STOCK PURCHASE AGREEMENT
BY AND AMONG
▇▇▇▇ ▇▇▇▇▇▇
AND
▇▇▇▇ ▇▇▇▇▇▇▇▇
AS SELLERS
AND
THE PROJECT GROUP, INC.
AS PURCHASER
JUNE 30, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions .................................................................. 1
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Section 1.01. Certain Defined Terms............................................. 1
Section 1.02. References, Etc................................................... 1
ARTICLE II Purchase and Sale of the Stock............................................................ 2
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Section 2.01. Purchase and Sale................................................. 2
Section 2.02. Purchase Price.................................................... 2
Section 2.03. Time and Place of Closing......................................... 2
Section 2.04. Delivery of Stock; Payment of Purchase Price...................... 2
ARTICLE III Representations and Warranties of Sellers................................................. 2
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Section 3.01. Organization and Qualification.................................... 3
Section 3.02. Capitalization of the Company; Title to the Stock................. 3
Section 3.03. Authority......................................................... 3
Section 3.04. No Conflict....................................................... 4
Section 3.05. Consents and Approvals............................................ 4
Section 3.06. Financial Statements.............................................. 4
Section 3.07. Undisclosed Liabilities........................................... 5
Section 3.08. Absence of Changes................................................ 5
Section 3.09. Litigation........................................................ 6
Section 3.10. Assets and Properties of the Company.............................. 7
Section 3.11. Condemnation...................................................... 7
Section 3.12. Contracts......................................................... 7
Section 3.13. Intellectual Property Rights...................................... 8
Section 3.14. Receivables....................................................... 8
Section 3.15. Governmental Approvals............................................ 8
Section 3.16. Collective Bargaining Agreements.................................. 9
Section 3.17. Labor Matters..................................................... 9
Section 3.18. Employee Benefit Plans............................................ 9
Section 3.19. Compliance with Laws.............................................. 11
Section 3.20. Taxes............................................................. 11
Section 3.21. Insurance......................................................... 12
Section 3.22. Suppliers; Service Providers...................................... 12
Section 3.23. Environmental..................................................... 13
Section 3.24. Acquisition Transactions.......................................... 14
Section 3.25. Propriety of Past Payments........................................ 14
Section 3.26. Brokers, Finders and Financial Advisors........................... 14
Section 3.27. Investment Purpose, Knowledge and Experience;
Restricted Securities............................................ 14
Section 3.28. Disclosure........................................................ 15
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ARTICLE IV Representations and Warranties of Purchaser............................................... 16
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Section 4.01. Authority......................................................... 16
Section 4.02. Stock Consideration............................................... 16
Section 4.03. No Conflict....................................................... 16
Section 4.04. Consents and Approvals............................................ 16
Section 4.05. Litigation........................................................ 16
Section 4.06. Brokers, Finders and Financial Advisors........................... 17
ARTICLE V Covenants .................................................................. 17
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Section 5.01. Investigation of Business; Access to Properties and Records....... 17
Section 5.02. Closing Conditions; Obtaining Consents............................ 18
Section 5.03. Further Assurances................................................ 18
Section 5.04. Conduct of Business............................................... 19
Section 5.05. Public Announcements.............................................. 19
Section 5.06. Acquisition Transactions.......................................... 20
Section 5.07. Tax Matters....................................................... 20
Section 5.08. Casualty Loss and Condemnation.................................... 21
Section 5.09. Updating of Schedules; Certain Notifications...................... 22
Section 5.10. Collection of Receivables......................................... 22
Section 5.11. Non-Competition................................................... 22
Section 5.12. Closing Costs..................................................... 23
Section 5.13 Executive Committee............................................... 23
ARTICLE VI Conditions .................................................................. 23
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Section 6.01. Conditions to Obligations of each of the Parties.................. 23
Section 6.02. Conditions to Obligations of Sellers.............................. 24
Section 6.03. Conditions to Obligations of Purchaser............................ 24
ARTICLE VII Termination .................................................................. 26
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Section 7.01. Termination....................................................... 26
Section 7.02. Effect of Termination............................................. 27
ARTICLE VIII Indemnification .................................................................. 27
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Section 8.01. Indemnification of Sellers........................................ 27
Section 8.02. Indemnification of Purchaser...................................... 28
Section 8.03. Limitations on Indemnification.................................... 29
Section 8.04. Indemnification Procedures........................................ 30
Section 8.05. Payment........................................................... 31
Section 8.06. Other Indemnities; Survival of Representations,
Warranties and Covenants........................................ 31
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ARTICLE IX Miscellaneous .................................................................. 32
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Section 9.01. Notices........................................................... 32
Section 9.02. Benefit and Burden................................................ 33
Section 9.03. No Third Party Rights............................................. 33
Section 9.04. Amendments and Waiver............................................. 33
Section 9.05. Assignments....................................................... 33
Section 9.06. Counterparts...................................................... 33
Section 9.07. Captions and Headings............................................. 34
Section 9.08. Construction...................................................... 34
Section 9.09. Severability...................................................... 34
Section 9.10. Remedies.......................................................... 34
Section 9.11. Applicable Law.................................................... 34
Section 9.12. Submission to Jurisdiction........................................ 34
Section 9.13. Expenses; Prevailing Party Costs.................................. 35
Section 9.14. Entire Agreement.................................................. 35
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ANNEXES AND SCHEDULES
Schedule 3.01 Organization and Qualification
Schedule 3.05 Consents and Approvals
Schedule 3.06 Financial Statements
Schedule 3.08 Absence of Changes
Schedule 3.09 Litigation
Schedule 3.10 Assets and Properties of the Company
Schedule 3.12 Contracts
Schedule 3.13 Intellectual Property Rights
Schedule 3.14 Receivables
Schedule 3.16 Collective Bargaining Agreements
Schedule 3.18 Employee Benefit Plans
Schedule 3.18(a) Employee Benefit Plans - Disclosure
Schedule 3.18(b) Employee Benefit Plans - Compliance
Schedule 3.18(c) Employee Benefit Plans - Liabilities
Schedule 3.18(d) Employee Benefit Plans - Certain Transactions
Schedule 3.18(e) Employee Benefit Plans - Obligations
Schedule 3.18(f) Employee Benefit Plans - Commitments
Schedule 3.19 Compliance with Laws
Schedule 3.20 Taxes
Schedule 3.21 Insurance
Schedule 3.22(a) Suppliers
Schedule 3.22(b) Service Providers
Schedule 3.25 Propriety of Past Payments
Schedule 3.26 Brokers, Finders and Financial Advisors
Schedule 4.06 Brokers, Finders and Financial Advisors
Schedule 5.05 Conduct of Business
Exhibit A Employment Agreement
Exhibit B Stock Option Agreement
Exhibit C Conversion Rights Agreement
Exhibit D Lock-Up Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "AGREEMENT") dated as of the 30th day of
June, 2004, by and among ▇▇▇▇ ▇▇▇▇▇▇, an individual residing in Houston, Texas
("▇▇▇▇▇▇"), and ▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual residing in Houston, Texas
("▇▇▇▇▇▇▇▇") (▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ being herein referred to individually as
"SELLER" and collectively as the "SELLERS"), and THE PROJECT GROUP, INC., a
corporation organized under the laws of the State of Nevada ("TPG") or its
assignee provided for in Section 9.05 (TPG or such assignee being herein
referred to as "PURCHASER").
W I T N E S S E T H :
WHEREAS, Dolphin Knowledge, Inc. is a corporation organized under the laws
of the State of Texas (the "COMPANY") and is a boutique consulting firm
providing consulting services in the areas of team collaboration, cross
corporate collaboration, collaborative technologies, document management and
knowledge management (the "COMPANY BUSINESS");
WHEREAS, the Sellers own all of the issued and outstanding capital stock
of the Company (the "STOCK");
WHEREAS, Sellers desire to sell the Stock to Purchaser, and Purchaser
desires to purchase the Stock from Sellers, on the terms, provisions and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Sellers and Purchaser do hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms . Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
set forth in Annex A hereto.
Section 1.02. References, Etc. The words "HEREOF,""HEREIN" and "HEREUNDER"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in Annex A or in any other provision of this Agreement in the
singular shall have the same meanings in the plural and vice versa. All
pronouns, nouns and other terms used in this Agreement shall include the
masculine, feminine and neuter forms thereof, wherever appropriate to the
context. All references herein to Articles, Sections, Annexes, Exhibits and
Schedules shall, unless the context requires a different construction, be deemed
to be references to the Articles and Sections of this Agreement and the Annexes,
Exhibits and Schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "INCLUDING" (and
with correlative meaning "INCLUDE") means including, without limiting the
generality of any description preceding such term. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP.
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ARTICLE II
PURCHASE AND SALE OF THE STOCK
Section 2.01. Purchase and Sale . On the Closing Date and upon the terms
and subject to the conditions set forth herein, the Sellers shall sell, convey,
transfer, assign and deliver the Stock to Purchaser, free and clear of all
Liens, and Purchaser shall purchase and accept the Stock from the Sellers.
Section 2.02. Purchase Price . The purchase price (the "PURCHASE PRICE")
for the Stock shall be (a) $70,000 in cash (the "CASH CONSIDERATION"), and (b)
6,600,000 shares of restricted common stock of TPG (the "STOCK CONSIDERATION").
The Purchase Price shall be payable equally to ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇.
Section 2.03. Time and Place of Closing . Subject to the satisfaction or
waiver of the conditions set forth in Article VI hereof, the closing of the
transactions contemplated by this Agreement shall take place on the Closing Date
at 10:00 A.M., Houston, Texas time, at the offices of TPG, at 333 N. ▇▇▇ Houston
Parkway E, Suite 275, Houston, Texas, or at such other time, date or place as
Sellers and Purchaser may agree. Upon consummation of the Closing, the
transactions contemplated by this Agreement shall be deemed effective upon
completion of the Closing ("EFFECTIVE TIME").
Section 2.04. Delivery of the Stock; Payment of Purchase Price . On the
Closing Date: (a) the Sellers shall deliver to Purchaser the certificates
representing the Stock, duly endorsed in blank or accompanied by stock powers
duly endorsed in blank, with all Taxes attributable to the transfer and
sale of the Stock paid by the Sellers; and (b) in full consideration and
exchange for
the Stock, the Purchaser shall pay the Sellers the Purchase Price, the Cash
Consideration of which will be payable by certified check, wire transfer or such
other form as shall be acceptable to the Sellers and the Stock Consideration
being payable by delivery of stock certificates registered in the names of the
Sellers or by delivery of irrevocable instructions to the transfer agent of TPG
to issue and deliver to the Sellers stock certificates registered in the names
of the Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to all of the terms, conditions and provisions
of this Agreement, each Seller hereby represents and warrants to Purchaser,
as of the date hereof and as of the Closing Date, as follows:
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Section 3.01. Organization and Qualification . The Company is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Texas. The Company has all requisite power and authority,
corporate or otherwise, to own, lease and operate its Assets and Properties and
to carry on its business as now being conducted. The Company is duly qualified
to do business and is in good standing in the jurisdictions shown on Schedule
3.01, which are the only jurisdictions in which its Assets and Properties or the
nature of the business conducted by it makes such qualification necessary and
where failure to so qualify would have a Material Adverse Effect with respect to
the Company and its subsidiaries. The Company has all requisite power and
authority, corporate and otherwise, to own, lease and operate its Assets and
Properties and to carry on its business as now being conducted. The Company does
not have and has had no subsidiaries or Affiliates (excluding Related Persons).
Section 3.02. Capitalization of the Company; Title to the Stock . The
authorized capital stock of the Company consists of 10,000 shares of common
stock, no par value per share, of which 10,000 shares, representing the Stock,
are issued and outstanding. All of the outstanding shares of capital stock of
the Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of preemptive rights. All of the Stock is owned of
record by the Sellers, free and clear of Liens. There are no outstanding or
authorized subscriptions, options, warrants, calls, rights or other similar
Contracts, including rights of conversion or exchange under any outstanding Debt
or equity security or other Contract (each, a "COMMITMENT"), to which any of the
Stock is subject or obligating the Company to issue, deliver or sell, or cause
to be issued, delivered or sold, any other shares of capital stock of the
Company or any other Debt or equity securities convertible into or evidencing
the right to subscribe for any such shares of capital stock or obligating the
Company to grant, extend or enter into any such Contract. There are no voting
trusts, proxies or other Contracts to which Sellers or the Company is a party or
is bound with respect to the voting of any shares of capital stock of the
Company. The Sellers have full legal right to sell, assign and transfer the
Stock to Purchaser and will, upon payment for the Stock and delivery to
Purchaser of a certificate or certificates representing the Stock, transfer good
and indefeasible title to the Stock to Purchaser, free and clear of Liens.
