Exhibit 10.2
ASSET PURCHASE AGREEMENT
by and between
JUDGE, INC. and
▇▇▇▇▇ ASSOCIATES OF ATLANTA, INC.
THIS ASSET PURCHASE AGREEMENT is dated as of March 31, 1998 by and
between ▇▇▇▇▇ Associates of Atlanta, Inc. ("Seller") and Judge, Inc., a
Pennsylvania corporation ("Buyer").
BACKGROUND
The parties hereto desire to provide for the acquisition by Buyer of
certain assets of Seller relating to, used, or held for use in its permanent and
contract placement businesses (the "Business"), but excluding certain assets and
liabilities, all on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1. ACQUISITION OF ASSETS.
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, at the Closing, Seller shall sell, convey, assign, transfer and
deliver to Buyer all of Seller's right, title and interest in and to all of the
tangible and intangible properties and assets owned or held by Seller and
primarily relating to or used or held for use in connection with the Business,
free and clear of all liens (except as set forth in the Disclosure Statement
pursuant to Section 4.3 hereof), including, without limitation, the following
assets owned or held by Seller and each of the assets listed or required to be
listed on the Disclosure Statement pursuant to Section 4.12 hereof, but
excluding the Excluded Assets (as herein defined) (the "Purchased Assets"):
(a) Cash of $50,000;
(b) Accounts Receivable;
(c) All supplies, machinery, furniture, equipment and other
personal property, including those set forth on Schedule 1.1(c)
hereto;
(d) All inventions, whether or not patented, know-how, domestic
and foreign letters patent, patent applications, patent
licenses, software licenses and know-how licenses (including
but not limited to the names "▇▇▇▇▇ Associates of Atlanta,
Inc.", and trade secrets (including but not limited to all
results of research and development), trade names, trademarks,
service-marks, copyrights, trademark registrations and
applications, service ▇▇▇▇ registrations and applications,
copyright registrations and applications and rights-to-use
(including the ▇▇▇▇▇.▇▇▇ website) (collectively "Intellectual
Property") as set forth on Schedule 1.1(d) hereto;
(e) All right, title and interest in, to and under all purchase
orders, sales agreements, equipment leases, distribution
agreements, licensing agreements and other contracts,
agreements and commitments of Seller identified on Schedule
1.1(e), subject in each case to the terms of such contracts
("Contracts")
(f) Copies of all books and records predominantly relating to
the Business and the Purchased Assets (including such books and
records as are contained in computerized storage media),
including all inventory, purchasing, accounting, sales, export,
import, manufacturing, marketing, banking and shipping records
and all files, contractor, consultant, customer/client and
supplier lists, records, literature and correspondence, and
marketing materials excluding tax returns;
(g) The leases (the "Leases") related to the facilities at
Norcross, Georgia; Glastonbury, Connecticut; Arlington, Texas;
and Dekalb, Illinois. (the "Facilities");
(h) Any other assets of Seller's Business including those set
forth on Schedule 1.1(h) which are of a nature not customarily
reflected in the books and records of a business, such as
assets which have been written off for accounting purposes but
which are still used by or of value to Seller;
(i) All Authorizations (as defined in Section 4.5(b))
associated with the Seller's Business and its operations;
(j) All intangible assets and goodwill associated with the
Seller's Business and its operations;
Exhibit 10.2 (cont.)
(k) Any other assets of Seller which are located at the
Facilities in including those set forth on Schedule 1.1(k); and
(l) Work in process, including placements completed where the
individual has agreed to work but has not yet started
employment.
1.2 Excluded Assets. Notwithstanding anything to the contrary in
Section 1.1 of this Agreement, the following rights, properties and assets shall
not be included in the Purchased Assets (the "Excluded Assets"):
(a) All employee records (excluding employment and non-competition
agreements);
(b) Seller's Benefit Plan(s) and all obligations related thereto;
(c) All ownership interests in real property, in each case together
with all buildings thereon;
(d) Seller's tax returns and records;
(e) Cash to the extent it exceeds $50,000.00;
(f) Marketable securities
(g) Employee advances; and
(h) Car lease
1.3 Liabilities to be Assumed by Buyer. Subject to the terms and
conditions of this Agreement, at the Closing, Buyer shall assume and thereafter
in due course pay and fully satisfy all liabilities, obligations and related
expenses arising after the Closing pursuant to the terms of the Contracts, trade
accounts payables related to the operation of the business prior to Closing in
an amount not exceeding the amount accrued therefor on the Closing Statement,
accrued compensation and accrued expenses recorded on Seller's books as of the
Closing as set forth on Schedule 1.3(a) hereof which includes accrued
compensation and accrued expenses.
Except as otherwise specifically provided for in this Section 1.3,
Buyer shall not assume, or in any way be liable or responsible for, any
liabilities, obligations or debts of Seller of any type or nature, including,
without limitation, any related unfunded pension liabilities, any medical, life,
disability insurance liabilities, unfunded pension liabilities, any ▇▇▇▇▇▇▇
compensation claims, any local, state, federal, payroll or other tax
liabilities, liabilities relating to claims for damages based upon the breach by
Seller of any federal, state or local environmental or occupational health and
safety laws or regulations, liabilities related to products liability, tort
claims or other litigation, any undisclosed liabilities, liabilities incurred
for the costs and expenses of negotiating and consummating the transactions
contemplated by this Agreement, liabilities incurred in connection with the
termination of any of the Contracts to be transferred hereunder, any liabilities
related to the classification of independent contractors, and tort claims
asserted against Seller or claims against Seller for breach of contract which
are based on acts or omissions of Seller occurring on, before or after the
Closing.
SECTION 2. PURCHASE PRICE AND PAYMENT.
2.1 Purchase Price.
(a) The total consideration for the assets acquired would be a
minimum of $1,446,402, plus the assumption of the specified liabilities, of
which $696,402 would be paid to Seller at Closing by wire transfer.
(b) Shares of Judge's unregistered common stock in the amount
of 50,000 shares would be delivered to Seller at Closing, bearing the
appropriate restrictive legends. If the 30-day average stock price of Judge's
stock, as reported on the Nasdaq Stock Market, as of the first anniversary of
the Closing is not at least $15.00 per share, Buyer shall pay Seller an amount
equal to the difference between $15.00 and the 30-day average closing price of
the shares for the period ending on the Anniversary Date times 50,000.
Obligation to make payment pursuant to this Section 2.2(b)
shall be evidenced by the Buyer's subordinated promissory note in the form
attached as Exhibit ___ hereof (the "Promissory Note").
(c) It is understood by the parties that the total purchase
price consideration of $1,446,402 was determined on an operating income (plus
certain discretionary spending items) which totals for 1997 $258,286 ("Operating
Income") multiple of 5.6.
2.2 Closing Adjustments.
(a) The following items shall be apportioned and prorated, on
a daily basis, between the Seller and the Buyer as of 12:00 midnight at the
commencement of the Closing Date:
(i) Rent for the Facilities.
(ii) All items for which payment has been received by the
Seller and for which services have not been rendered;
(iii) Supplies and equipment delivered after Closing; and
Exhibit 10.2 (cont.)
(iv) All commissions payable to staff employees shall be
attributable to the sale to which they relate. The party who receives the
revenue associated with the sale will be responsible to pay the commission.
(b) At the Closing, the Seller shall present to the Buyer a
Schedule of the adjustments in Section 2.2(a) showing the computation thereof
and the purchase price shall be appropriately adjusted.
2.3 Post Closing Purchase Price Adjustment.
(a) Prior to the Closing, Buyer and Seller(and their
respective affiliates) shall promptly prepare or cause to be prepared, in
accordance with United States generally accepted accounting principles ("GAAP")
consistently applied, a balance sheet of Company as of the close of business on
March 31, 1998. Such balance sheet prepared and finally determined as provided
in this Section 2.3 is referred to herein as the "Closing Statement." At
closing, Buyer shall deliver to Seller a final draft of the Closing Statement,
together with its calculation of Net Working Capital (as herein defined) as of
the close of business on March 31, 1998.
