ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and is entered into this
6th day of May, 1999, by, between and among XXXXXXX COMPUTER RESOURCES, INC., a
Delaware corporation, ("Purchaser No. 1"), XXXXXXX SELECT INTEGRATION SOLUTIONS,
INC. (Purchaser No. 2"), SYSTEMS ATLANTA COMMERCIAL SYSTEMS, INC., a Georgia
corporation (Seller) and B. XXXXX XXXXXX (X. Xxxxxx), XXXXXXX X. XXXXXX, (X.
Xxxxxx), XXXXX X. XXXXXX (X. Xxxxxx) and XXXXX X. XXXXXX (X. Xxxxxx) (X. Xxxxxx,
X. Xxxxxx, X. Xxxxxx and X. Xxxxxx hereinafter referred to collectively as the
"Shareholders and individually as the Shareholder). Systems Atlanta, Inc., a
Georgia corporation and an affiliate of Seller (SAI) is also a party to this
Agreement for purposes of Section 13.
W I T N E S S E T H :
WHEREAS, Seller is a full service provider of a variety of computer service and
support solutions to large and medium size commercial, governmental and other
professional customers throughout the Atlanta, Georgia Metropolitan area; and
WHEREAS, Shareholders are the owners of 100,000 shares of the outstanding stock
of Seller, in the following proportions: X. Xxxxxx - 44,178 shares, X. Xxxxxx -
42,587, X. Xxxxxx - 12,435; and X. Xxxxxx - 800, which stock constitutes 100% of
the outstanding stock of Seller; and
WHEREAS, Purchaser No. 1 is in the business of marketing and selling a broad
range of microcomputers and related products including equipment selection,
procurement and configuration; and
WHEREAS, Purchaser No. 2, a wholly-owned subsidiary of Purchaser No. 1, is a
single source provider of integrated desktop management and network services
including life cycle services, internetworking services, and end user support
services; and
WHEREAS, Purchaser No. 1 desires to purchase certain of the assets of Seller
used in its business of marketing and selling a broad range of microcomputers
and related products including equipment selection, procurement and
configuration (Business No. 1") and assume certain of the liabilities of Seller
in connection with Business No. 1 and Purchaser No. 2 desires to purchase
certain of the assets of Seller used in its integrated desktop management and
network services business (Business No. 2") and assume certain of the
liabilities of Seller in connection with Business No. 2; and Seller desires to
sell certain of such assets, subject to such liabilities, but only (i) upon the
terms and subject to the conditions set forth in this Agreement, (ii) the
representations, warranties, covenants, indemnifications, assurances and
undertakings of Seller, Shareholder and of Purchaser No. 1 and Purchaser No. 2
contained in this Agreement, (iii) the agreement of Seller to refrain from
competition with Purchaser No. 1 and Purchaser No. 2 for five (5) years from the
Closing of this transaction, and (iv) the agreements of Shareholders to refrain
from competition for the later of five (5) years from the Closing Date or one
(1) year after the termination of each respective Shareholder's employment with
Purchaser No. 1 pursuant to and in accordance with, the terms of his respective
Employment Agreement to be executed upon Closing.
NOW, THEREFORE, in consideration of the above premises and the mutual promises,
covenants, agreements, representations and warranties herein contained, the
parties hereto agree as follows:
1.
DEFINITIONS
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1.1 Affiliate. "Affiliate" shall have the meaning ascribed to such term in Rule
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405 promulgated under the Securities Act of 1933, as amended.
1.2 Assumed Liabilities No 1. The "Assumed Liabilities No. 1" are the
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liabilities of Seller assumed or paid at Closing by Purchaser No. 1
pursuant to Section 3.1 of this Agreement.
1.3 Assumed Liabilities No 2. The "Assumed Liabilities No. 2" are the
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liabilities of Seller assumed or paid at Closing by Purchaser No. 2
pursuant to Section 3.2 of this Agreement.
1.4 Balance Sheet. The "Balance Sheet" is the unaudited balance sheet of Seller
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as of March 31, 1999, included as part of the Financial Statements.
1.5 Closing. The "Closing" shall be the consummation of the transactions
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contemplated under this Asset Purchase Agreement.
1.6 Closing Date. The "Closing Date" shall be as of 10:00 a.m., E.D.T., May 6,
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1999.
1.7 Code. The "Code" is the Internal Revenue Code of 1986, as amended, 26
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U.S.C. 1 et seq.
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1.8 Court. A "Court" is any federal, state, municipal, domestic, foreign or
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other governmental tribunal or an arbitrator or person with similar power
or authority.
1.9 Disclosure Schedule. The "Disclosure Schedule" is the Disclosure Schedule
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dated the date of this Agreement and delivered by Seller to Purchaser No. 1
and Purchaser No. 2, respectively.
1.10 Encumbrance. An "Encumbrance" is any security interest, lien, or
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encumbrance whether imposed by agreement, understanding, law or otherwise,
on any of Purchased Assets No. 1 and/or Purchased Assets No. 2 (as defined
herein).
1.11 Excluded Assets. An "Excluded Asset" is any asset set forth in Section 2.4.
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1.12 Financial Statements. The "Financial Statements" are the audited financial
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statements of Seller for the years ended October 2, 1998 and October 3,
1997, including any and all notes thereto and the unaudited financial
statements of Seller for the period commencing October 4, 1998 and ending
March 31, 1999.
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1.13 Governmental Entity. A "Governmental Entity" is any Court or any federal,
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state, municipal, domestic, foreign or other administrative agency,
department, commission, board, bureau or other governmental authority or
instrumentality.
1.14 Knowledge of Seller and Shareholders or Sellers Knowledge. Knowledge of
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Seller and Shareholders and/or Sellers Knowledge shall mean actual
knowledge of any Shareholder.
1.15 Net Asset Amount No. 1. Net Asset Amount No. 1 shall have the meaning set
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forth in Section 5.1.
1.16 Net Asset Amount No. 2. Net Asset Amount No. 2" shall have the meaning set
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forth in Section 5.1.
1.17 Person. Any natural person, firm, partnership, association, corporation,
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company, limited liability company, limited partnership, trust, business
trust, governmental authority or other entity.
1.18 Pro Forma Balance Sheet No. 1. The "Pro Forma Balance Sheet No. 1" is the
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audited balance sheet of Seller prepared as described in Section 5.1 and
adjusted for Excluded Assets of Seller and Excluded Liabilities relating to
Business No. 1 of Seller as of the Closing Date.
1.19 Pro Forma Balance Sheet No. 2. The "Pro Forma Balance Sheet No. 2" is the
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audited balance sheet of Seller prepared as described in Section 5.1 and
adjusted for Excluded Assets of Seller and Excluded Liabilities relating to
Business No. 2 of Seller as of the Closing Date.
1.20 Pro Forma EBIT. The earnings of Purchaser No. 1's Atlanta Division and
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Purchaser No. 2's Atlanta Division for the period commencing on the Closing
Date and ending January 5, 2000 before interest and taxes, and without
incorporating gains or losses realized on the disposition of assets other
than in the ordinary course of business. The determination of Pro Forma
EBIT shall be determined in accordance with the provisions set forth in
Section 5.2.
1.21 Purchase Price No. 1. The "Purchase Price No. 1" is the total consideration
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paid by Purchaser No. 1 to Seller for Purchased Assets No. 1 as set forth
in Sections 4.1, 4.2(d), 4.2(f) and 4.6.
1.22 Purchase Price No. 2. The "Purchase Price No. 2" is the total consideration
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paid by Purchaser No. 2 to Seller for Purchased Assets No. 2 as set forth
in Sections 4.2, 4.2 (e), 4.2(f) and 4.6
1.23 Purchased Assets No. 1. The "Purchased Assets No. 1" are the assets of
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Seller, used in Business No. 1, acquired by Purchaser No. 1 pursuant to the
terms of this Agreement.
1.24 Purchased Assets No. 2. The Purchased Assets No. 2 are the assets of
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Seller, used in Business No. 2, acquired by Purchaser No. 2 pursuant to the
terms of this Agreement.
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1.25 Sellers Accountant. Sellers Accountant shall mean Thigpen, Jones, Xxxxxx
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and Company, P.C.
1.26 March 31st Pro-Forma Balance Sheet No. 1. The March 31st Pro-Forma Balance
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Sheet No. 1" is the unaudited balance sheet of Seller adjusted for Excluded
Assets of Seller and Excluded Liabilities relating to Business No. 1 of
Seller as of March 31, 1999.
1.27 March 31st Pro-Forma Balance Sheet No. 2. The March 31st Pro-Forma Balance
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Sheet No. 2" is the unaudited balance sheet of Seller adjusted for Excluded
Assets of Seller and Excluded Liabilities relating to Business No. 2 of
Seller as of March 31, 1999.
1.28 Tax or Taxes: Any federal, state, provincial, local, foreign or other
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income, alternative, minimum, any taxes under Section 1374 of the Code, any
taxes under Section 1375 of the Code, accumulated earnings, personal
holding company, franchise, capital stock, net worth, capital, profits,
windfall profits, gross receipts, value added, sales, use, goods and
services, excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium, severance,
environmental, including taxes under Section 59A of the Code), real
property, personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance, social security,
disability, workers' compensation, payroll, health care, withholding,
estimated or other similar tax, duty or other governmental charge or
assessment or deficiencies thereof (including all interest and penalties
thereon and additions thereto whether disputed or not).
1.29 Tax Return. A "Tax Return" is a report, return or other information
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required to be supplied to a Governmental Entity in connection with Taxes
including, where permitted or required, combined or consolidated returns
for any group of entities that includes Seller.
2.
TERMS
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2.1 Agreement.
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Seller agrees to sell and convey to Purchaser No. 1 the Purchased Assets
No. 1 as hereinafter set forth in Section 2.2. Seller agrees to sell and
convey to Purchaser No. 2 the Purchased Assets No. 2 as hereinafter set
forth in Section 2.3. Purchaser No. 1 agrees to purchase the Purchased
Assets No. 1 and Purchaser No. 2 agrees to purchase the Purchased Assets
No. 2. The agreements of Purchaser No. 1 and Purchaser No. 2 and Seller are
expressly conditioned upon the terms, conditions, covenants,
representations and warranties as hereinafter set forth.
2.2 Assets to be Sold by Seller and Purchased by Purchaser No. 1.
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At the Closing of this Agreement, Purchaser No. 1 shall purchase and Seller
shall sell all the assets of Seller used in Business No. 1, except for the
Excluded Assets relating to Business No. 1. The Purchased Assets No. 1
shall include, but not be limited to:
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(a) The tangible personal property and assets of Seller of every kind and
description, real, personal or mixed, wherever located, used in
Business No. 1, including without limitation, all such assets as
reflected on the March 31, 1999 Pro Forma Balance Sheet No. 1
(excepting those assets disposed of, and including those assets
acquired, in the ordinary course of business since the date of the
March 31, 1999 Pro Forma Balance Sheet No. 1).
(b) All intangible assets of Seller which are used in Business No. 1 of
Seller, including without limitation, all purchase orders, contract
rights and agreements, work in process, customer lists, supplier
agreements, patents, trademarks and service marks (including the
goodwill associated with the marks), office supplies, computer
programs, claims of the Seller, the right to use of the corporate and
trade names of or used by the Seller, or any derivative thereof, as
all or part of a corporate or trade name;
(c) All investment securities, cash and cash equivalents and customer
notes receivable relating to Business No. 1;
(d) All inventory of Business No. 1 which shall be valued on a moving
average basis at the lower of cost of acquisition, less any trade or
cash discounts, or market;
(e) All accounts receivable and vendor receivables relating to Business
No. 1;
(f) Certain vehicles of Seller set forth on attached Exhibit A;
(g) All prepaid expenses applicable to Business No. 1, including but not
limited to all prepaid software licenses;
(h) All vendor rebates, spiff money, retainage amounts under any contracts
and any customer deposits relating to Business No. 1;
(i) All distribution contracts and authorizations of Seller relating to
Business No. 1;
(j) All base artwork, photo materials, plates (if owned by Seller),
separations and other materials that are used by Seller for printing
brochures and promotional materials including all intellectual
property rights therein relating to Business No. 1;
(k) The assignment of any telephone numbers used in Business No. 1 of
Seller;
(l) The entire right, title, benefit and interest of Seller now existing
or hereafter arising, in or to all indemnities, guaranties,
warranties, claims and choses of action of Seller against other
parties with respect to Purchased Assets No. 1, including by way of
example and not limitation, any rights under insurance policies and
any other rights thereunder, but only with respect to Purchased Assets
No. 1;
(m) Sellers rights under the agreements set forth in Schedule 2.2(m) with
respect to the parties set forth therein, pursuant to which such
parties agreed not to disclose, use or communicate information
regarding such parties business (which is part of Business No. 1) and
not to engage in certain activities competitive with Business No. 1.
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2.3 Assets to be Sold by Seller and Purchased by Purchaser No. 2.
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At the Closing of this Agreement, Purchaser No. 2 shall purchase and Seller
shall sell all the assets of Seller used in Business No. 2, except for the
Excluded Assets relating to Business No. 2. The Purchased Assets No. 2
shall include, but not be limited to:
(a) The tangible personal property and assets of Seller of every kind and
description, real, personal or mixed, wherever located, used in
Business No. 2, including without limitation, all such assets as
reflected on the March 31, 1999 Pro Forma Balance Sheet No. 2
(excepting those assets disposed of, and including those assets
acquired, in the ordinary course of business since the date of the
March 31, 1999 Pro Forma Balance Sheet No. 2).
(b) All intangible assets of Seller which are used in Business No. 2 of
Seller, including without limitation, all purchase orders, contract
rights and agreements, work in process, customer lists, supplier
agreements, patents, trademarks and service marks (including the
goodwill associated with the marks), office supplies, computer
programs, claims of the Seller, the right to use of the corporate and
trade names of or used by the Seller, or any derivative thereof, as
all or part of a corporate or trade name;
(c) All investment securities, cash and cash equivalents and customer
notes receivable relating to Business No. 2;
(d) All inventory of Business No. 2 which shall be valued on a moving
average basis at the lower of cost of acquisition, less any trade or
cash discounts, or market;
(e) All accounts receivable and vendor receivables relating to Business
No. 2;
(f) Certain vehicles of Seller set forth on attached Exhibit A-1;
(g) All prepaid expenses applicable to Business No. 2, including but not
limited to all prepaid software licenses;
(h) All of Sellers fixed rate contracts and time and material contracts
relating to Business No. 2;
(i) All vendor rebates, spiff money, retainage amounts under any contracts
and any customer deposits relating to Business No. 2;
(j) All of Sellers service contracts relating to Business No. 2;
(k) All distribution contracts and authorizations of Seller relating to
Business No. 2;
(l) All base artwork, photo materials, plates (if owned by Seller),
separations and other materials that are used by Seller for printing
brochures and promotional materials including all intellectual
property rights therein relating to Business No. 2;
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(m) The assignment of any telephone numbers used in Business No. 2 of
Seller;
(n) The entire right, title, benefit and interest of Seller now existing
or hereafter arising, in or to all indemnities, guaranties,
warranties, claims and choses of action of Seller against other
parties with respect to Purchased Assets No. 2, including by way of
example and not limitation, any rights under insurance policies and
any other rights thereunder, but only with respect to Purchased Assets
No. 2; and
(o) Sellers rights under the agreements set forth in Schedule 2.3(o) with
respect to the parties set forth therein, pursuant to which such
parties agreed not to disclose, use or communicate information
regarding such parties business (which is part of Business No. 2) and
not to engage in certain activities competitive with Business No. 2.
2.4 Excluded Assets.
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The Excluded Assets are set forth on Exhibit B hereto.
2.5 Lease Agreements.
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Seller is the lessee under certain lease agreements calling for payments of
more than $5,000.00 per year covering the following real and personal
properties:
(i) Real property located at 000 Xxxxx Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxx 00000; and
(ii) Lease Agreement for computer equipment entered into on February 23,
1998 with Green Tree at a monthly rate of $333.34 for thirty-six
months. The term of the lease is February 23, 1998 to February 23,
2001.