Section 3.03. Authority . Each of the Sellers and the Company has all
requisite power and authority, corporate or otherwise, to execute and deliver
this Agreement and the Closing Documents to which he or it is a party and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by the Company of the Closing Documents to which it will be a party and
the consummation of the transactions contemplated thereby have been duly and
validly authorized by the Board of Directors of the Company and no other
corporate proceedings or approvals on the part of the Company are necessary to
authorize the Closing Documents or to consummate the transactions contemplated
thereby. Each of the Sellers has duly and validly executed and delivered this
Agreement and each of the Sellers and the Company will, on or prior to the
Closing Date, execute and deliver the Closing Documents to which it is a party
and, assuming the due authorization, execution and delivery of this Agreement
and the Closing Documents by the parties hereto and thereto other than Sellers
and the Company, this Agreement constitutes, and when executed and delivered
each of such Closing Documents will constitute, the legal, valid and binding
obligation of each of the Sellers and the Company, as applicable, enforceable
against each of the Sellers and the Company, as applicable, in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally and general equitable principles.
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Section 3.04. No Conflict . The execution and delivery by each of the
Sellers and the Company of this Agreement and the Closing Documents to which he
or it is a party and the consummation of the transactions contemplated hereby
and thereby, do not and will not, by the lapse of time, the giving of notice or
otherwise: (a) constitute a violation of any Law; (b) constitute a breach or
violation of any provision contained in the charter or bylaws of the Company;
(c) constitute a breach of any provision contained in, or a default under, any
Governmental Approval, any writ, injunction, order, judgment or decree of any
Governmental Authority or any Contract to which any of the Sellers or the
Company is a party or by which any of the Sellers or the Company or any of their
respective Assets and Properties is bound or affected; or (d) result in or
require the creation of any Lien upon the Stock or, except as otherwise provided
in this Agreement and the Closing Documents, any of the Assets and Properties of
any of the Sellers or the Company.
Section 3.05. Consents and Approvals . Except as set forth in Schedule
3.05, no Governmental Approvals and no notifications, filings or registrations
to or with any Governmental Authority or any other Person is or will be
necessary for the valid execution and delivery by each of the Sellers and the
Company of this Agreement and the Closing Documents to which he or it is a party
or the consummation of the transactions contemplated hereby or thereby, or the
enforceability hereof or thereof, other than those which have been obtained or
made and are in full force and effect.
Section 3.06. Financial Statements . Attached hereto as Schedule 3.06 are
copies of: (a) the unaudited consolidated balance sheets, statements of income
and retained earnings and Related Schedules of the Company as at and for the
fiscal years ended December 31, 2003 and 2002, as prepared by the Company (the
"ANNUAL FINANCIAL STATEMENTS"); (b) the consolidated unaudited balance sheets,
statements of income and retained earnings and Related Schedules of the Company
as at and for the three-month period ending March 31, 2004, as prepared by the
Company (the "UNAUDITED FINANCIAL STATEMENTS"), the Annual Financial Statements,
the Unaudited Financial Statements and the Effective Time Financial Statements
(as hereinafter defined), herein collectively the "FINANCIAL STATEMENTS". Not
later than three days prior to Closing, Sellers shall have delivered to
Purchaser copies of (a) the unaudited balance sheet, statements of income and
retained earnings and Related Schedules of the Company as at and for the period
commencing January 1, 2004 and ending on a date not more than thirty days prior
to the Effective Time (the "EFFECTIVE TIME FINANCIAL STATEMENTS"). Except as set
forth in Schedule 3.06 (i) the Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis and fairly and accurately
present the financial position of the Company as of the dates indicated therein
and the results of operations for the respective periods indicated therein
(except as otherwise noted therein), subject to changes in the Unaudited
Financial Statements and the Effective Time Financial Statements resulting from
normal year-end adjustments which adjustments in the aggregate shall not be
material (other than adjustments related to depreciation, inventory valuation
and unaccrued bonuses and profit sharing plan contribution related to such
unaccrued bonuses, which adjustments are, for all Financial Statements other
than the Effective Time Financial Statements, reflected in Schedule 3.06, and
for the Effective Time Financial Statements are included therewith), and (ii)
the Related Schedules are true, correct and complete.
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Section 3.07. Undisclosed Liabilities . The Company and its Affiliates did
not have as of the date of the Unaudited Financial Statements, and have not
incurred since that date, any Liabilities of any nature, except Liabilities: (a)
which are accrued or reserved against in the Unaudited Financial Statements; or
(b) which were incurred after the date of the Unaudited Financial Statements in
the ordinary course of the business of the Company and its Affiliates consistent
with past practice and which did not have, and could not reasonably be expected
to have, a Material Adverse Effect with respect to the Company or any Affiliate.
Section 3.08. Absence of Changes . Except with respect to the transactions
contemplated by this Agreement and the Closing Documents or as set forth in
Schedule 3.08, since the date of the most recent Annual Financial Statements,
the Company has:
(a) conducted its business only in the ordinary and usual course and
consistent with past practice;
(b) not (i) amended or proposed to amend its charter or bylaws, (ii)
split, combined or reclassified any shares of its capital stock or
(iii) declared, set aside or paid any dividend or distribution on
any shares of its capital stock, whether payable in cash, stock,
Assets and Properties or otherwise;
(c) not issued, sold, pledged or disposed of, or agreed to issue, sell,
pledge or dispose of, any shares of its capital stock or any
Commitment or any Debt or equity securities convertible into or
exchangeable for any shares of its capital stock;
(d) not (i) created, incurred, assumed, guaranteed or become
contingently liable with respect to any Debt or canceled any Debts
owed to it, (ii) redeemed, purchased, acquired or offered to
purchase or acquire any shares of its capital stock or any
Commitments or any Debt or equity security convertible into or
exchangeable for any shares of its capital stock, (iii) purchased,
acquired or leased any Assets and Properties other than in the
ordinary course of business consistent with past practice, (iv) made
any capital expenditure or commitment therefor other than in the
ordinary course of business, consistent with past practice, (v)
sold, pledged, leased, disposed of or encumbered any of its Assets
and Properties other than sales of inventory in the ordinary course
of business, (vi) purchased or acquired any businesses or the
securities or other Debt or equity interests of any Person, (vii)
made any loan or advance to, or any investment in, any Person,
(viii) entered into any Contract, or amended, modified or terminated
any Contract, other than in the ordinary course of business
consistent with past practice, (ix) made any payment or distribution
to the Company except in the ordinary course of business and
consistent with past practices (which payments or distributions are
set forth on Schedule 3.08), or (x) changed its policies with
respect to the extension of credit to customers, suppliers or
distributors;
(e) not (i) entered into or amended, or committed itself to enter into
or amend, any employment, severance, consulting, compensation or
special pay Contract, with respect to termination of employment or
otherwise, or other similar Contracts with any directors, officers
or key employees, (ii) paid or agreed to pay any pension, retirement
allowance or other employee benefit to any such director, officer or
key employee, whether past or present (other than for benefit
entitlements under Employee Plans and Agreements in effect as of the
date of the Annual Financial Statements in accordance with the terms
of such Employee Plans and Agreements), or (iii) paid any bonuses
to, or increased the compensation of, any Employee (including
Sellers);
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(f) not adopted, entered into or amended, or committed itself to adopt,
enter into or amend, any of the Employee Plans and Agreements,
except as required to comply with changes in applicable Law;
(g) maintained its financial Books and Records on a consistent basis,
with, to the best of Sellers' knowledge, no deviation from
requirements of GAAP accounting principles other than as set forth
in Schedule 3.08, and not made any change in its accounting systems,
methods or practices;
(h) maintained with financially responsible insurance companies
insurance on its tangible Assets and Properties and its businesses
in such amounts and against such risks and Losses as are consistent
with past practice;
(i) not engaged in any transaction or sustained any Loss which had, or
could reasonably be expected to have, and there has not been, a
Material Adverse Effect with respect to the Company;
(j) not suffered any physical damage, destruction or Loss to its Assets
and Properties (whether or not insured) in excess of $5,000 in the
aggregate;
(k) used its customary efforts to preserve intact its business
organizations and goodwill, kept available the services of its
present officers and key employees, used its customary efforts to
preserve its business relationships with customers, suppliers,
dealers, distributors, franchisees and others having business
relationships with it and not engaged in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement or any of the Closing Documents;
(l) not increased or made any other change in, or charge against, any of
the Reserves or written off or written down any of the Receivables;
and
(m) not entered into any Contract to do any of the foregoing.
Section 3.09. Litigation . Except as set forth in Schedule 3.09, there are
no Claims pending or, to the knowledge of Sellers or the Company, threatened
against or affecting the Company or any of its Assets and Properties before or
by any Governmental Authority or any other Person. Neither Sellers nor the
Company has knowledge of the basis for any Claim, which alone or in the
aggregate: (a) could reasonably be expected to result in any Liability which
could have a Material Adverse Effect with respect to the Company; or (b) seeks
to restrain or enjoin the execution and delivery of this Agreement or any of the
Closing Documents or the consummation of any of the transactions contemplated
hereby or thereby. Except as set forth in Schedule 3.09, there are no judgments
or outstanding orders, injunctions, decrees, stipulations or awards (whether
rendered by a Governmental Authority or by an arbitrator) against the Company or
any of its Assets and Properties: (i) that impose a material Liability on the
Company; (ii) that have or could reasonably be expected to have a Material
Adverse Effect with respect to the Company; or (iii) which prohibit or restrict,
or could reasonably be expected to result in any delay of, the consummation of
the transactions contemplated by this Agreement or any of the Closing Documents.
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Section 3.10. Assets and Properties of the Company . The Company has good
and indefeasible title to all of the Assets and Properties reflected in the
Unaudited Financial Statements, free and clear of Liens (other than Permitted
Encumbrances), except for Assets and Properties sold or otherwise disposed of by
the Company between the date of the Unaudited Financial Statements and the date
hereof in the ordinary course of business. The Unaudited Financial Statements
reflect all of the material Assets and Properties used or held for use in the
business of the Company as of the date hereof and such Assets and Properties
constitute all of the Assets and Properties necessary to conduct the business of
the Company as currently conducted. All leases under which the Company leases
any Assets and Properties are free and clear of Liens (other than Permitted
Encumbrances), in good standing and valid and effective in accordance with their
respective terms and there is not, under any of such leases: (a) any existing
default by the Company or, to the knowledge of Sellers or the Company, by any
other party thereto; or (b) to the knowledge of Sellers or the Company, any
event which with the giving of notice or the lapse of time, or both, would
become a default, except for such defaults as to which requisite waivers or
consents have been or will, on or prior to the Closing Date, be obtained.
Schedule 3.10 sets forth separate lists of all of the fixed Assets and
Properties of the Company and all Assets and Properties of the Company which are
leased by the Company. All of the Assets and Properties of the Company reflected
in the Unaudited Financial Statements or purchased since the date of the
Unaudited Financial Statements: (i) other than inventory, have been maintained
in accordance with good industry practice; and (ii) as to inventory, are of a
quality and quantity usable and saleable in the ordinary course of business, and
not surplus or obsolete, and are valued in the Unaudited Financial Statements at
existing standard cost. Except as set forth in Schedule 3.10, all of such Assets
and Properties (including inventory and work-in-process) are located on premises
owned or leased by the Company.
Section 3.11. Condemnation. There are no pending or, to the knowledge of
Sellers or the Company, threatened condemnation or eminent domain proceedings,
or contemplated sales in lieu thereof, involving a partial or total taking of
any of the Assets and Properties of the Company.
Section 3.12. Contracts. Schedule 3.12 hereto sets forth a true, complete
and correct list of all Contracts (including all amendments thereto) to which
the Company is a party or by which the Company or any of its Assets and
Properties is bound and which (a) involve consideration or other expenditures in
excess of $5,000 or performance over a period of more than one year, or (b)
relate to transactions of any nature between the Company and any Affiliate of
Sellers or the Company. Sellers or the Company has furnished Purchaser with
true, complete and correct copies of all of such Contracts. Except as set forth
on Schedule 3.12, as of the date hereof the Company is not, and to the knowledge
of Sellers and the Company, no other party to any such Contract is, in breach or
violation of any such Contract or default thereunder and there does not exist
any event that, with the giving of notice or the lapse of time, or both, would
become a breach, violation or default by the Company or, to the knowledge of
Sellers or the Company, any other party thereto, except for such breaches,
violations, defaults and events as to which requisite waivers or consents have
been or will, on or prior to the Closing Date, be obtained.
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Section 3.13. Intellectual Property Rights. Schedule 3.13 sets forth
separate true, complete and correct lists of: (a) all of the Intellectual
Property Rights capable of being listed, specifying whether such Intellectual
Property Rights are owned or licensed by the Company; and (b) all Contracts
relating to any of the Intellectual Property Rights. The Company owns or
lawfully possesses, and has the right to use, all of the Intellectual Property
Rights, and all of the Intellectual Property Rights are valid and in full force
and effect. None of the Intellectual Property Rights are owned by any Person
other than the Company. The Company is not now, and upon consummation of the
transactions contemplated hereby will not be, in default in any material respect
under any license or other Contract related to any of the Intellectual Property
Rights. The Company has not granted any license to or made any assignment of any
of the Intellectual Property Rights. Except as set forth in Schedule 3.13, there
is no existing or, to the knowledge of Sellers or the Company, threatened
infringement, misuse or misappropriation by any Person of any of the
Intellectual Property Rights. The Company is not infringing or has infringed on
any intellectual property rights of any Person and there is no pending Claim (i)
alleging any infringement, misuse or misappropriation by the Company of any
intellectual property rights allegedly owned by any other Person or (ii)
challenging or, to the knowledge of Sellers or the Company, threatening to
challenge the Company's rights, title and interests with respect to its
continued use and right to preclude others from using any of the Intellectual
Property Rights.
