BUSINESS COMBINATION AGREEMENT
Dated as of May 27, 1997
By and Among
IT PARTNERS INC.
and
C.N.S., INC.
and
▇▇▇▇▇▇▇ NICE and ▇▇▇▇ ▇▇▇▇▇▇▇
TABLE OF CONTENTS
DEFINITIONS PAGE
Section 1.1. Affiliate . . . . . . . . . . . . . . . . . . . 10
Section 1.2. Balance Sheet . . . . . . . . . . . . . . . . . 10
Section 1.3. Benefit Arrangements. . . . . . . . . . . . . . 11
Section 1.4. Buyer . . . . . . . . . . . . . . . . . . . . . 11
Section 1.5. Buyer's Accountants . . . . . . . . . . . . . . 11
Section 1.6. Capital Liabilities . . . . . . . . . . . . . . 11
Section 1.7. Citibank Rate . . . . . . . . . . . . . . . . . 11
Section 1.8. Closing . . . . . . . . . . . . . . . . . . . . 11
Section 1.9. Closing Balance Sheet . . . . . . . . . . . . . 11
Section 1.10. Closing Date. . . . . . . . . . . . . . . . . . 11
Section 1.11. Code. . . . . . . . . . . . . . . . . . . . . . 11
Section 1.12. Confidentiality Agreement . . . . . . . . . . . 11
Section 1.13. Corporation . . . . . . . . . . . . . . . . . . 11
Section 1.14. Dispute Resolution Firm . . . . . . . . . . . . 11
Section 1.15. Employee. . . . . . . . . . . . . . . . . . . . 11
Section 1.16. Employee Benefit Plan . . . . . . . . . . . . . 12
Section 1.17. ERISA . . . . . . . . . . . . . . . . . . . . . 12
Section 1.18. Excluded Assets . . . . . . . . . . . . . . . . 12
Section 1.19. Excluded Liabilities. . . . . . . . . . . . . . 12
Section 1.20. Exhibit . . . . . . . . . . . . . . . . . . . . 12
Section 1.21. Final Closing Balance Sheet . . . . . . . . . . 12
Section 1.22. Final Net Asset Value . . . . . . . . . . . . . 12
Section 1.23. Financials Date . . . . . . . . . . . . . . . . 12
Section 1.24. Guarantees. . . . . . . . . . . . . . . . . . . 12
Section 1.25. H-S-R Act . . . . . . . . . . . . . . . . . . . 12
Section 1.26. Individual Returns. . . . . . . . . . . . . . . 12
Section 1.27. Individual Taxes. . . . . . . . . . . . . . . . 13
Section 1.28. Intellectual Property . . . . . . . . . . . . . 13
Section 1.29. IRS . . . . . . . . . . . . . . . . . . . . . . 13
Section 1.30. Material. . . . . . . . . . . . . . . . . . . . 13
Section 1.31. Material Adverse Effect . . . . . . . . . . . . 13
Section 1.32. Material Contracts. . . . . . . . . . . . . . . 13
Section 1.33. MGAAP . . . . . . . . . . . . . . . . . . . . . 13
Section 1.34. Net Asset Value . . . . . . . . . . . . . . . . 13
Section 1.35. Offering Memorandum . . . . . . . . . . . . . . 13
Section 1.36. PBGC. . . . . . . . . . . . . . . . . . . . . . 13
Section 1.37. Person. . . . . . . . . . . . . . . . . . . . . 13
Section 1.38. Proposed Closing Balance Sheet. . . . . . . . . 14
Section 1.39. Purchase Price. . . . . . . . . . . . . . . . . 14
Section 1.40. Retirement Plan . . . . . . . . . . . . . . . . 14
Section 1 41. Schedule. . . . . . . . . . . . . . . . . . . . 14
Section 1.42. Securities Act. . . . . . . . . . . . . . . . . 14
Section 1.43. Seller. . . . . . . . . . . . . . . . . . . . . 14
Section 1.44. Seller's Accountants. . . . . . . . . . . . . . 14
Section 1.45. Senior Debt . . . . . . . . . . . . . . . . . . 14
Section 1.46. Shares. . . . . . . . . . . . . . . . . . . . . 14
Section 1.47. Subordinated Debt . . . . . . . . . . . . . . . 14
Section 1.48. Subsidiary. . . . . . . . . . . . . . . . . . . 14
Section 1.49. Transaction Documents . . . . . . . . . . . . 14
ARTICLE II. PURCHASE AND SALE OF SHARES
Section 2.1 Sale. . . . . . . . . . . . . . . . . . . . . . 15
Section 2.2. Purchase Price and Allocation . . . . . . . . . 15
DEFINITIONS PAGE
Section 2.3. Adjustment of Purchase Price. . . . . . . . . . 15
Section 2.5 Board of Directors Membership;
Amendments to Buyer's By-laws. . . . . . . . . .17
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1. Organization and Good Standing. . . . . . . . . 17
Section 3.2. Capitalization. . . . . . . . . . . . . . . . . 17
Section 3.3 Ownership of the Shares . . . . . . . . . . . . 18
Section 3.4 Execution and Effect of Agreement . . . . . . . 18
Section 3.5. Consents. . . . . . . . . . . . . . . . . . . . 18
Section 3.6. Balance Sheet . . . . . . . . . . . . . . . . . 18
Section 3.7. Absence of Certain Changes. . . . . . . . . . . 19
Section 3.8. Litigation. . . . . . . . . . . . . . . . . . . 19
Section 3.9. Properties: Absence of Encumbrances . . . . . . 20
Section 3.10. Intellectual Property . . . . . . . . . . . . . 20
Section 3.11. Contracts . . . . . . . . . . . . . . . . . . . 20
Section 3.12. Employees: Employee Benefit Matters . . . . . . 21
Section 3.13. Guarantees by Others. . . . . . . . . . . . . . 22
Section 3.14. Tax Matters . . . . . . . . . . . . . . . . . . 22
Section 3.15. Compliance with Law and Other
Instruments: Regulatory Matters. . . . . . . .. 23
Section 3.16. Permits . . . . . . . . . . . . . . . . . . . . 23
Section 3.17. Environmental Matters . . . . . . . . . . . . . 23
Section 3.18. Insurance . . . . . . . . . . . . . . . . . . . 24
Section 3.19. Banks; Powers of Attorney . . . . . . . . . . . 24
Section 3.20. Brokerage Fees. . . . . . . . . . . . . . . . . 24
Section 3.21. Limitation of Representations
and Warranties . . . . . . . . . . . . . . . . 24
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OE BUYER
Section 4.1. Organization and Good Standing . . . . . . . . 24
Section 4.2. Investment Representation . . . . . . . . . . . 24
Section 4.3. Execution and Effect of Agreement . . . . . . . 24
Section 4.4. Restrictions. . . . . . . . . . . . . . . . . . 25
Section 4.5. No Lawsuits: Consents . . . . . . . . . . . . . 25
Section 4.6. Limitation of Representations
and Warranties . . . . . . . . . . . . . . . .. 25
ARTICLE V. COVENANTS AND AGREEMENTS OF THE SELLER
Section 5.1. Corporate Action. . . . . . . . . . . . . . . . 25
Section 5.2. Conduct of Business to Closing. . . . . . . . . 26
Section 5.3. Consents. . . . . . . . . . . . . . . . . . . . 27
Section 5.4. Covenant Against Competition. . . . . . . . . . 27
Section 5.5. Capital Liabilities . . . . . . . . . . . . . . 28
Section 5.6. Purchase Price Allocation . . . . . . . . . . . 28
Section 5.7. Access to Information and Cooperation . . . . . 28
Section 5.8. Public Statements . . . . . . . . . . . . . . . 28
ARTICLE VI. COVENANTS AND AGREEMENTS OF BUYER
Section 6.1. Corporate Action. . . . . . . . . . . . . . . . 29
Section 6.2. Public Statements . . . . . . . . . . . . . . . 29
DEFINITIONS PAGE
Section 6.3 Consents. . . . . . . . . . . . . . . . . . . . 29
Section 6.4. Certain Employee Benefit Matters. . . . . . . . 29
Section 6.5. Preservation of and Access to Certain
Information and Cooperation After Closing. . . 30
Section 6.6. Nondisposition of Shares. . . . . . . . . . . . 31
ARTICLE VII. CONDITIONS OF OBLIGATIONS OF BUYER
Section 7.1. Representations and Warranties True . . . . . . 31
Section 7.2. Covenants and Agreements-No Default . . . . . . 31
Section 7.3. Officer's Certificates. . . . . . . . . . . . . 31
Section 7.4. No Material Adverse Change. . . . . . . . . . . 31
Section 7.5. Consents. . . . . . . . . . . . . . . . . . . . 32
Section 7.6. Transaction Documents . . . . . . . . . . . . . 32
Section 7.7. Adverse Proceedings . . . . . . . . . . . . . . 32
ARTICLE VIII. CONDITIONS OF OBLIGATIONS OF SELLER
Section 8.1. Representations and Warranties True . . . . . . 32
Section 8.2. Covenants and Agreements-No Default . . . . . . 33
Section 8.3. Officer's Certificates. . . . . . . . . . . . . 33
Section 8.4. Consents. . . . . . . . . . . . . . . . . . . . 33
Section 8 5. Transaction Documents . . . . . . . . . . . . . 33
Section 8.6. Adverse Proceedings . . . . . . . . . . . . . . 33
ARTICLE IX. INTENTIONALLY DELETED
ARTICLE X. CLOSING
Section 10.1. Closing . . . . . . . . . . . . . . . . . . . . 33
Section 10.2. Documents to be Delivered by Seller . . . . . . 34
Section 10.3. Documents to be Delivered by Buyer. . . . . . . 35
ARTICLE XI. MISCELLANEOUS
Section 11.1. Survival of Representations, Warranties,
Covenants and Agreements . . . . . . . . . . . 35
Section 11.2. Indemnification . . . . . . . . . . . . . . . . 36
Section 11.3. Disclaimer of Other Representations and
Warranties by Seller . . . . . . . . . . . . .. 37
Section 11.4. Disclosure. . . . . . . . . . . . . . . . . . . 37
Section 11.5. Expenses and Taxes. . . . . . . . . . . . . . . 37
Section 11.6. Entire Agreement. . . . . . . . . . . . . . . . 37
Section 11.7. Amendment and Waiver. . . . . . . . . . . . . . 38
Section 11.8. Binding Agreement and Successors. . . . . . . . 38
Section 11.9. No Third Party Beneficiaries. . . . . . . . . . 38
Section 11.10. Notices. . . . . . . . . . . . . . . . . . . . 38
Section 11.11. Further Assurances. . . . . . . . . . . . . . . 39
Section 11.12. Article and Section Headings. . . . . . . . . . 39
Section 11.13. Governing Law. . . . . . . . . . . . . . .. . . 39
Section 11.14. Courts . . . . . . . . . . . . . . . . . . . . .39
Section 11.15. Construction . . . . . . . . . . . . . . . . . .39
Section 11.16. Counterparts. . . . . . . . . . . . . . . . . . 40
Section 11.17. Attorneys' Fees . . . . . . . . . . . . . . . . 40
BUSINESS COMBINATION AGREEMENT
This BUSINESS COMBINATION AGREEMENT ("Agreement") is made as of May
22, i997, by and among C.N.S., INC., a New Jersey corporation (the
"Corporation"), ▇▇▇▇▇▇▇ NICE and ▇▇▇▇ ▇▇▇▇▇▇▇, individuals, with a place of
business at c/o C.N.S., INC., ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(collectively hereinafter referred to as the "Seller"), and IT PARTNERS INC.,
a Delaware corporation with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer").
