EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
ANSWERTHINK CONSULTING GROUP, INC.,
(BUYER)
INFINITY CONSULTING GROUP, INC.,
(INFINITY)
AND
THE SHAREHOLDERS OF INFINITY
(COLLECTIVELY, SELLERS)
DATED AS OF SEPTEMBER 30, 1998
TABLE OF CONTENTS
PAGE
1. DEFINITIONS...................................................................4
2. PURCHASE AND SALE OF INFINITY SHARES..........................................7
(a) BASIC TRANSACTION...................................................7
(b) PURCHASE PRICE......................................................7
(c) EARNED PAYOUT AMOUNT................................................7
(d) FORM AND DATE OF PAYMENT OF EARNED PAYOUT AMOUNT....................8
(e) NET CASH ADJUSTMENT.................................................9
(f) THE CLOSING.........................................................9
(g) DELIVERIES AT THE CLOSING...........................................9
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION....................9
(a) REPRESENTATIONS AND WARRANTIES OF EACH SELLER.......................9
(i) AUTHORIZATION OF TRANSACTION...............................9
(ii) NONCONTRAVENTION..........................................9
(iii) BROKER'S FEES............................................9
(iv) INFINITY SHARES...........................................9
(v) DISCLOSURE................................................10
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER........................10
(i) ORGANIZATION OF THE BUYER.................................10
(ii) AUTHORIZATION OF TRANSACTION.............................10
(iii) NONCONTRAVENTION........................................10
(iv) BROKERS' FEES............................................10
(v) INVESTMENT................................................10
4. REPRESENTATIONS AND WARRANTIES CONCERNING INFINITY...........................10
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER...................11
(b) CAPITALIZATION.....................................................11
(c) NONCONTRAVENTION...................................................11
(d) SUBSIDIARIES.......................................................11
(e) FINANCIAL STATEMENTS...............................................12
(f) EVENTS SUBSEQUENT TO JUNE 30, 1998.................................12
(g) UNDISCLOSED LIABILITIES............................................13
(h) TAX MATTERS........................................................14
(i) TANGIBLE ASSETS....................................................15
(j) OWNED REAL PROPERTY................................................15
(k) INTELLECTUAL PROPERTY..............................................15
(l) REAL PROPERTY LEASES...............................................16
(m) CONTRACTS..........................................................17
(n) NOTES AND ACCOUNTS RECEIVABLE......................................17
(o) POWERS OF ATTORNEY.................................................17
(p) INSURANCE..........................................................18
(q) LITIGATION.........................................................18
(r) EMPLOYEES..........................................................18
(s) EMPLOYEE BENEFITS..................................................18
(t) GUARANTIES.........................................................19
(u) ENVIRONMENT, HEALTH, AND SAFETY....................................19
(v) LEGAL COMPLIANCE...................................................20
(w) CERTAIN BUSINESS RELATIONSHIPS WITH INFINITY.......................21
(x) BROKERS' FEES......................................................21
(y) DISCLOSURE.........................................................21
5. RESERVED.....................................................................21
6. ADDITIONAL COVENANTS.........................................................21
(a) GENERAL............................................................21
(b) LITIGATION SUPPORT.................................................21
(c) TRANSITION.........................................................21
(d) CONFIDENTIALITY....................................................21
(e) TERMINATION OF BANK FACILITIES; RELEASE OF GUARANTIES.............22
(f) MONITORING INFORMATION.............................................22
(g) SECTION 338(H)(10) ELECTION........................................22
(h) LANDLORDS' CONSENTS................................................22
(i) ADDITIONAL TAX MATTERS.............................................22
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(j) COVENANT NOT TO COMPETE............................................22
(k) CONDUCT DURING EARNED PAYOUT PERIOD................................23
7. CONDITIONS TO OBLIGATIONS TO CLOSE...........................................23
(a) CONDITIONS TO OBLIGATION OF THE BUYER..............................23
(b) CONDITIONS TO OBLIGATIONS OF THE SELLERS...........................25
8. REMEDIES FOR BREACHES OF THIS AGREEMENT......................................26
(a) SURVIVAL...........................................................26
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER................26
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS..............27
(d) MATTERS INVOLVING THIRD PARTIES....................................28
(e) EXCLUSIVE REMEDY...................................................28
(f) PAYMENT; GENERAL RIGHT OF OFFSET...................................28
(g) OTHER INDEMNIFICATION PROVISIONS...................................28
(h) ARBITRATION WITH RESPECT TO CERTAIN INDEMNIFICATION MATTERS........28
9. RESERVED.....................................................................29
10. MISCELLANEOUS...............................................................29
(a) THE SELLERS........................................................29
(b) PRESS RELEASES AND ANNOUNCEMENTS...................................30
(c) NO THIRD-PARTY BENEFICIARIES.......................................30
(d) ENTIRE AGREEMENT...................................................30
(e) SUCCESSION AND ASSIGNMENT..........................................30
(f) FACSIMILE/COUNTERPARTS.............................................30
(g) DESCRIPTIVE HEADINGS...............................................30
(h) NOTICES............................................................30
(i) GOVERNING LAW......................................................31
(j) AMENDMENTS AND WAIVERS.............................................31
(k) SEVERABILITY.......................................................31
(l) EXPENSES...........................................................31
(m) CONSTRUCTION.......................................................31
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES..................31
(o) SPECIFIC PERFORMANCE...............................................31
-ii-
LIST OF EXHIBITS, ANNEXES AND SCHEDULES
EXHIBITS
Exhibit A Form of Equity Purchase Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Financial Statements
Exhibit D Form of Compliance Agreement
Exhibit E Form of Opinion of Sellers' Legal Counsel
Exhibit F Confidentiality Agreement
ANNEXES AND TABLE
Annex I Determination of Adjusted EBITA of Infinity
Annex II Exceptions to Representations and Warranties of Sellers
Annex III Exceptions to Representations and Warranties of Buyer
Annex IV Persons to Deliver Compliance Agreements
Annex V RESERVED
Annex VI Persons to Execute Buyer's Options, Number of Buyer's Options To Be Delivered, Initial
Salary of Sellers and Initial Salary and Bonus for Non-Seller Employees
SCHEDULES
Allocation Schedule
Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("AGREEMENT") is entered into as
of the 30th day of September, 1998, and effective as of September 29, 1998, by
and among ANSWERTHINK CONSULTING GROUP, INC., a Florida corporation (the
"BUYER"), INFINITY CONSULTING GROUP, INC., an Indiana corporation ("INFINITY"),
and THE SHAREHOLDERS OF INFINITY LISTED ON THE SIGNATURE PAGE HEREOF
(collectively, the "SELLERS"). The Buyer and the Sellers are referred to herein
individually as a "PARTY" and collectively as the "PARTIES."
The Sellers collectively own all of the outstanding capital
stock of Infinity.
This Agreement contemplates a transaction in which Buyer will
purchase from Sellers, and the Sellers will sell to the Buyer, all of the
outstanding capital stock of Infinity.
Now, therefore, in consideration of the premises and the
mutual promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"ACG MARKET PRICE AT CLOSING" has the meaning set forth in
SECTION 2(B) below.
"ACG MARKET PRICE AT EARNOUT" has the meaning set forth in
SECTION 2(D)(II) below.
"ADJUSTED EBITA OF INFINITY" means adjusted earnings before
interest and taxes and goodwill amortization of Infinity during the Earned
Payout Period as determined by ANNEX I attached hereto.
"ADVERSE CONSEQUENCES" means all damages from complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties,
fines, costs, amounts paid in settlement, liabilities, obligations, taxes,
liens, losses, expenses, and fees, including all reasonable attorneys' fees and
court costs.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"AFFILIATED GROUP" means any affiliated group within the
meaning of Code Sec. 1504 (or any similar group defined under a similar
provision of state, local or foreign law).
"BASIS" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms the reasonable basis
for any specified consequence.
"BUYER" has the meaning set forth in the preface above.
"BUYER'S COMMON STOCK" means the common stock, par value
$0.001 per share, of Buyer.
"BUYER'S OPTIONS" means options to purchase Buyer's Shares
pursuant to and in accordance with the terms of the Stock Option Agreement
attached hereto as EXHIBIT B.
"BUYER'S SHARES" means the shares of restricted Buyer's Common
Stock, which are issued pursuant to and in accordance with the terms set forth
in the Equity Purchase Agreement attached hereto as EXHIBIT A.
"CASH PORTION OF THE EARNED PAYOUT AMOUNT" has the meaning set
forth in SECTION 2(D) below.
"CASH PORTION OF THE PURCHASE PRICE" has the meaning set forth
in SECTION 2(B) below.
"CLOSING" has the meaning set forth in SECTION 2(F) below.
"CLOSING DATE" has the meaning set forth in SECTION 2(F)
below.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means all confidential information
and trade secrets of Infinity including, without limitation, the identity, lists
or descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information; contract proposals, or
bidding information; business plans and training and operations methods and
manuals; personnel records; fee structure; and management systems, policies or
procedures, including related forms and manuals.
"CONTROLLED GROUP OF CORPORATIONS" has the meaning set forth
in Code Sec. 1563.
"CUSTOMER CONTRACT OR AGREEMENT" means any agreement whereby
Infinity provides consulting services to a third party during the 1997 or 1998
fiscal years of Infinity.
"CUSTOMER" shall have the meaning set forth in SECTION 6(J)
below.
"DEFERRED INTERCOMPANY TRANSACTION" has the meaning set forth
in Treas. Reg. ss.1.1502-13.
"DISCLOSURE SCHEDULE" has the meaning set forth in SECTION 4
below.
"DOCUMENTATION" has the meaning set forth in SECTION 4(K)
below.
"EARNED PAYOUT AMOUNT" has the meaning set forth in SECTION
2(C) below.
"EARNED PAYOUT PERIOD" means the period from September 1, 1998
through August 31, 1999.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
Material fringe benefit plan or program.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in
ERISA Sec. 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in
ERISA Sec. 3(1).
"EQUITABLE EXCEPTIONS" shall have the meaning set forth in
SECTION 3(A)(I) below.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"FIDUCIARY" has the meaning set forth in ERISA Sec. 3(21).
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION
4(E) below.
"FIRST TIER EARNED PAYOUT AMOUNT" has the meaning set forth in
SECTION 2(C)(I) below.
"FIRST TIER PERCENTAGE" has the meaning set forth in SECTION
2(C)(I) below.
"GAAP" means generally accepted accounting principles,
consistently applied, as in effect from time to time.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 8(D)
below.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 8(D)
below.
"INFINITY" has the meaning set forth in the preface above.
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"INFINITY'S BUSINESS" means the business of Infinity on the
execution date of this Agreement, consisting of software implementation and
consulting services, primarily associated with the PeopleSoft software.
"INFINITY SHARES" means all outstanding shares of the common
stock, $0.01 par value per share, of Infinity.
"INTELLECTUAL PROPERTY" means all (a) trademarks, service
marks, trade dress, logos, trade names, and corporate names and registrations
and applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information), (e) other proprietary rights, and (f) copies and tangible
embodiments thereof (in whatever form or medium).
"KNOWLEDGE" means, with respect to Infinity, actual knowledge
after reasonable investigation and inquiry by Sellers, which inquiry shall
include an inquiry of the employees of Infinity with responsibility for the
matters in question.
"LIABILITY" means any liability, debt, obligation, amount or
sum due (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due) including any
liability for Taxes.
"LICENSES" has the meaning set forth in SECTION 4(K) below.
"MATERIAL" has the meaning set forth in SECTION 4 below.
"MOST RECENT BALANCE SHEET" means the balance sheet contained
within the Most Recent Financial Statements.
"MOST RECENT FINANCIAL STATEMENTS" means the Financial
Statements for and as of June 30, 1998.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec.
3(37).
