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EXHIBIT 2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of the 12th day of June, 2001, by and among Partners Resources Inc., an
Arizona corporation and wholly-owned subsidiary of SCB (as herein defined)
("Seller"), SCB Computer Technology, Inc., a Tennessee corporation ("SCB"),
Partners Capital Group, a California corporation and wholly-owned subsidiary of
SCB ("PCG"), Xxxxxxx X. Xxxxxxxxxx ("Xxxxxxxxxx"), Xxxxx X. Xxxxx ("Xxxxx"), and
OneNeck IT Services, Corporation, an Arizona corporation ("Purchaser").
RECITALS
A. Seller, through its Enterprise Resource Planning Group
("ERP"), provides information technology consulting and outsourcing services.
Seller's business of providing such information technology consulting and
outsourcing services conducted through ERP is referred to herein as the
"Business."
B. Seller desires to sell to Purchaser substantially all of
Seller's assets relating to the Business, and Purchaser desires to purchase such
assets, all on the terms and subject to the conditions contained in this
Agreement.
C. SCB and PCG are parties to this Agreement for the limited
purposes set forth in Articles VI and IX herein. Xxxxxxxxxx and Xxxxx
(collectively, the "Principals") are parties to this Agreement for the limited
purposes set forth in Articles V and VI herein.
AGREEMENTS
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject to
the conditions contained in this Agreement, Purchaser agrees to purchase from
Seller, and Seller agrees to sell to Purchaser, all of the assets, properties,
rights and business as a going concern as of the Closing Date (as herein
defined) of whatever kind or nature, wherever situated or located, and whether
reflected on Seller's books and records or previously written-off or otherwise
not shown on Seller's books and records, of Seller that are used in or relate to
the Business other than the Excluded Assets (as herein defined) (collectively,
the "Purchased Assets"). All of the Purchased Assets shall be sold to Purchaser
free and clear of any and all liens, claims, encumbrances and security interests
(collectively, the "Liens") other than the Permitted Liens (as herein defined).
If, for any reason, any of the Purchased Assets cannot be assigned by Seller to
Purchaser, Seller shall work with Purchaser to take such actions and execute
such documents as are reasonably necessary to assure that Purchaser will have
the continuing benefit and use of such Purchased Assets.
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1.2 Enumeration of Purchased Assets. The Purchased Assets shall
include, without limitation, the following assets, properties and rights of
Seller that are used in the Business other than the Excluded Assets:
(a) all furniture, art work, fixtures, equipment
(including office equipment and supplies), machinery, parts, telephone systems,
computer hardware, monitors, key boards and hard drives, tools and all other
tangible personal property used in the conduct of the Business, including,
without limitation, any of the foregoing which has been fully depreciated
(collectively, the "Equipment");
(b) to the extent assignable and subject to obtaining any
necessary consents to assignment, all leasehold interests and leasehold
improvements created by all leases of personal property used in the conduct of
the Business under which Seller is a lessee;
(c) to the extent assignable and subject to obtaining any
necessary consents to assignment, Seller's entire leasehold interest in and
rights thereunder of, and the fixed assets, fixtures, and other leasehold
improvements owned by Seller as lessee of the building located at 0000 Xxxx
Xxxxxxxx Xxxx in Scottsdale, Arizona (the "Scottsdale Building"), the building
located at 0000 Xxxx Xxxxxxx Xxxxxxxxx in Gilbert, Arizona (the "Gilbert
Building"), and the office space located at 00 Xxxxxxx Xxxxx, Xxxxx 000, in
Providence, Rhode Island (the "Office Space"; and together with the Scottsdale
Building and the Gilbert Building, the "Leased Premises");
(d) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper received as a result of the operation
of the Business (collectively, the "Accounts Receivable");
(e) all deposits received as a result of the operation of
the Business and rights with respect thereto;
(f) to the extent assignable and subject to obtaining any
necessary consents to assignment, all interests in and rights, claims, benefits,
and obligations under all real property and personal property lease agreements,
sales orders and sales contracts, purchase orders and purchase contracts,
license agreements, distribution agreements, customer agreements, sales
representative agreements, service agreements, supply agreements, franchise
agreements, computer software licenses and agreements, technical service
agreements, employment agreements, severance agreements, confidentiality or
secrecy agreements, and any and all other agreements and contracts relating to,
and any quotations and bids generated by, the operation of the Business (the
"Contracts");
(g) all intellectual property rights used in the
Business, whether registered, arising under common law or otherwise, including,
without limitation, patents and applications therefor, know-how (to the extent
owned by Seller), unpatented inventions, trade secrets, methodologies, business
and marketing plans, copyrights and applications therefor, trademarks and
applications therefor, service marks and applications therefor, trade names and
applications therefor, trade dress, logos and slogans used in the Business,
which include the name "Enterprise Resource Planning" and logos using the
acronym "ERP", and all goodwill associated with such intellectual property
rights (the "Intellectual Property");
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(h) to the extent assignable and subject to obtaining any
necessary consents to assignment, all authorizations, approvals, consents,
licenses, and permits granted by governmental authorities relating to the
operation of the Business (the "Permits");
(i) copies of all customer lists, customer records,
supplier lists, supplier records, and other customer and supplier information
relating to the operation of the Business;
(j) all books and records relating to the operation of
the Business;
(k) all rights in connection with prepaid expenses with
respect to the Purchased Assets;
(l) all computer software relating directly to the
Business, including all documentation, customizations, and source codes, if any,
with respect to such software;
(m) all sales and promotional materials, catalogues and
advertising literature relating to the Business;
(n) all telephone numbers, fax numbers, computer
extensions, and data processing extensions of the Business; and
(o) the goodwill of the Business.
1.3 Excluded Assets. The Purchased Assets shall exclude all of the
following assets, properties, and rights of Seller (the "Excluded Assets"):
(a) all cash on hand and in banks, cash equivalents
(exclusive of letters of credit issued by customers of the Business), securities
and other investments;
(b) all checkbooks and cancelled checks;
(c) to the extent relating to periods prior to 11:59 p.m.
Providence, Rhode Island Time on May 31, 2001 (such time and date, collectively,
the "Measurement Date"), all insurance policies, insurance premiums and premium
refunds, insurance claims, and insurance proceeds, and all rights arising
therefrom;
(d) to the extent relating to periods prior to the
Measurement Date, all prepaid taxes, insurance premiums, and worker's
compensation premiums, and all rights arising therefrom;
(e) to the extent relating to periods prior to the
Measurement Date, all tax credits, refunds, rebates, abatements, net operating
losses and other tax assets, and all rights arising therefrom;
(f) to the extent relating to periods prior to the
Measurement Date, all inter-company accounts receivable;
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(g) all interests in and rights under the leases of, and
all fixed assets, fixtures, and leasehold improvements owned by Seller and
located on or appurtenant to, all real property that is not expressly included
in the Purchased Assets;
(h) all interests in and rights under the Seller's
Documents (as herein defined);
(i) the corporate charter, minute book, stock records,
and corporate seal of Seller, all books and records related to the Business'
accounting, finances and taxes, and all books and records not relating to the
Business;
(j) all trademarks, service marks, trade names, trade
dress, logos, and other intellectual property and rights with respect thereto,
whether registered or applied for or arising under common law or otherwise,
utilizing the name "SCB" or any variant thereof, SCB's puzzle logo or any
variant thereof, or any combination of the foregoing or otherwise not relating
to the Business;
(k) all Permits that are not assignable or for which any
necessary consent to assignment is not obtained;
(l) all interests in and rights, claims, benefits and
obligations under all Contracts that are not assignable or for which any
necessary consent to assignment is not obtained;
(m) all other assets, properties, and rights of Seller
that are not used in or do not relate to the Business.
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein defined),
Purchaser shall absolutely and unconditionally assume all of the Assumed
Liabilities (as herein defined) from Seller, be subject to and abide by all of
the terms and conditions of the Assumed Liabilities that are imposed upon
Seller, and perform and discharge all Assumed Liabilities in full and when due.
Purchaser shall not assume any of the Excluded Liabilities (as herein defined).
2.2 Assumed Liabilities. The "Assumed Liabilities" shall consist
of all liabilities and obligations of any nature, whether direct or indirect,
material or immaterial, known or unknown, asserted or unasserted, due or to
become due, absolute, accrued, contingent, liquidated, or otherwise
("Liabilities"), of Seller arising before, on or after the Closing Date directly
from or in connection with Seller's ownership and use of the Purchased Assets
and conduct of the Business other than the Excluded Liabilities, including,
without limitation, all of the following Liabilities of Seller:
(a) all trade accounts payable of the Business (the
"Accounts Payable");
(b) all accrued expenses of the Business, including,
without limitation, all earned but unpaid vacation pay and sick and personal
leave with respect to the Transferred Employees (as herein defined);
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(c) all Liabilities arising from or in connection with
all Contracts and Permits that are assigned by Seller to Purchaser hereunder;
and
(d) all Liabilities arising from or in connection with
the charge of employment discrimination (Charge Number 350A11119) filed by the
Equal Employment Opportunity Commission on behalf of Xxxxx X. Xxxx against SCB
Enterprise Solutions on March 1, 2001, and any and all other legal proceedings
relating to or arising from such charge of employment discrimination.
2.3 Excluded Liabilities. The "Excluded Liabilities" shall consist
of the following Liabilities of Seller:
(a) to the extent relating to periods prior to the
Measurement Date, any Liability to any Affiliate (as herein defined) of Seller;
provided, however, that any Liability of Seller to TAG (as defined herein) shall
be an Excluded Liability in all respects;
(b) all accounts payable for accrued health insurance
premiums (except to the extent relating to the Transferred Employees for periods
after the Measurement Date) and all contributions to the SCB KSOP for the
benefit of persons employed by Seller;
(c) all Liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any other expenses incurred
by Seller in connection with the negotiation and preparation of this Agreement
and any documents or instruments contemplated herein and the consummation of the
transactions contemplated herein;
(d) any Liability for taxes with respect to the operation
of the Business before the Measurement Date;
(e) any Liability for or related to indebtedness of
Seller to banks, financial institutions or other persons or entities with
respect to borrowed money;
(f) any Liability under any Contract or Permit that is
not assigned by Seller to Purchaser hereunder;
(g) any Liability for retrospective or similar insurance
premium adjustments relating to the Business for any period before the
Measurement Date;
(h) any Liability for earned but unpaid salaries, wages,
bonuses, commissions, severance and other compensation payable to persons
employed by Seller, except for (i) the earned but unpaid vacation pay and sick
and personal leave with respect to the Transferred Employees and (ii) to the
extent relating to periods after the Measurement Date, the earned but unpaid
salaries, wages, bonuses, commissions and other compensation payable to persons
employed by the Business; and
(i) all Liabilities of Seller pursuant to the Seller's
Documents.
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2.4 No Expansion of Third-Party Rights. The assumption by
Purchaser of the Assumed Liabilities shall not expand the rights or remedies of
any third party against Purchaser or Seller as compared to the rights and
remedies which such third party would have had against Seller had Purchaser not
assumed the Assumed Liabilities. Without limiting the generality of the
preceding sentence, the assumption by Purchaser of the Assumed Liabilities shall
not create any third-party beneficiary rights.
