STOCK PURCHASE AGREEMENT
Dated as of August 7, 1998
By and Between
TANKNOLOGY-NDE INTERNATIONAL, INC.,
OUTBOUND SERVICES, INC.,
and
THE STOCKHOLDERS OF
OUTBOUND SERVICES, INC.
TABLE OF CONTENTS
Page
ARTICLE I ACQUISITION AND TRANSFER OF SHARES
Section 1.01. Acquisition and Transfer; Assignment of Intellectual
Property Rights.............................................1
Section 1.02. Disbursement Agent..........................................1
Section 1.03. Cash Payment................................................3
Section 1.04. Promissory Note.............................................3
Section 1.05. Stock Warrants..............................................3
Section 1.06. T-NDE Capital Stock.........................................3
Section 1.07. Payment of Debt.............................................3
Section 1.08. Future Investment in OSI....................................4
Section 1.09. Closing.....................................................4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF EACH
STOCKHOLDER
Section 2.01. Ownership and Status of OSI Capital Stock...................4
Section 2.02. Power of the Stockholder; Approval of the Acquisition.......4
Section 2.03. No Conflicts or Litigation..................................5
Section 2.04. Preemptive and Other Rights; Waiver.........................5
Section 2.05. Control of Related Businesses...............................5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
OSI AND THE STOCKHOLDERS
Section 3.01. Due Incorporation...........................................6
Section 3.02. Qualification...............................................6
Section 3.03. Authorization; Enforceability; Absence of Conflicts;
Required Consents...........................................6
Section 3.04. Charter Documents and Records; No Violation.................7
Section 3.05. No Defaults.................................................7
Section 3.06. Controlling Affiliates......................................7
Section 3.07. Capital Stock of OSI........................................7
Section 3.08. Transactions in Capital Stock...............................8
Section 3.09. No Bonus Shares.............................................8
Section 3.10. Predecessor Status; etc.....................................8
Section 3.11. Related Party Agreements....................................8
Section 3.12. Litigation..................................................8
Section 3.13. Financial Statements; Disclosure............................8
Section 3.14. Compliance With Laws........................................9
Section 3.15. Certain Environmental Matters..............................10
Section 3.16. Liabilities and Obligations................................10
Section 3.17. Receivables................................................10
Section 3.18. Real Properties............................................11
Section 3.19. Other Tangible Assets......................................11
Section 3.20. Intellectual Property Rights...............................11
Section 3.21. Relations With Governments, etc............................12
Section 3.22. Commitments................................................12
Section 3.23. Insurance..................................................13
Section 3.24. Employee Matters...........................................13
Section 3.25. Compliance With ERISA, etc.................................15
Section 3.26. Taxes......................................................17
Section 3.27. Government Contracts.......................................18
Section 3.28. Absence of Changes.........................................18
Section 3.29. Bank Relations; Powers of Attorney.........................20
Section 3.30. Current Reports............................................20
Section 3.31. No Brokers.................................................20
Section 3.32. Year 2000 Compliance.......................................20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF T-NDE
Section 4.01. Organization; Power........................................21
Section 4.02. Authorization; Enforceability; Absence of Conflicts;
Required Consents..........................................21
Section 4.03. Capital Stock of T-NDE.....................................22
Section 4.04. No Litigation..............................................22
ARTICLE V CONDITIONS TO CLOSING AND CONSUMMATION
Section 5.01. Conditions to the Obligations of Each Party................22
Section 5.02. Conditions to the Obligations of the Stockholders..........22
Section 5.03. Conditions to the Obligations of T-NDE.....................23
ARTICLE VI COVENANTS FOLLOWING THE CLOSING DATE
Section 6.01. Preparation and Filing of Tax Returns......................24
Section 6.02. Removal of Guaranties......................................25
Section 6.03. Undertakings by Certain Stockholders.......................25
Section 6.04. Intellectual Property Rights...............................26
ARTICLE VII INDEMNIFICATION
Section 7.01. Survival of Representations and Warranties.................26
Section 7.02. Indemnification of T-NDE Indemnified Parties...............27
Section 7.03. Indemnification of Stockholder Indemnified Parties.........27
Section 7.04. Conditions of Indemnification..............................28
Section 7.05. Remedies Not Exclusive.....................................30
Section 7.06. Limitations on Indemnification.............................30
Section 7.07. Satisfaction of Indemnity..................................30
ARTICLE VIII COMPETITION AND CONFIDENTIALITY
Section 8.01. Prohibited Activities......................................31
Section 8.02. Damages....................................................32
Section 8.03. Reasonable Restraint.......................................33
Section 8.04. Severability; Reformation..................................33
Section 8.05. Independent Covenant.......................................33
Section 8.06. Materiality................................................33
Section 8.07. Potentially Competitive Activities.........................33
ARTICLE IX DEFINITIONS AND DEFINITIONAL PROVISIONS
Section 9.01. Defined Terms..............................................34
Section 9.02. Other Defined Terms........................................43
Section 9.03. Other Definitional Provisions..............................43
Section 9.04. Captions...................................................44
ARTICLE X GENERAL PROVISIONS
Section 10.01. Brokers and Agents.........................................44
Section 10.02. Assignment; No Third Party Beneficiaries...................44
Section 10.03. Entire Agreement; Amendment; Waivers.......................44
Section 10.04. Expenses...................................................45
Section 10.05. Notices....................................................45
Section 10.06. Governing Law..............................................46
Section 10.07. Exercise of Rights and Remedies............................46
Section 10.08. Time.......................................................46
Section 10.09. Reformation and Severability...............................46
Section 10.10. Remedies Cumulative........................................46
Section 10.11. Release....................................................47
Section 10.12. Arbitration................................................47
Section 10.13. Counterpart Execution; Facsimiles..........................48
SCHEDULES
Schedule 1.04 Form of Promissory Note and Allocation of Cash Payment
Schedule 1.05-1 Stockholders Receiving Warrants
Schedule 1.05 Form of Warrant Agreement
Schedule 1.06 Stockholders Receiving T-NDE Common Stock
Schedule 2.01 Ownership and Status of OSI Capital Stock
Schedule 2.06 Control of Related Businesses
Schedule 3.02 Jurisdictions in which OSI is authorized or qualified to
do business
Schedule 3.06 Controlling Affiliates
Schedule 3.07 Capital Stock of OSI
Schedule 3.08 Transactions in Capital Stock
Schedule 3.09 No Bonus Shares
Schedule 3.10 Predecessor Status; etc.
Schedule 3.11 Related Party Agreements
Schedule 3.12 Litigation
Schedule 3.14 Compliance With Laws
Schedule 3.15 Certain Environmental Matters
Schedule 3.16 Liabilities and Obligations
Schedule 3.17 Receivables
Schedule 3.18 Real Properties
Schedule 3.19 Other Tangible Assets
Schedule 3.20 Proprietary Rights
Schedule 3.22 Commitments
Schedule 3.23 Insurance
Schedule 3.24 Employee Matters
Schedule 3.25 Multiemployer Plans
Schedule 3.26 Taxes
Schedule 3.28 Absence of Changes
Schedule 3.29 Bank Relations; Powers of Attorney
Schedule 6.03 List of Guaranties made by ▇▇▇▇▇ ▇. Law
Schedule 7.01 Indemnified Representations and Warranties of OSI Which
do not Expire
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
_______, 1998, by and among the parties designated on the signature page hereto
as Sellers (hereinafter referred to individually as a "Stockholder" and
collectively as "Stockholders"), being the owners of all of the outstanding
common stock of OUTBOUND SERVICES, INC., a California corporation (hereinafter
referred to as "OSI"), and TANKNOLOGY-NDE INTERNATIONAL, INC., a Delaware
corporation (hereinafter referred to as "T-NDE");
RECITALS
WHEREAS, Stockholders own 142,423 shares (the "Shares") of OSI
common stock, no par value (the "Common Stock"), constituting all of the issued
and outstanding Shares of Common Stock; and
WHEREAS, T-NDE desires to acquire the Shares and Stockholders
desire to sell the Shares to T-NDE in accordance with the terms and subject to
the conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties set forth in this Agreement, the
parties to this Agreement hereby agree as follows:
ARTICLE I
ACQUISITION AND TRANSFER OF SHARES
At the Closing and subject to the terms and conditions of this
Agreement, the parties hereto shall cause the following events to occur:
Section 1.01. Acquisition and Transfer; Assignment of
Intellectual Property Rights. Stockholders shall convey, assign, transfer and
deliver to T-NDE all of the Shares, represented by the appropriate stock
certificates duly endorsed for transfer, free and clear of all liens, claims,
encumbrances, restrictions, legends or other impediments to the complete, full
and unfettered transfer of ownership thereof. Each Stockholder hereby assigns,
and if at this time is not able to assign, agrees to assign, to OSI all right,
title, and interest, throughout the world, in and to all Intellectual Property
it has developed, conceived, or created for use by OSI.
Section 1.02. Disbursement Agent. There shall be a Disbursement
Agent whose purpose is to facilitate the distribution among the Stockholders of
the Acquisition Consideration delivered by T-NDE under the Acquisition
Agreements, and to facilitate the efficient communication between T-NDE and the
Stockholders thereunder. The Stockholders entitled to receive at least 80% of
the Acquisition Consideration shall appoint one Stockholder to serve as the
Disbursement Agent, who can only be substituted by a similar vote of the
Stockholders, upon written notice to T-NDE.
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The undersigned Stockholders hereby appoint Stockholder ▇▇▇▇▇ ▇.
Law as the Disbursement Agent.
(a) Attorney-in-fact; Scope of Authority. The Stockholders hereby
appoint the Disbursement Agent, or any substitute Disbursement Agent, as the
true and lawful attorney-in-fact for Stockholders. In his capacity as
attorney-in-fact, the Disbursement Agent shall have the authority to do and
perform any act whatsoever necessary or desirable to be done in connection with
all matters relating to the Acquisition Agreements, the undersigned Stockholders
hereby ratifying and approving the acts of said attorney-in-fact, and the
signature of said attorney-in-fact shall constitute the act of any or all
Stockholders. Specifically, but not by way of limitation, the Disbursement Agent
shall have the following powers:
(i) to take delivery of the Promissory Note as provided for in
Section 1.04 and to act as holder thereof, receiving principal and interest
payments thereunder on behalf of Stockholders, in accordance with the terms
of this Agreement and the Promissory Note;
(ii) to take delivery of all notices and correspondence as
provided for or arising out of the Acquisition Agreements;
(iii) to act on behalf of the Stockholders to amend, modify,
waive, or release any of the terms or provisions of the Acquisition
Agreements as the Disbursement Agent deems appropriate, any such amendment,
modification, waiver or release executed or granted by the Disbursement
Agent to be binding upon and enforceable against all Stockholders to the
same extent as if such amendment, modification, waiver or release had been
executed by such Stockholder.
(b) Duties of the Disbursement Agent. In fulfillment of his
duties, the Disbursement Agent shall:
(i) take delivery of the Promissory Note as provided for in
Section 1.04 and to act as holder thereof on behalf of Stockholders, taking
delivery of principal and interest payments thereunder and distributing
such payments among the Stockholders pro rata according to each
Stockholder's respective percentage ownership of OSI Capital Stock as
indicated by Schedule 2.01 to this Agreement and to enter into any
subordination or inter-creditor agreements on behalf of the Stockholders
necessary to effectuate the Promissory Note;
(ii) take delivery or receive all Notices and correspondence
provided for or arising out of the Transaction Documents and deliver such
notices and correspondence to Stockholders.
(c) Delivery to Disbursement Agent. Delivery by T-NDE to the
Disbursement Agent of the Promissory Note and payments thereunder, and any
notice or correspondence as provided for or arising out of the Acquisition
Agreements shall be deemed to constitute delivery to the Stockholders as
required by the Acquisition Agreements as of the date of delivery to the
Disbursement Agent.
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(d) Fulfillment of Duties. The Disbursement Agent shall be an
attorney-in-fact for, and on behalf of, the Stockholders only, and not an agent
or representative of T-NDE. Delivery of Promissory Note and payments thereunder,
and notices by T-NDE to the Disbursement Agent shall fully satisfy the delivery
obligations of T-NDE under the Acquisition Agreements and T-NDE shall not be
responsible for, and Stockholders shall have no recourse to T-NDE in respect of,
the fulfillment or non-fulfillment of the duties of the Disbursement Agent, with
respect to any matter hereunder, including, without limitation, any Promissory
Note payment or notice delivered to the Disbursement Agent.
(e) Liability. The Disbursement Agent shall not be liable to any
Stockholder for any act or failure to act, unless the act or failure to act
constituted willful misconduct, gross negligence, bad faith, or fraud.
(f) Compensation. The Disbursement Agent shall not receive any
compensation for services as Disbursement Agent, but shall receive reimbursement
for expenses incurred in performing those services.
Section 1.03. Cash Payment. In partial consideration for the
Shares transferred pursuant to Section 1.01, T-NDE shall pay the Stockholders
within two (2) days of Closing an aggregate of $700,000 in cash (the "Cash
Payment"), to be distributed among the Stockholders pro rata according to each
Stockholder's respective percentage of ownership of OSI Capital Stock as
indicated by Schedule 2.01 to this Agreement.
Section 1.04. Promissory Note. In partial consideration for the
Shares transferred pursuant to Section 1.01, T-NDE shall deliver to the
Disbursement Agent at Closing, a promissory note validly executed by T-NDE in
the form set forth in Schedule 1.04 (the "Promissory Note"). The Promissory Note
shall be in the aggregate principal amount of $750,000, payable in accordance
with the terms therein.
Section 1.05. Stock Warrants. In partial consideration for the
Shares transferred pursuant to Section 1.01, T-NDE shall deliver to the
Stockholders within two (2) days of Closing, stock warrants (the "Stock
Warrants") for the purchase of 500,000 shares of common stock of T-NDE ("T-NDE
Common Stock"), to be distributed among the Stockholders in the amounts set
forth opposite each Stockholder's name in Schedule 1.05-1 upon the terms set
forth in the Warrant Agreement, in the form set forth in Schedule 1.05-2.
Section 1.06. T-NDE Capital Stock. In partial consideration for
the Shares transferred pursuant to Section 1.01, T-NDE shall deliver to the
Stockholders within two (2) days of Closing, stock certificates for 250,000
shares of T-NDE Common Stock, to be distributed among the Stockholders in the
amounts set forth opposite each Stockholder's name in Schedule 1.06.
Section 1.07. Payment of Debt. (a) T-NDE shall either guarantee
or advance funds to OSI for OSI to pay, as of the Closing (or when due) certain
Indebtedness of OSI in an amount not to exceed $335,000. The Indebtedness
comprises the following:
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Convertible Debentures...............................$ 60,000.00
Loan Payable to G Hirs.................................184,064.00
Accrued Salary to ▇▇▇▇▇ ▇. Law........................ 37,956.43
Line of Credit (Monarch Bank)......................... 30,000.00
Accounts Payable listed in Schedule 1.07.............. 11,590.82
[Other Obligations] ............................ 11,388.75
(b) The TNDE loan of $65,000 to OSI shall be forgiven and treated
as if paid in capital.