(b) If the Net Working Capital as of the Closing Date as
conclusively determined as provided herein (such conclusive determination is
referred to herein as "Certified Net Working Capital"), is less than $65,000.00,
then Seller shall pay, or cause to be paid to Buyer, the amount of such
deficiency. If the Certified Net Working Capital is more than $65,000.00, then
buyer shall pay or cause to be paid to Seller, the amount of such excess. Any
payment pursuant to this Section shall be made within five business days
following receipt by the parties of the final Closing Statement and the
Certified Net Working Capital calculation.
(c) For purposes of this Agreement, "Net Working Capital"
shall mean the accounts receivable, the net fixed assets plus deposits less all
current liabilities, accounts payable, accrued expenses and commissions payable.
2.4 Allocation of Consideration. The Purchase Price shall be allocated
among the Purchased Assets as set forth on Schedule 2.4 hereto. The parties
shall report this transaction for tax purposes consistently with such
allocation.
SECTION 3. CLOSING.
3.1 Time and Place of Closing. The closing of the purchase and sale of
the Purchased Assets (the "Closing") pursuant to this Agreement shall take place
as of March 31, 1998 (the "Closing Date") and shall be held at the offices of
Gomel & ▇▇▇▇▇, Atlanta, Georgia, commencing at 10:00 A.M., local time or at such
other date, time or place as may be agreed to by Buyer and Seller.
3.2 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) Seller shall deliver, or shall cause to be delivered, to
Buyer the following:
(i) A ▇▇▇▇ of sale satisfactory to Buyer transferring
title to all of the Purchased Assets in the form attached as Exhibit ___ hereto;
(ii) Such other instruments of transfer as shall be
necessary or appropriate to vest in Buyer good and marketable title to the
Purchased Assets;
(iii) Assignments satisfactory to Buyer of all Contracts
whenever necessary;
(iv) Opinion letter of Seller's Counsel; and
(v) The Leases
(b) Buyer shall deliver, or shall cause to be delivered, to
Seller the Purchase Price in accordance with Section 2.1 and Employment
Agreement to be executed by ▇▇. ▇▇▇▇▇ in substantially the form attached as
Schedule 3.2 (b) hereto.
(c) Buyer shall deliver to Seller an assumption of liabilities
agreement pursuant to which Buyer assumes at Closing those liabilities required
to be assumed by it under Section 1.3.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
Certain representations and warranties made by Seller are modified as
and to the extent set forth in the Disclosure Statement which has previously
been delivered to Buyer at least three (3) business days prior to the date
hereof (the "Disclosure Statement") or as otherwise provided herein. Seller
represents and warrants to Buyer as of the date of this Agreement as follows:
4.1 Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it. Seller is duly qualified
to do business and is in good standing in each jurisdiction in which failure to
be so qualified would have an adverse effect on the Business or the Purchased
Assets except Texas and Illinois. The Disclosure Statement set forth a complete
and accurate list with respect to the Seller of all its affiliates, each
jurisdiction where it or an affiliate is authorized to do business, and Seller's
capitalization (including the identity of each stockholder and the number of
shares held by each).
Exhibit 10.2 (cont.)
4.2 Power and Authorization. Seller has full legal right, power and
authority to enter into and perform its obligations under this Agreement, the
Employment Agreement, and the other agreements and documents required to be
delivered by it prior to or at the Closing (the "Seller Transaction Documents").
The execution, delivery and performance by Seller of this Agreement and the
Seller Transaction Documents have been duly authorized by all necessary action.
This Agreement has been duly and validly executed and delivered by Seller and
constitutes the legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms. When executed and delivered as
contemplated herein, each of the Seller Transaction Documents shall constitute
the legal, valid and binding obligation of Seller, enforceable against it in
accordance with its terms.
4.3 No Conflicts
(a) Except as described in the Disclosure Statement, the
execution, delivery and performance of this Agreement and the Seller Transaction
Documents do not and will not (with or without the passage of time or the giving
of notice):
(i) Violate or conflict with any law, regulation, permit,
license, certificate, judgment, order, award or other decision or requirement of
any arbitrator, court, government or governmental agency or instrumentality
(domestic or foreign) (collectively, "Laws"), binding upon it that is likely to
have an adverse effect on the Business;
(ii) Violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any Contract,
or give to others any rights (including rights of termination, foreclosure,
cancellation or acceleration) in or with respect to any of the Purchased Assets;
(iii) Result in, require or permit the creation or
imposition of any restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance of any nature upon or with
respect to the Purchased Assets that is likely to, either individually or in the
aggregate, have a material adverse effect on the Purchased Assets;
(iv) Cause Buyer to become subject to, or become liable
for the payment of any tax; except for Buyer's prorated portion of accrued ad
valorem taxes; or
(v) Cause any of the Purchased Assets to be reassessed or
revalued by any taxing authority or governmental body.
(b) There are no judicial, administrative or other
governmental actions, proceedings or investigations pending against Seller or,
to the knowledge of Seller, threatened, that question any of the transactions
contemplated by, or the validity of, this Agreement or any of the other
agreements or instruments contemplated hereby or which, if adversely determined,
is likely to have an adverse effect upon the ability of Seller to enter into or
perform its obligations under this Agreement or any such other agreements or
instruments. Seller has not received any request from any governmental agency or
instrumentality for information with respect to the transactions contemplated
hereby.
4.4 Brokers. No person, acting on behalf of Seller or its affiliates or
under the authority of any of the foregoing is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee, directly or
indirectly, from any of such parties in connection with any of the transactions
contemplated by this Agreement.
4.5 Compliance with Laws.
(a) Except as described in the Disclosure Statement: the
operation of the Business and the Purchased Assets is, and at all times during
the last two (2) years has been, in compliance in all material respects with all
applicable Laws; and Seller has not had any basis to expect, and has not
received, with respect to the Purchased Assets or the operation of the Business,
during the last two (2) years, any notice, order or other communication from any
governmental agency or instrumentality of any alleged, actual, or potential
violation of or failure to comply with any Law.
(b) All federal, foreign, state, local and other governmental
consents, licenses, permits, franchises, grants and authorizations
(collectively, "Authorizations") required for the operation of the Business as
currently conducted and as conducted during the last two years are, except as
otherwise described in the Disclosure Statement, in full force and effect
without any default or violation thereunder by Seller or by any other party
thereto and Seller has not received any notice of any claim or charge that
Seller is or within the last two years had been in violation of or in default
under any such Authorization. Except as described in the Disclosure Statement:
(i) no proceeding is pending or, to the knowledge of Seller, threatened by any
person to revoke or deny the renewal of any Authorization; and (ii) Seller has
not been notified that any such Authorization may not in the ordinary course be
renewed upon its expiration or that by virtue of the transactions contemplated
hereby any such Authorization may not be granted or renewed or transferred to
Buyer.
4.6 Securities Laws Matter
(a) Seller acknowledges that Shares and the monies earned
pursuant to Section 2 (b) through (e) herein, if any, (the "Securities")
hereunder will not be registered under the Securities Act of 1933, as amended
(the "Securities Act"), and must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from such
registration becomes or is available.
Exhibit 10.2 (cont.)
(b) Seller represents and warrants that its primary residence
is located in the State of Georgia
(c) Seller represents and warrants that:
(i) It is well versed in financial matters and has such
knowledge and experience in financial and business matters and that it is fully
capable of understanding the merits and risks of the investment being made in
the Securities and the risks involved in connection therewith;
(ii) It is acting herein for its own account and is
acquiring the Securities for investment without a view to the resale or other
distribution thereof. It is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities to
be acquired hereunder is consistent with its overall investment program and
financial position, and recognizes that there are substantial risks involved in
an investment in the Securities;
(iii) It is an "accredited investor" as defined in Rule
501(a) of Regulation D under the Securities Act; and
(iv) It has received and reviewed the prospectus related
to the initial public offering of Judge Group common shares, its annual report
on Form 10-K for the year ended December 31, 1996 and its quarterly reports on
Form 10-Q for the three months ended March 31, 1997, June 30, 1997, and
September 30, 1997.