At the Closing, Seller and Purchaser No. 1 or Purchaser No. 2 shall execute
necessary documentation for the assignment of these leases and all of
Seller's right and interest thereunder to Purchaser No. 1 and/or Purchaser
No. 2, as agreed upon by the parties and, at the Closing, Seller shall
assign all its rights and interest in said leases to Purchaser No. 1 and/or
Purchaser No. 2, as applicable. Purchaser No. 1 and Purchaser No. 2 agree
to indemnify and hold Seller harmless from any liability with respect to
the aforementioned leases occurring after the Closing Date which is assumed
by such party. To the extent that the assignment of any lease shall require
the consent of other parties thereto, this Agreement shall not constitute
an assignment thereof and Seller shall obtain any such necessary consents
or assignments by the Closing, or as reasonably possible after the Closing.
2.6 Instruments of Transfer.
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Except as otherwise provided herein, at Closing, Seller will deliver to
Purchaser No. 1 and Purchaser No. 2, respectively, such bills of sale,
endorsements, assignments and other good and sufficient instruments of
transfer and assignment as shall be effective to vest in Purchaser No. 1
and Purchaser No. 2, as applicable, good title and interest in and to
Purchased Assets No. 1 and Purchased Assets No. 2, respectively. At or
after the Closing, and without further consideration, Seller will execute
and deliver to Purchaser No. 1 and Purchaser No. 2, as applicable, such
further instruments of conveyance and
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transfer and take such other action as Purchaser No. 1 and/or Purchaser No.
2 may reasonably request in order to more effectively convey and transfer
to Purchaser No. 1 and/or Purchaser No. 2, as applicable, any of the
Purchased Assets No. 1 and/or Purchased Assets No. 2 or for aiding and
assisting and collecting and reducing to possession and exercising rights
with respect thereto. Seller and Shareholders agree to use their best
efforts to obtain and deliver to Purchaser No. 1 and Purchaser No. 2, as
applicable, such consents, approvals, assurances and statements from third
parties as Purchaser No. 1 and Purchaser No. 2, as applicable, may
reasonably require in a form reasonably satisfactory to Purchaser No. 1 and
Purchaser No. 2. In addition to the foregoing, Seller will deliver to
Purchaser No. 1 and Purchase No. 2, as applicable, the originals or copies
of all of Seller's books, records and other data relating to Purchased
Assets No. 1 and Purchased Assets No. 2, respectively; and simultaneously
with such delivery, Seller shall take all such acts as may be necessary to
put Purchaser No. 1 in actual possession, and operating control of
Purchased Assets No. 1 and put Purchaser No. 2 in actual possession, and
operating control of Purchased Assets No. 2. Seller shall cooperate with
Purchaser No. 1 and Purchaser No. 2 to permit such parties, if possible, to
enjoy Sellers ratings and benefits under workmen's compensation laws and
unemployment compensation laws to the extent permitted by such laws.
2.7 Instruments Giving Certain Powers and Rights.
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At the Closing, Seller shall, by appropriate instrument, constitute and
appoint Purchaser No. 1 and Purchaser No. 2, their respective successors
and assigns, the true and lawful attorney of Seller with full power of
substitution, in the name of Purchaser No. 1 and/or Purchaser No. 2, as
applicable, or the name of Seller, on behalf of and for the benefit of
Purchaser No. 1 and Purchaser No. 2, as applicable, to collect all accounts
receivable and/or vendor receivables and other items being transferred and
assigned to Purchaser No. 1 and/or Purchaser No. 2, as applicable, as
provided herein, to endorse, without recourse, any and all checks in the
name of Seller the proceeds of which Purchaser No. 1 and/or Purchaser No.
2, as applicable, is entitled to hereunder, to institute and prosecute, in
the name of Seller or otherwise, all proceedings which Purchaser No. 1
and/or Purchaser No. 2, as applicable, may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to Purchased
Assets No. 1 and/or Purchased Assets No. 2, as applicable, to defend and
compromise any and all actions, suits and proceedings in respect of any of
Purchased Assets No. 1 and/or Purchased Assets No. 2, as applicable, and to
do all such acts and things in relation thereto as such party may deem
advisable. Purchaser No. 1 and/or Purchaser No. 2, as applicable, shall
provide Seller with notice of any collection action(s) instituted by it
under this provision. Seller agrees that the foregoing powers are coupled
with an interest and shall be irrevocable by Seller, directly or
indirectly, by the dissolution of Seller or in any manner or for any
reason. Seller further agrees that Purchaser No. 1 and/or Purchaser No. 2,
as applicable, shall retain for its own respective account any amounts
collected pursuant to the foregoing powers, and Seller shall pay or
transfer to Purchaser No.1 and/or Purchaser No. 2, as applicable, if and
when received, any amounts which shall be received by Seller
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after the Closing in respect of any such receivables or other assets,
properties, rights or business to be transferred and assigned to Purchaser
No. 1 and/or Purchaser No. 2, as provided herein. Seller further agrees
that, at any time or from time to time after the Closing, it will, upon the
request of Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 and at Seller's expense,
do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged or delivered, all such further reasonable acts, assignments,
transfers, powers of attorney or assurances as may be required in order to
further transfer, assign, grant, assure and confirm to Purchaser No. 1
and/or Purchaser No. 2, as applicable, or to aid and assist in the
collection or granting of possession by Purchaser No. 1 and/or Purchaser
No. 2, as applicable, of any of the Purchased Assets No. 1 and/or the
Purchased Assets No. 2, or to vest in Purchaser No. 1 good and marketable
title to Purchased Assets No. 1 and to vest in Purchaser No. 2 good and
marketable title to Purchased Assets No. 2.
To the extent that any assignment does not result in a complete transfer of
the contracts to Purchaser No. 1 and/or Purchaser No. 2, as applicable,
because of a provision in any contract against Seller's assignment of any
its right thereunder, Seller shall cooperate with Purchaser No. 1 and
Purchaser No. 2 in any reasonable manner proposed by Purchaser No. 1 and/or
Purchaser No. 2, as applicable, to complete the acquisition of the
contracts and Seller's rights, benefits and privileges thereunder in order
to fulfill and carry out Seller's obligations under this Agreement. Such
additional action may include, but is not limited to: (i) entering into a
subcontract between Seller and Purchaser No. 1 and/or Purchaser No. 2, as
applicable, which allows such party to perform Seller's duties under such
contracts and to enforce Seller's rights thereunder; (ii) the sale of
Seller's stock owned by Shareholders to Purchaser No. 1 and/or Purchaser
No. 2, as applicable, on terms to which all parties may mutually agree in
good faith to allow such party to operate Seller as a wholly or
partially-owned subsidiary to enforce the contracts; or (iii) entering into
a new multi-party agreement with such customers which allows Purchaser No.
1 and/or Purchaser No. 2, as applicable, to perform Seller's obligations
and enforce Seller's rights under the contracts.
3.
ASSIGNMENT OF LIABILITIES
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3.1 Liabilities to be Paid Off at Closing or Assumed by Purchaser No. 1.
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A. At the Closing, Purchaser No. 1 shall assume and pay off or discharge
when due (and secure the release of Seller and any Shareholder from
any and all personal liability or guaranty with respect to such
obligation), the following:
(i) Sellers obligation to SAI (whose obligation is to AT&T - Finova)
under a floor plan credit facility, the outstanding amount of
which on the March 31, 1999 Pro Forma Balance Sheet No. 1 is
$522,731.86 and as of the Closing Date is $227,585.40, which is
collateralized by a security interest in SAIs assets;
(ii) Sellers obligation to SAI (whose obligation is to the Bank of
Canton) under a term financing line, the outstanding amount of
which on the March 31, 1999 Pro Forma Balance Sheet No. 1 is
$0.00 and as of the Closing Date, is $138,581.91, which is
collateralized by a security interest in certain of SAIs assets;
(iii)Sellers obligation to GMAC on a vehicle being transferred to
Purchaser No. 1, the outstanding amount of which on the March 31,
1999 Pro Forma Balance Sheet is $12,052.93 and as of the Closing
Date, is $11,729.69, which is collateralized by a security
interest in said vehicle.
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The Assumed Liabilities to be paid off as set forth in Sections 3.1 A. (i),
(ii) and (iii), as may be incurred, increased or decreased since the March
31, 1999 Pro Forma Balance Sheet No. 1 to the Pro Forma Balance Sheet No. 1
for operations in the ordinary course of business or any other transaction
permitted by this Agreement, and subject to the satisfaction of the Net
Asset Amount No. 1 requirement set forth in Section 4.1(d) as of the
Closing Date.
It is intent of the parties that Purchaser No. 1 shall pay off at Closing,
or assume and pay off or discharge when due, all obligations of Seller set
forth in Section 3.1 A above for which any Shareholder has personal
liability and Purchaser No. 1 agrees to use its best efforts to secure the
release of any Shareholder from such liability after the Closing if such
releases are not secured prior to Closing.
B. All of the trade accounts payable of the Seller relating to Business
No. 1 incurred in the ordinary course of business consistent with
Sellers prior practices, the outstanding amount of which is
$334,937.90 on the March 31, 1999 Pro Forma Balance Sheet No. 1, and
as may be incurred, increased or decreased since the March 31, 1999
Balance Sheet No. 1 to the Pro Forma Balance Sheet No. 1for operations
in the ordinary course of business or any other transaction provided
by this Agreement, and subject to the satisfaction of the Net Asset
Amount No. 1 requirement set forth in Section 4.1(d) as of the Closing
Date.
3.2 Liabilities to be Paid Off at Closing or Assumed by Purchaser No. 2.
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At the Closing, Purchaser No. 2 shall assume and pay off or discharge when
due (and secure the release of Seller and any Shareholder from any and all
personal liability or guaranty with respect to such obligation), the
following:
A. All of the trade accounts payable of the Seller relating to Business
No. 2 incurred in the ordinary course of business consistent with
Sellers prior practices, the outstanding amount of which is $5,959.43
on the March 31, 1999 Pro Forma Balance Sheet No. 2; and as may be
incurred, increased or decreased since the March 31, 1999 Balance
Sheet No. 2 to the Pro Forma Balance Sheet No. 2 for operations in the
ordinary course of business or any other transaction provided by this
Agreement, and subject to the satisfaction of the Net Asset Amount No.
2 requirement set forth in Section 4.1(d) as of the Closing Date.
3.3 Executory Contracts to be Assumed by Purchaser No. 1.
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At the Closing, Purchaser No. 1 shall assume and pay, perform and discharge
when due the following:
(i) All of the obligations and liabilities of Seller arising after the
Closing under the contracts described in Section 2.2.
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(ii) All future liabilities for merchandise in transit FOB shipping point
relating to Business No. 1 which has not been received and/or entered
into inventory by Seller and for which no xxxx has been posted by
Seller as of the Closing.
(iii) Greentree Leasing Contract.
3.4 Executory Contracts to be Assumed by Purchaser No. 2.
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At the Closing, Purchaser No. 2 shall assume and pay, perform and discharge
when due the following:
(i) All of the obligations and liabilities of Seller arising after the
Closing under the contracts described in Section 2.3.
(ii) All future liabilities for merchandise in transit FOB shipping point
relating to Business No. 2 which has not been received and/or entered
into inventory by Seller and for which no xxxx has been posted by
Seller as of the Closing.
3.5 Excluded Liabilities.
---------------------
Notwithstanding anything in this Agreement to the contrary, Purchaser No. 1
and Purchaser No. 2 shall not assume or become responsible for any claim,
liability or obligation of any nature whatsoever, whether known or unknown,
accrued, absolute, contingent or otherwise (a "Liability") of Seller except
Assumed Liabilities No. 1 and Assumed Liabilities No. 2 that are
specifically assumed by such party. Without limiting the generality of the
foregoing, the following are included among the Liabilities of Seller which
Purchaser No. 1 and Purchase No. 2 shall not assume or become responsible
for (unless specifically included as Assumed Liabilities No. 1 or Assumed
Liabilities No. 2):
(a) all Liabilities for any Taxes whether deferred or which have accrued
or may accrue or become due and payable by Seller either prior to, on
or after the Closing Date, including, without limitation, all Taxes
and fees of a similar nature arising from the sale and transfer of
Purchased Assets No. 1 and Purchased Assets No. 2 to Purchaser No. 1
and Purchaser No. 2, respectively;
(b) all Liabilities and obligations to directors, officers, employees or
agents of Seller, including, without limitation, all Liabilities and
obligations for wages, salary, bonuses, commissions, vacation (except
to the extent Purchaser No. 1 and/or Purchaser No. 2, as applicable,
agrees to assume such item as set forth in Section 3.1 and/or 3.2,
respectively) or severance pay, profit sharing or pension benefits,
and all Liabilities and obligations arising under any bonus,
commission, salary or compensation plans or arrangements, whether
accruing prior to, on or after the Closing Date;
(c) all Liabilities and obligations with respect to unemployment
compensation claims and workmen's compensation claims and claims for
race, age and sex discrimination or sexual harassment or for unfair
labor practice based on or arising from occurrences, circumstances or
events, or exposure to conditions, existing or occurring prior to the
Closing Date and for which any claim may be asserted by any of Sellers
employees, prior to, on or after the Closing Date;
11
(d) all Liabilities of Seller to third parties for personal injury or
damage to property based on or arising from occurrences, circumstances
or events, or exposure to conditions, existing or occurring prior to
the Closing Date and for which any claim may be asserted by any third
party prior to, on or after the Closing Date;
(e) all Liabilities and obligations of Seller arising under or by virtue
of federal or state environmental laws based on or arising from
occurrences, circumstances or events, or exposure to conditions,
existing or occurring prior to the Closing Date and for which any
claim may be asserted prior to, on or after the Closing Date;
(f) all Liabilities of Seller including any costs of attorneys' fees
incurred in connection therewith, for litigation, claims, demands or
governmental proceedings arising from occurrences, circumstances or
events, or exposure to conditions occurring or existing prior to the
Closing Date;
(g) all Liabilities based on any theory of liability or product warranty
with respect to any product manufactured or sold prior to the Closing
Date and for which any claim may be asserted by any third party, prior
to, on or after the Closing Date;
(h) all attorneys' fees, accountants or auditors' fees, and other costs
and expenses incurred by Seller and/or Shareholders in connection with
the negotiation, preparation and performance of this Agreement or any
of the transactions contemplated hereby;
(i) all Liabilities of Seller in connection with the Excluded Assets;
(j) any Liabilities of Seller with respect to any options, warrants,
agreements or convertible or other rights to acquire shares of its
capital stock of any class; and
(k) any Liabilities of Seller incurred incident to any indemnification for
breach of any representations, warranties, covenants, or other
agreements made by Seller under any of the asset purchase, stock,
reorganization, or other legal transaction(s) set forth in Disclosure
Schedule 2.2(k).
(l) all other debts, Liabilities, obligations, contracts and commitments
(whether direct or indirect, known or unknown, contingent or fixed,
liquidated or unliquidated, and whether now or hereinafter arising)
arising out of or relating to the ownership, operation or use of any
of Purchased Assets No. 1 and/or Purchased Assets No. 2 on or prior to
the Closing Date or the conduct of the Business No. 1 of Seller and/or
Business No. 2 of Seller prior to the Closing Date, except only for
the liabilities and obligations to be assumed or paid, performed or
discharged by Purchaser No. 1 and/or Purchaser No. 2 constituting
Assumed Liabilities No. 1 or Assumed Liabilities No. 2.
Seller shall pay all liabilities not being assumed hereunder by Purchaser
No. 1 or Purchaser No. 2 within the customary time for payment of such
liabilities.
12
It is the intent of the parties that upon Closing, all employees of Seller
will be terminated by such parties and Purchaser No. 1 or Purchaser No. 2
will extend offers of employment to such individuals.
4.
CONSIDERATION FOR
-----------------
PURCHASED ASSETS NO. 1 AND PURCHASED ASSETS NO. 2
-------------------------------------------------
4.1 Purchase Price No. 1 for Purchased Assets No. 1.
-------------------------------------------------------
Subject to the other terms of this Agreement, Purchase Price No. 1 for
Purchased Assets No. 1 shall be the sum of:
(a) Six Hundred Thirty-Six Thousand Four Hundred Twenty Dollars
($636,420.00); and
(b) The liabilities assumed or paid off at Closing under Section 3.1; and
(c) Any amount that may be paid pursuant to Section 4.6 that is allocated
to Purchase Price No. 1.
