STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT dated as of April 1, 2003 (the "Agreement")
is made and entered into by and among BELCAN CORPORATION, an Ohio corporation
("Purchaser") and ARC COMMUNICATIONS, INC., a New Jersey corporation ("Seller").
RECITALS:
Seller desires to sell and Purchaser desires to purchase all of the issued
and outstanding shares of capital stock ("Purchased Shares") of Arcmesa
Educators, Inc., a New Jersey corporation ("Company").
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements herein contained, the parties hereto agree as follows:
1. SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase. Subject to the terms and conditions of this
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Agreement, at the Closing (later defined), the Seller will sell, assign and
transfer to Purchaser the Purchased Shares, free and clear of all charges,
interests, liens, security interests, restrictions or encumbrances of any kind,
and Purchaser will purchase the Purchased Shares from the Seller.
1.2 Purchase Price. The purchase price ("Purchase Price") for the
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Purchased Shares, together with the Seller's covenants of non-competition
contained in the Non-Competition Agreement referenced in Section 4.7 herein,
shall be the combination of the following amounts:
(a) The sum of Three Hundred Fifty Thousand Dollars ($350,000)
("Initial Payment") which shall be payable at Closing and which shall be
allocated to the purchase of the Purchased Shares.
(b) The sum of One Hundred Thousand Dollars ($100,000) (the
"Non-Competition Payment") shall be payable upon the first annual anniversary
date of the Closing, all of which shall be allocated to the Seller's covenants
of non-competition contained in the Non-Competition Agreement.
1.3 Closing. Subject to the provisions of this Agreement, the closing
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(the "Closing") of the transactions contemplated by this Agreement shall take
place at the offices of Keating, Muething & Klekamp, P.L.L., 1400 Provident
Tower, One East Fourth Street, Cincinnati, Ohio 45202, on April 1, 2003 at 10:00
a.m. or at such other time, place or date as Purchaser and the Seller may
mutually agree. Provided, however, that if a condition to Closing set forth in
Article 7 or elsewhere herein shall not have been fulfilled or waived at such
time, either party hereto entitled to the benefits of such condition may
postpone the Closing by notice to the other party until such condition or
conditions shall have been met or waived, except that in no event shall the
Closing occur after April 15, 2003. The date and time of such Closing are herein
referred to as the "Closing Date."
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2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER.
Except as otherwise disclosed in writing to Purchaser or excepted in the
schedules delivered by the Seller to Purchaser (the "Disclosure Schedule"), the
Seller covenants, represents and warrants, which representations and warranties
shall be true and accurate as of the Closing Date as if such representations and
warranties had been made as of the Closing Date, with and to Purchaser, its
successor and assigns, as follows:
2.1 Organization. The Company is a corporation duly incorporated and
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organized, validly existing and in good standing under the laws of New Jersey
and has full corporate power and authority to own, lease and operate all of its
properties and assets and to carry on its business as it is now being conducted.
2.2 Capitalization. The authorized and issued capital stock of the
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Company and the ownership of the Purchased Shares is as set forth on Section 2.2
of the Disclosure Schedule. All of the Purchased Shares have been duly and
validly issued and are fully paid and non-assessable, free of any claim of
pre-emptive rights. There are no outstanding rights to purchase or receive, or
options, warrants, puts, calls, contracts, commitments or demands of any
character relating to the Company's authorized or issued capital stock or which
could require the issuance of capital stock by the Company. There are no voting
trusts, shareholder agreements or other agreements or understandings to which
the Company or Seller is a party with respect to the voting of their capital
stock.
2.3 No Violation; Consents and Approvals. Neither the execution and
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delivery of this Agreement by the Seller, nor the consummation of the
transactions contemplated hereby, will conflict with, result in a breach of,
permit any party to terminate or accelerate the provisions of, or result in the
imposition of any lien, encumbrance or restriction upon the property or assets
of the Company under (a) the provisions of the Articles of Incorporation or the
Code of Regulations of the Company, (b) the provisions of any obligation,
indenture, agreement, permit, license, registration or other instrument to which
the Company is a party or which the Company holds, or (c) any statute or law or
any order, decree, judgment, rule or regulation of any court or governmental
agency or authority having jurisdiction over the Company. No permit, consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority or other person (either governmental or
private) is necessary in connection with the execution and delivery by the
Seller of this Agreement or the consummation by the Seller of the transactions
contemplated hereby.
2.4 Subsidiaries and Other Capital Stock. The Company has no active
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Subsidiaries. [The Company has inactive Subsidiaries as set forth on Section 2.4
of the Disclosure Schedule.] As used herein, the term "Subsidiaries" means any
corporation or other entity in which the Company is entitled by virtue of its
ownership of securities (or equivalent interests) to elect a majority of the
directors (or persons performing equivalent functions).