Section 3.14. Receivables. The Unaudited Financial Statements set forth
all of the trade and other accounts receivable, notes, bonds and other evidences
of Debt and other rights to receive payments owing to the Company at their
respective dates (collectively with any of the foregoing arising between the
Receivables Schedule Date [as hereinafter defined] and the Closing Date, the
"RECEIVABLES") and any and all reserves applicable thereto (collectively, the
"RESERVES"). Schedule 3.14 sets forth an aged schedule of all of the Receivables
as of a date within three Business Days prior to the date hereof (the
"RECEIVABLES SCHEDULE DATE"). Except as set forth in Schedule 3.14, since
December 31, 2003: (a) there has been no increase or other change in, or charge
against, any of the Reserves; or (b) any write-off or write-down of any of the
Receivables, except for increases, changes, charges, write-offs or write-downs
not exceeding $5,000 in the aggregate. Except as set forth in Schedule 3.14, all
of the Receivables: (i) represent arms' length sales actually made in the
ordinary course of business; (ii) are subject to no counterclaim or set-off; and
(iii) are not in dispute. All Receivables remaining unpaid on the Closing Date
will be collectible within 90 days following the Closing Date. Purchaser will
use commercially reasonable efforts to collect all Receivables in the ordinary
course of business.
Section 3.15. Governmental Approvals . (a) The Company has all
Governmental Approvals (including those required pursuant to any zoning
requirements or Environmental Law) required for the ownership, conduct and
operation of their business as presently conducted; (b) all of such Governmental
Approvals are in full force and effect; (c) the Company has not committed any
violation of any of the terms of any of such Governmental Approvals and is in
compliance in all material respects with all of such Governmental Approvals; and
(d) the Company has not received any notice of violation of any of the terms of
any such Governmental Approvals which is outstanding and unresolved or
unsatisfied. No revocation, termination, limitation, withdrawal or inability to
renew any of such Governmental Approvals is pending or, to the knowledge of
Sellers or the Company, threatened. (i) All consents and waivers required on the
parts of Sellers or the Company under such Governmental Approvals in connection
with the execution and delivery of this Agreement and the Closing Documents and
the consummation of the transactions contemplated hereby and thereby have been
obtained and are in full force and effect; and (ii) the execution of this
Agreement and the Closing Documents and the consummation of the transactions
contemplated hereby and thereby in and of themselves will not result in the
revocation, termination, limitation, withdrawal or inability to renew any of
such Governmental Approvals.
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Section 3.16. Collective Bargaining Agreements . The Company is not a
party to any collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups representing or purporting to
represent employees of the Company ("EMPLOYEES").
Section 3.17. Labor Matters . The Company has not experienced any labor
strike, general employment dispute, request for representation, union
organization efforts, work slowdown or stoppage or boycott with respect to the
products or services sold by the Company, against or affecting the Company or
its Assets and Properties. (a) The Company has complied, and is in compliance,
in all material respects with all applicable Laws respecting employment and
employment practices, employment terms and conditions of employment, including
any provisions thereof relating to wages, hours, collective bargaining and the
payment of social security, unemployment and similar Taxes; (b) there is no
unfair labor practice charge or complaint against the Company pending or, to the
knowledge of Sellers or the Company, threatened; (c) there is no labor strike,
general employment dispute, request for representation, union organization
effort, work slowdown or stoppage or boycott with respect to the products or
services sold by the Company pending or, to the knowledge of Sellers or the
Company, threatened against or affecting the Company or any of its Affiliates or
their Assets and Properties; (d) there are no administrative charges or court
complaints against the Company Products concerning alleged employment
discrimination or other employment related matters pending or, to the knowledge
of Sellers or the Company, threatened before any Governmental Authority; and (e)
no Person has, to the knowledge of Sellers or the Company, asserted that the
Company has any Liability for any arrearages of wages or any Taxes or penalties
for failure to comply with any of the foregoing.
Section 3.18. Employee Benefit Plans .
(a) Disclosure. Schedule 3.18(a) sets forth a true, complete and correct
list of all pension, thrift, savings, profit sharing, retirement,
incentive bonus or other bonus, medical, dental, life, accident
insurance, benefit, employee welfare, disability, group insurance,
stock purchase, stock option, stock appreciation, stock bonus,
executive or deferred compensation, loan, hospitalization, cafeteria
plan and other similar fringe or employee benefit or compensation
plans, programs and arrangements, and any employment or consulting
contracts, "golden parachutes," severance agreements or plans,
vacation and sick leave plans, programs, arrangements and policies,
including all "employee benefit plans", all employee manuals, and
all written or binding oral statements of policies, practices or
understandings relating to employment (collectively, the "EMPLOYEE
PLANS AND AGREEMENTS"), which are provided to, for the benefit of or
relate to the Employees and/or directors of the Company, including
any former Employees or directors of the Company. Except as set
forth in Schedule 3.18(a), Sellers have furnished Purchaser with
true, complete and correct copies of: (i) all of the Employee Plans
and Agreements, including all amendments thereto and all summary
plan descriptions thereof, (ii) the most recent Liability valuation
report with respect to each of the Employee Plans and Agreements for
which a report or estimate has been prepared, (iii) the most recent
assets valuation report with respect to each of the Employee Plans
and Agreements that has Assets and Properties for which a report or
estimate is required to have been prepared, (iv) the most recent
annual report filed with any Governmental Authority with respect to
each of the Employee Plans and Agreements for which such report must
be filed and (v) the most recent determination letter received from
any Governmental Authority with respect to each of the Employee
Plans and Agreements.
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(b) Compliance with Laws and Plan Terms; Qualification and Exemption.
Except as set forth on Schedule 3.18(b): (i) with respect to each of
the Employee Plans and Agreements, the Company has complied in all
material respects with, and each of the Employee Plans and
Agreements conforms in all material respects to and has from its
inception been operated in all material respects in compliance with,
all applicable Laws, and each of the Employee Plans and Agreements
has been administered in all material respects in accordance with
its terms; (ii) all contributions required to be made to any of the
Employee Plans and Agreements and all premiums for insurance
coverage for each fiscal year for each of the Employee Plans and
Agreements ended before the date hereof, and for any portion of a
fiscal year ending on the Closing Date, have been timely paid, or
with respect to payments to be made but not yet due, have been
properly accrued and recorded in the Financial Statements; and (iii)
each of the Employee Plans and Agreements that is intended to be
qualified under applicable Tax laws and each trust intended to be
exempt under applicable Tax laws (the "QUALIFIED PLANS") is
qualified or exempt, as the case may be.
(c) Liabilities; Claims and Proceedings; Terminations. Except as set
forth on Schedule 3.18(c), no event or condition has occurred or
exists with respect to any "employee benefit plan", whether or not
maintained or contributed to by the Company, which individually or
collectively could result in a material Liability to the Company
under applicable law. Except as set forth on Schedule 3.18(c), there
is no material pending or, to the knowledge of Sellers or the
Company, threatened or anticipated Claims (other than undisputed
Claims for the payment of benefits in accordance with the terms
thereof), grievance or allegation of unfair labor practice (or any
basis therefor) involving any of the Employee Plans and Agreements
or any investigation, proceeding, administrative review or other
administrative agency process pending or, to the knowledge of
Sellers or the Company, threatened which could result in the
imposition upon the Company of any material penalty, assessment or
Liability in connection with any of the Employee Plans and
Agreements, individually or collectively. Except as set forth on
Schedule 3.18(c), each of the Employee Plans and Agreements can be
unilaterally terminated at any time by the Company without any
Liability to any Person.
(d) Prohibited Transactions; Reportable Events. Except as set forth on
Schedule 3.18(d), none of the Employee Plans and Agreements has
engaged or is about to engage in a "prohibited transaction" under
applicable law (a "PROHIBITED TRANSACTION") and no "reportable
event" has occurred or is about to occur, in either case, which
could result in any material Liability to the Company.
- 10 -
(e) No Triggering of Obligations. The execution and delivery by each of
the Sellers and the Company of this Agreement and the Closing
Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:
(i) entitle any Employee to severance pay, unemployment compensation
or any other payment; (ii) except as set forth on Schedule 3.18(e),
accelerate the time of payment or vesting, or increase the amount of
compensation due to any Employee; or (iii) result in any Prohibited
Transaction for which an exemption is not available.
(f) Future Commitments. Except as set forth in Schedule 3.18(f), the
Company does not have any commitment and has not taken any action to
adopt or establish any additional Employee Plans and Agreements or
to materially increase the benefits under any of the existing
Employee Plans and Agreements. None of the Employee Plans and
Agreements provides (or has any obligation or commitment to provide)
health benefits with respect to any current or former Employees,
directors or independent contractors (or any beneficiary thereof) of
the Company beyond their retirement or other termination of service.
Section 3.19. Compliance with Laws . Except as set forth in Schedule 3.19,
the Company: (a) has not committed a violation of any material requirement of
any Law and is in compliance in all material respects with all Laws; (b) has not
been given notice or been charged with the violation of any material requirement
of any Law; and (c) is not subject to any Liability for past or continuing
violation of any Law. Except as disclosed in Schedule 3.19, no investigation or
review by any Governmental Authority with respect to the Company or its Assets
and Properties is pending or, to the knowledge of Sellers or the Company,
threatened and no Governmental Authority has indicated to the Company or Sellers
an intention to conduct the same.
Section 3.20. Taxes . The Company has correctly prepared and filed all
federal, state, local and foreign Tax returns and other reports that the Company
is required by Law to file and has paid all Taxes that are due and payable
pursuant to such returns and reports or are otherwise due and payable under
applicable Law, except to the extent that any of the same are being contested in
good faith by appropriate proceedings promptly initiated and diligently pursued
and with respect to which reserves have been set aside on the Books and Records
of the Company in an amount sufficient to discharge any such disputed Tax
Liability and which are reflected in the Unaudited Financial Statements. The
Company has not filed any Tax return as a part of a consolidated group and has
not, directly or indirectly, paid or incurred any Liability for payment of Taxes
in an amount greater than the amount of Taxes it would have paid or become
obligated to pay as a non-consolidated individual taxpayer entity. No
installment or deferred payments of Taxes and no deficiency or assessment of
Taxes has been proposed, asserted or assessed or, to the knowledge of Sellers or
the Company, been threatened to be proposed, asserted or assessed, with respect
to the business of the Company by any Governmental Authority or any other Person
which has not been fully paid or finally settled. There are no ongoing
administrative or judicial proceedings concerning Taxes or any audits or
examinations of any of the Tax returns of the Company. None of the Assets and
Properties of the Company is required to be treated as being owned by any other
Person for Tax purposes. No closing agreement or similar Contract with any
Governmental Authority exists with respect to the Company or its business
relating to Taxes for any taxable year or period after the date hereof. The
Company has not been granted any waiver of any statute of limitations with
respect to, or any extension of any period for the assessment of, any Taxes
relating to the Company or its business. The Company has never been audited by
governmental taxing authorities. The statute of limitations has run on all Tax
returns of the Company covering taxable periods through December 31, 2000.
Except as may otherwise be provided in Section 5.08, all Tax settlement
agreements, arrangements, policies or guidelines, formal or informal, express or
implied, that may exist between the Company and any Affiliate and all
obligations thereunder shall terminate as of the Closing Date, with no Liability
on the part of the Company. Sellers or the Company has furnished true, complete
and correct copies of all of such Tax settlement agreements, arrangements,
policies or guidelines to Purchaser.
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Section 3.21. Insurance . Schedule 3.21 sets forth a true, complete and
correct list and description of all policies of fire, liability, environmental,
pollution, product liability, workers compensation, health and other forms of
insurance currently, or within the last three years, in effect with respect to
the Company or its Assets and Properties (and any programs of self insurance),
including, with respect to each such policy: (a) the limit of Liability upon the
issuance thereof; (b) the period of time during which such coverage has been
maintained with the issuer thereof; (c) a description of retentions,
self-insured amounts, deductibles and other similar amounts; (d) the available
coverage thereunder as of the date hereof; and (e) other than Claims made and
notice given to the insurer that were not given or required to be given to the
Company with respect to Employee medical insurance policies, all Claims made and
notices given to the insurer with respect to each such policy's coverage during
the last three years (or such shorter period of time as to which such policy has
been in force and effect with such insurer). The Company is not a co-insurer
under any such policies, except to the extent of the amount of the deductible,
self-retention or similar amounts applicable to such policies. There is no Claim
by the Company pending under any of such policies as to which coverage has been
questioned, denied or disputed. Except as set forth in Schedule 3.21, the
Company has not been denied any insurance coverage applicable to its business or
its Assets and Properties within the last three years by any insurer or
prospective insurer. The Company has not received any written notice from or on
behalf of any insurance carrier issuing any such policy that insurance rates
therefor will hereafter be increased (except to the extent that insurance rates
may be increased for all similarly situated risks for all policy holders) due to
the activities or the condition of the business of the Company Products or its
Assets and Properties.