(c) The amount for Accrued Salary to ▇▇▇▇▇ ▇. Law of $37,956.43
set out above is calculated as follows: Net of Accrued Salary of $145,000 less
Stockholder Advance of $74,043.57 less amounts due on exercise of options
($33,000). Mr. Law hereby agrees that such amounts may be so netted and that
upon payment of $37,956.43, all amounts due to him from OSI for Accrued Salary
shall be satisfied.
Section 1.08. Future Investment in OSI. T-NDE shall invest at
least $500,000 in additional working capital in OSI payable at not less than
$83,000 at the beginning of each quarter, commencing with the Closing with a
final payment in an amount that together with prior payments equals at least
$500,000.
Section 1.09. Closing. The closing of the transactions
contemplated hereunder (the "Closing") shall take place by exchange of documents
on ________________, 19___ (the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each of the Stockholders represents and warrants to T-NDE that,
as applied solely to himself, all the following representations and warranties
in this Article II are as of the date of this Agreement, true and correct:
Section 2.01. Ownership and Status of OSI Capital Stock. The
Stockholder is the record and beneficial owner or the legal owner of the number
of shares of OSI Capital Stock set forth opposite the Stockholder's name in
Schedule 2.01, free and clear of all Liens, except for the Liens.
Section 2.02. Power of the Stockholder; Approval of the
Acquisition. The Stockholder has the full power, legal capacity and authority to
execute and deliver this Agreement and each other Transaction Document to which
the Stockholder is a party or causes the execution and performance of
Transaction Documents signed by the Disbursement Agent, and to perform the
Stockholder's obligations under this Agreement and under all other Transaction
Documents to which the Stockholder is a party. This Agreement constitutes, and
each such other Transaction Document, when executed in and delivered by the
Disbursement Agent or by the Stockholder, will constitute, the legal, valid and
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binding obligation of the Stockholder, enforceable against the Stockholder in
accordance with its terms, except as that enforceability may be (i) limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and (ii) subject
to general principles of equity (regardless of whether that enforceability is
considered in a proceeding in equity or at law) and any implied covenant of good
faith and fair dealing.
Section 2.03. No Conflicts or Litigation. The execution, delivery
and performance in accordance with their respective terms by the Stockholder of
this Agreement and the other Transaction Documents to which the Stockholder is a
party, or which the Disbursement Agent is a party on behalf of the Stockholder
do not and will not (a) violate or conflict with any Governmental Requirement,
(b) breach or constitute a default under any agreement or instrument to which
the Stockholder is a party or by which the Stockholder or any of the Shares
owned by the Stockholder is bound, (c) result in the creation or imposition of,
or afford any Person the right to obtain, any Lien upon any of the Shares owned
by the Stockholder (or upon any assets, revenues, income or profits of the
Stockholder therefrom) or (d) if the Stockholder is an Entity, violate the
Stockholder's Charter Documents. No Litigation is pending or, to the knowledge
of the Stockholder, threatened to which the Stockholder is or may become a party
which (a) questions or involves the validity or enforceability of any of the
Stockholder's obligations under any Transaction Document or (b) seeks (or
reasonably may be expected to seek) (i) to prevent or delay the consummation by
the Stockholder of the transactions contemplated by this Agreement to be
consummated by the Stockholder or (ii) damages in connection with consummation
by the Stockholder or by the Disbursement Agent on behalf of the Stockholder of
the transactions contemplated by this Agreement.
Section 2.04. Preemptive and Other Rights; Waiver. Except for the
right of the Stockholder to acquire T-NDE Common Stock pursuant to Sections 1.05
and 1.06, the Stockholder either (a) does not own or otherwise have any
statutory or contractual preemptive or other right of any kind (including any
right of first offer or refusal) to acquire any shares of OSI Capital Stock or
T-NDE Common Stock or (b) hereby irrevocably waives each right of that type the
Stockholder does own or otherwise has.
Section 2.05. Control of Related Businesses. Except as set forth
in Schedule 2.06, the Stockholder is not, alone or with one or more other
Persons, the Controlling Affiliate of any Entity, business or trade (other than
OSI if the Stockholder is an Affiliate of OSI) that (a) is engaged in any line
of business which is the same as or similar to any line of business in which OSI
is engaged or (b) is, or has within the three-year period ending on the date of
this Agreement, engaged in any transaction with OSI, except for transactions in
the ordinary course of business of OSI.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF
OSI AND THE STOCKHOLDERS
OSI and each Stockholder jointly and severally represent and
warrant to, and agree with, T-NDE that all the following representations and
warranties in this Article III are as of the date of this Agreement, true and
correct:
Section 3.01. Due Incorporation. OSI (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California, (b) has all requisite corporate power and authority under those
laws and its Charter Documents to own or lease and to operate its properties and
to carry on its business as now conducted and (c) is duly qualified and in good
standing as a foreign corporation in all jurisdictions in which it owns or
leases property or in which the carrying on of its business as now conducted so
requires except where the failure to be so qualified, singly or in the
aggregate, would not have a Material Adverse Effect.
Section 3.02. Qualification. Schedule 3.02 lists all the
jurisdictions in which OSI is authorized or qualified to own or lease and to
operate its properties or to carry on its business as now conducted, and OSI
does not own, lease or operate any properties, or carry on its business, in any
jurisdiction not listed in Schedule 3.02 which is Material to OSI.
Section 3.03. Authorization; Enforceability; Absence of
Conflicts; Required Consents. (a) The execution, delivery and performance by OSI
of this Agreement and each other Transaction Document to which it is a party,
and the effectuation of the Acquisition and the other transactions contemplated
hereby and thereby, are within its corporate or other power under its Charter
Documents and the applicable Governmental Requirements of the State of
California and have been duly authorized by all proceedings, including actions
permitted to be taken in lieu of proceedings, required under its Charter
Documents and those Governmental Requirements.
(b) This Agreement has been, and each of the other Transaction
Documents to which OSI is a party, concurrently executed and delivered to T-NDE,
will have been, duly executed and delivered by OSI and is, or when so executed
and delivered will be, the legal, valid and binding obligation of OSI,
enforceable against OSI in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law) and any implied covenant of good faith and fair dealing.
(c) The execution, delivery and performance in accordance with
their respective terms by OSI, the Disbursement Agent or the Stockholders of the
Transaction Documents to which they are party have not and will not (i) violate,
breach or constitute a default under (A) the Charter Documents of OSI (B) any
Governmental Requirement applicable to OSI (C) any Material Agreement of OSI,
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(ii) result in the acceleration or mandatory prepayment of any Indebtedness or
any Guaranty of OSI or afford any holder of any of that Indebtedness, or any
beneficiary of any of those Guaranties, the right to require OSI to redeem,
purchase or otherwise acquire, reacquire or repay any of that Indebtedness, or
to perform any of those Guaranties, (iii) cause or result in the imposition of,
or afford any Person the right to obtain, any Lien upon any property or assets
of OSI (or upon any revenues, income or profits of OSI) or (iv) result in the
revocation, cancellation, suspension or material modification, in any single
case or in the aggregate, of any Governmental Approval possessed by OSI at the
date hereof and necessary for the ownership or lease or the operation of its
properties or the carrying on of its business as now conducted, including any
necessary Governmental Approval under each applicable Environmental Law.
(d) No Governmental Approvals are required to be obtained, and no
reports or notices to or filings with any Governmental Authority are required to
be made, by OSI or the Stockholders for the execution, delivery or performance
by OSI or the Stockholders of the Transaction Documents to which they are party,
the enforcement against OSI of its obligations thereunder or the effectuation of
the Acquisition and the other transactions contemplated thereby.
Section 3.04. Charter Documents and Records; No Violation. The
Stockholders have caused true, complete and correct copies of the Charter
Documents, each as in effect on the date hereof, and the minute books and
similar corporate or other Entity records of OSI to be delivered or otherwise
made available to T-NDE. No breach or violation of any Charter Document of OSI
has occurred and is continuing.
Section 3.05. No Defaults. No condition or state of facts exists,
or, with the giving of notice or the lapse of time or both, would exist, which
(a) entitles any holder of any outstanding Indebtedness or any Guaranty of OSI,
or a representative of that holder, to accelerate the maturity, or require a
mandatory prepayment, of that Indebtedness or Guaranty, or affords that holder
or its representative, or any beneficiary of that Guaranty, the right to require
OSI to redeem, purchase or otherwise acquire, reacquire or repay any of that
Indebtedness, or to perform that Guaranty in whole or in part, (b) entitles any
Person to obtain any Lien (other than a Permitted Lien) upon any properties or
assets owned by OSI (or upon any revenues, income or profits of OSI therefrom)
or (c) constitutes a violation or breach of, or a default under, any Material
Agreement of OSI by OSI.
Section 3.06. Controlling Affiliates. Except as set forth in
Schedule 3.06, OSI does not own, of record or beneficially, directly or
indirectly through any Person, and does not control, directly or indirectly
through any Person or otherwise, any Capital Stock or any option, warrant or
right to acquire Capital Stock of any Entity.
Section 3.07. Capital Stock of OSI. Schedule 3.07 sets forth, by
each class and by each series within each class, the total number of shares of
authorized OSI Capital Stock and the total number of such shares that have been
issued and are now outstanding. Except as set forth in Schedule 3.07: (a) no
shares of OSI Capital Stock are held by OSI as treasury shares; and (b) no
outstanding options, warrants or rights to acquire Capital Stock of OSI exist.
All the issued and outstanding Capital Stock of OSI (a) have been duly
authorized and validly issued in accordance with the applicable Governmental
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Requirements of the State of California and Charter Documents and (b) are fully
paid and nonassessable. OSI has not issued or sold any of its outstanding
Capital Stock in breach or violation of (a) any applicable statutory or
contractual preemptive rights, or any other rights of any kind (including any
rights of first offer or refusal), of any Person or (b) the terms of any
options, warrants or rights to acquire its Capital Stock which then were
outstanding. No Person has, otherwise than solely by reason of that Person's
right, if any, to vote shares of the Capital Stock of OSI it holds, any right to
vote on any matter with the holders of Capital Stock of OSI.
Section 3.08. Transactions in Capital Stock. Except as set forth
in Schedule 3.08, (a) OSI has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire or reacquire any of its equity securities
or any interests therein or to pay any dividend or make any distribution in
respect thereof; and (b) no transaction has been effected, and no action in
contemplation of the transactions described in this Agreement has been taken,
respecting the equity ownership of OSI.
Section 3.09. No Bonus Shares. Except as set forth in Schedule
3.09, no outstanding OSI Capital Stock was issued for less than the fair market
value thereof at the time of issuance or was issued in exchange for any
consideration other than cash.
Section 3.10. Predecessor Status; etc. Schedule 3.10 lists all
the legal and assumed names of all predecessor companies for the past five years
of OSI, including the names of any Entities from which OSI previously acquired
material assets. Except as disclosed in Schedule 3.10, OSI has not been a
Subsidiary or division of another corporation or a part of an acquisition that
later was rescinded.
Section 3.11. Related Party Agreements. Schedule 3.11 sets forth
all Related Party Agreements in effect on the date hereof (the "Retained Related
Party Agreements"). The terms and conditions of each of the Retained Related
Party Agreements are no less favorable to OSI than OSI reasonably could have
expected to obtain in an arm's-length transaction with a Person other than an
Affiliate of OSI, the rentals provided for in the Retained Related Party
Agreements constituting leases of property to OSI do not and will not exceed
fair market rentals of the properties being rented or leased under those
Retained Related Party Agreements and the payments provided to be made by OSI in
the other Retained Related Party Agreements do not exceed the fair market value
of the goods or other property provided to or the services performed for OSI.
Section 3.12. Litigation. Except as disclosed in Schedule 3.12,
no Litigation is pending or, to the knowledge of OSI or any Stockholder,
threatened to which OSI is or may become a party.
Section 3.13. Financial Statements; Disclosure. (a) Financial
Statements. (i) The Financial Statements (including in each case the related
schedules and notes, if any) attached hereto as Schedule 3.13, which have been
prepared by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, a California accountant corporation, and in
accordance with the GAAP, except as set forth in the notes attached to such
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Financial Statements, present fairly, in all material respects, the financial
position of OSI at the respective dates of the balance sheets included therein
and the results of operations and cash flows of OSI for the respective periods
set forth therein (subject, in the case of interim financial statements, to
normal and recurring year-end adjustments and the absence of footnote
disclosure). As of the date of any balance sheet included in the Financial
Statements delivered to T-NDE, OSI did not have any outstanding Indebtedness to
any Person or any liabilities of any kind (including contingent obligations, tax
assessments or unusual forward or long-term commitments), or any unrealized or
anticipated loss, which in the aggregate then were Material to OSI or required
to be reflected in those Financial Statements or in the notes thereto in
accordance with GAAP which were not so reflected.
(ii) Since the Current Balance Sheet Date, no changes have
occurred in the business, operations, properties or assets, liabilities,
condition (financial or other) or results of operations of OSI that could
reasonably be expected in the aggregate to have a Material Adverse Effect.
(b) Disclosure. As of the date hereof, all Information that has
been made available to T-NDE by or on behalf of OSI prior to the date of this
Agreement in connection with the transactions contemplated hereby is, taken
together, true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
light of the circumstances under which those statements were made.
Section 3.14. Compliance With Laws. (a) Except as disclosed in
Schedule 3.14, (i) OSI possesses, or, if required by the applicable
Environmental Laws (including those relating to the maintenance, repair or
servicing of appliances, equipment or other products containing
chlorofluorocarbons or hydrochlorofluorocarbons), one or more of its employees
as required by those Environmental Laws possesses, all necessary master licenses
and similar Governmental Approvals required for the conduct of its business; and
(ii) OSI and such one or more of its employees are in compliance in all material
respects with the terms and conditions of all Governmental Approvals necessary
for the ownership or lease and the operation of its properties (including all
the facilities and sites it owns or holds under any lease) and the carrying on
of its business as now conducted. Schedule 3.14 discloses all the Governmental
Approvals so possessed. All the Governmental Approvals so listed are valid and
in full force and effect and, except as disclosed in Schedule 3.14, OSI has not
received, nor to the knowledge of any Stockholder, has any employee of either
received, any notice from any Governmental Authority of its intention to cancel,
terminate or not renew any of those Governmental Approvals.
(b) Except as disclosed in Schedule 3.14, OSI (i) has been,
continues to be, and will be following the closing in compliance in all material
respects with all Governmental Requirements applicable to it or any of its
presently or previously owned or operated properties (including all the
facilities and sites now or previously owned or held by it under any lease),
businesses or operations, including all applicable Governmental Requirements
under ERISA and Environmental Laws; and (ii)(A) OSI has not received, nor to the
knowledge of OSI has any employee received, any notice from any Governmental
Authority which asserts, or raises the possibility of assertion of, any
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noncompliance with any of those Governmental Requirements and (B) to the
knowledge of OSI and the Stockholders, no condition or state of facts exists
which would provide a valid basis for any such assertion.
Section 3.15. Certain Environmental Matters. Except as disclosed
in Schedule 3.15, (a) OSI has complied in all material respects, and remains in
compliance in all material respects, with the provisions of all Environmental
Laws applicable to OSI or any of its presently owned or operated facilities,
sites or other properties, businesses and operations and which relate to the
reporting by OSI of all sites presently owned or operated by OSI where Solid
Wastes, Hazardous Wastes or Hazardous Substances have been treated, stored,
disposed of or otherwise handled; (b) no release (as defined in those
Environmental Laws) at, from, in or on any site owned or operated by OSI has
occurred which, if all relevant facts were known to the relevant Governmental
Authorities, reasonably could be expected to require remediation to avoid deed
record notices, restrictions, liabilities or other consequences that would not
be applicable if that release had not occurred; (c) OSI (or any agent or
contractor of OSI) has not transported or arranged for the transportation of any
solid wastes, hazardous wastes or hazardous substances to, as such terms are
defined in the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 and the Resource Conservation and Recovery Act of 1976, or disposed
or arranged for the disposition thereof, any off-site location that could lead
to any claim against OSI, T-NDE or any Subsidiary of T-NDE, as a potentially
responsible party or otherwise, for any clean-up costs, remedial work, damage to
natural resources, personal injury or property damage, including any claim under
CERCLA; and (d) no storage tanks exist on or under any of the properties owned
or operated by OSI from which any Solid Wastes, Hazardous Wastes or Hazardous
Substances have been released into the surrounding environment. OSI has provided
T-NDE with copies (or if not available, accurate written summaries) of all
environmental investigations, studies, audits, reviews and other analyses
conducted by or on behalf, or which otherwise are in the possession, of OSI
respecting any facility, site or other property presently owned or operated by
OSI.
Section 3.16. Liabilities and Obligations. Schedule 3.16 lists
all present liabilities, of every kind, character and description and whether
accrued, absolute, fixed, contingent or otherwise, of OSI which (a) exceed or
reasonably could be expected to exceed $10,000 and (b) (i) had been incurred
prior to the Current Balance Sheet Date, but are not reflected on the Current
Balance Sheet, or (ii) were incurred after the Current Balance Sheet Date
otherwise than in the ordinary course of business and consistent with past
practice. Schedule 3.16 also lists and describes each of OSI's outstanding
secured and unsecured Guaranties not constituting its Indebtedness and, for each
of those Guaranties, whether any Stockholder or Related Person or Affiliate of
any Stockholder is a Person whose obligation is covered by that Guaranty, and if
that item is secured by any property or asset of OSI, the nature of that
security.
Section 3.17. Receivables. Except as set forth in Schedule 3.17,
all the accounts and notes or other advances receivable of OSI reflected on the
Current Balance Sheet were collected, or are valid and enforceable claims
arising in the ordinary course of business and, to the knowledge of OSI, are
collectible, in the respective amounts so reflected, net of the reserves, if
any, reflected in the Current Balance Sheet.
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Section 3.18. Real Properties. (a) Schedule 3.18 lists and
correctly describes in all material respects: (i) all real properties owned by
OSI and, for each of those properties, the address thereof and the use thereof
in the business of OSI, and (ii) all real properties of which OSI is the lessee
and, for each of those properties, the address thereof and the lease (including
its expiration date and any renewal options) relating thereto.
(b) OSI has provided T-NDE with true, complete and correct copies
of all title reports and insurance policies owned or in the possession of OSI
and relating to any of the real properties listed as being owned in Schedule
3.18. Except as set forth in Schedule 3.18 or those reports and policies, and
except for Permitted Liens, OSI owns in fee, and has good, valid and marketable
title to, free and clear of all Liens, each property listed in Schedule 3.18 as
being owned.
(c) OSI has provided T-NDE with true, correct and complete copies
of all leases under which OSI is leasing each of the properties listed in
Schedule 3.18 as being leased and, except as set forth in Schedule 3.18, (i)
each of those leases is, to the knowledge of OSI, valid and binding on the
lessor party thereto, and (ii) the lessee party thereto has not sublet any of
the leased space to any Person other than OSI.
(d) The fixed assets of OSI are affixed only to one or more of
the real properties listed in Schedule 3.18 and, except as set forth in Schedule
3.18, are maintained in accordance with reasonable commercial operating
practices and adequate for the purposes for which they presently are being used
or held for use, ordinary wear and tear excepted.
Section 3.19. Other Tangible Assets. (a) Schedule 3.19 discloses
all leases, including capital leases, that are Material to OSI under which OSI
is leasing its property, plant and equipment and other tangible assets other
than real properties. Except as set forth in Schedule 3.19, (i) each of those
leases is, to the knowledge of OSI, valid and binding on the lessor party
thereto and (ii) the lessee party thereto has not sublet any of the leased
property to any Person other than OSI.
(b) Except as set forth in Schedule 3.19, all the property, plant
and equipment of OSI are in good working order and condition, ordinary wear and
tear excepted, and adequate for the purposes for which they presently are being
used or held for use.
(c) In each case, free and clear of all Liens except for
Permitted Liens and as set forth in Schedule 3.19, OSI has good and valid title
to, or holds under a lease valid and binding on the lessor party thereto, all
its tangible personal properties and assets (including its property, plant and
equipment) that individually is or in the aggregate are Material to OSI.
Section 3.20. Intellectual Property Rights. Except as set forth
in Schedule 3.20, OSI owns, free and clear of all Liens, or has the legal right
to use all Intellectual Property Rights that are necessary to the conduct of its
business as now conducted, in each case free, to their knowledge, of any claims
or infringements. Schedule 3.20 (a) lists these Intellectual Property Rights,
(b) indicates the Intellectual Property Rights owned by OSI and, for those not
listed as so owned, the agreement or other arrangement pursuant to which they
are possessed, and (c) lists any and all Persons that, to the knowledge of OSI
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or the Stockholders, have, at any time, had any claim whatsoever to any right,
title or interest in Intellectual Property. No consent of any Person will be
required for the use of any of these Intellectual Property Rights by T-NDE
following Closing and no governmental registration of any of these Intellectual
Property Rights has lapsed or expired or been canceled, abandoned, opposed or
the subject of any reexamination request. OSI has obtained any and all
applications, assignments, documents, and other instruments from all Persons
having any rights or interest in the Intellectual Property necessary to protect
all rights, title, and interest in or to such Intellectual Property, including
an assignment by any and all Persons listed in Schedule 3.20(c) of all
Intellectual Property Rights of such person, in the form set forth at Schedule
5.03-6 (the "Intellectual Property Assignment").
Section 3.21. Relations With Governments, etc. OSI has not made,
offered or agreed to offer anything of value to any governmental official,
political party or candidate for government office which would cause OSI to be
in violation of the Foreign Corrupt Practices Act of 1977 or any Governmental
Requirement to a similar effect.
Section 3.22. Commitments. Schedule 3.22 sets forth a complete
list of each of the following whether written or oral to which OSI is a party or
by which any of its properties is bound and which presently remains executory in
whole or in any part:
(a) each partnership, joint venture or cost-sharing agreement;
(b) each guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(c) each instrument, agreement or other obligation evidencing or
relating to Indebtedness of OSI or to money lent or to be lent to another
Person, which together with other such instruments, evidence Indebtedness
of more than $25,000 in the aggregate;
(d) each contract to purchase or sell real property;
(e) each agreement with dealers or sales or commission agents,
public relations or advertising agencies, accountants or attorneys (other
than in connection with this Agreement and the transactions contemplated
hereby) involving total payments within any 12-month period in excess of
$25,000 in the aggregate and which is not terminable without penalty and on
no more than 30 days' prior notice;
(f) each agreement for the acquisition or provision of services,
supplies, equipment, inventory, fixtures or other property involving more
than $25,000 in the aggregate;
(g) each contract containing any noncompetition covenant;
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(h) each agreement providing for the purchase from a supplier of
all or substantially all the requirements of OSI of a particular product or
service; and
(i) each other agreement or commitment not made in the ordinary
course of business that is Material to OSI.
True, correct and complete copies of all written items listed above, and true,
correct and complete written descriptions of all oral items listed above, have
heretofore been delivered or made available to T-NDE. Except as set forth in
Schedule 3.22: (a) there are no existing or asserted defaults, events of default
or events, occurrences, acts or omissions that, with the giving of notice or
lapse of time or both, would constitute defaults or events of default by OSI or,
to the knowledge of OSI or any Stockholder, any other party thereto, under any
of the items listed above which are Material to OSI; and (b) no penalties have
been incurred, nor are amendments pending, with respect to the items listed
above which are Material to OSI. The items listed above are in full force and
effect and are valid and enforceable obligations of OSI and, to the knowledge of
OSI or any Stockholder, the other parties thereto in accordance with their
respective terms, and no defenses, off-sets or counterclaims have been asserted
or, to the knowledge of OSI or any Stockholder, may be made by any party thereto
(other than by OSI), nor has OSI waived any rights thereunder.
Section 3.23. Insurance. Schedule 3.23 sets forth a list of all
insurance policies carried by OSI. OSI has previously provided T-NDE with: (a) a
complete list of all insurance loss runs and worker's compensation claims
received for the most recently ended three policy years; and (b) true, complete
and correct copies of all insurance policies carried by OSI which are in effect,
all of which (i) have been issued by insurers of recognized responsibility and
(ii) currently are, and will remain without interruption through Closing, in
full force and effect. Except as set forth in Schedule 3.23: (a) no insurance
carried by OSI has been canceled by the insurer during the past five years, and
OSI has not been denied coverage during the past ten years; and (b) OSI has not
received any notice or other communication from any issuer of any such insurance
policy of any material increase in any deductibles, retained amounts or the
premiums payable thereunder, and, to the knowledge of OSI and the Stockholders,
no such increase in deductibles, retainages or premiums is threatened.
Section 3.24. Employee Matters. (a) Cash Compensation. Schedule
3.24 sets forth a complete written list of the names, titles and rates of annual
cash compensation, at the Current Balance Sheet Date and at the date hereof (and
the portions thereof attributable to salary or the equivalent, fixed bonuses,
discretionary bonuses and other cash compensation, respectively) of all key
employees, nonemployee officers, nonemployee directors and key consultants and
independent contractors of OSI who receive annualized cash compensation of
greater than $100,000.
(b) Employment Agreements. Schedule 3.24 lists all Employment
Agreements remaining executory in whole or in part on the date hereof or to
become effective after the date hereof, and OSI has provided T-NDE with true,
complete and correct copies of all those Employment Agreements. OSI is not a
party to any oral Employment Agreement.
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(c) Other Compensation Plans. Schedule 3.24 lists all Other
Compensation Plans either remaining executory on the date hereof or to become
effective after the date hereof. OSI has provided T-NDE with a true, correct and
complete copy of each of those Other Compensation Plans that is in writing and
an accurate written description of each of those Other Compensation Plans that
is not written. Except as set forth in Schedule 3.24, each of the Other
Compensation Plans, including each that is a Welfare Plan, may be unilaterally
amended or terminated by OSI without liability to OSI, except as to benefits
accrued thereunder prior to that amendment or termination.
(d) ERISA Benefit Plans. Schedule 3.24 (i) lists (A) each ERISA
Pension Benefit Plan (1) the funding requirements of which (under Section 301 of
ERISA or Section 412 of the Code) are, or at any time during the six-year period
ending on the date hereof were, in whole or in part, the responsibility of OSI
or (2) respecting which OSI is, or at any time during that period was, a
"contributing sponsor" or an "employer" as defined in Sections 4001(a)(13) and
3(5), respectively, of ERISA (each plan described in this clause (A) being a
"Company ERISA Pension Plan"), (B) each other ERISA Pension Benefit Plan
respecting which an ERISA Affiliate is, or at any time during that period was,
such a "contributing sponsor" or "employer" (each plan described in this clause
(B) being an "ERISA Affiliate Pension Plan") and (C) each other ERISA Employee
Benefit Plan that is being, or at any time during that period was, sponsored,
maintained or contributed to by OSI (each plan described in this clause (C) and
each Company ERISA Pension Plan being a "Company ERISA Benefit Plan"), (ii)
states the termination date of each Company ERISA Benefit Plan and ERISA
Affiliate Pension Plan that has been terminated and (iii) identifies for each
ERISA Affiliate Pension Plan the relevant ERISA Affiliates. OSI has provided
T-NDE with (i) true, complete and correct copies of (A) each Company ERISA
Benefit Plan and ERISA Affiliate Pension Plan, (B) each trust agreement related
thereto and (C) all amendments to those plans and trust agreements. Except as
set forth in Schedule 3.24, (i) OSI is not, nor at any time during the six-year
period ended on the date hereof was, a member of any ERISA Group that currently
includes, or included when OSI was a member, among its members any Person other
than OSI and (ii) no Person is an ERISA Affiliate of OSI.
(e) Employee Policies and Procedures. Schedule 3.24 lists all
Employee Policies and Procedures. OSI has provided T-NDE with a copy of all
written Employee Policies and Procedures and a written description of all
Material unwritten Employee Policies and Procedures.
(f) Unwritten Amendments. Except as described in Schedule 3.24,
no Material unwritten amendments have been made, whether by oral communication,
pattern of conduct or otherwise, with respect to any of the Employment
Agreements, Other Compensation Plans or Employee Policies and Procedures.
(g) Labor Compliance. OSI has been and is in compliance in all
material respects with all applicable Governmental Requirements respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and OSI is not liable for any arrears of wages or penalties for
failure to comply with any of the foregoing. OSI has not engaged in any unfair
labor practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment conditions or
practices. Except as set forth in Schedule 3.24, there are no (i) unfair labor
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practice charges or complaints or racial, color, religious, sex, national
origin, age, disability or handicap discrimination charges or complaints pending
or, to the knowledge of OSI or any Stockholder, threatened against OSI before
any Governmental Authority (nor, to the knowledge of OSI or any Stockholder,
does any valid basis therefor exist) or (ii) existing or, to the knowledge of
OSI or any Stockholder, threatened labor strikes, disputes, grievances,
controversies or other labor troubles affecting OSI (nor, to the knowledge of
OSI or any Stockholder, does any valid basis therefor exist).
(h) Unions. Except as set forth in Schedule 3.24, (i) neither OSI
nor any ERISA Affiliate has ever been a party to any agreement with any union,
labor organization or collective bargaining unit, (ii) no employees of OSI are
represented by any union, labor organization or collective bargaining unit and
(iii) to the knowledge of OSI or any Stockholder, none of the employees of OSI
have threatened to organize or join a union, labor organization or collective
bargaining unit.
(i) Change of Control Benefits. Except as set forth in Schedule
3.24, OSI is not a party to any agreement, nor has it established any policy,
practice or program, requiring it to make a payment or provide any other form of
compensation or benefit or vesting rights to any person employed by or
performing services for OSI which would not be payable or provided in the
absence of this Agreement or the consummation of the transactions contemplated
by this Agreement, including any parachute payment under Section 280G of the
Code.
(j) Retirees. OSI does not have any obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and the applicable parallel provisions of ERISA.
Section 3.25. Compliance With ERISA, etc. (a) Compliance. Each of
OSI's ERISA Benefit Plans and Other Compensation Plans (each, a "Plan") (i) is
in substantial compliance with all applicable provisions of ERISA, as well as
with all other applicable Governmental Requirements, and (ii) has been
administered, operated and managed in accordance with its governing documents.
