Exhibit 2.1
===============================================================================
ASSET PURCHASE AGREEMENT
by and among
PHARMAKON, L.L.C.,
▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇,
PDI, INC.
and
INSERVE SUPPORT SOLUTIONS
Dated as of August 26, 2004
===============================================================================
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS..........................................2
Section 1.1 Seller's Assets...........................................2
Section 1.2 Assumption of Liabilities.................................5
Section 1.3 Retained Liabilities......................................5
Section 1.4 Closing Payment...........................................6
Section 1.5 Post-Closing Purchase Price Adjustment....................7
Section 1.6 Earnout Payments..........................................9
Section 1.7 Escrow Amount............................................12
Section 1.8 Time and Place of Closing................................13
Section 1.9 Deliveries by the Seller.................................13
Section 1.10 Deliveries by the Buyer..................................14
Section 1.11 Books and Records of the Seller..........................14
Section 1.12 Affiliate Accounts.......................................14
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE MEMBERS......15
Section 2.1 Organization; Etc........................................15
Section 2.2 Authority Relative to This Agreement.....................15
Section 2.3 Consents and Approvals; No Violations....................16
Section 2.4 Financial Statements.....................................16
Section 2.5 Absence of Undisclosed Liabilities.......................16
Section 2.6 Absence of Certain Changes; No Material Adverse Change...17
Section 2.7 Litigation...............................................17
Section 2.8 Compliance with Law......................................17
Section 2.9 Employee Benefit Plans...................................18
Section 2.10 Labor Relations..........................................19
Section 2.11 Tax Matters..............................................20
Section 2.12 Contracts................................................21
Section 2.13 Real Property; Leases....................................22
Section 2.14 Intellectual Property....................................22
Section 2.15 Title to Assets; Sufficiency of Assets...................23
Section 2.16 Receivables..............................................24
Section 2.17 Escheat Property.........................................24
Section 2.18 Insurance................................................24
Section 2.19 Customers; Key Employees.................................24
Section 2.20 Environmental Matters....................................25
Section 2.21 Books and Records........................................25
Section 2.22 Affiliate Transactions...................................25
Section 2.23 Brokers' and Finders' Fees...............................25
Section 2.24 No Other Warranties......................................25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT........26
Section 3.1 Organization; Etc........................................26
Section 3.2 Authority Relative to This Agreement.....................26
Section 3.3 Consents and Approvals; No Violations....................26
Section 3.4 Availability of Funds....................................27
Section 3.5 Litigation...............................................27
Section 3.6 Brokers' and Finders' Fees...............................27
Section 3.7 No Other Warranties......................................27
ARTICLE IV COVENANTS OF THE PARTIES.............................................
Section 4.1 Conduct of Business of the Seller........................27
Section 4.2 Access to Information....................................28
Section 4.3 Consents; Cooperation....................................29
Section 4.4 Public Announcements.....................................31
Section 4.5 Tax Matters..............................................31
Section 4.6 Employees; Employee Benefits.............................32
Section 4.7 Updated Employee Information.............................33
Section 4.8 Proprietary Information..................................33
Section 4.9 Use of Name..............................................33
Section 4.10 Maintenance of Books and Records; Sharing of Data........34
Section 4.11 Transfers Not Effected as of Closing.....................34
Section 4.12 No Solicitation..........................................35
Section 4.13 Covenant Not To Compete..................................35
Section 4.14 Further Actions..........................................36
ARTICLE V CONDITIONS TO CONSUMMATION OF THE ASSET PURCHASE....................36
Section 5.1 Conditions to Each Party's Obligations to Consummate
the Asset Purchase.......................................36
Section 5.2 Further Conditions to the Obligations of the Seller
and the Members..........................................37
Section 5.3 Further Conditions to the Buyer's Obligations............38
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER..................................39
Section 6.1 Termination..............................................39
Section 6.2 Procedure for and Effect of Termination..................40
Section 6.3 Amendment and Modification...............................40
Section 6.4 Extension; Waiver........................................40
ARTICLE VII SURVIVAL AND INDEMNIFICATION......................................41
Section 7.1 Survival Periods.........................................41
Section 7.2 Agreement of the Seller and the Members to Indemnify.....41
Section 7.3 Agreement of the Buyer and the Parent to Indemnify.......43
Section 7.4 Third-Party Indemnification..............................43
Section 7.5 Setoff...................................................44
Section 7.6 No Duplication; Sole Remedy..............................45
ARTICLE VIII MISCELLANEOUS PROVISIONS.........................................45
Section 8.1 Entire Agreement.........................................45
Section 8.2 Severability.............................................45
Section 8.3 Notices..................................................45
Section 8.4 Governing Law; Jurisdiction..............................46
Section 8.5 Descriptive Headings.....................................47
Section 8.6 Counterparts.............................................47
Section 8.7 Assignment...............................................47
Section 8.8 Fees and Expenses........................................47
Section 8.9 Interpretation...........................................47
Section 8.10 No Third-Party Beneficiaries.............................48
Section 8.11 Sellers' Representative..................................48
Section 8.12 Bulk Transfer Laws.......................................49
Section 8.13 Guarantee by the Parent..................................49
Section 8.14 Specific Performance.....................................49
ARTICLE IX DEFINITIONS AND USAGE..............................................49
Section 9.1 Certain Defined Terms......................................
Section 9.2 Other Defined Terms......................................53
SCHEDULES
Intellectual Property.......................................Schedule 1.1(a)(vi)
Retained Contracts...........................................Schedule 1.1(b)(v)
Contracts and Permits Not Legally Transferable..............Schedule 1.1(b)(ix)
Closing Balance Sheet Qualifications............................Schedule 1.5(a)
Budget .........................................................Schedule 1.6(e)
Jurisdictions......................................................Schedule 2.1
Seller Consents and Approvals......................................Schedule 2.3
Financial Statements...............................................Schedule 2.4
Undisclosed Liabilities............................................Schedule 2.5
Permits............................................................Schedule 2.8
Employee Plans and Employment Agreements........................Schedule 2.9(a)
Severance and Other Payments....................................Schedule 2.9(g)
Employees......................................................Schedule 2.10(a)
Tax Matters.......................................................Schedule 2.11
Tax Jurisdictions..............................................Schedule 2.11(g)
Material Defaults; Claims......................................Schedule 2.12(b)
Real Property Leases..............................................Schedule 2.13
Seller Owned IP................................................Schedule 2.14(b)
Title to Assets; Liens ........................................Schedule 2.15(a)
Seller Accounts Receivable........................................Schedule 2.16
Insurance.........................................................Schedule 2.18
Customers.........................................................Schedule 2.19
Books and Records.................................................Schedule 2.21
Agreements with Members and Affiliates............................Schedule 2.22
Corporate and Trade Names .........................................Schedule 4.9
Required Consents...............................................Schedule 5.3(e)
Employment Agreements...........................................Schedule 5.3(f)
Obligations.....................................................Schedule 5.3(h)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 26, 2004 (this
"Agreement"), by and among Pharmakon, L.L.C., an Illinois limited liability
company also doing business as Group Dynamics, L.L.C., ShareCom, L.L.C.,
VistaCom, L.L.C. and ▇.▇▇▇▇, L.L.C. (the "Seller"), ▇▇▇▇▇▇ ▇▇▇▇, who owns
42.70% of the issued and outstanding equity interests of the Seller, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, who owns 32.59% of the issued and outstanding equity interests of the
Seller, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who owns 17.97% of the issued and outstanding
equity interests of the Seller and ▇▇▇▇▇ ▇▇▇▇▇▇▇, who owns 6.74% of the issued
and outstanding equity interests of the Seller (each, a "Member" and,
collectively, the "Members"), PDI, Inc., a Delaware corporation (the "Parent"),
and InServe Support Solutions, a California corporation (the "Buyer").
WHEREAS, the Seller is engaged in the business of providing continuing
medical education, promotional and marketing solutions and services to the
pharmaceutical and biotechnology industries (the "Business");
WHEREAS, the Buyer desires to purchase and assume from the Seller, and
the Seller desires to sell, assign, transfer, convey and deliver to the Buyer,
substantially all the assets and properties relating to the Business, together
with certain obligations and liabilities relating thereto, all in the manner
and subject to the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Seller's Assets.
(a) Acquired Assets. Subject to the terms and conditions of this
Agreement, the Seller agrees to sell, assign, transfer, convey and deliver to
the Buyer, and the Buyer agrees to purchase and acquire, free and clear of all
Liens, all of the Seller's right, title and interest in and to all of the
Seller's property and assets, real, personal or mixed, tangible and intangible,
of every kind and description, wherever located, but excluding the Retained
Assets (collectively, the "Acquired Assets"). Without limiting the generality
of the foregoing, but subject to Section 1.1(b), the Acquired Assets shall
include all of the following rights, title, interests, assets and properties,
if any, existing as of the Closing Date, of the Seller:
(i) subject to Section 1.1(b), all of the contracts, agreements,
license agreements, Health Plan Policies and leases, including amendments
and supplements, modifications, side letters or agreements, to which the
Seller is a party, other than Employee Plans (not including the Health
Plan Policies) and Employment Agreements (collectively, the "Contracts");
(ii) all of the Seller's furnishings, furniture, office supplies,
fixtures and other tangible personal property;
(iii) all marketing, sales and promotional literature, books,
records, files, documents, financial records, bills, internal accounting
and audit records, operating manuals, personnel records, business and
strategic plans, customer and supplier lists and files, including
preprinted materials, art work, correspondence and other similar items
(excluding Tax Returns) in the possession or under the control of the
Seller (the "Books and Records");
(iv) all accounts receivable and other receivables of the Seller;
(v) all rights to all of the Seller's telephone and facsimile
numbers (it being understood that the telephone companies and not the
Seller own such numbers);
(vi) all of the Seller's intangible assets and all Seller
Intellectual Property, including the Intellectual Property set forth in
Section 1.1(a)(vi) of the Seller Disclosure Schedule as well as the
corporate names set forth in Section 4.9 of the Seller Disclosure
Schedule;
(vii) all payments, deposits (including security deposits) and
prepaid expenses, claims for refunds and rights to offset in respect
thereof of the Seller to the extent reflected as assets on the Closing
Working Capital Statement;
(viii) all rights under warranties, representations and
guarantees made by suppliers, manufacturers or contractors of the Seller
with respect to the Acquired Assets;
(ix) all Permits;
(x) all bank accounts set forth in Section 2.21 of the Seller
Disclosure Schedule (it being understood that, pursuant to Section
1.1(b)(ii), any cash and cash equivalents held in such accounts as of the
Closing and the bank account to be established for receipt of the Initial
Purchase Price and any subsequent payments under this Agreement shall be
Retained Assets); and
(xi) all claims (including claims for past infringement of Seller
Intellectual Property) and causes of action of the Seller against other
Persons (regardless of whether or not such claims and causes of action
have been asserted by the Seller, are ▇▇▇▇▇▇ or inchoate, known or
unknown, contingent or noncontingent), and all rights of indemnity, rights
of contribution, rights to refunds, rights of reimbursement and other
rights of recovery possessed by the Seller (regardless of whether such
rights are currently exercisable) arising from or relating to the Acquired
Assets, excluding those arising from, but only to the extent relating to,
the Retained Liabilities.
(b) Retained Assets. Notwithstanding anything contained herein to the
contrary, the Seller shall not sell, assign, transfer, convey or deliver, or
cause to be sold, assigned, transferred, conveyed or delivered, to the Buyer,
and the Buyer shall not purchase from the Seller any of the following assets,
properties, interests and rights of the Seller (the "Retained Assets"):
(i) all Tax Returns, company charters, minute books, stock
records and corporate seals and all other books and records of the Seller,
to the extent such books and records relate exclusively to the Retained
Assets or the Retained Liabilities;
(ii) all cash and cash equivalents, such as bank deposits,
certificates of deposits and marketable securities, including any cash
used as collateral for letters of credit or performance bonds of the
Seller;
(iii) all claims for any refunds (or rights thereto) relating to
Taxes and other governmental charges of any nature attributable to or
imposed upon the Seller or any of its Subsidiaries or the conduct of the
Business on or prior to the Closing Date, other than the claims for
refunds set forth in Section 1.1(a)(vii);
(iv) shares of stock or any other ownership interest in any
corporation, partnership, trust or other entity held by the Seller;
(v) all contracts set forth in Section 1.1(b)(v) of the Seller
Disclosure Schedule;
(vi) all insurance benefits (other than those relating to the
Health Plan Policies);
(vii) all claims and causes of action of the Seller against other
Persons (regardless of whether or not such claims and causes of action
have been asserted, are ▇▇▇▇▇▇ or inchoate, known or unknown, contingent
or noncontingent), and all rights of indemnity, rights of contribution,
rights to refunds, rights of reimbursement and other rights of recovery
possessed by the Seller (regardless of whether such rights are currently
exercisable) arising from or relating to the Retained Liabilities,
excluding those arising from, but only to the extent relating to, the
Acquired Assets;
(viii) deposits of the Seller with, and refunds from, the
Internal Revenue Service, including tax deposits, prepayments and
estimated payments; deposits made pursuant to, and refunds under, Section
7519 of the Internal Revenue Code of 1986, as amended (the "Code") and all
rights to such deposits and refunds and all interest on such deposits and
refunds;
(ix) Contracts and Permits, in each case which are not legally
transferable, each of which is set forth in Section 1.1(b)(ix) of the
Seller Disclosure Schedule;
(x) the Non-Competition Agreement, dated February 3, 2000,
between the Seller and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇;
(xi) all Employee Plans (other than the Health Plan Policies);
and
(xii) all rights of the Seller under this Agreement and the
Ancillary Agreements to which it is a party.
Section 1.2 Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, the Buyer hereby agrees to assume, pay, perform
and discharge when due the following and no other liabilities and obligations
of the Seller incurred in the ordinary course of business (collectively, the
"Assumed Liabilities"):
(a) all accounts payable to the extent reflected on the Closing
Working Capital Statement;
(b) all accrued expenses to the extent reflected on the Closing
Working Capital Statement;
(c) all other current liabilities to the extent reflected on the
Closing Working Capital Statement;
(d) all liabilities and obligations of the Seller under the Contracts
but only to the extent such obligations (A) arise after the Closing Date, (B)
do not arise from or relate to any breach by the Seller of any provision of any
of such Contracts and (C) do not arise from or relate to any event,
circumstance or condition occurring or existing on or prior to the Closing Date
that, with notice or lapse of time, would constitute or result in a breach of
any of such Contracts; and
(e) all liabilities, obligations or commitments related to or arising
from the operation of the Business by the Buyer or its successors to any
Acquired Assets or the ownership of the Acquired Assets by the Buyer or its
successors to any Acquired Assets occurring after the Closing Date.
Section 1.3 Retained Liabilities. Subject to the terms and conditions
of this Agreement, the Buyer shall not assume and the Seller shall retain any
liability or obligation not expressly included in the Assumed Liabilities,
whether accrued, contingent or otherwise, including the following liabilities
and obligations (collectively, the "Retained Liabilities"):
(a) all Taxes, including Transfer Taxes the Seller has agreed to
assume pursuant to Section 4.5(a), imposed on the Seller or attributable to the
Acquired Assets for any taxable year (or portion thereof) that ends on or
before the Closing Date;
(b) any liability of the Seller arising out of or relating to the
execution, delivery or performance of this Agreement or any of the Ancillary
Agreements;
(c) any liability of the Seller to any employee, consultant or
director or former employee, consultant or director of the Seller under or with
respect to any Employee Plan or Employment Agreement, other than any liability
under or with respect to any Health Plan Policy that arises out of or relates
to any event that occurs after the Closing Date;
(d) any indebtedness from borrowing or any long-term debt;
(e) any liability relating to any Actions arising from or relating to
acts, omissions or events occurring prior to the Closing Date; and
(f) any liability under any Contract acquired by the Buyer pursuant to
Section 1.1(a) that arises after the Closing Date but that arises out of or
relates to any breach or default that occurred prior to the Closing Date.
Section 1.4 Closing Payment. Not later than the third Business Day
prior to the Closing Date, the Seller will cause to be prepared and delivered
to the Buyer (i) an estimated working capital statement, which shall reflect,
as of the Closing Date, the current assets to be transferred to the Buyer in
accordance with Section 1.1(a) and the current liabilities to be assumed by the
Buyer in accordance with Section 1.2 and prepared in the same manner as the
Closing Working Capital Statement as described in Section 1.5 (the "Estimated
Closing Working Capital Statement") and (ii) a certificate of a senior officer
of the Seller setting forth in reasonable detail a calculation of an estimate
of the Closing Net Working Capital Amount (the "Estimated Net Working Capital
Amount"). Unless objected to by the Buyer on the basis of fraud or manifest
error, the Estimated Net Working Capital Amount delivered by the Seller shall
be binding on the Buyer and the Seller for purposes of the Closing in
accordance with this Section 1.4. In the event that the Buyer objects to the
Estimated Net Working Capital Amount (as provided above), the Buyer and the
Seller and their respective representatives shall resolve such objection in a
mutually agreeable manner through the good faith efforts of senior officers of
the parties.
(b) Subject to the terms and conditions of this Agreement, the Buyer
agrees to (i) assume the Assumed Liabilities, (ii) subject to the adjustment
and escrow provisions in Sections 1.4, 1.5 and 1.7, pay to the Seller at the
Closing by wire transfer in accordance with wire transfer instructions to be
provided by the Seller to the Buyer prior to Closing, $30,000,000 in cash (as
adjusted pursuant to Sections 1.4 and 1.5 and less the Escrow Amount, the
"Initial Purchase Price") and (iii) pay to the Seller any Earnout Payments
payable pursuant to Section 1.6 (the total consideration paid to the Seller
pursuant to clauses (i), (ii) and (iii) above, as adjusted pursuant to this
Agreement, the "Purchase Price"). If the Estimated Net Working Capital Amount
is less than zero (the "Target Net Working Capital Amount"), the Initial
Purchase Price shall be reduced by the amount by which the Estimated Net
Working Capital Amount is less than the Target Net Working Capital Amount. If
the Estimated Net Working Capital Amount is greater than the Target Net Working
Capital Amount, the Initial Purchase Price shall be increased by the amount by
which the Estimated Net Working Capital Amount is greater than the Target Net
Working Capital Amount. The Initial Purchase Price shall be subject to further
adjustment as set forth in Section 1.5.
Section 1.5 Post-Closing Purchase Price Adjustment. As promptly as
practicable, but no later than 90 days after the Closing Date, the Buyer will
cause to be prepared and delivered to the Seller (i) a working capital
statement, which shall reflect, as of the Closing Date, the current assets
transferred to the Buyer in accordance with Section 1.1(a) and the current
liabilities assumed by the Buyer in accordance with Section 1.2 (the "Closing
Working Capital Statement"), which shall be prepared in accordance with GAAP
and subject to the permitted adjustments and qualifications set forth in
Schedule 1.5(a) and (ii) a certificate of a senior officer of the Buyer,
setting forth the amount of the Net Working Capital of the Business as of the
Closing Date (the "Closing Net Working Capital Amount") and the amount of any
adjustment to the Initial Purchase Price pursuant to this Section 1.5, if any,
together with supporting calculations (the "Adjustment Certificate"). The
Seller shall have 30 days from the date on which the Closing Working Capital
Statement and the Adjustment Certificate are delivered to it to review such
documents (the "Review Period"). In furtherance of the foregoing, the Buyer
shall give the Seller and its authorized representatives reasonable access
(subject to the execution of such customary confidentiality and other
undertakings as may be requested by the Buyer's independent auditor) to all
books, records, files and other documents, personnel, offices and other
facilities and properties of the Business as the Seller may reasonably require
in order to review and verify the Closing Working Capital Statement and the
Adjustment Certificate; provided, however, that any such access shall be
conducted in such a manner as not to interfere unreasonably with the normal
operation of the Business. If the Seller disagrees in any respect with any item
or amount shown or reflected in the Closing Working Capital Statement or the
Adjustment Certificate or with the calculation of the Closing Net Working
Capital Amount, the Seller may, on or prior to the last day of the Review
Period, deliver a notice to the Buyer setting forth, in reasonable detail the
elements and/or amounts with which it disagrees (the "Dispute Notice"). If no
Dispute Notice is received by the Buyer on or prior to the last day of the
Review Period, the Closing Working Capital Statement and the Adjustment
Certificate shall be deemed accepted by the Seller. In the event that the
Seller delivers a Dispute Notice to the Buyer, the Buyer or the Seller, as the
case may be, will concurrently pay to the other party any undisputed portion of
the Closing Net Working Capital Amount set forth in the Adjustment Certificate.