Section 3.22. Suppliers; Service Providers .
(a) Suppliers. Schedule 3.22(a) sets forth a true, complete and correct
list of all suppliers to the Company (in terms of and specifying the
dollar volume of purchases by the Company from each such supplier)
that supplied Assets and Properties (including inventory) purchased
by in and for each of the twelve (12) calendar months ending
December 31, 2003, showing the total dollar amount of purchases from
each such supplier during each such month. Returns by the Company to
such suppliers during such period are deducted from the obligation
owing for purchases. The Company has not received notice from any
such supplier that the execution of this Agreement and the Closing
Documents and the consummation of the transactions contemplated
hereby and thereby will result in the loss to the Company of any
such suppliers.
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(b) Service Providers. Schedule 3.22(b) sets forth a true, complete and
correct list of all service providers (including, professionals,
agents and brokers) of the Company for the period from January 1,
2002 to the date hereof and a description of the services provided.
Prior to the date hereof, Sellers have delivered to Purchaser copies
of all Contracts and policy statements relating to the services of
service providers, and a description of all material modifications
or exceptions thereto. The Company has not received notice from any
such service providers that the execution of this Agreement and the
Closing Documents and the consummation of the transactions
contemplated hereby and thereby will result in the loss to the
Company of any such service providers.
Section 3.23. Environmental.
(a) The Company has not committed any violation of any Environmental Law
and the Company, and the present conditions and activities of and
on, and use of, the Assets and Properties of the Company, are in
compliance in all material respects with all Environmental Laws;
(b) the Company has not been given notice of or been charged with any
violation of any Environmental Law;
(c) the Company is not subject to any Liability under any Environmental
Law arising out of operations by the Company prior to Closing;
(d) no investigation or review of the Company by any Governmental
Authority in connection with any Environmental Law is pending or, to
the knowledge of Sellers or the Company, threatened and no
Governmental Authority has indicated to the Company or Sellers an
intention to conduct the same;
(e) none of the Assets and Properties presently or heretofore owned or
controlled by the Company or has been used (i) as a landfill, or for
waste disposal activities or operations, (ii) as a site for the
generation, storage, treatment, processing, recycling or disposal of
any Hazardous Material except in compliance with Environmental Laws
or (iii) for any other use that would or could (excluding Hazardous
Materials existing on such Assets and Properties in compliance in
all material respects with all Environmental Laws) give rise to the
Release of any Hazardous Material on any of the Assets and
Properties presently or heretofore owned or controlled by the
Company, or on any off-site properties;
(f) there is no Hazardous Material or storage tank (whether underground
or above ground, closed or otherwise), sump or well currently on any
of the Assets and Properties presently or heretofore owned or
controlled by the Company;
(g) the Company has not received any notice or has any knowledge of any
Environmental Claims, Liabilities and Losses with respect to the
Company regarding any Assets and Properties presently or heretofore
owned or controlled by the Company, or any adjacent property;
- 13 -
(h) neither the Company nor any tenant or subtenant of the Company
either is or has been required to obtain any Governmental Approval
to construct, occupy, operate, use or conduct any activity currently
ongoing on any of the Assets and Properties of the Company by reason
of any Environmental Law; and
(i) none of the Assets and Properties presently or heretofore owned or
controlled by the Company is currently on or has ever been on, or is
or has ever been proposed for listing on or investigation under, any
Environmental Law.
Section 3.24. Acquisition Transactions . Except for this Agreement and the
Closing Documents, none of Sellers or the Company is a party to any Contract,
including any letter of intent, in connection with, related to or providing for
the acquisition of all or any substantial part of the business or Assets and
Properties of the Company or any capital stock of the Company, whether by
merger, purchase of Assets and Properties, tender offer or otherwise, and
whether for cash, securities or any other consideration.
Section 3.25. Propriety of Past Payments . Except as set forth in Schedule
3.25: (a) no funds or Assets and Properties of the Company have been used for
illegal purposes; (b) no unrecorded funds or Assets and Properties of the
Company have been established for any purpose; (c) no accumulation or use of the
funds or Assets and Properties of the Company has been made without being
properly accounted for in the financial Books and Records of the Company; (d)
all payments by or on behalf of the Company have been duly and properly recorded
and accounted for in their financial Books and Records; (e) no fraudulent entry
has been made in the financial Books and Records of the Company; (f) no payment
has been made by or on behalf of the Company with the understanding that any
part of such payment is to be used for any purpose other than that described in
the documents supporting such payment; and (g) the Company has not made,
directly or indirectly, any illegal contributions to any political party or
candidate, either domestic or foreign, or any other payment in violation of any
applicable Law.
Section 3.26. Brokers, Finders and Financial Advisors . Except as set
forth on Schedule 3.26, no broker, finder or financial advisor has acted for
Sellers or the Company in connection with this Agreement or any of the Closing
Documents or the transactions contemplated hereby or thereby, and no broker,
finder or financial advisor is entitled to any broker's, finder's or financial
advisor's fee or other commission in respect thereof based in any way on any
Contract with Sellers or the Company. The Company has no Liability for any
matter set forth on Schedule 3.26.
Section 3.27. Investment Purpose, Knowledge and Experience; Restricted
Securities.
(a) Sellers are acquiring the Stock Consideration Shares for their own
accounts, not as nominee or agent, solely for the purpose of
investment and not with a view to, or for offer or sale in
connection with, any distribution thereof;
- 14 -
(b) Sellers have such knowledge and experience in financial and business
matters that each is capable of evaluating the merits and risks of
accepting the Stock Consideration Shares as partial payment of the
Purchase Price, are able to bear the economic risk of such
investment for an indefinite period of time, and have sufficient
financial resources available to support the complete loss of its
investment in the Stock Consideration Shares;
(c) Sellers have relied solely on their own investigation in deciding
whether to accept the Stock Consideration Shares and have had the
opportunity to ask questions and receive answers regarding TPG, its
business and the Stock Consideration Shares;
(d) Sellers understand that the Stock Consideration Shares are
"restricted securities" under United States federal securities laws
inasmuch as they are being acquired in a transaction not involving a
public offering and that under such laws and applicable regulations
such securities may not be resold without registration under the
Securities Act of 1933, as amended, or an available exemption from
registration; and
(e) Sellers understand that the certificates evidencing the Stock
Consideration Shares will bear, in addition to the legend called for
by Section 6.03(d), the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
Section 3.28. Disclosure . The schedules, documents, exhibits, reports,
certificates and other written statements and information furnished by or on
behalf of Sellers or the Company to Purchaser do not contain any material
misstatement of fact or, to the knowledge of Sellers or the Company, omit to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. Sellers have not withheld any fact known to them or the Company that
has or is reasonably likely to have a Material Adverse Effect with respect to
the Company.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Subject to all of the terms, conditions and provisions of this Agreement,
Purchaser hereby represents and warrants to Sellers, as of the date hereof and
as of the Closing Date, as follows:
Section 4.01. Authority . Purchaser has all requisite power and authority
to execute and deliver this Agreement and the Closing Documents to which it is a
party and to consummate the transactions contemplated hereby and thereby.
Purchaser has duly and validly executed and delivered this Agreement and will,
on or prior to the Closing Date, execute and deliver each of the Closing
Documents to which it is a party and, assuming the due authorization, execution
and delivery of this Agreement and such Closing Documents by the other parties
hereto and thereto, this Agreement constitutes, and when executed and delivered
each of such Closing Documents will constitute, the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar Laws affecting creditors'
rights generally and general equitable principles.
Section 4.02. Stock Consideration. Upon consummation of the transactions
contemplated hereby and registration of the shares comprising the Stock
Consideration (the "STOCK CONSIDERATION SHARES") in the names of the Sellers in
the stock records of TPG, the Stock Consideration Shares will be duly
authorized, validly issued, fully paid and nonassessable, and free and clear of
any Liens, claims or encumbrances.
Section 4.03. No Conflict . The execution and delivery by Purchaser of
this Agreement and the Closing Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby do not and
shall not, by the lapse of time, the giving of notice or otherwise: (a)
constitute a violation of any Law; (b) constitute a breach of any provision
contained in, or a default under, any Governmental Approval, any writ,
injunction, order, judgment or decree of any Governmental Authority or any
Contract to which Purchaser is a party or by which Purchaser or its Assets and
Properties is bound or affected; or (c) except as otherwise contemplated by this
Agreement and the Closing Documents, result in or require the creation of any
Lien upon any of the Assets and Properties of Purchaser.
Section 4.04. Consents and Approvals. Except as set forth in Schedule
4.04, no Governmental Approvals and no notifications, filings or registrations
to or with any Governmental Authority or any other Person is or will be
necessary for the valid execution and delivery by Purchaser of this Agreement
and the Closing Documents to which it is a party, or the consummation of the
transactions contemplated hereby or thereby, or the enforceability hereof or
thereof, other than those which have been obtained or made and are in full force
and effect.
Section 4.05. Litigation . There are no Claims pending or, to the
knowledge of Purchaser, threatened before or by any Governmental Authority or
any other Person, and Purchaser has no knowledge of the basis for any Claim,
which either alone or in the aggregate, seeks to restrain or enjoin the
execution and delivery of this Agreement or any of the Closing Documents or the
consummation of any of the transactions contemplated hereby or thereby. There
are no judgments or outstanding orders, injunctions, decrees, stipulations or
awards (whether rendered by a Governmental Authority or by an arbitrator)
against Purchaser that prohibit or restrict, or could reasonably be expected to
result in any delay of, the consummation of the transactions contemplated by
this Agreement or any of the Closing Documents.
- 16 -
Section 4.06. Brokers, Finders and Financial Advisors . Except as set
forth in Schedule 4.06, no broker, finder or financial advisor has acted for
Purchaser in connection with this Agreement or any of the Closing Documents or
the transactions contemplated hereby or thereby, and no broker, finder or
financial advisor is entitled to any broker's, finder's or financial advisor's
fee or other commission in respect thereof based in any way on any Contract with
Purchaser.
ARTICLE V
COVENANTS
Section 5.01. Investigation of Business; Access to Properties and Records
.. (a) For a period commencing on the date of this Agreement and ending June 30,
2004 or the earlier termination of this Agreement (the "INSPECTION PERIOD"),
Sellers shall, and shall cause the Company to, afford to Purchaser and its
accountants, counsel, financial advisors and other representatives involved in
the transactions contemplated by this Agreement and the Closing Documents (the
"PURCHASER REPRESENTATIVES"), at Purchaser's sole cost and expense, upon
reasonable request during normal business hours, full and complete access to the
offices, Assets and Properties, Books and Records, Property Records, and
Contracts of the Company; provided, however, that such investigation shall be
conducted in such a manner so as to not cause any unreasonable disruption of or
to the personnel and operations of the Company. No investigation pursuant to
this Section 5.01 shall affect any representations or warranties made in this
Agreement or any of the Closing Documents or the conditions to the obligations
of the respective parties to consummate the transactions contemplated hereby or
thereby; provided that any information obtained as a result of any such
investigation or diligence shall be subject to the covenant in Section 5.09(b).
Purchaser shall hold and shall use commercially reasonable efforts to cause the
Purchaser Representatives to hold, in strict confidence all non-public documents
and information furnished to Purchaser or the Purchaser Representatives in
connection with the transactions contemplated by this Agreement; provided,
however, that: (i) Purchaser may disclose any such information to the Purchaser
Representatives; and (ii) Purchaser and the Purchaser Representatives may
disclose any such information the failure of which to disclose would result in
the violation of any Law or in the imposition of any fine, penalty or charge by
any Governmental Authority that under authority of Law has required the
disclosure or production of such information by Purchaser or any of the
Purchaser Representatives; provided further, that in the event that Purchaser or
a Purchaser Representative is obligated to disclose any such information in
order to avoid the violation of any Law or the imposition of any fine, penalty
or charge by any Governmental Authority, it shall provide Sellers with such
advance notice thereof as may be reasonable under the circumstances in order to
permit Sellers the opportunity to intervene and seek appropriate relief for the
protection of the confidentiality of such information.
- 17 -
(b) Purchaser agrees (i) to hold all of the material Books and Records
and Property Records of the Company received by Purchaser from
Sellers on the Closing Date, and to not destroy or dispose of any
thereof, for a period of five years commencing on the Closing Date
or such longer period as may be required by Law, and (ii) following
the Closing Date, to afford Sellers, their accountants and counsel,
at Sellers' sole cost and expense, upon reasonable request, during
normal business hours, full and complete access to such Books and
Records to the extent that such access may be requested for any
legitimate purpose; provided, however, that such access shall be
provided in such a manner so as to not cause any unreasonable
disruption of or to the personnel and operations of Purchaser and
the Company.