The sum of the items contained in Sections 4.1(a), (b) and (c) above shall
be adjusted by the amounts determined under Section 4.1(d) and Section
4.2(e).
(d) If Net Asset Amount No. 1 of Seller as of the Closing Date as shown on
the Pro Forma Balance Sheet No. 1 is less than $111,193.00, Purchase
Price No. 1 shall be decreased on a dollar-for-dollar basis to the
extent of such deficit. If Net Asset Amount No. 1 of Seller as of the
Closing Date as shown on Pro Forma Balance Sheet No. 1 is greater than
$111,193.00, Purchase Price No. 1 shall be increased on a
dollar-for-dollar basis to the extent of such excess. The
determination of Net Asset Amount No. 1 shall be made in the manner
provided for in Section 5.1 hereof.
4.2 Purchase Price No. 2 for Purchased Assets No. 2.
-------------------------------------------------------
Subject to the other terms of this Agreement, the Purchase Price for
Purchased Assets No. 2 shall be the sum of:
(a) One Hundred Eighty-Three Thousand One Hundred Fifteen Dollars
($183,115.00); and
(b) The liabilities assumed or paid off at Closing under Section 3.2; and
(c) Any amount that may be paid pursuant to Section 4.6 that is allocated
to Purchase Price No. 2
The sum of the items contained in Sections 4.2(a), (b), (c), above
shall be adjusted by the amounts determined under Sections 4.2(d) and
(e), as follows;
(d) If Net Asset Amount No. 2 of Seller as of the Closing Date as shown on
the Pro Forma Balance Sheet No. 2 is less than $31,913.00, Purchase
Price No. 2 shall be decreased on a dollar-for-dollar basis to the
extent of such deficit.
13
If Net Asset Amount No. 2 of Seller as of the Closing Date as shown on
Pro Forma Balance Sheet No. 2 is greater than $31,913.00, Purchase
Price No. 2 shall be increased on a dollar-for-dollar basis to the
extent of such excess. The determination of Net Asset Amount No. 2
shall be made in the manner provided for in Section 5.1 hereof.
(e) In the event that Purchaser No. 1's and Purchaser No. 2's Atlanta
Divisions aggregate EBIT from their operations, from the Closing Date
to January 5, 2000 is less than Two Hundred Eighteen Thousand Five
Hundred Fifty-Nine and 78/100 Dollars ($218,559.78), the Purchase
Price shall be decreased on a dollar-for-dollar basis equal to the
difference between Two Hundred Eighteen Thousand Five Hundred
Fifty-Nine and 78/100 Dollars ($218,559.78) and the total of such Pro
Forma EBIT. The determination of Purchaser No. 1's and Purchaser No.
2's Atlanta Divisions aggregate Pro Forma EBIT shall be made in the
manner provided for in Section 5.2 hereof. Any adjustment to the
Purchase Price under this Section shall be made to the promissory
notes issued under Sections 4.3(c) and 4.4(c) based on the following
percentages: Purchaser No. 1's Subordinated Promissory Note - 77.7%;
Purchaser No. 2's Subordinated Promissory Note - 22.3%.
4.3 Payment of the Purchase Price for Purchased Assets No. 1.
--------------------------------------------------------
Subject to the conditions, covenants, representations and warranties
hereof, at Closing, Purchaser No. 1 shall deliver:
(a) By certified or bank cashier's check or by wire transfer to Seller,
the amount of Six Hundred Thirteen Thousand Nine Hundred Forty-Nine
Dollars ($613,949.00), of which Four Hundred One Thousand Nine Hundred
One Dollars ($401,901.00) is an advance payment by Purchaser No. 1 to
Seller for the amount projected in good faith by the parties to be
owed by Purchase No. 1 to Seller pursuant to the provisions of Section
4.1(d), which advance payment shall be credited against the amount
ultimately determined to be owed to Seller by Purchaser No. 1, to the
extent applicable, pursuant to the provisions of Section 5.1 upon the
conclusion of the determination of the Net Asset Amount No. 1;
(b) The Assumed Liabilities No. 1 assumed or paid off under Section 3.1;
and
(c) The remaining sum of Four Hundred Twenty-Four Thousand Three Hundred
Seventy-Two Dollars ($424,372.00) as may be adjusted as set forth in
Sections 5.1 and/or 5.2, shall be payable pursuant to the terms of
Purchaser No. 1's subordinated promissory note. The note shall bear
interest at the prime rate of Chase Manhattan Bank as of the date of
Closing. The principal of the note shall be payable in full on the
first annual anniversary of the Closing. Interest on the unpaid
principal balance of the note shall be paid quarterly with the first
interest payment being due and payable ninety (90) days from Closing.
Such note and all obligations of Purchaser No. 1 thereunder will be
subordinated and made junior in right of payment to the extent and in
the manner provided in a Subordination Agreement to be executed
between Deutsche Financial Services Company and Purchaser No. 1 and
Seller. A copy of said note is attached hereto as Exhibit C. Such note
shall be subordinate to Purchaser
14
No.1's lender pursuant to the terms of a Subordination Agreement in
the form attached hereto as Exhibit D.
4.4 Payment of the Purchase Price for Purchased Assets No. 2.
--------------------------------------------------------
Subject to the conditions, covenants, representations and warranties
hereof, at Closing, Purchaser No. 2 shall deliver:
(a) By certified or bank cashier's check or by wire transfer to Seller,
the amount of One Hundred Seventy-Six Thousand Four Hundred
Seventy-Seven Dollars ($176,477.00) of which One Hundred Fifteen
Thousand Three Hundred Forty-Six Dollars ($115,346.00) is an advance
payment by Purchaser No. 2 to Seller for the amount projected in good
faith by the parties to be owed by Purchaser No. 2 to Seller pursuant
to the provisions of Section 4.2(d), which advance payment shall be
credited against the amount ultimately determined to be owed to Seller
by Purchaser No. 2, to the extent applicable, pursuant to the
provisions of Section 5.1 upon the conclusion of the determination of
the Net Asset Amount No. 2; and
(b) The Assumed Liabilities No. 2 assumed or paid off under Section 3.2;
and
(c) The remaining sum of One Hundred Twenty-One Thousand Nine Hundred
Eighty-Four Dollars ($121,984.00) as may be adjusted as set forth in
Sections 5.1 and/or 5.2, shall be payable pursuant to the terms of
Purchaser No. 2's subordinated promissory note. The note shall bear
interest at the prime rate of Chase Manhattan Bank as of the date of
Closing. The principal of the note shall be payable in full on the
first annual anniversary of the Closing. Interest on the unpaid
principal balance of the note shall be paid quarterly with the first
interest payment being due and payable ninety (90) days from Closing.
Such note and all obligations of Purchaser No. 2 thereunder will be
subordinated and made junior in right of payment to the extent and in
the manner provided in a Subordination Agreement to be executed
between Deutsche Financial Services Company and Purchaser No. 2 and
Seller. A copy of said note is attached hereto as Exhibit E. Such note
shall be subordinate to Purchaser No. 2's lender pursuant to the terms
of a Subordination Agreement in the form attached hereto as Exhibit F.
4.5 Allocation of Purchase Price.
----------------------------
Purchase Price No. 1 to be paid to Seller hereunder, including the
liabilities assumed or paid by Purchaser No. 1 pursuant to Section 3.1,
shall be allocated as set forth on Exhibit G attached hereto. Purchase
Price No. 2 to be paid to Seller hereunder, including the liabilities
assumed or paid by Purchaser No. 2 pursuant to Section 3.2, shall be
allocated as set forth in Exhibit G-1 attached hereto. Seller, Purchaser
Xx. 0, Xxxxxxxxx Xx. 0 and Shareholders agree that each shall act in a
manner consistent with such allocation in (a) filing Internal Revenue Form
8594; and (b) in paying sales and other transfer taxes in connection with
the purchase and sale of assets pursuant to this Agreement.
4.6 Potential Adjustment to Purchase Price.
--------------------------------------
If the earnings before interest and taxes (EBIT) of the Purchaser No. 1's
and Purchaser No. 2's Atlanta Divisions in the aggregate during any of
fiscal
15
years 1999 (May 6, 1999 to January 5, 2000), 2000, 2001, 2002 and (January
6, 2003 to May 5, 2003) exceed the applicable EBIT threshold for such year
set forth below:
Fiscal 1999 - $218,559
(May 6, 1999 to January 5, 2000)
Fiscal 2000 - $377,814
Fiscal 2001 - $427,814
Fiscal 2002 - $457,814
Fiscal 2003 - $169.254
(January 5, 2003 to May 5, 2003)
Purchaser No. 1 and Purchaser No. 2 (according to the percentages set forth
below) shall pay Seller, by bank check or wiring within ninety (90) days
following the end of the fiscal year, an amount equal to fifty percent (50%) of
the aggregate EBIT of Purchaser No. 1's and Purchaser No. 2's Atlanta Divisions
in excess of the EBIT Threshold for the applicable year or portion thereof,
subject to a cumulative limitation of One Million Four Hundred Seventy-Five
Thousand Dollars ($1,475,000.00) during such aggregate period. Any EBIT
shortfall in any year shall not be offset against any excess EBIT in any
subsequent year(s) hereunder, it being the intent of the parties that the EBIT
Threshold set forth herein shall apply to each applicable year separately,
subject, however, to the cumulative limitation of One Million Four Hundred
Seventy-Five Thousand Dollars ($1,475,000.00) during such aggregate period.
Such cash payment by Purchaser Xx. 0 xxx Xxxxxxxxx Xx. 0 xxxxx xx additional
Purchase Price which will be added to the good will allocation of the Purchase
Price. Commencing on the closing date, a 1.8% royalty fee (MAS-1.5% and Adfund
fee-.3%) on gross sales by Purchaser No. 1's and Purchaser No. 2's respective
Atlanta Divisions shall be made incident to said determination. For each
subsequent year described above in this paragraph for which Purchaser No. 1 and
Purchaser No. 2 may be required to pay additional Purchase Price, the parties
shall, in good faith, agree upon the MAS and Adfund royalty fee to be charged
hereunder based on the level of services and support being provided by Purchaser
No. 1 and Purchaser No. 2 to its respective Atlanta Division. Provided,
however, such MAS and Adfund royalty fees shall be 1.8% if the parties are
unable to come to an agreement for each subsequent year. For purposes of this
Section, the term Atlanta Division shall be defined as Business No. 1 and
Business No. 2 acquired from Seller, by Purchaser No. 1 and Purchaser No. 2,
respectively, and Purchaser No. 1's and Purchaser No. 2's operations in Atlanta,
Georgia that existed prior to the closing of the Purchase Agreement. Purchaser
No. 1 and Purchaser No. 2 shall pay their respective percentage of any amounts
due hereunder, which percentage shall be predicated on the respective EBIT
contribution made by each of their Atlanta Divisions to the computation set
forth above.
For purposes of this Section, the term EBIT shall mean the net income
before taxes and before interest expense of Purchaser No. 1's and Purchaser
No. 2's Atlanta Divisions during the applicable period. The EBIT shall be
determined by the internally-generated financial statements of Purchaser
No. 1 and Purchaser No. 2 determined in the manner set forth above in
accordance with generally accepted accounting principles, consistently
applied, provided that no effect shall be given to any increase in the
amounts of depreciation, amortization or other expense or deduction taken
on tangible or intangible assets of Purchaser, if such increase is
attributable to a revaluation of such assets incident to their acquisition
pursuant to the terms of this Agreement. Said determination of EBIT shall
be subject to verification as described below. In addition, for purposes of
determining EBIT for any particular year, except as noted above, no item of
income or expense will be allocated by Purchaser No. 1 or Purchaser No. 2
to Purchaser No. 1's and/or Purchaser No. 2's Atlanta Division unless such
items are reasonably calculated to contribute to the
16
increase in profits of such Atlanta Divisions, it being the intent of the
parties that the Purchaser No. 1 and Purchaser No. 2 shall exercise the
utmost good faith with respect to allocations of income and expense to
Purchaser No. 1's and Purchaser No. 2's Atlanta Division. Incident to the
determination of EBIT of Purchaser No. 1s and Purchase No. 2's Atlanta
Division, no compensation of any executive or other employee of Purchaser
No. 1 and/or Purchaser No. 2 or their respective affiliates who do not work
directly for Purchaser No. 1s and/or Purchaser No. 2's Atlanta Division
shall be allocated to such division. Any payment made to Seller pursuant to
this Section 4.5 shall not be charged against the EBIT for any year.
Within ninety (90) days after the end of each fiscal year or period
described herein, Purchaser No. 1 and Purchaser No. 2 will deliver to
Seller a copy of the report of EBIT prepared by Purchaser No. 1 and
Purchaser No. 2 for the subject period along with any supporting
documentation reasonably requested by Seller. Within thirty (30) days
following delivery to Seller of such report, Seller shall have the right to
object in writing to the results contained in such determination. If timely
objection is not made by the Seller to such determination, such
determination shall become final and binding for purposes of this
Agreement. If timely objection is made by Seller to Purchaser No. 1 and
Purchase No. 2 and Seller and Purchaser No. 1 and Purchaser No. 2 are able
to resolve their differences in writing within thirty (30) days following
the expiration of the thirty-day (30-day) period, then such determination
shall become final and binding as it regards to this Agreement. If timely
objection is made by Seller to Purchaser No. 1 and Purchaser No. 2 and
Seller and Purchaser No. 1 and Purchaser No. 2 are unable to resolve their
differences in writing within thirty (30) days following the expiration of
the thirty-day (30-day) period, then all disputed matters pertaining to the
report shall be submitted to and reviewed by an arbitrator (the Arbitrator)
which shall be an independent accounting firm selected by Purchaser No. 1
and Purchaser No. 2 and Seller. If Purchaser No. 1 and Purchaser No. 2 and
Seller are unable to agree promptly on an accounting firm to serve as the
Arbitrator, each shall select by no later than the 30th day following the
expiration of the sixty-day (60-day) period, an accounting firm, and the
two selected accounting firms shall be instructed to select promptly
another independent accounting firm, such newly selected firm to serve as
the Arbitrator. The Arbitrator shall consider only the disputed matters
pertaining to the determination and shall act promptly to resolve all
disputed matters, and its decision with respect to all disputed matters
shall be final and binding upon Seller and Purchaser. Expenses of the
Arbitration shall be borne one-half (1/2) by Purchaser No. 1 and Purchaser
No. 2 and one-half (1/2) by Seller. Each party shall be responsible for its
own attorney and accounting fees.
4.7 Certain Closing Expenses.
------------------------
Except as set forth below, Seller shall be responsible for and shall pay
all federal, state and local sales tax (if any), documentary stamp tax and
all other duties, or other like charges properly payable upon and in
connection with the conveyance and transfer of the Purchased Assets No. 1
by Seller to Purchaser No. 1 and the conveyance and transfer of the
Purchased Assets No. 2 by Seller to Purchaser No. 2.
17
5.
POST-CLOSING ADJUSTMENTS
------------------------
5.1 Within sixty (60) days after the Closing Date (the Post Closing Date),
Sellers Accountant will perform an audit of the Seller as of the Closing
Date and Sellers Accountant will deliver to Purchaser No.1 and to Purchaser
No. 2 copies of Pro Forma Balance Sheet No. 1 and Pro Forma Balance Sheet
No. 2, respectively, prepared by Sellers Accountant along with any
supporting documentation reasonably requested by Purchaser No. 1 or
Purchaser No. 2 reflecting Net Asset Amount No. 1 and Net Asset Amount No.
2 as of the Closing which shall be defined as the total of the Purchased
Assets No. 1 less the total of the Assumed Liabilities No. 1 relating to
Business No. 1, as reflected on Pro Forma Balance Sheet No. 1 (the Net
Asset Report No. 1) and the total of the Purchased Assets No. 2 less the
total of the Assumed Liabilities No. 2 relating to Business No. 2, as
reflected on Pro Forma Balance Sheet No. 2 (the Net Asset Report No. 2").
