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Exhibit 10.38
STOCK PURCHASE AGREEMENT
By and Between
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ASSOCIATES, INC.
and
▇▇▇ ▇▇ ▇▇▇▇▇
Dated as of January 12, 1999
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TABLE OF CONTENTS
SECTION 1. DEFINITIONS...........................................................................................1
SECTION 2. SALE AND PURCHASE OF STOCK............................................................................5
2.1 Sale and Purchase of Shares.....................................................................5
2.2 Closing Payments................................................................................5
SECTION 3. CLOSING AND DELIVERIES................................................................................6
3.1 Closing.........................................................................................6
3.2 Deliveries by the Company and the Shareholder...................................................6
3.3 Deliveries by Buyer.............................................................................7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.....................................................7
4.1 Organization and Good Standing; Corporate Authority. ...........................................7
4.2 Validity and Non-Contravention..................................................................8
4.3 Capitalization..................................................................................8
4.4 Options or Other Rights; Subsidiaries...........................................................8
4.5 Affiliates......................................................................................8
4.6 Consents........................................................................................9
4.7 Financial Statements............................................................................9
4.8 No Material Adverse Changes.....................................................................9
4.9 Ordinary Course................................................................................10
4.10 Agreements, Etc................................................................................10
4.11 Labor Relations and Practices..................................................................10
4.12 Licenses and Permits...........................................................................11
4.13 Intellectual Property..........................................................................11
4.14 Litigation and Orders..........................................................................11
4.15 Taxes..........................................................................................12
4.16 Environmental..................................................................................13
4.17 Insurance......................................................................................13
4.18 Accounts Receivable............................................................................13
4.19 Real Property and Leases.......................................................................13
4.20 Title to Assets and Properties.................................................................13
4.21 Undisclosed Liabilities........................................................................13
4.22 Customers and Suppliers........................................................................14
4.23 Compliance With Laws...........................................................................14
4.24 No Brokers', Finders' or Insider Fees..........................................................14
4.25 Product Warranty and Product Liability.........................................................14
4.26 Employee Benefit Plans; ERISA..................................................................14
4.27 Employees. ..........................................................................16
4.28 Political Contributions and Other Payments. .........................................16
4.29 Securities Matters. .................................................................17
4.30 Disclosure............................................................................17
4.31 No Other Representations..............................................................17
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER..............................................................17
5.1 Investment Intent..............................................................................17
5.2 Organization and Good Standing.................................................................17
5.3 Validity of Agreements. .......................................................................18
5.4 No Breach......................................................................................18
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5.5 Capitalization.................................................................................18
5.6 No Brokers', Finders', or Insider Fees.........................................................19
5.7 Consents.......................................................................................19
5.8 Stock Payment Shares...........................................................................19
5.9 Disclosure.....................................................................................19
5.10 Buyer's Financing..............................................................................19
SECTION 6. PRE-CLOSING COVENANTS................................................................................19
6.1 General........................................................................................19
6.2 Operations of Business.........................................................................19
6.3 Full Access....................................................................................21
6.4 Notice of Developments.........................................................................21
SECTION 7. POST-CLOSING COVENANTS...............................................................................22
7.1 General........................................................................................22
7.2 Litigation Support.............................................................................22
7.3 Transition.....................................................................................22
7.4 Tax Matters....................................................................................22
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF BUYER...............................................................23
8.1 Deliveries.....................................................................................23
8.2 Representations, Warranties and Covenants......................................................23
8.3 Third-Party Consents...........................................................................23
8.4 No Material Adverse Change.....................................................................23
8.5 No Orders or Actions...........................................................................23
8.6 Employment and Noncompetition Agreement........................................................23
8.7 Noncompetition Agreements......................................................................23
8.8 Restricted Stock Agreement.....................................................................23
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDER.....................................................24
9.1 Representations, Warranties and Covenants......................................................24
9.2 No Orders or Actions...........................................................................24
9.3 Deliveries.....................................................................................24
SECTION 10. INDEMNIFICATION AND SURVIVAL.........................................................................24
10.1 Indemnification by the Shareholder.............................................................24
10.2 Indemnification by Buyer.......................................................................24
10.3 Claims.........................................................................................25
10.4 Third Party Claims.............................................................................25
10.5 Limitations on Indemnification.................................................................25
10.6 Survival of Representations and Warranties.....................................................26
10.7 Indemnification Exclusive......................................................................26
10.8 General Qualifications on Indemnification......................................................26
10.9 Payment in Common Stock........................................................................27
SECTION 11. TERMINATION..........................................................................................27
11.1 Termination of Agreement.......................................................................27
11.2 Effect of Termination..........................................................................28
SECTION 12. MISCELLANEOUS........................................................................................28
12.1 Waivers and Amendments.........................................................................28
12.2 Notices........................................................................................28
12.3 Fees and Expenses..............................................................................29
12.4 Successors and Assigns.........................................................................29
12.5 Choice of Law..................................................................................29
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12.6 Dispute Resolution.............................................................................29
12.7 Severability...................................................................................30
12.8 Entire Agreement...............................................................................30
12.9 Construction...................................................................................30
12.10 Incorporation of Exhibits and Schedules........................................................30
12.11 Headings and Recitals..........................................................................31
12.12 Counterparts...................................................................................31
12.13 Knowledge......................................................................................31
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SCHEDULES
Schedule 4.2 Validity and Non-Contravention
Schedule 4.3 Capitalization
Schedule 4.5 Affiliates
Schedule 4.6 Consents
Schedule 4.7(a) Financial Statements
Schedule 4.7(b) Exceptions to Financial Statements
Schedule 4.8 No Material Adverse Changes
Schedule 4.9 Ordinary Course
Schedule 4.10 Agreements, Etc.
Schedule 4.11(a) Employees
Schedule 4.11(b) Labor Matters
Schedule 4.12 Licenses and Permits
Schedule 4.13 Intellectual Property
Schedule 4.14 Litigation and Orders
Schedule 4.15 Tax Matters
Schedule 4.17 Insurance
Schedule 4.19 Real Property and Leases
Schedule 4.20 Title to Assets and Properties
Schedule 4.21 Undisclosed Liabilities
Schedule 4.22 Customers and Suppliers
Schedule 4.23 Compliance with Laws
Schedule 4.24 Brokers
Schedule 4.25 Product Warranty and Product Liability
Schedule 4.26 Employee Benefit Plans; ERISA
Schedule 4.27 Highly Compensated Employees
Schedule 6.2 Operations of Business
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EXHIBITS
EXHIBIT A FORM OF RESTRICTED STOCK AGREEMENT
EXHIBIT B FORM OF EMPLOYMENT AND NONCOMPETITION AGREEMENT
EXHIBIT C FORM OF NONCOMPETITION AGREEMENT
EXHIBIT D FORM OF EMPLOYMENT AGREEMENTS
EXHIBIT E LEGAL OPINION - COMPANY COUNSEL
EXHIBIT F LEGAL OPINION - BUYER'S COUNSEL
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of January 12, 1999
(this "Agreement"), is made by and between ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Associates, Inc.,
an Ohio corporation (the "Buyer"), and ▇▇▇ ▇▇ ▇▇▇▇▇, an individual resident of
Georgia (the "Shareholder").
RECITALS:
A. The Shareholder is the beneficial and record owner of all
the issued and outstanding shares of capital stock (the "Shares") of Bureau Van
Dijk Computer Services, Inc., a Georgia corporation (the "Company").
B. The Shareholder desires to sell to Buyer, and Buyer desires
to purchase from the Shareholder, all of the Shares upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
The following terms when used in this Agreement shall have the
following respective meanings:
"Actions" shall mean any pending, litigation, action, suit,
investigation, proceeding, hearing, complaint, assessment, inquiry or judgment,
administrative or judicial, at law or in equity.
"Affiliate" shall mean any Person which directly or indirectly
controls, is controlled by, or is under common control with such Person. A
Person shall be deemed to control another Person if such Person owns fifty-one
percent (51%) or more of any class of stock of the "controlled" Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the controlled Person, whether through ownership
of stock or partnership interests, by contract, or otherwise.
"Agreement" means this Agreement.
"Ancillary Agreements" shall mean the Employment and
Noncompetition Agreement, the Restricted Stock Agreement and the Noncompetition
Agreements, in each case only as applicable
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to the relevant party or parties to such Ancillary Agreement, as indicated by
the context in which such term is used.
"Articles of Incorporation" shall mean, as applicable (a) the
Amended and Restated Articles of Incorporation of Buyer or (b) the Articles of
Incorporation of the Company.
"Basket" shall have the meaning set forth in Section 10.5(a).
"Buyer" shall have the meaning set forth in the preamble
hereto.
"Bylaws" shall mean the Bylaws of the Company.
"Cap" shall have the meaning set forth in Section 10.5(a).
"Cash Payment" shall have the meaning set forth in Section
2.2(a).
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended.
"Claimant" shall have the meaning set forth in Section 10.3.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section
3.1.
"Closing Payments" shall have the meaning set forth in Section
2.2.
"Code" shall have the meaning set forth in Section 4.15(e).
"Common Stock" shall have the meaning set forth in Section
2.2(b).
"Company" shall have the meaning set forth in the preamble
hereto.