"NET SERVICE REVENUES" means the gross revenue of Infinity as
normally calculated on the Financial Statements less the sum of the following:
(i) Infinity's cost of subcontractors, (ii) reimbursed expenses, and (iii) the
cost of software that is resold by Infinity, all as calculated in accordance
with GAAP, consistently applied.
"NET CASH OF INFINITY" means the total cash of Infinity less
the total liabilities of Infinity determined in accordance with GAAP,
consistently applied.
"1999 ADJUSTED EBITA PERCENTAGE" means the Adjusted EBITA of
Infinity during the Earned Payout Period (prepared on an accrual basis of
accounting and in accordance with GAAP) divided by the Net Service Revenues
during the Earned Payout Period.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"PARTY" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"PURCHASE PRICE" has the meaning set forth in SECTION 2(B)
below.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec.
4043.
"SECOND TIER EARNED PAYOUT AMOUNT" has the meaning set forth
in SECTION 2(C)(II) below.
"SECOND TIER PERCENTAGE" has the meaning set forth in SECTION
2(C)(II) below.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY INTEREST" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due and payable (or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings), (c) liens arising under workers' compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) liens
arising in connection with sales of foreign receivables, (e) liens on goods in
transit incurred pursuant to documentary letters of credit, (f) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"SELLERS" has the meaning set forth in the preface above.
"SELLERS' EARNOUT SHARES" has the meaning set forth in SECTION
2(D)(II) below.
"STOCK PORTION OF THE EARNED PAYOUT AMOUNT" has the meaning
set forth in SECTION 2(D) below.
"STOCK PORTION OF THE PURCHASE PRICE" has the meaning set
forth in SECTION 2(B) below.
"SUBSIDIARY" means any corporation with respect to which
another specified corporation has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"TAX" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not.
"TAX RETURN" means any tax return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
2. PURCHASE AND SALE OF INFINITY SHARES.
(b) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and
each Seller agrees to sell to the Buyer, all of its respective Infinity Shares
for the consideration specified below in this SECTION 2.
(b) PURCHASE PRICE. The purchase price for Infinity Shares
shall be composed of the Cash Portion of the Purchase Price, the Stock Portion
of the Purchase Price and the Earned Payout Amount. The Buyer agrees to pay to
the Sellers in the aggregate the sum of (i) $2,234,000 (to be increased dollar
for dollar by the amount of the adjustment, if any, set forth in SECTION 2(E))
in cash (the "CASH PORTION OF THE PURCHASE PRICE"); and (ii) $3,627,000 in the
form of Buyer's Shares (the "STOCK PORTION OF THE PURCHASE PRICE") equal to
$3,627,000 divided by the ACG Market Price at Closing (as hereinafter defined),
all in exchange for the Infinity Shares to be purchased by Buyer pursuant to the
terms hereof. The "ACG MARKET PRICE AT CLOSING" shall be $19.50. The Cash
Portion of the Purchase Price shall be paid by Buyer to Sellers at the Closing
by wire transfer of immediately available funds to an account designated by
Sellers on SCHEDULE 2(B). The Stock Portion of the Purchase Price shall be
issued by Buyer to Sellers at the Closing by the delivery of stock certificates;
PROVIDED that each Seller enters into an equity purchase agreement in the form
attached hereto as EXHIBIT A. The sum of the Cash Portion of the Purchase Price,
the Stock Portion of the Purchase Price and the Earned Payout Amount shall be
referred to as the "PURCHASE PRICE." Each of (i) the Cash Portion of the
Purchase Price and (ii) the Stock Portion of the Purchase Price shall be
allocated among Sellers in dollar amounts determined pro rata in accordance with
the ALLOCATION SCHEDULE.
(c) EARNED PAYOUT AMOUNT. In addition to the Cash Portion
of the Purchase Price and the Stock Portion of the Purchase Price, the Buyer
agrees to pay to the Sellers an amount (the "EARNED PAYOUT AMOUNT") equal to the
sum of the following:
(i) the product of the following (referred to as the
"FIRST TIER EARNED PAYOUT AMOUNT"): (i) the quotient of (A)
the amount, if any, by which the Net Service Revenues earned
during the Earned Payout Period
-7-
exceed $8,000,000 up to a maximum excess amount of $2,000,000
DIVIDED BY (B) $2,000,000 (such quotient hereinafter referred
to as the "FIRST TIER PERCENTAGE") and (ii) $816,000.
Notwithstanding the foregoing in this SECTION 2(C)(I), the
First Tier Earned Payout Amount shall be equal to zero unless
either (x) the 1999 Adjusted EBITA Percentage is greater than
or equal to 35.00% (rounded to the hundredth of a percentage
point) or (y) the Second Tier Earned Payout Amount (as
calculated below) is greater than zero; and
(ii) the product of the following (such amount shall
be referred to as the "SECOND TIER EARNED PAYOUT AMOUNT"): (i)
the quotient of (A) the amount, if any, by which the Net
Service Revenues earned during the Earned Payout Period exceed
$10,000,000 up to a maximum excess amount of $2,000,000
DIVIDED BY (B) $2,000,000 (such quotient hereinafter referred
to as the "SECOND TIER PERCENTAGE") and (ii) $816,000.
Notwithstanding the foregoing in this SECTION 2(C)(II), the
Second Tier Earned Payout Amount shall be equal to zero if the
difference between the following is greater than the 1999
Adjusted EBITA Percentage (rounded to the hundredth of a
percentage point): (x) 35.00% less (y) the product of 2.00%
and the Second Tier Percentage. If and only if (1) the Second
Tier Earned Payout Amount is equal to zero, (2) the Net
Service Revenues earned during the Earned Payout Period exceed
$12,000,000 and (3) the 1999 Adjusted EBITA Percentage
(rounded to the hundredth of a percentage point) is greater
than 28.00%, then notwithstanding the foregoing sentence, the
Second Tier Earned Payout Amount will be equal to the product
of the following (PROVIDED, HOWEVER, that in no event will the
Second Tier Earned Payout Amount exceed $816,000): (i)
$816,000 and (ii) the quotient of (A) the 1999 Adjusted EBITA
Percentage (rounded to the hundredth of a percentage point)
MINUS 28.00% divided by (B) 5.00%. In addition, if and only if
the conditions in (1), (2) and (3) above in this SUBPARAGRAPH
2(C)(II) are met, then the Second Tier Percentage will be
equal to the quotient of (A) the 1999 Adjusted EBITA
Percentage (rounded to the hundredth of a percentage point)
MINUS 28.00% divided by (B) 5.00%; PROVIDED, HOWEVER, that in
no event will such quotient of (A) divided by (B) exceed 1.0.
(d) FORM AND DATE OF PAYMENT OF EARNED PAYOUT AMOUNT. The
Earned Payout Amount, if any, shall be payable in the aggregate as follows: (i)
52.21% of the Earned Payout Amount, if any, in cash (the "CASH PORTION OF THE
EARNED PAYOUT AMOUNT") and (ii) 47.79% of the Earned Payout Amount, if any, in
Buyer's Shares, as determined hereinafter (the "STOCK PORTION OF THE EARNED
PAYOUT AMOUNT").
(i) CASH PORTION OF EARNOUT. The Cash Portion of the
Earned Payout Amount, if any, shall be payable (pro rata in
accordance with the percentages set forth on the ALLOCATION
SCHEDULE) to the Sellers. The Cash Portion of the Earned
Payout Amount shall be paid by wire transfer or other delivery
of immediately available funds within forty-five (45) days
following the expiration of the Earned Payout Period to an
account designated Sellers.
(ii) STOCK PORTION OF EARNOUT PAYABLE TO SELLERS. The
Stock Portion of the Earned Payout Amount, if any, will be
issued (pro rata in accordance with the percentages set forth
on the ALLOCATION SCHEDULE) to the Sellers, by the delivery to
each such Seller of the number Buyer's Shares as calculated in
this SECTION 2(D)(II) ("SELLERS' EARNOUT SHARES"). The
aggregate number of Sellers' Earnout Shares under this SECTION
2(D)(II) will be equal the Stock Portion of the Earned Payout
Amount divided by the ACG Market Price at Earnout (as defined
hereinafter). The "ACG MARKET PRICE AT EARNOUT" shall mean the
average of the closing bid price of the Buyer's Common Stock
as listed on the NASDAQ National Market System for the five
(5) business days prior to the two (2) business days
immediately prior to August 31, 1999. The Sellers' Earnout
Shares shall be issued (pro rata in accordance with the
percentages set forth on the ALLOCATION SCHEDULE) to the
Sellers (as rounded down to the nearest whole number);
PROVIDED, that each Seller receiving Sellers' Earnout Shares
must enter into an equity purchase agreement in the form
attached hereto as EXHIBIT A.
(iii) PAYOUT OF STOCK PORTION OF EARNOUT. The Stock
Portion of the Earned Payout Amount, if any, shall be payable
on or before forty-five (45) days following the expiration of
the Earned Payout Period by the delivery of certificates
representing Sellers' Earnout Shares calculated in accordance
with this SECTION 2(D)(II).
(iv) DETERMINATION. The Earned Payout Amount shall be
determined by Coopers & ▇▇▇▇▇▇▇, L.L.P. in accordance with the
terms of this Agreement and ANNEX I hereto.
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(e) NET CASH ADJUSTMENT. The Cash Portion of the Purchase
Price shall be adjusted upward on a dollar-for-dollar basis by the amount by
which the Net Cash of Infinity as of August 31, 1998 is greater than zero;
PROVIDED, HOWEVER, that such upward adjustment pursuant to this SECTION 2(E)
shall not exceed $500,000 and PROVIDED, FURTHER, that Sellers' conduct the
business of Infinity in the ordinary course from August 31, 1998 through the
Closing Date. In the event the Parties are unable to agree on or calculate the
Net Cash of Infinity as of August 31, 1998 before the Closing, the Net Cash of
Infinity as of August 31, 1998 shall be determined subsequent to the Closing by
Coopers & ▇▇▇▇▇▇▇, L.L.P. in accordance with the terms of this Agreement (at the
joint expense of the Buyer and the Sellers), which determination shall be final,
conclusive and binding on the Parties.
(f) THE CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP in Washington, D.C. commencing at 9:00 a.m. local time
on September 30, 1998 or on the first business day following the satisfaction or
waiver of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (the "CLOSING DATE"), effective as of September
29, 1998; PROVIDED, HOWEVER, that the Closing Date shall be no later than
October 15, 1998.
(g) DELIVERIES AT THE CLOSING. At the Closing, (i) the
Sellers will deliver to the Buyer the various certificates, instruments, and
documents referred to in SECTION 7(A) below, (ii) the Buyer will deliver to the
Sellers the various certificates, instruments, and documents referred to in
SECTION 7(B) below, (iii) the Sellers will each deliver to the Buyer stock
certificates representing all of its Infinity Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (iv) the Buyer will
deliver to the Sellers the consideration specified in SECTION 2(H) above as may
be adjusted after the Closing pursuant to SECTION 2(B) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF EACH SELLER. Each
Seller represents and warrants to the Buyer that, subject to the specific
qualifications and limitations set forth below, the statements contained in this
SECTION 3(A) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
SECTION 3(A)) with respect to itself, or himself, except as set forth on ANNEX
II attached hereto:
(i) AUTHORIZATION OF TRANSACTION. The Seller has full
power and authority to execute and deliver this Agreement and
to perform its obligations hereunder and this Agreement has
been duly executed and delivered by the Seller. This Agreement
constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and
conditions, except that (A) such enforceability may be subject
to bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws, decisions or equitable
principles now or hereafter in effect relating to or affecting
the enforcement of creditors' rights or debtors' obligations
generally, and to general equity principles, and (B) the
remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding
therefore may be brought (the terms of clause (A) and (B) are
sometimes collectively referred to as the "EQUITABLE
EXCEPTIONS"). The Seller need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement
(other than as provided for in ARTICLE 2 of this Agreement).
(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement by the Seller, nor the consummation
of the transactions contemplated hereby by the Seller, will
(A) violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which the
Seller is subject or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any part the right to accelerate, terminate, modify,
or cancel, or require any notice under any contract, lease,
sublease, license, sublicense, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which
the Seller is a party or by which it is bound or to which any
of its assets is subject.
(iii) BROKER'S FEES. Seller has no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement for which the Buyer could become liable or
obligated.
(iv) INFINITY SHARES. The Seller holds of record and
owns beneficially the number of Infinity Shares set forth next
to its name in
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SECTION 4(B) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under
the Securities Act and state securities laws), claims, Taxes,
Security Interests, options, warrants, rights, contracts,
calls, commitments, equities, and demands. The Seller is not a
party to (or has otherwise waived all rights under) any
option, warrant, right, contract, call, put, or other
agreement or commitment providing for the disposition or
acquisition of any capital stock of Infinity (other than this
Agreement). The Seller is not a party to (or has otherwise
terminated) any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock
of Infinity.
(v) DISCLOSURE. The representations and warranties
regarding the Seller contained in this SECTION 3(A) as
amended, modified and/or supplemented by ANNEX II do not
contain any untrue statement of a fact or omit to state any
Material fact necessary in order to make the statements and
information contained in this SECTION 3(A) not misleading.
(b) REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Sellers that the statements contained in this
SECTION 3(B) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this SECTION 3(B)), except as set forth in ANNEX III attached hereto.
(i) ORGANIZATION OF THE BUYER. Buyer is a corporation
duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. Buyer is a
publicly traded company that is traded on the NASDAQ National
Market System under the symbol ANSR.
(ii) AUTHORIZATION OF TRANSACTION. Buyer has full
power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to
perform its obligations hereunder and this Agreement has been
duly executed and delivered by the Buyer. This Agreement
constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions
except for the Equitable Exceptions. Buyer does not need to
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement (other than as provided for in
ARTICLE 2 of this Agreement).
(iii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement by the Buyer, nor the consummation
of the transactions contemplated hereby by the Buyer, will (A)
violate any statute, regulation, rule, judgment, order,
decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which the
Buyer is subject or any provision of its charter or bylaws or
(B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require
any notice under any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness,
Security Interest, or other arrangement to which the Buyer is
a party or by which it is bound or to which any of its assets
is subject and which has a Material adverse effect on Buyer.
(iv) BROKERS' FEES. The Buyer has no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement for which the Sellers could become liable or
obligated.
(v) INVESTMENT. The Buyer is not acquiring Infinity
Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES CONCERNING INFINITY. The
Sellers jointly and severally represent and warrant to the Buyer that, subject
to the specific qualifications and limitations set forth herein, the statements
contained in this SECTION 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this SECTION 4), except as set forth in the Disclosure
Schedule delivered by the Sellers to the Buyer on the date hereof and initialed
by the Parties (the "DISCLOSURE SCHEDULE"). The Disclosure Schedule may be
updated one or more times prior to the Closing Date. Any updated Disclosure
Schedule shall be delivered at or before the Closing. In the event any such
updated Disclosure Schedule indicates a material change from information
previously provided to the Buyer, Buyer shall be entitled to terminate this
Agreement (without any liability whatsoever to Infinity) by written notice
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delivered to Infinity following receipt of such updated Disclosure Schedule. An
event or matter that causes any representation or warranty contained in this
Section to be inaccurate, incorrect or false will not be deemed to be
"MATERIAL," to have a "MATERIAL" change in or in respect of, to have a
"MATERIAL" adverse effect or to be "MATERIALLY" affected unless the loss that
may reasonably be expected to occur to Infinity with respect to such event or
matter, when taken together with all other related losses that may reasonably be
expected to occur to Infinity as a result of any such events or matters, would
exceed $25,000 in the aggregate or unless such event or matter constitutes a
criminal violation of law. For purposes of this paragraph, the word "loss" shall
mean any and all direct or indirect payments, obligations, assessments, losses,
losses of income, liabilities, costs and expenses paid or incurred, or
reasonably likely to be paid or incurred, or diminutions in value or reduction
in benefits or rights of any kind or character (whether or not known or asserted
before the date of this Agreement, fixed or unfixed, conditional or
unconditional, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise) that are reasonably
likely to occur, including without limitation, penalties, interest on any amount
payable to a third party as a result of the foregoing, and any reasonable legal
or other expenses reasonably expected to be incurred in connection with
defending any demands, claims, actions or causes of action that, if adversely
determined, could reasonably be expected to result in losses, and all amounts
paid in settlement of claims or actions; PROVIDED, HOWEVER, that losses shall be
net of any insurance proceeds entitled to be received from a nonaffiliated
insurance company on account of such loss (after taking into account any cost
incurred in obtaining such proceeds or any increases in insurance premiums as a
direct result thereof). A Customer Contract or Agreement is "Material" if during
either calendar year 1997 or 1998 such Customer Contract or Agreement produced
or is expected to produce $50,000 of Net Service Revenues. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the
foregoing, the mere listing (or inclusion of a copy) of a document or other item
shall not be deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has to do with the
existence of the document or other items itself). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this SECTION 4.
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER.
Infinity is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. Except as disclosed in
SECTION 4(A) of the Disclosure Schedule, Infinity is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the nature of its businesses or the ownership or leasing of its properties
requires such qualification. Infinity has full corporate power and authority to
carry on the businesses in which it is engaged and to own and use the properties
owned and used by it. SECTION 4(A) of the Disclosure Schedule lists the
directors and officers of Infinity. The Sellers have delivered to the Buyer
correct and complete copies of the charter and bylaws of Infinity (as amended to
date). The minute books containing the records of meetings and/or resolutions of
the stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books and the stock record books of Infinity
are correct and complete. Infinity is not in default under or in violation of
any provision of its charter or bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of
Infinity consists of 10,000 shares of capital stock, 300 of which are issued and
outstanding and no Infinity Shares are held in treasury. All of the issued and
outstanding Infinity Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the Sellers. Except as set
forth on the Disclosure Schedule, there are no outstanding or authorized
options, warrants, rights, contracts, calls, puts, rights to subscribe,
conversion rights, or other agreements or commitments to which Infinity is a
party or which are binding upon Infinity providing for the issuance,
disposition, or acquisition of any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to Infinity. There are no voting trusts, proxies, or any other
agreements or understandings with respect to the voting of the capital stock of
Infinity.
(c) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction of any
government, governmental agency, or court to which Infinity is subject or any
provision of the charter or bylaws of Infinity, or (ii) conflict with, result in
a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require
any notice under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which Infinity is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Infinity does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions contemplated by this
Agreement.
(d) SUBSIDIARIES. Infinity has no Subsidiaries.
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(e) FINANCIAL STATEMENTS. Attached hereto as EXHIBIT C are
the following financial statements (collectively the "FINANCIAL STATEMENTS"):
unaudited balance sheet and statement of income, changes in stockholder's
equity, and cash flow as of and for the fiscal years ended December 31, 1996 and
1997 and unaudited balance sheet and statement of income, and changes in
stockholder's equity as of and for the 6 month period ended June 30, 1998 for
Infinity. The Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby, are
correct and complete, fairly present the financial condition of Infinity as of
such dates, and are consistent with the books and records of Infinity (which
books and records are correct and complete).
(f) EVENTS SUBSEQUENT TO JUNE 30, 1998. Since June 30,
1998, except as set forth on the Disclosure Schedule, there has not been any
Material adverse change in the assets, Liabilities, business, financial
condition, operations, results of operations, or future prospects of Infinity.
Without limiting the generality of the foregoing since that date except as set
forth on the Disclosure Schedule:
(i) Infinity has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(ii) Infinity has not entered into any contract,
lease, sublease, license or sublicense (or series or related
contracts, leases, subleases, licenses and sublicenses) either
involving more than $35,000 or outside the Ordinary Course of
Business;
(iii) Infinity has not accelerated, terminated,
modified, or canceled any contract, lease, sublease, license
or sublicense (or series of related contracts, leases,
subleases, licenses and sublicenses) involving more than
$25,000 to which Infinity is a party or by which it is bound;
(iv) no party has notified Infinity of any
acceleration, termination, modification or cancellation of any
outstanding Material Customer Contract or any contract,
agreement, lease, sublease, license or sublicense (or series
of related contracts, leases, subleases, licenses and
sublicenses), other than any employment agreements entered
into in the Ordinary Course of Business, involving more than
$25,000 to which a Infinity is a party or by which it is
bound;
(v) Infinity has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(vi) Infinity has not made any capital expenditure (or
series of related capital expenditures) either involving more
than $10,000 individually or $30,000 in the aggregate, or
outside the Ordinary Course of Business;
(vii) Infinity has not made any capital investment in,
any loan to, or any acquisition of the securities or assets of
any other person (or series of related capital investments,
loans, and acquisitions) involving more than $50,000 in the
aggregate;
(viii) Infinity has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease
obligations) involving more than $10,000 individually or in
the aggregate or outside the Ordinary Course of Business;
(ix) Infinity has not delayed or postponed (beyond its
normal practice) the payment of any accounts payable and other
Liabilities;
(x) Infinity has not canceled, compromised, waived, or
released any right or claim (or series of related rights and
claims) either involving more than $25,000 or outside the
Ordinary Course of Business;
(xi) Infinity has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
(xii) there has been no change made or authorized in
the charter or bylaws of Infinity;
(xiii) Infinity has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including
upon conversion or exercise) any of its capital stock;
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(xiv) Infinity has not declared, set aside, or paid
any dividend or distribution with respect to its capital stock
nor redeemed, purchased, or otherwise acquired any of its
capital stock;
(xv) Infinity has not made any consulting or other
payment to the Sellers;
(xvi) Infinity has not experienced any damage,
destruction or loss involving more than $25,000 (whether or
not covered by insurance) to its property;
(xvii) Infinity has not made any loan to, or entered
into any other transaction with, any of its officers,
directors or employees (who are not Sellers) outside the
Ordinary Course of Business giving rise to any claim or right
on its part against the person or on the part of the person
against it;
(xviii) Infinity has not made any loan to, or entered
into any other transaction with, any of the Sellers giving
rise to any claim or right on its part against the person or
on the part of such person against it;
(xix) Infinity has not entered into any employment
contract or collective bargaining agreement, written or oral,
or modified in any material respect the terms of any existing
such contract or agreement with any of its full-time staff
employees;
(xx) Infinity has not granted an increase outside the
Ordinary Course of Business in the base compensation of any of
its directors, officers, and employees (other than the
Sellers);
(xxi) Infinity has not granted an increase in the base
compensation, nor has Infinity made any payments or promises
or commitments to pay to any of the Sellers to make any other
payments (other than salary and reimbursement of customary
expenses) to any of the Sellers, including without limitation
bonuses.
(xxii) Infinity has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization, life, or other
insurance, (G) severance, or (H) other plan, contract or
commitment for any of its directors, officers, and employees,
or modified or terminated any existing such plan, contract or
commitment;
(xxiii) Infinity has not made any other change in
employment terms for any of its directors, officers, and
full-time staff employees;
(xxiv) Infinity has not made or pledged to make any
charitable or other capital contribution outside the Ordinary
Course of Business;
(xxv) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving Infinity.
(xxvi) Infinity has not committed to any of the
foregoing.
(g) UNDISCLOSED LIABILITIES. Infinity does not have any
Liability (and there is no Basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand against
Infinity giving rise to any Liability, including, without limitation, Liability
under the Fair Labor Standards Act of 1938, as amended and the rules and
regulations promulgated thereunder) which is individually in excess of $5,000,
except for (i) Liabilities set forth on the face of the Most Recent Balance
Sheet (rather than in any notes thereto), and (ii) Liabilities which have arisen
after December 31, 1998 Year End in the Ordinary Course of Business (none of
which relates to any breach of contract, breach of warranty, tort, infringement,
or violation of law or arose out of any charge, complaint, action, suit,
proceedings, hearing, investigation, claim, or demand).
(h) TAX MATTERS.
(i) Infinity has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and
complete in all respects. All Taxes owed by Infinity (whether
or not shown on any Tax Return) have been paid or accrued on
the Balance Sheet. Infinity currently
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is not the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by any
authority in a jurisdiction where Infinity does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the
assets of Infinity that arose in connection with any failure
(or alleged failure) to pay any Tax.
(ii) Infinity has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid
or owing to any employee, creditor, independent contractor, or
other third party and Infinity has properly reflected the
status of all employees and independent contractors in
connection therewith as required by applicable Tax law and the
Fair Labor Standards Act of 1938, as amended, and the rules
and regulations promulgated thereunder.
(iii) Neither Sellers nor any of the directors or
officers (or employees responsible for Tax matters) of
Infinity have received, nor do any of them expect to receive,
any notice that any authority intends to assess any additional
Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax Liability of
Infinity either (A) claimed or raised by any authority in
writing or (B) as to which Sellers or any of the directors or
officers (or employees responsible for Tax matters) of
Infinity have Knowledge based upon personal contact with any
agent of such authority. SECTION 4(H) of the Disclosure
Schedule lists all federal, state, local, and foreign income
Tax Returns filed with respect to Infinity for taxable periods
ended on or after December 31, 1990, indicates those Tax
Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Sellers
have delivered to the Buyer correct and complete copies of all
federal income Tax Returns filed, examination reports
received, and statements of deficiencies assessed against or
agreed to, by Infinity since December 31, 1990.
(iv) Infinity has not waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(v) Infinity has not filed a consent under Code Sec.
341(f) concerning collapsible corporations. Infinity has not
made any payments, is not obligated to make any payments, nor
is a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be
deductible to Infinity under Code Sec. 280G. Infinity has not
been a United States real property holding corporation within
the meaning of Code Sec. 897(c)(2) during the applicable
period specified in Code Sec. 897(c)(1)(A)(ii). Infinity has
disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of
Code Sec. 6662. Infinity is not a party to any Tax allocation
or sharing agreement. Infinity has never been (nor has any
Liability for unpaid Taxes because it once was) a member of an
Affiliated Group filing a consolidated federal income Tax
Return and has never incurred any Liability for the Taxes of
any Person under Treas. Reg. ss.1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise, during any part of any
consolidated return year within any part of which consolidated
return year also was a member of the Affiliated Group.
Infinity (and any predecessor of Infinity) has been a validly
electing S corporation within the meanings of Sections 1361
and 1362 of the Code and any corresponding state or local tax
provisions at all times since the date of its incorporation,
and Infinity will be an S corporation until and including the
Closing Date. The election of Infinity to be taxed under
subchapter S of the Code is valid, in full force and effect
and is in compliance with all applicable Tax laws, rules and
regulations. Infinity has not had at any time during
Infinity's existence owned any subsidiaries (including any
"qualified subchapter S subsidiaries" within the meaning of
Section 1361(b)(3)(13) of the Code.
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Infinity would not be liable for any Tax under Section 1374 of
the Code in connection with a deemed sale of Infinity's assets
caused by an election under Section 338(h)(10) of Code.
Infinity has not, in the past ten (10) years, (i) acquired
assets from another corporation in a transaction in which
Infinity's Tax basis for the acquired assets was determined in
whole or in part by reference to the Tax basis of the acquired
assets (or any other property) in the hands of the transferor
or (ii) acquired the stock of any other corporation that is a
qualified subchapter S subsidiary.
(vi) SECTION 4(H) of the Disclosure Schedule sets
forth the following information with respect to Infinity as of
the most recent practicable date (as well as on an estimated
pro forma basis as of the Closing giving effect to the
consummation of the transactions contemplated hereby): (A) the
amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess
charitable contribution allocable to Infinity; and (B) the
amount of any deferred gain or loss allocable to Infinity
arising out of any Deferred Intercompany Transaction.
(vii) The unpaid Taxes of Infinity do not exceed the
reserve for Tax Liability set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of Infinity in
filing its Tax Returns.
(i) TANGIBLE ASSETS. Infinity owns or leases all tangible
assets necessary for the conduct of its businesses as presently conducted and as
presently proposed to be conducted. To the Knowledge of Sellers, each such
tangible asset is free from defects (patent and latent), has been maintained in
accordance with normal industry practice, is in good operating condition and
repair (subject to normal wear and tear), and is suitable for the purposes for
which it presently is used.
(j) OWNED REAL PROPERTY. Infinity does not own nor does it
have any interest in any real property or improvements thereon (other than the
leases disclosed in SECTION 4(J) of the Disclosure Schedule, and the leasehold
improvements relating to the same) nor does Infinity have any options,
agreements or contracts under which it has the right or obligation to acquire
any interest in any real property or improvements (other than as disclosed in
SECTION 4(J) of the Disclosure Schedule)
(k) INTELLECTUAL PROPERTY.
(i) Attached hereto as SECTION 4(K) of the Disclosure
Schedule is a list and brief description of all Intellectual
Property owned or licensed by Infinity. Infinity has furnished
Buyer with copies of all license agreements to which Infinity
is a party, either as licensor or licensee, with respect to
any Intellectual Property. Infinity has good title to or the
right to use all the Intellectual Property and all inventions,
processes, designs, formulae, trade secrets and know-how
necessary for the conduct of the Infinity's business, in its
business as presently conducted without the payment of any
royalty or similar payment, and Infinity is not infringing on
any Intellectual Property right of others, and neither
Infinity nor Sellers are aware of any infringement by others
of any such rights owned by Infinity.
(ii) All licenses set forth on SECTION 4(K) of the
Disclosure Schedule are valid and binding obligations of
Infinity, and to the Knowledge of the Sellers and officers
(and employees with responsibility thereto), of the other
parties thereto, and enforceable against Infinity, and to the
Knowledge of the Sellers and officers (and employees with
responsibility thereto), the other parties thereto in
accordance with their respective terms, except for the
Equitable Exceptions. Infinity owns and possesses all right,
title and interest in and to, or has the right to use pursuant
to a valid license, all Intellectual Property necessary for
the operation of the business of Infinity as presently
conducted.
(iii) All personnel, including employees, agents,
consultants, and contractors, who have contributed to or
participated in the conception and development of any
Intellectual Property have executed the nondisclosure
agreements set forth in SECTION 4(K) of the Disclosure
Schedule and either (1) have been party to a written agreement
with Infinity that has accorded Infinity full, effective,
exclusive and original
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ownership of all Intellectual Property, or (2) have executed
appropriate instruments of assignment in favor of Infinity as
assignee that have conveyed to Infinity full, effective, and
exclusive ownership of all Intellectual Property.
(iv) The Sellers have also delivered to the Buyer
correct and complete samples or copies of all trademarks,
service marks, trade names, copyrights, patents, registrations
and, as relate to the foregoing, applications, licenses,
agreements, and permissions (as amended to date) held by
Infinity, and have made available to the Buyer correct and
complete copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such item.
With respect to each item of Intellectual Property necessary
for the conduct of the business of Infinity as heretofore
conducted, each as listed on SECTION 4(K) of the Disclosure
Schedule: (A) the identified owner possesses all right, title,
and interest in and to the item; (B) the item is not subject
to any outstanding judgment, order, decree, stipulation,
injunction, or charge; (C) no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand is
pending or, to the Knowledge of any of the Sellers, is
threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and (D)
Infinity has never agreed to indemnify any person or entity
for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(v) Except as set forth on SECTION 4(K) of the
Disclosure Schedule, all of the computer software, computer
firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated,
computerized, and/or software system(s) that are used or
relied on by Legacy in the conduct of its business will not
malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when
processing, providing, and/or receiving (i) date-related data
into and between the twentieth and twenty-first centuries and
(ii) date-related data in connection with any valid date in
the twentieth and twenty-first centuries.
(l) REAL PROPERTY LEASES. SECTION 4(L) of the Disclosure
Schedule lists and describes briefly all real property leased or subleased to
Infinity. The Sellers have delivered to the Buyer correct and complete copies of
the leases and subleases listed in SECTION 4(L) of the Disclosure Schedule (as
amended to date). With respect to each lease and sublease listed in SECTION 4(L)
of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect, subject to the
Equitable Exceptions;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms immediately following the Closing;
(iii) Infinity is not and, to the Knowledge of
Sellers, no other party to the lease or sublease is in breach
or default, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default or permit
termination, modification, or acceleration thereunder;
(iv) Infinity has not, and to the Knowledge of the
Sellers, no other party to the lease or sublease has
repudiated any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) Infinity has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(vii) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations.
(m) CONTRACTS. SECTION 4(M) of the Disclosure Schedule
lists the following contracts, agreements, Customer Contracts or Agreements and
other written arrangements to which Infinity is a party:
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(i) any written arrangement (or group of related
written arrangements) for the lease of personal property from
or to third parties providing for lease payments in excess of
$35,000 per annum;
(ii) any written arrangement (or group of related
written arrangements) for the furnishing or receipt of
services which either calls for performance over a period of
more than one year or involves more than the sum of $50,000;
(iii) any written arrangement concerning a partnership
or joint venture;
(iv) any written arrangement (or group of related
written arrangement) under which it has created, incurred,
assumed, or guaranteed (or may create, incur, assume, or
guarantee) indebtedness (including capitalized lease
obligations) involving more than $35,000 or under which it has
imposed (or may impose) a Security Interest on any of its
assets, tangible or intangible;
(v) any written arrangement requiring confidentiality
or noncompetition;
(vi) any written arrangement with any of its
directors, officers, or employees, or any of its Affiliates;
(vii) any written arrangement under which the
consequences of a default or termination could have an adverse
effect on the assets, Liabilities, business, financial
condition, operations, results of operations, or future
prospects of Infinity;
(viii) any written Customer Contract or Agreement; or
(ix) any other written arrangement (or group of
related written arrangements) either involving more than
$35,000 or not entered into in the Ordinary Course of
Business.
The Sellers have delivered to the Buyer a correct and complete copy of
each written arrangement listed in SECTION 4(M) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed: (A) the
written arrangement is legal, valid, binding, enforceable, and in full force and
effect, subject to the Equitable Exceptions; (B) the written arrangement will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms immediately following the Closing; (C) Infinity is not, nor
to the Knowledge of Sellers, is any other party in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification, or acceleration, under the
written arrangement; and (D) Infinity is not, nor to the Knowledge of Sellers,
has any other party, repudiated any provision of the written arrangement.
Infinity is not a party to any verbal contract, agreement, or other arrangement
which, if reduced to written form, would be required to be listed in SECTION
4(M) of the Disclosure Schedule under the terms of this SECTION 4(M). To the
Knowledge of the Sellers and the officers and directors of Infinity, no unfilled
Material Customer Contract or Agreement obligating Infinity to perform services
will result in a loss to Infinity upon completion of performance. Infinity has
not been notified that any of its customers intends either to dispute charges
under or to terminate early a Material Customer Contract or Agreement.
(n) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of Infinity are reflected properly on its books and records, are
valid receivables subject to no setoffs or counterclaims, are presently current
and collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to a reserve of $20,000 for bad accounts.
(o) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of Infinity.
(p) INSURANCE. SECTION 4(P) of the Disclosure Schedule
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which Infinity has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past five (5) years:
(i) the name address and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
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(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the
coverage was on a claims made, occurrence, or other basis) and
amount (including a description of how deductibles and
ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium
adjustments or other loss sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, and enforceable and in full force and effect; (B) the policy
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms immediately following the Closing Date; (C) Infinity
is not in breach or default (including with respect to the payment of premiums
or the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default or permit termination,
modification, or acceleration, under the policy; and (D) to the Knowledge of the
Sellers, no party to the policy has repudiated any provision thereof. Infinity
has been covered during the past five (5) years by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period. SECTION 4(P) of the Disclosure Schedule describes any
self-insurance arrangements affecting Infinity.