(b) For 30 days after the Buyer's receipt of a Dispute Notice, the
parties shall endeavor in good faith to resolve by mutual agreement all matters
in the Dispute Notice. In the event the parties are unable to resolve by mutual
agreement any matter in the Dispute Notice within such 30-day period, the Buyer
and the Seller hereby agree that they shall engage KPMG LLP as the "Accountant"
(if KPMG LLP is unable or unwilling to serve as the Accountant, the parties
shall, within 15 days of the end of such 30-day period, agree on an alternate
independent accounting firm which shall not be engaged by either party to
perform any work and shall not have performed any work for either party during
the previous two years to serve as the Accountant or have such selection made
pursuant to the rules of the American Arbitration Association (the "AAA") in
the event they are unable to agree within such allotted time period) in respect
of this Section 1.5. Each of the Buyer and the Seller further agree that it
shall not engage, or agree to engage, KPMG LLP or such other accounting firm as
shall have been engaged as the Accountant under this Section 1.5(b) to perform
any services other than as the Accountant pursuant to this Section 1.5(b) until
the Final Gross Profit Statement relating to the final Measuring Period
provided under Section 1.6 has been finalized in accordance with Section
1.6(c). The Buyer and the Seller shall cooperate with the Accountant and
promptly provide all documents and information requested by the Accountant.
(c) The Accountant shall promptly, and in any event within 60 days
after the date of its appointment, render its decision on the question in
writing (the "Adjustment Report") and finalize the Closing Working Capital
Statement, determine the appropriate Closing Net Working Capital Amount and
provide appropriate supporting calculations. The Adjustment Report shall be
final and binding upon the parties hereto, shall be deemed a final arbitration
award that is binding on each of the parties hereto, and no party shall seek
further recourse to courts or other tribunals, other than to enforce the
Adjustment Report. Judgment may be entered to enforce the Adjustment Report in
any court of competent jurisdiction. The Buyer and the Seller shall each be
responsible for paying 50% of all fees and expenses relating to the work of the
Accountant; provided, however, that if 80% or more of the amounts in dispute
between the parties with respect to the Closing Net Working Capital Amount are
resolved by the Accountant in favor of one party, then 100% of the fees and
expenses of the Accountant shall be borne by the other party.
(d) Effective upon the end of the Review Period (if a timely Dispute
Notice is not delivered), or upon the resolution of all matters set forth in
the Dispute Notice by mutual agreement of the parties or by the issuance of the
Adjustment Report (if a timely Dispute Notice is delivered), the Initial
Purchase Price shall be subject to adjustment as follows. If the Closing Net
Working Capital Amount is less than the Estimated Net Working Capital Amount,
the Initial Purchase Price shall be reduced by the amount equal to the amount
by which the Closing Net Working Capital Amount is less than the Estimated Net
Working Capital Amount. If the Closing Net Working Capital Amount is greater
than the Estimated Net Working Capital Amount, the Initial Purchase Price shall
be increased by the amount equal to the amount by which the Closing Net Working
Capital Amount is more than the Estimated Net Working Capital Amount. Any
adjustment to the Initial Purchase Price pursuant to this Section 1.5 (a
"Post-Closing Purchase Price Adjustment") shall be paid by the applicable
party: (i) on the fifth Business Day following the end of the Review Period (if
a timely Dispute Notice is not delivered) or (ii) (A) with respect to
undisputed amounts paid pursuant to the last sentence of Section 1.5(a), on the
fifth Business Day following the delivery of a Dispute Notice to the Buyer and
(B) giving effect to any payment made by the applicable party as described in
the foregoing clause (A), five Business Days after resolution of all matters
set forth in the Dispute Notice by mutual agreement of the parties or five
Business Days after the date on which the Adjustment Report has been received
by the Seller and the Buyer (if a timely Dispute Notice is delivered). Any such
payment shall be made by wire transfer of immediately available funds to an
account or accounts designated by the recipient prior to the applicable payment
date. Notwithstanding the foregoing, if it is determined that a downward
Post-Closing Purchase Price Adjustment is required, the Buyer may, at its sole
election, take account of any such Post-Closing Purchase Price Adjustment in
connection with the payment of any Earnout Payments as contemplated in Section
1.6 or the release of the Escrow Amount as contemplated in Section 1.7.
Section 1.6 Earnout Payments. Subject to Section 4.13(d) and in
accordance with Sections 1.6(b), (c) and (d) hereof, the Buyer shall make
further payments to the Seller (each such payment, an "Earnout Payment")
following each of the fiscal years ended December 31, 2004, 2005 and 2006 (each
such fiscal year, a "Measuring Period"), in each case in an amount equal to the
product of (A) the "Earnout Amount" (as set forth in the table below) for the
relevant Measuring Period multiplied by (B) the percentage determined by
dividing (x) the positive difference, if any, between the Gross Profit for the
relevant Measuring Period and the "Baseline Amount" (as set forth in the table
below) for the relevant Measuring Period by (y) the difference between the
"Target Amount" (as set forth in the table below) for the relevant Measuring
Period and the Baseline Amount for the relevant Measuring Period; provided,
however, that (i) no Earnout Payment shall be payable in respect of any
Measuring Period unless the Gross Profit for the relevant Measuring Period is
greater than the Baseline Amount for the relevant Measuring Period, (ii) no
Earnout Payment in respect of any Measuring Period shall exceed an amount equal
to 125% of the Earnout Amount for the relevant Measuring Period and (iii) the
total aggregate amount of Earnout Payments paid by the Buyer pursuant to this
Section 1.6 shall in no event exceed $10,000,000. The Baseline Amounts, Target
Amounts and Earnout Amounts for each of the Measuring Periods are as follows:
-------------------------------- ------------------- -------------------- --------------------
Measuring Baseline Amount Target Earnout
Period Amount Amount
-------------------------------- ------------------- -------------------- --------------------
January 1 - December 31, 2004 $7,568,350 $9,406,000 $3,333,333
-------------------------------- ------------------- -------------------- --------------------
January 1 - December 31, 2005 $9,406,000 $11,424,000 $3,333,333
-------------------------------- ------------------- -------------------- --------------------
January 1 - December 31, 2006 $11,424,000 $13,819,000 $3,333,334
-------------------------------- ------------------- -------------------- --------------------
(b) Promptly upon completion of the annual audit of the Buyer for each
Measuring Period, but in no event later than March 31 of the year following
such Measuring Period, the Buyer shall prepare in good faith and deliver to the
Seller a statement (a "Gross Profit Statement") certified by the Buyer's chief
financial officer, setting forth in reasonable detail the Buyer's calculation
of the Gross Profit of the Business for such Measuring Period. The Gross Profit
of the Business for the Measuring Period from January 1 - December 31, 2004
shall be the aggregate Gross Profit of the Business for such period, whether
operated by the Seller prior to the Closing or by the Buyer subsequent to the
Closing. For purposes of this Agreement, (x) "Gross Profit" shall mean total
revenue generated by the Business minus pass through amounts related to such
revenue minus Total Cost of Sales, and shall be determined in accordance with
GAAP and consistent with the past practices of the Business, and (y) "Total
Cost of Sales" shall mean all direct costs related to the total revenue
generated by the Business during the relevant Measuring Period, including, but
not limited to (i) recruiting costs, (ii) teleconferencing costs, (iii)
honoraria expenses, (iv) mail program costs, (v) costs of independent
contractors, (vi) moderator costs (including internal moderators on staff, fees
for service moderators on staff and outsourced independent contractor
moderators), (vii) creative services costs, (viii) client services expenses,
(ix) postage, (x) printing costs and (xi) special event costs. For the
avoidance of doubt, nothing in this Section 1.6(b) shall create any obligation
on the part of the Buyer to perform a separate annual audit of the Business.
(c) The Seller shall have 60 days after the delivery of a Gross Profit
Statement to object to the Gross Profit Statement (the "Earnout Payment
Objection Period"). In furtherance of the foregoing, the Buyer shall give the
Seller and its authorized representatives reasonable access (subject to the
execution of such customary confidentiality and other undertakings as may be
requested by the Buyer's independent auditor) to all books, records, files and
other documents, personnel, offices and other facilities and properties of the
Business as the Seller may reasonably require in order to review and verify the
Gross Profit Statement; provided, however, that any such access shall be
conducted in such a manner as not to interfere unreasonably with the normal
operation of the Business. The Seller shall notify the Buyer in writing of any
objections to such documents, setting forth in reasonable detail a description
of such objection and, if applicable and reasonably ascertainable, the dollar
amount of such objection. The Seller and the Buyer shall attempt in good faith
to resolve such dispute by negotiation. If the parties are unable to resolve
such dispute within 30 days thereafter, such dispute shall be resolved in
accordance with Sections 1.5(b) and (c) of this Agreement. If the Seller does
not object during the Earnout Payment Objection Period, the Gross Profit
Statement shall be conclusive and binding on the parties hereto, except as set
forth below in this Section 1.6(c). The Gross Profit Statement, either as
agreed to by the Buyer and the Seller (which shall be deemed to be the case in
the event the Seller fails to object thereto during the Earnout Payment
Objection Period) or as adjusted by the Accountant pursuant to the preceding
sentence, shall be final and binding and shall be referred to as a "Final Gross
Profit Statement." Within five Business Days of the determination of the Final
Gross Profit Statement, the Buyer shall pay to the Seller the relevant Earnout
Payment, if any; provided, that, in the event that the Seller objects during
the Earnout Payment Objection Period, the Buyer will pay to the Seller, within
five Business Days of such objection, any undisputed portion of the Earnout
Payment which would be payable pursuant to Section 1.6(a) if the Gross Profit
Statement (and the amount of the Gross Profit derived therefrom) were deemed
accepted by the Seller. Notwithstanding anything to the contrary contained
herein, if a subsequent review of a Final Gross Profit Statement during the
course of resolving a dispute relating to the Gross Profit Statement for a
later Measuring Period reveals a difference of at least $100,000 between (i)
the Earnout Payment due with respect to the actual Gross Profit of the Business
for a prior Measuring Period as to which the Seller did not object to the Gross
Profit Statement for such Measuring Period and (ii) the Earnout Payment paid to
the Seller in respect of such Measuring Period (a "Material Prior Profit
Discrepancy"), the party discovering such Material Prior Profit Discrepancy
shall notify the other party in writing, setting forth in reasonable detail a
description and the dollar amount of such Material Prior Profit Discrepancy.
The Seller and the Buyer shall attempt in good faith to resolve such Material
Prior Profit Discrepancy by negotiation. If the parties are unable to resolve
such Material Prior Profit Discrepancy within 30 days thereafter, such Material
Prior Profit Discrepancy shall be resolved in accordance with Sections 1.5(b)
and (c) of this Agreement and the relevant party shall reimburse the other
party for the amount of any such discrepancy as so resolved. For the avoidance
of doubt, the right of any party to reimbursement in respect of prior Measuring
Periods contemplated by this Section 1.6(c) shall expire upon the issuance of
the Final Gross Profit Statement for the final Measuring Period under Section
1.6(a).
(d) The Buyer may, in its sole discretion, exercise a right of offset
against any Earnout Payment required to be paid by the Buyer pursuant to
Section 1.6(a) by deducting from the amount of such Earnout Payment (i) the
amount of any Post-Closing Purchase Price Adjustment, or (ii) the amount of any
indemnity obligation of the Seller Parties under Article VII, in each case, to
the extent that such amounts have been definitively determined and have not
been previously paid to the Buyer, either pursuant to Section 1.7 or otherwise.
Neither the exercise of nor the failure to exercise such right of offset will
constitute an election of remedies or limit the Buyer in any manner in the
enforcement of any other remedies that may be available to it.
(e) An agreed operating budget for the Business for the fiscal years
2004 through 2006 is set forth in Schedule 1.6(e) (the "Budget"). During each
Measuring Period, the Buyer shall use its commercially reasonable efforts to
manage and operate the Business in the ordinary course, consistent with past
practice and in accordance with the Budget, including the expenditure of funds
called for by the Budget, except as may be required by applicable law.
Notwithstanding anything to the contrary contained herein, if the Business
performs materially below the performance levels set forth in the Budget during
any Measuring Period, the Buyer may, in its sole discretion, alter the Budget
and/or the way in which the Business is managed and operated.
(f) Notwithstanding anything to the contrary contained herein, if
during any Measuring Period, the Buyer shall directly or indirectly dispose of
all or a substantial part of the Business (a "Sale"), then the Buyer shall pay
to the Seller within 60 days of the Sale an amount equal to (i) the full target
Earnout Amount for any Measuring Periods that have not yet commenced plus (ii)
in respect of the Measuring Period in which a Sale occurs, the greater of (A)
the Earnout Payment which would be payable by the Buyer pursuant to Section
1.6(a) if Gross Profit for the portion of such Measuring Period completed as of
the date of Sale were annualized and earned for the full Measuring Period and
(B) the full target Earnout Amount for such Measuring Period; provided,
however, that in no event shall the total amount of any payment made under this
Section 1.6(f) plus any previously paid Earnout Payments exceed $10,000,000.
(g) In the event that (1) ▇▇▇▇▇ ▇▇▇▇▇▇'▇ or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇'▇
employment with the Buyer terminates prior to December 31, 2006 for any reason
other than (i) the performance of the Business being materially below the
performance levels set forth in the Budget during any Measuring Period, (ii)
voluntary termination by such employee, (iii) death of such employee, (iv)
disability of such employee, or (v) termination "For Cause" (as defined in the
relevant employment agreement), or (2) either ▇▇. ▇▇▇▇▇▇'▇ or ▇▇. ▇▇▇▇▇▇▇'▇
duties or responsibilities with the Buyer are materially reduced without such
employee's consent, then, notwithstanding anything herein to the contrary, the
Buyer shall pay to the Seller, within 60 days following such termination of
employment, an amount equal to (i) the full target Earnout Amount for any
Measuring Periods that have not yet commenced plus (ii) in respect of the
Measuring Period in which such termination or reduction of duties occurs, the
greater of (A) the Earnout Payment which would be payable by the Buyer pursuant
to Section 1.6(a) if Gross Profit for the portion of such Measuring Period
completed as of the date of such termination or reduction of duties were
annualized and earned for the full Measuring Period and (B) the full target
Earnout Amount for such Measuring Period; provided, however, that in no event
shall the total amount of any payment made under this Section 1.6(g) plus any
previously paid Earnout Payments exceed $10,000,000.
Section 1.7 Escrow Amount. Notwithstanding anything contained in this
Agreement to the contrary, at the Closing, the Buyer, the Seller, the Members
and the escrow agent thereunder (the "Escrow Agent") shall enter into an Escrow
Agreement, substantially in the form of Exhibit A hereto (the "Escrow
Agreement"), pursuant to which the Buyer shall deposit in an Escrow Account
(the "Escrow Account") $1,500,000 otherwise payable as part of the Initial
Purchase Price (the "Escrow Amount") for collateral payment of any Post-Closing
Purchase Price Adjustment and for collateral payment of any indemnification
obligations of the Seller Parties under Article VII.
(b) On the date that is three months after the Closing Date (the
"First Release Date"), an amount equal to the excess, if any, of (i) the then
current balance of the Escrow Account, over (ii) $1,000,000 plus (x) the
aggregate amount of all indemnification claims brought by the Buyer that have
been resolved and are due to the Buyer pursuant to Article VII but that have
not been paid to the Buyer (either pursuant to this Section 1.7 or otherwise)
as of such date, and (y) the aggregate amount of all unresolved indemnification
claims brought by the Buyer in accordance with Article VII which remain
unresolved as of such date, shall be released from the Escrow Account to the
Seller in accordance with the terms and conditions of the Escrow Agreement.
(c) On the date that is 9 months after the Closing Date (the "Second
Release Date"), an amount equal to the excess, if any, of (i) the then current
balance of the Escrow Account, over (ii) $500,000 plus (x) the aggregate amount
of all indemnification claims brought by the Buyer that have been resolved and
are due to the Buyer pursuant to Article VII but that have not been paid to the
Buyer (either pursuant to this Section 1.7 or otherwise) as of such date, and
(y) the aggregate amount of all unresolved indemnification claims brought by
the Buyer in accordance with Article VII which remain unresolved as of such
date, shall be released from the Escrow Account to the Seller in accordance
with the terms and conditions of the Escrow Agreement.
(d) On the date that is 21 months after the Closing Date (the "Final
Release Date"), an amount equal to the positive difference, if any, between (i)
the then current balance of the Escrow Account, and (ii) the total of (x) the
aggregate amount of all indemnification claims brought by the Buyer that have
been resolved and are due to the Buyer pursuant to Article VII but that have
not been paid to the Buyer (either pursuant to this Section 1.7 or otherwise)
as of such date, and (y) the aggregate amount of all unresolved indemnification
claims brought by the Buyer in accordance with Article VII which remain
unresolved as of such date, shall be released from the Escrow Account to the
Seller in accordance with the terms and conditions of the Escrow Agreement.
(e) Upon the satisfaction (either by release from the Escrow Account
or otherwise) of any indemnification claim for an amount less than the amount
retained in respect thereof on any Release Date, the Escrow Agent shall
promptly release to the Seller an amount equal to the positive difference, if
any, between the amount retained in respect thereof on the applicable Release
Date and the amount released from the Escrow Account to the Buyer in
satisfaction thereof (such difference, the "Excess Amount"); provided, that,
any Excess Amount shall be released to the Seller if and only to the extent
that the then current balance of the Escrow Account exceeds the total of (i)
the aggregate amount of all indemnification claims brought by the Buyer that
have been resolved and are due to the Buyer pursuant to Article VII but that
have not been paid to the Buyer (either pursuant to this Section 1.7 or
otherwise) as of such date, plus (ii) the aggregate amount of all unresolved
indemnification claims brought by the Buyer in accordance with Article VII
which remain unresolved as of such date, plus (iii) if such indemnification
claim is satisfied during the period (A) between the First Release Date and the
Second Release Date, $1,000,000, and (B) between the Second Release Date and
the Final Release Date, $500,000.
Section 1.8 Time and Place of Closing. Upon the terms and subject to
the conditions of this Agreement, the closing of the transactions contemplated
by this Agreement (the "Closing") will take place at the offices of Skadden,
Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
at 9:00 a.m. (local time) on the third Business Day following the date on which
all the conditions to each party's obligations specified in Article V hereunder
have been satisfied or waived by the party entitled to waive the applicable
condition (other than those conditions that by their nature are to be satisfied
at the Closing, but subject to the fulfillment or waiver of those conditions),
or at such other date, place or time as the parties may agree in writing. The
date on which the Closing occurs and the transactions contemplated hereby
become effective is referred to herein as the "Closing Date."
Section 1.9 Deliveries by the Seller. Subject to the terms and
conditions hereof, at the Closing, the Seller will deliver to the Buyer the
officer's certificate provided for in Section 5.3(c). In addition, at the
Closing, the Seller will deliver the following to the Buyer:
(a) one or more Bills of Sale and Assignment (the "Bills of Sale")
duly executed by the Seller and substantially in the form of Exhibit B hereto,
transferring to the Buyer or its assignees all of the Acquired Assets;
(b) the Escrow Agreement duly executed by the Seller and each of the
Members;
(c) the consents set forth in Schedule 5.3(e) hereto;
(d) documents evidencing the release or termination of all Liens on
the Acquired Assets, and copies of filed UCC termination statements with
respect to all UCC financing statements evidencing Liens;
(e) a Domain Name Assignment (the "Domain Name Assignment") duly
executed by the Seller and substantially in the form of Exhibit C hereto; and
(f) all other documents, instruments and writings required to be
delivered by the Seller or any of the Members at or prior to the Closing Date
pursuant to this Agreement.
Section 1.10 Deliveries by the Buyer. Subject to the terms and
conditions hereof, at the Closing, the Buyer will deliver the Initial Purchase
Price (less the Escrow Amount) to the Seller, in immediately available funds by
wire transfer to an account or accounts to be specified in writing by the
Seller, and will deliver to the Seller the officer's certificate provided for
in Section 5.2(c). In addition, the Buyer will deliver the following to the
Seller:
(a) an Instrument of Assumption duly executed by the Buyer (and/or its
designees) and substantially in the form of Exhibit D hereto (the "Instrument
of Assumption" and, together with the Bills of Sale, the Domain Name Assignment
and the Escrow Agreement, the "Ancillary Agreements");
(b) the Escrow Agreement duly executed by the Buyer and the Escrow
Agent, together with the deposit of the Escrow Amount with the Escrow Agent;
and
(c) all other documents, instruments and writings required to be
delivered by the Buyer (and/or its designees) at or prior to the Closing Date
pursuant to this Agreement.
Section 1.11 Books and Records of the Seller. The Seller agrees to
deliver to the Buyer at the Closing, the Books and Records.
Section 1.12 Affiliate Accounts. On or prior to the Closing Date, all
amounts owing and outstanding by the Company to the Members or any of their
Affiliates shall be cancelled.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE MEMBERS
The Seller and each of the Members hereby represents and warrants,
severally and not jointly, to the Buyer as follows:
Section 2.1 Organization; Etc. The Seller (i) is a limited liability
company duly organized, validly existing and in good standing under the Laws of
the State of Illinois, (ii) has all requisite company power and authority to
own, lease and operate the properties and assets that it purports to own or use
and to carry on its business as it is now being conducted, and (iii) is duly
qualified and in good standing to do business in each jurisdiction in which the
nature of its business or the ownership, operation or leasing of its properties
makes such qualification necessary, except where the failure to be so existing
and in good standing, to have such power and authority or to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect.
Section 2.1 of the Seller Disclosure Schedule contains a complete and accurate
list of the jurisdiction of formation and any other jurisdictions in which the
Seller is qualified to do business. The Seller has heretofore delivered to
Buyer complete and correct copies of the certificate of formation and operating
agreement, as presently in effect, of the Seller. The Seller has no
Subsidiaries.
