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EXHIBIT 10.20
STOCK PURCHASE AGREEMENT
Dated November 10, 1998,
and effective as of November 1, 1998,
by and among
ABR INFORMATION SERVICES, INC.,
a Florida corporation,
BMC CONSULTANTS, INC.,
a Colorado corporation,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
D'▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and
▇▇▇▇ ▇. ▇▇▇▇▇,
as Shareholders,
and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as Shareholders' Agent
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STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES..............................................................................1
2. PURCHASE PRICE -PAYMENT..................................................................................1
2.1. Purchase Price..................................................................................1
2.2. Payment of Purchase Price.......................................................................3
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE PRINCIPAL SHAREHOLDER..................................6
3.1. Corporate.......................................................................................6
3.2. Shareholders....................................................................................7
3.3. No Violation....................................................................................8
3.4. Financial Statements............................................................................8
3.5. Tax Matters.....................................................................................9
3.6. Accounts Receivable............................................................................10
3.7. Absence of Certain Changes.....................................................................10
3.8. Absence of Undisclosed Liabilities.............................................................12
3.9. No Litigation..................................................................................12
3.10. Compliance With Laws and Orders................................................................12
3.11. Title to and Condition of Properties...........................................................14
3.12. Insurance......................................................................................16
3.13. Contracts and Commitments......................................................................17
3.14. Labor Matters..................................................................................18
3.15. Employee Benefit Plans.........................................................................19
3.16. Employment Compensation........................................................................23
3.17. Trade Rights...................................................................................23
3.18. Major Customers and Suppliers..................................................................24
3.19. Service Warranty and Liability.................................................................24
3.20. Bank Accounts..................................................................................25
3.21. Affiliates' Relationships to Company...........................................................25
3.22. Assets Necessary to Business...................................................................25
3.23. No Brokers or Finders..........................................................................25
3.24. Year 2000 Compliance...........................................................................25
3.25. Systems Performance............................................................................26
3.26. Software Ownership; Non Infringement...........................................................26
3.27. Disclosure.....................................................................................26
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................27
4.1. Corporate......................................................................................27
4.2. Authority......................................................................................27
4.3. No Brokers or Finders..........................................................................27
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4.4. Disclosure.....................................................................................27
4.5. Investment Intent..............................................................................28
5. COVENANTS...............................................................................................28
5.1. Employment and Noncompetition Agreements.......................................................28
5.2. Noncompetition; Confidentiality................................................................28
5.3. General Releases...............................................................................29
5.4. Section 338(h)(10) Election....................................................................29
5.5. Employees of Company...........................................................................30
6. INDEMNIFICATION.........................................................................................30
6.1. By Principal Shareholder.......................................................................30
6.2. By Buyer.......................................................................................31
6.3. Indemnification of Third-Party Claims..........................................................31
6.4. Payment........................................................................................32
6.5. Indemnification for Environmental Matters......................................................32
6.6. Limitations on Indemnification.................................................................32
6.7. No Waiver......................................................................................34
7. CLOSING.................................................................................................34
7.1. Documents to be Delivered by Company and Shareholders..........................................34
7.2. Documents to be Delivered by Buyer.............................................................35
8. TERMINATION.............................................................................................36
9. RESOLUTION OF DISPUTES..................................................................................36
9.1. Arbitration....................................................................................36
9.2. Arbitrators....................................................................................36
9.3. Procedures; No Appeal..........................................................................37
9.4. Authority......................................................................................37
9.5. Entry of Judgment..............................................................................37
9.6. Confidentiality................................................................................37
9.7. Continued Performance..........................................................................37
9.8. Tolling........................................................................................37
10. MISCELLANEOUS...........................................................................................37
10.1. Disclosure Schedule............................................................................37
10.2. Further Assurance..............................................................................38
10.3. Disclosures and Announcements..................................................................38
10.4. Assignment; Parties in Interest................................................................38
10.5. Law Governing Agreement........................................................................38
10.6. Amendment and Modification.....................................................................38
10.7. Notice.........................................................................................39
10.8. Expenses.......................................................................................40
10.9. Shareholders' Agent; Power of Attorney.........................................................41
10.10. Entire Agreement...............................................................................42
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10.11. Counterparts; Facsimile Signatures..................................42
10.12. Headings............................................................42
10.13. Glossary of Terms...................................................43
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Disclosure Schedule
Schedule 3.1.(c) Foreign Corporation Qualification
Schedule 3.1.(e) Directors and Officers of the Company
Schedule 3.1.(f) Shareholder List
Schedule 3.3 Violation, Conflict, Default
Schedule 3.4 Financial Statements
Schedule 3.5.(b) Tax Returns (Exceptions to Representations)
Schedule 3.5.(c) Tax Audits
Schedule 3.5.(e) Tax, Other
Schedule 3.6 Accounts Receivable (Aged Schedule)
Schedule 3.7 Certain Changes
Schedule 3.8 Off-Balance Sheet Liabilities
Schedule 3.9 Litigation Matters
Schedule 3.10.(a) Non-Compliance with Laws
Schedule 3.10.(b) Licenses and Permits
Schedule 3.10.(c) Environmental Matters (Exceptions to Representations)
Schedule 3.11 Liens
Schedule 3.11.(c) Real Property
Schedule 3.12 Insurance
Schedule 3.13.(b) Personal Property Leases
Schedule 3.13.(g) Collective Bargaining Agreements
Schedule 3.13.(h) Loan Agreements, etc.
Schedule 3.13.(i) Guarantees
Schedule 3.13.(l) Material Contracts
Schedule 3.14 Labor Matters
Schedule 3.15.(a) Employee Plans/Agreements
Schedule 3.16 Employment Compensation
Schedule 3.17 Trade Rights
Schedule 3.18.(a) Major Customers
Schedule 3.18.(b) Major Suppliers
Schedule 3.18.(c) Sales Representatives
Schedule 3.19 Service Warranty, Warranty Expense and Liability Claims
Schedule 3.20 Bank Accounts
Schedule 3.21.(a) Contracts with Affiliates
Schedule 3.21.(c) Obligations of and to Affiliates
Schedule 3.24 Year 2000 Noncompliance
Schedule 3.26 Software Ownership Exceptions
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated November 10, 1998, and
effective as of November 1, 1998, by and among ABR Information Services, Inc., a
Florida corporation ("Buyer"), BMC Consultants, Inc., a Colorado corporation
("Company"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, D'▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and
▇▇▇▇ ▇. ▇▇▇▇▇ (individually "Shareholder" and together the "Shareholders"), and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Shareholders' Agent").
RECITALS
1. Company is engaged in the business of providing retirement plan
administration and consulting services to third parties (the "BMC Business").
Shareholders own all of the issued and outstanding shares (the "Shares") of
capital stock of Company.
2. Company's facilities consist solely of leased offices at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Facilities").
3. Buyer desires to purchase the Shares from Shareholders and Shareholders
desire to sell the Shares to Buyer, upon the terms and conditions herein set
forth.
4. Shareholders wish to designate ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ their agent and
attorney-in-fact, with the authority to act on their behalf in connection with
the sale of the Shares to Buyer.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, effective as of the
Effective Date (as hereinafter defined) Shareholders shall sell to Buyer and
Buyer shall purchase from Shareholders all of the Shares.
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price.
2.1.(a) Amount. The aggregate purchase price (the "Purchase
Price") payable for the Shares shall be the sum of (a) THREE MILLION
DOLLARS ($3,000,000) and (b) a contingent payment (the "Contingent
Payment") based on the BMC Business' net earnings before income taxes
("Pre-Tax Earnings") for the twelve-month period commencing as of
November 1,
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1998 (the "Contingent Payment Period"). All payments of Purchase Price
are to be made for pro rata distribution among the Shareholders in
accordance with their respective shareholdings in the Company as set
forth in Schedule 3.1(f)hereto (except that (i) an aggregate of Eight
Hundred Eighty Thousand Dollars ($880,000) otherwise allocable and
distributable to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Principal Shareholder") shall
be subject to the holdback provisions of Sections 2.2(c) and 2.2(d)
below and (ii) Three Hundred Seventy-Five Thousand Dollars ($375,000)
otherwise allocable and distributable to the Principal Shareholder shall
be paid directly to the Company as provided in Section 2.2 (a) below).
2.1.(b) Calculation of Contingent Payment. The Contingent
Payment shall equal (i) THREE HUNDRED THOUSAND DOLLARS ($300,000), in
the event the BMC Business' Pre-Tax Earnings for the Contingent Payment
Period equals or exceeds $600,000, or (ii) EIGHT HUNDRED THOUSAND
DOLLARS ($800,000), in the event the BMC Business' Pre-Tax Earnings for
the Contingent Payment Period equals or exceeds $800,000. No Contingent
Payment shall be due or payable in the event the BMC Business' Pre-Tax
Earnings for the Contingent Payment Period is less than $600,000.
2.1.(c) Calculation of Pre-Tax Earnings. The calculation of the
BMC Business' Pre-Tax Earnings for the Contingent Payment Period shall
include revenue received from retirement plan administration and
consulting services but shall not include revenue received from COBRA
administration services or other services not performed by Company as of
the date hereof but offered by Buyer or any of its subsidiaries or
affiliates. Except as expressly provided herein, the calculation of
Pre-Tax Earnings shall be made in accordance with generally accepted
accounting principles applied on a consistent basis, subject to the
following adjustments:
(i) Any depreciation or amortization adjustments resulting
solely from the transactions contemplated by this Agreement
shall not be included for purposes of calculating Pre-Tax
Earnings for the Contingent Payment Period.
(ii) Notwithstanding Company's actual expenses for the
Contingent Payment Period relating to items and functions (such
as property and casualty insurance, errors and omissions
insurance, health and welfare programs and human resource
functions) that Company and Buyer mutually agree shall be
provided by Buyer or another subsidiary thereof, Company shall
accrue as an expense for purposes of calculating Pre-Tax
Earnings for the Contingent Payment Period the same dollar
amount as it accrued in the twelve months preceding the
Effective Date with respect to such items and functions.
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(iii) The calculation of Pre-Tax Earnings for the
Contingent Payment Period shall not exclude any expense item (or
series of related items) relating to personnel matters or
exceeding $10,000 annually, unless such exclusion has been
preapproved in writing by Buyer. The parties hereby agree that
the calculation of Pre-Tax Earnings shall exclude legal and
accounting fees associated with the transaction contemplated
hereby because the Closing Balance Sheet (as defined in Section
3.4) reflects all such accrued costs or such costs will be paid
by the Principal Shareholder in accordance with the Section 10.8
hereof. Additionally, such costs (other than those paid directly
by the Principal Shareholder), excluding the first $25,000
(which Buyer has agreed to pay), will be included in the minimum
net worth and minimum working capital calculations contemplated
in Section 3.4 hereof.
(iv) Company shall review with Buyer on a monthly basis any
and all expense items Company intends to exclude for purposes of
calculating Pre-Tax Earnings for the Contingent Payment Period.
(v) In the event Buyer (or any subsidiary thereof)
generates new retirement plan administration or consulting
services business for Company during the Contingent Payment
Period, and/or Company generates new COBRA or pension
administration services business (or other new business for
similar administrative services not performed by Company as of
the date hereof), Buyer and Company agree to make a reasonable
allocation of sales and other reasonable costs associated with
obtaining such new business for purposes of calculating
Company's Pre-Tax Earnings for the Contingent Payment Period.