(q) LITIGATION. SECTION 4(Q) of the Disclosure Schedule
sets forth each instance in which Infinity (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge or (ii) is a party
or, to the Knowledge of the Sellers and the directors and officers (and
employees with responsibility for litigation matters) of Infinity, is threatened
to be made a party to any charge, complaint, action, suit, proceeding, hearing,
or investigation of or in any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any arbitrator.
Except as specifically described on SECTION 4(Q) of the Disclosure Schedule, no
matter listed thereon would reasonably be expected, individually, to result in a
Material adverse effect to Infinity. Neither the Sellers nor any of the
directors or the officers (or employees with responsibility for litigation
matters) of Infinity has any reason to believe that any such charge, complaint,
action, suit, proceeding, hearing, or investigation may be brought or threatened
against Infinity.
(r) EMPLOYEES. To the Knowledge of the Sellers and the
directors and officers (and employees with responsibility for employment
matters) of Infinity, no employee has any plans to terminate employment with
Infinity. Infinity is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. Infinity has not
committed any unfair labor practice. Neither the Sellers nor any of the
directors or the officers (or employees with responsibility for litigation
matters) of Infinity has any Knowledge of any organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of Infinity.
(s) EMPLOYEE BENEFITS. SECTION 4(S) of the Disclosure
Schedule lists all Employee Benefit Plans that Infinity maintains or to which
Infinity contributes for the benefit of any current or former employee of
Infinity.
(i) Each Employee Benefit Plan (and each related trust
or insurance contract) complies in form and in operation in
all respects with the applicable requirements of ERISA and the
Code.
(ii) All required reports and descriptions, if any,
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each Employee Welfare Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each Employee Pension Benefit
Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of Infinity. All premiums or
other payments which are due for all periods ending on or
before the Closing Date have been paid with respect to each
Employee Welfare Benefit Plan.
(iv) Each Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified
plan" under Code Sec. 401(a) and has received a currently
valid and favorable determination letter from the Internal
Revenue Service, and that nothing has occurred since the
receipt of such letter that would materially affect the tax
qualified status of each such Employee Pension Benefit Plan.
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(v) The market value of assets under each Employee
Pension Benefit Plan (other than any Multiemployer Plan)
equals or exceeds the present value of Liabilities thereunder
(determined on an accumulated benefit obligation basis) as of
the last day of the most recent plan year. No Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be
filed with the PBGC. No proceeding by the PBGC to terminate
any Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge
of the Sellers and directors and officers (and employees with
responsibility for employee benefits matters) of Infinity,
threatened.
(vi) There have been no Prohibited Transactions with
respect to any Employee Benefit Plan. No Fiduciary has any
Liability for breach of fiduciary duty or any other failure to
act or comply in connection with the administration or
investment of the assets of any Employee Benefit Plans. No
charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand with respect to the
administration or the investment of the assets of any Employee
Benefit Plan (other than routine claims for benefits) is
pending or, to the Knowledge of the Sellers and the directors
and officers (and employees with responsibility for employee
benefits matters) of Infinity, threatened. Neither the Sellers
nor any of the directors or the officers (or employees with
responsibility for litigation matters) of Infinity has any
Knowledge of any Basis for any such charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand.
(vii) The Sellers have delivered to the Buyer correct
and complete copies of (A) the plan documents and summary plan
descriptions, (B) the most recent determination letter
received from the Internal Revenue Service, (C) the most
recent Form 5500 Annual Report, and (D) all related trust
agreements, insurance contracts, and other funding agreements
which implement each Employee Benefit Plan.
Infinity does not contribute to, has never contributed to, nor ever has
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan. Infinity has not
incurred, and neither the Sellers nor any of the directors or the officers (or
employees with responsibility for litigation matters) of Infinity has any reason
to expect that Infinity will incur, any Liability to the PBGC (other than PBGC
premium payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any Employee Pension Benefit Plan
that Infinity and the Controlled Group of Corporations which includes Infinity
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute. Infinity does not
maintain, nor has it ever maintained or contributed to, or ever has been
required to contribute to any Employee Welfare Benefit Plan providing health,
accident, or life insurance benefits to former employees, their spouses, or
their dependents (other than in accordance with Code Sec. 162(k)).
(t) GUARANTIES. Infinity is not a guarantor nor is it
otherwise liable for any Liability or obligation (including indebtedness) of any
other person.
(u) ENVIRONMENT, HEALTH, AND SAFETY.
(i) Infinity and its respective predecessors and
Affiliates have complied with all laws (including rules and
regulations thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning the
environment, public health and safety, and employee health and
safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been
filed or commenced against any of them alleging any failure to
comply with any such law or regulation.
(ii) To the Knowledge of Sellers and the directors and
officers of Infinity, Infinity has no Liability (and there is
no Basis for any present or future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand
against Infinity giving rise to any Liability) under the
Occupational Safety and Health Act, as amended, or any other
law (or rule or regulation thereunder) of any federal, state,
local, or foreign government (or agency thereof) concerning
employee health and safety.
(iii) To the Knowledge of Sellers and the directors
and officers of Infinity, Infinity does not have any Material
Liability (and Infinity has not exposed any employee to any
substance or condition that could form the Basis for any
present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand (under the common law
or pursuant to statute) against Infinity giving rise to any
Liability) for any illness of or personal injury to any
employee.
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(iv) To the Knowledge of Sellers and the directors and
officers of Infinity, Infinity has obtained and been in
compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required
under, and has complied with all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all federal, state, local, and foreign laws
(including rules, regulations, codes, plans, judgments,
orders, decrees, stipulations, injunctions, and charges
thereunder) relating to public health and safety, worker
health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharge,
releases, or threatened releases of pollutants, contaminants,
or chemical, industrial, hazardous, or toxic materials or
wastes into ambient air, surface water, ground water, or lands
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
(v) LEGAL COMPLIANCE. Except as it would not, individually
or in the aggregate, have a Material adverse effect:
(i) Infinity has complied with all laws (including
rules and regulations thereunder) of federal, state, local,
and foreign governments (and all agencies thereof). No charge,
complaint, action, suit, proceeding, hearing, investigation,
claim, demand, or notice has been filed or commenced against
Infinity which is currently pending and alleges any failure to
comply with any such law or regulation.
(ii) Infinity has complied with all applicable laws
(including rules and regulations thereunder) relating to the
employment of labor (including but not limited to the
engagement of independent contractors under the Fair Labor
Standards Act of 1938, as amended, and the rules and
regulations promulgated thereunder), employee civil rights,
hiring of engaging non-United States citizens, and equal
employment opportunities.
(iii) Infinity has not violated in any respect or
received a notice or charge asserting any violation of the
▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇ Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Act, or the
Federal Trade Act, each as amended.
(iv) Infinity has not:
(A) made or agreed to make any contribution,
payment, or gift of funds or property to any
governmental official, employee, or agent where
either the contribution, payment, or gift or the
purpose thereof was illegal under the laws of any
federal, state, local, or foreign jurisdiction;
(B) established or maintained any unrecorded
fund or asset for any purpose, or made any false
entries on any books or records for any reason; or
(C) made or agreed to make any contribution,
or reimbursed any political gift or contribution made
by any other person, to any candidate for federal,
state, local, or foreign public office in excess of
$500.
(v) Infinity has filed in a timely manner all reports,
documents, and other materials it was required to file (and
the information contained therein was correct and complete in
all respects) under all applicable laws (including rules and
regulations thereunder).
(vi) Infinity has possession of all records and
documents it was required to retain under all applicable laws
(including rules and regulations thereunder).
(w) CERTAIN BUSINESS RELATIONSHIPS WITH INFINITY. Except
as set forth in SECTION 4(W) of the Disclosure Schedule, neither the Sellers nor
its Affiliates has been involved in any business arrangement or relationship
with Infinity within the past twelve (12) months other than customary employment
relationships, and neither the Sellers nor its Affiliates owns any material
property or right, tangible or intangible, which is used in the business of
Infinity.
(x) BROKERS' FEES. Infinity does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or similar
representative with respect to the transactions contemplated by this Agreement.
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(y) DISCLOSURE. The representations and warranties
contained in this SECTION 4 as amended, modified and/or supplemented by the
Disclosure Schedules do not contain any untrue statement of a fact or omit to
state any Material fact necessary in order to make the statements and
information contained in this SECTION 4 not misleading.
5. RESERVED.
6. ADDITIONAL COVENANTS. The Parties further covenant and
agree as follows:
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
SECTION 8 below). The Sellers acknowledge and agree that from and after the
Closing the Buyer will be entitled to possession of all documents, books,
records, agreements, and financial data of any sort relating to Infinity;
provided that Sellers may retain any copies of the foregoing as shall be
necessary to comply with applicable tax and other laws, regulations and
ordinances.
(b) LITIGATION SUPPORT. In the event and for so long as
any Party actively is contesting or defending against any charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Infinity, each of the other Parties will cooperate
with him or it and his, her or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
SECTION 8 below).
(c) TRANSITION. The Sellers will not take any action that
primarily is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of Infinity from
maintaining the same business relationships with Infinity after the Closing for
a period of twenty-four (24) months thereafter as it maintained with Infinity
prior to the Closing. The Sellers will refer all customer inquiries relating to
Infinity's Business to the Buyer and/or Infinity from and after the Closing for
a period of twenty-four (24) months thereafter.
(d) CONFIDENTIALITY. The Sellers will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement for a period
of three (3) years from the Closing, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in its possession. In the
event that the Sellers are requested or required (by oral question or request
for information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, the Sellers will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this SECTION 6(D). If, in the absence of a
protective order or the receipt of a waiver hereunder, the Sellers are, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that Sellers may disclose the
Confidential Information to the tribunal; PROVIDED, HOWEVER, that the Sellers
shall use their reasonable efforts to obtain, at the reasonable request of the
Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Buyer shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
(e) TERMINATION OF BANK FACILITIES; RELEASE OF GUARANTIES.
Sellers shall (i) retire all of Infinity's outstanding bank indebtedness as of
the Closing Date, except as otherwise specifically agreed by Buyer in writing
and (ii) fully, completely and unconditionally release Infinity at or prior to
Closing as guarantor for the Sellers on all banking facilities of Infinity or
other guarantees.
(f) MONITORING INFORMATION. Prior to the Closing, Sellers
shall cause Infinity to deliver such information as may reasonably be requested
by Buyer.
(g) SECTION 338(H)(10) ELECTION. The Sellers and Buyer
shall join in making a timely election (but in no event later than sixty (60)
days following the Closing) under Section 338(h)(10) of the Code (including the
prerequisite election under Section 338 of the Code) and any similar state law
provisions in all applicable states, with respect to the sale and purchase of
Infinity Shares pursuant to this Agreement, and each party shall provide to the
others all necessary information to permit such elections to be
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made. Buyer and the Sellers shall, as promptly as practicable following the
Closing Date, take all actions necessary and appropriate (including filing such
forms, returns, schedules and other documents as may be required) to effect and
preserve timely elections; PROVIDED, HOWEVER, that Buyer shall be the party
responsible for preparing and filing the forms, returns, schedules and other
documents necessary for making an effective and timely election. All Taxes
attributable to the elections made pursuant to this SECTION 6(G) shall be the
liability of the Sellers and the Sellers shall indemnify the Buyer (as provided
in SECTION 8(B) herein) from and against the entirety of all Taxes created from
the conversion by Infinity to the accrual basis of tax accounting from the cash
basis of tax accounting immediately prior to the Closing. In connection with
such elections, within sixty (60) days following the Closing Date, Buyer and the
Sellers shall act together in good faith to determine and agree upon the "deemed
sale price" to be allocated to each asset of Infinity in accordance with
Treasury Regulation Section 1.338(h)(10)-1(f) and the other regulations under
Section 338 of the Code. Notwithstanding the generality of the immediately
preceding sentence, Buyer and the Sellers agree that the "deemed sale price"
shall be allocated to the fixed assets at their book value as of August 31, 1998
and the monetary assets of Infinity at their fair market value as of the Closing
Date and the balance of the "deemed sale price" shall be allocated to goodwill
and other intangible assets of Infinity. Both Buyer and the Sellers shall report
the tax consequences of the transactions contemplated by this Agreement
consistently with such allocations and shall not take any position inconsistent
with such allocations in any Tax Return or otherwise. In the event that Buyer
and the Sellers are unable to agree as to such allocations, Buyer's reasonable
positions with respect to such allocations shall control. The Sellers shall be
liable for, and shall indemnify and hold Buyer and Infinity harmless against,
any Taxes or other costs attributable to (i) a failure on the part of the
Sellers to take all actions required of them under this SECTION 6(G); or (ii) a
failure on the part of Infinity to qualify as an "S corporation" for federal
and/or state income tax purposes.