The Pro Forma Balance Sheet No. 1 and the Pro Forma Balance Sheet No. 2
shall be prepared using the same accounting methods, policies, practices
and procedures, with consistent classifications, judgments, estimations and
methodologies as used in the preparation of the March 31, 1999 Pro Forma
Balance Sheet No. 1 and the March 31, 1999 Pro Forma Balance Sheet No. 2.
Within thirty (30) days following delivery to Purchaser No. 1 of Net Asset
Report No. 1 and to Purchaser No. 2 of Net Asset Report Xx. 0, Xxxxxxxxx
Xx. 0 and Purchaser No. 2 shall have the right to object in writing to the
results contained therein. If timely objection is not made by Purchaser No.
1 and/or Purchaser No. 2 to Net Asset Report No. 1 and/or Net Asset Report
No. 2, as applicable, Net Asset Report No. 1 and Net Asset Report No. 2
shall become final and binding for purposes of this Agreement. If timely
objection is made by Purchaser No. 1 and/or Purchaser No. 2 to Net Asset
Report No. 1 and/or Net Asset Report No. 2, and Seller and Purchaser No. 1
and/or Purchaser No. 2, as applicable, are able to resolve their
differences in writing within fifteen (15) days following the expiration of
such thirty (30) day period, then Net Asset Report No. 1 and/or Net Asset
Report No. 2, as resolved, shall become final and binding as it relates to
this Agreement. If timely objection is made by Purchaser No. 1 and/or
Purchaser No. 2, as applicable, to Net Asset Report No. 1 and/or Net Asset
Report No. 2 and Seller and Purchaser No. 1 and/or Purchaser No. 2, as
applicable, are unable to resolve their differences in writing within such
fifteen (15) day period, then all disputed matters pertaining to Net Asset
Report No. 1 and/or Net Asset Report No. 2 shall be submitted to and
reviewed by an arbitrator (the Arbitrator) which shall be an independent
accounting firm selected by Seller and Purchaser No. 1 and/or Purchaser No.
2, as applicable. If Purchaser No. 1 and/or Purchaser No. 2, as applicable,
and Seller are unable to agree promptly on the accounting firm to serve as
the Arbitrator, each shall select by not later than the seventh (7th) day
following the expiration of the Net Asset Report objection period, a
nationally recognized accounting firm, and each selected accounting firm
shall be instructed to jointly select promptly another nationally
recognized accounting firm, such third accounting firm shall serve as the
Arbitrator. The Arbitrator shall consider only the disputed matters
pertaining to the determination and shall act promptly and fairly to
resolve all disputed matters and its decision with respect to all disputed
matters shall be final and binding upon Seller, Purchaser No. 1 and
Purchaser No. 2, as applicable. The expenses of the arbitration shall be
borne one-half (1/2) by Purchaser No. 1 and/or Purchaser No. 2, as
applicable, and one-half (1/2) by Seller. Each party shall be responsible
for its own attorney and accounting fees. If the Net Asset Amount No. 1 (as
shown on the Net Asset Report No. 1) is less than $111,193.00, the Purchase
Price No. 1 to be paid to Seller shall be decreased on a dollar-for-dollar
basis for such difference by
18
Seller first repaying to Purchaser No. 1 by certified or cashier's check or
wire transfer, the advance payment made by Purchaser to Seller at Closing
against the Net Asset Amount No. 1 determination as set forth in Section
4.3(a) then by any other cash paid under Section 4.3(a), if necessary. If
the Net Asset Amount No. 1 (as shown on the Net Asset Report No. 1) is
greater than $111,193.00, the Purchase Price No. 1 to be paid to Seller
shall be increased on a dollar-for-dollar basis for such excess. In the
event such excess is greater than the advance payment made by Purchaser No.
1 to Seller under Section 4.3(a), any additional amount owing shall be paid
immediately by Purchaser No. 1 to Seller by certified or cashier's check or
wire transfer on the date of the resolution of this determination. In the
event the increase in Purchase Price No. 1 is less than the amount of the
advance payment made under Section 4.3(a) by Purchaser No. 1 to Seller, the
difference between the amount of the advance payment paid to Seller at
Closing and the amount that Seller is entitled pursuant to this provision,
shall be repaid to Purchaser No. 1 by Seller by certified or cashiers check
or wire transfer on the date of the resolution of this determination. If
the Net Asset Amount No. 2 (as shown on the Net Asset Report No. 2) is less
than $31,913.00, the Purchase Price No. 2 to be paid to Seller shall be
decreased on a dollar-for-dollar basis for such difference by Seller
repaying to Purchaser No. 2 by certified or cashier's check or wire
transfer the advance payment paid by Purchaser No. 2 to Seller at Closing
against the Net Asset Amount No. 2 determination as set forth in Section
4.4(a) then by any other cash paid under Section 4.4(a), if necessary. If
the Net Asset Amount No. 2 (as shown on the Net Asset Report No. 2) is
greater than $31,913.00, the Purchase Price No. 2 to be paid to Seller
shall be increased on a dollar-for-dollar basis for such excess. In the
event such excess is greater than the advance payment made by Purchaser No.
2 to Seller under Section 4.4(a), any additional amount owing shall be paid
immediately by Purchaser No. 2 to Seller by certified or cashier's check or
wire transfer on the date of the resolution of this determination. In the
event the increase in Purchase Price No. 2 is less than the amount of the
advance payment made under Section 4.4(a) by Purchaser No. 2 to Seller, the
difference between the amount of the advance payment paid to Seller at
Closing and the amount that Seller is entitled to pursuant to this
provision, shall be repaid to Purchaser No. 2 by Seller by certified or
cashier's check or wire transfer on the date of the resolution of this
determination.
Seller and Purchaser No. 1 and Purchaser No. 2 agree that any adjustments
made as a result of the issuance of Net Asset Report No. 1 and Net Asset
Report No. 2 that result in an adjustment to Purchase Price No. 1 and/or
Purchase Price No. 2 shall not constitute a breach of any representation or
warranty made by Seller as to such item under any of the pertinent
provisions of Section 8. Nothing herein contained shall be construed as a
release or waiver of any rights that Purchaser No. 1 and/or Purchaser No. 2
may have under this agreement that relate to any breach of representation
or warranty relating to an item that is not set forth in Net Asset Report
No. 1 and/or Net Asset Report No. 2.
5.2 Within sixty (60) days after January 5, 2000, Purchaser No. 1 and Purchaser
No. 2 will deliver to Seller a determination of the Atlanta Division's Pro
Forma aggregate EBIT prepared by Purchaser No. 1 and Purchaser No. 2 for
the period commencing on the Closing Date and ending January 5, 2000 along
with any supporting documentation reasonably requested by Seller. For
purposes of this Section, the term Atlanta Division shall be defined as
Business No. 1 and Business No. 2 acquired from Seller by Purchaser No. 1
and Purchaser No. 2, respectively, and Purchaser No. 1's and Purchaser No.
2's operations in Atlanta, Georgia that existed prior to the closing of the
Purchase Agreement. Incident to said Pro Forma EBIT determination, a 1.8%
royalty fee (MAS 1.5% and Adfund .3%) royalty fee on gross sales by
Purchaser No. 1's and Purchaser 2's respective Atlanta Divisions during
said period shall be made incident to said
19
determination. Within thirty (30) days following delivery of such reports,
Seller shall have the right to object in writing to the results contained
in such determination. If timely objection is not made by Seller of such
determination, such determination shall become final and binding. If timely
objection is made by any party, and Purchaser No. 1 and Purchaser No. 2 and
Seller are able to resolve their differences in writing within fifteen (15)
days following the expiration of the Pro Forma EBIT objection period, then
such determination as resolved shall become final and binding as it relates
to this Agreement. If timely objection is made by Seller, and Seller and
Purchaser No. 1 and/or Purchaser No. 2 are unable to resolve their
differences in writing within fifteen (15) days following the expiration of
the Pro Forma EBIT objection period, then all disputed matters relating to
the report shall be submitted to and reviewed by an Arbitrator according to
the process and procedure set forth in Section 5.1 above. The expenses of
the arbitration shall be borne one-half (1/2) by Purchaser No. 1 and
Purchaser No. 2 and one-half by Seller. Each party shall be responsible for
its own attorney and accounting fees. Any net reduction in Purchase Price
No. 1 and Purchase Price No. 2 as a result of said adjustment shall be made
in the manner set forth in Section 4.2(e) and shall be reflected by
decreasing the face amount of the promissory notes as set forth in Sections
4.3(c) and 4.4(c). The parties agree to implement any adjustments to any
interest payments that may have been made prior to the date of such
determination to reflect the adjustment set forth above.
6.
EMPLOYMENT AGREEMENTS
---------------------
6.1 Employment Agreements of X. Xxxxxx and X. Xxxxxx.
------------------------------------------------
At Closing, Purchaser No. 1 shall enter into an Employment Agreement with
X. Xxxxxx and X. Xxxxxx, respectively. Copies of said Employment Agreements
are attached hereto and made a part hereof as Exhibits H and H-1.
7.
COVENANT NOT TO COMPETE AGREEMENTS
----------------------------------
7.1 Covenant Not to Compete Agreements of Seller and Shareholders.
-------------------------------------------------------------
At Closing, Seller and each Shareholder shall enter into Covenant Not to
Compete Agreements with Purchaser No. 1 and Purchaser No. 2. Copies of said
Covenant Not to Compete Agreements are attached hereto and made a part
hereof as Exhibits I, X-0, X-0, X-0, X-0, X-0, I-6, I-7, I-8 and I-9.
8.
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
AND SHAREHOLDERS
----------------
Except as set forth in the Disclosure Schedule attached hereto, Seller and
Shareholders, jointly and severally, represent and warrant to Purchaser No.
1 and Purchaser No. 2 that the following statements are true and correct as
of the date hereof:
20
8.1 Organization, Good Standing, Qualification and Power of Seller.
--------------------------------------------------------------
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has the corporate power
and authority to own, lease and operate the Purchased Assets No. 1 and the
Purchased Assets No. 2 and to conduct Business No. 1 and Business No. 2
currently being conducted by it. The Seller is duly qualified and validly
existing in Georgia and in good standing in each of the other jurisdictions
in which it is required by the nature of its business or the ownership of
its properties to so qualify. Seller has no subsidiaries. The Disclosure
Schedule correctly lists, with respect to the Seller, each jurisdiction in
which it is qualified to do business as a foreign corporation.
8.2 Capitalization.
--------------
The authorized capitalization of the Seller consists solely of one hundred
thousand (100,000) shares of common stock, par value one dollar ($1.00), of
which one hundred thousand (100,000) shares representing one hundred
percent (100%) of the issued stock are currently owned by the Shareholders,
are fully paid and nonassessable and have not been issued in violation of
the preemptive rights of any person. Except as set forth in Disclosure
Schedule, Seller is not obligated to issue or acquire any of its
securities, nor has it granted options or any similar rights with respect
to any of its securities.
8.3 Authority to Make Agreement.
------------------------------
Seller and each Shareholder have the full legal power and authority to
enter into, execute, deliver and perform their respective obligations under
this Agreement and each of the other agreements, instruments and other
instruments to be delivered incident hereto ("Other Seller Documents").
This Agreement and the Other Seller Documents have been duly and validly
executed and delivered by Seller and each Shareholder, and are the legal
and binding obligation of each of them, enforceable in accordance with
their respective terms, subject to principles of equity, bankruptcy laws,
and laws affecting creditors' rights generally. Seller has taken all
necessary action (including action of its Board of Directors and its
Shareholders) to authorize and approve the execution and delivery of this
Agreement and the Other Seller Documents, the performance of its
obligations thereunder and the consummation of the transactions
contemplated thereby.
8.4 Existing Agreements, Governmental Approvals and Permits.
------------------------------------------------------------
(a) The execution, delivery and performance of this Agreement and the
Other Seller Documents by Seller, the sale, transfer, conveyance,
assignment and delivery of the Purchased Assets No. 1 to Purchaser No.
1 and of the Purchased Assets No. 2 to Purchaser No. 2 as contemplated
in this Agreement, and the consummation of the other transactions
contemplated thereby: (i) do not violate any provisions of law,
statute, ordinance or regulation applicable to Seller, any Shareholder
or Purchased Assets Xx. 0 xxx/xx Xxxxxxxxx Xxxxxx Xx. 0, (xx) (except
for Seller's secured creditors set forth in Sections 3.1 and/or 3.2,
whose consent shall be obtained prior to Closing and except as set
forth in Disclosure Schedule), will not conflict with, or result in
the breach or termination of any provision of, or constitute a default
under (in each case
21
whether with or without the giving of notice or the lapse of time or
both) the Articles of Incorporation or Bylaws of Seller or any
indenture, mortgage, lease, deed of trust, or other instrument,
contract or agreement or any license, permit, approval, authority, or
any order, judgment, arbitration award, or decree to which Seller or
any Shareholder is a party or by which Seller or any Shareholder or
any of their assets and properties are bound (including, without
limitation, the Purchased Assets No.1 and/or Purchased Assets No. 2),
and (iii) will not result in the creation of any encumbrance upon any
of the properties, assets, or Business No. 1 or Business No. 2 of
Seller or of any Shareholder. Neither Seller, nor any Shareholder, nor
any of their assets or properties (including, without limitation, the
Purchased Assets No. 1 and/or Purchased Assets No. 2) is subject to
any provision of any mortgage, lease, contract, agreement, instrument,
license, permit, approval, authority, order, judgment, arbitration
award or decree, or to any law, rule, ordinance, or regulation, or any
other restriction of any kind or character, which would prevent Seller
or any Shareholder from entering into this Agreement or any of the
Other Seller Documents or from consummating the transactions
contemplated thereby.
(b) Neither Seller nor any Shareholder is a party to, subject to or bound
by any agreement, judgment, award, order, writ, injunction or decree
of any court, governmental body or arbitrator which would prevent the
use by Purchaser No. 1 of Purchased Assets No. 1 or by Purchaser No. 2
of Purchased Assets No. 2 in accordance with present practices of
Seller after the Closing Date or which, by operation of law, or
pursuant to its terms, would be breached, terminate, lapse or be
subject to termination or default under (in each case whether with or
without notice, the passage of time or both) upon the consummation of
the transactions contemplated in this Agreement.
(c) No approval, authority or consent of, or filing by Seller with, or
notification to, any foreign, federal, state or local court, authority
or governmental or regulatory body or agency or any person is
necessary to authorize the execution and delivery of this Agreement or
the Other Seller Documents by Seller or any Shareholder, the sale,
transfer, conveyance, assignment and delivery of the Purchased Assets
No. 1 to Purchaser No. 1 or of Purchased Assets No. 2 to Purchaser No.
2, or the consummation of the other transactions contemplated thereby,
or to continue the use and operation of Purchased Assets No. 1 by
Purchaser No. 1 or Purchased Assets No. 2 by Purchaser No. 2 after the
Closing Date.
8.5 Financial Statements.
---------------------
(a) Copies of the Financial Statements are attached to the Disclosure
Schedule. Each of the Financial Statements are true and complete in
all material respects and were prepared in accordance with generally
accepted accounting principles (except that the March 31, 1999 Pro
Forma Balance Sheet No. 1 and the March 31, 1999 Pro Forma Balance
Sheet No. 2 do not contain any footnotes and are subject to normal
year-end audit adjustments as shall be reflected on the Pro Forma
Balance Sheet No. 1 and Pro Forma Balance Sheet No. 2 of Seller which
will be prepared as set forth in Section 5.1) applied on a consistent
basis throughout the periods indicated (except as noted on such
Financial Statements) and fairly present in all material respects the
financial position and condition of the Seller as of the respective
dates thereof and the results of its operation and changes in
financial position for the respective periods then ended.
22
(b) Except to the extent reflected, reserved against, or disclosed on Pro
Forma Balance Sheet No. 1 and/or Pro Forma Balance Sheet No. 2, the
Financial Statements, or the Disclosure Schedule, the Seller had, as
of such date, no material liabilities or obligations of any nature,
whether accrued, absolute, contingent, or otherwise, including without
limitation, unfunded pension or other retirement plan liabilities and
tax liabilities whether or not incurred in respect of or measured by
the Seller's income, for any period prior to the date of said
Financial Statements, or arising out of transactions entered into or
any set of facts existing prior thereto. Except to the extent
disclosed on the Disclosure Schedule, there exists no basis for the
assertion against Seller, as of the date of the Financial Statements
or of Pro Forma Balance Sheet No. 1 and/or Pro Forma Balance Sheet No.