ARTICLE III
Purchase Price
3.1 Purchase Price. Upon the terms and subject to the conditions
of this Agreement, Purchaser shall deliver or cause to be delivered to Seller at
the Closing, in full payment for the sale, conveyance, assignment, transfer and
delivery of the Purchased Assets, immediately available federal funds in the
amount of $9,500,000, subject to adjustment as set forth in Section 3.2 and
Section 3.3 (the "Purchase Price").
3.2 Working Capital Adjustment.
(a) Not more than 10 days before the Closing Date, Seller
shall deliver to Purchaser a statement setting forth Seller's good-faith
estimates of the Estimated Adjusted Working Capital (as defined herein) and the
Estimated Interim Cash Adjustment (as defined herein), which shall be certified
by the chief financial officer of Seller (the "Preliminary Statement").
Purchaser and its representatives shall be entitled to inspect all work papers,
schedules and other supporting materials relating to the preparation of the
Preliminary Statement and to consult with Seller and its representatives
regarding the methods used to calculate the Estimated Adjusted Working Capital
and the Estimated Interim Cash Adjustment.
(b) At the Closing, an amount equal to the difference, if
any, between the Estimated Adjusted Working Capital as shown on the Preliminary
Statement and $2,900,000 shall be paid by Purchaser to Seller if the Estimated
Adjusted Working Capital exceeds $2,900,000 or by Seller to Purchaser if
$2,900,000 exceeds the Estimated Adjusted Working Capital. In addition, at the
Closing, (i) if the Estimated Interim Cash Adjustment results in an increase in
the Purchase Price, Purchaser shall pay Seller the amount of such increase, or
(ii) if the Estimated Interim Cash Adjustment results in a decrease in the
Purchase Price, Seller shall pay Purchaser the amount of such decrease.
(c) On a date no later than 180 days after the Closing
Date (the Calculation Date"), Purchaser, with reasonable, good-faith assistance
from Seller, shall prepare and deliver to Seller a statement setting forth
Purchaser's good-faith determination of the Actual Adjusted Working Capital (as
defined herein) and the Actual Interim Cash Adjustment (as defined herein),
which shall be certified by the chief financial officer of Purchaser (the
"Original Closing Statement"). Seller and its representatives shall be entitled
to inspect all work papers, schedules and other supporting materials relating to
the preparation of the Original Closing Statement and to consult with Purchaser
and its representatives regarding the methods used to calculate the Actual
Adjusted Working Capital and the Actual Interim Cash Adjustment.
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(d) The Original Closing Statement shall become final and
binding upon Seller and Purchaser unless Seller notifies Purchaser of a
disagreement with respect to any matter contained therein (a "Notice of
Disagreement") within 30 days after the receipt thereof. A Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. For a period of 30 days after the delivery of the Notice of
Disagreement, Seller and Purchaser shall attempt in good faith to resolve in
writing all of their differences with respect to each matter specified in the
Notice of Disagreement, in which case such resolution shall be final and binding
upon the parties.
(e) If, at the end of such 30-day period, Seller and
Purchaser have not resolved in writing all of their differences with respect to
any such matter, then each unresolved matter (a "Disputed Matter") shall be
submitted to and reviewed by the Dallas, Texas, office of KPMG LLP or such other
independent certified public accounting firm agreed to by Seller and Purchaser
(the "Accounting Arbitrator"). The Accounting Arbitrator shall consider only the
Disputed Matters and shall act promptly to resolve in writing all Disputed
Matters. The determinations of the Accounting Arbitrator with respect to the
Disputed Matters shall be final and binding upon Seller and Purchaser. Judgment
upon the Accounting Arbitrator's award may be entered in any court having
jurisdiction thereof.
(f) Seller shall be responsible for and pay (1) all of
its expenses incurred in preparing the Preliminary Statement, assisting in the
preparation of and reviewing the Original Closing Statement, and resolving any
Disputed Matter, and (2) 50% of the fees and expenses of any Accounting
Arbitrator incurred in resolving any Disputed Matter. Purchaser shall be
responsible for and pay (1) all of its expenses incurred in reviewing the
Preliminary Statement, preparing the Original Closing Statement, and resolving
any Disputed Matter, and (2) 50% of the fees and expenses of any Accounting
Arbitrator incurred in resolving any Disputed Matter.
(g) Within 10 days after the final determination of the
Closing Statement (as herein defined), (i) an amount equal to the difference, if
any, between the Estimated Adjusted Working Capital as shown on the Preliminary
Statement and the Actual Adjusted Working Capital as shown on the Closing
Statement, plus simple interest thereon from the Closing Date until the payment
date at a rate per annum equal to the prime rate of interest charged from time
to time during such period as announced by First Tennessee Bank, N.A., shall be
paid by Purchaser to Seller if the Actual Adjusted Working Capital exceeds the
Estimated Adjusted Working Capital or by Seller to Purchaser if the Estimated
Adjusted Working Capital exceeds the Actual Adjusted Working Capital; and (ii)
an amount equal to the difference, if any, between the Estimated Interim Cash
Adjustment as shown on the Preliminary Statement and the Actual Interim Cash
Adjustment as shown on the Closing Statement, plus simple interest thereon from
the Closing Date until the payment date at a rate per annum equal to the prime
rate of interest charged from time to time during such period as announced by
First Tennessee Bank, N.A., shall be paid by Purchaser to Seller, or by Seller
to Purchaser, as the case may be, in order to adjust the amount of the Purchase
Price paid to Seller at Closing to reflect the Actual Interim Cash Adjustment.
(h) As used in this Agreement, the following terms shall
have the meanings set forth below:
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(i) "Closing Statement" means the Original
Closing Statement, together with any and all adjustments thereto reflecting any
written agreement between Seller and Purchaser resolving their differences with
respect to any matter specified in a Notice of Disagreement and any written
decision of the Accounting Arbitrator resolving any Disputed Matter.
(ii) "Estimated Adjusted Working Capital" means
the estimated value, as of the Measurement Date, of the total current assets of
the Business (excluding any Excluded Assets that are current assets) less the
total current liabilities of the Business (excluding any Excluded Liabilities
that are current liabilities, and all accrued but unpaid salaries, wages,
bonuses, commissions, severance, vacation and sick pay, and other compensation
payable by Seller to the Principals and all other persons employed in the
conduct of the Business), as determined by Seller pursuant to Section 3.2(a) in
accordance with generally accepted accounting principles ("GAAP") applied on a
basis consistent with prior periods.
(iii) "Actual Adjusted Working Capital" means the
actual value, as of the Measurement Date, of the total current assets of the
Business (excluding any Excluded Assets that are current assets) less the total
current liabilities of the Business (excluding any Excluded Liabilities that are
current liabilities, and all accrued but unpaid salaries, wages, bonuses,
commissions, severance, vacation and sick pay, and other compensation payable by
Seller to the Principals and all other persons employed in the conduct of the
Business), as determined by Purchaser pursuant to Section 3.2(c) in accordance
with GAAP applied on a basis consistent with prior periods. In calculating
Actual Adjusted Working Capital, (A) 87% of the amount of any Accounts
Receivable that were written-off or written-down as of the Measurement Date but
were subsequently collected prior to the Calculation Date shall be added to the
Actual Adjusted Working Capital, and (B) 87% of the amount of any Accounts
Receivable that were deemed collectible as of the Measurement Date but were not
collected as of the Calculation Date shall be subtracted from the Actual
Adjusted Working Capital. For purposes of computing the Actual Adjusted Working
Capital, all payments of accounts receivable that are received by Purchaser from
customers after the Closing Date shall be applied in the order of the oldest
accounts receivable owed by such customers first.
(iv) "Estimated Interim Cash Adjustment" means
Seller's good-faith written estimate of the Interim Cash Adjustment (as defined
herein).
(v) "Actual Interim Cash Adjustment" means the
actual amount of the Interim Cash Adjustment (as defined herein).
3.3 Interim Cash Adjustment. The Purchase Price shall be also
adjusted in the following manner (the "Interim Cash Adjustment"):
(a) the Purchase Price shall be increased by the amount
of cash or cash equivalents which the Seller has, during the period commencing
on the Measurement Date and extending through the Closing Date (the "Interim
Period"), paid to partially or fully discharge (or advanced to Purchaser for use
by Purchaser to partially or fully discharge) any liabilities of Seller which,
had they existed on the Closing Date, would have been Assumed Liabilities
(including without limitation the liabilities listed in Section 2.3(h)(ii)
hereof and all employment and payroll taxes with respect thereto); and
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(b) the Purchase Price shall be reduced by the amount of
cash or cash equivalents which the Seller has received during the Interim Period
as partial or full payment for any assets of Seller which, had they been assets
of Sellers on the Closing Date, would have been Purchased Assets.
3.4 Method of Payment. Unless otherwise agreed to in writing by
Seller and Purchaser, all amounts payable by either party to the other pursuant
to this Article III or any other provision of this Agreement shall be paid by
wire transfer of immediately available federal funds to such bank account as the
receiving party shall designate in writing to the paying party.
3.5 Allocation of Purchase Price. Within 90 days after the
Closing, Purchaser and Seller shall mutually cooperate and agree upon a written
allocation of the Purchase Price among the Purchased Assets in the manner
required by Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code"), which allocation shall constitute Schedule 3.5 hereto (the
"Allocation"). Seller and Purchaser shall use the Allocation, together with any
and all revisions thereto reflecting any payment made pursuant to Section
3.2(g), for all federal, state and local income tax purposes, including, without
limitation, the preparation and filing of their respective counterparts of
Treasury Form 8594 or any other Treasury Form hereafter mandated by the Internal
Revenue Service as required by the regulations under Section 1060 of the Code;
provided, however, that nothing in this Agreement shall be construed to mean
that a party hereto or other person must (a) use, for any one or more purposes,
any price or other allocation set forth or provided for in this Agreement if
such party or person reasonably believes or reasonably is advised that such use
is not in accordance with law, or (b) make or file, or cooperate in the making
or filing of, any return or report to any governmental authority in any manner
that such party or person reasonably believes or reasonably is advised is not in
accordance with law.
3.6 Mutual Cooperation to Unwind Certain Matters. Notwithstanding
anything to the contrary in this Agreement, in the event that the sale of the
Purchased Assets fails to close for any reason, then all parties hereto agree
that they shall mutually cooperate with one another, and use all commercially
reasonable efforts, promptly to unwind and correct (and assist in the prompt
unwinding and correction of) any payments, notices, reports, filings or
withholdings made by any of the parties to any governmental authority or
administrative agency with respect to the operation of the Business during the
contemplated Interim Period, including without limitation all matters relating
to employment notices, reports, taxes, and withholdings.
ARTICLE IV
Representations and Warranties
4.1 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller as follows:
(a) Purchaser is a corporation duly organized, existing
and in good standing under the laws of the State of Arizona.
(b) Purchaser has full corporate power and authority to
enter into and perform its obligations under this Agreement and all other
documents and instruments to be executed by
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Purchaser pursuant to this Agreement (this Agreement and such other documents
and instruments are referred to collectively as the "Purchaser's Documents") and
to consummate the transactions contemplated therein.
(c) Purchaser has taken all corporate actions necessary
to authorize the execution and delivery of the Purchaser's Documents, the
performance of its obligations thereunder, and the consummation of the
transactions contemplated therein.
