EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
RETURN ON INVESTMENT CORPORATION,
TECTONIC SOLUTIONS, INC.,
CONSTRUCTION YELLOW PAGES, LLC
AND
▇▇▇▇ ▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇▇
OCTOBER 29, 2003
TABLE OF CONTENTS
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PAGE
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SECTION 1. PURCHASE AND SALE................................................1
1.1 Agreement to Purchase and Sell........................................1
1.2 Included Assets.......................................................1
1.3 Excluded Assets.......................................................2
1.4 Assumption of Assumed Liabilities.....................................3
1.5 Excluded Liabilities..................................................3
1.6 Nonassignable Contracts...............................................4
SECTION 2. CLOSING MATTERS; PURCHASE PRICE..................................5
2.1 Closing...............................................................5
2.2 Purchase Price........................................................5
2.3 Allocation of Purchase Price..........................................5
2.4 Receivables...........................................................6
2.5 Outstanding Payables..................................................6
2.6 Further Assurances....................................................6
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDERS...6
3.1 Organization; Books and Records.......................................6
3.2 Authorization, Execution and Enforceability...........................7
3.3 Absence of Restrictions and Conflicts.................................8
3.4 Share Ownership; No Interest in Other Entities........................8
3.5 Ownership of Assets and Related Matters...............................8
3.6 Financial Statements..................................................9
3.7 Real Property; Other Assets..........................................10
3.8 Absence of Certain Changes...........................................10
3.9 Legal Proceedings....................................................10
3.10 Licenses, Permits and Compliance with Law............................11
3.11 Contracts and Commitments............................................11
3.12 Tax Returns; Taxes...................................................12
3.13 Insurance............................................................13
3.14 Intellectual Property................................................13
3.15 Transactions with Affiliates.........................................14
3.16 Customer and Supplier Relations......................................15
3.17 Brokers, Finders and Investment Bankers..............................15
3.18 Disclosure...........................................................15
3.19 Investment Representations...........................................15
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.................17
4.1 Organization and Standing............................................17
4.2 Authority, Execution and Enforceability..............................17
4.3 Absence of Restrictions and Conflicts................................17
4.4 Parent Shares........................................................18
4.6 SEC Filings; Purchaser Financial Statements..........................18
4.7 Purchaser Capitalization.............................................19
4.8 Parent Capitalization................................................19
4.9 Litigation...........................................................19
4.10 No Material Adverse Change...........................................19
4.11 Brokers' and Finders' Fees..........................................19
4.12 Disclosure...........................................................19
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS...................19
5.1 Conduct of Business of the Company...................................19
5.2 No Solicitation......................................................21
5.3 Distribution of Parent Shares and Notes..............................21
5.4 Use of Name..........................................................22
5.5 Public Announcements.................................................22
5.6 Access to Information, Confidentiality...............................22
SECTION 6. OTHER COVENANTS.................................................22
6.1 Employment Matters...................................................22
6.2 SEC Filings..........................................................23
6.3 Best Source Contacts.................................................24
6.4 Office Sublease......................................................24
SECTION 7. CONDITIONS TO CLOSING...........................................24
7.1 Conditions to Each Party's Obligations to Consummate the
Acquisition..........................................................24
7.2 Conditions to the Company's and the Shareholders' Obligations to
Consummate the Acquisition...........................................24
7.3 Conditions to the Purchaser's and the Parent's Obligations to
Consummate the Acquisition...........................................25
SECTION 8. TERMINATION.....................................................27
8.1 Termination..........................................................27
8.2 Effect of Termination................................................27
8.3 Amendment............................................................28
8.4 Extension; Waiver....................................................28
8.5 Procedure for Termination, Amendment, Extension or Waiver............28
SECTION 9. INDEMNIFICATION.................................................28
9.1 Indemnification Obligations of the Company and Shareholders..........28
9.2 Indemnification Obligations of the Purchaser.........................29
9.3 Indemnification Procedure............................................29
9.4 Claims Period........................................................31
9.5 Shareholder Liability Limitations....................................31
9.5 Shareholder Liability Limitations....................................32
SECTION 10. MISCELLANEOUS...................................................33
10.1 Notices..............................................................33
10.2 Interpretation.......................................................35
10.3 Entire Agreement; Third-Party Beneficiaries..........................35
10.4 Governing Law........................................................35
10.5 Assignment...........................................................35
10.6 Severability.........................................................35
10.7 Counterparts.........................................................35
10.8 Costs and Expenses...................................................36
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SCHEDULES
Schedule 1.2(a)............. Tangible Assets
Schedule 1.2(c)............. Intellectual Property
Schedule 1.3(a)............. Excluded Assets
Schedule 1.5(c)............. Excluded Contracts and Agreements
Schedule 2.3................ Allocation
Schedule 3.1................ List of Locations where Qualified as a Foreign
Limited Liability Company
Schedule 3.3................ Absence of Conflicts
Schedule 3.4(b)............. Company Owned Equity
Schedule 3.6................ Company Financial Statements
Schedule 3.7................ Real Property Leases
Schedule 3.8................ Absence of Certain Changes
Schedule 3.9................ Legal Proceedings
Schedule 3.10............... Licenses
Schedule 3.11............... Contracts and Commitments
Schedule 3.12............... Taxes
Schedule 3.13............... Insurance
Schedule 3.14(a)............ Owned Intellectual Property
Schedule 3.14(b)............ Licensed Intellectual Property
Schedule 3.14(c)............ Intellectual Property Disputes
Schedule 3.15............... Transactions with Affiliates
Schedule 3.16............... Customer and Supplier Relations
Schedule 6.1................ Employees
EXHIBITS
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Exhibit A.................. ▇▇▇▇ of Sale and Assignment and Assumption
Agreement
Exhibit B.................. Form of Non-Competition Agreement
Exhibit C.................. Intellectual Property Assignment Agreement
Exhibit D.................. Legal Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
Exhibit E.................. Form of Investor Representation Letter
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ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated as of October 29,
2003, by and among Tectonic Solutions, Inc., a Georgia corporation (the
"PURCHASER"), Return On Investment Corporation, a Delaware corporation and the
sole shareholder of the Purchaser (the "PARENT"), Construction Yellow Pages,
LLC, a Michigan limited liability company (the "COMPANY"), ▇▇▇▇ ▇▇▇▇▇▇▇, an
individual resident of the state of Georgia and a member of the Company
("▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), an individual resident of the state of
Michigan and a member of Best Source Publishing, LLC, which is a member of the
Company. In this Agreement, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ are referred to, individually, as
a "PRINCIPAL MEMBER" and, collectively, as the "PRINCIPAL MEMBERS."
W I T N E S S E T H:
--------------------
WHEREAS, the Company publishes a comprehensive print directory for the
commercial construction industry that architecture and engineering firms,
design-build firms, and specialty contractors use to find essential information
about companies, products, and equipment needed to complete construction
projects (the "BUSINESS");
WHEREAS, the parties desire to enter into this Agreement pursuant to which
the Company proposes to sell to the Purchaser, and the Purchaser proposes to
purchase from the Company (the "ACQUISITION"), substantially all of the assets
used or held for use by the Company in the Business, and the Purchaser proposes
to assume certain of the liabilities and obligations of the Company relating to
the Business; and
WHEREAS, the parties desire to make certain representations, warranties and
agreements in connection with the Acquisition;
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. PURCHASE AND SALE.
1.1 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and conditions of
this Agreement, the Company hereby agrees to sell, convey, assign, transfer and
deliver to the Purchaser, and the Purchaser hereby agrees to purchase and
acquire from the Company, all right, title and interest of the Company in and to
all of the Assets (as hereinafter defined), free and clear of all Liens (as
hereinafter defined).
1.2 INCLUDED ASSETS. Except as otherwise expressly set forth in Section 1.3
hereof, the term "ASSETS" shall mean and shall include the following property
and assets of the Company:
(a) all the equipment, servers, computer hardware, machinery, office
equipment, furniture, fixtures and similar tangible property employed by the
Company in the conduct of the Business, and including those items listed on
SCHEDULE 1.2(A);
(b) all right, title and interest of the Company in the Contracts (as
hereinafter defined);
(c) all goodwill, patents, patent applications, copyrights, copyright
applications, domain names, methods, know-how, software, source code, technical
documentation, processes, procedures, inventions, trade secrets, trademarks,
trade names, service marks, service names, registered user names, technology,
research records, data, designs, plans, drawings, manufacturing know-how and
formulas, whether patentable or unpatentable, and other intellectual or
proprietary rights or property of the Company (and all rights thereto and
applications therefore), including the intellectual property listed on SCHEDULE
1.2(C);
(d) all customer lists used by the Company;
(e) the name "Construction Yellow Pages,"
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" and all variations thereof;
(f) all cash and accounts receivable of the Company;
(g) all claims, rights and causes of action of the Company against or
with respect to third parties related to the Business, and all rights and
interest of the Company in, to and under all Contracts between it and any other
party or parties under any Contracts which have been acquired by it by
assignment or in any other manner, whether or not disclosed or required to be
disclosed in SCHEDULE 3.11 hereof, including all rights in distribution
agreements with third parties and all of the Company's rights, if any, to
inventory and equipment loaned to the Company or which the Company has on
consignment; and
(h) all other assets of Company employed in the conduct of the
Business, whether real, personal, tangible, intangible or mixed and whether or
not reflected in the Company Financial Statements or in the books or records of
the Company, including all books, records and files (including, to the extent
permitted by law or if authorized by the effected employees, all personnel
files), rights under executory contracts and purchase and sale orders to be
assumed by Purchaser hereunder (including all written contracts, orders and
arrangements between Company and third parties existing at the Closing Date for
the supply of goods and services for use in the Business), any prepaid expenses
to the extent properly assignable to Purchaser and relating to periods
subsequent to the Closing Date, permits and licenses to the extent transferable
under law and all agreements for the lease of equipment, vehicles and office
furniture.
1.3 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
herein, the term "Assets" shall not mean or include the following assets,
properties and rights of the Company (collectively, the "EXCLUDED ASSETS"):
(a) the assets listed on SCHEDULE 1.3(A); and
(b) the Best Source Contracts (as defined in Section 3.11 below) and
any rights therein or thereunder; and
(c) the minute books, stock registers and related records of the
Company.
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1.4 ASSUMPTION OF ASSUMED LIABILITIES. Except as expressly provided in this
Section 1.4, the Purchaser shall not assume any claims, liabilities or
obligations of the Company. As the sole exception to the foregoing, the
Purchaser shall assume and agree to fully pay, perform, and discharge when due,
the following liabilities and obligations of the Company existing as of the
Closing Date (collectively, the "ASSUMED LIABILITIES"):
(a) the obligations and liabilities of the Company under each
Contract;
(b) the obligations and liabilities of the Company under each Best
Source Contract under which the Purchaser receives benefits after Closing
pursuant to arrangements contemplated by Section 6.3(b) below;
(c) except to the extent excluded in Section 1.5 below, all other
liabilities of the Company incurred in the ordinary course of business in
connection with the Business;
(d) all obligations and liabilities reflected on, accrued for,
reserved against or otherwise provided for in the Company Financial Statements;
and
(e) accrued vacation of the Company's employees, provided that it does
not exceed $1,500.