2.5 Financial Statements.
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(a) Section 2.5 of the Disclosure Schedule sets forth a true and
correct copy of the unaudited balance sheet of the Company as at December 31,
2002 (the "Balance Sheet"). Section 2.5 of the Disclosure Schedule also sets
forth a true and correct copy of the unaudited income statement of the Company
for the period ended December 31, 2002. The foregoing financial statements are
collectively referred to herein as the "Financial Statements."
(b) The Financial Statements have been prepared from the books and
records of the Company as, at and for the periods indicated and have been
prepared in accordance with GAAP as approved from time to time and consistently
followed throughout the periods indicated, and present fairly the assets,
liabilities and financial positions of the Company, and the results of its
operations, as, at and for the periods indicated, except for normal year-end
adjustments in accordance with GAAP.
2.6 Absence of Undisclosed Liabilities. Except to the extent shown on
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the Financial Statements or Section 2.6 of the Disclosure Statement, to the
Seller's and the Company's knowledge the Company has no other material
liabilities or material obligations of any nature whether accrued, absolute,
contingent or otherwise, and the Seller and the Company do not know and will
not, at the Closing Date, know or have any reason to know of any basis for the
assertion of any such other material obligation or material liability against
the Company.
2.7 Intellectual Property/Licenses. Section 2.7 of the Disclosure
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Schedule sets forth (a) a description of all trademarks (whether registered or
unregistered), trade names (whether registered or unregistered), patents and
registered copyrights and applications for any of the foregoing (b) a
description of all licenses owned by the Company (collectively, the
"Intellectual Property/Licenses"), together with a designation of the ownership
and (c) a list of all agreements or arrangements which affect the ownership or
use of any item of Intellectual Property/Licenses. To the Seller's and the
Company's knowledge, the use by the Company of the Intellectual
Property/Licenses as heretofore used in the conduct of its business does not and
will not, after the Closing Date, infringe upon the rights of others and, to the
Seller's and the Company's knowledge, no third party is infringing upon the
rights of the Company in such Intellectual Property/Licenses.
2.8 Omitted.
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2.9 Contracts and Agreements. Section ~~2.9 of the Disclosure Schedule
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sets forth a description of all contracts and agreements (whether written or
oral) and all amendments thereto or modifications thereof to which the Company
is a party or by which it may be bound, excluding those which:
(a) Involve a price, cost or other consideration of less than $10,000;
(b) Can be fully performed within a period of three (3) months; or
(c) Are terminable by the Company on not more than thirty (30) days
notice without cost to the Company.
2.10 Bank Accounts. Section ~~2.10 of the Disclosure Schedule sets
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forth the name and address of each bank in which the Company has an account or
safety deposit box, the designation of such account and the names of all persons
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authorized to draw thereon or enter therein, as may be the case.
2.11 Employee Matters. To the Seller's and the Company's knowledge,
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the Company is in substantial compliance with all federal and state laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices. All obligations of the Company, whether arising by operation of law,
by contract or by past custom, for payments by the Company directly to its
employees or to trusts or other funds or to any governmental agency, for
employment compensation benefits, workers compensation benefits, accident,
sickness and disability benefits, pension, profit sharing and any other
retirement benefits, social security benefits, vacation and holiday pay, bonuses
and other forms of compensation, or any other benefits, have been or prior to
Closing will be paid or adequate accruals therefor have been made on the
Financial Statements.
2.12 Taxes and Tax Returns. The Seller, on behalf of the Company, will
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duly and timely file all federal, state and local tax returns required to be
filed by it for all periods prior to the Closing Date, and all such returns, to
the Seller's and the Company's knowledge will be when filed, true, complete and
correct in all material respects. The Seller, on behalf of the Company will,
prior to the Closing Date, duly and timely pay or make adequate provision for
the payment of all taxes, assessments and other governmental charges which have
been incurred as set forth in the aforementioned tax returns or are otherwise
due and payable with respect to periods ending prior to the Closing Date. All
sales and goods and services taxes required through the date of this Agreement
to be collected and remitted by the Company have been properly collected and
remitted in all material respects. All sales and goods and services taxes will
continue to be properly collected and remitted in all material respects to the
extent required, up to and through the Closing Date. All necessary sales tax
exemption certificates have been obtained by the Company and all such
certificates have been properly completed and maintained in all material
respects. No tax returns filed by the Company are under audit or examination by
any taxing authority and there are no applications or agreements for the
extension of the time for the filing of any tax return or for the assessment of
any amounts of tax nor any consent to an extension of the period of limitations
applicable to such assessment or to the collection of any tax. To the Seller's
and the Company's knowledge, no issue or issues have been raised in connection
with any prior or pending inquiry into, or audit of, any tax filings of the
Company which may be expected to be raised in the future by such taxing
authorities and no facts exist or have existed which would constitute grounds
for the assessment of any further tax liabilities, which individually or in the
aggregate are material with respect to the periods which have not been examined
by the governmental authorities. Attached to Section 2.12 of the Disclosure
Schedule are true and complete copies of all federal, state and local income tax
returns which the Company has filed for each of the past three (3) years and the
Company has made available to Purchaser copies of all schedules, work papers,
elections, tax depreciation schedules and other documents which were used in the
preparation of each such tax return. There are no liens for taxes upon the
assets of the Company except for liens for taxes not yet due. As used herein,
"taxes" mean (a) all net income, gross income, gross receipts, sales, goods and
services, use, transfer, franchise, profits, withholding, payroll, employment,
excise, severance, property or windfall profits taxes, or other taxes of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority (domestic or foreign) upon
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the Company with respect to all periods or portions thereof ending on or before
the Closing Date and/or (b) any liability of the Company for the payment of any
amounts of the type described in the immediately preceding clause (a) as a
result of being a member of an affiliated or combined group.
