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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
dated October 22, 1998,
by and among
ABR INFORMATION SERVICES, INC.,
a Florida corporation,
▇▇▇▇▇▇▇▇, LTD.,
a Wisconsin corporation,
THE BARRINGTON GROUP, LTD.,
a Wisconsin corporation,
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
as Shareholders,
and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
as Shareholders' Agent
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PURCHASE AND SALE AGREEMENT
TABLE OF CONTENTS
Page
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1. PURCHASE AND SALE OF SHARES...................................................1
2. PURCHASE PRICE - PAYMENT......................................................1
2.1. Purchase Price.......................................................1
2.2. Payment of Purchase Price............................................2
2.3. Method of Payment....................................................5
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS......................5
3.1. Corporate............................................................5
3.2. Shareholders.........................................................7
3.3. No Violation.........................................................7
3.4. Financial Statements.................................................8
3.5. Tax Matters..........................................................8
3.6. Accounts Receivable.................................................10
3.7. Absence of Certain Changes..........................................10
3.8. Absence of Undisclosed Liabilities..................................11
3.9. No Litigation.......................................................12
3.10. Compliance With Laws and Orders.....................................12
3.11. Title to and Condition of Properties................................14
3.12. Insurance...........................................................15
3.13. Contracts and Commitments...........................................16
3.14. Labor Matters.......................................................17
3.15. Employee Benefit Plans..............................................18
3.16. Employment Compensation.............................................21
3.17. Trade Rights........................................................21
3.18. Major Customers and Suppliers.......................................22
3.19. Service Warranty and Liability......................................23
3.20. Bank Accounts.......................................................23
3.21. Affiliates' Relationships to Company and its Subsidiaries...........23
3.22. Assets Necessary to Business........................................23
3.23. No Brokers or Finders...............................................24
3.24. Year 2000 Compliance................................................24
3.25. Systems Performance.................................................24
3.26. Software Ownership; Non Infringement................................24
3.27. Disclosure..........................................................25
4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................25
4.1. Corporate...........................................................26
4.2. Authority...........................................................26
4.3. No Brokers or Finders...............................................26
4.4. Disclosure..........................................................26
4.5. Investment Intent...................................................26
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5. COVENANTS....................................................................26
5.1. Employment and Noncompetition Agreements............................26
5.2. Noncompetition; Confidentiality.....................................26
5.3. General Releases....................................................28
5.4. Section 338(h)(10) Election.........................................28
6. INDEMNIFICATION..............................................................29
6.1. By Principal Shareholders...........................................29
6.2. By Buyer............................................................30
6.3. Indemnification of Third-Party Claims...............................30
6.4. Payment.............................................................31
6.5. Limitations on Indemnification......................................31
6.6. No Waiver...........................................................32
7. CLOSING......................................................................32
7.1. Documents to be Delivered by Company and Shareholders...............32
7.2. Documents to be Delivered by Buyer..................................33
8. TERMINATION..................................................................34
9. RESOLUTION OF DISPUTES.......................................................34
9.1. Arbitration.........................................................34
9.2. Arbitrators.........................................................34
9.3. Procedures; No Appeal...............................................34
9.4. Authority...........................................................35
9.5. Entry of Judgment...................................................35
9.6. Confidentiality.....................................................35
9.7. Continued Performance...............................................35
9.8. Tolling.............................................................35
10. MISCELLANEOUS................................................................35
10.1. Disclosure Schedule.................................................35
10.2. Further Assurance...................................................35
10.3. Disclosures and Announcements.......................................35
10.4. Assignment; Parties in Interest.....................................36
10.5. Law Governing Agreement.............................................36
10.6. Amendment and Modification..........................................36
10.7. Notice..............................................................36
10.8. Expenses............................................................38
10.9. Shareholders' Agent; Power of Attorney..............................39
10.10. Entire Agreement....................................................40
10.11. Counterparts; Facsimile Signatures..................................40
10.12. Headings............................................................40
10.13. Glossary of Terms...................................................40
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DISCLOSURE SCHEDULE
Schedule 3.1.(c) Foreign Corporation Qualification
Schedule 3.1.(d) Subsidiaries
Schedule 3.1.(e) Directors and Officers of the Company
Schedule 3.1.(f) Shareholder List
Schedule 3.3 Violation, Conflict, Default
Schedule 3.4 Financial Statements
Schedule 3.5.(b) Tax Returns (Exceptions to Representations)
Schedule 3.5.(c) Tax Audits
Schedule 3.5.(f) Tax, Other
Schedule 3.6 Accounts Receivable (Aged Schedule)
Schedule 3.7 Certain Changes
Schedule 3.8 Off-Balance Sheet Liabilities
Schedule 3.9 Litigation Matters
Schedule 3.10.(a) Non-Compliance with Laws
Schedule 3.10.(b) Licenses and Permits
Schedule 3.10.(c) Environmental Matters (Exceptions to Representations)
Schedule 3.11.(a) Liens
Schedule 3.11.(c) Real Property
Schedule 3.12 Insurance
Schedule 3.13.(b) Personal Property Leases
Schedule 3.13.(d) Contracts with Affiliates, Etc.
Schedule 3.13.(f) Collective Bargaining Agreements
Schedule 3.13.(g) Loan Agreements, etc.
Schedule 3.13.(h) Guarantees
Schedule 3.13.(i) Contracts Subject to Renegotiation
Schedule 3.13.(k) Material Contracts
Schedule 3.14 Labor Matters
Schedule 3.15.(a) Employee Plans/Agreements
Schedule 3.15.(i) Future Commitments
Schedule 3.16 Employment Compensation
Schedule 3.17 Trade Rights
Schedule 3.18.(a) Major Customers
Schedule 3.18.(b) Major Suppliers
Schedule 3.18.(c) Sales Representatives
Schedule 3.19 Service Warranty, Warranty Expense and Liability Claims
Schedule 3.20 Bank Accounts
Schedule 3.21.(a) Contracts with Affiliates
Schedule 3.21.(c) Obligations of and to Affiliates
Schedule 3.24 Year 2000 Noncompliance
Schedule 3.25 Software Updates
Schedule 3.26 Software Ownership Exceptions
Schedule 5.4 Purchase Price Allocation
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated October 22, 1998, by
and among ABR Information Services, Inc., a Florida corporation ("Buyer");
▇▇▇▇▇▇▇▇, Ltd., a Wisconsin corporation ("Company"); The Barrington Group,
Ltd., a Wisconsin corporation ("TBG"); ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (individually "Shareholder" and together the "Shareholders");
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as agent for the Shareholders (the "Shareholders'
Agent").
RECITALS
1. Company, including its sole Subsidiary (as hereinafter defined),
TBG, is engaged in the business of providing cafeteria plan and flexible
spending account administration services to third parties (the "▇▇▇▇▇▇▇▇
Business"). Shareholders own all of the issued and outstanding shares (the
"Shares") of capital stock of Company, and Company owns all of the issued and
outstanding shares of capital stock of TBG.
2. The facilities of Company and its sole Subsidiary consist solely
of leased offices at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ and 8th Floors, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇; 118 ▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and storage space rental
at Downtown Mini Warehouse, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(collectively, the "Facilities").
3. Buyer desires to purchase the Shares from Shareholders and
Shareholders desire to sell the Shares to Buyer, upon the terms and conditions
hereinafter set forth.
4. Shareholders wish to designate ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as their agent
and attorney-in-fact, with the authority to act on their behalf in connection
with the sale of the Shares to Buyer.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows.
1. PURCHASE AND SALE OF SHARES
Subject to the terms and conditions of this Agreement, effective as of
the Closing Date (as hereinafter defined) Shareholders shall sell to Buyer and
Buyer shall purchase from Shareholders all of the Shares.
2. PURCHASE PRICE - PAYMENT
2.1. Purchase Price. The aggregate purchase price payable for the
Shares (the "Purchase Price") shall be FIFTEEN MILLION NINE HUNDRED SEVEN
THOUSAND FIVE HUNDRED DOLLARS ($15,907,500). All payments of the Purchase
Price are to be made for pro rata distribution among the Shareholders in
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accordance with their respective shareholdings in the Company as set
forth in Schedule 3.1(f) hereto (except that Two Million Dollars
($2,000,000) otherwise allocable and distributable to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (individually a "Principal Shareholder" and together
the "Principal Shareholders") shall be subject to the holdback provisions
of Sections 2.2(b) and 2.2(c) below).
2.2. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer as follows:
2.2.(a) Cash to Shareholders' Agent. At the Closing, Buyer
shall deliver to the Shareholders' Agent the sum of THIRTEEN MILLION
NINE HUNDRED SEVEN THOUSAND FIVE HUNDRED DOLLARS ($13,907,500).
2.2.(b) Purchase Price Holdback for Claim Check
Reconciliation and BenefitAmerica Receivables.
(i) On the Closing Date, Buyer will transfer the
sum of One Million Dollars ($1,000,000) to a segregated
interest-bearing account with a bank or other financial
institution with a combined capital and surplus in excess of
$50,000,000, which amount shall be held by Buyer in such
account for the purpose of securing (A) payment in full of
$465,336.32 in accounts receivable (the "BenefitAmerica
Receivables") due and owing the Company and/or TBG from
BenefitAmerica, Inc., a subsidiary of Colonial Companies, Inc.
("BenefitAmerica"), as of the Closing Date, and (B)
reconciliation of the individual claims bank accounts such
that the sum of (x) Cash in Bank, (y) accounts receivable for
unreimbursed claims as per TBG's ledger, and (z) amounts under
TBG's bank line of credit that were paid from the individual
claims bank accounts, equals zero ($0). For purposes of this
Section 2.2.(b) only, "Holdback Period" shall mean the period
commencing on the date and ending three (3) months from the
Closing Date, subject to extension as hereinafter provided.
(ii) If, prior to the expiration of the Holdback
Period, Buyer desires to assert a claim for failure to collect
the BenefitAmerica Receivables in full or reconcile the
individual claims bank accounts as set forth in Section
2.2(b)(i) above, then Buyer shall give the Shareholders' Agent
written notice of such claim (for purposes of this Section
2.2.(b), a "Claim Notice"), specifying in reasonable detail
the basis therefor and the amount and calculation thereof. If
the Shareholders' Agent does not deliver to Buyer written
notice of an objection to such claim within twenty (20) days
after receipt of the Claim Notice relating thereto, Buyer
shall be entitled to withdraw the dollar amount of its claim
(as set forth in the Claim Notice) from the segregated
account, and promptly upon such withdrawal Buyer shall assign
to the Shareholders' Agent, for the benefit of the Principal
Shareholders (and without any additional consideration), the
BenefitAmerica Receivable(s) to which such Claim
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Notice relates. If the Shareholders' Agent shall timely
deliver to Buyer such written notice of objection, then Buyer
shall not make a withdrawal from the segregated account with
respect to the claim set forth in the Claim Notice until: (x)
Buyer and Shareholders' Agent have executed joint written
instructions referring to such Claim Notice and directing
Buyer to withdraw, for Buyer's own account, funds from the
segregated account; or (y) Buyer has received a copy of a
judgment, decree or order of a court, or copy of an
arbitration award, adjudicating the dispute with respect to
such claim for indemnification; whereupon Buyer shall withdraw
from the segregated account, for Buyer's own account, such
amount (if any) as provided therein, and promptly upon such
withdrawal Buyer shall assign to the Shareholders' Agent, for
the benefit of the Principal Shareholders (and without any
further consideration), the BenefitAmerica Receivables to
which such Claim Notice relates.