(h) LANDLORDS' CONSENTS. Sellers shall cause Infinity on
or before the Closing Date to obtain from its landlords (to the extent required
under the pertinent premises lease) written consent to the assignment of all
leases being assumed by Buyer, which assignments are deemed to have resulted
from the transactions contemplated by this Agreement.
(i) ADDITIONAL TAX MATTERS.
(i) The Buyer shall cause Infinity (at Sellers' sole
cost and expense) to file with the appropriate governmental
authorities all Tax Returns required to be filed by it for any
taxable period ending prior to the Closing Date and Sellers
shall remit any Taxes due in respect of such Tax Returns (but
only to the extent such Taxes are in excess of the reserve, if
any, for such Tax liability used to determine the Net Cash of
Infinity at Closing). In addition, Sellers shall cause their
Certified Public Accountant to prepare a short period tax
return for Infinity covering the period from December 31, 1997
through the Closing Date; PROVIDED, HOWEVER, that Sellers
shall provide Coopers & ▇▇▇▇▇▇▇, L.L.P. with at least ten (10)
days to review such return prior to its filing (such review to
be at Buyer's sole cost and expense). The cost of preparation
of such short period tax return shall be paid by Sellers.
(ii) Buyer and Sellers recognize that each of them
will need access, from time to time, after the Closing Date,
to certain accounting and Tax records and information held by
the Buyer and/or Infinity to the extent such records and
information pertain to events occurring on or prior to the
Closing Date; therefore, Buyer agrees to cause Infinity to (A)
use its best efforts to properly retain and maintain such
records for a period of six (6) years from the date the Tax
Returns for the year in which the Closing occurs are filed or
until the expiration of the statute of limitations that
applies to the Tax Return in question (i.e., including Tax
Returns for years preceding the year in which the Closing
occurs), whichever is later, and (B) allow the Sellers and
their agents and representatives at times and dates mutually
acceptable to the Parties, to inspect, review and make copies
of such records as such other party may deem necessary or
appropriate from time to time, such activities to be conducted
during normal business hours and at the other Party's expense.
(j) COVENANT NOT TO COMPETE. For a period of two (2) years
from and after the Closing Date, the Sellers will not, directly or indirectly,
as principal, agent, trustee or through the agency of any corporation,
partnership, association or agent or agency, (i) own, manage, control,
participate in, consult with, render services for, or in any manner engage in
any activity or business competing with the businesses of the Buyer, Infinity or
their Affiliates in any country, (ii) request, advise, induce or attempt to
induce any customer, supplier, licensee or other business relation of the Buyer,
Infinity or any of their Affiliates (each a "CUSTOMER") to withdraw, curtail,
cancel or otherwise cease such Customer's business with the Buyer, Infinity
and/or such Affiliate or in any way interfere with the relationship between any
such Customer and the Buyer, Infinity and/or any of their Affiliates, (iii)
service, canvass, solicit or accept any business from any Customer for the
purpose of competing with the Buyer, Infinity or the Affiliates, (iv) disclose
to any
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other person, firm, corporation or other entity, the name or address of any
Customer for the purpose of competing with the Buyer, Infinity or any of their
Affiliates, or (iv) solicit for employment or employ any person who is or was
employed by Infinity, the Buyer or any of their Affiliates at any time within
the eighteen (18) month period immediately preceding such solicitation of
employment to leave the employ of the Buyer, Infinity or such Affiliate and/or
accept employment with any Seller or with such Person, firm, association,
corporation or other entity, or in any way willfully interfere with the
relationship between the Buyer, Infinity or any of their Affiliates and any such
person or (iv) initiate or engage in any discussions regarding an acquisition
of, or Seller's employment (whether as an employee, an independent contractor or
otherwise) by, any businesses with which Infinity has entertained discussions or
has requested and received information relating to the acquisition of such
business by Infinity upon or within the one (1) year period prior to the date
hereof; PROVIDED, HOWEVER, that no owner of less than five percent (5%) of the
outstanding stock of any publicly traded corporation shall be deemed to engage
solely by reason thereof in any of its businesses. For purposes of this
Agreement, the Parties have agreed to allocate $50,000 of the Purchase Price to
the covenant not to compete contained in this SECTION 6(J). In addition to the
definition of Affiliate set forth in SECTION 1 hereof, for purposes of this
SECTION 6(J), "AFFILIATE" with respect to the Buyer shall include, without
limitation, any corporation or business entity that either controls or is
controlled by the Buyer, The ▇▇▇▇▇▇▇ Group, Inc., Delphi Partners, Inc. or
Legacy Technology, Inc. or is controlled by the shareholders that control the
Buyer (and for this definition, "control" means the ownership, either directly
or through an unbroken chain of control, of more than fifty (50%) of the equity
interests or combined voting or management rights in an entity.)
(k) CONDUCT DURING EARNED PAYOUT PERIOD. Sellers
acknowledge and agree that, during the Earned Payout Period, Buyer shall be
entitled to oversee the operation and management of Infinity's Business,
including the setting of goals and review of budgets and performance, all of
which shall be reasonably and legally designed and intended to maximize the
productivity, efficiency, profitability and Adjusted EBITA of Infinity. The
Sellers further agree, during the Earned Payout Period, not and not to allow
Infinity to cut staff, capital expenditures and general and administrative
expenses or take other actions that are not consistent with Infinity's prior
practices and/or prudent business practices, and Sellers agree not and not to
allow Infinity to engage in any activity in order to increase current year
profits of the business of Infinity at the expense of the longer term growth of
the business of Infinity. During the Earned Payout Period, the Buyer agrees to
(i) maintain separate books and records for Infinity; (ii) maintain Infinity as
a separate entity and not to sell or otherwise dispose of any of its assets
except in the Ordinary Course of Business or sell or otherwise dispose of any of
its stock; (iii) cause Infinity to be operated essentially as it was prior to
the sale of the Infinity Shares except in so far as the prior practices of
Infinity were imprudent or unreasonable or its productivity efficiency and
profitability can be improved and increased through economies of scale, Buyer's
experience or otherwise; and (iv) not unreasonably change, except with the
consent of ▇▇▇▇▇ ▇. ▇▇▇▇, and except in the Ordinary Course of Business, (A) the
prices charged for Infinity's services, (B) the level of compensation of
Infinity's consultants and full-time corporate employees or (C) the level
Infinity's general and administrative expenses, unless the prior business
practices were unreasonable or imprudent and/or unless the changes are
reasonably necessary to support the growth of Infinity's business. Buyer,
Infinity and the Sellers recognize and acknowledge that the relationship that
will exist between Buyer, Infinity and the Sellers upon the consummation of the
transactions contemplated herein will be based on a high degree of mutual trust
and confidence among the parties, and each of Buyer and the Sellers agree that
at all times following the Closing that each will act with respect to its
dealings with Infinity and its operations in such a way as to promote, to the
extent reasonably possible, the successful operation and growth of Infinity.
7. CONDITIONS TO OBLIGATIONS TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation
of the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction or waiver of the following
conditions:
(i) the representations and warranties set forth in
SECTION 3(A) and SECTION 4 above shall be true and correct in
all material respects at and as of the Closing Date;
(ii) the Sellers shall have performed and complied
with all of their covenants hereunder in all Material respects
through the Closing;
(iii) Infinity (A) will have given (and the Sellers
will have caused Infinity to give) any notices to third
parties, and Infinity will have used (and Sellers will have
caused Infinity to use) its reasonable best efforts to obtain
third-party consents, that the Buyer may reasonably request in
connection with the matters pertaining to Infinity disclosed
or required to be disclosed in the Disclosure Schedule; (B)
will have procured all necessary third party consents required
to consummate this Agreement and the transactions contemplated
hereby; and (C) will have taken any additional action (and the
Sellers will cause Infinity to take any additional action)
that may be necessary, proper, or advisable in connection with
any other notices to, filings with, and authorizations,
consents, and approvals of
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governments, governmental agencies, and third parties that he,
she or it may be required to give, make, or obtain to
consummate this Agreement and the transactions contemplated
hereby;
(iv) no action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, or (C)
affect adversely the right of the Buyer to own, operate, or
control Infinity Shares or Infinity (and no such judgment,
order, decree, stipulation, injunction, or charge shall be in
effect);
(v) the Sellers shall have delivered to the Buyer a
certificate (without qualification as to knowledge or
Materiality or otherwise) to the effect that each of the
conditions specified above in SECTION 7(A)(I)-(IV) is
satisfied in all respects;
(vi) the acquisition by the Buyer of Infinity Shares
shall represent one hundred percent (100%) of the issued and
outstanding capital stock of Infinity and all of such Infinity
Shares shall be free and clear of any Security Interests or
other liens, claims or encumbrances of any nature whatsoever;
(vii) the Parties and Infinity shall have received all
other authorizations, consents and approvals of governments
and governmental agencies set forth herein and in the
Disclosure Schedule;
(viii) the Buyer and Infinity shall have received from
each Seller and from at least 90% of the other persons listed
on ANNEX IV an executed compliance agreement in the form
attached hereto as EXHIBIT D and the initial salary and bonus
for each such person listed on ANNEX IV (other than Sellers)
and the initial salary for each Seller;
(ix) the Buyer shall have received from each Seller an
executed Equity Purchase Agreement in the form attached hereto
as EXHIBIT A with respect to the Buyer's Shares issued to each
Seller on the Closing Date;
(x) Sellers shall have caused each person listed on
ANNEX VI to execute a Stock Option Agreement in the form
attached hereto as EXHIBIT B for the issuance to each such
person listed on ANNEX VI of (A) Buyer's Options in the amount
set forth next to such person's name on Closing Date and (B)
potential additional Buyer's Options in accordance with the
terms of EXHIBIT B;
(xi) the Buyer shall have received from counsel to the
Sellers an opinion with respect to the matters set forth in
EXHIBIT E attached hereto, addressed to the Buyer and dated as
of the Closing Date;
(xii) the Buyer shall have received the resignations,
effective as of the Closing, of each director of Infinity
prior to the Closing;
(xiii) the Buyer shall be satisfied in its sole
discretion with the results of its continuing legal, financial
and business due diligence investigations of Infinity, all of
which shall be final and completed to Buyer's satisfaction not
later than two (2) days prior to Closing;
(xiv) no material adverse change shall have occurred
in Infinity's Business or its future prospects;
(xv) Sellers shall have caused Infinity to cancel each
outstanding phantom stock, deferred bonus or option plan, if
any, all at no cost to the Buyer or Infinity;
(xvi) all liens and Security Interests securing debts
of Infinity which have been paid in full prior to or at the
Closing shall have been fully released of record to the
satisfaction of the Buyer and all Uniform Commercial Code
financing statements covering such debts shall have been
terminated;
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(xvii) no unsatisfied liens for the failure to pay
Taxes of any nature whatsoever shall exist against Infinity,
or against or in any way affecting any Infinity Share;
(xviii) Buyer shall be satisfied that it can obtain a
full stepped-up basis in the assets of Infinity pursuant to
the Section 338(h)(10) election and any similar state law
election made pursuant to SECTION 6(G) above;
(xix) all obligations of Infinity which are not being
retired or satisfied by the Sellers prior to or at the Closing
shall have been modified in such a manner that their
covenants, repayment schedules, and other provisions will be
upon terms reasonably satisfactory to Buyer.