WITNESSETH:
WHEREAS. Seller owns all of the issued and outstanding capital stock of the
Corporation;
WHEREAS, the Corporation is engaged in (i) refurbishing, upgrading,
cleaning and repairing computers, audio-visual equipment and consumer
products, as well as products used in connection with computers, audio-visual
equipment and consumer products, and performing depot work on such
computers,audio-visual equipment and consumer products and products related
respectively thereto and (ii) performing computer network system integration,
maintenance and support and selling, repairing and coordinating the use of the
equipment related thereto;
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, in accordance with the terms and conditions of this Agreement,
all of the issued and outstanding shares of capital stock of the Corporation:
NOW THEREFORE, in consideration of the mutual covenants and agreements of
the parties contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
Section 1.1. Affiliate. "Affiliate" shall mean any Person that directly
or indirectly controls, is controlled by, or is under common control with the
Person in question. For purposes of determining whether a Person is an
Affiliate, the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through ownership of securities, contract
or otherwise.
Section 1.2. Balance Sheet. "Balance Sheet" shall mean the unaudited
statement of net assets and liabilities of the Corporation as at February 28,
1997, a copy of which is attached hereto as Exhibit A.
Section 1.3. Benefit Arrangements. "Benefit Arrangements" shall mean
all profit sharing, life, health, hospitalization, savings, bonus, deferred
compensation, incentive compensation, severance pay, disability, vacation,
sick pay, holiday and fringe benefit plans, individual employment and
severance contracts and other policies and practices of the Corporation, or
any Affiliate thereof, providing employee or executive compensation or
benefits to Employees or beneficiaries of Employees. other than Retirement
Plans.
Section 1.4. Buyer. "Buyer" shall have the meaning set forth above.
Section 1.5. Buyer's Accountants. "Buyer's Accountants" shall mean the
independent accounting firm of Ernst & Young.
Section 1.6. Capital Liabilities. "Capital Liabilities" shall mean all
outstanding debt of the Corporation in excess of $466,013.84 bank debt.
Section 1.7. Citibank Rate. "Citibank Rate" shall mean the rate
announced from time to time by Citibank, N.A. as its prime commercial lending
rate in New York City, New York (U.S.A.).
Section 1.8. Closing. "Closing" shall mean the consummation of the
events described in ARTICLE IX.
Section 1.9. Closing Balance Sheet. "Closing Balance Sheet" shall mean
the audited statement of net assets and liabilities of the Corporation as at
the Closing Date as prepared and delivered in accordance with Section 2.4.
Section 1.10. Closing Date. "Closing Date" shall mean the date on which
the Closing shall occur.
Section 1.11. Code. "Code" shall mean the Internal Revenue Code of 1988
as amended.
Section 1.12. Confidentiality Agreement. "Confidentiality Agreement"
shall mean the Confidentiality Agreement dated as of December 31, 1996 between
the Buyer and the Seller.
Section 1.13. Corporation. "Corporation" shall have the meaning set
forth above.
Section 1.14. Dispute Resolution Firm. "Dispute Resolution Firm" shall
mean the independent accounting firm of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
Section 1.15. Employee. "Employee" shall mean each person who is a
current employee, former employee, or retired employee of the Corporation or
its predecessors.
Section 1.16. Employee Benefit Plan. "Employee Benefit Plan" shall mean
each "employee benefit plan," as defined in Section 3(3) of ERISA, maintained
or contributed to by the Corporation or any Affiliate thereof, which provides
benefits to Employees, but excluding Multiemployer Plans.
Section 1.17. ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
Section 1.18. Excluded Assets. "Excluded Assets" shall mean the assets
listed in Schedule 1.25, any consideration or proceeds received by the
Corporation upon the disposition thereof, and any reserves established by
Seller or the Corporation for any Excluded Liabilities.
Section 1.19. Excluded Liabilities. "Excluded Liabilities" shall mean
the liabilities listed in Schedule 1.19.
Section 1.20. Exhibit. "Exhibit" shall mean an exhibit to this
Agreement.
Section 1.21. Final Closing Balance Sheet. "Final Closing Balance Sheet"
shall have the meaning set forth in Section 2.4.
Section 1.22. Final Net Asset Value. "Final Net Asset Value" shall mean
the Net Asset Value as finally determined pursuant to Section 2.4(a), whether
by failure of Seller to deliver notice of objection, by agreement of the
parties, or by final determination of the Dispute Resolution Firm.
Section 1.23. Financials Date. "Financials Dates shall mean February 28,
1997.
Section 1.24. Guarantees. "Guarantees" shall mean any obligations,
contingent or otherwise, of a Person in respect of any indebtedness,
obligation or liability of another Person, including but not limited to direct
or indirect guarantees, endorsements (except for collection or deposit in the
ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to
purchase or repurchase such indebtedness, obligation or liability or any
security therefor or to provide funds for the payment or discharge thereof,
agreements to maintain solvency, assets, level of income. or other financial
condition, and agreements to make payment other than for value received.
Section 1.25. H-S-R Act. "H-S-R Act" shall mean the ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976. as amended.
Section 1.26. Individual Returns. "Individual Returns" shall have the
meaning set forth in Section 3.16.
Section 1.27. Individual Taxes. "Individual Taxes" shall have the
meaning set forth in Section 3.16.
Section 1.28. Intellectual Property. "Intellectual Property" shall mean
patents, patent applications, trademark registrations and applications
therefor, service ▇▇▇▇ registrations and applications therefor, copyright
registrations and applications therefor and trade names.
Section 1.29. IRS. "IRS" shall mean the Internal Revenue Service.
Section 1.30. Material. "Material" (or "Materiality") when used with
reference to information, a fact or circumstance, a course of action, a
decision-making process, or other matter shall be limited to information,
facts and circumstances, courses of action, decision- making process or other
matters as to which there is a substantial likelihood that a reasonable
purchaser of the Shares would attach importance in determining whether to
purchase the Shares.
Section 1.31. Material Adverse Effect. "Material Adverse Effect" when
used with reference to a Person shall mean a material adverse effect on the
business, properties (taken as a whole) or financial condition of the Person
or Persons.
Section 1.32. Material Contracts. "Material Contract" shall mean the
contracts, agreements, commitments or other arrangements listed in Schedule
3.13.
Section 1.33. MGAAP. "MGAAP" shall mean Generally Accepted Accounting
Principles as in effect in the United States on the date of this Agreement,
modified as provided in the notes to the Balance Sheet.
Section 1.34. Net Asset Value. "Net Asset Value" shall mean total assets
(not including any Excluded Assets) minus total liabilities (not including any
Excluded Liabilities) as shown on the Proposed Closing Balance Sheet or the
Final Closing Balance Sheet, as the case may be, each of which shall be
prepared on a basis consistent with the Balance Sheet.
Section 1.35. Offering Memorandum. "Offering Memorandum" shall mean a
Confidential Memorandum prepared by ▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇ dated 1997.
Section 1.36. PBGC. "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
Section 1.37. Person. "Person" shall mean any individual, corporation,
unincorporated association, business trust, estate, partnership, trust, State,
the United States or any other entity.
Section 1.38. Proposed Closing Balance Sheet. "Proposed Closing Balance
Sheet" shall have the meaning set forth in Section 2.4.
Section 1.39. Purchase Price. "Purchase Price" shall have the meaning
set forth in Section 2.3.
Section 1.40. Retirement Plan. "Retirement Plan" shall mean any plan,
fund, program or policy which provides retirement income to an Employee or
results in a deferral of income by an Employee for periods extending to or
beyond the termination of employment of the Employee by Seller and al;
Affiliates thereof, and pursuant to which the Corporation or an Affiliate
thereof has paid benefits or contributed funds or has an obligation to pay
benefits or contribute funds in respect of such Employee.
Section 1 41. Schedule. "Schedule" shall mean a schedule to this
Agreement.
Section 1.42. Securities Act. "Securities Act" shall mean the Securities
Act of 1933, as amended.
Section 1.43. Seller. "Seller" shall have the meaning set forth above.
Section 1.44. Seller's Accountants. "Seller's Accountants" shall mean
the independent accounting firm of Nimensky & Gallinson, P. A.