(iii) If Buyer has not delivered a Claim Notice to
Shareholders' Agent prior to the expiration of the Holdback
Period, or if any and all Claim Notices delivered to
Shareholders' Agent during the Holdback Period have been
resolved pursuant to subsection (ii) above, then Buyer shall
deliver to Shareholders' Agent the portion of the funds held
in the segregated account equal to (x) One Million Dollars
($1,000,000), less (y) any amounts withdrawn by Buyer as
provided herein, plus (z) any interest earned with respect to
the funds held in the segregated account. Buyer shall deliver
such amount to the Shareholders' Agent promptly after the
expiration of the Holdback Period, unless one or more Claim
Notice(s) have not been finally resolved pursuant to
subsection (ii) above, in which case Buyer shall deliver to
the Shareholders' Agent any undisputed amount but shall retain
the amount(s) of such claim(s) in the segregated account
until: (a) Buyer and the Shareholders' Agent have executed
joint written instructions referring to such Claim Notice(s)
and directing Buyer as to the disbursement of the funds in the
segregated account; or (b) Buyer has received a copy of a
judgment, decree or order of a court, or copy of an
arbitration award, adjudicating the dispute with respect to
such Claim Notice(s); whereupon Buyer shall disburse the funds
in the segregated account as provided therein.
2.2.(c) Purchase Price Holdback for Closing Balance Sheet
Items.
(i) On the Closing Date, Buyer will transfer the
sum of One Million Dollars ($1,000,000) to a segregated
interest-bearing account with a bank or other financial
institution with a combined capital and surplus in excess of
$50,000,000, which amount shall be held by Buyer in such
account for the purpose of rectifying undisclosed (or
understated) liabilities, overstated assets, or other errors
(collectively "Closing Balance Sheet Errors") in the Closing
Balance Sheet (as hereinafter defined in Section 3.4);
provided, however, that, for purposes of this Section 2.2(c)
only, undisclosed or understated liabilities shall not
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include losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs,
and expenses (including, without limitation, prejudgment
interest in any litigated matter, penalties, court costs and
attorneys' fees and expenses). For purposes of this Section
2.2(c) only, "Holdback Period" shall mean the period
commencing on the date hereof and ending six (6) months from
the Closing Date, subject to extension as hereinafter
provided.
(ii) If, prior to the expiration of the Holdback
Period, Buyer determines to assert a claim for one or more
Closing Balance Sheet Errors, then Buyer shall give the
Shareholders' Agent written notice of such claim (for purposes
of this Section 2.2(c), a "Claim Notice"), specifying in
reasonable detail the basis therefor and the amount and
calculation thereof. If the Shareholders' Agent does not
deliver to Buyer written notice of an objection to the claim
for indemnification within twenty (20) days after receipt of
the Claim Notice relating thereto, Buyer shall be entitled to
withdraw the dollar amount of its claim (as set forth in the
Claim Notice) from the segregated account. If the
Shareholders' Agent shall timely deliver to Buyer such written
notice of objection, then Buyer shall not make a withdrawal
from the segregated account with respect to the claim set
forth in the Claim Notice until: (x) Buyer and Shareholders'
Agent have executed joint written instructions referring to
such Claim Notice and directing Buyer to withdraw, for Buyer's
own account, funds from the segregated account; or (y) Buyer
has received a copy of a judgment, decree or order of a court,
or copy of an arbitration award, adjudicating the dispute with
respect to such claim for indemnification; whereupon Buyer
shall withdraw from the segregated account, for Buyer's own
account, such amount (if any) as provided therein.
(iii) If Buyer has not delivered a Claim Notice to
Shareholders' Agent prior to the expiration of the Holdback
Period, or if any and all Claim Notices delivered to
Shareholders' Agent during the Holdback Period have been
resolved pursuant to subsection (ii) above, then Buyer shall
deliver to Shareholders' Agent the portion of the funds held
in the segregated account equal to (x) One Million Dollars
($1,000,000), less (y) any amounts withdrawn by Buyer as
provided herein, plus (z) any interest earned with respect to
the funds held in the segregated account. Buyer shall deliver
such amount to the Shareholders' Agent promptly after the
expiration of the Holdback Period, unless one or more Claim
Notice(s) have not been finally resolved pursuant to
subsection (ii) above, in which case Buyer shall retain the
amount(s) of such claim(s) in the segregated account until:
(a) Buyer and the Shareholders' Agent have executed joint
written instructions referring to such Claim Notice(s) and
directing Buyer as to the disbursement of the funds in the
segregated account; or (b) Buyer has received a copy of a
judgment, decree or order of a court, or copy of an
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arbitration award, adjudicating the dispute with respect to
such Claim Notice(s); whereupon Buyer shall disburse the funds
in the segregated account as provided therein.
2.3. Method of Payment. All payments under Section 2.2 above shall
be made in the form of certified or bank cashier's check
payable to the order of the recipient or, at the recipient's
option, by wire transfer of immediately available funds to an
account designated by the recipient in writing a reasonable
amount of time prior to the time for payment specified herein.
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SHAREHOLDERS
The Principal Shareholders, jointly and severally, make the following
representations and warranties to Buyer, each of which is true and correct as
of the Closing Date, shall be unaffected by any investigation heretofore or
hereafter made by or on behalf of Buyer, or any knowledge of Buyer other than
as specifically disclosed in the Disclosure Schedule delivered to Buyer at the
time of the execution of this Agreement, and shall survive the Closing of the
transactions provided for herein. Except for the representations and warranties
set forth in Sections 3.1, 3.2, 3.4 and 3.6, all representations and warranties
with respect to facts regarding TBG existing prior to January 1, 1998 are made
solely to the best of the knowledge of the Shareholders.
3.1. Corporate.
3.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Wisconsin.
3.1.(b) Corporate Power. Each of the Company and the
Subsidiaries (as hereinafter defined) has all requisite corporate
power and authority to own, operate and lease its properties and to
carry on its business as and where such is now being conducted.
3.1.(c) Qualification. Company is duly licensed or qualified
to do business as a foreign corporation, and is in good standing, in
each jurisdiction wherein the character of the properties owned or
leased by it, or the nature of its business, makes such licensing or
qualification necessary. The states in which Company is licensed or
qualified to do business as a foreign corporation are listed in
Schedule 3.1.(c).
3.1.(d) Subsidiaries. Schedule 3.1.(d) sets forth the name,
jurisdiction of incorporation, capitalization, ownership and
officers and directors of each corporation in which the Company has
a direct or indirect equity interest ("Subsidiary") and the
jurisdictions in which each Subsidiary is qualified or licensed to
do business as a foreign corporation. Except as listed in Schedule
3.1.(d), the Company does not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have
any direct or indirect equity or other ownership interest in any
entity or business. All of the issued and
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outstanding shares of capital stock of each Subsidiary are owned by
the Company, free and clear of all Liens (as defined in Section
3.11(a)) including, without limitation, voting trusts or agreements,
proxies, or marital or community property interests (except for the
Liens specifically described in Schedule 3.1.(d)), and are validly
issued, fully paid and nonassessable (except as provided in
Wisconsin Statutes Section 180.0622(2)(b) as judicially construed).
Except as set forth in Schedule 3.1.(d), there are no (a) securities
convertible into or exchangeable for the capital stock or other
securities of any Subsidiary, (b) options, warrants or other rights
to purchase or subscribe to capital stock or other securities of any
Subsidiary or securities which are convertible into or exchangeable
for capital stock or other securities or any Subsidiary, or (c)
contracts, commitments, agreements, understandings or arrangements
of any kind relating to the issuance, sale or transfer of any
capital stock or other equity securities of any Subsidiary, any such
convertible or exchangeable securities or any such options, warrants
or other rights. Each Subsidiary (x) is a corporation duly
organized, validly existing and in good standing under the laws of
its state of incorporation, (y) has full corporate power and
authority to carry on its business as it is now being conducted and
to own and lease the properties and assets it now owns and leases,
and (z) is in good standing and is duly qualified or licensed to do
business as a foreign corporation in each of the jurisdictions
listed opposite the name of such Subsidiary in Schedule 3.1.(d),
which are the only jurisdictions in which such Subsidiary is
required to be so qualified or licensed. The copies of the Articles
of Incorporation and Bylaws of each Subsidiary, including any
amendments thereto, which have been heretofore delivered by Seller
to Buyer, are true, correct and complete copies of such instruments
presently in effect. The corporation minute book and stock records
of each Subsidiary which have been furnished to Buyer for inspection
are true, correct and complete and accurately reflect all material
corporation action taken by such Subsidiary.
3.1.(e) Corporate Documents, etc. The copies of the Articles
of Incorporation and Bylaws of the Company, including any amendments
thereto, which have been delivered by Shareholders to Buyer are
true, correct and complete copies of such instruments as presently
in effect. The corporate minute book and stock records of the
Company which have been furnished to Buyer for inspection are true,
correct and complete and accurately reflect all material corporate
action taken by the Company. The directors and officers of the
Company are listed in Schedule 3.1.(e).
3.1.(f) Capitalization of the Company. The authorized capital
stock of the Company consists entirely of 9,000 shares of common
stock, par value $1.00 per share. No shares of such capital stock
are issued or outstanding except for 1,000 shares of common stock of
the Company which are owned of record and beneficially by
Shareholders in the respective numbers set forth in Schedule
3.1.(f). All such shares of capital stock of the Company are validly
issued, fully paid and nonassessable (except as provided in
Wisconsin Statutes Section 180.0622(2)(b) as judicially construed).
There are no (a) securities
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convertible into or exchangeable for any of the Company's capital
stock or other securities, (b) options, warrants or other rights to
purchase or subscribe to capital stock or other securities of the
Company or securities which are convertible into or exchangeable for
capital stock or other securities of the Company, or (c) contracts,
commitments, agreements, understandings or arrangements of any kind
relating to the issuance, sale or transfer of any capital stock or
other equity securities of the Company, any such convertible or
exchangeable securities or any such options, warrants or other
rights.
3.2. Shareholders.
3.2.(a) Power. Each Shareholder has full power, legal right
and authority to enter into, execute and deliver this Agreement and
the other agreements, instruments and documents contemplated hereby
(such other documents sometimes referred to herein as "Ancillary
Instruments"), and to carry out the transactions contemplated
hereby.
3.2.(b) Validity. This Agreement has been duly and validly
executed and delivered by each Shareholder and is, and when executed
and delivered each Ancillary Instrument will be, the legal, valid
and binding obligation of such Shareholder, enforceable in
accordance with its terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
3.2.(c) Title. Each Shareholder has the power to transfer,
and Buyer is receiving, good and marketable title to the Shares to
be sold by such Shareholder hereunder, free and clear of all Liens
including, without limitation, voting trusts or agreements, proxies,
or marital or community property interests.
3.3. No Violation. Except as set forth on Schedule 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor
the consummation by the Company, TBG and the Shareholders of the
transactions contemplated hereby and thereby (a) will violate any
statute, law, ordinance, rule or regulation (collectively, "Laws") or any
order, writ, injunction, judgment, plan or decree (collectively,
"Orders") of any court, arbitrator, department, commission, board,
bureau, agency, authority, instrumentality or other body, whether
federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) will require any authorization, consent, approval,
exemption or other action by or notice to any Government Entity
(including, without limitation, under any "plant-closing" or similar
law), or (c) subject to obtaining the consents referred to in Schedule
3.3, will violate or conflict with, or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien upon any
of the assets of Company or any Subsidiary (or the Shares) under, any
term or provision of the Articles of Incorporation or Bylaws of Company
or any Subsidiary or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which
Company, any Subsidiary or any Shareholder is a party or by which
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Company, any Subsidiary or any Shareholder or any of its or their assets
or properties may be bound or affected.