Section 2.2 Authority Relative to This Agreement. The Seller has the
requisite power and authority to execute and deliver this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary company action on the part of the Seller. Each Member has all
necessary legal capacity to enter into this Agreement and the Ancillary
Agreements to which such Member is a party and to consummate the transactions
contemplated hereby and thereby. This Agreement has been and the Ancillary
Agreements to which it is a party will at the Closing be duly and validly
executed and delivered by the Seller and each of the Members and (assuming this
Agreement has been and each of the Ancillary Agreements to which it is to be a
party will at the Closing be duly authorized, executed and delivered by the
other parties thereto) constitutes or will at the Closing constitute a valid
and binding agreement of the Seller and each of the Members, enforceable
against the Seller and each of the Members in accordance with its terms and
conditions, except that (a) such enforcement may be subject to any bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or other Laws, now
or hereafter in effect, relating to or limiting creditors' rights generally and
(b) enforcement of this Agreement and the Ancillary Agreements, including,
among other things, 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 therefor may be brought.
Section 2.3 Consents and Approvals; No Violations. Except as set forth
in Section 2.3 of the Seller Disclosure Schedule, neither the execution and
delivery of this Agreement or any of the Ancillary Agreements by the Seller or
the Members nor the consummation by the Seller or the Members of the
transactions contemplated hereby or by any of the Ancillary Agreements to which
it is a party will (a) conflict with or result in any breach of any provision
of the certificate of formation, operating agreement or comparable
organizational document of the Seller, (b) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, change of control rights,
cancellation, modification or acceleration) under, or require any consent
under, any indenture, license, contract, agreement or other instrument or
obligation to which the Seller is a party or by which it or any of its
properties or assets are bound, (c) result in the creation or imposition of any
Lien on any of the Acquired Assets; (d) violate any order, writ, injunction,
decree or award rendered by any federal, state, local, municipal or non-U.S.
governmental or regulatory authority (a "Governmental Entity") or any statute,
rule or regulation or principle of common law (collectively, "Laws" and,
individually, a "Law") applicable to the Seller or any of its properties or
assets, or (e) require any filing with, or the obtaining of any permit,
authorization, consent or approval of, any Governmental Entity, except in the
case of clauses (b) and (e) of this Section 2.3 for any such violations,
breaches, defaults or requirements that, individually or in the aggregate, (x)
would not reasonably be expected to have a Material Adverse Effect or would not
adversely affect the ability of the Seller or any of the Members to consummate
the transactions contemplated by this Agreement or any of the Ancillary
Agreements or (y) become applicable as a result of the business or activities
in which the Buyer is or (other than in respect of its acquisition of the
Acquired Assets) proposes to be engaged or as a result of any acts or omissions
by, or the status of or any facts pertaining to, the Buyer.
Section 2.4 Financial Statements. True and complete copies of the
Financial Statements, together with the related auditors' reports, are included
in Section 2.4 of the Seller Disclosure Schedule. The Financial Statements have
been prepared from, are in accordance with and accurately reflect, the books
and records of the Seller, have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be stated in
the notes thereto) and fairly present the consolidated financial position and
the consolidated results of operations and cash flows (and changes in financial
position, if any) of the Seller as of the times and for the periods referred to
therein.
Section 2.5 Absence of Undisclosed Liabilities. Except for (a)
liabilities or obligations incurred in the ordinary course of business and
consistent with past practice since June 30, 2004, (b) liabilities or
obligations accrued or reserved against in the Financial Statements or (c)
liabilities or obligations disclosed herein or in Section 2.5 of the Seller
Disclosure Schedule, since June 30, 2004, the Seller has no liabilities or
obligations (whether known, unknown, liquidated, unliquidated, due, to become
due, direct, indirect, accrued or contingent). To the knowledge of the Seller,
the accruals and reserves reflected in the Financial Statements are adequate,
appropriate and reasonable and have been calculated in a consistent manner.
Section 2.6 Absence of Certain Changes; No Material Adverse Change.
Since June 30, 2004, except as permitted under Section 4.1 of this Agreement:
(a) the Business has been conducted in the ordinary course consistent with past
practice; (b) the Seller has not (i) sold, assigned, licensed, transferred,
conveyed or otherwise disposed of any assets that would otherwise be Acquired
Assets, except in the ordinary course of business consistent with past
practice, (ii) modified or amended any of the Contracts, except in the ordinary
course of business in accordance with past practice, (iii) hired any employee
with an annual base cash compensation in excess of $100,000, or increased in
any material respect the compensation of any of the officers or other
employees, except for such increases for persons who are not officers of the
Seller as are granted in the ordinary course of business in accordance with its
customary practices (which shall include normal periodic performance reviews
and related compensation and benefit increases), (iv) adopted, granted,
extended or increased the rate or terms of any Employee Plan, except increases
required by any applicable Law, (v) made any change in any of the Seller's
present accounting methods and practices, except as required by GAAP or changes
in GAAP, made or changed any election for tax purposes, adopted or changed any
accounting method for tax purposes, filed any amended Tax Return, settled any
Tax claim or assessment or entered into any "closing agreement" as described in
Section 7121 of the Code with respect to the Acquired Assets, (vi) licensed any
Intellectual Property rights to or from any Person, (vii) made or authorized
any capital expenditures in excess of $5,000 other than in accordance with its
annual plan previously provided to the Buyer, (viii) incurred any indebtedness
for borrowed money, issued any debt securities or assumed, guaranteed or
endorsed the obligations of any other Persons or subjected any of its
properties or assets to any Liens, (ix) cancelled or compromised any debt or
claim or waived or released any rights of the Business, (x) entered into any
agreement or arrangement with any Member or any Affiliate of any Member, or
(xi) taken, or agreed to take, any of the foregoing actions; and (c) there has
not been any change, act, circumstance or event which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect.
Section 2.7 Litigation. There is no Action or governmental
investigation pending or, to the knowledge of the Seller, threatened against
the Seller or any of the Members in respect of or affecting any of the Acquired
Assets or the Business by or before any court, arbitrator or Governmental
Entity. There is no Action pending or, to the knowledge of the Seller,
threatened, against the Seller or any of the Members seeking to enjoin or
restrain the consummation of the transactions contemplated hereby. There is not
outstanding or, to the knowledge of the Seller, threatened, any orders,
judgments, decrees, results of arbitration or injunctions issued by any court,
arbitrator or Government Entity against, affecting or naming the Seller or any
of the Members or affecting any of the Acquired Assets or the Business.
Section 2.8 Compliance with Law. The Business is not being and has not
been conducted in material violation of any applicable Law or any order, writ,
injunction, results of arbitration or decree of any court, arbitrator or
Governmental Entity. The Business has all material permits, licenses and other
governmental authorizations, consents and approvals necessary to conduct its
business as currently conducted or proposed to be conducted, which is the
continuation of the Business as currently conducted (collectively, the
"Permits"). All of the Permits are identified in Section 2.8 of the Seller
Disclosure Schedule. The Business is not and has not been in material violation
of the terms of any Permit. Each such Permit is in full force and effect; the
Seller is in compliance with the terms of each such Permit; and, to the
knowledge of the Seller, no suspension or cancellation of such Permit is
threatened and there is no basis for believing that such Permit will not be
renewable upon its expiration.
Section 2.9 Employee Benefit Plans. Section 2.9(a) of the Seller
Disclosure Schedule contains a true and complete list of each deferred
compensation and each incentive compensation, stock purchase, stock option and
other equity compensation plan, program, agreement or arrangement; each
severance or termination pay, medical, surgical, hospitalization, life
insurance and other "welfare" plan, fund or program (within the meaning of
section 3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")); each profit-sharing, stock bonus or other "pension" plan, fund or
program (within the meaning of section 3(2) of ERISA); and each other employee
benefit plan, fund, program, agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by the
Seller or by any trade or business, whether or not incorporated (an "ERISA
Affiliate"), that together with the Seller would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which the Seller or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Seller (the "Employee Plans"), and each
employment, severance, retention, consulting or similar agreement currently in
effect that has been entered into by the Seller and any employee of the
Business (collectively, the "Employment Agreements"). Neither the Seller nor
any ERISA Affiliate has any commitment or formal plan, whether legally binding
or not, to create any additional employee benefit plan or modify or change any
existing Employee Plan that would affect any employee or former employee of the
Seller.
(b) With respect to each Employment Agreement and Employee Plan, the
Seller has heretofore delivered to the Buyer true and complete copies of the
Employment Agreement and Employee Plan and any amendments thereto (or if the
Employment Agreement or Employee Plan is not a written Employment Agreement or
Employee Plan, a description thereof), any related trust or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each Employee Plan intended to qualify under section 401 of Code.
Each Employee Plan intended to be "qualified" within the meaning of section
401(a) of the Code is so qualified and the trusts maintained thereunder are
exempt from taxation under section 501(a) of the Code. Each Employee Plan
intended to satisfy the requirements of section 501(c)(9) has satisfied such
requirements.
(c) None of the Employee Plans is a "multiemployer plan," as such term
is defined in section 3(37) of ERISA, nor is any Employee Plan subject to
section 302 or Title IV of ERISA or section 412 of the Code. No liability under
Title IV or section 302 of ERISA has been incurred by the Seller or any ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Seller or any ERISA Affiliate of incurring any
such liability, other than liability for premiums due the Pension Benefit
Guaranty Corporation (which premiums have been paid when due).
(d) Neither the Seller, any Employee Plan, any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which the Seller, any Employee Plan, any such
trust, or any trustee or administrator thereof, or any party dealing with any
Employee Plan or any such trust could be subject to either a civil penalty
assessed pursuant to sections 409 or 502(i) of ERISA or a tax imposed pursuant
to sections 4975 or 4976 of the Code.
(e) Each Employee Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code.
(f) No Employee Plan or Employment Agreement provides medical,
surgical, hospitalization, death or similar benefits (whether or not insured)
for employees or former employees of the Seller for periods extending beyond
their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits under any "pension plan," or
(iii) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(g) Except as set forth in Section 2.9(g) of the Seller Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, (i) entitle any
current or former employee or officer of the Seller or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer. No amounts payable under the Employee Plans or Employment Agreements
will fail to be deductible for federal income tax purposes by virtue of section
280G of the Code.
(h) The Seller has not incurred any liability based upon, arising out
of or relating to the classification of any individual as an independent
contractor or "leased employee" (within the meaning of Section 414(n) of the
Code) rather than as an employee, and no event has occurred that with the lapse
of time or the giving of notice or both would result in the Seller incurring
any such liability. Except as set forth in Section 2.9(h) of the Seller
Disclosure Schedule, no independent contractor or a "leased employee"
participates in any Employee Plan.
(i) There are no pending, threatened or anticipated claims by or on
behalf of any Employee Plan or Employment Agreement, by any employee or
beneficiary covered under any such Employee Plan or Employment Agreement, or
otherwise involving any such Employee Plan (other than routine claims for
benefits).
Section 2.10 Labor Relations. (a) Section 2.10(a) of the Seller
Disclosure Schedule accurately sets forth, with respect to each employee of the
Seller (including any employee who is on a leave of absence or on layoff,
short-term disability or long-term disability status): (i) the name and title
of such employee; (ii) the aggregate dollar amounts of the compensation
(including wages, salary, commissions, director's fees, fringe benefits, target
bonuses, profit-sharing payments and other payments or benefits of any type)
received by such employee from the Seller with respect to services performed in
the fiscal year ended December 31, 2003; (iii) such employee's annualized
compensation as of the date of this Agreement; (iv) the number of hours of
sick-time which such employee has accrued as of the date hereof and the
aggregate dollar amount thereof; (v) the number of hours of vacation time which
such employee has accrued as of the date hereof and the aggregate dollar amount
thereof; and (vi) employment status (i.e., active or on a leave of absence or
on layoff, short-term disability or long-term disability status and full-time
or part time).
(b) (i) The Seller is and at all times has been in compliance in all
material respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and is not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law; (ii) there is no labor strike, slowdown, stoppage or lockout actually
pending, or, to the knowledge of the Seller, threatened against or affecting
the Business; (iii) there are no material claims or controversies pending, or
to the knowledge of the Seller, threatened, between the Seller and any employee
of the Seller; (iv) the Seller is not a party to or bound by any collective
bargaining or similar agreement with any labor organization; (v) no employees
of the Seller are represented by any labor organization with respect to their
employment with the Seller; (vi) no labor union, labor organization, or group
of employees of the Seller has made a pending demand for recognition or
certification; and (vii) there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority, and, to the
knowledge of the Seller, there are no labor union organizing activities, with
respect to any employees of the Seller.
Section 2.11 Tax Matters. Except as set forth in Section 2.11 of the
Seller Disclosure Schedule:
(a) the Seller has (i) duly filed (or there have been filed on their
behalf) with the appropriate Taxing Authorities all Tax Returns required to be
filed by them with respect to the Business or the Acquired Assets and all such
Tax Returns are complete, true and correct in all material respects and (ii)
duly paid (or there have been paid on their behalf) all Taxes due and payable
or claimed by any Taxing Authority to be due and payable with respect to the
Business or the Acquired Assets, and (iii) no due dates for any Tax Returns for
the taxable year ended December 31, 2003 or any subsequent taxable year have
been extended;
(b) there are no outstanding liens for Taxes in respect of any
Acquired Asset and, to the knowledge of the Seller, no claims are being
asserted with respect to any Tax that could result in a lien for Taxes in
respect of any Acquired Asset or liability under Treasury Regulation 1.1502-6
or any comparable state, local or non-U.S. Tax provision, or in any liability
of the Buyer or any Affiliate of the Buyer for such Tax;
(c) the Seller has duly withheld and paid over to the appropriate
Taxing Authority all amounts required to be so withheld and paid over in
connection with amounts paid or owing to any employee, independent contractor,
creditor, member or third party with respect to the Business;
(d) no federal, state, local or non-U.S. audits or other
administrative proceedings or court proceedings are presently pending or have
been performed with regard to any Taxes or Tax Returns of the Seller with
respect to the Business;
(e) the applicable statutes of limitation for the assessment of Taxes
on the Business or the Acquired Assets have expired for all periods through and
including December 31, 2000;
(f) the Seller has not granted any requests, agreements, consents, or
waivers to extend the statutory period of limitations applicable to the
assessment of any Taxes with respect to any Tax Returns of any of the Sellers
that include the Business or the Acquired Assets;
(g) Section 2.11(g) of the Seller Disclosure Schedule sets forth all
jurisdictions in which the Seller currently files income, franchise or sales
Tax Returns in connection with the Business;
(h) the Seller has not received written notice of any claim made by an
authority in a jurisdiction where such entity does not file Tax Returns, that
any such entity is or may be subject to taxation by that jurisdiction;
(i) at all times since its formation, Seller has been treated as a
partnership or other pass-through entity for all federal, State and local Tax
purposes; and
(j) the Seller does not have a permanent establishment or other place
of business outside of the United States, and no Members are not United States
persons.
Section 2.12 Contracts. (a) The Seller has made available to the Buyer
true, correct and complete copies of all of the following Contracts to which
the Seller is a party or by which the Acquired Assets are bound in existence on
the date hereof: (i) non-competition or director, officer or employee
indemnification agreements; (ii) contracts granting a right of first refusal or
first negotiation with respect to any assets or line of business of the
Business; (iii) partnership or joint venture agreements; (iv) agreements for
the acquisition, sale or lease of material properties or assets of the Business
(by merger, purchase or sale of assets or stock or otherwise); (v) contracts or
agreements with any Governmental Entity; (vi) Leases; (vii) loan agreements,
credit agreements, promissory notes, guarantees, subordination agreements,
letters of credit or other similar types of contract; (viii) agreements to
acquire any debt obligations of others; (ix) contracts that involve the
performance of services or delivery of goods or materials either to or by the
Seller of an amount or value in excess of $50,000; (x) License Agreements; or
(xi) commitments and agreements to enter into any of the foregoing.
(b) Except as set forth in Section 2.12(b) of the Seller Disclosure
Schedule: (i) there is not now and has not been any material default under any
Contract by the Seller or, to the knowledge of the Seller, by any other party
thereto, and no event has occurred that with the lapse of time or the giving of
notice or both would constitute a material default thereunder by the Seller, or
to the knowledge of the Seller, any other party; (ii) to the knowledge of the
Seller, no party to any such Contract has given notice to the Seller of, or
made a claim against the Business with respect to, any breach or default
thereunder, in any such case in which such breach or default would reasonably
be expected to be material to the Business; and (iii) assuming the Contracts
have been duly authorized, executed and delivered by the respective other
parties thereto, all the Contracts are valid, binding and enforceable
obligations of the Seller and the other parties thereto (except as such
enforceability may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other Laws, now or hereafter in effect,
relating to or limiting creditors' rights generally).
Section 2.13 Real Property; Leases. The Seller does not own or ground
lease, and has never owned or ground leased, any real property on behalf of the
Business. Section 2.13 of the Seller Disclosure Schedule sets forth a list of
all real property leased or subleased on behalf of the Business (the "Leased
Real Property"). A true and complete copy of each lease pursuant to which the
Seller (for the use or benefit of the Business) leases any Leased Real Property
(each, a "Lease") has heretofore been delivered to the Buyer. The Seller has
valid leasehold interests in the Leased Real Property free and clear of all
Liens. With respect to the Leased Real Property, the Seller has not entered
into any written sublease, license, option, right, concession or other
agreement or arrangement granting to any Person any portion thereof or interest
therein. To the knowledge of the Seller, the Leased Real Property is supplied
with utilities and other services adequate for its operation. The Seller is not
aware of any Lien, easement, covenant or other restriction applicable to the
Leased Real Property which would reasonably be expected to materially impair
the use or the occupancy of the Leased Real Property by the Seller for the
conduct of the Business as currently conducted and contemplated to be
conducted, which is the continuation of the Business as currently conducted.
The Seller is not aware of any Lien, easement, covenant or other restriction
applicable to the Leased Real Property which would reasonably be expected to
materially impair the use or occupancy of the Leased Real Property by the
Seller for the conduct of the Business as currently conducted and contemplated
to be conducted, which is the continuation of the Business as currently
conducted.
Section 2.14 Intellectual Property.
(a) The Seller owns, or has a valid right to use all of the
Intellectual Property that is used in or necessary for the conduct by the
Seller of the Business as currently conducted (the "Seller Intellectual
Property").
(b) Section 2.14(b) of the Seller Disclosure Schedule sets forth, for
the Seller Owned IP, a complete and accurate list of all United States and
non-U.S.: (i) Patents and Patent applications; (ii) Trademark registrations,
Trademark applications and material unregistered Trademarks; (iii) Internet
domain name registrations; (iv) Copyright registrations, Copyright applications
and material unregistered Copyrights; and (v) material Software. All Trademarks
listed on Section 2.14(b) of the Seller Disclosure Schedule have been in
continuous use by the Seller since their adoption by the Seller.
(c) To the knowledge of the Seller, the conduct by the Seller of the
Business, as presently conducted and contemplated to be conducted, does not
infringe upon or otherwise violate the Intellectual Property of any other
Person. There is no pending or, to the knowledge of the Seller, threatened
claim against the Seller (i) alleging that the Seller, the Seller Intellectual
Property or the License Agreements infringes, misappropriates, dilutes or
otherwise violates any Intellectual Property rights of any Person, or (ii)
challenging the Seller's ownership or use of, or the validity, enforceability
or registerability of, any Intellectual Property, and, to the knowledge of the
Seller, there is no basis for a claim regarding any of the foregoing.
(d) The Seller has not brought or threatened a claim against any
Person (i) alleging infringement, misappropriation, dilution or any other
violation of the Seller Intellectual Property or the License Agreements or (ii)
challenging any Person's ownership or use of, or the validity, enforceability
or registerability of, any Intellectual Property.
(e) The Seller is in compliance with all privacy policies or related
policies, programs or other notices that concern the Seller's use of personal
information. The transactions contemplated by this Agreement will not violate
the privacy policies posted (currently or in the past) on the Seller's web
sites or otherwise made publicly available.
(f) The Software included in the Seller Owned IP was developed by (i)
employees of the Seller or (ii) independent contractors who have created such
Software as "work made for hire" (as such term is defined in 17 U.S.C. ss. 101)
and/or assigned their rights to the Seller by written agreement.
(g) The Seller has taken reasonable measures to protect the
confidentiality of its material Trade Secrets.
Section 2.15 Title to Assets; Sufficiency of Assets. (a) (i) Except as
set forth in Section 2.15(a) of the Seller Disclosure Schedule, the Seller has
good title to, or a valid leasehold interest in or right to use by license or
otherwise, the Acquired Assets, free and clear of all Liens and (ii) none of
the Members owns, or has rights to use, any assets used in the Business. Any
Liens described in Section 2.15(a) of the Seller Disclosure Schedule shall have
been terminated or released prior to the Closing Date. Upon execution and
delivery by the Seller to the Buyer of the instruments of conveyance referred
to in Section 1.9, the Buyer will become the true and lawful owner of, and will
receive good title to, the Acquired Assets, free and clear of all Liens.
(b) The interests being acquired by the Buyer with respect to the
Acquired Assets include or will include as of the Closing Date all personal
property, both tangible and intangible, rights, agreements and other assets
necessary to operate the Business as conducted on or immediately prior to the
date hereof and as currently proposed to be conducted, which is the
continuation of the Business as currently conducted.