(d) Seller acknowledges and agrees that Buyer may, if it so
desires, permit transfers, or authorize its transfer agent to permit transfers,
of the Securities only when such Securities have been registered under the
Securities Act or when the request for transfer is accompanied by satisfactory
assurance (including, if requested, an opinion of counsel acceptable to Buyer)
that the sale or proposed transfer does not require registration under the
Securities Act, and Seller agrees that a legend to such effect will be placed on
the Securities.
4.7 Litigation. Except as described in the Disclosure Statement, there
are no, and during the last two (2) years there have not been any, claims,
actions, suits, proceedings (arbitration or otherwise) or investigations
involving or affecting the Business or the Purchased Assets before or by any
court or governmental agency or instrumentality, or before an arbitrator of any
kind; and no pending claim, action, suit, proceeding or investigation, if
determined adversely, would either individually or in the aggregate have a
material adverse effect on the Business, or would result in a liability in
excess of $5,000 in the case of any single action or $10,000 in the case of all
such actions in the aggregate. To the knowledge of Seller, except as described
in the Disclosure Statement, no such claim, action, suit, proceeding or
investigation is presently threatened or contemplated and there are no facts
which could reasonably serve as a basis for any such claim, action, suit,
proceeding or investigation. There are no unsatisfied judgments, penalties or
awards against or affecting the Business.
4.8 Financial Statements.
(a) The compiled statements of income of the Business for the
12-month periods ended December 31, 1996 and 1997, compiled by ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C. independent certified public accountant, a correct
and complete copy of which is attached hereto as part of Schedule 4.8, are true
and correct in all material respects and present fairly the financial position
of the Business of the Seller and the results of its operations for the fiscal
periods then ended, in conformity with GAAP consistently applied in accordance
with past practice, and includes all adjustments which are necessary for a fair
presentation of the information shown.
(b) The compiled statements of income of the Business for the
months ended January and February, 1998, compiled by ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, P.C. independent certified public accountant, a correct and complete
copy of which is attached hereto as part of Schedule 4.8, are true and correct
in all material respects and present fairly the financial position of the
Business of the Seller and the results of its operations for the period then
ended, in conformity with GAAP applied on a consistent basis with prior year
statements of income, and includes all adjustments which are necessary for a
fair presentation of the information shown.
(c) The compiled balance sheet of the Business for months
ended January and February 1998 (the "Balance Sheet"), compiled by ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, P.C.; independent certified public accountant, a correct
and complete copy of which is attached hereto as part of Schedule 4.8, is true
and complete in all material respects and presents fairly the assets and
liability of the Business of the Seller as of such date, in conformity with GAAP
applied on a consistent basis, and includes all adjustments which are necessary
for a fair presentation of the information shown.
4.9 Accounts Receivable. All accounts receivable reflected on the
Balance Sheet and included in the Purchased Assets have been acquired or have
arisen only in the ordinary course of business, consistent with past practice,
and are not subject to defenses, set-offs or counterclaims. All of such accounts
receivable are generally due within 30 days after being accrued on the books of
the Seller and have been collected, or are collectible within 90 days after
billing, in the full aggregate recorded amounts thereof, less, in the case of
the accounts receivable reflected on the Balance Sheet, the amount of the
allowance for doubtful accounts shown on the Balance Sheet. The allowance for
such doubtful accounts on the Balance Sheet has been determined in conformity
with GAAP consistently applied with past practice. Schedule 4.9 lists the
Exhibit 10.2 (cont.)
Business's accounts receivable as of both Balance Sheets dated February 28, 1998
and March 31, 1998, in each case specifying the account debtor, the face amount
of the receivable and the age of the receivable.
4.10 Personal Property. Except as described in the Disclosure
Statement: (a) Seller has good and valid title to all of the Purchased Assets
free and clear of any restriction, mortgage, deed of trust, pledge, lien,
security interest or other charge, claim or encumbrance; and (b) all Purchased
Assets owned or leased by Seller are in the possession or under the control of
Seller are suitable for the purposes for which they are currently being used and
are of a condition, nature and quantity sufficient for the conduct of the
Business as it is presently conducted.
4.11 List of Properties, Contracts, etc. The Disclosure Statement lists
or adequately describes the following:
(a) Each vehicle, item of machinery, equipment and other
tangible asset (other than real property) included in the Purchased Assets with
a fair market or book value in excess of $1,000.00 in respect of any item, and
location thereof;
(b) Each Authorization employed in the Business;
(c) Each (i) fictitious business name, tradename, registered
and unregistered trademark, service ▇▇▇▇ and related application (the "Marks"),
(ii) patent, patent right and patent application (collectively, "Patents"),
(iii) copyright in published and material unpublished works ("Copyrights"),
computer programs and software, including Seller's website ("Software"), (iv)
proprietary formula, trade secret, formulation and invention ("Trade Secrets"),
and (v) license and permit issued or granted by any person relating to any of
the foregoing; in each case included in the Purchased Assets and owned, leased,
used or held by, granted to or licensed by Seller as either licensor or
licensee, together with all other interests therein granted by Seller to any
other person and all agreements with respect to any of the foregoing to which
Seller is a party (including secrecy and non-disclosure agreements with current
or former employees, consultants or contractors);
(d) Each contract, agreement or commitment which restricts or
purports to restrict any business activities or freedom of Seller or Seller's
officers, employees or consultants to engage in the Business or to compete with
any person;
(e) Each Contract involving the performance of services or
delivery of goods or materials by or to Seller;
(f) Each contract, agreement or commitment relating to the
Business to which Seller is a party or is otherwise bound providing for payments
(contingent or otherwise) to or by any person or entity based on sales,
purchases or profits, other than direct payments for goods, and each other
contract, agreement or commitment relating to the Business to which Seller is a
party or by which it or any Purchased Assets are otherwise bound which is
material to its business, operation, financial condition or prospects;
(g) Each form of contract, agreement or commitment used by
Seller as a standard form in the ordinary course of the Business;
(h) A summary of each policy and binder of insurance, owned
by, or maintained in the preceding two (2) years for the benefit of, or
respecting which any premiums are paid directly or indirectly by Seller relating
to the Business;
(i) Each insurance claim made or loss incurred in the
preceding two (2) years pursuant to any workers' compensation, liability or
other insurance policy for a claim in excess of $5,000.00; and
(j) Each outstanding power-of-attorney or similar power
relating to the Business granted by Seller for any purpose whatsoever.
Seller has furnished and will furnish or make available to
Buyer true and complete copies of each agreement, plan and other document
required to be disclosed on the Disclosure Statement.
4.12 Contracts. Except as described in the Disclosure Statement, each
Contract was made in the ordinary course of business, is in full force and
effect and is valid, binding and enforceable against the parties thereto in
accordance with its terms. Except as described in the Disclosure Statement,
Seller has performed all obligations required to be performed by it under each
such Contract, and no condition exists or event has occurred which with notice
or lapse of time would constitute a default or a basis for delay or
non-performance by Seller or, to the best knowledge of Seller, by any other
party thereto. Seller does not have any liabilities, whether fixed or
contingent, relating to or arising out of contracts with the United States
government or any agency thereof or any other customers, including, but not
limited to, claims arising out of pricing provisions therein. There is no
contractual or other requirement for any employee of the Business to obtain or
maintain a security clearance with respect to any governmental agency or
instrumentality. Except as described in the Disclosure Statement, each other
party to each such Contract has consented or been given sufficient notice (where
such consent or notice is necessary) that the same shall remain in full force
and effect following the Closing.
4.13 Intellectual Property. Except as otherwise described in the
Disclosure Statement, Seller is the sole owner or has the exclusive perpetual
right to use without consideration, all Intellectual Property, free and clear of
any lien, security interest, restriction, encumbrance or other adverse claim;
the Seller has not granted or licensed to any person any rights with respect to
any Intellectual Property and no other person has any rights in or to any of the
Intellectual Property (including, without limitation,
Exhibit 10.2 (cont.)
any rights to market or distribute any of the Intellectual Property); the rights
of Seller in and to any of the Intellectual Property will not be limited or
otherwise affected by reason of any of the transactions contemplated hereby; and
the Intellectual Property is sufficient for the conduct of the Business as it is
presently conducted. The Intellectual Property does not infringe and, to
Seller's knowledge, is not alleged to have infringed any trademark, copyright,
patent or other proprietary right of any person.
4.14 Customers and Suppliers. No present customer or supplier has
terminated or materially reduced, or has given notice that it intends to
terminate or materially reduce, the amount of business done with Seller with
respect to the Business. Seller is not aware of any such intention on the part
of any such customer, supplier or vendor, whether or not in connection with the
transactions contemplated hereunder. There are no and during the last two (2)
years there have not been any disputes or controversies involving, in the
aggregate, more than $5,000 between Seller and any customer, supplier or other
person regarding the quality, merchantability or safety of, or involving a claim
of breach of warranty which has not been fully resolved with respect to
warranties provided by the Business.
4.15 Taxes. All federal, state, local and foreign income, profits,
franchise, sales, use, value added, payroll, premium, occupancy, property,
severance, excise, withholding, customs, unemployment, transfer and other taxes,
including interest, additions to tax and penalties (collectively "Taxes")
relating to the Business due or properly shown to be due on any return filed by
Seller with respect to taxable periods ending on or prior to, and the portion of
any interim period up to, the date hereof have been fully and timely paid; and
there are no levies, liens, or other encumbrances relating to Taxes existing,
threatened or pending with respect to any Purchased Asset.
4.16 Employee Benefits
(a) The Disclosure Statement contains a complete and correct
list of all benefit plans, arrangements, commitments and payroll practices
(whether or not employee benefit plans ("Employee Benefit Plans") as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, without limitation, sick leave, vacation pay, severance
pay, salary continuation for disability, consulting or other compensation
arrangements, retirement, deferred compensation, bonus, incentive compensation,
stock purchase, stock option, health including hospitalization, medical and
dental, life insurance and scholarship programs maintained for the benefit of
any present or former employees of the Business.
(b) With respect to each Employee Benefit Plan required to be
listed on the Disclosure Statement: (i) each Employee Benefit Plan has been
administered in compliance with its terms, and is in compliance in all material
respects with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), and all other applicable Laws (including, without
limitation, the funding and prohibited transaction provisions of ERISA and the
Code, continuation coverage obligations pursuant to Title V of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and the Family
and Medical Leave Act of 1993 ("FMLA")); (ii) the Seller has made or provided
for all contributions required under the terms of such Plans; (iii) there are
and during the past three years there have been no inquiries, proceedings,
claims or suits pending or threatened by any governmental agency or authority or
by any participant or beneficiary against any of the Employee Benefit Plans, the
assets of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of any of such Employee Benefit Plans
with respect to the design or operation of the Employee Benefit Plans; (iv) each
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA) which is
intended to be "qualified" within the meaning of Section 401(a) of the Code is
and has from its inception been so qualified, and any trust created pursuant to
any such Employee Pension Benefit Plan is and has been from its inception exempt
from federal income tax under Section 501(a) of the Code and the IRS has issued
each such Plan a favorable determination letter which is currently applicable or
an application for such a determination letter shall be made prior to the
expiration of the applicable remedial amendment period; (v) neither Seller nor
any ERISA Affiliate is aware of any circumstance or event which would jeopardize
the tax-qualified status of any such Employee Pension Benefit Plan or the
tax-exempt status of any related trust; and (vi) Seller and its ERISA Affiliates
have, prior to the Closing, delivered to Buyer, with respect to all Employee
Benefit Plans listed in the Disclosure Statement, true, complete and correct
copies of the following: all plan documents, handbooks, manuals, collective
bargaining agreements and similar documents governing employment policies,
practices and procedures; all the most recent summary plan descriptions and any
subsequent summaries of material modifications and all other material employee
communications discussing any employee benefit; Forms 5500 (including audit
reports) as filed with the IRS for the most recent four (4) plan years; the most
recent report of the enrolled actuary for all plans requiring actuarial
valuation; all trust agreements with respect to employee benefit plans; plan
contracts with service providers and plan contracts with insurers providing
benefits for participants or liability insurance for fiduciaries and other
parties in interest or bonding; most recent annual audit and accounting of plan
assets for all funded plans; and most recent IRS determination letter for all
plans qualified under Section 401(a) of the Code. As used herein, "ERISA
Affiliate" shall refer to any trade or business, whether or not incorporated,
under common control with the Seller within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
Exhibit 10.2 (cont.)
(c) Neither Seller nor any ERISA Affiliate maintains or has
ever maintained or been obligated to contribute to a "Multiemployer Plan" (as
such term is defined by Section 4001(a)(3) of ERISA), and Seller is not bound by
any collective bargaining agreement or legally binding arrangement to maintain
or contribute to any Employee Benefit Plan.
(d) Neither Seller nor any ERISA Affiliate maintains or has
ever maintained or been obligated to contribute to a Defined Benefit Plan (as
defined in Section 3(35) of ERISA).
(e) All reports and information required to be filed with the
Department of Labor and IRS or with plan participants and their beneficiaries
with respect to each Employee Benefit Plan required to be listed on the
Disclosure Statement have been filed and all annual reports (including Form 5500
series) of such Plans were certified, if applicable, without qualification by
each Plan's accountants and actuaries. There has been no material change with
regard to any such Employee Benefit Plan since the last annual report.
(f) All Employee Benefit Plans required to be listed on the
Disclosure Statement may, without liability, be amended, terminated or otherwise
discontinued except as specifically prohibited by federal law.
(g) Any bonding required under ERISA with respect to any
Employee Benefit Plan required to be listed on the Disclosure Statement has been
obtained and is in full force and effect and no funds held by or under the
control of the Seller or any ERISA Affiliate are plan assets.
(h) Neither Seller nor any ERISA Affiliate maintains any
retired life and/or retired health insurance plans which provide for continuing
benefits or coverage for any employee or any beneficiary of an employee after
such employee's termination of employment.
(i) Neither Seller nor any ERISA Affiliate is bound by any
collective bargaining agreement of legally binding arrangement to maintain or
contribute to any Employee Benefit Plan.
(j) There has been no material violation of the "continuation
coverage requirements" of "group health plans" of former section 162(k) of the
Code (as in effect for tax years beginning on or before December 31, 1988) and
of section 4980B of the Code (as in effect for tax years beginning on and after
January 1, 1989) and Part 6 of Subtitle B of Title I of ERISA with respect to
any group health plan to which such continuation coverage requirements apply.
(k) There has been no material violation of the health
insurance obligation is imposed by section 9801 of the Code and Part 7 of
Subtitle B of Title I of ERISA ("HIPAA") with respect to any Employee Benefit
Plan which is a group health plan (as defined under Section 5000(b) (1) of the
Code or Part 6 of Subtitle B of Title I of ERISA) to which such insurance
obligations apply.
4.17 Labor Matters
(a) Except as described in the Disclosure Statement: (i) to
the knowledge of Seller, no application or petition for certification of a
collective bargaining agent is pending and none of the employees of Seller
engaged in the Business are, or during the last two (2) years have been,
represented by any union or other bargaining representative; (ii) to the
knowledge of Seller, during the last two (2) years, no union has attempted to
organize any group of the Seller's employees engaged in the Business, and no
group of the Seller's employees engaged in the Business has sought to organize
themselves into a union or similar organization for the purpose of collective
bargaining; (iii) during the last two (2) years there has not been and there is
not currently pending any labor arbitration or proceeding in respect of the
grievance of any employee engaged in the Business, any application, charge or
complaint filed by any employee or union with the National Labor Relations Board
or any comparable state or local agency, any strike, slowdown, picketing or work
stoppage by any employees at the Facility, any lockout of any such employees or
any labor trouble or other labor-related controversy, occurrence or condition;
(iv) no agreement restricts Seller from relocating or closing the Facility or
any portion thereof; and (v) to the knowledge of Seller, no such agreement,
action, proceeding or occurrence is threatened or contemplated by any person.
(b) Except as described in the Disclosure Statement with
respect to the Business and the Facility, Seller has not been cited for
violations of the Occupational Safety and Health Act of 1970, 29 U.S.C. sec. 651
et seq. ("OSHA"), any regulation promulgated pursuant to OSHA, or any other
statute, ordinance, rule, or regulation establishing standards of workplace
safety, or paid any fines or penalties with respect to any such citation. Except
as described in the Disclosure Statement: (i) there have not been any
inspections of the Facility by representatives of the Occupational Safety and
Health Administration or any other government agency vested with authority to
enforce any statute, ordinance, rule or regulation establishing standards of
workplace safety; (ii) to the knowledge of Seller, no representative of any such
government agency has attempted to conduct any such inspection or sought entry
to the Facility for that purpose; (iii) Seller has not been notified of any
complaint or charge filed by any employee or employee representative with any
such government agency which alleges that Seller has violated OSHA or any other
statute, ordinance, rule or regulation establishing standards of workplace
safety; (iv) Seller has not been notified that any employee or employee
representative of the Business has requested that any such government agency
conduct an inspection of the Facility to determine whether violations of OSHA or
any other such statute, ordinance, rule or regulation may exist; and (v)
Exhibit 10.2 (cont.)
Seller does not maintain any condition, process, practice or procedure at the
Facility which would be deemed a material violation of OSHA or any other
statute, ordinance, regulation or rule establishing standards or workplace
safety.
(c) Attached to the Disclosure Statement are true and correct
copies of each OSHA Form No. 200 completed and maintained by Seller at the
Facility for the last two (2) years.
4.18 Employees. The Disclosure Statement sets forth the following
information for each employee of Seller engaged in the Business (including each
such person on leave or layoff status) (collectively, the "Employees"): employee
name and job title; current annual rate of compensation (identifying bonuses
separately) and any change in compensation since December 31, 1997; vacation
accrued and service credited for purposes of vesting and eligibility to
participate in applicable Employee Benefit Plans; description of any material
pre-existing condition known to Seller with respect to any applicable Employee
Benefit Plan; and any automobile leased or owned by Seller primarily for use by
any of the foregoing persons. Except as described in the Disclosure Statement,
none of Employees is a party to, or is otherwise bound by, any agreement or
arrangement with any person or entity other than Seller which limits or
adversely affects the performance of his or her duties, the ability of Seller to
conduct the Business, or his or her freedom to engage in the Business
(including, without limitation, any confidentiality, non-competition,
non-solicitation or proprietary rights agreement). The Disclosure Statement
lists or describes each employment, severance, change of control, consulting,
commission, agency and representative agreement or arrangement relating to the
Business to which Seller is a party or is otherwise bound, including, without
limitation, all agreements and commitments relating to wages, hours or other
terms or conditions of employment (other than unwritten employment arrangements
terminable at will without payment of any contractual severance or other
amount).
4.19 Full Disclosure.
(a) All documents and other papers delivered by or on behalf
of Seller in connection with the transactions contemplated by this Agreement are
accurate and complete in all material respects and are authentic. No
representation or warranty of Seller contained in this Agreement or the
Disclosure Statement contains any untrue statement of a material fact or omits
to state a fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading in any
material respect.
(b) Except as described in this Agreement or the Disclosure
Statement, there is no fact known to Seller (other than general economic or
industry conditions) which materially adversely affects or, so far as Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition or results of operations of the Business or the ability of
Seller to perform this Agreement.
4.20 Absence of Changes or Events. Except as described on the
Disclosure Statement and except for actions taken after the date hereof pursuant
to a specific covenant hereunder, since February 28, 1998 the Seller has not:
(a) Discharged or satisfied any lien or encumbrance, or paid
any liabilities, other than in the ordinary course of business consistent with
past practice, or failed to pay or discharge when due any liabilities which the
failure to pay or discharge has caused or will cause any material damage or risk
of material loss to Purchased Assets or the Business;
(b) Sold, assigned or transferred any of its Assets or
properties except in the ordinary course of business consistent with past
practice;
(c) Created, incurred, assumed or guaranteed any indebtedness
for money borrowed, or mortgaged, pledged or subjected to any Lien, any of its
Purchased Assets, other than the liens, if any, for current taxes not yet due
and payable;
(d) Made or suffered any amendment or termination of any
Contract to which it is a party or by which it is bound or canceled, modified or
waived any debts or claims held by it, other than in the ordinary course of
business consistent with past practice, or waived any right of substantial
value, whether or not in the ordinary course of business;
(e) Suffered any damage, destruction or loss, whether or not
covered by insurance, of any item carried on its books of account at more than
$1,000, or suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility services required to conduct its Business;
(f) Suffered any decrease in its retained earnings or working
capital, or any material adverse change in its Business, except as contemplated
in this Agreement
(g) Suffered any adverse change or any threat of an adverse
change in its relation with, or any loss or threat of loss of, any of its
customers other than usual attrition in the ordinary course of customers that
are not individually or in the aggregate material to the Business;
(h) Made any capital expenditure or capital addition or
betterment except such as may be involved in ordinary repair, maintenance and
replacement of its Purchased Assets;
(i) Increased the salaries or other compensation of, or made
any advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its shareholders, directors, officers, employees or independent
Exhibit 10.2 (cont.)
contractors, or made any increase in, or any addition to, other benefits to
which any of its shareholders, directors, officers or employees may be entitled;
(j) Changed any of the accounting principles followed by it or
the methods of applying such principles; or
(k) Entered into any material transaction or any transaction
other than in the ordinary course of business consistent with past practice.
4.21 Investments and Subsidiaries. The Business is and has been
conducted at all times during the last two years solely by and through Company
and no other person, and, other than the capital stock of ▇▇▇▇▇ Associates of
Chicago and Search Associates, neither of which has conducted any business
activities in the last two years, except for any marketable securities, Company
does not directly or indirectly own, control or have any investment or other
interest in any corporation, partnership, joint venture, business trust or other
entity and Company has not agreed, contingently or otherwise, to share any
profit, loss, cost or liability, or to indemnify any person or entity or to
guaranty the obligations of any person or entity.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as of the date of this
Agreement as follows:
5.1 Organization and Good Standing. Buyer is a Pennsylvania corporation
duly organized and validly existing under the laws of the Commonwealth of
Pennsylvania and has all necessary corporate power and authority to carry on its
business as presently conducted, to own and lease the assets which it owns and
leases and to perform all its obligations under each agreement and instrument by
which it is bound.
5.2 Power and Authorization. Buyer has full legal right, power and
authority to enter into and perform its obligations under this Agreement and
under the other agreements and documents (the "Buyer Transaction Documents")
required to be delivered by it prior to or at the Closing. The execution,
delivery and performance by Buyer of this Agreement and the Buyer Transaction
Documents have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms. When executed and delivered as contemplated herein,
each of the Buyer Transaction Documents shall constitute the legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms.
5.3 No Conflicts.
(a) The execution, delivery and performance of this Agreement
and the Buyer Transaction Documents do not and will not (with or without the
passage of time or the giving of notice):
(i) Violate or conflict with any provision of Buyer's
Articles of Incorporation, by-laws or of any Law binding upon Buyer; or
(ii) Violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any material
agreement or other material obligation to which Buyer is a party.
(b) No consents or approvals of, or registrations,
notifications, filings and/or declarations with, any court, government or
governmental agency or instrumentality, creditor, lessor or other person are
required to be given or made by Buyer in connection with the execution, delivery
and performance of this Agreement and the other agreements and instruments
contemplated herein, other than such as have been obtained or made or which the
failure to obtain would not have a material adverse affect on Buyer's ability to
consummate the transactions contemplated herein and therein.
(c) There are no judicial, administrative or other
governmental actions, proceedings or investigations pending or, to the knowledge
of Buyer, threatened, that question any of the transactions contemplated by this
Agreement or the validity of this Agreement or any of the other agreements or
instruments contemplated hereby or which, if adversely determined, would have an
a material adverse effect upon the ability of Buyer to enter into or perform its
obligations under this Agreement or any of the other agreements or instruments
contemplated hereby. Buyer has not received any request from any governmental
agency or instrumentality for information with respect to the transactions
contemplated hereby.
5.4 Brokers. No person acting on behalf of Buyer or any of its
affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
5.5 Capital Structure. The capital structure of the Buyer is as
presented in its most recent filings with the U.S. Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Exhibit 10.2 (cont.)
SECTION 6. EMPLOYEE BENEFITS AND EMPLOYMENT.
6.1 Employment.
(a) Buyer will offer employment to each employee of the
Business listed on Schedule 6.1 attached hereto at a rate of pay at least equal
to such employee's rate of pay (base and bonus) in effect on, and with such
benefits as shall be, in the aggregate, generally comparable to such employee's
benefits immediately prior to, the Closing Date. Employees who accept such
employment shall be referred to as "Transferred Employees" for purposes of this
Agreement. Seller shall be responsible for any severance pay obligations with
respect to individuals employed in the Business who are not Transferred
Employees and whose employment with Seller is terminated. Anything contained in
or implied by the provisions of this Section 6.1 to the contrary
notwithstanding, the provisions of this Section shall not create any third-party
beneficiary rights in any person, including any Transferred Employee.
(b) Each Transferred Employee will be required to sign Buyer's
NonSolicitation and Confidentiality Agreement in order to continue their
employment. Seller agrees to assist Buyer in obtaining such executed agreements
from the Transferred Employees.
6.2 Employee Pension Benefit Plans. The benefits under any Employee
Pension Benefit Plan (as defined in Section 3(2) of ERISA) maintained by Seller
which have accrued to any Transferred Employee as of the Closing Date shall be
frozen as of the Closing Date and no further benefits shall accrue under any
such Employee Pension Benefit Plan with respect to such Transferred Employee.
Buyer assumes no responsibility with respect to any such Employee Pension
Benefit Plan.
6.3 Employee Welfare Benefit Plans. Buyer shall assume and continue the
Employee Welfare Benefit Plans (as defined in Section 3(1) of ERISA) maintained
by Seller as of the Closing Date with respect to the Transferred Employees in
accordance with the terms and conditions of this Section 6.3 and such Employee
Welfare Benefit Plans. However, Buyer reserves the right to modify, amend,
suspend, or terminate such Employee Welfare Benefit Plans at any time after the
Closing Date. Notwithstanding the foregoing, Seller shall remain responsible and
liable for any acts or omissions by Seller with respect to such Employee Welfare
Benefit Plans occurring prior to the Closing date.
In addition, Seller shall remain responsible for any injury sustained
prior to the Closing Date that is related to a worker's compensation claim prior
to the Closing Date.
6.4 Vacation and Holidays. Buyer will allow the same vacations and
holidays as provided by Seller for the period ending December 31, 1998 except
that Buyer will not permit the use of any vacation carried over from 1997 or
prior years.
6.5 Health Continuation Coverage. Seller shall be responsible for all
health continuation coverage requirements of the Code and ERISA for all periods
prior to the Closing Date. Buyer shall be responsible for all health
continuation coverage requirements of the Code and ERISA for Transferred
Employees for all periods subsequent to the Closing Date.
6.6 Health Insurance Portability and Accountability Act. Seller shall
be responsible for all health insurance obligations imposed by HIPAA with
respect to any Employee Welfare Benefit Plan which is a group health plan (as
defined under Section 5000(b)(1) of the Code or Part 6 of Subtitle B of Title I
of ERISA) for all periods prior to the Closing Date. Buyer shall be responsible
for all HIPAA obligations with respect to any Employee Welfare Benefit Plan
which is a group health plan and which is assumed by Buyer for Transferred
Employees for all periods subsequent to the Closing Date.
6.7 Reporting and Disclosure Requirements. Seller shall be responsible
for filing all annual reports and satisfying all other reporting and disclosure
requirements with respect to any Employee Benefit Plan for all Plan Years ending
prior to the Closing date.
6.8 Employee Records. Seller shall grant Buyer full access to all
employee records relating to the Transferred Employees.
SECTION 7. CERTAIN CONDITIONS PRECEDENT TO BUYER'S
The obligation of Buyer to consummate the acquisition of the Purchased
Assets is subject to the fulfillment by or at the Closing of each of the
following conditions:
7.1. Representations and Warranties. Seller's representations and
warranties contained in this Agreement shall be deemed to have been made again
at and as of the Closing and shall then be true and correct.
7.2 Performance of Covenants. Seller shall have performed or complied
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by them prior to or at the Closing.
7.3 Apptovals. The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been obtained
and no such consent or approval: (a) shall have been conditioned upon the
modification, cancellation or termination of any lease, commitment, agreement,
easement, right or Authorization included in the Purchased Assets; or (b) shall
impose on the Buyer, any condition, provision or requirement not presently
imposed upon Seller, and which is described in the Disclosure Statement, or any
condition that would be more restrictive after the Closing on Buyer, than the
conditions presently imposed on Seller.
7.4 Legal Matters. The Closing shall not violate any order or decree of
any court or governmental body of competent jurisdiction and no suit, action,
proceeding or investigation shall have been brought or threatened by any person
(other than the Buyer or an affiliate of Buyer) which questions the validity or
legality of this Agreement or the transactions contemplated hereby.
7.5 No Material Adverse Change. There shall not have been any material
adverse change or threat of material adverse change in the Business or the
Purchased Assets, or in any development of a nature that is, or is likely to be
materially adverse to the Business or the Purchased Assets.
7.6 Opinion of Counsel. Buyer shall have received the opinion
satisfactory to Buyer of Gomel & ▇▇▇▇▇, counsel for Seller, in the form attached
hereto as Schedule 7.6 dated as of the Closing.
7.7 Closing Certificates. The Buyer shall have received certificates
from the Seller, dated the Closing Date, certifying in such detail as the Buyer
may reasonably request that the conditions specified in Sections 7.1, 7.2 and
7.3 hereof have been fulfilled.
SECTION 8. CERTAIN CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
The obligation of Seller to consummate the sale of the Purchased Assets
is subject to the fulfillment by or at the Closing of each of the following
conditions:
8.1. Representations and Warranties. Buyer's representations and
warranties contained in this Agreement shall be deemed to have been made again
at and as at the Closing and shall then be true and correct.
8.2 Performance of Covenants. Buyer shall have performed or complied
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
8.3 Approvals. The consent or approval of all persons described on the
Disclosure Statement pursuant to Sections 4.5(b) and 4.13 shall have been
obtained.
8.4. Legal Mattters. The Closing shall not violate any order or decree
of any court or governmental body of competent jurisdiction and no suit, action,
investigation, or legal or administrative proceeding shall have been brought or
threatened by any person (other than Seller or an affiliate of Seller) which
questions the validity or legality of this Agreement or the transactions
contemplated hereby.
8.5 Closing Certificates. The Seller shall have received certificates
from the Buyer, dated the Closing Date, certifying in such detail as the Seller
may reasonably request that the conditions specified in Sections 8.1 and 8.2
hereof have been fulfilled.
SECTION 9. CERTAIN POST-CLOSING MATTERS; COVENANTS
9.1 Confidential Information. From and after the Closing, unless
expressly consented to in writing by Buyer, Seller shall not, and shall use best
efforts to cause all Transferred Employees and others to, directly or
indirectly, use or disclose to any third person, any trade secret, financial
data, customer list, pricing or marketing policies or plans or other proprietary
or confidential information relating to the Business.
9.2 Covenant Not to Compete. Seller agrees that, unless acting with the
prior written consent of the Buyer, he will not, directly or indirectly,
(a) For a period of two (2) years after the Closing Date,
engage in the business of, or own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing or control of, or
be connected as an partner, principal, agent, representative, consultant,
advisor or otherwise with, or use or permit his name to be used in connection
with, any business or enterprise engaged in the business of permanent or
contract placement, personnel consulting services or project management services
anywhere in Michigan, Pennsylvania, Connecticut, Massachusetts, New York, New
Jersey, Virginia or Florida (the "Territory");
(b) For a period of two (2) years after the Closing Date, in
any manner induce or attempt to influence any employee of the Buyer or any of
its affiliates to terminate such employment
(c) For a period of two (2) years after the Closing Date, in
any manner contact, induce, solicit or influence any client of the Business or
of the Buyer or any of its affiliates to cause such client to terminate its
relationship with the Business and/or Buyer, or
(d) For a period of two (2) years after the Closing Date,
utilize or disclose any information concerning proprietary or confidential
information in respect to the Purchased Assets.
In the event that the provisions of this Section 9.2 should ever be
deemed to exceed the time or geographic limitations or any other limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum permitted by applicable law.
Seller specifically acknowledges and agrees that the foregoing
Exhibit 10.2 (cont.)
restrictions are reasonable and necessary to protect the legitimate interests of
the Buyer, that the Buyer would not have entered into this Agreement in the
absence of such restrictions, that any violation of such restrictions will
result in irreparable injury to the Buyer, that the remedy at law for any breach
of the foregoing restrictions will be inadequate, and that, in the event of any
such breach, the Buyer, in addition to any other relief available to it, shall
be entitled to temporary injunctive relief before trial from any court of
competent jurisdiction as a matter of course and to permanent injunctive relief
without the necessity of quantifying actual damages.
9.3 Pursuit of Authorizations. Seller shall use its best efforts to
take, or cause to be taken, such action, to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the provisions
of this Agreement and under applicable law to transfer any Intellectual Property
to the Buyer and, at the expense of Buyer, to permit the Buyer to promptly
obtain all governmental consents, licenses, permits, franchises, grants or other
authorizations which are used in the Business ("Authorizations") and are
required for the Business and operations of the Buyer after the Closing.
9.4 Audited Financial Statements. Upon the request of Buyer, Seller
shall at the expense of Buyer, take, or cause to be taken by their accountants,
such action as is necessary to provide to Buyer audited financial statements of
Seller, and appropriate accountant's consents, that comply with the requirements
of Regulation S-X under the Securities Exchange Act of 1934, as amended.
SECTION 10. INDEMNIFICATION
10.1 Indemnification by Seller.
(a) Seller shall indemnify and hold Buyer and Buyer's
officers, directors and shareholders harmless against and in respect of any and
all losses, costs, expenses, claims, damages, obligations and liabilities,
including interest, penalties and reasonable attorneys fees and disbursements
("Damages"), which Buyer or any such person may suffer, incur or become subject
to arising out of, based upon or otherwise in respect of:
(i) any inaccuracy in or breach of any
representation or warranty of Seller made in or pursuant to this Agreement, or
any Seller Transaction Document;
(ii) any breach or nonfulfillment of any covenant or
obligation of Seller contained in this Agreement or any Seller Transaction
Document;
(iii) any liability or other obligation of Seller
not expressly assumed by Buyer pursuant to Section 1.3. (iv) any liability or
obligation of Seller resulting from Seller not qualified to do business as a
foreign corporation in Texas and Illinois. In the event Buyer makes any
indemnification claim against Seller prior to Buyer's payments which may be
required pursuant to Section 2.1 (b) through (e) herein, then the Buyer shall
have the right, notwithstanding and in addition to any other rights which Buyer
may have with respect to the Seller or against any other person or entity, to
set-off such claim for indemnification against such payments. To the extent the
Buyer does not set-off such indemnification claim against such payment, the
Seller shall pay promptly same to Buyer.
10.2 Indemnification by Buyer. Buyer shall indemnify and hold Seller
and Seller's officers, directors and shareholders harmless against and in
respect of any and all Damages which Seller may suffer, incur or become subject
to arising out of, based upon or otherwise in respect of: (a) any inaccuracy in
or breach of any representation or warranty of Buyer made in or pursuant to this
Agreement or any Buyer Transaction Document; (b) any breach or nonfulfillment of
any covenant or obligation of Buyer contained in this Agreement or any Buyer
Transaction Document; and (c) the operation or failure to perform by Buyer of
the Business and the Purchased Assets after the Closing Date, including any
liability or other obligation of Seller assumed by Buyer pursuant to Section 1.3
herein.
10.3 Inter-Party Claims. Any party seeking indemnification pursuant to
this Section 10 (the "Indemnified Party") shall notify the other party or
parties from whom such indemnification is sought (the "Indemnifying Party") of
the Indemnified Party's assertion of such claim for indemnification, specifying
the basis of such claim. The Indemnified Party shall thereupon give the
Indemnifying Party reasonable access to the books, records and assets of the
Indemnified Party which evidence or support such claim or the act, omission or
occurrence giving rise to such claim and the right, upon prior notice during
normal business hours, to interview any appropriate personnel of the Indemnified
Party related thereto.
10.4 Third Party Claims.
(a) Each Indemnified Party shall promptly notify the
Indemnifying Party of the assertion by any third party of any claim with respect
to which the indemnification set forth in this Section relates (which shall also
constitute the notice required by Section 10.3). The Indemnifying Party shall
have the right, upon notice to the Indemnified Party within twenty (20) business
days after the receipt of any such notice, to undertake the defense of or, with
the consent of the Indemnified Party (which consent shall not unreasonably be
withheld), to settle or compromise such claim. The failure of the Indemnifying
Party to
Exhibit 10.2 (cont.)
give such notice and to undertake the defense of or to settle or compromise such
a claim shall constitute a waiver of the Indemnifying Party's rights under this
Section 10.4(a) and shall preclude the Indemnifying Party from disputing the
manner in which the Indemnified Party may conduct the defense of such claim or
the reasonableness of any amount paid by the Indemnified Party in satisfaction
of such claim.
(b) The election by the Indemnifying Party, pursuant to
Section 10.4(a), to undertake the defense of a third-party claim shall not
preclude the party against which such claim has been made also from
participating or continuing to participate in such defense, so long as such
party bears its own legal fees and expenses for so doing.
10.5 Limitations. Seller shall have no obligation to indemnify Buyer or
any other person against Damages pursuant to Section 10.1(a)(i) of this
Agreement arising out of or based upon any inaccuracy in or breach of any
representation or warranty made in or pursuant to this Agreement or any
Transaction Document unless and until the aggregate of all such Damages suffered
or incurred by Buyer and such persons exceeds $10,000; in which event Buyer and
such persons shall be entitled to indemnification of the amount of Damages
suffered or incurred in excess of such amount.
SECTION 11. MISCELLANEOUS.
11.1 Knowledge. All references in this Agreement to Seller's knowledge
respecting a particular matter shall conclusively be deemed and presumed to
include, without limitation, all facts, circumstances and conditions known to
Seller regarding such matter.
11.2 Survival of Representations and Warranties.
(a) The representations and warranties made by the parties in
this Agreement and in the certificates, documents, Schedules and Exhibits
delivered pursuant hereto shall survive the consummation of the transactions
herein contemplated for a period of two (2) years, except that the
representations and warranties set forth in Section 4.15 shall remain in force
for a period corresponding to that of the applicable statute of limitations.
Anything in this Agreement to the contrary notwithstanding, the representations
and warranties of Seller hereunder, and the right of Buyer to indemnification
for breach thereof, shall not be affected by any investigation of Seller or its
subsidiaries made by Buyer or its agents or representatives.
(b) In the event of any inconsistency between the statements
made in the body of this Agreement and those contained in the Disclosure
Statement (other than an express exception to a specifically identified
statement), those in this Agreement shall control.