(b) Qualification. All Plans that are intended to qualify under
Section 401(a) of the Code (the "Qualified Plans") are so qualified and have
been determined by the IRS to be so qualified (or application for determination
letters have been timely submitted to the IRS). OSI has provided T-NDE with
true, complete and correct copies of the current plan determination letters,
most recent actuarial valuation reports, if any, most recent Form 5500, or, as
applicable, Form 5500-C/R, filed with respect to each such Qualified Plan and
most recent trustee or custodian report. To the extent that any Qualified Plans
have not been amended to comply with applicable Governmental Requirements, the
remedial amendment period permitting retroactive amendment of these Qualified
Plans has not expired and will not expire within 120 days after Closing. All
reports and other documents required to be filed with any governmental agency or
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distributed to plan participants or beneficiaries have been timely filed or
distributed.
(c) No Prohibited Transactions, etc. None of the Stockholders,
any Plan or OSI has engaged in any Prohibited Transaction. No Plan has incurred
an accumulated funding deficiency, as defined in Section 412(a) of the Code and
Section 302(a) of ERISA, and no circumstances exist pursuant to which OSI could
have any direct or indirect liability whatsoever (including being subject to any
statutory Lien to secure payment of any such liability), to the Pension Benefit
Guaranty Corporation under Title IV of ERISA or to the IRS for any excise tax or
penalty with respect to any Plan now or hereafter maintained or contributed to
by OSI or any of its ERISA Affiliates. Further:
(i) there have been no terminations, partial terminations or
discontinuances of contributions to any Qualified Plan without a
determination by the IRS that such action does not adversely affect the
tax-qualified status of that plan;
(ii) no Termination Event has occurred;
(iii) no Reportable Event has occurred with respect to any Plan
which was not properly reported;
(iv) the valuation of assets of any Qualified Plan, as of
Closing, shall equal or exceed the actuarial present value of all "benefit
liabilities" (within the meaning of Section 4001(a)(16) of ERISA) under
that plan in accordance with the assumptions contained in the regulations
of the Pension Benefit Guaranty Corporation governing the funding of
terminated defined benefit plans;
(v) with respect to Plans qualifying as "group health plans"
under Section 4980B of the Code or Section 607(l) or 609 of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA" or qualified medical child support orders), OSI and the
Stockholders have complied in all material respects with all reporting,
disclosure, notice, election and other benefit continuation and coverage
requirements imposed thereunder as and when applicable to those plans, and
OSI has not incurred (nor will it incur) any direct or indirect liability
or is (or will be) subject to any loss, assessment, excise tax penalty,
loss of federal income tax deduction or other sanction, arising on account
of or in respect of any direct or indirect failure by OSI or any
Stockholder, at any time prior to Closing, to comply with any such federal
or state benefit continuation or coverage requirement, which is capable of
being assessed or asserted before or after Closing directly or indirectly
against OSI, any Stockholder, T-NDE or any Subsidiary of T-NDE with respect
to any of those group health plans;
(vi) the Financial Statements as of the Current Balance Sheet
Date reflect the approximate total pension, medical and other benefit
liability for all Plans, and no material
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funding changes or irregularities are reflected thereon which would cause
those Financial Statements to be not representative of prior periods; and
(vii) OSI has not incurred liability under Section 4062 of ERISA.
(d) Multiemployer Plans. Except as set forth in Schedule 3.25,
neither OSI nor any ERISA Affiliate of OSI is, or at any time during the
six-year period ended on the date hereof was, obligated to contribute to a
Multiemployer Plan. Neither OSI nor any ERISA Affiliate of OSI has made a
complete or partial withdrawal from a Multiemployer Plan so as to incur
withdrawal liability as defined in Section 4201 of ERISA. Schedule 3.25 lists
for each Multiemployer Plan on such Schedule OSI's best estimate of the amount
of withdrawal liability that would be incurred if OSI and each of its ERISA
Affiliates were to make a complete withdrawal from such Multiemployer Plan as of
the Closing Date. Except as set forth in Schedule 3.25, the aggregate amount of
such withdrawal liability if OSI and each of its ERISA Affiliates were to make a
complete withdrawal from each such Multiemployer Plan would not exceed $25,000.
(e) Claims and Litigation. Except as set forth in Schedule 3.25,
no Litigation or claims (other than routine claims for benefits) are pending or,
to the knowledge of OSI or any Stockholder, threatened against, or with respect
to, any of the Plans or with respect to any fiduciary, administrator or sponsor
thereof (in their capacities as such), or any party-in-interest thereof.
(f) Excise Taxes, Damages and Penalties. No act, omission or
transaction has occurred which would result in the imposition on OSI of (i)
breach of fiduciary duty liability damages under Section 409 of ERISA, (ii) a
civil penalty assessed pursuant to subsection (c), (i) or (l) of Section 502 of
ERISA or (iii) any excise tax under applicable provisions of the Code with
respect to any Plan.
(g) Welfare Trusts. Any trust funding a Plan, which is intended
to be exempt from federal income taxation pursuant to Section 501(c)(9) of the
Code, satisfies the requirements of that section and has received a favorable
determination letter from the IRS regarding that exempt status and has not,
since receipt of the most recent favorable determination letter, been amended or
operated in a way that would adversely affect that exempt status.
Section 3.26. Taxes. (a) Each of the following representations
and warranties in this Section 3.26 is qualified to the extent set forth in
Schedule 3.26.
(b) All Returns required to be filed with respect to any Tax for
which OSI may be liable have been duly and timely filed with the appropriate
Taxing Authority, each Tax shown to be payable on each such Return has been
paid, each Tax payable by OSI has been timely paid and adequate reserves have
been established on the consolidated books of OSI for all Taxes for which OSI is
liable, but the payment of which is not yet due. OSI is not, and has never been,
liable for any Tax payable by reason of the income or property of a Person other
than OSI. OSI has timely filed true, correct and complete declarations of
estimated Tax in each jurisdiction in which any such declaration is required to
be filed by it. No Liens for Taxes exist upon the assets of OSI except Liens for
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Taxes which are not yet due. OSI is not, and has never been, subject to Tax in
any jurisdiction outside of the United States. No Litigation with respect to any
Tax for which OSI is asserted to be liable is pending or, to the knowledge of
OSI or any Stockholder, threatened and no basis which OSI or any Stockholder
believes to be valid exists on which any claim for any such Tax can be asserted
against OSI. There are no requests for rulings or determinations in respect of
any Taxes pending between OSI and any Taxing Authority. No extension of any
period during which any Tax may be assessed or collected and for which OSI is or
may be liable has been granted to any Taxing Authority. OSI is not, nor has it
been a party to any tax allocation or sharing agreement. All amounts required to
be withheld by OSI and paid to governmental agencies for income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the proper Taxing Authority. OSI has made all
deposits required by law to be made with respect to employees' withholding and
other employment taxes.
(c) Neither OSI nor any Stockholder is a "foreign person," as
that term is referred to in Section 1445(f)(3) of the Code.
(d) OSI has not filed a consent pursuant to Section 341(f) of the
Code or any comparable provision of any other tax statute and has not agreed to
have Section 341(f)(2) of the Code or any comparable provision of any other tax
statute apply to any disposition of an asset. OSI has not made, is not obligated
to make and is not a party to any agreement that could require it to make any
payment that is not deductible under Section 280G of the Code. No asset of OSI
is subject to any provision of applicable law which eliminates or reduces the
allowance for depreciation or amortization in respect of that asset below the
allowance generally available to an asset of its type. No accounting method
changes of OSI exist or are proposed or threatened which could give rise to an
adjustment under Section 481 of the Code.
Section 3.27. Government Contracts. OSI is not a party to any
governmental contract subject to price redetermination or renegotiation.
Section 3.28. Absence of Changes. Since the Current Balance Sheet
Date, except as set forth in Schedule 3.28, none of the following has occurred
with respect to OSI:
(a) to the knowledge of OSI or any Stockholder any circumstances,
conditions, events or state of facts (in the aggregate), which have caused,
are causing or will cause a Material Adverse Effect;
(b) any change in its authorized Capital Stock or in any of its
outstanding Capital Stock or options, warrants or rights to acquire its
Capital Stock;
(c) any Restricted Payment, except any declaration or payment of
dividends by any Company Subsidiary solely to OSI and except for the
exercise of any options or conversion of any debentures on or before the
Closing Date;
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(d) any increase in, or any commitment or promise to increase,
the rates of cash compensation as of the date hereof, or the amounts or
other benefits paid or payable under any Company ERISA Pension Plan or
Other Compensation Plan, except for ordinary and customary bonuses and
salary increases for employees (other than the Stockholders or their family
members) at the times and in the amounts consistent with its past practice;
(e) to the knowledge of OSI or any Stockholder, any work
interruptions, labor grievances or claims filed, or any similar event or
condition of any character, that could have a Material Adverse Effect
following Closing;
(f) any distribution, sale or transfer of, or any commitment to
distribute, sell or transfer, any of its assets or properties of any kind
which singly is or in the aggregate are Material to OSI, other than
distributions, sales or transfers in the ordinary course of its business
and consistent with its past practices to Persons other than the
Stockholders and their family members and Affiliates;
(g) any cancellation, or agreement to cancel, any Indebtedness,
obligation or other liability owing to it, including any Indebtedness,
obligation or other liability of any Stockholder or any Related Person or
Affiliate thereof, provided that it may negotiate and adjust bills in the
course of good faith disputes with customers in a manner consistent with
past practice;
(h) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property
or rights or requiring consent of any Person to the transfer and assignment
of any such assets, property or rights;
(i) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside
of the ordinary course of its business consistent with its past practices;
(j) any waivers of any of its rights or claims that in the
aggregate are Material to OSI;
(k) any transaction by it outside the ordinary course of its
business or not consistent with its past practices;
(l) any incurrence by it of any Indebtedness or any Guaranty, or
any commitment to incur any Indebtedness or any such Guaranty;
(m) any investment in the Capital Stock, options, warrants,
rights to acquire the Capital Stock or the Indebtedness of any Person other
than short-term United States Treasury obligations or short-term
certificates of deposit of a commercial bank or trust company;
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(n) any capital expenditure or series of related capital
expenditures by OSI in excess of $25,000, or commitments by OSI to make
capital expenditures totaling in excess of $25,000; or
(o) to the knowledge of OSI or any Stockholder any cancellation
or termination of a Material Agreement of OSI.
Section 3.29. Bank Relations; Powers of Attorney. Schedule 3.29
sets forth:
(a) the name of each financial institution in which OSI has
borrowing or investment arrangements, deposit or checking accounts or safe
deposit boxes;
(b) the types of those arrangements and accounts, including, as
applicable, names in which accounts or boxes are held, the account or box
numbers and the name of each Person authorized to draw thereon or have
access thereto; and
(c) the name of each Person holding a general or special power of
attorney from OSI and a description of the terms of each such power.
Section 3.30. Current Reports. OSI has received the current SEC
filings of T-NDE and the Board of Directors of OSI had ample opportunity to
review the contents thereof prior to approving the transactions contemplated
hereby.
Section 3.31. No Brokers. The Stockholders and OSI have not,
directly or indirectly, in connection with this Agreement or the transactions
contemplated hereby (a) employed any broker, finder or agent or (b) agreed to
pay or incurred any obligation to pay any broker's or finder's fee, any sales
commission or any similar form of compensation.
Section 3.32. Year 2000 Compliance. OSI's computer based systems
and software applications are currently fully functional for the year 2000 and
beyond or the software codes utilized therein are capable of being converted to
provide full functionality for the year 2000 and beyond without Material expense
and without unreasonable interruption to or interference with the business
operations or administration of OSI. In the event OSI's computer based systems
and software are not converted to full functionality prior to January 1, 2000
such fact will not cause a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF T-NDE
T-NDE represents and warrants to each Stockholder that all the
following representations and warranties in this Article IV are as of the date
of this Agreement, true and correct:
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Section 4.01. Organization; Power. T-NDE is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority under the laws of
that State and its Charter Documents to own or lease and to operate its
properties presently and following Closing and to carry on its business as now
conducted and as proposed to be conducted following Closing.
Section 4.02. Authorization; Enforceability; Absence of
Conflicts; Required Consents. (a) The execution, delivery and performance by
T-NDE of this Agreement and each other Transaction Document to which it is a
party, and the effectuation of the Acquisition and the other transactions
contemplated hereby and thereby, are within its corporate power under its
Charter Documents and the applicable Governmental Requirements of the State of
Delaware and have been duly authorized by all proceedings, including actions
permitted to be taken in lieu of proceedings, required under its Charter
Documents and the applicable Governmental Requirements of the State of Delaware.
(b) This Agreement has been, and each of the other Transaction
Documents to which T-NDE is a party, when executed and delivered to the other
parties thereto, will have been, duly executed and delivered by it and is, or
when so executed and delivered will be, its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as that
enforceability may be (i) limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, (ii) subject to general principles of equity
(regardless of whether that enforceability is considered in a proceeding in
equity or at law), and (iii) any implied covenant of good faith and fair
dealing.
(c) The execution, delivery and performance in accordance with
their respective terms by T-NDE of the Transaction Documents to which it is a
party have not and will not (i) violate, breach or constitute a default under
(A) the Charter Documents of T-NDE, (B) any Governmental Requirement applicable
to T-NDE or (C) any Material Agreement of T-NDE, (ii) result in the acceleration
or mandatory prepayment of any Indebtedness or any Guaranty of T-NDE or afford
any holder of any of that Indebtedness, or any beneficiary of any of those
Guaranties, the right to require T-NDE to redeem, purchase or otherwise acquire,
reacquire or repay any of that Indebtedness, or to perform any of those
Guaranties, (iii) cause or result in the imposition of, or afford any Person the
right to obtain, any Lien upon any property or assets of T-NDE (or upon any
revenues, income or profits of T-NDE therefrom), or (iv) result in the
revocation, cancellation, suspension or material modification, in any single
case or in the aggregate, of any Governmental Approval possessed by T-NDE at the
date hereof and necessary for the ownership or lease and the operation of its
properties or the carrying on of its business as now conducted, including any
necessary Governmental Approval under each applicable Environmental Law.
(d) No Governmental Approvals are required to be obtained, and no
reports or notices to or filings with any Governmental Authority are required to
be made, by T-NDE for the execution, delivery or performance by T-NDE of the
Transaction Documents to which it is a party, the enforcement against T-NDE of
its obligations thereunder or the effectuation of the Acquisition and the other
transactions contemplated thereby.
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Section 4.03. Capital Stock of T-NDE. (a) All shares of T-NDE
Common Stock distributed under Sections 1.05 or 1.06, when issued, (i) will have
been duly authorized and validly issued in accordance with the DGCL and the
Charter Documents of T-NDE and (ii) will be fully paid and nonassessable. None
of the shares of T-NDE Common Stock distributed pursuant to Sections 1.05 and
1.06, will, when issued, have been issued in breach or violation of any
applicable statutory or contractual preemptive rights, or any other rights of
any Person of any kind (including any rights of first offer or refusal) or the
terms of any then outstanding options, warrants or other rights it has issued to
acquire T-NDE Common Stock.
(b) T-NDE has all requisite corporate power and authority to
execute, deliver and perform its obligations under, and has duly and validly
authorized, the Warrant Agreement, and it is a valid and binding agreement of
T-NDE, enforceable against T-NDE in accordance with its terms, except as
enforcement thereof may be subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, (ii) general principles of equity
(regardless of whether that enforcement is considered in a proceeding in equity
or at law), and (iii) any implied covenant of good faith and fair dealing.