Section 2.16 Receivables. Section 2.16 of the Seller Disclosure
Schedule provides an accurate and complete breakdown and aging of all accounts
receivable and other receivables of the Seller as of June 30, 2004. All
existing accounts receivable of the Seller: (i) represent valid and binding
obligations of customers of the Business arising from bona fide transactions
entered into in the ordinary course of business; (ii) in the case of the
accounts receivable of the Seller reflected in the Closing Working Capital
Statement, are current and collectible net of any allowance for uncollectible
accounts reflected in the Closing Working Capital Statement (it being
understood that such representation and warranty is not a guarantee of
collection); (iii) to the knowledge of the Seller, are not subject to any valid
right to counterclaim or set-off; and (iv) are not the subject of any Action
brought by or on behalf of the Seller.
Section 2.17 Escheat Property. There are no claims, suits, or actions
pending or, to the knowledge of the Seller, threatened, by any Governmental
Entity, or its agents, assignees, or contractors, for escheat of any unclaimed
or abandoned property or liability, which is subject to escheat relating to the
Business, including but not limited to the following: outstanding or
undelivered honoraria payments, outstanding health and dental checks;
outstanding pension checks; undelivered equity interests and distributions
thereon; undelivered bonds/long-term debt principal and interest; accounts
receivable credits; customer overpayments; customer duplicate payments;
unidentified remittances; unrefunded overcharges; uninvoiced receipts; refunds
due; voiding of outstanding liabilities; reversals of credit balances or
outstanding liabilities to profit and loss; or reversals of credit balances or
outstanding liabilities against original charges, and, to the knowledge of the
Seller, there is no basis for any such claims, suits or actions.
Section 2.18 Insurance. Section 2.18 of the Seller Disclosure Schedule
sets forth a true and complete list of all insurance policies or binders owned
or held by the Seller with respect to the Business. The Seller has delivered or
made available to the Buyer true and complete copies of such policies and
binders. There has not been any claim (including any claim for worker's
compensation) in excess of $10,000 made by the Seller with respect to the
Business under, or which has been made against the Seller with respect to the
Business and has been paid or defended in accordance with, the terms of any
insurance policy maintained by the Seller with respect to the Business since
June 30, 2004.
Section 2.19 Customers; Key Employees. Section 2.19 of the Seller
Disclosure Schedule sets forth a list of the twenty customers from which the
Business generated the most revenues for the year ended December 31, 2003. The
Seller has not received any notice or other indication (in writing or
otherwise) by any customer of its intention to terminate, substantially reduce
or change the terms of its relationship with the Seller and, to the knowledge
of the Seller, no such termination, reduction or change is threatened. The
Seller does not guarantee or make any representation or warranty that any such
customers will become customers of the Buyer after the Closing. No key employee
of the Business has indicated to the Seller an intention to leave or otherwise
terminate his or her employment. The Seller does not guarantee or make any
representation or warranty that any such employees will become employees of the
Buyer after the Closing.
Section 2.20 Environmental Matters. No notice, notification, demand,
request for information, citation, summons, complaint or order has been
received by, and no investigation, Action, claim, suit, proceeding or review is
pending or, to the knowledge of the Seller, threatened by any Person against
the Seller, and no penalty has been assessed against the Seller with respect to
any matters relating to or arising out of any Environmental Law; the Seller is
in compliance with all Environmental Laws; and there are no liabilities of or
relating to the Seller relating to or arising out of any Environmental Law and,
to the knowledge of the Seller, there is no existing condition, situation or
set of circumstances which would reasonably be expected to result in such a
liability.
Section 2.21 Books and Records. The books and records of the Seller
accurately reflect in all material respects the assets, liabilities, business,
financial condition and results of operations of the Seller and have been
maintained in accordance with good business and bookkeeping practices. Section
2.21 of the Seller Disclosure Schedule contains a list of all bank accounts and
safe deposit boxes of the Seller and the names of persons having signature
authority with respect thereto or access thereto.
Section 2.22 Affiliate Transactions. Section 2.22 of the Seller
Disclosure Schedule sets forth a complete and correct list as of the date
hereof of all contracts and agreements to which the Seller, on the one hand,
and the Members or any of their Affiliates, on the other hand, are a party that
are in effect as of the date hereof.
Section 2.23 Brokers' and Finders' Fees. Except for ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Partners LLC, whose fees will be paid by the Seller, neither the Seller nor any
of its Affiliates have employed any investment banker, broker or finder or
incurred any liability for any investment banking fees, brokerage fees,
commissions or finders' fees in connection with this Agreement, the Ancillary
Agreements or the transactions contemplated hereby and thereby.
Section 2.24 No Other Warranties
. Notwithstanding anything to the contrary contained in this
Agreement, the Seller makes no implied warranty of any kind whatsoever, and
makes no representation with respect to any matter not expressly set forth in
this Article II. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE PARENT
The Buyer and the Parent hereby represent and warrant, jointly and
severally, to the Seller and the Members as follows:
Section 3.1 Organization; Etc. Each of the Buyer and the Parent (i) is
a corporation validly existing and in good standing under the Laws of its
jurisdiction of incorporation, (ii) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted, and (iii) is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or the
ownership, operation or leasing of its properties makes such qualification
necessary, except where the failure to be so existing and in good standing, to
have such power and authority or to be so qualified would not, individually or
in the aggregate, have a Buyer Material Adverse Effect.
Section 3.2 Authority Relative to This Agreement. Each of the Buyer
and the Parent has the requisite corporate power and authority to execute and
deliver this Agreement and the Ancillary Agreements to which it is to be a
party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Ancillary Agreements to which
it is to be a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all requisite
corporate action on the part of the Buyer and the Parent. This Agreement has
been and the Ancillary Agreements to which it is to be a party will at the
Closing be duly and validly executed and delivered by the Buyer and the Parent
and (assuming this Agreement has been and each of the Ancillary Agreements to
which it is to be a party will at the Closing be duly authorized, executed and
delivered by the Seller and each of the Members) constitutes or will at the
Closing constitute a valid and binding agreement of the Buyer and the Parent,
enforceable against the Buyer and the Parent in accordance with its terms,
except that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b)
enforcement of this Agreement and the Ancillary Agreements, including, among
other things, 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 therefor may be brought.
Section 3.3 Consents and Approvals; No Violations. Neither the
execution and delivery of this Agreement or any Ancillary Agreements by the
Buyer or the Parent nor the consummation by the Buyer or the Parent of the
transactions contemplated hereby will (a) conflict with or result in any breach
of any provision of the certificate of incorporation or bylaws of the Buyer or
the Parent, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, change of control rights, cancellation, modification or
acceleration) under, or require any consent under, any indenture, license,
contract, agreement or other instrument or obligation to which the Buyer, the
Parent or any of their respective Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound, (c) violate
any order, writ, injunction, decree or Laws applicable to the Buyer, the
Parent, any of their respective Subsidiaries or any of their respective
properties or assets, or (d) require any filing with, or the obtaining of any
permit, authorization, consent or approval of, any Governmental Entity, except
in the case of clause (d) of this Section 3.3 for any such requirements that,
individually or in the aggregate, would not have a Buyer Material Adverse
Effect.
Section 3.4 Availability of Funds. The Buyer currently has sufficient
immediately available funds in cash or cash equivalents and will at the Closing
have sufficient immediately available funds in cash to pay the Initial Purchase
Price and to pay any other amounts payable pursuant to this Agreement and the
Ancillary Agreements and to effect the transactions contemplated hereby and
thereby.
Section 3.5 Litigation. There is no Action or governmental
investigation pending or, to the knowledge of the Buyer or the Parent, any
Action or governmental investigation threatened against the Buyer, the Parent
or any of their respective Subsidiaries by or before any court or Governmental
Entity, the outcome of which, in the reasonable judgment of the Buyer or the
Parent, is likely individually or in the aggregate, to have or reasonably be
expected to have a Buyer Material Adverse Effect.
Section 3.6 Brokers' and Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Company, whose fees will be paid by the Buyer, none of the Buyer, the Parent or
any of their respective Affiliates has employed any investment banker, broker
or finder or incurred any liability for any investment banking, financial
advisory or brokerage fees, commissions or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
Section 3.7 No Other Warranties
Notwithstanding anything to the contrary contained in this
Agreement, neither the Buyer nor the Parent makes any implied warranty of any
kind whatsoever, or makes any representation with respect to any matter not
expressly set forth in this Article III.
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1 Conduct of Business of the Seller. During the period from
the date of this Agreement to the Closing Date, except (x) as otherwise
contemplated by this Agreement or the transactions contemplated hereby, or (y)
for those matters consented to by the Buyer in writing, the Seller agrees that
it shall:
(a) conduct its business in the ordinary course consistent with past
practice and, to the extent consistent therewith, use all commercially
reasonable efforts to preserve intact its current business organization,
maintain its existing insurance, use commercially reasonable efforts to keep
available the services of its current officers and employees and preserve
relationships with those Persons having business dealings with the Seller to
the end that its goodwill and ongoing businesses shall be unimpaired at the
time of the Closing; and
(b) not (i) sell, assign, license, transfer, convey or otherwise
dispose of any of the Acquired Assets, except in the ordinary course of
business consistent with past practice; (ii) make any loans, advances (other
than advances in the ordinary course of business) or capital contributions to,
or investments in, any other Person; (iii) terminate, modify, transfer or amend
any of the Contracts, except in the ordinary course of business consistent with
past practice; (iv) hire any employee with an annual base cash compensation in
excess of $100,000, or increase in any material respect the compensation of any
of the officers or other employees, except for such increases for persons who
are not officers of the Seller as are granted in the ordinary course of
business in accordance with its customary practices (which shall include normal
periodic performance reviews and related compensation and benefit increases);
(v) adopt, grant, extend or increase the rate or terms of any Employee Plan,
except increases required by any applicable Law; (vi) make any change in any of
the Seller's present accounting methods and practices, except as required by
GAAP or changes in GAAP, make or change any election for tax purposes, adopt or
change any accounting method for tax purposes, file any amended Tax Return,
settle any Tax claim or assessment or enter into any "closing agreement" as
described in section 7211 of the Code related to the Acquired Assets; (vii)
license any Intellectual Property rights to or from any Person other than in
the ordinary course of business consistent with past practice; (viii) make or
authorize any capital expenditures in excess of $5,000 other than in accordance
with its annual plan previously provided to the Buyer; (ix) incur any
indebtedness for borrowed money, issue any debt securities or assume, guarantee
or endorse the obligations of any other Persons or subject any of its
properties or assets to any Liens; (x) cancel or compromise any debt or claim
or waive or release any rights of the Business; (xi) pay any dividend or
otherwise make or pay any distribution other than in cash; (xii) enter into any
agreement or arrangement with any Member or any Affiliate of any Member; (xiii)
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization; (xiv)
take, or agree to take, any action that would or is reasonably likely to result
in any of the conditions to the Closing set forth in Article V not being
satisfied, or would make any representation or warranty of the Seller and/or
the Members contained herein inaccurate in any respect at, or as of any time
prior to, the Closing Date, or that would materially impair the ability of the
Seller or the Buyer to consummate the Closing in accordance with the terms
hereof or materially delay such consummation; or (xv) take, or agree to take,
any of the foregoing actions.
Section 4.2 Access to Information. (a) From the date of this Agreement
to the Closing, the Seller will (i) give the Buyer and its authorized
representatives reasonable access (subject to the execution of such customary
confidentiality and other undertakings as may be requested by the Seller's
independent auditor) to all books, records, files, work papers, other
documents, personnel, offices and other facilities and properties of the
Business and its accountants, (ii) permit the Buyer to make such copies and
inspections thereof as the Buyer may reasonably request and (iii) cause the
officers of the Business to furnish the Buyer with such financial and operating
data and other information with respect to the business and properties of the
Business as the Buyer may from time to time reasonably request; provided,
however, that any such access shall be conducted at the Buyer's expense, at a
reasonable time, under the supervision of the personnel of the Seller and in
such a manner as to not interfere unreasonably with the normal operation of the
business of the Seller.
(b) All such information and access shall be subject to the terms and
conditions of the letter agreement (the "Confidentiality Agreement") between
the Buyer and the Seller, dated February 2, 2004, which agreement shall expire
as of the Closing.
(c) During the period from the date hereof through the Closing Date,
the Seller shall enforce its rights for the benefit of the Buyer under any and
all confidentiality agreements entered into during the 18 months prior to the
date hereof in connection with breaches or potential breaches thereof that
become known to the Seller and promptly following the Closing Date shall cause
the recipients (other than the Buyer) of confidential information with respect
to the Business to either return to the Seller or destroy such confidential
information. Following the Closing Date, in connection with the Seller's
transfer of such confidentiality agreements to the Buyer as part of the
Acquired Assets, the Seller will provide copies of such agreements to the
Buyer.
Section 4.3 Consents; Cooperation. Subject to the other provisions of
this Agreement, each of the parties shall cooperate and use its commercially
reasonable efforts to perform its obligations under this Agreement and to take,
or cause to be taken, and do, or cause to be done, all things necessary, proper
or advisable under applicable Laws to obtain all consents and all regulatory
approvals, to consummate and make effective the transactions contemplated by
this Agreement and to satisfy all conditions to their respective obligations
under this Agreement, in accordance with the terms of this Agreement and will
cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement, including:
(a) Each of the parties promptly will make their respective filings
and submissions and will take all actions necessary, proper or advisable under
applicable Laws to obtain any required approval of any Governmental Entity with
jurisdiction over the transactions contemplated by this Agreement (except that
no party shall have any obligation to take or consent to the taking of any
action required by any such Governmental Entity that could have a material
adverse effect on the economic and financial benefits of the transactions
contemplated by this Agreement). Each of the parties will furnish all
information required for any application or other filing to be made pursuant to
any applicable Law in connection with the transactions contemplated by this
Agreement.
(b) In the event any Action by any Governmental Entity or other Person
is commenced which questions the validity or legality of the transactions
contemplated by this Agreement or by the Ancillary Agreements or seeks Damages
in connection therewith, the parties agree to cooperate and use all
commercially reasonable efforts to defend against such Action and, if an
injunction or other order is issued in any such Action, to use all commercially
reasonable efforts to have such injunction or other order lifted and to
cooperate reasonably regarding any other impediment to the consummation of the
transactions contemplated by this Agreement.
(c) The Seller will give any notices to third parties and use
commercially reasonable efforts to obtain any third party consents (i)
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement, (ii) disclosed or required to be disclosed in Section 2.3 of
the Seller Disclosure Schedule or (iii) required to avoid a breach of or
default under any Contracts in connection with the consummation of the
transactions contemplated by this Agreement.
(d) Each party shall give prompt notice, in writing, to the other
party or parties of (i) the occurrence, or failure to occur, of any event which
occurrence or failure causes any representation or warranty of the Seller, the
Buyer or the Parent, as the case may be, contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing Date or
that results in the failure to satisfy any of the conditions specified in
Article V of this Agreement and (ii) any failure of the Seller or the Buyer, as
the case may be, to comply with or satisfy any material covenant, condition or
agreement to be complied with or satisfied by any of them under this Agreement
(each, a "Pre-Closing Notice" and, collectively, the "Pre-Closing Notices").
Any Pre-Closing Notice (x) shall specify in reasonable detail the nature of the
events in respect of which such Pre-Closing Notice is being delivered and (y)
if such event involves an inaccurate or untrue representation or warranty of
the Seller or the Members that does not arise from or relate to breaches by the
Seller or the Members of any of their respective representations, warranties,
covenants or other agreements under this Agreement, shall set forth, to the
extent reasonably practicable, a reasonable estimate of the Damages that would
reasonably be expected to arise from such inaccurate or untrue representation
or warranty for which the Buyer Parties would be entitled to indemnification
under Article VII were the Closing to occur and such inaccuracy were not cured
prior to the Closing (the "Estimated Damages").
(e) In the event that, within 5 Business Days after the Closing Date,
each of the Seller's insurance carriers MetLife and Blue Cross and Blue Shield
of Illinois shall not have consented to the assignment by the Seller to the
Buyer of all insurance policies relating to the Employee Plans for which it is
the carrier (the "Health Plan Policies") effective as of the Closing Date, the
parties shall enter into a Transition and Services Agreement (the "Transition
and Services Agreement") containing customary terms, conditions and covenants
effective as of the Closing Date, pursuant to which the Seller shall, at the
Buyer's expense, provide coverage to Transferred Employees under the Seller's
existing welfare benefit plans during the period beginning on the Closing Date
and ending on December 31, 2004, unless terminated earlier in accordance with
the Transition and Services Agreement, whereupon such Transferred Employees
shall be entitled to participate in the Buyer's welfare benefit plans on a
comparable basis to similarly situated Buyer employees. The Seller agrees that
until the earlier of (x) the date on which each of MetLife and Blue Cross and
Blue Shield of Illinois have consented to the assignment by the Seller to Buyer
of the Health Plan Policies, and (y) the date of the Transition and Services
Agreement, the Seller shall, at the Buyer's expense, take all necessary actions
to maintain the Health Plan Policies for the benefit of the Buyer.
Section 4.4 Public Announcements. Upon the signing of this Agreement,
the parties shall consult with each other with respect to the issuance of a
joint report, statement or press release with respect to this Agreement and the
transactions contemplated hereby. Thereafter, except as otherwise agreed to by
the parties, the parties shall not issue any report, statement or press release
or otherwise make any public statements with respect to this Agreement and the
transactions contemplated hereby, except (a) as otherwise agreed to by the
parties, (b) in a manner consistent with any previously issued press releases
and (c) to the extent that, in the reasonable judgment of a party, required by
applicable Law, or, in the case of the Buyer, required by its obligations as a
publicly-held, exchange-quoted company, in which case the parties shall use
their commercially reasonable efforts to reach mutual agreement as to the
language of any such report, statement or press release.
Section 4.5 Tax Matters.
(a) Transfer Taxes. All sales (including, without limitation, bulk
sales), use, transfer (including real property transfer or gains), recording,
ad valorem, privilege, documentary, filing, recordation, gross receipts,
registration, conveyance, excise, license, gains, stamp, duties or similar
taxes and fees, together with any interest, additions, or penalties with
respect thereto and any interest in respect of such addition or penalties
(collectively, the "Transfer Taxes"), arising out of, in connection with or
attributable to the transactions effected pursuant to this Agreement shall be
borne and paid by the Seller. The party which has primary legal responsibility
for the payment of any particular Transfer Tax (the "Payor") shall prepare and
timely file all relevant Tax Returns required to be filed in respect of such
Transfer Tax, pay the Transfer Tax shown on such Tax Return, and notify the
other parties in writing of the Transfer Tax shown on such Tax Return and how
such Transfer Tax was calculated, and if the Payor is the Buyer, the Seller
shall reimburse the Payor for the amount of such Transfer Tax in immediately
available funds within ten Business Days of receipt of such notice.
(b) Allocation of Purchase Price; Tax Filings. The Buyer shall prepare
a schedule (the "Allocation Schedule") allocating the Purchase Price among the
Acquired Assets. The Buyer shall use its commercially reasonable efforts to
deliver the Allocation Schedule to the Seller prior to the Closing, but in no
event later than 90 days following the Closing, unless the determination of any
Post-Closing Purchase Price Adjustment has not yet been finalized pursuant to
Section 1.5(d), in which case, the Allocation Schedule shall be delivered to
the Seller within 15 days following the date on which such Post-Closing
Purchase Price Adjustment is finalized in accordance with Section 1.5(d). The
Allocation Schedule shall be prepared in good faith in accordance with section
1060 of the Code and the regulations thereunder. The Buyer shall consult with
the Seller regarding the manner in which such allocation is determined, and
shall provide the Seller with copies of any valuations or appraisals obtained
by the Buyer in connection with the Buyer's determination of such allocation.
Any Post-Closing Purchase Price Adjustments and Earnout Payments shall be
reflected in the final allocation of the Purchase Price among the Acquired
Assets in a manner consistent with the Allocation Schedule and section 1060 of
the Code and the regulations thereunder. The Seller and the Buyer shall (a)
timely file all federal, state, local and other forms and Tax Returns required
to be filed in connection with such Allocation Schedule, (b) be bound by such
Allocation Schedule for purposes of filing such Tax Returns, (c) prepare and
file, and cause its Affiliates to prepare and file, all Tax Returns on a basis
consistent with such Allocation Schedule and (d) take no position, and cause
its Affiliates to take no position, inconsistent with such Allocation Schedule
on any applicable Tax Return, in any audit or proceeding before any federal,
state, local and other Taxing Authority, in any report made for tax, financial
accounting or any other purposes or otherwise. In the event that the Allocation
Schedule is disputed by any taxing authority, the party receiving notice of
such dispute shall promptly notify the other party hereto concerning the
existence and resolution of such dispute.
(c) Assistance and Cooperation. After the Closing Date, the Seller and
the Buyer shall, and shall cause their respective employees and Affiliates to,
provide and make available to the other all information relating to Taxes
attributable to the Business or the Acquired Assets that is required in
connection with the preparation or filing of any Tax Return, including any
certificates or forms necessary or appropriate to establish an exemption from
or otherwise reduce any liability for Taxes, and shall reasonably cooperate,
and shall cause their respective employees and Affiliates to cooperate in
preparing for any audits of, or disputes with, Taxing Authorities regarding any
Tax Returns relating to the Business or the Acquired Assets.