Section 1.45. Senior Debt. "Senior Debt" shall mean such obligations to
a third party or parties other than the Sellers that the Buyer shall have
incurred prior to or at the Closing.
Section 1.46. Shares. "Shares" shall mean all of the issued and
outstanding shares of stock of the Corporation.
Section 1.47. Subordinated Debt. "Subordinated Debt" shall mean the
amount which the Buyer is obligated to the Seller as set forth Section 2.3
hereof.
Section 1.48. Subsidiary. "Subsidiary," as it relates to any Person,
shall mean a corporation more than 50% of whose outstanding securities the
Person has the right, other than as affected by events of default, directly or
indirectly, to vote for the election of directors.
Section 1.49. Transaction Documents. "Transaction Documents" shall mean
all other agreements. documents or instruments to be executed by a party
hereto in connection with this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Sale. On the terms and subject to the conditions set forth
in this Agreement, Seller hereby agrees to sell, transfer, assign and deliver
to Buyer or one or more of its designated Subsidiaries, free and dear of any
lien, security interest, charge, encumbrance or claim, and Buyer hereby agrees
to purchase from Seller the Shares on the Closing Date.
Section 2.2. Purchase Price and Allocation. The entire consideration to
be paid by Buyer to Seller in exchange for the sale, transfer, assignment and
delivery to Buyer of the Shares shall be $4,329,004.70 (the "Purchase Price),
which shall be paid by Buyer to Seller at the time of Closing in the following
manner As to cash, in the amount of $1,785,864..20 by wire transfer of
immediately available funds into the trust account of ▇▇▇ & ▇▇▇▇▇▇▇▇▇ P.A.; as
to Subordinated Debt in the form of two promissory notes, one in the amount of
$472,363.10 payable to ▇▇▇▇▇▇▇ Nice, and- a second in the amount of
$432,900.47 payable to ▇▇▇▇ ▇▇▇▇▇▇▇; and as to equity, stock certificates
representing ownership of 305,585 shares of the common stock of Buyer,
allocated 159,406 shares to ▇▇▇▇▇▇▇ Nice, and 151,116 shares to ▇▇▇▇ ▇▇▇▇▇▇▇.
At Closing, Buyer shall receive an original of the Company's note to its
officers in the amount of $77,507.00, marked "Paid and Canceled."
Section 2.3. Adjustment of Purchase Price.
(a) As promptly as practicable, and in any event not more than 60
days following the Closing Date, Buyer together with Buyer's Accountants shall
prepare and deliver to Seller and Seller's Accountants the Proposed Closing
Balance Sheet. The Proposed Closing Balance Sheet shall be prepared on a basis
consistent with, and as provided in, the Balance Sheet, and shall be audited
and accompanied by the report of Buyer's Accountants. Seller and Seller's
Accountants shall have the right to observe the physical inventories to be
conducted by, and to consult during reasonable business hours with appropriate
personnel of, Buyer and Buyer's Accountants and to have access to, and to
review and make copies of, the work papers of Buyer's Accountants with respect
to such inventories and the preparation of the Proposed Closing Balance Sheet.
(b) (i) Seller may dispute the Proposed Closing Balance Sheet
prepared by Buyer and Buyer's Accountants by notifying Buyer and Buyer's
Accountants in writing, setting forth in reasonable detail the amount(s) in
dispute and the basis for such dispute, within 45 days of Seller's receipt of
the Proposed Closing Balance Sheet. If Seller fails to deliver a notice of
objections within such 45-day period, Seller shall be deemed to have accepted
the Proposed Closing Date Balance Sheet and the Net Asset Value thereon. In
the event the aggregate amounts in dispute are less than $100,000, the Closing
Net Asset Value proposed by Buyer and Buyer's Accountants shall be adjusted by
one-half of the dispute amount, and such resolution shall be final, binding
and conclusive on Seller and Buyer.
(ii) In the event the amounts in dispute exceed $100,000,
Buyer's Accountants and Seller's Accountants shall attempt in good faith to
resolve such dispute, and any resolution by them as to any disputed amount(s)
shall be final, binding and conclusive on Seller and Buyer. If Buyer's
Accountants and Seller's Accountants do not resolve any such dispute within 15
days of the date of receipt by Buyer or Seller's written notice of dispute,
Buyer and Seller shall, within five additional days, retain the Dispute
Resolution Firm, which firm shall, within 30 days of each submission, resolve
such remaining dispute, and provide written notice of such resolution by
facsimile, confirmed by mail, and such resolution shall be binding and
conclusive on Seller and Buyer. Such resolution shall be within the range of
amounts defined by the amount proposed by Buyer's Accountants and the amount
proposed by Seller's Accountants as to each disputed item. The fees and
disbursements of the Dispute Resolution Firm shall be borne by Buyer and
Seller in the proportion that the aggregate amount of disputed items submitted
to the Dispute Resolution Firm that is unsuccessfully disputed by each party
(as finally determined by the Dispute Resolution Firm) bears to the total
amount of the disputed items as submitted to the Independent Accounting Firm.
After resolving the items in dispute, the Dispute Resolution Firm shall
prepare and deliver to each of Seller and Buyer the Final Closing Balance
Sheet and a certification of the Net Asset Value thereon.
(c) As promptly as possible and in any event not more than 60 day
following the Closing Date, in the event that the Final Net Asset Value is
less than the Net Asset Value stated on the Balance Sheet, Seller shall pay to
Buyer the difference plus interest thereon from the Closing Date through the
date of payment at a rate per annum, which may fluctuate from time to time,
equal to the Citibank Rate. In the event that the Final Net Asset Value is
greater than the Net Asset Value stated on the Balance Sheet, Buyer shall pay
to Seller, the difference, plus interest on such amount from the Closing Date
through the date of payment at a rate per annum, which may fluctuate from time
to time, equal lo the Citibank Rate. Such payment shall be made in immediately
available funds not later than two business days after the determination of
the Final Net Asset Value by wire transfer to a bank account designated by the
party entitled to receive the payment;
(d) To the extent that the Final Net Asset Value is different
from the Net Asset Value reflected on the Balance Sheet, the allocation of the
Purchase Price shall be increased or decreased. as the case may be, by such
difference;
(e) the Purchase Price shall be adjusted subsequent to Closing by
recalculating the EBITDA upon which the Purchase Price is based. EBITDA for
this purpose will be calculated for the year ended as of the Date of Closing.
To the extent this recalculated EBITDA times 6 exceeds the Purchase Price, the
excess will be paid to the Seller not later than two business days after the
recalculation and apportioned among cash (45%) common stock of the Buyer (35%)
and debt (20%);
(f) As promptly as possible and in any event not more than 60
days following the first anniversary of Closing, the Purchase Price shall be
further adjusted based upon EBITDA for the year ended on the first anniversary
of Closing. EBITDA will include any inventory write-up required by Buyer's
Accountants as the result of a physical inventory count taken in connection
with a certified audit conducted during this year. To the extent this
recalculated EBITDA times 6 exceeds the post Closing adjusted Purchase Price,
the excess will be paid to the Sellers not later than two business days after
the recalculation and apportioned among cash (45%), common stock of the Buyer
(35%) and a note (20%).
Section 2.5 Board of Directors Membership: Amendments to Buyer's
By-laws. Prior to Closing. Buyer will take such corporate action as is
necessary to amend its by-laws or charter, in order to conform to the
Shareholders' Agreement which Buyer and others become parties. Immediately
following Closing, Buyer shall take such corporate action as may be necessary
to cause ▇▇▇▇▇▇▇ Nice to become a member of Buyer's Board of Directors, and,
if necessary, to reelect ▇▇▇▇▇▇▇ Nice to continue to serve on the Board until
the negotiation of all of the shares of the common stock of Buyer acquired by
Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
Section 3.1. Organization and Good Standing. The Corporation is duly
organized, validly existing and in good standing under the laws of the State
of New Jersey. The Corporation has full corporate power and authority to carry
on its business as it is now being conducted. The Corporation is qualified as
a foreign corporation in, and is in good standing under the laws of, each
state set forth in Schedule 3.1, which are the only jurisdictions in which the
failure of the Corporation to be so qualified would have a Material Adverse
Effect on the Corporation.
Section 3.2. Capitalization. The authorized capital stock of the
Corporation consists of 1000 snares of common Stock, without par value, 1000
shares of which are outstanding. Each of the outstanding Shares has been duly
authorized and validly issued and is fully paid and nonassessable. No shares
of capital stock of the Corporation are held in treasury, and there are no
other issued or outstanding equity securities of the Corporation and no other
issued or outstanding equity securities of the Corporation convertible at any
time into equity securities of the Corporation. Neither Seller nor the
Corporation is subject to any commitment or obligation that would require the
issuance or sale of additional shares of capital stock of the Corporation at
any time under options, subscriptions, warrants, rights or any other
obligations. Neither the execution and delivery of this Agreement and the
Transaction Documents nor the consummation of the transactions contemplated
hereby or thereby will (a) violate any of the provisions of the charter or
by-laws of the Corporation, or (b) conflict with or result in a breach of, or
give rise to a right of termination of, or accelerate the performance required
by the terms of any judgment, court order or consent decree, permit or license
or any statute, rule or regulation of any governmental body, or any agreement,
indenture, mortgage or instrument to which Seller, or the Corporation is a
party or to which it or its property is subject, or constitute a default
thereunder, except, in the case of clause (b), where such conflict, breach,
right of termination or default would not have a Material Adverse Effect on
Corporation.
Section 3.3 Ownership of the Shares. Seller is the record and
beneficial owner of the Shares, which are free and clear of any lien, security
interest, charge, encumbrance or claim, and Seller has, or will have on the
Closing Date, the right to transfer to Buyer complete and encumbered legal and
equitable title to the shares.
Section 3.4 Execution and Effect of Agreement. Seller has the ability
and authority to enter into and consummate this Agreement and the Transaction
Documents, and the execution and delivery of such agreements and the
consummation of the transactions completed hereby have, if and to the extent
necessary, been duly authorized. This Agreement has been duly executed and
delivered by the Seller, and constitutes a legal, valid and binding obligation
of each such Person executing such Agreement subject to such applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws affecting
the rights of creditors generally and to the exercise of judicial discretion
in accordance with general principals of equity (whether applied by a court of
law or of equity).
Section 3.5. Consents. Except (a) for filings, consents, approvals and
authorizations that the failure to obtain or make would not have a Material
Adverse Effect on the Corporation, (b) as set forth in Schedule 3.5, or (c)
for filings, consents, waivers, approvals or authorizations pursuant to the
H-S-R Act, no consent, waiver, approval or authorization of any governmental
authority or of any third party or notice to or filing with any governmental
authority or any third party, on the part of Seller, or the Corporation is
required in connection with the execution and delivery by Seller of this
Agreement or any instrument contemplated hereby or the consummation of any of
the transactions contemplated hereby.
Section 3.6. Balance Sheet. Except as set forth in Schedule 3.6, the
Balance Sheet was prepared in accordance with MGAAP and fairly presents the
Corporation's financial condition as of the date thereof. To Seller's
knowledge, the Corporation has no Material liabilities or obligations, whether
contingent or absolute, direct or indirect, matured or unmatured, which are
not shown or provided for on the Balance Sheet or the notes thereto or set
forth on Schedule 3.6, or any other Schedule to this Agreement, and Seller
knows of no reasonable basis (as determined in Seller's reasonable judgment)
for the assertion of any such liabilities or obligation.
Section 3.7. Absence of Certain Changes. Since Febnuary28, 1997, except
as disclosed on Schedule 3.7 or as otherwise contemplated by this Agreement,
there has not been:
(a) any change in the assets, liabilities, business, properties
or operations of the Corporation, other than changes (i) described in the
Schedules or (ii) made or incurred in the ordinary course of business, which
taken in the aggregate have had a Material Adverse Effect on the Corporation:
(b) any dividend or other distribution declared, paid or made on
or in respect of the capital stock of the Corporation;
(c) any employment or other contract or commitment entered into
by the Corporation, except in the ordinary course of business;
(d) a cancellation of any claim of or debts owed to the
Corporation, except in the ordinary course of business;
(e) excluding any inventory or obsolete assets disposed of in the
ordinary course of business of the Corporation, any sale, assignment, transfer
or other disposition of (i) any Intellectual Property of the Corporation, the
cost of which on the accounting records of the Corporation exceeds $2,500.00
or (ii) any other assets of the Corporation, the cost of which on the
accounting records of the Corporation exceeds $2,500.00;
(f ) any capital expenditure capital addition or capital
improvement by the Corporation involving an amount in excess of $100,000;
(g) any mortgage, lien, pledge, encumbrance or security interest
created on any assets, tangible or intangible of the Corporation, except
purchase money security interests created in the ordinary course of business
of the Corporation;
(h) any damage, destruction or loss (whether or not covered by
insurance incurred by the Corporation) which would have a Material Adverse
Effect on the Corporation;
(i) any labor disturbances of the Corporation which would have a
Material Adverse Effect on the Corporation; or
(j) to Seller's knowledge, any other event or condition which has
had or, in the reasonable judgment of Seller, would likely have a Material
Adverse Effect on the Corporation.
Section 3.8. Litigation. Except as set forth in Schedule 3.8, Schedule
3.15 or Schedule 3.17, there is no action at law or in equity, arbitration
proceeding or governmental investigation pending or, to the knowledge of
Seller, threatened by or before any court, any governmental or administrative
agency or commission, or arbitrator, against Seller or the Corporation, in
respect of this Agreement or any of the transactions contemplated hereby that
would prevent a consummation of any of the transactions contemplated hereby.
Except as set forth in Schedule 3.8, Schedule 3.15, or Schedule 3.17, there is
no action at law or in equity, arbitration proceeding or governmental
investigation pending, or to the knowledge of Seller threatened, by or before
any court, any governmental or administrative agency or commission, or
arbitrator against or involving any of the businesses, properties, rights or
assets of the Corporation, employees or agents, which reasonably could be
expected to have a Material Adverse Effect on the Corporation.
Section 3.9. Properties: Absence of Encumbrances. Schedule 3.9 sets
forth a complete list of all real property leased, by the Corporation. With
respect thereto: (a) the leases are in full force and effect and constitute
valid and enforceable leasehold interests of the Corporation, free and dear of
all liens, claims, security interests, encumbrances created by Seller that
would have a Material Adverse Effect on the Corporation, (b) the Corporation
is not in default and has not received any written notice of default under any
lease where there reasonably could be expected to be a Material Adverse Effect
on the Corporation, and (c) to the knowledge of Seller there is no event which
with notice or lapse of time or both would constitute such a default by the
Corporation or by a lessor.
Section 3.10. Intellectual Property. Schedule 3.10 sets forth a complete
list of all Intellectual Property of the Corporation on the date hereof and of
all license agreements pursuant to which any such Intellectual Property is
licensed (a) by or to the Corporation. The Corporation does not own, license
or, to Seller's knowledge, use Intellectual Property Material in the continued
operation of the Corporation's business that is not listed on Schedule 3.10.
Except as otherwise indicated in Schedule 3.10, the Corporation uses the
Intellectual Property listed in Schedule 3.10 free and clear of any royalty,
lien, encumbrance or charge. Notwithstanding anything to the contrary
contained herein, Seller make no representation or warranty, and no such
representation or warranty shall be implied, that any of the Intellectual
Property is valid or enforceable. To the knowledge of Seller, except as set
forth in Schedule 3.08 or Schedule 3.10, the Corporation has not received,
within the two year period immediately preceding the date of this Agreement,
any notice or claim that any such Intellectual Property is not valid or
enforceable, or of any infringement upon or conflict with any patent,
trademark, service ▇▇▇▇, copyright or trade name of any third party by the
Corporation or of any claim by any third party alleging any such infringement
or conflict. To the knowledge of Seller, except as set forth in Schedule 3.08
or Schedule 3.10, during the two-year period immediately preceding the date of
this Agreement, the Corporation has not given any notice of infringement to
any third party with respect to any of the Intellectual Property listed in
Schedule 3.10.
Section 3.11. Contracts. Schedule 3.1 1 sets forth a list of all
contracts, agreements, commitments or other arrangements to which the
Corporation is a party or by which the Corporation is obligated. Except for
contracts, agreements, commitments or other arrangements set forth on Schedule
3.11 or other Schedules, as of the date of this Agreement the Corporation is
not a party to or obligated by any: (a) Benefit Arrangements providing for
aggregate payments of $50,000 or more in any 12 month period or any contract
with employees, consultants or agents not terminable at will without cost or
other liability by reason of such termination; (b) collective bargaining
agreement; (c) guarantees by the Corporation of any obligation for the
borrowing of $50,000 in the aggregate; (d) indentures, notes, mortgages,
installment obligations, capital leases or other instruments relating to the
borrowing of money in excess of $50,000 in the aggregate; (e) agreements,
contracts or leases not listed on Schedule 3.09 (excluding open purchase
orders and supply agreements entered into in the ordinary course of business)
that involve the receipt or payment by the Corporation within one year of more
than $100,000; and (f) executory contracts involving the acquisition or
disposition of Material tangible or intangible assets other than in the
ordinary course of business. Except as disclosed on Schedule 3.10 or as would
not have a Material Adverse Effect on the Corporation, the Corporation is not
in default under any Material Contract, has not waived any Material rights
under any Material Contract and (to the knowledge of Seller) has no knowledge
or notice that any party with whom it has a Material Contract is in default
under any Material Contract.
Section 3.12. Employees: Employee Benefit Matters.
(a) Schedule 3.12 to this Agreement contains a true and complete
list of all sales agents, consultants and employees of the Corporation
(whether employed or engaged by written or oral agreement), their respective
rates of compensation and any general or Material individual wage increase
scheduled to take effect prior to Closing other than in the ordinary course of
business. The Corporation has paid in full such employees, agents and
consultants, or adequately reserved for, all wages, salaries, commissions,
bonuses and other compensation for all services performed by them, except for
such payments as are not yet due; and the Corporation is in compliance in all
material respects with all laws and regulations respecting employment and
employment practices, terms and conditions or employment, wages and hours.
employee benefit plans and taxes (including withholding taxes) relating to
employment;
(b) Schedule 3.12 sets forth a list of all Employee Benefit
Plans, all Material Benefit Arrangements, all Multiemployer Plans, and all
Retirement Plans. Except as set forth in Schedule 3. 14, with respect to each
of such Employee Benefit Plans, Benefit Arrangements and Retirement Plans,
Seller has delivered or made available to Buyer, as and if applicable, copies
of (i) the text or formal plan document, including amendments and the summary
plan description, (ii) the most recent IRS determination letter relating to
the qualification of Retirement Plans under Section 401 of the Code and the
related trust's qualification under Section 501 of the Code, (iii) the trust
agreements, insurance contracts or other documents that constitute all or a
part of the funding vehicle, (iv) in the case of all Employee Benefit Plans,
the most recent annual reports (IRS Form 5500s), including the schedules
thereto, and (v) the most recent actuarial reports or other financial reports;
(c) Except as set forth in Schedule 3.12, (i) all Employee
Benefit Plans comply in all Material respects with ERISA and the Code; (ii)
the Corporation have paid all contributions due under any of the Employee
Benefit Plans and Multiemployer Plans to which they are required to
contribute; and (iii) the Corporation do not have minimum funding deficiencies
or Multiemployer Plan withdrawal liabilities (including without limitation
liabilities imposed by virtue of any other member of a controlled group having
such liabilities imposed on it);
(d) Except as set forth in Schedule 3.12, there are no Material
actions, suits or claims pending or, to the knowledge of Seller, threatened
against any Employee Benefit Plan, any Retirement Plan, any Benefit
Arrangement, or any administrator or fiduciary thereof, other than benefit
claims arising in the normal course of operation of such Employee Benefit
Plans, Benefit Arrangements, or Retirement Plans; and
(e) To the knowledge of Seller, the Corporation has not engaged
in any non-exempt "Prohibited Transaction," as defined in Section 406 of ERISA
or Section 4975 of the Code, with respect to any Employee Benefit Plan or with
respect to any other parties-in-interest.