3.4. Financial Statements. Included as Schedule 3.4 are true and
complete copies of the financial statements of Company (including its
Subsidiaries) consisting of (i) an unaudited balance sheet of Company as
of the Closing Date, and (iii) an audited balance sheet at May 31, 1998
and the related audited statements of income and cash flows for the five
months then ended (including the notes contained therein or annexed
thereto), which financial statements have been reported on, and are
accompanied by, the signed opinions of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., independent
auditors for Company for such periods. The unaudited balance sheet of the
Company as of the Closing Date is hereinafter referred to as the "Closing
Balance Sheet" and the audited balance sheet of the Company as of May 31,
1998 is hereinafter referred to as the "Recent Balance Sheet." All of
such financial statements (including all notes and schedules contained
therein or annexed thereto) are true, complete and accurate, have been
prepared in accordance with generally accepted accounting principles
(except, in the case of unaudited statements, for the absence of footnote
disclosure) applied on a consistent basis, have been prepared in
accordance with the books and records of Company (including its
Subsidiaries), and fairly present, in accordance with generally accepted
accounting principles, the assets, liabilities and financial position,
the results of operations and cash flows of Company (including its
Subsidiaries) as of the dates and for the years and periods indicated.
3.5. Tax Matters.
3.5.(a) Provision For Taxes. The provision made for taxes on
the Closing Balance Sheet is sufficient for the payment of all
current and deferred federal, state, foreign, county, local and
other income, ad valorem, excise, profits, franchise, occupation,
property, payroll, sales, use, gross receipts and other taxes (and
any interest and penalties) and assessments, whether or not
disputed, at the date of the Closing Balance Sheet and for all years
and periods prior thereto. Since the date of the Recent Balance
Sheet, neither the Company nor any Subsidiary has incurred any taxes
other than taxes incurred in the ordinary course of business
consistent in type and amount with past practices of Company.
3.5.(b) Tax Returns Filed. Except as set forth on Schedule
3.5.(b), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of Company or any
Subsidiary have been timely filed and when filed were true and
correct in all material respects, and the taxes shown as due thereon
were paid or adequately accrued. True and complete copies of all tax
returns or reports filed by Company for each of its three most
recent fiscal years have been delivered to Buyer. Company and its
Subsidiaries have duly withheld and paid all taxes which they are
required to withhold and pay relating to salaries and other
compensation heretofore paid to the employees of Company and the
Subsidiaries.
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3.5.(c) Tax Audits. The federal and state income tax returns
of Company have been audited by the Internal Revenue Service and
appropriate state taxing authorities for the periods and to the
extent set forth in Schedule 3.5.(c), and Company has not received
from the Internal Revenue Service or from the tax authorities of any
state, county, local or other jurisdiction any notice of intent to
audit or any notice of underpayment of taxes or other deficiency
which has not been paid nor any objection to any return or report
filed by Company. There are outstanding no agreements or waivers
extending the statutory period of limitations applicable to any tax
return or report.
3.5.(d) No Consolidated Group. Company has never been a
member of an affiliated group of corporations that filed a
consolidated tax return. Neither Company nor any Subsidiary has any
liability for the taxes of any person or entity under Sections
1.1502-6 or 1.1502-78 of Title 26 of the Code of Federal Regulations
(or any similar provisions of state, local or foreign income tax
laws).
3.5.(e) S Corporation. Company properly and timely filed a
valid election under Section 1362 of the Internal Revenue Code of
1986, as amended (the "Code"), to be treated as an S corporation ("S
Corp") as defined under Section 1361 of the Code for federal income
tax purposes effective from October 5, 1995 and has corresponding
elections in effect under the laws of Wisconsin. Company has
properly and timely filed a valid election to treat TBG as a
qualified Subchapter S subsidiary with respect to the Company. Such
elections have remained in effect since October 5, 1995 and January
1, 1998, respectively. Except for transactions contemplated by this
Agreement, none of the Company, the Subsidiaries or any of the
Shareholders has taken any action, nor has any event occurred, that
would result in the revocation or termination of any of such
elections. Company (including the Subsidiaries) is not subject to
the tax imposed by Section 1374 of the Code (or any equivalent state
statute) in excess of an aggregate of $1,000,000 and Company
(including the Subsidiaries) does not have a "net unrealized
built-in gain" as such phrase is defined in Section 1374(d) of the
Code (or any equivalent state statute) in excess of an aggregate of
$2,150,000.
3.5.(f) Other. Except as set forth in Schedule 3.5.(f),
neither Company nor any Subsidiary has (i) filed any consent or
agreement under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) applied for any tax ruling, (iii)
entered into a closing agreement with any taxing authority, (iv)
filed an election under Section 338(g) or Section 338(h)(10) of the
Code (nor has a deemed election under Section 338(e) of the Code
occurred), except as contemplated hereby, (v) made any payments, or
been a party to an agreement (including this Agreement) that under
any circumstances could obligate it to make payments that will not
be deductible because of Section 280G of the Code, or (vi) been a
party to any tax allocation or tax sharing agreement. Neither the
Company nor any Subsidiary is a "United States real property holding
company" within the meaning of Section 897 of the Code.
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3.6. Accounts Receivable. All accounts receivable of Company
(including its Subsidiaries) reflected on the Closing Balance Sheet, and
all accounts receivable incurred in the normal course of business since
the date thereof, represent arm's length sales actually made in the
ordinary course of business; with the exception of the BenefitAmerica
Receivables (which are collectible within three months of the Closing
Date),are collectible (net of the reserve shown on the Closing Balance
Sheet for doubtful accounts) within six months of the Closing Date in the
ordinary course of business without the necessity of commencing legal
proceedings; are subject to no counterclaim or setoff; and are not in
dispute. Schedule 3.6 contains a true and correct aged schedule of
accounts receivable as of October 1, 1998. If and to the extent Buyer
receives funds pursuant to Section 2.2 or Section 6.1 with respect to
uncollected accounts receivable reflected on the aged schedule set forth
in Schedule 3.6, such uncollected accounts receivable shall promptly be
assigned to the Shareholders' Agent, for the benefit of the Principal
Shareholders (and without any additional consideration).
3.7. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.7, since the date of the Recent Balance Sheet there
has not been:
3.7.(a) No Adverse Change. Any material adverse change in the
financial condition, assets, liabilities, business, prospects or
operations of Company and its Subsidiary, taken as a whole;
3.7.(b) No Damage. Any loss, damage or destruction, whether
covered by insurance or not, affecting the Company, any Subsidiary,
their respective properties or the ▇▇▇▇▇▇▇▇ Business;
3.7.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company or any Subsidiary (including, without
limitation, any increase or change pursuant to any bonus, pension,
profit sharing, retirement or other plan or commitment), or any
bonus or other employee benefit granted, made or accrued, except for
changes in the ordinary course of business, consistent with past
practice;
3.7.(d) No Labor Disputes. Any labor dispute or disturbance,
other than routine individual grievances which are not material to
the business, financial condition or results of operations of
Company and its Subsidiary taken as a whole;
3.7.(e) No Commitments. Any commitment or transaction by
Company or any Subsidiary (including, without limitation, any
borrowing or capital expenditure) other than in the ordinary course
of business consistent with past practice;
3.7.(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of the
capital stock of the Company or any Subsidiary; any redemption,
purchase or other acquisition by Company or any Subsidiary of any
capital stock of Company or any Subsidiary,
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or any security relating thereto; or any other payment to any
shareholder of Company or any Subsidiary as such a shareholder;
3.7.(g) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of Company or
any Subsidiary other than in the ordinary course of business;
3.7.(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by Company or any Subsidiary;
3.7.(i) No Liens. Any mortgage, pledge, lien or encumbrance
made on any of the properties or assets of Company or any
Subsidiary;
3.7.(j) No Amendment of Contracts. Any entering into,
amendment or termination by Company or any Subsidiary of any
contract, or any waiver of material rights thereunder, other than in
the ordinary course of business;
3.7.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance with past practice) to any person
including, but not limited to, any Affiliate (for purposes of this
Agreement, the term "Affiliate" shall mean and include: all
Shareholders, present or former warrantholders, directors and
officers of Company and/or any Subsidiary; the spouse of any such
person; any person who would be the heir or descendant of any such
person if he or she were not living; and any entity in which any of
the foregoing has a direct or indirect interest, except through
ownership of less than 5% of the outstanding shares of any entity
whose securities are listed on a national securities exchange or
traded in the national over-the-counter market); or
3.7.(l) Credit. Any grant of credit to any customer or
distributor of Company or any Subsidiary on terms or in amounts more
favorable than those which have been extended to such customer or
distributor in the past, any other change in the terms of any credit
heretofore extended, or any other change of the policies or
practices of the Company and its Subsidiaries with respect to the
granting of credit.
3.8. Absence of Undisclosed Liabilities. Except as and to the extent
specifically disclosed in the Closing Balance Sheet, or in Schedule 3.8,
Company (including its Subsidiaries) does not have any liabilities,
commitments or obligations (secured or unsecured, and whether accrued,
absolute, contingent, direct, indirect or otherwise). Except as and to
the extent described in the Closing Balance Sheet or in Schedule 3.8, no
Shareholder has knowledge of any basis for the assertion against Company
or any of its Subsidiaries of any liability and there are no
circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may give rise to liabilities, except
commercial liabilities and obligations incurred in the ordinary course of
Company's business and consistent with past practice.
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3.9. No Litigation. Except as set forth in Schedule 3.9 there is no
action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation"), pending or, to the best
of the knowledge of the Shareholders, threatened against Company, any
Subsidiary, its or their directors (in such capacity), the ▇▇▇▇▇▇▇▇
Business or any of the assets of the Company or its Subsidiaries, nor does
any Shareholder know, or have grounds to know, of any basis for any
Litigation. Schedule 3.9 also identifies all Litigation to which Company,
any Subsidiary or any of their respective directors (in such capacity)
have been parties since January 1, 1998. Except as set forth in Schedule
3.9, none of the Company, the Subsidiaries or their respective businesses
or assets is subject to any Order of any Government Entity.
3.10. Compliance With Laws and Orders.
3.10.(a) Compliance. Except as set forth in Schedule 3.10.(a),
Company and its Subsidiaries (including each and all of their
respective operations, practices, properties and assets) are in
compliance with all applicable Laws and Orders, including, without
limitation, those applicable to discrimination in employment,
occupational safety and health, trade practices, competition and
pricing, service warranties, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and
the Environmental Laws as hereinafter defined. Except as set forth
in Schedule 3.10.(a), neither Company nor any Subsidiary has
received notice of any violation or alleged violation of, or is
subject to any Liability for past or continuing violation of, any
Laws or Orders. All reports and returns required to be filed by
Company or any Subsidiary with any Government Entity have been
filed, and were accurate and complete in all material respects when
filed. Without limiting the generality of the foregoing:
(i) The operation of the business of the Company
(including its Subsidiaries) as it is now conducted does not,
nor does any condition existing at any of the Facilities, in
any manner constitute a nuisance or other tortuous
interference with the rights of any person or persons in such
a manner as to give rise to or constitute the grounds for a
suit, action, claim or demand by any such person or persons
seeking compensation or damages or seeking to restrain, enjoin
or otherwise prohibit any aspect of the conduct of such
business or the manner in which it is now conducted.