Section 4.6 Employees; Employee Benefits. Prior to the Closing, the
Buyer or its Affiliates shall offer employment, effective as of the Closing, to
all employees of the Business who are active employees immediately prior to the
Closing and any employee who is, on such date, on disability or medical leave
or an approved leave of absence, upon such employee's return. Each offer of
employment shall be on terms and conditions comparable (but not necessarily
identical) to those terms and conditions of employment applicable to such
Employee immediately prior to the Closing, except as otherwise agreed to by the
Buyer and the relevant employee; provided, that, with respect to the medical
insurance plans currently maintained by the Seller, the Buyer shall continue
such plans until such time as the Buyer is able to transfer the Transferred
Employees to medical insurance plans maintained by the Buyer. Employees who
accept such offer of employment with the Buyer as of the Closing are referred
to herein as the "Transferred Employees."
(b) With respect to each benefit plan of the Buyer ("Buyer Benefit
Plan") in which Transferred Employees subsequently participate, for purposes of
determining eligibility to participate, vesting and, with respect to any
vacation or severance plan or policy only, for the purpose of determining
benefit entitlement, service with Seller (and predecessor employers to the
extent Seller provides past service credit) shall be treated as service with
Buyer; provided, that such service shall not be recognized to the extent that
(i) such service was not recognized under the applicable benefit plan of the
Seller ("Seller Benefit Plan") or (ii) such recognition would result in a
duplication of benefits.
(c) Nothing in this Section 4.6 or elsewhere in this Agreement shall
be construed to create a right in any employee to employment with the Buyer or
any Affiliate of the Buyer and the employment of each Transferred Employee
shall be "at will" employment.
(d) The Seller shall take all actions that may be necessary or
appropriate to cause each Transferred Employee to be 100% vested in his or her
account balance under the Seller's 401(k) Savings Plan (the "Seller Savings
Plan") as of the Closing Date, and shall cause the trustee of the Seller
Savings Plan to pay such account balance to such Transferred Employee or his or
her beneficiary in accordance with the terms of the Seller Savings Plan and the
election of the Transferred Employee, as applicable.
Section 4.7 Updated Employee Information. Prior to the Closing Date,
the Seller will cause to be prepared and promptly delivered to the Buyer an
updated Section 2.10(a) of the Seller Disclosure Schedule that is true and
correct in all respects as of the Cut-Off Date. For purposes of satisfying the
condition set forth in Section 5.3(a), the Seller will be deemed to have made
all representations and warranties relating to such schedules of the Cut-Off
Date, and such updated schedule shall be included in the representations
covered by the officer's certificate to be delivered by the Seller to the Buyer
at the Closing pursuant to Section 5.3(c).
Section 4.8 Proprietary Information. From and after the Closing, each
of the Members and the Seller shall not, and shall not permit any of their
respective Affiliates to, disclose or make use of (except to pursue its rights
under this Agreement or the Ancillary Agreements), and shall use its best
efforts to cause all of its Affiliates not to disclose or make use of, any
knowledge, information or documents of a confidential nature or not generally
known to the public with respect to Acquired Assets, the Business or the Buyer
or its business (including the financial information, technical information or
data relating to the Seller's products or customers, as well as filings and
testimony (if any) presented in the course of any litigation of a Claim
pursuant to Section 7.4 and any information relating to any settlement
thereof), except to the extent that such knowledge, information or documents
shall have become public knowledge other than through improper disclosure by a
Member, the Seller or any of their respective Affiliates. The Seller and each
Member shall enforce, for the benefit of the Buyer, all confidentiality,
invention assignments and similar agreements between a Member, the Seller, on
the one hand, and any other party, on the other hand, relating to the Acquired
Assets or the Business which are not Contracts included in the Acquired Assets.
Section 4.9 Use of Name. Neither the Seller nor any of the Members
shall, and shall not use, or permit any of their respective Affiliates to use,
any of the names listed in Section 4.9 of the Seller Disclosure Schedule or any
name reasonably similar thereto. Simultaneously with, and with effect from, the
Closing, the Seller shall amend its certificate of formation and other
corporate records, if necessary, to comply with this provision.
Section 4.10 Maintenance of Books and Records; Sharing of Data. Each
of the parties hereto shall preserve, until at least the eighth anniversary of
the Closing Date, all pre-Closing Date records possessed or to be possessed by
such party relating to the Business. After the Closing Date and up until at
least the eighth anniversary of the Closing Date, upon any reasonable request
from a party hereto or its representatives, the party holding such records
shall, subject to the confidentiality provisions of Section 4.2(b) or other
appropriate confidentiality obligations, (x) provide to the requesting party or
its representatives reasonable access to such records during normal business
hours, provided that such access shall not interfere unreasonably with the
business operations of the party holding such records, and (y) permit the
requesting party or its representatives to make copies of such records, in each
case at reasonable cost to the requesting party or its representatives for
copying or other out-of-pocket expenses. Such records may be sought under this
Section 4.10 for any reasonable purpose, including, without limitation, to the
extent reasonably required in connection with the audit, accounting, Tax,
litigation, federal securities disclosure or other similar needs of the party
seeking such records. Promptly upon request by the Buyer or the Seller made at
any time following the Closing Date, the other party shall authorize the
release to the requesting party of all files pertaining to the Seller, the
Acquired Assets or the business or operations of the Seller held by any
federal, state, county or local authorities, agencies or instrumentalities.
Section 4.11 Transfers Not Effected as of Closing. Nothing herein
shall be deemed to require the conveyance, assignment or transfer of any
Acquired Asset that by its terms or by operation of Law cannot be freely
conveyed, assigned, transferred or assumed. To the extent the parties hereto
have been unable to obtain any governmental or any third party consents or
approvals required for the transfer of any Acquired Asset and to the extent not
otherwise prohibited by the terms of any Acquired Asset, the Seller shall
continue to be bound by the terms of such applicable Acquired Asset and the
Buyer shall pay, perform and discharge fully all of the obligations of the
Seller or any of its Affiliates thereunder from and after the Closing. The
Seller shall, without consideration therefor, pay, assign and remit to the
Buyer promptly all monies, rights and other consideration received in respect
of such performance. The Seller shall exercise or exploit its rights in respect
of such Acquired Assets only as reasonably directed by the Buyer and at the
Buyer's expense. Subject to and in accordance with Section 4.3, for not more
than 30 days following the Closing Date, the parties hereto shall continue to
use their commercially reasonable efforts to obtain all such unobtained
consents or approvals at the earliest practicable date. If and when any such
consents or approvals shall be obtained, then the Seller shall promptly assign
its rights and obligations thereunder to the Buyer without payment of
consideration and the Buyer shall, without the payment of any consideration
therefor, assume such rights and obligations. The parties shall execute such
good and sufficient instruments as may be necessary to evidence such assignment
and assumption. Nothing in this Section 4.11 or elsewhere in this Agreement
shall affect in any respect the condition set forth in Section 5.3(e).
Section 4.12 No Solicitation. During the period prior to the Closing,
none of the Seller, the Members or any of their respective representatives
will, directly or indirectly, take any of the following actions with any Person
other than the Buyer without the prior written consent of the Buyer: (A)
solicit, initiate, facilitate or encourage, or furnish information with respect
to the Business, in connection with any inquiry, proposal or offer with respect
to any merger, consolidation or other business combination involving the
Business, the Seller or the acquisition or other disposition of all or any
portion of the Business, the Acquired Assets or any securities of or other
interests in the Seller (an "Alternative Transaction"); (B) negotiate, discuss,
explore or otherwise communicate or cooperate in any way with any third party
with respect to any Alternative Transaction; or (C) enter into any agreement,
arrangement or understanding with respect to an Alternative Transaction or
requiring the Seller to abandon, terminate or refrain from consummating a
transaction with the Buyer. The Seller or the Members, as the case may be,
shall promptly notify the Buyer after receipt of any inquiry, indication of
interest, proposal or offer with respect to any Alternative Transaction
described in this Section 4.12.
Section 4.13 Covenant Not To Compete. (a) During the Non-Competition
Period, the Seller and each of the Members shall not, and shall not permit any
of their respective employees and Affiliates to, directly or indirectly own,
manage, control, participate in or provide services to any Restricted Business
other than as an employee of the Buyer. Notwithstanding the foregoing, the
Seller and each of the Members and their respective employees and Affiliates
shall not be prohibited from:
(i) acquiring or owning less than 5% (by voting power) of the
outstanding capital stock of any publicly-traded company which is engaged
in the Restricted Business; or
(ii) performing their respective obligations under this Agreement
and the Ancillary Agreements.
(b) The Seller and each of the Members have carefully considered the
nature and extent of the restrictions set forth herein and acknowledge that the
same are reasonable with respect to scope, duration and territory. The Seller
and each of the Members recognize and agree that the restrictions set forth
herein are being entered into in connection with the sale of the Business to
the Buyer and that the Buyer would not be entering into this Agreement absent
such restrictions and the full commitment of each of the Seller and each of the
Members to abide by such restrictions. The Seller and each of the Members
recognize and acknowledge that a breach by the Seller or any of the Members of
this Section 4.13 will cause irreparable harm and material loss and damage to
the Buyer as to which it will not have an adequate remedy at law or in damages.
Accordingly, the Seller and each Member acknowledges and agrees that the
issuance of an injunction or other equitable remedy is an appropriate remedy
for any such breach in addition to any other remedies that the Buyer may have
at law or in equity. For the avoidance of doubt, the termination of the
employment of any Member with the Buyer shall not affect any of the obligations
of such party set forth in this Section 4.13.
(c) If any court determines that any of the provisions of this Section
4.13 is unenforceable because of the duration or geographic scope of such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable to the maximum extent permitted by applicable law.
(d) In the event of any breach by any Member of any of the provisions
of this Section 4.13, the Buyer shall not be obligated to pay, and the Seller
shall not be entitled to receive, a portion of any Earnout Payments otherwise
payable pursuant to Section 1.6 equal to the product of (i) the Pro Rata Share
of such Member multiplied by (ii) the aggregate amount of any Earnout Payments
otherwise payable pursuant to Section 1.6.
Section 4.14 Further Actions. From and after the Closing Date, the
Seller and the Members shall cooperate with the Buyer and the Buyer's
Affiliates and representatives, and shall execute and deliver such documents
and take such other actions as the Buyer may reasonably request, for the
purpose of evidencing the transactions contemplated by this Agreement and the
Ancillary Agreements and putting the Buyer in possession and control of all of
the Acquired Assets. Without limiting the generality of the foregoing, from and
after the Closing Date, the Seller shall promptly remit to the Buyer any funds
that are received by the Seller and that are included in, or that represent
payment of receivables included in, the Acquired Assets. The Seller hereby
irrevocably authorizes the Buyer, at all times on and after the Closing Date,
to endorse in the name of the Seller any check or other instrument that is made
payable to such Seller and that represents funds included in, or that
represents the payment of any receivable included in, the Acquired Assets.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE ASSET PURCHASE
Section 5.1 Conditions to Each Party's Obligations to Consummate the
Asset Purchase. The respective obligations of each party to consummate the
transactions contemplated hereby is subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other Governmental Entity that remains in force and makes illegal,
restrains or prohibits the consummation of any of the transactions contemplated
by this Agreement;
(b) There shall not be any suit, action, or other proceeding pending
or threatened by or before any Governmental Entity or administrative agency or
commission that seeks to enjoin or otherwise prevent consummation of the
transactions contemplated hereby; provided, however, that a failure of the
condition set forth in this Section 5.1(b) shall not be asserted by any party
that has directly or indirectly encouraged such suit, action or proceeding; and
(c) All consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Governmental Entity required
in connection with the execution, delivery or performance of this Agreement
shall have been obtained or made, except where the failure to have obtained or
made any such consent, approval, order, authorization, declaration or filing
would not have a Material Adverse Effect.
Section 5.2 Further Conditions to the Obligations of the Seller and
the Members. The obligation of the Seller and the Members to consummate the
transactions contemplated hereby are further subject to satisfaction or waiver
by the Seller at or prior to the Closing Date of the following additional
conditions:
(a) The representations and warranties of the Buyer and the Parent
contained in Article III hereof and in all certificates delivered by the Buyer
and the Parent pursuant hereto or in connection with the transactions
contemplated hereby shall be true and accurate in all respects (in the case of
representations and warranties qualified by "materiality" or by Buyer Material
Adverse Effect after taking into account such qualifications and in the case of
the representations and warranties set forth in Section 3.2) or in all material
respects (in the case of all other representations and warranties) as of the
date of this Agreement and shall be true and accurate in all respects (in the
case of representations and warranties qualified by "materiality" or by Buyer
Material Adverse Effect after taking into account such qualifications and in
the case of the representations and warranties set forth in Section 3.2) or in
all material respects (in the case of all other representations and warranties)
at and as of the Closing Date as though such representations and warranties
were made at and as of such date (except to the extent expressly made as of an
earlier date, in which case, as of such date) (it being understood that for
purposes of determining the accuracy of such representations and warranties as
of the Closing Date, inaccuracies that result directly from changes
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by the Seller shall be disregarded);
(b) The Buyer shall have performed and complied in all material
respects with all agreements, obligations and covenants contained in this
Agreement to be performed or complied with by it on or prior to the Closing;
(c) The Buyer shall have delivered to the Seller and the Members an
officer's certificate to the effect that each of the conditions specified above
in Sections 5.2(a) and (b) is satisfied in all respects;
(d) The Buyer shall have delivered, after satisfaction of all other
conditions set forth in this Article V, the Initial Purchase Price to the
Seller and the Escrow Amount to the Escrow Agent; and
(e) Each of the documents referred to in Section 1.10 shall have been
executed by the Buyer and delivered to the Seller and the Members.
Section 5.3 Further Conditions to the Buyer's Obligations. The
obligation of the Buyer to consummate the transactions contemplated hereby are
further subject to the satisfaction or waiver by the Buyer at or prior to the
Closing Date of the following additional conditions:
(a) The representations and warranties of the Seller and the Members
contained in Article II hereof, in the Seller Disclosure Schedule and in all
certificates delivered by the Seller and the Members pursuant hereto or in
connection with the transactions contemplated hereby shall be true and accurate
in all respects (in the case of representations and warranties qualified by
"materiality" or by Material Adverse Effect after taking into account such
qualifications and in the case of the representations and warranties set forth
in Section 2.2) or in all material respects (in the case of all other
representations and warranties) as of the date of this Agreement and shall be
true and accurate in all respects (in the case of representations and
warranties qualified by "materiality" or by Material Adverse Effect after
taking into account such qualifications and in the case of the representations
and warranties set forth in Section 2.2) or in all material respects (in the
case of all other representations and warranties) at and as of the Closing Date
as though such representations and warranties were made at and as of such date
(except to the extent expressly made as of an earlier date, in which case, as
of such date) (it being understood that for purposes of determining the
accuracy of such representations and warranties as of the Closing Date,
inaccuracies that result directly from changes specifically permitted by this
Agreement or resulting from any transaction expressly consented to in writing
by the Buyer shall be disregarded);
(b) The Seller and each of the Members shall have performed and
complied in all material respects with all agreements, obligations and
covenants contained in this Agreement to be performed or complied with by it on
or prior to the Closing;
(c) The Seller and each of the Members shall have delivered to the
Buyer a certificate to the effect that each of the conditions specified above
in Sections 5.3(a) and (b) is satisfied in all respects;
(d) Each of the documents referred to in Section 1.9 shall have been
executed by the Seller and each of the Members and delivered to the Buyer;
(e) Each of the consents identified in Schedule 5.3(e), as such
schedule may be updated from time to time as provided therein, shall have been
obtained and shall be in full force and effect;
(f) The employment agreements identified in Schedule 5.3(f) hereto
shall remain in full force and effect;
(g) The Service Agreement between the Seller and Blitz Research, Inc.,
dated July 1, 2004, shall remain in full force and effect;
(h) The obligations identified in Schedule 5.3(h) hereto shall have
been terminated and cancelled;
(i) The Seller and each of the Members shall have delivered to the
Buyer documents evidencing the release or termination of all Liens on the
Acquired Assets, and copies of filed UCC termination statements with respect to
all UCC financing statements evidencing Liens; and
(j) A Business License in respect of the Business valid through at
least December 31, 2004 shall have been issued to the Buyer by the Village of
Schaumburg, Illinois.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
Section 6.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual written consent of the Seller and the Buyer;
(b) by the Seller or the Buyer at any time after September 30, 2004 if
the Closing shall not have occurred by such date; provided, however, that the
right to terminate this Agreement under this Section 6.1(b) shall not be
available to (i) the Seller, if the Seller or any of the Members has breached
any of their representations, warranties or covenants hereunder in any material
respect and such breach has been the cause of or resulted in the failure of the
Closing to occur on or before such date or (ii) the Buyer, if the Buyer or the
Parent has breached any of its representations, warranties or covenants
hereunder in any material respect and such breach has been the cause of or
resulted in the failure of the Closing to occur on or before such date;
(c) by the Seller, on the one hand, or the Buyer, on the other hand,
if the other shall have breached or failed to perform in any material respect
any of its respective representations, warranties, covenants or other
agreements contained in this Agreement, which breach or failure to perform (i)
would give rise to the failure of a closing condition set forth in Section 5.2
or 5.3, as applicable, and (ii) cannot be or has not been cured within ten
Business Days after the giving of written notice to the Seller by the Buyer or
to the Buyer by the Seller, as the case may be, of the intent to terminate this
Agreement pursuant to this Section 6.1(c);
(d) by the Seller or the Buyer, if any court of competent jurisdiction
or other competent Governmental Entity shall have issued a statute, rule,
regulation, order, decree or injunction or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement and such statute, rule, regulation, order, decree or
injunction or other action shall have become final and nonappealable; or
(e) by the Seller or the Buyer, if the aggregate amount of all
Estimated Damages set forth in all Pre-Closing Notices delivered by either
party to the other pursuant to Section 4.3(d) hereof is greater than $200,000.
For the avoidance of doubt, nothing in this Section 6.1(e) shall affect any
party's entitlement to indemnification under Article VII following the Closing.
Section 6.2 Procedure for and Effect of Termination. In the event of
termination of this Agreement and abandonment of the transactions contemplated
hereby by the parties hereto pursuant to Section 6.1 hereof, written notice
thereof shall be given by a party so terminating to the other party and this
Agreement shall forthwith terminate and shall become null and void and of no
further effect, and the transactions contemplated hereby shall be abandoned
without further action by the Seller or the Buyer. If this Agreement is
terminated pursuant to Section 6.1 hereof:
(a) each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement and Section 4.2(b) hereof;
(b) all filings, applications and other submissions made pursuant
hereto shall, to the extent practicable, be withdrawn from the relevant
Governmental Entity or other Person; and
(c) there shall be no liability or obligation hereunder on the part of
the Seller or the Buyer or any of their respective directors, officers,
employees, Affiliates, controlling persons, agents or representatives, except
that with respect to a termination pursuant to Section 6.1, the Seller or the
Buyer, as the case may be, may have liability to the other party if the basis
of termination is a willful, material breach by the Seller or the Buyer, as the
case may be, of one or more of the provisions of this Agreement, and except
that the obligations provided for in Sections 4.2(b), 4.4, 6.2 and Article VIII
(other than Section 8.12) hereof shall survive any such termination.
Section 6.3 Amendment and Modification. Except as set forth in this
Section 6.3, this Agreement may not be amended, modified or supplemented in any
respect, except by a written instrument signed by all of the parties hereto
expressly stating that such instrument is intended to amend, modify or
supplement this Agreement. Notwithstanding the preceding sentence, the Buyer
may assign any or all of its rights, interests and obligations hereunder as
provided in Section 8.7.
Section 6.4 Extension; Waiver. At any time prior to the Closing, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid if set forth in writing in an
instrument signed by or on behalf of such party. The waiver by any party hereto
of a breach of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1 Survival Periods. All representations and warranties made
by any party in or pursuant to this Agreement or in any document delivered
pursuant hereto shall survive for 21 months after the Closing; provided,
however, that (i) the representations and warranties set forth in Sections 2.9,
2.11, 2.17 and 2.20 shall survive the Closing until 180 days after the
expiration of the statute of limitations relating thereto and (ii) the
representations and warranties set forth in Sections 2.2, 2.15(a) and 3.2 shall
survive the Closing for an indefinite period of time. Notwithstanding the
foregoing, if a claim notice is timely sent pursuant to Section 7.2 or 7.3, the
representation or warranty with respect to which such claim notice is sent, and
the related indemnification obligations set forth in Article VII with respect
to the claim notice, shall survive until the resolution of the claim for
Damages to which such claim notice relates, or such longer period as provided
in the preceding sentence. All covenants made by any party pursuant to this
Agreement shall survive the Closing pursuant to their terms. Except as provided
above, the parties intend to shorten the statute of limitations and, except in
the case of fraud, agree that no claims or causes of action may be brought
against the Seller, the Members or the Buyer based upon, directly or
indirectly, any of the representations or warranties contained in Articles II
and III hereof after the applicable survival period or, except as provided in
Section 6.2(c) hereof, any termination of this Agreement. This Section 7.1
shall not limit any covenant or agreement of the Parties to the extent such
covenant or agreement contemplates performance after the Closing. The right to
indemnification, payment of Damages or other remedy based on the
representations, warranties, covenants and obligations set forth in this
Agreement will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any
such representation, warranty, covenant or obligation. The waiver of any
condition based on the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations.