(xx) the Sellers shall and Infinity shall have caused
all of Infinity's officers, directors and/or other senior
employees of Infinity to, have repaid in full all debts and
other obligations, if any, owed to Infinity;
(xxi) the Buyer shall have received from Infinity the
Financial Statements;
(xxii) all appropriate corporate and shareholder
authorizations of Infinity shall have been obtained;
(xxiii) since the Most Recent Balance Sheet, Infinity
shall have made no dividend, consulting or other payment to
the Sellers, except for employment salaries (not to exceed
current compensation) as set forth in SECTION 4(M) of the
Disclosure Schedule and bonuses as set forth on SECTION 4(M)
of the Disclosure Schedule; PROVIDED, HOWEVER, that no payment
shall be made for any cash to accrual tax liability as a
result of the transactions contemplated hereby;
(xxiv) except as set forth on the Disclosure Schedule,
since the Most Recent Balance Sheet, Infinity shall not have
transferred, conveyed, disposed of and/or sold any of its
Material assets, except in the Ordinary Course of Business;
and
(xxv) all Intellectual Property created or developed
by any Seller and any other current employee of Infinity that
has been used historically by Infinity or is being used
currently by Infinity shall be one hundred percent (100%)
owned by Infinity as of the Closing Date.
The Buyer may waive any condition specified in this SECTION 7(A) if it
executes a writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers to consummate the transactions to be performed by
them in connection with the Closing is subject to satisfaction or waiver of the
following conditions:
(i) the representations and warranties set forth in
SECTION 3(B) above shall be true and correct in all Material
respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all Material respects
through the Closing;
(iii) no action, suit or proceeding shall be pending
or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction wherein an unfavorable judgment, order, decree,
stipulation, injunction, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such judgment, order, decree, stipulation, injunction, or
charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate (without qualification as to knowledge or
Materiality or otherwise) to the effect that each of the
conditions specified above in SECTION 7(B)(I)-(III) is
satisfied in all respects;
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(v) the Parties and Infinity shall have received all
other authorizations, consents, and approvals of governments
and governmental agencies set forth herein and in the
Disclosure Schedule;
(vi) each Seller and each of the other persons listed
on ANNEX IV who have executed a compliance agreement in the
form attached hereto as EXHIBIT D shall have received from
Buyer an executed compliance agreement in the form attached
hereto as EXHIBIT D and pursuant to the terms described in
ANNEX IV with respect to the initial salary and bonus for each
such person listed on ANNEX IV (other than Sellers) and with
respect to the initial salary for each Seller;
(vii) each of the Sellers who has executed an Equity
Purchase Agreement in the form of EXHIBIT A attached hereto
shall have received from Buyer a fully executed Equity
Purchase Agreement in the form of EXHIBIT A attached hereto
for the issuance of Buyer's Shares to each Seller on the
Closing Date;
(viii) each person listed on ANNEX VI receiving
Buyer's Options under this Agreement and who has executed a
Stock Option Agreement in the form attached hereto as EXHIBIT
B shall have received from Buyer an executed Stock Option
Agreement in the form attached hereto as EXHIBIT B for the
issuance to each such person listed on ANNEX VI of (A) Buyer's
Options in the amount set forth next to such person's name on
Closing Date and (B) potential additional Buyer's Options in
accordance with the terms of EXHIBIT B;
(ix) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated
hereby will be reasonably satisfactory in form and substance
to the Sellers.
The Sellers may waive any condition specified in this SECTION 7(B) if
they execute a writing so stating at or prior to the Closing. If the Closing
occurs, Sellers shall be deemed to have waived any unsatisfied condition to
their obligations hereunder.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL. All of the representations and warranties of
the Sellers contained in SECTION 4 above (other than the representations and
warranties of the Sellers contained in SECTION 4(H) above) shall survive the
Closing hereunder (even if the Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of the Closing) and continue
in full force and effect for a period of two (2) years thereafter. The other
representations, warranties, and covenants of the Parties contained in this
Agreement (including the representations and warranties of the Sellers contained
in SECTION 4(H) above) shall survive the Closing (even if the damaged Party knew
or had reason to know of any misrepresentation or breach of warranty or covenant
at the time of the Closing) and continue in full force and effect for the
applicable statute of limitations, except as otherwise provided elsewhere in
this Agreement.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Sellers breach any of their
representations, warranties, agreements, and covenants
contained herein, and provided that the particular
representation, warranty, agreement, or covenant survives the
Closing and that the Buyer makes a written claim for
indemnification against the Sellers pursuant to SECTION 10(H)
below within the applicable survival period, then the Sellers
agree to jointly and severally indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may
suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyer
may suffer after the end of the applicable survival period
resulting from, arising out of, relating to, in the nature of,
or caused by the breach; PROVIDED, HOWEVER, that the Sellers
shall not have any obligation to indemnify the Buyer from and
against any Adverse Consequences resulting from, arising out
of, relating to, in the nature of, or caused by the breach of
any representation or warranty of the Sellers contained in
SECTION 4 above (i) until the Buyer has suffered aggregate
losses by reason of all such breaches in excess of a $35,000
threshold (at which point the Sellers will be obligated to
indemnify the Buyer from and against all such aggregate losses
including losses relating back to the first dollar) or (ii) in
excess of the Purchase Price (after which point Sellers shall
have no obligation to indemnify Buyer from and against further
such Adverse Consequences); PROVIDED, FURTHER, HOWEVER, that
the limitations set forth in (i) and (ii) above specifically
shall not apply to the liability of Sellers with respect to
Adverse Consequences resulting from or attributable to
intentional fraud or any willful misconduct by the Sellers or
to any breaches of the
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representations and warranties contained in SECTION 4(G),
SECTION 4(H) and SECTION 4(N) hereof or to any breach on or
prior to the date hereof of that certain agreement dated March
2, 1998 between American Electric Power Service Corporation
and Infinity.
(ii) In the event any Seller breaches any of its
Several representations, warranties, and covenants contained
herein, and provided that the particular representation,
warranty, or covenant survives the Closing and that the Buyer
makes a written claim for indemnification against such Seller
pursuant to SECTION 10(H) below within the applicable survival
period, then the Seller agrees to indemnify the Buyer from and
against the entirety of any Adverse Consequences the Buyer may
suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Buyer
may suffer after the end of the applicable survival period)
resulting from, arising out of, relating to, in the nature of,
or caused by the breach.
(iii) The Sellers agree to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any Liability of Infinity arising
under Reg. ss.1.1502-6 (because Infinity once was a member of
an Affiliated Group during any part of any consolidated return
year within any part of which consolidated return year any
corporation other than Infinity also was a member of the
Affiliated Group).
(iv) The Sellers agree to indemnify the Buyer from and
against the entirety of any sales, use, recording or other
transfer Taxes which may become due and owing by reason of the
transactions contemplated by this Agreement.
(v) The Sellers agree to indemnify the Buyer from and
against the entirety of any brokerage fees or investment
banking commissions due by Sellers or Infinity by reason of
the transactions contemplated by this Agreement.
(vi) The Sellers shall be liable for, and hereby
indemnify, the Buyer for all Taxes imposed on Infinity with
respect to any taxable year ended on or before the Closing
Date or with respect to any period beginning before and ending
after the Closing Date, for the portions of such taxable year
or period ending prior to the Closing Date, including without
limitation any Taxes incurred in connection with any audit by
any governmental authority for any such period ending on or
prior to the Closing Date; PROVIDED, HOWEVER, that such
indemnity shall be made only to the extent such Taxes are in
excess of the reserve, if any, for such Tax Liability used to
determine the Net Cash of Infinity at Closing. The Parties
hereto shall, to the extent permitted or not prohibited by
applicable law, elect with the relevant taxing authority, if
required or necessary, to terminate the taxable year of
Infinity as of the Closing Date. In any case where applicable
law does not permit Infinity to treat such date as the end of
a taxable year or period, then whenever it is necessary to
determine the liability for income Taxes of Infinity, for a
portion of a taxable year or period, such determination shall
(unless otherwise agree to in writing by the Buyer and the
Sellers) be determined by a closing of Infinity's books as of
the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned based upon
the number of days during such taxable year or period the
Sellers and Buyer owned the stock in Infinity.
(vii) The Sellers shall indemnify the Buyer from and
against the entirety of all Taxes created from and the
conversion by Infinity to the accrual basis of tax accounting
from the cash basis of tax accounting immediately prior to the
Closing.
(viii) The Sellers shall indemnify the Buyer from and
against the entirety of all Adverse Consequences as a result
of any noncompliance by Infinity prior to the Closing with any
wage or employment laws.
(ix) The Parties shall make appropriate adjustments
for tax benefits in determining the liability of the Sellers
under this SECTION 8.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLERS.
In the event the Buyer breaches any of its representations, warranties, and
covenants contained herein, and provided that the particular representation,
warranty, or covenant survives the Closing and that the Sellers make a written
claim for indemnification against the Buyer pursuant to SECTION 10(H) below
within the applicable survival period, then the Buyer agrees to indemnify the
Sellers from and against the entirety of any Adverse Consequences the
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Sellers may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Sellers may suffer after the end of the
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach.
(d) MATTERS INVOLVING THIRD PARTIES. If any third party
shall notify any Party (the "INDEMNIFIED PARTY") with respect to any matter
which may give rise to a claim for indemnification against any other Party (the
"INDEMNIFYING PARTY") under this SECTION 8, then the Indemnified Party shall
notify in writing each Indemnifying Party thereof promptly; PROVIDED, HOWEVER,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is damaged and materially prejudiced from adequately defending such claim. In
the event any Indemnifying Party notifies the Indemnified Party within thirty
(30) days after the Indemnified Party has given notice of the matter that the
Indemnifying party is assuming the defense thereof, (A) the Indemnifying Party
will defend the Indemnified Party against the matter with counsel of its choice
reasonably satisfactory to the Indemnified Party, (B) the Indemnified Party may
retain separate co-counsel at its sole cost and expense (except that the
Indemnifying Party will be responsible for the fees and expenses of the separate
co-counsel to the extent the Indemnified Party reasonably concludes that the
counsel the Indemnifying Party has selected has a conflict of interest), (C) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement or compromise with respect to the matter without the written
consent of the Indemnifying Party (not to be withheld unreasonably), and (D) the
Indemnifying Party will not consent to the entry of any judgment with respect to
the matter, or enter into any settlement or compromise which does not include a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all Liability with respect thereto, without the written
consent of the Indemnified Party (not to be withheld unreasonably). In the event
no Indemnifying Party notifies in writing the Indemnified Party within twenty
(20) days after the Indemnified Party has given notice of the matter that the
Indemnifying Party is assuming the defense thereof, however, the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate. At any time after
commencement of any such action, any Indemnifying Party may request an
Indemnified Party to accept a bona fide offer from the other Party(ies) to the
action for a monetary settlement payable solely by such Indemnifying Party
(which does not burden or restrict the Indemnified Party nor otherwise prejudice
him or her) whereupon such action shall be taken unless the Indemnified Party
determines that the dispute should be continued, the Indemnifying Party shall be
liable for indemnity hereunder only to the extent of the lesser of (i) the
amount of the settlement offer or (ii) the amount for which the Indemnified
Party may be liable with respect to such action. In addition, the Party
controlling the defense of any third party claim shall deliver, or cause to be
delivered, to the other Party copies of all correspondence, pleadings, motions,
briefs, appeals or other written statements relating to or submitted in
connection with the defense of the third party claim, and timely notices of, and
the right to participate in (as an observer) any hearing or other court
proceeding relating to the third party claim.