1.5 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary set
forth herein, the Assumed Liabilities shall not include, and in no event shall
the Purchaser assume, agree to pay, discharge or perform or incur any liability
or obligation of the Company under this Agreement which is not expressly
included as an Assumed Liability in accordance with Section 1.4 hereof (all
obligations and liabilities of the Company, other than the Assumed Liabilities,
are hereinafter referred to as the "EXCLUDED Liabilities"). Except to the extent
reflected on, accrued for, reserved against or otherwise provided for in the
Company Financial Statements or disclosed in the Company Disclosure Schedule,
and except for obligations and liabilities incurred in the ordinary course of
business that are not in the aggregate materially adverse to the Company, the
Excluded Liabilities shall include, but not be limited to, the following:
(a) claims, obligations and liabilities of the Company, including
compensatory, punitive damages, known or unknown, direct or indirect, including
all costs and expenses relating thereto, arising out of any Proceeding (as
hereinafter defined) before or after the Closing Date;
(b) obligations and liabilities of the Company for (i) "Taxes" (as
defined in Section 3.12(e) below) with respect to any period (other than payroll
and other similar Taxes incurred in the ordinary course of business), (ii) for
unpaid Taxes of any Person (other than the Company) under Treasury Regulations
Section 1.1502-6 (or any similar provisions of state, local or foreign law), as
a transferee or successor, by contract or otherwise or (iii) obligations or
liabilities of the Company for federal, state, county, local, foreign or other
income, sales, use or transfer taxes or assessments (including interest and
penalties thereon, if any) of any kind whatsoever arising from, based upon or
related to the sale, transfer or delivery of the Assets pursuant to this
Agreement;
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(c) obligations and liabilities of the Company under the contracts and
agreements listed in SCHEDULE 1.5(C) attached hereto;
(d) any contingent liabilities of the Company of any kind arising or
existing on or prior to the Closing Date, including, but not limited to, claims,
proceedings or causes of action which are currently or hereafter become the
subject of claims, assertions, litigation or arbitration, including those
relating to penalties for late deliveries, quality defaults or product liability
procedures;
(e) sponsorship, debts, obligations or liabilities under any pension,
profit sharing, savings, retirement, health, medical, life, disability, dental,
deferred compensation, stock option, bonus, incentive, severance pay, group
insurance or other similar employee plans or arrangements, or under any
policies, handbooks, or custom or practice, collective bargaining agreement, or
any employment agreements, whether express or implied, applicable to any of the
Company's employees at any time (other than accrued vacation as provided in
Section 1.4(e) above);
(f) any liability or obligation of the Company arising out of any
wrongful or unlawful violation or infringement of any Intellectual Property of
any person or entity occurring on or prior to the Closing Date;
(g) any Indebtedness of the Company, including, obligations or
liabilities, if any, of the Company to any Principal Members in respect of money
loaned by the Principal Members to the Company. "INDEBTEDNESS" shall mean (i)
all liabilities of the Company with respect to the outstanding principal amount
of indebtedness for borrowed money (including indebtedness secured by a lien on
property, contingent liabilities or otherwise), all accrued interest thereon,
and all fees, expenses, prepayment penalties and other charges which would be
payable with respect thereto if fully paid out, plus (ii) that portion of the
obligations of the Company with respect to capital leases that are properly
classified as a liability on a balance sheet prepared in accordance with United
States generally accepted accounting principles, and all fees, expenses,
prepayment penalties and other charges which would be payable in relation
thereto if fully paid out;
(h) debts, expenses, obligations or liabilities of the Company arising
out of any claim, action, suit or proceeding pending as of the Closing Date or
arising out of or relating to matters or events occurring on or prior to the
Closing Date; and
(i) any liabilities or obligations arising out of or relating
exclusively to the Excluded Assets.
1.6 NONASSIGNABLE CONTRACTS.
(a) To the extent that assignment hereunder by the Company to the
Purchaser of any Contract is not permitted or is not permitted without the
consent of a third party and, such consent has not been obtained as of the
Closing Date, this Agreement shall not be deemed to constitute an undertaking to
assign the same if such consent is not given or if such an undertaking otherwise
would constitute a breach of or cause a loss of benefits thereunder. The
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Company shall use its reasonable commercial efforts to obtain as expeditiously
as possible any and all such third-party consents.
(b) If and to the extent that the Company is unable to obtain any
required third party consent contemplated by Section 1.6(a), the Company shall
continue to be bound by any such Contract (the "NON-ASSIGNED CONTRACT"). In such
event, to the maximum extent permitted by law or the terms of the Non-Assigned
Contract, (i) the Company shall use commercially reasonable efforts to make the
benefit of such Non-Assigned Contract available to the Purchaser, and (ii) the
assignment provisions of this Agreement shall operate to the extent permitted by
law or the applicable Non-Assigned Contract to create a subcontract, sublease or
sublicense with the Purchaser to perform each relevant Non-Assigned Contract at
a price equal to the monies, rights and other consideration receivable or
payable by the Company with respect to the performance by or enjoyment of the
Purchaser under such subcontract, sublease or sublicense. To the extent such
benefit is made available, and/or such subcontract, sublease or sublicense is
created, (1) the Purchaser shall pay, perform and discharge fully all
obligations of the Company under any such Non-Assigned Contract from and after
the date hereof, (2) the Company shall, without further consideration therefor,
pay and remit to the Purchaser promptly any monies, rights and other
consideration received in respect of such Non-Assigned Contract performance, and
(3) the Company shall exercise or exploit its rights and options under all such
Non-Assigned Contracts only as directed by the Purchaser and at the Purchaser's
expense.
(c) If any third party consent contemplated by Section 1.6(b) shall be
obtained or any such Non-Assigned Contract shall otherwise be assignable, the
Company shall promptly assign all of its rights and obligations thereunder or in
connection therewith to the Purchaser without payment of further consideration
therefor, and the Purchaser shall confirm its assumption of such rights and
obligations as of the date thereof.
SECTION 2. CLOSING MATTERS; PURCHASE PRICE.
2.1 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "CLOSING") shall be held on the second business day following the
satisfaction (or waiver by the party so entitled) of all the conditions set
forth in Section 7, at the offices of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place
and time agreed to by the parties. The date and time at which the Closing
actually occurs is referred to herein as the "CLOSING DATE."
2.2 PURCHASE PRICE. On the terms and subject to the conditions set forth in
this Agreement, the purchase price (the "PURCHASE PRICE") for the Assets, in
addition to the Purchaser's assumption of the Assumed Liabilities, shall be
SEVEN HUNDRED AND FIFTY THOUSAND (750,000) shares of Parent common stock, par
value $0.01 per share (the "PARENT SHARES").
2.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price (plus the amount of
the Assumed Liabilities) shall be allocated among the Assets as set forth in
SCHEDULE 2.3 (the "ALLOCATION") to be delivered immediately prior to the
Closing, which will be prepared by the parties by arm's length negotiation, in
compliance with Section 1060 of the Internal Revenue
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Code of 1986, as amended (the "CODE") and the Treasury Regulations promulgated
thereunder (the "REGULATIONS"). The Purchaser and the Company shall (i) timely
file all forms (including Internal Revenue Service ("IRS") Form 8594, and Tax
Returns (as hereinafter defined) required to be filed in connection with the
Allocation, (ii) be bound by the Allocation for purposes of determining Taxes,
and (iii) take no position, and cause its affiliates to take no position,
inconsistent with the Allocation on any applicable Tax Return or in any audit or
proceeding before any Tax Authority (as hereinafter defined). In the event that
the Allocation is disputed by any Tax Authority, the party receiving notice of
the dispute shall promptly notify the other parties hereto concerning resolution
of the dispute.
2.4 RECEIVABLES. After the Closing Date, the Company will deliver to the
Purchaser any cash or other property it may receive with respect to receivables
originated by the Company prior to the Closing Date.
2.5 OUTSTANDING PAYABLES. The Purchaser covenants to pay, as and when due
in the ordinary course of business consistent with past practice, any
outstanding balances relating to the Assets as of the Closing Date.
2.6 FURTHER ASSURANCES. Each party hereto shall on the date hereof and from
time to time thereafter at any other party's reasonable request and without
further consideration execute and deliver to such other party such instruments,
certificates and documents required to effect the Acquisition in addition to
those delivered pursuant to this Section 2 as shall be reasonably requested to
consummate more effectively the transactions contemplated by this Agreement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PRINCIPAL
MEMBERS.
The Company and Principal Members, jointly and severally, represent and
warrant to the Parent and the Purchaser that the statements contained in this
Section 3 are true, correct and complete as of the date hereof, and will be
true, correct and complete as of the Closing Date (unless specifically made as
of another date), except as specified to the contrary in the Disclosure Schedule
prepared by the Company accompanying this Agreement (the "COMPANY DISCLOSURE
SCHEDULE") which is made a part hereof. The Company Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3. A disclosure in any Schedule included in the
Company Disclosure Schedule shall act as a disclosure, exception or exclusion,
as applicable, to each other Schedule in the Company Disclosure Schedule.
3.1 ORGANIZATION; BOOKS AND RECORDS.
(a) The Company is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
all requisite power and authority and possesses all governmental franchises,
licenses, permits, authorizations and approvals necessary (i) to own, lease and
operate the Business, and to carry on the Business as now being conducted, and
(ii) to enter into and perform its obligations under this Agreement and the
Company Ancillary Documents. The Company is duly qualified to transact business
and is in good standing as a foreign limited liability company in each
jurisdiction where the character
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of the Business or the ownership, leasing or holding of the Assets requires such
qualification, except where the failure to be so qualified or in good standing,
individually or in the aggregate, would not have a Material Adverse Effect (as
hereinafter defined) on the Business. SCHEDULE 3.1 contains a correct and
complete list, as of the date hereof, of the jurisdictions in which the Company
is qualified to do business as a foreign limited liability company. A "MATERIAL
ADVERSE EFFECT" means any result, occurrence, change, event, effect or
circumstance that individually or in the aggregate with any such other result,
occurrence, change, effect, event or circumstance is or is reasonably likely to
be materially adverse to the assets, liabilities, financial condition, results
of operations or business, of the applicable entity or, taken as a whole, or
materially adverse to the ability of the Company, the Principal Members, the
Purchaser or the Parent to perform their respective obligations under this
Agreement and consummate the transactions contemplated hereby. In no event shall
any of the following constitute a Material Adverse Effect: (i) a change in the
trading prices of the Purchaser's equity securities between the date of this
Agreement and the Closing Date, in and of itself; (ii) effects, changes, events,
circumstances or conditions generally affecting the industries in which the
Parent, Purchaser or the Company, as applicable, operate or arising from changes
in general business or economic conditions, and not specifically relating to the
Parent, Purchaser or Company, as the case may be; (iii) effects, changes,
events, circumstances or conditions directly attributable to (A) out-of-pocket
fees and expenses (including legal, accounting, investigatory, investment
banking, and other fees and expenses) incurred in connection with the
transactions contemplated by the Agreement or (B) the payment by the Purchaser
or Company of all amounts due to any officers or employees of Company under
employment contracts, non-competition agreements, employee benefit plans or
severance arrangements as specified in the Company Disclosure Schedule; (iv) any
effects, changes, events, circumstances or conditions resulting from any change
in law or GAAP, which affect generally entities such as the Purchaser and
Company; and (v) any effects, changes, events, circumstances or conditions
resulting from compliance by the Purchaser or Company with the express terms of
this Agreement or action taken with the prior informed written consent of the
other party.
(b) The Company has provided to the Purchaser a true and complete copy
of its articles of organization and its operating agreement, each as amended to
date. The corporate records of the Company are true and complete in all material
respects.