2.1.(d) Conduct of Business During the Contingent Payment
Period. During the Contingent Payment Period, Buyer covenants and agrees
that Buyer will, and if appropriate will cause its Affiliates to, (i)
not move the business location of Company more than 30 miles from the
business premises of the BMC Business as of the date hereof, and (ii)
permit the Principal Shareholder (subject to his employment agreement
with Company) to manage and control the day-to-day affairs of the BMC
Business.
2.2. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer as follows:
2.2.(a) Cash to Shareholders' Agent. At the Closing, Buyer shall
deliver to the Shareholders' Agent the sum of One Million Seven Hundred
Forty-Five Thousand Dollars ($1,745,000). Additionally, Buyer shall
deliver to the Company the sum of Three Hundred Seventy-Five Thousand
Dollars ($375,000), which amount shall constitute payment in full of
that certain
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Promissory Note, dated October 29, 1998, of the Principal Shareholder in
favor of the Company in the principal amount of $375,000.
2.2.(b) Contingent Payment. The initial calculation of the
Contingent Payment shall be made by Buyer, which shall deliver its
calculation (setting forth in reasonable detail Buyer's calculation of
the BMC Business' Pre-Tax Earnings and the various elements thereof) on
or before January 31, 2000 to Shareholders' Agent for his review and
comment. If Buyer and Shareholder's Agent are able to agree in writing
upon the amount of the Contingent Payment within fifteen (15) days
following delivery of the initial calculation to Shareholders' Agent,
then Buyer shall pay such amount. Such payment of the Contingent
Payment, if any, shall be made to the Shareholders' Agent within fifteen
(15) days following the date of such written agreement but in no event
earlier than January 1, 2000. In the event Buyer and Shareholders' Agent
cannot agree on the amount of the Contingent Payment by March 1, 2000,
then the determination of the Contingent Payment shall be submitted to
binding arbitration in accordance with Article 9 of this Agreement and
shall be paid on the later of (i) January 2, 2000, or (ii) 5 days after
a determination pursuant to such arbitration procedures.
2.2.(c) Purchase Price Holdback for Securing Minimum Net Worth
and Minimum Working Capital Requirements in the Closing Balance Sheet.
On the Closing Date, Buyer will transfer the sum of Three Hundred Eighty
Thousand Dollars ($380,000) to a segregated interest-bearing account
with a bank or other financial institution with a combined capital and
surplus in excess of $50,000,000, which amount shall be held by Buyer in
such account for the purpose of securing the representation contained in
Section 3.4 hereof that the Closing Balance Sheet (as defined in Section
3.4) will, upon finalization following receipt of the Recent Balance
Sheet, reflect that the Company had a net worth (i.e., stockholders'
equity) of at least $380,000 and working capital (i.e., current assets
less current liabilities) of at least $130,000 as of October 31, 1998.
If the Closing Balance Sheet, upon finalization, does not reflect that
the Company had a net worth of at least $380,000 or working capital of
at least $130,000 as of October 31, 1998, then Buyer shall deliver to
Principal Shareholder that portion of the funds held in the segregated
account equal to (x) $380,000, less the greater of (y) the amount by
which the net worth as reflected on the Closing Balance Sheet falls
below $380,000, or (z) the amount by which the working capital as
reflected on the Closing Balance Sheet falls below $130,000. If the
Closing Balance Sheet, upon finalization, reflects that the Company had
a net worth of at least $380,000 and working capital of at least
$130,000 as of October 31, 1998, then Buyer shall deliver to Principal
Shareholder the entire $380,000 held in the segregated account. Buyer
shall deliver the requisite amount to the Principal Shareholder promptly
after receipt of the Recent Balance Sheet and finalization of the
Closing Balance Sheet.
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2.2.(d) Purchase Price Holdback for Securing the General
Indemnification Obligations of Company and the Principal Shareholder.
(i) On the Closing Date, Buyer will transfer the sum of
Five Hundred Thousand Dollars ($500,000) to a segregated
interest-bearing account with a bank or other financial
institution with a combined capital and surplus in excess of
$50,000,000, which amount shall be held by Buyer in such account
for the purpose of securing the indemnification obligations of
Company and the Principal Shareholder under this Agreement. For
purposes hereof, "Holdback Period" shall mean the period
commencing on the date hereof and ending five (5) months from
the Closing Date, subject to extension as hereinafter provided.
(ii) If, prior to the expiration of the Holdback Period,
Buyer determines to assert a claim for indemnification under
Article 6 of this Agreement, then Buyer shall give the Principal
Shareholder written notice of such claim (for purposes of this
Section 2.2(c), a "Claim Notice"), specifying in reasonable
detail the basis therefor and the amount and calculation
thereof. If the Principal Shareholder does not deliver to Buyer
written notice of an objection to the claim for indemnification
within twenty (20) days after receipt of the Claim Notice
relating thereto, Buyer shall be entitled to withdraw the dollar
amount of its claim (as set forth in the Claim Notice) from the
segregated account. If the Principal Shareholder shall timely
deliver to Buyer such written notice of objection, then Buyer
shall not make a withdrawal from the segregated account with
respect to the claim set forth in the Claim Notice until: (x)
Buyer and Principal Shareholder have executed joint written
instructions referring to such Claim Notice and directing Buyer
to withdraw, for Buyer's own account, funds from the segregated
account; or (y) Buyer has received a copy of a judgment, decree
or order of a court, or copy of an arbitration award,
adjudicating the dispute and determining an amount with respect
to such claim for indemnification; whereupon Buyer shall
withdraw from the segregated account, for Buyer's own account,
such amount as provided therein.
(iii) If Buyer has not delivered a Claim Notice to
Principal Shareholder prior to the expiration of the Holdback
Period, or if any and all Claim Notices delivered to Principal
Shareholder during the Holdback Period have been resolved
pursuant to subsection (ii) above, then Buyer shall deliver to
Principal Shareholder the portion of the funds held in the
segregated account equal to (x) $500,000, less (y) any amounts
withdrawn by Buyer as provided herein, plus (z) any interest
earned with respect to such balance. Buyer shall deliver such
amount to the Principal Shareholder promptly after the
expiration of the Holdback Period, unless one or more Claim
Notice(s) have not been finally resolved pursuant to
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subsection (ii) above, in which case Buyer shall retain such
amount in the segregated account until: (a) Buyer and Principal
Shareholder have executed joint written instructions referring
to such Claim Notice(s) and directing Buyer as to the
disbursement of the funds in the segregated account; or (b)
Buyer has received a copy of a judgment, decree or order of a
court, or copy of an arbitration award, adjudicating the dispute
and determining an amount with respect to such Claim Notice(s);
whereupon Buyer shall disburse the funds in the segregated
account as provided therein.
2.2.(e) Method of Payment. All payments under this Section 2.2
shall be made in the form of certified or bank cashier's check payable
to the order of the recipient or, at the recipient's option, by wire
transfer of immediately available funds to an account designated by the
recipient not less than 48 hours prior to the time for payment specified
herein.
3. REPRESENTATIONS AND WARRANTIES OF COMPANY AND THE
PRINCIPAL SHAREHOLDER
The Company and the Principal Shareholder, jointly and severally, make
the following representations and warranties to Buyer, each of which was true
and correct on the Effective Date (other than Section 3.2(b)), remains true as
of the Closing Date, shall be unaffected by any investigation heretofore or
hereafter made by or on behalf of Buyer, or any knowledge of Buyer other than as
specifically disclosed in the Disclosure Schedule delivered to Buyer at the time
of the execution of this Agreement, and shall survive the Closing of the
transactions provided for herein.
3.1. Corporate.
3.1.(a) Organization. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Colorado.
3.1.(b) Corporate Power. Company has all requisite corporate
power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted.
3.1.(c) Qualification. Company is duly licensed or qualified to
do business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or qualification
necessary. The states in which Company is licensed or qualified to do
business are listed in Schedule 3.1(c).
3.1.(d) Subsidiaries. Company does not own any interest in any
corporation, partnership or other entity.
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3.1.(e) Corporate Documents, etc. The copies of the Articles of
Incorporation and By-Laws of the Company, including any amendments thereto,
which have been delivered by Company to Buyer are true, correct and
complete copies of such instruments as presently in effect. The corporate
minute book and stock records of the Company which have been furnished to
Buyer for inspection are true, correct and complete and accurately reflect
all material corporate action taken by the Company. The directors and
officers of the Company are listed in Schedule 3.1.(e).
3.1.(f) Capitalization of the Company. The authorized capital stock of
the Company consists entirely of 10,000 shares of common stock, no par
value per share. No shares of such capital stock are issued or outstanding
except for 2,406 shares of common stock of the Company which are owned of
record and beneficially by Shareholders in the respective numbers set forth
in Schedule 3.1.(f). All such shares of capital stock of the Company are
validly issued, fully paid and nonassessable. There are no (a) securities
convertible into or exchangeable for any of the Company's capital stock or
other securities, (b) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of the Company or securities
which are convertible into or exchangeable for capital stock or other
securities of the Company, or (c) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance, sale
or transfer of any capital stock or other equity securities of the Company,
any such convertible or exchangeable securities or any such options,
warrants or other rights.
3.2. Shareholders.
3.2.(a) Power. Each Shareholder has full power, legal right and
authority to enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby and to which such
shareholder is a party (such other documents sometimes referred to herein
as "Ancillary Instruments"), and to carry out the transactions contemplated
hereby.
3.2.(b) Validity. This Agreement has been duly and validly executed
and delivered by each Shareholder and is, and when executed and delivered
each Ancillary Instrument to which such shareholder is a party will be, the
legal, valid and binding obligation of such Shareholder, enforceable in
accordance with its terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights
generally, and by general equitable principles.
3.2.(c) Title. Each Shareholder has, and Buyer is receiving, good and
marketable title to the Shares to be sold by such Shareholder hereunder,
free and clear of all Liens (as defined in Section 3.11(a)) including,
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without limitation, voting trusts or agreements, proxies, marital or
community property interests.
3.3. No Violation. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by Company and Shareholders of the transactions contemplated hereby
and thereby (a) will violate any statute, law, ordinance, rule or regulation
(collectively, "Laws") or any order, writ, injunction, judgment, plan or decree
(collectively, "Orders") of any court, arbitrator, department, commission,
board, bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), or (c) subject to
obtaining the consents referred to in Schedule 3.3, will violate or conflict
with, or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, or result in the creation of any
Lien upon any of the assets of Company (or the Shares) under, any term or
provision of the Articles of Incorporation or By-Laws of Company or of any
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which Company or, to the knowledge of the Principal
Shareholder (with respect to the other Shareholders only), any Shareholder is a
party or by which Company or any Shareholder or any of its or their assets or
properties may be bound or affected.