2, of any material liability of any nature or in any amount not fully
reflected, reserved against, or disclosed in the Financial Statements
or in Pro Forma Balance Sheet No. 1 and/or Pro Forma Balance Sheet No.
2.
8.6 Customers.
---------
The Disclosure Schedule includes a correct list of the twenty-five (25)
largest customers of the Seller by sales in dollars for each of 1998 and
January through March of 1999 and the amount of business done by the Seller
with each such customer for such periods. Assuming that Purchaser No. 1
continues to conduct Business No. 1 and that Purchaser No. 2 continues to
conduct Business No. 2 in the ordinary course consistent with Seller's
prior practices generally and specifically with respect to Seller's current
customers, Seller has no knowledge that any of the current customers of
Seller will or intend to (a) cease doing business with the Seller; or (b)
materially alter the amount of business they are presently doing with the
Seller; or (c) not do business with the Purchaser No. 1 and/or Purchaser
No. 2, as applicable, after the Closing.
8.7 Intangible Property.
--------------------
The Disclosure Schedule includes an accurate list and summary description
of all patents, franchises, distributorships, registered and unregistered
trademarks, trade names and service marks, licenses, brand names and
company lists and all applications for the foregoing, presently owned
and/or held (as a licensee or otherwise) by the Seller. The Seller is not a
licensor in respect to any patents, trade secrets, inventions, shop rights,
know-how, trademarks, trade names, copyrights, or applications therefor.
The Disclosure Schedule contains an accurate and complete description of
such intangible property and the items of all licenses and other agreements
relating thereto. All of the above-mentioned intangibles used in the
Seller's Business No. 1 and/or Sellers Business No. 2 are the sole property
of the Seller, provided that such intangibles will continue to be used by
the Atlanta Divisions of Purchaser No. 1 and Purchaser No. 2 in the same
manner as conducted by Seller, do not require the consent of or consent to
any other person as a condition to their use or the transaction provided
for herein and do not infringe upon the rights of others.
23
8.8 Significant Agreements.
-----------------------
The Disclosure Schedule contains an accurate and complete list of all
contracts, agreements, licenses, instruments and understandings (whether or
not in writing) to which the Seller is a party or is bound and that are
material to Business No. 1 and/or Business No. 2, assets, financial
condition or results of operations of the Seller. Without limiting the
generality of the foregoing, such list includes all such contracts,
agreements, licenses and instruments:
(a) Providing for payments of more than Five Thousand Dollars ($5,000.00)
per year, other than purchase orders incurred in the ordinary course
of business;
(b) Providing for the extension of credit other than consistent with
normal credit terms described in the Disclosure Schedule;
(c) Limiting the ability of the Seller to conduct its Business No. 1 or
its Business No. 2 or any other business or to otherwise compete in
its or any other business, including as to manner or place;
(d) Providing for a guarantee or indemnity by the Seller, including but
not limited to any indemnification provided under any asset purchase
agreement, stock purchase agreement, or other transaction that Seller
is a party to;
(e) With any Affiliate of Seller;
(f) With any labor union or employees' association connected with Seller's
Business No. 1 and/or Sellers Business No. 2;
(g) For the employment or retention of any director, officer, employee,
agent, shareholder, consultant, broker or advisor of Seller or any
other contract between Seller and any director, officer, employee,
agent, shareholder, consultant or advisor which does not provide for
termination at will by the Seller without further cost or other
liability to the Seller as of or at any time after the Closing.
(h) In the nature of a profit sharing, bonus stock option, stock purchase,
pension, deferred compensation, retirement, severance,
hospitalization, insurance or other plan or contract providing benefit
to any person or former director, officer, employee, agent,
shareholder, consultant, broker or advisor of Seller, or such person's
dependents, beneficiaries or heirs;
(i) In the nature of an indenture, mortgage, promissory note, loan or
credit agreement or other contract relating to the borrowing of money
or a line of credit by the Seller or relating to the direct or
indirect guarantee or assumption by the Seller of obligations of
others;
(j) Leases or subleases with respect to any property, real, personal or
mixed, in which the Seller is involved, as lessor or lessee; and
(k) Distributorship Agreement(s) or License Agreement(s) with respect to
any property which Seller has entered into as licensor.
24
True and correct copies of all items so disclosed in the Disclosure
Schedule (if written) have been provided or made available to Purchaser Xx.
0 xxx/xx Xxxxxxxxx Xx. 0. Each of such items listed, or required to be
listed, is a valid and binding obligation of the parties thereto
enforceable in accordance with its terms, subject to principles of equity,
bankruptcy laws, and laws affecting creditors' rights generally, and there
have been no material defaults or claims of material default by the Seller
and there are no facts or conditions that have occurred or that are
anticipated to occur which, through the passage of time or the giving of
notice, or both, would constitute a default by the Seller, or would cause
the acceleration of any obligation of any party thereto or the creation of
an Encumbrance upon any asset of the Seller. There are no material oral
contracts, agreements or understandings made by any Shareholder, material
to Purchased Assets No. 1 or Purchased Assets No. 2, except such as have
been disclosed in the Disclosure Schedule and for which an accurate summary
description has been provided.
8.9 Inventory.
---------
Except as specifically described on the Disclosure Schedule, all inventory
is reflected on the April 5, 1999 list attached to the Disclosure Schedule
and at the Closing Date will consist of items of quality and quantity which
are usable or saleable in the ordinary course of business of Seller in the
conduct of its Business No. 1 and/or its Business No. 2, and items of below
standard quality and items not usable or saleable in the ordinary course of
Seller's business have been written down in value in accordance with good
business practices to estimated net realizable market value or adequate
reserves have been provided therefor. The values at which the inventory are
carried on the list attached to the Disclosure Schedule reflect the normal
valuation policy of Seller in setting inventory at the lower of cost or net
realizable market values, all in accordance with generally accepted
accounting principles. Except as set forth on the Disclosure Schedule,
since December 31, 1998, the inventory of Seller has been maintained at
normal and adequate levels for the continuation of the Business No. 1
and/or Business No. 2 in its normal course. No change has occurred in such
inventory which affects or will affect the usability or salability thereof,
no write-downs or write-offs of the value of such inventory has occurred
and no additional amounts have been reserved with respect to such
inventories except in each case those adjustments made in the ordinary
course of business. The Disclosure Schedule lists the location of all
inventory together with a brief description of the type and amount at each
location.
8.10 Accounts Receivable and Vendor Receivables.
----------------------------------------------
All accounts receivable and vendor receivables of Seller which have arisen
in connection with Business No. 1 and/or Business No. 2 or otherwise and
which are reflected on the Financial Statements and all receivables which
have arisen since December 31, 1998 through the Closing shall have arisen
only from bonafide transactions in the ordinary course of business and
represent valid, collectible and existing claims, net of any reserve as
reflected on the Pro Forma Balance Sheet No. 1 and/or the Pro Forma Balance
Sheet No. 2. Subject to customer credit, the payment of each account and
vendor receivable will not be subject to any known defense, counterclaim
condition (other than Seller's performance in the ordinary course of
business) whatsoever. The Disclosure Schedule hereto accurately lists, as
of April 22, 1999, all receivables arising out of or
25
relating to Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0, the amount owing and
aging of such accounts receivable, the name of the party from whom such
account receivable is owing, any security in favor of Seller for the
repayment of such account receivable which Seller purports to have. Seller
has made available to Purchaser No. 1 and Purchaser No. 2 complete and
correct copies of all instruments, documents and agreements evidencing such
accounts receivable and of all instruments, documents or agreements (if
any) creating security therefor.
8.11 Taxes.
-----
Except as to Taxes not yet due and payable, and except for Taxes the
payment of which is being diligently contested in good faith and by proper
proceedings and for which adequate reserves have been established in
accordance with generally accepted accounting principles, and except as set
forth in the Disclosure Schedule, Seller has filed all returns and reports
that are now required to be filed by it in connection with any federal,
state or local tax, duty or charge levied, assessed or imposed upon it, or
its property, including unemployment, social security and similar taxes;
and all of such taxes have been either paid or adequate reserves or other
provision has been made therefor. Seller and Shareholders shall pay,
without right of reimbursement from Purchaser No. 1 and/or Purchaser No. 2,
all of Seller and Shareholders income Taxes including but not limited to
any Taxes attributable to any gain under Section 1374 of the Code,
including any interest and penalties thereon, that relate to the activities
of Seller through the Closing including this transaction, as due.
8.12 Title to Purchased Assets; Encumbrances.
-------------------------------------------
(a) With respect to Purchased Assets No. 1 and Purchased Assets No. 2
sold, at the Closing Seller shall have good title to Purchased Assets
No. 1 and/or Purchased Assets No. 2 being acquired by Purchaser No. 1
and/or Purchaser No. 2, respectively, and except for matters expressly
set forth in Section 3.1, Section 3.2 Section 3.3 or Section 3.4,
which Encumbrances, if any, upon Purchased Assets No. 1 and/or
Purchased Assets No. 2 shall be removed at Closing, free and clear of
all Encumbrances whatsoever; immediately after the transfer of
Purchased Assets No. 1 being acquired by Purchaser No. 1 from Seller
and Purchased Assets No. 2 being acquired by Purchaser No. 2 from
Seller, Purchaser No. 1 will own all of said Purchased Assets No. 1
and Purchaser No. 2 will own all of said Purchased Assets No. 2, free
and clear of all Encumbrances whatsoever, whether perfected or
unperfected; and, by way of illustration but not limitation, there are
not any unpaid taxes, assessments or charges due or payable by Seller
to any federal, state or local agency, or any obligations or
liabilities or any unsatisfied judgments against, or, to the best of
Seller's knowledge, any litigation or proceedings pending or
threatened against Seller by Seller's employees, clients, customers,
creditors, suppliers, or any other party (nor state of facts for any
such obligation, liability, litigation or proceeding), that could
become a claim, obligation, liability, lien or other charge of or
against Purchaser Xx. 0, Xxxxxxxxx Xx. 0, or Purchased Assets No. 1 or
Purchased Assets No. 2. To the best of knowledge of Seller, all of
Seller's tangible and other operating assets used in Business No. 1
and/or Business No. 2 which are being sold hereunder to Purchaser No.
1 and/or Purchaser No. 2, respectively, are, in all material respects,
in good operating condition and repair, free of all structural,
material or mechanical defects and conform with all applicable laws
and regulations.
26
(b) Except as otherwise specifically set forth herein, Seller is not a
party to any contract, agreement, lease or commitment that would
result in any claim, obligation, liability, lien or other charge
against Purchaser No. 1 and/or Purchaser No. 2 or Purchased Assets No.
1 or Purchased Assets Xx. 0, xxx Xxxxxxxxx Xx. 0 xxx Xxxxxxxxx Xx. 0
are not obligated to assume the obligations under any contract,
agreement, lease or commitment of Seller, except as specifically set
forth herein.
8.13 Pending Actions.
----------------
Seller has not been served with or received notice of any actions, suits,
arbitrations, OSHA, EPA or other governmental violations, or any other
proceedings or investigations, either administrative or judicial, strikes,
lockouts or NLRB charges or complaints ("Actions and Disputes"). To the
best of Seller's knowledge, there are no Actions or Disputes pending or
threatened against or affecting (directly or indirectly) the Seller or its
property or assets, nor are there any facts or conditions which exist which
would give rise to any such Actions or Disputes which, if determined
adversely to Seller, would have a material adverse effect upon Seller's
Business No. 1 and/or Sellers Business No. 2.
8.14 Insurance.
---------
The Disclosure Schedule contains an accurate and complete listing (showing
type of insurance, amount, insurance company, annual premium and special
exclusions) of all policies of fire, liability, worker's compensation and
other forms of insurance owned or held by the Seller. All such policies are
in full force and effect; are sufficient for compliance with all
requirements of law and of all agreements to which the Seller is a party;
are valid, outstanding and enforceable policies; provide adequate insurance
coverage for the assets and operations of the Seller and will remain in
full force and effect through the Closing. There are no outstanding
requirements or recommendations by any insurance company that issued a
policy with respect to any of the properties and assets of the Seller by
any Board of Fire Underwriters or other body exercising similar functions
or by any Governmental Entity requiring or recommending any repairs or
other work to be done on or with respect to any of the properties and
assets of the Seller or requiring or recommending any equipment or
facilities to be installed on or in connection with any of the properties
or assets of the Seller.
8.15 Status of Business.
--------------------
(a) Since October 2, 1998, Business No. 1 and Business No. 2 of the Seller
have been operated only in the ordinary course, and, except as set
forth in the Disclosure Schedule or permitted under Section 2.4
dealing with Excluded Assets, there has not been with respect to
Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0:
(i) Any material change in its condition (financial or other),
assets, liabilities, obligations, business or earnings, except
changes in the ordinary course of business, none of which in the
aggregate has been materially adverse;
(ii) Any material liability or obligation incurred or assumed, or any
material contract, agreement, arrangement, lease (as lessor or
lessee), or
27
other commitment entered into or assumed, on behalf of Business
No. 1 and/or Business No. 2, whether written or oral, except in
the ordinary course of business;
(iii)Any purchase or sale of material assets in anticipation of this
Agreement, or any purchase, lease, sale, abandonment or other
disposition of material assets, except in the ordinary course of
business;
(iv) Any waiver or release of any material rights, except for rights
of nominal value;
(v) Any cancellation or compromise of any material debts owed to
Seller or material claims known by Seller against another person
or entity, except in the ordinary course of business;
(vi) Any damage or destruction to or loss of any physical assets or
property of Seller which materially adversely affects Business
No. 1 and/or Business No. 2 or any of the properties of the
Seller (whether or not covered by insurance);
(vii)Any material changes in the accounting practices, depreciation
or amortization policy or rates theretofore adopted by the
Seller, or any material revaluation or write-up or write-down of
any of its assets;
(viii) Any direct or indirect redemption, purchase or other
acquisition for value by the Seller of its shares, or any
agreement to do so;
(ix) Any material increase in the compensation levels or in the method
of determining the compensation of any of the Seller's officers,
directors, agents or employees, or any bonus payment or similar
arrangement with or for the benefit of any such person, any
increase in benefits expense to the Seller, any payments made or
declared into any profit-sharing, pension, or other retirement
plan for the benefit of employees of the Seller, except in the
ordinary course of business;
(x) Any loans or advances between the Seller and any Shareholder, or
any family member or any associate or Affiliate of the Seller or
of any Shareholder;
(xi) Any material contract canceled or the terms thereof amended or
any notice received with respect to any such contract terminating
or threatening termination or amendment of any such contract;
(xii)Any transfer or grant of any material rights under any leases,
licenses, agreements, or with respect to any trade secrets or
know-how;
(xiii) Any labor trouble or employee controversy materially adversely
affecting Business No. 1 and/or Business No. 2 or assets; or
(xiv)Any dividend or other distribution on or in respect of shares of
its capital stock, except for any distributions made pursuant to
the provisions of Section 2.4 relating to Excluded Assets or S
corporation
28
distributions consistent with prior business practices or
otherwise shown on the Disclosure Schedule.
(b) Seller is not
(i) in violation of any outstanding judgment, order, injunction,
award or decree specifically relating to Business Xx. 0 xxx/xx
Xxxxxxxx Xx. 0, xx
(xx) in violation of any federal, state or local law, ordinance or
regulation which is applicable to Business No. 1 and/or Business
No. 2, except where such violation does not have a materially
adverse effect on Business No. 1 and/or Business No. 2.
Seller has all permits, licenses, orders, approvals, authorizations,
concessions and franchises of any federal, state or local governmental
or regulatory body that are material to or necessary in the conduct of
Business No. 1 and/or Business No. 2, except where failure to have
such permit, license, order, approval, authorization, concession or
franchise does not have a materially adverse effect on Business Xx. 0
xxx/xx Xxxxxxxx Xx. 0. All such permits, licenses, orders, approvals,
concessions and franchises are set forth on the Disclosure Schedule
and are in full force and effect and there is no proceeding, or to the
knowledge of Seller, threatened to revoke or limit any of them.
