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EXHIBIT 10(I)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into
effective as of April 30, 2001 (the "Effective Date") by and among Norstan,
Inc., a corporation organized under the laws of the State of Minnesota
("Seller"), Synchromesh Consulting, Inc., a corporation organized under the laws
of the State of Minnesota (the "Purchaser") and, solely with respect to Articles
IV(E) and V hereof, Xxxxx X. Xxxxx ("Xxxxx"), an individual residing in the
State of Minnesota.
W I T N E S S E T H:
WHEREAS, Seller is the sole shareholder of Norstan Consulting Holding
Company ("Holding"), a Minnesota corporation.
WHEREAS, Holding is the sole shareholder of Norstan Consulting, Inc., a
corporation organized under the laws of the State of Minnesota (the "Company");
WHEREAS, Xxxxx serves as the Chief Executive Officer of the Company;
WHEREAS, Purchaser desires to purchase all of the issued and
outstanding shares of Holding common stock (the "Shares"); and
WHEREAS, Holding is willing to transfer and convey the Shares to
Purchaser on the terms, and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
A G R E E M E N T:
I. Purchase and Sale of the Shares; Consideration; Closing.
(A) Purchase and Sale of the Shares. At the Closing (as defined below),
Seller shall sell, transfer, assign, set over, deliver and surrender the Shares
to Purchaser, and Purchaser shall purchase and accept the Shares from Seller.
(B) Purchase Price. As consideration for the Shares, Purchaser shall
pay to Seller the sum of $5,301,934.01 (the "Purchase Price"), plus certain
contingent consideration described in Section I(E) below. In addition, Seller
agrees to unconditionally release the Company from all of the Company's
indebtedness to Seller and Seller's subsidiaries, and to assume all of the
Company's trade accounts payable (including obligations for which documentation
may not be available on the Closing Date) and accrued payroll obligations
(including without limitation accrued salaries, wages, bonuses, commissions and
all related payroll taxes) reflected on the balance sheet of the Company on
April 30, 2001, such balance sheet to be prepared in accordance with generally
accepted accounting principles of the United
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States on a basis consistent with accounting principles employed by the Company
during the year ended April 30, 2001 ("GAAP"). The Purchase Price shall be paid
in the form of: (i) $500,000 in immediately available funds (the "Cash
Portion"); (ii) Purchaser's 120-day promissory note in the amount of $1.5
million, bearing interest at the weighted-average effective rate imposed on
Seller pursuant to that certain Credit Agreement, dated as of July 23, 1996, by
and among Seller, First Bank National Association, Xxxxxx Trust and Savings Bank
and the Sumitomo Bank, Limited, Chicago Branch, as amended to date (the "Seller
Credit Agreement"), or any replacement facility, adjustable monthly, secured by
the accounts and notes receivable of the Company and substantially in the form
attached hereto as Exhibit A (the "Purchaser Note"); and (iii) assignment by the
Company to Seller of (a) that certain promissory note, dated October 28, 1999,
issued by XxxxXxxxxx.xxx, LLC in favor of the Company with an original unpaid
principal balance of $1,861,164.64 and a current unpaid principal balance of
$1,801,934.01 (the "TechSkills Note") and (b) that certain promissory note,
dated January 22, 2001, issued by Substance Abuse Management Inc. ("SAMI") in
favor of the Company with an original unpaid principal balance of $1,500,000 and
a current unpaid principal balance of $1,412,284.31 and the related personal
guarantee of Xxxxx Xxxxxxxx dated January 22, 2001 (collectively, the "SAMI
Note"); (the TechSkills Note and the SAMI Note shall be referred to herein
collectively as the "Notes").
(C) Collection of Notes; Purchaser Guarantee. The Company's assignment
of the Notes is without recourse to both the Company and Purchaser; provided,
however, that: (1) if the SAMI Note is in payment default at any time during the
three-year period following the Closing Date, Seller shall deliver written
notice thereof to Purchaser, and if while the SAMI Note is in payment default
Purchaser receives any payment from SAMI for services rendered or for any other
purpose, Purchaser shall promptly remit the amount thereof to Seller, less any
related travel and lodging expenses incurred by Purchaser and reimbursed by SAMI
(which remittance by Purchaser shall be limited to the total amount of interest,
principal and other charges due Seller under the SAMI Note); and (2) if as of
the third anniversary of the Closing Date (the "Third Anniversary") Seller has
collected less than $3,000,000 of the principal amount due and owing under the
Notes as of the Closing Date (including principal payments received from
Purchaser pursuant to clause (1) above), Purchaser shall then remit to Seller an
amount equal to the lesser of: (i) $500,000 or (ii) the excess of (a) $3,000,000
over (b) the principal amount collected by Seller under the Notes as of the
Third Anniversary. Within a reasonable period after the Third Anniversary,
Seller shall deliver to Purchaser written notice, in reasonable detail, of the
amount due and owing Seller under this Section I(C) (the "Purchaser Guarantee"),
and Purchaser shall remit the same to Seller within 10 business days following
receipt of such notice. In the event Purchaser does not make a full and timely
payment of the Purchaser Guarantee, interest shall accrue on the unpaid balance
at the weighted-average effective rate under the Seller Credit Agreement. Seller
shall use its reasonable best efforts to collect the outstanding principal under
the Notes in accordance with their respective terms. If, prior to the Third
Anniversary, Seller reduces, discounts, or otherwise compromises its claim
against the obligor under either or both of the Notes, Seller shall reduce the
Purchaser Guarantee by 50 percent of the amount of such reduction. In the event
that Seller collects additional principal amounts (a "Supplemental Recovery")
under the Notes after the Third Anniversary, Seller shall promptly remit to
Purchaser the amount of the excess, if any, of (i) the aggregate principal
amount recovered by Seller under the Notes and the Purchaser Guarantee over (ii)
$3,000,000, limited to the amount of the Purchaser Guarantee paid by Purchaser
to Seller.
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(D) The Closing. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Xxxxxx Xxxxxxx
Xxxxxx & Brand, LLP, 0000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, on
May 1, 2001 or on such other date as the parties may mutually agree (the
"Closing Date"). Irrespective of the actual Closing Date, the transactions
contemplated by this Agreement shall be deemed effective as of the close of
business on April 30, 2001. At the Closing, Holding shall deliver to Purchaser
one or more certificates representing the Shares, duly endorsed for transfer.
Purchaser shall deliver to Seller: (i) the Cash Portion via wire transfer of
immediately available funds to an account designated by Seller; (ii) the
Purchaser Note; and (iii) originally executed instruments representing the
TechSkills Note and the SAMI Note, accompanied by duly executed assignments
separate from certificates.