2.13 Title to and Condition of Non-Real Estate Assets. Except for such
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assets as have been disposed of in the ordinary conduct of the Company's
business between December 31, 2002 and the Closing Date, the Company has good
and marketable title to, or valid leasehold interests in, all non-real estate
assets reflected on the Balance Sheet or acquired by it after December 31, 2002
or otherwise used in the operation of the Company's businesses, free and clear
of all liens, claims, mortgages, charges, easements or other encumbrances of any
kind whatsoever except: (a) to the extent reflected or reserved against on the
Balance Sheet, or (b) for liens for property taxes not yet due.
2.14 Real Property. The Company owns or leases no real property.
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2.15 Litigation. Except as listed in Section ~~2.15 of the Disclosure
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Schedule, there are no claims, actions, suits or proceedings pending or, to the
Seller's and the Company's knowledge, threatened (a) against or affecting the
Seller that might adversely affect the Purchased Shares or the performance by
the Seller of its obligations hereunder, or (b) against or affecting the
Company, or any of its property, assets or business. Except as disclosed in
Section ~~2.15 of the Disclosure Schedule, (i) each claim, action, suit and
proceeding listed in Section ~~2.15 of the Disclosure Schedule is fully covered
by existing policies of insurance; (ii) the Company is not a party to any
action, suit or proceeding as a party plaintiff nor is the Company presently
contemplating or aware of grounds for the initiation of any such action, suit or
proceeding; and (iii) the Company is not involved in any investigation by any
governmental body, and, to the Seller's and the Company's knowledge, no such
investigation is threatened.
2.16 Employee Benefit Plans. Section ~~2.16 of the Disclosure Schedule
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sets forth a description of all bonus, stock option, phantom stock option,
incentive compensation, profit sharing, retirement, pension, group insurance,
death benefit or other fringe benefit plans, trust agreements or arrangements of
the Company, and copies of all documents relating to each of said benefit plans
have been separately delivered to Purchaser. Such plans and arrangements which
are subject to the Employee Retirement Income Security Act of 1974 ("ERISA") are
referred to hereafter as the "Benefit Plans". The Company has made available to
Purchaser for inspection all annual reports filed on Internal Revenue Service
("IRS") Form 5500 with respect to any Benefit Plans and other reports filed with
the Pension Benefit Guaranty Corporation since January 1, 2000 to the extent
applicable. With respect to the Benefit Plans:
(a) The Internal Revenue Service has issued, and the Company has made
available to Purchaser for inspection, favorable determination letters with
respect to the qualification of all Benefit Plans and all amendments thereto, as
currently in effect and as required to be amended to comply with the Tax Reform
Act of 1986 which are intended to be qualified retirement plans under the
Internal Revenue Code of 1986 (the "Code");
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(b) To the Seller's and the Company's knowledge, none of the Benefit
Plans or any assets thereof has engaged in, or been a party to any "prohibited
transaction" as defined in ERISA or the Code;
(c) There is no liability arising from the termination or partial
termination of any Benefit Plan, except for liabilities as to which adequate
reserves are reflected in the Balance Sheet, and there exists no condition
presenting a material risk of such liability;
(d) All Benefit Plans have been operated in substantial compliance
with ERISA, the Code and other applicable law, and all reports have been filed
with respect to the Benefit Plans in accordance with ERISA and the Code.
(e) None of the Benefit Plans is a "multi employer" pension plan which
is subject to the Multi Employer Pension Plan Amendment Act of 1980.
(f) The Company has no obligation for the payment of any unfunded or
withdrawal liability under any Benefit Plan or other plan listed in Section
~~2.16 of the Disclosure Schedule.
2.17 Collective Bargaining, Employment and Non-Competition Agreements.
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The Company is not a party to any collective bargaining or similar labor
agreement. Section ~~2.17 of the Disclosure Schedule sets forth (i) all
consulting agreements to which the Company is a party and (ii) all employment,
non-competition and compensation agreements (whether written or oral) with
officers or other employees of the Company, together with a copy, or in the case
of any oral agreement, a summary, of each such agreement. Except as set forth in
such Section ~~2.17 of the Disclosure Schedule, to the Seller's and the
Company's knowledge, there exist no labor grievances or other material problems
involving labor relations of the Company which have not been fully satisfied or
discharged. Neither the Company nor the Seller knows of any organizational
effort to have any labor organization certified by the Company. The Company is
neither a member of any multi employer association nor a participant in any
multi employer bargaining group in any dealings with any labor organization.
2.18 Compliance with Applicable Law. Except as set forth in Section
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~~2.18 of the Disclosure Schedule, to the Seller's and the Company's knowledge,
the Company is conducting and has conducted its businesses so as to comply in
all material respects with all applicable laws, ordinances, regulations, decrees
and orders, of any governmental entity, including without limitation, the
National Labor Relations Act as amended, the Welfare and Pension Plans
Disclosure Act, the Fair Labor Standards Act and Equal Pay Act, Title 7 of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the
Occupational Safety and Health Act of 1970, the Americans With Disabilities Act
of 1990, and the Employees Retirement Income Security Act of 1974, and any other
law, ordinance, regulation, decree or order, the failure to comply with which
might have a material adverse effect on the financial condition, business,
properties, reputation, results of operations or prospects of the Company and
Purchaser.
2.19 Absence of Certain Changes. Since December 31, 2002, except as
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set forth in Section ~~2.19 of the Disclosure Schedule, there has not been:
(a) any material adverse change in the condition (financial or
otherwise), assets, liabilities (accrued, absolute, fixed, contingent or
otherwise) or businesses of the Company, except changes in the ordinary course
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of business, none of which has or will have, and all of which in the aggregate
have not had and will not have, a material adverse affect on the businesses,
liabilities, assets or financial conditions of the Company;
(b) any change in the Articles of Incorporation or Code of Regulations
of the Company;
(c) any declaration, setting aside or payment of any dividend, or any
other distribution on or in respect of any securities of the Company, or any
transfer of assets of any kind whatsoever to the Seller or any redemption,
retirement, purchase or other acquisition by the Company of any shares of its
capital stock;
(d) any waiver by the Company of any material right or rights of
value, or any material payment, direct or indirect, of any debt, liability or
other obligation before the same shall have become due in accordance with its
terms;
(e) any material change in the accounting methods, practices or
policies followed by the Company;
(f) except in the ordinary course of business consistent with past
practices, any increase in the compensation payable or to become payable by the
Company, or the granting of any loans or advances, to any officer, director,
employee, consultant or shareholders of the Company, or any member of their
families or any affiliate or associate of such person, or any increase in the
rate of commission or other variable compensation to be paid by the Company to
any person;
(g) any payment under any pension, retirement, profit sharing, bonus
or other employee welfare or benefit plan or any provision for any such payment
by the Company;
(h) any assumption or guarantee by the Company of any debt,
obligation, or contractual liability (whether absolute, fixed or contingent and
whether or not currently due and payable) of a third party except as a result of
the endorsement of checks for deposit or collection of amounts due the Company
in the ordinary course of business;
(i) any merger or consolidation of or by the Company with any other
entity or any acquisition of all or any part of the stock, equity interest or
the business or assets of any other association, corporation or business
organization by the Company;
(j) except for the sale, lease, replacement or disposition of assets
in the ordinary course of business, any sale, lease, disposition of, mortgage,
pledge or subjection to any lien or encumbrance on, or any waiver of any
substantial rights relating to, any material property or assets, tangible or
intangible, of the Company;
(k) any issuance or sale by the Company of any of its capital stock,
bonds, debentures, notes, membership interests or other securities or any grant
of any option, warrant or right related thereto;
(l) any contract, agreement or transaction out of the ordinary course
of business;
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(m) any acquisition of assets by the Company other than in the
ordinary course of business;
(n) any revaluation of any of the assets of the Company;
(o) except for trade debt incurred in the ordinary course of business,
any borrowings (including, without limitation, any discounted lease financing)
by the Company;
(p) any event or condition not in the ordinary course of business of
the Company; or
(q) aggregate capital expenditures by the Company in excess of Thirty
Thousand and 00/100 Dollars ($30,000).
2.20 Customer Contracts. The Company has written contracts with all of
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the customers listed in Section ~~2.20 of the Disclosure Schedule.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser covenants, represents and warrants, which representations and
warranties shall be true and accurate as of the Closing Date as if such
representations and warranties had been made at the Closing Date, with and to
the Seller, its successors and assigns, as follows:
3.1 Organization. Purchaser is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Ohio and duly
authorized under its Certificate of Incorporation and under applicable laws to
engage in the business conducted by it.
3.2 Authorization. The sole shareholder of Purchaser has approved, or
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will approve prior to Closing, the execution and delivery of this Agreement and
the performance by Purchaser of its respective obligations and undertakings
hereunder and the officers executing this Agreement on behalf of Purchaser have
authority to do so and upon execution by such officers this Agreement shall be
the valid and binding obligation of Purchaser.
3.3 No Violation; Consents and Approvals. Neither the execution nor
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delivery of this Agreement by Purchaser nor the consummation of the transactions
contemplated hereby will conflict with, result in a breach of, permit any party
to terminate or accelerate the provisions of, or result in the imposition of any
lien, encumbrance or restriction upon the property or assets of Purchaser.
4. COVENANTS OF THE SELLER.
4.1 Announcements, Communications and Confidential Information. The
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Seller and Company shall not, without the prior approval of Purchaser, make any
public announcement or furnish any information to the public concerning the
transactions contemplated by this Agreement prior to Closing unless such
announcement or furnishing of information is necessitated by applicable rules
and regulations or applicable laws, as reasonably determined by counsel for
Seller.
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4.2 Fees for Professional Services. The Seller shall pay all fees and
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disbursements for professional services rendered to the Company and the Seller
in connection with the transactions contemplated by this Agreement, including
all attorney, accountant and investment banking fees and disbursements.
4.3 Corporate Transactions. Until the Closing Date the Seller: (a)
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shall not seek to merge the Company into any entity other than Purchaser or an
affiliate of Purchaser, (b) shall not negotiate or entertain any offer with
respect to the sale of all or part of the capital stock of the Company or
substantially all or the assets of any of the Company, and (c) shall not, and
shall not authorize or permit any officer, director, employee, investment
banker, attorney, accountant or other representative to, solicit or encourage
the making of any proposals reasonably expected to lead to the acquisition of
all or part of the capital stock of the Company or substantially all of any of
the Company's assets. The Seller shall promptly notify Purchaser in writing of
any such proposal.
4.4 Conduct of Business Pending the Closing. Seller covenants and
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agrees that, prior to the Closing Date, unless Purchaser shall otherwise agree
in writing or as otherwise expressly permitted or contemplated by this Agreement
that the business of the Company shall be conducted only in the ordinary course
and consistent with past practice.
4.5 Cause Conditions to be Satisfied. The Seller shall use its best
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efforts to cause all of the conditions set forth in Sections ~~7.1 and ~~8.1
hereof to be satisfied at the earliest practical time.
4.6 Notice of Certain Actions. The Seller shall promptly notify
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Purchaser, of any actions, suits, claims, investigations, grievances,
arbitrations or proceedings commenced or, to the best of its knowledge,
threatened against, relating to or involving or otherwise affecting the Company
which, if pending on the date hereof, would have been required to have been
disclosed in writing pursuant to this Agreement.
4.7 Non-Competition. Seller agrees, at Closing, to execute the
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Non-Competition Agreement in the form of the attached Exhibit A.
5. COVENANTS OF PURCHASER.
5.1 Announcements and Communications. Purchaser shall not, without the
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prior approval of the Seller, which approval shall not be unreasonably withheld
or delayed, make any public announcement or furnish any information to the
public concerning the transactions contemplated by this Agreement prior to
Closing unless such announcement or furnishing of information is necessitated by
applicable rules and regulations or applicable laws, as reasonably determined by
counsel for Purchaser. Purchaser shall promptly advise the Seller of all
communications which it receives pertaining to the transactions contemplated by
this Agreement, including, without limitation, communications from governmental
agencies and authorities.
5.2 Cause Conditions to be Satisfied. Purchaser shall use its best efforts
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to cause all of the conditions set forth in Sections ~~7.2 and ~~8.2 hereof to
be satisfied at the earliest practical time.
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5.3 Fees for Professional Services. The Purchaser shall pay all fees and
--------------------------------
disbursements for professional services rendered to the Purchaser in connection
with the transactions contemplated by this Agreement, including all attorney,
accountant and investment banking fees and disbursements.
5A. COVENANTS OF PURCHASER AND SELLER
5A.1 Liabilities/Accounts Receivable. (a) All obligations and liabilities
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of the Company (other than in respect of customer contracts) as of the Closing
Date shall remain the responsibility and obligation of the Seller to satisfy. To
the extent that any such obligation or liability remains outstanding on the
first anniversary of the Closing Date, the Purchaser may offset the amount of
such obligation or liability against the Non-Competition Payment.
(b) All accounts receivable of the Company as of the Closing Date
(including customer credit card purchases made prior to the Closing Date, but
which have not cleared the system), shall remain the property of the Seller, and
the Purchaser and the Company (after the Closing) agree to remit any cash
received in respect of such receivables to the Seller on a weekly basis
following the Closing.
5A.2 Cooperation. The parties agree to cooperate with each other in respect
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of the audit to be performed by the Seller on the Company for periods prior to
the Closing Date and in respect of tax returns to be filed by the Seller in
respect of the Company for periods prior to the Closing Date.
6. PURCHASER DUE DILIGENCE.
6.1 Purchaser Due Diligence. During the period prior to the Closing Date,
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the Company and the Seller will give to Purchaser and its counsel, accountants,
actuaries and other expert persons and other representatives, full access,
during normal business hours, to the Company and its assets, other properties,
books, contracts, commitments and other records and will furnish Purchaser and
such representatives, with all such information and data concerning the affairs
of the Company as Purchaser or such representatives reasonably may request for
the purpose of verifying the representations and warranties made herein and
further investigating the business and affairs of the Company prior to the
Closing.
7. CONDITIONS PRECEDENT.
7.1 Conditions Precedent to Purchaser's Obligations. The performance of the
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obligations of Purchaser under this Agreement are subject, at the election of
Purchaser, to the fulfillment or written waiver of each of the following
conditions on or before the Closing, the failure of any one of which conditions
shall give the Purchaser the right to terminate this agreement prior to the
Closing Date.
(a) All proceedings taken in connection with the transactions contemplated
by this Agreement and all instruments and documents required in connection
therewith or incident thereto shall be reasonably satisfactory in form and
substance to Purchaser.
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(b) The representations and warranties of the Seller and Company contained
in this Agreement, the Disclosure Schedule or in any certificate or document
delivered to Purchaser pursuant hereto shall be true and correct on the date
hereof and shall be deemed to have been made again on the Closing Date.
(c) No bona fide litigation or proceeding shall be pending or threatened to
restrain, set aside or invalidate the transactions contemplated by this
Agreement.
(d) The Company or Seller shall have delivered to Purchaser the documents
required to be delivered hereunder, including those to be delivered at the
Closing pursuant to Section ~~8.1 hereof.
(e) Purchaser shall have satisfactorily completed its due diligence as
provided for in Section ~~6.1 herein and the Purchaser shall have been satisfied
in all respects, and in its sole discretion, with the condition of the Company.
(f) The Purchaser shall have satisfied itself that all licenses and
accreditations required by the Company for the operation of its business are in
full force and effect, particularly the accreditation by the Accreditation
Council for Continuing Medical Education, and that, following the consummation
of the transactions contemplated by this Agreement, the Purchaser shall continue
to enjoy the same rights and privileges with respect to the licenses and
accreditations.
(g) The Company shall have been released from any liability for Seller's
obligations.
(h) The Purchaser shall have secured satisfactory arrangements with Kenneth
Meyer and Erin Casey for their continued employment with the Company.
7.2 Conditions Precedent to the Seller's Obligations. The performance of
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the Seller under this Agreement is subject, at the election of the Seller, to
the fulfillment or written waiver of each of the following conditions on or
before the Closing, the failure of any one of which conditions shall give the
Seller the right to terminate this agreement prior to the Closing Date.
(a) The representations and warranties of Purchaser contained in this
Agreement or in any certificate or document delivered to the Seller pursuant
hereto shall be true and correct on the date hereof and shall be deemed to have
been made again on the Closing Date.
(b) No bona fide litigation or proceeding shall be pending or threatened to
restrain, set aside or invalidate the transactions contemplated by this
Agreement.
(c) Purchaser shall have delivered to Seller at the Closing the documents
required to be delivered pursuant to Section ~~8.2 hereof.
8. DOCUMENTS TO BE DELIVERED AT CLOSING
8.1 Documents to be Delivered by the Seller at the Closing. At the Closing,
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the Company or Seller shall deliver to Purchaser:
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(a) A copy of the Articles of Incorporation of the Company certified by the
office of the New Jersey Secretary of State.
(b) Certified copies of the respective resolutions of the shareholders and
Boards of Directors of Seller and the Company approving this Agreement and
authorizing the transactions contemplated hereby.
(c) The written consents, in form and substance reasonably satisfactory to
Purchaser, of each party whose consent to the transactions contemplated hereby
is required.
(d) Custody of all of the Company's books, records, papers and other
documents.
(e) The minute books of the Company.
(f) Good standing certificates for the Seller and the Company, dated within
ten (10) days of the Closing Date.
(g) Stock certificates for the Purchased Shares duly endorsed for transfer
or accompanied by executed stock powers.
(h) The documents set forth in Section ~~7.1 to be delivered by the Company
and such other certificates and documents as Purchaser may reasonably request.
(i) A Non-Competition Agreement executed by the Seller in a form
substantially as that attached hereto as Exhibit A.
8.2 Documents to be Delivered by Purchaser at the Closing. At the Closing,
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Purchaser shall deliver to the Seller:
(a) A certified copy of the respective resolutions of the sole shareholder
and Board of Directors of Purchaser approving this Agreement and authorizing the
transactions contemplated hereby.
(b) The documents set forth in Section ~~7.2 to be delivered by Purchaser
and such other certificates and documents as the Seller may reasonably request.
(c) Three Hundred Fifty Thousand Dollars ($350,000) in cash.
9. INDEMNIFICATION.
9.1 Survival of Representations and Warranties. All of the terms and
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conditions of this Agreement, together with the warranties, representations and
covenants contained herein or in any instrument or document delivered or to be
delivered pursuant to or in connection with this Agreement, shall survive the
execution of this Agreement and the Closing notwithstanding any investigation or
due diligence heretofore or hereafter made by or on behalf of any party hereto
until the second (2nd) year anniversary of the Closing Date except (i) as to
matters with respect to which a party shall have given written notice of any
claim within such period which shall not terminate until resolved, (ii) as to
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the matters set forth in Section ~~2.12 which shall continue and survive until
such time as the applicable statute of limitations or tolling periods shall have
expired, and (iii) as to matters set forth in Section ~~2.2 which shall continue
indefinitely.