3.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY. The execution, delivery
and performance of this Agreement and the Company Ancillary Documents and the
consummation of the transactions contemplated by this Agreement and the Company
Ancillary Documents have been duly authorized by all necessary member action on
the part of the Company. This Agreement and each other certificate, agreement,
document or instrument to be executed and delivered by the Company or any
Principal Member in connection with the transactions contemplated by this
Agreement (the "COMPANY ANCILLARY DOCUMENTS") have been duly executed and
delivered by the Company and/or Principal Members (as the case may be), and
constitute the valid and legally binding agreements of the Company and/or
Principal Members (as the case may be), enforceable against the Company and/or
Principal Members (as the case may be) in accordance with their respective
terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other similar
laws of general applicability relating to or affecting the enforcement of
creditors' rights
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and by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
3.3 ABSENCE OF RESTRICTIONS AND CONFLICTS. Except as disclosed in SCHEDULE
3.3, the execution, delivery and performance of this Agreement and the Company
Ancillary Documents, the consummation of the transactions contemplated by this
Agreement and the Company Ancillary Documents and the fulfillment of and
compliance with the terms and conditions of this Agreement and the Company
Ancillary Documents do not and will not (as the case may be), (a) conflict with
or result in any breach of any term or provision of the articles of organization
or operating agreement of the Company, (b) with or without the passing of time
or the giving of notice or both, violate or conflict with, constitute a breach
of or default (or give rise to any right of termination, amendment or
cancellation) under, result in the loss of any benefit under or permit the
acceleration of any obligation under, any Contract or result in the creation of
any Lien on any of the Assets pursuant to, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other obligation to which the Company is a party or by which any of
its properties or assets is bound, (c) or violate any judgment, decree or order
of any Governmental Authority (as hereinafter defined) to which the Company is a
party or by which the Company or any of its properties is bound or (d) any
statute, law, rule or regulation applicable to the Company. Except as set forth
in Schedule 3.3, no consent, approval, order or authorization of, or
registration, declaration or filing with, any court, arbitrator, governmental
agency or public or regulatory unit, agency, body or authority (a "GOVERNMENTAL
AUTHORITY") with respect to the Company or any Principal Member is required in
connection with the execution, delivery or performance of this Agreement or the
Company Ancillary Documents by the Company or any Principal Member or the
consummation of the transactions contemplated by this Agreement or Company
Ancillary Documents by the Company or any Principal Member, other than any such
consent, approval, order, authorization, registration, declaration or filing
that is obtained or made on or before Closing or the failure to obtain or made
would not reasonably be expected to have a Material Adverse Effect on the
Company.
3.4 COMPANY OWNERSHIP; NO INTEREST IN OTHER ENTITIES.
(a) Best Source Publishing, LLC, SpecSource, Inc., and ▇▇▇▇▇▇▇ own
100% of the outstanding membership interests in the Company.
(b) Except as disclosed on SCHEDULE 3.4(B), the Assets do not include,
and the Company does not own, any direct or indirect equity interest (by stock
ownership, partnership interest, limited liability company interest, joint
venture interest or otherwise) in any other corporation, partnership, limited
liability company, joint venture, firm, association or business enterprise.
3.5 OWNERSHIP OF ASSETS AND RELATED MATTERS.
(a) NO THIRD PARTY OPTIONS. There are no existing agreements, options,
commitments or rights with, of or to any person (other than the Purchaser
pursuant to this Agreement) to acquire any assets, properties or rights included
in the Assets or any interest
8
therein, other than any such agreements, options, commitments and rights arising
in the ordinary course of business of the Company.
(b) OWNERSHIP; SUFFICIENCY OF ASSETS. The Company has, and will
transfer, assign or sublicense to the Purchaser pursuant to this Agreement, good
and valid, legal and beneficial title to the Assets, free and clear of all
Liens. In this Agreement, "Liens" means all mortgages, liens, pledges, security
interests, charges, easements, leases, subleases, licenses and other occupancy
arrangements, covenants, rights of way, options, imperfections of title, claims,
restrictions, or encumbrances of any kind other than any of the foregoing that
(1) relate to the Assumed Liabilities, (2) are reflected on, accrued for,
reserved against or otherwise provided for in the Company Financial Statements
or that arose since the date of the most recent balance sheet included in the
Company Financial Statements in the in the ordinary course of business, (3)
relate to Taxes and general and special assessments not in default and payable
without penalty and interest, or (4) are set forth in the Company Disclosure
Schedule. Other than the Best Source Contracts, the Assets constitute all the
assets and properties necessary to permit the Purchaser to conduct the Business
immediately after the date hereof in the same manner as the Company has
conducted the Business immediately prior to the date hereof.
(c) CONDITION OF CERTAIN ASSETS. The equipment and other tangible
property included in the Assets are in good operating condition and good state
of repair, subject to ordinary wear and tear.
3.6 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser the
following:
(a) the unaudited balance sheets of the Company at December 31, 2002,
and the unaudited statements of income, retained earnings and cash flows of the
Company for the period then ended (collectively, the "FINANCIAL STATEMENTS");
and
(b) the unaudited balance sheet of the Company at September 30, 2003,
and the unaudited statement of income of the Company for the period then ended
(collectively, the "INTERIM FINANCIAL STATEMENTS").
The Financial Statements and the Interim Financial Statements are
hereinafter referred to, collectively, as the "COMPANY FINANCIAL Statements."
The Company Financial Statements are attached hereto as SCHEDULE 3.6. The
Financial Statements have been prepared from, and are in accordance with, the
books and records of the Company, which books and records are maintained in
accordance with GAAP (except as expressly noted on SCHEDULE 3.6) consistently
applied throughout the periods indicated, and such books and records have been
maintained on a basis consistent with the past practice of the Company. Each of
the balance sheets included in such Company Financial Statements (including any
related notes and schedules) fairly presents in all material respects the
financial position of the Company, as of the date of such balance sheet, and
each of the statements of income, retained earnings, and cash flows included in
such Financial Statements (including any related notes and schedules) fairly
presents in all material respects the results of operations, changes in retained
earnings and changes in cash flows, as the case may be, of the Company for the
periods set forth therein, in each case in accordance with GAAP (except as
expressly noted therein or on SCHEDULE 3.6 and except for footnotes and, with
respect to interim statements, year-end adjustments) consistently applied
throughout the periods
9
indicated. Since September 30, 2003, there has been no material change in any of
the accounting (and tax accounting) policies, practices or procedures of the
Company.
3.7 REAL PROPERTY; OTHER ASSETS.
(a) The Company does not own, and has never owned, fee title to any
real property.
(b) The Company has good and marketable fee simple title to or a valid
leasehold interest in each tangible asset reflected in the latest balance sheet
of the Company (other than any such other asset disposed of or consumed in the
ordinary course of business) free and clear of all Liens.
(c) SCHEDULE 3.7 sets forth a true and complete list, and except as
stated in Schedule 3.7 the Company has heretofore delivered to the Purchaser or
its representatives true, correct and complete copies of all leases, subleases
and other agreements (the "REAL PROPERTY LEASES") under which the Company uses
or occupies or has the right to use or occupy, now or in the future, real
property or facilities (the "LEASED REAL PROPERTY"), including all
modifications, amendments and supplements thereto. Except where the failure
would not reasonably be expected to have, individually, a Material Adverse
Effect on the Company and except as set forth on Schedule 3.7: (A) the Company
has a valid and subsisting leasehold interest in each parcel of Leased Real
Property free and clear of all Liens and each Real Property Lease is in full
force and effect in all material respects; (B) all rent and other sums and
charges payable by the Company as tenant thereunder are current in all material
respects; (C) no termination event or condition or uncured default on the part
of the Company or, to the Company's knowledge, the landlord, exists under any
Real Property Lease; (D) to the Company's knowledge, the Company is in actual
possession of each Leased Real Property and is entitled to quiet enjoyment
thereof in accordance with the terms of the applicable Real Property Lease; and
(E) no consent or approval from the lessor under the Real Property Leases is
required for the consummation by the Company of the transactions contemplated
hereby.
(d) The Company's current use of the Leased Real Property and the
improvements and buildings located thereon in connection with the operation of
the Business is in compliance in all material respects and substantially
conforms with all applicable zoning and building regulation requirements.
3.8 ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.8, since
the date of the most recent balance sheet included in the Company Financial
Statements, the Company has in all material respects (a) extended credit to
customers, collected accounts receivable and paid accounts payable and similar
obligations of the Business in the ordinary course of business consistent with
past practice, (b) conducted the Business in the ordinary course on a basis
consistent with past practice, and (c) used its commercially reasonable efforts
to preserve the business, customers and suppliers of the Business.
3.9 LEGAL PROCEEDINGS. Except as set forth in SCHEDULE 3.9, there are no
suits, actions, claims, proceedings or investigations ("PROCEEDINGS") pending
or, to the knowledge of the Company, threatened against, relating to or
involving the Business, the Company or any of the
10
Company's officers or members (acting in their capacity as such) before any
Governmental Authority nor, to the knowledge of the Company, is there any valid
basis for any such Proceeding, nor is there any judgment, decree, injunction,
citation, or material order of any Governmental Authority outstanding against
the Company.
3.10 LICENSES, PERMITS AND COMPLIANCE WITH LAW. SCHEDULE 3.10 is a true and
complete list of all licenses, permits, franchises, certificates, approvals,
exemptions, classifications, registrations and other similar documents and
authorizations, and applications therefor held by the Company and issued by, or
submitted by the Company to, any Governmental Authority and are material to the
operation of the Business (collectively, the "Licenses"). The Company owns or
possesses all of the Licenses which are necessary to enable it to carry on the
Business as presently conducted. All Licenses are valid, binding, and in full
force and effect. The execution, delivery, and performance of this Agreement and
the consummation of the transactions contemplated hereby will not materially
adversely affect any License. The Company has taken all necessary action to
maintain each License. No notice has been received by the Company that any
License is being revoked or cancelled (other than expiration upon the end of any
term). The Company is (and has been at all times during the past five (5) years)
in material compliance with all applicable laws (including applicable laws
relating to safety and health of employees), ordinances, regulations and orders
of all Governmental Authorities.
3.11 CONTRACTS AND COMMITMENTS. SCHEDULE 3.11 sets forth a true, complete
and correct list of all written, and a description of all oral, agreements to
which, as of the Closing Date, the Company is a party or by which the Company is
bound relating to the Business (collectively, the "Contracts"), other than any
Contract that relates solely to an Excluded Asset or that is not material in
amount or that is not material to the Business, including: (A) contracts with
any current officer, member or employee of the Company; (B) contracts pursuant
to which the Company licenses other persons to use any of the Owned Intellectual
Property or has agreed to support, maintain, upgrade, enhance, modify, port, or
consult with respect to any of the Owned Intellectual Property, or pursuant to
which other persons license the Company to use the Owned Intellectual Property;
(C) contracts (1) for the sale of any of the assets of the Company, other than
contracts entered into in the ordinary course of business, (2) for the grant to
any person of any preferential rights to purchase any of its assets or (3) for
the sale or transfer of any equity of the Company; (D) contracts by which the
Company has agreed to design, develop, author or create any new custom, or
customized software for any third party; (E) contracts which restrict the
Company from competing in any line of business or with any person in any
geographical area or which restrict any other person from competing with the
Company in any line of business or in any geographical area; (F) contracts which
restrict the Company from disclosing any information concerning or obtained from
any other person or which restrict any other person from disclosing any
information concerning or obtained from the Company; (G) indentures, credit
agreements, security agreements, mortgages, guarantees, promissory notes and
other contracts relating to the borrowing of money or Indebtedness; and (H) all
other agreements, contracts or instruments entered into outside of the ordinary
course of business or which are material to the Company. Except as set forth on
SCHEDULE 3.11, all of the Contracts are in full force and effect as to the
Company and are the legal, valid and binding obligation of the Company,
enforceable against them in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting
11
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The Company is not in breach or default (with
or without notice or lapse of time, or both) in any material respect under any
Contract nor, to the knowledge of the Company, is any other party to any
Contract in breach or default (with or without notice or lapse of time, or both)
thereunder in any material respect. Except as set forth on Schedule 3.11, the
Company is not a party to any existing contract, obligation or commitment of any
type in any of the following categories: (1) any sales contract, including any
open bid or quotation, which is of an open-end or blanket nature; (2) contracts
for the purchase of materials, supplies or equipment which have not been entered
into in the ordinary course of business and consistent with past practice or for
capital expenditures in excess of $10,000; (3) contracts with distributors,
manufacturers' representatives or sales agents, except those which are
terminable at the option of the Company on 60 days' notice or less without
incurring any liability in excess of $10,000; (4) contracts under which the
Company has, except by way of endorsement of negotiable instruments for
collection in the ordinary course of business and consistent with past practice,
become absolutely or contingently or otherwise liable for (aa) the performance
of any other person, firm or corporation under a contract, or (bb) the whole or
any part of the indebtedness or liabilities of any other person, firm or
corporation; (5) powers of attorney outstanding from the Company other than as
issued in the ordinary course of business and consistent with past practice with
respect to customs, insurance, patent, trademark or tax matters, or to agents
for service of process; (6) contracts under which any amount payable by the
Company is dependent upon the revenues or profits of the Company (other than
employment contracts containing bonus payment provisions dependent on the
Company's financial performance which are contained in the Company Disclosure
Schedule); (7) contracts with any party for the loan of money or availability of
credit to or from the Company (except trade credit extended by the Company to
its or their customers or travel advances to its or their employees in the
ordinary course of business and consistent with past practice); or (8) any
hedging, option, derivative or other similar transaction. In addition, set forth
on Schedule 3.11 is a list of all agreements to which Best Source, LLC is a
party and under which the Company receives goods or services or occupies real
property and reimburses Best Source Publishing, LLC therefor (the "Best Source
Contracts").
3.12 TAX RETURNS; TAXES. Except as set forth on Schedule 3.12:
(a) The Company has filed all Tax Returns that it was required to file
and all such Tax Returns were correct and complete in all material respects. All
Taxes owed by the Company which are due and payable as of the date hereof have
been paid.
(b) To the Company's knowledge, there has been no issue raised or
adjustment proposed (and none is pending) by any Tax Authority with respect to
Taxes attributable to the Assets or the Company. There are no encumbrances for
Taxes upon any of the Assets except for liens for Taxes not yet due. There is no
pending Tax audit or examination, nor any action, suit, investigation, claim or
deficiency asserted with respect to the Assets or the Company.
(c) All amounts required to be withheld or collected for Taxes for
payments made to employees, independent contractors, creditors, stockholders or
other third parties or
12
others of the Company have been withheld or collected and have been or will be
remitted to the appropriate Tax Authority when due.
(d) None of the Assets is "tax-exempt use property" within the meaning
of Section 168(h) of the Code or tax-exempt bond financed property within the
meaning of Section 168(g)(5) of the Code.
(e) For purposes of this Agreement, (i) the term "TAX" or "TAXES"
includes all taxes, charges, fees, levies or other assessments imposed by any
Federal, state, local or foreign Tax Authority, including all income, gross
receipts, gains, profits, windfall profits, gift, severance, ad valorem, social
security, unemployment, disability, premium, recapture, credit, excise,
property, sales, use, occupation, service, service use, leasing, leasing use,
value added, transfer, payroll, employment, withholdings, estimated, license,
stamp, franchise or similar taxes (including any interest imposed thereon or
penalties, additions or fines attributable thereto or attributable to any
failure to comply with any requirement regarding Tax Returns and any interest in
respect of such penalties, additions or fines); (ii) "TAX RETURN" shall mean any
report, return, documents, declaration or other information or filing required
to be supplied to any Tax Authority or jurisdiction with respect to Taxes
including any supporting schedules or attachments and any amendments thereto;
and (iii) "TAX AUTHORITY" shall mean any Governmental Authority responsible for
the assessment, determination, collection or imposition of any Tax (including
the IRS).
3.13 INSURANCE. Schedule 3.13 sets forth a correct and complete list of
current insurance policies and coverages carried by or for the benefit of the
Company. All such policies are in full force and effect, and all premiums due
and payable in respect thereof have been paid. Since the respective dates of
such policies, no notice of cancellation or non-renewal with respect to any such
policy has been received by the Company. Schedule 3.13 sets forth a list of all
pending claims with respect to all such policies.
3.14 INTELLECTUAL PROPERTY.
(a) OWNED INTELLECTUAL PROPERTY. Schedule 3.14(a) lists all patents,
patent applications, computer software, source code, tradenames, trademarks,
service marks, trade dress, design marks, or slogans, including any federal and
state registration, as well as any common law marks, domain names, logos, or
copyrights that are owned by the Company and used in the operation of the
Business (such listed property together with all items of intellectual property
owned by the Company are referred to herein as the "Owned Intellectual
Property"). Except as disclosed on Schedule 3.14(a), (i) the Company possesses
all right, title, and interest in and to all Owned Intellectual Property, free
and clear of any Lien and has taken commercially reasonable steps to maintain
all such right, title, and interest, (ii) to the Company's knowledge, the
ownership and uses, as the case may be, by the Company of any Owned Intellectual
Property does not infringe any rights of any third party, (iii) such Owned
Intellectual Property is not subject to any outstanding injunction, judgment,
order, decree, or ruling, (iv) no claim or action is pending or, to the
knowledge of the Company, threatened which challenges the legality, validity,
enforceability, use or ownership by the Company of such Owned Intellectual
Property, (v) there is no license or other contractual obligation under which
the Company is a licensor with respect to any such Owned Intellectual Property,
(vi) to the knowledge of the Company, no
13
activity of any third party infringes upon or misappropriates the rights of the
Company with respect to any such Owned Intellectual Property, (vii) all
authorized third-party uses are being exercised within the limitations set forth
in the respective agreements, (viii) the Company has not, in connection with any
indebtedness incurred by the Company, granted to any third party any intent to
use trademark applications, and (ix) to the extent that any Owned Intellectual
Property has been developed or created by a third party for the Company, the
Company has a written agreement with such third party with respect thereto, and
the Company thereby either (A) has obtained ownership of and is the exclusive
owner of, or (B) has obtained a license (sufficient for the conduct of the
Business as currently conducted) to all of such third party's title, right, and
interest in such Owned Intellectual Property by operation of law or by valid
assignment, to the fullest extent it is legally possible to do so.
(b) LICENSED INTELLECTUAL PROPERTY. SCHEDULE 3.14(B) lists all
intellectual property not owned by the Company and lists each license or other
contractual obligation under which any such intellectual property is used by the
Company (collectively, the "INTELLECTUAL PROPERTY LICENSES"). Additionally, (i)
to the knowledge of the Company, the use by the Company of the intellectual
property underlying the Intellectual Property Licenses does not infringe any
rights of any third party, (ii) each Intellectual Property License is valid and
enforceable in accordance with its respective terms with respect to the Company
and each other party thereto and in full force and effect, (iii) the Company or,
to the knowledge of the Company, any other party to an Intellectual Property
License, is not in material breach or default thereof, (iv) to the knowledge of
the Company, the intellectual property underlying each Intellectual Property
License is not subject to any outstanding injunction, judgment, order, decree,
or ruling, (v) to the knowledge of the Company, no activity of any third party
infringes upon the rights of the Company with respect to any of the Intellectual
Property Licenses, nor infringes upon the rights of the licensors of the
respective Intellectual Property Licenses; (vi) the Company has paid all license
fees and the like payable with respect to the Intellectual Property Licenses to
the extent such payment was due, and (vii) the Company has the sufficient right
to use all intellectual property used in the Business that is not owned by the
Company.
(c) INTELLECTUAL PROPERTY DISPUTES. Except as set forth on Schedule
3.14(c), there is no domestic or foreign action pending, and there is no demand,
proceeding, claim, assertion, or dispute made or, to the knowledge of the
Company, threatened by any third party which would reasonably be expected to
have the effect of diminishing any right, interest, or title of the Company to
the Owned Intellectual Property. With respect to the items disclosed on
Scheduled 3.14(c), the Company has taken, is taking, and will take commercially
reasonable actions necessary to protect its right, title, and interest to all
Owned Intellectual Property.
3.15 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 3.15 or
as expressly contemplated by this Agreement, no officer or member of the
Company, or any person with whom any such officer or member has any direct
relation by blood, marriage, or adoption, or any entity in which any such person
owns any beneficial interest (other than a publicly held corporation whose stock
is traded on a national securities exchange or in the over-the-counter market
and less than five percent (5%) of the stock of which is beneficially owned by
all such Persons in the aggregate) or any Affiliate of any of the foregoing, or
any current or former Affiliate of the Company has any interest in any contract,
arrangement, or understanding with, or relating to, the Business, the Assets or
the Assumed Liabilities. For purposes of this Agreement,
14
"AFFILIATE" of any specified Person means any other person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person. For purposes of this definition, "CONTROL,"
when used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the foregoing. In
addition, for purposes of this definition, "PERSON" means any individual,
corporation, partnership, joint venture, trust, unincorporated organization or
Governmental Authority.
3.16 CUSTOMER AND SUPPLIER RELATIONS. SCHEDULE 3.16 contains a complete and
accurate list, as of the date hereof, of the names and addresses of the top 10
customers of the Business (as measured by sales for the 12 months ending
September 30, 2003) ("Customers") and the top 10 trade vendors of the Business
(as measured by purchases for the 12 months ended September 30, 2003)
("Suppliers"). Except as set forth in Schedule 3.16, to the knowledge of the
Company, no event has occurred that would materially and adversely affect the
Company's relations with any Customer or Supplier. Except as set forth in
Schedule 3.16, no Customer or Supplier during the last twelve months has
canceled, terminated or to the Company's knowledge made any threat to cancel or
otherwise terminate its contract or, in the case of Customers, to decrease its
usage of the Company's services or products. The Company has not received any
notice or has no knowledge to the effect that any current Customer or Supplier
intends to terminate or materially and adversely alter its business relations
with the Company, either as a result of the transactions contemplated by this
Agreement or otherwise. 3.17 BROKERS, FINDERS AND INVESTMENT BANKERS. The
Company has not employed any broker, finder, investment banker or other
intermediary or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, finders' fees or other similar fees in
connection with the transactions contemplated herein.
3.18 DISCLOSURE. No representation or warranty made by the Company or
Principal Members in this Agreement or the Company Disclosure Schedule contains
an untrue statement of a material fact or omits to state a material fact
required to be stated in this Section 3 or necessary to make the statements
contained in this Section 3 not misleading.
3.19 INVESTMENT REPRESENTATIONS.
(a) Except as contemplated by the Liquidation as defined in Section
5.3 below, the Company is acquiring the Parent Shares for its own account, and
not for any other Person, for investment only and with no intention of
distributing or reselling (and the Company will not distribute or resell) such
Parent Shares or any part thereof or interest therein in any transaction that
would violate the registration requirements of the securities laws of the United
States, or any state or non-U.S. jurisdiction, without prejudice, however, to
the rights of the Company at all times to sell or otherwise dispose of all or
any part of its Parent Shares under an effective registration statement or
applicable exemption from registration under the Securities Act of 1933, as
amended (the "Securities Act") and any applicable state securities law. The
Company has no contract, undertaking, agreement or arrangement with any Person
to sell, transfer or pledge to such Person its Parent Securities, any interest
therein, or any part thereof,
15
and the Company has no present plans to enter into any such contract,
undertaking, agreement or arrangement, except as contemplated by the Liquidation
as defined in Section 5.3.
(b) The Company is either (i) an accredited investor as that term is
defined in Rule 501 under the Securities Act, or (ii) has, either alone or with
its purchaser representative or representatives as that term is defined in Rule
501 under the Securities Act, such knowledge and experience in financial and
business matters that the Company is capable of evaluating the merits and risks
of an investment in Parent Securities.
(c) The Company understands that the Parent Shares have not yet been
registered under the Securities Act. The Company is fully aware of the
restrictions on sale, transferability and assignment of Parent Shares as set
forth in the certificates representing the Parent Shares referred to in Section
3.19(d) below, and that the Company must bear the economic risk of the Company's
investment for an indefinite period of time. The Company understands and agrees
that Parent may refuse to permit the sale, transfer or assignment of any Parent
Securities (other than the transfer upon the Liquidation under Section 5.3, to
which Parent and Purchaser hereby irrevocably consent), unless it receives an
opinion of counsel or other evidence reasonably satisfactory to it that such
sale, transfer or assignment is made in compliance with the registration
requirements of the Securities Act and any applicable state securities laws. The
Company has no need for any liquidity in its investment for an indefinite period
of time, and is able to bear the economic risk of losing its entire investment.