(d) This Agreement has been executed and delivered by a
duly authorized officer of Purchaser, constitutes a legal, valid and binding
obligation of Purchaser, and is enforceable against Purchaser in accordance with
its terms. As of the Closing Date, the other Purchaser's Documents will be
executed and delivered by a duly authorized officer of Purchaser, will
constitute legal, valid and binding obligations of Purchaser, and will be
enforceable against Purchaser in accordance with their respective terms.
(e) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority is required for the
execution and delivery by Purchaser of the Purchaser's Documents, the
performance of its obligations thereunder, and the consummation by Purchaser of
the transactions contemplated therein.
(f) Neither the execution and delivery by Purchaser of
the Purchaser's Documents, nor the performance of its obligations thereunder,
nor the consummation by Purchaser of the transactions contemplated therein will
conflict with or result in a breach or violation of any of the terms, conditions
or provisions of (1) Purchaser's articles of incorporation or bylaws, (2) any
applicable law, rule or regulation of any governmental entity, or (3) any
applicable order, writ, injunction, decision, judgment or decree of any court,
arbitrator, governmental authority or administrative agency.
(g) Purchaser has received one or more commitments (the
"Commitments") to provide funds to Purchaser sufficient to enable Purchaser to
consummate the transactions contemplated in the Purchaser's Documents and to pay
all fees and expenses related thereto (the "Financing"), true and correct copies
of which are set forth in Schedule 4.1(g).
(h) No broker's commission, finder's fee, investment
banker's fee or similar payment is or will become payable by Seller as a result
of or in connection with the transactions contemplated herein pursuant to any
agreement, contract, commitment, arrangement or understanding entered into by
Purchaser or any of its Affiliates (as herein defined). As used in this
Agreement, (1) the term "Affiliate" means any person or entity which controls a
party to this Agreement, which that party controls, or which is under common
control with that party; and (2) the term "control" means the power, direct or
indirect, to direct or cause the direction of the management and policies of a
person or entity through voting securities, contract or otherwise.
4.2 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser as follows:
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(a) Seller is a corporation duly organized, existing and
in good standing under the laws of the State of Arizona.
(b) [this section not used].
(c) Seller has full corporate power and authority to
conduct the Business as it is now being conducted, to enter into and perform its
obligations under this Agreement and all other documents and instruments to be
executed by Seller pursuant to this Agreement (this Agreement and such other
documents and instruments are referred to collectively as the "Seller's
Documents"), and to consummate the transactions contemplated therein.
(d) Seller has taken all corporate actions necessary to
authorize the execution and delivery of the Seller's Documents, the performance
of its obligations thereunder, and the consummation of the transactions
contemplated therein.
(e) This Agreement has been executed and delivered by a
duly authorized officer of Seller, constitutes a legal, valid and binding
obligation of Seller, and is enforceable against Seller in accordance with its
terms. As of the Closing Date, the other Seller's Documents will be executed and
delivered by a duly authorized officer of Seller, will constitute legal, valid
and binding obligations of Seller, and will be enforceable against Seller in
accordance with their respective terms.
(f) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority is required for the
execution and delivery by Seller of the Seller's Documents, the performance of
its obligations thereunder, and the consummation by Seller of the transactions
contemplated therein.
(g) Neither the execution and delivery by Seller of the
Seller's Documents, nor the performance of its obligations thereunder, nor the
consummation by Seller of the transactions contemplated therein will conflict
with or result in a breach or violation of any of the terms, conditions or
provisions of (1) Seller's articles of incorporation or bylaws, (2) any
applicable law, rule or regulation of any governmental entity, or (3) any
applicable order, writ, injunction, decision, judgment or decree of any court,
arbitrator, governmental authority or administrative agency, except in each case
for such conflicts, breaches and violations as would not have a material adverse
effect on the Business.
(h) Seller (1) has no subsidiaries related to the
Business, (2) does not directly or indirectly own any capital stock or other
equity securities of any corporation or any equity interest in any other entity
that is engaged in the Business, and (3) does not operate, manage or otherwise
control any corporation or other entity that is engaged in the Business.
(i) True and correct copies of the audited balance
sheets, statements of operations, and notes to financial statements of Seller,
together with any supplementary information thereto, as of and for the years
ended April 30, 1999, and April 30, 2000, respectively, as audited by BDO
Xxxxxxx, LLP ("BDO"), are set forth in Schedule 4.2(i).
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(j) True and correct copies of the unaudited balance
sheet and statement of operations of Seller as of and for the fiscal year ended
April 30, 2001, are set forth in Schedule 4.2(j).
(k) Except as described in Schedule 4.2(k), Seller has
full legal and beneficial title to the Purchased Assets, free and clear of any
and all Liens other than (1) statutory liens for taxes not yet due, (2) liens of
carriers and warehousemen incurred in the ordinary course of business for sums
not yet due, (3) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security, (4) security interests or other liens held by
equipment lessors (or their assigns) in any equipment, arising under any
equipment leases assigned to Purchaser as a Purchased Asset, and (5) any
landlord liens with respect to any Purchased Assets located at any of the Leased
Premises (collectively, the "Permitted Liens"). Except as described in Schedule
4.2(k), and any Permitted Liens, no chattel mortgage, security agreement,
financing statement or other instrument encumbering any of the Purchased Assets
has been recorded, filed, executed or delivered. PCG does not own any material
assets used by Seller in the conduct of the Business (except for PCG's interest
as lessee under the equipment leases with Emerald Capital/Hinsbrook Bank and
Crown Bank F.S.B., as disclosed in the Seller's Documents).
(l) No broker's commission, finder's fee, investment
banker's fee or similar payment is or will become payable by Purchaser as a
result of or in connection with the transactions contemplated herein pursuant to
any agreement, contract, commitment, arrangement or understanding entered into
by Seller or any of its Affiliates.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE OTHER SELLER'S
DOCUMENTS, NEITHER SELLER NOR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
OR REPRESENTATIVES HAS MADE, AND SELLER SHALL NOT BE BOUND BY, ANY EXPRESS OR
IMPLIED REPRESENTATION, WARRANTY, GUARANTEE, PROMISE, STATEMENT, INDUCEMENT OR
INFORMATION OF ANY KIND OR NATURE WITH RESPECT TO SELLER, THE BUSINESS, THE
PURCHASED ASSETS, OR ANY OTHER MATTTER, INCLUDING, WITHOUT LIMITATION, GENERAL
ECONOMIC, FINANCIAL, BUSINESS AND INDUSTRY CONDITIONS, THE PROBABLE SUCCESS,
PROFITABILITY OR OTHER PROSPECTS OF THE CONDUCT OF THE BUSINESS OR THE OWNERSHIP
AND USE OF THE PURCHASED ASSETS AFTER THE CLOSING DATE, OR THE LIKELIHOOD OF ANY
CHANGE IN LAWS, RULES OR REGULATIONS. SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND
ALL IMPLIED WARRANTIES WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO
THE PURCHASED ASSETS.
4.3 Survival of Representations and Warranties. The
representations and warranties made by Purchaser in Section 4.1 and by Seller in
Section 4.2 shall survive the Closing and shall continue in effect until 5:00
p.m. (Phoenix, Arizona time) on the one year anniversary of the Closing Date;
provided, however, that the representations and warranties made by Purchaser in
Sections 4.1(a), (b), (c), (d) and (h) and the representations and warranties
made by Seller in Sections 4.2(a), (c), (d), (e), (h), (k) and (l) shall survive
for the maximum period permitted by applicable law. The liabilities of
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Purchaser and Seller under their respective representations and warranties shall
expire at the end of the applicable survival periods; provided, however, that
the liability of a party for the inaccuracy or breach of any representation or
warranty shall not expire at the end of the applicable survival period if the
other party notifies such party thereof before the end of such survival period.
4.4 Unexpected Future Problems. Seller and Purchaser shall attempt
to resolve any and all future claims, issues and problems relating to the
operation of the Business and the use of the Purchased Assets by good-faith
negotiations between the parties based on the following general principles:
(a) Purchaser generally shall be responsible for all
matters relating to Purchaser's corporate existence, books of account, and
records.
(b) Seller generally shall be responsible for all matters
relating to Seller's corporate existence, books of account, and records, except
to the extent that they are based on information provided by or at the direction
of the Principals or Xxxxx X. Xxxxx or any employee, representative or agent of
Seller who reported directly to any such person at such time as the information
was so provided.
(c) Purchaser generally shall be responsible for all
actions, activities and decisions taken or made in the ordinary course of
operating the Business or the normal use of the Purchased Assets prior to the
Closing Date.
(d) Subject to Section 4.4(c), Seller generally shall be
responsible for all actions, activities and decisions relating to the operations
of Seller and all its Affiliates prior to the Closing Date, except to the extent
that such actions, activities and decisions were taken or made by or at the
direction of the Principals or Xxxxx X. Xxxxx or any employee, representative or
agent of Seller who reported directly to any such person at such time as the
actions, activities and decisions were taken or made.
ARTICLE V
Conduct Prior to Closing
5.1 General. The parties shall have the respective rights and
obligations with respect to the period between the date hereof and the Closing
Date that are set forth in the remainder of this Article V.
5.2 Seller's Obligations.
(a) Seller shall give to Purchaser's officers, employees,
attorneys, consultants, accountants and lenders reasonable access during normal
business hours to all of the properties, books, records, contracts and other
documents, and other materials of Seller relating to the Purchased Assets and
the Business, and to the personnel of the Business, subject to their compliance
with Seller's reasonable rules and procedures for conduct at its facilities.
Seller shall furnish to Purchaser such information regarding the Purchased
Assets and the Business as Purchaser may at any time and from time to time
reasonably request.
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(b) Seller shall use commercially reasonable efforts to
obtain all approvals, authorizations, consents and other actions by all
governmental authorities, Contract parties, lenders, and other persons and
entities necessary for Seller to consummate the transactions contemplated
herein.
(c) Seller shall use commercially reasonable efforts to
assist and cooperate with Purchaser in the assignment of all Permits necessary
for the operation of the Business by Purchaser, to the extent that they are
assignable by Seller to Purchaser hereunder.
(d) Seller shall use commercially reasonable efforts to
preserve the Business and the goodwill of its customers, suppliers, employees,
representatives, agents, and others having business relations with the Business.
(e) Seller shall maintain the Purchased Assets in good
operating condition and repair, ordinary wear and tear excepted.
(f) Seller shall conduct the Business (including, without
limitation, the collection of Accounts Receivable and the payment of Accounts
Payable and other obligations) in the ordinary course of business in accordance
with Seller's past practices.
(g) Without the prior written approval of (1) any one of
T. Xxxxx Xxxx, Xxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, or Xxxxxx X. Xxxxxxx and (2)
any one of the Principals or Xxxxx X. Xxxxx:
(i) Seller shall not incur, assume or guarantee
any indebtedness (including, without limitation, Accounts Payable) in an amount
greater than $5,000 in a single transaction;
(ii) Seller shall not sell, transfer or otherwise
dispose of any Purchased Asset or interest therein other than in the ordinary
course of business;
(iii) Seller shall not purchase, lease or
otherwise acquire any asset or property or interest therein in an amount greater
than $5,000 in a single transaction;
(iv) Seller shall not amend, terminate or give
notice of termination with respect to any material Contract or waive any
material right thereunder;
(v) Seller shall not enter into any transaction
pertaining to the Business (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of services), directly or
indirectly, with any Related Party; and
(vi) Seller shall not grant any increase in
salaries, wages, bonuses, commissions, employee benefits, or other remuneration
or compensation to any person employed by Seller or serving as a representative
or agent of Seller in the conduct of the Business.