(ii) Company and its Subsidiaries have made all
required payments to their respective unemployment
compensation reserve accounts with the appropriate
governmental departments of the states where they are required
to maintain such accounts, and each of such accounts has a
positive balance.
(iii) Company has delivered to Buyer copies of all
reports of Company and its Subsidiaries for the past five (5)
years required under the federal Occupational Safety and
Health Act of 1970, as amended, and
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under all other applicable health and safety laws and
regulations. The deficiencies, if any, noted on such reports
have been corrected.
3.10.(b) Licenses and Permits. Company and its Subsidiaries
have all licenses, permits, approvals, authorizations and consents
of all Government Entities and all certification organizations
required for the conduct of the ▇▇▇▇▇▇▇▇ Business (as presently
conducted and as proposed to be conducted) and operation of the
Facilities. All such licenses, permits, approvals, authorizations
and consents are described in Schedule 3.10.(b), are in full force
and effect and will not be affected or made subject to loss,
limitation or any obligation to reapply as a result of the
transactions contemplated hereby. Except as set forth in Schedule
3.10.(b), Company and its Subsidiaries (including their respective
operations, properties and assets) are and have been in compliance
with all such permits and licenses, approvals, authorizations and
consents.
3.10.(c) Environmental Matters. The applicable Laws relating
to pollution or protection of the environment, including Laws
relating to emissions, discharges, generation, storage, releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes ("Waste") into the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste including, without
limitation, the Clean Water Act, the Clean Air Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and
the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws". Without
limiting the generality of the foregoing provisions of this Section
3.10, Company and its Subsidiaries are in full compliance with all
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulations, code, plan,
order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder. Except as set forth in
Schedule 3.10.(c), there is no Litigation nor any demand, claim,
hearing or notice of violation pending or, to the knowledge of the
Shareholders, threatened against Company or any of its Subsidiaries
relating in any way to the Environmental Laws or any Order issued,
entered, promulgated or approved thereunder. Except as set forth in
Schedule 3.10.(c), there are no past or present (or, to the best of
the Shareholders' knowledge, future) events, conditions,
circumstances, activities, practices, incidents, actions, omissions
or plans which may reasonably be expected to interfere with or
prevent compliance or continued compliance with the Environmental
Laws or with any Order issued, entered, promulgated or approved
thereunder, or which may reasonably be expected to give rise to any
liability, including, without limitation, liability under CERCLA or
similar state or local Laws, or otherwise form the basis of any
Litigation, hearing, notice of violation, study or investigation,
based on or related to the
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manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Waste.
3.11. Title to and Condition of Properties.
3.11.(a) Marketable Title. Company (including its
Subsidiaries) has good and marketable title to all of the assets,
business and properties of Company and its Subsidiaries, including,
without limitation, all such properties (tangible and intangible)
reflected in the Closing Balance Sheet, free and clear of all
mortgages, liens, (statutory or otherwise) security interests,
claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens") except
those described in Schedule 3.11.(a) and, in the case of real
property, Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings (and which have been
sufficiently accrued or reserved against in the Closing Balance
Sheet), municipal and zoning ordinances and easements for public
utilities, none of which interfere with the use of the property as
currently utilized. None of the assets, business or properties of
Company or any Subsidiary are subject to any restrictions with
respect to the transferability thereof; and the Company's or
Subsidiary's, as the case may be, title thereto will not be affected
in any way by the transactions contemplated hereby.
3.11.(b) Condition. All property and assets owned or utilized
by Company and its Subsidiaries are in good operating condition and
repair, free from any defects (except such minor defects as do not
interfere with the use thereof in the conduct of the normal
operations of Company and its Subsidiaries), have been maintained
consistent with the standards generally followed in the industry and
are sufficient to carry on the business of Company and its
Subsidiaries as conducted during the preceding 12 months. To the
best of the Shareholders' knowledge, all buildings, plants and other
structures owned or otherwise utilized by Company and its
Subsidiaries are in good condition and repair and have no structural
defects or defects affecting the plumbing, electrical, sewerage, or
heating, ventilating or air conditioning systems.
3.11.(c) Real Property. Schedule 3.11.(c) sets forth all real
property owned, used or occupied by Company and its Subsidiaries
(the "Real Property"). Schedule 3.11.(c) also sets forth, with
respect to each parcel of Real Property which is leased, the
material terms of such lease. There are now in full force and effect
duly issued certificates of occupancy permitting the Real Property
and improvements located thereon to be legally used and occupied as
the same are now constituted. All of the Real Property has permanent
rights of access to dedicated public highways. No fact or condition
exists which would prohibit or adversely affect the ordinary rights
of access to and from the Real Property from and to the existing
highways and roads and there is no pending
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or, to the best of the Shareholders' knowledge, threatened
restriction or denial, governmental or otherwise, upon such ingress
and egress.
3.11.(d) No Condemnation or Expropriation. Neither the whole
nor any portion of the property or any other assets of Company or
any Subsidiary is subject to any Order to be sold or is being
condemned, expropriated or otherwise taken by any Government Entity
with or without payment of compensation therefor, nor to the best of
the Shareholders' knowledge has any such condemnation, expropriation
or taking been proposed.
3.12. Insurance. Set forth in Schedule 3.12 is a complete and
accurate list and description of all policies of fire, liability, errors
and omissions, electronic data processing, workers compensation, health
and other forms of insurance presently in effect with respect to the
business and properties of Company and its Subsidiaries, true and correct
copies of which have heretofore been delivered to Buyer. Schedule 3.12
includes, without limitation, the carrier, the description of coverage,
the limits of coverage, retention or deductible amounts, amount of annual
premiums, retroactive date of coverage, date of expiration and the date
through which premiums have been paid with respect to each such policy,
and any pending claims in excess of $5,000. All such policies are valid,
outstanding and enforceable policies and provide insurance coverage for
the properties, assets and operations of Company and its Subsidiaries, of
the kinds, in the amounts and against the risks customarily maintained by
organizations similarly situated; and no such policy (nor any previous
policy) provides for or is subject to any currently enforceable
retroactive rate or premium adjustment, loss sharing arrangement or other
actual or contingent liability arising wholly or partially out of events
arising prior to the date hereof. Schedule 3.12 indicates each policy as
to which (a) the coverage limit has been reached or (b) the total
incurred losses to date equal 75% or more of the coverage limit. No
notice of cancellation or termination has been received with respect to
any such policy, and none of the Company, any Subsidiary or nor any
Shareholder has knowledge of any act or omission of Company or any
Subsidiary which could result in cancellation of any such policy prior to
its scheduled expiration date. Neither Company nor any Subsidiary has
been refused any insurance with respect to any aspect of the operations
of the business nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has
carried insurance during the last three years. Company and its
Subsidiaries have duly and timely made all claims they have been entitled
to make under each policy of insurance. There is no claim by Company or
any Subsidiary pending under any such policies as to which coverage has
been questioned, denied or disputed by the underwriters of such policies,
and none of the Company, any Subsidiary or any of the Shareholders knows
of any basis for denial of any claim under any such policy. Neither
Company nor any Subsidiary has received any written notice from or on
behalf of any insurance carrier issuing any such policy that insurance
rates therefor will hereafter be substantially increased (except to the
extent that insurance rates may be increased for all similarly situated
risks) or that there will hereafter be a cancellation or an increase in a
deductible (or an increase in premiums in order to maintain an existing
deductible) or nonrenewal of any such policy. Such policies are
sufficient in
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all material respects for compliance by Company and its Subsidiaries with
all requirements of law and with the requirements of all material
contracts to which Company or any Subsidiary is a party.
3.13. Contracts and Commitments.
3.13.(a) Real Property Leases. Except as set forth in Schedule
3.11.(c), neither Company nor any Subsidiary has any leases of real
property.
3.13.(b) Personal Property Leases. Except as set forth in
Schedule 3.13.(b), neither Company nor any Subsidiary has any leases
of personal property involving consideration or other expenditure in
excess of $5,000 or involving performance over a period of more than
three months.
3.13.(c) Sales Commitments. Neither Company nor any Subsidiary
has any sales contracts or commitments except those made in the
ordinary course of business, at arm's length.
3.13.(d) Contracts With Affiliates and Certain Others. Except
as set forth in Schedule 3.13.(d), neither Company nor any
Subsidiary has any agreement, understanding, contract or commitment
(written or oral) with any Affiliate or any employee, agent,
consultant, distributor, dealer or franchisee that is not
immediately cancelable by Company without liability, penalty or
premium of any nature or kind whatsoever.
3.13.(e) Powers of Attorney. Neither the Company nor any
Subsidiary has given a power of attorney, which is currently in
effect, to any person, firm or corporation for any purpose
whatsoever.
3.13.(f) Collective Bargaining Agreements. Except as set forth
in Schedule 3.13.(f), neither Company nor any Subsidiary is a party
to any collective bargaining agreements with any unions, guilds,
shop committees or other collective bargaining groups. Copies of all
such agreements have heretofore been delivered to Buyer.
3.13.(g) Loan Agreements. Except as set forth in Schedule
3.13.(g), neither Company nor any Subsidiary is obligated under any
loan agreement, promissory note, letter of credit, or other evidence
of indebtedness as a signatory, guarantor or otherwise.
3.13.(h) Guarantees. Except as disclosed on Schedule 3.13.(h),
neither Company nor any Subsidiary has guaranteed the payment or
performance of any person, firm or corporation, agreed to indemnify
any person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any
person.
3.13.(i) Contracts Subject to Renegotiation. Except as
disclosed on Schedule 3.13.(i), neither Company nor any Subsidiary
is a party to any contract with any governmental body which is
subject to renegotiation.
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3.13.(j) Burdensome or Restrictive Agreements. Neither Company
nor any Subsidiary is a party to, and neither Company nor any
Subsidiary is bound by, any agreement requiring Company or any
Subsidiary to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting Company or any Subsidiary
from competing in any business or geographical area or soliciting
customers or otherwise restricting it from carrying on its business
anywhere in the world.
3.13.(k) Other Material Contracts. Neither Company nor any
Subsidiary has any lease, contract or commitment of any nature
involving consideration or other expenditure in excess of $ 5,000,
or involving performance over a period of more than three months, or
which is otherwise individually material to the operations of
Company or any Subsidiary, except as explicitly described in
Schedule 3.13.(k) on any other schedule to this Agreement.
3.13.(l) No Default. Neither Company nor any Subsidiary is in
default under any lease, contract or commitment, and no event or
omission has occurred which through the passage of time or the
giving of notice, or both, would constitute a default thereunder or
cause the acceleration of any of Company's or a Subsidiary's
obligations or result in the creation of any Lien on any of the
assets owned, used or occupied by Company or any Subsidiary. No
third party is in default under any lease, contract or commitment to
which Company or any Subsidiary is a party, nor has any event or
omission occurred which, through the passage of time or the giving
of notice, or both, would constitute a default thereunder or give
rise to an automatic termination, or the right of discretionary
termination, thereof.
3.14. Labor Matters. Except as set forth in Schedule 3.14, since
January 1, 1998 neither Company nor any Subsidiary has experienced any
labor disputes, union organization attempts or any work stoppage due to
labor disagreements in connection with its business. Except to the extent
set forth in Schedule 3.14, (a) Company and the Subsidiaries are in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is
not engaged in any unfair labor practice; (b) there is no unfair labor
practice charge or complaint against Company or any Subsidiary pending
or, to the best of the knowledge of the Shareholders, threatened; (c)
there is no labor strike, dispute, request for representation, slowdown
or stoppage actually pending or, to the best of the knowledge of the
Shareholders, threatened against or affecting Company or any Subsidiary
nor any secondary boycott with respect to products or services of Company
or any Subsidiaries; (d) no question concerning representation has been
raised or, to the best of the knowledge of the Shareholders, is
threatened respecting the employees of Company or any Subsidiary; (e) no
grievance which might reasonably be expected to have a material adverse
effect on Company or any Subsidiary, nor any arbitration proceeding
arising out of or under collective bargaining agreements, is pending and
no such claim therefor exists; and (f) there are no administrative
charges or court complaints against Company or any Subsidiary concerning
alleged employment
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discrimination or other employment related matters pending or threatened
before the U.S. Equal Employment Opportunity Commission or any Government
Entity.