Section 7.2 Agreement of the Seller and the Members to Indemnify.
Subject to the terms and conditions set forth herein, from and after the
Closing, the Seller and each of the Members, severally and not jointly and, in
the case of each Member, to the extent of such Member's Pro Rata Share, shall
indemnify and hold harmless the Buyer and its directors, officers, employees
and Affiliates (each, a "Buyer Party" and, collectively, the "Buyer Parties")
from and against all Damages incurred by any Buyer Party (collectively, the
"Buyer Damages") as a result of or arising out of (i) a breach of any
representation or warranty of the Seller or the Members contained in this
Agreement; (ii) a breach of any covenant or agreement on the part of the Seller
or the Members under this Agreement or the Ancillary Agreements; or (iii) the
Retained Liabilities and the Retained Assets.
(b) The obligation of the Seller and each of the Members to indemnify
the Buyer Parties pursuant to Section 7.2(a)(i) hereof is subject to the
following limitations:
(i) Except for breaches of those representations and warranties
set forth in Sections 2.2, 2.9, 2.11, 2.15(a), 2.17 and 2.20 and in the
absence of fraud or willful misconduct on the part of the Seller or the
Members, no indemnification pursuant to Section 7.2(a)(i) shall be made by
the Seller or any of the Members unless the aggregate amount of Buyer
Damages incurred exceeds $100,000 (the "Indemnity Basket") at which time
the Seller and the Members shall be liable only for the Buyer Damages in
excess of the Indemnity Basket;
(ii) Except for breaches of those representations and warranties
set forth in Sections 2.2, 2.9, 2.11, 2.15(a), 2.17 and 2.20 and in the
absence of fraud or willful misconduct on the part of the Seller or the
Members, in no event shall the aggregate obligation of the Seller and the
Members to indemnify the Buyer Parties under Section 7.2(a)(i) exceed $20
million;
(iii) Except in the case of fraud or willful misconduct, the
Seller and the Members shall be obligated to indemnify the Buyer Parties
pursuant to Section 7.2(a)(i) only for those claims giving rise to Buyer
Damages as to which the Buyer Parties have given the Seller and the
Members written notice thereof prior to the end of the applicable survival
period (as provided for in Section 7.1). Any written notice delivered by a
Buyer Party to the Seller or any of the Members with respect to Buyer
Damages shall set forth with as much specificity as is reasonably
practicable the basis of the claim for Buyer Damages and, to the extent
reasonably practicable, a reasonable estimate of the amount thereof;
(iv) In the event that the Seller and the Members are obligated
to indemnify the Buyer Parties pursuant to Section 7.2(a)(i), then solely
for the purposes of calculating the amount of Buyer Damages, all "Material
Adverse Effect" qualifications and other "materiality" qualifications
contained in any such representation and warranty shall be disregarded;
(c) In calculating the amount of any Buyer Damages for which the
Seller and the Members are liable for payment under Section 7.2, such Buyer
Damages shall be reduced by the amount of (i) any insurance recoveries which
the Buyer Party seeking indemnification actually receives as a direct
consequence of the circumstances to which the Buyer Damages related or from
which the Buyer Damages resulted or arose and (ii) any federal, state and/or
local or non-U.S. income tax benefits actually received by the Buyer Parties as
a result of the state of facts which entitled the Buyer Parties to recover from
the Seller pursuant to Section 7.2, net of any federal, state and/or local or
non-U.S. income tax detriments resulting from such payment. For these purposes,
the Buyer Parties shall be considered to have realized a tax benefit only when,
after utilizing all deductions, losses and credits otherwise available to them,
there was a decrease in the cumulative Taxes payable by them as a result of the
payment of such Buyer Damages, and the Buyer Parties shall be considered to
have suffered a tax detriment whenever, as a result of the payment of such
Buyer Damages, there is an increase in the cumulative Taxes payable by the
Buyer Parties, irrespective of whether such increase occurs in the taxable year
in which such payment is made. Payment by the Seller and the Members for any
such tax detriment, or to the Seller and the Members for any such tax benefit,
as the case may be, shall be made within seven days from the date of filing of
the Tax Return on which the related tax detriment or tax benefit is reflected.
Section 7.3 Agreement of the Buyer and the Parent to Indemnify.
Subject to the terms and conditions set forth herein, from and after the
Closing, the Buyer and the Parent, jointly and severally, shall indemnify and
hold harmless the Seller, each of the Members and their respective directors,
managers, officers, employees and Affiliates (each, a "Seller Party" and,
collectively, the "Seller Parties") from and against all Damages incurred by
any Seller Party (collectively, "Seller Damages") as a result of or arising out
of (i) a breach of any representation or warranty of the Buyer or the Parent
contained in this Agreement; (ii) a breach of any covenant or agreement on the
part of the Buyer or the Parent under this Agreement or the Ancillary
Agreements; or (iii) the Assumed Liabilities.
Section 7.4 Third-Party Indemnification. The obligations of the Seller
and each of the Members to indemnify the Buyer Parties under Section 7.2 hereof
with respect to Buyer Damages and the obligations of the Buyer to indemnify the
Seller Parties under Section 7.3 with respect to Seller Damages, in either case
resulting from the assertion of liability by third parties (each, as the case
may be, a "Claim"), will be subject to the following terms and conditions:
(a) Any party against whom any Claim is asserted will give the
indemnifying party written notice of any such Claim promptly after learning of
such Claim, and the indemnifying party may at its option undertake the defense
thereof by representatives of its own choosing and reasonably acceptable to the
indemnified party. Failure to give prompt notice of a Claim hereunder shall not
affect the indemnifying party's obligations under this Article VII, except to
the extent the indemnifying party is precluded from defending the relevant
Claim by such failure to give prompt notice. If the indemnifying party, within
30 days after notice of any such Claim, or such shorter period as is reasonably
required, fails to assume the defense of such Claim, the Buyer Party or the
Seller Party, as the case may be, against whom such Claim has been made will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement (subject to the terms of Section 7.4(c)) of
such Claim on behalf of and for the account and risk, and at the expense, of
the indemnifying party, subject to the right of the indemnifying party to
assume the defense of such Claim at any time prior to settlement, compromise or
final determination thereof.
(b) So long as the indemnifying party has assumed the defense of any
Claim in the manner set forth above, the indemnifying party shall have the
exclusive right to contest, defend and litigate such Claim and, except as
expressly provided in Section 7.4(c), shall have the exclusive right, in its
sole discretion, to settle any such claim, either before or after the
initiation of litigation at such time and on such terms as the indemnifying
party deems appropriate. If the indemnifying party elects not to assume the
defense of any such Claim (which shall be without prejudice to its right at any
time to assume subsequently such defense), the indemnifying party will
nonetheless be entitled, at its own expense, to participate in such defense.
The indemnified party shall have the right to participate, with separate
counsel (which counsel shall act in an advisory capacity only), in any such
contest, defense, litigation or settlement conducted by the indemnifying party.
After written notice from the indemnifying party to such indemnified party of
the indemnifying party's election to assume the defense of such Claim, the
indemnifying party will not be liable to such indemnified party for any
expenses of the indemnified party's counsel that are incurred in connection
with the defense thereof; provided, however, that the expense of such
indemnified party's counsel shall be paid by the indemnifying party if (i) the
indemnifying party requested such separate counsel to participate or (ii) in
the reasonable opinion of counsel to the indemnified party, a significant
conflict of interest exists between the indemnifying party, on the one hand,
and the indemnified party, on the other hand, that would make such separate
representation advisable.
(c) Without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld or delayed), the indemnifying party
shall not admit any liability with respect to, or settle, compromise or
discharge, any Claim or consent to the entry of any judgment with respect
thereto, except in the case of any settlement that includes as an unconditional
term thereof the delivery by the claimant or plaintiff to the indemnified party
of a written release from all liability in respect of such Claim and all Claims
arising therefrom or relating thereto. In addition, whether or not the
indemnifying party shall have assumed the defense of the Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise or
discharge, any Claim or consent to the entry of any judgment with respect
thereto, without the prior written consent of the indemnifying party (which
consent shall not be unreasonably withheld or delayed), and the indemnifying
party will not be subject to any liability for any such admission, settlement,
compromise, discharge or consent to judgment made by an indemnified party
without such prior written consent of the indemnifying party.
(d) The indemnifying party and the indemnified party shall cooperate
fully in all aspects of any investigation, defense, pre-trial activities,
trial, compromise, settlement or discharge of any claim in respect of which
indemnity is sought pursuant to this Article VII, including, but not limited
to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
Section 7.5 Setoff. The Buyer shall have the right to withhold and
deduct any sum that may be owed to any Buyer Party under Article VII from any
amount otherwise payable by any Buyer Party to the Seller or the Members,
including any amounts due to the Seller pursuant to Article VII, any Earnout
Payment, or subject to the provisions of Section 1.7, any amounts due to the
Seller pursuant to the Escrow Agreement. The Seller and the Members shall have
the right to withhold and deduct any sum that may be owed to any Seller Party
under Article VII from any amount otherwise payable by any Seller Party to the
Buyer. The withholding and deduction of any sum referred to in this Section 7.5
shall operate for all purposes as a complete discharge (to the extent of such
sum) of the obligation to pay the amount from which such sum was withheld and
deducted.
Section 7.6 No Duplication; Sole Remedy. (a) Any liability for
indemnification hereunder shall be determined without duplication of recovery
by reason of the state of facts giving rise to such liability constituting a
breach of more than one representation, warranty, covenant or agreement.
(b) The Buyer Parties', on the one hand, and the Seller Parties', on
the other hand, respective rights to indemnification as provided for in
Sections 7.2 and 7.3, as applicable, shall be the exclusive remedy for any
Buyer Damages or Seller Damages, respectively, for which indemnification is
provided hereunder, including any Buyer Damages that would be payable hereunder
but for any of the limitations set forth in this Article VII, including,
without limitation, in Sections 7.1(b)(i) and (ii); provided, however, that
nothing contained herein shall prevent an indemnified party from pursuing
remedies as may be available to such party under applicable Law in the event of
(i) fraud, (ii) Claims in which equitable relief would be suitable to address
the injury or possible injury, or (iii) an indemnifying party's failure to
comply with its indemnification obligations hereunder.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Entire Agreement. This Agreement (including the Seller
Disclosure Schedule), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement of the parties relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings among or between the parties both oral and written regarding
such subject matter.
Section 8.2 Severability. Any provision of this Agreement that is held
by a court of competent jurisdiction to violate applicable Law shall be limited
or nullified only to the extent necessary to bring this Agreement within the
requirements of such Law.
Section 8.3 Notices. Any notice required or permitted by this
Agreement must be in writing and must be sent by facsimile, by nationally
recognized commercial overnight courier, or mailed by United States registered
or certified mail, addressed to the other party at the address below or to such
other address for notice (or facsimile number, in the case of a notice by
facsimile) as a party gives the other party written notice of in accordance
with this Section 8.3. Any such notice will be effective as of the date of
receipt:
(a) if to the Seller or any of the Members, to
Pharmakon, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
One Prudential Plaza, Suite 3800
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
(b) if to the Buyer or the Parent, to
PDI, INC.
▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Section 8.4 Governing Law; Jurisdiction. This Agreement shall be
governed by, enforced under and construed in accordance with the Laws of the
State of Delaware, without giving effect to any choice or conflict of Law
provision or rule thereof. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America, in each case
located in the County of New Castle, for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts) and
further agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 8.3 (or to such
other address for notice that such party has given the other party written
notice of in accordance with Section 8.3) shall be effective service of process
for any litigation brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the
laying of venue of any litigation arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware or of
the United States of America, in each case located in the County of New Castle,
and hereby further irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such litigation brought in any such
court has been brought in an inconvenient forum.
Section 8.5 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and shall in no way be construed to
define, limit, describe, explain, modify, amplify, or add to the
interpretation, construction or meaning of any provision of, or scope or intent
of, this Agreement nor in any way affect this Agreement.
Section 8.6 Counterparts. This Agreement may be signed in counterparts
and all signed copies of this Agreement will together constitute one original
of this Agreement. This Agreement shall become effective when each party hereto
shall have received counterparts thereof signed by all the other parties
hereto.
Section 8.7 Assignment. Except as set forth in this Section 8.7,
neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any party without the prior written consent of the
other parties hereto, except that the Buyer may assign any or all of its
rights, benefits, interests and obligations under this Agreement or any
Ancillary Agreement (i) to one or more of its Affiliates, provided that no such
assignment shall relieve the Buyer of its obligations hereunder and (ii) after
the Closing Date, to any Person that acquires, directly or indirectly, all or
any part of the Business, provided that no such assignment shall relieve the
Buyer of its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.8 Fees and Expenses. Whether or not this Agreement and the
transactions contemplated hereby are consummated, and except as otherwise
expressly set forth herein, all costs and expenses (including legal and
financial advisory fees and expenses) incurred in connection with, or in
anticipation of, this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses. The Seller, on the one hand, and
the Buyer, on the other hand, shall indemnify and hold harmless the other party
from and against any and all claims or liabilities for financial advisory and
finders' fees incurred by reason of any action taken by such party or otherwise
arising out of the transactions contemplated by this Agreement by any Person
claiming to have been engaged by such party.
Section 8.9 Interpretation. Throughout this Agreement, nouns, pronouns
and verbs shall be construed as masculine, feminine, neuter, singular or
plural, whichever shall be applicable. Unless otherwise specified, all
references herein to "Section" shall refer to corresponding provisions of this
Agreement or the Seller Disclosure Schedule, as the case may be, whenever the
words "include," "includes" or including" are used in this Agreement, they are
deemed to be followed by the words "without limitation." The phrase "to the
knowledge of the Seller" or any similar phrase shall mean such facts and other
information that as of the date hereof are actually known to any officer,
director or management-level employee of the Seller, as the case may be, in
each case after reasonable investigation into the matter in question. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
Section 8.10 No Third-Party Beneficiaries. This Agreement shall not
benefit or create any right or cause of action in or on behalf of any Person
other than the parties hereto; provided, however, that this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and permitted assigns.
Section 8.11 Sellers' Representative. The Seller and each of the
Members hereby authorize, direct and appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and, in his
absence, incapacity or death, ▇▇▇▇▇▇ ▇▇▇▇ (the "Sellers' Representative"), and
each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ hereby accept such appointment, to act
as the sole and exclusive agent, attorney-in-fact and representative of the
Seller and each of the Members, with full power of substitution with respect to
all matters under this Agreement and the Ancillary Agreements, including
determining, giving and receiving notices and process hereunder and thereunder,
entering into any amendment or modification hereof and thereof, authorizing or
contesting the release of funds under the Escrow Agreement, contesting and
settling any determination of any Post-Closing Purchase Price Adjustment
pursuant to Section 1.5 hereof, contesting and settling any and all
determinations of Earnout Payments pursuant to Section 1.6 hereof, contesting
and settling any and all claims for indemnification pursuant to Article VII
hereof or resolving any other disputes hereunder and thereunder. Any actions
taken, exercises of rights, power or authority and any decision or
determination made by the Sellers' Representative consistent therewith, shall
be absolutely and irrevocably binding on the Seller and each Member as if the
Seller and such Member personally had taken such action, exercised such rights,
power or authority or made such decision or determination in the Seller's or
such Member's individual capacity. Notwithstanding anything to the contrary
contained in this Agreement, any action required to be taken by the Seller and
the Members hereunder or any action which the Seller and the Members, at their
election, have the right to take hereunder, shall be taken only by the Sellers'
Representative and neither the Seller nor any Member acting on its own shall be
entitled to take any such action. All deliveries and payments to be made by the
Buyer to the Seller or any Member hereunder shall be made exclusively to the
Sellers' Representative on behalf of the Seller and/or the Members, as
applicable, and any delivery or payment so made to the Sellers' Representative
shall constitute full performance of the obligations hereunder of the Buyer to
the Seller and the Members. The Buyer shall not be liable for allocation of
particular deliveries and payments among the Seller and the Members.
(b) Notwithstanding any notice received by the Buyer to the contrary
(except any notice of the appointment of a successor Sellers' Representative
approved by the Buyer) and absent bad faith or willful misconduct, the Buyer
(i) shall be fully protected in relying upon and shall be entitled to rely
upon, shall have no liability to the Seller or the Members with respect to,
actions, decisions and determinations of the Sellers' Representative and (ii)
shall be entitled to assume that all actions, decisions and determinations of
the Sellers' Representative are fully authorized by the Seller and all of the
Members.
(c) The Sellers' Representative shall not be liable to the Seller or
any of the Members or any of their respective affiliates for any decisions made
or actions taken by the Sellers' Representative. Each of the Seller and the
Members agrees, jointly and severally, to indemnify the Sellers' Representative
from and against any Damages that the Sellers' Representative may incur as a
result of his acting as the Sellers' Representative hereunder or in connection
with the performance of any of his duties hereunder to the fullest extent
permitted by applicable Law, except to the extent that such Damages are caused
by actions taken by, or omitted to be taken by, the Sellers' Representative in
bad faith.
Section 8.12 Bulk Transfer Laws. The Buyer acknowledges that the
Seller will not comply with the provisions of the bulk transfer Laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement. The Seller hereby covenants and agrees to indemnify and hold
harmless from and against any and all claims of the Seller's creditors or
others asserted against the Buyer or any of its Affiliates resulting from such
non-compliance.
Section 8.13 Guarantee by the Parent. The Parent hereby
unconditionally and irrevocably guarantees all of the obligations of the Buyer
pursuant to this Agreement and the Ancillary Agreements.
Section 8.14 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would
occur, no adequate remedy at Law would exist and Damages would be difficult to
determine, and that the parties shall be entitled to specific performance of
the terms hereof and immediate injunctive relief, without the necessity of
proving the inadequacy of money Damages as a remedy and without the necessity
of posting any bond or other security, in addition to any other remedy at Law
or equity.
ARTICLE IX
DEFINITIONS AND USAGE
Section 9.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Action" means any action, claim, dispute, proceeding, arbitration,
suit or investigation (whether civil, criminal, administrative, judicial or
investigative), or any appeal therefrom.
"Affiliate" means any Person, a spouse of such Person, any child or
parent sharing the same household with such Person, any director or officer of
such Person, and any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such Person. For
purposes of this definition, the term "control" or any form thereof includes,
with respect to any Person, the possession directly or indirectly, of the power
to direct or cause the direction of the management policies of such Person
through the ownership of voting securities, by contract or otherwise.
"Business Day" means any day other than a Saturday, a Sunday, a legal
holiday in the State of New York or a day on which commercial banks in the
State of New York are permitted or authorized to close.
"Buyer Material Adverse Effect" shall mean any change, circumstance,
event or effect which, individually or when considered in conjunction with
other changes, circumstances or effects, has had or would reasonably be likely
to have a material adverse effect on (a) the business, financial condition or
results of operations of the Parent or (b) the ability of the Buyer or the
Parent to consummate the transactions contemplated hereby or by the Ancillary
Agreements or to perform its obligations hereunder or thereunder.
"Copyrights" shall mean all copyrights, including, without limitation,
any moral rights and rights of attribution and integrity, the content contained
on any World Wide Web site, registrations and applications for any of the
foregoing, and the right to ▇▇▇ for past infringement thereof.
"Cut-Off Date" shall mean three Business Days prior to the Closing
Date.
"Damages" means any claim, loss, deficiency (financial or otherwise),
liability, cost or expense (including, without limitation, reasonable
attorneys' fees, costs and expenses) or damage of any kind or nature
whatsoever.
"Environmental Laws" means all currently existing Laws relating to
pollution or protection of the environment or human health and safety,
including, without limitation, Laws relating to releases or threatened releases
of Hazardous Materials into the indoor or outdoor environment (including,
without limitation, ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, release, transport or handling of
Hazardous Materials and all Laws with regard to record keeping, notification,
disclosure and reporting requirements respecting Hazardous Materials, and all
Laws relating to endangered or threatened species of fish, wildlife and plants
and the management or use of natural resources.
"Financial Statements" shall mean (a) the consolidated balance sheets
of the Seller as at December 31 in each of the years 2001 through 2003 together
with consolidated statements of income, members' equity and cash flows for each
of the years then ended, including the notes thereto, as certified, with
respect to the fiscal year ended December 31, 2003, by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
P.C., independent certified public accountants, whose reports thereon are
included therein, and, with respect to the fiscal years ended December 31, 2001
and 2002, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Company, LLP, independent certified public
accountants, whose reports thereon are included therein and (b) an unaudited
consolidated balance sheet of the Seller as at June 30, 2004 and unaudited
consolidated statements of income, members' equity and cash flows for the
quarterly period then ended, including the notes thereto.
"Hazardous Materials" means all substances defined as "Hazardous
Substances," "Oils," "Pollutants" or "Contaminants" in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. ss. 300.5, toxic
mold, or defined as such by, or regulated as such under, any Environmental Law.