5.3 Purchaser's Obligations.
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(a) Purchaser shall use commercially reasonable efforts
to obtain all approvals, authorizations, consents and other actions by all
governmental authorities and other persons and entities necessary for Purchaser
to consummate the transactions contemplated herein.
(b) Purchaser shall use commercially reasonable efforts
to obtain the Financing in accordance with the terms of the Commitments, it
being understood that Purchaser shall not be obligated to enter into loan
documents which contain provisions that are not commercially reasonable in the
context of leveraged acquisition financings and normal commercial practice in
connection therewith.
5.4 Principals' Obligations. The Principals shall assist and
cooperate with Seller as reasonably requested in performing all of its
obligations under this Agreement (including, without limitation, Seller's
obligations under Section 5.2) and shall not take any action that would cause
Seller to breach or fail to perform any of such obligations.
5.5 Joint Obligations.
(a) Seller, Purchaser and the Principals each shall
promptly give the other party written notice of the existence or occurrence of
any condition that would make any representation or warranty herein contained of
either party untrue or that would reasonably be expected to prevent the
consummation of the transactions contemplated herein.
(b) Neither Seller, Purchaser nor the Principals shall
intentionally perform or omit to perform any act that would prevent or excuse
the performance of this Agreement by any party hereto or that would result in
any representation or warranty herein contained of such party being untrue in
any material respect as if originally made on and as of the Closing Date.
(c) Seller, Purchaser and the Principals each shall use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate the transactions contemplated herein as soon as possible.
ARTICLE VI
Related Transactions
6.1 General. At the Closing, and in connection with and as an
integral part of this Agreement and the transactions contemplated herein, the
parties shall take the actions set forth in the remainder of this Article VI.
6.2 Services Agreement. SCB, Seller and Purchaser shall enter into
a Services Agreement, in substantially the form attached as Exhibit 6.2,
pursuant to which SCB and Seller provide certain administrative and other
services to Purchaser on a transitional basis.
6.3 Compensation and Termination of Employment of Xxxxxxxxxx.
(a) SCB, Seller and PCG shall pay to Xxxxxxxxxx pursuant
to the Employment Agreement dated as of March 25, 1999, among such parties, as
amended or modified thereafter (the "Xxxxxxxxxx Employment Agreement"), an
amount equal to his base salary thereunder plus all
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bonuses and other contractual amounts due through the Closing Date, including,
without limitation, (1) the final installment of his annual bonus for the fiscal
year ended April 30, 2000, (2) his quarterly bonus for the fiscal quarter ended
October 31, 2000, (3) his quarterly bonus for the fiscal quarter ended January
31, 2001, (4) the agreed upon amount of his quarterly bonus for the fiscal
quarter ended April 30, 2001, and (5) the agreed upon amount of his annual bonus
for the fiscal year ended April 30, 2001.
(b) SCB, Seller, PCG and Xxxxxxxxxx shall enter into a
Termination Agreement, in substantially the form attached as Exhibit 6.3(b),
pursuant to which the parties terminate the Xxxxxxxxxx Employment Agreement as
of the Closing Date without any further liability or obligation on the part of
any party.
6.4 Compensation and Termination of Employment of Xxxxx.
(a) SCB, Seller and PCG shall pay to Xxxxx pursuant to
the Employment Agreement dated as of March 25, 1999, among such parties, as
amended or modified thereafter (the "Xxxxx Employment Agreement"), an amount
equal to his base salary thereunder plus all bonuses and other contractual
amounts due through the Closing Date, including, without limitation, (1) his
quarterly bonus for the fiscal quarter ended January 31, 2001, (2) the agreed
upon amount of his quarterly bonus for the fiscal quarter ended April 30, 2001,
(3) the agreed upon amount of his annual bonus for the fiscal year ended April
30, 2001, (4) the agreed upon amount of his quarterly bonus for the fiscal
quarter ending July 31, 2001, covering the period from May 1, 2001, through the
Closing Date, and (5) the agreed upon amount of his annual bonus for the fiscal
year ending April 30, 2002, covering the period from May 1, 2001, through the
Closing Date.
(b) SCB, Seller, PCG and Xxxxx shall enter into a
Termination Agreement, in substantially the form attached as Exhibit 6.4(b),
pursuant to which the parties terminate the Xxxxx Employment Agreement as of the
Closing Date without any further liability or obligation on the part of any
party.
6.5 Cooperation.
(a) SCB, Seller, PCG and Xxxxxxxxxx shall enter into a
Cooperation Agreement, in substantially the form attached as Exhibit 6.5(a),
pursuant to which Xxxxxxxxxx agrees to cooperate with SCB, Seller and PCG in
connection with any and all internal and external inquiries and investigations
and any and all claims and legal proceedings relating to SCB, Seller or PCG and
covering any time during the period of his employment with any such parties, all
as described in such Cooperation Agreement.
(b) SCB, Seller, PCG and Xxxxx shall enter into a
Cooperation Agreement, in substantially the form attached as Exhibit 6.5(b),
pursuant to which Xxxxx agrees to cooperate with SCB, Seller and PCG in
connection with any and all internal and external inquiries and investigations
and any and all claims and legal proceedings relating to SCB, Seller or PCG and
covering any time during the period of his employment with any such parties, all
as described in such Cooperation Agreement.
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6.6 Termination of Office Lease. Seller and Purchaser shall
mutually execute and deliver a notice to the landlord of the Office Space at
Providence, Rhode Island, terminating the lease of the Office Space effective as
of the last day of the first calendar month immediately following the calendar
month in which the Closing occurs.
ARTICLE VII
Conditions to Closing
7.1 Conditions to Seller's Obligation. The obligation of Seller to
consummate the transactions contemplated herein shall be subject to the
fulfillment of all of the following conditions on or prior to the Closing Date:
(a) Each representation and warranty made by Purchaser
and the Principals in this Agreement shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
such representation and warranty had been made on and as of the Closing Date.
(b) Purchaser and the Principals shall have complied with
and performed in all material respects all of their respective agreements,
covenants and obligations contained in this Agreement that are to be performed
by Purchaser and the Principals on or before the Closing Date, including,
without limitation, all obligations that Purchaser and the Principals would be
required to perform at the Closing if the transactions contemplated herein were
consummated.
(c) Purchaser shall have delivered to Seller immediately
available federal funds in an amount equal to the Purchase Price, as adjusted in
accordance with Section 3.2(b).
(d) All documents, instruments and agreements required to
be executed and delivered by Purchaser, the Principals or third parties at the
Closing as contemplated herein shall have been duly executed and delivered.
(e) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or third party on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transactions contemplated herein; and no decree,
order, injunction or other decision of any court, arbitrator, governmental
authority, or administrative agency restraining, enjoining or otherwise
preventing the consummation of the transactions contemplated herein shall be in
effect.
(f) Purchaser shall have delivered to Seller the written
opinion of Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP, counsel to Purchaser, dated as of
the Closing Date, in substantially the form attached as Exhibit 7.1(f).
7.2 Conditions to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated herein shall be subject to
the fulfillment of all of the following conditions on or prior to the Closing
Date:
(a) Each representation and warranty made by Seller in
this Agreement shall have been true and correct in all material respects when
made and shall be true and correct in all material
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respects on and as of the Closing Date with the same force and effect as though
such representation and warranty had been made on and as of the Closing Date.
(b) Seller shall have complied with and performed in all
material respects all of its agreements, covenants and obligations contained in
this Agreement that are to be performed by Seller on or before the Closing Date,
including, without limitation, all obligations that Seller would be required to
perform at the Closing if the transactions contemplated herein were consummated.
(c) Purchaser shall have obtained the Financing on terms
and conditions satisfactory to Purchaser, and all conditions to the availability
of the Financing shall have been satisfied.
(d) All documents, instruments and agreements required to
be executed and delivered by Seller or third parties at the Closing as
contemplated herein shall have been duly executed and delivered.
(e) No suit, proceeding or investigation shall have been
commenced or threatened by any governmental authority or third party on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transactions contemplated herein; and no decree,
order, injunction or other decision of any court, arbitrator, governmental
authority, or administrative agency restraining, enjoining or otherwise
preventing the consummation of the transactions contemplated herein shall be in
effect.
(f) Seller shall have delivered to Purchaser the written
opinion of Baker, Donelson, Bearman & Xxxxxxxx, PC, counsel to Seller, dated as
of the Closing Date, in substantially the form attached as Exhibit 7.2(f).
(g) All approvals, authorizations, consents and other
actions necessary to assign the Contracts and Permits listed on Schedule 7.2(g)
(the "Material Consents") shall have been obtained on terms and conditions
reasonably satisfactory to Purchaser. Subject to Section 9.4, all approvals,
authorizations, consents and other actions referred to in Section 5.2(b), other
than the Material Consents, shall have been obtained on terms and conditions
reasonably satisfactory to Purchaser; and if any Permit is not assignable by
Seller to Purchaser hereunder, Purchaser shall have either obtained a substitute
Permit on terms and conditions reasonably satisfactory to Purchaser or shall
have obtained a binding commitment from the applicable governmental authority to
issue such substitute Permit to Purchaser following the Closing.
7.3 Casualty. If, prior to the Closing, any damage to or loss of
any of the Purchased Assets occurs due to fire, flood, riot, theft, Act of God
or other casualty, and if Purchaser does not elect, or is not permitted by the
terms of this Agreement to elect, to terminate this Agreement, the Purchase
Price shall be reduced by an amount, to be agreed upon by Seller and Purchaser,
equal to the reasonably estimated total cost necessary to repair or replace such
damaged or lost Purchased Asset, and Seller shall assign to Purchaser the
proceeds, if any, of all applicable business interruption insurance payable by
reason of such occurrence with respect to the period commencing at the Closing
Date. Any adjustment made in accordance with this Section 7.3 shall be the sole
and exclusive adjustment to be made by reason of any such occurrence for the
purposes of this
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Agreement, and the Purchased Assets shall not include the right to receive any
casualty insurance proceeds payable by reason of such occurrence.
ARTICLE VIII
Closing
8.1 Time and Place of Closing. The transactions contemplated by
this Agreement shall be consummated (the "Closing") at the offices of Xxxxxxx &
Xxxxx Xxxxxxx Xxxx LLP, Two North Central Avenue, Phoenix, Arizona, as soon as
practicable after the date hereof and in no event later than June 20, 2001,
beginning at 11:00 a.m. (Phoenix, Arizona, time), or on such other date or at
such other time or place as shall be mutually agreed upon by Seller and
Purchaser; provided, however, that if any condition to the obligations of Seller
and Purchaser to consummate the transactions contemplated herein set forth in
Article VII has not been satisfied or waived by such date and time, and unless
this Agreement is terminated as provided in Section 12.2, the Closing shall take
place on or before the second business day after such condition is satisfied or
waived. The date and completion time of the Closing are referred to in this
Agreement as the "Closing Date."
8.2 Transfer of Title. At the Closing, Seller shall assign, convey
and transfer all of its right, title and interest in and to the Purchased Assets
to Purchaser, free and clear of all Liens other than the Permitted Liens,
pursuant to such conveyancing instruments as are reasonably satisfactory in form
and substance to Seller and Purchaser. The title to and possession of the
Purchased Assets shall pass from Seller to Purchaser on the Closing Date. Risk
of loss of or damage to the Purchased Assets shall pass from Seller to Purchaser
as of the Measurement Date. The parties specifically acknowledge and agree that
upon the occurrence of the Closing, equitable title to the Purchased Assets
shall have passed from Seller to Purchaser as of the Measurement Date. From and
after the Closing, Seller shall cooperate with Purchaser and execute, deliver
and record such conveyancing instruments and other documents and instruments
reasonably requested by Purchaser in order to more fully perfect Purchaser's
right, title and interest thereto and therein.
8.3 Closing Documents. At the Closing, the parties shall deliver
the documents and instruments and shall perform the acts that are set forth in
the remainder of this Article VIII. All documents and instruments that Purchaser
delivers at the Closing shall be in form and substance reasonably satisfactory
to Seller and Seller's counsel. All documents and instruments that Seller
delivers at the Closing shall be in form and substance reasonably satisfactory
to Purchaser and Purchaser's counsel.
8.4 Purchaser's Deliveries. Subject to the fulfillment or written
waiver of the conditions set forth in Section 7.2, Purchaser shall execute
and/or deliver, or shall cause to be executed and/or delivered, to Seller all of
the following:
(a) immediately available federal funds in an amount
equal to the Purchase Price, as adjusted in accordance with Section 3.2(b);
(b) an Assumption Agreement, in substantially the form
attached as Exhibit 8.4(b), pursuant to which Purchaser assumes the Assumed
Liabilities from Seller;
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(c) the Services Agreement described in Section 6.2;
(d) the Termination Agreement described in Section
6.3(b);
(e) the Termination Agreement described in Section
6.4(b);
(f) the Cooperation Agreement described in Section
6.5(a);
(g) the Cooperation Agreement described in Section
6.5(b);
(h) a certificate, dated as of the Closing Date, executed
by an executive officer of Purchaser and certifying as to the matters specified
in Sections 7.1(a) and 7.1(b);
(i) a certificate, dated as of the Closing Date, executed
by an executive officer of Purchaser and certifying as to (1) the articles of
incorporation of Purchaser, (2) the bylaws of Purchaser, (3) resolutions adopted
by the board of directors of Purchaser authorizing the execution and delivery by
Purchaser of the Purchaser's Documents, the performance of its obligations
thereunder, and the consummation by Purchaser of the transactions contemplated
therein, and (4) the incumbency and specimen signatures of the officers of
Purchaser executing the Purchaser's Documents on behalf of Purchaser;
(j) any and all other documents and instruments necessary
for Purchaser to perform its obligations under this Agreement and to consummate
the transactions contemplated herein; and
(k) a letter from Xxxxx Xxxxx, Esq. or the Purchaser, in
form and substance satisfactory to the Seller, confirming that Seller will not
be a party to the proposed amendment to the existing Contract between Seller and
Xxxxxxx Xxxxxx Candies, Inc.
8.5 Seller's Deliveries. Subject to the fulfillment or written
waiver of the conditions set forth in Section 7.1, Seller shall deliver to
Purchaser physical possession of all tangible Purchased Assets, and shall
execute (in recordable form where applicable) and/or deliver, or shall cause to
be executed and/or delivered, to Purchaser all of the following:
(a) a Xxxx of Sale, in substantially the form attached as
Exhibit 8.5(a), pursuant to which Seller assigns, conveys and transfers all of
its right, title and interest in and to the tangible Purchased Assets to
Purchaser as provided herein;
(b) an Assignment, in substantially the form attached as
Exhibit 8.5(b), pursuant to which Seller assigns, conveys and transfers all of
its right, title and interest in and to the intangible Purchased Assets to
Purchaser as provided herein, along with the original instruments (if any)
representing, evidencing or constituting such intangible Purchased Assets;
(c) such other assignments of any of the Purchased Assets
(in recordable form where applicable) that are necessary in the opinion of
Purchaser's counsel or are required by the applicable governmental agencies,
insurance companies, customers, lessors, and other parties with whom the
assignments must be filed;
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(d) the Services Agreement described in Section 6.2;
(e) the Termination Agreement described in Section
6.3(b);
(f) the Termination Agreement described in Section
6.4(b);
(g) the Cooperation Agreement described in Section
6.5(a);
(h) the Cooperation Agreement described in Section
6.5(b);
(i) a certificate, dated as of the Closing Date, executed
by an executive officer of Seller and certifying as to the matters specified in
Sections 7.2(a) and 7.2(b);
(j) a certificate, dated as of the Closing Date, executed
by an executive officer of Seller and certifying as to (1) the articles of
incorporation of Seller, (2) the bylaws of Seller, (3) resolutions adopted by
the board of directors and the sole shareholder of Seller authorizing the
execution and delivery by Seller of the Seller's Documents, the performance of
its obligations thereunder, and the consummation by Seller of the transactions
contemplated therein, and (4) the incumbency and specimen signatures of the
officers of Seller executing the Seller's Documents on behalf of Seller; and
(k) releases of all Liens held by Seller's lenders in any
of the Purchased Assets, including, without limitation, UCC-3 termination
statements (or, in the alternative, pay-off or commitment letters issued by such
lenders obligating such lenders to release such Liens and deliver such
termination statements following receipt of specified funds for the account of
the Seller or SCB);
(l) if and to the extent that they are obtained by Seller
using commercially reasonable efforts, estoppel letters duly executed by the
landlords of the Xxxxxxx Building, dated as close as practicable to the Closing
Date, stating in substance that (1) the copy of the lease attached to the
estoppel letter is a true, correct and complete copy of the lease and represents
the entire agreement between the landlord and Seller, (2) neither the landlord
nor Seller is in breach of or default under the lease, and no event has occurred
which, with notice or the passage of time or both, would constitute a breach of
or default under, or would permit termination, modification or acceleration of,
the lease, (3) the landlord has not repudiated any provision of the lease, (4)
to the landlord's knowledge, there are no disputes, oral agreements or
forbearance programs in effect as to the lease, (5) the landlord has obtained
all approvals of governmental authorities required by law to be obtained by the
landlord (including licenses and permits) in order for Seller to operate the
Business as currently conducted at the Xxxxxxx Building, (6) the landlord
consents to the grant of a leasehold mortgage or a collateral assignment of the
lease in favor of Purchaser's lender, and (7) such other matters as Purchaser
shall reasonably request;
(m) if and to the extent that they are obtained by Seller
using commercially reasonable efforts, landlord waivers duly executed by the
landlord of the Xxxxxxx Building with respect to all property of Seller located
at the Xxxxxxx Building;
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(n) if requested by Purchaser, and if and to the extent
that they are obtained by Seller using commercially reasonable efforts,
agreements duly executed by each mortgagee of the Xxxxxxx Building (1) stating
that, notwithstanding any default by the landlord of any of the terms under any
mortgage on the Xxxxxxx Building, the mortgagee will not disturb Purchaser's
tenancy as long as Purchaser is not in default under the lease pertaining to the
Xxxxxxx Building, (2) consenting to the grant of leasehold mortgages on such
lease, or collateral assignments of such lease, to Purchaser's lender(s), and
(3) stating such other matters as Purchaser or Purchaser's lenders shall
reasonably request;
(o) to the extent that they are obtained by Seller using
commercially reasonable efforts, all consents to the assignment of the Contracts
and Permits or alternate arrangements with respect thereto, all as reasonably
satisfactory to Purchaser; notwithstanding anything in this Agreement to the
contrary, neither Seller nor SCB shall not have any obligation whatsoever to
procure, obtain or deliver the consent of the landlord for the assignment and
assumption of the lease relating to the Scottsdale Building or the Office Space
and if Purchaser elects to obtain the consent of the landlord for the assignment
and assumption of the lease for the Office Space, such responsibility shall be
the sole obligation of Purchaser and shall not be a condition to Closing.
Purchaser hereby agrees that it will not obtain the consent of the landlord for
the assignment and assumption of the lease for the Scottsdale Building;
(p) certificates of title or origin (or like documents)
with respect to any of the Purchased Assets for which a certificate of title or
origin (or like document) is required in order for title thereto to be
transferred by Seller to Purchaser;
(q) a notice of the consummation of the transactions
contemplated herein to be given to persons employed by Seller in the Business,
in form and substance reasonably satisfactory to Purchaser and Seller;
(r) a notice of the consummation of the transactions
contemplated herein to be given to customers and suppliers of the Business, in
form and substance reasonably satisfactory to Purchaser and Seller; and
(s) any and all other documents and instruments necessary
for Seller to perform its obligations under this Agreement and to consummate the
transactions contemplated herein.
8.6 Joint Deliveries. At the Closing, the parties shall execute
and deliver, or cause to be executed and delivered, to each other, all legally
required transfer tax declarations concerning the Purchased Assets.
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ARTICLE IX
Post-Closing Actions
9.1 General. The parties shall have the respective rights and
obligations after the Closing Date that are set forth in the remainder of this
Article IX.
9.2 Inspection of Records. For a period of five years after the
Closing Date, Seller and Purchaser shall make their respective books and records
(including, without limitation, work papers in the possession of their
respective accountants) available for inspection by the other party or its duly
authorized representatives for reasonable business purposes at reasonable times
during normal business hours with respect to all transactions of or relating to
the Business (including, without limitation, the transactions contemplated
herein), the financial condition, assets, liabilities, operations and cash flows
of the Business, and the Assumed Liabilities. In the case of records owned by
Seller, such records shall be made available at Seller's executive office; and
in the case of records owned by Purchaser, such records shall be made available
at Purchaser's executive office. As used in this Section 9.2, the right of
inspection includes the right to make extracts or copies.
9.3 Financial Information. Within 60 days after the Closing Date,
SCB shall provide Purchaser with internally prepared, unaudited financial
statements for the Business on a stand-alone basis consisting of a balance sheet
as of April 30, 2001, and a statement of operations for the year then ended.
Within 30 days after the completion of SCB's audit for the year ended April 30,
2001, SCB shall provide Purchaser with a report from BDO outlining the audit
procedures that BDO performed on the accounts of the Business and indicating
whether BDO discovered any necessary adjustments to the account balances. SCB
and Seller, in consultation with BDO, and Purchaser, in consultation with its
auditors, shall agree upon the audit procedures to be performed by BDO with
respect to the accounts of the Business, subject to compliance with Statement of
Auditing Standards No. 75.
9.4 Certain Assignments. Any other provision of this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to transfer or assign, or a transfer or assignment of, any Contract or Permit,
or any benefit arising thereunder or resulting therefrom, if an attempt at
transfer or assignment thereof without the consent required for such assignment
would constitute a breach thereof or in any way adversely affect the rights of
Purchaser or Seller thereunder. If (a) any required consent to the transfer or
assignment to Purchaser of any Contract or Permit is not obtained, (b) an
attempted transfer or assignment would be ineffective or would adversely affect
the rights of Purchaser or Seller thereunder so that Purchaser would not receive
substantially all of such rights, (c) a Contract is assigned to Purchaser
pursuant to the provisions hereof and the other contracting party thereafter
raises objections to the assignment and refuses to allow Purchaser to perform
the Contract on the terms therein provided or threatens to terminate the
Contract or xxx for damages, or (d) a surety company issuing a bond to Seller
objects to the completion of performance under a Contract by Purchaser, then in
any such case Purchaser and Seller shall cooperate with each other in good faith
in an arrangement whereby Seller will provide for Purchaser the benefits under
such Contract or Permit.
9.5 Funds and Other Assets. After the Closing Date, if Seller
receives any funds or other assets that are included in the Purchased Assets and
to which Purchaser is entitled (including,
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without limitation, any payment on the Accounts Receivable), Seller shall hold
such funds and assets in trust for Purchaser and shall account for, pay and
deliver the same to Purchaser promptly after receipt. After the Closing Date, if
Purchaser receives any funds or other assets that are not included in the
Purchased Assets and to which Seller is entitled, Purchaser shall hold such
funds and assets in trust for Seller and shall account for, pay and deliver the
same to Seller promptly after receipt.
9.6 Occupation of Premises. Seller shall use commercially
reasonable efforts to provide for Technology Alliance Group, LLC ("TAG"), to
vacate the portion of the Xxxxxxx Building that it currently occupies within one
year after the Closing Date. Seller shall not be required to pay any rent or
other amount to Purchaser on account of the occupancy by TAG of a portion of the
Xxxxxxx Building, provided that TAG vacates such premises within one year after
the Closing Date. Purchaser shall use commercially reasonable efforts to remove
certain computer servers from Seller's data center located at 00000 X. 00xx
Xxxxxx in Phoenix, Arizona (the "Honeywell Facility"), within one year after the
Closing Date. Purchaser shall not be required to pay any rent or other amount to
Seller on account of the location of the computer servers at the Honeywell
Facility, provided that Purchaser removes the computer serves therefrom within
one year after the Closing Date.
9.7 Third-Party Claims. The parties shall cooperate with each
other with respect to the defense of any and all claims made or litigation
commenced by third parties subsequent to the Closing Date which are not subject
to the indemnification provisions contained in Article XI, provided that the
party requesting cooperation shall reimburse the other party for the other
party's reasonable out-of-pocket costs and expenses of furnishing such
cooperation.
9.8 Sales and Transfer Taxes and Fees. Seller shall pay when due
any and all federal, state and local excise, sales, transfer, use and other
taxes (including interest and penalties thereon), all personal property title
application fees, and all recording and filing fees assessed or imposed on
account of the transfer of the Purchased Assets as contemplated herein,
regardless of whether the liability for such taxes or fees is imposed by law
upon Seller or Purchaser.
9.9 Covenants Not to Compete.
(a) As an inducement for Purchaser to enter into this
Agreement and to consummate the transactions contemplated herein, SCB agrees
that, for a period of one year after the Closing Date, neither SCB, nor any of
its subsidiaries, nor any of its or their respective directors and officers will
do, directly or indirectly, any of the following:
(i) perform information technology consulting or
outsourcing services using Baan(TM), X.X. Xxxxxxx(TM), or SalesLogix(TM)
software anywhere in the United States of America for manufacturing and
distribution customers, except for any customer of SCB or any of its
subsidiaries (other than Seller in the conduct of the Business) for which SCB or
such subsidiary has performed such services on or before the Closing Date;
(ii) solicit any person or entity to perform
information technology consulting or outsourcing services using Baan(TM), X.X.
Xxxxxxx(TM), or SalesLogix(TM) software, except for any customer of SCB or any
of its subsidiaries (other than Seller in the conduct of the Business) for which
SCB or such subsidiary has performed such services on or before the Closing
Date; or
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(iii) solicit any person employed by Purchaser or
any of its subsidiaries to terminate his or her employment with Purchaser or
such subsidiary or to work for SCB or any of its subsidiaries.
(b) As an inducement for Seller to enter into this
Agreement and to consummate the transactions contemplated herein, Purchaser
agrees that, for a period of one year after the Closing Date, neither Purchaser,
nor any of its subsidiaries, nor any of its or their respective directors and
officers will do, directly or indirectly, any of the following:
(i) perform information technology professional
staffing services anywhere in the United States of America, except as may be
incidental to the performance of information technology consulting or
outsourcing services utilizing Baan(TM), X.X. Xxxxxxx(TM), or
SalesLogix(TM) software;
(ii) solicit any person or entity to perform
information technology professional staffing services, except as may be
incidental to the performance of information technology consulting or
outsourcing services utilizing Baan(TM), X.X. Xxxxxxx(TM), or
SalesLogix(TM) software; or
(iii) solicit any person employed by SCB or any of
its subsidiaries (other than the persons employed by Seller in the conduct of
the Business) to terminate his or her employment with SCB or such subsidiary or
to work for Purchaser or any of its subsidiaries.
(c) In the event of any breach of any covenant set forth
in Section 9.9(a) or 9.9(b), the period during which the breached covenant is in
effect shall be extended for the period of such breach. SCB and Purchaser
recognize that the territory, time and scope limitations set forth in Sections
9.9(a) and 9.9(b) are reasonable and are required for the protection of the
parties. In the event that any such territory, time or scope limitation is
determined to be unreasonable by a court of competent jurisdiction in a final,
non-appealable order, SCB and Purchaser agree to reduce such territory, time or
scope limitation to such a territory, time or scope as the court may deem
reasonable under the circumstances.
(d) SCB and Purchaser specifically recognize that any
breach of any covenant set forth in Section 9.9(a) or 9.9(b) would cause
irreparable injury to the non-breaching party and that monetary damages could be
difficult to ascertain and/or inadequate. Accordingly, without limiting the
availability of legal or equitable (including injunctive) remedies under any
other provisions of this Agreement, SCB and Purchaser agree that in the event of
any such breach, the non-breaching party shall be entitled to injunctive relief
in addition to any and all other legal and equitable remedies that may be
available.
9.10 Further Assurances. The parties shall execute such further
documents and instruments, and shall perform such further acts, as may be
necessary to comply with the terms of this Agreement and to consummate the
transactions contemplated herein.
9.11 Collection and Application of Accounts Receivables. From and
after the Closing, (i) Purchaser shall continually use commercially reasonable
efforts to collect all accounts receivable
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from customers as and when due, and (ii) all payments of accounts receivable
that are received by Purchaser from customers after the Closing shall be applied
by Purchaser in the order of the oldest accounts receivable owed by such
customers first.
9.12 Amendment and Release of Office Space Lease. Purchaser shall,
on or before June 30, 2001, enter into an amendment of the lease for the Office
Space which releases SCB from any and all obligations under such lease, the form
and substance of such release to be acceptable to SCB, in its reasonable
opinion. If Purchaser does not provide SCB with an acceptable form of such
release on or before June 30, 2001, Purchaser shall execute a termination of the
lease for the Office Space, such termination shall be effective July 31, 2001.
ARTICLE X
Employees and Employee Benefits
10.1 Transferred Employees. On or before the Closing Date,
Purchaser shall offer employment, commencing as of the day after the Measurement
Date, to each person employed by Seller in the conduct of the Business as of the
Measurement Date on terms and conditions established by Purchaser in its sole
discretion, subject to the provisions of Sections 10.3, 10.4 and 10.5. Seller
shall use reasonable efforts to assist Purchaser in effecting an orderly change
of employment of the employees of Seller who accept employment offers from
Purchaser (the "Transferred Employees"). Purchaser acknowledges that the
obligation to pay salaries, wages, bonuses, commissions and other compensation
earned by the Transferred Employees for periods after the Measurement Date is an
Assumed Liability under this Agreement.
10.2 Seller Plans. Except for participation in the SCB KSOP, the
Transferred Employees shall cease to actively participate in the employee
benefit plans, programs and policies of Seller and its Affiliates (the "Seller
Plans") as of June 30, 2001. Except for participation in the SCB KSOP, Seller
shall cause the Transferred Employees participating in any Seller Plans to be
fully vested in any benefits accrued to them thereunder as of June 30, 2001.
Seller shall cause (a) the Transferred Employees to be fully vested in their SCB
KSOP accounts as of the Measurement Date (including the matching contributions
declared for fiscal year ended April 30, 2001, to be deposited in three equal
installments on June 30, July 31, and August 31, 2001), (b) the participation of
the Transferred Employees in the SCB KSOP to be terminated as of the Measurement
Date, and (c) the distribution of the SCB KSOP account balances of the
Transferred Employees to or as directed by the Transferred Employees as soon as
practicable after the Measurement Date. Seller shall use commercially reasonable
efforts to facilitate direct rollovers of the SCB KSOP account balances of the
Transferred Employees to Purchaser's 401(k) or other tax-qualified retirement
plans as reasonably requested by the Transferred Employees.
10.3 Purchaser Plans. Purchaser shall credit the Transferred
Employees with all service recognized by Seller under the Seller Plans as
service with Purchaser for the purposes of eligibility to participate, vesting,
and available levels of benefits under the employee benefit plans, programs and
policies of Purchaser (the "Purchaser Plans"). As soon as practicable after the
Closing Date, Seller shall advise Purchaser of all service by the Transferred
Employees recognized by Seller under the Seller Plans as of the Measurement
Date.
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10.4 Group Medical Insurance. As of July 1, 2001, Purchaser shall
provide or cause to be provided group medical insurance benefits to the
Transferred Employees and their eligible dependents. Seller shall provide all
notices and fulfill all of its obligations, if any, under Section 4980B(f) of
the Code with respect to the Transferred Employees.
10.5 Vacation, Sick and Personal Time. Purchaser shall permit the
Transferred Employees an opportunity to take vacation, sick and personal time
with pay, in a manner consistent with the Purchaser Plans, to the extent of the
unused vacation, sick and personal time to which they were entitled under the
Seller Plans as of the Measurement Date. Notwithstanding anything to the
contrary herein, the right of the Transferred Employees to accrue additional
vacation, sick, and personal time under any Seller Plans shall terminate as of
the Measurement Date, and any rights to which they were entitled as of the
Measurement Date shall vest as of such date.
10.6 Payroll Records and Taxes. Seller and Purchaser agree that
upon the occurrence of the Closing, Purchaser shall have purchased the Business,
and in connection therewith Purchaser will employ certain Transferred Employees.
As soon as practicable after the Closing Date, Seller shall deliver to Purchaser
copies of all payroll records for 2001 in Seller's possession with respect to
the Transferred Employees. Purchaser shall furnish to each Transferred Employee
a Form W-2 disclosing all wages and other compensation paid and all taxes
withheld therefrom in 2001 by Seller and Purchaser, and Seller shall be relieved
of the responsibility to do so.
10.7 No Employment Rights. Nothing contained in this Agreement
shall (a) confer upon any former, current or future employee of Seller or
Purchaser any right or remedy, including, without limitation, any right to
employment or continued employment of any nature or for any period, or (b) cause
the employment status of any former, current or future employee of Seller or
Purchaser to be other than terminable at will.
ARTICLE XI
Indemnification
11.1 General. From and after the Closing Date, the parties shall
indemnify each other as provided in this Article XI. No specifically enumerated
indemnification obligation with respect to a particular subject matter as set
forth below shall limit or affect the applicability of a more general
indemnification obligation as set forth below with respect to the same subject
matter. For the purposes of this Article XI, each party shall be deemed to have
remade all of its representations and warranties contained in this Agreement as
of the Closing Date with the same effect as if originally made as of the Closing
Date.