3.15. Employee Benefit Plans.
3.15.(a) Disclosure. Schedule 3.15.(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or
other bonus, medical, dental, life, accident insurance, benefit,
employee welfare, disability, group insurance, stock purchase, stock
option, stock appreciation, stock bonus, executive or deferred
compensation, hospitalization and other similar fringe or employee
benefit plans, programs and arrangements, and any employment or
consulting contracts, "golden parachutes," collective bargaining
agreements, severance agreements or plans, vacation and sick leave
plans, programs, arrangements and policies, including, without
limitation, all "employee benefit plans" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to
employment, which are provided to, for the benefit of, or relate to,
any persons ("Company Employees") employed by Company (including its
Subsidiaries). The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to Buyer. Each of the Employee Plans/Agreements is
identified on Schedule 3.15.(a), to the extent applicable, as one or
more of the following: an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA), a "defined benefit plan" (as
defined in Section 414 of the Code), an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA), and/or as a plan
intended to be qualified under Section 401 of the Code. No Employee
Plan/Agreement is a "multiemployer plan" (as defined in Section 4001
of ERISA), and neither Company nor any Subsidiary has any further
obligation to contribute to, or any Liability with respect to, any
multiemployer plan.
3.15.(b) Terminations, Proceedings, Penalties, etc. With
respect to each employee benefit plan (including, without
limitation, the Employee Plans/Agreements) that is subject to the
provisions of Title IV of ERISA and with respect to which the
Company, any Subsidiaries, or any of their respective assets may,
directly or indirectly, be subject to any Liability, contingent or
otherwise, or the imposition of any Lien (whether by reason of the
complete or partial termination of any such plan, the funded status
of any such plan, any "complete withdrawal" (as defined in Section
4203 of ERISA) or "partial withdrawal" (as defined in Section 4205
of ERISA) by any person from any such plan, or otherwise):
(i) no such plan has been terminated so as to
subject, directly or indirectly, any assets of Company or any
Subsidiary to any liability, contingent or otherwise, or the
imposition of any lien under Title IV of ERISA;
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(ii) no proceeding has been initiated or threatened
by any person (including the Pension Benefit Guaranty
Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of Company or any Subsidiary to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA, whether to the PBGC or to any
other person or otherwise on account of the termination of any
such plan;
(iv) if any such plan were to be terminated as of
the Closing Date, no assets of Company or any Subsidiary would
be subject, directly or indirectly, to any liability,
contingent or otherwise, or the imposition of any lien under
Title IV of ERISA;
(v) no "reportable event" (as defined in Section
4043 of ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code, respectively), whether or not waived;
and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
3.15.(c) Prohibited Transactions, etc. There have been no
"prohibited transactions" within the meaning of Section 406 or 407
of ERISA or Section 4975 of the Code for which a statutory or
administrative exemption does not exist with respect to any Employee
Plan/Agreement, and no event or omission has occurred in connection
with which the Company, any Subsidiaries, or any of their respective
assets or any Employee Plan/Agreement, directly or indirectly, could
be subject to any liability under ERISA, the Code or any other Law
or Order applicable to any Employee Plan/Agreement, or under any
agreement, instrument, Law or Order pursuant to or under which
Company and/or any Subsidiaries have agreed to indemnify or are
required to indemnify any person against liability incurred under
any such Law or Order.
3.15.(d) Leased Employees; Title IV Liability. There are not
and never have been any leased employees within the meaning of
Section 414(n) of the Code who perform services for Company or any
Subsidiary, and no individuals are expected to become leased
employees with the passage of time. Neither Company nor any
Subsidiary has any liability, actual or contingent, under Title IV
of ERISA.
3.15.(e) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company or any
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Subsidiary to date have been made and all amounts properly accrued
to date as liabilities of Company or any Subsidiary which have not
been paid have been properly recorded on the books of Company and
are reflected in the Closing Balance Sheet; (ii) Company and the
Subsidiaries have complied with, and each such Employee
Plan/Agreement conforms in form and operation to, all applicable
laws and regulations, including but not limited to ERISA and the
Code, in all respects and all reports and information relating to
such Employee Plan/Agreement required to be filed with any
governmental entity have been timely filed; (iii) all reports and
information relating to each such Employee Plan/Agreement required
to be disclosed or provided to participants or their beneficiaries
have been timely disclosed or provided; (iv) each such Employee
Plan/Agreement which is intended to qualify under Section 401 of the
Code has received a favorable determination letter from the Internal
Revenue Service with respect to such qualification or is within the
initial remedial amendment period provided for in Section 401(b) of
the Code, its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code, and nothing has occurred
that has or is likely to adversely affect such qualification or
exemption; (v) there are no actions, suits or claims pending (other
than routine claims for benefits) or threatened with respect to such
Employee Plan/Agreement or against the assets of such Employee
Plan/Agreement; and (vi) no Employee Plan/Agreement is a plan which
is established and maintained outside the United States primarily
for the benefit of individuals substantially all of whom are
nonresident aliens.
3.15.(f) Post-Retirement Benefits. No Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company or Subsidiary employees beyond their retirement or other
termination of service other than (i) coverage mandated by
applicable law, (ii) death or retirement benefits under any Employee
Plan/Agreement that is an employee pension benefit plan, (iii)
deferred compensation benefits accrued as liabilities on the books
of Company (including the Closing Balance Sheet), (iv) disability
benefits under any Employee Plan/ Agreement that is an employee
welfare benefit plan and which have been fully provided for by
insurance or otherwise or (v) benefits in the nature of severance
pay.
3.15.(g) No Triggering of Obligations. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of Company or any Subsidiary to severance
pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due to
any such employee or former employee or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available.
3.15.(h) Delivery of Documents. There has been delivered to
Buyer, with respect to each Employee Plan/Agreement:
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(i) a copy of the summary plan description,
together with each summary of material modifications, required
under ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is
embodied entirely in an insurance policy to which Company or
any Subsidiary is a party, a true and complete copy of such
Employee Plan/Agreement; and
(ii) if the Employee Plan/Agreement is funded
through a trust or any third party funding vehicle (other than
an insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof.
3.15.(i) Future Commitments. Except as described in Schedule
3.15.(i), neither Company nor any Subsidiary has any announced plan
or legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.16. Employment Compensation. Schedule 3.16 contains a true and
correct list of all employees to whom Company and/or any Subsidiaries are
paying compensation, including bonuses and incentives, at an annual rate
in excess of Ten Thousand Dollars ($10,000) for services rendered or
otherwise; and in the case of salaried employees such list identifies the
current annual rate of compensation for each employee and date and amount
of most recent salary increase, and in the case of hourly or commission
employees identifies certain reasonable ranges of rates and the number of
employees falling within each such range.
3.17. Trade Rights. Schedule 3.17 lists all Trade Rights (as defined
below) in which Company and/or any Subsidiaries now have any interest,
specifying whether such Trade Rights are owned, controlled, used or held
(under license or otherwise) by Company and/or any Subsidiaries, and also
indicating which of such Trade Rights are registered. All Trade Rights
shown as registered in Schedule 3.17 have been properly registered, all
pending registrations and applications have been properly made and filed
and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current. In order to conduct the
business of Company and the Subsidiaries, as such is currently being
conducted or proposed to be conducted, Company and its Subsidiaries do
not require any Trade Rights that they do not already have. Neither
Company nor any Subsidiary is infringing, or has infringed, any Trade
Rights of another in the operation of the business of Company and its
Subsidiaries. To the best of the knowledge of the Shareholders, no person
or entity of any kind is infringing the Trade Rights of Company or any
Subsidiary. Neither Company nor any Subsidiary has granted any license or
made any assignment of any Trade Right listed on Schedule 3.17. Except as
set forth in Schedule 3.17, neither Company nor any Subsidiary pays any
royalties or other consideration for the right to use any Trade Rights of
others. There is no Litigation pending or, to the best of the knowledge
of the Shareholders, threatened to challenge Company's or any
Subsidiary's right, title and interest with respect to its continued use
and right to preclude others from using any Trade Rights of Company and
the Subsidiaries. All Trade Rights of Company and its
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Subsidiaries are valid, enforceable and in good standing, and there are
no equitable defenses to enforcement based on any act or omission of
Company or any of the Subsidiaries. The consummation of the transactions
contemplated hereby will not alter or impair any Trade Rights owned or
used by Company or any of the Subsidiaries. As used herein, the term
"Trade Rights" shall mean and include: (i) all trademark rights, business
identifiers, trade dress, service marks, trade names and brand names, all
registrations thereof and applications therefor and all goodwill
associated with the foregoing; (ii) all copyrights, copyright
registrations and copyright applications, and all other rights associated
with the foregoing and the underlying works of authorship; (iii) all
patents and patent applications, and all international proprietary rights
associated therewith; (iv) all contracts or agreements granting any
right, title, license or privilege under the intellectual property rights
of any third party; (v) all inventions, mask works and mask work
registrations, know-how, discoveries, improvements, designs, trade
secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other types
of intellectual property; and (vi) all claims for infringement or breach
of any of the foregoing.
3.18. Major Customers and Suppliers.
3.18.(a) Major Customers. Schedule 3.18.(a) contains a list of
the twenty (20) largest customers of Company (including the
Subsidiaries) for each of the two (2) most recent fiscal years
(determined on the basis of the total dollar amount of net sales)
showing the total dollar amount of net sales to each such customer
during each such year. Except as set forth in Schedule 3.18.(a), no
Shareholder has any knowledge or information of any facts
indicating, nor any other reason to believe, that any of the
customers listed on Schedule 3.18.(a) will not continue to be
customers of the business of Company (including its Subsidiaries)
after the Closing at substantially the same level of purchases as
heretofore.
3.18.(b) Major Suppliers. Schedule 3.18.(b) contains a list of
the five (5) largest suppliers to Company (including its
Subsidiaries) for each of the two (2) most recent fiscal years
(determined on the basis of the total dollar amount of purchases)
showing the total dollar amount of purchases from each such supplier
during each such year. No Shareholder has any knowledge or
information of any facts indicating, nor any other reason to
believe, that any of the suppliers listed on Schedule 3.18.(b) will
not continue to be suppliers to the business of Company (including
its Subsidiaries) after the Closing and will not continue to supply
the business with substantially the same quantity and quality of
goods at competitive prices.
3.18.(c) Sales Representatives. Schedule 3.18.(c) contains a
list of all sales representatives of Company and the Subsidiaries,
together with true, correct and complete copies of all sales
representative contracts and policy statements (including without
limitation, commission and other compensation arrangements), and a
description of all substantial modifications or exceptions.