(d) The Company agrees that, so long as required by law, certificates
evidencing the Parent Shares and any securities issued in exchange for or in
respect thereof shall bear a legend to the following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE
SECURITIES LAWS."
3.20 NO OTHER REPRESENTATIONS AND WARRANTIES. Neither the Company nor any
Principal Member has made nor shall be deemed to have made any representation or
warranty other than as expressly made by them in this Section 3. Without
limiting the generality of the foregoing, and notwithstanding any
representations and warranties made by the Company or any Principal Member in
this Section 3, neither the Company nor any Principal Member makes any
representation or warranty with respect to (a) any projections, estimates or
budgets delivered to or made available to the Purchaser or Parent or their
counsel, accountants or other advisers at any time with respect to future
revenues, expenses or expenditures or future results of operations, or (b)
except as expressly covered by a representation and warranty contained in this
Section 3, any
16
other information or documents (financial or otherwise) made available to the
Purchaser, Parent or their counsel, accountants or other advisers before or
after the date of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND PARENT.
The Purchaser and the Parent, jointly and severally, represent and warrant
to the Company and Principal Members that the statements contained in this
Section 4 are true, correct and complete as of the date hereof, and will be
true, correct and complete as of the Closing Date (unless specifically made as
of another date), except as specified to the contrary in the Disclosure Schedule
prepared by the Purchaser accompanying this Agreement (the "PURCHASER DISCLOSURE
SCHEDULE") which is made a part hereof. The Purchaser Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4. A disclosure in any Schedule included in the Parent
Disclosure Schedule shall act as a disclosure, exception or exclusion, as
applicable, to each other Schedule in the Parent Disclosure Schedule.
4.1 ORGANIZATION AND STANDING. The Purchaser and the Parent are
corporations duly organized, validly existing and in good standing under the
laws of the state of Georgia and Delaware, respectively, and each has the
requisite corporate power and authority to carry on its business as now being
conducted. Each of the Purchaser and Parent is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Purchaser or the Parent.
4.2 AUTHORITY, EXECUTION AND ENFORCEABILITY. The execution, delivery and
performance of this Agreement and the Purchaser Ancillary Documents and the
consummation of the transactions contemplated by this Agreement and the
Purchaser Ancillary Documents have been duly authorized by all necessary
corporate action on the part of the Purchaser and the Parent. This Agreement and
each other certificate, agreement, document or instrument to be executed and
delivered by the Purchaser or the Parent in connection with the transactions
contemplated by this Agreement (the "PURCHASER ANCILLARY DOCUMENTS") have been
duly executed and delivered by the Purchaser and/or the Parent (as the case may
be), and constitutes the valid and legally binding agreements of the Purchaser
and/or Parent (as the case may be), enforceable against the Purchaser and/or the
Parent (as the case may be) in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
4.3 ABSENCE OF RESTRICTIONS AND CONFLICTS. The execution, delivery and
performance of this Agreement and the Purchaser Ancillary Documents, the
consummation of the transactions contemplated by this Agreement and the
Purchaser Ancillary Documents and the fulfillment of and compliance with the
terms and conditions of this Agreement and the Purchaser Ancillary Documents do
not and will not (as the case may be), (a) conflict with or result in any breach
of any term or provision of the charter documents or by-laws of the Purchaser or
the Parent, (b) with or without the passing of time or the giving of notice or
both, violate or conflict with,
17
constitute a breach of or default (or give rise to any right of termination,
amendment or cancellation) under, result in the loss of any benefit under or
permit the acceleration of any obligation under, any material note, bond,
mortgage, indenture, lease, license, contract, agreement or other obligation to
which Parent or the Purchaser is a party or by which any of its properties or
assets is bound, (c) or violate any judgment, decree or order of any
Governmental Authority to which the Purchaser or the Parent is a party or by
which the Purchaser, the Parent or any of their properties is bound or (d) any
statute, law, rule or regulation applicable to the Purchaser or to Parent. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority with respect to the Purchaser or the
Parent is required in connection with the execution, delivery or performance of
this Agreement or the Purchaser Ancillary Documents by the Purchaser or the
Parent or the consummation of the transactions contemplated by this Agreement or
Purchaser Ancillary Documents by the Purchaser or the Parent.
4.4 PARENT SHARES. The Parent Shares to be issued in payment of the
Purchase Price will, when issued and delivered in accordance with this Agreement
will be duly authorized, validly issued, fully paid and non-assessable and none
of which will be issued in violation of any preemptive or similar rights;
provided, however, the Parent Shares to be issued hereunder may be subject to
restrictions on transfer under applicable federal and state securities laws.
4.5 SEC FILINGS; PURCHASER FINANCIAL STATEMENTS.
(a) Parent has filed all required forms, reports, registration
statements and documents with the SEC since January 1, 2000. All such required
forms, reports and documents (including those that the Parent may file
subsequent to the date hereof until the Closing) are referred to herein as the
"PARENT SEC REPORTS"; provided, that any Parent SEC Report shall be deemed to
include all amendments to such report through the date hereof. As of their
respective filing dates (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), the Parent SEC Reports
(A) complied in all material respects with the requirements of the Securities
Act, or the Securities Exchange Act of 1934, as amended, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Parent SEC
Reports and (B) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(b) The consolidated financial statements of the Parent (including, in
each case, the notes thereto), included in the Parent SEC Reports (the "PARENT
FINANCIAL STATEMENTS"), including each Parent SEC Report filed after the date
hereof until the Closing, (A) complied as to form in all material respects with
the applicable rules and regulations of the SEC with respect thereto; (B) was
prepared in accordance with GAAP applied on a consistent basis throughout the
periods indicated (other than the provision of notes to the financial statements
for quarterly periods); and (C) fairly presented the consolidated financial
position of the Parent and its subsidiaries at the respective dates thereof and
the consolidated results of Parent's operations and cash flows for the periods
indicated (subject, in the case of unaudited financial statements, to audit
adjustments). There has been no change in the Parent's accounting policies
except as described in the notes to the Parent Financial Statements.
18
4.6 PURCHASER CAPITALIZATION. The authorized capital stock of the Purchaser
as of the date of this Agreement consists of 1,000 shares of Common Stock, $0.01
par value per share, of which 1,000 shares are issued and outstanding and held
by Parent.
4.7 PARENT CAPITALIZATION. The authorized capital stock of the Parent
consists of 25,000,000 shares of Common Stock, $0.01 par value per share, of
which 11,323,494 shares are issued and outstanding (subject to the changes prior
to the Closing Date contemplated by the Purchaser Disclosure Schedule) and
500,000 shares of preferred stock, none of which are issued and outstanding.
4.8 LITIGATION. There is no legal action, suit or proceeding of any nature
pending or to the Parent's or the Purchaser's knowledge threatened against the
Purchaser, the Parent, either of its properties, officers, members or employees,
nor, to the knowledge of the Purchaser or the Parent, is there any valid basis
therefor.
4.9 NO MATERIAL ADVERSE CHANGE. Since the date of the most recent audited
balance sheet included in the Parent SEC Reports, there has not occurred any
material adverse change in the financial condition, liabilities, assets,
business or results of operations of Parent. For purposes of this Section,
changes in general economic conditions or changes in the industry and market in
which the Parent competes shall not constitute a material adverse change,
whether occurring at any time or from time to time.
4.10 BROKERS' AND FINDERS' FEES. Except as otherwise provided herein, the
Purchaser and Parent have not incurred, nor will they incur, directly or
indirectly, any liability for brokerage or finders' fees or agent's commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
4.11 DISCLOSURE. No representation or warranty of the Purchaser or the
Parent in this Agreement and no statement in any Purchaser Disclosure Schedule,
when read together with the Parent SEC Reports, omits to state a material fact
necessary to make the statements herein or therein, in light of the
circumstances in which they were made, not misleading.
SECTION 5. COVENANTS OF THE COMPANY AND THE PRINCIPAL MEMBERS.
Unless the Purchaser otherwise agrees in writing, the Company and the
Principal Members covenant and agree with Purchaser and Parent that from the
date hereof until the Closing or other termination of this Agreement as follows:
5.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as expressly provided for
herein, during the period from the date of this Agreement to the Closing Date,
the Company shall (a) act and carry on its business only in the ordinary course
of business and, to the extent consistent therewith, (b) use its reasonable
commercial efforts to preserve intact its current business organizations, keep
available the services of its current key officers and employees and preserve
the goodwill of those engaged in material business relationships with the
Company, and to that end, without limiting the generality of the foregoing, the
Company shall not, without the prior written consent of the Purchaser:
19
(a) (i) declare, set aside or make any distributions (whether in cash,
securities or other property) in respect of, any of its outstanding membership
interest in the Company, (ii) split, combine or reclassify any outstanding
interest or issue or authorize the issuance of any other interest in respect of,
in lieu of or in substitution for membership interest, or (iii) purchase, redeem
or otherwise acquire any interest in the Company, except as provided in Section
5.7;
(b) amend its articles of organization, operating agreement, or other
comparable charter or organizational documents;
(c) directly or indirectly acquire, make any investment in, or make
any capital contributions to, any person other than in the ordinary course of
business;
(d) directly or indirectly sell, pledge or otherwise dispose of or
encumber any of its properties or assets that are material to its business,
except for sales, pledges or other dispositions or encumbrances in the ordinary
course of business;
(e) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, other than indebtedness owing to or
guarantees of indebtedness owing to the Company, or (ii) make any loans or
advances to any other person, other than to the Company and other than routine
travel advances to employees or customer trade credit, except, in the case of
clause (i), for borrowings under existing credit facilities described in the
Company Disclosure Schedule in the ordinary course of business;
(f) grant or agree to grant to any officer, employee or consultant any
increase in wages or bonus, severance, profit sharing, retirement, deferred
compensation, insurance or other compensation or benefits, or establish any new
compensation or benefit plans or arrangements, except normal, regularly
scheduled increases in respect of non-officer employees;
(g) enter into or amend any employment, consulting, severance or
similar agreement with any individual, except with respect to new hires of
non-officer employees in the ordinary course of business;
(h) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization, share
exchange or other material reorganization or any agreement involving any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of all or any
significant portions of the assets of the Company, in a single transaction or
series of related transactions which would reasonably be expected to interfere
with the completion of the Acquisition;
(i) make any tax election or settle or compromise any income tax
liability of the Company involving on an individual basis more than $10,000;
(j) make any change in any method of accounting or accounting practice
or policy, except as required by any changes in GAAP;
(k) enter into any agreement, understanding or commitment that
restrains, limits or impedes the Company's ability to compete with or conduct
any business or line of
20
business, except for any such agreement, understanding or commitment entered
into in the ordinary course of business;
(l) plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or effort
concerning the termination of employment of employees of the Company;
(m) except as previously approved by the written unanimous consent of
the members of the Company prior to the date hereof and as identified to the
Purchaser prior to the date hereof, authorize or commit to make capital
expenditures in excess of $10,000; or
(n) authorize any of, or commit or agree to take any of, the foregoing
actions in respect of which it is restricted by the provisions of this Section
5.1.
5.2 NO SOLICITATION. The Company shall, and shall cause its affiliates,
officers, members, employees, agents and representatives (including any
investment banker, financial advisor, attorney or accountant retained by the
Company) to discontinue any solicitation efforts, discussions or negotiations
with respect to any Acquisition Proposal (as hereinafter defined) with any
person or entity other than the Purchaser or Parent. The Company shall not, and
shall not authorize or permit any of its affiliates, officers, members,
employees, agents or representatives (including any investment banker, financial
advisor, attorney or accountant retained by the Company or any of its
subsidiaries or affiliates) to, directly or indirectly, initiate, solicit or
encourage (including by way of furnishing information or assistance), or take
any action to facilitate, any inquiries, any expression of interest or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, an Acquisition Proposal, or enter into or maintain or continue discussions
or negotiate with any person in furtherance of such inquiries or to obtain an
Acquisition Proposal or agree to or endorse any Acquisition Proposal. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means an inquiry, offer,
proposal or other indication of interest (other than the Acquisition) regarding
any of the following matters involving the Company: (a) any merger,
consolidation, share exchange, tender or exchange offer, recapitalization,
business combination or other similar transaction; (b) any acquisitions of
membership interest or other securities issued by the Company; (c) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of all or any
substantial portion of the assets of the Company, taken as a whole, in a single
transaction or series of related transactions; or (d) any proposal, plan or
intention to do any of the foregoing or any agreement in principle or other
agreement to engage in any of the foregoing.
5.3 DISTRIBUTION OF PARENT SHARES. As soon as practicable after the
Closing, the Company shall distribute the Parent Shares received by it to its
then members in a liquidation and dissolution of the Company in compliance with
the Michigan Limited Liability Company Act (the "Liquidation"). Notwithstanding
the foregoing, in no event shall the Company undertake the Liquidation in such a
manner that the creditors of the Company receive Parent Securities, or that the
creditors of the Company are not satisfied pursuant to the relevant provisions
of Michigan law including the Limited Liability Company Act. In connection with
the Liquidation, the Company further covenants not to distribute any Parent
Shares to a member (or any other authorized recipient) without first delivering
an Investor Representation Letter to the Parent executed such member or other
authorized recipient of the Parent Shares.
21
5.4 USE OF NAME. Immediately following the Closing Date, the Company shall
not use for any commercial purpose any corporate, trade, or service name
including the words and marks "Construction Yellow Pages" or
"▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇" or any confusingly similar words, other than in
connection with the Liquidation and the winding up of the affairs of the Company
after Closing.
5.5 PUBLIC ANNOUNCEMENTS. After the date of this Agreement, each party
shall consult with the other Parties before issuing, and provide to the other
parties the opportunity to review and comment upon, any press release, SEC
filing or other public statements with respect to the transactions contemplated
hereby, including the Acquisition, and shall not issue any such press release or
make any such public statement without the other parties' prior written consent
(which consent shall not be unreasonably withheld), except as may be required by
applicable law, regulation or by court process.
5.6 ACCESS TO INFORMATION, CONFIDENTIALITY. Upon reasonable notice, the
Company shall afford to the Purchaser and to the Purchaser's officers,
employees, counsel, financial advisors and other representatives reasonable
access during normal business hours during the period prior to the Effective
Time to all its properties, books, contracts, commitments, Tax Returns,
personnel (with the prior consent of the Company) and records and, during such
period, the Company shall furnish as promptly as practicable to the Purchaser
such information concerning its business, properties, financial condition,
operations and personnel as the Purchaser may from time to time reasonably
request, provided, however, that the Company shall not be required to disrupt
its business operations with respect to the provision of such information. Any
such investigation by the Purchaser shall not affect the representations or
warranties contained in this Agreement. Except as required by law, before
Closing the Purchaser and Parent will, and will cause their directors, officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to, (a) hold and not disclose any non-public information obtained
from or on behalf of the Company or its affiliates in confidence in accordance
with the confidentiality provisions of the letter agreement between Parent and
the Company (b) use such information only for the purpose of investigating the
Company in connection with the Acquisitions contemplated by this Agreement, and
(c) not, directly or indirectly, solicit or divert or attempt to solicit or
divert any business, customer or employee of the Company.
SECTION 6. OTHER COVENANTS.
6.1 EMPLOYMENT MATTERS.
(a) Except as provided otherwise in a written agreement, Parent and
Purchaser shall be under no obligation to employ or continue to employ any
individual for any period. It is understood and agreed among the parties that
Purchaser will offer employment effective as of the close of business on the
Closing Date to only those other employees of the Company set forth on Schedule
6.1 (the "Employees") in connection with the purchase of the Assets, subject to
the satisfaction of the conditions set forth in the Purchaser's offer letters,
including the Purchaser's completion of background checks and other
pre-employment procedures with respect to such employees and such employees'
execution of the relevant documents relative to such employees' respective
positions with the Purchaser. The Purchaser's employment of the Employees shall
be
22
on an "at-will" basis and on such other terms and conditions of employment as
the Purchaser shall offer in its sole discretion. Those Employees who accept
Purchaser's offer of employment and who commence working with the Purchaser
shall be referred to hereinafter as the "Transferred Employees."
(b) With respect to each Transferred Employee, on the Closing Date the
Company hereby waives and releases each such individual from non-competition
covenants enforceable by the Company with respect to the employment, activities
or other conduct of such individuals after their termination of employment with
the Company (other than the obligation not to disclose confidential or
proprietary information of the Company and its Affiliates).
(c) Except as otherwise provided in this Agreement, the Company shall
be solely responsible for any and all liabilities in respect of employees and
other personnel of the Business, including the Transferred Employees, and their
beneficiaries and dependents, relating to or arising out of or in connection
with (i) the employment or the actual or constructive termination of employment
of any employee of the Business by the Company (including in connection with the
consummation of the transactions contemplated by this Agreement), (ii) the
participation in or accrual of benefits or compensation under, or the failure to
participate in or to accrue compensation under, any plan or plans and (iii)
accrued but unpaid salaries, wages, bonuses, incentive compensation, vacation or
sick pay or other compensation or payroll items (including deferred
compensation). The Company shall be solely responsible for meeting and the
Purchaser and the Parent shall have no liability in respect of any obligations
under Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code in
respect of each of Seller's employees who incur a "qualifying event" on or
before the Closing Date or as a result of the transactions contemplated hereby.
(d) Except to the extent included in the Assumed Liabilities, the
Purchaser and the Parent shall have no obligation to pay any retirement,
severance, deferred compensation, incentive, stock option, vacation, bonus,
unemployment, partnership or other payments, distributions or benefits that the
Employees or any other Person may have accrued up to and including the Closing
Date as a member, officer, employee, independent contractor, agent,
representative or other personnel of the Company or otherwise.
(e) The Company agrees to provide coverage to qualified beneficiaries
who are already receiving health and/or dental coverage on the Closing Date
under Section 4980B of the Code (hereinafter "COBRA") to the extent required
under COBRA. The Company agrees to offer health and/or dental coverage to the
extent required under COBRA to individuals whose qualifying event occurs before
or on the Closing Date. The Purchaser agrees to offer health and/or dental
coverage as required under COBRA to Transferred Employees whose qualifying event
occurs after the Closing Date to the extent required under COBRA.
6.2 SEC FILINGS. Until such time as the Company and its Members have
disposed of all of the Parent Shares issued pursuant to this Agreement, Parent
shall timely file with the SEC all reports required to be filed by Parent
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, so that Rule 144 under the Securities Act is available for resales of
the Parent Shares in compliance with that Rule.
23
6.3 BEST SOURCE CONTRACTS. Before Closing the Company will (a) use its
reasonable commercial efforts to assist the Purchaser, at its request, to enter
into separate agreements with the parties (other than Best Source Publishing,
LLC) to the Best Source Contracts so that after Closing the Purchaser may
receive the good, services or other benefits provided to the Company under the
Best Source Contracts, and/or (b) negotiate in good faith with the Purchaser to
enter into other mutually satisfactory arrangements so that after Closing the
Purchaser may receive the goods, services or other benefits provided to the
Company under the Best Source Contracts.
6.4 OFFICE SUBLEASE. Before Closing the Company and Purchaser will use
their best efforts to negotiate and come to an agreement with Best Source
Publishing, LLC and the landlord for a sublease for the space currently occupied
by the Company located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 7. CONDITIONS TO CLOSING.
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE ACQUISITION.
The respective obligations of each party to consummate the transactions
contemplated by this Agreement shall be subject to fulfillment at or prior to
the Closing Date of the following conditions:
(a) No Action or Proceeding. No claim, action, suit or other
proceeding shall be pending or threatened by any public authority or person
before any court, agency or administrative body which would have the effect of
making illegal, materially delaying or otherwise restraining or prohibiting the
transactions contemplated hereby or allowing any material damages to be
recovered or other material relief to be obtained as a result of the
transactions contemplated hereby or as a result of any agreement entered into in
connection with, or as a condition precedent to, the consummation of the
transactions contemplated hereby.
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Acquisition shall be in effect, provided, however, that the
party invoking this condition shall have complied with its obligations under
this Agreement in all material respects.
7.2 CONDITIONS TO THE COMPANY'S AND THE PRINCIPAL MEMBERS' OBLIGATIONS TO
CONSUMMATE THE ACQUISITION. The obligations of the Company and the Principal
Members to consummate the transactions contemplated by this Agreement shall be
subject to fulfillment at or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. Representations and warranties of
the Purchaser and the Parent contained in this Agreement (other than
representations and warranties expressly made as of a certain date, which shall
be accurate as of such date) shall have been accurate in all respects as of the
date of this Agreement and shall be accurate in all respects as of the Closing
Date as if made on and as of the Closing Date, except for any such failure
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect
24
on the Purchaser or the Parent, and the Company shall have received a
certificate signed on behalf of the Purchaser and the Parent by an authorized
officer to such effect.
(b) Performance of Obligations of the Purchaser and the Parent. The
Purchaser and the Parent shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, and the Company shall have received a certificate signed on
behalf of the Purchaser and the Parent by an authorized officer to such effect.
(c) No Material Adverse Change. Since the date of this Agreement, the
Purchaser and the Parent, taken as a whole, shall not have experienced any
change, event or occurrence that has had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Purchaser or the Parent.
(d) Delivery of Certificate. The Company shall have received a stock
certificate representing the Parent Shares registered in the Company's name in
accordance with this Agreement.
(e) ▇▇▇▇ of Sale and Assignment and Assumption Agreement. The Company
shall have received the ▇▇▇▇ of Sale and Assignment and Assumption Agreement in
the form attached hereto as EXHIBIT A, duly executed by the Purchaser.
(f) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any Governmental Entity or any other Person
required to be obtained or made by the Purchaser or the Parent in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made.
(g) Board Approval. The Acquisition shall have been approved by the
Boards of Directors of Parent and Purchaser.
(h) Additional Closing Documents. The Purchaser shall have furnished
to the Company such additional certificates and other documents as the Company
may have reasonably requested as to any of the conditions set forth in this
Section 7.2.
7.3 CONDITIONS TO THE PURCHASER'S AND THE PARENT'S OBLIGATIONS TO
CONSUMMATE THE ACQUISITION. The obligations of the Purchaser and the Parent to
consummate the transactions contemplated by this Agreement shall be subject to
fulfillment at or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Representations and warranties of
the Company and the Principal Members contained in this Agreement (other than
representations and warranties expressly made as of a certain date, which shall
be accurate as of such date) shall have been accurate in all respects as of the
date of this Agreement and shall be accurate in all respects as of the Closing
Date as if made on and as of the Closing Date, except for any such failure
which, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on the Company, and the Purchaser shall have
received a certificate signed on behalf of the Company by an authorized officer
to such effect with respect to the Company.
25
(b) Performance of Obligations of the Company and the Principal
Members. The Company and the Principal Members shall have performed in all
material respects all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Purchaser shall have received
a certificate signed on behalf of the Company by an authorized officer to such
effect with respect to the Company.
(c) No Material Adverse Change. Since the date of this Agreement, the
Company shall not have experienced any change, event or occurrence that has had
or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or the Business.
(d) ▇▇▇▇ of Sale and Assignment and Assumption Agreement. The
Purchaser shall have received the ▇▇▇▇ of Sale and Assignment and Assumption
Agreement, duly executed by the Company.
(e) Non-Competition Agreements. The Purchaser shall have received
agreements not to compete with the Purchaser and the Parent from ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇ in substantially the form attached hereto as EXHIBIT B.