Section 3.13. Guarantees by Others. Schedule 3.13 sets forth a complete
list of the date hereof of all Guarantees of the Corporation for the benefit
of Persons doing business with the Corporation.
Section 3.14. Tax Matters.
(a) The Corporation has filed (including extensions) all federal,
state, local, and other tax returns (the "Individual Returns") required to be
filed by it under applicable law, including estimated tax returns and reports,
and the Corporation has paid all required Material federal, state and local
income and other applicable taxes, additions to such taxes, penalties and
interest with respect thereto (the "Individual Taxes") due and payable on or
before the date hereof (and will duly and timely pay all such amounts required
to be paid between the date hereof and the Closing Date). The Corporation has
paid, withheld or adequately provided for (or will adequately provide for) any
and all Individual Taxes in respect of the conduct of its business or the
ownership of its property and in respect of any transaction for which such
taxes are due or would be due if the current tax period ended at the close of
business on the Closing Date;
(b) Seller has delivered or made available (or will make
available prior to Closing) to Buyer copies of all tax returns filed by the
Corporation for all tax years beginning with the year ended December 31, 1996,
together with all tax basis fixed asset schedules and any information
necessary to document differences between tax basis accounting and MGAPP
accounting reflected on the Proposed Closing Balance Sheet and related income
statements;
(c) No Material proposed taxes, addition to tax, interest, or
penalties have been asserted against the Corporation except those that have
been paid in full, those that would not have a Material Adverse Effect on the
Corporation, and those as set forth in Schedule 3.16. There are no agreements,
waivers, or other arrangements providing for extensions of time in respect of
the assessment or collection of any unpaid tax against the Corporation, except
as set forth in Schedule 3.14; and
(d) No election or consent under Section 341(f) of the Code has
been made or shall be made on or prior to the Closing Date by or on behalf of
the Corporation.
Section 3.15. Compliance with Law and Other Instruments: Regulatory
Matters. Except as set forth on Schedule 3.15 or Schedule 3.16, (a) the
business of the Corporation has been and is being conducted in accordance with
all applicable laws, ordinances, rules and regulations of all authorities
(exclusive of Environmental Laws as defined in and covered by Section 3.17
below), violation of which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on the Corporation; and (b) the
Corporation is not in violation of, or in default under, any term or provision
of its charter documents or of any lien, indenture, lease, agreement,
instrument, commitment or other arrangement, or subject to any restriction of
any kind or character, which reasonably could be expected to have a Material
Adverse Effect on the Corporation.
Section 3.16. Permits. Schedule 3.16 sets forth a list of all
governmental approvals, authorizations, licenses and permits of all
governmental agencies necessary to the conduct of the business of the
Corporation on the date hereof. Except as set forth in Schedule 3.16, all such
approvals, authorizations, licenses and permits are in full force and effect
and, to the knowledge of Seller, no proceedings to revoke them are pending or
threatened and the Corporation is in compliance with the terms and conditions
under which they were issued or granted.
Section 3.17. Environmental Matters. Except as set forth on Schedule
3.17, the property leased by the Corporation and described in Section 3.09
("Property") and its existing and, to the knowledge of Seller, prior uses
comply and have at all times complied with, and the Corporation is not in
violation of and has not voided, in connection with the use, maintenance or
operation of its business, any applicable federal, state, county or local
statutes, laws, regulations, rules, ordinances, codes, licenses or permits
rating to the handling, manufacturing, treatment, storage, disposal,
discharge, use or transportation of hazardous or toxic substances, materials
or wastes, including without limitation the Clean Air Act, the Federal Water
Pollution Control Act of 1972, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
and the Toxic Substances Control Act (collectively, "Environmental Laws"). To
Seller's knowledge, except as set forth on Schedule 3.17, the Corporation has
received no notice that any Environmental Laws or other federal, state or
local statutes, orders, rules or regulations, ordinances or governmental
policies require any work, repairs, construction or capital expenditures with
respect to the Property.
Section 3.18. Insurance. The Corporation is named as an insured with
insurance carriers not related to or affiliated with the Seller in amounts and
against all risks nominally insured against by Persons operating similar
businesses in similar locations. Schedule 3.18 sets forth a list of the
insurance coverage in effect as of the date of this Agreement.
Section 3.19. Banks; Powers of Attorney. Schedule 3.19 sets forth as of
the date of this Agreement: (a) the names and locations of all banks. trust
companies, savings and loan associations and other financial institutions at
which the Corporation maintains safe deposit boxes or accounts of any nature
to which it has access, and the names of all Persons authorized to draw
thereon, make withdrawals therefrom or have access thereto; and (b) the names
of all Persons to whom the Corporation has granted a power of attorney.
Section 3.20. Brokerage Fees. Except for Equinox Financial Limited,
whose fees Seller shall pay, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with this Agreement or the transactions contemplated hereby based upon any
agreements, written or oral, made by or on behalf of Seller or by or on behalf
of any director, officer, employee, agent or Affiliate of Seller.
Section 3.21. Limitation of Representations and Warranties. Except as
expressly set forth herein, neither Seller makes any representation or
warranty, express or implied, in connection with the transactions contemplated
by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OE BUYER
Buyer represents and warrants to Seller as follows:
Section 4.1. Organization and Good Standing. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware and has full corporate power and authority to carry on its businesses
as they are now being conducted.
Section 4.2. Investment Representation. Buyer is aware that the Shares
are not registered under the Securities Act. Buyer possesses such knowledge
and experience in business matters that it is capable of evaluating the merits
and risks of its investments hereunder. Buyer is acquiring the Shares for its
own account, for investment purposes only and not with a view to the
distribution thereof.
Section 4.3. Execution and Effect of Agreement. Buyer has the corporate
power and authority to enter into this Agreement and the Transaction
Documents, and the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws affecting the rights of creditors generally and to the exercise of
judicial discretion in accordance with general principles of equity (whether
applied by a court of law or of equity). Each of the Transaction Documents,
upon its execution and delivery by Buyer, will constitute a legal, valid and
binding obligation of each such Person executing such Agreement, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws affecting the rights of creditors
generally and to the exercise of judicial discretion in accordance with
general principles of equity (whether applied by a court of law or of equity).
Section 4.4. Restrictions. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
(a) violate any of the provisions of the charter or by-laws of Buyer, or (b)
conflict with or result in a breach of, or give rise to a right of termination
of, or accelerate the performance required by the terms of any judgment, court
order or consent decree, or any agreement, indenture, mortgage or instrument
to which Buyer is a party or to which it or its property is subject, or
constitute a default thereunder, except, in the case of the foregoing clause
(b), where such conflict, breach, right of termination or default would not
have a Material Adverse Effect on Buyer.
Section 4.5. No Lawsuits; Consents. There is no lawsuit, proceeding or
investigation pending or, to the knowledge of Buyer threatened, against Buyer
the effect of which would prevent the consummation of any of the transactions
contemplated hereby. Except (a) for filings, consents, waivers, approvals and
authorizations as to which the failure to obtain or make would not have a
Material Adverse Effect on the Buyer, and (b) for filings, consents, waivers,
approvals and authorizations pursuant to the H-S-R Act, no filing, consent,
approval or authorization of any governmental authority or of any third party
on the part of the Buyer is required in connection with the execution and
delivery of this Agreement or any instrument contemplated hereby or the
consummation of any of the transactions contemplated hereby.
Section 4.6. Limitation of Representations and Warranties. Except as
expressly set forth herein, Buyer makes no representation or warranty, express
or implied, in connection with the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS AND AGREEMENTS OF THE SELLER
Seller covenants and agrees for the benefit of Buyer as follows:
Section 5.1. Corporate Action. Seller shall take, and shall cause the
Corporation to take, all action, corporate or otherwise, necessary or
appropriate for the consummation of the transactions contemplated hereby.
Seller shall execute such additional documents, instruments, memoranda and
other writings as shall be necessary or appropriate to carry out and
effectuate the terms and conditions of this Agreement.
Section 5.2. Conduct of Business to Closing. Except as contemplated by
this Agreement, Seller shall not cause the business of the Corporation to be
conducted other than in the ordinary course. Except as contemplated by or set
forth in this Agreement or the Schedules, annexed hereto, or as consented to
in writing by Buyer (which consent shall not be unreasonably withheld), Seller
shall act, or cause the Corporation to act, as follows:
(a) The Corporation will not adopt any Material change in any
method of accounting or accounting practice, except as contemplated or
required by MGAPP or Schedule 3.6;
(b) The Corporation will not amend its charter or by laws (or
other similar organizational documents);
(c) Except (i) in the ordinary course of business, (ii) as
required by law, (iii) as required or appropriate to maintain the
qualification of any Employee Benefit Plan or Benefit Arrangement under
applicable tax laws or under ERISA, (iv) as required by existing Employee
Benefit Plans, Retirement Plans, or Benefit Arrangements, or (v) as otherwise
contemplated by this Agreement, the Schedules, or the Exhibits, neither the
Corporation nor any Affiliate will enter into or amend any Employee Benefit
Plan or Benefit Arrangement covering Employees, or give any general or
Material individual wage or salary increase to its Employees;
(d) The Corporation shall not enter into any collective
bargaining agreement covering Employees;
(e) Except (i) in the ordinary course of business, (ii) as
otherwise contemplated by this Agreement or the Schedules, or (iii) in
connection with the transfer of any of the Excluded Assets, the Corporation
will not sell, mortgage, pledge, or otherwise dispose of any substantial
assets or properties;
(f) Except as contemplated by this Agreement or the Schedules,
the Corporation will not merge or consolidate with, or agree to merge or
consolidate with, or purchase or agree to purchase all or substantially all of
the assets of, or otherwise acquire, any other business entity;
(g) Except as contemplated by this Agreement or the Schedules,
the Corporation will not (i) authorize for issuance issue or sell any
additional shares of its or its Subsidiaries' capital stock or any securities
or obligations convertible into shares of its Subsidiaries' capital stock or
issue or grant any option. warrant or other right to purchase any shares of
its capital stock, or (ii) declare or pay any dividend or other distribution
on or in respect of its capital stock:
(h) The Corporation will maintain its existing insurance
policies, or comparable coverage, in full force and effect;
(i) Except in the ordinary course of business or as contemplated
by this Agreement or the Schedules, the Corporation will not incur or agree to
incur long-term debt for borrowed money; and
(j) The Corporation shall not make any capital expenditure,
capital addition, or capital improvement exceeding $25,000.
Section 5.3. Consents.
Seller shall use reasonable efforts to (i) obtain all consents, waivers
and authorizations and make all filings with and give all notices that may be
necessary or reasonably required to consummate the transactions contemplated
hereby, it being understood that neither Seller shall be under any obligation
to pay money to any third party (other than fees imposed by statute or
regulation to obtain governmental consents or approvals) as a condition to
receiving any such consents, waivers or authorizations and (ii) cause each of
the conditions precedent to the obligations of Buyer hereunder to be
satisfied.
Section 5.4. Covenant Against Competition.
(a) Except as modified by the Employment Agreement between Buyer
and ▇▇▇▇▇▇▇ Nice and the Consulting Agreement between Buyer and ▇▇▇▇ ▇▇▇▇▇▇▇,
the Seller shall not, directly or indirectly, during the term of and for a
period of twelve months after the expiration of such Employment Agreement or
Consulting Agreement, as the case may be, engage in the Corporation's business
within a 500-mile radius of the place of such employment or the principal
place of business of Buyer;
(b) Except as may be required by law or in the bona fide
prosecution of its rights under this Agreement or any Transaction Document,
after Closing the Seller shall not use or disclose any confidential
information principally concerning the Corporation's business;
(c) Seller acknowledges and agree that it would be difficult to
fully compensate Buyer for damages resulting from the breach or threatened
breach of the foregoing provisions of this Section 5.5 and, accordingly that
Buyer shall be entitled to temporary and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent
injunctions, to enforce such provisions upon proving that it has suffered or
that there is a substantial probability that it will suffer irreparable harm
and without the necessity of posting any bond or other understanding in
connection therewith. This provision with respect to injunctive relief shall
not, however, diminish Buyer's right to claim and recover damages; and
(d) The provisions of this Section 5.5 are severable and if any
one or more of them may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall
nevertheless be binding and enforceable. For purposes of this Section, each of
clauses (a) through (c) except for leases and time payments shall be
considered a separate covenant such that if the geographic scope of any such
clause shall be determined by a court to be invalid, that clause shall be
severed and the remaining clauses shall remain in full force and effect.
Section 5.5. Capital Liabilities. No later than Closing, Seller shall
cause such Capital Liabilities, as may exist at Closing, including all
interest accrued thereon, to be fully satisfied or to specifically provided
for on Schedule 1.19, except for leases and time payments thereafter.
Section 5.6. Purchase Price Allocation. Seller acknowledges that the
allocation of the Purchase Price as set forth in Section 2.3 has been
negotiated among the parties and is consistent with the value of the Shares
and the covenants of Seller under Section 5.4. Seller and Buyer shall each use
such allocation of the Purchase Price in any tax returns or other reports
filed with taxing authorities which deal with the transactions contemplated in
this Agreement.
Section 5.7. Access to Information and Cooperation.
(a) Subsequent to the date of this Agreement, Seller shall give
Buyer, its counsel, and its consultants full and complete access, upon
reasonable notice during normal business hours, to all records and affairs of
the Corporation within their possession and will provide copies of such
information concerning the Corporation as Buyer may reasonably request for any
proper purpose, including without limitation in connection with the
preparation of any tax returns or financial statements or in connection with
any judicial, quasi judicial, administrative, tax audit or arbitration
proceeding: and
(b) Seller shall at its expense cooperate fully with the Buyer in
the defense or pursuit of any claim or action which relates to occurrences
involving the business of the Corporation prior to the Closing Date that does
not relate to an Excluded Asset.
Section 5.8. Public Statements. Seller shall not release any
information concerning this Agreement or the transactions contemplated hereby
that is intended for or may result in public dissemination thereof without the
prior written consent of Buyer (which shall not be unreasonably withheld or
delayed), unless (a) in the opinion of counsel to Seller, the release of such
information is required by law and (b) prior to the release of such
information and as soon as possible after Seller has received such counsel's
opinion, (i) Seller shall advise Buyer of the opinion and (ii) at Buyer's
request, Seller shall provide a copy to Buyer, and further provided that
Seller shall be permitted to disclose to Employees, and upon Buyer's request
to give Buyer the opportunity to make a joint statement with Seller to
Employees, concerning the terms of Benefit Arrangements and Employee Benefit
Plans available to Employees following Closing.
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees for the benefit of Seller as follows
Section 6.1. Corporate Action. Buyer shall take all action, corporate
or otherwise, necessary or appropriate for the consummation of the
transactions contemplated hereby. Buyer shall execute such additional
documents, instruments, memoranda and other writings as shall be necessary or
appropriate to carry out and effectuate the terms and conditions of this
Agreement.
Section 6.2. Public Statements. Buyer shall not release any information
concerning this Agreement or the transactions contemplated hereby that is
intended for or may result in public dissemination thereof without the prior
written consent of Seller (which shall not be unreasonably withheld or
delayed), unless (a) in the opinion of counsel to Buyer, the release of such
information is required by law and (b) prior to the release of such
information and as soon as possible after Buyer has received such counsel's
opinion, (i) Buyer shall advise Seller of the opinion and (ii) at Seller's
request, Buyer shall provide a copy to Seller.
Section 6.3 Consents.
(a) Buyer shall promptly make any and all filings that are or may
be required under the H-S-R Act and shall cooperate with Seller in connection
with similar filings by Seller. Buyer shall cooperate and use reasonable
efforts to ensure that any pre-acquisition waiting period required by the
H-S-R Act expires or is otherwise terminated, and shall comply promptly with
any requests made pursuant to the FI-S-R Act or the regulations thereunder;
and
(b) Buyer shall use reasonable efforts to (i) obtain all
consents, waivers and authorizations and make all filings with and give all
notices that may be necessary or reasonably required to consummate the
transactions contemplated hereby, provided that Buyer shall not be under any
obligation to pay money to any third party as a condition to receiving any
such consents, waivers or authorizations, and (ii) cause each of the
conditions precedent to the obligations of Seller hereunder to be satisfied.
Section 6.4. Certain Employee Benefit Matters.
(a) Commencing upon the Closing Date, Buyer shall cause the
Corporation to continue to employ each Employee who is an employee on the
Closing Date upon the same terms and conditions of employment as pertained to
each Employee on the day immediately preceding the Closing Date and as are
specifically described in the Schedules to this Agreement, provided that this
undertaking shall in no way diminish the Corporation's existing rights to lay
off employees or to terminate employees on account of unacceptable performance
or otherwise in accordance with the terms of any contracts of employment. If
any Employee is laid off or on leave on the Closing Date, Buyer shall cause
the Corporation to recall or reinstate such Employee in accordance with the
layoff or leave of absence policy of the Corporation that is in effect on the
date of this Agreement and is specifically described in the Schedules. Buyer
shall take all reasonable action required or appropriate to cause the
Corporation to fulfill all obligations of the employer under all Benefit
Arrangements, Employee Benefit Plans, Multiemployer Plans, and Retirement
Plans as of the Closing Date (including without 1imitation severance payments
or benefits that have accrued, or that accrue or inure, on or after the
Closing Date or that inure after the date of this Agreement and prior to the
Closing Date as a result of action taken by Seller with consent of Buyer)
which are specifically described on the Schedules, except as may be required
otherwise by law; and
(b) The Buyer shall maintain and keep available a pool of options
for the acquisition of the common stock of Buyer, which option shall, from
time-to-time and at the sole discretion of Buyer, be made available to the
employees of the Company.
Section 6.5. Preservation of and Access to Certain Information and
Cooperation After Closing.
(a) Buyer shall, and from and after the Closing Date shall cause
the Corporation and its Affiliates, to preserve all books and records of the
Corporation until Seller notifies Buyer that all statutes of limitations
relating to ta periods to which such records relate have expired, and
thereafter not to destroy or dispose of such records without notice to Seller
offering it the right to copy such records. Except as prohibited or limited by
law or regulation, Buyer shall, and shall cause the Corporation from and after
the Closing Date to, give Seller and Seller's employees, accountants, counsel,
and advisors, reasonable access upon reasonable notice and for proper business
purposes during normal business hours, to all officers, employees, offices,
properties, agreements, books, records and affairs of the Corporation, in a
manner that does not unreasonably interfere with the normal conduct of its
business. Buyer shall, and shall cause the Corporation to, prepare and
transmit such financial reports in accordance with past practices and
procedures and on a timely basis as may be necessary for Seller or its
Affiliates to prepare any Consolidated Tax Return, and ensure that Seller and
its authorized representatives shall be free, during the period referred to in
the first sentence of this Section, to make copies of such books, records,
files and data concerning the Corporation for the following purposes: (i) the
review of the Proposed Closing Balance Sheet and the resolution of any
disputes with respect to the Proposed Closing Balance Sheet, (ii) the
preparation of any tax returns for the Affiliated Group, (iii) or in
anticipation of any judicial, quasi judicial, administrative, tax audit, or
arbitration proceeding initiated by or against third parties and relating to
the Corporation, and (iv) in connection with any claim relating to Excluded
Assets or Excluded Liabilities. Except as may be required by law or in the
bona fide prosecution of its rights under this Agreement or any Transaction
Document and except as specifically provided above, Seller shall not use or
disclose any such information; and
(b) Buyer shall after Closing cause the Corporation, at Seller's
expense to, cooperate fully and to such extent as is reasonable under the
circumstances with Seller in the defense of pursuit of any claim or action
that relates to an Excluded Liability or an Excluded Asset.