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3.19. Service Warranty and Liability. Schedule 3.19 contains true,
correct and complete copies of all warranties, commitments and
obligations of Company and its Subsidiaries for sales of Services (as
defined below) and, except as stated therein, there are no warranties,
commitments or obligations with respect to the provision of such
Services. Schedule 3.19 sets forth the estimated aggregate annual cost to
Company and its Subsidiaries of meeting warranty or liability obligations
or commitments for customers for each of the five (5) preceding fiscal
years. Schedule 3.19 contains a description of all liability claims and
similar Litigation relating to services rendered, which are presently
pending or which to the best of Shareholders' knowledge are threatened,
or which have been asserted or commenced against Company or any
Subsidiary within the last five (5) years, in which a party thereto
either requests injunctive relief or alleges damages (whether or not
covered by insurance). The provision of such services by the Company
and/or the Subsidiaries meet and comply with all governmental laws and
regulations currently in effect. As used in this Section 3.19, the term
"Services" means any and all services currently or at any time previously
rendered, provided or sold by Company and/or any of the Subsidiaries, or
by any predecessor of Company and/or any of the Subsidiaries, under any
brand name or ▇▇▇▇ under which services are or have been rendered,
provided or sold by Company and/or any of the Subsidiaries.
3.20. Bank Accounts. Schedule 3.20 sets forth the names and
locations of all banks, trust companies, savings and loan associations
and other financial institutions at which the Company and/or any
Subsidiary maintain a safe deposit box, lock box or checking, savings,
custodial or other account of any nature, the type and number of each
such account and the signatories therefor, a description of any
compensating balance arrangements, and the names of all persons
authorized to draw thereon, make withdrawals therefrom or have access
thereto.
3.21. Affiliates' Relationships to Company and its Subsidiaries.
3.21.(a) Contracts With Affiliates. All leases, contracts,
agreements or other arrangements between Company (including its
Subsidiaries) and any Affiliate are described on Schedule 3.21.(a).
3.21.(b) No Adverse Interests. No Affiliate has any direct or
indirect interest in (i) any entity which does business with Company
or any Subsidiary or is competitive with business of the Company
and/or the Subsidiaries, or (ii) any property, asset or right which
is used by Company or any Subsidiary in the conduct of such
business.
3.21.(c) Obligations. All obligations of any Affiliate to
Company, and all obligations of Company or any Subsidiary to any
Affiliate, are listed on Schedule 3.21.(c).
3.22. Assets Necessary to Business. Company (including its
Subsidiaries) presently has and at the Closing will have good, valid and
marketable title to all property and assets, tangible and intangible, and
all leases, licenses and other
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agreements, necessary to permit Buyer to carry on the business of Company
and its Subsidiaries as presently conducted.
3.23. No Brokers or Finders. None of Company, the Subsidiaries or
any of their respective directors, officers, employees, shareholders or
agents, including the Shareholders, have retained, employed or used any
broker or finder in connection with the transaction provided for herein
or in connection with the negotiation thereof.
3.24. Year 2000 Compliance. Except as set forth in Schedule 3.24, to
the best of the knowledge of the Principal Shareholders, the computer
source codes, programs and other software of the Company and/or the
Subsidiaries (including machine readable code, printed listings of code,
databases, documentation and related property and information of Company
and/or the Subsidiaries used or under development for use in the ▇▇▇▇▇▇▇▇
Business) (collectively, "Software") accurately determines chronological
dates and accurately performs all calculations, data manipulations,
sorting and transmission of date data regardless of whether the date
represents or references different centuries.
3.25. Systems Performance. The Software and related systems owned or
used by Company or its Subsidiaries perform adequately to deliver the
functionality needed to meet the information systems requirements of the
▇▇▇▇▇▇▇▇ Business as they are presently conducted. No Shareholder has
caused or will cause any unplanned interruption of the operations of, or
accessibility to, the Software or related systems (or any system
component) through any device, method or means including, without
limitation, the use of any "virus," "lockup," "time bomb" or "key lock"
device or program, or disabling code, which has the potential or
capability of causing any unplanned interruption of the operations of, or
accessibility of, the Software or related systems (or any system
component) to Buyer, or any user authorized by Buyer, or which could
alter, destroy or inhibit the use of the Software or related systems (or
any system component), or the data contained therein (collectively,
"Disabling Devices"), which could block access to or prevent the use of
the Software or any system (or system component) by Buyer or any
authorized user. No Shareholder has placed, nor is any Shareholder aware
of, any Disabling Device on any Software or system component owned or
used by Company or its Subsidiaries. Except as set forth in Schedule
3.25, there is no new version, update or release of any Software
currently being developed.
3.26. Software Ownership; Non Infringement. Except as set forth in
Schedule 3.26 hereto:
(1) Company (including its Subsidiaries) owns all right, title
and interest in and to the Software;
(2) Company (including its Subsidiaries) has developed the
Software entirely through its own efforts for its own account, and
the Software is free and clear of all Liens of any nature
whatsoever;
(3) The Software does not infringe any patent, copyright or
trade secret of any third party;
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(4) The Software is fully eligible for protection under the
applicable copyright law and has not been forfeited to the public
domain;
(5) The source code and system specification of the Software
have been maintained in confidence;
(6) All personnel, including employees, agents, consultants
and contractors, who have participated in the concept and the
development of the Software either (a) have been party to a for-hire
relationship with Company or a Subsidiary thereof that has accorded
the Company (including its Subsidiaries) full, effective and
exclusive ownership of all tangible and intangible property thereby
arising with respect to the Software, or (b) have executed
appropriate instruments and assigns in favor of the Company and its
Subsidiaries as assignees and have conveyed to the Company and its
Subsidiaries full, effective and exclusive ownership of all tangible
and intangible property thereby arising with respect to the
Software;
(7) Company (including its Subsidiaries) has duly obtained the
right and license to use, copy, modify and distribute the software
components contained in the Software, the Software contains no other
software components in which any third party may claim superior or
joint ownership, and no Software is a derivative work of any
software programs not owned by their entirety by Company or its
Subsidiaries;
(8) Company and its Subsidiaries have not granted any rights
in the Software to any third party; and
(9) The Software contains certain software components duly
licensed to Company or its Subsidiaries for inclusion in the
Software, and the Software contains no other software components in
which any third party may claim superior or joint ownership, nor is
any Software a derivative work of any other software programs not
owned in their entirety by Company or a Subsidiary thereof.
3.27. Disclosure. No representation or warranty by Company
and/or the Shareholders in this Agreement, nor any statement,
certificate, schedule, document or exhibit hereto furnished or to be
furnished by or on behalf of Company or Shareholders pursuant to
this Agreement or in connection with transactions contemplated
hereby, contains or shall contain any untrue statement of material
fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading. All statements and
information contained in any certificate, instrument, Disclosure
Schedule or document delivered by or on behalf of Company and/or
Shareholders shall be deemed representations and warranties by the
Company and the Shareholders.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to the
Shareholders, each of which is true and correct as of the Closing Date,
shall be unaffected by any investigation hereafter made by Shareholders
or any notice to Shareholders, and shall survive the Closing of the
transactions provided for herein.
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4.1. Corporate.
4.1.(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
4.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out
the transactions contemplated hereby and thereby.
4.2. Authority. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Buyer. No other corporate act or proceeding on the part of Buyer or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by Buyer
pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
4.3. No Brokers or Finders. Except for Broadview Associates LLC,
neither Buyer nor any of its directors, officers, employees or agents has
retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation
thereof.
4.4. Disclosure. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Buyer pursuant to
this Agreement or in connection with transactions contemplated hereby,
contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained
therein not misleading.
4.5. Investment Intent. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
5. COVENANTS
5.1. Employment and Noncompetition Agreements. Contemporaneously
with the execution of this Agreement, Shareholders shall cause each of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ to execute and deliver to Company
an Employment and Noncompetition Agreement, substantially in the form of
Exhibit A hereto.
5.2. Noncompetition; Confidentiality. As an inducement to Buyer to
execute this Agreement and complete the transactions contemplated hereby,
and in order to preserve the goodwill associated with the business of
Company being acquired pursuant to this Agreement, and in addition to and
not in limitation of any covenants contained in
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any agreement executed and delivered pursuant to Section 5.1 hereof, each
Shareholder hereby covenants and agrees as follows:
5.2.(a) Covenant Not to Compete. For a period of three (3)
years from the Closing Date, neither of the Principal Shareholders
(i.e., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇) will directly or
indirectly:
(i) engage in, continue in or carry on any business
which competes with Company, any Subsidiary and/or the
▇▇▇▇▇▇▇▇ Business or is substantially similar thereto,
including owning or controlling any financial interest in any
corporation, partnership, firm or other form of business
organization which is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Company (including its
Subsidiaries) or Buyer (or any of its subsidiaries) in any
aspect with respect to the ▇▇▇▇▇▇▇▇ Business, including, but
not limited to, advertising or otherwise endorsing the
products of any such competitor; soliciting customers or
otherwise serving as an intermediary for any such competitor;
loaning money or rendering any other form of financial
assistance to or engaging in any form of business transaction
on other than an arm's length basis with any such competitor;
(iii) offer employment to an employee of Company,
any Subsidiary or the ▇▇▇▇▇▇▇▇ Business, without the prior
written consent of Buyer; or
(iv) engage in any practice the purpose of which is
to evade the provisions of this covenant not to compete or to
commit any act which adversely affects the Company, any
Subsidiary and/or the ▇▇▇▇▇▇▇▇ Business;
provided, however, that the foregoing shall not prohibit the
ownership of securities of corporations which are listed on a
national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of
the outstanding shares of any such corporation. The parties agree
that the geographic scope of this covenant not to compete shall
extent to and cover the entire United States of America, which
constitutes the geographic scope of the ▇▇▇▇▇▇▇▇ Business as of the
date of this Agreement. The parties agree that a Buyer may sell,
assign or otherwise transfer this covenant not to compete, in whole
or in part, to any subsidiary of Buyer or to any person,
corporation, firm or entity that purchases all or part of the
business of the Company or any Subsidiary. In the event a court of
competent jurisdiction determines that the provisions of this
covenant not to compete are excessively broad as to duration,
geographical scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over
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broad provisions shall be deemed, without further action on the part
of any person, to be modified, amended and/or limited but only to
the extent necessary to render the same valid and enforceable in
such jurisdiction.
5.2.(b) Covenant of Confidentiality. No Shareholder shall at
any time subsequent to the Closing, except as explicitly requested
by Buyer, (i) use for any purpose, (ii) disclose to any person, or
(iii) keep or make copies of documents, tapes, discs or programs
containing, any confidential information concerning Company or any
Subsidiary. For purposes hereof, "confidential information" shall
mean and include, without limitation, all Trade Rights in which
Company or any Subsidiary has an interest, all customer lists and
customer information, and all other information concerning the
processes, apparatus, equipment, packaging, products, marketing and
distribution methods of Company or any Subsidiary, not previously
disclosed to the public directly by Company.
5.2.(c) Equitable Relief for Violations. Each Shareholder
agrees that the provisions and restrictions contained in this
Section 5.2 are necessary to protect the legitimate continuing
interests of Buyer in acquiring the Shares, and that any violation
or breach of these provisions will result in irreparable injury to
Buyer for which a remedy at law would be inadequate and that, in
addition to any relief at law which may be available to Buyer for
such violation or breach and regardless of any other provision
contained in this Agreement, Buyer shall be entitled to injunctive
and other equitable relief as a court may grant after considering
the intent of this Section 5.2.
5.3. General Releases. Contemporaneously with the execution of this
Agreement, each Shareholder shall deliver, and shall cause each of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ to deliver, a general release to Buyer, in substantially the form
attached hereto as Exhibit B.