11.2 Certain Definitions. As used in this Agreement, the following
terms shall have the indicated meanings:
(a) "Damages" shall mean all assessments, charges, costs,
damages, expenses, fines, judgments, levies, losses, penalties and other
liabilities and obligations and all claims, demands, investigations, causes of
actions, actions, suits, legislative proceedings, regulatory proceedings, and
other legal proceedings in respect thereof. Damages include, without limitation,
(1) reasonable attorneys', accountants', investigators', and experts' fees and
expenses sustained or
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incurred in connection with the investigation or defense of any of the
foregoing; (2) expenses reasonably incurred to compensate employees for any
costs or ramifications associated with compliance or lack of compliance with the
requirements of Section 401(k) of the Code; and (3) costs and expenses
reasonably incurred to bring the Purchased Assets and the Business into
compliance with Environmental Laws. Damages exclude incidental or consequential
damages (including, without limitation, lost profits) and punitive or exemplary
damages, except with respect to Third-Party Claims.
(b) "Indemnified Party" shall mean a person or entity
entitled to indemnification from an Indemnifying Party pursuant to this Article
XI.
(c) "Indemnifying Party" shall mean a party hereto
required to provide indemnification to an Indemnified Party pursuant to this
Article XI.
(d) "Third-Party Claim" shall mean any claim, demand,
action, suit, legal proceeding, investigation or like matter asserted or
threatened by a party other than the parties hereto, their successors and
permitted assigns, against any Indemnified Party or to which any Indemnified
Party is subject.
11.3 Indemnification Obligations of Seller. Seller shall indemnify,
save and keep harmless Purchaser, its subsidiaries and other Affiliates, its and
their respective successors and permitted assigns, and its and their respective
directors, officers, employees, agents and representatives against and from all
Damages sustained or incurred by any of them resulting from or arising out of or
by virtue of:
(a) any action, judgment, appeal, investigation or other
proceeding related to any investigation by any governmental authority or other
administrative agency into the activities of Seller or any of its Affiliates;
(b) any lawsuit, administrative action or other
proceeding by or on behalf of the shareholders of Seller or any of its
Affiliates;
(c) any inaccuracy or breach of any representation and
warranty made by Seller in this Agreement;
(d) any breach of any agreement or covenant of Seller
contained in this Agreement or any failure by Seller to perform any of its
obligations hereunder (including, without limitation, its obligations under this
Article XI);
(e) any Liability of Seller other than the Assumed
Liabilities;
(f) the failure of Seller to comply with any applicable
bulk sales laws in connection with the transactions contemplated herein; and
(g) any claim by any state or local governmental
authority or administrative agency against Purchaser or any of the Purchased
Assets, arising from Seller's failure to have
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qualified to do business as a foreign corporation in any state where such
qualification was legally required based on its operations of the Business prior
to the Closing Date (including without limitation, any claims for taxes,
penalties, interest, or assessments that would have been assessed against Seller
or owed by Seller had Seller been so qualified).
11.4 Indemnification Obligations of Purchaser. Purchaser shall
indemnify, save and keep harmless Seller, its subsidiaries and other Affiliates,
its and their respective successors and permitted assigns, and its and their
respective directors, officers, employees, agents and representatives against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of:
(a) any action, judgment, appeal, investigation or other
proceeding related to any investigation by any governmental authority or other
administrative agency into the activities of Purchaser or any of its Affiliates;
(b) any lawsuit, administrative action or other
proceeding by or on behalf of the shareholders of Purchaser or any of its
Affiliates;
(c) any inaccuracy or breach of any representation and
warranty made by Purchaser or the Principals in this Agreement;
(d) any breach of any agreement or covenant of Purchaser
or the Principals contained in this Agreement or any failure by Purchaser or the
Principals to perform any of their respective obligations hereunder (including,
without limitation, the obligations of Purchaser under this Article XI);
(e) any of the Assumed Liabilities; any Liability of
Purchaser; or any Liability of the Principals incurred after the Closing Date;
(f) any Third-Party Claim resulting from or arising out
of or by virtue of the acts or omissions of Purchaser after the Closing Date,
including, without limitation, the operation of the Business after the Closing
Date; and
(g) any debt or equity financing activity undertaken by
Purchaser or the Principals to obtain funds for Purchaser's use in the
consummation of the transactions contemplated herein (including, without
limitation, the payment of the Purchase Price to Seller) or the operation of the
Business after the Closing Date.
11.5 Cooperation. Subject to the provisions of Section 11.7, the
Indemnifying Party shall have the right, at its own expense, to participate in
the investigation and defense of any Third-Party Claim, and if such right is
exercised, the parties shall cooperate in the investigation and defense of such
Third-Party Claim.
11.6 Subrogation. The Indemnifying Party shall not be entitled to
require that any action be brought against any other person before action is
brought against it hereunder by the Indemnified
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Party, but shall be subrogated to any right of action to the extent that it has
paid or successfully defended against any Third-Party Claim.
11.7 Third-Party Claims. Forthwith following the receipt of notice
of a Third-Party Claim, the party receiving the notice of the Third-Party Claim
shall (a) notify the other party of its existence, setting forth with reasonable
specificity the facts and circumstances of which such party has received notice,
and (b) if the party giving such notice is an Indemnified Party, specifying the
basis hereunder upon which the Indemnified Party's claim for indemnification is
asserted. The Indemnified Party may, upon reasonable notice, tender the defense
of a Third-Party Claim to the Indemnifying Party. If (a) the defense of a
Third-Party Claim is so tendered and within 30 days thereafter such tender is
accepted without qualification by the Indemnifying Party, or (b) the
Indemnifying Party shall acknowledge in writing to the Indemnified Party and
without qualification its indemnification obligations as provided in this
Article XI within 30 days after the date on which written notice of a
Third-Party Claim has been given pursuant to this Section 11.7, then except as
hereinafter provided, the Indemnified Party shall not, and the Indemnifying
Party shall, have the right to contest, defend, litigate or settle such
Third-Party Claim. The Indemnified Party shall have the right to be represented
by counsel at its own expense in any such contest, defense, litigation or
settlement conducted by the Indemnifying Party, provided that the Indemnified
Party shall be entitled to reimbursement therefor if the Indemnifying Party
shall lose its right to contest, defend, litigate and settle the Third-Party
Claim as herein provided. The Indemnifying Party shall lose its right to defend,
contest, litigate and settle the Third-Party Claim if it shall fail to
diligently contest the Third-Party Claim. So long as the Indemnifying Party has
not lost its right and/or obligation to defend, contest, litigate and settle as
herein provided, the Indemnifying Party shall have the exclusive right to
contest, defend and litigate the Third-Party Claim, and shall have the exclusive
right, in its discretion exercised in good faith and upon the advice of counsel,
to settle any such matter, either before or after the initiation of litigation,
at such time and upon such terms as it deems fair and reasonable, provided that
written notice of its intention to settle shall be given to the Indemnified
Party at least 10 days prior to any such settlement. All expenses (including,
without limitation, attorneys' fees) incurred by the Indemnifying Party in
connection with the foregoing shall be paid by the Indemnifying Party.
Notwithstanding the foregoing, in connection with any settlement negotiated by
an Indemnifying Party, no Indemnified Party shall be required by an Indemnifying
Party to (x) enter into any settlement that does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to the Indemnified Party
of a release from all liability in respect of such claim or litigation, (y)
enter into any settlement that attributes by its terms liability to the
Indemnified Party, or (z) consent to the entry of any judgment that does not
include as a term thereof a full dismissal of the litigation or proceeding with
prejudice. No failure by an Indemnifying Party to acknowledge in writing its
indemnification obligations under this Article XI shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is entitled to
indemnification against a Third-Party Claim, and the Indemnifying Party fails to
accept a tender of or assume the defense of a Third-Party Claim pursuant to this
Section 11.7, or if, in accordance with the foregoing, the Indemnifying Party
shall lose its right to contest, defend, litigate and settle such Third-Party
Claim, the Indemnified Party shall have the right, without prejudice to its
right of indemnification hereunder, in its discretion exercised in good faith
and upon the advice of counsel, to contest, defend and litigate such Third-Party
Claim, and may settle such Third-Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the Indemnified
Party deems fair and reasonable, provided that written notice of its intention
to settle is given to the Indemnifying Party at least 10 days prior to any
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such settlement. If, pursuant to this Section 11.7, the Indemnified Party so
contests, defends, litigates or settles a Third-Party Claim for which it is
entitled to indemnification hereunder as hereinabove provided, the Indemnified
Party shall be reimbursed by the Indemnifying Party for the reasonable
attorneys' fees and other expenses of defending, contesting, litigating and/or
settling the Third-Party Claim which are incurred from time to time, forthwith
following the presentation to the Indemnifying Party of itemized bills for said
attorneys' fees and other expenses.
ARTICLE XII
Termination
12.1 General. The parties shall have the rights and remedies with
respect to the termination and/or enforcement of this Agreement which are set
forth in this Article XII.
12.2 Right to Terminate. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date only
in the following manners and for the indicated reasons:
(a) by Purchaser and Seller in a written agreement
executed and delivered by such parties; or
(b) by written notice given by Purchaser or Seller to the
other party if the Closing shall not have occurred at or before 5:00 p.m.
(Phoenix, Arizona, time) on June 12, 2001.
Neither party shall be liable or obligated to the other under this Agreement,
except as to those provisions herein that are binding on the parties.
12.3 Certain Effects of Termination. In the event of the
termination of this Agreement as provided in Section 12.2:
(a) Purchaser's right of access pursuant to Section
5.2(a) shall terminate and each party shall, and shall cause its employees,
accountants, legal counsel, and other representatives to, return promptly all
information and materials furnished to it by the other party (or any subsidiary,
division, associate or Affiliate of such other party) in connection with the
transactions contemplated hereby, whether so obtained before or after the
execution of this Agreement, and any and all copies, extracts or other
reproductions thereof (except for copies of documents publicly available) which
may have been made, and shall use reasonable efforts to cause its
representatives and any representatives of financial institutions and investors
and others to whom such documents were furnished promptly to return such
documents and any copies thereof any of them may have made; and
(b) all information received by any party hereto with
respect to the business of the other party hereto or its subsidiaries,
divisions, Affiliates or associates (other than information which is a matter of
public knowledge or which has heretofore been or is hereafter publicly published
in any publication for public distribution or filed as public information with
any governmental authority) shall not, unless otherwise required by law, at any
time be disclosed to third parties by such party for any reason whatsoever.
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This Section 12.3 shall survive any termination of this Agreement.
12.4 Remedies. Notwithstanding any termination right granted in
Section 12.2, in the event of the non-fulfillment of any condition to a party's
closing obligation, such party may elect to do one of the following:
(a) proceed to close despite the non-fulfillment of any
closing condition, it being understood that the occurrence of the Closing shall
not be deemed a waiver of a breach of any representation, warranty or covenant
or of such party's rights and remedies with respect thereto;
(b) decline to close, terminate this Agreement as
provided in Section 12.2(b), and thereafter seek damages to the extent permitted
in Section 12.5; or
(c) seek specific performance of the obligations of the
other party. Each party hereby agrees that in the event of any breach by such
party of this Agreement, the remedies available to the other party at law would
be inadequate and that such party's obligations under this Agreement may be
specifically enforced.