Section 4.04. No Litigation. No Litigation is pending or, to the
knowledge of T-NDE, threatened to which T-NDE is or may become a party which (a)
questions or involves the validity or enforceability of any obligation of T-NDE
under any Transaction Document, (b) seeks (or reasonably may be expected to
seek) (i) to prevent or delay consummation by T-NDE of the transactions
contemplated by this Agreement to be consummated by T-NDE or (ii) damages from
T-NDE in connection with any such consummation.
ARTICLE V
CONDITIONS TO CLOSING AND CONSUMMATION
Section 5.01. Conditions to the Obligations of Each Party. The
obligation of each party hereto to take the actions contemplated to be taken by
that party at the Closing is subject to the satisfaction on or before the
Closing Date of each of the following conditions or waiver pursuant to Section
10.04:
(a) No Litigation. No Litigation shall be pending on the Closing
Date to restrain, prohibit or otherwise interfere with, or to obtain
material damages or other relief from T-NDE or any Subsidiary of T-NDE in
connection with, the consummation of the Acquisition;
Section 5.02. Conditions to the Obligations of the Stockholders.
The obligations of each Stockholder with respect to actions to be taken by it at
or before the Closing Date and the actions to be taken on the Closing Date are
subject to the satisfaction, or the waiver by each Stockholder pursuant to
Section 10.04 on or before the Closing Date, of all the following conditions:
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(1) Representations and Warranties. All the representations and
warranties of T-NDE in Article IV shall be true and correct as of the
Closing Date;
(2) Delivery of Documents and Acquisition Consideration. T-NDE
shall have delivered to the Stockholders or the Disbursement Agent as
appropriate:
(A) the Cash Payment as provided for in Section 1.03;
(B) an executed Promissory Note as provided for in Section 1.04;
(C) an executed Warrant Agreement in substantially the form set
forth in Schedule 1.05 and the Stock Warrants pursuant
thereto; and
(D) the delivery of the stock certificates representing 250,000
shares of T-NDE Common Stock as provided for in Section 1.06.
(E) the cash in respect to the Payment of Debt as provided for in
Section 1.07.
Section 5.03. Conditions to the Obligations of T-NDE. The
obligations of T-NDE with respect to actions to be taken by it at or before the
Closing Date are subject to the satisfaction, or the waiver by T-NDE pursuant to
Section 10.04, on or before the Closing Date of all the following conditions:
(1) Representations and Warranties. All the representations and
warranties of the Stockholders and OSI in Articles II and III shall be true
and correct as of the Closing;
(2) Delivery of Documents. The Stockholders and OSI shall have
delivered to T-NDE:
(A) a Company secretary's certificate, in substantially the
form of Schedule 5.03-2 signed by OSI's Secretary, respecting the
Charter Documents of OSI, resolutions of the Board of Directors and
Stockholders of OSI and the incumbency and signatures of certain
officers of OSI;
(B) from each Stockholder, a certificate to the effect that
no withholding is required under Section 1445 of the Code and in the
form of Schedule 5.03-3, with the blanks appropriately filled, duly
executed and delivered by that Stockholder;
(C) an opinion dated of the date of this Agreement and
addressed to T-NDE from Counsel for OSI and the Stockholders
substantially in the form of Schedule 5.03-4;
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(D) from each officer and director of OSI, if any, a notice
of resignation substantially in the form of Schedule 5.03-5;
(E) for OSI, a certificate, dated within 15 days prior to
the Closing Date, duly issued by the appropriate Governmental
Authorities in the State of California and in each other jurisdiction
listed for it in Schedule 3.02, showing it to be in good standing and
authorized to do business in the State of California and those other
jurisdictions;
(F) the execution and delivery of employment agreements by
▇▇▇▇▇ ▇. Law, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇;
(G) an Intellectual Property Assignment duly executed by
each individual listed in Schedule 3.20(c), as set forth in the form
of Schedule 5.03-6;
(H) the stock certificates representing all OSI Stock, duly
endorsed for transfer, free and clear of all liens, claims,
encumbrances, restrictions, legends or other impediments to the
complete, full and unfettered transfer of ownership thereof; and
(I) an executed form 8023 certifying the Acquisition as a
Corporate Qualified Stock Purchase, as defined in the Code.
ARTICLE VI
COVENANTS FOLLOWING THE CLOSING DATE
Section 6.01. Preparation and Filing of Tax Returns. Each party
hereto will, and will cause its Affiliates to, provide to each of the other
parties hereto such cooperation and information as any of them reasonably may
request in filing any Return, amended Return or claim for refund, determining a
liability for Taxes or a right to refund of Taxes or in conducting any audit or
other proceeding in respect of Taxes. This cooperation and information shall
include providing copies of all relevant portions of the relevant Returns,
together with such accompanying schedules and work papers, documents relating to
rulings or other determinations by Taxing Authorities and records concerning the
ownership and Tax bases of property as are relevant which a party possesses.
Each party will make its employees, if any, reasonably available on a mutually
convenient basis at its cost to provide an explanation of any documents or
information so provided. Subject to the preceding sentence, each party required
to file Returns pursuant to this Agreement shall bear all costs attributable to
the preparation and filing of those Returns. In addition, the Stockholders and
T-NDE shall make elections under Section 338(h)(10) of the Code on their
respective Returns. The parties agree that the tangible assets of OSI are to be
valued at their respective book values with the balance of the purchase price
being allocated to intangible assets. In the event of a tax audit of OSI for a
year preceding the Closing Date, the Stockholders shall be permitted to
participate in and defend the tax audit. T-NDE shall not amend any Return filed
on behalf of OSI for any period preceding the Closing Date or take any position
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with respect to a Return reporting the activities of the Company for a period
that occurred prior to the Closing Date which would adversely affect the tax
liabilities of the Stockholders.
Section 6.02. Removal of Guaranties. T-NDE will use its
reasonable best efforts to ensure that, within 90 days after Closing, the
Guaranties made by ▇▇▇▇▇ ▇. Law, listed in Schedule 6.02 are terminated;
provided, however, that if T-NDE is unable to effect the termination of any of
those Guaranties or the retirement of any of Indebtedness, T-NDE will indemnify
and hold harmless ▇▇▇▇▇ ▇. Law from and against any liabilities, claims,
demands, judgments, losses, costs, damages or expenses whatsoever (including
reasonable attorneys' fees) that ▇▇▇▇▇ ▇. Law may sustain, suffer or incur and
that result from or arise out of or relate to that Guaranty or that
Indebtedness, as the case may be. T-NDE will notify ▇▇▇▇▇ ▇. Law within 90 days
after closing of any Guaranties with respect to which he has not been released,
and ▇▇▇▇▇ ▇. Law may terminate those Guaranties prospectively. T-NDE will take
no action to alter, modify, or change the Guaranties without ▇▇▇▇▇ ▇. Law's
written consent.
Section 6.03. Undertakings by Certain Stockholders. (a) Each
Stockholder covenants that the Stockholder will not attempt to transfer (whether
by sale, assignment, pledge or otherwise) T-NDE Common Stock issued to the
Stockholder pursuant to Section 1.06 unless Stockholder gives written notice to
T-NDE of its intention to effect such transfer and such notice shall describe
the manner and circumstances of the proposed transfer in sufficient detail, and
shall be accompanied by a written opinion of legal counsel who shall be
reasonably satisfactory to T- NDE, addressed to T-NDE, to the effect that the
proposed transfer of the securities in question may be effected without
registration under the Securities Act. Any such legal opinion must be reasonably
satisfactory to T-NDE and must state that it may also be relied upon by any
applicable transfer agent. Upon compliance with the terms hereof to the
satisfaction of T-NDE, the Stockholder shall be instructed to transfer such
securities in accordance with the terms of the notice delivered by the
Stockholder to T-NDE. Each certificate evidencing the shares of T-NDE Common
Stock so transferred shall bear an appropriate restrictive legend reasonably
deemed appropriate by T-NDE. The Stockholder will, prior to any transfer (unless
such transfer is made pursuant to Rule 144 or an effective registration
statement under the Securities Act), cause any transferee of the shares of T-
NDE Common Stock, to enter into an agreement with T-NDE that the transferee will
take and hold such securities subject to the provisions and upon the conditions
specified in this Section 6.03. Without limiting the generality of any provision
hereof, the provisions of this Section shall be binding on successive
transferees where appropriate to ensure compliance with applicable securities
laws. T-NDE shall have no obligation to effect any transfer on its books and
records (and no such attempted transfer shall be effective) unless such transfer
is made in accordance with the terms of this Section 6.03. T-NDE may issue stop
transfer instructions to any transfer agent for the T-NDE Common Stock in order
to implement any restriction on transfer contemplated by this Section 6.03.
T-NDE Common Stock shall contain the following legend, which legend may be
removed upon two years following the date of its transfer from T-NDE or any
Affiliate thereof:
"THE ISSUANCE OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
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SECURITIES LAWS OF ANY STATE, AND THEY MAY NOT BE DISTRIBUTED, SOLD,
TRANSFERRED, ASSIGNED, HYPOTHECATED OR OFFERED UNLESS THERE IS IN
EFFECT A REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS COVERING SUCH
SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
OF THESE SECURITIES SATISFACTORY TO THE ISSUER STATING THAT SUCH
DISTRIBUTION, SALE, TRANSFER, ASSIGNMENT, HYPOTHECATION OR OFFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT AND LAWS."
(b) the provisions contained in Section 6.03(a) shall also be
applicable to the T-NDE Common Stock issued pursuant to the exercise of Stock
Warrants under Section 1.05 and the Warrant Agreement, except to the extent that
the provisions of Section 6.03(a) conflict with Section 1.05 or the Warrant
Agreement.
Section 6.04. Intellectual Property Rights. Each Stockholder
covenants that it shall (i) execute and deliver any and all applications,
assignments, documents, and other instruments that T-NDE shall deem necessary to
protect the right, title and interest of OSI in or to Intellectual Property;
(ii) reasonably cooperate and assist in providing information for making and
completing regulatory and other filings; (iii) reasonably cooperate and assist
in providing information for or participating in any action, threatened action,
or considered action relating to the Intellectual Property; and (iv) take any
and all other actions as T-NDE may otherwise require with respect to the
Intellectual Property.
ARTICLE VII
INDEMNIFICATION
Section 7.01. Survival of Representations and Warranties. All the
provisions of this Agreement will survive the Closing, provided that the
representations and warranties set forth in Articles II, III and IV and in any
certificate delivered in connection herewith with respect to any of those
representations and warranties will terminate and expire on the second
anniversary of the Closing Date, except as follows: (a) the representations and
warranties of the Stockholders which relate expressly or by necessary
implication to Taxes, ERISA or other employment or labor matters will survive
until the expiration of the applicable statutes of limitations (including all
periods of extension and tolling); (b) the representations and warranties of the
Stockholders which relate expressly or by necessary implication to the
environment or Environmental Laws will survive for a period of five years from
the Closing Date; (c) the representations and warranties of the Stockholders set
forth in Sections 2.01 and 2.02 will survive forever; (d) the representations
and warranties of T-NDE in Section 4.03, will survive forever, and the
representations and warranties of OSI in Article III will expire as when the
representations and warranties of the Stockholders to the same effect expire.
After a representation and warranty has terminated and expired, no
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indemnification will or may be sought pursuant to this Article VII on the basis
of that representation and warranty by any Person who would have been entitled
pursuant to this Article VII to indemnification on the basis of that
representation and warranty prior to its termination and expiration, provided
that: (A) the amount of that claim, if against any Stockholder, shall be taken
into account in determining whether the aggregate amount of all claims against
OSI or that Stockholder has exceeded the Threshold Amount or that Stockholder's
share of the Threshold Amount (as measured pro rata according to each
Stockholder's respective percentage ownership of OSI Capital Stock as indicated
by Schedule 2.01 to this Agreement) for purposes of Section 7.06; and (B) in the
case of each representation and warranty that will terminate and expire as
provided in this Section 7.01, no claim presented in writing for indemnification
pursuant to this Article VII on the basis of that representation and warranty
prior to its termination and expiration will be affected in any way by that
termination and expiration.
Section 7.02. Indemnification of T-NDE Indemnified Parties. (a)
Subject to the applicable provisions of Sections 7.01 and 7.06, each Stockholder
covenants and agrees that such Stockholder, jointly and severally, will
indemnify each T-NDE Indemnified Party against, and hold each T-NDE Indemnified
Party harmless from and in respect of, all Damage Claims that arise from, are
based on or relate to or otherwise are attributable to (i) any breach of the
representations and warranties of the Stockholders and/or OSI set forth herein
(other than in Article II) or in certificates delivered in connection herewith
(other than in respect of certificates relating only to the representations and
warranties in Article II), or (ii) any nonfulfillment of any covenant or
agreement on the part of the Stockholders or OSI under this Agreement.
(b) Subject to the applicable provisions of Sections 7.01 and
7.06, the Stockholders additionally covenant and agree that they, jointly and
severally, will indemnify each T-NDE Indemnified Party against, and hold each
T-NDE Indemnified Party harmless from and in respect of, all Damage Claims that
arise from, are based on or relate to or otherwise are attributable to (i) all
Litigation as described on Sections 3.12 and 3.24; (ii) all Taxes due or
required to be withheld by OSI described on Section 3.26; (iii) any amount
exceeding $40,000 which is due and owing to Sprint Corporation or any of its
Affiliates; and (iv) all accruals for service warranty obligations of OSI.
Notwithstanding any other provisions contained in this Agreement, all T-NDE
Indemnified Losses arising under this Section 7.02(b) shall be indemnified
whether or not such losses are based upon facts or conditions which are known or
unknown by OSI or the Stockholders, and whether or not such facts or conditions
are listed in the respective Schedules to this Agreement.
(c) Each Stockholder, severally and not jointly with any other
Person, covenants and agrees that it will indemnify each T-NDE Indemnified Party
against, and hold each T-NDE Indemnified Party harmless from and in respect of,
all Damage Claims that arise from, are based on or relate or otherwise are
attributable to (i) any breach of the representations and warranties of that
Stockholder solely as to that Stockholder set forth in Article II or in
certificates delivered by that Stockholder and relating to those representations
and warranties or (ii) any nonfulfillment of any several agreement on the part
of that Stockholder in this Agreement.
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Section 7.03. Indemnification of Stockholder Indemnified Parties.
T-NDE covenants and agrees that it will indemnify each Stockholder Indemnified
Party against, and hold each Stockholder Indemnified Party harmless from and in
respect of, all Damage Claims that arise from, are based on or relate or
otherwise are attributable to (a) any breach by T-NDE of its representations and
warranties set forth herein or in its certificates, if any, delivered to OSI or
the Stockholders in connection herewith or (b) any nonfulfillment of any
covenant or agreement on the part of T-NDE in this Agreement.
Section 7.04. Conditions of Indemnification. (a) All claims for
indemnification under this Agreement shall be asserted and resolved as follows
in this Section 7.04.
(b) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (i) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-party claim or
claims asserted against the Indemnified Party ("Third Party Claim") that could
give rise to a right of indemnification under this Agreement and (ii) transmit
to the Indemnifying Party a written notice ("Claim Notice") describing in
reasonable detail the nature of the Third Party Claim, a copy of all papers
served with respect to that claim (if any), an estimate of the amount of damages
attributable to the Third Party Claim to the extent feasible (which estimate
shall not be conclusive of the final amount of that claim) and the basis for the
Indemnified Party's request for indemnification under this Agreement. Except as
set forth in Section 7.01, the failure to promptly deliver a Claim Notice shall
not relieve the Indemnifying Party of its obligations to the Indemnified Party
with respect to the related Third Party Claim except to the extent that the
resulting delay is materially prejudicial to the defense of that claim. Within
15 days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article VII with respect to that Third Party Claim and (ii) if the
Indemnifying Party does not dispute its potential liability to the Indemnified
Party with respect to that Third Party Claim, whether the Indemnifying Party
desires, at the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against that Third Party Claim.
(c) If the Indemnifying Party does not dispute its potential
liability to the Indemnified Party and notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, that Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 7.04(c), and the Indemnified
Party will furnish the Indemnifying Party with all information in its possession
with respect to that Third Party Claim and otherwise cooperate with the
Indemnifying Party in the defense of that Third Party Claim; provided, however,
that the Indemnifying Party shall not enter into any settlement with respect to
any Third Party Claim that purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party or any Affiliate of any Indemnified
Party without the prior consent of that Indemnified Party (which consent may be
withheld in the sole discretion of that Indemnified Party). The Indemnified
Party is hereby authorized, at the sole cost and expense of the Indemnifying
Party, to file, during the Election Period, any motion, answer or other
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Indemnified Party shall deem necessary or appropriate to protect its interests
or those of the Indemnifying Party. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 7.04(c) and will bear its own
costs and expenses with respect to that participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and, on its written
notification of that employment, the Indemnifying Party shall not have the right
to assume or continue the defense of such action on behalf of the Indemnified
Party.
(d) If the Indemnifying Party (i) within the Election Period (A)
disputes its potential liability to the Indemnified Party under this Article
VII, (B) elects not to defend the Indemnified Party pursuant to Section 7.04(c),
or (C) fails to notify the Indemnified Party that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 7.04(c) or (ii) elects to
defend the Indemnified Party pursuant to Section 7.04(c) but fails diligently
and promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings. Notwithstanding the foregoing, if the
Indemnifying Party has delivered a written notice to the Indemnified Party to
the effect that the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article VII and if that dispute is resolved in
favor of the Indemnifying Party, the Indemnifying Party shall not be required to
bear the costs and expenses of the Indemnified Party's defense pursuant to this
Section 7.04 or of the Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified Party shall reimburse the
Indemnifying Party in full for all reasonable costs and expenses of such
Litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 7.04(d), and the Indemnifying Party shall bear its own costs and
expenses with respect to that participation.
(e) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of Damages attributable to that claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of that claim) and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not notify
the Indemnified Party within 15 days from its receipt of the Indemnity Notice
that the Indemnifying Party disputes the claim specified by the Indemnified
Party in the Indemnity Notice, that claim shall be deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has timely disputed that
claim, as provided above, that dispute shall be resolved by proceedings in
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accordance with Section 10.13 if the parties do not reach a settlement of that
dispute within 30 days after notice of that dispute is given.
Section 7.05. Remedies Not Exclusive. The remedies provided in
this Agreement shall not be exclusive of any other rights or remedies available
to any other party, either at law or in equity.
Section 7.06. Limitations on Indemnification. (a) Notwithstanding
the provisions of Sections 7.02(a) and (b), none of the Stockholders shall be
required to indemnify or hold harmless any of the T-NDE Indemnified Parties on
account of any T-NDE Indemnified Loss under Sections 7.02(a) and (b) unless the
liability of the Stockholders in respect of that T-NDE Indemnified Loss, when
aggregated with the liability of the Stockholders in respect of all T-NDE
Indemnified Losses under Sections 7.02(a) and (b), exceeds, and only to the
extent the aggregate amount of all those T-NDE Indemnified Losses does exceed,
the Threshold Amount. T-NDE Indemnified Party recourse for the recovery of T-NDE
Indemnified Losses shall be limited to the remaining balance on the Promissory
Note at the time that the T-NDE Indemnified Party sends the Third Party Claim or
Indemnity Notice. For purposes of determining the amount of T-NDE Indemnified
Losses, no effect will be given to any resulting Tax benefit to any T-NDE
Indemnified Party.
(b) Notwithstanding any provisions in this Agreement, the parties
agree that neither T-NDE nor the Stockholders shall make any claims for
indemnification against OSI for the breach of any representations and warranties
contained herein, and OSI shall in no circumstance become an Indemnifying Party
under this Agreement.
Section 7.07. Satisfaction of Indemnity. (a) Subject to the
provisions of 7.07(b), to secure the indemnification provided for in this
Article VII, T-NDE shall have the right to offset the amount of the
indemnification obligation of an Indemnifying Party under said indemnification
provisions against the amounts due and payable by T-NDE under the Promissory
Note. All offsets made under the Promissory Note shall be made from installments
next coming due in the direct order of their due dates (whether or not due). In
the event that T-NDE becomes entitled to make an offset, it may do so only after
the T-NDE Indemnified Party notifies Indemnifying Party of a claim for
indemnification in accordance with the applicable provisions of this Article
VII. The Promissory Note shall contain a reference to Buyer's right of offset in
accordance with the provisions of this Agreement. In the event that T-NDE elects
to offset against any payment due under the Promissory Note, T-NDE shall send
written notice to the Disbursement Agent stating that T-NDE is exercising such
right of offset, such notice to be sent at the same time as the Indemnity
Notice, and shall be accompanied by a acknowledgment signed by the T-NDE
Indemnified Party to the effect that such offset by T-NDE will satisfy, to the
extent of the amount offset the indemnification obligation to such T-NDE
Indemnified Party. Exercise of the right of offset pursuant to this Section 7.07
shall not affect or diminish the right of the T-NDE Indemnified Party to receive
from the Indemnifying Party when due any indemnifiable amount to which the
Indemnified Party becomes entitled pursuant to the provisions of this Article
which is in excess of the amount offset.
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(b) T-NDE shall be permitted to offset against the Promissory
Note, under the terms of Section 7.07(a), all Indemnified Losses that have been
paid by T-NDE ("Liquidated Losses") prior to the next occurring installment due
date under the Promissory Note. T-NDE shall further be permitted to offset
amounts for claims giving rise to potential Indemnified Losses that have been
asserted against T-NDE prior to the next occurring installment due date under
the Promissory Note ("Potential Losses"); provided, however, that T-NDE shall be
permitted to make offsets for Potential Losses only to the extent of the amount
(if any) by which the aggregate of Potential Losses exceeds the amount remaining
payable on the Promissory Note. The amount of Potential Losses shall be
determined by T-NDE in good faith.
ARTICLE VIII
COMPETITION AND CONFIDENTIALITY
Section 8.01. Prohibited Activities. The parties acknowledge that
the provisions in this Article VIII are essential to protect the Business of
OSI. Further, each Stockholder has the means to support itself and its
dependents other than by engaging in the Business in contravention of this
Article VIII, and this Article VIII will not impair the Stockholder's ability to
provide that support.
The parties further acknowledge that the business of OSI is by
its nature a nation-wide business and that OSI's services can be accessed
anywhere in North America by means of a telephone call. In addition, OSI's
business and services do not require that OSI maintain a physical location close
to its customers. The nature of the Stockholders' relationships with OSI have
brought them into close contact with many confidential affairs of OSI not
readily available to the public, and plans for future developments of OSI.
Accordingly, each Stockholder agrees that, in consideration of this Agreement
and the Acquisition Consideration and other benefits provided for herein, each
Stockholder is subject to the following restrictive covenants:
(a) Non-Compete. Each Stockholder agrees, severally and not
jointly with any other Person, that it will not, during the period beginning on
the date hereof and ending on the third anniversary of the Closing Date,
directly or indirectly, for any reason, for his own account or on behalf of or
together with any other Person:
(i) own, finance, control, or participate in the ownership or
control of, or become a principal, agent, or other representative of any
Person engaged in a business competitive with T-NDE, OSI, or their
Affiliates;
(ii) accept employment with a Person that is engaged in a
business competitive with T-NDE, OSI, or any of their Affiliates;
(iii) permit its name to be used by or in connection with a
business competitive with T-NDE, OSI, or any of their Affiliates;
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(iv) solicit, divert, recruit or employ any employee of T-NDE,
OSI, or their Affiliates, or induce any employee thereof to terminate his
or her employment with T-NDE, OSI, or any of their Affiliates;
(v) call on, solicit, perform services for any Person that is or
has been a customer of OSI or an Affiliate thereof or any prospective
customer that had received or, to the knowledge of the Stockholder, was
about to receive a business proposal therefrom, for the purpose of
soliciting or selling any product or service in competition with T-NDE,
OSI, or any of their Affiliates.
(vi) advise or suggest to any Person that such Person curtail,
cancel or withdraw its business from OSI or an Affiliate; or
(vii) call on any Entity which has been called on by T-NDE or OSI
in connection with a possible acquisition by T-NDE or OSI, with the
knowledge of that Entity's status as such an acquisition candidate, for the
purpose of acquiring that Entity or arranging the acquisition of that
Entity by any Person other than T-NDE or OSI.
(b) Confidentiality.
(i) Each Stockholder acknowledges that: (A) the nature of the
Stockholders' relationships with OSI have brought them into close contact
with many confidential affairs of OSI not readily available to the public,
and plans for future developments of OSI; (B) OSI and its Affiliates have a
legitimate business interest in the protection of Confidential Information;
and (C) Confidential Information is a valuable asset worthy of and subject
to protection by OSI and its Affiliates.
(ii) Accordingly, each Stockholder covenants that (A) Stockholder
will hold such Confidential Information in the strictest of confidence and
will not disclose to any Person any Confidential Information for any reason
or purpose whatsoever; and (B) Stockholder will not use any Confidential
Information for any reason or purpose whatsoever.
(c) Permitted Activities. Notwithstanding the foregoing, any
Stockholder may own and hold as a passive investment up to 5% of the outstanding
capital stock of a competing Entity if that class of capital stock is listed on
a national stock exchange or included in the Nasdaq National Market. Further,
Stockholders shall be permitted to seek and obtain employment utilizing their
general skills provided that such employment does not fall within the specific
provisions of this Section 8.01. In the event a Stockholder obtains employment
without violation of the terms of this Section 8.01, Stockholder shall inform
any new employers of Stockholder's obligations hereunder.
Section 8.02. Damages. Because of the difficulty of measuring
economic losses to T-NDE as a result of any breach by a Stockholder of his
covenants in Section 8.01, and because of the immediate and irreparable damage
that could be caused to T-NDE for which it would have no other adequate remedy,
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each Stockholder agrees that T-NDE may enforce the provisions of Section 8.01 by
injunctions and restraining orders against that Stockholder if he breaches any
of those provisions. Monetary Damages against a Stockholder for breach of the
provisions of this Article VIII shall be limited to that Stockholders pro rata
share of the unpaid balance of the Promissory Note.
Section 8.03. Reasonable Restraint. The parties hereto each agree
that Sections 8.01 and 8.02 impose a reasonable restraint on the Stockholders in
light of the activities and business of T-NDE on the date hereof, the current
business plans of T-NDE and the investment, if any, by each Stockholder in T-NDE
as a result of the Acquisition.
Section 8.04. Severability; Reformation. The covenants in this
Article VIII are severable and separate, and the unenforceability of any
specific covenant in this Article VIII is not intended by any party hereto to,
and shall not, affect the provisions of any other covenant in this Article VIII.
If any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth in Section 8.01 are unreasonable as applied
to any Stockholder, the parties hereto, including that Stockholder, acknowledge
their mutual intention and agreement that those restrictions be enforced to the
fullest extent the court deems reasonable, and thereby shall be reformed to that
extent as applied to that Stockholder and any other Stockholder similarly
situated.
Section 8.05. Independent Covenant. All the covenants in this
Article VIII are intended by each party hereto to, and shall, be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of any Stockholder against T-NDE,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by T-NDE of any covenant in this Article VIII. It is
specifically agreed that the period specified in Section 8.01 shall be computed
in the case of each Stockholder by excluding from that computation any time
during which that Stockholder is in violation of any provision of Section 8.01.
The covenants contained in this Article VIII shall not be affected by any breach
of any other provision hereof by any party hereto.
Section 8.06. Materiality. OSI and each Stockholder, severally
and not jointly with any other Person, hereby agree that this Article VIII is a
material and substantial part of the transactions contemplated hereby.
Section 8.07. Potentially Competitive Activities. In the event a
Stockholder desires to undertake an activity prior to the third anniversary of
the Closing Date which may or may not violate the terms of this Article, that
Stockholder may provide written notice to T-NDE outlining the nature of such
activity to T-NDE. If T-NDE believes that the activity described in the notice
would violate the terms of this Article, T-NDE shall so notify that Stockholder
within ten (10) days after receipt of that Stockholder's notice. The failure to
so notify that Stockholder shall result in a waiver of T-NDE's right to enforce
the provisions of this Article against that Stockholder with respect to the
activity described in the notice. If T-NDE does notify that Stockholder within
ten (10) days after receipt of that Stockholder's notice, T-NDE shall set forth
the reasons it believes the proposed activity will violate the terms of this
Article. Within ten (10) days after receipt of T-NDE's written response, that
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Stockholder may provide a written rebuttal specifically addressing T-NDE's
objections and that Stockholder's intent to proceed with the activity. If that
Stockholder provides a written rebuttal within ten (10) days after receipt of
T-NDE's written response, T-NDE shall then have ten (10) days from receipt of
that Stockholder's written rebuttal to commence arbitration to determine whether
the proposed activity violates this Article. The failure to commence arbitration
within ten (10) days after receipt of that Stockholder's written rebuttal shall
result in a waiver of T-NDE's right to enforce the provisions of this Article
against that Stockholder described in the Stockholder's notice.
ARTICLE IX
DEFINITIONS AND DEFINITIONAL PROVISIONS
Section 9.01. Defined Terms. As used in this Agreement, the
following terms have the meanings assigned to them below:
"Acquisition" means the transaction comprising the transfer of
Shares from the Stockholders to T-NDE.
"Acquisition Agreements" means this Agreement, the Warrant
Agreement, and the Promissory Note.
"Acquisition Consideration" means any of the Cash Payment, the
Promissory Note principal and interest payments, the Stock Warrants, and
the T-NDE Capital Stock.
"Affiliate" means, as to any specified Person, any other Person
that, directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person.
"Business" means the activities of providing maintenance
management services for customers throughout the United States, including
the maintenance of a call center, the maintenance of a proprietary software
program to manage the business; knowledge of vendors which provide
maintenance and repair services; obtaining knowledge about the customers
and their property, both real and personal; pricing maintenance services
from outside vendors; and any goodwill associated therewith.
"Capital Stock" means, with respect to: (a) any corporation, any
share, or any depositary receipt or other certificate representing any
share, of an equity ownership interest in that corporation; and (b) any
other Entity, any share, membership or other percentage interest, unit of
participation or other equivalent (however designated) of an equity
interest in that Entity.
"Cash Payment" means the Cash Payment as defined in Section 1.03.
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"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
"Charter Documents" means, with respect to any Entity at any
time, in each case as amended, modified and supplemented at that time, the
articles or certificate of formation, incorporation or organization (or the
equivalent organizational documents) of that Entity, (b) the bylaws or
limited liability company agreement or regulations (or the equivalent
governing documents) of that Entity and (c) each document setting forth the
designation, amount and relative rights, limitations and preferences of any
class or series of that Entity's Capital Stock or of any rights in respect
of that Entity's Capital Stock.
"Code" means the Internal Revenue Code of 1986.
"Confidential Information" means any of the following that
relates to or is used or useful to OSI or its Affiliates: (i) information
such as customer lists of OSI or its Affiliates, software or source code,
pricing structures and policies, among other business documents, data, and
information; and (ii) all conceptions and ideas for inventions,
improvements or valuable discoveries, whether or not patentable, all trade
secrets, all works of authorship (including illustrations, writings,
computer programs and software) and all other business or technical
information. Confidential Information does not include information or items
which are, as of the date Stockholder received the information, generally
available to and generally known by the public, or through no fault of any
Stockholder, hereafter becomes generally available to and generally known
by the public.
"Controlling Affiliate" means an Affiliate possessing, directly
or indirectly, the power to direct or cause the direction of the management
or policies of a Person (whether through ownership of Capital Stock of that
Person, by contract or otherwise).
"Current Balance Sheet" means the unaudited consolidated balance
sheet of OSI at June 30, 1998.
"Current Balance Sheet Date" means June 30, 1998.
"Damage" to any specified Person means any cost, damage
(including any consequential, exemplary, punitive or treble damage) or
expense (including reasonable fees of and actual disbursements by
attorneys, consultants, experts or other Representatives and Litigation
costs) to, any fine of or penalty on or any liability (including loss of
earnings or profits) of any other nature of that Person; provided, that if
any Indemnified Party should have a claim against any Indemnifying Party
that does not involve a Third Party Claim and for which the Indemnified
Party seeks indemnification pursuant to Section 7.04(e), the amount of
Damages attributable to that claim will not include any amount representing
consequential, exemplary, punitive or treble damage.
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"Damage Claim" means, as asserted (a) against any specified
Person, any claim, demand or Litigation made or pending against the
specified Person for Damages to any other Person, or (b) by the specified
Person, any claim or demand of the specified Person against any other
Person for Damages to the specified Person.
"DGCL" means the Delaware General Corporation Law.
"Employee Policies and Procedures" means at any time all employee
manuals and all material policies, procedures and work-related rules that
apply at that time to any employee, nonemployee director or officer of, or
any other natural person performing consulting or other independent
contractor services for, OSI or any Company Subsidiary.
"Employment Agreement" means at any time any (a) agreement to
which OSI or any of its Affiliates is a party which then relates to the
direct or indirect employment or engagement, or arises from the past
employment or engagement, of any natural person by OSI or any Company
Subsidiary, whether as an employee, a nonemployee officer or director, a
consultant or other independent contractor, a sales representative or a
distributor of any kind, including any employee leasing or service
agreement and any noncompetition agreement, or (b) agreement between OSI or
any Company Subsidiary and any Person which arises from the sale of a
business by that Person to OSI or any Company Subsidiary and limits that
Person's competition with OSI or any Company Subsidiary. For the purposes
of this definition, "Employment Agreement" shall not include any agreement
between OSI and any natural person creating at will employment or
employment which can be terminated by OSI upon not more than thirty (30)
days notice without cause.
"Entity" means any sole proprietorship, corporation, partnership
of any kind having a separate legal status, limited liability company,
business trust, unincorporated organization or association, mutual company,
joint stock company or joint venture.
"Environmental Laws" means any and all Governmental Requirements
relating to the environment or worker health or safety, including ambient
air, surface water, land surface or subsurface strata, or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes (including
Solid Wastes, Hazardous Wastes or Hazardous Substances) or noxious noise or
odor into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, recycling,
removal, transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes (including petroleum,
petroleum distillates, asbestos or asbestos-containing material,
polychlorinated biphenyls, chlorofluorocarbons (including
chlorofluorocarbon-12) or hydrochloro-fluorocarbons).
"ERISA" means the Employee Retirement Income Security Act of
1974.
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"ERISA Affiliate" means, with respect to any specified Person at
any time, any other Person, including an Affiliate of the specified Person,
that is, or at any time within six years of that time was, a member of any
ERISA Group of which the specified Person is or was a member at the same
time.
"ERISA Employee Benefit Plan" means any "employee benefit plan"
as defined in Section 3(3) of ERISA and includes any ERISA Pension Benefit
Plan.
"ERISA Group" means any "group of organizations" within the
meaning of Section 414(b), (c), (m) or (o) of the Code or any "controlled
group" as defined in Section 4001(a)(14) of ERISA.
"ERISA Pension Benefit Plan" means any "employee pension benefit
plan", as defined in Section 3(2) of ERISA, including any plan that is
covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code (excluding any Multiemployer Plan).
"Exchange Act" means the Securities Exchange Act of 1934.
"Financial Statements" means (a) the balance sheets of OSI as of
December 31, 1997 and December 31, 1996 and the related statements of
operations and retained earnings for each of OSI's fiscal years in the
two-year period ended December 31, 1997 and (b) the balance sheets and the
related statements of operations and retained earnings for the first
quarter of 1998 and the months of April and May 1998.
"GAAP" means generally accepted accounting principles and
practices in the United States as in effect from time to time which have
been concurred in by Ernst & Young, LLP and have been or are applied on a
basis consistent (except for changes concurred in by Ernst & Young, LLP
with the most recent Financial Statements delivered to T-NDE prior to the
Closing.
"Governmental Approval" means at any time any authorization,
consent, approval, permit, franchise, certificate, license, implementing
order or exemption of, or registration or filing with, any Governmental
Authority, including any certification or licensing of a natural person to
engage in a profession or trade or a specific regulated activity, at that
time.
"Governmental Authority" means (a) any national, state, county,
municipal or other government, domestic or foreign, or any agency, board,
bureau, commission, court, department or other instrumentality of any such
government, or (b) any Person having the authority under any applicable
Governmental Requirement to assess and collect Taxes for its own account.
"Governmental Requirement" means at any time (a) any law,
statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, writ, edict, award, authorization or other requirement of any
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Governmental Authority in effect, and as then may be interpreted by
applicable Governmental Authorities, at that time or (b) any obligation
included in any certificate, certification, franchise, permit or license
issued by any Governmental Authority or resulting from binding arbitration,
including any requirement under common law, at that time.
"Guaranty" means, for any specified Person, without duplication,
any liability, contingent or otherwise, of that Person guaranteeing or
otherwise becoming liable for any obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any liability of the specified Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
that obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of that obligation, (b) to
purchase property, securities or services for the purpose of assuring the
owner of that obligation of its payment or (c) to maintain working capital,
equity capital or other financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to pay that obligation;
provided, that the term "Guaranty" does not include endorsements for
collection or deposit in the ordinary course of the endorser's business.
"Indebtedness" of any Person means, without duplication, (a) any
liability of that Person (i) for borrowed money or arising out of any
extension of credit to or for the account of that Person (including
reimbursement or payment obligations with respect to surety bonds, letters
of credit, banker's acceptances and similar instruments), for the deferred
purchase price of property or services or arising under conditional sale or
other title retention agreements, other than trade payables arising in the
ordinary course of business, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) in respect of capital leases or (iv) in respect
of interest rate protection agreements, (b) any liability secured by any
Lien upon any property or assets of that Person (or upon any revenues,
income or profits of that Person therefrom), whether or not that Person has
assumed that liability or otherwise become liable for the payment thereof
or (c) any liability of others of the type described in the preceding
clause (a) or (b) in respect of which that Person has incurred, assumed or
acquired a liability by means of a Guaranty.
"Intellectual Property" means anything that is, has been, or is
capable of being patented, protected as a trade secret, protected by
copyright law, or protected by or under any other U.S. or foreign laws or
statutes relating to intellectual or industrial property rights. Without
limiting the foregoing, Intellectual Property may take the form of
inventions, discoveries, ideas, improvements, schematics, diagrams,
know-how, information, data, plans, designs, methods, processes, hardware,
or software.
"Intellectual Property Rights" means any rights whatsoever in
Intellectual Property and all rights of action accrued and to accrue under
and by virtue of the Intellectual Property, including the right to ▇▇▇ and
recover for past infringement thereof.
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"IRS" means the Internal Revenue Service.
"Lien" means, with respect to any property or asset of any Person
(or any revenues, income or profits of that Person therefrom) (in each case
whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise), (a) any mortgage, lien,
security interest, pledge, attachment, levy or other charge or encumbrance
of any kind thereupon or in respect thereof or (b) any other arrangement
under which the same is transferred, sequestered or otherwise identified
with the intention of subjecting the same to, or making the same available
for, the payment or performance of any liability in priority to the payment
of the ordinary, unsecured creditors of that Person, including any "adverse
claim" (as defined in the applicable Uniform Commercial Code) in the case
of any Capital Stock. For purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to
that asset.
"Litigation" means any action, case, proceeding, claim,
grievance, suit or investigation or other proceeding conducted by or
pending before any Governmental Authority or any arbitration proceeding.
"Material" means, as applied to any Entity or OSI, material to
the business, operations, property or assets, liabilities, financial
condition or results of operations of that Entity and its Subsidiaries
considered as a whole or OSI, as the case may be. No liability, claim,
loss, or other amount owing which is less than $25,000 shall be considered
Material.
"Material Adverse Effect" means, with respect to the consequences
of any fact or circumstance (including the occurrence or non-occurrence of
any event) to OSI, that such fact or circumstance has caused, is causing or
will cause, directly, indirectly or consequentially, singly or in the
aggregate with other facts and circumstances, any Damages in excess of the
Threshold Amount.
"Material Agreement" of any Entity means any contract or
agreement (a) to which that Entity or any of its Subsidiaries is a party,
or by which that Entity or any of its Subsidiaries is bound or to which any
property or assets of that Entity or any of its Subsidiaries is subject and
(b) which is Material to that Entity. No agreement that can be terminated
upon thirty (30) days notice without penalty shall be considered a Material
Agreement.
"Multiemployer Plan" means a "multiemployer" plan as defined in
Section 4001(a)(3) of ERISA, Section 414 of the Code or Section 3(37) of
ERISA.
"Original Issue Date" means, with respect to any Warrant issued
in the Acquisition, the Closing Date.
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"Other Compensation Plan" means any compensation arrangement,
plan, policy, practice or program established, maintained or sponsored by
OSI or any Company Subsidiary, or to which OSI or any Company Subsidiary
contributes, on behalf of any of its employees, nonemployee directors or
officers or other natural persons performing consulting or other
independent contractor services for OSI or any Company Subsidiary, (a)
including all such arrangements, plans, policies, practices or programs
providing for severance pay, deferred compensation, incentive, bonus or
performance awards or the actual or phantom ownership of any Capital Stock
or options, warrants or rights to acquire Capital Stock of OSI or any
Company Subsidiary, but (b) excluding all Company ERISA Pension Plans and
Employment Agreements.
"Permitted Liens" means, as applied to the property or assets of
any Person (or any revenues, income or profits of that Person therefrom):
(a) Liens for Taxes if the same are not at the time due and delinquent; (b)
Liens of carriers, warehousemen, mechanics, laborers and materialmen for
sums not yet due; (c) Liens incurred in the ordinary course of that
Person's business in connection with worker's compensation, unemployment
insurance and other social security legislation (other than pursuant to
ERISA or Section 412(n) of the Code); (d) Liens incurred in the ordinary
course of that Person's business in connection with deposit accounts or to
secure the performance of bids, tenders, trade contracts, statutory
obligations, surety and appeal bonds, performance and return-of-money bonds
and other obligations of like nature; (e) easements, rights-of-way,
reservations, restrictions and other similar encumbrances incurred in the
ordinary course of that Person's business or existing on property and not
materially interfering with the ordinary conduct of that Person's business
or the use of that property; (f) defects or irregularities in that Person's
title to its real properties which do not materially (i) diminish the value
of the surface estate or (ii) interfere with the ordinary conduct of that
Person's business or the use of any of such properties; (g) any interest or
title of a lessor of assets being leased by any Person pursuant to any
capital lease disclosed in Schedule 3.19 or any lease that, pursuant to
GAAP, would be accounted for as an operating lease; and (h) Liens securing
purchase money Indebtedness disclosed in Schedule 3.18 or 3.19 so long as
such Liens do not attach to any property or assets other than the
properties or assets purchased with the proceeds of such Indebtedness.
"Person" means any natural person, Entity, estate, trust, union
or employee organization or Governmental Authority or, for the purpose of
the definition of "ERISA Affiliate," any trade or business.
"Prohibited Transaction" means any transaction that is prohibited
under Section 4975 of the Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA.
"Promissory Note" means Promissory Note as defined in Section
1.04.
"Related Party Agreement" means any contract or other agreement,
written or oral, (a) to which OSI or any Company Subsidiary is a party or
is bound or by which any property of OSI or any Company Subsidiary is bound
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or may be subject and (b) (i) to which any Stockholder or any of that
Stockholder's Related Persons or Affiliates also is a party, or (ii) of
which any Stockholder or any of that Stockholder's Related Persons or
Affiliates is a beneficiary.
"Related Person" of a Stockholder means: (a) if that Stockholder
is a natural person, (i) any family member of that Stockholder, (ii) any
estate of that Stockholder or any family member of that Stockholder, (iii)
the trustee of any trust of which all the beneficiaries are Related Persons
of that Stockholder and (iv) any Entity the entire equity interest in which
is owned by any one or more of that Stockholder and Related Persons of that
Stockholder; and (b) if that Stockholder is an Entity, estate or trust, (i)
any Person who owns an equity interest in that Stockholder on the date
hereof, (ii) any Person who would be a Related Person under clause (a) of
this definition of a natural person who is an ultimate beneficial owner of
that Stockholder or (iii) any other Entity the entire equity interest in
which is owned by any one or more of that Stockholder and Related Persons
of that Stockholder.
"Reportable Event" means, with respect to any Company ERISA
Pension Plan, (a) the occurrence of any of the events set forth in Section
4043(b) or (c) (other than a Reportable Event as to which the provision of
30 days' notice to the Pension Benefit Guaranty Corporation is waived under
applicable regulations), 4062(e) or 4063(a) of ERISA with respect to that
plan, (b) any event requiring OSI or any ERISA Affiliate to provide
security to that plan under Section 401(a)(29) of the Code or (c) any
failure to make a payment required by Section 412(m) of the Code with
respect to that plan.
"Representatives" means, with respect to any Person, the
directors, officers, employees, Affiliates, accountants (including
independent certified public accountants), advisors, attorneys, consultants
or other agents of that Person, or any other representatives of that Person
or of any of those directors, officers, employees, Affiliates, accountants
(including independent certified public accountants), advisors, attorneys,
consultants or other agents.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"Restricted Payment" means, with respect to any Entity at any
time, any of the following effected by that Entity: (a) any declaration or
payment of any dividend or other distribution, direct or indirect, on
account of any Capital Stock of that Entity or any Affiliate of that Entity
or (b) any direct or indirect redemption, retirement, purchase or other
acquisition for value of, or any direct or indirect purchase, payment or
sinking fund or similar deposit for the redemption, retirement, purchase or
other acquisition for value of, or to obtain the surrender of, any then
outstanding Capital Stock of that Entity or any Affiliate of that Entity or
any then outstanding warrants, options or other rights to acquire or
subscribe for or purchase unissued or treasury Capital Stock of that Entity
or any Affiliate of that Entity.