5.4. Section 338(h)(10) Election. Company and Shareholders will join
with the Buyer in making an election under Section 338(h)(10) of the Code
(and any corresponding elections under state tax law) (collectively, a
"Section 338(h)(10) Election") with respect to the purchase and sale of
the stock of the Company hereunder. The Shareholders of the Company will
pay any tax attributable to the making of the Section 338(h)(10) Election
and will indemnify the Buyer, the Company and their subsidiaries against
any tax (including interest and penalties) arising out of any failure to
pay such tax. The Shareholders will also pay any state, local, or foreign
tax (and indemnify the Buyer, the Company and their subsidiaries against
any tax (including interest and penalties) arising out of any failure to
pay such tax) attributable to an election under state, local, or foreign
law similar to the election available under Section 338(g) of the Code
(or which results from the making of an election under Section 338(g) of
the Code) with respect to the purchase and sale of the stock of the
Company hereunder. Buyer shall be responsible for the preparation and
filing of such election. The allocation of purchase price among the
assets of the Company shall be made in accordance with Schedule 5.4
hereto. Shareholders and Buyer shall accept such purchase price
allocations and Buyer and each Shareholder shall report, act, file in all
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respects and for purposes consistent with such allocations. Shareholders
and the Company (if required) shall execute and deliver to Buyer at
Closing three copies of such documents or forms (including Section 338
Forms, as defined below) as Buyer shall request or as are required by
applicable law for an effective Section 338(h)(10) Election, including,
without limitation, any "Statement of Section 338(h)(10)" and IRS Form
8023 (together with any schedules or attachments thereto, the "Section
338 Forms") that are required pursuant to the Treasury Regulations.
6. INDEMNIFICATION
6.1. By Principal Shareholders. Subject to the terms and conditions
of this Article 6, each Principal Shareholder, jointly and severally,
hereby agrees to indemnify, defend and hold harmless Buyer, its
directors, officers, employees and controlled and controlling persons
(hereinafter "Buyer's Affiliates"), the Company and its Subsidiaries from
and against all Claims asserted against, resulting to, imposed upon, or
incurred by Buyer, Buyer's Affiliates, the Company or any of its
Subsidiaries, directly or indirectly, by reason of, arising out of or
resulting from (a) the inaccuracy or breach of any representation or
warranty of any Shareholder or Company contained in or made pursuant to
this Agreement, (b) the breach of any covenant of any Shareholder, the
Company or TBG contained in this Agreement, or (c) the litigation matters
referred to in Schedule 3.9. Notwithstanding the foregoing, Buyer agrees
not to seek indemnification from the Principal Shareholders under this
Section 6.1 for breach of any representation or warranty contained in or
made pursuant to this Agreement if and to the extent the Company would be
entitled, based upon the facts constituting such alleged breach, to
indemnification from EMPHESYS Financial Group, Inc., a Delaware
corporation ("EFG"), under that certain Stock Purchase Agreement, dated
December 19, 1997, as amended January 1, 1998, between the Company and
EFG (the "Prior Agreement"); provided, however, that (1) Buyer may
immediately seek indemnification from the Principal Shareholders under
this Section 6.1 to the extent the amount of the Claim exceeds the
balance of the indemnification limits specified under the Prior Agreement
and/or the relevant survival period under the Prior Agreement has
terminated, and (2) if Buyer notifies the Shareholders' Agent, prior to
the second anniversary of the Closing Date, that Company is seeking
indemnification from EFG under the Prior Agreement, any Claim
subsequently made by Buyer for indemnification under this Section 6.1
within six (6) months after resolution of the indemnification claim
against EFG based upon substantially the same facts shall be valid and
preserved despite the termination of the two-year survival period
specified in Section 6.5(a) below. Buyer agrees that it will cause the
Company promptly and diligently to pursue indemnification from EFG under
the Prior Agreement for a material breach of any representation or
warranty contained therein once management of Buyer becomes aware of
facts constituting such an alleged material breach. As used in this
Article 6, the term "Claim" shall include (i) all debts, liabilities and
obligations; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs and attorneys'
fees and expenses); and (iii) all demands, claims,
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suits, actions, costs of investigation, causes of action, proceedings and
assessments, whether or not ultimately determined to be valid.
6.2. By Buyer. Subject to the terms and conditions of this Article
6, Buyer hereby agrees to indemnify, defend and hold harmless each
Shareholder from and against all Claims asserted against, resulting to,
imposed upon or incurred by any such person, directly or indirectly, by
reason of or resulting from (a) the inaccuracy or breach of any
representation or warranty of Buyer contained in or made pursuant to this
Agreement, or (b) the breach of any covenant of Buyer contained in this
Agreement.
6.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to Claims relating to third parties shall be subject to the
following terms and conditions:
6.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim, and the
Indemnifying Party will undertake the defense thereof by
representatives chosen by it. In all matters concerning the
Principal Shareholders by virtue of joint and several liability, the
Shareholders' Agent shall give and receive notice and otherwise act
in all respects on their behalf. Failure to give such notice shall
not affect the Indemnifying Party's duty or obligations under this
Article 6, except to the extent the Indemnifying Party is prejudiced
thereby. So long as the Indemnifying Party is defending any such
Claim actively and in good faith, the Indemnified Party shall not
settle such Claim. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by them and in the possession or under the
control of the Indemnified Party, for the use of the Indemnifying
Party and its representatives in defending any such Claim, and shall
in other respects give reasonable cooperation in such defense.
6.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend
such Claim actively and in good faith, the Indemnified Party will
(upon further notice) have the right to undertake the defense,
compromise or settlement of such Claim or consent to the entry of a
judgment with respect to such Claim, on behalf of and for the
account and risk of the Indemnifying Party, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to judgment
therein.
6.3.(c) Indemnified Party's Rights. Anything in this Section
6.3 to the contrary notwithstanding, (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to
defend, compromise or settle such Claim, and (ii) the Indemnifying
Party shall not, without the written consent of the Indemnified
Party, settle or compromise any Claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the
giving by the
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claimant or the plaintiff to the Indemnified Party of a release from
all Liability in respect of such Claim.
6.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 6, which payment may
be accomplished in whole or in part, at the option of the Indemnified
Party, by the Indemnified Party setting off any amount owed to the
Indemnifying Party by the Indemnified Party. To the extent set-off is
made by an Indemnified Party in satisfaction or partial satisfaction of
an indemnity obligation under this Article 6 that is disputed by the
Indemnifying Party, upon a subsequent determination by final judgment not
subject to appeal that all or a portion of such indemnity obligation was
not owed to the Indemnified Party, the Indemnified Party shall pay the
Indemnifying Party the amount which was set-off and not owed together
with interest from the date of set-off until the date of such payment at
an annual rate equal to the average annual rate in effect as of the date
of the set-off, on those three maturities of United States Treasury
obligations having a remaining life, as of such date, closest to the
period from the date of the set-off to the date of such judgment. Upon
judgment, determination, settlement or compromise of any third party
Claim, the Indemnifying Party shall pay promptly on behalf of the
Indemnified Party, and/or to the Indemnified Party in reimbursement of
any amount theretofore required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all
other Claims of the Indemnified Party with respect thereto, unless in the
case of a judgment an appeal is made from the judgment. If the
Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond to
stay execution of the judgment pending appeal. Upon the payment in full
by the Indemnifying Party of such amounts, the Indemnifying Party shall
succeed to the rights of such Indemnified Party, to the extent not waived
in settlement, against the third party who made such third party Claim.
6.5. Limitations on Indemnification. Except for any willful or
knowing breach or misrepresentation, as to which claims may be brought
without limitation as to time or amount:
6.5.(a) Time Limitation. No claim or action shall be brought
under this Article 6 for breach of a representation or warranty
after the lapse of two (2) years following the Closing. Regardless
of the foregoing, however, or any other provision of this Agreement,
any claim made by a party hereunder by delivering written notice of
the claim to the Indemnifying Party or Parties, by filing a suit or
action in a court of competent jurisdiction or a court reasonably
believed to be of competent jurisdiction or by a demand for
arbitration in accordance with Article 9 hereof for breach of a
representation or warranty prior to the termination of the survival
period for such claim shall be preserved despite the subsequent
termination of such survival period.
6.5.(b) Amount Limitation. The aggregate amount of the
indemnification obligations of the Principal Shareholders pursuant
to this Article 6 for breaches of any representations or warranties
shall not exceed Two Million Dollars ($2,000,000), exclusive of (and
in addition to) any withdrawals pursuant to the holdback provisions
of Section 2.2.(b) and 2.2.(c) above.
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6.6. No Waiver. The closing of the transactions contemplated
by this Agreement shall not constitute a waiver by any party of its
rights to indemnification hereunder, regardless of whether the party
seeking indemnification has knowledge of the breach, violation or
failure of condition constituting the basis of the Claim at or
before the Closing, and regardless of whether such breach, violation
or failure is deemed to be "material" for purposes of Section 9.2.
7. CLOSING
The closing of this transaction ("▇▇▇ ▇▇▇▇▇▇▇") shall take place
contemporaneously with the execution and delivery of this agreement at the
offices of ▇▇▇▇▇ & Lardner, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, at
1:00 P.M. on October 22, 1998, or at such other hour and place as the parties
hereto shall agree upon in writing. The date hereof is referred to in this
Agreement as the "Closing Date". Unless otherwise indicated, the transactions
contemplated hereby shall be deemed for all purposes to be effective as of the
Closing Date.
7.1. Documents to be Delivered by Company and Shareholders. At the
Closing, Company and Shareholders shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
7.1.(a) Stock Certificate(s). Stock certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached, in either case as of the Closing Date.
7.1.(b) Opinion of Counsel. A written opinion of counsel to
Company and Shareholders, dated as of the Closing Date, addressed to
Buyer, substantially in the form of Exhibit C hereto.
7.1.(c) Consents and Approvals. Executed originals of all
approvals, consents and waivers that are required to effect the
transactions contemplated hereby.
7.1.(d) Employment and Noncompetition Agreements. The
Employment and Noncompetition Agreements referred to in Section 5.1,
duly executed by the persons referred to in such Section.
7.1.(e) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and shareholder(s) of Company
and TBG, respectively, authorizing and approving this Agreement and
the consummation of the transactions contemplated by this Agreement.
7.1.(f) Articles; Bylaws. Copies of the Bylaws of Company and
each Subsidiary certified by the respective secretaries of such
entities, and copies of the Articles of Incorporation of Company and
each Subsidiary certified by the Secretary of State of their
respective states of incorporation.
7.1.(g) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or
otherwise on behalf of
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another person) any document executed and delivered to Buyer
pursuant to the terms hereof.
7.1.(h) General Releases. The General Releases referred to in
Section 5.3, duly executed by the persons referred to in such
Section.
7.1.(i) Resignations. The resignations of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ as officers and directors of the Company and each
Subsidiary, effective as of the Closing and in form satisfactory to
Buyer's counsel.
7.1.(j) Affidavit. An affidavit from each of the Shareholders
in form and substance satisfactory to Buyer, to the effect that
neither the Company nor any Subsidiary is a "foreign person,"
"foreign corporation," "foreign partnership," "foreign trust" or
"foreign estate" under Section 1445 of the Code, and containing all
such other information as is required to comply with the
requirements of such Section.
7.1.(k) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at the Closing pursuant
to this Agreement and such other certificates of authority and
documents as Buyer may reasonably request.
7.2. Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Shareholders the following documents, in each case duly
executed or otherwise in proper form:
7.2.(a) Cash Purchase Price. To Shareholders' Agent,
certified or bank cashier's checks (or wire transfers) as required
by Sections 2.2(a) hereof.