(c) No claim, litigation, action, investigation or proceeding is pending
or, to the knowledge of Seller, threatened, and no order, injunction
or decree is outstanding, against or relating to Business No. 1 and/or
Business No. 2 or its assets, and Seller does not know of any
information which could result in such a claim, litigation, action,
investigation or proceeding, which, if determined adversely to Seller,
would have a material adverse effect upon Seller's Business Xx. 0
xxx/xx Xxxxxxxx Xx. 0.
(x) At the Closing, Seller shall have accrued or paid in full, to all
employees of Business No. 1 and/or Business No. 2, all wages,
salaries, commissions, bonuses, vacations and other direct
compensation for all services performed by them. To the best of
Seller's Knowledge, Seller is in compliance with all federal, state
and local laws, ordinances and regulations relating to employment and
employment practices at Business No. 1 and/or Business No. 2, and all
employee benefit plans and tax laws relating to employment at Business
No. 1 and/or Business No. 2, except where such non-compliance would
not have a materially adverse effect on Business No. 1 and/or Business
No. 2. There is no unfair labor practice complaint against Seller
relating to Business No. 1 and/or Business No. 2 pending before the
National Labor Relations Board or similar agency or body and, to the
best of Seller's Knowledge, no condition exists that could give rise
to any unfair labor practice complaint. There is no labor strike,
dispute, slowdown or stoppage actually pending or, to the Knowledge of
Seller, threatened against or involving Business No. 1 and/or Business
No. 2. Seller has no labor contracts or collective bargaining
agreements with respect to any of its employees.
29
8.16 Environmental Laws.
-------------------
(a) To the best of Seller's Knowledge, the real estate located at 000 X.
Xxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000, which is leased by
Seller, (Real Estate) has not been used or operated in any fashion
involving producing, handling and disposing of chemicals, toxic
substances, wastes and effluent materials, x-rays or other materials
or devices in material violation of any laws, rules, regulations or
orders, and to the best of Seller's Knowledge, the Real Estate is in
material compliance with applicable laws, regulations, ordinances,
decrees and orders arising under or relating to health, safety, and
environmental laws and regulations, including without limitation the
Federal Occupation and Safety Health Act, 29 U.S.C. 651, et seq.;
Federal Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
6901, et seq.; Federal Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601, et seq.;
the Federal Clean Air Act, 42 U.S.C. 2401, et seq.; the Federal Clean
Water Act, 33 U.S.C. 1251, et seq.; and all state and local laws that
correspond therewith or supplement such laws.
(b) To the best of Seller's Knowledge, the Real Estate has not been
operated, in violation of any laws, rules, regulations or orders, so
as to involve or create any surface impoundments, incinerators, land
fills, waste storage tanks, waste piles, or deep well injection
systems or for the purpose of storage, treatment or disposal of a
hazardous waste as defined by RCRA or hazardous substance, pollutant
or contaminate as defined by CERCLA and, to the best of Seller's
Knowledge, no acts have been committed that would make the Real Estate
or any part thereof subject to remedial action under RCRA or CERCLA or
corresponding state or local laws.
(c) To the best of Seller's Knowledge, there have not been, are not now
and as of the Closing Date, there will be no solid waste, hazardous
waste, hazardous substance, toxic substance, toxic chemicals,
pollutants or contaminants, underground storage tanks, purposeful
dumps, or accidental spills in, on or about the Real Estate or any of
the assets of the Seller, whether real or personal, owned or leased,
or stored on any real property owned or leased by the Seller or by the
Seller's lessees, licensees, invites, or predecessors.
(d) Seller is not engaged in, and to the best of Seller's Knowledge and
belief, is not threatened with any litigation, or governmental or
other proceeding which may give rise to any claim against the Real
Estate. Specifically, there are no pending suits, charges, actions,
governmental investigations, or other proceedings, involving, directly
or indirectly without limitation, the laws, statutes and regulations
set forth in subsection (a), above, whether initiated by a third party
or by Seller and there are none, to the best of Seller's Knowledge,
threatened against or relating to or involving the Real Estate or the
transactions contemplated by this Agreement. Seller is not in default
with respect to any order, writ, injunction or decree of any federal,
state, local or foreign court, department, agency or instrumentality.
(e) The Disclosure Schedule will list all waste disposal sites, dump sites
and other areas either on the Real Estate or offsite at which
hazardous or toxic waste generated by the Seller has been disposed (in
each case identifying
30
such waste) and it will specifically identify each such site or area
which is or has been included in any published federal, state or local
(domestic or foreign) superfund or other list of hazardous or toxic
waste sites or areas.
(f) To the best of Seller's Knowledge, Seller has obtained all permits,
and licenses and other authorizations required by all environmental
laws; and all of such permits, licenses and other authorizations are
in full force and effect as of the date hereof. A true and correct
list of all such permits, licenses and other authorizations is set
forth in the Disclosure Schedule.
8.17 Certain Employees
------------------
(a) Each of the following is included in the list of agreements set forth
in the Disclosure Schedule: all collective bargaining agreements,
employment and consulting agreements, bonus plans, deferred
compensation plans, employee pension plans or retirement plans,
employee profit-sharing plans, employee stock purchase and stock
option plans, hospitalization insurance, and other plans and
arrangements providing for employee benefits of employees of the
Seller.
(b) The Disclosures Schedule contains a true, complete and accurate list
of the following: the names, positions, and compensation of the
present employees of the Seller, together with a statement of the
annual salary payable to salaried employees and a summary of the
bonuses and description of agreements for additional compensation and
other like benefits, if any, paid or payable to such persons for the
period set forth in the Disclosure Schedule. Except as listed in the
Disclosure Schedule, to the best of Seller's Knowledge, all employees
of Seller are employees--at--will.
(c) Seller has no retired employees who are receiving or are entitled to
receive any payments, health or other benefits from Seller.
8.18 Payments to Employees.
-----------------------
All accrued obligations of Seller relating to employees and agents of
Seller, whether arising by operation of law, by contract, or by past
service, for payments to trusts or other funds or to any governmental
agency, or to any individual employee or agent (or his heirs, legatees, or
legal representatives) with respect to unemployment compensation benefits,
profit sharing or retirement benefits, or social security benefits have
been paid or accrued by Seller. All obligations of Seller as an employer or
principal relating to employees or agents, whether arising by operation of
law, by contract, or by past practice, for vacation and holiday pay,
bonuses, and other forms of compensation which are or may become payable to
such employees or agents, have been paid or will be paid or accrued by
Seller.
8.19 Change of Corporate Name.
---------------------------
At the Closing, Seller, if requested by either Purchaser No. 1 and/or
Purchaser No. 2, will adopt and file with the Secretary of State of Georgia
an Amendment to the Charter of Seller changing the name of Seller to a name
substantially dissimilar to Systems Atlanta Commercial Systems, Inc. and
Seller shall also execute a Consent for Use of Similar Name form, as set
forth in the
31
Disclosure Schedule, granting to Purchaser No. 1 and/or Purchaser No. 2 (as may
be agreed by such parties) the use of the name Systems Atlanta, Inc.
8.20 Brokers and Finders.
---------------------
Except as set forth in the Disclosure Schedule, no broker, finder or other
person or entity acting in a similar capacity has participated on behalf of
Seller in bringing about the transaction herein contemplated, or rendered
any service with respect thereto or been in any way involved therewith.
8.21 Preservation of Organization.
------------------------------
Except as set forth on the Disclosure Schedule, since December 31, 1998,
the Seller has kept intact Business No. 1 and/or Business No. 2 and
organization of the Seller; retained the services of all the Seller's
material employees and agents, retained the Seller's arrangements with the
manufacturers of the products distributed by Seller in the same manner as
conducted prior to such date, and engaged in no transaction other than in
the ordinary course of Seller's Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0.
8.22 Absence of Certain Business Practices.
-----------------------------------------
Neither Seller, nor, to Seller's Knowledge, any officer, employee or agent
of the Seller, nor any other Person acting on its behalf, has, directly or
indirectly, within the past five years given or agreed to give any gift,
bribe, rebate or kickback or otherwise provide any similar benefit to any
customer, supplier, governmental employee or any other Person who is or may
be in a position to help or hinder Seller or Business No. 1 and/or Business
No. 2 (or assist Seller in connection with any actual or proposed
transaction relating to Business No. 1 and/or Business No. 2 or any other
business previously operated by Company) (i) which subjected or might have
subjected Seller to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) which if not given in the past,
might have had a material adverse effect on Business Xx. 0 xxx/xx Xxxxxxxx
Xx. 0, (xxx) which if not continued in the future, might have a material
adverse effect on Business No. 1 and/or Business No. 2 or subject Seller to
suit or penalty in any private or governmental litigation or proceeding,
(iv) for any of the purposes described in Section 162(c) of the Code or (v)
for the purpose of establishing or maintaining any concealed fund or
concealed bank account.
8.23 Suppliers.
---------
The Disclosure Statement sets forth the names of and description of
contractual arrangements (whether or not binding or in writing) with the
ten (10) largest suppliers of the Seller by sales or services in dollars.
Assuming that Purchaser No.1 and/or Purchaser No. 2, as applicable,
continues to conduct Business No. 1 and/or Business No. 2 in the ordinary
course consistent with Seller's prior practices generally and specifically
with respect to Seller's current suppliers, Seller has no direct knowledge
that any of the current suppliers of the Seller will, or intend to, (a)
cease doing business with the Seller; or (b) materially alter the amount of
business they are currently doing with the Seller; or (c) not do business
with Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 after the Closing.
32
8.24 Product Liability Claims.
--------------------------
To the best of Seller's Knowledge, there are no material product liability
claims against the Seller, either potential or existing, which are not
fully covered by product liability insurance coverage with a responsible
company which, if determined adversely to Seller, would have a material
adverse effect upon Seller's Business Xx. 0 xxx/xx Xxxxxxxx Xx. 0.
8.25 Employee Benefit Plans.
------------------------
For the purposes of this Section 8.25, "Seller" shall include all persons
who are members of a controlled group, a group of trades or businesses
under common control, or an affiliated service group (within the meanings
of Sections 414(b), (c) or (m) of the Code), of which the Seller is a
member.
(a) The Employee Benefit Plans presently maintained by the Seller or to
which the Seller has contributed within the past six (6) years,
including any terminated or frozen plans which have not yet
distributed all plan assets, are fully set forth in the Disclosure
Schedule. For purposes of this provision, the term "Employee Benefit
Plan" shall mean:
(i) A Welfare Benefit Plan as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
established for the purpose of providing for its participants or
their beneficiaries, through the purchase of insurance or
otherwise, medical, surgical, or hospital care or benefits, or
benefits in the event of sickness, accident, disability, death or
unemployment (including any plan or program of severance pay), or
vacation benefits, apprenticeship or other training programs, or
day care centers, scholarship funds, or prepaid legal services,
or any benefit described in Section 302(c) of the Labor
Management Relations Act of 1947;
(ii) An Employee Pension Benefit Plan as defined in Section 3(2) of
ERISA established or maintained by the Seller for the purpose of
providing retirement income to employees or for the purpose of
providing deferral of income by employees for periods extending
to the termination of covered employment or beyond; and
(iii)Any other plan or arrangement not covered by ERISA but which
provides benefits to employees or former employees and results in
an accrued liability on the part of the Seller either by contract
or by operation of law.
(b) With respect to any such Employee Benefit Plans, the Seller represents
and warrants that, to the best of Seller's Knowledge;
(i) The Seller has not, with respect to any Employee Benefit Plans,
engaged in any prohibited transaction, as such term is defined in
Section 4975 of the Code or Section 406 of ERISA.
(ii) The Seller has, with respect to any Employee Benefit Plans,
substantially complied with all reporting and disclosure
requirements required by Title I, Subtitle B, Part 1 of ERISA.
33
(iii)There was no accumulated funding deficiency (as defined in
section 302 of ERISA and Section 412 of the Code) with respect to
any Employee Pension Benefit Plan which is a defined benefit
pension plan, whether or not waived, as of the last day of the
most recent fiscal year of the plans ending prior to the date of
this Agreement.
(iv) Except as described on the Disclosure Schedule, there are no
contributions due to any Employee Pension Benefit Plan for the
most recent fiscal year of the plans ending prior to the date of
this Agreement and the Seller's Financial Statements reflect any
liability of the Seller to make contributions to the Employee
Pension Benefit Plans.
(v) No material liability to the Pension Benefit Guaranty Corporation
("PBGC") has been asserted with respect to any Employee Pension
Benefit Plan which is a defined benefit pension plan.
(vi) There has been no reportable event as described in Section
4043(b) of ERISA since the effective date of Section 4043 of
ERISA with respect to any Employee Pension Benefit Plan which is
a defined benefit plan.
(vii)Except for claims for benefits by participants and beneficiaries
in the normal course of events, to the best of Seller's
knowledge, there are no claims, pending or threatened, by any
individual or Governmental Entity, which, if decided adversely,
would have a material adverse effect upon the financial condition
of any Employee Benefit Plan, the plan administrator of any
Employee Benefit Plan, or the Seller.
(viii) The Seller has made available for inspection all annual reports
for the Seller filed on Internal Revenue Service ("IRS") Form
5500 or 5500C, all reports for the Seller prepared by an actuary
for the last three plan years, the plan and trust documents and
the Summary Plan Description, as amended, for each Employee
Benefit Plan and the last filed PBGC1 Form (if applicable) for
each Employee Benefit Plan, with respect to any Employee Benefit
Plans other than multi-employer plans (within the meaning of
Section 3(37) of ERISA), and other reports filed with the PBGC
during the last three plan years.
(ix) All Employee Pension Benefit Plans are intended to be qualified
retirement plans under the Code. The IRS has issued, and the
Seller has made available for inspection, one or more
determination letters with respect to the qualification of all
Employee Pension Benefit Plans stating that the IRS has made a
favorable determination as to the qualification of such Plan
under Section 401(a) of the Code, and that continued
qualification of the Plan in its present form will depend upon
its effect in operation. The time for adoption of any amendments
required by changes in the Code since such determination letters
were issued, or changes required by the IRS as a condition for
continued qualification of such plans has not expired, or did not
expire
34
without such amendments being made. Such plans are now, and
always have been, established in writing and maintained and
operated in accordance with the plan documents, ERISA, the Code,
and all other applicable laws. Except as described in the
Disclosure Schedule, such Plans are now and always have been,
established in writing and maintained and operated substantially
in accordance with the plan documents, ERISA, the Code and all
other applicable laws, in all material respects.
(x) There is no liability arising from the termination or partial
termination of any Employee Benefit Plan, except for liabilities
as to which adequate reserves are reflected on the Financial
Statements, and there exists no condition presenting a material
risk of such liability.
(xi) The Seller has timely made any contributions it is obligated to
make to any multi-employer plan within the meaning of Section
3(37) of ERISA. The Seller has no liability arising as a result
of withdrawal from any multi-employer plan, no such withdrawal
liability has been asserted and no such withdrawal liability will
be asserted with regard to any withdrawal or partial withdrawal
on or before the date of this Agreement.
8.26 Assets Necessary to the Business.
------------------------------------
The Seller owns, leases or holds under license all assets and properties
(tangible and intangible) necessary to carry on its Business No. 1 and
Business No. 2 and operations as presently conducted and as shown on the
Financial Statements. Such assets and properties are all of the assets and
properties necessary to carry on Seller's Business No. 1 and Business No. 2
as presently conducted and Shareholders (other than through their ownership
of stock in the Seller and/or as set forth on the Disclosure Schedule) nor
any member of their family owns or leases or has any interest in any assets
or properties presently being used to carry on Business No. 1 or Business
No. 2 of Seller other than the joint use of the trade name Systems Atlanta.
8.27 Transactions with Affiliates.
------------------------------
Except as disclosed on the Disclosure Schedule, there is no lease,
sublease, contract, agreement or other arrangement of any kind whatsoever
entered into by Seller and any Shareholder or Affiliate.