(E) Contingent Consideration. As additional consideration for the
Shares, Purchaser shall pay to Seller an amount equal to 50 percent of Seller's
earnings before income taxes, interest, depreciation and amortization ("EBITDA")
for the 12-month period ending April 30, 2003 (the "Contingent Purchase Price")
determined in conformity with GAAP. Purchaser shall provide Seller with written
notice (the "EBITDA Notice") of Purchaser's determination of EBITDA in
reasonable detail on or before June 30, 2003, together with copies of a similar
computation with respect to Purchaser's EBITDA for the 12-month period ending
April 30, 2002. Following Purchaser's delivery to Seller of the EBITDA Notice,
Purchaser shall provide Seller's independent accountants and/or Seller's other
agents and representatives with reasonable access to Purchaser's books, records
and employees for the purpose of substantiating Purchaser's determination of
EBITDA for the 12-month period ending April 30, 2003. Seller shall deliver to
Purchaser, within 60 days following Seller's receipt of the EBITDA Notice,
written notice of (i) Seller's concurrence with Purchaser's determination of
EBITDA for the 12-month period ending April 30, 2003 ("Notice of Concurrence")
or (ii) Seller's disagreement with such determination, accompanied by a detailed
explanation of such disagreement. In the event of a disagreement, the parties
shall endeavor for a period of at least 30 days to negotiate a settlement of
their differences. If the parties are unable to reach agreement during such
period, the parties shall engage Ernst & Young LLP (the "Independent Firm") to
perform a determination of Purchaser's EBITDA for the 12-month period ending
April 30, 2003 (the "Final Determination"), which determination shall be final
and binding on each of the parties. The Independent Firm shall make its
determination based solely on presentations by Purchaser and Seller, and not by
independent review. In resolving any disputed item the Independent Firm may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Any fees and expenses of the Independent Firm shall be borne by: (i)
Seller in the proportion that the aggregate dollar amount of such disputed items
so submitted that are unsuccessfully disputed by Seller bears to the aggregate
dollar amount of all disputed items and (ii) Purchaser in the proportion that
the aggregate dollar amount of such disputed items so submitted that are
successfully disputed by Seller bears to the aggregate dollar amount of all
disputed items. Purchaser shall pay to Seller the Contingent Purchase Price
within 10 business days following (i) Purchaser's receipt of the Notice of
Concurrence; (ii) completion of the parties' negotiated settlement with respect
to Purchaser's EBITDA for the 12-month period ending April 30, 2003; or (iii)
the parties' receipt of the Final Determination, as applicable.
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II. Representations and Warranties of Seller Concerning the
Transaction. Seller represents and warrants to Purchaser that, except as set
forth in the disclosure schedules attached hereto as Exhibit B and incorporated
by reference herein (the "Seller Disclosure Schedules"):
(A) Organization of Seller. Seller is a corporation, validly existing
and in good standing under the laws of the State of Minnesota, with the
requisite corporate power and authority to own and use its properties and assets
and to carry on its business as currently conducted.
(B) Authorization; Enforcement. Seller has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and to otherwise carry out its obligations
hereunder. The execution and delivery of this Agreement by Seller and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Seller. This Agreement has
been duly executed by Seller and when delivered in accordance with the terms
hereof shall constitute the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application. Seller is not in violation of
any provision of its articles of incorporation, bylaws or other charter
documents.
(C) No Conflicts. The execution, delivery and performance of this
Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby do not and will not (i) conflict with or violate any
provision of its articles of incorporation, bylaws or other charter documents
(each as amended through the date hereof), (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument
(evidencing a debt of Seller or otherwise) to which Seller is a party or by
which any property or asset of Seller is bound or affected, or (iii) result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which Seller is
subject, or by which any property or asset of Seller is bound or affected,
except in the case of each of clauses (ii) and (iii), as could not, individually
or in the aggregate, have or result in a Material Adverse Effect (as defined
below) on Seller. Seller is not conducting its business in violation of any law,
ordinance or regulation of any governmental authority, except for violations
which, individually or in the aggregate, (x) do not and will not adversely
affect the legality, validity or enforceability of this Agreement or (y) do not
and will not adversely impair Seller's ability to perform fully on a timely
basis its material obligations under this Agreement (a "Seller Material Adverse
Effect").
(D) Ownership of the Shares; Ownership of Company Stock. Except for the
lien in favor of U.S. Bancorp National Association pursuant to the Seller Credit
Agreement, Seller owns of record and beneficially all of the Shares free and
clear of any liens, claims, options, charges, or encumbrances of any nature
whatsoever ("Encumbrances"), and free and clear of any restrictions on transfer.
Other than pursuant to the Seller Credit Agreement, Seller has not previously
sold, assigned or otherwise transferred any right or interest in the Shares, nor
is Seller a party to any option, warrant, purchase right, or other contract or
commitment that
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could require Seller to sell, transfer or otherwise dispose of any capital stock
of Holding (other than this Agreement). Holding owns of record and beneficially
all of the issued and outstanding capital stock of the Company (the "Company
Stock") free and clear of any Encumbrances except for liens imposed pursuant to
the Seller Credit Agreement, and free and clear of any restrictions on transfer,
exclusive of restrictions imposed pursuant to the Seller Credit Agreement.
Holding has not previously sold, assigned or otherwise transferred any right or
interest in the Company Stock, nor is Holding a party to any option, warrant,
purchase right, or other contract or commitment that could require Holding to
sell, transfer or otherwise dispose of any Company Stock.
(E) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of Seller,
threatened against or affecting Seller or any of its properties before or by any
court, governmental or administrative agency or regulatory authority (federal,
state, county, local or foreign) which adversely affects or challenges the
legality, validity or enforceability of this Agreement.
(F) Status of Holding. The sole asset of Holding consists of 100
percent of the issued and outstanding capital stock of the Company; Holding has
no liabilities.
III. Representations and Warranties of Seller regarding the Company.
Seller hereby represents and warrants to Purchaser that, except as set forth in
the Seller Disclosure Schedules:
(A) Organization and Qualification. Each of Holding and the Company is
a corporation, validly existing and in good standing under the laws of the State
of Minnesota, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its respective business as currently
conducted. The Company is duly qualified to do business and is in good standing
as a foreign corporation in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not, individually or in the aggregate, have a material adverse effect
on the results of operations, assets, or financial condition of the Company (a
"Company Material Adverse Effect").
(B) Capitalization. Holding has 50,000,000 shares of authorized capital
stock, consisting of 10,000,000 shares of common stock, $.01 par value per
share, and 40,000,000 undesignated shares. Holding has 100 shares of common
stock issued and outstanding, all of which are owned beneficially and of record
by Seller. No other shares of Holding capital stock are issued or outstanding.