(c) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly destroy or redeliver to the
other all non-public written material provided pursuant to this
Section 5.01 and shall not retain any copies, extracts or other
reproductions in whole or in part of such written material. In such
event, all documents, memoranda, notes and other writings prepared
by Purchaser based on the information in such material shall also be
destroyed (and Purchaser shall use commercially reasonable efforts
to cause the Purchaser Representatives to similarly destroy their
documents, memoranda, notes and other writings).
Section 5.02. Closing Conditions; Obtaining Consents . Subject to the
terms and conditions herein provided, Sellers and Purchaser each agree to use
commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and the Closing Documents and to cooperate with
the other in connection with the foregoing, including using commercially
reasonable efforts to: (a) obtain all waivers, consents and approvals required
to be obtained from other parties to Contracts of the Company; (b) obtain all
Governmental Approvals required to be obtained under any Law; (c) effect all
necessary registrations and filings including submissions of information
requested by Governmental Authorities; and (d) fulfill its respective conditions
set forth in Article VI of this Agreement. Sellers and Purchaser do not believe
that any notice is required to be filed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended. Sellers and Purchaser further covenant and
agree, with respect to any threatened or pending preliminary or permanent
injunction or other order, decree or ruling or Law that would adversely affect
the ability of Sellers, the Company or Purchaser to execute and deliver this
Agreement or any of the Closing Documents or to consummate the transactions
contemplated hereby or thereby, to use commercially reasonable efforts to
prevent the entry, enactment or promulgation thereof, as the case may be, and to
have any such injunction, order or decree lifted or rescinded.
Section 5.03. Further Assurances. Sellers and Purchaser agree that, from
time to time, whether before, at or after the Closing Date, each of them will
take such other action as may be reasonably requested and necessary or
appropriate to carry out the purposes and intent of this Agreement and the
Closing Documents. From time to time before, or at the request of Purchaser, the
Company, after the Closing Date, Sellers, to the extent they then may lawfully
do so: (a) shall, and shall cause each of their Affiliates to, take such actions
and to execute, acknowledge and deliver to the Company such Contracts, deeds,
assignments, conveyances, transfers, powers of attorney and assurances as may
reasonably be necessary to effect or evidence the transfer to the Company of any
Assets and Properties held by or in the name of, or which may appear in any
public record to be owned by, any such Person and used or held for use primarily
in connection with the business of the Company; and (b) shall assist the Company
in transferring to the Company all Governmental Approvals, if any, that are held
by any such Person or any of their respective predecessors and are necessary to
the operation or maintenance of the business of the Company as currently
conducted.
- 18 -
Section 5.04. Conduct of Business. Except as otherwise contemplated by
this Agreement or the Closing Documents, after the date hereof and prior to the
Closing Date or earlier termination of this Agreement, unless Purchaser shall
otherwise agree in writing, Sellers shall cause the Company to:
(a) not take or perform any act or refrain from taking or performing any
act which, if taken or performed or failed to be taken or performed
between the date of the most recent Annual Financial Statements and
the date hereof, would have resulted in a breach of the
representations and warranties of Sellers set forth in Section 3.08;
(b) not enter into any agreement, or extend an existing agreement that
will survive after the Closing Date;
(c) not sell (other than sales of inventory in the ordinary course of
business), pledge, lease, license or otherwise transfer any of their
Assets or Properties or, except as contemplated by this Agreement,
make any payments or distributions to Sellers or any of their
Affiliates;
(d) not make any payments or distributions of Assets or Properties to
the Company or Sellers except for products purchased or services
performed and at prices charged in the ordinary course of business
and consistent with past practices;
(e) confer on a regular and frequent basis with one or more
representatives of Purchaser to report operational matters of
materiality and the general status of ongoing operations; and
(f) not enter into any Contract to (i) take or perform any act which
Sellers are required to cause the Company to not take or perform
pursuant to this Section 5.04 or (ii) refrain from taking or
performing any act which Sellers are required to cause the Company
to take or perform pursuant to this Section 5.04.
Nothing contained in this Agreement shall give to Purchaser, directly or
indirectly, rights to control or direct the Company's operations prior to the
Closing Date. Prior to the Closing Date, the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision of its operations.
Section 5.05. Public Announcements . Except as required by Law, without
the prior written approval of the other party, neither Sellers nor Purchaser
will, and Sellers shall cause the Company to not, issue, or permit any agent or
Affiliate thereof to issue, any press release or otherwise make or permit any
agent or Affiliate thereof to make, any public statement or announcement with
respect to this Agreement, the Closing Documents or the transactions
contemplated hereby and thereby; provided, however, that to the extent that, in
the opinion of their respective counsels, any public statements are required to
be made by the Company or Purchaser pursuant to any Law, the parties shall
endeavor to consult with each other prior to issuing any such press release or
written public statement.
- 19 -
Section 5.06. Acquisition Transactions . After the date hereof and prior
to the Closing Date or the earlier termination of this Agreement, Sellers shall
not, and shall not permit the Company to, initiate, solicit, negotiate,
encourage or facilitate any proposal or offer to acquire all or any substantial
part of the business or Assets and Properties of the Company or any capital
stock of the Company, whether by merger, purchase of Assets and Properties,
tender offer or otherwise, and whether for cash, securities or any other
consideration or combination thereof. Sellers: (a) acknowledge and agree that a
breach of any of the covenants contained in this Section 5.06 will result in
irreparable harm to Purchaser which will not be compensable in money damages;
and (b) agree that such covenant shall be specifically enforceable and that
specific performance and injunctive relief shall be a remedy properly available
to Purchaser for a breach of such covenant. Sellers further hereby agree jointly
and severally, to indemnify, defend and hold harmless Purchaser from and against
any and all Claims, Liabilities and Losses which may be imposed on, incurred by
or asserted against Purchaser, arising out of or resulting from any breach of
the covenants contained in this Section 5.06 or the inaccuracy of the
representations set forth in Section 3.24.
Section 5.07. Tax Matters. (a) Except as otherwise provided in this
Section 5.07, all Tax settlement agreements, arrangements, policies or
guidelines, formal or informal, express or implied, that may exist between the
Company and Sellers and all obligations thereunder shall terminate as of the
Closing Date.
(b) Sellers shall timely prepare and file (or cause to be so prepared
and filed) all tax returns of the Company due for all periods prior
to the Effective Time, and shall provide copies of such returns a
reasonable period of time prior to filing to Purchaser for review
and comment; provided that such returns shall not be subject to
Purchasers' approval. All other returns shall be prepared and filed
by Purchaser. Sellers shall pay, or be responsible, for the Taxes
arising out of or in connection with the transactions effected
pursuant to this Agreement as set forth in Section 5.07(f) below and
all Taxes related to income of the Company generated or accruing
prior to the Effective Time ("PRE-CLOSING TAXES") to the extent that
the Liability for such Taxes is not reflected in the Effective Time
Financial Statements.
(c) After the Closing Date, Purchaser and Sellers shall, and shall cause
their respective Affiliates to, cooperate in the preparation of all
Tax returns and reports and shall provide, or cause to be provided,
to the requesting party any Books and Records pertaining to the
Company requested by such party in connection therewith, as well as
access to, and the cooperation of, the accountants and auditors of
Purchaser and Sellers. Each party shall cooperate with the other in
connection with any Tax investigation, audit or Claim. Purchaser and
Sellers shall, and shall cause their respective Affiliates to,
preserve all Books and Records relating to any Liabilities for Taxes
with respect to any taxable period until the later of the expiration
of all applicable statutes of limitation (including any extensions
thereof) or the conclusion of all Claims with respect to Taxes for
such period.
- 20 -
(d) After the Closing Date, Sellers shall indemnify, defend and hold
harmless Purchaser, the Company from and against any Pre-Closing Taxes.
Purchaser agrees to, after the Closing Date, indemnify, defend and hold harmless
Sellers from and against any Taxes of the Company other than Pre-Closing Taxes.
Sellers shall retain any refunds of Pre-Closing Taxes and Purchaser (or the
Company) shall retain any refunds received in respect of other Taxes. In the
event that Purchaser (or the Company) receives any refund of Pre-Closing Taxes,
such refunds will be paid to the Sellers in proportion to the ratio in which the
Sellers held the shares of the Company at Closing.
(e) In the event that Purchaser or the Company receives notice, whether
orally or in writing, of any pending or threatened Tax examinations, Claims
settlements, proposed adjustments, assessments or reassessments or related
matters with respect to Taxes that could affect Sellers, or if Sellers receive
notice of such matters that could affect Purchaser or the Company, the party
receiving such notice shall notify in writing the potentially affected party
within ten days thereof. The failure of any party to give such notice shall not
impair that party's rights hereunder except to the extent that the other party
demonstrates material detriment caused thereby. Sellers shall have the right to
control any audit or examination by any taxing authority, initiate any Claim for
refund, file any amended return and contest, resolve and defend against any
assessment, notice of deficiency or other adjustment or proposed adjustment
relating or with respect to any Pre-Closing Taxes, and Purchaser and the Company
shall have a corresponding right with respect to other Taxes.
(f) Sellers shall pay all Taxes arising out of or in connection with the
transactions effected pursuant to this Agreement. Sellers and Purchaser shall
cooperate in filing all necessary documentation and returns with respect to such
Taxes.
Section 5.08. Casualty Loss and Condemnation . If, prior to the Closing
Date, all or any portion of the Assets and Properties of the Company is
destroyed by fire or other casualty, or is taken in condemnation or under the
right of eminent domain, or if proceedings for such purposes shall be pending or
threatened and: (a) any such destruction, taking or proceeding or any threat
thereof involves, or if more than one in the aggregate involve, an amount in
excess of $10,000, Purchaser shall have the right, in its sole discretion, to
terminate this Agreement by providing Sellers written notice of its election to
do so; or (b) any such destruction, taking or proceeding or any threat thereof
involves, or if more than one in the aggregate involve, an amount less than or
equal to $10,000, or involves an amount in excess thereof and Purchaser does not
elect to terminate this Agreement pursuant to Section 5.08(a), Purchaser shall
purchase the Stock notwithstanding any such destruction, taking or proceeding or
threat thereof (without reduction of the Purchase Price therefore) and Sellers
shall, on the Closing Date: (i) pay to Purchaser all sums paid to Sellers by
third parties by reason of the destruction or taking of such Assets and
Properties; and (ii) assign, transfer and set over unto Purchaser, without
recourse against Sellers, all of the rights, title and interests of Sellers in
and to any unpaid awards or other payments (including insurance proceeds not
expended or committed to expenditure by Sellers or the Company to repair or
restore such destruction) from third parties arising out of the destruction or
taking of such Assets and Properties. Prior to the Closing, none of Sellers or
the Company shall voluntarily compromise, settle or adjust any material amounts
payable by reason of any material destruction or taking of any of the Assets and
Properties of the Company without first obtaining the written consent of
Purchaser.
- 21 -
Section 5.09. Updating of Schedules; Certain Notifications . (a) Sellers
shall deliver to Purchaser: (i) an updated aged schedule of the Receivables on
the Closing Date, which schedule shall be prepared as of the close of business
on the Business Day immediately preceding the Closing Date; and (ii) an update
of all of the other Schedules to this Agreement not less than two Business Days
prior to the Closing Date. From the date hereof until the Closing Date, Sellers
shall promptly notify Purchaser in writing of any changes or additions to the
Schedules or the occurrence of any event that to Sellers knowledge has resulted
in or could reasonably be expected to result in a Material Adverse Effect with
respect to the Company. Nothing contained herein shall be deemed in any way to
constitute a waiver by Purchaser of the conditions contained in Article VI.
(b) Each of the Sellers and Purchaser shall promptly notify the other in
writing of the occurrence of any event which becomes known to either
Sellers or Purchaser and which will, or could reasonably be expected
to, result in the failure to satisfy any of the conditions to the
obligations of any party specified in Article VI.
Section 5.10. Collection of Receivables . Purchaser will, or will cause
the Company to, use commercially reasonable efforts to collect the Receivables.
In the event that, notwithstanding such efforts, any of the Receivables are not
paid in full at the expiration of the 90 day period commencing with the Closing
Date, Purchaser will deliver to Sellers a schedule setting forth the aggregate
amount of uncollected Receivables, specifying the account debtor of each such
Receivable and the outstanding amount due thereunder, together with invoices and
supporting documents, and Sellers shall pay Purchaser an amount equal to: (a)
the aggregate outstanding balance of such Receivables; minus (b) an amount equal
to the balance of the Reserves as of the Closing Date. Upon receipt by Purchaser
of such amount from Sellers, Purchaser shall cause all right, title and interest
in and to the uncollected balances of such Receivables to be assigned,
transferred and delivered to Sellers, without recourse to Purchaser or the
Company. In the event that any such Receivables are assigned, transferred and
delivered to Sellers, Purchaser agrees to provide Sellers with such reasonable
assistance in the collection of such Receivables as Sellers may reasonably
request. In the event that the Company makes any sales to or performs any
services for any account debtor of any of the Receivables after the Closing
Date, any payments received by the Company from such account debtor shall be
applied: (i) as designated by such account debtor; or (ii) in the absence of any
such designation, to the oldest unpaid Receivable owed by such account debtor.
Each of Purchaser and Sellers shall promptly pay to the other any amounts
received by him or it (or any Affiliates) on account of a Receivable (or any
portion thereof) that is, at such time, the property of the other or an
Affiliate of the other.
Section 5.11. Non-Competition . In consideration of the terms and
provisions of this Agreement, each Seller agrees that, for the period commencing
at the Effective Time and ending six months after the termination of each
Seller's employment by the Purchaser, such Seller shall not, directly or
indirectly, as an employee, employer, consultant, agent, representative,
principal, partner, stockholder (other than ownership of securities of a
publicly held corporation in which such Seller owns less than 1% of the
outstanding equity), officer, director, investor or financier, or in any other
individual or representative capacity: (a) engage or participate in the
Company's Business (as hereinafter defined) without the prior written consent of
the Company, (b) call on or solicit, or attempt to call on or solicit, any of
the Company's past and current or prospective (determined immediately prior to
the Effective Time) data source, investor, customer or supplier in a manner that
is competitive with the Company Business, (c) induce or attempt to induce any
Employee to terminate his employment with the Company, or hire or attempt to
hire any Employee, (d) induce or attempt to induce any of the Company's past,
current or prospective (determined immediately prior to the Effective Time) data
source, information supplier, subscriber or service resource (including without
limitation investment or other financing resources) to withdraw, curtail or
cancel the furnishing of data, information, supplies or services to the Company,
or (e) engage in any act or activity that would interfere with or harm any
business relationship that the Company may have with any investor, customer,
subscriber, Employee, principal or supplier.
- 22 -
Section 5.12. Closing Costs. (a) Sellers shall be responsible for the
payment of, and on or prior to Closing shall pay, (i) all commissions, other
than payments due to Strategies Merchant Bankers, payable with respect the
transactions contemplated hereby, (ii) any and all stamp duties or similar
charges payable with respect to the transfer of the Stock contemplated hereby,
(iii) any and all legal, accounting and other professional fees incurred by
Sellers in conjunction with the transactions contemplated hereby, and (iii) such
other closing costs as are customarily borne by sellers in the conveyance of
stock; and (b) Purchaser shall be responsible for the payment of, and, on or
prior to Closing shall pay, (i) all commissions or fees payable to Strategies
Merchant Bankers, (ii) any and all legal, accounting and other professional fees
incurred by Purchaser in conjunction with the transactions contemplated hereby,
and (iii) such other costs as are customarily borne by purchasers in the
conveyance of stock.
Section 5.13. Executive Committee. Within ninety (90) days after Closing,
the Purchaser will establish an "EXECUTIVE COMMITTEE" that will be charged with
overseeing operational management of the Purchaser. The Executive Committee will
initially consist of seven members. Except as may otherwise be agreed among the
Purchaser, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, upon establishment of the Executive Committee,
and for a period of eighteen months, ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall each be appointed
to the Executive Committee and, thereafter, at least one of ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇
shall be appointed to serve on the Executive Committee.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions to Obligations of each of the Parties . The
respective obligations of each party to consummate the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) no preliminary or permanent injunction or other order, decree or
ruling by any Governmental Authority or any other Person which
prevents the consummation of the transactions contemplated by this
Agreement or any of the Closing Documents shall have been issued and
remain in effect;
(b) no Claim shall have been asserted, threatened or commenced by any
Governmental Authority or any other Person and no Law shall have
been enacted, promulgated or issued by any Governmental Authority,
which would reasonably be expected to (i) prohibit the ownership or
operation of all or any material portion of the business of the
Company, (ii) prohibit the purchase of, payment for or retention of
the Stock by Purchaser or the consummation of the transactions
contemplated by this Agreement or any of the Closing Documents or
(iii) make the consummation of any such transactions illegal; and
- 23 -
(c) all Governmental Approvals legally required for the consummation of
the transactions contemplated by this Agreement and the Closing
Documents shall have been obtained and be in full force and effect
on the Closing Date.
(d) TPG and each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ shall have entered into the
"EMPLOYMENT AGREEMENT" substantially in the form attached hereto as
Exhibit A and the "STOCK OPTION AGREEMENT" provided for in the
Employment Agreement substantially in the form attached hereto as
Exhibit B.
Section 6.02. Conditions to Obligations of Sellers . The obligations of
Sellers to consummate the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions, except as Sellers may waive in writing:
(a) Purchaser shall have complied with and performed in all material
respects all of the terms, covenants, agreements and conditions
contained in this Agreement and the Closing Documents to which it is
a party which are required to be complied with and performed on or
prior to the Closing Date;
(b) the representations and warranties of Purchaser in this Agreement
and in each of the Closing Documents to which it is a party shall
have been true and correct on the date hereof or thereof, as
applicable, and such representations and warranties shall be true
and correct on and as of the Closing Date (except those, if any,
expressly stated to be true and correct at an earlier date), with
the same force and effect as though such representations and
warranties had been made on and as of the Closing Date; and
(c) the Purchaser shall have entered into, and delivered to the Sellers,
the "CONVERSION RIGHTS AGREEMENT" in the form attached hereto as
Exhibit C, pursuant to which the Sellers will have certain rights
described therein to convert the Stock Consideration into shares of
convertible preferred stock of TPG.
Section 6.03. Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby shall be subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions, except as Purchaser may waive in writing:
(a) each of the Sellers and the Company shall have complied with and
performed in all material respects all of the terms, covenants,
agreements and conditions contained in this Agreement and the
Closing Documents to which each is a party which are required to be
complied with and performed on or prior to the Closing Date;
(b) the representations and warranties of Sellers in this Agreement and
in each of the Closing Documents to which each is a party shall have
been true and correct on the date hereof or thereof, as applicable,
and such representations and warranties shall be true and correct on
and as of the Closing Date (except those, if any, expressly stated
to be true and correct at an earlier date), with the same force and
effect as though such representations and warranties had been made
on and as of the Closing Date;
- 24 -
(c) the Company shall have on hand at closing, and reflected on its
balance sheet, working capital (the "MINIMUM WORKING CAPITAL") in an
amount not less than that amount necessary to pay one full month of
operating expenses of the Company, including but not limited to
salaries, payroll taxes and benefits of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, travel
expenses, rents, utilities and such other operating expenses as the
Company shall have incurred. Minimum Working Capital, for purposes
hereof, shall be computed as the excess of cash and accounts
receivable, net of allowance for bad debts, over liabilities of the
Company. Operating expenses for purposes of computing Minimum
Working Capital shall be the greater of (i) operating expenses of
the Company for the last completed calendar month prior to the
Closing Date or (ii) the average operating expenses of the Company
for the six calendar months last completed prior to the Closing
Date;
(d) the Purchaser shall have received from the Sellers a fully executed
"LOCK-UP AGREEMENT" in the form attached hereto as Exhibit D;
(e) there shall have not occurred after the date of the Annual Financial
Statements, any event or condition which has caused, or which could
reasonably be expected by Purchaser, in the exercise of its sole
discretion, to cause in the future, a Material Adverse Effect with
respect to the Company;
(f) Purchaser shall have received the Financial Statements;
(g) the Effective Time Financial Statements shall not reflect any
Material Adverse Effect in the financial condition or results of
operations of the Company from that reflected in the Unaudited
Financial Statements; and
(h) Purchaser shall have received each of the following, dated as of the
Closing Date or, with respect to certificates of Governmental
Authorities, dated within ten Business Days prior to the Closing
Date:
(i) the Certificate of Incorporation of the Company certified by
the Secretary of State of the State of the Texas, the Bylaws
of the Company certified by its Secretary or an Assistant
Secretary, a certificate of the Secretary of State of the
State of Texas as to the existence and good standing of the
Company and certificates of the appropriate Governmental
Authorities of each jurisdiction in which the Company is
qualified or authorized to transact business as to the good
standing and qualification or authorization of the Company;
(ii) a certificate executed by each of Sellers, individually and in
their capacities as officers and directors of the Company,
certifying as to fulfillment of the conditions specified in
Section 6.03(a), Section 6.03(b) and Section 6.03(c),
including a computation of Minimum Working Capital pursuant to
Section 6.03(c);
- 25 -
(iii) the original minute books and stock record and transfer books
of the Company, reflecting as of the Closing Date the name and
address of, and the number of shares of capital stock owned of
record by, each shareholder of the Company, and all unissued
stock certificates in the possession of Sellers or the
Company;
(iv) resignations, effective as of the Closing Date, of each of the
officers and directors of the Company; and
(v) waivers and/or consents in form reasonably satisfactory to
Purchaser from Sellers' spouses, if required under community
property laws.
ARTICLE VII
TERMINATION
Section 7.01. Termination . This Agreement may be terminated at any time
prior to the Closing Date:
(a) by the mutual written consent of Sellers and Purchaser;
(b) by Sellers, on the one hand, or Purchaser, on the other hand, if (i)
the non-terminating party or any of its Affiliates fails to satisfy
any term, covenant, agreement or condition required to be satisfied
by it on or before the Closing Date or (ii) there has been a breach
of any representation, warranty, term, covenant or agreement made to
or for the benefit of the terminating party or any of its Affiliates
in this Agreement, which breach has not been cured as of the Closing
Date;
(c) by either Sellers or Purchaser if the Closing has not occurred on or
prior to August 31, 2004 (the "CLOSING PERIOD"); provided, however,
that Purchaser may, by written notice to the Sellers delivered at
least one business day prior to the end of the Closing Period,
extend the Closing Period for up to thirty (30) calendar days; and,
provided, further, that the right to terminate this Agreement shall
not be available to any party whose failure, or the failure of any
of its Affiliates, to fulfill an obligation under this Agreement has
been the cause of or resulted in the failure of the Closing Date to
occur on or before such date; or
(d) by either Sellers or Purchaser upon the issuance of an injunction,
stay or restraining order issued by any court of competent
jurisdiction enjoining or preventing consummation of the purchase
and sale of the Stock or the other transactions contemplated by this
Agreement or any of the Closing Documents beyond September 30, 2004,
which injunction, stay or order has not been reversed, vacated or
expired so as to permit the Closing Date to occur on or before
September 30, 2004.
- 26 -
Section 7.02. Effect of Termination . In order to elect to terminate this
Agreement pursuant to Section 7.01, written notice of such election must be
given by the terminating party to the other party and, upon receipt of such
notice by the non-terminating party, this Agreement shall terminate and have no
further effect, and the transactions contemplated hereby shall be abandoned
without any further action by either of the parties, except that the provisions
of Sections 3.24, 5.01(c), 5.07 (last sentence only), 7.02, 9.04, 9.13 and 9.14
shall survive the termination of this Agreement; provided, however, that if this
Agreement is terminated by a party under circumstances in which another party or
any of its Affiliates has willfully or in bad faith failed or refused to satisfy
a covenant or condition to the obligations of either party to consummate the
transactions contemplated by this Agreement (the "DEFAULTING PARTY"), the
Defaulting Party shall be and remain liable for all Claims, Liabilities and
Losses imposed on, incurred by or asserted against the non-defaulting party,
directly or indirectly, arising out of or resulting from such failure.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Indemnification of Sellers . Subject to the terms and
conditions of this Article VIII, Purchaser agrees to indemnify, defend and hold
harmless Sellers, and their respective heirs, executors, personal
representatives, administrators, successors and assigns (the "SELLERS
INDEMNIFIED PERSONS"), from and against any and all Claims, Liabilities and
Losses which may be imposed on, incurred by or asserted against any Seller
Indemnified Person, arising out of or resulting from, directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
Purchaser contained in or made pursuant to this Agreement or any of
the Closing Documents which was not disclosed to Sellers in writing
prior to the Closing; provided that no such notification shall be
deemed to waive or abrogate any right of Sellers with respect to
conditions to Closing in Section 6.02;
(b) the breach of any covenant or agreement of Purchaser contained in
this Agreement or in any of the Closing Documents; or
(c) the conduct of the business of the Company after the Closing Date,
or any act or failure to act of the Company prior to the Closing
Date that is either (i) reflected in the Unaudited Financial
Statements or (ii) a Liability under any contractual obligation
identified in this Agreement or any of the Schedules, the
performance or payment of which was not due or owing prior to the
Closing Date;
(d) the presence, Release or threatened Release of any Hazardous
Material located on, within or affecting any of the Assets and
Properties of the Company, or migrating to adjacent properties,
which Hazardous Material (i) was located on, about or within such
Assets and Properties prior to or as of the Closing Date in
compliance with all Environmental Laws or (ii) was not located on,
about or within such Assets and Properties prior to or as of the
Closing Date;
- 27 -
(e) any compliance, investigative, enforcement, cleanup, removal,
containment, remedial, response, cost recovery, contribution,
brownfields cleanup or other private or governmental or regulatory
action at any time threatened, instituted or completed, which is in
any way connected with (i) any Hazardous Material which was (i)
located on, about or within such Assets and Properties prior to or
as of the Closing Date in compliance with all Environmental Laws or
(ii) not located on, about or within the Assets and Properties of
the Company prior to or as of the Closing Date or (ii) the
activities of, or ownership or operation of the Assets and
Properties of the Company by the Company after the Closing Date (A)
in violation of any Environmental Law, (B) that results in any
Administrative Proceeding or (C) that if reported to a Governmental
Authority would likely result in any Administrative Proceeding; or
(f) any Claim to fees or costs for alleged services by a broker, agent,
finder or other Person claiming to act in a similar capacity at the
request of Purchaser in connection with this Agreement or any of the
Closing Documents;
provided, however, that Purchaser shall not be liable for any portion of any
Claims, Liabilities or Losses resulting from a material breach by any Seller of
any of his or its obligations under this Agreement or any of the Closing
Documents or from a Seller Indemnified Person's gross negligence, fraud or
willful misconduct.
Section 8.02. Indemnification of Purchaser. Subject to the terms and
conditions of this Article VIII, from and after the Closing Date, Sellers,
jointly and severally, agree to indemnify, defend and hold harmless Purchaser,
the Company, their respective Affiliates, their respective present and former
directors, officers, shareholders, employees and agents and their respective
heirs, executors, personal representatives, administrators, successors and
assigns (the "PURCHASER INDEMNIFIED PERSONS"), from and against any and all
Claims, Liabilities and Losses which may be imposed on, incurred by or asserted
against any Purchaser Indemnified Person, arising out of or resulting from,
directly or indirectly:
(a) the inaccuracy of any representation or breach of any warranty of
Sellers contained in or made pursuant to this Agreement or any of
the Closing Documents which was not disclosed to Purchaser in
writing prior to the Closing; provided that no such notification
shall be deemed to waive or abrogate any right of Purchaser with
respect to conditions to Closing in Section 6.03;
(b) the breach of any covenant or agreement of Sellers contained in this
Agreement or any of the Closing Documents;
(c) the conduct of the business of the Company prior to the Closing
Date, or any act or failure to act of the Company prior to the
Closing Date, that is neither (i) reflected in the Unaudited
Financial Statements nor (ii) a Liability under a contractual
obligation identified in this Agreement or any of the Schedules, or
otherwise disclosed by Sellers to Purchaser in writing
contemporaneous with execution of this Agreement (including a
specific reference in such written disclosure to this Agreement),
the performance or payment of which was not due or owing prior to
the Closing Date;
- 28 -
(d) the presence, Release or threatened Release of any Hazardous
Material located on, within or affecting any of the Assets and
Properties of Sellers, the Company or any of its Affiliates, or
migrating to adjacent properties, which Hazardous Material was
located on, about or within such Assets and Properties prior to or
as of the Closing Date in violation of any Environmental Law or
which is a basis for an Administrative Proceeding to the extent that
such Administrative Proceeding relates to any period prior to the
Closing Date (or that if reported to a Governmental Authority would
likely result in and serve as a basis for such Administrative
Proceeding);
(e) any compliance, investigative, enforcement, cleanup, removal,
containment, remedial, response, cost recovery, contribution,
brownfields cleanup or other private or governmental or regulatory
action at any time threatened, instituted or completed, which is in
any way connected with (i) any Hazardous Material which was located
on, about or within the Assets and Properties of the Company or any
of its Affiliates prior to or as of the Closing Date in violation of
any Environmental Law or which is a basis for an Administrative
Proceeding to the extent that such Administrative Proceeding relates
to any period prior to the Closing Date (or that if reported to a
Governmental Authority would likely result in and serve as a basis
for such Administrative Proceeding); or (ii) the activities of or
ownership or operation of the Assets and Properties of the Company
or any of its Affiliates by Sellers, the Company or any of its
Affiliates prior to or as of the Closing Date (A) in violation of
any Environmental Law, (B) that results in any Administrative
Proceeding or (C) that if reported to a Governmental Authority would
likely result in any Administrative Proceeding; or
(f) any Claim to fees or costs for alleged services rendered by a
broker, agent, finder or other Person claiming to act in a similar
capacity at the request of Sellers, the Company in connection with
this Agreement or any of the Closing Documents;
provided, however, that Sellers shall not be liable for any portion of any
Claims, Liabilities or Losses resulting from a material breach by Purchaser of
its obligations under this Agreement or any of the Closing Documents or from a
Purchaser Indemnified Person's gross negligence, fraud or willful misconduct.
Section 8.03. Limitations on Indemnification . The obligations of
Purchaser and Sellers to indemnify any Person pursuant to this Article VIII
shall be subject to the following limitations:
(a) except as provided in Sections 8.03(b) and 8.03(c), notice of the
Claim shall have been given by such Seller Indemnified Person or
Purchaser Indemnified Person, as the case may be, to Purchaser or
Sellers within the two-year period after the Effective Time (or such
longer period of time for notice of Claims as is provided in Section
8.06 hereof);
(b) with respect solely to claims for indemnification pursuant to
Section 8.02(d) or 8.02(e) or a breach of the representations and
warranties in Section 3.24, notice of such Claim shall have been
given by the Purchaser Indemnified Person to Sellers within the
two-year period after the Effective Time as provided in Section
8.06(a) hereof; and
- 29 -
(c) notwithstanding Sections 8.03(a) and 8.03(b), there shall be no
threshold or other limitations on claims for indemnification (i)
pursuant to Sections 5.07 and 5.10 or (ii) for a breach of the
representations, warranties and covenants in Sections 3.24 and 5.06.
Section 8.04. Indemnification Procedures. The obligations and Liabilities
of any party to indemnify any other party pursuant to this Article VIII shall be
subject to the following terms and conditions:
(a) Notice and Defense. Within a reasonable period of time after a party
or parties to be indemnified (whether one or more, the "INDEMNIFIED
PARTY") receives actual notice of any Claim covered by Section 8.01
or 8.02, as the case may be, the Indemnified Party shall, if a Claim
in respect thereof is to be made pursuant to Section 8.01 or 8.02,
as the case may be, notify the party from whom indemnification is
sought (the "INDEMNIFYING PARTY") in writing of such Claim; provided
however, that the failure to so notify the Indemnifying Party shall
not relieve the Indemnifying Party from any Liability which it may
have to the Indemnified Party pursuant to Section 8.01 or 8.02, as
the case may be, except to the extent of material detriment suffered
by the Indemnifying Party as a result of such failure. In the event
that a Claim, Liability or Loss arises out of or results from
matters with respect to third parties, the Indemnifying Party will
undertake the defense thereof by representatives chosen by it which
are reasonably acceptable to the Indemnified Party. So long as the
Indemnifying Party is defending any such Claim actively and in good
faith, the Indemnified Party shall not settle such Claim. Each of
the Indemnifying Party and the Indemnified Party shall be entitled
to consult with each other, to the extent it reasonably requests, in
respect of the defense of such Claim and shall cooperate in the
defense of any such Claim, including making its officers, directors,
employees and Books and Records available for use in such Claim, and
shall take those actions reasonably within its power which are
reasonably necessary to preserve any legal defenses to such matters.
(b) Failure to Defend. If the Indemnifying Party, within a reasonable
time after notice of any such Claim, fails to defend such Claim
actively and in good faith, the Indemnified Party will (upon further
notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of
the Indemnifying Party, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment.
(c) Indemnified Party's Rights. Notwithstanding anything contained in
this Article VIII to the contrary: (i) if there is a reasonable
probability that a Claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to
defend, compromise or settle such Claim; and (ii) no consent order
shall be entered into or Claim settled unless the Indemnified Party
has given its prior written consent thereto, which consent shall not
be unreasonably withheld or delayed; provided, however, that the
Indemnified Party shall consent to any settlement, compromise or
discharge of such Claim that the Indemnifying Party may recommend
that by its terms fully releases the Indemnified Party from any
further Claims with respect to the matters giving rise to such
Claim.
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Section 8.05. Payment . The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article VIII and reimburse each
Indemnified Party for all reasonable expenses (including reasonable counsel
fees) for which the Indemnified Party is entitled to be indemnified hereunder as
they are incurred by such Indemnified Party. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
promptly pay on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required to be paid by it, the amount
so determined by such judgment, determination, settlement or compromise and all
other Claims of the Indemnified Party with respect thereto, unless in the case
of a judgment or determination an appeal is made from such judgment or
determination; provided, however, that if the Indemnifying Party desires to
appeal from an adverse judgment or determination, then the Indemnifying Party
shall post and pay the cost of the security or bond to stay execution of the
judgment or determination pending appeal. Upon the payment in full by the
Indemnifying Party of all of such amounts, the Indemnifying Party shall succeed
to the rights of the Indemnified Party, to the extent such rights are not waived
in settlement, against the third party who made such third party Claim.
Section 8.06. Other Indemnities; Survival of Representations, Warranties
and Covenants . The indemnities provided in Sections 8.01 and 8.02 are in
addition to, and not in lieu of, other indemnification obligations of the
parties contained in this Agreement. Except as otherwise provided herein, all
representations, warranties, covenants and agreements made by Sellers, the
Company and Purchaser in this Agreement, the Closing Documents or in any
certificate or other instrument delivered by Sellers, the Company or Purchaser
under this Agreement or any of the Closing Documents shall survive the execution
and delivery of this Agreement and the Closing Documents, regardless of any
investigation made by or on behalf of any party; provided, however, that:
(a) the representations and warranties of Sellers, other than those
contained in Sections 3.01 (first and fourth sentences only), 3.02,
3.03 and 3.04 (which shall survive indefinitely), and Section 3.20
(which shall survive as provided in subsection (b) of this Section
8.06), and the indemnification obligations of Sellers set forth in
Section 8.02(d) and (e), shall terminate and have no further force
or effect after the expiration of the two year period commencing on
the Effective Time;
(b) the representations and warranties of Sellers contained in Section
3.20 shall terminate and have no further force or effect upon the
expiration of the statute of limitations period applicable thereto;
and
(c) the representations and warranties of Purchaser, other than those
contained in Sections 4.01 (first sentence only) and 4.02 and 4.05
(which shall survive indefinitely), shall terminate and have no
further force or effect after the expiration of the two year period
commencing on the Effective Time, and the indemnification
obligations of Purchasers set forth in Section 8.01(d) and (e) shall
survive indefinitely;
- 31 -
in each case unless notice of a Claim relating thereto shall be delivered by a
Purchaser Indemnified Person to Sellers, or a Seller Indemnified Person to
Purchaser, as the case may be, prior to the expiration of the specified period
(other than those whose period of survival is indefinite and as to which Notice
of Claims can be given at any time), in which case such representation, warranty
or indemnity shall survive following such period solely with respect to such
Claim until such Claim is resolved. The right to indemnification provided in
this Article VIII shall be the exclusive remedy of any Purchaser Indemnified
Person or Seller Indemnified Person with respect to the inaccuracy of any
representation or the breach of any warranty made by Sellers or Purchaser in
this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Notices . Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by: (a)
regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile transmission;
or (d) overnight courier service, to the parties at the following addresses or
facsimile numbers:
(i) if to Sellers, to:
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) if to Purchaser, to:
The Project Group, Inc.
▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
20333 S.H. ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
- 32 -
or at such other address or number as shall be designated by either of the
parties in a notice to the other party given in accordance with this Section
9.01. Except as otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given: (A) in the case of a notice sent by
regular or registered or certified mail, three Business Days after it is duly
deposited in the mails; (B) in the case of a notice delivered by hand, when
personally delivered; (C) in the case of a notice sent by facsimile, upon
transmission subject to telephone confirmation of receipt; and (D) in the case
of a notice sent by overnight mail or overnight courier service, the next
Business Day after such notice is mailed or delivered to such courier, in each
case given or addressed as aforesaid.
Section 9.02. Benefit and Burden . This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their successors
and permitted assigns.
Section 9.03. No Third Party Rights . Nothing in this Agreement shall be
deemed to create any right in any creditor or other Person not a party hereto
(other than the Seller Indemnified Persons and the Purchaser Indemnified
Persons) and this Agreement shall not be construed in any respect to be a
Contract in whole or in part for the benefit of any third party (other than the
Seller Indemnified Persons and the Purchaser Indemnified Persons).
Section 9.04. Amendments and Waiver . No amendment, modification,
restatement or supplement of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless in writing and signed by the party against whom
that waiver is sought to be enforced. No failure or delay on the part of any
party hereto in exercising any right, power or privilege hereunder and no course
of dealing between or among any of the parties hereto shall operate as a waiver
of any right, power or privilege hereunder. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. No
notice to or demand on any party in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any party to any other or further action in
any circumstances without notice or demand.
Section 9.05. Assignments . Except for Purchaser's right to assign any of
its rights, interests and obligations under this Agreement to an Affiliate of
Purchaser, neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto and any attempt to do so shall be
null and void.
Section 9.06. Counterparts . This Agreement may be executed in
counterparts and by the different parties in separate counterparts, each of
which when so executed shall be deemed an original and all of which taken
together shall constitute one and the same agreement.
- 33 -
Section 9.07. Captions and Headings . The captions and headings contained
in this Agreement are inserted and included solely for convenience and shall not
be considered or given any effect in construing the provisions hereof if any
question of intent should arise.