(e) EXCLUSIVE REMEDY. The Parties acknowledge and agree
that the foregoing indemnification provisions in this SECTION 8 shall be the
exclusive remedy of the Parties for any breach of the representations and
warranties of the Parties contained in SECTION 3 or SECTION 4 of this Agreement.
(f) PAYMENT; GENERAL RIGHT OF OFFSET. The Indemnifying
Parties shall promptly pay to the Indemnified Party for which such Indemnified
Party is entitled to indemnity hereunder in cash the amount of any Adverse
Consequences to which such Indemnified Party is entitled to by reason of the
provisions of this Agreement, including without limitation SECTION 8(H) and
SECTION 9. Notwithstanding the foregoing, in connection with the indemnification
of Buyer pursuant to SECTION 8(B)(I) above, Buyer shall have the option to first
seek indemnification payments through offset against Stock Portion of the
Purchase Price or Earned Payout Amount payable to Sellers, after an
indemnification claim has been made therefor, for the amount of any Adverse
Consequences or any other payments to which Buyer is entitled to by reason of
the provisions of this Agreement, including without limitation SECTION 8(B) and
SECTION 9.
(g) OTHER INDEMNIFICATION PROVISIONS. Except as provided
in Section 8(f) above, the foregoing indemnification provisions are in addition
to, and not in derogation of, any statutory or common law remedy any Party may
have for breach of representation, warranty, or covenant.
(h) ARBITRATION WITH RESPECT TO CERTAIN INDEMNIFICATION
MATTERS. THE PARTIES AGREE TO SUBMIT TO ARBITRATION, IN ACCORDANCE WITH THESE
PROVISIONS, ANY DISPUTED CLAIM OR CONTROVERSY ARISING FROM OR RELATED TO THE
ALLEGED BREACH OF THIS AGREEMENT OR ANY DISPUTED INDEMNIFICATION CLAIM MADE
PURSUANT TO THIS SECTION 8. THE PARTIES FURTHER AGREE THAT THE ARBITRATION
PROCESS AGREED UPON HEREIN SHALL BE THE EXCLUSIVE MEANS FOR RESOLVING ALL
DISPUTES MADE SUBJECT TO ARBITRATION HEREIN, BUT THAT NO ARBITRATOR SHALL HAVE
AUTHORITY TO EXPAND THE SCOPE OF THESE ARBITRATION PROVISIONS. ANY ARBITRATION
HEREUNDER SHALL BE CONDUCTED UNDER THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (AAA). EITHER PARTY MAY INVOKE ARBITRATION
PROCEDURES HEREIN BY WRITTEN NOTICE FOR ARBITRATION CONTAINING A STATEMENT OF
THE MATTER TO BE ARBITRATED. THE PARTIES SHALL THEN HAVE FOURTEEN (14) DAYS IN
WHICH THEY MAY IDENTIFY A MUTUALLY AGREEABLE, NEUTRAL ARBITRATOR. AFTER THE
FOURTEEN (14) DAY PERIOD HAS EXPIRED, THE PARTIES SHALL PREPARE AND SUBMIT TO
THE AAA A JOINT SUBMISSION, WITH EACH PARTY TO CONTRIBUTE HALF OF THE
APPROPRIATE
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ADMINISTRATIVE FEE. IN THE EVENT THE PARTIES CANNOT AGREE UPON A NEUTRAL
ARBITRATOR WITHIN FOURTEEN (14) DAYS AFTER WRITTEN NOTICE FOR ARBITRATION IS
RECEIVED, THEIR JOINT SUBMISSION TO THE AAA SHALL REQUEST ARBITRATOR WHO ARE
PRACTICING ATTORNEYS WITH PROFESSIONAL EXPERIENCE IN THE FIELD OF CORPORATE LAW,
AND THE PARTIES SHALL ATTEMPT TO SELECT AN ARBITRATOR FROM THE PANEL ACCORDING
TO AAA PROCEDURES. UNLESS OTHERWISE AGREED BY THE PARTIES, THE ARBITRATION
HEARING SHALL TAKE PLACE IN THE MIAMI, FLORIDA METROPOLITAN AREA, AT A PLACE
DESIGNATED BY THE AAA. ALL ARBITRATION PROCEDURES HEREUNDER SHALL BE
CONFIDENTIAL. EACH PARTY SHALL BE RESPONSIBLE FOR ITS COSTS INCURRED IN ANY
ARBITRATION, AND THE ARBITRATOR SHALL NOT HAVE AUTHORITY TO INCLUDE ALL OR ANY
PORTION OF SAID COSTS IN AN AWARD REGARDLESS OF WHICH PARTY PREVAILS. THE
ARBITRATOR MAY INCLUDE EQUITABLE RELIEF. ANY ARBITRATION AWARDED SHALL BE
ACCOMPANIED BY A WRITTEN STATEMENT CONTAINING A SUMMARY OF THE ISSUES IN
CONTROVERSY, A DESCRIPTION OF THE AWARD, AND AN EXPLANATION OF THE REASONS FOR
THE AWARD. THE ARBITRATION WILL BE SUBJECT TO THE FOLLOWING CONDITIONS:
(i) THAT EACH PARTY SHALL BE ENTITLED TO DISCOVERY
PURSUANT TO THE FEDERAL RULES OF CIVIL PROCEDURE AND FEDERAL
RULES OF EVIDENCE;
(ii) THAT EVIDENCE SHALL BE COMPETENT ONLY IF IT IS
ADMISSIBLE IN EVIDENCE, UNDER THE FEDERAL RULES OF CIVIL
PROCEDURE AND FEDERAL RULES OF EVIDENCE; AND
(i) THAT THE LOSING PARTY SHALL PAY THE REASONABLE LEGAL
FEES AND COSTS OF THE PREVAILING PARTY, AS SHALL BE DETERMINED BY THE
ARBITRATOR.
9. ARBITRATION AGREEMENT FOR ACCOUNTING DISPUTES.
(a) GENERAL. Notwithstanding anything stated within the
context of this Agreement to the contrary, the parties hereby agree that all
questions, issues and/or disputes related to accounting determinations arising
under this Agreement shall be resolved as set forth in this SECTION 9.
(b) DEMAND FOR ARBITRATION. If a dispute should arise
under this contract, either party may within thirty (30) days make a demand for
arbitration by filing a demand in writing with the other.
(c) APPOINTMENT OF ARBITRATORS. The parties may agree upon
one arbitrator, but in the event that the parties do not agree, the parties
shall, respectively nominate one (1) "Big Five" accounting firm (other than KPMG
Peat Marwick) not presently employed by the parties. The two (2) "Big Five"
accounting firms so nominated shall then appoint a third "Big Five" accounting
firm (other than KPMG Peat Marwick) to serve on the panel consisting of the
three (3) nominated "Big Five" accounting firms.
(d) ARBITRATION AWARD. The decision of any two of the "Big
Five" accounting firms nominated to the panel shall be binding and conclusive
upon the parties. If the panel of arbitrators fails to reach agreement within
sixty (60) days of appointment of the third panelist, three (3) new arbitrators
shall be nominated as set forth in SECTION 9(C). The process shall be repeated
until a decision is finally reached by two (2) of the three (3) arbitrators
nominated to the panel.
10. MISCELLANEOUS.
(a) THE SELLERS.
(i) When any particular Seller (as opposed to the
Sellers as a group) makes a representation, warranty, or
covenant herein, then that representation, warranty, or
covenant will be referred to herein as the "SEVERAL"
obligation of that Seller. This means that the particular
Seller making the representation, warranty, or covenant will
be solely responsible for any Adverse Consequences the Buyer
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by any breach thereof. The
representations and warranties of each of the Sellers in
SECTION 3(A) above concerning the transaction is an example of
Several obligations.
(ii) When the Sellers as a group make a
representation, warranty, or covenant herein, then that
representation, warranty, or covenant will be referred to
herein as the "JOINT AND SEVERAL" obligation of the Sellers.
This means each Seller will be responsible for the entirety of
any Adverse Consequences the Buyer may suffer resulting from,
arising out of, relating to, in the nature of, or caused by
any breach thereof. The representations and warranties of the
Sellers in SECTION 4 above concerning Infinity are examples of
Joint and Several obligations.
(b) PRESS RELEASES AND ANNOUNCEMENTS. Except as may be
required by applicable securities laws or stock exchange requirements, no Party
shall issue any press release or announcement relating to the subject matter of
this Agreement prior to, at or about the Closing without the prior written
approval of the Buyer and the Sellers, which written approval will not be
unreasonably withheld; PROVIDED, HOWEVER, that any Party may
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make any public disclosure it believes in good faith is required by law or
regulation (in which case the disclosing Party will advise the other Parties
prior to making the disclosure).
(c) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the Parties and their
respective successors and permitted assigns.
(d) ENTIRE AGREEMENT. This Agreement (including the
documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, that may have related in any way to the
subject matter hereof; PROVIDED, HOWEVER, that unless and until the consummation
of the purchase and sale transaction contemplated hereunder occurs, the
Confidentiality Agreement attached hereto as EXHIBIT F shall remain in full
force and effect.
(e) SUCCESSION AND ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of his, her or its rights, interests, or obligations hereunder
without the prior written approval of the Buyer and the Sellers; PROVIDED,
HOWEVER, that the Buyer may (i) assign any or all of its rights and interests
hereunder to a wholly-owned Subsidiary (in any or all of which cases the Buyer
nonetheless shall remain liable and responsible for the performance of all of
its obligations hereunder).
(f) FACSIMILE/COUNTERPARTS. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument. A facsimile,
telecopy or other reproduction of this Agreement may be executed by one or more
parties hereto, and an executed copy of this Agreement may be delivered by one
or more parties hereto by facsimile or similar instantaneous electronic
transmission device pursuant to which the signature of or on behalf of such
party can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any Party hereto, all
parties hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(g) DESCRIPTIVE HEADING. The descriptive section headings
contained in this Agreement are inserted for convenience or reference only and
shall not control or affect in any way the meaning, interpretation, or
construction of any of the provisions of this Agreement.
(h) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to Infinity or the Sellers:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇
c/o Infinity Consulting Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Efron & Efron, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ Efron, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer:
AnswerThink Consulting Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
(i) GOVERNING LAW. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT HERETO WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE
(WHETHER OF THE STATE OF FLORIDA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF FLORIDA.
(j) AMENDMENTS AND WAIVERS. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by the Buyer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(l) EXPENSES. Each of the Parties and Infinity will bear
his, her or its own costs and expenses (including legal fees and expenses and
investment banking fees) incurred in connection with this Agreement and the
transactions contemplated hereby. The Sellers acknowledge and agree that
Infinity has not borne or will bear any of the Sellers' costs and expenses
(including any of its legal fees and expenses and investment banking fees) in
connection with this Agreement or any of the transactions contemplated hereby.
(m) CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant relating to the
same subject matter as any other representation, warranty or covenant
(regardless of the relative levels of specificity) which the Party has not
breached, it shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
(n) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(o) SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
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[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
ANSWERTHINK CONSULTING GROUP, INC.
By:
----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
INFINITY:
INFINITY CONSULTING GROUP, INC.
By:
----------------------------------------
Name:
Title:
SELLERS:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
IN ACCORDANCE WITH SEC RULES, CERTAIN SCHEDULES AND
EXHIBITS TO THE AGREEMENT, WHICH ARE LISTED IN THE
TABLE OF CONTENTS TO THE AGREEMENT, ARE OMITTED. SUCH
SCHEDULES AND EXHIBITS WILL BE FURNISHED
SUPPLEMENTALLY TO THE SEC UPON REQUEST.)
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