The Company is authorized to issue 1,000,000 shares of capital stock with a par
value of $.01 per share in the case of common stock and a par value as
determined by its board of directors in the case of preferred stock. The Company
has 100 shares of its common stock issued and outstanding, all of which are
owned beneficially and of record by Holding. No other shares of the Company's
capital stock are issued or outstanding. All of the Shares and the Company Stock
have been duly authorized and are validly issued, fully paid and nonassessable.
There are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require either Holding or the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Holding or the Company. There
are no voting
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trusts, proxies, or other agreements or understandings with respect to the
voting of the capital stock of either Holding or the Company.
(C) No Conflicts. The consummation of the transactions contemplated
hereby do not and will not: (i) conflict with or violate any provision of
Holding or the Company's respective articles of incorporation, bylaws or other
charter documents (each as amended through the date hereof), (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument (evidencing a debt of Holding or the Company) to which Holding or the
Company is a party or by which any property or asset of Holding or the Company
is bound or affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which Holding or the Company is subject, or
by which any property or asset of Holding or the Company is bound or affected,
except in the case of each of clauses (ii) and (iii), as could not, individually
or in the aggregate, have or result in a Company Material Adverse Effect.
(D) Brokers and Finders. Neither Holding nor the Company has employed
any broker, agent or finder or agreed to incur any liability for any brokerage
fees, agents' commissions or finders' fees in connection with the transactions
contemplated hereby.
(E) Consents and Approvals. None of Seller, Holding or the Company is
required to obtain any consent, waiver, authorization or order of, or make any
filing or registration with, any court or other federal, state, local, foreign
or other governmental authority or other Person (defined below) in connection
with the execution, delivery and performance by the parties of this Agreement
other than where the failure to obtain such consent, waiver, authorization or
order, or to give or make such notice or filing, could not, individually or in
the aggregate, have or result in a Company Material Adverse Effect. Seller shall
deliver to Purchaser the Shares in the manner contemplated hereby free and clear
of all Encumbrances. A "Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
(F) Litigation; Proceedings. There is no action, suit, notice of
violation, proceeding or investigation pending or, to the knowledge of Seller,
threatened against or affecting Holding or the Company or any of their
respective properties before or by any court, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) which:
(i) adversely affects or challenges the legality, validity or enforceability of
this Agreement; or (ii) could, individually or in the aggregate, have or result
in a Company Material Adverse Effect.
(G) No Default or Violation. Neither Holding nor the Company: (i) is in
default under or in violation of (and, to the knowledge of Seller, has not
received notice of a claim that it is in default under or that it is in
violation of) any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its respective
properties is bound, (ii) is not in violation of any order of any court,
arbitrator or governmental body, and (iii) is not in violation of any statute,
rule or regulation of any
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governmental authority, except as could not individually or in the aggregate,
have or result in, a Company Material Adverse Effect.
(H) Books and Records. The books of account, minute books, stock record
books and other records of both Holding and the Company, all of which have been
made available to Purchaser, are true, complete and correct and have been
maintained in accordance with sound business practices, including the
maintenance of an adequate system of internal controls. The minute books of
Holding and the Company contain accurate and complete records of all meetings
held of corporate action taken by the shareholders, the boards of directors, and
committees of the boards of directors of Holding and the Company, and no meeting
of any such shareholders, boards of directors or committee has been held for
which minutes have not been prepared and are not contained in such minute books.
(I) Compliance with Law. Each of Holding and the Company has complied
and is currently in compliance with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
changes thereunder) of the federal government of the United States and state
governments (and all agencies thereof) of the United States, asserting or
claiming jurisdiction over it or over any part of its operations, and no
proceedings or notices have been filed or, to the knowledge of Seller, commenced
against Holding or the Company alleging any failure to comply, except where the
failure to be in compliance has not had and is not reasonably expected to have a
Company Material Adverse Effect.
(J) Title to Assets. Each of Holding and the Company has good and
marketable title to all of the assets used in or useful to its business, free
and clear of all Encumbrances, other than Encumbrances existing under the Seller
Credit Agreement. To the knowledge of Seller, none of the assets of Holding or
the Company are in the possession of any person other than Holding or the
Company, as applicable.
(K) Employee Benefit Matters.
(1) Compliance. With respect to each employee welfare benefit
plan and employee pension benefit plan as defined in sections 3(l) and
3(2) of ERISA that has been or is sponsored by, participated in, or
contributed to, by the Company (each, a "Plan"), through the date of
Closing: (i) the plan is in compliance with ERISA in all material
respects, including but not limited to all reporting and disclosure
requirements of Part I of Subtitle B of Title I of ERISA; (ii) the
appropriate Form 5500 has been timely filed, for each year of its
existence; (iii) there has been no transaction described in sections
406 or 407 of ERISA or section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") relating to the plan unless exempt under
section 408 of ERISA or section 4975 of the Code, as applicable; (iv)
the bonding requirements of section 412 of ERISA have been satisfied;
and (v) all contributions required to have been made with respect to
the plan have been timely made. There is no litigation, action,
proceeding, investigation or claim asserted or, to the knowledge of
Seller, threatened or contemplated, with respect to any Plan (other
than the payment of benefits in the normal course) nor any issue if
resolved adversely to the Company that may subject the Company to the
payment of a penalty, interest, tax or other amount.
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(2) Certain Pension Plans. All Plans that are intended to
qualify under section 401 (a) of the Code either (i) have been
determined by the IRS to be qualified under section 401 (a) of the Code
or (ii) have applicable remedial amendment periods that will not have
ended before the Closing Date.
(3) No Defined Benefit Pension Plans. Neither the Company nor
any entity that has been treated as a single employer together with the
Company under section 414 of the Code has maintained, had an obligation
to contribute to, contributed to, or incurred any liability with
respect to a plan that is or was a pension plan (as defined in section
3(2) of ERISA) that is or was subject to Title IV of ERISA.
(4) Extended Medical Coverage. No employee welfare benefit
plan (as defined in section 3(l) of ERISA) maintained by the Company
provides medical, surgical, hospitalization or life insurance benefits
(whether or not insured by a third party) for employees or former
employees of the Company for periods extending beyond their
terminations of employment, other than coverage mandated by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"); and the Company has not made any commitment to provide
retiree medical, surgical, hospitalization or life insurance coverage
for any current or former employees or directors of the Company (except
as required by COBRA).
(5) Effect of this Transaction. Except as otherwise listed on
the Seller Disclosure Schedules, the consummation of the transactions
contemplated by this Agreement, either alone or in conjunction with
another event (such as a termination of employment), will not (i)
entitle any current or former employee or officer of the Company to
severance pay from the Company, or any other payment under a Plan, (ii)
accelerate the time of payment or vesting of benefits under a Plan, or
(iii) increase the amount of compensation due any such employee or
officer by the Company.
(L) Taxes.
(1) Affiliated Groups. The Company has not been a member of an
affiliated group (within the meaning of Section 1504 of the Code) or
similar group under state, local or other applicable law filing
consolidated tax returns other than the group the parent of which is
Norstan ("Affiliated Group").
(2) Filing of Returns. The Company and the Affiliated Group of
which the Company is or has been a member have filed, or caused to be
filed in a timely manner, all Tax Returns (as defined below) required
to be filed for each taxable period in which the Company was a member
of the group on or before the date of this Agreement (taking into
account any and all extensions) and all of those Tax Returns are
complete and correct.
(3) Payment of Taxes. All Taxes (as defined below) due and
payable or claimed to be due and payable from the Company have been
timely paid in full or are not yet delinquent.
(4) Withholding. The Company has complied with all applicable
laws relating to the withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of
the Code or similar provisions under any foreign laws),
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has, within the time and in the manner prescribed by those laws,
withheld and paid over to the proper governmental body all amounts
required to be so withheld and paid over under all such applicable laws
and has, within the time and in the manner prescribed by those laws,
filed all Tax Returns with respect to withholding.
(5) Encumbrances. Except for liens for ad valorem Taxes and
real and personal property Taxes not yet delinquent, there are no
Encumbrances for Taxes on the assets of the Company.
(6) Third-Party Taxes. The Company has no liability for the
Taxes of any other person by contract or as transferor or successor, or
otherwise.
(7) Tax Sharing. Except for: (i) Taxes in connection with
leases of personal property by or to the Company; and (ii) a Tax
sharing agreement by and among the Company, Seller and their affiliates
which shall not be effective with respect to the Company after the
Closing Date, the Company is not a party to, is not bound by, and has
no obligation under, any contract, agreement or arrangement providing
for the allocation or sharing of Taxes.
(8) Definitions. For purposes of this Agreement, "Taxes" shall
mean and include all taxes, charges, fees, duties, levies, penalties or
other assessments proposed by any federal, state or local authority
within the United States of America, including income, gross IMP
receipts, excise, property, sales, gains, use, license, capital stock,
transfer, franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions attributable
thereto (whether or not disputed); and "Tax Returns" shall mean and
include all federal, state, and local tax returns, declarations,
statements, reports, schedules, forms or information returns or claims
for refunds relating to Taxes or other written information required to
be supplied to any taxing authority in connection with Taxes (including
any amended Tax Returns).
(M) Insurance. Seller has delivered to Purchaser a listing of all
current insurance policies maintained by Seller with respect to Holding and the
Company through the Closing Date.
IV. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller that, except as set forth in the disclosure
schedules attached hereto as Exhibit C and incorporated by reference herein (the
"Purchaser Disclosure Schedules"):
(A) Authorization; Enforcement. Purchaser is a corporation validly
existing and in good standing under the laws of the State of Minnesota. This
Agreement has been duly executed and delivered by Purchaser constitutes the
valid and legally binding obligation of Purchaser, enforceable against Purchaser
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Purchaser is not in violation of any provision of its articles of incorporation,
bylaws or other charter documents.
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(B) Promissory Notes. The Notes and the Purchaser Note are valid
receivables, are not subject to valid counterclaims or setoffs, and are
collectible in accordance with their terms.
(C) Investment Intent. Purchaser is acquiring the Shares for
Purchaser's own account, for investment purposes only and not with a view to or
for distributing or reselling the Shares or any part thereof or interest
therein.
(D) Purchaser's Status. At the date hereof, Purchaser is an "accredited
investor" within the meaning of Rule 501(a)(3) promulgated under the Securities
Act.
(E) Access to Information. Purchaser acknowledges that as Chief
Executive Officer of the Company, Xxxxx (and, by attribution, Purchaser) has
been afforded (i) complete and unfettered access to the books, records and
personnel of the Company; (ii) the opportunity to ask such questions as Xxxxx
and/or Purchaser has deemed necessary of, and to receive answers from,
representatives of Seller concerning the business and affairs of the Company;
and (iii) the opportunity to obtain such additional information which Seller
possesses or can acquire without unreasonable effort or expense that is
necessary for Purchaser to make an informed investment decision with respect to
the Shares. Neither such inquiries nor any other investigation conducted by or
on behalf of Purchaser or Purchaser's representatives, agents or counsel shall
modify, amend or affect Purchaser's right to rely on the truth, accuracy and
completeness of Seller's representations and warranties contained herein;
provided, however, that Seller's representations and warranties shall have no
force or effect if, and to the extent that, Xxxxx has, at the Closing Date,
actual knowledge that such representations and warranties are untrue.
(F) Reliance. Purchaser understands and acknowledges that (i) the
Shares are being offered and sold to Purchaser without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such exemption,
depends in part on, and Seller will rely upon the accuracy and truthfulness of,
the foregoing representations and Purchaser hereby consents to such reliance.
V. Covenants.
(A) Conduct of Business. Each of Seller and Xxxxx covenant that, from
and after the execution of this Agreement through the Closing, except as
provided in Section V(B) below, the Company's business will be conducted in the
ordinary course, consistent with past practice, including without limitation
with respect to: solicitation of business, performance of, and billing for
consulting engagements, collection of accounts receivable, hiring and retention
of personnel, management of employee compensation and benefit matters, and
payment of accounts payable, salaries and other obligations of the Company.
(B) Reductions in Force. During the period from the date hereof through
and including the Closing Date, Xxxxx and Seller shall jointly identify those
employees of the Company whose services will not be required after the Closing.
Xxxxx shall terminate the employment of such individuals (the "Terminated
Employees") on or prior to the Closing Date, providing each of the Terminated
Employees with the Company's standard severance arrangement. Seller agrees to
bear the entire severance cost associated with the Terminated Employees and to
indemnify Xxxxx, Purchaser and the Company with respect to such severance cost;
provided, however, that the foregoing indemnification protection shall not apply
if and to the extent that Purchaser incurs severance costs as a result of a
misrepresentation of Seller's standard severance arrangement or other breach of
this Section V(B).
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(C) Reasonable Best Efforts. Upon the terms and subject to the
conditions hereof, each of the parties hereto agrees to use its reasonable best
efforts promptly 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 and make
effective the transactions contemplated by this Agreement. An undertaking of a
party under this Agreement to use such party's reasonable best efforts shall not
require such party to incur unreasonable expense or obligations in order to
satisfy such undertaking. If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each party
hereto and its proper officers, directors or other representatives will promptly
take such action.
(D) Notification of Certain Matters. Purchaser, on the one hand, and
Seller, on the other hand, will each give prompt notice to the other of (i) the
occurrence, or failure to occur, of any event the occurrence or failure of which
would reasonably be likely to cause any of their respective representations or
warranties contained in this Agreement to be untrue or incorrect at any time
from the date hereof to the Closing Date, and (ii) any failure on their
respective parts or on the part of any of their respective officers, directors,
partners, employees, representatives or agents, if any, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
each of them under this Agreement; provided, however, that no such notification
will alter or otherwise affect such representations, warranties, covenants,
conditions or agreements.
(E) Performance on SAMI Consulting Projects. Purchaser agrees to use
its reasonable best efforts to satisfactorily perform, in all material respects,
Purchaser's obligations under any and all consulting and other projects in any
way arising out of or relating to the origin of the SAMI Note.
(F) Litigation Cooperation. From and after the Closing Date, Purchaser
shall provide to Seller, at no cost to Seller (exclusive of Seller's obligation
to reimburse Purchaser's reasonable travel expenses) such support as Seller
shall require in connection with Seller's dispute with Xxxxxxx Xxxxxx and his
affiliated entities.
(G) Equipment Leases. Exhibit D hereto sets forth a listing of certain
equipment leases under which Seller is the lessee and the related equipment is
in the possession of: (i) the Company (the "Company Leases"); or (ii) third
parties pursuant to sublease arrangements (the "Third Party Leases"). Each of
Seller and Purchaser undertakes to put forth its reasonable best efforts to
arrange for the assignment of the Company Leases from Seller to Purchaser on a
basis without recourse to Seller. If and to the extent that Seller and Purchaser
are unable to effect an assignment of the Company Leases, Purchaser covenants to
perform, in all material respects, the lessee's duties and obligations arising
thereunder. With respect to the Third Party Leases, Purchaser agrees to put
forth its reasonable best efforts to invoice and collect the monthly payment
obligations of such third parties in accordance with the payment schedule set
forth in Exhibit D and to remit such payment to the equipment lessor, all in a
manner
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consistent with past practice, until the expiration of the applicable
equipment lease obligations. If and to the extent that Purchaser is unable to
collect the monthly payment obligations from the third parties, Purchaser shall
provide Seller with timely notice thereof and thereafter remit the appropriate
payments to the equipment lessor following receipt of same from Seller.
(H) Closed Facility Leases. Exhibit E hereto enumerates certain
facilities leases to which the Company is a party and, as of the date of this
Agreement, are not in use by the Company. Seller agrees to assume each of the
leasehold obligations identified in Exhibit E (the "Closed Facility Leases") and
to indemnify, defend and hold Purchaser harmless from and against and in respect
of any and all liabilities, losses, damages, claims, costs and expenses arising
from or relating in any manner to the Closed Facility Leases.
VI. Transition Matters.
(A) Shared Office Space. The parties acknowledge and agree that Seller
and the Company currently occupy joint office facilities pursuant to leasehold
interests held by Seller in the cities of Minnetonka, Minnesota, Milwaukee,
Wisconsin, Des Moines, Iowa, Omaha, Nebraska, Cleveland, Ohio and Columbus,
Ohio. During the 12-month period commencing on the Closing Date, subject to
Seller's receipt of any and all third party consents required under the terms of
Seller's lease agreements, Purchaser shall be permitted to occupy the space now
occupied by the Company without cost to Purchaser, provided, however, that in
the event Seller's occupancy of any such facility is terminated for any reason
during such 12-month period, Purchaser's right to occupy the related facilities
shall terminate simultaneously; and, provided further, that if Seller's
occupancy is so terminated, Seller shall use its reasonable best efforts to
provide Purchaser with reasonably prompt notice thereof.
(B) Other Office Space; Office Equipment. Each of Purchaser and Seller
agrees to put forth its reasonable best efforts to arrange for the assignment by
Seller to Purchaser on a nonrecourse basis to Seller of Seller's leasehold
interest in the Warren, New Jersey office facility and office machines and
equipment currently utilized by the Company therein. In the event that the
parties are unsuccessful with respect to any one or more of such lease
assignments, Seller shall put forth its reasonable best efforts to enable
Purchaser to obtain all rights and privileges associated with any such lease,
subject to Seller's receipt of any and all third party consents required under
the terms of Seller's lease agreements. Purchaser hereby undertakes to perform
all of Seller's duties and satisfy all of Seller's other obligations under each
agreement not assignable to Purchaser on a nonrecourse basis to Seller and
Seller agrees not to extend or otherwise modify or amend its obligations under
any such agreement without Purchaser's prior written consent.
(C) Telephone and Switchboard Equipment. During the 12-month period
commencing on the Closing Date, Purchaser shall be permitted to utilize Seller's
telephone and switchboard equipment currently in the space now occupied by the
Company without cost to Purchaser, provided, however, that in the event Seller's
occupancy of any such facility is terminated for any reason during such 12-month
period, Purchaser's right to utilize the related telephone and switchboard
equipment shall terminate simultaneously.
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(D) Information System Support. During the 12-month period commencing
on the Closing Date, Seller shall provide Purchaser with the information systems
support services reasonably required by Purchaser at a price of $31.00 per hour,
payable monthly upon receipt of Seller's invoice. Notwithstanding the preceding
sentence, Seller shall provide Purchaser with labor support for Purchaser's
Xxxxxxx Software installation and transition without charge therefor for a
period of three months following the Closing Date.
(E) Corporate Software Systems. For a period of 90 days commencing on
the Closing Date, Seller shall permit Purchaser to access all of Seller's
corporate software applications currently utilized by the Company and Purchaser
agrees to reimburse Seller for all direct costs incurred by Seller in connection
therewith. During such 90-day period, Seller shall provide reasonable consulting
assistance to Purchaser in connection with the selection, implementation, and
conversion to a new financial and HR software system for the Company at no cost
or expense to the Company.
(F) Name Change. Purchaser acknowledges and agrees that on and after
the Closing Date, Purchaser shall use its reasonable best efforts to
discontinue, as soon as possible, all use of the name "Norstan" and any and all
logos in any way similar to those currently maintained by Seller, and in no
event shall Purchaser's use continue after 60 days following the Closing Date.
Purchaser agrees to file an amendment of the Company's articles of incorporation
with the office of the Minnesota Secretary of State to effect a change in the
name of the Company within 30 days after the Closing Date. Purchaser further
agrees to execute and deliver to Seller, upon Seller's request, any and all
instruments required, in the reasonable judgment of Seller, to effect an
assignment from the Company to Seller of any and all logos, trademarks, service
marks, and other intellectual property identifiable with the name "Norstan"
registered in the name of the Company with any federal state, or foreign
government or agency thereof. Seller shall reimburse Purchaser for all costs
incurred by Purchaser during the six-month period following the Closing Date for
services provided by third parties to effect and advertise a name change for the
Company, subject to a maximum reimbursement obligation of $100,000. Purchaser
agrees to indemnify Seller for any and all losses or other damages Seller may
incur in connection with, or in any way arising out of, Purchaser's use, after
the Closing Date, of the name "Norstan" or any logo or other symbol maintained
by, or otherwise identified with Seller.
(G) Corporate Travel Programs. Purchaser may utilize Seller's corporate
travel and American Express programs in a manner consistent with the Company's
current use of same for a period of three months following the Closing Date;
provided, however, that Purchaser shall pay for all expenses incurred by
Purchaser or its employees under these programs and Purchaser agrees to
indemnify Seller for all such expenses.
(H) Human Resources and Payroll Processing. During the three-month
period commencing on the Closing Date, Seller shall provide Purchaser with human
resources support services, including human resources training, at no cost to
Purchaser. During the same period, Seller shall process or cause Purchaser's
payroll to be processed, provided, that: (i) Purchaser shall reimburse Seller
for all third-party payroll processing charges and expenses incurred on
Purchaser's behalf; and (ii) Purchaser shall deliver to Seller via cashier's
check or wire transfer sufficient funds to cover each Purchaser payroll
processed by Seller, prior to the processing thereof.
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(I) Consulting Opportunities. Seller agrees to put forth its reasonable
best efforts to offer Purchaser a reasonable opportunity to bid on internal and
external consulting projects reasonably deemed by Seller to be within
Purchaser's expertise and availability of resources and identified by Seller
during the 24-month period following the Closing Date. Such projects shall not
include work Seller may substantially perform with internal resources.
(J) Accounts Receivable Collections Support. During the 60-day period
commencing on the Closing Date, Seller shall provide to Purchaser, at no cost to
Purchaser, accounts receivable collections support on a level consistent with
the services rendered by Seller to the Company immediately prior to the Closing
Date.
(K) 401(k) Plan Contributions. On or before January 31, 2002, Seller
shall pay to Purchaser an amount equal to, and representing, a matching 401(k)
contribution on a pro rata basis for amounts contributed by employees of the
Company during the period from January 1, 2001 to the Closing Date who are
continuously employed by the Company during the period from the Closing Date to
and including December 31, 2001.
(L) Release. Purchaser hereby grants to Seller and Seller's affiliates,
together with their respective officers, directors, employees and other agents
and representatives, an unconditional release of liability for any and all
losses or damages that may be incurred by Purchaser and Purchaser's affiliates
and their respective officers, directors, employees and other agents and
representatives directly or indirectly resulting from, or in any arising out of,
Seller's provision of services to Purchaser pursuant to this Article VI;
provided, however, that the foregoing shall not apply in connection with any act
of gross negligence or willful misconduct by Seller's officers, directors,
employees, agents and representatives.
VII. Conditions Precedent to the Closing.
(A) Conditions Precedent to Purchaser's Obligation to Close.
Notwithstanding any other provision herein, the obligation of Purchaser to
consummate the transactions contemplated hereunder are, at the option of
Purchaser, subject to the satisfaction of each of the conditions set forth
below:
(1) Agreements and Conditions. On or before the Closing Date,
Seller shall have complied with and duly performed all agreements and
conditions to be complied with or performed by Seller on or before the
Closing Date pursuant to or in connection with this Agreement.
(2) Representations and Warranties. The representations and
warranties of Seller contained in this Agreement 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 representations and warranties had
been restated and made on and as of the Closing Date, except for those
representations and warranties which speak as of a specified date.
(3) Opinion of Counsel. Purchaser shall have received an
opinion of Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP, counsel for Seller, in
form and substance reasonably satisfactory to Purchaser and its
counsel.
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(4) No Legal Proceedings. No legal proceeding shall have been
instituted or threatened which, in Purchaser's reasonable opinion,
questions or reasonably appears to portend subsequent questioning of
the validity or legality of this Agreement or the transactions
contemplated hereby or seeks to restrict, limit, prohibit or enjoin (or
to obtain damages as a result of) such transactions or may have a
Company Material Adverse Effect.
(5) Officer's Certificate. Purchaser shall have received a
certificate dated the Closing Date and executed by the Chief Executive
Officer or the Chief Financial Officer of Seller, certifying that the
representations and warranties made by Seller in this Agreement are
true and correct in all material respects at and as of the Closing Date
(except for such representations and warranties which speak as of a
specified date), and that Seller has fulfilled all conditions to the
Closing provided for in this Agreement to be fulfilled by Seller.
(6) Consents and Releases. All consents, approvals and
releases, including but not limited to releases of any security
interests in or to the Shares, required in connection with the
transactions contemplated by this Agreement, all in form and substance
reasonably satisfactory to Purchaser, shall have been obtained.
(B) Conditions Precedent to Seller's Obligation to Close.
Notwithstanding any other provision herein, the obligation of Seller to
consummate the transactions contemplated hereunder are, at the option of Seller,
subject to the satisfaction of each of the conditions set forth below:
(1) Lender Consent. Seller shall have received from its
lenders under the Seller Credit Agreement all consents required
thereunder to effect and consummate the transactions contemplated by
this Agreement and a full and complete release of all related security
interests in the Shares, the capital stock of the Company and the
assets of Holding and the Company.
(2) Conversion of SAMI Accounts Receivable; Guarantee. The
Company, acting through Xxxxx, shall have converted the Company's
accounts receivable from Substance Abuse Management Inc. into the SAMI
Note and obtained an unconditional personal guarantee of the SAMI Note
from the sole shareholder of SAMI.
(3) Assignment of Titan Litigation. The Company shall have
assigned to Seller all of the Company's right, title to, and interest
in, all claims the Company has or may have in the future, arising out
of Seller's acquisition of Xxxxxx Inc., the formation and operation of
Titan Technology and all related matters, together with all litigation
or arbitration conducted in connection therewith.
(4) Agreements and Conditions. On or before the Closing Date,
Purchaser shall have complied with and duly performed all agreements
and conditions to be complied with or performed by Purchaser on or
before the Closing Date pursuant to or in connection with this
Agreement.
(5) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement 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
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representations and warranties had been restated and made on and as of
the Closing Date, except for those representations and warranties which
speak as of a specified date.
(6) Opinion of Counsel. Purchaser shall have received an
opinion of Xxxxxxxxx & Xxxxxx, PLLP, counsel for Purchaser, in form and
substance reasonably satisfactory to Seller and its counsel.
(7) No Legal Proceedings. No legal proceeding shall have been
instituted or threatened which, in Seller's reasonable opinion,
questions or reasonably appears to portend subsequent questioning of
the validity or legality of this Agreement or the transactions
contemplated hereby or seeks to restrict, limit, prohibit or enjoin (or
to obtain damages as a result of) such transactions.