7.2.(b) Opinion of Counsel. A written opinion of ▇▇▇▇▇ &
Lardner, counsel to Buyer, dated as of the Closing Date, addressed
to Company, in substantially the form of Exhibit D hereto.
7.2.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
7.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and
delivered to Company or Shareholders by Buyer pursuant to the terms
hereof.
7.2.(e) Other Documents. All other documents, instruments or
writings required to be delivered to Company at the Closing pursuant
to this Agreement and such other certificates of authority and
documents as Company may reasonably request.
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8. TERMINATION
This Agreement may be terminated without further liability of any party
at any time prior to the Closing: (a) by mutual written agreement of Buyer and
Shareholders' Agent; or (b) by either Buyer or Shareholders' Agent (i) if the
Closing shall not have occurred by 11:59 p.m. Eastern time on the date hereof,
provided the terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring at or before such
time, or (ii) if any Government Entity shall have issued an Order enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement.
9. RESOLUTION OF DISPUTES
9.1. Arbitration.
9.1.(a) Any dispute, controversy or claim arising out of or
relating to this Agreement or any contract or agreement entered into
pursuant hereto or the performance by the parties of its or their
terms shall be settled by binding arbitration held in Tampa, Florida
in accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically
otherwise provided in this Article 9. Notwithstanding the foregoing,
Buyer may, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened
violation of the covenants of any Shareholder under Section 5.2 of
this Agreement, or any covenants not to compete contained in any
Employment and Noncompetition Agreement delivered pursuant to
Section 5.1 hereof.
9.1.(b) No party shall be required to submit to arbitration
hereunder unless all persons who are not parties to this Agreement,
but who are necessary parties to a complete resolution of the
controversy, submit to the arbitration process on the same terms as
the parties hereto. Without limiting the generality of the
foregoing, no claim under Article 6 for the indemnification of a
third-party claim shall be subject to arbitration under this Article
9 unless the third party bringing such claim against the indemnitee
shall agree in writing to the application of this Article 9 to the
resolution of such claim.
9.2. Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand
for arbitration, to exceed $250,000, then the panel to be appointed shall
consist of three neutral arbitrators; otherwise, one neutral arbitrator.
9.3. Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrator(s). The arbitrator(s) shall give the parties
written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if
any party so requests within 10 days after the decision. Thereafter, the
decision of the arbitrator(s) shall be final,
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binding, and nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in
the arbitration process.
9.4. Authority. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
9.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject
matter jurisdiction. Buyer and each Shareholder hereby submit to the in
personam jurisdiction of the Federal and State courts in Florida, for the
purpose of confirming any such award and entering judgment thereon.
9.6. Confidentiality. All proceedings under this Article 9 and all
evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties.
9.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 9 shall have been or may be invoked
shall not excuse any party from performing its obligations under this
Agreement and during the pendency of any such procedure all parties shall
continue to perform their respective obligations in good faith, subject
to any rights to terminate this Agreement that may be available to any
party and to the right of setoff provided in Section 6.4 hereof.
9.8. Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Article 9 are pending. The parties
will take such action, if any, required to effectuate such tolling.
10. MISCELLANEOUS
10.1. Disclosure Schedule. The Schedules have been compiled in a
bound volume (the "Disclosure Schedule"), executed by Shareholders and
dated and delivered to Buyer on the date of this Agreement. Information
set forth in any Schedule of the Disclosure Schedule shall be deemed to
have been disclosed with respect to all Schedules of the Disclosure
Schedule.
10.2. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company and Shareholders will execute and
deliver to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the
transactions contemplated hereby.
10.3. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by Buyer, Company or
Shareholders shall be subject to the approval of the other parties in all
essential respects, except that approval of the Shareholders or Company
shall not be required as to any statements and other information which
Buyer may submit to the Securities and Exchange Commission, the Nasdaq
Stock Market ("Nasdaq") or Buyer's stockholders or be required to make
pursuant to any rule or regulation of the Securities and Exchange
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Commission or Nasdaq, or otherwise required by law. Shareholders shall
act hereunder only through Shareholders' Agent.
10.4. Assignment; Parties in Interest.
10.4.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, Buyer may, without
consent of any other party, (i) merge Company and/or any Subsidiary
with and into Buyer and/or any subsidiary of Buyer, or (ii) cause
one or more subsidiaries of Buyer to carry out all or part of the
transactions contemplated hereby; provided, however, that Buyer
shall, nevertheless, remain liable for all of its obligations, and
those of any such subsidiary, to Shareholders hereunder.
10.4.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
10.5. Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to
the internal laws of the State of Florida, excluding any choice of law
rules that may direct the application of the laws of another
jurisdiction.
10.6. Amendment and Modification. Buyer and Shareholders may amend,
modify and supplement this Agreement in such manner as may be agreed upon
in writing between Buyer and Shareholders' Agent; provided, however, that
Buyer may, in Buyer's discretion, require the execution of any amendment
by all the Shareholders personally.
10.7. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands or requests are as follows:
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(a) If to Buyer, to:
ABR Information Services, Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Chairman of the Board,
President and Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Buyer shall furnish to the
Agent in writing.
(b) If to Shareholders, to Shareholders' Agent:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
The Barrington Group, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as Shareholders shall designate as a
successor Shareholders' Agent in accordance with this Agreement.
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(c) If to Company or TBG, to:
The Barrington Group, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to)
▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice to Company or TBG given after Closing shall also be given in
the same manner to Buyer.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to
this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of
proof of delivery); if sent by overnight courier pursuant to this
paragraph, such communication shall be deemed delivered upon receipt; and
if sent by U.S. mail pursuant to this paragraph, such communication shall
be deemed delivered as of the date of delivery indicated on the receipt
issued by the relevant postal service, or, if the addressee fails or
refuses to accept delivery, as of the date of such failure or refusal.
Delivery to the Agent shall constitute delivery to all Shareholders. Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this Section.
10.8. Expenses.
10.8.(a) Brokerage. Except as to Broadview Associates LLC,
which shall be compensated by Buyer, Shareholders and Buyer each
represent and warrant to each other that there is no broker involved
or in any way connected with the transfer provided for herein on
their behalf respectively (and Shareholders represent and warrant
that there is no broker involved on behalf of Company) and each
agrees to hold the other harmless from and against all other claims
for brokerage commissions or finder's fees in connection with the
execution of this Agreement or the transactions provided for herein.
10.8.(b) Expenses to be Paid by Shareholders. Shareholders
shall pay, and shall indemnify, defend and hold Buyer, Company and
the Subsidiaries harmless from and against, each of the following:
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
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(ii) Professional Fees. All fees and expenses,
including accounting and other professional fees, incurred in
connection with or relating to the preparation and provision
of the financial statements of the Company as set forth in
Section 3.4 above.
10.8.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
10.8.(d) Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of
the arbitrator as set forth in Section 10.4) the prevailing party in
any action brought with respect to or to enforce any right or remedy
under this Agreement shall be entitled to recover from the other
party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such
action, including without limitation attorneys' fees and prejudgment
interest.
10.9. Shareholders' Agent; Power of Attorney. The Shareholders
hereby appoint and constitute ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as Shareholders' Agent
hereunder, to exercise the powers on behalf of Shareholders set forth in
this Agreement; and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ hereby accepts such appointment.
In the event of the death, resignation or inability to act of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, and upon receipt by Buyer of evidence of the same which is
satisfactory to Buyer, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall be successor Shareholders'
Agent with all powers of his predecessor.
10.9.(a) Power of Attorney. Each Shareholder, by his or her
execution of this Agreement, hereby constitutes and appoints the
Shareholders' Agent his or her true and lawful attorney in fact,
with full power in his or her name and on his or her behalf:
(i) to receive on behalf of such Shareholder the
proceeds of sale of such Shareholder's Shares being sold
hereunder, to give Buyer a receipt therefor on behalf of such
Shareholder and to hold such proceeds subject to the terms
hereof and the instructions of such Shareholder with respect
to the ultimate disbursement thereof;
(ii) to act on such Shareholder's behalf according
to the terms of this Agreement, including, without limitation,
the power to amend this Agreement in accordance with Article
10.6 or terminate this Agreement in accordance with Section 8;
to consent to the assignment of rights under this Agreement in
accordance with Section 10.4.(a); to give and receive notices
on behalf of all the Shareholders; and to act on their behalf
in connection with any matter as to which the Shareholders (or
Principal Shareholders) jointly and severally are an
"Indemnified Party" or "Indemnifying Party" under Article 6
hereof; all in the absolute discretion of the Agent;
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(iii) in general, to do all things and to perform
all acts, including, without limitation, executing and
delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or deemed
advisable in connection with this Agreement.
This power of attorney, and all authority hereby conferred, is
granted subject to the interests of the other Shareholders and the
Buyer hereunder and in consideration of the mutual covenants and
agreements made herein, and shall be irrevocable and shall not be
terminated by any act of any Shareholder or by operation of law,
whether by the death or incapacity of any Shareholder or by the
occurrence of any other event. Each Shareholder agrees, jointly and
severally, to hold the Shareholders' Agent free and harmless from
any and all loss, damage or liability which they, or any one of
them, may sustain as a result of any action taken in good faith
hereunder.
10.10. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
10.11. Counterparts; Facsimile Signatures. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. This Agreement and the Ancillary Instruments may be effective
upon the execution and delivery by any party of facsimile copies of
signature pages hereto and thereto duly executed by such party; provided,
however, that any party delivering a facsimile signature page covenants
and agrees to deliver promptly after the date hereof two (2) original
copies to the other parties hereto.
10.12. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
10.13. Glossary of Terms. The following sets forth the location of
certain definitions of capitalized terms defined in the body of this
Agreement:
"Act" - Section 3.26
"Affiliate" - Section 3.7.(k)
"Ancillary Instruments" - Section 3.2.(a)
"Buyer's Affiliates" - Section 6.1
"CERCLA" - Section 3.10.(c)
"Claim" - Section 6.1
"Closing" - Preamble to Article 9
"Closing Date" - Section 7
"Code" - Section 3.5.(e)
"Common Stock" - Section 2.2(b)
"Company Employees" - Section 3.15.(a)
"Contingent Payment" - Section 2.1
"Disclosure Schedule" - Article 10
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"Employee Plans/Agreement(s)" - Section 3.15.(a)
"Environmental Laws" - Section 3.10.(c)
"ERISA" - Section 3.15.(a)
"Facilities" - Second Recital
"Government Entities" - Section 3.3
"Indemnified Party" - Section 6.3.(a)
"Indemnifying Party" - Section 6.3.(a)
"Laws" - Section 3.3
"Lien" - Section 3.11.(a)
"Litigation" - Section 3.9
"Orders" - Section 3.3
"PBGC" - Section 3.15.(b)(ii)
"Purchase Price" - Section 2.1
"Real Property" - Section 3.11.(c)
"Recent Balance Sheet" - Section 3.4
"Services" - Section 3.19
"Settlement Date" - Section 2.2.(c)
"Shares" - First Recital
"Trade Rights" - Section 3.17
"Warrants" - First Recital
"Waste" - Section 3.10.(c)
Where any group or category of items or matters is defined collectively
in the plural number, any item or matter within such definition may be
referred to using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.
BUYER:
ABR INFORMATION SERVICES, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: Senior Vice President
COMPANY:
▇▇▇▇▇▇▇▇, LTD.,
a Wisconsin corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: ▇▇▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇:
THE BARRINGTON GROUP, LTD.,
a Wisconsin corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Title: President
SHAREHOLDERS:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Individually
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually
SHAREHOLDERS' AGENT:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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