Exhibit 99.1
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of June 20, 2006, by and among TELEMANAGEMENT SERVICES, INC.
d/b/a TMS PROFESSIONAL MARKETS GROUP, a Delaware corporation (the "Company"),
ACCESS WORLDWIDE COMMUNICATIONS, a Delaware corporation (the "Shareholder") and
TMS PROFESSIONAL MARKETS GROUP, LLC, a Delaware limited liability company (the
"Buyer").
RECITALS
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A. The Buyer desires to purchase substantially all of the
Company's assets.
B. The Company desires to sell and the Buyer desires to
purchase such assets upon the terms and subject to the conditions set forth
herein.
C. The Shareholder owns 100% of the Company's outstanding capital
stock.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties, and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used in this Agreement shall have
the meanings set forth below.
"Acquired Assets" has the meaning given such term in Section 2.1(a).
"Affiliate" means any Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or under common control
with, the Person(s) specified. The term "control" (including the terms
"controlling," "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or the policies of a Person, whether through the
ownership of at least fifty percent (50%) of the voting securities of such
Person, by contract or otherwise.
"Agreement" has the meaning given such term in the preface above.
"Assumed Liabilities" has the meaning given such term in
Section 2.1(c).
"Benefit Program or Agreement" means any employment, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation and sick leave policy, severance pay policy or
agreement, deferred compensation agreement or arrangement, consulting agreement,
employment contract and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described in
Section 3.07(a)(i).
"Business" means the business of providing sales and marketing
communications services to health care clients including, without limitation,
pharmaceutical, biotech, medical device, medical diagnostic, and other related
pharmaceutical or health care companies. These services include both outbound or
inbound communications with health care professionals (physicians, physician
assistants, nurse practitioners, nurses, and other health care professionals),
pharmacists, patients, and health care consumers such as product detailing to
physician offices, physician and pharmacist profiling, patient education and
other direct to consumer programs, disease management, pharmacy stocking,
pharmacy education & awareness, vacant territory management, direct-to-consumer
call handling, patient compliance/persistency programs, patient acquisition
programs, consumer affairs, customer service, clinical trial recruitment and
screening. Types of communications utilized include inbound and outbound
telephone calls (including land lines, wireless, IVR, and VOIP), email and
web-based communications, faxing, and fulfillment services including, without
limitation, direct mail, package, coupon fulfillment and rebate fulfillment.
Notwithstanding the foregoing, the services performed by AM Medica
Communications Group, a wholly owned subsidiary of the Shareholder, which
includes (i) organizing meetings that provide medical education programs, (ii)
the production of medical publications and multimedia, and (iii) medical
symposia and research award programs, shall not be included within this
definition.
"Buyer Indemnified Party" has the meaning given such term in Section
8.1.
"Claim Notice" has the meaning given such term in Section 8.3. "Claims"
has the meaning given such term in Section 8.3.
"Closing" has the meaning given such term in Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended (or any
successor law).
"Company" has the meaning given such term in the preface above.
"Company Indemnified Party" has the meaning given such term in
Section 8.2.
"Company Indemnifying Party" has the meaning given such term in
Section 8.1.
"Confidential Information" has the meaning given such term in
Section 10.11.
"Conveyance Documents" has the meaning given such term in
Section 2.1(b).
"Disclosure Schedule" means the disclosure schedule delivered by the
Company and the Shareholder and forming a part of this Agreement.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended (or any successor law).
"Excluded Assets" has the meaning given such term in Section 2.1(a)
"Financial Statements" has the meaning given such term in Section 4.8.
"GAAP" means U.S. generally accepted accounting principles consistently
applied.
"Hazardous Materials" means (a) materials which are listed or otherwise
defined as "hazardous" or "toxic" under any applicable local, state, federal
and/or foreign laws and regulations that govern the existence and/or remedy of
contamination on property, the protection of the environment from contamination,
the control of hazardous wastes, or other activities involving hazardous
substances, including building materials, or (b) any petroleum products or
nuclear materials.
"Indemnified Party" has the meaning given such term in Section 8.3(a).
"Indemnifying Party" has the meaning given such term in Section 8.3(a).
"Intellectual Property" has the meaning given such term in Section
4.14(a).
"Knowledge" means that which is known by a Person and that which a
Person should know, after conducting a reasonable inquiry of all matters
relating thereto.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest, other than (i) liens for Taxes not yet due and payable, (ii)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (iii) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Loss" has the meaning given such term in Section 8.1.
"Material Adverse Effect" has the meaning given such term in
Section 4.2 hereof.
"Most Recent Financial Statements" has the meaning given such term in
Section 4.8.
"Most Recent Fiscal Month End" has the meaning given such term in
Section 4.8.
"Net Working Capital" shall mean current assets, minus Assumed
Liabilities, each determined in accordance with GAAP. For reference purposes
only, a computation of the Company's Net Working Capital as of April 30, 2006 is
attached hereto as Schedule 1.1.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Parties" means collectively all the parties to this Agreement as
specified in the preface above.
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"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, any other business entity or a
governmental entity (or any department, agency or political subdivision
thereof).
"Plan" means each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(including, but not limited to, employee benefit plans, such as foreign plans,
which are not subject to the provisions of ERISA).
"Post-Execution Schedules" has the meaning given such term in
Section 7.4.
"Securities Act" means the Securities Act of 1933, as amended (or any
successor law).
"Services Sub-Contracting Agreement" means the agreement between the
Buyer and the Shareholder, substantially in the form of Exhibit A, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"Solvent" shall mean, with respect to any Person, that (i) the fair
value of all of such Person's properties and assets is in excess of the total
amount of its Indebtedness; (ii) it is able to pay its debts as they mature;
(iii) it does not have unreasonably small capital for the business in which it
is engaged or for any business or transaction in which it is about to engage;
and (iv) it is not "insolvent" as such term is defined in Section 101(31) of
Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not and including any
obligations to indemnify or otherwise assume or succeed to the Tax liability of
any other Person.
"Third Party Claim" has the meaning given such term in Section 8.3(b).
"Transaction Documents" means collectively this Agreement, the
Disclosure Schedules, and the Services Sub-Contracting Agreement (including any
and all exhibits, schedules and attachments to any such documents and any other
documents executed in connection therewith).
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1.2 Construction
As used in this Agreement, (i) each term defined in this
Agreement has the meaning assigned to it, (ii) each accounting term not
otherwise defined in this Agreement has the meaning assigned to it in accordance
with U.S. Treasury Regulations, (iii) as the context may require, words in the
singular include the plural and words in the plural include the singular, (iv)
as the context may require, words in the masculine or neuter gender include the
masculine, feminine and neuter genders, (v) except as the context may require,
all references to Schedules or Exhibits refer to Schedules or Exhibits delivered
herewith or attached hereto (each of which is deemed to be a part of this
Agreement), (vi) all references to Sections or Articles refer to Sections or
Articles of this Agreement, (vii) all references to "$" or "dollars" refer to
U.S. dollars, (viii) any amount to be paid in "$" or "dollars" shall be paid in
U.S. dollars, and (ix) the terms "herein", "hereunder", "hereby", "hereto" and
terms of similar import refer to this Agreement in its entirety, and not to any
particular Article, Section, paragraph or subparagraph. No provision of this
Agreement will be construed in favor of, or against, any of the parties hereto
by reason of the extent to which such party or its counsel participated in its
drafting or by reason of the extent to which this Agreement or any provision
hereof is inconsistent with any prior draft hereof or thereof.
ARTICLE II
AGREEMENT TO CONTRIBUTE AND PURCHASE.
2.1 Sale and Purchase of Assets.
(a) Acquired Assets. On the terms and subject to the
conditions of this Agreement, at the Closing referred to in Section 3.1 hereof,
the Company shall sell, convey, assign, transfer and deliver to Buyer, and Buyer
shall purchase, acquire and accept delivery of, all assets and properties owned
or used by the Company in connection with its business or the Shareholder in
connection with the Business, except for (i) the Purchase Price and other rights
of the Company under this Agreement, (ii) the Company's corporate minute book
and stock records, and (iii) those assets specifically listed on Schedule 2.1(a)
(such specifically listed assets in clauses (i), (ii) and (iii) being referred
to as the "Excluded Assets"), including without limiting the generality of the
foregoing:
(i) all cash and cash equivalents and accounts
receivable;
(ii) all raw materials, works-in-process,
inventories and other materials of the Company wherever located and including
all inventory in transit or on order and not yet delivered, and all rights with
respect to the processing and completion of any works-in-process of the Company,
including the right to collect and receive charges for services performed by the
Company with respect thereto;
(iii) all supplies, equipment, vehicles,
machinery, furniture, fixtures, leasehold improvements and other tangible
property used by the Company in connection with its business, and the Company's
interest as lessee in any leases with respect to any of the foregoing;
(iv) all of the Company's right, title and
interest in and to its Contracts, including the Contracts listed or required to
be listed on Schedule 4.10 hereto;
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(v) all proprietary knowledge, trade secrets,
confidential information, client lists, customer lists, databases, pharmacy
lists, consumer data, computer software and licenses, formulae, designs and
drawings, quality control data, processes (whether secret or not), methods,
inventions and other similar know-how or rights used in the conduct of the
Company's business, including, but not limited to, the areas of manufacturing,
marketing, advertising and personnel training and recruitment, together with all
other intangible rights used in connection with the Company's business,
including all files, manuals, documentation and source and object codes related
thereto;
(vi) all utility, security and other deposits and
prepaid expenses;
(vii) the Company's business as a going concern
and its franchises, Permits and other authorizations of Governmental Authorities
(to the extent such Permits and other authorizations of Governmental Authorities
are transferable) and third parties, licenses, telephone numbers, customer
lists, vendor lists, referral lists and contracts, advertising materials and
data, restrictive covenants, choses in action and similar obligations owing to
the Company from its present and former shareholders, officers, employees,
agents and others, together with all books, operating data and records
(including financial, accounting and credit records), files, papers, records and
other data of the Company;
(viii) all rights of the Company in and to its
corporate name "Telemanagement Services, Inc." and its d/b/a "TMS Professional
Markets Group" and to all tradenames, trademarks and slogans used in its
business, all variants thereof and all goodwill associated therewith;
(ix) all rights to real property used by the
Company; and
(x) all other property and rights of every kind
or nature used by the Company in the operation of its business.
It is specifically understood and agreed by the parties hereto that the Buyer is
acquiring, and Company is selling, all of the tangible and intangible assets
attributable to or used by the Company in its business, including any such
assets owned by the Shareholder, except the Excluded Assets. The aforesaid
assets and properties to be transferred to the Buyer hereunder are hereinafter
collectively referred to as the "Acquired Assets."
(b) Method of Conveyance. The sale, transfer, conveyance,
assignment and delivery by the Company of the Assets to the Buyer in accordance
with Section 2.1(a) hereof shall be effected on the Closing Date by the
Company's execution and delivery to the Buyer of one or more Bills of Sale,
Assignments and other conveyance instruments with respect to the Company's
transfer of intangible rights, real property interests and other assets in form
and scope reasonably satisfactory to Buyer (collectively the "Conveyance
Documents"). At the Closing, good, valid and marketable title to all of the
Assets shall be transferred, conveyed, assigned and delivered by the Company to
the Buyer pursuant to the Conveyance Documents, free and clear of any and all
liens, encumbrances, mortgages, security interests, pledges, claims, equities
and other restrictions or charges of any kind or nature whatsoever.
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(c) Assumed Liabilities. At the Closing, the Buyer shall
assume, and agree to satisfy and discharge as the same shall become due, (i) all
trade accounts payable, accrued expenses and active rebate liabilities that have
been incurred in the ordinary course of the Company's business and are reflected
on Schedule 2.1(c), (ii) the Company's liabilities and other obligations arising
subsequent to the Closing under (x) the Contracts listed on Schedule 4.10, and
(y) all other Contracts entered into by the Company in the ordinary course of
its business (including open purchase orders) and not required to be listed on
Schedule 4.10, in each case to the extent that the Company's rights thereunder
are effectively transferred to Buyer at Closing, and (iii) the obligations
listed on Schedule 2.1(c) hereto (collectively the "Assumed Liabilities").
Except as expressly set forth in this paragraph 2.1(c), the Buyer shall not
assume or be responsible at any time for any liability, obligation, debt or
commitment of the Company, whether absolute or contingent, accrued or unaccrued,
asserted or unasserted, or otherwise, including but not limited to any
liabilities, obligations, debts or commitments of the Company incident to,
arising out of or incurred with respect to, this Agreement and the transactions
contemplated hereby (including any and all sales, income or other taxes arising
out of the transactions contemplated hereby). Without limiting the generality of
the foregoing, the Company and the Shareholder expressly acknowledge and agree
that the Company shall retain, and that Buyer shall not assume or otherwise be
obligated to pay, perform, defend or discharge, (a) any liability of the Company
and/or the Shareholder for Taxes, whether measured by income or otherwise, (b)
any liability of the Company in connection with any Plan, Benefit Program or
Agreement, including, without limitation, any liability of the Company under
ERISA, (c) any liability of the Company under any federal, state or local law,
rule, regulation, ordinance, program, Permit, or other legal requirement
relating to health, safety, Hazardous Materials and environmental matters
applicable to the Company's business and/or the facilities used by the Company
(whether or not owned by the Company), (d) any product liability pertaining to
products sold or manufactured by the Company prior to the Closing Date, (e) any
liability for customer rebates or adjustments with respect to any period prior
to the Closing Date, (f) any liability or obligation of the Company relating to
any default taking place before the Closing Date under any of the Assumed
Liabilities to the extent such default created or increased the liability or
obligation, or (g) any obligation of the Company to the Shareholder, any
Affiliate of the Company or the Shareholder, or any Person claiming to have a
right to acquire any capital stock or other securities of the Company. The
Company and the Shareholder further agree to satisfy and discharge as the same
shall become due all obligations and liabilities of the Company not specifically
assumed by the Buyer hereunder.
2.2 Payment for the Assets. The consideration for the Acquired
Assets and each other right acquired by the Buyer pursuant to this Agreement and
the other Transaction Documents (the "Purchase Price") will be: (a) Ten Million
Five Hundred Thousand Dollars ($10,500,000.00) minus the sum of (i) $352,334 and
(ii) simple interest thereon calculated at a rate of 10% per annum based on the
number of days elapsed starting on April 1, 2006 and ending on the Closing Date,
which amount shall be paid by the Buyer to Lee H. Edelstein in satisfaction of
the Shareholder's liability to him in the same amount (the sum of such numbers,
the "Closing Payment Amount"); plus or minus the Purchase Price Adjustment; and
(b) the assumption of the Assumed Liabilities. At the Closing, the Purchase
Price, prior to adjustment on account of the Purchase Price Adjustment, shall be
delivered as follows: (i) the Buyer shall pay to the Company an amount equal to
the Closing Payment Amount minus Seven Hundred
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and Fifty Thousand Dollars ($750,000) by wire transfer; (ii) Seven Hundred and
Fifty Thousand Dollars ($750,000) shall be retained by the Buyer (the "Balance
Sheet Holdback Amount") and distributed in accordance with Section 2.5; and
(iii) the balance of the Purchase Price by the execution and delivery of the
Conveyance Documents. The Purchase Price Adjustment shall be paid in accordance
with Sections 2.3, 2.4 and 2.5. The Purchase Price shall be allocated,
apportioned and adjusted among the Acquired Assets in the manner specified in
IRS Form 8594 attached as Schedule 2.2 and the parties agree to abide by such
allocations for all tax reporting purposes.
2.3 Closing Date Balance Sheet. As soon as practical (and in no
event later than 90 days after the Closing Date), the Buyer shall cause to be
prepared and delivered to the Company (a) a balance sheet for the Company's
business and Acquired Assets and Assumed Liabilities dated as of the Closing
Date (the "Closing Date Balance Sheet"), and (b) a calculation of the Net
Working Capital as of the Closing Date (the "Closing Net Working Capital") based
on the Closing Date Balance Sheet, including such schedules and data as may be
appropriate to support such calculation and a calculation of the Purchase Price
Adjustment (as defined in Section 2.5 below). The Company and its accountants
shall be entitled to review the Closing Date Balance Sheet, Buyer's calculations
of the Closing Net Working Capital and Purchase Price Adjustment, and any
working papers, trial balances and similar materials relating to the Closing
Date Balance Sheet prepared by Buyer or its accountants. Buyer shall also
provide the Company and its accountants with timely access, during Buyer's
normal business hours, to Buyer's personnel, properties, books and records to
the extent related to the determination of the Closing Date Balance Sheet and
Closing Net Working Capital.
2.4 Disputes. The following clauses (a) and (b) set forth the
procedures for resolving disputes among the parties with respect to the
determination of the Purchase Price Adjustment:
(a) Within thirty (30) days after delivery to the Company
of Buyer's calculation of the Purchase Price Adjustment pursuant to this Article
I, the Company may deliver to Buyer a written report (the "Company's Report")
prepared by the Company advising Buyer either that the Company: (i) agrees with
the Buyer's calculations of the Closing Net Working Capital and the Purchase
Price Adjustment; or (ii) deems that one or more adjustments are required. If
the Company does not submit a Company's Report within the 30-day period provided
herein, then the Closing Net Working Capital and the Purchase Price Adjustment
as calculated by Buyer in Section 2.3 shall become final and shall not be
subject to further review, challenge or adjustment. If Buyer shall concur with
the adjustments proposed by the Company, or if Buyer shall not object thereto in
a writing delivered to the Company within thirty (30) days after Buyer's receipt
of the Company's Report, the calculations of the Closing Net Working Capital
Purchase Price Adjustment set forth in such Company's Report shall become final
and shall not be subject to further review, challenge or adjustment.
(b) In the event that the Company submits a Company's
Report and Buyer and the Company are unable to resolve the disagreements set
forth in such report within (30) days after the date of the Company's Report,
then such disagreements shall be referred to Berkowitz Dick Pollack & Brant (the
"Settlement Accountants"), and the determination of the Settlement Accountants
shall be final and shall not be subject to further review, challenge or
adjustment. The Settlement Accountants shall use their best efforts to reach a
determination not
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more than thirty (30) days after such referral. The costs and expenses of the
services of the Settlement Accountants shall be paid by the Company if (A) the
difference between (i) the Purchase Price Adjustment resulting from the
determinations of the Settlement Accountants, and (ii) the Purchase Price
Adjustment resulting from the determinations set forth in the Company's Report,
is greater than (B) the difference between (i) the Purchase Price Adjustment
resulting from the determinations of the Settlement Accountants, and (ii) the
Purchase Price Adjustment resulting from Buyer's calculations as set forth in
the deliveries pursuant to Section 2.3 hereof; otherwise, such costs and
expenses of the Settlement Accountants shall be paid by Buyer.
2.5 Purchase Price Adjustment. The "Purchase Price Adjustment"
shall be determined as follows: (a) If the Closing Net Working Capital finally
determined in accordance with Sections 2.3 and 2.4 above is greater than $1.4
million, then, within five business days of the final determination of the
Closing Net Working Capital, the Buyer shall pay to the Company an amount that
is equal to: (i) the amount by which the Closing Net Working Capital exceeds
$1.4 million; plus (ii) the amount of the Balance Sheet Holdback; (b) if the
Closing Net Working Capital finally determined in accordance with Sections 2.3
and 2.4 above is less than $1.4 million, but greater than $650,000, then, within
five business days of the final determination of the Closing Net Working
Capital, the Buyer shall pay to the Company from the Balance Sheet Holdback an
amount that is equal to (a) the amount by which the Closing Net Working Capital
exceeds $650,000 and the Buyer shall be entitled to the remainder of the Balance
Sheet Holdback; (c) if the Closing Net Working Capital finally determined in
accordance with Sections 2.3 and 2.4 above is less than $650,000, then, within
five business days of the final determination of the Closing Net Working
Capital, the Company shall pay to the Buyer an amount that is equal to the
amount by which the Closing Net Working Capital is less than $650,000 and the
Buyer shall be entitled to the entire Balance Sheet Holdback.
2.6 Interest. Any and all amounts due from the Buyer or the
Sellers pursuant to this Article II will be payable without interest, regardless
of when paid.
ARTICLE III
CLOSING.
3.1 Closing. Unless this Agreement has been terminated pursuant to
Article IX, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Greenberg Traurig, P.A., 401 East
Las Olas Boulevard, Fort Lauderdale, Florida 33301 at 10:00 a.m. on the third
business day after the satisfaction of the conditions set forth in Article VI
hereof (other than those conditions to be satisfied at Closing), or at such
other time and place as the Parties may mutually agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDER REGARDING THE TRANSACTION.
In order to induce the Buyer to purchase the Acquired Assets and enter
into the Transaction Documents to which they are a party, each of the
Shareholder and the Company, jointly and severally, represent and warrant to the
Buyer that the statements contained in this Article 4 are correct and complete
as of the date hereof and as of the Closing Date.
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4.1 Authorization of Transaction. The Company and the Shareholder
have full corporate power and authority and legal capacity to execute and
deliver the Transaction Documents to which it is a party and to perform its
obligations thereunder. Each of the Transaction Documents constitutes the valid
and legally binding obligations of the Company and the Shareholder party
thereto, enforceable in accordance with their respective terms and conditions.
Except as set forth on Schedule 4.1, neither of the Company or the Shareholder
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by the Transaction Documents. The
execution, delivery, and performance of the Transaction Documents to which the
Company and the Shareholder are parties have been duly authorized by the
Company, the Shareholder, and the shareholders of the Shareholder.
4.2 Noncontravention. Except as set forth on Schedule 4.2, neither
the execution and the delivery of the Transaction Documents, nor the
consummation of the transactions contemplated hereby or thereby, will: (a)
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company or the Shareholder is subject
or any provision of the charter, bylaws, operating agreement or other governing
documents of either the Company or the Shareholder; (b) result in the
suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, authorization or approval applicable to the Business; or (c) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice or consent under any material agreement,
contract, lease, license, instrument, or other arrangement to which the Company
or the Shareholder is a party or to which any of the Acquired Assets is subject,
which could reasonably be expected to have a material adverse effect on the
business, assets, liabilities, financial condition, prospects or operations of
the Company or the Shareholder (a "Material Adverse Effect").
4.3 Brokers' Fees. Except as set forth on Schedule 4.3, neither of
the Company or the Shareholder has any liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement or any of the Transaction Documents.
4.4 The Shareholder. The Shareholder is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and authorized to do business and is in good
standing as a foreign entity in all jurisdictions in which the nature of its
activities and properties (both owned and leased) makes such qualification
necessary, except where the failure to so qualify would not reasonably be
expected to have a Material Adverse Effect.
4.5 The Company. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and as
presently proposed to be conducted. The Company has all requisite power and
authority to execute and deliver the Transaction Documents, to sell the Acquired
Assets, and to carry out the provisions of the Transaction Documents. The
Company is duly qualified and authorized to do business and is in good standing
as a foreign entity in all jurisdictions in which the nature of its activities
and properties (both owned and leased) makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect.
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4.6 Subsidiaries. Except as set forth on Schedule 4.6, neither the
Company nor the Shareholder owns or controls, either directly or indirectly, any
equity security or other interest of any Person and neither the Company nor the
Shareholder is a participant in any joint venture, partnership or similar
arrangement.
4.7 Capitalization; Voting Rights.
(a) All outstanding shares of capital stock of the
Company have been issued in compliance with all applicable state and federal
laws concerning the issuance of securities, free of any Lien.
(b) There exists no option plan or other agreement or
understanding between the Company and any Person to purchase equity securities
of the Company or which provides for acceleration or other changes in the
vesting provisions or other terms of any Company securities, whether as the
result of any merger, reorganization, consolidation, sale of assets of the
Company, change in control or any other transaction(s) by the Company.
4.8 Financial Statements. Attached to this Agreement as Schedule
4.8 are the following financial statements for the Shareholder (including its
subsidiaries) and the Company (collectively the "Financial Statements"): (i) for
the Shareholder, audited balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the fiscal years ended
December 31, 2003, December 31, 2004 and December 31, 2005, including the notes
thereto; (ii) for the Company, unaudited balance sheets and statements of
income, changes in stockholders' equity, and cash flow as of and for the fiscal
years ended December 31, 2003, December 31, 2004 and December 31, 2005, together
with consolidating statements which include both the Company and the Shareholder
financials for all periods, and (iii) for the Company, unaudited balance sheets
and statements of income, changes in stockholders' equity, and cash flow (the
"Most Recent Financial Statements") as of and for the five (5) months ended May
31, 2006 (the "Most Recent Fiscal Month End"). The Financial Statements
(including the notes thereto) have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and present fairly
the financial condition of the Company and the Shareholder, as the case may be,
as of such dates and the results of operations of the Company and the
Shareholder, as the case may be, for such periods and are correct and complete
and consistent with the books and records of each of the Company and the
Shareholder (which books and records are correct and complete); provided,
however, that the Most Recent Financial Statements are subject to normal
year-end adjustments (which will not be material individually or in the
aggregate) and lack footnotes and other presentation items.
4.9 Absence of Undisclosed Liabilities. The Company has no debt,
obligation or liability (whether accrued, absolute, contingent, liquidated or
otherwise, whether due or to become due, and whether or not known to the Company
or the Shareholder), other than those: (i) reflected on or disclosed in the
liabilities section of the balance sheet contained in the Most Recent Financial
Statements; (ii) incurred in the ordinary course of business since the Most
Recent Fiscal Month End (none of which relate to a breach of contract, breach of
warranty, tort, infringement or violation of applicable law or which arose from
any action or in violation of this Agreement) which in the aggregate are not in
excess of $10,000; or (iii) disclosed on Schedule 4.9.
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4.10 Agreements; Action.
(a) Except as otherwise specifically contemplated by the
Transaction Documents, there are no agreements, understandings or proposed
transactions between the Company or the Shareholder or any of their respective,
officers, directors, shareholders or Affiliates.
(b) Except as set forth on Schedule 4.10(b) (the "Company
Contracts"), there are no agreements, understandings, instruments, contracts,
proposed transactions, judgments, orders, writs or decrees to which the Company
or the Shareholder is a party, but in the case of the Shareholder only to the
extent they relate to the Business, which may involve: (i) obligations
(contingent or otherwise) of, or payments to, any Person in excess of $25,000;
or (ii) the transfer or license of any patent, copyright, trade secret or other
proprietary right to or from the Company or the Shareholder (other than licenses
arising from the purchase of "off the shelf" or other standard products); or
(iii) a guaranty of any indebtedness or obligations of any Person; or (iv) a
covenant not to compete or other restriction on the Company's or the
Shareholder's ability to conduct a business or engage in any other activity; or
(v) any agreement for employment of any officer or other employee; or (vi) any
collective bargaining agreement or other agreement with any labor union,
employee representative or group of employees; or (vii) any agreement or lease
under which the Company or the Shareholder leases any real or personal property,
either as lessor or lessee; or (viii) provisions restricting the development,
delivery or distribution of the Company's or the Shareholder's products or
services; or (ix) indemnification by the Company or the Shareholder's with
respect to infringements of proprietary rights (other than indemnification
obligations arising from purchase, sale or license agreements entered into in
the Ordinary Course of Business); or (x) agreements providing warranty or
extended service obligations to customers.
(c) Except as set forth on Schedule 4.10(c), each Company
Contract is legal, valid, binding and enforceable by or against the Company in
accordance with its terms (except, in each case, as enforceability by or against
the Company may be limited by applicable bankruptcy or similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity) and in full force and effect on identical terms following consummation
of the transactions contemplated by this Agreement.
(d) Except as set forth on Schedule 4.10(d), since the
Most Recent Fiscal Month End, the Company has not: (i) authorized or made any
distribution upon or with respect to any equity securities; (ii) incurred any
indebtedness for money borrowed or any other liabilities (other than with
respect to indebtedness and other obligations incurred in the Ordinary Course of
Business or as disclosed in the Financial Statements) individually in excess of
$5,000 or, in the case of indebtedness and/or liabilities individually less than
$1,000, in excess of $10,000 in the aggregate; (iii) made any loans or advances
to any Person, other than advances for travel expenses in the Ordinary Course of
Business; or (iv) sold, exchanged or otherwise disposed of any of its assets or
rights.
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(e) For the purposes of subsections (c) and (d) above,
all indebtedness, liabilities, agreements, understandings, instruments,
contracts and proposed transactions involving the same Person (including Persons
or entities which the Company has reason to believe are Affiliates thereof)
shall be aggregated for the purpose of meeting the individual minimum dollar
amounts of such subsections.
4.11 Obligations to Related Parties. Except as set forth on
Schedule 4.11, there are no obligations of the Company to any of its respective
officers, managers, directors, members, stockholders, employees or other
Affiliates other than: (a) for payment of salary for services rendered for the
current pay period; and (b) for other standard employee benefits made generally
available to all employees. None of the employees, managers, directors, members
or stockholders of the Company or the Shareholder, or any members of their
immediate families, are indebted to the Company, or have any direct or indirect
ownership interest in any Person with respect to which the Company is an
Affiliate or with which the Company has a business relationship, or any Person
which competes with the Company, other than passive investments in publicly
traded companies (representing less than 1% of such company). No employee,
manager, director, member, or stockholder of the Company or the Shareholder, or
any member of their immediate families has, directly or indirectly, an interest
in any contract with the Company (other than employment contracts set forth on
the Disclosure Schedule and such contracts as relate to any such Person's
ownership of securities of the Company or the Shareholder). The Company is not a
guarantor or indemnitor of any indebtedness of any other Person.
4.12 Changes. Since December 31, 2005, other than those
transactions to be consummated in connection with the Closing of the
transactions contemplated by this Agreement, except as set forth on Schedule
4.12, there has not been with respect to the Company or the Shareholder (in the
case of the Shareholder solely as it relates to the Business):
(a) Any change in their respective businesses, assets,
liabilities, financial condition, prospects or operations, other than changes in
the Ordinary Course of Business, none of which changes individually or in the
aggregate has had or is reasonably expected to have (individually or in the
aggregate) a Material Adverse Effect.
(b) Any resignation or termination of any officer, key
employee or group of employees; and neither the Company nor the Shareholder has
Knowledge of any impending resignation or termination of employment of any
officers, key employees or groups of employees;
(c) Any material change in their respective contingent
obligations by way of guaranty, endorsement, indemnity, warranty or otherwise;
(d) Any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting their respective
business, assets, liabilities, financial condition, prospects or operations;
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(e) Any waiver of a valuable right or of a material debt
owed to it;
(f) Any direct or indirect loans made to any of their
respective employees, officers, managers, directors, members or stockholders,
other than advances made in the Ordinary Course of Business;
(g) Any material change in any compensation arrangement
or agreement with their respective employees (other than in the Ordinary Course
of Business), officers, managers or directors;
(h) Any authorization or payment of any distribution of
any kind of their respective assets;
(i) Any labor organization activity;
(j) Any debt, obligation or liability incurred, assumed
or guaranteed, except those for immaterial amounts and for current liabilities
incurred in the Ordinary Course of Business;
(k) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets or any other
sale of assets not in the Ordinary Course of Business;
(l) Any change in any agreement to which any one of them
is a party or by which any one of them is bound which could reasonably be
expected to have a Material Adverse Effect;
(m) Any other event or condition of any character that,
either individually or cumulatively, has materially and adversely affected (or
could be reasonably expected to materially and adversely affect) their
respective business, assets, liabilities, financial condition, prospects or
operations; or
(n) Any arrangement or commitment by any of them to do
any of the acts described in subsection (a) through (m) above.
4.13 Title to Properties and Assets; Liens, Etc. Upon Closing, the
Company shall have good and marketable title to the Acquired Assets, in each
case subject to no Liens, except for those Liens listed on Schedule 4.13. All
material tangible personal property included within the Acquired Assets is in
good operating condition and repair (ordinary wear and tear excepted) and is
reasonably fit and usable for the purpose for which it is proposed to be used by
the Company after Closing. The Acquired Assets constitute all properties and
assets necessary to conduct the Business and no assets or properties used in the
Business by the Company are owned by the Shareholder or any other Affiliate of
the Company or the Shareholder.
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4.14 Intellectual Property.
(a) Schedule 4.14 lists all patents, trademarks, service
marks, trade names, copyrights, trade secrets, licenses, or other proprietary
rights and processes either (i) owned or leased by the Company, or (ii) owned or
leased by the Shareholder and used in the Business (the "Intellectual
Property"). Neither the Company nor the Shareholder is bound by or a party to
any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other Person other
than such licenses or agreements arising from the purchase of "off the shelf' or
standard products.
(b) The Company owns (or has the right to use pursuant to
license, sublicense, agreement or permission in writing) all Intellectual
Property necessary for the operation of the Business as presently conducted. The
Company has taken all reasonable precautions to maintain and protect each item
of Intellectual Property.
(c) The Company has not received any communications
alleging that it has violated or, by conducting the Business as presently
conducted and as presently proposed to be conducted, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade secrets or
other proprietary rights of any other Person, nor does the Company or the
Shareholder have Knowledge of any basis therefor.
(d) Neither the Company, nor the Shareholder, has
Knowledge that any of the employees of the Company or the Shareholder is
obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with their duties to
the Company or the Shareholder, as applicable, or that would conflict with their
respective business as presently conducted and as presently proposed to be
conducted. It is not necessary for the Company to utilize any inventions, trade
secrets or proprietary information of any of its employees made prior to their
employment by the Company or the Shareholder, as applicable.
4.15 Compliance with Other Instruments. Neither the Company nor the
Shareholder is currently in violation or default of (a) any term their
respective formation documents, or (b) any provision of any mortgage, indenture,
material agreement, instrument or contract to which it is party or by which it
is bound, where such violation or default has had or reasonably could be
expected to have a Material Adverse Effect.
4.16 Litigation. Except as set forth on Schedule 4.16, there is no
action, suit, proceeding or investigation pending or currently threatened
against the Company or the Shareholder (a) that questions the validity of the
Transaction Documents or the right of the Company or the Shareholder to enter
into any of such agreements, or to consummate the transactions contemplated
hereby or thereby, (b) relating to the Business, or (c) which would reasonably
be expected to result, either individually or in the aggregate, in any Material
Adverse Effect or a change in the equity ownership of the Company; nor does the
Company or the Shareholder have any Knowledge that there is any basis for any of
the foregoing. Neither of the Company nor the Shareholder is a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. There is no action, suit,
proceeding or investigation by the Company or the Shareholder currently pending
or which the Company or the Shareholder intends to initiate.
15
4.17 Tax Returns and Payments. Each of the Company and the
Shareholder have timely filed all Tax Returns required to be filed by them. All
such Tax Returns were correct and complete in all material respects and were
prepared in compliance with applicable laws and regulations. All Taxes shown to
be due and payable on such Tax Returns, any assessments imposed, and all other
Taxes due and payable by the Company or the Shareholder on or before the Closing
(whether or not shown on any Tax Return) have been paid or will be paid prior to
the time they become delinquent. There are no Liens for Taxes on the assets of
either the Company or the Shareholder. No claim has ever been made by an
authority in a jurisdiction where the Company or the Shareholder does not file
Tax Returns that it is or may be subject to taxation by that jurisdiction. The
Company and the Shareholder have withheld and paid all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, equity owner or other Person and
have paid over to the proper government authority all Taxes required to be
collected from any Person . Neither the Company nor the Shareholder has been
advised, and the Company and the Shareholder have no Knowledge, (a) that any of
the Tax Returns of the Company or the Shareholder have been or are being audited
as of the date hereof, or (b) of any deficiency in assessment or proposed
judgment to the Taxes of the Company or the Shareholder. There is no liability
for any Tax to be imposed upon the properties or assets of the Company or the
Shareholder as of the date of this Agreement that is not adequately reserved for
in the Financial Statements for the Most Recent Fiscal Month End. Neither the
Company nor the Shareholder has been a member of an affiliated group filing a
consolidated U.S. federal income Tax Return or has liability for the Taxes of
any Person under Regulation Section 1.1502-6 of the Code (or any similar
provision of any state, local or foreign law), whether as a transferee or
successor, by contract or otherwise. No payments under any contracts assumed by
the Buyer will obligate it to make any payments that would not be deductible
under Section 280G of the Code. The Company has not waived any statute of
limitations with respect to Taxes or agreed to an extension of time with respect
to a Tax assessment or deficiency.
4.18 Employees. Except as set forth on Schedule 4.18, neither the
Company nor the Shareholder has any collective bargaining agreements with any of
its employees. Except as set forth on Schedule 4.18, there is no labor union
organizing activity pending or threatened with respect to the Company or the
Shareholder. Neither the Company nor the Shareholder is a party to or bound by
any currently effective employment contract, deferred compensation arrangement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation plan or agreement. To the Knowledge of the Company and the
Shareholder, no employee of the Company or the Shareholder, nor any consultant
with whom the Company or the Shareholder has contracted, is in violation of any
term of any employment contract, proprietary information agreement or any other
agreement relating to the right of any such individual to be employed by, or to
contract with, the Company or the Shareholder because of the nature of the
business conducted by the Shareholder or to be conducted by the Company; and to
the Knowledge of the Company and the Shareholder, the employment by the Buyer of
the employees previously employed by the Company or the Shareholder, and the
performance of the Company's or the Shareholder's contracts with any such
employees or its independent contractors, to the extent any such contracts are
Company Contracts or assigned to the Buyer, will not result in any such
violation. Neither the Company nor the Shareholder has received any notice
alleging that any such violation has occurred. No employee of the Company or the
16
Shareholder has been granted the right to continued employment by the Company or
the Shareholder or to any material compensation following termination of
employment with the Company or the Shareholder. Neither the Company nor the
Shareholder has Knowledge that any officer, key employee or group of employees
of the Company or the Shareholder intends to terminate his, her or their
employment with the Company or the Shareholder, as applicable, nor do the
Company or the Shareholder have a present intention to terminate the employment
of any of their respective officers, key employees or group of employees.
4.19 Compliance with Laws; Permits. Neither the Company nor the
Shareholder is, or has been, in violation of any applicable statute, rule,
regulation, order or restriction of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of the Business or
the ownership of its properties. No governmental orders, permissions, consents,
approvals or authorizations are required to be obtained and no registrations or
declarations are required to be filed in connection with the execution and
delivery of the Transaction Documents and the sale of the Acquired Assets and
transfer of the Assured Liabilities to the Buyer, except such as has been duly
and validly obtained or filed, or with respect to any filings that must be made
after the date hereof, which will be filed in a timely manner. The Company and
the Shareholder have all franchises, permits, licenses and any similar authority
necessary for the conduct of the Business.
4.20 Environmental and Safety Laws. Neither the Company nor the
Shareholder is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety. No Hazardous
Materials are used or have been used, stored, or disposed of by the Company or
the Shareholder or, to the Company or the Shareholder's Knowledge, by any other
Person on any property owned, leased or used by the Company or the Shareholder.
4.21 Employee Benefit Plans; ERISA.
(a) No Contributions to Benefit Plans. Except as set
forth on Schedule 4.21(a) neither the Company nor the Shareholder maintains or
contributes to: (i) any incentive, bonus, commission, deferred compensation,
severance or termination pay plan, agreement or arrangement, whether formal or
informal and whether legally binding or not; (ii) any pension, profit-sharing,
equity purchase, equity option, group life insurance, hospitalization insurance,
disability, retirement or any other employee benefit plan, agreement or
arrangement, whether formal or informal and whether legally binding or not;
(iii) any fringe benefit plan, agreement or arrangement, whether formal or
informal and whether legally binding or not; or (iv) any other "employee benefit
plan" as such term is defined in Section 3(3) of ERISA.
(b) No Penalty or Tax. Neither the Company nor the
Shareholder has engaged in a transaction in connection with which it could be
subject either to a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code.
(c) No Qualified Plans. Neither the Company nor the
Shareholder currently has a "qualified plan" that meets, purports to meet, or is
intended to meet the requirements of Section 401(a) of the Code.
17
(d) No Multiemployer Benefit Plans. Neither the Company
nor the Shareholder has maintained or contributed to or been required to
contribute to a "multiemployer plan," as such term is defined in Section 3(37)
of ERISA.
4.22 Accounts Receivable. All accounts receivable included within
the Acquired Assets are bona fide accounts receivable which are fully
collectible, net of any reserve for doubtful accounts reflected on the face of
the balance sheets included in the Financial Statements for the Most Recent
Fiscal Month End.
4.23 Solvency. The Company, the Shareholder and its other
subsidiaries, taken as a whole, are Solvent prior to, and will be Solvent after
giving effect to, the transactions contemplated by the Transaction Documents.
The transactions contemplated hereby were effectuated without actual intent to
hinder, delay or defraud present or future creditors of the Company or the
Shareholder. It is the Company's and the Shareholder's express intention that
the Company and the Shareholder will remain Solvent, and the Company and the
Shareholder have sufficient capital to carry on their business and transactions
as now conducted and as planned to be conducted by the Shareholder in the future
after giving effect to the transactions contemplated by the Transaction
Documents.
4.24 Full Disclosure. Neither the Transaction Documents, nor, to
the Knowledge of the Company and the Shareholder, any other document delivered
by the Shareholder to the Buyer or its attorneys or agents in connection with
the transactions contemplated hereby or thereby, contain any untrue statement of
a material fact nor omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer represents and warrants to the Company as follows as
of the date hereof and as of closing:
5.1 Requisite Power and Authority. The Buyer has all necessary
power and authority under all applicable provisions of law to execute and
deliver the Transaction Documents to which it is a party and to carry out their
provisions. All action on its part required for the lawful execution and
delivery of the Transaction Documents to which it is a party have been or will
be effectively taken prior to the Closing. Upon their execution and delivery,
the Transaction Documents to which it is a party will be valid and binding
obligations of the Buyer, enforceable in accordance with their terms, except, in
each case, as enforceability by or against the Buyer may be limited by
applicable bankruptcy or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
ARTICLE VI
CONDITIONS To CLOSING.
6.1 Conditions to the Buyer's Obligations at the Closing. The
obligation of the Buyer to purchase the Acquired Assets and take the other
actions required to be taken by the Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer in whole or in part):
18
(a) Consents, Permits, and Waivers. The Company shall
have obtained any and all consents, permits and waivers as are necessary or
appropriate for consummation of the transactions contemplated by the Transaction
Documents, including without limitation any consents required for the assignment
of the Contracts, unless waived in writing by the Buyer.
(b) Secretary's Certificate. The Buyer shall have
received from the secretary (or person performing similar duties) for each of
the Company and the Shareholder a certificate having attached thereto: (i) the
entity's charter, bylaws or other organizational documents as in effect at the
time of the Closing with a certification that such documents have not been
superseded or amended as of the Closing; (ii) resolutions approved by the
appropriate Persons authorizing the transactions contemplated hereby; and (iii)
a good standing certificate (or similar certificates or documents) issued by the
Secretary of State of the State of its jurisdiction of incorporation and any
other jurisdiction in which such entity is qualified to do business, dated a
recent date before the Closing.
(c) Legal Opinion. The Buyer shall have received from
legal counsel to the Company and the Shareholder an opinion addressed to the
Buyer, dated as of the Closing, in a form reasonably acceptable to the Buyer and
its counsel.
(d) Outstanding Obligations. There shall be no unpaid
obligations of the Company other than those included within the Assumed
Liabilities.
(e) Proceedings and Conveyance Documents. All proceedings
in connection with the transactions contemplated at the Closing and all
Conveyance Documents and other documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the Buyer
and its counsel, and the Buyer and its counsel shall have received all such
counterpart originals or certified or other copies of the Conveyance Documents
and such other documents as they may reasonably request.
(f) Financial Performance. The following financial
performance condition shall have been satisfied by, on an accrual basis: (i) the
Net Working Capital of the Company as of the Closing shall be not less than
$650,000; and (ii) the revenues of the Company for the five (5) month period
ending May 31, 2006, shall have been not less than $6.5 million.
(g) Shareholder Approval The shareholders of the Company
and the Shareholder shall have approved the Transaction Documents and such
approval shall be effective.
(h) Release of Liens. The Buyer shall have received
evidence satisfactory to the Buyer that any and all Liens that encumber the
Acquired Assets have been released prior to Closing.
(i) Due Diligence Investigation. The Buyer shall have
completed its due diligence investigation, and the results thereof shall be
acceptable to the Buyer in its sole and absolute discretion, including without
limitation, the Buyer's approval in its sole and absolute discretion of all
Post-Execution Schedules.
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6.2 Conditions to Obligations of the Company. The Company's
obligation to transfer the Purchased Assets at the Closing is subject to the
satisfaction, on or prior to the Closing, of the following conditions:
(a) Performance of Obligations. The Buyer shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by the Buyer on or before the Closing.
(b) Transaction Documents, Contribution and Loan. All of
the Transaction Documents shall have been executed and delivered by the parties
thereto.
ARTICLE VII
PRE CLOSING and POST CLOSING COVENANTS
7.1 Regular Conduct of the Business and Operations. Until the
Closing Date, the Company shall, and the Shareholder shall cause the Company to,
operate the Business only in the usual and Ordinary Course of Business and use
best efforts to preserve the goodwill and organization of the Business and the
relationships with the Company's customers, suppliers, employees and other
Persons having business relations with the Company. Without limiting the
generality of the foregoing, between the date of this Agreement and the Closing,
neither the Company nor the Shareholder shall:
(a) take or omit to take any action that would result in
a breach of any of the representations, warranties or covenants made by the
Company or the Shareholder in this Agreement;
(b) take any action or omit to take any action which act
or omission would reasonably be anticipated to have a Material Adverse Effect on
the Company;
(c) (i) enter into any contract out of the Ordinary
Course of Business or restricting in any material respect the conduct of its
business, (ii) make any loans or investments, (iii) increase the compensation,
incentive arrangements or other benefits to any officer or employee outside of
the Ordinary Course of Business, (iv) redeem, purchase or otherwise acquire
directly or indirectly any of the Company's issued and outstanding capital
stock, any outstanding rights or securities exercisable or exchangeable for or
convertible into its capital stock, (v) make any distribution or dividends with
respect to the Company's capital stock or any other payment to the Shareholder
or its Affiliates, if such distribution or dividend would cause the Net Working
Capital to not meet the requirements of Section 6.1(f), (vi) amend their
respective articles of incorporation, bylaws, certificate of formation, or other
organization documents unless such amendment is necessary to comply with the
terms of this Agreement or issue or agree to issue any capital stock, or any
rights or options to acquire, or securities convertible into or exchangeable
for, any of their respective capital stock, (vii) directly or indirectly engage
in any transaction, arrangement or contract with any officer, director, manager,
shareholder or other insider or Affiliate of the Company or the Shareholder,
except in the
20
Ordinary Course of Business and as described on Schedule 4.11, (viii) execute
any guaranty, issue any debt, borrow any money or otherwise incur or create any
indebtedness or liability (other than trade payables in the Ordinary Course of
Business); (ix) purchase, sell, lease or dispose of any material property or
assets with an aggregate value in excess of $10,000; (x) delay or postpone the
payment of any accounts payable other than in the Ordinary Course of Business;
(xi) accelerate the collection of or discount any accounts receivable outside
the Ordinary Course of Business; (xii) make any capital expenditure or
commitment therefor in excess of $10,000 individually or in the aggregate;
(xiii) make any changes to its normal and customary practices regarding the
solicitation, booking and fulfillment of orders outside the Ordinary Course of
Business; (xiv) cease from making accruals for Taxes, bonuses, vacation and
other customary accruals of the Company outside the Ordinary Course of Business;
(xv) cease from ensuring that accounts payable are current consistent with past
practice; (xvi) abstain from making payments of any Taxes, principal or interest
on borrowed funds and other customary expenses of the Company as they become
due, (xvii) issue or directly or indirectly contract to issue, sell, encumber,
assign or transfer any shares of capital stock; or
(d) enter into any transaction, arrangement or contract
with any Person except on an arm's length basis in the Ordinary Course of
Business.
Notwithstanding the foregoing, nothing in this Section 7.1 shall
prohibit the Company or the Shareholder from taking any action or omitting to
take any action: (i) as required or as expressly contemplated by the Transaction
Documents; (ii) with the written consent of the Buyer; or (iii) solely in the
case of the Shareholder, in connection with its or its subsidiaries' activities
that are unrelated to the Business, provided such action or omission to act
complies with Section 7.1(a) and 7.1(b).
7.2 Buyer's Access to Information and Properties. The Company and
the Shareholder shall permit the Buyer and its authorized employees, agents,
accountants, legal counsel and other representatives to have access to the
books, records, employees, counsel, accountants, engineers and other
representatives of the Company and the Shareholder (as they relate to the
Business) at all times reasonably requested by the Buyer for the purpose of
conducting an investigation of the Company's financial condition, corporate
status, operations, prospects, business and properties. The Company and the
Shareholder shall make available to the Buyer for examination and reproduction
all documents and data of every kind and character relating to the Company and
the Shareholder (as they relate to the Business) in possession or control of, or
subject to reasonable access by, the Company and/or the Shareholder, including,
without limitation, all files, records, data and information relating to the
properties (whether stored in paper, magnetic or other storage media) and all
agreements, instruments, contracts, assignments, certificates, orders, and
amendments thereto. Also, the Company and the Shareholder shall allow the Buyer
access to, and the right to inspect, the properties, except to the extent that
such properties are operated by a third-party operator, in which case the
Company and the Shareholder shall use their respective best efforts to cause the
operator of such properties to allow Buyer access to, and the right to inspect,
such properties.
21
7.3 Notice Regarding Changes. The Company and the Shareholder
shall promptly inform the Buyer in writing of any change in facts and
circumstances that could render any of the representations and warranties made
herein by the Company and/or the Shareholder inaccurate or misleading if such
representations and warranties had been made upon the occurrence of the fact or
circumstance in question. The Buyer shall promptly inform the Company in writing
of any change in facts and circumstances that could render any of the
representations and warranties made herein by it inaccurate or misleading if
such representations and warranties had been made upon the occurrence of the
fact or circumstance in question.
7.4 Ensure Conditions Met. Subject to the terms and conditions of
this Agreement, each party hereto shall use all reasonable commercial efforts to
take or cause to be taken all actions and do or cause to be done all things
required under applicable legal requirements in order to consummate the
transactions contemplated hereby, including, without limitation, (i) obtaining
all permits, authorizations, consents and approvals of any governmental
authority or other person which are required for or in connection with the
consummation of the transactions contemplated hereby and by the Transaction
Documents, (ii) taking any and all reasonable actions necessary to satisfy all
of the conditions to each party's obligations hereunder as set forth in Article
VI, and (iii) executing and delivering all agreements and documents required by
the terms hereof to be executed and delivered by such party on or prior to the
Closing. Notwithstanding the foregoing, the Seller will provide final copies of
all of the Schedules to this Agreement to the Buyer as soon as practicable and
in no event later than ten (10) business days after the date hereof (such
Schedules as they may be amended, supplemented or provided to the Buyer after
execution of this Agreement, the "Post-Execution Schedules").
7.5 Casualty Loss. If, between the date of this Agreement and the
Closing, any of the properties of the Company shall be destroyed or damaged in
whole or in part by fire, earthquake, flood, other casualty or any other cause,
then the Company shall, at the Buyer's election, (i) cause such properties to be
repaired or replaced prior to the Closing with properties of substantially the
same condition and function, (ii) deposit in a separate account an amount
sufficient to cause such properties to be so repaired or replaced, or (iii)
enter into contractual arrangements satisfactory to the Buyer so that the
Company will have at the Closing the same economic value as if such casualty had
not occurred.
7.6 No Shop. From the date of this Agreement until the earlier of
(i) the Closing Date, or (ii) the termination of this Agreement, the Company
shall not, and the Shareholder shall not and each of the Company and the
Shareholder shall cause its shareholders, officers, directors, employees and
other agents not to, directly or indirectly, take any action to solicit,
initiate or encourage any offer or proposal or indication of interest in a
merger, consolidation or other business combination involving any equity
interest in the Company, or any portion of the Acquired Assets, other than in
connection with the transactions contemplated by this Agreement. The Company
shall immediately advise the Buyer of the terms of any offer, proposal or
indication of interest that it receives or otherwise becomes aware of.
7.7 Name Change. The Company hereby represents, warrants and
covenants to the Buyer that the corporate name of the Company is as set forth on
the signature page hereof, including the d/b/a, and further agrees and
acknowledges that such names are included with the Acquired Assets and that the
exclusive right to use such name will be transferred to the Buyer on the Closing
Date. The Company and the Shareholder shall, at or prior to Closing, file an
appropriate amendment to the Company's Articles or Certificate of Incorporation
changing its name to a name which is in no way similar to the corporate name set
forth on the signature page hereof, including the d/b/a and shall furnish such
written consents and assignments as the Buyer shall hereafter reasonably request
in connection with such name change.
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7.8 Liability for Transfer Taxes. The Company shall be responsible
for the timely payment of, and shall indemnify and hold harmless the Buyer
Indemnified Parties against, all sales (including, without limitation, bulk
sales), use, value added, documentary, stamp, gross receipts, registration,
transfer, conveyance, excise, recording, license and other similar Taxes and
fees ("Transfer Taxes"), arising out of or in connection with or attributable to
the transactions effected pursuant to this Agreement and the other Transaction
Documents. The Sellers shall prepare and timely file all Tax Returns required to
be filed in respect of Transfer Taxes (including, without limitation, all
notices required to be given with respect to bulk sales taxes), provided that
the Buyer shall be permitted to prepare any such Tax Returns that are the
primary responsibility of the Buyer under applicable law. The Buyer's
preparation of any such Tax Returns shall be subject to the Company's approval,
which approval shall not be withheld unreasonably.
7.9 Shareholder Approval. On or before July 7, 2006, the
Shareholder shall prepare and file with the Securities and Exchange Commission
(the "SEC") a preliminary copy of a Proxy Statement meeting the requirements of
Section 14(a) of the Securities Exchange Act of 1934 and the rules and schedules
promulgated thereunder (the "Proxy Statement"). In the event that the SEC does
not review or take action with respect to the Proxy Statement, then on the
twelfth calendar day after the filing of the preliminary copy of the Proxy
Statement, the Shareholder shall file with the SEC and mail to the shareholders
of the Shareholder a definitive copy of the Proxy Statement for the purpose of
obtaining the consent and affirmative approval of more than fifty percent of the
shareholders (or such higher number as is required under applicable law or the
governing documents of the Company or the Shareholder) of the Company and the
Shareholder approving the execution of this Agreement and the other Transaction
Documents and approving the transactions contemplated thereby. In the event that
the SEC does review or take action with respect to the Proxy Statement, the
Shareholder shall use its best efforts to comply with SEC requests and actions
in a manner designed to have the Proxy Statement mailed to its shareholders as
promptly as practicable. In any event, on or before July 31, 2006, the
Shareholder shall have obtained the written consent of its shareholders
sufficient to approve the Agreement under the Shareholder's governing documents
and applicable law.
7.10 Employee Matters.
(a) Effective as of 12:01 a.m., local time, on the day
after the Closing Date, the employment by the Company of the employees listed on
Schedule 7.9 shall terminate and the Buyer shall be deemed to have offered
employment to each individual whose employment was so terminated (the "Business
Employees"), effective at 12:01 a.m., local time, on the day after the Closing
Date or, in the case of a Business Employee not actively at work on the Closing
Date on account of a disability, on the day such employee reports for work after
termination of such disability upon substantially the same terms and conditions
with substantially the same duties and responsibilities and at substantially the
same rate of pay as in effect on the Closing Date while such individuals were
employed by the Company.
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(b) The parties acknowledge that the transactions
provided for in this Agreement may result in obligations on the part of the
Company and one or more of the Plans that is a welfare benefit plan (within the
meaning of Section 3(1) of ERISA) to comply with the health care continuation
requirements of Part 6 of Title 1 of ERISA and Code Section 4980B, as
applicable. The parties expressly agree that Buyer and Buyer's benefit plans
shall have no responsibility for compliance with such health care continuation
requirements (i) for qualified beneficiaries who previously elected to receive
continued coverage under the Company's ERISA benefit plans or who between the
date of this Agreement and the Closing Date elect to receive continued coverage,
or (ii) with respect to those employees or former employees of the Company who
may become eligible to receive such continued coverage as a result of the
transactions provided for in this Agreement.
(c) Except as specifically set forth in this Agreement:
(i) the Buyer shall not be obligated to assume, continue or maintain any of the
Plans or Benefit Programs or Agreements; (ii) no assets or liabilities of the
Plans shall be transferred to, or assumed by, the Buyer or the Buyer's benefit
plans; (iii) the Company shall be solely responsible for funding and/or paying
any benefits under any of the Plans or Benefit Programs or Agreements, including
any termination benefits and other employee entitlements accrued under such
plans by or attributable to employees of the Company prior to the Closing Date,
other than (A) accrued vacation, sick time and paid time off and (B) any such
payment to the extent set forth as a current liability on the Closing Date
Balance Sheet; and (iv) the Company shall be responsible for any and all
payments to employees arising out of the transactions contemplated hereby
required under the Worker Adjustment and Retraining Notification Act or similar
state and local laws.
(d) Nothing in this Agreement, express or implied, shall
confer upon any employee of the Company, or any representative of any such
employee, any rights or remedies, including any right to employment or continued
employment for any period, of any nature whatsoever.
(e) The Company shall permit the Buyer to contact and
make arrangements with the Company's employees for the purpose of assuring their
continued employment by the Company after the Closing and for the purpose of
ensuring the continuity of the Company's business, and the Company agrees not to
discourage any such employees from consulting with the Buyer.
(f) The Company shall use its best efforts to keep
available the services of its present employees through the Closing Date.
7.11 Restrictions on Company Dissolution and Distributions. The
Company shall not, and the Shareholder shall take no action to cause or permit
the Company to, dissolve, until the later of (a) the Company's payment, or
adequate provision for the payment, of all of its obligations pursuant to
Article VIII hereof; or (b) the lapse of more than one year after the Closing
Date. The Company shall not, and the Shareholder shall take no action to cause
or permit the Company to make any distribution of the proceeds received pursuant
to this Agreement until the Company's payment, or adequate provision for the
payment, of all of its obligations to the Buyer under this Agreement and to all
other creditors of the Company.
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7.12 Certain Tax Matter. The Company and the Shareholder shall be
liable for all Taxes of the Company. In addition, in the case of Taxes that are
payable with respect to a Straddle Period (as defined below), the Company and
the Shareholder shall pay to the Buyer an amount equal to the Tax for such
Straddle Period multiplied by a fraction the numerator of which is the number of
days from the beginning of the Straddle Period through the Closing Date, and the
denominator of which is the number of days in the entire Straddle Period.
"Straddle Period" means any Tax period that begins before the Closing Date and
ends after the Closing Date.
7.13 Further Actions. In case at any time after the Closing any
further action is necessary to carry out the purposes of the Transaction
Documents, the Parties will take such further action (including the execution
and delivery of such further instruments and documents) as any other Party may
reasonably request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Article 8 below).
7.14 Compliance With Law. The Company shall, and the Shareholder
shall cause the Company to, comply with all applicable statutes, rules,
regulations, orders or restrictions of any domestic or foreign government or any
instrumentality or agency thereof in respect of the conduct of the Business or
the ownership of its properties, including, without limitation, the timely
filing of all Tax returns required to be filed by it and the timely payment of
all Taxes that become due and payable.
7.15 Non-Compete, Non-Solicitation and Confidentiality.
(a) Non-Compete. The Company and the Shareholder agree
that from the date of Closing and for a period of three (3) years thereafter
(the "Non-Compete Period"), neither they nor any Affiliate (collectively, the
"Restricted Parties") will, directly or indirectly, as partner, shareholder,
member, officer, director, employee, consultant, independent contractor, joint
venturer, investor, lender or otherwise, participate in any business or
enterprise engaged anywhere in the United States (the "Restricted Area") in the
provision of any services which are the same as, substantially similar to or
competitive with the Business and the services which the Company was designing,
developing, selling or providing, at any time prior to the Closing Date.
Competitive activities within the Restricted Area shall include, without
limitation, any call or communication that either originates from or is directed
to a Person in the United States, without regard for where any other Person
participating in such communication may reside.
(b) Non-Solicitation. Without the prior consent of the
Buyer, none of the Restricted Parties shall during the Non-Compete Period,
directly or indirectly, for themselves or for any other person, firm,
corporation, partnership, association or other entity (including the Company),
(i) attempt to employ or enter into any contractual arrangement with any
employee or former employee of the Business, unless such employee or former
employee has not been employed by the Business for a period in excess of nine
months, and/or (ii) call on or solicit any of the actual or targeted prospective
customers or clients of the Business with respect to business in the Restricted
Area, nor shall such Restricted Parties make known the names and addresses of
such customers or any information relating in any manner to the Company's trade
or business relationships with such customers.
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(c) Confidentiality. Such Restricted Parties shall not at
any time divulge, communicate, use to the detriment of the Buyer or for the
benefit of any other person or persons, or misuse in any way, any Confidential
Information pertaining to the Business. Any confidential information or data now
known or hereafter acquired by such Restricted Parties with respect to the
Business shall be deemed a valuable, special and unique asset of the Buyer that
is received by such Restricted Party in confidence and as a fiduciary, and such
Restricted Party shall remain a fiduciary to the Buyer with respect to all of
such information.
(d) Injunctive Relief. It is recognized and hereby
acknowledged by the parties hereto that a breach or violation by a Restricted
Party of any or all of the covenants and agreements contained in this Section
7.15 may cause irreparable harm and damage to the Buyer in a monetary amount
which may be virtually impossible to ascertain. As a result, each Restricted
Party recognizes and hereby acknowledges that the Buyer shall be entitled to an
injunction from any court of competent jurisdiction enjoining and restraining
any breach or violation of any or all of the covenants and agreements contained
in this Section 7.15 by such Restricted Party and/or his associates, Affiliates,
partners or agents, either directly or indirectly, and that such right to
injunction shall be cumulative and in addition to whatever other rights or
remedies the Buyer may possess hereunder, at law or in equity. Nothing contained
in this Section 7.15 shall be construed to prevent Buyer from seeking and
recovering from a Restricted Party damages sustained by it as a result of any
breach or violation by such Restricted Party of any of the covenants or
agreements contained herein.
ARTICLE VIII
INDEMNIFICATION
8.1 General Indemnification by the Company Indemnifying Parties.
The Company and the Shareholder (individually a "Company Indemnifying Party" and
collectively the "Company Indemnifying Parties"), jointly and severally, shall
indemnify and hold the Buyer, and its successors and assigns, partners, manager,
officers and its Affiliates (as applicable, the "Buyer Indemnified Party")
harmless from and against any and all loss, liability, claim, damage, cost or
expense (including without limitation diminution in value and reasonable
attorneys' fees and expenses) (a "Loss"), whether or not involving a third party
claim, which it may incur, directly or indirectly, as a result of or arising
from, (i) any inaccuracy in any representation or warranty under Article IV of
this Agreement, (ii) any breach of any covenant or other agreement in the
Transaction Documents by any Company Indemnifying Party, (iii) any liabilities
of the Company other than the Assumed Liabilities and (iv) any liabilities
relating to the Business occurring on or before the Closing Date other than the
Assumed Liabilities. No claim for indemnification under this Section 8.1 shall
be made unless the claims for Losses by the Buyer Indemnified Parties exceed
$50,000 in the aggregate provided, that if the total amount of all such Losses
exceeds such amount, then the Company and the Shareholder will be obligated to
indemnify the Buyer Indemnified Parties for all Losses, including the initial
$50,000 and the maximum aggregate Losses for which the Company Indemnifying
Parties shall be liable to the Buyer shall not exceed $7,500,000, plus the
actual amount of the Buyer' costs of enforcement of these indemnification
obligations. All materiality qualifications contained in the Company's and/or
the Shareholder's representations and warranties made in ARTICLE IV of this
Agreement or any other Transaction Document, including the term "Material
Adverse Effect", will be taken into account under this ARTICLE VII solely for
purposes of determining whether a breach or violation of such representation or
warranty has occurred for which an indemnity obligation exists. Without limiting
the generality of the foregoing, all such materiality qualifications will be
ignored and not given effect for purposes of determining the amount of any
Losses resulting from any such breach or violation.
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8.2 General Indemnification by Buyer. The Buyer shall indemnify
and hold the Company and the Shareholder, their successors and assigns,
stockholders, directors and officers (as applicable, the "Company Indemnified
Party"), harmless from and against any and all Losses, whether or not involving
a third party claim, which it may incur, directly or indirectly, as a result of
or arising from, (i) any inaccuracy in any representation or warranty of the
Buyer under the Transaction Documents and (ii) any breach of any covenant or
other agreement in the Transaction Documents by the Buyer. No claim for
indemnification under this Section 8.2 shall be made unless the claims for
Losses by the Company Indemnified Party exceed $50,000 in the aggregate
provided, that if the total amount of all such Losses exceeds such amount, then
the Buyer will be obligated to indemnify the Company Indemnified Party for all
Losses, including the initial $50,000 and the maximum aggregate Losses for which
the Buyer shall be liable to the Company Indemnified Party shall not exceed
$750,000, plus the actual amount of the Company Indemnified Party's costs of
enforcement of these indemnification obligations
8.3 Indemnification Procedures. Any claim or demand for
indemnification under this Article VIII ("Claim(s)") shall be asserted and
resolved as follows:
(a) In the event that any Buyer Indemnified Party or any
Company Indemnified Party (as the case may be, "Indemnified Party") has a Claim
against, respectively, any Company Indemnifying Party, or the Buyer (as the case
may be, "Indemnifying Party") which does not involve a Claim being asserted
against or sought to be collected by a third party, the Indemnified Party shall
give the Indemnifying Party written notice (a "Claim Notice") of any matter
which such Indemnified Party has determined has given or could give rise to a
right of indemnification hereunder, supported by reasonable documentation
setting forth the nature of the circumstances entitling the Indemnified Party to
indemnity hereunder (including, but not limited to, references to the provisions
hereof upon which the Indemnified Party is relying in making such claim).
(b) In the event that any Claim for which the
Indemnifying Party would be liable to an Indemnified Party hereunder is asserted
against an Indemnified Party by a third party (a "Third Party Claim"), the
Indemnified Party shall deliver a Claim Notice to the Indemnifying Party. The
Indemnifying Party shall have thirty (30) days from the date of delivery of the
Claim Notice to notify the Indemnified Party: (A) whether the Indemnifying Party
disputes liability to the Indemnified Party hereunder with respect to the Third
Party Claim, and, if so, the basis for such a dispute; and (B) if such party
does not dispute liability, whether or not the Indemnifying Party desires, at
the sole cost and expense of the Indemnifying Party, to defend against the Third
Party Claim, provided that the Indemnified Party is hereby authorized (but not
obligated) to file any motion, answer or other pleading and to take any other
action which the Indemnified Party shall deem necessary or appropriate to
protect the Indemnified Party's interests.
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(c) In the event that the Indemnifying Party timely
notifies the Indemnified Party that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify with respect to the Third Party
Claim, the Indemnifying Party shall defend the Indemnified Party against such
Third Party Claim by appropriate proceedings, provided that such Third Party
Claim shall not be compromised or settled without the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld. If the
Indemnified Party desires to participate in, but not control, any such defense
or settlement the Indemnified Party may do so at its sole cost and expense. If
the Indemnifying Party elects not to defend the Indemnified Party against a
Third Party Claim, whether by failure of such party to give the Indemnified
Party timely notice as provided herein or otherwise, then the Indemnified Party,
without waiving any rights against such party, may settle or defend against such
Third Party Claim and the Indemnified Party shall be entitled to recover from
the Indemnifying Party the amount of any settlement or judgment (subject to any
rights of appeal) and, on an ongoing basis, all indemnifiable costs and
reasonable expenses of the Indemnified Party with respect thereto, including
interest from the date such costs and reasonable expenses were incurred;
provided that such Third Party Claim shall not be compromised or settled without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
(d) An Indemnified Party shall not be entitled to
indemnification under this Article 8 unless notice of a claim for indemnity
shall have been given within the applicable survival and/or notice period, if
any, set forth in Section 8.4 below.
(e) Any indemnification payment required to be made
pursuant to this Agreement shall be (a) reduced by any insurance proceeds
actually received by the Indemnified Party or any of its Affiliates with respect
to the item giving rise to the indemnification payment and (b) reduced to take
account of any net Tax benefit "actually realized" by the Indemnified Party
arising from the incurrence or payment of any such indemnified amount. In
computing the amount of any such Tax benefit, the Indemnified Party shall be
deemed to recognize all other items of loss, deduction or credit before
recognizing any item arising from the incurrence or payment of any indemnified
amount except that carrybacks of net operating losses or other tax attributes
shall be applied in making such computation after recognizing any item arising
from the incurrence or payment of an indemnified amount. Any indemnification
payment hereunder shall initially be made without regard to adjustment for net
Tax benefit under this Section 8.1 and shall be increased or reduced to reflect
any such net Tax benefit within ten (10) Business Days after the Indemnified
Party would be required to pay but for the incurrence or payment of such
indemnified amount. The parties shall make any adjusting payment between each
other as is required under this Section 8.1 within ten (10) Business Days of the
date an Indemnified Party is deemed to have actually realized each net Tax
benefit. The amount of any reduction hereunder shall be adjusted to reflect any
final determination with respect to the Indemnified Party's liability for taxes
and payments to reflect such adjustment shall be made by the Indemnifying Party
if necessary within ten (10) Business Days of such determination.
8.4 Survival of Representations and Warranties. All of the
representations and warranties of the Company and the Shareholder contained in
this Agreement shall survive the Closing hereunder and continue in full force
and effect for a period of thirty-six (36) months thereafter; provided, however,
that the representations and warranties set forth in Sections 4.1, 4.2, 4.3,
4,7, 4.13, 4.14, 4.17, 4.21, 4.23 and 4.24 shall survive the Closing and
continue in full
28
force and effect indefinitely (subject only to the expiration of applicable
statutes of limitation). All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company or the
Shareholder pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company and
the Shareholder hereunder solely as of the date of such certificate or
instrument. If a Claim is asserted by a Party before the expiration of the
survival or limitations period, such asserted Claim shall survive until the
final adjudication and resolution of such Claim.
ARTICLE IX
TERMINATION
9.1 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of the Buyer and the
Company;
(b) By the Buyer in the event of any breach in any
material respect by the Company or the Shareholder of any of its
representations, warranties, covenants or agreements contained herein and, in
the case of any breach of any covenant hereunder, either (i) such breach cannot
be cured or (ii) if it can be cured, has not been cured prior to the first to
occur of (x) 5:00 p.m. (Eastern Time) on the date that is 10 days following
receipt by the breaching party of written notice of such breach or (y) 5:00 p.m.
(Eastern Time) on the date immediately preceding the date set forth in Section
9.1(f);
(c) By the Company in the event of any breach in any
material respect by Buyer of any of Buyer's representations, warranties,
covenants or agreements contained herein and, in the case of any breach of any
covenant hereunder, either (i) such breach cannot be cured or (ii) if it can be
cured, has not been cured prior to the first to occur of (x) 5:00 p.m. on the
date that is 10 days following receipt by the breaching party of written notice
of such breach or (y) 5:00 p.m. on the date immediately preceding the date set
forth in Section 9.1(f);
(d) By the Buyer or the Company if any court of competent
jurisdiction in the United States or other Governmental Authority will have
issued a final and non-appealable order, decree or ruling permanently
restraining, rejoining or otherwise prohibiting the consummation of any material
transaction contemplated herein;
(e) By the Buyer if any event or condition has occurred
or is reasonably likely to occur on or after the Closing Date which,
individually or in the aggregate with any other events or conditions, has or is
reasonably likely to have a Material Adverse Effect on the business or operation
of the Company; or
(f) By the buyer, without any action by any party, at any
time on or after 5:00 p.m. (Eastern Time) on August 1, 2006, and by the
Shareholder, without any action by any party, at any time on or after 5:00 p.m.
(Eastern Time) on October 1, 2006, unless such dates are extended by the written
agreement of the Company and the Buyer.
29
9.2 Notice of Termination. Any party desiring to terminate this
Agreement pursuant to 9.1 will give written notice of such termination to the
other parties to this Agreement.
9.3 Effect of Termination. If this Agreement will be terminated
pursuant to 9.1, all further obligations of the parties under this Agreement
will be terminated without further liability of any party to the other;
provided, that nothing herein will relieve any party from liability for its
breach of this Agreement prior to such termination.
ARTICLE X
MISCELLANEOUS.
10.1 Governing Law; Choice of Forum. This Agreement shall be
governed in all respects by the laws of the State of Florida as such laws are
applied to agreements between Florida residents entered into and performed
entirely in Florida. Each of the Parties submits to the jurisdiction of the
state courts of Florida sitting in Palm Beach County or the United States
District Court, Southern District of Florida in any action or proceeding arising
out of or relating to this Agreement and agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court. Each
Party also agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court. Each of the Parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other Party with respect thereto.
10.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
Parties and shall inure to the benefit of and be enforceable by each Person who
shall be a holder of the Units from time to time.
10.3 Entire Agreement. The Transaction Documents and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the Parties with regard to the subject matter hereof and
thereof and no Party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
10.4 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
10.5 Amendment and Waiver. This Agreement may be amended or
modified only upon the written consent of each of the Parties hereto.
10.6 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Party upon any breach,
default or noncompliance by another party under the Transaction Documents shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter
30
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character on the Buyer' part of any breach, default or noncompliance
under the Transaction Documents or any waiver on such Party's part of any
provisions or conditions of the Transaction Documents must be in writing and
shall be effective only to the extent specifically set forth in such writing.
All remedies under the Transaction Documents, by law or otherwise afforded to
any Party, shall be cumulative and not alternative.
10.7 Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the Party to be notified; (b) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day; (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the Party to be notified at the following address:
If to the Buyer to:
TMS Professional Markets Group, LLC.
180 Royal Palm Way
Suite 203
Palm Beach, FL 33480
Attn: Mike Schmickle
(Telefax: (561) 659-9055)
with a required copy to:
Greenberg Traurig, P.A.
Suite 2000
401 East Las Olas Boulevard
Fort Lauderdale, FL 33301
Attn: David Peck, Esq.
(Telefax: (954) 765-1477)
If to the Company to:
4950 Communications Avenue
Suite 300
Boca Raton, FL 33431
Attn: Shawkat Raslan
(Telefax: (561) - )
If to the Shareholder:
4950 Communications Avenue
Suite 300
Boca Raton, FL 33431
Attn: Shawkat Raslan
(Telefax: (561) - )
31
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein.
10.8 Expenses. Each party shall be responsible for its fees and
expenses incurred with respect to the negotiation, execution, delivery and
performance of the Transaction Documents
10.9 Attorneys' Fees. In the event that any suit or action is
instituted to enforce any provision in the Transaction Documents, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to the Transaction Documents, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.11 Confidentiality. Each Party hereto agrees that, except with
the prior written consent of the other Parties, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs ("Confidential Information") of the other Parties
to which such Party has been or shall become privy by reason of the Transaction
Documents, discussions or negotiations relating to the Transaction Documents,
the performance of its obligations hereunder or the ownership of the Company's
limited liability company interests. The provisions of this Section 10.11 shall
be in addition to, and not in substitution for, the provisions of any separate
confidentiality or nondisclosure agreement executed by one or more of the
Parties. The foregoing notwithstanding, Buyer may from time to time disclose
certain Confidential Information of the Company to its advisory board,
investment committee or similar body and its partners to apprise such parties as
to matters relating to the Buyer's investment in the Company.
10.12 Public Announcements. The timing and content of any public
announcements relating to the execution of this Agreement and the consummation
of the transactions contemplated hereby shall be approved by both the Buyer and
the Shareholder prior to the release of such public announcements.
10.13 Time of the Essence. Time is of the essence with respect to
the performance of all obligations provided herein and the consummation of all
transactions contemplated hereby.
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IN WITNESS WHEREOF, the Parties hereto have executed this ASSET
PURCHASE AGREEMENT as of the date set forth in the preface hereof.
TELEMANAGEMENT SERVICES, INC.
By:
-------------------------------
Name:
Title:
ACCESS WORLDWIDE COMMUNICATIONS, INC.
By:
-------------------------------
Name:
Title:
TMS PROFESSIONAL MARKETS GROUP, LLC
By:
-------------------------------
Name:
Title:
33
SCHEDULES
---------
1.1 Net Working Capital Example
2.1(a) Excluded Assets
2.1(c) Assumed Liabilities
2.2 Purchase Price Allocation
4.1 Filings, Consents and Authorizations
4.3 Broker's Fees
4.6 Subsidiaries
4.8 Financial Statements
4.9 Undisclosed Liabilities
4.10(b) Company Contracts
4.10(c) Enforceability of Contracts
4.10(d) No Actions
4.11 Obligations to Related Parties
4.12 Absence of Charges
4.13 Liens
4.14 Intellectual Property
4.18 Employees
4.23 Full Disclosure
34