12.5 Right to Damages. If this Agreement is terminated pursuant to
Section 12.2, neither party hereto shall have any right or claim against the
other party except if the circumstances giving rise to such termination were
caused by or resulted from (a) the other party's material breach of or failure
to perform its obligations under any provision of Article V, VI or VIII or (b)
any of the representations and warranties made by the other party in Article IV
being inaccurate in a material respect when made, in which event the termination
of this Agreement pursuant to Section 12.2 shall not be deemed or construed as
limiting or denying any legal or equitable right or remedy of such party, and
such party shall also be entitled to recover, without limitation, its costs and
expenses incurred in pursuing its rights and remedies (including reasonable
attorneys' fees).
ARTICLE XIII
Miscellaneous
13.1 Bulk Sales Laws. The parties hereby waive compliance with the
bulk sales laws of the State of Arizona and any other state where any of the
Purchased Assets is located or in which the Business is conducted.
13.2 Public Disclosures. Except as otherwise required by applicable
laws, rules or regulations of any governmental authority or stock exchange, all
press releases, publicity and other public disclosures concerning the
transactions contemplated herein shall be made only upon the prior agreement of
Seller and Purchaser. Seller and Purchaser shall use all reasonable efforts to
consult and agree with each other with respect to the content of any such
required press release or other publicity. If such press release or publicity is
required to comply with applicable laws, rules or regulations, the disclosing
party shall provide the other party with reasonable opportunity to review and
comment upon the proposed disclosure before such disclosure is made. This
provision shall not apply to communications made by either Seller or Purchaser
with their respective directors, officers, employees, attorneys, accountants and
lenders.
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13.3 Notices. All notices required or permitted to be given
hereunder shall be made in writing and may be delivered by hand, by facsimile,
by nationally recognized private courier, or by the United States mail. Notices
delivered by mail shall be deemed given three business days after being
deposited in the United States mail, postage prepaid, registered or certified
mail, return receipt requested. Notices delivered by hand, by facsimile, or by
nationally recognized private courier shall be deemed given on the first
business day following receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also delivered by hand or is
deposited in the United States mail, postage prepaid, registered or certified
mail, return receipt requested, on or before two business days after its
delivery by facsimile. All notices shall be addressed as follows:
If to Seller: Partners Resources Inc.
c/o SCB Computer Technology, Inc.
0000 Xxxxxx Xxxx-Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: T. Xxxxx Xxxx
Telecopier: (000) 000-0000
with a copy to: Baker, Donelson, Bearman & Xxxxxxxx, PC
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier: (000) 000-0000
If to Purchaser: OneNeck IT Services, Corporation
c/o SCB Enterprise Solutions
0000 X. Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
with a copy to: Xxxxxxx & Xxxxx Xxxxxxx Xxxx LLP
One Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: P. Xxxxxx Xxxx, Esq.
Telecopier: (000) 000-0000
Any party hereto may change its address for the purposes of notice hereunder by
notifying the other party thereof in accordance with the provisions of this
Section 13.3.
13.4 Fees and Expenses. Except as otherwise specifically provided
herein, each party hereto shall be responsible for and pay all fees and expenses
(including, without limitation, financial advisors', attorneys', accountants'
and other professional fees and expenses) incurred by such party in connection
with, relating to, or arising out of the negotiation, execution and delivery of
this Agreement and all other documents and instruments contemplated herein, the
performance of such
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party's obligations hereunder and thereunder, and the consummation of the
transactions contemplated herein and therein.
13.5 Entire Agreement. This Agreement, including the attached
schedules and exhibits, constitutes the full understanding of the parties
hereto, a complete allocation of risks between them, and a complete and
exclusive statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior negotiations,
understandings and agreements, whether written or oral, among the parties
(including, without limitation, their letter of intent dated March 14, 2001)
other than their confidentiality letter agreement dated March 27, 2001. Each
schedule and exhibit attached hereto shall be considered incorporated into this
Agreement.
13.6 Waivers. The failure in any one or more instances of a party
to insist upon performance of any of the terms, covenants or conditions of this
Agreement or to exercise any right or privilege conferred in this Agreement, or
the waiver by such party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party. A breach of any
representation, warranty or covenant shall not be affected by the fact that a
more general or more specific representation, warranty or covenant was not also
breached.
13.7 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute but one instrument.
13.8 Severability. If a court of competent jurisdiction declares
that any provision of this Agreement or portion thereof is illegal, invalid or
unenforceable, then such provision shall be modified automatically to the extent
necessary to make such provision fully legal, valid or enforceable. If such
court does not modify any such provision or portion thereof as contemplated
herein, but instead declares it to be wholly illegal, invalid or unenforceable,
then such provision or portion thereof shall be severed from this Agreement,
this Agreement and the rights and obligations of the parties hereto shall be
construed as if this Agreement did not contain such severed provision or portion
thereof, and this Agreement otherwise shall remain in full force and effect.
13.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONTROLLED
AS TO VALIDITY, ENFORCEMENT, INTERPRETATION, CONSTRUCTION, EFFECT AND IN ALL
OTHER RESPECTS BY THE INTERNAL LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE IN THAT STATE, WITHOUT REGARD TO THE CONFLICT-OF-LAWS PRINCIPLES
THEREOF.
13.10 Binding Effect. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their successors and permitted
assigns.
13.11 Benefit. Except as otherwise expressly provided herein,
nothing in this Agreement, express or implied, shall confer on any person other
than the parties hereto and their respective successors and permitted assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement as a third-party beneficiary or otherwise.
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13.12 Assignability. This Agreement shall not be assignable by any
party hereto without the prior written consent of the other party, which consent
shall not be unreasonably withheld. Notwithstanding the foregoing, at or prior
to the Closing, Purchaser may assign its rights under this Agreement to the
financial institution(s) providing the Financing for collateral security
purposes;
provided, however, that no such collateral assignment shall relieve Purchaser of
any of its liabilities or obligations under this Agreement.
13.13 Amendments. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf of
each of the parties hereto or except as otherwise provided in Section 13.6.
Seller and Purchaser contemplate that the schedules hereto may be amended and
supplemented in accordance with this Section 13.13, as soon as practicable
before the Closing Date, to provide more accurate and complete disclosures.
13.14 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
13.15 Resolution of Disputes.
(a) Except as otherwise provided in Sections 3.2 and 9.9,
if any dispute or claim relating to this Agreement or the transactions
contemplated herein arises or occurs, Seller and Purchaser shall attempt in good
faith to resolve such dispute or claim promptly by negotiations between their
respective authorized representatives. The disputing or claiming party shall
give the other party written notice of the dispute or claim. The date of such
notice is referred to herein as the "Notice Date." Within 30 days after the
Notice Date, the receiving party shall submit a written response to the
disputing or claiming party. The notice and the response thereto shall include a
statement of each party's position and a summary of the evidence and arguments
supporting its position. The authorized representatives of the parties shall
meet at a mutually acceptable time and place within 45 days after the Notice
Date and thereafter as often as they reasonably deem necessary to exchange
relevant information and to attempt to resolve the dispute or claim.
(b) If the matter has not been resolved through
negotiations between the authorized representatives of Seller and Purchaser as
contemplated in Section 13.15(a) within 60 days after the Notice Date, the
parties shall attempt in good faith to resolve the matter by negotiations
between their respective chief executive officers. The chief executive officers
of the parties shall meet at a mutually acceptable time and place within 75 days
after the Notice Date and thereafter as often as they reasonably deem necessary
to exchange relevant information and to attempt to resolve the dispute or claim.
(c) If the matter has not been resolved through
negotiations between the chief executive officers of Seller and Purchaser as
contemplated in Section 13.15(b) within 90 days after the Notice Date, the
parties shall jointly submit the matter to the Center for Public Resources, Inc.
("CPR") for non-binding mediation. The parties shall attempt in good faith to
resolve the matter through non-binding mediation in accordance with the then
current CPR Mediation Procedure, a copy of the existing version of which is
attached hereto as Exhibit 13.15(c). The mediation shall be held in Dallas,
Texas, or such other location upon which the parties may agree.
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(d) If the matter has not been resolved through
non-binding mediation within 60 days after the date of joint submission of the
matter to the CPR for mediation, Seller and Purchaser may, but shall not be
obligated to, take any and all other lawful actions intended to resolve the
matter, including, without limitation, the filing of a lawsuit in a court of
competent jurisdiction.
(e) All deadlines set forth in this Section 13.15 may be
extended by the written agreement of Seller and Purchaser.
(f) Seller shall be responsible for and pay all of its
expenses incurred in resolving or attempting to resolve any dispute or claim
pursuant to this Section 13.15 and 50% of the fees and expenses incurred in any
non-binding mediation of the matter pursuant to Section 13.15(c). Purchaser
shall be responsible for and pay all of its expenses incurred in resolving or
attempting to resolve any dispute or claim pursuant to this Section 13.15 and
50% of the fees and expenses incurred in any non-binding mediation of the matter
pursuant to Section 13.15(c).
(g) The procedures set forth in this Section 13.15 shall
be the sole, exclusive procedures for the resolution of disputes between and
claims by Seller and Purchaser relating to this Agreement or the transactions
contemplated herein; provided, however, that a party may seek a preliminary
injunction or other preliminary judicial relief if, in its reasonable,
good-faith judgment, such action is necessary to avoid irreparable damage.
Despite such action, the parties shall continue to participate in good faith in
the procedures specified in this Section 13.15. All applicable statutes of
limitations shall be tolled while the procedures specified in this Section 13.15
are pending, and the parties shall take any and all actions required to
effectuate such tolling.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
PARTNERS RESOURCES INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
ONENECK IT SERVICES, CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
SCB COMPUTER TECHNOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
PARTNERS CAPITAL GROUP
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
/s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------------
XXXXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxx
-----------------------------------------
XXXXX X. XXXXX
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LIST OF SCHEDULES AND EXHIBITS
1. Schedule 3.5, Allocation of Purchase Price (due after Closing)
2. Schedule 4.1(g), Financing Commitment in favor of Purchaser
3. Schedule 4.2(i), copies of audited balance sheet, statements of
operations and notes to financial statements of Seller as of and for
the years ended April 30, 1999 and April 30, 2000
4. Schedule 4.2(j), copies of unaudited balance sheet and statement of
Operations of Seller as of and for the fiscal year ended April 30, 2001
5. Schedule 4.2(k), list of all liens, claims, encumbrances, and security
interests, other than Permitted Liens
6. Exhibit 6.2, form of Services Agreement
7. Exhibit 6.3(b), form of Termination Agreement for Xxxxxxxxxx
8. Exhibit 6.4(b), form of Termination Agreement for Xxxxx
9. Exhibit 6.5(a), form of Cooperation Agreement for Xxxxxxxxxx
10. Exhibit 6.5(b), form of Cooperation Agreement for Xxxxx
11. Exhibit 7.1(f), opinion of Purchaser's Counsel
12. Exhibit 7.2(f), opinion of Seller's Counsel
13. Exhibit 7.2(g), list of all Material Consents
14. Exhibit 8.4(b), form of Assumption Agreement
15. Exhibit 8.5(a), form of Xxxx of Sale
16. Exhibit 8.5(b), form of Assignment
17. Exhibit 13.15(c), copy of the existing version of the CPR Mediation
Procedure
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