Section 6.6. Nondisposition of Shares. Buyer shall not, and shall not
permit any of their Affiliates to, sell, transfer, offer for sale, pledge,
hypothecate, or otherwise dispose of the Shares except pursuant to a valid
registration under the Securities Act, unless an exemption from registration
under the Securities Act is available.
ARTICLE VII
CONDITIONS OF OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the purchase of the Shares on the
Closing Date and to perform its other covenants and agreements in accordance
with the terms and conditions of this Agreement are subject to each of the
following conditions which, if not satisfied, may be waived in writing by
Buyer, provided however, that any such waiver, if made knowingly, shall also
be deemed a waiver of any claim for damages, losses or other remedies
otherwise available to Buyer as the result of the failure to satisfy such
condition.
Section 7.1. Representations and Warranties True. Except as otherwise
permitted, contemplated, or limited by this Agreement and except for
representations and warranties that by their terms speak only as of a
specified date, (a) each of the representations and warranties of Seller
contained in ARTICLE III that is limited by Materiality shall be true and
correct on and as of the Closing Date as though made on and as of the Closing
Date, and (b) each of the representations and warranties that is not so
limited shall be true and correct in all Material respects on and as of the
Closing Date as though made on and as of the Closing Date.
Section 7.2. Covenants and Agreements-No Default. Seller shall not be
in default in respect of any obligation under this Agreement and Seller shall
have performed or complied in all Material respects with all covenants and
agreements required by this Agreement to be performed or complied with by them
prior to or as of the Closing Date.
Section 7.3. Officer's Certificates. Seller shall have furnished Buyer
with a certificate signed by a corporate officer confirming the satisfaction
of the conditions set forth in Section 7.1 and Section 7.2.
Section 7.4. No Material Adverse Change. Except as permitted or
contemplated by this Agreement or any Schedule, or disclosed in the Balance
Sheet, since the Financials Date the Corporation shall not have suffered an
adverse change in its business or financial condition that could reasonably be
expected to have a Material Adverse Effect on the Corporation.
Section 7.5. Consents. Seller shall have obtained all third-party and
governmental consents, waivers, authorizations and approvals and shall have
made all filings and given all notices required in connection with the
consummation of the transactions contemplated by this Agreement other than
those that are not Material or set forth in Schedule 3.7, and all applicable
waiting periods in respect of the transactions contemplated by this Agreement
under the H-S-R Act shall have expired or otherwise terminated, it being
understood that (a) the Seller shall not be under any obligation to pay money
to any third party (other than fees imposed by statute or regulation) as a
condition to receiving such consents, waivers, and authorizations, and (b)
Seller shall use reasonable efforts to cause each of the conditions precedent
to the obligations of Buyer hereunder to be satisfied. In the event Seller is
unable to obtain any such consents, the condition contained in this Section
7.5 shall be deemed satisfied if Seller provides to Buyer and, other than as
to matters identified on Schedule 3.13, in a manner and form satisfactory to
Buyer in its sole discretion, at the Closing the economic equivalent of any
rights that would have inured to the Buyer had such consents been obtained.
Buyer shall have obtained all third-party consents, waivers, authorizations
and approvals and shall have made all filings and given all notices required
in connection with the consummation of the transactions contemplated by this
Agreement that are referenced in Section 4.5.
Section 7.6. Transaction Documents. Seller shall have provided Buyer
with all of the documents required by Section 10.2 to be delivered at Closing
by Seller.
Section 7.7. Adverse Proceedings. No Material action, proceeding or
governmental investigation shall have been instituted or threatened against
the consummation of the transactions contemplated in this Agreement or any
Material Transaction Document or against or involving the Corporation where
the outcome might reasonably be expected to have a Material Adverse Effect on
the Corporation.
ARTICLE VIII
CONDITIONS OF OBLIGATIONS OF SELLER
The obligation of Seller to consummate the sale of the Shares on the
Closing Date and to perform their other covenants and agreements in accordance
with the terms and conditions of this Agreement are subject to each of the
following conditions which, if not satisfied, may be waived in writing by
Seller, provided however, that any such waiver, if made knowingly, shall also
be deemed a waiver of any claim for damages, losses or other remedies
otherwise available to Seller or its Affiliates as the result of the failure
to satisfy such condition.
Section 8.1. Representations and Warranties True. Except as otherwise
permitted or contemplated by this Agreement and except for representations and
warranties that by their terms speak only as of a specified date, (a) each of
the representations and warranties of Buyer contained in ARTICLE IV that is
limited by Materiality shall be true and correct on and as of the Closing Date
as though made on and as of the Closing Date and (b) each of the
representations and warranties that is not so limited shall be true and
correct in all Material respects on and as of the Closing Date as though made
on and as of the Closing Date.
Section 8.2. Covenants and Agreements-No Default. Buyer shall not be in
default in respect of any obligation under this Agreement and Buyer shall have
performed or complied in all Material respects with all covenants and
agreements required by this Agreement to be performed or complied with by
Buyer prior to or as of the Closing Date.
Section 8.3. Officer's Certificates. Buyer shall have furnished Seller
with a certificate signed by a corporate officer confirming the satisfaction
of the conditions set forth in Sections 8.1 and 8.2.
Section 8.4. Consents. Buyer shall have obtained all third-party and
governmental consents, waivers, authorizations and approvals and shall have
made all filings and given all notices required in connection with the
consummation of the transactions contemplated by this Agreement that are
referenced in Section 4.5, and all applicable waiting periods in respect of
the transactions contemplated by this Agreement under the H-S-R Act shall have
expired or otherwise terminated, it being understood that (a) Buyer shall not
be under any obligation to pay money to any third-party (other than fees
imposed by statute or regulation) as a condition to receiving such consents,
waivers, and authorizations and (b) Buyer shall use reasonable efforts to
cause each of the conditions precedent to the obligations of Seller hereunder
to be satisfied. Seller shall have obtained all third-party and governmental
consents, waivers, authorizations, and approvals and shall have made all
filings and given all notices required in connection with the consummation of
the transactions contemplated by this Agreement that are referenced in Section
3.7 or are set forth in Schedule 3.7.
Section 8 5. Transaction Documents. Buyer shall have provided Seller
with all of the documents required by Section 10.3 to be delivered at Closing
by Buyer.
Section 8.6. Adverse Proceedings. No Material action, proceeding or
governmental investigation shall have been instituted or threatened against
the consummation of the transactions contemplated in this Agreement or the
Transaction Documents.
ARTICLE IX INTENTIONALLY DELETED
ARTICLE X
CLOSING
Section 10.1. Closing. The Closing shall take place at the offices of
Semmes, ▇▇▇▇▇ 8 ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on
May 21, 1997 at 1C:00 a.m., or at such other place and at such other time and
date as may be mutually agreed upon in writing by Buyer and Seller, only upon
fulfillment of (a) all the conditions set forth in ARTICLE VII that have not
been waived by Buyer, and (b) all the conditions set forth in ARTICLE VIII
that have not been waived by Seller. If such conditions have not been
fulfilled or waived by such date, the Closing shall take place within five
business days after fulfillment or waiver of all such conditions but in no
event later than June 1, 1997 unless otherwise mutually agreed to in writing
by the Buyer and the Seller. All proceedings to be taken and all documents to
be executed and delivered by Seller in connection with the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Buyer and its counsel. All proceedings to be taken and all
documents to be executed and delivered by Buyer in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Seller and its counsel. All proceedings
to be taken and all documents to be executed and delivered at the Closing
shall be deemed to have been taken and executed simultaneously, and no
proceedings shall be deemed taken nor any documents executed or delivered
until all have been taken, executed or delivered.
Section 10.2. Documents to be Delivered by Seller. At the Closing,
Seller shall deliver, or shall cause to be delivered. to Buyer the following:
(a) Certificates representing the Shares, which certificates
shall be duly endorsed in blank or, in lieu thereof, shall have affixed
thereto stock powers executed in blank and in proper form for transfer;
(b) Employment Contracts for certain employees of the
Corporation.
(c) An opinion of counsel for Seller, dated the Closing Date,
substantially in the form attached hereto as Exhibit C;
(d) Certificates of a Vice President, the Secretary or an
Assistant Secretary of Seller, dated the Closing Date, setting forth the
resolutions of the Board of Directors of Seller authorizing the execution and
deli-very of this Agreement and the consummation of the transactions
contemplated hereby, and certifying that such resolutions have not been
amended or rescinded and are in full force and effect;
(e) A good standing certificate and a copy of the Corporation's
charter, certified as of a date reasonably close to the Closing Date;
(f) The certificate contemplated by Section 7.3;
(g) Such other documents, instruments or agreements as may be
reasonably requested by Buyer to effectuate the transactions contemplated by
this Agreement; and
(i) The "Paid and Canceled" note provided for in Section 2.2.
Section 10.3. Documents to be Delivered by Buyer. At the closing, Buyer
shall deliver, or cause to be delivered, to Seller the following:
(a) A wire transfer of funds to the account designated by Seller
in an amount equal to the cash portion of the Purchase Price, as provided in
Section 2.2;
(b) A note in favor of the Seller as provided for in Section 2.2
(c) Certificates representing 305,585 shares of the common stock
of the Buyer.
(d) An opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ 8 ▇▇▇▇▇▇, counsel for Buyer, dated
the Closing Date, substantially in the form attached hereto as Exhibit D;
(e) Certificates of the Secretary or an Assistant Secretary of
Buyer, dated the Closing Date, setting forth copies of the resolutions of the
Board of Directors of Buyer, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, and
certifying that such resolutions have not been amended or rescinded and are in
full force and effect:
(f) The certificate contemplated by Section 8.3;
(g) Subordination Agreement in connection with Section 10.3 (b)
(h) Such other documents, instruments or agreements as may be
reasonably requested by Seller to effectuate the transactions contemplated by
this Agreement; and
(i) The Employment Agreement and Consulting Agreement referred
to in Section 5.4.