8.28 Territorial Restrictions.
-------------------------
Except as described in the Disclosure Schedule, Seller is not restricted by
any written agreement or understanding with any other Person from carrying
on the Business No. 1 and/or Business No. 2 anywhere in the world. Neither
Purchaser nor any of its Affiliates will, as a result of its acquisition of
Purchased Assets No. 1 and/or Purchased Assets No. 2 become restricted in
carrying on Business No. 1 and/or Business No. 2 anywhere in the world as a
result of any contract or other agreement to which Seller is a party or by
which it is bound.
8.29 Full Disclosure.
----------------
None of the representations and warranties made by the Seller herein, or
made on its behalf, including any disclosures made in the Disclosure
Schedule, contains or will contain, to the best of Seller's knowledge, any
untrue statement of material fact or omits or will omit any material fact.
35
9.
REPRESENTATIONS AND WARRANTIES
------------------------------
OF PURCHASER XX. 0 XXX XXXXXXXXX XX. 0
--------------------------------------
Purchaser No. 1 hereby represents and warrants to Seller that the following
statements are true and correct as of the date hereof.
9.1 Organization, Good Standing and Power of Purchaser No. 1.
----------------------------------------------------------------
(a) Purchaser No. 1 is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
full corporate power and lawful authority to execute, deliver and
perform this Agreement and conduct Business No. 1 of Seller currently
conducted by Seller in each of the jurisdictions in which Seller
currently conducts its Business No. 1, which are the only
jurisdictions where the failure to be so qualified by Purchaser No. 1
will have a material adverse effect on the business prospects or
financial condition of Purchaser No. 1.
9.2 Status of Agreements.
----------------------
(a) All requisite corporate action (including action of its Board of
Directors) to approve, execute, deliver and perform this Agreement and
each of the other agreements, instruments and other documents to be
delivered by and on behalf of Purchaser No. 1 ("Other Purchaser No. 1
Documents") in connection herewith has been taken by Purchaser No. 1.
This Agreement has been duly and validly executed and delivered by
Purchaser No. 1 and constitutes the valid and binding obligation of
Purchaser No. 1 enforceable in accordance with its terms. All Other
Purchaser No. 1 Documents in connection herewith will, when executed
and delivered, constitute the valid and binding obligation of
Purchaser No. 1 enforceable in accordance with their respective terms.
(b) No authorization, approval, consent or order of, or registration,
declaration or filing with, any court, governmental body or agency or
other public or private body, entity or person is required (except for
Purchaser No. 1's primary lender, Deutsche Financial Services Company,
whose consent shall be obtained prior to Closing) in connection with
the execution, delivery or performance of this Agreement or any Other
Purchaser No. 1 Documents in connection herewith.
(c) Neither the execution, delivery nor performance of this Agreement or
any of the Other Purchaser No. 1 Documents in connection herewith does
or will:
(i) conflict with, violate or result in any breach of any judgment,
decree, order, statute, ordinance, rule or regulation applicable
to Purchaser No. 1;
(ii) conflict with, violate or result in any breach of any agreement
or instrument to which Purchaser is a party or by which Purchaser
No. 1 or any of Purchaser's assets or properties is bound, or
constitute a default
36
thereunder or give rise to a right of acceleration of an
obligation of Purchaser No. 1; or
(iii)conflict with or violate any provision of the Articles of
Incorporation or By-Laws of Purchaser No. 1.
9.3 Brokers and Finders.
---------------------
No broker, finder or other person or entity acting in a similar capacity
has participated on behalf of Purchaser No. 1 in bringing about the
transaction herein contemplated, or rendered any service with respect
thereto or been in any way involved therewith.
Purchaser No. 2 hereby represents and warrants to Seller that the following
statements are true and correct as of the date hereof.
9.4 Organization, Good Standing and Power of Purchaser No. 2.
----------------------------------------------------------------
(a) Purchaser No. 2 is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has
full corporate power and lawful authority to execute, deliver and
perform this Agreement and conduct Business No. 2 of Seller currently
conducted by Seller in each of the jurisdictions in which Seller
currently conducts its Business No. 2, which are the only
jurisdictions where the failure to be so qualified by Purchaser No. 2
will have a material adverse effect on the business prospects or
financial condition of Purchaser No. 2.
9.5 Status of Agreements.
----------------------
(a) All requisite corporate action (including action of its Board of
Directors) to approve, execute, deliver and perform this Agreement and
each of the other agreements, instruments and other documents to be
delivered by and on behalf of Purchaser No. 2 ("Other Purchaser No. 2
Documents") in connection herewith has been taken by Purchaser No. 2.
This Agreement has been duly and validly executed and delivered by
Purchaser No. 2and constitutes the valid and binding obligation of
Purchaser No. 2 enforceable in accordance with its terms. All Other
Purchaser No. 2 Documents in connection herewith will, when executed
and delivered, constitute the valid and binding obligation of
Purchaser No. 2 enforceable in accordance with their respective terms.
(b) No authorization, approval, consent or order of, or registration,
declaration or filing with, any court, governmental body or agency or
other public or private body, entity or person is required (except for
Purchaser No. 2's primary lender, Deutsche Financial Services Company,
whose consent shall be obtained prior to Closing) in connection with
the execution, delivery or performance of this Agreement or any Other
Purchaser No. 2 Documents in connection herewith.
(c) Neither the execution, delivery nor performance of this Agreement or
any of the Other Purchaser No. 2 Documents in connection herewith does
or will:
37
(i) conflict with, violate or result in any breach of any judgment,
decree, order, statute, ordinance, rule or regulation applicable
to Purchaser No. 2;
(ii) conflict with, violate or result in any breach of any agreement
or instrument to which Purchaser No. 2 is a party or by which
Purchaser No. 2 or any of Purchaser's assets or properties is
bound, or constitute a default thereunder or give rise to a right
of acceleration of an obligation of Purchaser No. 2; or
(iii)conflict with or violate any provision of the Articles of
Incorporation or By-Laws of Purchaser No. 2.
9.6 Brokers and Finders.
---------------------
No broker, finder or other person or entity acting in a similar capacity
has participated on behalf of Purchaser No. 2 in bringing about the
transaction herein contemplated, or rendered any service with respect
thereto or been in any way involved therewith.
9.7 MD& A UPDATE
--------------
Since January 5, 1999, there has been no material adverse change in the
results of operations or financial condition of Purchaser No. 1, nor are
there any demands, commitments, events or uncertainties known to Purchaser
No. 1 which No. 1 which could affect Purchaser No. 1s and/or Purchaser No.
2's liquidity, capital resources, or results or operations as of the date
hereof (other than those previously disclosed by Purchaser in its periodic
reports filed with the Securities and Exchange Commission) that would
require discussion in Managements Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) prepared in accordance with Item
303 of Regulation S-K promulgated by the Securities and Exchange Commission
if such MD&A were required to be updated through the date hereof.
9.8 Full Disclosure
----------------
None of the representations and warranties made by Purchaser No. 1 herein
contains or will contain, to the best of Purchaser No. 1's knowledge, any
untrue statement of material fact or omits or will omit any material fact.
None of the representations and warranties made by Purchaser No. 2 herein
contains or will contain, to the best of Purchaser No. 2's knowledge, any
untrue statement of material fact or omits or will omit any material fact.
38
10.
SURVIVAL OF AND RELIANCE UPON
REPRESENTATIONS, WARRANTIES AND AGREEMENTS; INDEMNIFICATION
-----------------------------------------------------------
10.1 Survival of Representations and Warranties.
----------------------------------------------
The parties acknowledge and agree that all representat-ions, warranties and
agreements contained in this Agreement or in any agreement, instrument,
exhibit, certificate, schedule or other document delivered in connection
herewith, shall survive the Closing and continue to be binding upon the
party giving such representation, warranty or agreement and shall be fully
enforceable to the extent provided for in Sections 10.3 and 10.4 hereof, at
law or in equity, for the period beginning on the date of Closing and
ending two (2) years thereafter, except for the representations, warranties
and agreements designated and identified in Sections 3.1, 3.2, 3.3, 4.2,
8.3, 8.11, 8.12, 8.13, 8.16, 9.2 and 9.4 which shall survive the Closing
and shall terminate in accordance with the statute of limitations governing
written contracts in the State of Georgia and Exhibits H and H-1 and I,
I-1, I-2, I-3, I-4, I-5, I-6, I-7, I-8 and I-9, which shall terminate as
provided therein.
10.2 Reliance Upon and Enforcement of Representations, Warran-ties and
---------------------------------------------------------------------------
Agreements.
----------
(a) Seller hereby agrees that, notwithstanding any right of Purchaser No.
1 and/or Purchaser No. 2 to fully investigate the affairs of Seller,
and notwithstanding knowledge of facts determined or determinable by
Purchaser No. 1 and/or Purchaser No. 2 pursuant to such investigation
or right of investigation, Purchaser No. and/or Purchaser No. 2 have
the right to rely fully upon the representations, warranties and
agreements of Seller contained in this Agreement and upon the accuracy
of any document, certificate or exhibit given or delivered to
Purchaser No. 1 and/or Purchaser No. 2 pursuant to the provisions of
this Agreement.
(b) Purchaser No. 1 and/or Purchaser No. 2 hereby agree that,
notwithstanding any right of Seller to fully investigate the affairs
of Purchaser No. 1 and/or Purchaser No. 2, and notwithstanding
knowledge of facts determined or determinable by Seller pursuant to
such investigation or right of investigation, Seller have the right to
rely fully upon the representations, warranties and agreements of
Purchaser No. 1 and/or Purchaser No. 2 contained in this Agreement and
upon the accuracy of any document, certificate or exhibit given or
delivered to Seller pursuant to the provisions of this Agreement.
10.3 Indemnification by Seller and Shareholder.
---------------------------------------------
Provided Purchaser No. 1 and/or Purchaser No. 2 make a written claim for
indemnification against Seller and/or Shareholders within any applicable
survival period specified in Section 10.1 and subject to the limitations
set forth in Section 10.6, Seller and Shareholders (jointly and severally),
shall indemnify Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 against and hold
them harmless from:
(i) any and all loss, damage, liability or deficiency resulting from or
arising out of any inaccuracy in or breach of any representation,
warranty, covenant, or obligation made or incurred by Seller herein or
in any other agreement, instrument or document delivered by or on
behalf of Seller pursuant to the provisions of the Agreement;
39
(ii) any imposition (including by operation of law) or attempted imposition
by a third party upon Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0 of any
liability of Seller which Purchaser No. 1 has not specifically agreed
to assume pursuant to Section 3.1 of this Agreement and/or which
Purchaser No. 2 has not specifically agreed to assume pursuant to
Section 3.2 of this Agreement;
(iii)any liability (except for any Assumed Liabilities No. 1 or Assumed
Liabilities No. 2 described in Sections 3.1 and 3.2, respectively) or
other obligation incurred by or imposed upon Purchaser Xx. 0 xxx/xx
Xxxxxxxxx Xx. 0 resulting from the failure of the parties to comply
with the provisions of any law relating to bulk transfers which may be
applicable to the transaction herein contemplated;
(iv) any and all costs and expenses (including reasonable legal and
accounting fees) related to any of the foregoing.
Except as otherwise provided in this Agreement, nothing in this Section
10.3 shall be construed to limit the amount to which, or the time by which,
by reason of offset or otherwise, that Purchaser No. 1 and/or Purchaser No.
2 may recover from Seller or any Shareholder pursuant to this Agreement
resulting from Seller's or any Shareholders breach or violation of any
representation, warranty, covenant or agreement contained herein.
Any amounts to which Purchaser No. 1 and/or Purchaser No. 2, their
successors or assigns, is entitled to indemnification pursuant to the
provisions of this Section, shall first be offset against the amount
payable to Seller under the applicable subordinated promissory note.
Provided, however, the offset in any one year may not exceed the aggregate
amount of principal and interest due on said applicable subordinated
promissory note for said year.
10.4 Indemnification by Purchaser Xx. 0 xxx/xx Xxxxxxxxx Xx. 0.
-----------------------------------------------------------------
Provided Shareholders and Seller make a written claim for indemnification
against Purchaser No. 1 and/or Purchaser No. 2, as applicable, within any
applicable survival period specified in Section 10.1 and subject to the
limitations set forth in Section 10.6, Purchaser No. 1 and/or Purchaser No.
2, as applicable, shall indemnify Seller and Shareholders against and hold
it harmless from any and all loss, damage, liability or deficiency
resulting from or arising out of: (i) any Assumed Liabilities of Purchaser
No. 1 or any Assumed Liabilities of Purchaser No. 2 , as applicable; (ii)
any liability of Purchaser No. 1 and/or Purchaser No. 2 arising out of
Purchaser No. 1's and/or Purchaser No. 2's operations subsequent to the
Closing (except to the extent such liability is the result of a breach of a
covenant or warranty of Seller hereunder); (iii) any inaccuracy in or
breach of any representation, warranty, covenant or obligation made or
incurred by Purchaser No. 1 and/or Purchaser No. 2, as applicable herein or
in any other agreement, instrument, or document delivered by or on behalf
of Purchaser No. 1 and/or Purchaser No. 2 pursuant to the provisions of
this Agreement; and (iv) any and all related costs and expenses (including
reasonable legal and accounting fees). Except as otherwise provided herein,
nothing in this Section 10.4 shall be construed to limit the amount to
which, or the time by which, by reason of offset or otherwise, that Seller
may recover from Purchaser No. 1 and/or Purchaser No. 2 pursuant to this
Agreement resulting from its breach or violation of any representation,
warranty, covenant or agreement contained herein.
40
10.5 Notification of and Participation in Claims.
------------------------------------------------
(a) No claim for indemnification shall arise until notice thereof is given
to the party from whom indemnity is sought. Such notice shall be sent
within ten (10) days after the party to be indemnified has received
notification of such claim, but failure to notify the indemnifying
party shall in no event prejudice the right of the party to be
indemnified under this Agreement, unless the indemnifying party shall
be prejudiced by such failure and then only to the extent of such
prejudice. In the event that any legal proceeding shall be instituted
or any claim or demand is asserted by any third party in respect of
which Seller/Shareholders on the one hand, or Purchaser Xx. 0 xxx/xx
Xxxxxxxxx Xx. 0, as applicable, on the other hand, may have an
obligation to indemnify the other, the party asserting such right to
indemnity (the "Party to be Indemnified") shall give or cause to be
given to the party from whom indemnity is sought (the "Indemnifying
Party") written notice thereof and the Indemnifying Party shall have
the right, at its option and expense, to participate in the defense of
such proceeding, claim or demand, but not to control the defense,
negotiation or settlement thereof, which control shall at all times
rest with the Party to be Indemnified, unless the Indemnifying Party
irrevocably acknowledges in writing full and complete responsibility
for and agrees to provide indemnification of the Party to be
Indemnified, in which case such Indemnifying Party may assume such
control through counsel of its choice and at its expense. In the event
the Indemnifying Party assumes control of the defense, the
Indemnifying Party shall not be responsible for the legal costs and
expenses of the Party to be Indemnified in the event the Party to be
Indemnified decides to join in such defense. The parties hereto agree
to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such third party legal proceeding,
claim or demand.
(b) If the Party to be Indemnified is also the party controlling the
defense, negotiation or settlement of any matter, and if the Party to
be Indemnified determines to compromise the matter, the Party to be
Indemnified shall immediately advise the Indemnifying Party of the
terms and conditions of the proposed settlement. If the Indemnifying
Party agrees to accept such proposal, the Party to be Indemnified
shall proceed to conclude the settlement of the matter, and the
Indemnifying Party shall immediately indemnify the Party to be
Indemnified pursuant to the terms of Sections 10.3 and 10.4 hereunder.
If the Indemnifying Party does not agree within fourteen (14) days to
accept the settlement (said 14-day period to begin on the first
business day following the date such party receives a complete copy of
the settlement proposal), the Indemnifying Party shall immediately
assume control of the defense, negotia-tion or settlement thereof, at
that Indemnifying Party's expense. Thereafter, the Party to be
Indemnified shall be indemnified in the entirety for any liability
arising out of the ultimate defenses, negotiation or settlement of
such matter.