"Intellectual Property" means all Copyrights, Patents, Software,
Trademarks, Trade Secrets, and rights of publicity and privacy relating to the
use of the names, likenesses, voices, signatures and biographical information
of real persons.
"License Agreements" means all agreements (including, without
limitation, any outstanding decrees, orders, judgments, settlement agreements
or stipulations) to which the Seller is a party or otherwise bound (whether
oral or written, and whether between the Seller and an independent Person or
inter-corporate) which contain provisions granting to or obtaining from the
Seller rights in any Intellectual Property used in or necessary for the conduct
by the Seller of the Business as currently conducted and contemplated to be
conducted.
"Liens" shall mean all liens, pledges, charges, claims, security
interests or other encumbrances except for statutory liens relating to (i)
Taxes not yet due and payable and (ii) compliance with bulk transfer Laws.
"Material Adverse Effect" shall mean any change, circumstance, event
or effect which, individually or when considered in conjunction with other
changes, circumstances or effects, has had or would reasonably be likely to
have a material adverse effect on (a) the business, financial condition or
results of operations of the Seller or (b) the ability of the Seller to
consummate the transactions contemplated hereby or by the Ancillary Agreements
or to perform its obligations hereunder or thereunder.
"Net Working Capital" shall mean current assets included in the
Acquired Assets less current liabilities included in the Assumed Liabilities.
"Non-Competition Period" shall mean the period commencing on the
Closing Date and continuing until the earlier of (a) December 31, 2008 and (b)
the date that is two years after date on which the Buyer's obligation to make a
final Earnout Payment or to make no additional Earnout Payments is determined.
"Patents" means all patents and industrial designs, including, without
limitation, any continuations, divisionals, continuations-in-part, renewals,
reissues and applications for any of the foregoing, and the right to ▇▇▇ for
past infringement thereof.
"Person" shall mean any individual, partnership, corporation, limited
liability company, association, business trust, joint venture, governmental
entity, business entity or other entity of any kind or nature, including any
business unit of such Person.
"Pro Rata Share" shall mean, with respect to each Member, a percentage
equal to such Member's percentage ownership of the issued and outstanding
equity interests of the Seller set forth in the preamble to this Agreement.
"Release Date" shall mean each of the First Release Date, the Second
Release Date and the Final Release Date.
"Restricted Business" shall mean the business of providing
peer-to-peer interactive continuing medical education and marketing programs
involving medical professionals to the pharmaceutical and biotechnology
industries anywhere in the United States.
"Seller Disclosure Schedule" shall mean the disclosure schedule being
delivered by the Seller to the Buyer concurrently herewith.
"Seller Owned IP" shall mean the Seller Intellectual Property owned by
the Seller.
"Software" means all (a) computer programs, including, without
limitation, any and all software implementation of algorithms, models and
methodologies, whether in source code or object code form, (b) databases and
compilations, including, without limitation, any and all data and collections
of data, and (c) all documentation, including, without limitation, user manuals
and training materials, relating to any of the foregoing.
"Subsidiary" shall mean, with respect to any Person, any corporation
or other organization, whether incorporated or unincorporated, of which (a) at
least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries or (b) such Person or any other Subsidiary of such Person is a
general partner (excluding any such partnership where such Person or any
Subsidiary of such Person does not have a majority of the voting interest in
such partnership).
"Tax" or "Taxes" shall mean all taxes, charges, fees, duties, levies,
penalties or other assessments imposed by any federal, state, local or non-U.S.
Governmental Entity, including income, gross receipts, excise, property, sales,
gain, use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum estimated, profit,
gift, severance, value added, disability, premium, recapture, credit,
occupation, service, leasing, employment, stamp and other taxes, and shall
include interest, penalties or additions attributable thereto or attributable
to any failure to comply with any requirement regarding Tax Returns.
"Taxing Authority" means any government or political subdivision or
territory or possession of any government or any authority or agency therein or
thereof having power to tax.
"Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes required to be
filed with the Internal Revenue Service or any U.S., state or any other
governmental entity or tax authority or agency, whether domestic or foreign,
including any such document prepared on a consolidated, combined or unitary
basis and also including any schedule or attachment thereto, and including any
amendment thereto.
"Trade Secrets" means any and all forms and types of technology, trade
secrets and other confidential information, data, know-how, inventions,
proprietary processes, formulae, algorithms, source code, models,
methodologies, and any documentation related to the foregoing.
"Trademarks" means all trademarks, service marks, trade names,
corporate names, Internet domain names, designs, logos, emblems, signs or
insignia, slogans, and other similar designations of source or origin general
intangibles of like nature, together with all goodwill symbolized by any of the
foregoing, registrations and applications for any of the foregoing, and the
right to ▇▇▇ for past infringement thereof.
Section 9.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Section of this Agreement set forth
below:
AAA..........................................................Section 1.5(b)
Accountant...................................................Section 1.5(b)
Acquired Assets..............................................Section 1.1(a)
Adjustment Certificate.......................................Section 1.5(a)
Adjustment Report............................................Section 1.5(c)
Agreement..........................................................Preamble
Allocation Schedule..........................................Section 4.5(b)
Alternative Transaction........................................Section 4.12
Ancillary Agreements........................................Section 1.10(a)
Assumed Liabilities.............................................Section 1.2
Baseline Amount..............................................Section 1.6(a)
Bills of Sale................................................Section 1.9(a)
Books and Records............................................Section 1.1(a)
Budget.......................................................Section 1.6(e)
Business...........................................................Recitals
Buyer..............................................................Preamble
Buyer Benefit Plan...........................................Section 4.6(b)
Buyer Damages................................................Section 7.2(a)
Buyer Parties................................................Section 7.2(a)
Buyer Party..................................................Section 7.2(a)
Claim...........................................................Section 7.4
Closing.........................................................Section 1.8
Closing Date....................................................Section 1.8
Closing Net Working Capital Amount...........................Section 1.5(a)
Closing Working Capital Statement............................Section 1.5(a)
Confidentiality Agreement....................................Section 4.2(b)
Contracts....................................................Section 1.1(a)
Dispute Notice...............................................Section 1.5(a)
Domain Name Assignment.......................................Section 1.9(e)
Earnout Amount...............................................Section 1.6(a)
Earnout Payment..............................................Section 1.6(a)
Earnout Payment Objection Period.............................Section 1.6(c)
Employee Plans...............................................Section 2.9(a)
Employment Agreements........................................Section 2.9(a)
ERISA........................................................Section 2.9(a)
ERISA Affiliate..............................................Section 2.9(a)
Escrow Account...............................................Section 1.7(a)
Escrow Agent.................................................Section 1.7(a)
Escrow Agreement.............................................Section 1.7(a)
Escrow Amount................................................Section 1.7(a)
Estimated Closing Working Capital Statement..................Section 1.4(a)
Estimated Damages............................................Section 4.3(d)
Estimated Net Working Capital Amount.........................Section 1.4(a)
Excess Amount................................................Section 1.7(d)
Final Gross Profit Statement.................................Section 1.6(c)
Final Release Date...........................................Section 1.7(d)
First Release Date...........................................Section 1.7(b)
Governmental Entity.............................................Section 2.3
Gross Profit.................................................Section 1.6(b)
Gross Profit Statement.......................................Section 1.6(b)
Health Plan Policies.........................................Section 4.3(e)
Indemnity Basket.............................................Section 7.2(b)
Initial Purchase Price.......................................Section 1.4(b)
Instrument of Assumption....................................Section 1.10(a)
Law.............................................................Section 2.3
Laws............................................................Section 2.3
Lease..........................................................Section 2.13
Leased Real Property...........................................Section 2.13
Material Prior Profit Discrepancy............................Section 1.6(c)
Measuring Period.............................................Section 1.6(a)
Member.............................................................Preamble
Members............................................................Preamble
Parent.............................................................Preamble
Payor........................................................Section 4.5(a)
Permits.........................................................Section 2.8
Post-Closing Purchase Price Adjustment.......................Section 1.5(d)
Pre-Closing Notice...........................................Section 4.3(d)
Purchase Price...............................................Section 1.4(b)
Retained Assets..............................................Section 1.1(b)
Retained Liabilities............................................Section 1.3
Review Period................................................Section 1.5(a)
Sale.........................................................Section 1.6(f)
Second Release Date..........................................Section 1.7(c)
Seller.............................................................Preamble
Seller Benefit Plan..........................................Section 4.6(b)
Seller Damages..................................................Section 7.3
Seller Intellectual Property................................Section 2.14(a)
Seller Parties..................................................Section 7.3
Seller Party....................................................Section 7.3
Sellers' Representative.....................................Section 8.11(a)
Target Amount................................................Section 1.6(a)
Target Net Working Capital Amount............................Section 1.4(b)
Total Cost of Sales..........................................Section 1.6(b)
Transfer Taxes...............................................Section 4.5(a)
Transferred Employees........................................Section 4.6(a)
Transition and Services Agreement............................Section 4.3(e)
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement
to be duly signed as of the date first above written.
PHARMAKON, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
INSERVE SUPPORT SOLUTIONS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Director and Chief Executive
Officer
PDI, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice Chairman of the Board
of Directors and Chief
Executive Officer
EXHIBITS
Form of Escrow Agreement.............................................Exhibit A
Form of ▇▇▇▇ of Sale and Assignment..................................Exhibit B
Form of Domain Name Assignment.......................................Exhibit C
Form of Instrument of Assumption.....................................Exhibit D
EXHIBIT A -- FORM OF ESCROW AGREEMENT
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of [ ], 2004, (the "Agreement") by and
among InServe Support Solutions, a California corporation (the "Buyer"),
Pharmakon, L.L.C., an Illinois limited liability company also doing business as
Group Dynamics, L.L.C., ShareCom, L.L.C., VistaCom, L.L.C. and ▇.▇▇▇▇, L.L.C.
("Seller"), ▇▇▇▇▇▇ ▇▇▇▇, who owns 42.70% of the issued and outstanding equity
interests of the Seller, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, who owns 32.59% of the issued and
outstanding equity interests of the Seller, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who owns 17.97%
of the issued and outstanding equity interests of the Seller and ▇▇▇▇▇ ▇▇▇▇▇▇▇,
who owns 6.74% of the issued and outstanding equity interests of the Seller
(each, a "Member" and, collectively, the "Members"), and [ ], a [ ] banking
corporation (as escrow agent hereunder, the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Buyer, the Seller and the Members are parties to an Asset
Purchase Agreement, dated as of August 26, 2004 (the "Asset Purchase
Agreement"), pursuant to which the Buyer shall purchase and assume from the
Seller, and the Seller shall sell, assign, transfer, convey and deliver to the
Buyer, certain assets and properties relating to the Business;
WHEREAS, pursuant to the Asset Purchase Agreement, $1,500,000
otherwise payable as part of the Initial Purchase Price (the "Escrow Amount")
will be held in escrow to secure the Buyer's rights to indemnification set
forth in Section 7.2 of the Asset Purchase Agreement and any adjustments to the
Purchase Price contemplated by Section 1.5 of the Asset Purchase Agreement;
WHEREAS, the Buyer has agreed to deposit, or to cause to be deposited,
the Escrow Amount in cash into an escrow account with the Escrow Agent on the
date hereof, which funds shall be held in escrow and distributed in accordance
with the terms of this Agreement and the Asset Purchase Agreement;
WHEREAS, pursuant to Section 8.11 of the Asset Purchase Agreement, the
Sellers' Representative was appointed as agent and attorney-in-fact for the
Seller and each of the Members, among other things, to act with full power of
substitution with respect to all matters under the Asset Purchase Agreement and
the Ancillary Agreements, including determining, giving and receiving notices
and process thereunder, entering into any amendment or modification thereof,
authorizing or contesting the release of funds under this Agreement, contesting
and settling any determination of any Post-Closing Purchase Price Adjustment
pursuant to Section 1.5 of the Asset Purchase Agreement, contesting and
settling any and all claims for indemnification pursuant to Article VII of the
Asset Purchase Agreement and resolving any other disputes under the Asset
Purchase Agreement and the Ancillary Agreements;
WHEREAS, the Escrow Agent is willing to act as escrow agent in respect
of the Escrow Account (as hereinafter defined) upon the terms and conditions
hereinafter set forth; and
WHEREAS, capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed to them in the Asset Purchase
Agreement, a copy of which is attached as Annex A hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereto, intending to be legally bound, hereby agree as follows:
(1) Appointment of the Escrow Agent. The Buyer, the Seller and the Members
hereby appoint [ ] as escrow agent in accordance with the terms and
conditions set forth herein, and the Escrow Agent hereby accepts such
appointment.
(2) Deposit of the Escrow Amount. Simultaneously with the execution and
delivery of this Agreement, the Buyer shall deposit in an account with
the Escrow Agent the Escrow Amount in immediately available funds (the
"Escrowed Proceeds"), the receipt of which will be acknowledged by the
Escrow Agent substantially in the form of Annex B attached hereto, and
which Escrowed Proceeds shall be held by the Escrow Agent upon the
terms and conditions hereinafter set forth.
(3) Investment of the Escrow Account.
First: During the term of this Agreement, the Escrow Agent shall
invest and reinvest the Escrowed Proceeds and any interest or income earned
thereon (the "Escrow Account"), in any of the investments listed on Schedule A
hereto, at the written direction of the Sellers' Representative.
Notwithstanding the foregoing, the Escrow Agent shall have the power to sell or
liquidate the investments comprising the Escrow Account to the extent that the
Escrow Agent shall be required to do so to release all or any portion of the
Escrow Account pursuant to Section 4 or Section 5 hereof.
Second: (i) The Escrow Agent shall have no obligation to invest or
reinvest any of the Escrow Account in the absence of timely and specific
written investment instructions from the Sellers' Representative. In no event
shall the Escrow Agent be liable for the selection of investments. The Escrow
Agent shall not have any liability for any loss sustained as a result of any
investment made as provided above, any liquidation of any such investment as
provided herein prior to its maturity, or the failure of the Sellers'
Representative to give the Escrow Agent timely written instruction to invest or
reinvest the Escrow Account.
(ii) Any interest or other income received on such
investment and reinvestment of the Escrow Account
shall become part of the Escrow Account and any losses
incurred on such investment and reinvestment of the
Escrow Account shall be debited against the Escrow
Account. If a selection is not made and a written
direction is not given to the Escrow Agent with
respect to the Escrow Account, the Escrow Account
shall remain uninvested with no liability for interest
therein. In no event shall the Escrow Agent be deemed
an investment manager or adviser in respect of any
selection of investments hereunder.
(4) Releases of the Escrow Account. Except as otherwise provided in
Section 5 hereof, the Escrow Agent shall hold and release funds from
the Escrow Account to the Seller, free of the escrow created hereby,
as follows:
First: On the date that is three months after the Closing Date (the
"First Release Date"), the Escrow Agent shall automatically, without further
direction, release from the Escrow Account and deliver to the Seller an amount
equal to the excess, if any, of (i) the then current balance of the Escrow
Account, over (ii) $1,000,000 plus (x) the aggregate amount of all
indemnification claims brought by the Buyer and set forth in one or more Buyer
Certificates that have been resolved in accordance with Section 5 and are due
to the Buyer pursuant to Article VII of the Asset Purchase Agreement but that
have not been paid to the Buyer (either pursuant to this Section 4 or
otherwise) as of such date, and (y) the aggregate amount of all unresolved
indemnification claims brought by the Buyer in accordance with Article VII of
the Asset Purchase Agreement and set forth in one or more Buyer Certificates
which remain unresolved pursuant to Section 5 as of such date.
Second: On the date that is 9 months after the Closing Date (the
"Second Release Date"), the Escrow Agent shall automatically, without further
direction, release from the Escrow Account and deliver to the Seller an amount
equal to the excess, if any, of (i) the then current balance of the Escrow
Account, over (ii) $500,000 plus (x) the aggregate amount of all
indemnification claims brought by the Buyer and set forth in one or more Buyer
Certificates that have been resolved in accordance with Section 5 and are due
to the Buyer pursuant to Article VII of the Asset Purchase Agreement but that
have not been paid to the Buyer (either pursuant to this Section 4 or
otherwise) as of such date, and (y) the aggregate amount of all unresolved
indemnification claims brought by the Buyer in accordance with Article VII of
the Asset Purchase Agreement and set forth in one or more Buyer Certificates
which remain unresolved pursuant to Section 5 as of such date.
Third: On the date that is 21 months after the Closing Date (the
"Final Release Date"), the Escrow Agent shall automatically, without further
direction, release from the Escrow Account and deliver to the Seller an amount
equal to the positive difference, if any, between (i) the then current balance
of the Escrow Account, and (ii) the total of (x) the aggregate amount of all
indemnification claims brought by the Buyer and set forth in one or more Buyer
Certificates that have been resolved pursuant to Section 5 and are due to the
Buyer pursuant to Article VII of the Asset Purchase Agreement but that have not
been paid to the Buyer (either pursuant to this Section 4 or otherwise) as of
such date, and (y) the aggregate amount of all unresolved indemnification
claims brought by the Buyer in accordance with Article VII of the Asset
Purchase Agreement and set forth in one or more Buyer Certificates which remain
unresolved pursuant to Section 5 as of such date.
Fourth: Upon the satisfaction (either by release from the Escrow
Account or otherwise) of any indemnification claim for an amount less than the
amount retained in respect thereof on any Release Date, the Escrow Agent shall
automatically, without further direction, release from the Escrow Account and
deliver to the Seller an amount equal to the positive difference, if any,
between the amount retained in respect thereof on the applicable Release Date
and the amount released from the Escrow Account to the Buyer in satisfaction
thereof (such difference, the "Excess Amount"); provided, that, any Excess
Amount shall be released to the Seller if and only to the extent that the then
current balance of the Escrow Account exceeds the total of (i) the aggregate
amount of all indemnification claims brought by the Buyer and set forth in one
or more Buyer Certificates that have been resolved in accordance with Section 5
and are due to the Buyer pursuant to Article VII of the Asset Purchase
Agreement but that have not been paid to the Buyer (either pursuant to this
Section 4 or otherwise) as of such date, plus (ii) the aggregate amount of all
unresolved indemnification claims brought by the Buyer in accordance with
Article VII of the Asset Purchase Agreement and set forth in one or more Buyer
Certificates which remain unresolved pursuant to Section 5 as of such date,
plus (iii) if such indemnification claim is satisfied during the period (A)
between the First Release Date and the Second Release Date, $1,000,000, and (B)
between the Second Release Date and the Final Release Date, $500,000.
Fifth: If, for any reason, the Escrow Agent fails to release funds
from the Escrow Account, or any part thereof, as provided in this Agreement and
the Asset Purchase Agreement, the Seller and the Buyer agree to provide joint
directions to the Escrow Agent to release funds from the Escrow Account as
provided in this Agreement and in the Asset Purchase Agreement.
(5) Delivery to the Buyer. From time to time, the Buyer may, to the
extent the Buyer believes in good faith that it is entitled to a
Post-Closing Purchase Price Adjustment pursuant to and/or
indemnification under the Asset Purchase Agreement, deliver to
Escrow Agent and the Seller a certification signed by a duly
authorized officer of the Buyer (a) certifying that, pursuant to
the terms of the Asset Purchase Agreement, the Buyer is entitled
to receive a specified portion of the Escrow Account as is
identified in any such certificate, and that a copy of the
certification has been delivered to the Seller in the manner set
forth in Section 12(b) hereof and (b) describing in reasonable
detail the basis of the claim and, in the case of an
indemnification claim, the amount and calculation of Buyer
Damages arising from such claim, or, in the case of a
Post-Closing Purchase Price Adjustment, the amount of such
Post-Closing Purchase Price Adjustment (a "Buyer Certificate").
In the event that the Escrow Agent does not receive a notice (an
"Objection Notice") from the Seller within 30 days of receipt of
such a Buyer Certificate, disputing the Buyer's right to a
Post-Closing Purchase Price Adjustment or indemnification, as the
case may be, then the Escrow Agent shall promptly deliver to the
Buyer the portion of the Escrow Account identified in such Buyer
Certificate. For the avoidance of doubt, with respect to any
claim for a Post-Closing Purchase Price Adjustment, the delivery
of an Objection Notice by the Seller to the Escrow Agent in
accordance with this Section 5 shall not relieve the Seller of
its obligation to deliver a Dispute Notice to the Buyer pursuant
to Section 1.5(a) of the Asset Purchase Agreement in order to
object to any item or amount in the Closing Working Capital
Statement or the Adjustment Certificate or with the Buyer's
calculation of the Closing Net Working Capital Amount. Any
portion of the Escrow Account that is not the subject of any
particular Buyer Certificate delivered by the Buyer pursuant to
this Section 5 shall continue to be held by Escrow Agent in
accordance with the terms and conditions hereof. In the event
that Escrow Agent receives an Objection Notice from the Seller
within 30 days of receipt of such a Buyer Certificate, disputing
in whole or in part the Buyer's right to a Post-Closing Purchase
Price Adjustment or indemnification, as the case may be, then
Escrow Agent shall concurrently release from the Escrow Account
to the Buyer any undisputed portion of the amount set forth in
the Buyer Certificate and shall continue to hold in the Escrow
Account the disputed portion of the amount set forth in the Buyer
Certificate identified in the Objection Notice and shall not
release such disputed amount until the earlier of the Escrow
Agent's receipt of (x) a joint written direction signed by the
Buyer and the Seller, (y) with respect to any claim for a
Post-Closing Purchase Price Adjustment, an Adjustment Report
prepared by the Accountant in accordance with Section 1.5(c) of
the Asset Purchase Agreement or (z) with respect to any claim for
indemnification, a court order resolving the dispute in
accordance with the terms of the Asset Purchase Agreement and
this Agreement. If the amount in the Escrow Account is
insufficient to pay any amounts set forth in any Buyer
Certificate and due to the Buyer under this Section 5, the Seller
and the Members agree, subject to the terms and conditions set
forth in the Asset Purchase Agreement, that such shortfall shall
not affect such Buyer Party's indemnity rights under the Asset
Purchase Agreement in respect thereof.