(j) The Subordination Agreement in respect to the notes referred
to in Section 2.3.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Survival of Representations, Warranties, Covenants and
Agreements. Except as otherwise expressly provided in this Agreement, all
covenants and all representations and warranties made by the parties in this
Agreement (including statements contained in any Schedule or certificate or
other instrument delivered by or on behalf of a party to this Agreement) shall
survive the execution of this Agreement and the Closing and any
investigations, examinations or audits made by or on behalf of the parties,
provided that representations and warranties shall survive only until the
applicable "Expiration Date" as follows:
(a) The Expiration Date for the representations and warranties
made in Section 3.16 shall be the date on which all applicable tax statutes of
limitation have expired; and
(b) The Expiration Date for all other representations and
warranties made in this Agreement shall be the date of the payment of the
Subordinated Debt to Seller.
On the applicable Expiration Date, the associated representations and
warranties shall have no further force or effect and all liabilities of the
parties thereunder shall be extinguished, provided that if prior to the
Expiration Date a party has delivered to the other party a notice asserting a
good faith claim for breach of representation and warranty, that specific
claim shall survive and be actionable after the Expiration Date.
Section 11.2. Indemnification.
(a) Seller shall hold harmless and indemnity Buyer from and
against all claims, actions, damages, liabilities or losses (including court
costs and attorneys fees) (collectively, "Losses") arising out of: (i) the
breach by Seller of any of its representations, warranties, covenants or
agreements made under or pursuant to this Agreement; and (ii) products
liability claims asserted against or paid by the Corporation (after having
used reasonable and appropriate efforts to avoid or reduce such payments), but
only where such claims are asserted within 18 months after the Closing Date
and in respect of products shipped prior to the Closing Date;
(b) Buyer shall hold harmless and indemnify Seller from and
against all Losses arising out of: (i) the breach by Buyer of any of its
representations, warranties, covenants or agreements made under or pursuant to
this Agreement; (ii) the breach by Buyer or, after Closing, the Corporation of
any agreements with any third parties; (iii) actions wrongfully taken with
respect to the Corporation by Buyer or its Affiliates, or by the Corporation
after Closing; and (iv) actions taken with respect to the corporation by
Seller prior to Closing at the request of Buyer;
(c) For purposes of this Section 11.2, any Losses incurred by the
Corporation shall be deemed to have been incurred by Buyer;
(d) After the Closing, Seller shall not be entitled to
contribution from, or recovery against, the Corporation with respect to any
liability of Seller which may arise under this Section 11.2, and
(e) Consummation of the transactions contemplated by this
Agreement and the Transaction Documents shall not be deemed to be a waiver of.
any right or remedy of a party, nor shall this Section 11.2 or any other
provision of this Agreement be deemed to be a waiver of any ground of defense
by a Party
Section 11.3. Disclaimer of Other Representations and Warranties by
Seller. The parties hereto acknowledge and agree that Seller does not make,
and has not made, any representations or warranties relating to the
Corporation, or any of the transactions contemplated by this Agreement other
than the representations and warranties expressly set forth in this Agreement.
Without limiting the generality of the disclaimer set forth in the preceding
sentence, Seller does not make, has not made and shall not be deemed to have
made any representations or warranties in the Offering Memorandum, in any
presentation relating to the businesses of the Corporation given in connection
with the transactions contemplated by this Agreement, in any filing made by or
on behalf of the Corporation with any governmental agency, or in any other
information provided to or made available to Buyer and not included in the
Schedules to this Agreement, and no statement contained in the Offering
Memorandum or made or contained in any such presentation, filing, or
information shall be deemed a representation or warranty hereunder or
otherwise. No person has been authorized by Seller, or the Corporation to make
any representation or warranty in respect of Seller, or the Corporation in
connection with the transactions contemplated by this Agreement.
Section 11.4. Disclosure. Notwithstanding any provision to the contrary
contained in this Agreement, the Exhibits or the Schedules, any information
disclosed in one Schedule shall be deemed to be disclosed in all Schedules.
Certain information set forth in the Schedules has been included and disclosed
solely for informational purposes and may not be required to be disclosed
pursuant to the terms and conditions of the Agreement. The disclosure of any
information shall not be deemed to constitute an acknowledgment or agreement
that the information is required to be discussed in connection with the
representations and warranties made in this Agreement or that the information
is Material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is Material.
Section 11.5. Expenses and Taxes. All legal, accounting and other costs
and fees incurred by the Corporation and the Seller in connection with the
transactions contemplated by this Agreement shall be borne and paid for by the
Corporation prior to Closing. All legal, accounting and other costs and fees
incurred by Buyer in connection with the transactions contemplated by this
Agreement and all taxes (other than value added taxes or taxes on, relating to
or measured by income or gains), stamp duty, notarial, registration and
recording fees and similar taxes resulting from or relating to the transfer of
any of the Shares to Buyer or any party designated by Buyer shall be borne by
Buyer.
Section 11.6. Entire Agreement. This Agreement, the Schedules, and the
Exhibits constitute the entire agreement and understanding between the parties
hereto in respect of the matters set forth herein, and all prior negotiations,
writings and understandings relating to the subject matter of this Agreement
(including without limitation the Offering Memorandum), other than the
Confidentiality Agreement, are merged herein and are superseded and canceled
by this Agreement. Other than as expressly set forth in this Agreement and the
Schedules and Exhibits, no representations, warranties, covenants, agreements
or conditions, express or implied, whether by statute or other wise, have been
made by the parties hereto.
Section 11.7. Amendment and Waiver. This Agreement may be amended,
modified, supplemented or changed in whole or in part only by an agreement in
writing making specific reference to this Agreement and executed by each of
the parties hereto. Any of the terms and conditions of this Agreement may be
waived in whole or in part, but only by an agreement in writing making
specific reference to this Agreement and executed by the party that is
entitled to the benefit thereof.
Section 11.8. Binding Agreement and Successors. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that prior to
the consummation of this Agreement the rights of the parties hereunder may not
be assigned, and provided that the obligations of the parties hereunder may
not be delegated, in whole or in part, without the prior written consent of
the other party hereto.
Section 11.9. No Third Party Beneficiaries. Nothing in this Agreement
is intended to confer upon any Person other than the parties hereto any rights
or remedies.
Section 11.10. Notices. Any notice, request, instruction or other
document or communication required or permitted to be given under this
Agreement shall be in writing and shall be deemed to be given upon (i)
delivery in person, (ii) five days after being deposited in the mail, postage
prepaid, for mailing by certified or registered mail, (iii) one day after
being deposited with an overnight courier, charges prepaid, or (iv) when
transmitted by facsimile, with a copy simultaneously sent as provided in
clauses (ii) and (iii), in every case as follows:
If to Buyer, delivered or mailed to:
IT Partners Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy delivered or mailed by the same method to:
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇, Esquire
Semmes, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Seller, delivered or mailed to:
▇▇▇▇▇▇▇ Nice
▇▇▇▇ ▇▇▇▇▇▇▇
C.N.S., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy delivered or mailed by the same method to:
▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Commons, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address or addresses as may be specified in writing at any
time or from time to time by either party to the other party hereto.
Section 11.11. Further Assurances. The parties hereto each agree to
execute, make, acknowledge, and deliver such instruments, agreements and other
documents as may be reasonably required to effectuate the purposes of this
Agreement and to consummate the transactions contemplated hereby.
Section 11.12. Article and Section Headings. The Article, Exhibit and
Section headings contained in this Agreement, the Exhibits and the Schedules
are for convenience of reference only and shall not limit or otherwise affect
the meaning or interpretation of this Agreement, the Exhibits, or the
Schedules or any of their terms and conditions.
Section 11.13. Governing Law. This Agreement shall be construed and
enforced in accordance with and shall be governed by the laws of the State of
Maryland, without regard to its conflict of law provisions and principles.
Section 11.14. Courts. Any dispute arising from the interpretation
or operation of this Agreement shall be resolved in the courts of the State of
Maryland, and the parties hereby consent to and elect, and waive any objection
to, such jurisdiction in the event of litigation hereunder.
Section 11.15. Construction. As used in this Agreement, any
reference to the masculine, feminine or neuter gender shall include all
genders, the plural shall include the singular, and the singular shall include
the plural. With regard to each and every term and condition of this Agreement
and any and all agreements and instruments subject to the terms hereof, the
parties hereto understand and agree that the same have or has been mutually
negotiated, prepared and drafted, and that if at any time the parties hereto
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party hereto actually prepared, drafted or requested any
term or condition of this Agreement or any agreement or instrument subject
hereto.
Section 11.16. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
Section 11.17. Attorneys' Fees. Should legal proceedings be instituted to
enforce the provisions of this Agreement or any Transaction Document, the
prevailing party shall be entitled to costs of suit, including attorneys' fees
actually incurred, from the unsuccessful party.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the day and year first above written.
ATTEST: C.N.S., Inc.
--------------------------- By:
▇▇▇▇ ▇▇▇▇▇▇▇, Secretary -------------------------------
▇▇▇▇▇▇▇ Nice, President
--------------------------------
▇▇▇▇▇▇▇ Nice, Individually
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Individually
ATTEST: IT PARTNERS INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the day and year first above written.
ATTEST: C.N.S., Inc.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------- By: /s/ ▇▇▇▇▇▇▇ Nice
▇▇▇▇ ▇▇▇▇▇▇▇, Secretary -------------------------------
▇▇▇▇▇▇▇ Nice, President
/s/ ▇▇▇▇▇▇▇ Nice
--------------------------------
▇▇▇▇▇▇▇ Nice, Individually
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Individually
ATTEST: IT PARTNERS INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