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"Restricted Person" means at any time: (a) each Stockholder named
as an Affiliate of OSI in Schedule 3.06; and (b) each other Person who,
pursuant to Securities Act Rule 144(a)(2), would be treated together at
that time with any Stockholder named as an Affiliate of OSI in Schedule
3.06 as a single "person" for purposes of determining the compliance of
that "person" with Securities Act Rule 144(e).
"Returns" of any Person means the returns, reports or statements
(including any Information returns) any Governmental Requirement requires
to be filed by that Person for purposes of any Tax.
"Section 338(h)(10) Purchase" means a transaction as a result of
which the Acquisition is effected by means of a Stock Purchase and in
connection with which T-NDE or any of its Affiliates makes an election
under Section 338(h)(10) of the Code with respect to its purchase of OSI
Capital Stock.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933.
"Stockholder Indemnified Loss" means each Damage Claim described
in Section 7.03.
"Stockholder Indemnified Party" means (a) each Stockholder and
each of that Stockholder's Affiliates (other than OSI or, following the
Closing Date, T-NDE or any of its Subsidiaries, if the Stockholder is an
Affiliate of T-NDE), agents and counsel and (b) prior to the Closing Date,
OSI and each of its officers, directors, employees, agents and counsel who
are not Stockholder Indemnified Parties within the meaning of clause (a) of
this definition.
"Stock Warrants" means the Stock Warrants as defined in Section
1.05.
"Subsidiary" of any specified Person at any time, means any
Entity a majority of the Capital Stock of which is at that time owned or
controlled, directly or indirectly, by the specified Person.
"T-NDE Common Stock" means T-NDE Common Stock as defined in
Section 1.07.
"T-NDE Indemnified Loss" means each Damage Claim described in
Section 7.02.
"T-NDE Indemnified Party" means T-NDE and its Affiliates,
including, after the Closing, OSI, and each of their respective officers,
directors, employees, agents and counsel; provided, however, that no Person
who indemnifies T-NDE Indemnified Parties in this Agreement in his capacity
as a Stockholder will be a T-NDE Indemnified Party for purposes of this
Agreement.
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"Tax" or "Taxes" means all net or gross income, gross receipts,
net proceeds, sales, use, ad valorem, value added, franchise, bank shares,
withholding, payroll, employment, excise, property, deed, stamp,
alternative or add-on minimum, environmental or other taxes, assessments,
duties, fees, levies or other governmental charges or assessments of any
nature whatever imposed by any Governmental Requirement, whether disputed
or not, together with any interest, penalties, additions to tax or
additional amounts with respect thereto.
"Taxing Authority" means any Governmental Authority having or
purporting to exercise jurisdiction with respect to any Tax.
"Termination Event" means, with respect to any Company ERISA
Pension Plan, (a) any Reportable Event with respect to that plan which is
likely to result in the termination of that plan, (b) the termination of,
or the filing of a notice of intent to terminate, that plan or the
treatment of any amendment to that plan as a termination under Section
4041(c) of ERISA or (c) the institution of proceedings to terminate, or the
appointment of a trustee to administer, that plan under Section 4042 of
ERISA.
"Threshold Amount" means $50,000.
"Transaction Document" means the Acquisition Agreements,
documents, instruments and certificates executed pursuant to or in
connection with this Agreement including those specified or referred to in
Article I and V to be delivered at or before the Closing, all as amended,
modified or supplemented from time to time.
"Welfare Plan" means an "employee welfare benefit plan" as
defined in Section 3(1) of ERISA.
Section 9.02. Other Defined Terms. Words and terms used in this
Agreement which are defined elsewhere in this Agreement are used herein as
therein defined.
Section 9.03. Other Definitional Provisions. (a) Except as
otherwise specified herein, all references herein to any Governmental
Requirement defined or referred to herein, including the Code, CERCLA, ERISA,
the Exchange Act, RCRA and the Securities Act, shall be deemed references to
that Governmental Requirement or any successor Governmental Requirement, as the
same may have been amended or supplemented from time to time, and any rules or
regulations promulgated thereunder.
(b) When used in this Agreement, the words "herein," "hereof" and
"hereunder" and words of similar import refer to this Agreement as a whole and
not to any provision of this Agreement, and the words "Article," "Paragraph,"
"Section," "Annex," "Addendum," "Schedule" and "Exhibit" refer to Articles,
Paragraphs and Sections of, and Annexes, Addenda, Schedules and Exhibits to,
this Agreement unless otherwise specified.
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(c) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes the
other gender and the neuter.
(d) The word "including" (and, with correlative meaning, the word
"include") means including, without limiting the generality of any description
preceding such word, and the words "shall" and "will" are used interchangeably
and have the same meaning.
Section 9.04. Captions. Captions to Articles, Paragraphs,
Sections and subsections of, and Annexes, Addenda, Schedules and Exhibits to,
this Agreement or any other Transaction Document are included for convenience of
reference only, and such captions shall not constitute a part of this Agreement
or any other Transaction Document for any other purpose or in any way affect the
meaning or construction of any provision of this Agreement or any other
Transaction Document.
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Brokers and Agents. The Stockholders jointly and
severally represent and warrant to T-NDE that neither OSI nor any Stockholder
has directly or indirectly employed or become obligated to pay any broker or
similar agent in connection with the transactions contemplated hereby and agree,
without regard to the Threshold Amount limitations set forth in Article VII, to
indemnify T-NDE against all Damage Claims arising out of claims for any and all
fees and commissions of brokers or similar agents employed or promised payment
by OSI or such Stockholder.
Section 10.02. Assignment; No Third Party Beneficiaries. This
Agreement and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding on and inure to the benefit of the
parties hereto, the successors of T-NDE, and the heirs and legal representatives
of the Stockholders (and, in the case of any trust, the successor trustees of
that trust). Neither this Agreement nor any other Transaction Document is
intended, or shall be construed, deemed or interpreted, to confer on any Person
not a party hereto or thereto any rights or remedies hereunder or thereunder,
except as provided in Section 10.11 or Article VII or as otherwise provided
expressly herein or therein.
Section 10.03. Entire Agreement; Amendment; Waivers. This
Agreement and the documents delivered pursuant hereto constitute the entire
agreement and understanding among the Stockholders, OSI and T-NDE and supersede
all prior agreements and understandings, both written and oral, relating to the
subject matter of this Agreement. This Agreement may be amended, modified or
supplemented, and any right hereunder may be waived, if, but only if, that
amendment, modification, supplement or waiver is in writing and signed by the
Disbursement Agent on behalf of the Stockholders, or by the Stockholders
entitled to receive at least 80% of the total Acquisition Consideration, OSI and
T-NDE; provided, however, that, in the event the Stockholders execute the
amendment individually (rather than the Disbursement Agent), no such amendment,
modification, supplement or waiver will be effective unless it is signed by each
Stockholder affected thereby to the extent that it (a) changes the several
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nature of that Stockholder's representations and warranties (to the extent they
are not already joint and several as provided in Article III and Section 10.01),
(b) reduces the amount, or changes the components, of the Acquisition
Consideration that Stockholder is entitled to receive pursuant to Section 1.4,
or (c) amends or waives this sentence. The waiver of any of the terms and
conditions hereof shall not be construed or interpreted as, or deemed to be, a
waiver of any other term or condition hereof.
Section 10.04. Expenses. Whether or not the transactions
contemplated hereby are consummated, (a) T-NDE will pay the fees, expenses and
disbursements of T-NDE and its Subsidiaries and their Representatives which are
incurred in connection with the subject matter of this Agreement and any
amendments thereto, including all costs and expenses incurred in the performance
of and compliance with all conditions to be performed by T-NDE under this
Agreement, (b) OSI will pay from OSI funds in the ordinary course of business,
all reasonable fees, expenses and disbursements of counsel for OSI incurred in
connection with the subject matter of this Agreement, and (c) the Stockholders
will pay from personal funds, and not from funds of OSI, all sales, use,
transfer and other similar taxes and fees incurred in connection with the
transactions contemplated hereby including the fees, expenses and disbursements
of counsel for the Stockholders incurred in connection with the subject matter
of this Agreement. The Stockholders will file all necessary documentation and
Returns with respect to all sales, use, transfer and other similar taxes and
fees they are required by this Section 10.04 to pay. In addition, each
Stockholder acknowledges that he, and not OSI or T-NDE or the Surviving
Corporation, will pay all Taxes due upon receipt of the consideration payable to
that Stockholder pursuant to the transactions contemplated by this Agreement.
Section 10.05. Notices. All notices required or permitted
hereunder shall be in writing, and shall be deemed to be delivered and received
(a) if personally delivered or if delivered by telex, telegram, facsimile or
courier service, when actually received by the party to whom notice is sent or
(b) if delivered by mail (whether actually received or not), at the close of
business on the third Houston, Texas business day next following the day when
placed in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
(i) if to T-NDE or any of its Subsidiaries, addressed to it at:
Tanknology-NDE International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: President
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with a copy to:
Tanknology-NDE International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
; and
(ii) if to any of the Stockholders, addressed to:
Outbound Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇. Law, President
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
Section 10.06. Governing Law. This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Texas without
regard to the conflicts of law provisions thereof.
Section 10.07. Exercise of Rights and Remedies. Except as
otherwise provided herein, no delay or omission in the exercise of any right,
power or remedy accruing to any party hereto as a result of any breach or
default hereunder by any other party hereto shall impair any such right, power
or remedy, nor shall it be construed, deemed or interpreted as a waiver of or
acquiescence in any such breach or default, or of any similar breach or default
occurring later; nor shall any waiver of any single breach or default be
construed, deemed or interpreted as a waiver of any other breach or default
hereunder occurring before or after that waiver.
Section 10.08. Time. Time is of the essence in the performance of
this Agreement in all respects.
Section 10.09. Reformation and Severability. If any provision of
this Agreement is invalid, illegal or unenforceable, that provision shall, to
the extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties hereto as
expressed herein, and if such a modification is not possible, that provision
shall be severed from this Agreement, and in either case the validity, legality
and enforceability of the remaining provisions of this Agreement shall not in
any way be affected or impaired thereby.
Section 10.10. Remedies Cumulative. No right, remedy or election
given by any term of this Agreement shall be deemed exclusive, but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
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Section 10.11. Release. Subject to the limitations set forth in
the last sentence in this Section 10.11, each Stockholder hereby unconditionally
and irrevocably releases and forever discharges, effective as of and forever
after the Closing Date, to the fullest extent permitted by Texas, all past,
present and future T-NDE Indemnified Parties (including, after the Closing Date,
OSI which will be a Subsidiary of T-NDE immediately after the Closing Date), and
the officers, directors, employees, agents, and counsel of OSI (the "Released
Party") from any and all debts, liabilities, obligations, claims, demands,
actions or causes of action, suits, judgments or controversies of any kind
whatsoever (collectively, "Pre-Acquisition Claims") against OSI and OSI
Subsidiaries, if any, and the officers, directors, employees, agents, and
counsel of OSI or any of them that arises out of or is based on any agreement or
understanding or act or failure to act (including any act or failure to act that
constitutes ordinary or gross negligence), misrepresentation, omission,
transaction, fact, event or other matter occurring prior to the Closing Date
(whether based at law or in equity or otherwise, foreseen or unforeseen, matured
or unmatured, known or unknown, accrued or not accrued) (collectively,
"Pre-Acquisition Matters"), including: (a) claims by the Stockholder with
respect to repayment of loans or indebtedness; (b) any rights, titles and
interests in, to or under any agreements, arrangements or understandings to
which the Stockholder is a party; and (c) claims by the Stockholder with respect
to dividends, violation of preemptive rights, or payment of salaries or other
compensation or in any way arising out of or in connection with the
Stockholder's employment with OSI, the cessation of that employment, the
Stockholder's status as an officer, director or stockholder of OSI or otherwise
(but excluding any and all claims in respect of (i) accrued and unpaid amounts
owing to the Stockholder pursuant to each Employment Agreement disclosed in
Schedule 3.24 to which the Stockholder is a party, (ii) accrued and unpaid cash
compensation owing to the Stockholder in the normal and ordinary course of
business and consistent with past practices, (iii) benefits accrued under each
Company ERISA Benefit Plan or Other Compensation Plan, the existence of which
has been disclosed in Schedule 3.25, and (iv) amounts or other obligations owing
to the Stockholder, directly or indirectly, pursuant to each Retained Related
Party Agreement, if any, which is disclosed in Schedule 3.11 and to which the
Stockholder, directly or indirectly, is a party). The Stockholder further agrees
not to file or bring any Litigation before any Governmental Authority on the
basis of or respecting any Pre-Acquisition Claim concerning any Pre-Acquisition
Matter against any Related Party. Each Stockholder (a) acknowledges that he or
she fully comprehends and understands all the terms of this Section 10.12 and
their legal effects and (b) expressly represents and warrants that (i) he or she
is competent to effect the release made in this Section 10.12 knowingly and
voluntarily and without reliance on any statement or representation of any
Released Party or its Representatives and (ii) he or she had the opportunity to
consult with an attorney of his or her choice regarding this Section 10.12. This
Section 10.12 shall not affect the rights of the Stockholders under this
Agreement or any other Transaction Document.
Section 10.12. Arbitration. Any and all controversies or claims
arising out of or relating to this Agreement, or the breach thereof shall be
settled by binding arbitration held in ▇▇▇▇▇▇ County, Texas administered by the
American Arbitration Association ("AAA") and shall be conducted under the AAA's
then-effective commercial arbitration rules, and judgment on the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof;
provided, however, that a controversy or claim otherwise subject to arbitration
hereunder may initially be heard by any court of competent jurisdiction to the
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extent, and only to the extent, that initial submission of the matter to a court
is necessary for a party to seek emergency injunctive relief, and provided,
further, however, that the matter initially submitted to a court shall be
rendered by the court to arbitration pursuant to this section as soon as the
matter as to which such emergency injunctive relief was sought has been heard by
the court. The direct expense of any arbitration proceeding hereunder shall be
borne by the non-prevailing party.
Section 10.13. Counterpart Execution; Facsimiles. This Agreement
may be executed in any number of counterparts, each of which shall be deemed an
original and which together shall constitute one agreement. A facsimile copy of
any party's signature on this Agreement shall be enforceable against such party
as an original.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement
on the date first above written.
TANKNOLOGY-NDE INTERNATIONAL, INC.
By: //▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇//
Title: Chairman
OUTBOUND SERVICES, INC.
By: //▇▇▇▇▇ ▇. LAW//
Title: CEO, President
SELLERS:
//▇▇▇▇▇ ▇. LAW//
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▇▇▇▇▇ ▇. Law
//▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇//
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//▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇//
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//▇▇▇▇ ▇▇▇▇▇▇//
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▇▇▇▇ ▇▇▇▇▇▇
//▇▇▇▇ ▇▇▇▇ HIRS//
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▇▇▇▇ ▇▇▇▇ Hirs
//▇▇▇▇ ▇▇▇▇//
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//▇▇▇▇ ▇▇▇▇▇▇▇▇//
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//▇▇▇▇▇ ▇▇▇▇▇▇▇//
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//▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇//
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//▇▇▇▇▇ ▇. ▇▇▇▇▇▇//
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