3.4. Financial Statements. Included as Schedule 3.4 are true and
complete copies of (i) the current draft of the preliminary audit report and
financial statements of Company consisting of (a) a balance sheet of Company as
of December 31, 1997, and the related statements of income and cash flows for
the year then ended (including the notes contained therein or annexed thereto)
and (b) a balance sheet of Company as of September 30, 1998 and the related
statements of income and cash flows for the nine months then ended (including
the notes contained therein or annexed thereto), and (ii) the current draft of
the balance sheet of the Company as of October 31, 1998, and the related
statements of income and cash flows for the ten months then ended (including the
notes contained therein or annexed thereto). The Principal Shareholder hereby
covenants, agrees, represents and warrants that (a) the final audited financial
statements will be delivered to Buyer on or before November 20, 1998, and will
be reported on, and accompanied by, the signed, unqualified opinions of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP, independent auditors for Company for such periods and (b) the
final Closing Balance Sheet (as defined below) will be delivered simultaneously
therewith. The parties hereto covenant and agree that upon receipt, such audited
and unaudited financial statements shall be deemed for all purposes to
constitute a part of Schedule 3.4 to the Disclosure Schedules as if they had
been part of such schedule as of the delivery thereof on November 10, 1998. The
final audited balance sheet of the Company as of September 30, 1998 is herein
referred to as the "Recent Balance Sheet" and the final unaudited balance sheet
of the Company as of October 31, 1998 is herein referred to as the "Closing
Balance Sheet." All of such financial statements (including all notes and
schedules contained therein or annexed thereto) are and will be true, complete
and accurate, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis, prepared in accordance with
the
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books and records of Company, and fairly present, in accordance with
generally accepted accounting principles, the assets, liabilities and financial
position, the results of operations and cash flows of Company as of the dates
and for the years and periods indicated. In addition to the foregoing, the
Principal Shareholder hereby represents and warrants that the Closing Balance
Sheet will, upon receipt, reflect that the Company had a net worth (i.e.,
stockholders' equity) of at least $380,000 and working capital (i.e., current
assets less current liabilities) of at least $130,000 as of October 31, 1998.
3.5. Tax Matters.
3.5.(a) Provision For Taxes. The provision made for taxes on the
Closing Balance Sheet is sufficient for the payment, either currently or on
a deferred basis, of all federal, state, foreign, county, local and other
income, ad valorem, excise, profits, franchise, occupation, property,
payroll, sales, use, gross receipts and other taxes (and any interest and
penalties) and assessments, whether or not disputed, at the date of the
Closing Balance Sheet and for all years and periods prior thereto. Since
the date of the Recent Balance Sheet, Company has not incurred any taxes
other than taxes incurred in the ordinary course of business consistent in
type and amount with past practices of Company.
3.5.(b) Tax Returns Filed. Except as set forth on Schedule 3.5.(b),
all federal, state, foreign, county, local and other tax returns required
to be filed by or on behalf of Company have been timely filed and when
filed were true and correct in all material respects, and the taxes shown
as due thereon were paid or adequately accrued. True and complete copies of
all tax returns or reports filed by Company for each of its three most
recent fiscal years have been delivered to Buyer. Company has duly withheld
and paid all taxes which it is required to withhold and pay relating to
salaries and other compensation heretofore paid to the employees of
Company.
3.5.(c) Tax Audits. The federal and state income tax returns of
Company have not been audited by the Internal Revenue Service or any state
taxing authorities for any period, and Company has not received from the
Internal Revenue Service or from the tax authorities of any state, county,
local or other jurisdiction any notice of underpayment of taxes or other
deficiency which has not been paid nor any objection to any return or
report filed by Company. There are outstanding no agreements or waivers
extending the statutory period of limitations applicable to any tax return
or report.
3.5.(d) No Consolidated Group. Company has never been a member of an
affiliated group of corporations that filed a consolidated tax return.
Company does not have any liability for the taxes of any person or entity
under Sections 1.1502-6 or 1.1502-78 of Title 26 of the Code of Federal
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Regulations (or any similar provisions of state, local or foreign income
tax laws).
3.5.(e) S Corporation. Company properly and timely filed a valid
election under Section 1362 of the Internal Revenue Code of 1986, as
amended (the "Code"), to be treated as an S corporation ("S Corp") as
defined under Section 1361 of the Code for federal income tax purposes
effective from January 1, 1991 and has corresponding elections in effect
under the laws of Colorado. Such elections have remained in effect since
January 1, 1991. Except for transactions contemplated by this Agreement,
neither Company nor any of the Shareholders has taken any action, nor has
any event occurred, that would result in the revocation or termination of
any of such elections. Company is not subject to the tax imposed by Section
1374 of the Code (or any equivalent state statute) and Company does not
have a "net unrealized built-in gain" as such phrase is defined in Section
1374(d) of the Code (or any equivalent state statute).
3.5.(f) Other. Except as set forth in Schedule 3.5.(f), Company has
not (i) filed any consent or agreement under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) applied for any tax
ruling, (iii) entered into a closing agreement with any taxing authority,
(iv) filed an election under Section 338(g) or Section 338(h)(10) of the
Code (nor has a deemed election under Section 338(e) of the Code occurred),
except as contemplated hereby, (v) made any payments, or been a party to an
agreement (including this Agreement) that under any circumstances could
obligate it to make payments that will not be deductible because of Section
280G of the Code, or (vi) been a party to any tax allocation or tax sharing
agreement. The Company is not a "United States real property holding
company" within the meaning of Section 897 of the Code.
3.6. Accounts Receivable. All accounts receivable of Company reflected on
the Closing Balance Sheet, and all accounts receivable incurred in the normal
course of business since the date thereof, represent arm's length sales actually
made in the ordinary course of business; are collectible (net of the reserve
shown on the Closing Balance Sheet for doubtful accounts) in the ordinary course
of business without the necessity of commencing legal proceedings; are subject
to no counterclaim or setoff; and are not in dispute. Schedule 3.6 contains an
aged schedule of accounts receivable included in the Closing Balance Sheet.
3.7. Absence of Certain Changes. Except as and to the extent set forth in
Schedule 3.7, since the date of the Recent Balance Sheet there has not been:
3.7.(a) No Adverse Change. Any adverse change in the financial
condition, assets, liabilities, business, prospects or operations of
Company;
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3.7.(b) No Damage. Any loss, damage or destruction, whether covered
by insurance or not, affecting the Company, its properties or the BMC
Business;
3.7.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company (including, without limitation, any increase
or change pursuant to any bonus, pension, profit sharing, retirement or
other plan or commitment), or any bonus or other employee benefit granted,
made or accrued;
3.7.(d) No Labor Disputes. Any labor dispute or disturbance, other
than routine individual grievances which are not material to the business,
financial condition or results of operations of Company.
3.7.(e) No Commitments. Any commitment or transaction by Company
(including, without limitation, any borrowing or capital expenditure) other
than in the ordinary course of business consistent with past practice;
3.7.(f) No Dividends. Any declaration, setting aside, or payment of
any dividend or any other distribution in respect of Company's capital
stock; any redemption, purchase or other acquisition by Company of any
capital stock of Company, or any security relating thereto; or any other
payment to any shareholder of Company as such a shareholder;
3.7.(g) No Disposition of Property. Any sale, lease or other transfer
or disposition of any properties or assets of Company;
3.7.(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by Company;
3.7.(i) No Liens. Any mortgage, pledge, lien or encumbrance made on
any of the properties or assets of Company;
3.7.(j) No Amendment of Contracts. Any entering into, amendment or
termination by Company of any contract, or any waiver of material rights
thereunder, other than in the ordinary course of business;
3.7.(k) Loans and Advances. Any loan or advance (other than advances
to employees in the ordinary course of business for travel and
entertainment in accordance with past practice) to any person including,
but not limited to, any Affiliate (for purposes of this Agreement, the term
"Affiliate" shall mean and include: all Shareholders, directors and
officers of Company; the spouse of any such person; any person who would be
the heir or descendant of any such person if he or she were not living; and
any entity in which any of the foregoing has a direct or indirect interest,
except through ownership of less
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than 5% of the outstanding shares of any entity whose securities are listed
on a national securities exchange or traded in the national
over-the-counter market);
3.7.(l) Credit. Any grant of credit by Company to any customer or
distributor on terms or in amounts more favorable than those which have
been extended to such customer or distributor in the past, any other change
in the terms of any credit heretofore extended, or any other change of
Company's policies or practices with respect to the granting of credit; or
3.7.(m) No Unusual Events. Any other event or condition not in the
ordinary course of business of Company, other than the transactions
specifically contemplated by this Agreement.
3.8. Absence of Undisclosed Liabilities. Except as and to the extent
specifically disclosed in the Recent Balance Sheet, or in Schedule 3.8, Company
does not have any liabilities, commitments or obligations (secured or unsecured,
and whether accrued, absolute, contingent, direct, indirect or otherwise), other
than commercial liabilities and obligations incurred since the date of the
Recent Balance Sheet in the ordinary course of business and consistent with past
practice and none of which has or will have a material adverse effect on the
business, financial condition or results of operations of Company. Except as and
to the extent described in the Recent Balance Sheet or in Schedule 3.8, neither
Company nor any Shareholder has knowledge of any basis for the assertion against
Company of any liability and there are no circumstances, conditions, happenings,
events or arrangements, contractual or otherwise, which may give rise to
liabilities, except commercial liabilities and obligations incurred in the
ordinary course of Company's business and consistent with past practice.
3.9. No Litigation. Except as set forth in Schedule 3.9 there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether civil,
criminal or administrative ("Litigation"), pending or, to the knowledge of the
Shareholders, threatened against Company, its directors (in such capacity), its
business or any of its assets, nor does Company or any Shareholder know, or have
grounds to know, of any basis for any Litigation. Schedule 3.9 also identifies
all Litigation to which Company or any of its directors (in such capacity) have
been parties since January 1, 1997. Except as set forth in Schedule 3.9, neither
Company nor its business or assets is subject to any Order of any Government
Entity.
3.10. Compliance With Laws and Orders.
3.10.(a) Compliance. Except as set forth in Schedule 3.10.(a),
Company (including each and all of its operations, practices, properties
and assets) is in compliance with all applicable Laws and Orders,
including, without limitation, those applicable to discrimination in
employment, occupational safety and health, trade practices, competition
and pricing, product warranties, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and the
Environmental Laws as hereinafter defined. Except as set forth in Schedule
3.10.(a), Company has not received notice of any violation or
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alleged violation of, and is subject to no Liability for past or continuing
violation of, any Laws or Orders. All reports and returns required to be
filed by Company with any Government Entity have been filed, and were
accurate and complete when filed. Without limiting the generality of the
foregoing:
(i) To the knowledge of the Shareholders, the operation of
Company's business as it is now conducted does not, nor does any
condition existing at any of the Facilities, in any manner constitute
a nuisance or other tortious interference with the rights of any
person or persons in such a manner as to give rise to or constitute
the grounds for a suit, action, claim or demand by any such person or
persons seeking compensation or damages or seeking to restrain, enjoin
or otherwise prohibit any aspect of the conduct of such business or
the manner in which it is now conducted.
(ii) Company has made all required payments to its unemployment
compensation reserve accounts with the appropriate governmental
departments of the states where it is required to maintain such
accounts, and each of such accounts has a positive balance.
(iii) Company has delivered to Buyer copies of all reports of
Company for the past five (5) years required under the federal
Occupational Safety and Health Act of 1970, as amended, and under all
other applicable health and safety laws and regulations. The
deficiencies, if any, noted on such reports have been corrected.
3.10.(b) Licenses and Permits. Company has all licenses, permits,
approvals, authorizations and consents of all Government Entities and all
certification organizations required for the conduct of the business (as
presently conducted and as proposed to be conducted) and operation of the
Facilities. All such licenses, permits, approvals, authorizations and
consents are described in Schedule 3.10.(b), are in full force and effect
and will not be affected or made subject to loss, limitation or any
obligation to reapply as a result of the transactions contemplated hereby.
Except as set forth in Schedule 3.10.(b), Company (including its
operations, properties and assets) is and has been in compliance with all
such permits and licenses, approvals, authorizations and consents.
3.10.(c) Environmental Matters. The applicable Laws relating to
pollution or protection of the environment, including Laws relating to
emissions, discharges, generation, storage, releases or threatened releases
of pollutants, contaminants, chemicals or industrial, toxic, hazardous or
petroleum or petroleum-based substances or wastes ("Waste") into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to
the manufacture,
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processing, distribution, use, treatment, storage, disposal, transport or
handling of Waste including, without limitation, the Clean Water Act, the
Clean Air Act, the Resource Conservation and Recovery Act, the Toxic
Substances Control Act and the Comprehensive Environmental Response
Compensation Liability Act ("CERCLA"), as amended, and their state and
local counterparts are herein collectively referred to as the
"Environmental Laws". Without limiting the generality of the foregoing
provisions of this Section 3.10, Company is in full compliance with all
material limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulations, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. Except as set forth in Schedule
3.10.(c), there is no Litigation nor any demand, claim, hearing or notice
of violation pending or, to the knowledge of the Shareholders, threatened
against Company relating in any way to the Environmental Laws or any Order
issued, entered, promulgated or approved thereunder. Except as set forth in
Schedule 3.10.(c), there are no past or present (or, to the best of
Company's and the Shareholders' knowledge, future) events, conditions,
circumstances, activities, practices, incidents, actions, omissions or
plans which may interfere with or prevent compliance or continued
compliance with the Environmental Laws or with any Order issued, entered,
promulgated or approved thereunder, or which may give rise to any
liability, including, without limitation, liability under CERCLA or similar
state or local Laws, or otherwise form the basis of any Litigation,
hearing, notice of violation, study or investigation, based on or related
to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Waste.
3.11. Title to and Condition of Properties.
3.11.(a) Marketable Title. Company has good and marketable title to
all of Company's assets, business and properties, including, without
limitation, all such properties (tangible and intangible) reflected in the
Recent Balance Sheet, free and clear of all mortgages, liens, (statutory or
otherwise) security interests, claims, pledges, licenses, equities,
options, conditional sales contracts, assessments, levies, easements,
covenants, reservations, restrictions, rights-of-way, exceptions,
limitations, charges or encumbrances of any nature whatsoever
(collectively, "Liens") except those described in Schedule 3.11(a) and, in
the case of real property, Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings (and which have been
sufficiently accrued or reserved against in the Recent Balance Sheet),
municipal and zoning ordinances and easements for public utilities, none of
which interfere with the use of the property as currently utilized. None of
Company's assets, business or properties are subject to any restrictions
with respect to the
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transferability thereof; and the Company's title thereto will not be
affected in any way by the transactions contemplated hereby.
3.11.(b) Condition. All property and assets owned or utilized by
Company are in good operating condition and repair, free from any defects
(except such minor defects as do not interfere with the use thereof in the
conduct of the normal operations of Company), have been maintained
consistent with the standards generally followed in the industry and are
sufficient to carry on the business of Company as conducted during the
preceding 12 months. To the knowledge of the Shareholders, all buildings,
plants and other structures owned or otherwise utilized by Company are in
good condition and repair and have no material structural defects or
defects affecting the plumbing, electrical, sewerage, or heating,
ventilating or air conditioning systems.
3.11.(c) Real Property. Company does not own any real property. The
only real property used or occupied by Company (the "Real Property") is
leased from an unaffiliated third-party lessor, and Schedule 3.11.(c) sets
forth, the material terms of such lease. To the knowledge of the Principal
Shareholder, there are now in full force and effect duly issued
certificates of occupancy permitting the Real Property and improvements
located thereon to be legally used and occupied as the same are now
constituted. To the knowledge of the Principal Shareholder, all of the Real
Property has permanent rights of access to dedicated public roads. To the
knowledge of the Principal Shareholder, no fact or condition exists which
would prohibit or adversely affect the ordinary rights of access to and
from the Real Property from and to the existing roads and there is no
pending or threatened restriction or denial, governmental or otherwise,
upon such ingress and egress. To the knowledge of the Principal Shareholder
there is not (i) any claim of adverse possession or prescriptive rights
involving any of the Real Property, (ii) any structure located on any Real
Property which encroaches on or over the boundaries of neighboring or
adjacent properties or (iii) any structure of any other party which
encroaches on or over the boundaries of any of such Real Property. To the
knowledge of the Principal Shareholder, none of the Real Property is
located in a flood plain, flood hazard area, wetland or lakeshore erosion
area within the meaning of any Law, regulation or ordinance. To the
knowledge of the Principal Shareholder, no public improvements have been
commenced and to Company's and Shareholders' knowledge none are planned
which in either case may result in special assessments against or otherwise
materially adversely affect any Real Property. To the knowledge of the
Principal Shareholder, no portion of any of the Real Property has been used
as a landfill or for storage or landfill of hazardous or toxic materials.
The Principal Shareholder has no knowledge of any (i) planned or proposed
increase in assessed valuations of any Real Property, (ii) Order requiring
repair, alteration, or correction of any existing condition affecting any
Real Property or the systems or improvements thereat, (iii) condition or
defect which could give rise to an order of the sort
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referred to in "(ii)" above, (iv) underground storage tanks, or any
structural, mechanical, or other defects of material significance affecting
any Real Property or the systems or improvements thereat (including, but
not limited to, inadequacy for normal use of mechanical systems or disposal
or water systems at or serving the Real Property), or (v) work that has
been done or labor or materials that has or have been furnished to any Real
Property during the period of six (6) months immediately preceding the date
of this Agreement for which liens could be filed against any of the Real
Property.
3.11.(d) No Condemnation or Expropriation. To the knowledge of the
Shareholders, neither the whole nor any portion of the property or any
other assets of Company is subject to any Order to be sold or is being
condemned, expropriated or otherwise taken by any Government Entity with or
without payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed.
3.12. Insurance. Set forth in Schedule 3.12 is a complete and accurate
list and description of all policies of fire, liability, errors and omissions,
electronic data processing, workers compensation, health and other forms of
insurance presently in effect with respect to the business and properties of
Company, true and correct copies of which have heretofore been delivered to
Buyer. Schedule 3.12 includes, without limitation, the carrier, the description
of coverage, the limits of coverage, retention or deductible amounts, amount of
annual premiums, retroactive date of coverage, date of expiration and the date
through which premiums have been paid with respect to each such policy, and any
pending claims in excess of $5,000. All such policies are valid, outstanding and
enforceable policies and provide insurance coverage for the properties, assets
and operations of Company, of the kinds, in the amounts and against the risks
customarily maintained by organizations similarly situated; and no such policy
(nor any previous policy) provides for or is subject to any currently
enforceable retroactive rate or premium adjustment, loss sharing arrangement or
other actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof. Schedule 3.12 indicates each policy as to
which (a) the coverage limit has been reached or (b) the total incurred losses
to date equal 75% or more of the coverage limit. No notice of cancellation or
termination has been received with respect to any such policy, and neither
Company nor any Shareholder has knowledge of any act or omission of Company
which could result in cancellation of any such policy prior to its scheduled
expiration date. Company has not been refused any insurance with respect to any
aspect of the operations of the business nor has its coverage been limited by
any insurance carrier to which it has applied for insurance or with which it has
carried insurance during the last three years. Company has duly and timely made
all claims it has been entitled to make under each policy of insurance. There is
no claim by Company pending under any such policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies, and
neither Company nor any of the Shareholders knows of any basis for denial of any
claim under any such policy. Company has not received any written notice from or
on behalf of any insurance carrier issuing any such policy that insurance rates
therefor will hereafter be substantially increased (except to the extent that
insurance rates may be increased for all similarly situated risks) or that there
will hereafter be a cancellation or an
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increase in a deductible (or an increase in premiums in order to maintain an
existing deductible) or nonrenewal of any such policy. Such policies are
sufficient in all material respects for compliance by Company with all
requirements of law and with the requirements of all material contracts to
which Company is a party. Except as set forth on Schedule 3.12, all
general liability policies maintained by or for the benefit of Company since
its inception have been "occurrence" policies and not "claims made" policies.
3.13. Contracts and Commitments.
3.13.(a) Real Property Leases. Except as set forth in
Schedule 3.11.(c), Company has no leases of real property.
3.13.(b) Personal Property Leases. Except as set forth in
Schedule 3.13.(b), Company has no leases of personal property
involving consideration or other expenditure in excess of $10,000
over a period of twelve months.
3.13.(c) Purchase Commitments. Company has no purchase
commitments for inventory items or supplies that, together with
amounts on hand, constitute in excess of three months normal usage,
or which are at an excessive price.
3.13.(d) Sales Commitments. Company has no sales contracts or
commitments to customers which aggregate in excess of $ 25,000 to
any one customer (or group of affiliated customers). Company has
no sales contracts or commitments except those made in the ordinary
course of business, at arm's length, and no such contracts or
commitments are for a sales price which would result in a loss to
the Company.
3.13.(e) Contracts With Affiliates and Certain Others.
Company has no agreement, understanding, contract or commitment
(written or oral) with any Affiliate or any employee, agent,
consultant, distributor, dealer or franchisee of the Company, that
is not immediately cancelable by Company without liability, penalty
or premium of any nature or kind whatsoever.
3.13.(f) Powers of Attorney. The Company has not given a
power of attorney, which is currently in effect, to any person,
firm or corporation for any purpose whatsoever.
3.13.(g) Collective Bargaining Agreements. Except as set
forth in Schedule 3.13.(g), Company is not a party to any
collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups. Copies of all
such agreements have heretofore been delivered to Buyer.
3.13.(h) Loan Agreements. Except as set forth in Schedule
3.13.(h), Company is not obligated under any loan agreement,
promissory note,
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letter of credit, or other evidence of indebtedness as a signatory,
guarantor or otherwise.
3.13.(i) Guarantees. Except as disclosed on Schedule
3.13.(i), Company has not guaranteed the payment or performance of
any person, firm or corporation, agreed to indemnify any person or
act as a surety, or otherwise agreed to be contingently or
secondarily liable for the obligations of any person.
3.13.(j) Contracts Subject to Renegotiation. Company is not a
party to any contract with any governmental body which is subject
to renegotiation.
3.13.(k) Burdensome or Restrictive Agreements. Company is not
a party to nor is it bound by any agreement, deed, lease or other
instrument which is so burdensome as to materially affect or impair
the operation of Company. Without limiting the generality of the
foregoing, Company is not a party to nor is it bound by any
agreement requiring Company to assign any interest in any trade
secret or proprietary information, or prohibiting or restricting
Company from competing in any business or geographical area or
soliciting customers or otherwise restricting it from carrying on
its business anywhere in the world.
3.13.(l) Other Material Contracts. Company has no lease,
contract or commitment of any nature involving consideration or
other expenditure in excess of $ 10,000 over a twelve month period,
or involving performance over a period of more than three months,
or which is otherwise individually material to the operations of
Company, except as explicitly described in Schedule 3.13.(l).
3.13.(m) No Default. Company is not in default under any
lease, contract or commitment, nor has any event or omission
occurred which through the passage of time or the giving of notice,
or both, would constitute a default thereunder or cause the
acceleration of any of Company's obligations or result in the
creation of any Lien on any of the assets owned, used or occupied
by Company. To the knowledge of the Shareholders, no third party
is in default under any lease, contract or commitment to which
Company is a party, nor has any event or omission occurred which,
through the passage of time or the giving of notice, or both, would
constitute a default thereunder or give rise to an automatic
termination, or the right of discretionary termination, thereof.
3.14. Labor Matters. Except as set forth in Schedule 3.14, within the
last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with its business. Except to the extent set forth in Schedule 3.14,
(a) Company is in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practice; (b) there is no unfair
labor practice
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charge or complaint against Company pending or, to the knowledge of the
Shareholders, threatened; (c) there is no labor strike, dispute, request for
representation, slowdown or stoppage actually pending or, to the knowledge of
the Shareholders, threatened against or affecting Company nor any secondary
boycott with respect to products of Company; (d) no question concerning
representation has been raised or, to the knowledge of the Shareholders, is
threatened respecting the employees of Company; (e) no grievance which might
have a material adverse effect on Company, nor any arbitration proceeding
arising out of or under collective bargaining agreements, is pending and, to
the knowledge of the Shareholders, no such claim therefor exists; and (f) there
are no administrative charges or court complaints against Company concerning
alleged employment discrimination or other employment related matters pending
or, to the knowledge of the Shareholders, threatened before the U.S. Equal
Employment Opportunity Commission or any Government Entity.
3.15. Employee Benefit Plans.
3.15.(a) Disclosure. Schedule 3.15.(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive
bonus or other bonus, medical, dental, life, accident insurance,
benefit, employee welfare, disability, group insurance, stock
purchase, stock option, stock appreciation, stock bonus, executive
or deferred compensation, hospitalization and other similar fringe
or employee benefit plans, programs and arrangements, and any
employment or consulting contracts, "golden parachutes," collective
bargaining agreements, severance agreements or plans, vacation and
sick leave plans, programs, arrangements and policies, including,
without limitation, all "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), all employee manuals, and all written
or binding oral statements of policies, practices or understandings
relating to employment, which are provided to, for the benefit of,
or relate to, any persons ("Company Employees") employed by
Company. The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to Buyer. Each of the Employee Plans/Agreements is
identified on Schedule 3.15.(a), to the extent applicable, as one
or more of the following: an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), a "defined benefit plan" (as
defined in Section 414 of the Code), an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA), and/or as a plan
intended to be qualified under Section 401 of the Code. No
Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and Company has never contributed nor been
obligated to contribute to any such multiemployer plan.
3.15.(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without
limitation, the Employee
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Plans/Agreements) that is subject to the provisions of Title IV of
ERISA and with respect to which the Company or any of its assets
may, directly or indirectly, be subject to any Liability,
contingent or otherwise, or the imposition of any Lien (whether by
reason of the complete or partial termination of any such plan, the
funded status of any such plan, any "complete withdrawal" (as
defined in Section 4203 of ERISA) or "partial withdrawal" (as
defined in Section 4205 of ERISA) by any person from any such plan,
or otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any assets of Company to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA;
(ii) no proceeding has been initiated or, to the
knowledge of the Shareholders, threatened by any person
(including the Pension Benefit Guaranty Corporation ("PBGC"))
to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly
or indirectly, any assets of Company to any liability,
contingent or otherwise, or the imposition of any lien under
Title IV of ERISA, whether to the PBGC or to any other person
or otherwise on account of the termination of any such plan;
(iv) if any such plan were to be terminated as of the
Closing Date, no assets of Company would be subject, directly
or indirectly, to any liability, contingent or otherwise, or
the imposition of any lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043 of
ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code, respectively), whether
or not waived; and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
3.15.(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407
of ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any
Employee Plan/Agreement, and no event or omission has occurred in
connection with which the Company or any of its assets or any
Employee Plan/Agreement, directly or indirectly, could be subject
to any liability under ERISA, the Code or any other Law or
Order applicable to any Employee Plan/Agreement, or under any
agreement, instrument, Law or
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Order pursuant to or under which Company has agreed to indemnify
or is required to indemnify any person against liability incurred
under any such Law or Order.
3.15.(d) Full Funding. The funds available under each
Employee Plan/Agreement which is intended to be a funded plan equal
or exceed the amounts required to be paid, or which would be
required to be paid if such Employee Plan/Agreement were
terminated, on account of rights vested or accrued as of the
Closing Date (using the actuarial methods and assumptions then used
by Company's actuaries in connection with the funding of such
Employee Plan/Agreement).
3.15.(e) Controlled Group; Affiliated Service Group; Leased
Employees. Company is not and never has been a member of a
controlled group of corporations as defined in Section 414(b) of
the Code or in common control with any unincorporated trade or
business as determined under Section 414(c) of the Code. Company
is not and never has been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. There are not
and never have been any leased employees within the meaning of
Section 414(n) of the Code who perform services for Company, and no
individuals are expected to become leased employees with the
passage of time. Company has no liability, actual or contingent,
under Title IX of ERISA.
3.15.(f) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company to date
have been made and all amounts properly accrued to date as
liabilities of Company which have not been paid have been properly
recorded on the books of Company and are reflected in the Recent
Balance Sheet; (ii) Company has complied with, and each such
Employee Plan/Agreement conforms in form and operation to, all
applicable laws and regulations, including but not limited to ERISA
and the Code, in all respects and all reports and information
relating to such Employee Plan/Agreement required to be filed with
any governmental entity have been timely filed; (iii) all reports
and information relating to each such Employee Plan/Agreement
required to be disclosed or provided to participants or their
beneficiaries have been timely disclosed or provided; (iv) each
such Employee Plan/Agreement which is intended to qualify under
Section 401 of the Code has received a favorable determination
letter from the Internal Revenue Service with respect to such
qualification, its related trust has been determined to be exempt
from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; (v) there are no
actions, suits or claims pending (other than routine claims for
benefits) or, to the knowledge of the Shareholders, threatened with
respect to such Employee Plan/Agreement or against the assets of
such Employee Plan/Agreement; and (vi) no Employee Plan/Agreement
is a plan which is established and maintained outside the United
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States primarily for the benefit of individuals substantially all
of whom are nonresident aliens.
3.15.(g) Post-Retirement Benefits. No Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company employees beyond their retirement or other termination of
service other than (i) coverage mandated by applicable law, (ii)
death or retirement benefits under any Employee Plan/Agreement that
is an employee pension benefit plan, (iii) deferred compensation
benefits accrued as liabilities on the books of Company (including
the Recent Balance Sheet), (iv) disability benefits under any
Employee Plan/ Agreement that is an employee welfare benefit plan
and which have been fully provided for by insurance or otherwise or
(v) benefits in the nature of severance pay.
3.15.(h) No Triggering of Obligations. The consummation of
the transactions contemplated by this Agreement will not (i)
entitle any current or former employee of Company to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such
employee or former employee or (iii) result in any prohibited
transaction described in Section 406 of ERISA or Section 4975 of
the Code for which an exemption is not available.
3.15.(i) Delivery of Documents. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for
the last two years;
(ii) a copy of the summary plan description, together
with each summary of material modifications, required under
ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is
embodied entirely in an insurance policy to which Company is
a party, a true and complete copy of such Employee
Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through a
trust or any third party funding vehicle (other than an
insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
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(iv) the most recent determination letter received from
the Internal Revenue Service with respect to each Employee
Plan/Agreement that is intended to be a "qualified plan"
under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual report
has been filed and delivered to Buyer pursuant to clause (i) of this Section
3.15.(i), no material adverse change has occurred with respect to the matters
covered by the latest such annual report since the date thereof.
3.15.(j) Future Commitments. Company has no announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.16. Employment Compensation. Schedule 3.16 contains a true and correct
list of all employees to whom Company is paying compensation, including bonuses
and incentives, at an annual rate in excess of Ten Thousand Dollars ($10,000)
for services rendered or otherwise; and in the case of salaried employees such
list identifies the current annual rate of compensation for each employee, the
date of their last salary adjustment, the previous annual rate of compensation
for each employee, and any bonuses paid to each employee during the preceding
twelve months; and in the case of hourly or commission employees identifies
certain reasonable ranges of rates and the number of employees falling within
each such range.
3.17. Trade Rights. Schedule 3.17 lists all Trade Rights (as defined
below) in which Company now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in Schedule 3.17 have been properly
registered, all pending registrations and applications have been properly made
and filed and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current. In order to conduct the business of
Company, as such is currently being conducted or proposed to be conducted,
Company does not require any Trade Rights that it does not already have.
Company is not infringing and has not infringed any Trade Rights of another in
the operation of the business of Company, nor is any other person infringing
the Trade Rights of Company. Company has not granted any license or made any
assignment of any Trade Right listed on Schedule 3.17, nor does Company pay any
royalties or other consideration for the right to use any Trade Rights of
others. There is no Litigation pending or threatened to challenge Company's
right, title and interest with respect to its continued use and right to
preclude others from using any Trade Rights of Company. All Trade Rights of
Company are valid, enforceable and in good standing, and there are no equitable
defenses to enforcement based on any act or omission of Company. The
consummation of the transactions contemplated hereby will not alter or impair
any Trade Rights owned or used by Company. As used herein, the term "Trade
Rights" shall mean and include: (i) all trademark rights, business
identifiers, trade dress, service marks, trade names and brand names, all
registrations thereof and applications therefor and all goodwill associated
with the foregoing; (ii) all
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copyrights, copyright registrations and copyright applications, and all other
rights associated with the foregoing and the underlying works of authorship;
(iii) all patents and patent applications, and all international proprietary
rights associated therewith; (iv) all contracts or agreements granting any
right, title, license or privilege under the intellectual property rights of any
third party; (v) all inventions, mask works and mask work registrations,
know-how, discoveries, improvements, designs, trade secrets, shop and royalty
rights, employee covenants and agreements respecting intellectual property and
non-competition and all other types of intellectual property; and (vi) all
claims for infringement or breach of any of the foregoing.
3.18. Major Customers and Suppliers.
3.18.(a) Major Customers. Schedule 3.18.(a) contains a list
of the twenty (20) largest customers of Company for the twelve
month period ending December 31, 1997 and the ten month period
ending October 31, 1998 (determined on the basis of the total
dollar amount of net sales) showing the total dollar amount of net
sales to each such customer during each such year. Neither Company
nor any Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the
customers listed on Schedule 3.18.(a) (except as indicated thereon)
will not continue to be customers of the business of Company after
the Closing at substantially the same level of purchases as
heretofore.
3.18.(b) Major Suppliers. Schedule 3.18.(b) contains a list
of the five (5) largest suppliers to Company for the twelve month
period ending December 31, 1997 and the ten month period ending
October 31, 1998 (determined on the basis of the total dollar
amount of purchases) showing the total dollar amount of purchases
from each such supplier during each such year. Neither Company nor
any Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the
suppliers listed on Schedule 3.18.(b) will not continue to be
suppliers to the business of Company after the Closing and will not
continue to supply the business with substantially the same
quantity and quality of goods at competitive prices.
3.18.(c) Sales Representatives. Schedule 3.18.(c) contains a
list of all sales representatives of Company, together with true,
correct and complete copies of all sales representative contracts
and policy statements, and a description of all substantial
modifications or exceptions.
3.19. Service Warranty and Liability. Schedule 3.19 contains a true,
correct and complete copy of Company's standard written warranty or warranties
for sales of Services (as defined below) and, except as stated therein, there
are no warranties, commitments or obligations with respect to the provision of
such Services. Schedule 3.19 sets forth the estimated aggregate annual cost to
Company of meeting warranty or liability obligations or commitments for
customers for each of the five (5) preceding fiscal years. Schedule 3.19
contains a description of all liability claims and similar Litigation relating
to services rendered,
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which are presently pending or which to Company's or any Shareholder's
knowledge are threatened, or which have been asserted or commenced against
Company within the last five (5) years, in which a party thereto either requests
injunctive relief or alleges damages (whether or not covered by insurance). The
provision of such services by the Company meets and complies with all
governmental laws and regulations currently in effect. As used in this Section
3.19, the term "Services" means any and all services currently or at any time
previously rendered, provided or sold by Company, or by any predecessor of
Company under any brand name or ▇▇▇▇ under which services are or have been
rendered, provided or sold by Company.
3.20. Bank Accounts. Schedule 3.20 sets forth the names and locations of
all banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains a safe deposit box, lock box or
checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
3.21. Affiliates' Relationships to Company.
3.21.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company and any Affiliate
are described on Schedule 3.21.(a).
3.21.(b) No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with
Company or is competitive with Company's business, or (ii) any
property, asset or right which is used by Company in the conduct of
its business.
3.21.(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company to any Affiliate, are
listed on Schedule 3.21.(c).
3.22. Assets Necessary to Business. Company presently has and at the
Closing will have good, valid and marketable title to all property and assets,
tangible and intangible; and all leases, licenses and other agreements,
necessary to permit Buyer to carry on the business of Company as presently
conducted.
3.23. No Brokers or Finders. Neither Company nor any of its directors,
officers, employees, Shareholders or agents have retained, employed or used any
broker or finder in connection with the transaction provided for herein or in
connection with the negotiation thereof.
3.24. Year 2000 Compliance. Except as disclosed on Schedule 3.24, to the
knowledge of the Shareholders: (a) the computer source codes, programs and
other software of the Company (including machine readable code, printed
listings of code, databases, documentation and related property and information
of Company used or under development for use in the BMC Business)
(collectively, "Software") accurately determines chronological
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dates and accurately performs all calculations, data manipulations, sorting and
transmission of date data regardless of whether the date represents or
references different centuries (For example, when the actual date changes from
12/31/1999 to 1/1/2000, the Software will accurately determine that 1/1/2000 is
the new date and determine that an individual born in 1948 is 52 years old and
not -48 [i.e., 00-48 = -48], or otherwise incorrectly perform the age
calculation); (b) the Software provides that all date related user interface
functionalities and data fields permit the entry of a four digit year (i.e.,
the years 1965, 2065 and 3065 could all be entered by the user without the need
of a manual override) and such date data will result in accurate calculations,
data manipulations, sorting and transmission of all data, including the date
data; (c) the entry of a date equal to or greater than 01/01/2000 into the
Software will not affect any calculation that produces or uses time spans such
that the results of the calculation are incorrect (i.e., such as an interest
calculation); and (d) the integrity of calculations performed utilizing the
Software will not be affected by date data for dates on or after 01/02/2000,
and calculations using previously generated data (on or before 12/31/1999) will
also maintain calculation integrity.
3.25. Systems Performance. To the knowledge of the Shareholders, the
Software and related system components are capable of interconnecting and/or
interfacing with each other, and they deliver the functionality needed to meet
the information systems requirements of the BMC Business as they are presently
conducted. No Shareholder will cause any unplanned interruption of the
operations of, or accessibility to, the Software or related systems (or any
system component) through any device, method or means including, without
limitation, the use of any "virus," "lockup," "time bomb" or "key lock" device
or program, or disabling code, which has the potential or capability of causing
any unplanned interruption of the operations of, or accessibility of, the
Software or related systems (or any system component) to Buyer, or any user
authorized by Buyer, or which could alter, destroy or inhibit the use of the
Software or related systems (or any system component), or the data contained
therein (collectively, "Disabling Devices"), which could block access to or
prevent the use of the Software or any system (or system component) by Buyer or
any authorized user. No Shareholder has placed, nor is any Shareholder aware
of, any Disabling Device on any Software or system component owned or used by
Company. To the knowledge of the Principal Shareholder, there is no new
version, update or release of any Software currently being developed, other
than standard updates the release of which will not render the existing version
obsolete.
3.26. Software Ownership; Non Infringement. The Company only utilizes
software purchased ("Purchased Software") or licensed ("Licensed Software") from
unaffiliated third party software vendors. The Company owns all right, title
and interest in and to the Purchased Software. With respect to Licensed
Software, Company has duly obtained the right and license to use the software as
currently utilized by the Company.
3.27. Disclosure. No representation or warranty by Company and/or the
Shareholders in this Agreement, nor any statement, certificate, schedule,
document or exhibit hereto furnished or to be furnished by or on behalf of
Company or Shareholders pursuant to
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this Agreement or in connection with transactions contemplated hereby, contains
or shall contain any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not misleading.
All statements and information contained in any certificate, instrument,
Disclosure Schedule or document delivered by or on behalf of Company and/or
Shareholders shall be deemed representations and warranties by the Company and
the Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which was true and correct on the Effective Date (other
than Section 4.2), remains true as of the Closing Date, shall be unaffected by
any investigation hereafter made by Shareholders or any notice to Shareholders,
and shall survive the Closing of the transactions provided for herein.
4.1. Corporate.
4.1.(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Florida.
4.1.(b) Corporate Power. Buyer has all requisite corporate
power and authority to enter into this Agreement and the other
documents and instruments to be executed and delivered by Buyer and
to carry out the transactions contemplated hereby and thereby.
4.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Buyer. No other
corporate act or proceeding on the part of Buyer or its shareholders is
necessary to authorize this Agreement or the other documents and instruments to
be executed and delivered by Buyer pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes, and
when executed and delivered, the other documents and instruments to be executed
and delivered by Buyer pursuant hereto will constitute, valid and binding
agreements of Buyer, enforceable in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or
other laws affecting creditors' rights generally, and by general equitable
principles.
4.3. No Brokers or Finders. Neither Buyer nor any of its directors,
officers, employees or agents has retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
4.4. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of Buyer pursuant to this
Agreement or in connection with transactions contemplated hereby, contains or
shall contain any untrue statement of material
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fact or omits or shall omit a material fact necessary to make the statements
contained therein not misleading.
4.5. Investment Intent. The Shares are being acquired by Buyer for its
own account, for investment and not with the view to distribution, assignment
(excluding any assignment to Affiliates of Buyer), resale or other transfer.
5. COVENANTS
5.1. Employment and Noncompetition Agreements. Contemporaneously with the
execution of this Agreement, Principal Shareholder shall execute and deliver to
Company an Employment and Noncompetition Agreement, substantially in the form
of exhibit A hereto.
5.2. Noncompetition; Confidentiality. As an inducement to Buyer to
execute this Agreement and complete the transactions contemplated hereby, and
in order to preserve the goodwill associated with the business of Company being
acquired pursuant to this Agreement, and in addition to and not in limitation
of any covenants contained in any agreement executed and delivered pursuant to
Section 5.1 hereof, Principal Shareholder hereby covenants and agrees as
follows:
5.2.(a) Covenant Not to Compete. For a period of three (3)
years from the Closing Date, Principal Shareholder will not
directly or indirectly:
(i) engage in, continue in or carry on any business
which competes with Company or the BMC Business or is
substantially similar thereto, including owning or
controlling any financial interest in any corporation,
partnership, firm or other form of business organization
which is so engaged;
(ii) consult with, advise or assist in any way, whether
or not for consideration, any corporation, partnership, firm
or other business organization which is now or becomes a
competitor of Company or Buyer (or any of its subsidiaries)
in any aspect with respect to the BMC
Business, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arm's length basis with
any such competitor;
(iii) offer employment to an employee of Company or the
BMC Business, without the prior written consent of Buyer; or
(iv) engage in any practice the purpose of which is to
evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Company or the BMC
Business;
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provided, however, that the foregoing shall not prohibit the ownership of
securities of corporations which are listed on a national securities exchange
or traded in the national over-the-counter market in an amount which shall not
exceed 5% of the outstanding shares of any such corporation. The parties agree
that the geographic scope of this covenant not to compete shall extend to and
cover the entire state of Colorado. The parties agree that a Buyer may sell,
assign or otherwise transfer this covenant not to compete, in whole or in part,
to any subsidiary of Buyer or to any person, corporation, firm or entity that
purchases all or part of the business of the Company. In the event a court of
competent jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or activity,
it is expressly agreed that this covenant not to compete shall be construed so
that the remaining provisions shall not be affected, but shall remain in full
force and effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended and/or
limited but only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
5.2.(b) Covenant of Confidentiality. No Shareholder shall at
any time subsequent to the Closing, except as explicitly requested
by Buyer, (i) use for any purpose, (ii) disclose to any person, or
(iii) keep or make copies of documents, tapes, discs or programs
containing, any confidential information concerning Company. For
purposes hereof, "confidential information" shall mean and include,
without limitation, all Trade Rights in which Company has an
interest, all customer lists and customer information, and all
other information concerning Company's processes, apparatus,
equipment, packaging, products, marketing and distribution methods,
not previously disclosed to the public directly by Company.
5.2.(c) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this
Section 5.2 are necessary to protect the legitimate continuing
interests of Buyer in acquiring the Shares, and that any violation
or breach of these provisions will result in irreparable injury to
Buyer for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to Buyer for
such violation or breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive
and other equitable relief as a court may grant after considering
the intent of this Section 5.2.
5.3. General Releases. Contemporaneously with the execution of this
Agreement, each Shareholder shall deliver a general release to Buyer, in
substantially the form attached hereto as Exhibit B.
5.4. Section 338(h)(10) Election. At the Buyer's option, Company and
Shareholders will join with the Buyer in making an election under Section
338(h)(10) of the Code (and any corresponding elections under state tax law)
(collectively, a "Section 338(h)(10) Election") with respect to the purchase
and sale of the stock of the Company hereunder. The Shareholders of the
Company will pay any tax attributable to the making of the Section
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338(h)(10) Election and will indemnify the Buyer, the Company and their
subsidiaries against any tax (including interest and penalties) arising out of
any failure to pay such tax. The Shareholders will also pay any state, local,
or foreign tax (and indemnify the Buyer, the Company and their subsidiaries
against any tax (including interest and penalties) arising out of any failure to
pay such tax) attributable to an election under state, local, or foreign law
similar to the election available under Section 338(g) of the Code (or which
results from the making of an election under Section 338(g) of the Code) with
respect to the purchase and sale of the stock of the Company hereunder. Buyer
shall be responsible for the preparation and filing of such election. The
allocation of purchase price among the assets of the Company shall be made in
accordance with book values reflected in the Recent Balance Sheet, an amount not
to exceed $80,000 for noncompete assets, and the remainder to goodwill.
Shareholders and Buyer shall accept such purchase price allocations and Buyer
and each Shareholder shall report, act, file in all respects and for purposes
consistent with such allocations. Shareholders and the Company (if required)
shall execute and deliver to Buyer at Closing three copies of such documents or
forms (including Section 338 Forms, as defined below) as Buyer shall request or
as are required by applicable law for an effective Section 338(h)(10) Election,
including, without limitation, any "Statement of Section 338(h)(10)" and IRS
Form 8023 (together with any schedules or attachments thereto, the "Section 338
Forms") that are required pursuant to the Treasury Regulations.
5.5. Employees of Company. To the extent permitted under the terms and
provisions of any benefit plans of Company (or its parent corporation) which
are made available to the employees of Company generally, the employees of
Company shall receive credit for years of service to Company for the purpose of
determining benefits for which such employees are eligible.
6. INDEMNIFICATION
6.1. By Principal Shareholder. Subject to the terms and conditions of
this Article 6, Principal Shareholder, hereby agrees to indemnify, defend and
hold harmless Buyer, its directors, officers, employees and controlled and
controlling persons (hereinafter "Buyer's Affiliates") and the Company from and
against all Claims asserted against, resulting to, imposed upon, or incurred by
Buyer, Buyer's Affiliates or the Company, directly or indirectly, by reason of,
arising out of or resulting from (a) the inaccuracy or breach of any
representation or warranty of any Shareholder (including Principal Shareholder)
or Company contained in or made pursuant to this Agreement, (b) the breach of
any covenant of any Shareholder (including Principal Shareholder) or the
Company contained in this Agreement, (c) the litigation matters referred to in
Schedule 3.9, or (d) the conduct of the BMC Business or operations of the
Company prior to the Closing (other than Claims for liabilities to the extent
the amounts thereof are specifically reflected in the Recent Balance Sheet).
As used in this Article 6, the term "Claim" shall include (i) all debts,
liabilities and obligations; (ii) all losses, damages (including, without
limitation, consequential damages), judgments, awards, settlements, costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs and attorneys fees
and expenses); and (iii) all demands,
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claims, suits, actions, costs of investigation, causes of action, proceedings
and assessments, whether or not ultimately determined to be valid.
6.2. By Buyer. Subject to the terms and conditions of this Article 6,
Buyer hereby agrees to indemnify, defend and hold harmless each Shareholder
from and against all Claims asserted against, resulting to, imposed upon or
incurred by any such person, directly or indirectly, by reason of or resulting
from (a) the inaccuracy or breach of any representation or warranty of Buyer
contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement.
6.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
6.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will
give the party from whom indemnification is sought (the
"Indemnifying Party") prompt written notice of any such Claim, and
the Indemnifying Party will undertake the defense thereof by
representatives chosen by it. In all matters concerning the
Shareholders, the Shareholders' Agent shall give and receive notice
and otherwise act in all respects on their behalf. Failure to give
such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 6, except to the extent the
Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. The
Indemnified Party shall make available to the Indemnifying Party or
its representatives all records and other materials required by
them and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
6.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend
such Claim actively and in good faith, the Indemnified Party will
(upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the
account and risk of the Indemnifying Party, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to judgment
therein.
6.3.(c) Indemnified Party's Rights. Anything in this Section
6.3 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to
defend, compromise or settle such Claim, and (ii) the
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Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any Claim or consent to the
entry of any judgment which does not include as an unconditional
term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all Liability in respect of such
Claim.
6.4. Payment. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this Article 6, which payment may be accomplished in
whole or in part, at the option of the Indemnified Party, by the Indemnified
Party setting off any amount owed to the Indemnifying Party by the Indemnified
Party. To the extent set-off is made by an Indemnified Party in satisfaction
or partial satisfaction of an indemnity obligation under this Article 6 that is
disputed by the Indemnifying Party, upon a subsequent determination by final
judgment not subject to appeal that all or a portion of such indemnity
obligation was not owed to the Indemnified Party, the Indemnified Party shall
pay the Indemnifying Party the amount which was set-off and not owed together
with interest from the date of set-off until the date of such payment at an
annual rate equal to the prime rate (as announced by the Wall Street Journal)
in effect as of the date of the set-off. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
pay promptly on behalf of the Indemnified Party, and/or to the Indemnified
Party in reimbursement of any amount theretofore required to be paid by it, the
amount so determined by judgment, determination, settlement or compromise and
all other Claims of the Indemnified Party with respect thereto, unless in the
case of a judgment an appeal is made from the judgment. If the Indemnifying
Party desires to appeal from an adverse judgment, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of the
judgment pending appeal. Upon the payment in full by the Indemnifying Party of
such amounts, the Indemnifying Party shall succeed to the rights of such
Indemnified Party, to the extent not waived in settlement, against the third
party who made such third party Claim.
6.5. Indemnification for Environmental Matters. Without limiting the
generality of the foregoing, Principal Shareholder agrees to indemnify,
reimburse, hold harmless and defend Buyer, Buyer's affiliates and Company for,
from, and against all Claims asserted against, imposed on, or incurred by any
such person, directly or indirectly, in connection with any pollution, threat
to the environment, or exposure to, or manufacture, processing, distribution,
use, treatment, generation, transport or handling, disposal, emission,
discharge, storage or release of Waste that (A) is related in any way to
Company's or any previous owner's or operator's ownership, operation or
occupancy of the business, properties and assets owned or used by Company, and
(B) in whole or in part occurred, existed, arose out of conditions or
circumstances that existed, or was caused on or before the Closing Date.
6.6. Limitations on Indemnification. Except for any willful or knowing
breach or misrepresentation, as to which claims may be brought without
limitation as to time or amount:
6.6.(a) Time Limitation. No claim or action shall be brought
under this Article 6 for breach of a representation or warranty
after the lapse of
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two (2) years following the Closing. Regardless of the foregoing,
however, or any other provision of this Agreement:
(i) There shall be no time limitation on claims on
actions brought for breach of any representation or warranty
made by Shareholders or Company in or pursuant to Sections
3.1, 3.2, 3.9 and 3.10, and as between Buyer and the
Principal Shareholder, the Principal Shareholder hereby
waives all applicable statutory limitation periods with
respect thereto.
(ii) Any claim or action brought for breach of any
representation or warranty made by the Principal Shareholder
with respect to tax or ERISA matters may be brought at any
time until the underlying tax or ERISA obligation is barred
by the applicable period of limitation under federal and
state laws relating thereto (as such period may be extended
by waiver).
(iii) Any claim made by a party hereunder by delivering
written notice of the claim to the Indemnifying Party or
Parties, by filing a suit or action in a court of competent
jurisdiction or a court reasonably believed to be of
competent jurisdiction or by a demand for arbitration in
accordance with Article 9 hereof for breach of a
representation or warranty prior to the termination of the
survival period for such claim shall be preserved despite the
subsequent termination of such survival period.
(iv) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of
more than one representation or warranty, and such claims
have different periods of survival hereunder, the termination
of the survival period of one claim shall not affect a
party's right to make a claim based on the breach of
representation or warranty still surviving.
6.6.(b) Amount Limitation. The Principal Shareholder shall
have no liability under this Article 6 to indemnify Buyer or
Buyer's Affiliates from any loss, damage or cost associated with or
relating to a claim unless and until the aggregate amount of
losses, damages and costs exceeds $50,000; but in such event,
Buyer, Buyer's Affiliates and Company shall be entitled to
indemnification in full except as otherwise limited herein. The
aggregate amount of the indemnification obligations of the
Principal Shareholder pursuant to this Article 6 shall not exceed
92% of the aggregate Purchase Price as set forth in Section 2.1;
provided, however, that there shall be no amount limitation on
claims or actions brought for breach of any representation or
warranty made by the Principal Shareholder in or pursuant to
Sections 3.1, 3.2, 3.5 and 3.15.
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6.7. No Waiver. The closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing, and regardless of
whether such breach, violation or failure is deemed to be "material" for
purposes of Section 9.2.
7. CLOSING
The closing of this transaction ("▇▇▇ ▇▇▇▇▇▇▇") shall take place
contemporaneously with the execution and delivery of this agreement at the
offices of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, Denver, Colorado, at 10:00 A.M. on
November 10, 1998, or at such other hour and place as the parties hereto shall
agree upon in writing. The date hereof is referred to in this Agreement as the
"Closing Date". Unless otherwise indicated, the transactions contemplated
hereby shall be deemed for all purposes to be effective as of November 1, 1998,
which date shall be referred to herein as the "Effective Date."
7.1. Documents to be Delivered by Company and Shareholders. At the
Closing, Company and Shareholders shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
7.1.(a) Stock Certificate(s). Stock certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached, in either case as of the Effective Date.
7.1.(b) Opinion of Counsel. A written opinion of, counsel
to Company and Shareholders, dated as of the Closing Date,
addressed to Buyer, substantially in the form of Exhibit C hereto.
7.1.(c) Consents and Approvals. Executed originals of all
approvals, consents and waivers that are required to effect the
transactions contemplated hereby.
7.1.(d) Estoppel Certificates. An estoppel certificate or
status letter from the landlord under each lease of Real Property,
which estoppel certificate or status letter will certify: (i) the
lease is valid and in full force and effect; (ii) the amounts
payable by Company under the lease and the date to which the same
have been paid; (iii) whether there are, to the knowledge of said
landlord, any defaults thereunder, and, if so, specifying the
nature thereof; and (iv) a statement that the transactions
contemplated by this Agreement will not constitute a default under
the lease.
7.1.(e) Employment and Noncompetition Agreement. The
Employment and Noncompetition Agreement referred to in Section 5.1,
duly executed by the persons referred to in such Section.
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7.1.(f) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and the Shareholders of
Company, authorizing and approving this Agreement and the
consummation of the transactions contemplated by this Agreement.
7.1.(g) Articles; By-Laws. A copy of the By-Laws of Company
certified by the secretary of Company, and a copy of the Articles
of Incorporation of Company certified by the Secretary of State of
the state of incorporation of Company.
7.1.(h) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or
otherwise on behalf of another person) any document executed and
delivered to Buyer pursuant to the terms hereof.
7.1.(i) General Releases. The General Releases referred to in
Section 5.3, duly executed by the persons referred to in such
Section.
7.1.(j) Resignations. The resignations of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
as President, Treasurer and a Director of the Company, and ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ as Secretary and a Director of the Company, effective as
of the Closing and in form satisfactory to Buyer's counsel.
7.1.(k) Affidavit. An affidavit from Company in form and
substance satisfactory to Buyer, to the effect that Company is not
a "foreign person," "foreign corporation," "foreign partnership,"
"foreign trust" or "foreign estate" under Section 1445 of the Code,
and containing all such other information as is required to comply
with the requirements of such Section.
7.1.(l) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at the Closing pursuant
to this Agreement and such other certificates of authority and
documents as Buyer may reasonably request.
7.2. Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Shareholders the following documents, in each case duly executed or
otherwise in proper form:
7.2.(a) Cash Purchase Price. To Shareholders' Agent and the
Company, the wire transfers as required by Section 2.2(a) hereof.
7.2.(b) Opinion of Counsel. A written opinion of ▇▇▇▇▇ &
Lardner, counsel to Buyer, dated as of the Closing Date, addressed
to Company, in substantially the form of Exhibit D hereto.
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7.2.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
7.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Company or Shareholders by Buyer pursuant to the terms
hereof.
7.2.(e) Other Documents. All other documents, instruments or
writings required to be delivered to Company at the Closing
pursuant to this Agreement and such other certificates of authority
and documents as Company may reasonably request.
8. TERMINATION
[INTENTIONALLY OMITTED]
9. RESOLUTION OF DISPUTES
9.1. Arbitration.
9.1.(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or any contract or agreement entered
into pursuant hereto or the performance by the parties of its or
their terms shall be settled by binding arbitration held in Tampa,
Florida in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, except as
specifically otherwise provided in this Article 9. Notwithstanding
the foregoing, Buyer may, in its discretion, apply to a court of
competent jurisdiction for equitable relief from any violation or
threatened violation of the covenants of Principal Shareholder
under Section 5.2 of this Agreement, or any covenants not to
compete contained in any Employment and Noncompetition Agreement
delivered pursuant to Section 5.1 hereof.
9.1.(b) No party shall be required to submit to arbitration
hereunder unless all persons who are not parties to this Agreement,
but who are necessary parties to a complete resolution of the
controversy, submit to the arbitration process on the same terms as
the parties hereto. Without limiting the generality of the
foregoing, no claim under Article 6 for the indemnification of a
third-party claim shall be subject to arbitration under this
Article 9 unless the third party bringing such claim against the
indemnitee shall agree in writing to the application of this
Article 9 to the resolution of such claim.
9.2. Arbitrators. If the matter in controversy (exclusive of attorney
fees and expenses) shall appear, as at the time of the demand for arbitration,
to exceed $250,000, then the panel to be appointed shall consist of three
neutral arbitrators; otherwise, one neutral arbitrator.
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9.3. Procedures; No Appeal. The arbitrator(s) shall allow such discovery
as the arbitrator(s) determine appropriate under the circumstances and shall
resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrator(s). The
arbitrator(s) shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any party so requests within 10 days after the
decision. Thereafter, the decision of the arbitrator(s) shall be final,
binding, and nonappealable with respect to all persons, including (without
limitation) persons who have failed or refused to participate in the
arbitration process.
9.4. Authority. The arbitrator(s) shall have authority to award relief
under legal or equitable principles, including interim or preliminary relief,
and to allocate responsibility for the costs of the arbitration and to award
recovery of attorneys fees and expenses in such manner as is determined to be
appropriate by the arbitrator(s).
9.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Buyer and each Shareholder hereby submit to the in personam
jurisdiction of the Federal and State courts in Florida, for the purpose of
confirming any such award and entering judgment thereon.
9.6. Confidentiality. All proceedings under this Article 9 and all
evidence given or discovered pursuant hereto, shall be maintained in confidence
by all parties.
9.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 9 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party and to the right of setoff
provided in Section 6.4 hereof.
9.8. Tolling. All applicable statutes of limitation shall be tolled while
the procedures specified in this Article 9 are pending. The parties will take
such action, if any, required to effectuate such tolling.
10. MISCELLANEOUS
10.1. Disclosure Schedule. The Schedules have been compiled in a bound
volume (the "Disclosure Schedule"), executed by Shareholders and dated and
delivered to Buyer on the date of this Agreement. Information set forth in the
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive and such information shall
not be deemed to have been disclosed with respect to any other article or
section of this Agreement or for any other purpose. The Disclosure Schedule
shall not vary, change or alter the language of the representations and
warranties contained in this Agreement and, to the extent the language in the
Disclosure Schedule does not conform in
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every respect to the language of such representations and warranties, such
language in the Disclosure Schedule shall be disregarded and be of no force or
effect.
10.2. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company and Shareholders will execute and
deliver to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the transactions
contemplated hereby.
10.3. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by Buyer, Company or Shareholders
shall be subject to the approval of the other parties in all essential
respects, except that approval of the Shareholders or Company shall not be
required as to any statements and other information which Buyer is required to
submit (upon advice of counsel) to the Securities and Exchange Commission, the
Nasdaq Stock Market ("Nasdaq") or Buyer's stockholders or to make pursuant to
any rule or regulation of the Securities and Exchange Commission or Nasdaq, or
otherwise required by law. Shareholders shall act hereunder only through
Shareholders' Agent.
10.4. Assignment; Parties in Interest.
10.4.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without
consent of any other party, (i) merge Company with and into Buyer
and/or any subsidiary of Buyer, or (ii) cause one or more
subsidiaries of Buyer to carry out all or part of the transactions
contemplated hereby; provided, however, that Buyer shall,
nevertheless, remain liable for all of its obligations, and those
of any such subsidiary, to Shareholders hereunder.
10.4.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person
any right or remedy under or by reason of this Agreement.
10.5. Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Florida, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.
10.6. Amendment and Modification. Buyer and Shareholders may amend,
modify and supplement this Agreement in such manner as may be agreed upon in
writing between Buyer and Shareholders' Agent; provided, however, that Buyer
may, in Buyer's discretion, require the execution of any amendment by all the
Shareholders personally.
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10.7. Notice. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service.
The respective addresses to be used for all such notices, demands or requests
are as follows:
(a) If to Buyer, to:
ABR Information Services, Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chairman of the Board,
President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Buyer shall furnish to Shareholders'
Agent in writing.
(b) If to Shareholders, to Shareholders' Agent:
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o BMC Consultants, Inc.
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other person or address as Shareholders shall designate as a
successor Shareholders' Agent in accordance with this Agreement.
(c) If to Company, to:
BMC Consultants, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (303) 770 -7490
(with a copy to)
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice to Company given after Closing shall also be given in the same
manner to Buyer.
If personally delivered, such communication shall be deemed delivered upon
actual receipt; if electronically transmitted pursuant to this paragraph, such
communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent
by overnight courier pursuant to this paragraph, such communication shall be
deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Delivery to Shareholders' Agent shall constitute delivery
to all Shareholders. Any party to this Agreement may change its address for
the purposes of this Agreement by giving notice thereof in accordance with this
Section.
10.8. Expenses.
10.8.(a) Brokerage. Shareholders and Buyer each represent and
warrant to each other that there is no broker involved or in any
way connected with the transfer provided for herein on their behalf
respectively (and Shareholders represent and warrant that there is
no broker involved on behalf of Company) and each agrees to hold
the other harmless from and against all other claims for brokerage
commissions or finder's fees in connection with the execution of
this Agreement or the transactions provided for herein.
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10.8.(b) Expenses to be Paid by the Principal Shareholder.
The Principal Shareholder (personally, and not through the Company)
shall pay, and shall indemnify, defend and hold Buyer and Company
harmless from and against, each of the following:
(i) Transfer Taxes. Any sales, use, excise, transfer or
other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
(ii) Professional Fees. All fees and expenses,
including legal, accounting and other professional fees,
incurred by the Shareholders in connection with the
consummation of the transactions contemplated by this
Agreement and the preparation of the financial statements of
the Company as set forth in Section 3.4 of this Agreement,
but only to the extent such fees and expenses exceed $25,000.
10.8.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
10.8.(d) Costs of Litigation or Arbitration. The parties
agree that (subject to the discretion, in an arbitration
proceeding, of the arbitrator as set forth in Section 10.4) the
prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled
to recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party
in connection with such action, including without limitation
attorneys' fees and prejudgment interest.
10.9. Shareholders' Agent; Power of Attorney.
10.9.(a) Shareholders' Agent. The Shareholders hereby appoint
and constitute ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as Shareholders' Agent hereunder,
to exercise the powers on behalf of Shareholders set forth in this
Agreement; and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ hereby accepts such appointment.
In the event of the death, resignation or inability to act of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and upon receipt by Buyer of evidence of the
same which is satisfactory to Buyer, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be
successor Shareholders' Agent with all powers of his predecessor.
10.9.(b) Power of Attorney. Each Shareholder, by his
execution of this Agreement, hereby constitutes and appoints the
Shareholders' Agent his true and lawful attorney in fact, with full
power in his name and on his behalf:
(i) to receive on behalf of such Shareholder the
proceeds of sale of such Shareholder's Shares being sold
hereunder, to give Buyer a receipt therefor on behalf of such
Shareholder and to hold such proceeds
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subject to the terms hereof and the instructions of such
Shareholder with respect to the ultimate disbursement thereof;
(ii) to act on such Shareholder's behalf according to
the terms of this Agreement, including, without limitation,
the power to contest or acquiesce in the determination of the
Contingent Payment in accordance with Section 2.1; to amend
this Agreement in accordance with Article 10.6 or terminate
this Agreement in accordance with Section 8; to consent to
the assignment of rights under this Agreement in accordance
with Section 10.4.(a); to give and receive notices on behalf
of all the Shareholders; and to act on their behalf in
connection with any matter as to which the Shareholders are
an "Indemnified Party" or "Indemnifying Party" under Article
6 hereof; all in the absolute discretion of the Shareholders'
Agent;
(iii) in general, to do all things and to perform all
acts, including, without limitation, executing and delivering
all agreements, certificates, receipts, instructions and
other instruments contemplated by or deemed advisable in
connection with this Agreement.
This power of attorney, and all authority hereby conferred, is granted
subject to the interests of the other Shareholders and the Buyer hereunder and
in consideration of the mutual covenants and agreements made herein, and shall
be irrevocable and shall not be terminated by any act of any Shareholder or by
operation of law, whether by the death or incapacity of any Shareholder or by
the occurrence of any other event. Each Shareholder agrees, jointly and
severally, to hold the Shareholders' Agent free and harmless from any and all
loss, damage or liability which they, or any one of them, may sustain as a
result of any action taken in good faith hereunder.
10.10. Entire Agreement. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated
herein, and there have been and are no agreements, representations or
warranties between the parties other than those set forth or provided for
herein.
10.11. Counterparts; Facsimile Signatures. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument. This Agreement
and the Ancillary Instruments may be effective upon the execution and delivery
by any party of facsimile copies of signature pages hereto and thereto duly
executed by such party; provided, however, that any party delivering a
facsimile signature page covenants and agrees to deliver promptly after the
date hereto two (2) original copies to the other parties hereto.
10.12. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
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10.13. Glossary of Terms.
The following sets forth the location of certain definitions of
capitalized terms defined in the body of this Agreement:
"Act" - Section 3.26
"Affiliate" - Section 3.7.(k)
"Ancillary Instruments" - Section 3.2.(a)
"Buyer's Affiliates" - Section 6.1
"CERCLA" - Section 3.10.(c)
"Claim" - Section 6.1
"Closing" - Preamble to Article 9
"Closing Date" - Section 7
"Code" - Section 3.5.(e)
"Company Employees" - Section 3.15.(a)
"Contingent Payment" - Section 2.1
"Disclosure Schedule" - Article 10
"Employee Plans/Agreement(s)" - Section 3.15.(a)
"Environmental Laws" - Section 3.10.(c)
"ERISA" - Section 3.15.(a)
"Facilities" - Second Recital
"Government Entities" - Section 3.3
"Indemnified Party" - Section 6.3.(a)
"Indemnifying Party" - Section 6.3.(a)
"Laws" - Section 3.3
"Lien" - Section 3.11.(a)
"Litigation" - Section 3.9
"Orders" - Section 3.3
"PBGC" - Section 3.15.(b)(ii)
"Purchase Price" - Section 2.1
"Real Property" - Section 3.11.(c)
"Recent Balance Sheet" - Section 3.4
"Services" - Section 3.19
"Settlement Date" - Section 2.2.(c)
"Shares" - First Recital
"Trade Rights" - Section 3.17
"Waste" - Section 3.10.(c)
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
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49
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
BUYER:
ABR INFORMATION SERVICES, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________
Title: Senior Vice President
___________________________
COMPANY:
BMC CONSULTANTS, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
SHAREHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ D'▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
___________________________________
D'▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
44
50
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Individually
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Individually
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇, Individually
SHAREHOLDERS' AGENT:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
45