(8) Officer's Certificate. Seller shall have received a
certificate dated the Closing Date and executed by the Chief Executive
Officer or the Chief Financial Officer of Purchaser, certifying that
the representations and warranties made by Purchaser in this Agreement
are true and correct in all material respects at and as of the Closing
Date (except for such representations and warranties which speak as of
a specified date), and that Purchaser has fulfilled all conditions to
the Closing provided for in this Agreement to be fulfilled by
Purchaser.
(9) Employment Contract. Xxxxx shall have consented in writing
to: (i) the assignment of his employment agreement with Seller, dated
March 1, 2000, from Seller to the Company without further liability to
Seller; or (ii) the termination of same without further liability to
Seller.
VIII. Termination of the Agreement.
(A) Termination by Mutual Consent. This Agreement may be terminated at
any time prior to the Closing Date by the mutual written consent of Purchaser
and Seller. This Agreement shall automatically terminate if the Closing has not
occurred on or before May 1, 2001 unless such date is extended by written
consent of the parties hereto.
(B) Termination by Purchaser. Purchaser may terminate this Agreement by
written notice to Seller at any time prior to the Closing Date if:
(1) a condition to the performance of Purchaser set forth
herein shall not be fulfilled on or before the date specified for the
fulfillment thereof, unless such failure is a result of acts or
failures to act of the Purchaser; or
(2) a material default under or a material breach of this
Agreement or a material misrepresentation or a material breach of any
representation, warranty or covenant of Seller set forth in this
Agreement or in any instrument delivered by Seller pursuant hereto
shall have occurred and be continuing unless the same is curable and is
cured by Seller prior to the Closing Date.
(C) Termination by Seller. Seller may terminate this Agreement by
written notice to Purchaser at any time prior to the Closing Date if:
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(1) a condition to the performance of Seller set forth herein
shall not be fulfilled on or before the date specified for the
fulfillment thereof, unless such failure is a result of acts or
failures to act of Seller; or
(2) a material default under or a material breach of this
Agreement or a material misrepresentation or a material breach of any
representation, warranty or covenant of Purchaser set forth in this
Agreement or in any instrument delivered by Purchaser pursuant hereto
shall have occurred and be continuing unless the same is curable and is
cured by Purchaser prior to the Closing Date.
(D) Effect of Termination. In the event of the termination and
abandonment hereof prior to the Closing Date pursuant to the provisions of this
Section VIII, this Agreement shall become void and have no effect, and each
party shall pay all of its own expenses incurred in connection herewith, without
any liability on the part of any party or its partners, directors, officers or
shareholders; provided, however, that if this Agreement is terminated and
abandoned because either party has defaulted under or breached this Agreement or
any representation, warranty or covenant set forth in this Agreement, then the
party so electing to terminate this Agreement shall be entitled to pursue,
exercise and enforce any and all other remedies, rights, powers and privileges
available to it at law or in equity.
IX. Survival.
(A) Representations and Warranties. The representations and warranties
of the parties in this Agreement shall survive the Closing and any
investigations made by or on behalf of any of the parties hereto for the
following periods, after which periods such representations and warranties shall
be of no further force and effect unless written notice of a claim with respect
to such representation and warranty shall have been given to the party
responsible therefor prior to the expiration thereof:
(1) The representations and warranties contained in Section
III(K) shall survive, with respect to a particular tax period, until
six months after the applicable limitations period (including waivers
and extensions) shall have barred any assessment of tax deficiencies
for such tax period or, if later, until six months after the final
unappealable decision by a court of competent jurisdiction with respect
to such tax.
(2) All other representations and warranties of Seller shall
survive the Closing for a period of one year.
(B) Covenants. All covenants of any party hereto which are not fully
performed as of the Closing shall survive the Closing for a period of one year
following the expiration of the applicable performance period.
X. Indemnification.
(A) Indemnification by Seller. Without limiting any other substantive
remedy Purchaser may expressly have hereunder, Seller hereby agrees to
indemnify, defend and hold Purchaser harmless from and against and in respect of
any and all liabilities, losses, damages, claims, costs and expenses, including
reasonable attorneys' fees (collectively, "Claims"), arising
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from or relating in any manner to: (i) the breach of any representation or
warranty of Seller contained herein; or (ii) the failure of Seller to perform
any of its covenants contained herein. Seller's indemnification obligations
shall apply whether the subject Claims arise from third party claims (including
but not limited to claims made by shareholders of Seller) or not. In addition,
Seller hereby agrees to assume, and bear all expenses incurred in connection
with, Purchaser's defense against that certain action brought against the
Company under a complaint filed on April 27, 2001 by TechSkills, LLC in the
Circuit Court of Milwaukee County, Wisconsin, and to indemnify and hold
Purchaser harmless from and against and in respect of any and all liabilities,
losses, damages, claims, costs and expenses, including reasonable attorneys'
fees, arising from or relating in any manner to the aforementioned complaint;
provided, however, that such indemnification protection shall not apply in
connection with any liabilities, losses, damages, claims, costs and expenses
incurred by Purchaser as a result of any acts or omissions by the Company in
relation to the subject matter of the complaint subsequent to April 30, 2000;
and, provided further, that if any resolution of the TechSkills complaint
unfavorable to Purchaser, whether by settlement or judgment, is limited to a
reduction in the amount owed by TechSkills under the TechSkills Note, Purchaser
shall not be entitled to any indemnification protection hereunder, but shall
only be entitled to a reduction of the Purchaser Guarantee in accordance with
the provisions of Section I(C) hereof.
(B) Indemnification by Purchaser. Without limiting any other
substantive remedy Seller may expressly have hereunder, Purchaser hereby agrees
to indemnify, defend, and hold Seller harmless from and against and in respect
of any and all liabilities, losses, damages, claims, costs and expenses,
including reasonable attorneys' fees (collectively, "Claims"), arising from or
relating in any manner to: (i) subject to the limitations set forth in Section
I(C) hereof with respect to Purchaser's assignment of the Notes, the breach of
any representation or warranty of Purchaser contained herein; or (ii) the
failure of Purchaser to perform any of its covenants contained herein.
Purchaser's indemnification obligations shall apply whether the subject Claims
arise from third party claims or not.
(C) Procedure for Claiming Indemnification.
(1) The party seeking indemnification (the "Indemnitee") shall
give the party from whom indemnification is sought (the "Indemnitor")
notice of any claim or the commencement of action or proceeding
promptly after the Indemnitee receives notice thereof; provided,
however, that the failure of the Indemnitee to give notice shall not
relieve the Indemnitor of its obligations hereunder, except to the
extent the Indemnitor is actually prejudiced or harmed by such failure
to give notice. The Indemnitor shall be permitted to assume the defense
of any such claim or litigation resulting from such claim, with counsel
reasonably satisfactory to the Indemnitee. The Indemnitor shall provide
Indemnitee written notice of such assumption of defense within thirty
(30) days of receipt by the Indemnitor of notice of the proceeding.