(c) If the Indemnifying Party is the party controlling the defense,
negotiation or settlement of any matter, and the Indemnifying Party
determines to compromise the matter, the Indemnifying Party shall
immediately advise the Party to be Indemnified of the terms and
conditions of the proposed settlement. If the Party to be Indemnified
agrees to accept such proposal, the Indemnifying Party shall proceed
to conclude the settlement of the matter and immediately indemnify the
Party to be Indemnified pursuant to the terms of Sections 10.3 or
41
10.4 hereunder. If the Party to be Indemnified does not agree within
fourteen (14) days to accept the settlement (said 14-day period to
begin on the first business day following the date such party receives
a complete copy of the settlement proposal), the Party to be
Indemnified shall immediately assume control of the defense,
negotiation or settlement thereof, at the Party to be Indemnified's
expense. If the final amount paid to resolve the claim is less than
the amount of the original proposed settlement made by the
Indemnifying Party, then the Party to be Indemnified shall receive
such indemnification pursuant to Sections 10.3 or 10.4 hereof,
including any and all expenses incurred by the Party to be Indemnified
incurred in connection with the defense, negotiation or settlement of
such matter up to the maximum of the original proposed settlement. If
the amount finally paid to resolve the claim is equal to or greater
than the amount of the original proposed settlement proposed by the
Indemnifying Party, then the Indemnifying Party shall provide
indemnification pursuant to Sections 10.3 and 10.4 for the amount of
the original settlement proposal submitted by the Indemnifying Party,
and the Party to be Indemnified shall be responsible for all amounts
in excess of the original settlement proposal submitted by the
Indemnifying Party and all costs and expenses incurred by the Party to
be Indemnified in connection with such defense, negotiation or
settlement.
10.6 Limitation on Liability.
-------------------------
(a) Notwithstanding anything contained herein to the contrary, no claims
for indemnification shall be made by Purchaser Xx. 0 xxx/xx Xxxxxxxxx
Xx. 0 against the Seller and Shareholders until such time as all
claims hereunder, net of income tax benefit realized and/or realizable
and any applicable insurance coverage, if any, by Purchaser No. 1
and/or Purchaser No. 2, exceed Twenty Thousand Dollars ($20,000.00) in
the aggregate and then indemnification shall be made only to the
extent that such claim or claims exceed Twenty Thousand Dollars
($20,000.00) in the aggregate. In addition, notwithstanding anything
contained herein to the contrary, the maximum aggregate liability that
the Seller and Shareholders may be collectively required to pay
Purchaser No. 1 and Purchaser No. 2 under this Agreement shall be
limited to an amount equal to Eight Hundred Nineteen Thousand Five
Hundred Thirty-Five Dollars ($819,535.00).
(b) For purposes of this Section 10.6 ($20,000.00 basket amount), the
amount of any indemnification claim shall be reduced by the effect of
any income tax benefit realized by Purchaser Xx. 0 xxx/xx Xxxxxxxxx
Xx. 0. For purposes hereof, the marginal income tax rate of 40% shall
be utilized.
(c) Notwithstanding anything contained herein to the contrary, in the
event any Excluded Liability would attach to Purchased Assets No. 1
and/or Purchased Assets No. 2 under any successor liability statute or
otherwise, notwithstanding the fact that such liability was an
Excluded Liability, Seller and Shareholders shall be jointly and
severally responsible for the payment of such Excluded Liability and
the lien on Purchased Assets No. 1 and/or Purchased Assets No. 2
(which would represent a breach of certain representations under the
Agreement) related to such liability.
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11.
THE CLOSING
-----------
11.1 Date, Time and Place of Closing.
------------------------------------
Consummation of the transactions contemplated hereby (the "Closing") shall
take place on May 6, 1999 (the "Closing Date"), at 10:00 a.m. EDT at the
offices of Xxxxxxxxx & Dreidame, 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx,
Xxxx 00000, or on such other Closing Date, or at such other time and/or
place as the parties may mutually agree upon.
11.2 Conditions Precedent to Purchaser No. 1's and Purchaser No. 2's
---------------------------------------------------------------------------
obligations.
-----------
The obligation of Purchaser No. 1 and/or Purchaser No. 2 to perform in
accordance with this Agreement and to consummate the transactions herein
contemplated is subject to the satisfaction of the following conditions at
or before the Closing:
(a) Seller shall have complied with and performed all of the
representations, warranties, agreements and covenants hereunder
required to be performed by it prior to or at the Closing;
(b) There shall be no pending or threatened legal action which, if
successful, would prohibit consummation or require substantial
rescission of the transactions contemplated by this Agreement;
(c) The business, aggregate properties and operations of Seller shall not
have been materially adversely affected as a result of any fire,
accident or other casualty or any labor disturbance or act of God or
the public enemy, and there shall otherwise have been no material
adverse change to the business, aggregate properties, or operations of
Seller since December 31, 1998;
(d) Seller shall have delivered to Purchaser No. 1 and/or Purchaser No. 2,
as applicable, at or before the Closing, the following documents, all
of which shall be in form and substance reasonably acceptable to
Purchaser No. 1 and Purchaser No. 2 and its counsel:
(i) The instruments of transfer required by Sections 2.6 and 2.7;
(ii) Releases (or copies thereof) of all liens, claims, charges,
encumbrances, security interests and restrictions on Purchased
Assets No. 1 and Purchased Assets No. 2 necessary to provide
Purchaser No. 1 with good title to each of the Purchased Assets
No. 1 at the Closing and to provide Purchaser No. 2 with good
title to each of the Purchased Assets no. 2 at the Closing.
(iii)Certified copies of the corporate actions taken by the Board of
Directors and Shareholders of Seller authorizing the execution,
delivery and performance of this Agreement;
(iv) Certificates of Existence for Seller from the Secretary of State
of Georgia dated no earlier than fifteen (15) days prior to
Closing;
43
(v) Seller shall have entered into the Subordination Agreement in the
form attached hereto as Exhibits D and F;
(vi) Seller and each Shareholder shall have entered into the
non-competition agreements as set forth in Exhibits I, X-0, X-0,
X-0, X-0, X-0, I-6, I-7, I-8 and I-9.
(vii)X. Xxxxxx and X. Xxxxxx shall have entered into his respective
Employment Agreement set forth in Exhibits H and H-1.
(e) Seller will adopt and file with the Secretary of State of Georgia an
Amendment to the Charter of Seller changing the name of Seller to a
name substantially dissimilar to Systems Atlanta Commercial Systems,
Inc. and Seller shall execute a Consent for Use of Similar Name form
as set forth in Section 8.19.
(f) Purchaser No. 1 and Purchaser No. 2 shall have received assurances in
form and substance satisfactory to it (that may include insurance
certificates) that Seller has made all provisions necessary under
applicable law, with regard to an employer's obligation to provide for
a continuation of health insurance and other benefits of any employee,
who is not employed by Seller following termination of employment.
11.3 Conditions Precedent to Seller's Obligations.
------------------------------------------------
The obligation of Seller to perform in accordance with this Agreement and
to consummate the transactions herein contemplated is subject to the
satisfaction of the following conditions at or before the Closing:
(a) Performance by Purchaser No. 1 and Purchaser No. 2 of all of the
representa-tions, warranties, agreements and covenants to be performed
by it at or before the Closing;
(b) There shall be no pending or threatened legal action which, if
successful, would prohibit consummation or require substantial
rescission of the transactions contemplated by this Agreement;
(c) Purchaser No. 1 shall deliver to Seller at or before the Closing the
following documents, all of which shall be in form and substance
acceptable to Seller and its counsel:
(i) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to Seller at the Closing pursuant to
Section 4.3(a) hereof;
(ii) Assumption of Liabilities Agreement under which Purchaser No. 1
assumes the Liabilities set forth in Section 3.1;
(iii) A promissory note as set forth in Section 4.3(c);
(iv) Certified copies of the corporate actions taken by Purchaser No.
1 authorizing the execution, delivery and performance of this
Agreement;
44
(v) Certificate of Good Standing for Purchaser No. 1 from the
Secretary of State of Delaware dated no earlier than fifteen (15)
days prior to the date of Closing; and
(d) Purchaser No. 2 shall deliver to Seller at or before the Closing the
following documents, all of which shall be in form and substance
acceptable to Seller and its counsel:
(i) A certified or bank cashier's check or wire transfer for the
aggregate amount to be paid to Seller at the Closing pursuant to
Section 4.4(a) hereof;
(ii) Assumption of Liabilities Agreement under which Purchaser No. 2
assumes the Liabilities set forth in Section 3.2;
(iii) A promissory note as set forth in Section 4.4(c);
(iv) Certified copies of the corporate actions taken by Purchaser No.
2 authorizing the execution, delivery and performance of this
Agreement;
(v) Certificate of Good Standing for Purchaser No. 2 from the
Secretary of State of Delaware dated no earlier than fifteen (15)
days prior to the date of Closing;
(e) Purchaser No. 1 shall have entered into the Employment Agreements set
forth in Exhibits H and H-1.
12.
GENERAL PROVISIONS
------------------
12.1 Publicity.
---------
All public announcements relating to this Agreement or the transactions
contemplated hereby will be made by Purchaser No. 1 and Purchaser No. 2
with the consent of Seller, which consent will not be unreasonably
withheld, except for any disclosure which may be required because of
Purchaser No. 1's being a publicly-traded corporation on the
over-the-counter market.
12.2 Expenses.
--------
Purchaser No. 1 will bear and pay all of its expenses incident to the
transactions contemplated by this Agreement which are incurred by Purchaser
No. 1 or its representatives, Purchaser No. 2 will bear and pay all of its
expenses incident to the transactions contemplated by this Agreement which
are incurred by Purchaser No. 2 or its representatives, and Seller shall
bear and pay all of the expenses incident to the transactions contemplated
by this Agreement which are incurred by Seller or their respective
representatives.
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12.3 Notices.
-------
46
All notices and other communications required by this Agreement shall be in
writing and shall be deemed given if delivered by hand or mailed by
registered mail or certified mail, return receipt requested, to the
appropriate party at the following address (or at such other address for a
party as shall be specified by notice pursuant hereto):
(a) If to Purchaser No. 1, to:
Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
(b) If to Purchaser No. 2, to
Pomeroy Select Integration Solutions, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxx III, Esq.
Xxxxxxxxx & Dreidame
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
(b) If to Seller, to:
Systems Atlanta Commercial Systems, Inc.
000 Xxxxx Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxx & Xxxxxx, LLP
X.X. Xxx 00000
Xxxxxxx, Xxxxxxx 00000
(c) If to Shareholders, to:
Xxxxx Xxxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
12.4 Binding Effect.
---------------
Except as may be otherwise provided herein, this Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives,
successors and assigns.
12.5 Headings.
--------
47
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
12.6 Exhibits.
--------
The Exhibit and Disclosure Schedule referred to in this Agreement
constitute an integral part of this Agreement as if fully rewritten herein.
12.7 Counterparts.
------------
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which constitute together one and
the same document.
12.8 Governing Law.
--------------
This Agreement shall be construed in accordance with and governed by the
laws of the State of Georgia, without regard to its laws regarding conflict
of laws.
12.9 Severability.
------------
If any provision of this Agreement shall be held unenforceable, invalid, or
void to any extent for any reason, such provision shall remain in force and
effect to the maximum extent allowable, if any, and the enforceability or
validity of the remaining provisions of this Agreement shall not be
affected thereby.
12.10 Waivers; Remedies Exclusive.
-----------------------------
No waiver of any right or option hereunder by any party shall operate as a
waiver of any other right or option, or the same right or option with
respect to any subsequent occasion for its exercise, or of any right to
damages. No waiver by any party of any breach of this Agreement or of any
representation or warranty contained herein shall be held to constitute a
waiver of any other breach or a continuation of the same breach. No waiver
of any of the provisions of this Agreement shall be valid and enforceable
unless such waiver is in writing and signed by the party granting the same.
Except as otherwise provided in the note issued pursuant to Sections 4.3(c)
and 4.4(c), the Employment Agreements and the Covenant Not to Compete
Agreements, the indemnification provided for by Section 10 herein shall
constitute the exclusive remedy of any party with respect to (i) the
matters for which such indemnification is provided and (ii) any other
matters arising out of, relating to or connected with this Agreement or the
transactions contemplated hereby, and whether any claims or causes of
action asserted with respect to any such matters are brought in contract,
tort or other legal theory whatsoever.
12.11 Assignments.
-----------
Except as otherwise provided in this Agreement, no party shall assign its
rights or obligations hereunder prior to Closing without the prior written
consent of the other party.
48
12.12 Entire Agreement.
-----------------
This Agreement and the agreements, instruments and other documents to be
delivered hereunder constitute the entire understanding and agreement
concerning the subject matter hereof. All negotiations between the parties
hereto are merged into this Agreement, and there are no representations,
warranties, covenants, understandings, or agreements, oral or otherwise, in
relation thereto between the parties other than those incorporated herein
and to be delivered hereunder. Except as otherwise expressly contemplated
by this Agreement, nothing expressed or implied in this Agreement is
intended or shall be construed so as to grant or confer on any person, firm
or corporation other than the parties hereto any rights or privilege
hereunder. No supplement, modification or amendment of this Agreement shall
be binding unless executed in writing by the parties hereto.
12.13 Business Records.
-----------------
Seller and Shareholders shall be permitted to retain copies of such books
and records relating to Purchased Assets No. 1 and/or Purchased Assets No.
2 and relating to the accounting and tax matters of Business No. 1 and/or
Business No. 2 and to have access to all original copies of records so
delivered to Purchaser No. 1 and/or Purchaser No. 2 at reasonable times,
for any reasonable business purpose, for a period of six (6) years after
the Closing.
12.14 Compliance with Bulk Sales Act.
----------------------------------
Purchaser No. 1 and Purchaser No. 2 waive compliance with the provisions of
any applicable bulk sales law and Seller and Shareholders, jointly and
severally, agree to indemnify and hold harmless Purchaser No. 1 and
Purchaser No. 2 from any liability incurred as a result of the failure to
so comply, except to liabilities explicitly assumed hereunder by Purchaser
No. 1 and/or Purchaser No. 2.
13.
SYSTEMS ATLANTA, INC.
--------------------
13.1 SAI, an Affiliate of Seller, is executing this Agreement for the purpose of
acknowledging that record title to certain of the Purchased Assets No. 1
and/or Purchased Assets No. 2 being conveyed hereunder by Seller to
Purchaser No. 1 and/or Purchaser No. 2 may be in the name of SAI and to
acknowledge that certain obligations being paid hereunder by Purchaser No.
1 and Purchaser No. 2 represent obligations to third party lenders which
obligations are originally in the name of SAI, but the proceeds of which
have been used by Seller in the operation of its Business No. 1 and
Business No. 2. Incident thereto, and at no additional cost to Purchaser
No. 1 and Purchaser No. 2 other than the consideration to be paid under
this Agreement to Seller, SAI agrees to execute at closing, General Bills
of Sale and Assignments to Purchaser No. 1 and Purchaser No. 2,
respectively, incident to it conveys any and all interest that SAI may own
in any of Purchased Assets No. 1 and/or Purchased Assets No. 2, free and
clear of any Encumbrances, to Purchaser No. 1 and Purchaser No. 2 and that
SAI agrees to do any and all further acts that may be necessary currently
or in the future, including those items set forth in Sections 2.6 and 2.7
of this Agreement, to effectuate the transfer of such Purchased Assets No.
1 and Purchased Assets No. 2 and to do any and all further things that may
be necessary to effectuate the intent of this Agreement.
The parties hereto have executed this Agreement as of the date first above
written.
49
WITNESSES: SYSTEMS ATLANTA COMMERCIAL
SYSTEMS, INC.
___________________________
___________________________ By:________________________________
B. Xxxxx Xxxxxx, Vice-President
XXXXXXX COMPUTER RESOURCES,
___________________________ INC.
___________________________ By: _______________________________
XXXXXXX SELECT INTEGRATION SOLUTIONS, INC.
___________________________
___________________________ By: ______________________________
___________________________
___________________________ __________________________________
B. XXXXX XXXXXX
___________________________
___________________________ __________________________________
XXXXXXX X. XXXXXX
___________________________
___________________________ __________________________________
XXXXX X. XXXXXX
___________________________
___________________________ __________________________________
XXXXX X. XXXXXX
50
For purposes of Section 13 of this Agreement:
SYSTEMS ATLANTA, INC.
___________________________
___________________________ By:________________________________
51