(f) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any Governmental Entity or any other Person
required to be obtained or made by the Company in connection with the execution,
delivery and performance of this Agreement shall have been obtained or made.
(g) Intellectual Property Assignment Agreement. The Company shall have
executed and delivered an Intellectual Property Assignment Agreement in favor of
the Purchaser in substantially the form attached hereto as EXHIBIT C.
(h) Legal Opinion. The Purchaser shall have received the legal opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel to the Company, in substantially the form
attached hereto as EXHIBIT D.
(i) Member Approval. The Acquisition shall have been approved
unanimously by all of the members of the Company.
26
(j) Investor Representation Letter. Parent and Purchaser shall have
received an Investor Representation Letter, in the form attached hereto as
EXHIBIT E from each member of the Company and any other Person that may receive
Parent Shares upon the liquidation of the Company.
(k) Additional Closing Documents. The Company and the Principal
Members shall have furnished to the Purchaser such additional certificates and
other documents as the Purchaser may have reasonably requested as to any of the
conditions set forth in this Section 7.3
(l) Cash on Hand. The Company's Assets shall include and the Company
shall have ONE HUNDRED AND FIVE THOUSAND DOLLARS ($105,000) in cash.
SECTION 8. TERMINATION.
8.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date, in
any one of the following circumstances:
(a) By mutual written consent duly authorized by the Board of Director
of the Purchaser and all members of the Company;
(b) By the Purchaser or the Company, if the Closing Date shall not
have occurred on or before December 1, 2003, otherwise than as a result of any
material breach of any provision of this Agreement by the party seeking to
effect such termination;
(c) By the Purchaser or the Company, if any federal or state court of
competent jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling, or taken any other action permanently restraining, enjoining
or otherwise prohibiting the Acquisition and such order, decree, ruling or other
action shall have become final and non-appealable, provided that neither party
may terminate this Agreement pursuant to this Section 8.1(c) unless such party
has used its reasonable commercial efforts to remove such order, decree, ruling
or injunction;
(d) By the Purchaser if any of the Company's representations and
warranties contained in this Agreement shall have been materially inaccurate as
of the date of this Agreement or shall have become materially inaccurate as of
the Closing Date as if made on such date, or if any of the Company's covenants
and agreements contained in this Agreement shall have been breached in any
material respect, provided, however, that the Purchaser may not terminate this
Agreement under this Section 8.1(d) on account of an inaccuracy in the Company's
representations and warranties that is curable by the Company or on account of a
breach of a covenant or agreement by the Company that is curable by the Company
unless the Company fails to cure such inaccuracy or breach within ten (10) days
after receiving written notice from the Purchaser of such inaccuracy or breach;
(e) By the Company if any of the Purchaser's or Parent's
representations and warranties contained in this Agreement shall have been
materially inaccurate as of the date of this Agreement or shall have become
materially inaccurate as of the Closing Date as if made on such date, or if any
of the Purchaser's or Parent's covenants and agreements contained in this
Agreement shall have been breached in any material respect, provided, however,
that the Company may not terminate this Agreement under this Section 8.1(e) on
account of an inaccuracy in the Purchaser's or Parent's representations and
warranties that is curable by the Purchaser or Parent or on account of a breach
of covenant or agreement by the Purchaser or Parent that is curable by the
Purchaser or Parent unless the Purchaser or Parent fails to cure such inaccuracy
or breach within ten (10) days after receiving written notice from the Company
of such inaccuracy or breach.
8.2 EFFECT OF TERMINATION. In the event of the termination and abandonment
of this Agreement pursuant to Section 8.1(a) hereof, this Agreement shall
(except for the provisions of Section 3.17, Section 4.10, Section 5.5, the last
sentence of Section 5.6, this Section 8.2 and
27
Section 9, which shall survive the termination of this Agreement) forthwith
become void and cease to have any force or effect, without any liability on the
part of any party hereto or any of its affiliates; provided, however, that
nothing in this Section 8.2 shall relieve any party to this Agreement of
liability for any willful or intentional breach of this Agreement.
8.3 AMENDMENT. At any time prior to the Closing Date, the parties hereto
may modify or amend this Agreement by written agreement executed and delivered
by duly authorized officers of the respective parties.
8.4 EXTENSION; WAIVER. At any time prior to the Closing Date, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties, (b) waive any inaccuracies in the representations and
warranties of the other parties contained in this Agreement or in any document
delivered pursuant to this Agreement, or (c) subject to Section 8.3, waive
compliance with any of the agreements or conditions of the other parties
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in a written instrument
executed and delivered by a duly authorized officer on behalf of such party. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of such rights.
8.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 8.1, an amendment of this
Agreement pursuant to Section 8.3 or an extension or waiver pursuant to Section
8.4 shall, in order to be effective, require in the case of the Purchaser,
action by its Board of Directors or the duly authorized designee of its Board of
Directors, or in the case of the Company, by unanimous consent of its members.
SECTION 9. INDEMNIFICATION.
9.1 INDEMNIFICATION OBLIGATIONS OF THE COMPANY AND PRINCIPAL MEMBERS.
Subject to the restrictions and limitations set forth in this Section 9, the
Company and Principal Members shall, jointly and severally, indemnify, defend
and hold harmless the Purchaser, the Parent and their respective officers,
directors, employees, and affiliates, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "PURCHASER
INDEMNIFIED PARTIES") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, and damages whenever arising
or incurred (including amounts paid in settlement, costs of investigation and
reasonable attorneys' fees and expenses), whether or not involving a third-party
claim, arising out of or relating to:
(a) any liability or obligation of the Company of any nature
whatsoever (including the Excluded Liabilities), except the Assumed Liabilities;
(b) any breach or inaccuracy of any representation or warranty made by
the Company or Principal Members in Section 3 of this Agreement;
(c) any breach of any covenant, agreement or undertaking made by the
Company and Principal Members in this Agreement; and
(d) any non-compliance by the parties hereto with any Michigan bulk
sales laws applicable to the Acquisition.
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The claims, liabilities, obligations, losses, costs, expenses, and damages of
the Purchaser Indemnified Parties described in this Section 9.1 as to which the
Purchaser Indemnified Parties are entitled to indemnification are hereinafter
collectively referred to as "PURCHASER LOSSES."
9.2 INDEMNIFICATION OBLIGATIONS OF THE PURCHASER AND PARENT. Subject to the
restrictions and limitations set forth in this Section 9, the Purchaser and
Parent, jointly and severally, shall indemnify and hold harmless the Company and
Principal Members and their respective members, managers, officers, employees,
and affiliates and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "COMPANY INDEMNIFIED PARTIES") from, against
and in respect of any and all claims, liabilities, obligations, losses, costs,
expenses, and damages whenever arising or incurred (including amounts paid in
settlement, costs of investigation and reasonable attorneys' fees and expenses),
whether or not involving a third-party claim, arising out of or relating to:
(a) any of the Assumed Liabilities;
(b) any breach or inaccuracy of any representation or warranty made by
the Purchaser or Parent in Section 4 of this Agreement;
(c) any breach of any covenant, agreement or undertaking made by the
Purchaser or Parent in this Agreement; and
(d) any use of the Assets or operation of the Business after Closing.
The claims, liabilities, obligations, losses, costs, expenses, and damages of
the Company Indemnified Parties described in this Section 9.2 as to which the
Company Indemnified Parties are entitled to indemnification are hereinafter
collectively referred to as "COMPANY LOSSES."
9.3 INDEMNIFICATION PROCEDURE.
(a) Promptly after receipt by a Purchaser Indemnified Party or a
Company Indemnified Party (hereinafter collectively referred to as an
"INDEMNIFIED PARTY") of notice by a third party of any complaint or the
commencement of any action or proceeding with respect to which such Indemnified
Party may be entitled to receive payment from the other party for any Purchaser
Losses or Company Losses (as the case may be), such Indemnified Party shall,
within ten (10) days, notify the Company and Principal Members or the Purchaser,
as the appropriate indemnifying parties (the "INDEMNIFYING PARTY"), of such
complaint or of the commencement of such action or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Indemnifying Party shall not relieve
the Indemnifying Party from liability for such claim arising otherwise than
under this Agreement and such failure to so notify the Indemnifying Party shall
relieve the Indemnifying Party from liability under this Agreement with respect
to such claim only if, and only to the extent that, such failure to notify the
Indemnifying Party results in material prejudice to the Indemnifying Party with
respect to material rights and defenses otherwise available to the Indemnifying
Party with respect to such claim. The Indemnifying Party shall have the right,
upon written notice delivered to the Indemnified Party within twenty (20) days
thereafter, to assume the defense of such action or proceeding, including the
employment of counsel
29
reasonably satisfactory to the Indemnified Party and the payment of the fees and
disbursements of such counsel. In the event, however, that the Indemnifying
Party declines or fails to assume the defense of the action or proceeding or to
employ counsel reasonably satisfactory to the Indemnified Party, in either case
within such 20-day period, then such Indemnified Party may employ counsel to
represent or defend it in any such action or proceeding and the Indemnifying
Party shall pay the reasonable fees and disbursements of such counsel as
incurred; PROVIDED, HOWEVER, that the Indemnifying Party shall not be required
to pay the fees and disbursements of more than one counsel for all Indemnified
Parties in any jurisdiction in any single action or proceeding. In any action or
proceeding with respect to which indemnification is being sought hereunder, the
Indemnified Party or the Indemnifying Party, whichever is not assuming the
defense of such action, shall have the right to participate in such litigation
and to retain its own counsel at such party's own expense. The Indemnifying
Party or the Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep the Indemnifying Party or the Indemnified Party, as
the case may be, reasonably apprised of the status of the defense of any action
the defense of which it is maintaining, and to cooperate in good faith with each
other with respect to the defense of any such action.
(b) No Indemnified Party may settle or compromise any claim or consent
to the entry of any judgment with respect to which indemnification is being
sought hereunder without the prior written consent of the Indemnifying Party,
unless such settlement, compromise or consent includes an unconditional release
of the Indemnifying Party from all liability arising out of such claim. An
Indemnifying Party may not, without the prior written consent of the Indemnified
Party, settle or compromise any claim or consent to the entry of any judgment
with respect to which indemnification is being sought hereunder unless (i) the
Indemnifying Party shall pay or cause to be paid all amounts arising out of such
settlement or judgment concurrently with the effectiveness thereof; (ii) the
terms or effect of the settlement shall not encumber any of the assets of any
Indemnified Party or any affiliate thereof, or contain or result in any
restriction, interference or condition that would apply to such Indemnified
Party or its affiliates or to the conduct of any of their respective businesses;
and (iii) the Indemnifying Party shall obtain, as a condition of such
settlement, a complete unconditional release of each Indemnified Party.
(c) Any party granted the right to direct the defense of any action or
proceeding under this Section 9.3 hereunder shall (1) keep the other parties
fully informed of material developments in the action or proceeding, (2)
promptly submit to the other parties copies of all pleadings, responsive
pleadings, motions and other similar legal documents and papers received in
connection with the action or proceeding, (3) permit the other parties and their
counsel, to the extent practicable, to confer on the conduct of the defense of
the action or proceeding, and (4) to the extent practicable, permit the other
parties and their counsel an opportunity to review all legal papers to be
submitted prior to their submission. The parties shall make available to each
other and each other's counsel and accountants all of their books and records
relating to the action or proceeding, and each party shall render to the other
such assistance as may be reasonably required in order to insure the proper and
adequate defense of the action or proceeding. The parties shall use their
respective good faith efforts to avoid the waiver of any privilege of another
party. The assumption of the defense of any action or proceeding by an
Indemnifying Party shall not constitute an admission of responsibility to
indemnify or in any manner impair or restrict the Indemnifying Party's rights to
later seek to be reimbursed its costs and expenses if indemnification under this
Agreement with respect to the
30
action or proceeding was not required. An Indemnifying Party may elect to assume
the defense of an action or proceeding at any time during the pendency of the
action or proceeding, even if initially the Indemnifying Party did not elect to
assume the defense, so long as the assumption at such later time would not
materially prejudice the rights of the Indemnified Party.
(d) In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement, such Indemnified Party shall send written notice of
such claim to the appropriate Indemnifying Party. Such notice shall specify the
basis for such claim. As promptly as possible after the Indemnified Party has
given such notice, such Indemnified Party and the appropriate Indemnifying Party
shall establish the merits and amount of such claim and, within five business
days of either the consensual resolution of the claim by the Indemnified Party
and Indemnifying Party or, if no such resolution occurs, the final
non-appealable determination of the merits and amount of such claim by a court
of competent jurisdiction, the Indemnifying Party shall pay to the Indemnified
Party immediately available funds in an amount equal to such claim as determined
hereunder.
9.4 CLAIMS PERIOD. For purposes of this Agreement, a "CLAIMS PERIOD" shall
be the period during which a claim for indemnification may be asserted under
this Agreement by an Indemnified Party, which period (a) shall begin on the
Closing Date and (b) shall terminate (or not terminate) as follows:
(i) with respect to Purchaser Losses arising under Section 9.1(a) that
do not also arise under Section 9.1(b), the Claims Period shall terminate
two years following the date hereof;
(ii) with respect to Purchaser Losses arising under Section 9.1(b),
the Claims Period shall terminate one year following the date hereof;
(iii) with respect to Purchaser Losses arising under Section 9.1(c) or
Section 9.1(d), the Claims Period shall not terminate;
(iv) with respect to Company Losses arising under Section 9.2(b), the
Claims Period shall terminate one year following the date hereof;
(v) with respect to Company Losses arising under Section 9.2(a),
Section 9.2(c) or Section 9.2(d), the Claims Period shall not terminate.
Notwithstanding the foregoing, if prior to the close of business on the
last day of the applicable Claims Period, an Indemnifying Party shall have been
properly notified of a claim for indemnity hereunder and such claim shall not
have been finally resolved or disposed of at such date, such claim shall
continue to survive and shall remain a basis for indemnity hereunder until such
claim is finally resolved or disposed of in accordance with the terms hereof.
9.5 LIMITATIONS ON INDEMNIFICATION. The right to receive indemnification
under this Section 9 is subject to the following limitations:
(a) Notwithstanding anything to the contrary herein and except for
actual fraud by a Principal Member, each Principal Member shall only be
obligated to indemnify the Purchaser
31
Indemnified Parties under this Section 9 up to the 30% of the aggregate number
of shares of Parent Shares that were actually received by such Principal Member.
For purposes of valuing the Parent Shares for purposes of satisfying Purchaser
Losses under this Section 9.5, the Parent Shares delivered to such Principal
Member shall be valued based on the closing price of the Parent's common stock
on the over-the-counter bulletin board (or any subsequent market) on either (i)
the Closing Date or (ii) the date such Parent Shares are delivered to the
Purchaser Indemnified Party in satisfaction of the Purchaser Loss, whichever is
greater.
(b) Notwithstanding anything to the contrary herein and except for
actual fraud by the Company, the Company shall only be obligated to indemnify
the Purchaser Indemnified Parties under this Section 9 up to 30% of the
aggregate number of shares of Parent Shares that were actually received by the
Company at Closing. For purposes of valuing the Purchaser Common Stock for
purposes of satisfying Purchaser Losses under this Section 9.5, the Parent
Shares delivered to the Company shall be valued based on the closing price of
the Parent's common stock on the over-the-counter bulletin board (or any
subsequent market) on either (1) the Closing Date or (2) the date such Parent
Shares are delivered to the Purchaser Indemnified Party in satisfaction of the
Purchaser Loss, whichever is greater. In addition to the foregoing, the Company
shall have no indemnity obligation after the Liquidation occurs, and after the
Liquidation any claim for indemnity by any Purchaser Indemnified Party may be
asserted, subject to all of the limitations of this Agreement, only against the
Principal Members who actually receive Principal Shares in the Liquidation.
(c) Neither the Company nor any Principal Member shall be liable to
the Purchaser Indemnified Parties until the aggregate amount of Purchaser Losses
exceeds $25,000 (the "Threshold Amount"), at which time the Company and the
Principal Members shall be liable only for Purchaser Losses in excess of the
Threshold Amount up to the applicable maximum amounts set forth in this
Agreement. All Purchaser Losses are payable, at the option of the Indemnifying
Party, with (i) Parent Shares or (ii) cash in an amount equal to the value
ascribed to the Parent Shares pursuant to Section 9.5(a) or Section 9.5(b), as
applicable. In the event it is finally determined in accordance with this
Section 9 that a Purchaser Indemnified Party is entitled to receive payment from
the Principal Members in respect of any Purchaser Losses, the amount recovered
by such Indemnified Party shall be paid pro rata (based on the number of Parent
Shares received by the Principal Members in connection with the Liquidation) by
the Principal Members. In such event, the Principal Members shall send one or
more certificates representing the Parent Shares to the Purchaser for
cancellation, and the Purchaser Indemnified Party shall promptly issue, or cause
to be issued, to each Principal Member a new certificate representing the number
of shares of the Parent Shares, if any, that the Purchaser Indemnified Party is
not entitled to cancel pursuant to the provisions of this Section 9.5. If a
Principal Member refuses to deliver to the Purchaser Indemnified Party his or
her stock certificate representing shares of Purchaser Common Stock after it is
finally determined that such Principal Member owes such shares in satisfaction
of a Purchaser Loss hereunder, the Purchaser Indemnified Party may enter a stop
transfer order with its transfer agent to effect the cancellation of the shares
that such Principal Member is obligated to deliver to the Purchaser Indemnified
Party hereunder.
(d) Neither the Company nor any Principal Member shall be required to
indemnify any Purchaser Indemnified Party with respect to any claim for a breach
of any representations
32
and warranties if the basic underlying facts giving rise to the claim were known
by or disclosed to any Purchaser Indemnified Party or its Affiliates on or
before Closing;
(e) In computing the amount of any indemnification to which any
Purchaser Indemnified Party may be entitled hereunder by virtue of a breach of
Section 3.6, if the amount of any liabilities has been understated or
unrecorded, on the one hand, but on the other hand the amount of any other
liabilities has been overstated or any assets understated, only the net effect
(benefits or detriment) of such errors shall be taken into account.
(f) Any amounts recoverable by any Purchaser Indemnified Party under
this Section 9 shall be treated as an adjustment to the Purchase Price or
Assumed Liabilities, as applicable, and shall be net of any Tax benefits and
third party recoveries (such as insurance or "pass-through warranty coverage,
which all Purchaser Indemnified Parties must exhaust before making any claim for
indemnification hereunder) to all Purchaser Indemnified Parties.
(g) No Purchaser Indemnified Party may recover any amounts on a claim
that are attributable to any delay in delivering notice of the claim to the
Company or any Principal Member. No indemnity shall become due (1) on account of
consequential, incidental or indirect damages or losses and, in particular, no
"multiple of profits" or other items shall be applied in calculating any
indemnity amount, or (2) in respect of any claim to the extent that the matter
that is the subject of the claim that is reflected on, accrued for or reserved
against or otherwise provided for in the Company Financial Statements.
(h) Neither the Company nor any Principal Member shall have any
liability with respect to any claim or part of a claim that would not have
arisen but for any act or omission after Closing by any Purchaser Indemnified
Party or any its Affiliates other than any act or omission done pursuant to this
Agreement or as required by applicable law.
9.6 EXCLUSIVE REMEDY. An action for damages under this Section 9
constitutes the sole and exclusive remedy of each party with respect to any
matter arising under this Agreement, and each party hereby irrevocably waives
and releases the other parties from any and all claims and other causes of
action, including claims for contribution, relating to such matters.
SECTION 10. MISCELLANEOUS.
10.1 NOTICES. All notices, communications and deliveries hereunder shall be
made in writing signed by the party making the same, shall specify the Section
hereunder pursuant to which it is given or being made, and shall be delivered
personally, by electronic facsimile transmission (with receipt acknowledged by
the sending party's facsimile machine), by registered or certified mail, or by
nationally recognized overnight courier (with postage and other fees prepaid in
each case) as follows:
33
To the Purchaser or the Parent:
Return On Investment Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company or ▇▇▇▇▇▇:
Construction Yellow Pages, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇., ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: R. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To ▇▇▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing by like notice. Such
notice shall be effective upon the date of delivery or refusal of delivery, if
sent by personal delivery, on the date of transmission if sent by facsimile, on
the third business day if sent by registered, or certified mail, or on the next
business day if sent by a nationally recognized overnight courier.
34
10.2 INTERPRETATION. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for convenience of reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." In this Agreement the phrase "to the
knowledge of the Company" and similar phrases means the actual knowledge of
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇, and the phrases "to the knowledge of the Purchaser" or "to
the knowledge of the Parent" and similar phrases means (in each case) the actual
knowledge of any director or officer of both the Purchaser and the Parent.
10.3 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. This Agreement is not intended to confer upon
any person (including any employees or former employees of Company), other than
the parties hereto, any rights or remedies. All agreements, covenants,
obligations and liabilities of Parent and Purchaser made in or arising under
this Agreement or any Purchaser Ancillary Documents shall be joint and several.
10.4 GOVERNING LAW. Any disputes among the parties hereto arising under
this Agreement shall be governed and construed as to both substantive and
procedural matters in accordance with the laws of the State of Georgia. In the
event either party hereto shall institute a legal action as a result of a
default in the other party's performance under this Agreement, any such action
shall be brought exclusively in the state courts of ▇▇▇▇ County, State of
Georgia which shall retain exclusive jurisdiction with respect to the
interpretation, performance, and enforcement of this Agreement.
10.5 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned or delegated, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties, and any such assignment without such prior
written consent shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
10.6 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
10.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
35
10.8 COSTS AND EXPENSES. The Company and Principal Members will bear all
costs and expenses (including any brokers or finders fees and any attorneys and
accountants fees) incurred by them in connection with the transactions
contemplated by this Agreement, and the Purchaser and the Parent will bear all
such costs and expenses incurred by the Purchaser or the Parent in connection
herewith.
10.9 CERTAIN INFORMATION. The specification of any dollar amount or the
inclusion of any item in the representations and warranties contained in this
Agreement or any schedules or exhibits hereto is not intended to imply that the
amounts, or higher or lower amounts, or the items so included, or other items,
are or are not required to be disclosed (including whether such amounts or items
are required to be disclosed as material or threatened) or are within or outside
of the ordinary course of business, and no party shall use the fact of the
setting of the amounts or the fact of the inclusion of any item in this
Agreement or the schedules or exhibits hereto in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
or included in this Agreement or in any schedule or exhibit hereto is or is not
required to be disclosed (including whether the amount or items are required to
be disclosed as material or threatened) or is within or outside of the ordinary
of business for purposes of this Agreement. The information contained in this
Agreement and in the schedules and exhibits hereto is disclosed solely for
purposes of this Agreement, and no information contained herein or therein shall
be deemed to be an admission by any party hereto to any third party of any
matter whatsoever, including any violation of law or breach of contract.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the Purchaser, the Parent, the Company and the
Principal Members have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first written above.
PURCHASER COMPANY
TECTONIC SOLUTIONS, INC. CONSTRUCTION YELLOW PAGES, LLC
By: _____________________________ By: Best Source Publishing, LLC,
its managing member
Name: _____________________________
By: ___________________________
Title: _____________________________
Name: ___________________________
Title: ___________________________
PARENT PRINCIPAL MEMBERS
RETURN ON INVESTMENT CORPORATION
By: _____________________________ ______________________________(Seal)
▇▇▇▇ ▇▇▇▇▇▇▇
Name: _____________________________
Title: _____________________________ ______________________________(Seal)
▇▇▇▇▇ ▇▇▇▇▇▇