(6) Resignation of the Escrow Agent. The Escrow Agent may resign and
be discharged from its duties hereunder at any time by giving
written notice of such resignation to the Sellers' Representative
and the Buyer specifying a date when such resignation shall take
effect and upon delivery of the Escrow Account to the successor
escrow agent designated by all parties hereto (other than the
Escrow Agent) in writing. Upon such notice, a successor Escrow
Agent shall be appointed with the mutual consent of the Sellers'
Representative and the Buyer. Such successor Escrow Agent shall
become the Escrow Agent hereunder upon delivery of the Escrow
Account to it. If the Sellers' Representative and the Buyer are
unable to agree upon a successor Escrow Agent within 30 days
after such notice, the Escrow Agent shall be entitled to apply to
a court of competent jurisdiction for the appointment of a
successor. The Escrow Agent shall continue to serve until its
successor accepts its appointment as escrow agent and receives
the Escrow Account. The Sellers' Representative and the Buyer
shall have the right at any time upon their mutual consent to
substitute a new escrow agent by giving notice thereof to the
Escrow Agent then acting. Upon its resignation and delivery of
the Escrow Account as set forth in this Section 6, the Escrow
Agent shall be discharged of and from any and all further
obligations arising in connection with the escrow contemplated by
this Agreement.
(7) Duties, Liability and Indemnification of Escrow Agent.
First: The Escrow Agent shall have no duties or responsibilities
whatsoever with respect to the Escrow Account except as are specifically set
forth herein, and as set forth in any additional written escrow instructions
which the Escrow Agent may receive after the date of this Agreement which are
signed by an officer of the Buyer and the Sellers' Representative, and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed to be genuine and to have been signed or presented by the
proper party or parties.
Second: The Escrow Agent shall not be liable for any action taken or
omitted in good faith and reasonably believed by it to be authorized hereby or
with the rights or powers conferred upon it hereunder, nor for any action taken
or omitted by it in good faith, and in accordance with advice of counsel (which
counsel may be of the Escrow Agent's own choosing), and shall not be liable for
any mistake of fact or error of judgment or for any acts or omissions of any
kind except for its own willful misconduct, gross negligence or bad faith as
determined by a court of competent jurisdiction.
Third: Each of the Buyer, the Seller and each of the Members, agrees
to jointly and severally indemnify and hold harmless the Escrow Agent and its
employees, directors, representatives, officers and agents and hold each
harmless against any and all liabilities incurred by it hereunder as a
consequence of such party's action or omissions, and the parties hereto agree
jointly and severally to reimburse, indemnify the Escrow Agent and hold it
harmless against any and all claims, costs, payments, and expenses (including
the fees and expenses of counsel) and all liabilities incurred by it in
connection with the performance of its duties hereunder, except in either case
for claims, costs, payments, and expenses (including the fees and expenses of
counsel) and liabilities incurred by the Escrow Agent resulting from its own
willful misconduct, gross negligence or bad faith. The Seller and each of the
Members, on the one hand, and the Buyer, on the other hand, agree to reimburse
each other for one-half of any payments made by them pursuant to this Section
7(c) with respect to liabilities for which the parties hereto are jointly
liable pursuant to this Section 7(c).
Fourth: The provisions of this Section 7 shall survive the termination
of this Agreement or the earlier resignation or removal of the Escrow Agent.
Fifth: Each of the parties hereto (for itself and any person or entity
claiming through it) hereby releases, waives, discharges, exculpates and
covenants not to ▇▇▇ the Escrow Agent for any action taken or omitted under
this Agreement except to the extent caused by the willful misconduct, gross
negligence or bad faith of the Escrow Agent.
Sixth: Anything in this Agreement to the contrary notwithstanding, in
no event shall the Escrow Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits).
Seventh: None of the provisions of this Agreement shall require the
Escrow Agent to expend or risk its own funds or otherwise to incur any
liability, financial or otherwise, in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it.
Eighth: Whenever in the administration of the provisions of this
Agreement the Escrow Agent shall deem it necessary or desirable that a matter
be proved or established prior to taking or suffering any action to be taken
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of willful misconduct, gross
negligence or bad faith on the part of the Escrow Agent, be deemed to be
conclusively proved and established by a certificate signed by each of the
Sellers' Representative and an officer of the Buyer, as the case may be, and
delivered to the Escrow Agent and such certificate, in the absence of willful
misconduct, gross negligence or bad faith on the part of the Escrow Agent,
shall be full warrant to the Escrow Agent for any action taken, suffered or
omitted by it under the provisions of this Agreement upon the faith thereof.
Ninth: The Escrow Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or, with the prior
written consent of the parties hereto (which consent shall not be unreasonably
withheld), by or through agents, attorneys, custodians or nominees appointed
with due care, and shall not be responsible for any willful misconduct, gross
negligence or bad faith on the part of any agent, attorney, custodian or
nominee so appointed.
(8) Compensation of Escrow Agent. Except as set forth in Section 6(c), all
fees and expenses of the Escrow Agent for performance of its duties
hereunder shall be paid by the Buyer. It is understood that the
customary fees and expenses set forth on Schedule B hereto (as such
schedule may be amended from time to time) for services rendered by
the Escrow Agent hereunder shall be considered compensation for
ordinary services as contemplated by this Agreement. The obligation of
the Buyer under this Section 8 to compensate the Escrow Agent and to
pay or reimburse the Escrow Agent for reasonable expenses,
disbursements and advances shall survive the satisfaction and
discharge of this Agreement or the earlier resignation or removal of
the Escrow Agent.
(9) Further Assurances. From time to time on and after the date hereof,
the other parties hereto shall deliver or cause to be delivered to the
Escrow Agent such further documents and instruments and shall do and
cause to be done such further acts as the Escrow Agent shall
reasonably request (it being understood that the Escrow Agent shall
have no obligation to make any such request) to carry out more
effectively the provisions and purposes of this Agreement, to evidence
compliance herewith or to assure itself that it is protected in acting
hereunder.
(10) Termination of Agreement. This Agreement shall terminate on the final
disposition of the Escrow Account provided that the rights of the
Escrow Agent and the obligations of the other parties hereto under
Sections 7 and 8 shall survive the termination hereof and the
resignation or removal of the Escrow Agent.
(11) Tax Treatment. Notwithstanding anything to the contrary in this
Agreement or the Asset Purchase Agreement, the parties hereto agree
that the Escrow Account shall be treated for U.S. federal income tax
purposes as a trust, all of which is deemed to be owned by the Seller
under subpart E of Part I of subchapter J of the Internal Revenue Code
of 1986, as amended (the "Code"), and that the Seller shall report for
federal, state, local or foreign income tax purposes all income or
other tax items derived from the Escrow Account. Prior to the filing
by the Seller of any income or estimated tax return that includes
income reportable pursuant to this paragraph, the Escrow Agent shall
pay to the Seller an amount equal to the aggregate U.S. federal income
tax that the Escrow Account would have paid if it were a corporation
subject to the tax imposed on corporations under section 11 of the
Code promptly after delivery of a request and instructions for payment
to the Escrow Agent.
(12) Miscellaneous.
First: This Agreement and (except in the case of the Escrow Agent) the
Asset Purchase Agreement embody the entire agreement and understanding among
the parties hereto relating to the subject matter hereof, and this Agreement
may not be amended, supplemented or otherwise modified without the prior
written consent of the parties hereto.
Second: Any notice required or permitted by this Agreement must be in
writing and must be sent by facsimile, by nationally recognized commercial
overnight courier, or mailed by United States registered or certified mail,
addressed to the other party at the address below or to such other address for
notice (or facsimile number, in the case of a notice by facsimile) as a party
gives the other party written notice of in accordance with this Section 12(b).
Any such notice will be effective as of the date of receipt:
If to the Seller or the Members:
Pharmakon, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Buyer, to:
InServe Support Solutions
c/o PDI, Inc.
▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to the Escrow Agent, to:
[ ]
[ ]
[ ]
Facsimile: [ ]
Attention: [ ]
with a copy to:
[ ]
[ ]
Facsimile: [ ]
Attention: [ ]
Third: The headings of the Sections of this Agreement have been
inserted for convenience and shall not modify, define, limit or expand the
express provisions of this Agreement.
Fourth: Except as provided in Section 6 hereof and as set forth in
this Section 12(d), this Agreement and the rights, interests and obligations
hereunder of the parties hereto may not be assigned by any party except with
the prior written consent of the other parties hereto, except that the Buyer
may assign any or all of its rights, benefits, interests and obligations under
this Agreement or any Ancillary Agreement (i) to one or more of its Affiliates,
provided that no such assignment shall relieve the Buyer of its obligations
hereunder and (ii) after the Closing Date, to any person that acquires,
directly or indirectly, all or any part of the Business, provided that no such
assignment shall relieve the Buyer of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon and inure to the
benefit of each party and each party's respective successors and permitted
assigns. Except as expressly provided herein, no other person shall acquire or
have any rights under or by virtue of this Agreement. This Agreement is
intended to be for the sole benefit of the parties hereto, and (subject to the
provisions of this Section 12(d)) their respective successors and assigns, and
none of the provisions of this Agreement are intended to be, nor shall they be
construed to be, for the benefit of any third person. Anything to the contrary
herein notwithstanding, any corporation into which the Escrow Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow
Agent shall be a party, or any corporation succeeding to the business of the
Escrow Agent shall be the successor of the Escrow Agent hereunder without the
execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto except where an instrument of transfer or
assignment is required by law to effect such succession, anything herein to the
contrary notwithstanding.
Fifth: This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to the principles of
conflict of laws.
Sixth: This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
[Execution Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
INSERVE SUPPORT SOLUTIONS
By:_______________________________________
Name:
Title:
PHARMAKON, L.L.C.
By:_______________________________________
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇
By:_______________________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_______________________________________
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_______________________________________
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇
By:_______________________________________
Name:
Title:
[ ], as Escrow Agent
By:_______________________________________
Name:
Title:
Schedule A
Permitted Investments
(i) Any bonds or obligations which as to principal and interest constitutes
direct obligations of or are guaranteed by the United States of America; (ii)
certificates of deposit of banks or trust companies[, including the Escrow
Agent,] organized under the laws of the United States of America or any state
thereof, with capital and surplus of at least $50,000,000; (iii) commercial
paper or finance company paper[, including that of any Affiliate of the Escrow
Agent], which is rated not less than prime-one or A-1 or their equivalents by
▇▇▇▇▇'▇ Investor Service, Inc., or Standard and Poor's Corporation or
successors; (iv) shares of any so called "money market fund" or Mutual Fund
which has its assets invested primarily in investments of the type described in
clauses (i), (ii) and (iii) above [including funds to which the Escrow Agent
may be the financial advisor and/or custodian]; provided, that the term of any
the investments described in clauses (i), (ii), (iii) and (iv) above shall not
be greater than one year.
Schedule A-1
Schedule B
Schedule of Escrow Fees
1. ACCEPTANCE FEE: [ ]
This fee covers the acceptance by the Escrow Agent of its appointment as escrow
agent under this Agreement; review, negotiation and execution of the relevant
transaction documents; establishment and maintenance of the appropriate
accounts, systems, data communication and other administrative procedures; and
closing of the accounts. Payable at closing.
2. ANNUAL ADMINISTRATION FEE: [ ]
This fee covers the normal administration of the Escrow Account including,
without limitation, disbursements, investments and reporting. Payable at
closing.
3. LEGAL FEES: At Cost
All reasonable legal fees and expenses incurred may be billed separately and
are payable upon execution of this Agreement and, to the extent incurred
following execution of this Agreement, are payable as incurred.
Annex A
Asset Purchase Agreement
Annex A-1
Annex B
Receipt of Funds by Escrow Agent
[Letterhead of Escrow Agent]
[Company]
[ ]
[ ]
Attention: [ ]
To Whom it May Concern:
The undersigned hereby acknowledges the receipt by [ ] (the "Escrow Agent"), of
$__________________ (the "Deposit") from [Company]. Pursuant to the terms of
the Escrow Agreement, dated as of __________, 2004 (the "Escrow Agreement"), by
and among [Buyer], [Seller], [Member 1], [Member 2], [Member 3], [Member 4],
and [ ], as Escrow Agent, of the Deposit will be deemed to constitute Escrowed
Proceeds, and will be held by the Escrow Agent in accordance with the terms of
the Escrow Agreement.
[Escrow Agent]
By: _______________________
Name:
Title:
EXHIBIT B -- FORM OF ▇▇▇▇ OF SALE AND ASSIGNMENT
This ▇▇▇▇ of Sale and Assignment ("▇▇▇▇ of Sale and Assignment") is
made and entered into effective as of ___________, 2004 from Pharmakon, L.L.C.,
an Illinois limited liability company also doing business as Group Dynamics,
L.L.C., ShareCom, L.L.C., VistaCom, L.L.C. and ▇.▇▇▇▇, L.L.C. (the "Seller") to
InServe Support Solutions, a California corporation (the "Buyer"). All
capitalized terms used in this ▇▇▇▇ of Sale and Assignment and not otherwise
defined herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement dated as of August 26, 2004 by and among the Buyer, the
Seller, PDI, Inc., a Delaware corporation, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Agreement").
WHEREAS, pursuant to the Agreement, the Seller has agreed to sell,
convey, assign, transfer and deliver to the Buyer, and the Buyer has agreed to
purchase and acquire, all of the Seller's right, title and interest in and to
the assets, properties and rights of the Seller described in the Agreement; and
WHEREAS, this ▇▇▇▇ of Sale and Assignment is being delivered by the
Seller to the Buyer pursuant to Section 1.9(a) of the Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth in
the Agreement and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the Seller hereby agrees as follows:
1. The Seller hereby sells, conveys, assigns, transfers and delivers
to the Buyer, its successors and assigns, all of the Acquired Assets.
2. This sale, conveyance, assignment and transfer has been validly
executed and delivered by the Seller to the Buyer in accordance with the
Agreement and is expressly made subject to those liabilities, obligations and
commitments which the Buyer has expressly assumed and agreed to perform, pay
and discharge pursuant to the Assumption Agreement executed by the Buyer of
even date herewith.
3. The Seller, by its execution of this ▇▇▇▇ of Sale and Assignment,
and the Buyer, by its acceptance of this ▇▇▇▇ of Sale and Assignment, hereby
acknowledge and agree that neither the representations and warranties nor the
rights and remedies of the Parties under the Agreement shall be deemed to be
enlarged, diminished, modified or altered in any way by this instrument.
4. This ▇▇▇▇ of Sale and Assignment shall be binding upon and inure
solely to the benefit of the Buyer and Seller and their respective permitted
successors and assigns in accordance with the Agreement.
5. This ▇▇▇▇ of Sale and Assignment may be signed in counterparts and
all signed copies of this ▇▇▇▇ of Sale and Assignment will together constitute
one original ▇▇▇▇ of Sale and Assignment. This ▇▇▇▇ of Sale and Assignment
shall become effective when each party hereto shall have received a counterpart
thereof signed by the other party hereto.
6. This ▇▇▇▇ of Sale and Assignment shall be governed by and construed
in accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of laws
of any jurisdiction other than those of the State of Delaware.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the undersigned has duly executed this
▇▇▇▇ of Sale and Assignment as of the date first above written.
PHARMAKON, L.L.C.
By:_______________________________________
Name:
Title:
INSERVE SUPPORT SOLUTIONS
By:_______________________________________
Name:
Title:
EXHIBIT C -- FORM OF DOMAIN NAME ASSIGNMENT
THIS DOMAIN NAME ASSIGNMENT (this "Assignment") is made and entered
into effective as of ________, 2004, (the "Effective Date"), from Pharmakon,
L.L.C., an Illinois limited liability company also doing business as Group
Dynamics, L.L.C., ShareCom, L.L.C., VistaCom, L.L.C. and ▇.▇▇▇▇, L.L.C. (the
"Assignor") to InServe Support Solutions, a California corporation (the
"Assignee"). All capitalized terms used in this Assignment and not otherwise
defined herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement dated as of August 26, 2004 by and among the Buyer, the
Seller, PDI, Inc., a Delaware corporation, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Agreement").
WHEREAS, pursuant to Section 1.1(a) of the Agreement, the Assignor has
agreed to assign to the Assignee all right, title and interest in and to the
domain names listed on Schedule A hereto (the "Domain Names"); and
WHEREAS, the Assignee desires to acquire all rights to the Domain
Names; and
WHEREAS, this Assignment is being delivered by the Assignor to the
Assignee pursuant to Section 1.9(f) of the Agreement.
NOW, THEREFORE, in consideration of the Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby:
1. The Assignor does hereby irrevocably assign to the Assignee all
right, title and interest in and to the Domain Names worldwide, with all rights
and privileges to be held and enjoyed by the Assignee and its successors and
assigns.
2. The Assignor agrees to cooperate with the Assignee to transfer the
Domain Names electronically from Assignor's account to Assignee's account as
promptly as practicable after the date of this Assignment. The Assignor further
agrees to complete accurately, execute, notarize (as necessary) and deliver at
any future date any additional documents that the Assignee reasonably
determines are necessary to perfect the Assignee's ownership of the Domain
Names including, but not limited to, any transfer documents required by a
domain name registrar.
3. This Assignment shall be binding upon and inure solely to the
benefit of the Assignee and Assignor and their respective permitted successors
and assigns in accordance with the Agreement.
4. This Assignment may be signed in counterparts and all signed copies
of this Assignment will together constitute one original Assignment. This
Assignment shall become effective when each party hereto shall have received a
counterpart thereof signed by the other party hereto.
5. The Assignment shall be governed by and construed in accordance
with the internal laws of the State of Delaware without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware
or any other jurisdiction) that would cause the application of laws of any
jurisdiction other than those of the State of Delaware.
IN WITNESS WHEREOF, each of the undersigned has caused this Assignment
to be duly signed as of the date first above written.
PHARMAKON, L.L.C.
By:_______________________________________
Name:
Title:
INSERVE SUPPORT SOLUTIONS
By:_______________________________________
Name:
Title:
EXHIBIT D -- FORM OF INSTRUMENT OF ASSUMPTION
This Instrument of Assumption ("Instrument of Assumption") is made and
entered into effective as of ________________, 2004, from InServe Support
Solutions, a California corporation (the "Buyer") to Pharmakon, L.L.C., an
Illinois limited liability company also doing business as Group Dynamics,
L.L.C., ShareCom, L.L.C., VistaCom, L.L.C. and ▇.▇▇▇▇, L.L.C. (the 'Seller").
All capitalized terms used in this Instrument of Assumption and not otherwise
defined herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement dated as of August 26, 2004 by and among the Buyer, the
Seller, PDI, Inc., a Delaware corporation, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Agreement").
WHEREAS, pursuant to the Agreement, the Seller has agreed to sell,
convey, assign, transfer and deliver to the Buyer, and the Buyer has agreed to
purchase and acquire, all of the Seller's right, title and interest in and to
the assets, properties and rights of the Seller described in the Agreement;
WHEREAS, this Instrument of Assumption is being delivered by the Buyer
pursuant to Section 1.10(a) of the Agreement; and
WHEREAS, in partial consideration therefor, the Agreement requires the
Buyer to assume certain of the liabilities of the Seller relating to the
Business;
NOW, THEREFORE, in consideration of the mutual promises set forth in
the Agreement and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the Buyer hereby agrees as follows:
1. The Buyer hereby assumes and agrees to pay, perform and discharge
when due all of the Assumed Liabilities.
2. The Buyer, by its execution of this Instrument of Assumption, and
the Seller, by its acceptance of this Instrument of Assumption, hereby
acknowledges and agrees that neither the representations and warranties
nor the rights and remedies of the Parties under the Agreement shall be
deemed to be enlarged, diminished, modified or altered in any way by this
instrument.
3. This Instrument of Assumption shall be binding upon and inure
solely to the benefit of the Buyer and the Seller and their respective
permitted successors and assigns in accordance with the Agreement.
4. This Instrument of Assumption may be signed in counterparts and all
signed copies of this Assumption Assignment will together constitute one
original Assumption Assignment. This Assumption Assignment shall become
effective when each party hereto shall have received a counterpart thereof
signed by the other party hereto.
5. The Instrument of Assumption shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the
application of laws of any jurisdiction other than those of the State of
Delaware.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Instrument of Assumption as of the date first above written.
PHARMAKON, L.L.C.
By:_______________________________________
Name:
Title:
INSERVE SUPPORT SOLUTIONS
By:_______________________________________
Name:
Title: