of Seller, nor the execution and delivery of this Agreement, in the case of CHC,
nor the consummation by Seller or CHC of the transactions contemplated by such
documents to which it is a party will require any consent, waiver, approval,
exemption, registration, declaration, license, authorization or permit of, or
filing with or notification to, any other person or entity, except for the HSR
Act (as herein defined) and such consents, waivers, approvals, exemptions,
registrations, declarations, licenses authorizations, permits, filings or
notifications which have been obtained or are listed on SCHEDULE 4.2(E), or
which, if not obtained or made, will not allow for the termination, cancellation
or acceleration of any obligation to repay under, any of the terms, conditions
or provisions of any Contract or obligation. Seller's inability to obtain
consents to the assignment of Contracts to Buyer shall not constitute a breach
or default of any provision of this Agreement. Neither the execution, delivery
or performance of this Agreement or any of the Seller Agreements by Seller, nor
the execution, delivery or performance of this Agreement by CHC, nor the
consummation by Seller or CHC of the transactions contemplated by such documents
to which it is a party, nor compliance by Seller or CHC with any of the
provisions of such documents to which it is a party, will constitute a default
(in and of itself or with the giving of notice, passage of time or both) under
the Seller Contracts, or result in the creation or imposition of any encumbrance
upon, or giving to any other party or parties any claim, interest or right
including rights of termination or cancellation in, or with respect to, the
Business or Property, which would have a Seller Material Adverse Effect; or
result in the loss of any license, franchise or legal privilege possessed by
Seller or give a right of termination to any party to any agreement or other
instrument to which Seller is a party or by which any of the Property or the
Business is bound, which would have a Seller Material Adverse Effect. Except for
the approval of CHC's shareholders and except as set forth on SCHEDULE 4.2(E),
there are no corporate, contractual, statutory or other restrictions of any kind
upon the power and authority of Seller to execute and deliver this Agreement and
the Seller Agreements, upon the power and authority of CHC to execute and
deliver this Agreement, and for Seller or CHC to consummate the transactions
contemplated by such documents to which it is a party.
(f) ENVIRONMENTAL MATTERS.
(i) Except as set forth on SCHEDULE 4.2(F) and in CHC's
annual, quarterly and current reports as filed since January 1, 2005 with the
United States Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K
pursuant to the Securities and Exchange Act of 1934, as amended (the "SEC
REPORTS"), (A) Seller is in compliance with all applicable Environmental Laws,
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except where failure to be in compliance would not have a Seller Material
Adverse Effect; (B) there is no Environmental Claim pending against Seller; (C)
Seller has obtained all material permits, approvals, identification numbers,
licenses or other authorizations required under any applicable Environmental
Laws (the "ENVIRONMENTAL PERMITS") and is and has been in compliance with their
requirements; (D) there are no underground or aboveground storage tanks or any
surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous
Materials are being or have been treated, stored or disposed of on any real
property currently owned or leased by Seller other than in compliance with
Environmental Laws; (E) Seller has not undertaken or completed any investigation
or assessment or remedial or response action relating to any such release,
discharge or disposal of or contamination with Hazardous Materials at any site,
location or operation of the Business, either voluntarily or pursuant to the
order of any Governmental Entity or the requirements of any Environmental Law;
and (F) except as set forth on SCHEDULE 4.2(F), there have been no Environmental
Claims against the Seller.
(ii) For purposes of this SECTION 4.2(F):
(A) "ENVIRONMENTAL CLAIM" shall mean any claim, action,
demand, order, or notice by or on behalf of, any Governmental Authority or
person alleging potential liability arising out of, based on or resulting from
the violation of any Environmental Law or permit or relating to any Hazardous
Materials.
(B) "ENVIRONMENTAL LAWS" shall mean all Laws that are
applicable to the Business or the Property relating to Releases or threatened
Releases of Hazardous Materials or otherwise relating to pollution or protection
of the environment, health, safety or natural resources, including, without
limitation, those relating to (A) the Releases or threatened releases of
Hazardous Materials or materials containing Hazardous Materials or (B) the
manufacture, generation, handling, treatment, storage, transport, disposal or
handling of Hazardous Materials or materials containing Hazardous Materials.
(C) "HAZARDOUS MATERIALS" means all substances, matters
and other particles defined or listed as "hazardous" or "toxic" under
Environmental Laws or are otherwise subject to or regulated by Environmental
Laws.
(D) "RELEASE" shall mean any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of Hazardous Materials into the indoor
or outdoor environment, including the movement of Hazardous Materials through
the air, soil, surface water or groundwater.
(g) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth
on SCHEDULE 4.2(G), since September 30, 2006, there has not been:
(i) Any Seller Material Adverse Effect;
(ii) Other than in the usual and ordinary course of
business, any increase in amounts payable by Seller to or for the benefit of or
committed to be paid by Seller to or for the benefit of any officer, consultant,
agent or employee of Seller, in any capacity, whether in the form of salary,
bonus, consulting fee, directors fee or otherwise, or in any benefits granted
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under any bonus, stock option, profit sharing, pension, retirement, deferred
compensation, insurance, or other direct or indirect benefit plan with respect
to any such person;
(iii) Any transaction entered into or carried out by Seller
other than in the ordinary and usual course of its business resulting in the
incurrence of liabilities or obligations of Seller;
(iv) Any material change made by Seller in the methods of
doing business or in the accounting principles or practices or the method of
application of such principles or practices;
(v) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the Property which will not be discharged prior to the Closing,
except for Permitted Liens (as hereinafter defined);
(vi) Any sale, lease or other disposition of, or any
agreement to sell, lease or otherwise dispose of any Property, individually in
excess of $100,000, or in the aggregate in excess of $250,000, excluding sales
in the ordinary course of business;
(vii) Any purchase of or any agreement to purchase capital
assets or any lease or any agreement to lease, as lessee, any capital assets of
the Business individually in excess of $100,000 or in the aggregate in excess of
$250,000;
(viii) Any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect to, any
term, condition or provision of any contract, agreement, license or other
instrument to which Seller is a party, which would have a Seller Material
Adverse Effect, other than any satisfaction by performance in accordance with
the terms thereof in the usual and ordinary course of its business;
(ix) Any damage, destruction or similar loss, whether or
not covered by insurance, adversely affecting the Seller in excess of $100,000
individually, or $250,000 in the aggregate;
(x) Any strike, picketing, work slowdown or labor
disturbance with respect to the Business; or
(xi) To the knowledge of Seller or CHC, any change in any
Law applicable to or binding upon the Business or the Property, which would have
a Seller Material Adverse Effect.
(h) TAXES AND TAX RETURNS. (i) For purposes of this Agreement,
(A) the term "TAXES" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
property, use, sales, transfer, license, payroll and franchise or other taxes of
any kind whatsoever, imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof whether computed on a
unitary, combined or any other basis; and such term shall include any interest
and penalties or additions to tax; and (B) the term "TAX RETURN" shall mean any
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report, return or other information required to be filed with, supplied to or
otherwise made available to a taxing authority in connection with Taxes.
(ii) Except for transfer tax returns in connection with
the transactions contemplated by this Agreement, which will be filed promptly
after the Closing Date, Seller has (A) filed with the appropriate taxing
authorities all Tax Returns relating to the Property or the Business required to
be filed for any period ending on or before the Closing Date (or are properly on
extension), and all such filed Tax Returns are true, correct and complete in all
material respects, and (B) paid in full all Taxes shown to be due on such Tax
Returns, together with any penalties or fines due in connection therewith. There
are no liens for Taxes upon the Property except for statutory liens for current
Taxes not yet due and payable. Seller will file appropriate Tax Returns for any
period ending on or before the Closing Date, and pay any Taxes for such periods
when due. Seller has not received any outstanding notice of audit, and is not
undergoing any audit, of Tax Returns relating to the Property or the Business
and has never received any notice of deficiency or assessment from any taxing
authority with respect to liability for Taxes relating to the Property or the
Business which has not been fully paid or finally settled and has not been
notified in writing of any potential or actual dispute or claim concerning any
Tax liability of Seller relating to the Property or the Business. There have
been no waivers of statutes of limitations by Seller with respect to any Tax
Returns relating to the Property or the Business. Seller has complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has withheld all amounts required by
law to be withheld from the wages or salaries of employees and independent
contractors of the Business, and is not liable for any Taxes with respect to the
employees and independent contractors of the Business for failure to comply with
such laws, rules and regulations.
(i) EMPLOYMENT MATTERS; ERISA MATTERS. Except as set forth on
SCHEDULE 4.2(I) or in the SEC Reports, there are no employment, consulting,
severance or indemnification contracts between the Seller and any of its
employees. The Seller is not a party to any union contract or collective
bargaining agreement. SCHEDULE 4.2(I) identifies those employees of the Seller
who are deemed to be key employees to the operations of the Business. Except as
otherwise set forth in this Agreement, Seller has no plans to terminate any key
employee, and none of the key employees is expected to terminate his employment
with Seller. Seller is in compliance with Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours.
Seller has no responsibility for and has not assumed any pension-related
liability of any predecessor business or Person.
(j) TITLE TO PROPERTY. (i) Seller has good and marketable title,
or valid leasehold rights (in the case of leased property), to all of the
Personal Property, free and clear of all liens, claims and encumbrances of any
nature, other than as disclosed on SCHEDULE 4.2(J) (the "PERMITTED LIENS"). On
the Closing Date, Seller will convey to Buyer good and marketable title to the
Personal Property or, in the case of assets constituting Personal Property which
are leased or licensed by Seller pursuant to Personal Property Leases or other
Contracts, valid leasehold interests or licenses to such Personal Property
Leases or other Contracts, free and clear of all liens, claims and encumbrances
of any nature other than Permitted Liens. Except for the Excluded Assets, (i)
SCHEDULE 1.1(A)(I) sets forth a complete and accurate list of all the Personal
Property owned by Seller, including without limitation, all inventory, raw
materials, packaging materials, machinery, equipment, tooling, parts, furniture,
supplies, vehicles, office equipment and other tangible personal property, and
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(ii) SCHEDULE 1.1(A)(III) sets forth a complete and accurate list of all
Personal Property Leases owned by Seller, including, without limitation, all
leases of equipment or other personal property used in the conduct of the
Business with a value in excess of $25,000 individually or $50,000 in the
aggregate. All Personal Property used in the conduct of the Business is owned or
leased by Seller and is held free and clear of all mortgages, pledges, liens,
security interests, claims, encumbrances and restrictions of any nature
whatsoever other than Permitted Liens. Except for Permitted Liens and except as
disclosed on SCHEDULE 4.2(J), no financing statement under the Uniform
Commercial Code or similar law naming Seller as debtor has been filed, and not
been terminated, prior to the Closing Date in any jurisdiction in respect of the
Property, and, except as disclosed on SCHEDULE 4.2(J), Seller is not a party to
or bound under any agreement or legal obligation authorizing any party to file
any such financing statement.
(ii) SCHEDULE 1.1(A)(III) sets forth, with respect to
Personal Property Leases, the commencement date, termination date, renewal
options, if any, and annual base rents. Except as disclosed on SCHEDULE 4.2(J)
and in the SEC Reports, each such Personal Property Lease is valid and
enforceable in accordance with its terms in all respects and is in full force
and effect. Neither Seller, nor to the knowledge of Seller or CHC, any other
party to any Personal Property Lease, is in default of its obligations
thereunder, and Seller (or any other party to any such Personal Property Lease)
has not at any time delivered or received any notice of default which remains
uncured under any such Personal Property Lease and no event has occurred which,
with the giving of notice or the passage of time, or both, would constitute a
default under any such Lease.
(k) TRADEMARKS, PATENTS AND COPYRIGHTS. (i) Except as disclosed
on SCHEDULE 4.2(K), Seller owns or has the right to use, sell or license all
Proprietary Rights and such Proprietary Rights are sufficient for the conduct of
the Business of Seller as it is currently being conducted as of the date hereof.
SCHEDULE 1.1(A)(II) hereto lists each patent, patent right, patent application,
tradename, trademark, trade name registration, trademark registration, trademark
application, copyright registration, copyright registration application, service
xxxx, brand xxxx and brand name, trade secret, formula, source and object code
owned or licensed by Seller, and any license for any of the foregoing in each
case.
(ii) Except as disclosed on SCHEDULE 4.2(K), the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not constitute a breach of any
instrument or agreement governing any Proprietary Rights, will not cause the
forfeiture or termination or give rise to a right of forfeiture or termination
of any Proprietary Rights or impair the right of the Business to use, sell or
license any Proprietary Rights or any portion thereof.
(iii) Except as disclosed on SCHEDULE 4.2(K), neither the
manufacture, marketing, license, sale or intended use of any product or service
currently sold violates any license or agreement between Seller and any third
party relating to such product or service or to the knowledge of Seller or CHC
infringes any intellectual property right of any other party, and there is no
pending or, to either Seller's or CHC's knowledge, threatened claim or
litigation contesting the validity and Seller's ownership or right to use, sell,
license or dispose of any Proprietary Right nor has Seller received any notice
14
asserting that any Proprietary Right or the proposed use, sale, license or
disposition thereof conflicts or will conflict with the rights of any other
party, and Seller has neither licensed the use of the Proprietary Rights to any
third party nor permitted the use by any third party of the same in a manner
which would infringe the Proprietary Rights of Seller.
(iv) Except as disclosed on SCHEDULE 4.2(K), no current or
prior members, officers, employees or consultants of Seller have asserted in
writing, nor to the knowledge of Seller or CHC threatened, any claim to an
ownership interest in any of the Proprietary Rights as a result of having been
involved in the development of such property while employed by or consulting to
the Business or otherwise.
(l) ACCOUNTS RECEIVABLE. The Receivables listed on SCHEDULE
1.1(A)(VII) are or will be subsisting; arose or will arise in the ordinary and
usual course of Seller's business; are not and will not be subject to any
counterclaim, set-off or defense known to the Seller; and are not and will not
be subject to any lien or encumbrance, other than Permitted Liens.
(m) LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC. Except as
disclosed on SCHEDULE 4.2(M) and in the SEC Reports, there is no legal,
administrative, arbitration or other action or proceeding or governmental
investigation pending against Seller or, to the knowledge of Seller or CHC,
pending against any member, officer or employee thereof. Except as disclosed on
SCHEDULE 4.2(M) and in the SEC Reports, Seller has not been informed of any
violation of or default under, any laws, ordinances, regulations, judgments,
injunctions, orders or decrees (including without limitation, any immigration
laws or regulations) of any court, governmental department, commission, agency,
instrumentality or arbitrator. Except as disclosed in SCHEDULE 4.2(M) and in the
SEC Reports, the Seller is not currently subject to any judgment, order,
injunction or decree of any court, arbitral authority, administrative agency or
Governmental Authority.
(n) CONTRACTS. SCHEDULE 1.1(A)(IV) sets forth a complete and
accurate list of all contracts or agreements to which Seller is a party,
involving either aggregate consideration payable to or by Seller of $50,000 in a
twelve month period or the Property, and Seller has provided or made available
to Buyer copies of all of such Contracts ("MATERIAL CONTRACTS"). Each Material
Contract (i) is in full force and effect and is binding upon and enforceable
against Seller, and, to the knowledge of Seller or CHC, all other parties
thereto in accordance with its terms, (ii) has not been otherwise materially
amended or modified by Seller except as specified in such Schedule and (iii) is
not in material default due to the action of Seller or, to the knowledge of
Seller or CHC, any other party thereto. Without limiting Section 4.2(v), neither
Seller nor CHC has received notice that any party to any Material Contract
intends to cancel or terminate such Contract, and neither Seller nor CHC is
aware of any pending, or to either Seller's and CHC's knowledge, threatened
dispute or other information that might result in any party to any Material
Contract canceling or terminating such Contract.
(o) CERTAIN TRANSACTIONS. No officer or employee of Seller, nor
any member of any such person's family is presently a party to any material
transaction with Seller, including without limitation, any contract, agreement
or other arrangement (i) providing for the furnishing of services by, (ii)
providing for the rental of real or personal property from, or (iii) otherwise
requiring payments to (other than for services as managers, officers, directors
or employees of the Seller), any such person or any corporation, partnership,
15
trust or other entity in which any such person has a substantial interest as a
stockholder, officer, director, trustee or partner.
(p) BROKER. Other than Jefferies Broadview, no broker, finder or
investment banker is entitled to any brokerage or finder's fee or other
commission from Seller in connection with the transactions contemplated hereby
based on the arrangements made by or on behalf of Seller.
(q) LICENSES. Seller is the holder of all state, federal and
local licenses, permits and approvals required to conduct the Business as it is
presently being conducted, except where the failure to hold the same would not
have a Seller Material Adverse Effect. Except as set forth on SCHEDULE 4.2(Q)(I)
and in the SEC Reports, all of the Permits are in good standing, valid and
effective, and free and clear of any liens, conditions or restrictions which
might limit their full utilization as authorized by any governmental authority.
SCHEDULE 1.1(A)(V) lists each transferable Permit held by Seller and its date of
expiration. SCHEDULE 4.2(Q)(II) sets forth those Permits issued by various
Governmental Authorities to Seller that are not assignable. Seller's inability
to assign such Permits to Buyer shall not constitute a breach or default of any
provision of this Agreement.
(r) COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 4.2(R)
and in the SEC Reports, Seller has complied in all material respects with all
Laws, which are applicable to or binding upon the Business or the Property.
(s) BOOKS OF ACCOUNT; RECORDS. The general ledgers, books of
account and other records of Seller are complete and correct in all respects and
have been maintained in accordance with good business practices and on a
consistent basis from period to period reflected therein.
(t) CONDITION OF THE PROPERTY. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN, ALL OF THE PROPERTY IS CONVEYED TO BUYER AS IS, WHERE IS AND
SELLER AND CHC HEREBY DISCLAIM ALL WARRANTIES WITH RESPECT THERETO, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
(u) ACCOUNTS PAYABLE. All of Seller's accounts payable have been
incurred in the ordinary course of business consistent with past practice.
(v) CUSTOMERS. Except as set forth on SCHEDULE 4.2(V) and in the
SEC Reports, there are no pending, or to either Seller's and CHC's knowledge,
threatened disputes between Seller and any of the licensors, licensees, vendors,
suppliers, clients or customers of the Business or other parties which in any
way relate to Seller's operation of the Business. Neither Seller nor CHC has any
information, or is aware of any facts, indicating that any licensors, licensees,
vendors, suppliers, clients or customers of the Business or other parties which
in any way relate to Seller's operation of the Business, intends to cease doing
business with Seller or materially alter the amount of business they are
presently doing with Seller, and neither Seller nor CHC is aware of any pending,
or to either Seller's and CHC's knowledge, threatened dispute or other
information that might result in any licensors, licensees, vendors, suppliers,
clients or customers of the Business or other parties which in any way relate to
Seller's operation of the Business, ceasing to do business with Seller or
16
materially altering the amount of business they are presently doing with Seller
or any disputes between Seller and any of the vendors, suppliers, or customers
of the Business or other parties which in any way relate to Seller's operation
of the Business.
(w) ENTIRE BUSINESS. The sale of the Property to be sold by
Seller to Buyer pursuant to this Agreement will convey to Buyer the entire
Business and all of the tangible and intangible property used by Seller (whether
owned, leased or held under license by Seller) in connection with the conduct of
the Business as heretofore conducted by Seller.
ARTICLE V
COVENANTS
Section 5.1 CONDUCT OF BUSINESS. Between the date of this Agreement and
the Closing Date, Seller shall, and CHC shall cause Seller to:
(a) Conduct the Business and enter into transactions only in the
ordinary course in accordance with past practices and, without Buyer's prior
written consent, refrain from changing or introducing any method of management
or operations;
(b) Refrain from making any changes in its accounting practices,
including with respect to revenue and expense recognition methods and
depreciation or amortization methods, policies or rates;
(c) Continue all accounts receivable collection efforts and
accounts payable payments in the ordinary course consistent with past practices;
(d) Refrain from making any purchase, sale, or disposition of
any asset or property in excess of $100,000 or, in the aggregate, in excess of
$250,000 (including, without limitation, any mortgage loan in excess of such
amount), other than in the ordinary course of business and from mortgaging,
pledging, subjecting to a Lien or otherwise encumbering any of its properties or
assets;
(e) Refrain from incurring any contingent liability as a
guarantor or otherwise with respect to the obligations of others, and from
incurring any other contingent or fixed obligations or liabilities;
(f) Refrain from entering into transactions with affiliated
persons or entities;
(g) Except as set forth on SCHEDULE 5.1 hereto, refrain from
declaring, setting aside, or paying any dividend, making any other distribution
in respect of its capital stock, or making any direct or indirect redemption,
purchase, or other acquisition of its stock;
(h) Refrain from making any change in the compensation payable
or to become payable to any of its officers, employees, agents, or independent
contractors, and from adopting or amending in any material respect any employee
benefit plan;
17
(i) Refrain from amending its Certificate of Incorporation or
by-laws without the consent of Buyer;
(j) Refrain from canceling any material indebtedness
(individually or in the aggregate) or waive any claims or rights of substantial
value;
(k) Refrain from entering into any material contract, including
any lease of real property, without the consent of Buyer, other than in the
ordinary course of business;
(l) Refrain from materially modifying or amending, or
terminating or permitting the lapse of, any material contracts or leases,
without the consent of Buyer, other than in the ordinary course of business;
(m) Refrain from making, or committing to make, any capital
expenditure in excess of $100,000 and $250,000 in the aggregate without the
consent of Buyer;
(n) Have in effect and maintain at all times all insurance of
the kind, in the amount, and with the insurers previously disclosed to Buyer or
equivalent insurance with any substitute insurers approved in writing by Buyer;
(o) Furnish to Buyer and its attorneys, accountants, advisors
and other representatives (collectively, "REPRESENTATIVES") such financial and
other information with respect to the Business or its assets as Buyer may from
time to time reasonably request;
(p) Provide Buyer and its Representatives with full and complete
access at reasonable times and upon reasonable prior notice to all of the
facilities, books and records (including marketing statistics) of the Business
and of Seller;
(q) Provide Buyer and its Representatives with full and complete
access to, and reasonably assist Buyer and its Representatives with, Seller's
licensors, licensees, vendors, suppliers, clients and customers;
(r) Perform or permit the following: (i) permit Buyer and its
Representatives to conduct a full investigation of the Property, including, but
not limited to, books, records, contracts, and such other documents as Buyer may
reasonably request, as well as the operating condition, environmental condition
and other aspects of the Purchased Assets and (ii) cooperate fully with Buyer
and its Representatives, and cause its employees, agents and other
Representatives to cooperate fully with Buyer and its Representatives, for the
purpose of enabling Buyer and its Representatives to conduct the activities
described above; and
(s) Maintain the overall marketing effort of the Business at
levels consistent with the past practices of Seller, except as may be modified
in the ordinary course of business.
Section 5.2 NOTICE OF DEFAULT. From the date hereof until the Closing,
promptly upon the occurrence of, or promptly upon Seller or CHC, on the one
hand, or Buyer or Axium, on the other hand, becoming aware of the impending or
threatened occurrence of, any event which would cause or constitute a breach or
default hereunder, or would have caused or constituted a breach or default had
such event occurred or been known to Seller or CHC, on the one hand, or Buyer or
18
Axium, on the other hand, prior to the date hereof, of any of the
representations, warranties, or covenants of Seller or CHC, on the one hand, or
Buyer or Axium, on the other hand, contained in or referred to in this Agreement
or in any Schedule or Exhibit referred to in this Agreement, Seller or CHC or
Buyer or Axium (as applicable) shall give detailed written notice thereof to
Buyer or Seller (as applicable) and shall use its reasonable best efforts to
prevent or promptly remedy the same.
Section 5.3 CONFIDENTIALITY. Subject to the provisions of SECTION 9.10
and except as otherwise required by law, Seller, CHC, Buyer and Axium shall
protect and maintain the confidentiality of all matters related to and
contemplated by this Agreement and the agreements executed and delivered in
connection herewith.
Section 5.4 PRESERVATION OF BOOKS AND RECORDS. Until at least the
expiration of ninety (90) days after the Closing Date, CHC and Seller will
preserve and maintain all of Seller's books and records and all books and
records of CHC exclusively related to the Business that are in their possession
and not otherwise transferred to Buyer pursuant to this Agreement and will
provide Buyer and its auditors, employees and agents with full access to the
records of Seller (other than Seller's attorney-client communications and work
product) upon reasonable notice during normal business hours and shall allow
Buyer and its auditors, employees and agents, at Buyer's expense, to make copies
of such documents, records and other information pertaining to the Business as
Buyer may reasonably request. If CHC or Seller desires to dispose of any such
books and records before the expiration of such period, CHC or Seller, as
applicable, will first give written notice thereof to Buyer and will, at Buyer's
option and expense, appropriately package and deliver such books and records to
Buyer at such location as Buyer shall designate. If upon receiving written
notice of CHC's or Seller's desire to dispose of books and records, Buyer does
not direct CHC or Seller, as applicable, to deliver such books and records
within 45 days, then CHC or Seller, as applicable, may dispose of such books and
records without violating the terms of this Agreement.
Section 5.5 CHC SHAREHOLDERS MEETING. CHC, acting through its Board of
Directors, shall, in accordance with the applicable provisions of its
Certificate of Incorporation and the NYBCL, use its commercially reasonable
efforts to obtain the approval of its shareholders and the adoption of this
Agreement and the transactions contemplated hereby (the "TRANSACTION"),
including:
(i) As promptly as practicable following the execution
and delivery of this Agreement, duly call, give notice of, convene and hold a
special meeting of its shareholders (the "SPECIAL MEETING") for the purposes of
considering and taking action upon the approval and adoption of the Transaction;
(ii) As promptly as practicable following the execution
and delivery of this Agreement, subject to SECTION 5.10, declare advisable and
recommend to its shareholders that they approve the Transaction and adopt this
Agreement, and include disclosure regarding the approval of CHC's Board of
Directors (the "CHC BOARD"); and
(iii) As promptly as practicable following the execution
and delivery of this Agreement, but in no event later than the later of (a) the
expiration of twenty (20) calendar days after the full execution and delivery of
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this Agreement, if a definitive agreement is not executed by CHC for the sale of
all or substantially all of the assets of CHC's Commercial Services Business
Unit (the "SALE OF COMMERCIAL"), or (b) the expiration of thirty-four (34)
calendar days after the full execution and delivery of this Agreement, if a
definitive agreement is executed by CHC for the Sale of Commercial, prepare and
file with the Securities and Exchange Commission (the "SEC") a preliminary proxy
or information statement (y) relating solely to the Transaction and this
Agreement, if a definitive agreement is not executed by CHC for the Sale of
Commercial, or (z) relating solely to the Transaction, this Agreement, the Sale
of Commercial and the adoption of a plan of liquidation for CHC, if a definitive
agreement is executed by CHC for the Sale of Commercial, and, in either case,
obtain and furnish the information required to be included by the SEC in the
proxy or information statement and, after consultation with Buyer, respond
promptly to any comments made by the SEC with respect to the preliminary proxy
or information statement and cause a definitive proxy or information statement,
including any amendments or supplements thereto (the "PROXY STATEMENT") to be
mailed to its shareholders at the earliest practicable date.
Notwithstanding anything herein to the contrary, in no event shall CHC or
its Board of Directors be required to take any of the actions set forth in this
Section 5.5 prior to the date specified in subclause (a) or (b) of Section
5.5(iii), as applicable.
Section 5.6 ADDITIONAL COVENANTS. Seller, Buyer, CHC and Axium covenant
and agree, subject to the conditions set forth herein, to proceed diligently and
to use reasonable efforts to take or cause to be taken all actions and to do or
cause to be done all things necessary, proper and advisable to consummate the
transactions contemplated by this Agreement and to prepare and execute such
additional documents and to take or cause to be taken such additional actions,
as either party may reasonably request pursuant to the terms and conditions of
this Agreement.
Section 5.7 SALES AND TRANSFER TAXES. All sales and transfer taxes,
recording taxes, and similar taxes and charges, incurred in connection with the
sale of the Property under this Agreement will be borne by Buyer.
Section 5.8 TRANSFERRED EMPLOYEES.
(a) OFFER OF EMPLOYMENT. Subject to and in accordance with the
provisions of this SECTION 5.8, Buyer shall, effective upon the Closing, offer
full-time employment to substantially all (i.e., at least 90% and up to 100%) of
the employees who are employed by Seller as of the Closing Date (the
"EMPLOYEES") on terms and conditions comparable to the terms and conditions of
employment and benefits for current employees of Buyer in similar job
classifications and grades. Buyer shall hire all of the Employees who accept
such offer. Buyer will deliver to Seller a list of all of the Employees who have
accepted an offer of employment from Buyer promptly after the Closing. Each of
the Employees who actually becomes a full-time employee of Buyer upon the
Closing is hereinafter referred to as a "TRANSFERRED EMPLOYEE."
(b) TRANSITION. The employment of each Transferred Employee by
Seller shall end effective as of the close of business on the day before the
Closing Date and the employment of the Transferred Employees by Buyer shall
commence at or after 12:01 a.m. on the day of the Closing Date.
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(c) RETENTION OF EMPLOYEES PRIOR TO CLOSING. Seller shall expend
its reasonable efforts to assist Buyer in securing the employment on the Closing
Date of the Employees; provided, however, that Seller shall not be required to
incur any financial obligation beyond continuing to pay for current employee
compensation and benefits prior to the Closing in connection with the foregoing
unless otherwise required by this Agreement.
(d) COMPENSATION AND BENEFITS OF TRANSFERRED EMPLOYEES. Coverage
for Transferred Employees under Buyer's benefit plans and programs shall
commence as of 12:01 a.m. on the Closing Date. Buyer shall maintain for the
benefit of Transferred Employees a package of employee benefits that is
comparable in the aggregate to the employee benefit programs for current
employees of Buyer in similar job classifications and grades.
(e) EMPLOYEES OTHER THAN TRANSFERRED EMPLOYEES. Seller shall
retain responsibility only for employees of Seller who do not accept offers of
employment from Buyer.
Section 5.9 NONCOMPETE. For a period of three (3) years from and after
the Closing Date, neither CHC nor Seller shall engage or compete, directly or
indirectly, on its own account or as an equity holder, agent, partner, joint
venturer or consultant, in or with any business entity that is engaged in the
sale, distribution, manufacture or provision of products or services heretofore
sold, distributed, manufactured or provided by the Business; provided that CHC
and its affiliates shall be entitled to conduct and operate the businesses and
operations of the Commercial Services Business Unit of CHC as currently
conducted by CHC even if such businesses or operations might be deemed to be the
same as or to compete with the products or services heretofore sold,
distributed, manufactured or provided by the Business.
Section 5.10 SUPERIOR OFFER. Notwithstanding anything in this Agreement
to the contrary, the CHC Board may at any time prior to the Closing, (x)
withdraw or modify its approval or recommendation of this Agreement or the
Transaction or (y) approve or recommend a Superior Offer (as herein defined) if:
(A) a bona fide written offer is made to CHC by a third party for an Acquisition
Proposal, and such offer is not withdrawn; (B) the CHC Board determines in good
faith, after consultation with its financial advisor, that such offer
constitutes a Superior Offer; (C) following consultation with outside legal
counsel, the CHC Board or a committee of disinterested directors determines that
the withdrawal or modification of its approval or recommendation of this
Agreement or the Transaction is required to comply with the fiduciary duties of
the CHC Board to the shareholders of CHC under applicable Law; (D) such approval
or recommendation is not withdrawn or modified in a manner adverse to Buyer at
any time prior to five (5) business days after Buyer and Axium receive written
notice from CHC confirming that the CHC Board has determined that such offer is
a Superior Offer, setting forth in reasonable detail all material terms of such
Superior Offer; and (E) at the end of such five (5) business day period, after
taking into account any adjustment or modification of the terms of this
Agreement proposed by Buyer or Axium (and any adjustment or modification of the
terms of such Acquisition Proposal), the CHC Board again makes the determination
in good faith that the withdrawal or modification of such approval or
recommendation of this Agreement or the Transaction is required to comply with
the fiduciary duties of the CHC Board to the shareholders of CHC under
applicable Law. For purposes of this Agreement, (i) the term "SUPERIOR OFFER"
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means an Acquisition Proposal on terms that the CHC Board determines, in good
faith, based upon consultations with its outside legal counsel and its financial
advisor, that if consummated, is more favorable to CHC's shareholders than the
Transaction or this Agreement and is reasonably likely to be consummated, taking
into account all legal, financial and regulatory aspects of the offer and the
person making the offer and would, if consummated, be in the best interests of
the shareholders of CHC and (ii) the term "ACQUISITION PROPOSAL" means (other
than the transaction contemplated by this Agreement) any inquiry, proposal or
offer from any person relating to (1) any direct or indirect acquisition or
purchase of the Business or (2) any direct or indirect acquisition or purchase
of assets representing 20% or more of the assets of CHC, (3) any issuance, sale,
or other disposition of (including by way of merger, consolidation, business
combination, share exchange, joint venture, or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities) representing 20% or more
of the voting power of CHC, (4) any tender offer, exchange offer or other
transaction in which, if consummated, any person shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the
right to acquire beneficial ownership, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which beneficially owns or has
the right to acquire beneficial ownership, of 20% or more of the outstanding
voting capital stock of CHC, or (5) any merger, consolidation, share exchange,
business combination, recapitalization, liquidation or dissolution involving
CHC.
Section 5.11 NAME CHANGE. Within twenty (20) business days after the
Closing Date, Seller shall change its name to a name not confusingly similar
with its current name.
Section 5.12 CONVERSION TO LLC. Notwithstanding any other provision of
this Agreement, CHC shall be entitled to convert Seller to a limited liability
company or liquidate and dissolve Seller at any time in its discretion without
the consent of Buyer or Axium.
Section 5.13 TRANSITION SERVICES AGREEMENT. The parties hereto intend to
enter into a Transition Services Agreement on the Closing Date substantially in
the form set forth as EXHIBIT F hereto (the "TRANSITION SERVICES AGREEMENT")
providing for such Items of Service (as defined in the Transition Services
Agreement) as the Buyer may reasonably request by notice to the Seller given not
later than forty-five (45) days prior to the Closing.
Section 5.14 NO AMENDMENT OF FINANCING. Neither Axium nor Buyer shall
amend, supplement or modify its financing of the acquisition of the Property and
its assumption of the Assumed Liabilities, as to be provided by GoldenTree Asset
Management, LP pursuant to its commitment letter with Axium of October 16, 2006,
a copy of which has been provided to CHC and Seller, so as to prevent the
transactions contemplated by this Agreement.
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ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 CONDITIONS TO OBLIGATIONS OF SELLER AND CHC. The obligations
of Seller and CHC to consummate the transactions contemplated this Agreement are
subject to the fulfillment, or waiver by Seller or CHC, as of the Closing, of
the following conditions precedent:
(a) REPRESENTATIONS: WARRANTIES; COVENANTS. All of the
representations and warranties of Axium and Buyer contained in SECTION 4.1 shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date and Axium and Buyer shall, on or before the Closing, have
performed all of their obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
(b) CERTIFICATES FROM OFFICER OF AXIUM AND BUYER. Axium and
Buyer shall have delivered to Seller and CHC a certificate of the President of
Axium and Buyer dated as of the Closing Date to the effect that the statements
set forth in paragraph (a) above in this SECTION 6.1 are true and correct.
(c) NO ADVERSE PROCEEDINGS. No law, rule or regulation shall
have been enacted or promulgated, and no investigation, action, suit or
proceeding shall have been threatened or instituted against Seller, CHC, Axium
or Buyer, which, in any such case, in the reasonable judgment of Seller or CHC,
prohibits or precludes the consummation of the transactions contemplated hereby,
or which claims, or might give rise to a claim for, damages against Seller or
CHC as a result of the consummation of such transaction.
(d) SHAREHOLDER APPROVAL. The shareholders of CHC shall have
duly approved this Agreement and the transactions contemplated hereby in
accordance with CHC's Certificate of Incorporation and the NYBCL and as
contemplated by this Agreement.
(e) FAIRNESS OPINION NOT WITHDRAWN OR MODIFIED. Any financial
advisor's opinion received by the CHC Board to the effect that this Agreement
and the Transaction and the consideration to be received Seller in connection
herewith is fair to Seller from a financial point of view shall not have been
withdrawn or materially modified.
(f) BUYER'S SECRETARY'S CERTIFICATE. Buyer shall have delivered
a certificate, dated the Closing Date, executed by Buyer's Secretary, to the
effect that (A) the Certificate of Incorporation and by-laws of Buyer shall have
not been amended since the date upon which certified copies of each had been
delivered to Seller and CHC and remain in full force and effect and (B) the
officers executing this Agreement and the Buyer Agreements are duly elected and
hold the offices set forth therein, with copies of resolutions approved by the
Board of Directors of Buyer attached as an exhibit thereto.
(g) AXIUM'S SECRETARY'S CERTIFICATE. Axium shall have delivered
a certificate, dated the Closing Date, executed by Axium's Secretary, to the
effect that (A) the Certificate of Incorporation and by-laws of Axium shall have
not been amended since the date upon which certified copies of each had been
delivered to Seller and CHC and remain in full force and effect and (B) the
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officers executing this Agreement and the Buyer Agreements are duly elected and
hold the offices set forth therein, with copies of resolutions approved by the
Board of Directors of Axium attached as an exhibit thereto.
(h) XXXX OF SALE. Buyer shall have delivered a duly executed
copy of the Xxxx of Sale and such deeds, assignments, certificates of title and
other instruments of transfer and conveyance, conveying, selling, transferring
and assigning to Buyer title to all of the Property (subject to SECTION 1.3),
free and clear of all security interests, liens, charges or encumbrances
whatsoever, except for Permitted Liens and those liens assumed by Buyer pursuant
to this Agreement or the Xxxx of Sale; together with the written consents of all
parties necessary in order to duly transfer such title to the extent obtained.
(i) PURCHASE PRICE. Buyer shall have paid the Purchase Price as
provided in SECTION 2.1(B).
(j) SOLVENCY CERTIFICATE. Buyer shall have delivered a
certificate dated the Closing Date, in substantially in the form of EXHIBIT C,
signed by the Chief Financial Officer of Buyer, certifying that Buyer is Solvent
on the Closing Date after giving effect to the transactions contemplated hereby
(the "BUYER'S SOLVENCY CERTIFICATE").
(k) HSR ACT. The required waiting period under the HSR Act shall
have expired or been terminated without adverse action by the Federal Trade
Commission or United States Department of Justice.
(l) CONSENTS. Buyer shall have delivered a copy of the consent
of each Governmental Authority and each other person whose consent is required
for the consummation of the transactions contemplated by this Agreement or for
the assignment of any of the Property of Seller to Buyer.
Section 6.2 CONDITIONS TO THE OBLIGATIONS OF BUYER AND AXIUM. The
obligations of Axium and Buyer to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, or waiver by Axium and Buyer, as
of the Closing, of the following conditions precedent:
(a) REPRESENTATIONS; WARRANTIES; COVENANTS. All of the
representations and warranties of Seller and CHC contained in SECTION 4.2 shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date; and Seller and CHC shall, on or before the Closing, have
performed all of their obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
(b) CERTIFICATES FROM OFFICER OF SELLER AND CHC. Seller and CHC
shall have delivered to Buyer a certificate of the President of Seller and CHC
dated as of the Closing Date to the effect that the statements set forth in
paragraph (a) above in this SECTION 6.2 are true and correct.
(c) NO ADVERSE PROCEEDINGS. No law, rule or regulation shall
have been enacted or promulgated, and no investigation, action, suit or
proceeding shall have been threatened or instituted against Seller, CHC, Buyer
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or Axium, which, in any such case, in the reasonable judgment of Buyer or Axium,
prohibits or precludes the consummation of the transactions contemplated hereby,
or which claims, or might give rise to a claim for, damages against Seller or
CHC as a result of the consummation of such transaction.
(d) SHAREHOLDER APPROVAL. The shareholders of CHC shall have
duly approved this Agreement and the transactions contemplated hereby in
accordance with CHC's Certificate of Incorporation and the NYBCL and as
contemplated by this Agreement.
(e) SELLER'S SECRETARY'S CERTIFICATE. Seller shall have
delivered a certificate, dated the Closing Date, executed by Seller's Secretary,
to the effect that (A) the Certificate of Incorporation and bylaws of Seller
shall have not been amended since the date upon which certified copies of each
had been delivered to Buyer and remain in full force and effect and (B) the
officers executing this Agreement and Seller Agreements on behalf of Seller are
duly elected and hold the offices set forth therein, with copies of resolutions
approved by the Board of Directors of Seller attached as an exhibit thereto.
(f) CHC'S SECRETARY'S CERTIFICATE. CHC shall have delivered a
certificate, dated the Closing Date, executed by CHC's Secretary, to the effect
that the officers executing this Agreement on behalf of CHC are duly elected and
hold the offices set forth therein, with copies of resolutions approved by the
CHC Board attached as an exhibit thereto.
(g) XXXX OF SALE. Seller shall have delivered a duly executed
copy of the Xxxx of Sale and such deeds, assignments, certificates of title and
other instruments of transfer and conveyance, conveying, selling, transferring
and assigning to Buyer title to all of the Property (subject to SECTION 1.3),
free and clear of all security interests, liens, charges or encumbrances
whatsoever, except for Permitted Liens and those liens assumed by Buyer pursuant
to this Agreement or the Xxxx of Sale; together with the written consents of all
parties necessary in order to duly transfer such title to the extent obtained.
(h) IP ASSIGNMENT. Seller shall have delivered the Assignment of
Intellectual Property Rights in the form attached hereto as EXHIBIT D (the "IP
ASSIGNMENT").
(i) CONSENTS. Seller shall have delivered a copy of the consent
of each Governmental Authority whose consent is required for the consummation of
the transactions contemplated by this Agreement or for the assignment of any of
the Property.
(j) HSR ACT. The required waiting period under the HSR Act shall
have expired or been terminated without adverse action by the Federal Trade
Commission or United States Department of Justice.
(k) SOLVENCY CERTIFICATE. Seller shall have delivered a
certificate dated the Closing Date, in substantially in the form of Exhibit E,
signed by the Chief Financial Officer of Seller, certifying that Seller is
Solvent on the Closing Date after giving effect to the transactions contemplated
hereby ("SELLER'S SOLVENCY CERTIFICATE").
(l) VENDOR CASH. Seller shall have delivered to Axium and Buyer
an accounting as of the Closing Date of all Vendor Cash to be disbursed to
Seller's vendors in accordance with the client payment terms, identifying the
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client-specific bank accounts in which such Vendor Cash has been deposited, the
clients to which such Vendor cash relates and the amounts and dates of the
payments to be made.
ARTICLE VII
INDEMNIFICATION
Section 7.1 INDEMNIFICATION OF AXIUM AND BUYER. Subject to the
limitations contained in this Article VII, Seller and CHC, jointly and
severally, agree to indemnify, defend and hold harmless Axium and Buyer and
their respective directors, officers, stockholders, Affiliates, partners,
employees, consultants, successors and assigns from and against any and all
indebtedness, liabilities, claims, losses, damages, deficiencies or
responsibilities, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise
(including punitive or exemplary damages and fines or penalties and any interest
thereon), expenses (including reasonable fees and disbursements of counsel and
expenses of investigation and defense), liens or other obligations of any nature
whatsoever (hereinafter individually, a "Loss" and collectively, "LOSSES")
which, directly or indirectly, arise out of, result from or relate to: (a) any
inaccuracy in or any breach of any representation and warranty, or any breach of
any covenant or agreement, of Seller or CHC contained in this Agreement or in
any document or other papers delivered pursuant to this Agreement, provided that
a claim for indemnity is asserted on or before the expiration of six (6) months
after the Closing Date, provided that the indemnification liability of Seller
and CHC to Axium and Buyer under this Article VII shall not exceed the aggregate
amount of eight million dollars ($8,000,000) and that neither Axium nor Buyer
shall make any claim for indemnification by Seller and CHC until the total
claims for indemnification of Axium or Buyer are at least two hundred fifty
thousand dollars ($250,000); and (b) any claim for indemnification, or any
litigation whether listed on the litigation schedule or not, by Hewlett-Packard
Company, or its affiliates or subsidiaries, for any Loss which arises out of,
results from or relates to occurrences prior to or at the Closing Date.
Section 7.2 INDEMNIFICATION OF CHC AND SELLER. Subject to the
limitations contained in this Article VII, both Axium and Buyer, jointly and
severally, agree to indemnify, defend and hold harmless Seller and CHC from and
against any and all Losses which, directly or indirectly, arise out of, result
from or relate to any inaccuracy in or any breach of any representation and
warranty, or any breach of any covenant or agreement, of Axium or Buyer
contained in this Agreement or in any documents or other papers delivered
pursuant to this Agreement, PROVIDED that a claim for indemnity is asserted on
or before the expiration of six (6) months after the Closing Date, provided that
the indemnification liability of Axium and Buyer to Seller and CHC under this
Article VII shall not exceed the aggregate amount of eight million dollars
($8,000,000) and that neither Seller nor CHC shall make any claim for
indemnification by Axium and Buyer until the total claims for indemnification of
Seller or CHC are at least two hundred fifty thousand dollars ($250,000).
Section 7.3 METHOD OF ASSERTING CLAIMS. The party making a claim under
this Article VII is referred to as the "INDEMNIFIED PARTY" and the party against
whom such claims are asserted under this Article VII is referred to as the
"INDEMNIFYING PARTY." All claims by any Indemnified Party under this Article VII
shall be asserted and resolved as follows:
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(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third party,
said Indemnified Party shall with reasonable promptness, but in no event later
than thirty (30) days after knowledge of the claim or demand, notify in writing
the Indemnifying Party of such claim or demand, specifying the basis for such
claim or demand, and the amount or the estimated amount thereof to the extent
then determinable (which estimate shall not be conclusive of the final amount of
such claim and demand; the "Claim Notice"); provided, however, that any failure
to give such Claim Notice will not be deemed a waiver of any rights of the
Indemnified Party except to the extent the rights of the Indemnifying Party are
actually prejudiced by such failure. The Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel (who shall be reasonably acceptable to
the Indemnified Party) to represent the Indemnified Party and shall pay the
reasonable fees and disbursements of such counsel with regard thereto, provided,
however, that any Indemnified Party is hereby authorized prior to the date on
which it receives written notice from the Indemnifying Party designating such
counsel, to retain counsel, whose reasonable fees and expenses shall be at the
expense of the Indemnifying Party, to file any motion, answer or other pleading
and take such other action which it reasonably shall deem necessary to protect
its interests or those of the Indemnifying Party until the date on which the
Indemnified Party receives such notice from the Indemnifying Party. After the
Indemnifying Party shall retain such counsel, the Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (x) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (y) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceedings or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior to
the selection of counsel by the Indemnifying Party.) If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. A claim or demand may not be settled by the
Indemnifying Party without the prior written consent of the Indemnified Party
(which consent will not be unreasonably withheld) unless, as part of such
settlement, the Indemnified Party shall receive a full and unconditional release
reasonably satisfactory to the Indemnified Party.
(b) In the event any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to such
claim to the Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Article VII, the affected parties each
agree to retain all Books and Records related to such Claim Notice. In each
instance, the Indemnified Party shall have the right to be kept fully informed
by the Indemnifying Party and its legal counsel with respect to any legal
proceedings. Any information or documents made available to any party hereunder
and designated as confidential by the party providing such information or
27
documents and which is not otherwise generally available to the public and not
already within the knowledge of the party to whom the information is provided
(unless otherwise covered by the confidentiality provision of any other
agreement among the parties hereto, or any of them), and except as may be
required by applicable law, shall not be disclosed to any third Person (except
for the representatives of the party being provided with information, in which
event the party being provided with the information shall request its
representatives not to disclose any such information which it otherwise required
hereunder to be kept confidential).
Section 7.4 EXCLUSIVE REMEDY. Except for fraud, willful or intentional
misrepresentation or willful or intentional breach of warranty, covenant or
agreement, the indemnification provided in this Article VII shall be the sole
and exclusive post-Closing remedy available to any party against any other party
for any claim arising out of any breach of a representation, warranty or
covenant made pursuant to this Agreement.
ARTICLE VIII
TERMINATION OF AGREEMENT
Section 8.1 TERMINATION. At any time prior to the Closing, this
Agreement may be terminated:
(a) by mutual written consent of all of the parties to this
Agreement; and
(b) by any of Buyer, Seller or CHC, provided such party has not
previously been declared in default hereunder, pursuant to written notice to the
other parties hereto, if the Closing shall not have occurred by March 18, 2007
or by such later date as may be mutually agreed upon by the parties; and
(c) by any of Buyer, Seller or CHC if there shall be in effect a
final non-appealable court order restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby; and
(d) by Buyer, provided neither Seller nor CHC has previously
declared Buyer in default hereunder and terminated this Agreement pursuant to
SECTION 8.L(E) hereof, pursuant to written notice to Seller, if Seller or CHC
breaches any of their respective material representations, warranties, covenants
or agreements contained herein and, if such breach is curable, such breach is
not cured within five (5) business days after written notice thereof; and
(e) by Seller or CHC, provided neither Buyer nor Axium has
previously declared Seller or CHC in default hereunder and terminated this
Agreement pursuant to SECTION 8.1(D) hereof, pursuant to written notice to
Buyer, if Buyer or Axium breaches any of its material representations,
warranties, covenants or agreements contained herein, and if such breach is
curable, such breach is not cured within five (5) business days after written
notice thereof; and
(f) by CHC or Seller, if the CHC Board shall have withdrawn or
modified in a manner adverse to Buyer the approval or recommendation of this
Agreement and the Transaction in accordance with SECTION 5.10 of this Agreement,
but only (i) after providing written notice to Buyer (a "NOTICE OF SUPERIOR
OFFER") advising Buyer that the CHC Board has received a Superior Offer,
28
specifying the material terms and conditions of such Superior Offer in
reasonable detail and identifying the person making such Superior Offer, and
(ii) if Buyer does not, within five (5) business days of Buyer's receipt of the
Notice of Superior Offer, make an offer that the CHC Board determines, in its
good faith judgment (after consultation with its advisors), to be at least as
favorable to CHC's shareholders as the Superior Offer; PROVIDED that during such
five (5) business day period, CHC shall negotiate in good faith with Buyer (to
the extent Buyer wishes to negotiate) to enable Buyer to make such an offer;
PROVIDED FURTHER, that Buyer acknowledges and agrees that concurrently with such
termination CHC may enter into a definitive agreement providing for
implementation of such Superior Offer.
Section 8.2 EFFECT OF TERMINATION. All obligations of the parties
hereunder shall cease upon any termination pursuant to SECTION 8.1 (the date
such termination occurs, a "TERMINATION DATE"), PROVIDED, HOWEVER, that the
provisions of Article VII, this Article VIII and Section 5.3, Section 9.4,
Section 9.5, and Section 9.10 hereof shall survive any termination of this
Agreement and nothing herein shall relieve any party from any liability for a
material error or omission in any of its representations or warranties contained
herein or a material failure to comply with any of its covenants, conditions, or
agreements contained herein.
Section 8.3 TERMINATION PAYMENT. CHC and Seller, jointly and severally,
agree that in order to compensate Buyer for the direct and substantial expense
and damages suffered by Buyer in the event of termination of this Agreement
under certain circumstances, which damages cannot be determined with reasonable
certainty, CHC and Seller shall pay to Buyer an amount equal to four million
dollars ($4,000,000) (the "TERMINATION PAYMENT") if Seller or CHC terminates
this Agreement pursuant to Section 8.1(f) hereof.
Section 8.4 EXPENSES.
(a) Except as otherwise set forth in this Section 8.4, all
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses, whether
or not the transactions contemplated hereby are consummated. As used in this
Agreement, the term "EXPENSES" shall mean all reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
financing sources, experts and consultants to a party hereto and its affiliates)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Proxy Statement,
the solicitation of shareholder approvals and all other matters related to the
closing of the transactions contemplated by this Agreement. Buyer and Axium, on
the one hand, and Seller and CHC, on the other hand, shall each pay one-half of
the total filing fees in connection with the filing by Buyer and Axium and
Seller and CHC under the HSR Act.
(b) If this Agreement shall be terminated:
(i) by Buyer pursuant to Section 8.1(d), Seller and CHC
shall pay the reasonably documented Expenses of Buyer and Axium up to a maximum
amount of $250,000, and
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(ii) by Seller or CHC pursuant to Section 8.1(e), Buyer
and Axium shall pay the reasonably documented Expenses of Seller and CHC up to a
maximum amount of $250,000.
Section 8.5 PAYMENT. Amounts payable in accordance with Section 8.3 or
Section 8.4(b) shall be paid in immediately available funds within two business
days after receipt by the party obligated to pay of a written demand for, and
reasonable documentation with respect to, such Expenses.
Section 8.6 WAIVER. Seller and CHC may extend the time for the
performance of any of the obligations or other acts of Buyer or Axium hereunder,
waive any inaccuracies in the representations and warranties of Buyer or Axium
contained herein or in any document delivered pursuant hereto, or waive
compliance by Buyer or Axium with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by Seller and CHC. Axium or Buyer may extend the
time for the performance of any of the obligations or other acts of Seller or
CHC hereunder, waive any inaccuracies in the representations and warranties of
Seller or CHC contained herein or in any document delivered pursuant hereto, or
waive compliance by Seller or CHC with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by Buyer and Axium.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NOTICES. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when (i) delivered
personally or by facsimile transmission (and a copy is mailed by regular mail
within 24 hours of such transmission), in either case with receipt acknowledged,
(ii) three business days after being sent by registered or certified mail,
return receipt requested, or (iii) one business day after being sent by prepaid
overnight carrier, with a record of receipt, to the parties at the following
addresses:
(a) If to Buyer or Axium to:
Axium International, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxx Xxxxxxxx and Xxxxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Alschuler, Grossman, Xxxxx & Kahan LLP
0000 00xx Xxxxxx Xxxxx Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
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(b) If to Seller or CHC to:
Computer Horizons Corp.
00 Xxx Xxxxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, XX 00000-0000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Tower
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
or to such other address as any party shall have specified by notice in writing
to the other in compliance with this SECTION 9.1.
Section 9.2 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
attached hereto, the Buyer Agreements and the Seller Agreements constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings
among the parties hereto.
Section 9.3 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns; nothing in this Agreement, expressed or
implied, is intended to confer on any other person, other than the parties
hereto or their respective successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement. This Agreement
may not be assigned without the prior written consent of the other parties
hereto.
Section 9.4 APPLICABLE LAW. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflicts of law rules of
such state.
Section 9.5 JURISDICTION. Each of the parties hereto hereby irrevocably
submits to the exclusive jurisdiction of any New York state court or federal
court sitting in the State of New York for the Southern District of New York
over any action or proceeding arising out of or relating to this Agreement and
the transactions contemplated hereby and each of the parties hereto hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York state or federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent legally
possible, the defense of an inconvenient forum to the maintenance of such action
or proceeding. Each of the parties hereto irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing of copies of
such process to such party at its address set forth in this Agreement. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
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Section 9.6 FURTHER ASSURANCES. At, and from time to time after the date
hereof, at the request and expense of Buyer but without further consideration,
Seller will execute and deliver such other instruments of conveyance,
assignment, transfer, and delivery and take such other action as Buyer
reasonably may request in order more effectively to convey, transfer, assign and
deliver to Buyer, and to place Buyer in possession and control of, any of the
rights, properties, assets and business constituting part of the Property, or to
assist in the collection or reduction to possession of any and all of such
rights, properties, and assets or to enable Buyer to exercise and enjoy all
rights and benefits of Seller with respect to the Property.
Section 9.7 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 9.8 HEADINGS. The headings used herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 9.9 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by virtue of any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the maximum extent possible.
Section 9.10 PUBLICITY AND DISCLOSURES. From the date hereof to the first
to occur of a Termination Date or the Closing, and except as and to the extent
required by Law, without the prior written consent of the other parties hereto
(which consent shall not be unreasonably withheld), none of Buyer, CHC, Seller
or Axium shall, and each shall direct its Representatives not to, directly or
indirectly, make any public comment, statement, or communication with respect
to, or otherwise disclose or permit the disclosure of the existence of
discussions regarding a possible transaction between the parties hereto or any
of the terms, conditions or other aspects of the transactions contemplated by
this Agreement or any confidential information, except that such comments,
statements, communications and disclosures may be made (a) by each of Axium,
Buyer, CHC and Seller to such of their Representatives as need to know such
information for the purpose of evaluating or otherwise effecting the
transactions contemplated by this Agreement, (b) by CHC and Seller to their
employees in connection with the Closing, and (c) by each of Axium, Buyer, CHC
and Seller if it is required to do so by applicable securities laws, PROVIDED,
that Axium and Buyer shall notify Seller in advance of any such disclosure. If a
party hereto is required by law to make any such disclosure, it shall provide to
the other parties the content of the proposed disclosure, the reasons that such
disclosure is required by law and the time and place that such disclosure will
be made.
Section 9.11 AMENDMENT. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by each party hereto.
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Section 9.12 KNOWLEDGE OF SELLER OR CHC. Any reference to the words
"knowledge of Seller", "knowledge of CHC", "knowledge of Seller or CHC" or
similar words means the knowledge, after due inquiry, of the persons named in
and acting in such capacities described on SCHEDULE 9.12 or any of his or her
direct reports or any person who is deemed to have primary functional
responsibility for the area in question.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first set forth.
BUYER:
DIVERSITY MSP, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Operating Officer
AXIUM:
AXIUM INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
SELLER:
CHIMES, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
CHC:
COMPUTER HORIZONS CORP.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and CEO