11.3 Further Assurances. Each party hereto shall use best efforts to
comply with all requirements imposed hereby on such party and to cause the
transactions contemplated hereby to be consummated as contemplated hereby, and
shall, from time to time and without further consideration, either before or
after the Closing, execute such further instruments, and take such other
actions, as any other party hereto shall reasonably request in order to fulfill
its obligations under this Agreement and to effectuate the purposes of this
Agreement and to provide for the orderly and efficient transition of the
Business to Buyer. Each party shall promptly notify the other parties of any
event or circumstance known to such party that could prevent or delay the
consummation of the transactions contemplated by this Agreement, or which would
indicate a breach or non-compliance with any of the terms, conditions,
representations, warranties or agreements of any of the parties to this
Agreement.
11.4 Costs and Expenses. Except as otherwise expressly provided herein,
each party shall bear its own expenses in connection herewith. Any and all
transfer, documentary and similar taxes and recording and filing fees (other
than sales and use taxes which shall be borne by Buyer) incurred in connection
with the transactions contemplated herein shall be borne equally by Seller and
by Buyer, except that any filing fees required by the U.S. Patent and Trademark
Office with respect to the assignments of the patents and patent applications
included in the Intellectual Property shall be borne by Buyer.
11.5 Notices. All notices or other communications permitted or required
under this Agreement shall be in writing and shall be sufficiently given if and
when hand delivered to the persons set forth below, or if sent by documented
overnight delivery service or registered or certified mail, postage prepaid,
return receipt requested, or by telegram, telex or telecopy, receipt
acknowledged, addressed as set forth below or to such other person or persons
and/or at such other address or addresses as shall be furnished in writing by
any party hereto to the others. Any such notice or communication shall be deemed
to have been given as of the date received, in the case of personal delivery, or
on the date shown on the receipt or confirmation therefor in all other cases.
Exhibit 10.2 (cont.)
To Buyer:
Judge, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To Seller:
▇▇▇▇▇ Associates of Atlanta, Inc. Gomel & ▇▇▇▇▇
c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 700 ▇▇▇▇▇▇▇ ▇▇ Tower
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
11.6 Assignment and Benefit.
(a) Seller shall not assign this Agreement or any rights
hereunder, or delegate any obligations hereunder, without the prior written
consent of Buyer. Seller may assign the rights of this agreement to the
Shareholder upon dissolution. Subject to the foregoing, this Agreement and the
rights and obligations set forth herein shall inure to the benefit of, and be
binding upon, the parties hereto, and each of their respective successors, heirs
and assigns.
(b) This Agreement shall not be construed as giving any
person, other than the parties hereto and their permitted successors, heirs and
assigns, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any of the provisions herein contained, this Agreement and all
provisions and conditions hereof being intended to be, and being, for the sole
and exclusive benefit of such parties, and permitted successors, heirs and
assigns and for the benefit of no other person or entity
11.7 Settlement of Disputes. The parties will attempt in good faith to
resolve any and all controversies of every kind and nature between the parties
to this Agreement arising out of or in connection with the existence,
construction, validity, interpretation or meaning, performance, non-performance,
enforcement, operation, breach, continuance or termination of this Agreement
(each, a "Dispute") promptly by negotiations between senior executives of the
parties who have authority to settle the Dispute (and who do not have direct
responsibility for administration of this Agreement). The disputing party shall
give the other party written notice of the Dispute. Within twenty days after
receipt of said notice, the receiving party shall submit to the other a written
response. The notice and response shall include (a) a statement of each party's
position and a summary of the evidence and arguments supporting its position,
and (b) the name and title of the executive who will represent that party. The
executives shall meet at a mutually acceptable time and place within thirty days
of the date of the disputing party's notice and thereafter as often as they
reasonably deem necessary to exchange relevant information and to attempt to
resolve the Dispute. If the matter has not been resolved within sixty days of
the disputing party's notice, or if the party receiving said notice will not
meet within thirty days, the Dispute shall be submitted to arbitration in
accordance with the rules of the American Arbitration Association. The parties
further agree that all matters shall be governed by the laws of the Commonwealth
of Pennsylvania. The parties further agree that any arbitration conducted
pursuant to this section, shall be held in Philadelphia, Pennsylvania before a
panel of three (3) arbitrators, one selected by each of the parties and the
third select by the arbitrators selected by the parties. All deadlines specified
in this Section may be extended by mutual agreement.
11.8 Amendment, Modification and Waiver. The parties may, by mutual
agreement, amend or modify this Agreement in any respect, and Buyer and Seller
may: (a) extend the time for the performance of any of the obligations of the
other, (b) waive any inaccuracies in representations and warranties by the
other, (c) waive compliance by the other with any of the obligations contained
in this Agreement, and (d) waive the fulfillment of any condition precedent to
the performance under this Agreement of the waiving party. Any such amendment,
modification, extension or waiver shall be in writing. The waiver by a party of
any breach of any provision of this Agreement shall not constitute or operate as
a waiver of any other breach of such provision or of any other provision hereof,
nor shall any failure to enforce any provision hereof operate as a waiver of
such provision or of any other provision hereof.
11.9 Governing Law; Consent to Jurisdiction. This Agreement is made
pursuant to, and shall be construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania (and United States federal law, to the extent
applicable), irrespective of the principal place of business, residence or
domicile of the parties hereto, and without giving effect to otherwise
applicable principles of conflicts of law. Any of the parties, before or during
the arbitration contemplated by Section 11.7, may apply to a court as set forth
below for a temporary restraining order or preliminary injunction or similar
equitable relief to protect its interests pending completion of such arbitration
proceedings and, in particular, to enforce the provisions of Section 11.7 and to
aid the arbitration contemplated thereby. For this purpose, each party agrees
that suit may be instituted in any
Exhibit 10.2 (cont.)
federal court in the Eastern District of Pennsylvania or in ▇▇▇▇▇▇▇▇▇▇ County
state court in the Commonwealth of Pennsylvania, and each party waives any
objection which such party may now or hereafter have to the laying of the venue
of any such action, suit or proceeding, and irrevocably submits to the
jurisdiction of any such court. Any and all service of process and any other
notice in any such action, suit or proceeding shall be effective against any
party if given as provided in Section 11.5 herein. Nothing contained in this
Section 11.9, in Section 11.7 or elsewhere herein, shall be deemed to affect the
right of any party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
jurisdiction other than Pennsylvania. Nothing contained herein or in any
Transaction Document shall prevent or delay Buyer or Seller from seeking, in any
court of competent jurisdiction, specific performance or other equitable
remedies in the event of any breach or intended breach by Seller or Buyer of any
of its obligations hereunder.
11.10 Section Headings and Defined Terms. The section headings
contained herein are for reference purposes only and shall not in any way affect
the meaning and interpretation of this Agreement. The terms defined herein and
in any agreement executed in connection herewith include the plural as well as
the singular and the singular as well as the plural. Except as otherwise
indicated, all agreements defined herein refer to the same as from time to time
amended or supplemented or the terms thereof waived or modified in accordance
herewith and therewith.
11.11 Severability. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provisions or
parts were omitted.
11.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto by executing a counterpart hereof, but all of such
counterparts together shall be deemed to be one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
11.13 Entire Agreement, etc. This Agreement, together with the
Disclosure Statement and the agreements, Schedules, appendices and certificates
referred to herein or delivered pursuant hereto, constitute the entire agreement
between the parties hereto with respect to the purchase and sale of the
Purchased Assets and supersede all prior agreements and understandings. All
Schedules, exhibits and appendices attached hereto and referred to herein are
hereby incorporated herein and made a part hereof as if fully set forth herein.
The submission of a draft of this Agreement or portions or summaries thereof
does not constitute an offer to purchase or sell the Purchased Assets, it being
understood and agreed that neither Buyer nor Seller shall be legally obligated
with respect to such a purchase or sale or to any other terms or conditions set
forth in such draft or portion or summary unless and until this Agreement has
been duly executed and delivered by all parties.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement, all as of the date first above written.
JUDGE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
▇▇▇▇▇ ASSOCIATES OF ATLANTA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇, President