"Consents" shall mean any consent, approval, authorization,
waiver or notification of a Governmental Authority or any other Person.
"Contaminants" shall mean any contaminant, pollutant or
hazardous substance, as defined by CERCLA, as well as any waste materials,
petroleum and petroleum products.
"Contracts" shall have the meaning set forth in Section 4.2.
"Conversion Shares" shall have the meaning set forth in
Section 5.5.
"Convertible Preferred Stock" shall have the meaning set forth
in Section 5.5.
"Current Period" shall mean (i) any taxable year or other
period ending on or before the Closing for which a Tax Return is not required to
be filed on or before the Closing, and (ii) in
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the case of a taxable year or other period beginning before and ending after the
Closing, that portion of such taxable year or other period that ends on and
includes the Closing.
"Current Period Tax" shall mean the total tax due for a
Current Period.
"Debt" of any Person shall mean either (a) any liability of
such Person (i) for borrowed money (including the current portion thereof), or
(ii) under any reimbursement obligation relating to a letter of credit, bankers'
acceptance or note purchase facility, or (iii) evidenced by a bond, note,
debenture or similar instrument (including a purchase money obligation), or (iv)
for the payment of money relating to a lease that is required to be classified
as a capitalized lease obligation in accordance with U.S. generally accepted
accounting principles ("GAAP"), or (v) for all or any part of the deferred
purchase price of property or services (other than trade payables), or (b) any
liability of others described in the preceding clause (a) that such Person has
guaranteed, that is recourse to such Person or any of its assets or that is
otherwise its legal liability or that is secured in whole or in part by the
assets of such Person. For purposes of this Agreement, (i) Debt shall include
(a) all "cut" but uncashed checks issued by the Company that are outstanding on
the Closing Date and (b) any and all accrued interest, success fees, prepayment
premiums, make-whole premiums or penalties, and fees or expenses (including
reasonable attorney's fees) associated with the prepayment of any Debt.
"Employee Plans" shall have the meaning set forth in Section
4.26(a).
"Employment and Noncompetition Agreement" shall mean the
agreement to be delivered at the Closing as set forth in Section 3.2(i).
"Financial Statements" shall have the meaning set forth in
Section 4.7(a).
"GAAP" means United States generally accepted accounting
principles.
"Governmental Authority" shall mean any government or
political subdivision, whether federal, state, local or foreign, or any agency
or instrumentality of any such government or political subdivision, or any
federal state, local or foreign court or arbitrator.
"Indemnitor" shall have the meaning set forth in Section 10.3.
"Intellectual Property" shall have the meaning set forth in
Section 4.13(a).
"Intellectual Property Rights" shall have the meaning set
forth in Section 4.13.
"Interim Financial Statements" shall have the meaning set
forth in Section 4.7(a).
"Investment" shall mean any equity interest, directly or
indirectly, in any Person in excess of five percent (5%) of the total equity
ownership of such Person.
"Laws" shall mean any law, statute, code, ordinance, rule,
regulation or other requirement of any Governmental Authority.
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"Liens" shall mean any mortgage, lien, pledge, encumbrance,
security interest, claim, charge, defect in title or other restriction.
"Losses" shall have the meaning set forth in Section 10.1.
"Material Customers" shall have the meaning set forth in
Section 4.22.
"Noncompetition Agreements" shall mean the agreements to be
delivered at the Closing as set forth in Section 3.2(j).
"Options" shall mean any option, warrant, call, convertible or
exchangeable security, right of conversion or exchange, subscription,
unsatisfied preemptive right, other agreement or right of similar nature,
whether oral or written.
"Orders" shall mean any order, judgment, injunction, award,
decree, ruling, charge or writ of any Governmental Authority.
"Ordinary Course of Business" shall mean the ordinary course
of business consistent with past custom and practice (including with respect to
quantity and frequency).
"Permits" shall mean any license, permit, authorization,
grant, approval, franchise, waiver, Consent, qualification or similar document
or authority issued or granted by any Governmental Authority the non-existence
of which would have a material adverse effect on the party required to obtain
such.
"Person" shall mean any individual, sole proprietorship,
partnership, corporation, limited liability company, unincorporated society or
association, trust, or other entity.
"Plan" shall have the meaning set forth in Section 5.5.
"Redeemable Preferred Stock" shall have the meaning set forth
in Section 5.5.
"Regulations" shall mean the Code of Regulations of Buyer.
"Restricted Stock Agreement" shall mean the agreement to be
delivered at the Closing as set forth in Section 3.2(h).
"SAP" shall have the meaning set forth in Section 4.27.
" Shareholder" shall have the meaning set forth in the
preamble hereto.
"Shares" shall have the meaning set forth in the recitals to
this Agreement.
"Stock Payment" shall have the meaning set forth in Section
2.2(b).
"Subsidiary" means any corporation or entity other than the
Company of which more than fifty percent (50%) of the outstanding capital stock
or voting interests or rights have ordinary voting power to elect a majority of
the board of directors or other managers of such entity
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(irrespective of whether or not at the time capital stock or voting interests or
rights of any other class or classes of such Person shall or might have voting
power upon the occurrence of any contingency) is at the time directly or
indirectly owned by the Company or by the Company and/or one or more
Subsidiaries or the management of which corporation or entity is under control
of the Company and/or any other Subsidiary, directly or indirectly through one
or more Persons and any other Person which, under GAAP, should at any time for
financial reporting purposes be consolidated or combined with the Company and/or
any other Subsidiary.
"Taxes" shall mean any domestic or foreign federal, state or
local income, franchise, business, occupation, sales/use, manufacturer's excise,
payroll, withholding, Federal Insurance Contributions Act and employment and
unemployment taxes, personal and real property taxes and all other taxes or
charges (including all interest and penalties) levied or imposed by any
Governmental Authority.
"Taxing Authority" shall mean a Governmental Agency exercising
taxing authority including, without limitation, the Internal Revenue Service.
"Tax Returns" shall mean returns (including informational
returns), reports, statements, certificates, schedules, forms and other
documents relating to Taxes.
"Third Party" shall have the meaning set forth in Section
10.4.
"1933 Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, all as in effect from time
to time.
SECTION 2. SALE AND PURCHASE OF STOCK
2.1 Sale and Purchase of Shares. At the Closing, (a) the
Shareholder shall sell, assign and transfer all of the Shares to Buyer, (b) the
Shareholder shall deliver to Buyer one or more stock certificates representing
the Shares owned by the Shareholder, with duly executed stock powers attached in
proper form for transfer, (c) Buyer shall purchase all of the Shares, and (d)
Buyer shall pay and deliver to the Shareholder the consideration in the manner
and amount required by this Section 2.
2.2 Closing Payments. In consideration for the Shares, and
subject to and in accordance with Section 2.3, at the Closing Buyer shall:
(a) pay $17,500,000 in cash by wire transfer of immediately
available funds, subject to adjustments as provided in Section 2.3 (the "Cash
Payment"), and
(b) deliver to the Shareholder 300,000 shares of common stock
of Buyer, without par value (the "Common Stock"), issued and restricted pursuant
to the Restricted Stock Agreement (the "Restricted Stock Agreement") in
substantially the form attached as Exhibit A (the "Stock Payment").
The Cash Payment and the Stock Payment are collectively
referred to as the "Closing Payments."
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SECTION 3. CLOSING AND DELIVERIES
3.1 Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, LLP, Suite 3100, Promenade II, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on January 12, 1999 at 10:00 a.m. Atlanta time, or at such
other time or place as the parties mutually agree. "Closing Date" shall mean the
date on which the Closing occurs.
3.2 Deliveries by the Company and the Shareholder. At the
Closing, the Company and the Shareholder shall deliver or cause to be delivered
to Buyer the following:
(a) one or more certificates representing the Shares,
accompanied by duly executed stock powers in proper form for transfer;
(b) the minute books, stock ledgers and transfer books of the
Company, all fully updated to the reasonable satisfaction of the Buyer;
(c) receipt for the payment of the Closing Payments delivered
by the Shareholder to Buyer pursuant to Section 2.3 hereof;
(d) a certificate of the Secretary of State of the State of
Georgia as to the good standing of the Company in Georgia and a good standing
certificate from the Secretary of States of California and Indiana;
(e) a certificate of the Secretary of the Company certifying
that attached thereto are true and correct copies of (i) the Bylaws of the
Company and (ii) the Articles of Incorporation of the Company;
(f) a resignation of all officers and directors of the
Company, except as otherwise directed by the Buyer;
(g) the Restricted Stock Agreement duly executed by the
Shareholder;
(h) an Employment and Noncompetition Agreement in
substantially the form attached as Exhibit B duly executed by the Shareholder
(the "Employment and Noncompetition Agreement");
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(i) the Noncompetition Agreements in substantially the form
attached as Exhibit C duly executed between the Company and each of ▇▇▇▇-▇▇▇▇ De
Nys, ▇▇▇▇▇▇▇ Van Ommeslaghe and Alain Liedts (collectively, the "Noncompetition
Agreements");
(j) the legal opinion of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP,
counsel to the Company and the Shareholder, in substantially the form attached
as Exhibit E; and
(k) a copy of the agreements providing for the purchase by the
Shareholder of all the shares of the Company from each of ▇▇▇▇-▇▇▇▇ De Nys,
▇▇▇▇▇▇▇ Van Ommeslaghe and Alain Liedts.
3.3 Deliveries by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to the Shareholder the following:
(a) payment by wire transfer of immediately available funds
necessary to satisfy Buyer's obligation under Section 2.2(a) hereof;
(b) one or more certificates representing the Stock Payment,
accompanied by duly executed stock powers in proper form and transfer;
(c) the Employment and Noncompetition Agreement duly executed
on behalf of the Buyer;
(d) the Restricted Stock Agreement duly executed on behalf of
Buyer;
(e) a certificate of the Secretary of Buyer certifying that
attached thereto is a true and correct copy of Resolutions duly and validly
adopted by the Board of Directors of Buyer authorizing this Agreement, the
Ancillary Agreements, the issuance of the shares of Common Stock comprising the
Stock Payment and the transactions contemplated by this Agreement; and
(f) the legal opinion of ▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel
to the Buyer, in substantially the form attached as Exhibit F.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder hereby represents and warrants to Buyer that:
4.1 Organization and Good Standing; Corporate Authority. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of
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Georgia and has the corporate power and authority to own, operate and lease its
properties and to carry on its business as presently being conducted. The
Company is duly qualified to do business and is in good standing in the States
of California and Indiana and in each other State where failure to qualify would
have a material adverse affect on the business, operations or financial
condition of the Company taken as a whole.
4.2 Validity and Non-Contravention. This Agreement and the
Ancillary Agreements constitute the legal, valid and binding obligations of the
Shareholder, enforceable against the Shareholder (to the extent the Shareholder
is a party) in accordance with their terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting generally the entrustment of creditors' interests
and (b) the availability of equitable remedies (whether in a proceeding in
equity or at law). The Shareholder has full capacity, authority and right to
execute and deliver this Agreement and the Ancillary Agreements and to transfer
and deliver to Buyer the Shares. Except as set forth in Schedule 4.2, neither
the execution and delivery of this Agreement or the Ancillary Agreements by the
Shareholder nor the performance of his obligations hereunder or thereunder will
(a) violate, conflict with or result in a breach of any Laws or Orders or the
Articles of Incorporation or Bylaws of the Company, (b) violate, conflict with
or result in a breach or termination of, or otherwise give any contracting party
additional rights or compensation under, or the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a default
under the terms of, any note, deed, lease, instrument, security agreement,
mortgage, commitment, contract, agreement, license or other instrument, whether
written or oral, express or implied (collectively, "Contracts") to which the
Company or the Shareholder is a party or by which any of the assets or
properties of the Company are bound, or (c) result in the creation or imposition
of any Liens with respect to the Shares or any of the properties or assets of
the Company.
4.3 Capitalization. The authorized capital stock of the
Company consists of 1,000 shares of common stock, no par value, of which 1,000
shares are issued and outstanding, all of which were duly issued and are fully
paid and nonassessable. The Shareholder (a) is the record and beneficial owner
of all of the outstanding Shares; (b) has full power, right and authority, and
any approval required by Law, to make and enter into this Agreement and the
Ancillary Agreements and to sell, assign, transfer and deliver the Shares to
Buyer, and (c) except as set forth in Schedule 4.3, has good and marketable
title to the Shares free and clear of all Liens or Options. Upon the
consummation of the transaction contemplated by this Agreement in accordance
with the terms hereof, Buyer shall acquire good and marketable title to the
Shares, free and clear of all Liens and Options.
4.4 Options or Other Rights; Subsidiaries. There are no
authorized or outstanding Options providing for or relating to the issuance,
transfer or voting of any Shares or any unissued securities of the Company. The
Company has no Subsidiaries and no Investments.
4.5 Affiliates. Except as set forth in Schedule 4.5,
(a) the Company does not own, directly or indirectly, any of
the outstanding shares or securities convertible into capital shares of any
corporation or any participating interest in any partnership, joint venture or
other business enterprise.
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(b) the Shareholder does not have any direct or indirect
interest (i) in, or is a director, officer or employee of, any entity which is a
client, customer, supplier, lessor, lessee, debtor, creditor or competitor or
potential competitor of the Company, (ii) in any property, asset or right which
is owned or used by the Company in the conduct of its business, or (iii) in any
contractual relationship with the Company other than the employment of the
Shareholder as an employee of the Company or as provided in this Agreement.
4.6 Consents. Except as set forth in Schedule 4.6, no Consents
are required in connection with the execution and delivery by the Shareholder or
the Company of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby.
4.7 Financial Statements.
(a) Set forth on Schedule 4.7(a) are correct and complete
copies of (i) the audited balance sheets of the Company as of December 31, 1996
and 1997 and the related statements of operations and cash flows for the years
then ended, together with the notes thereto, and the other financial information
included therewith (collectively, the "Financial Statements"), (ii) the reviewed
balance sheet of the Company as of September 30, 1998 and the related statements
of operations and cash flows for the nine-month period then ended (the
"Third-Quarter Statements"), and (iii) the balance sheet of the Company as of
November 30, 1998 (which reflects all adjustments resulting from the 1996 and
1997 audits and the September 30, 1998 review) and the related statements of
operations for the month then ended (the "Interim Financial Statements").
(b) Except as set forth in Schedule 4.7(b), the Financial
Statements, Third-Quarter Statements and the Interim Financial Statements (i)
are consistent with the books and records of the Company (which are accurate and
complete in all material respects), (ii) have been prepared in accordance with
GAAP, consistently applied throughout the periods indicated (except that the
Interim Financial Statements lack footnote disclosure and are subject to
customary year-end adjustments) and (iii) fairly present the financial position,
results of operations and cash flows of the Company at the respective dates
thereof and for the periods therein indicated.
4.8 No Material Adverse Changes. Except as set forth in
Schedule 4.8 or as reflected in the Interim Financial Statements, since
September 30, 1998 there has not been any (a) material adverse change in the
financial condition of the Company or in the assets, liabilities, business, or
results of operations of the Company taken as a whole, (b) declaration, setting
aside or payment of any dividend or other distribution with respect to, or any
direct or indirect redemption or acquisition of, any of the capital stock of the
Company, (c) cancellation of any debt or claim held by the Company, (d) loss,
destruction or damage to any property which would have a material adverse effect
on operations of the Company, whether or not insured, (e) acquisition or
disposition of any assets or other transaction by the Company other than in the
Ordinary Course of Business, (f) transaction or agreement involving the Company
and any officer, director, employee (other than in the Ordinary Course of
Business) or the Shareholder of the Company, (g) increase, direct or indirect,
in the compensation paid or payable to any officer, director, employee or agent
of the Company or any establishment (other than in the Ordinary Course of
Business) or creation of any employee benefit plan, (h) any organized labor
trouble involving the Company, (i) arrangements relating to any royalty,
dividend or similar payment based on the sales volume of the Company, whether as
part of the terms of the Company's capital stock or by any separate agreement,
(j)
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customer that has terminated an engagement of the Company prior to completion,
or, to the best knowledge of the Shareholder, customer that has provided notice
to the Company or the Shareholder that such customer intends to do so, (k)
incurrence of indebtedness or any material Lien other than in the Ordinary
Course of Business, but in no event greater than $200,000 in the aggregate, or
(l) any agreement with respect to any of the foregoing actions.
4.9 Ordinary Course. Except as set forth in the Schedules
attached hereto and except for actions taken with Buyer's knowledge in order to
facilitate or in contemplation of the transactions contemplated in by Agreement,
since December 31, 1997, the Company has conducted its business in all material
respects only in the Ordinary Course of Business.
4.10 Agreements, Etc. Except as set forth in Schedule 4.10,
the Company is not a party to or bound by (a) any Contracts (other than oral
agreements for at will employment) relating to the employment of any Person by
the Company, or any bonus, deferred compensation, pension, profit sharing, stock
option, employee stock purchase, retirement insurance, health, welfare or other
employee benefit plan, (b) any loan or advance to, or Investment in, any other
Person or any Contracts relating to the making of any such loan, advance or
Investment, (c) any indemnity, or any guarantee or other contingent liability,
whether written or oral, in respect of any indebtedness or obligation of any
other Person (other than the endorsement of negotiable instruments for
collection in the Ordinary Course of Business), (d) any Contracts limiting the
freedom of the Company to engage in any line of business or to compete with any
other Person, (e) Contracts requiring future payments in excess of $10,000
annually, (f) any Contracts for the sale, lease, license or disposition of
products or services in excess of $100,000 annually or (g) any other material
Contract. All of such Contracts and instruments set forth in Schedule 4.10 (or
required to be set forth in Schedule 4.10) are in full force and effect, there
exists no material default or breach thereunder by the Company, or to the best
knowledge of the Shareholder, by any other party thereto, and the Company has
not received any written notice claiming that the Company has committed any such
material default or breach or indicating the desire or intention of any party
thereto to amend, modify, rescind or terminate the same. Except as set forth on
Schedule 4.10, the Shareholder is not a party to or bound by any Contract
limiting the freedom to engage in any line of business or compete with any
Person. To the best knowledge of the Shareholder, no employee is bound by or is
a party to any contract limiting the freedom of such employee to perform such
employee's current duties on behalf of the Company.
4.11 Labor Relations and Practices. The Company has no
Contracts with any labor union or other labor organization or employee
bargaining group relating to its employees. The Shareholder has no knowledge of
any efforts being made on the part of any labor union or other labor
organization or employee bargaining group or any employee with respect to
representation or organization of any of the Company's employees. The Company is
not delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed for
it as of the date hereof or amounts required to be reimbursed to such employees.
The Company is in compliance in all material respects with all applicable Laws
respecting labor, employment, fair employment practices, terms and conditions of
employment, and wages and hours. No claims of employment discrimination, sexual
harassment or unfair labor practices or strikes, slowdowns, stoppages of work or
any other concerted interference with normal operations are pending against the
Company or, to the best knowledge of the Shareholder, threatened against the
Company.
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4.12 Licenses and Permits. Schedule 4.12 sets forth a complete
and accurate list and description of all Permits of any Governmental Authority
held by the Company. The Company is in substantial compliance with the terms of
such Permits and there is no pending or, to the best knowledge of the
Shareholder, threatened termination, expiration (other than Permits issued for a
specified terms that expire and require renewal according to their terms), or
revocation thereof. Except for the Permits and authorizations set forth and
described in Schedule 4.12, neither the Company's conduct of its business nor
its ownership or use of any of its properties or assets is dependent on any
Permit.
4.13 Intellectual Property.
(a) Schedule 4.13 sets forth an accurate and complete list of
all letters patents, patents, patent applications, patent licenses, software
licenses, know-how, licenses, trade names, brand names, trade secrets,
trademarks, copyrights, service marks, trademark registrations and applications,
service ▇▇▇▇ registrations and applications and copyright registrations and
applications and all other intangible property rights or technology owned or
used by the Company in the operation of its business (collectively the
"Intellectual Property").
(b) No claim is pending or, to the best knowledge of the
Shareholder, threatened against the Company nor has the Company received any
written notice or claim from any Person asserting that any of the Company's
present or contemplated activities infringe or may infringe any Intellectual
Property Rights (as defined below) of such Person and the Shareholder is not
aware of any infringement by any other Person of any rights of the Company under
any Intellectual Property Rights.
As used herein, the term "Intellectual Property Rights" shall mean all
intellectual property rights including, without limitation, all of the
registered rights set forth on Schedule 4.13 and all patent, patent
applications, patent rights, trademarks, trademark applications, trade names,
service marks, service ▇▇▇▇ applications, copyrights, copyright applications,
computer programs and other computer software, inventions, designs, samples,
specifications, schematics, know-how, trade secrets, proprietary processes and
formulae, including production technology and processes, all source and object
code, algorithms, promotional materials, customer lists, supplier and dealer
lists and marketing research, and all documentation and media constituting,
describing or relating to the foregoing, including without limitation, manuals,
memoranda and records. Schedule 4.13 contains a list and brief description of
all registered Intellectual Property Rights.
4.14 Litigation and Orders. Except as set forth on Schedule
4.14, there are no Actions pending, or to the best knowledge of the Shareholder
threatened, against or affecting the Company or any of its properties, assets,
officers (in their capacity as such) or directors (in their capacity as such),
including any seeking to enjoin or prevent the consummation of the transactions
contemplated hereby, or otherwise claiming this Agreement or the Ancillary
Agreements or the transactions contemplated hereby or thereby are unlawful. The
Company and its properties and assets are not subject to any material Orders.
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4.15 Taxes.
(a) All Tax Returns that are or were required to be filed or
provided before the Closing by or with respect to the Company or its income,
properties, or operations have been timely filed or provided and are true,
correct and complete in all material respects. All Taxes owed by the Company for
the taxable periods covered by such Tax Returns (whether or not shown on any Tax
Return) have been paid. The Company has not been granted any extension of time
within which to file any Tax Return. No claim has ever been made by a Taxing
Authority in a jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to Tax in such jurisdiction. No Company assets are
subject to any Liens, whether or not perfected, for any Taxes, assessments, or
similar charges of a Government Authority, other than Liens for current Taxes,
assessments or similar charges not yet due and delinquent.
(b) Except as set forth in Schedule 4.15, no Tax Return filed
by the Company has been or is currently being audited or examined by any Taxing
Authority. There are no pending or, to the best knowledge of the Shareholder,
threatened audits, claims, deficiencies, or adjustments against the Company for
Taxes, and the Company has not granted any extension of the statutes of
limitations for the assessment or collection of Taxes which remains in effect.
(c) Each estimated payment for Current Period Taxes payable by
the Company has been made on or before the date on which payment is required in
an amount sufficient to avoid the imposition of a penalty.
(d) The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other Person.
(e) The Company has not been a United States real property
holding corporation within the meaning of section 897(c)(2) of the Internal
Revenue Code of 1986, as amended (the "Code") during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(f) The Company has never been a member of an affiliated group
filing a consolidated federal income Tax Return and has no liability for the
Taxes of any other Person.
(g) The Company has never been a "qualified personal service
corporation" within the meaning of Section 448(d)(2) of the Code.
(h) The Company has disclosed on its federal income Tax
Returns all positions taken thereon that could give rise to a substantial
understatement penalty within the meaning of Section 6662 of the Code.
(i) The Company has not agreed to any adjustments under
Section 481 of the Code with respect to a change in method of accounting.
4.16 Environmental. The Company's operations, properties and
assets (a) are and have been in substantial compliance with the requirements of
all applicable federal, state, local and foreign environmental, health and
safety statutes and regulations, and (b) are not the subject of any
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federal, state, local or foreign investigation evaluating whether any remedial
action is needed to respond to a release or threatened release of any
Contaminant into the environment.
4.17 Insurance. Schedule 4.17 sets forth a true and complete
list and brief description (including applicable premiums and deductibles) of
all policies of, and binders evidencing, life, fire, workmen's compensation,
product liability, general liability and other forms of insurance, including
title insurance, owned or maintained by the Company. All such policies are in
full force and effect, and the Company is not in material default under any of
them.
4.18 Accounts Receivable. To the best knowledge of the
Shareholder, all trade and other accounts receivable of the Company have arisen
only from bona fide transactions in the Ordinary Course of Business, are valid
receivables and, to the best of the Shareholder's knowledge, the Company has not
received notice from any Person owing accounts receivable disputing the amounts
owed or stating that such party is or will be unable to pay such accounts when
due.
4.19 Real Property and Leases. The Company does not own, and
has never owned, any real property. Schedule 4.19 constitutes a complete and
correct list of all real properties leased by the Company. The Company has
delivered or caused to be delivered true, complete and correct copies of all
leases for leased properties reflected in Schedule 4.19. The Company has valid
and enforceable leasehold interests in, all its real properties, free and clear
of all Liens except (a) Liens set forth in Schedule 4.19 and (b) Liens for
current Taxes, assessments or other governmental charges not yet due and
delinquent. The Company is not in violation, in any material respect, of any
zoning, building or safety ordinance, regulation or requirement or any other
Law, nor has it received any notice of such violation. The performance by the
Shareholder of this Agreement will not result in the termination of, or in any
increase of any amounts payable under, any of its real property leases.
4.20 Title to Assets and Properties. The Company has good and
marketable title to, or valid and enforceable leasehold interests in, all of its
tangible assets and properties shown as assets on the Interim Financial
Statements (other than assets disposed of since November 30, 1998 in the
Ordinary Course of Business) and all assets and properties acquired since
November 30, 1998, free and clear of all Liens, except (a) Liens set forth in
Schedule 4.20 and (b) Liens for current Taxes, assessments or other governmental
charges not yet due and delinquent. Except as set forth on Schedule 4.20, the
assets and properties owned or leased by the Company are, taken as a whole and
in all material respects, in good condition and repair (subject to normal wear
and tear consistent with the age of the assets and properties) and are
sufficient for the conduct of the Company's business as presently conducted.
4.21 Undisclosed Liabilities. Except (a) as set forth in
Schedule 4.21, (b) as incurred since November 30, 1998 in the Ordinary Course of
Business or (c) as set forth in the Interim Financial Statements (including the
reserves provided for therein), there are no debts, liabilities or obligations,
contingent or otherwise, of the Company, which are required by GAAP to be
recorded as balance sheet liabilities of the Company or described in footnotes
to the Company's financial statements.
4.22 Customers and Suppliers. Schedule 4.22 sets forth all
customers, licensees and other Persons that accounted for five percent (5%) or
more of the Company's revenues for the 12-month period ended December 31, 1997
and the nine-month period ended September 30, 1998 ("Material Customers").
Except as set forth on Schedule 4.22, (a) no Material Customer has
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terminated an engagement of the Company prior to its completion, or, to the best
knowledge of Shareholder, no Material Customer has provided notice that such
customer intends to do so; (b) the Company is not involved in any claim, dispute
or controversy with any of its Material Customers other than claims, disputes or
controversies arising in the Ordinary Course of Business, which do not involve
more than $10,000 in the aggregate with respect to any one Material Customer;
and (c) the Company is not involved in any claim, dispute or controversy with
any of its other customers or licensees or any of its suppliers or licensors
which, individually or in the aggregate, as of the date of this Agreement could
reasonably be expected to have a material adverse effect upon the Company's
assets, properties, liabilities, financial condition, results of operations or
business, in each case taken as a whole.
4.23 Compliance With Laws. The Company has complied in all
material respects with, and is not in violation of or in default in any material
respect under, any Laws or Orders applicable to the Company or to any of its
businesses, assets, properties or employees.
4.24 No Brokers', Finders' or Insider Fees. Except as set
forth in Schedule 4.24, no Person has, or immediately following the consummation
of the transactions contemplated hereby will have, as a result of any act or
omission of the Shareholder or the Company, any right, interest, or valid claim
against the Shareholder, the Company or Buyer for any commission, fee or other
compensation as a finder or broker in connection with the transactions
contemplated by this Agreement.
4.25 Product Warranty and Product Liability. Except as set
forth in Schedule 4.25, there are no product warranty or product liability
claims pending or, to the best knowledge of the Shareholder, threatened against
the Company. The Company has provided Buyer with a complete and accurate list of
all warranty information provided to or relied upon by its customers (other than
warranties, if any, which apply to the Company's goods and services by operation
of law).
4.26 Employee Benefit Plans; ERISA.
(a) Except for the employee plans disclosed on Schedule 4.26
(collectively, the "Employee Plans"), the Company does not maintain, contribute
to or have an obligation to contribute to any "Employee Benefit Plan" (as
defined in Section 3(3) of ERISA), or any other severance, bonus, stock option,
stock appreciation, stock purchase, retirement, insurance, health, welfare,
vacation, pension, profit-sharing or deferred compensation plan, agreement or
arrangement providing benefits for employees or former employees of the Company
nor has the Company or any officer or director of the Company taken any action
directly or indirectly to obligate the Company to institute any such Employee
Benefit Plan.
(b) The Company does not have any liability with respect to
any plans, arrangements or practices of the type described in the preceding
sentence previously maintained or contributed to the Company, or to which the
Company previously had an obligation to contribute, which could have a material
adverse effect upon the assets and properties, operations, condition (financial
or otherwise) or business of the Company, taken as a whole. The Shareholder
previously delivered to Buyer or its counsel true, complete and correct copies
of each of the Employee Plans, including all amendments thereto, and any other
documents, forms or other instruments relating thereto reasonably requested by
Buyer or its counsel. All Employee Plans have been maintained in substantial
compliance with all Laws, including, without limitation, ERISA, and all Orders
and have
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been administered in accordance with the terms of the applicable plan documents,
except where such failure to comply could not have a material adverse effect on
the assets and properties, operations, condition (financial or otherwise) or
business of the Company, taken as a whole.
(c) Except as disclosed on Schedule 4.26, the Company has not
made any promises or commitments to provide, and is under no obligation or
liability to provide, (i) medical benefits (including through insurance) to
retirees of the Company or their dependents or (ii) life insurance or other
death benefits (including through insurance) to retirees of the Company or their
dependents.
(d) No Employee Plan (i) is or at any time was funded through
a "welfare benefit fund" as defined in Section 419(e) of the Code, (ii) is or at
any time was subject to Title IV of ERISA, (iii) is or at any time was subject
to the minimum funding standards of Section 302 of ERISA or Section 412 of the
Code, or (iv) is or at any time was a "multiemployer plan" within the meaning of
Section 3(37) or 4001(a)(13) of ERISA, or Section 414(f) of the Code, or a
"multiple employer plan" within the meaning of Section 413(c) of the Code. No
trade or business is or, at any time within the past six (6) years, has been,
treated, together with the Company, as a single employer under Section 414 of
the Code or Section 4001 of ERISA.
(e) The execution and performance of this Agreement or any of
the Ancillary Agreements will not (i) constitute a stated triggering event under
any Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from the Company to any present or former officer,
employee, director, shareholder or consultant, or former employee (or dependents
of any thereof), or (ii) accelerate the time of payment or vesting, or increase
the amount, of compensation due to any employee, officer, director, shareholder
or consultant of the Company.
(f) All contributions, transfers, and payments by the Company
in respect of any Employee Plan have been or are fully deductible under the
Code.
(g) No Employee Plan provides benefits to any individual who
is not a current or former employee of the Company, or the dependents or other
beneficiaries of any such current or former employee.
(h) Other than routine claims for benefits, there are no
Actions with respect to any employee plan, nor to the best knowledge of the
Shareholder and the Company, is there any basis for such Actions.
(i) All (i) insurance premiums required to be paid with
respect to, (ii) benefits, expenses, and other amounts due and payable under,
and (iii) contributions, transfers, or payments required to be made to, any
Employee Plan prior to the Closing will have been paid, made or accrued on or
before the Closing.
(j) Except as expressly stated to the contrary in Contracts or
the instruments governing each Employee Plan made available to Buyer or its
counsel prior to Closing, the Company has reserved all rights necessary to amend
or terminate each of the Employee Plans without any Consents of any other
Person.
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(k) The execution and performance of this Agreement will not
result in payments (or transfers of property) which constitute "excess parachute
payments" within the meaning of Section 280G of the Code.
4.27 Employees. The Company has previously delivered to the
Buyer a list of all managers, employees and consultants of the Company who,
individually, have received or will receive compensation from the Company for
the fiscal year of the Company ended December 31, 1998 in excess of $100,000. In
each case, such Schedule included the current job title, start date with the
Company and current base salary of each such individual. Except as set forth on
Schedule 4.27, the Company has not received any written notice from any key
employee regarding such key employee's intention to terminate his or her
employment with the Company. For each of the fiscal years ended December 31,
1996 and 1997 and on an annualized basis for the nine-month period ended
September 30, 1998, the employee turnover rate has been less than twenty percent
(20%) (excluding employees that have retired or have been terminated by the
Company). Except as set forth in Schedule 4.27, the Company is in compliance in
all material respects with the immigration laws of the United States with
respect to the hiring, employment and engagement of all of its employees and
consultants who are not United States citizens. As of the date hereof, the
Company is in compliance in all material respects with all rules, regulations
and requirements of SAP AG, SAP America, Inc., Team SAP or as an ASAP Partner,
each as applicable to the Company.
4.28 Political Contributions and Other Payments. To the best
knowledge of the Shareholder, neither the Shareholder nor the Company nor any
other Person acting on behalf of the Shareholder nor the Company has, during the
past two years, (i) made any payment in violation of any law to any governmental
official or other governmental employee or agent (domestic or foreign) to induce
the recipient or the recipient's employer to do business with, grant favorable
treatment to or compromise or forego any claim against the Company, or (ii) made
any significant payment or conferred any benefit which are unlawful to promote
or retain sales or to help procure or maintain good relations with suppliers.
4.29 Securities Matters.
(a) The Shareholder is a sophisticated investor with
sufficient knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in the Buyer. The
Shareholder has access to and has consulted with, to the extent the Shareholder
considered appropriate, lawyers, accountants or investment advisers
knowledgeable in financial and business matters for the purpose of evaluating
the merits and risks of investment in the Buyer.
(b) The Shareholder can bear the economic risk and lack of
liquidity of the purchase of the Common Stock and of the loss of the entire
amount of the investment, and the Shareholder understands the tax consequences
of its receipt of the Common Stock.
(c) The Common Stock is being acquired for the Shareholder's
own account and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933 Act or
any applicable state securities laws.
(d) The Shareholder is an "accredited investor" as that term
is defined in Regulation D promulgated under the 1933 Act.
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4.30 Disclosure. Neither this Agreement (including the
Exhibits and Schedules hereto) nor any certificate or instrument signed and
delivered by the Shareholder to the Buyer at Closing pursuant to the terms of
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading.
4.31 No Other Representations. Except as expressly set forth
in this Section 4 and the Schedules corresponding to the representations and
warranties set forth herein, the Shareholder makes no representations,
warranties or statements, express or implied, with respect to the Company, its
business, operations, assets or prospects, upon which Buyer may rely in entering
into this Agreement or consummating the transactions contemplated herein. Any
information disclosed on a Schedule hereto shall be deemed automatically to
qualify any other representation or warranty contained herein to the extent that
such information might reasonably considered relevant to such other
representation or warranty, regardless of whether there is a specific cross
reference.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Shareholder that:
5.1 Investment Intent. The Shares are being purchased for its
own account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933 Act or
any applicable state securities laws.
5.2 Organization and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio and has the corporate power and authority to own, operate and
lease its properties and to carry on its business as presently being conducted.
5.3 Validity of Agreements. This Agreement and the Ancillary
Agreements constitute the legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting generally the entrustment of
creditors' interests and (b) the availability of equitable remedies (whether in
a proceeding in equity or at law). Buyer has the corporate power and authority
to enter into this Agreement and the Ancillary Agreements and to undertake and
perform fully the transactions contemplated hereby or thereby. All necessary
corporate action has been taken by and on behalf of Buyer with respect to the
authorization, execution, delivery and performance of this Agreement and the
Ancillary Agreements.
5.4 No Breach. Neither the execution and delivery of this
Agreement or the Ancillary Agreements by Buyer nor the performance of its
obligations hereunder or thereunder will violate, conflict with or result in a
breach of any Laws, Orders, the Articles of Incorporation or Regulations of
Buyer.
5.5 Capitalization. The authorized capital stock of the Buyer
consists of 45,000,000 shares of Common Stock, of which 6,822,950 shares are
issued and outstanding, 250,400 shares of convertible preferred stock, par value
$.01 (the "Convertible Preferred Stock"), of which
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250,400 shares are issued and outstanding, and 250,400 shares of redeemable
preferred stock, par value $.01 (the "Redeemable Preferred Stock"), of which no
shares are issued and outstanding. In addition, the Buyer has authorized and
reserved for issuance upon conversion of shares of the Convertible Preferred
Stock up to 2,504,000 shares of Common Stock and 250,400 shares of Redeemable
Preferred Stock (subject to adjustment for stock splits, stock dividends and the
like) and has reserved for issuance upon the exercise of Options or issuance of
restricted stock under the Buyer's 1997 Equity and Performance Incentive Plan
(the "Plan") 2,500,000 shares of Common Stock (subject in each case to
adjustments for stock splits, stock dividends and the like). Except for the
2,500,000 shares of Common Stock issuable as shares of restricted stock or upon
conversion of outstanding Options under the Plan and the Conversion Shares or
the 260,000 shares of Common Stock issuable pursuant to the warrants and
options, dated April 3, 1998, the Buyer has not issued or agreed to issue and is
not obligated to issue any outstanding warrants, options or other rights to
purchase or acquire any shares of its capital stock, nor any outstanding
securities convertible into such shares or any warrants, Options or other rights
to acquire any such convertible securities. All of the outstanding shares of
capital stock of the Buyer (including without limitation shares of the
Convertible Preferred Stock) are duly and validly authorized and issued and are
fully paid and nonassessable and have been offered, issued, sold and delivered
in compliance with applicable federal and state securities laws and not subject
to any preemptive rights. The Conversion Shares issuable upon conversion of
shares of the Convertible Preferred Stock will upon issuance be duly and validly
authorized and issued, fully paid and nonassessable and not subject to any
preemptive rights and will be issued in compliance with federal and state
securities laws. As used herein, the term "Conversion Shares" shall mean the
shares of Redeemable Preferred Stock and Common Stock issuable upon conversion
of the shares of Convertible Preferred Stock.
5.6 No Brokers', Finders', or Insider Fees. No Person has or,
immediately following the consummation of the transactions contemplated hereby,
will have, as a result of any act or omission of Buyer, any right, interest or
valid claim against the Shareholder, the Company or Buyer for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement.
5.7 Consents. No Consents are required in connection with the
execution and delivery by Buyer of this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated hereby or thereby.
5.8 Stock Payment Shares. The 300,000 shares of Buyer's Common
Stock to be issued to Shareholder as the Stock Payment have been duly authorized
for issuance to Shareholder pursuant to the terms of this Agreement, and when
issued and delivered to Shareholder shall be validly issued, fully paid and
non-assessable, and upon such issuance and delivery Shareholder shall acquire
good title to such shares of Common Stock, free and clear of all Liens or
Options except as provided in the Restricted Stock Agreement.
5.9 Disclosure. Neither (i) this Agreement (including the
Exhibits and Schedules hereto) nor (ii) any certificate or instrument to be
signed and delivered by the Buyer to the Shareholder at Closing pursuant to the
terms of this Agreement, nor (iii) the 1933 Act Registration Statement on Form
S-1 filed by the Company with the U.S. Securities and Exchange Commission as of
July 24, 1998 and as amended to the date of this Agreement, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading.
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5.10 Buyer's Financing. Neither the Buyer nor the Company
shall, as a result of the transaction contemplated herein or the terms of any
indebtedness incurred to finance the transactions contemplated herein, be
rendered insolvent under any definition, have unreasonably small capital to
conduct their respective businesses or be unable to pay their respective debts
as they mature.
SECTION 6. PRE-CLOSING COVENANTS
6.1 General. Each of the parties hereto shall use his or its
reasonable efforts to take all action and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Ancillary Agreements.
6.2 Operations of Business. Except as otherwise provided or
disclosed in this Agreement, the Schedules hereto or the Ancillary Agreements,
from the date hereof until the Closing, the Shareholder shall not and shall not
cause or permit the Company to, and the Company shall not, engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business, and without limiting the foregoing, the Shareholder shall
not sell, transfer or assign the Shares or permit the creation of any Lien with
respect to the Shares, and except as set forth in Schedule 6.2, the Company
shall not take any of the following actions without the prior written consent of
Buyer, which consent will not be unreasonably withheld or delayed:
(a) incur, create or suffer to exist any Liens except as
disclosed on Schedule 4.20;
(b) increase the compensation of or to become payable to any
officers, employees, agents, sales representatives or consultants of the Company
(including any such increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) other than increases of amounts payable to employees
that are not officers of the Company in the Ordinary Course of Business, or
enter into any employment Contract with any officer or employee, or any Contract
with any agent, sales representative or consultant, which is not terminable on
or at any time after the Closing;
(c) make any change in the Company's authorized capital stock,
including any stock split or reclassification in respect of its outstanding
capital stock, or declaration, payment or setting aside for payment of any
dividend, fees, or other distribution in respect of the capital stock of the
Company, or any redemption, purchase or other acquisition of any of the Shares
or other securities of the Company;
(d) make or commit to make any capital expenditures requiring
the payment of in excess of $50,000 in the aggregate;
(e) sell, transfer or otherwise dispose of any assets of the
Company, except for sales of inventory in the Ordinary Course of Business;
(f) incur any material obligation or liability (fixed or
contingent) relating to the Company's business, except trade or business
obligations incurred in the Ordinary Course of Business;
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(g) cancel or compromise any debt or claim, or waive or
release any rights of value;
(h) transfer, abandon, fail to maintain in good standing or
grant any rights under or with respect to any material leases, licenses or
agreements of the Company or the Intellectual Property, or enter into any
material Contract limiting the Company's ability to conduct its operations or
manufacture or distribute its products anywhere in the world;
(i) issue, sell or otherwise dispose of any of the capital
stock or any other equity interests of the Company or any evidences of
indebtedness of the Company;
(j) amend the Articles of Incorporation or Bylaws of the
Company;
(k) introduce any material change with respect to the
operation of the Company's business, including its methods of accounting;
(l) enter into any material Contract of a kind required to be
listed on Schedule 4.10;
(m) fail to maintain the properties and assets of the business
of the Company, whether owned or leased, in their current operating condition
and repair, reasonable wear and tear excepted;
(n) fail to maintain in full force and effect insurance for
the business of the Company providing coverage and amounts of coverage in
accordance with its current practice;
(o) merge or consolidate with any other corporation or acquire
any stock, business, or substantially all of the property or assets of any other
Person;
(p) write-up the value of any of the Company's assets;
(q) make any loan or advance to, or any Investment in, any
Person (including any officer, director, employee, agent, sales representative
or consultant);
(r) do any act which, with or without the giving of notice or
the passage of time, or both, would result in a material breach of or default
under any Contract required to be listed in Schedule 4.10;
(s) incur any indebtedness for borrowed money; or
(t) enter into any agreement or understanding to do any of the
foregoing.
6.3 Full Access. The Shareholder shall permit and shall cause
the Company to permit, and the Company shall permit, representatives of Buyer to
have access during reasonable times, and in a manner so as not to unreasonably
interfere with the normal business operations of the Company, to all premises,
properties, personnel, books, records (including tax records), contracts and
documents of or pertaining to the Company; provided, however, that such access
is reasonably necessary to perform its due diligence review in connection with
this Agreement and the transactions
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contemplated hereby; and provided further, that all access to Company premises,
employees or customers shall be provided only upon prior notice to, and approval
as to reasonable timing and scope of, the Shareholder.
6.4 Notice of Developments. The Shareholder shall promptly
notify Buyer in writing of any development in the business of the Company which
would be outside the Ordinary Course of Business, or which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in the Schedules. Upon receipt of written notice of any such
event, Buyer shall elect within ten (10) calendar days either (i) to accept such
notice and waive any inaccuracy or misrepresentation or warranty which would
have occurred had such notice not been given, or any breach of this Agreement
arising from the facts disclosed or (ii) terminate this Agreement pursuant to
Section 11(b) by delivering written notice to the Shareholder. If Buyer fails to
notify Shareholder of its election within such ten (10) day period, Buyer shall
be deemed to have elected (i) above.
SECTION 7. POST-CLOSING COVENANTS
7.1 General. If at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties shall take such further action (including the execution and
delivery of such further instruments and documents) as any other party may
reasonably request.
7.2 Litigation Support. In the event and for so long as any
party actively is contesting or defending against any Actions of third parties
after the Closing in connection with (a) any transaction contemplated by this
Agreement or the Ancillary Agreements or (b) any fact, situation, circumstances,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to or after the Closing
involving the Company, each of the other parties shall cooperate in the defense
or contest, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with the
defense or contest, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Section 10 below).
7.3 Transition. The Shareholder shall not take any action that
is designed or intended to have the effect of discouraging any actual or
potential lessor, licensor, customer, supplier, or other business associate of
the Company from maintaining the same business relationships with the Company
after the Closing as it maintained with the Company prior to the Closing.
7.4 Tax Matters.
The following provisions shall govern the allocation of
responsibility as between Buyer and the Shareholder for certain tax matters
following the Closing Date:
(a) Buyer shall prepare and file all Tax Returns for the
Company for all periods ending on or before the Closing Date which are filed
after the Closing Date. Buyer shall permit the Shareholder to review and comment
on each such Tax Return described in the preceding sentence prior to filing. The
Shareholder shall reimburse Buyer for Taxes of the Company with respect to
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such periods within fifteen (15) days after payment by Buyer or the Company of
such Taxes to the extent such Taxes exceed the sum of (i) the reserve for tax
liability shown on the face of the Interim Financial Statements plus (ii) 40% of
the book income of the Company for such period earned after November 30, 1998.
(b) Buyer shall prepare and file any Tax Returns of the
Company for Tax periods which begin before the Closing Date and end after the
Closing Date and the Buyer or the Company shall pay all Taxes due thereon.
(c) Buyer, the Company and the Shareholder shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes.
(d) Buyer and Company will provide the Shareholder with access
to such of the Company's books and records as may be reasonably requested by the
Shareholder in connection with Tax matters relating to the Company and periods
ending prior to the Closing Date. Buyer shall cause the Company to preserve and
not to discard any documents, books, or records of the Company for at least
three years following the Closing Date without first notifying the Shareholder
and permitting the Shareholder to keep or copy such documents, books or records.
SECTION 8. CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer to purchase and pay for the Shares at
the Closing is subject to the fulfillment, at or prior to the Closing, of the
following conditions, each of which shall be deemed waived by Buyer if Buyer
proceeds with the Closing without satisfaction of such condition, unless the
parties otherwise agree in writing:
8.1 Deliveries. The Shareholder shall have delivered or caused
to be delivered all of the items required by Section 3.2 of this Agreement.
8.2 Representations, Warranties and Covenants. The
representations and warranties set forth in Section 4 shall be true and correct
at and as of the Closing. The Shareholder shall have performed or complied with
all covenants and agreements contemplated by this Agreement to be performed by
such party at or prior to the Closing.
8.3 Third-Party Consents. The Shareholder shall have obtained
all Consents that may be required in connection with the consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements, if the
failure to obtain such Consents prior to Closing could reasonably be expected to
have a material adverse effect on the business of the Company following the
Closing.
8.4 No Material Adverse Change. There shall not have been any
material adverse change in any of the assets, business, financial condition or
results of operations of the Company.
8.5 No Orders or Actions. There shall be no Orders in effect
preventing, nor Actions pending seeking to prevent, consummation of any of the
transactions contemplated by this Agreement or the Ancillary Agreements.
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8.6 Employment and Noncompetition Agreement. Buyer shall have
entered into the Employment and Noncompetition Agreements with the Shareholder.
8.7 Noncompetition Agreements. The Company shall have entered
into the Noncompetition Agreements with each of ▇▇▇▇-▇▇▇▇ De Nys, ▇▇▇▇▇▇▇ Van
Ommeslaghe and Alain Liedts.
8.8 Restricted Stock Agreement. Buyer shall have entered into
the Restricted Stock Agreement with the Shareholder.
SECTION 9. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDER
The obligations of the Shareholder to sell the Shares at the
Closing is subject to the fulfillment, at or prior to the Closing, of the
following conditions, each of which shall be deemed waived by the Shareholder if
Shareholder proceeds with the Closing without satisfaction of such condition,
unless the parties otherwise agree in writing:
9.1 Representations, Warranties and Covenants. The
representations and warranties set forth in Section 5 shall be true and correct
at and as of the Closing. Buyer shall have performed or complied with all
covenants and agreements contemplated by this Agreement to be performed by it at
or prior to the Closing.
9.2 No Orders or Actions. There shall be no Orders in effect
preventing, nor Actions pending seeking to prevent, consummation of any of the
transactions contemplated by this Agreement or the Ancillary Agreements.
9.3 Deliveries. Buyer shall have delivered all of the items
required by Section 3.3 of this Agreement.
SECTION 10. INDEMNIFICATION AND SURVIVAL
10.1 Indemnification by the Shareholder. Following the
Closing, subject to the terms and conditions of this Section 10, the Shareholder
shall indemnify, defend and hold harmless Buyer and its respective officers,
directors, employees, agents and Affiliates from and against, and shall
reimburse them for, liabilities, damages, claims, penalties, fines, judgments,
awards, settlements, Taxes, costs, fees, expenses (including, but not limited
to, reasonable attorneys' fees) and disbursements, and any interest that has
accrued on any of the foregoing (collectively, "Losses") resulting from or
arising in connection with:
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(a) any breach of or misrepresentation in (i) any
representation or warranty made by the Shareholder in this Agreement or (ii) any
covenant or agreement made by the Shareholder in this Agreement to be performed
at or prior to the Closing;
(b) any breach of any covenant or agreement made by the
Shareholder performed after the Closing; and
(c) the purchase by the Shareholder of the shares of ▇▇▇▇-▇▇▇▇
De Nys, ▇▇▇▇▇▇▇ Van Ommeslaghe and Alain Liedts.
10.2 Indemnification by Buyer. Subject to the terms and
conditions of this Section 10, Buyer shall indemnify, defend and hold harmless
the Shareholder, and his heirs, assigns and successors from and against, and
shall reimburse him for, any Losses resulting from or arising in connection
with:
(a) any breach of or misrepresentation in (i) any
representation or warranty made by Buyer in this Agreement; or (ii) any covenant
or agreement made by Buyer in this Agreement to be performed at or prior to the
Closing; and
(b) any breach of any covenant or agreement made by Buyer in
this Agreement to be performed after the Closing.
10.3 Claims. In the event the Shareholder or Buyer (the
"Claimant") desires to make a claim for indemnification pursuant to Sections
10.1 or 10.2 hereof against the other (the "Indemnitor"), the Claimant shall
give prompt written notice of the claim to the Indemnitor, describing, in
reasonable detail, the nature of the claim. Failure to give such notice shall
not affect the indemnification provided hereunder except to the extent that such
failure shall have actually prejudiced the Indemnitor as a result thereof.
10.4 Third Party Claims. If the Claimant's notice involves a
claim against the Claimant by a Person not a party to this Agreement (a "Third
Party"), the Indemnitor shall have the exclusive right to defend and settle, at
Indemnitor's own expense and by Indemnitor's own counsel, any such matter so
long as the Indemnitor pursues the same diligently and in good faith. If the
Indemnitor undertakes to defend or settle, it shall promptly notify the Claimant
of its intention to do so, and the Claimant shall cooperate, at the sole expense
of the Indemnitor, with the Indemnitor and its counsel in all commercially
reasonable respects in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnitor with any books, records, access to personnel and facilities and other
information reasonably requested by the Indemnitor and in the Claimant's
possession or control. After the Indemnitor has notified the Claimant of
Indemnitor's intention to undertake to defend or settle any such asserted
liability, and for so long as the Indemnitor diligently pursues such defense,
the Indemnitor shall not be liable for any additional legal expenses incurred by
the Claimant in connection with any defense or settlement of such asserted
liability; provided, however, that the Claimant shall be entitled, at its
expense, to participate in the defense of such asserted liability and the
negotiations of the settlement thereof, and the Indemnitor shall not settle any
such Third Party claim without the consent of the Claimant unless the settlement
thereof imposes no liability or obligation on, and includes a complete release
from liability of, the Claimant; and provided further, however, that, if it
reasonably appears that such Third Party claim, if proven could result in an
aggregate Loss to the Indemnitee of greater than
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$5,000,000, then the Indemnitee shall be entitled to reimbursement of reasonable
legal fees and expenses incurred in connection with Indemnitee's participation
in such defense and settlement discussions. If, upon receiving notice, the
Indemnitor does not timely undertake to defend such matter to which the Claimant
is entitled to indemnification hereunder, or fails diligently to pursue such
defense, the Claimant may undertake such defense through counsel of its choice,
at the cost and expense of the Indemnitor, and the Claimant may settle such
matter, and the Indemnitor shall reimburse the Claimant for any losses incurred
by the Claimant in connection therewith.
10.5 Limitations on Indemnification.
(a) Subject to Section 10.5(b) below, (i) neither Buyer nor
the Shareholder shall be entitled to indemnification under this Agreement until
the aggregate amount of all Losses (other than Losses in connection with claims
excluded from application of the Basket pursuant to Section 10.5(b)) incurred by
such party exceeds $150,000 (the "Basket"), and then such party shall be
entitled to indemnification only for the amount by which such Losses incurred by
such party exceed the Basket amount; and (ii) the maximum aggregate obligation
of the Shareholder or the Buyer with respect to all matters for which either
party may seek indemnification under this Agreement shall not exceed $20,600,000
(the "Cap").
(b) Neither the Basket nor the Cap provided for in Section
10.5(a) shall apply to any claim made by Buyer based on the representations and
warranties contained in any of Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.15, 4.24, and
4.26, or to any claims made by the Shareholder based on the representations and
warranties contained in any of Sections 5.2, 5.3, 5.6 and 5.8. Furthermore,
neither the Basket nor the Cap shall apply to any indemnification claims made
pursuant to Sections 10.1(b), 10.1(c) or 10.2(b).
10.6 Survival of Representations and Warranties. All of the
representations and warranties of the Shareholder and Buyer contained in
Sections 4 and 5 above shall survive the Closing hereunder and continue in full
force and effect for a period of 18 months thereafter, except (i)
representations and warranties contained in Sections 4.15 and 4.26, which shall
survive until the expiration of the longest applicable period of limitations, if
any, applicable to the matters therein represented (as such period may be
extended pursuant to the request of the appropriate Governmental Authorities),
and (ii) representations and warranties contained in Sections 4.1, 4.2, 4.3,
4.5, 4.24, 5.2, 5.3, 5.6 and 5.8, which shall survive indefinitely.
10.7 Indemnification Exclusive. Except in the case of actual
fraud (intentional misrepresentation of a material fact reasonably relied upon
by the Claimant), indemnification pursuant to Sections 10.1 or 10.2, subject to
all terms, conditions and limitations provided for in this Section 10, shall be
the sole and exclusive remedy of the parties hereto or the other parties named
as beneficiaries of Sections 10.1 or 10.2 for monetary damages with respect to
any claims arising from, under or with respect to this Agreement, the
transactions contemplated herein or the matters subject to indemnification
hereunder.
10.8 General Qualifications on Indemnification.
Notwithstanding any provision of this Section 10 to the contrary, the right of
any Claimant to indemnification from an Indemnitor shall be subject to the
following:
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(a) The liability of an Indemnitor with respect to any
indemnification claim shall be reduced by the amount of any tax benefit actually
realized or any insurance proceeds received by any claimant as a result of any
Loss upon which such claim is based, and shall include any tax detriment
actually suffered by the claimant as a result of such Loss. The amount of such
tax benefit or detriment shall be determined by taking into account the effect,
if any, and to the extent determinable, of timing differences resulting from the
acceleration or deferral of items of gain or loss resulting from such Loss.
(b) A Loss shall include actual damages only and shall not
include any special, punitive, multiplied or consequential damages, except to
the extent the same are included in a Third Party judgment against the Claimant.
(c) Upon payment in full of any indemnification claim, the
Indemnitor shall be subrogated to the extent of such payment to the rights of
the Claimant against any Third Party with respect to the subject matter of such
indemnification claim.
(d) An Indemnitor shall be relieved its duty to indemnify
Claimant hereunder if and to the extent the Claimant fails to take commercially
reasonable steps in good faith to mitigate its Loss, including, but not limited
to, failure to pursue recovery under available policies of insurance.
(e) Any indemnification payment hereunder shall be deemed an
adjustment to the Purchase Price.
(f) The Buyer shall not be deemed to have incurred any Loss
relative to the Company to the extent such Loss may be charged against reserves
established in the Interim Financial Statements.
10.9 Payment in Common Stock. The Shareholder may, at his
option, pay any claim for indemnification under Section 10.1 in whole or part by
surrendering to the Buyer shares of Buyer Common Stock issued as the Stock
Payment. If, at the time of such surrender, the Buyer's common stock is listed
on any national securities exchange or the NASDAQ Stock Market, the value of
each share of Common Stock surrendered for payment of such claim shall be the
closing price as reported by such exchange on the NASDAQ Stock Market on the
trading day immediately preceding the date of surrender. For the period of one
year from the Closing Date, if Buyer's Common Stock is not listed on any such
national exchange or the NASDAQ Stock Market, the value of such Common Stock for
purposes of paying such claim shall be $11.00 per share; provided, however, that
after the first anniversary of the Closing Date, if the Buyer's Common Stock is
not listed on any such national exchange or the NASDAQ Stock Market, the value
of each share of Common Stock shall be the value on the date of surrender as
determined according to the provisions of the Buyer's current Employee Stock
Option Agreements. To the extent such valuation is less than $11 per share,
however, the Cap as of the time of such valuation will be reduced automatically
by an amount equal to the difference between $11 and such lesser per share
valuation, multiplied by the number of Stock Payment shares of Common Stock then
owned by the Shareholder.
SECTION 11. TERMINATION
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11.1 Termination of Agreement. This Agreement may be
terminated as provided below:
(a) The parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written
notice to the Shareholder at any time prior to the Closing (i) if the
Shareholder or the Company have breached any of their covenants contained in
this Agreement or if there is any inaccuracy in the representations or
warranties made by the Shareholder or the Company in this Agreement, Buyer has
notified the Shareholder of such breach or inaccuracy, and the breach or
inaccuracy has continued without cure for a period of ten (10) days after such
notice or (ii) if the Closing shall not have occurred on or before January 31,
1999 by reason of the failure of any condition precedent under Section 8 hereof
(unless the failure results primarily from Buyer breaching any covenant or
misrepresenting any representation or warranty contained in this Agreement); and
(c) The Shareholder may terminate this Agreement by giving
written notice to Buyer at any time prior to the Closing (i) if Buyer has
breached any of its covenants contained in this Agreement or if there is any
material inaccuracy in the representations or warranties made by Buyer contained
in this Agreement, the Shareholder has notified Buyer of such breach or
inaccuracy, and the breach or inaccuracy has continued without cure for a period
of ten (10) days after such notice or (ii) if the Closing shall not have
occurred on or before January 31, 1999 by reason of the failure of any condition
precedent under Section 9 hereof (unless the failure results primarily from the
Shareholder or the Company or parties under their control breaching any covenant
or misrepresenting any representation or warranty contained in this Agreement).
11.2 Effect of Termination. A termination of this Agreement
shall not in any way limit or restrict the rights and remedies of any party
hereto against any other party or parties who or which have willfully breached
any of the agreements or other provisions of this Agreement prior to termination
hereof.
SECTION 12. MISCELLANEOUS
12.1 Waivers and Amendments. This Agreement may be amended or
modified only by an instrument in writing duly executed by the parties to this
Agreement, which makes specific reference to this Agreement.
12.2 Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given and received
for all purposes when delivered by hand, telecopy, telex or other method of
facsimile, or five (5) days after being sent by registered or certified mail,
return receipt requested, postage prepaid or two (2) days after being sent by
overnight delivery providing receipt of delivery, to the following addresses:
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If to Buyer:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Associates, Inc.
CCAi Renaissance Centre
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
With a copy to Buyer's counsel:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
North Point
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
If to the Shareholder:
▇▇▇ ▇▇ ▇▇▇▇▇
Five Concourse Parkway
Suite 2875
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Suite 3100, Promenade II
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
12.3 Fees and Expenses. Each party shall bear his or its own
costs, fees and expenses (including attorneys' and advisors' fees and expenses)
incurred in connection with the negotiation, preparation, execution and Closing
of this Agreement, the Ancillary Agreements and the transactions contemplated
hereby or thereby; provided, however, that the Company shall pay at or prior to
Closing all legal or accountants' fees incurred by the Company or the
Shareholder in connection with the negotiation, preparation, execution and
Closing of this Agreement, up to a maximum of $200,000.
12.4 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and the successors and
assigns of the parties hereto, but no rights, obligations or liabilities
hereunder shall be assignable by any party without the prior written consent of
the other parties hereto; provided, however, that the Buyer may assign the
rights, obligations and liabilities to an affiliate of the Buyer without such
consent.
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12.5 Choice of Law. This Agreement shall be governed by and
construed and interpreted in accordance with the internal, substantive laws of
the State of Georgia.
12.6 Dispute Resolution. Except with respect to matters as to
which injunctive relief is being sought, any dispute arising out of or relating
to this Agreement or the transactions contemplated hereunder that has not been
settled within thirty (30) days by good faith negotiation between the parties to
this Agreement shall be submitted to the American Arbitration Association (AAA)
for final and binding arbitration pursuant to AAA's Commercial Arbitration
Rules. If the Buyer is the party bringing the claim subject to dispute, the
venue for such arbitration shall be Atlanta, Georgia. If the Shareholder is the
party bringing the claim subject to dispute, the venue for such arbitration
shall be in Cleveland, Ohio. Such proceedings shall be guided by the following
agreed upon procedures, which shall govern to the extent of any inconsistency
with the AAA Commercial Arbitration Rules:
(a) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral advisor which shall consist of
a summary presentation by each side of not more than three (3) hours; such
hearings to take place on one (1) or two (2) days at a maximum;
(d) decision to be rendered not more than ten (10) days
following such hearings; and
(e) punitive damages shall not be permitted under any
circumstances.
12.7 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
12.8 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements, or representations by or among
the parties, written or oral, to the extent they have related in any way to the
subject matter hereof.
12.9 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Unless the context otherwise requires, any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder. Unless the
context otherwise requires, the use of the singular shall include the plural,
the use of the masculine shall include the feminine, and vice versa. The word
"including" shall mean including without limitation.
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12.10 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
12.11 Headings and Recitals. The section Headings and Recitals
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
12.12 Counterparts. This Agreement may be executed
concurrently in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12.13 Knowledge. Wherever any statement in this Agreement or
the Schedules hereto is qualified to the Shareholder's "knowledge" or the "best
of Shareholder's knowledge", or words of similar import, such reference shall be
to the Shareholder's actual knowledge after due inquiry and reasonable
investigation as to the matters subject to such qualification, and shall not
include knowledge imputed to the Shareholder for any reason.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed or caused
this Agreement to be executed as of the day and year first above written.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ASSOCIATES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: Chief Financial Officer
/s/ ▇▇▇ ▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇ ▇▇ ▇▇▇▇▇
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