(2) If the Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, the Indemnitor shall take all steps
necessary in the defense or settlement of such claim or litigation
resulting therefrom and hold the Indemnitee harmless from and against
any and all losses, damages and liabilities caused by or arising out of
any settlement approved by the Indemnitor or any judgment in connection
with such claim or litigation resulting
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therefrom. The Indemnitee may participate, at its expense, in the
defense of any such claim or litigation, provided that the Indemnitor
shall direct and control the defense of such claim or litigation.
Except with the written consent of the Indemnitee, the Indemnitor shall
not, in the defense of such claim or any litigation resulting
therefrom, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof, the
giving by the claimant or the plaintiff to the Indemnitee of a release
from all liability with respect to the claim or litigation.
(3) If the Indemnitor shall not assume the defense of any such
claim or litigation resulting therefrom, the Indemnitee may defend
against such claim or litigation in such manner as it may deem
appropriate and, unless the Indemnitor shall deposit with the
Indemnitee a sum equivalent to the total amount demanded in such claim
or litigation, or shall deliver to Indemnitee a surety bond in form and
substance reasonably satisfactory to Indemnitee, Indemnitee may settle
such claim or litigation on such terms as it may reasonably deem
appropriate, and the Indemnitor shall promptly reimburse Indemnitee for
the amount of all expenses, legal or otherwise, reasonably incurred by
the Indemnitee in connection with the defense against or settlement of
such claim or litigation, net of any related income tax benefit
realized by the Indemnitee. If no settlement of such claim or
litigation is made, the Indemnitor shall promptly reimburse the
Indemnitee for the amount of any final judgment rendered with respect
to such claim or in such litigation and for all reasonable expenses,
legal or otherwise, incurred by the Indemnitee in the defense against
such claim or litigation, but only to the extent that such amounts are
actually paid.
XI. Post-Closing Tax Covenants.
(A) Taxes of Other Persons. Seller agrees to indemnify Purchaser and
the Company from and against the entirety of any adverse consequences Purchaser
or the Company may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any liability of either Seller for Taxes of any entity
other than the Company (i) under Treasury Reg. ss.1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
(B) Returns for Periods Through the Closing Date. Seller will include
the income of the Company (including any deferred income triggered into income
by Treasury Reg. ss.1.1502-13 and Treasury Reg. ss.1.1502-14 and any excess loss
accounts taken into income under Reg. ss.1.1502-19) on Seller's consolidated
federal income Tax Returns for all periods through the Closing Date and pay any
federal income Taxes attributable to such income. Purchaser will cause the
Company to furnish Tax information to Seller for inclusion in Seller's federal
consolidated income Tax Return for the period which includes the Closing Date in
accordance with the Company's past custom and practice. Seller will allow
Purchaser an opportunity to review and comment upon such Tax Returns (including
any amended returns) to the extent that they relate to the Company. Seller will
take no position on such returns that relate to the Company that would adversely
affect the Company after the Closing Date unless such position would be
reasonable in the case of an entity that owned the Company both before and after
the Closing Date. The income of the Company will be apportioned to the period up
to and including the Closing Date and the period after the Closing Date by
closing the books of the Company as of the end of the Closing Date. Seller shall
remain responsible for any state and/or federal
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income Taxes attributable to the income of the Company for all periods up to and
including the Closing Date. To the extent that the Company has paid to Seller
any amounts for Taxes on the Company's income for the period from January 1,
2001 up to and including the Closing Date, in excess of the amount of Tax
actually attributable to such income, Seller will reimburse the Company for such
excess within 30 days of the filing deadline for the relevant Tax Return.
(C) Audits. Seller will allow Purchaser and its counsel to participate,
at Purchaser's own expense, in any audits of Seller's consolidated federal
income Tax Returns to the extent that such returns relate to the Company. Seller
will not settle any such audit in a manner which would adversely affect the
Company after the Closing Date unless such settlement would be reasonable in the
case of an entity that owned the Company both before and after the Closing Date.
XII. General.
(A) Further Assurances. Purchaser and Seller agree that, on and after
the Closing Date, they shall take all appropriate action and execute any
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the provisions hereof.
(B) Amendment and Waiver. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
(C) Severability. In case any one or more of the provisions of this
Agreement shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Agreement shall not
in any way be affected or impaired thereby and the parties will attempt to agree
upon a valid and enforceable provision which shall be a reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Agreement.
(D) Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
mailed by first class mail, return receipt requested, or when receipt is
acknowledged, if sent by facsimile, telecopy or other electronic transmission
device. Notices, demands and communications to Purchaser and Seller will, unless
another address is specified in writing, be sent to the address indicated below:
If to Seller: If to Purchaser:
------------ ---------------
Norstan, Inc. Synchromesh Consulting, Inc.
0000 Xxxxx Xxx Xxxx 0000 Xxxxx Xxx Xxxx
Xxxxxxxxxx, XX 00000-0000 Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxxx Attention: Xxxxx X. Xxxxx
telephone: 000.000.0000 telephone: 000.000.0000
telecopy: 952.352.4461 telecopy: 952.238.5612
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With copies to: With a copy to:
-------------- --------------
Xxxxxx Xxxxxxx Xxxxxx & Brand, LLP Xxxxxxxxx & Xxxxxx, PLLP
3300 Xxxxx Fargo Center 0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx Attention: Xxxxxx Xxxxxxx and Xxxxxxx Xxxxxxxx
telephone: 000.000.0000 telephone: 612.371-3211
telecopy: 612.672.8397 telecopy: 612.371.3207
Xxxxx X. Xxxxxxx
Norstan, Inc.
0000 Xxxxx Xxx Xxxx
Xxxxxxxxxx, XX 00000-0000
telephone: 000.000.0000
telecopy: 952.352.4907
(E) Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by Purchaser
without the prior written consent of Seller, or assigned by Seller (other than
to any successor to Seller by merger, consolidation, share exchange or sale of
all or substantially all of Seller's assets) without the prior written consent
of Purchaser.
(F) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
(G) Complete Agreement. This Agreement and the exhibits hereto contain
the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
(H) Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
(I) Governing Law. The internal law, without regard to conflicts of
laws principles, of the State of Minnesota will govern all questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.
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22
(J) Authority. The persons executing this Agreement on behalf of the
entity parties hereto hereby represent and warrant that they are duly authorized
to execute and deliver this Agreement on behalf of the party for whom they are
signing and that no further action is required on behalf of such party in
connection with the execution and delivery of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
NORSTAN, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Its: CFO
SYNCHROMESH CONSULTING, INC. Xxxxx X. Xxxxx, individually
(solely with respect to Articles IV(E)
and V hereof):
/s/ Xxxxx X. Xxxxx
-----------------------------------------
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Its: CEO/President