9.2 Indemnification.
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(a) Subject to the following provisions of this Article ~~9, commencing on
the Closing Date, the Seller shall defend, indemnify and hold harmless,
Purchaser, the Company and any of their respective officers, directors,
employees, parent company and affiliates, from any and all claims, damages,
losses, liabilities, costs or expenses (including, without limitation, amounts
paid in settlement, reasonable attorneys' fees and costs of investigation),
whether fixed or contingent, matured or unmatured, liquidated or unliquidated,
which any of them may incur or suffer as a result of or arising out of any
breach of the representations, warranties, covenants or agreements of the
Company or the Seller set forth in this Agreement and for which claim has been
made during the applicable periods hereunder and all liabilities or obligations
(other than obligations in respect of customer contracts) of the Company for
periods prior to the Closing Date (a "Claim").
(b) Subject to the following provisions of this Article ~~9, commencing on
the Closing Date, Purchaser shall defend, indemnify and hold harmless the Seller
from any and all claims, damages, losses, liabilities, costs or expenses
(including, without limitation, amounts paid in settlement, reasonable
attorneys' fees and costs of investigation), whether fixed or contingent,
matured or unmatured, liquidated or unliquidated, which Seller may incur of
suffer as a result of or arising out of any breach of the representations,
warranties, covenants or agreements of Purchaser set forth in this Agreement and
for which claim has been made during the applicable periods hereunder.
9.3 Indemnification Procedure; Arbitration.
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(a) In the case of any claim asserted by a third party against a party
entitled to indemnification under this Agreement (the "Indemnified Party"),
written notice shall be given by the Indemnified Party to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of any claim or any
litigation resulting therefrom, provided, that (a) counsel for the Indemnifying
Party who shall conduct the defense of such claim or litigation shall be
reasonably satisfactory to the Indemnified Party, and the Indemnified Party may
participate in such defense at such Indemnified Party's expense, and (b) the
failure of any Indemnified Party to give written notice as provided herein shall
not relieve the Indemnifying Party of its indemnification obligation under this
Agreement except to the extent that such failure results in a lack of actual
notice to the Indemnifying Party and such Indemnifying Party is materially
prejudiced as a result of such failure to give notice. Except with the prior
written consent of the Indemnified Party, no Indemnifying Party, in the defense
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of any such claim or litigation, shall consent to entry of any judgment or enter
into any settlement that provides for injunctive or other nonmonetary relief
affecting the Indemnified Party or that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to such Indemnified Party
of a release from all liability with respect to such claim or litigation. In the
event that the Indemnified Party shall in good faith determine that the conduct
of the defense of any claim subject to indemnification hereunder or any proposed
settlement of any such claim by the Indemnifying Party would adversely affect in
a material manner the Indemnified Party's tax liability or (in the case of an
Indemnified Party that is Purchaser) the ability of the Purchaser to conduct its
business, or that the Indemnified Party may have available to it one or more
defenses or counterclaims that are inconsistent with one or more of those that
may be available to the Indemnifying Party in respect of such claim or any
litigation relating thereto, the Indemnified Party shall have the right at all
times to take over and assume control over the defense, settlement, negotiations
or litigation relating to any such claim at the sole cost (provided such costs
are reasonable) of the Indemnifying Party, such costs to be paid by the
Indemnifying Party to the Indemnified Party during the conduct of such defense,
settlement, negotiations or litigation, provided, that if the Indemnified Party
does so take over and assume control, the Indemnified Party shall not settle
such claim or litigation without the written consent of the Indemnifying Party,
such consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided within ten
(10) business days of its receipt of written notice of such claim by an
Indemnified Party, the Indemnified Party shall have the full right to defend
against any such claim or demand, to settle or agree to pay in full such claim
or demand, and the Indemnifying Party shall remain responsible for any damages
the Indemnified Party may suffer resulting from, arising out of or caused by
such third party claims to the extent provided in this Article ~~9. In any
event, the Seller and Purchaser shall cooperate in the defense of any claim or
litigation subject to this Article ~~9 and the records of each shall be
reasonably available to the other with respect to such defense.
(b) If the Indemnified Party believes that a matter has occurred that
entitles it to indemnification under Article ~~9 (other than matters covered by
Section ~~9.3(a) above), the Indemnified Party shall give prompt written notice
to the Indemnifying Party describing such matter in reasonable detail. The
Indemnified Party shall be entitled to give such notice prior to the
establishment of the amount of its damages and to supplement its Claim from time
to time thereafter by further written notices as they are established. The
Indemnifying Party shall send a written response to such Claim for
indemnification within twenty (20) business days after receipt of the Claim
stating its acceptance or objection to the indemnification Claim, and explaining
its position with respect thereto in reasonable detail. If such Indemnifying
Party does not respond within such twenty (20) business day period, it will be
deemed to have accepted the Indemnified Party's indemnification Claim as
specified in the notice given by the Indemnified Party. If the Indemnifying
Party gives a timely objection notice, then the parties will negotiate in good
faith to attempt to resolve the dispute. Upon the expiration of an additional
twenty (20) business day period from the date of the objection notice or such
longer period as to which the Indemnified and Indemnifying Parties may agree,
any such dispute shall be submitted to arbitration in Cincinnati, Ohio to a
member of the American Arbitration Association mutually appointed by the
Indemnified and Indemnifying Parties (or, in the event the Indemnified and
Indemnifying Parties cannot agree on a single such member, to a panel of three
members selected in accordance with the rules of such Association), who shall
promptly arbitrate such dispute in accordance with the rules of such Association
and report to the parties upon such disputed items, and such report shall be
final, binding and conclusive on the parties. Judgment upon the award by the
arbitrator(s) may be entered in any court having jurisdiction. All reasonable
fees and expenses of the arbitrators and costs of arbitration shall be paid as
determined by the arbitrators and the to the extent not so determined, each
party shall pay its own expenses.
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10. CERTAIN AGREEMENTS.
In the event the transactions contemplated by this Agreement are not
consummated, each party hereto will hold all non-public confidential information
which it obtained from the other parties hereto in the course of negotiating
this Agreement, which it did not previously know or which was not previously in
the public domain, confidential; no party will directly or indirectly use such
information until the same shall become in the public domain (other than by
disclosure by a party hereto receiving such information for use pursuant
hereto), and each party will return to the applicable party all documents,
objects and records obtained from such other party pursuant hereto which are not
in the public domain.
11. MISCELLANEOUS.
11.1 Expenses. Except as provided for herein, each of the parties hereto
shall bear all expenses incurred by it in connection with this Agreement and in
consummation of the transactions contemplated hereby and in preparation
therefor.
11.2 Notices. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be deemed duly given if
mailed by registered mail, postage prepaid, return receipt requested, or by
Federal Express or similar overnight delivery service, or if delivered
personally, at the following addresses pending the designation of another
address in accordance with the provisions hereof:
(a) If to Purchaser:
Mr. Richard J. Lajoie, Jr. Vice President Belcan
Corporation 11200 Anderson Way Cincinnati, Ohio
45242
With a copy to:
Keating, Muething & Klekamp, P.L.L.
1400 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Mr. Donald P. Klekamp
(b) If to the Seller:
ARC Communications, Inc.
788 Shrewsbury Avenue
Tinton Falls, New Jersey 07724
Attn: President
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With a copy to:
Westerman, Ball, Ederer, Miller & Sharpstein LLP
170 Old Country Road, 4th Floor
Mineola, New York 11501
Attention: Mr. Alan C. Ederer
11.3 Entire Agreement. This Agreement, the Disclosure Schedules and the
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other exhibits hereto contain all the terms agreed upon between the parties with
respect to the subject matter hereof and supersede all prior agreements,
arrangements and communications, whether oral or written. This Agreement may not
be changed or modified, except by agreement in writing, signed by all of the
parties hereto.
11.4 Headings. The headings of the Sections of this Agreement are for
--------
convenience of reference only and shall not be deemed to explain, limit or
amplify the provisions hereof.
11.5 Successors in Interest. Except as otherwise specifically provided
-----------------------
herein, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, legal representatives, personal
representatives, successors and assigns.
11.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which shall
be deemed but one and the same instrument.
11.7 Governing Law. This Agreement shall be construed and interpreted in
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accordance with and governed in all respects by the laws of the State of Ohio.
11.8 Brokerage. The Company, the Seller, and Purchaser represent and
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warrant that all negotiations relative to this Agreement have been carried on by
them directly between the parties without the intervention of any person or
firm, and each shall indemnify the others and hold them harmless against and in
respect of any claim for brokerage, finders fees, or other fees or commissions
relative to this Agreement or to the transactions contemplated hereby caused by
their actions relative to brokerage or similar fees.
11.9 Waiver. At any time prior to the Closing Date, the parties hereto may
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(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto,
and (iii) waive compliance with any of the agreements or conditions contained
herein to the extent permitted by law. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
11.10 Construction. This Agreement is to be deemed to have been prepared
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jointly by the parties hereto after arms-length negotiations, and any
uncertainty or ambiguity existing herein shall not be interpreted against any
party, but according to the application of the rules of interpretation of
contracts.
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11.11 Definition of Material, Materiality. As used herein, the terms
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"material" and "materially" shall mean having an adverse financial effect on the
Company or their assets or businesses, taken as a whole.
The remainder of this page is intentionally left blank.
IN WITNESS WHEREOF, the Seller and Purchaser each has caused this Agreement
to be duly executed in its name and on its behalf, all as of the day and year
first above written.
PURCHASER:
BELCAN CORPORATION
BY: /s/Richard J. Lajoie, Jr.
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Richard J. Lajoie, Jr.
Vice President
SELLER:
ARC COMMUNICATIONS, INC.
BY: /s/ Michael Rubel
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Michael Rubel
Chief Operating Officer