Section 9.08. Construction . The parties acknowledge that each of them has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement with its legal counsel and that this
Agreement shall be construed as if jointly drafted by the parties hereto.
Section 9.09. Severability . Should any clause, sentence, paragraph,
subsection, Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties agree
that the part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom by the parties, and the
remainder will have the same force and effectiveness as if such stricken part or
parts had never been included herein.
Section 9.10. Remedies . The parties agree that the covenants and
obligations contained in this Agreement and the Closing Documents relate to
special, unique and extraordinary matters and that a violation of any of the
terms hereof or thereof would cause irreparable injury in an amount which would
be impossible to estimate or determine and for which any remedy at law would be
inadequate. As such, the parties agree that if either party fails or refuses to
fulfill any of its obligations under this Agreement or any of the Closing
Documents or to make any payment or deliver any instrument required hereunder or
thereunder, then the other party shall have the remedy of specific performance,
which remedy shall be cumulative and nonexclusive and shall be in addition to
any other rights and remedies otherwise available under any other Contract or at
law or in equity and to which such party might be entitled.
Section 9.11. Applicable Law . THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
Section 9.12. Submission to Jurisdiction . Each of the parties hereby: (a)
irrevocably submits to the non-exclusive personal jurisdiction of any state or
federal court sitting in ▇▇▇▇▇▇ County, Texas, over any Claim arising out of or
relating to this Agreement or any of the Closing Documents and irrevocably
agrees that all such Claims may be heard and determined in such court; and (b)
irrevocably waives, to the fullest extent permitted by applicable Law, any
objection it may now or hereafter have to the laying of venue in any proceeding
brought in a state or federal court sitting in ▇▇▇▇▇▇ County, Texas, and any
claim that any such proceeding brought in a state or federal court sitting in
▇▇▇▇▇▇ County, Texas, has been brought in an inconvenient forum. Each of the
parties hereby irrevocably agrees that service of copies of the summons and
complaint and any other process which may be served in any such action or
proceeding may be made by mailing, by certified mail, a copy of such process to
such party at its address for notices specified herein. As an alternative method
of service, each of the parties also irrevocably consents to the service of any
and all process in any such action or proceeding by the mailing by certified
mail of copies of such process to it at its address for notices specified
herein. Each of the parties agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law. Nothing in this
Section 9.12 shall affect the right of either of the parties to serve legal
process in any other manner permitted by Law or affect the right of either of
the parties to bring any action or proceeding in the courts of any other
jurisdictions, domestic or foreign.
- 34 -
Section 9.13. Expenses; Prevailing Party Costs . Except as otherwise
specifically provided for in Section 5.12 hereof, each of Sellers and Purchaser
shall pay its own expenses incident to this Agreement and the Closing Documents
and the transactions contemplated hereby and thereby, including all legal and
accounting fees and disbursements, and Sellers shall be solely liable for any
and all expenses of the Company which are incident to this Agreement and the
Closing Documents and the transactions contemplated hereby and thereby (other
than customary general, administrative and overhead expenses incurred in the
ordinary course of business). Notwithstanding anything contained herein or
therein to the contrary, if any party commences an action against another party
to enforce any of the terms, covenants, conditions or provisions of this
Agreement or any of the Closing Documents, or because of a breach by a party of
its obligations under this Agreement or any of the Closing Documents, the
prevailing party in any such action shall be entitled to recover its Losses,
including reasonable attorneys' fees, incurred in connection with the
prosecution or defense of such action, from the losing party.
Section 9.14. Entire Agreement . This Agreement and the Closing Documents
set forth all of the promises, agreements, conditions, understandings,
warranties and representations among the parties with respect to the
transactions contemplated hereby and thereby, and supersede all prior
agreements, arrangements and understandings between the parties, whether
written, oral or otherwise. There are no promises, agreements, conditions,
understandings, warranties or representations, oral or written, express or
implied, among the parties concerning the subject matter hereof or thereof
except as set forth herein and therein.
- 35 -
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
"SELLERS"
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Spouse of ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, Spouse of ▇▇▇▇ ▇▇▇▇▇▇▇▇
"PURCHASER"
THE PROJECT GROUP, INC.
By:
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
- 36 -
ANNEX "A"
DEFINITIONS
"AFFILIATE" means, with respect to any Person, any other Person: (i) that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such Person; and (ii) in the case
of a natural person, that is the parent, spouse, child or sibling (herein,
collectively "RELATED PERSONS") of such Person. The term "CONTROL" (including,
with correlative meaning, the terms "CONTROLLING", "CONTROLLED BY" and "UNDER
COMMON CONTROL WITH") means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of a Person, whether
through the ownership of voting securities, by Contract or otherwise.
"AGREEMENT" means the Stock Purchase Agreement to which this Annex A is
attached, as the same may be amended, modified or supplemented from time to
time.
"ANNUAL FINANCIAL STATEMENTS" has the meaning specified in Section 3.06 of
the Agreement.
"ASSETS AND PROPERTIES" means all assets and properties of every kind,
nature, character and description, whether real, personal or mixed, tangible or
intangible, wherever situated, including any goodwill related thereto, and, with
respect to any Person, means all such assets and properties operated, owned or
leased by such Person.
"BOOKS AND RECORDS" means, with respect to any Person, all files,
documents, instruments, papers, books and records relating to the business,
operations, condition (financial and otherwise), results of operations and
Assets and Properties of such Person, including financial statements, Tax
returns and related guidelines, ledgers, journals, deeds, title policies,
surveys, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Governmental Approvals, customer lists, vendor lists, representative
listings, sales literature, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
"BUSINESS DAY" means any day on which commercial banks are not authorized
or required to close in Houston, Texas.
"CASH" means (i) cash and cash equivalents, (ii) securities which (A) are
listed on the New York Stock exchange or the American Stock Exchange, (B) are
reported on the Nasdaq Stock Exchange ("NASDAQ"), (C) are part of an issue which
is listed on the New York Stock Exchange or the American Stock Exchange or
reported on NASDAQ or (D) are regularly quoted by brokers or dealers making a
market in such securities, (iii) readily marketable securities or obligations
issued or guaranteed by the United States or any state, province, territory or
other political subdivision thereof, (iv) securities issued or guaranteed by any
national or state bank, savings and loan association, credit union or other
financial institution and (v) any other item that would be reflected as cash or
cash equivalents on a balance sheet prepared in accordance with generally
accepted accounting principles, but reduced by credit balances in any cash
accounts.
A-i
"CASH CONSIDERATION" has the meaning specified in Section 2.02 of the
Agreement.
"CLAIM" means any claim, demand, investigation, cause of action, suit,
default, assessment, litigation or other proceeding, including arbitral
proceedings and proceedings by or before any Governmental Authority.
"CLOSING" means the closing of the sale and delivery of the Stock
contemplated by Section 2.01.
"CLOSING DATE" means a date not later than ninety (90) calendar days
following the end of the Inspection Period, or such other date as shall be
mutually agreed by the parties on which Closing shall occur.
"CLOSING DOCUMENTS" means all agreements, instruments and documents
executed by or on behalf of Sellers, the Company or Purchaser or any of their
respective Affiliates in connection with or relating to the Agreement, together
with all agreements, instruments and documents referred to therein or
contemplated thereby.
"CLOSING PERIOD" has the meaning specified in Section 7.01(c) of the
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITMENT" has the meaning specified in Section 3.02 of the Agreement.
"COMPANY" means Dolphin Knowledge, Inc., a corporation organized under the
laws of the State of Texas.
"COMPANY BUSINESS" has the meaning specified in recitals of the Agreement.
"CONTRACT" means any agreement, lease, license, evidence of Debt,
mortgage, deed of trust, note, bond, indenture, security agreement, commitment,
instrument, understanding or other contract, obligation or arrangement of any
kind.
"DEBT" means, for any Person, all indebtedness, liabilities and
obligations of such Person: (i) for the repayment of money borrowed (whether or
not represented by bonds, debentures, notes, securities or other evidences of
indebtedness); (ii) representing deferred payment of the purchase price for
goods, services or Assets and Properties; (iii) under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet purposes;
(iv) under guaranties, endorsements (other than for collection or deposit in the
ordinary course of business) or assumptions of, or other contingent obligations
in respect of, or to purchase or otherwise acquire, any indebtedness,
liabilities or other obligations of any other Person; (v) in respect of letters
of credit; (vi) secured by a Lien existing on Assets and Properties owned by
such Person, whether or not the indebtedness, liabilities or obligations secured
thereby shall have been assumed by such Person; and/or (vii) to redeem or
repurchase any of such Person's capital stock, warrants, equity interests or
equivalents.
A-ii
"DEFAULTING PARTY" has the meaning specified in Section 7.02 of the
Agreement.
"DISPUTE" means any dispute or Claim by or between the parties arising out
of, relating to or in connection with this Agreement.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"EFFECTIVE TIME" has the meaning specified in Section 2.03.
"EMPLOYEE PLANS AND AGREEMENTS" has the meaning specified in Section
3.18(a) of the Agreement.
"EMPLOYEES" has the meaning specified in Section 3.16 of the Agreement.
"ENVIRONMENTAL CLAIMS, LIABILITIES AND LOSSES" means, with respect to any
Person, any Claim, Liability (including strict liability) or Loss arising out of
(i) the presence, Release or threatened Release of any Hazardous Material
located on, about, within or affecting any of the Assets and Properties of such
Person; or (ii) any compliance, investigative, enforcement, cleanup, removal,
containment, remedial, response, cost recovery, contribution, brownfields
cleanup or other private or governmental or regulatory action at any time
threatened, instituted or completed, which is in any way connected with (A) any
Hazardous Material or (B) the activities of such Person or the ownership or
operation of its Assets and Properties (1) in violation of any Environmental
Law, (2) that results in any Administrative Proceeding or (3) that if reported
to a Governmental Authority would likely result in any Administrative
Proceeding.
"ENVIRONMENTAL LAWS" means any and all Laws and requirements of any
Governmental Authority, now or hereafter in effect, including any Governmental
Approval, judgment, decision, order, injunction, decree, restriction or
determination, relating to pollution or protection of the environment, health,
safety or natural resources, including, without limitation, those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials, and other environmental conservation and
protection Laws, as such Laws and requirements may be amended, supplemented or
superseded and in effect from time to time.
"FINANCIAL STATEMENTS" has the meaning specified in Section 3.06 of the
Agreement.
"GAAP" means generally accepted United States accounting principles,
applied on a consistent basis, and which are applicable in the circumstances as
of the date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles observed in a current period are
comparable in all material respects to those accounting principles applied in
preceding periods.
"GOVERNMENTAL APPROVAL" means any authorization, consent, approval,
license, franchise, lease, ruling, tariff, rate, permit, certificate or
exemption of, or filing or registration with, any Governmental Authority.
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"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, county, province, city, town, municipality, local or other political
subdivision thereof or thereto and any court, tribunal, department, commission,
board, bureau, instrumentality, agency, council, arbitrator or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any other governmental entity with
authority over the applicable Person or Assets and Properties.
"HAZARDOUS MATERIALS" means any hazardous or toxic substances or
contaminated material including asbestos (friable, non-friable or any other
form), polychlorinated biphenyl and any flammable materials, explosives,
radioactive materials, hazardous materials, hazardous waste, hazardous or toxic
or regulated substances or related materials defined in or under any
Environmental Laws and any other substance, waste, pollutant, contaminant or
material, including petroleum products and derivatives, crude oil or fractions
thereof or any chemical which causes cancer or reproductive effects, which are
defined by applicable Law as hazardous or toxic or the use, transport, disposal,
storage, treatment, recycling, handling, discharge, Release or emission of which
is regulated or governed by any applicable Law.
"INDEMNIFIED PARTY" has the meaning specified in Section 8.04(a) of the
Agreement.
"INDEMNIFYING PARTY" has the meaning specified in Section 8.04(a) of the
Agreement.
"INSPECTION PERIOD" has the meaning specified in Section 5.01 of the
Agreement.
"INTELLECTUAL PROPERTY RIGHTS" means all intellectual property rights used
in, held for use in or necessary for the business of the Company anywhere the
Company currently conducts operations or otherwise does business, including all
technology, patents and patent rights, trademarks and trademark rights, trade
names and trade name rights, service marks and service ▇▇▇▇ rights, service
names and service name rights, brand names, trade names, trade secrets,
inventions, copyrights and copyright rights, know-how, designs, labels,
drawings, colors, information, computer programs and licenses.
"LAWS" means all laws, statutes, rules, regulations, ordinances, orders,
writs, injunctions or decrees and other pronouncements having the effect of law
of any Governmental Authority, including Environmental Laws.
"LIABILITY" means, with respect to any Person, any Debt, obligation and
other liability of such Person, whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due, including liabilities for Taxes,
material forward or long-term commitments, or unrealized or anticipated Losses
from any unfavorable Contracts or commitments.
"LIEN" means any mortgage, lien, charge, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, security interest, assessment,
lease, adverse claim, levy, preference or priority or other security agreement
of any kind or nature whatsoever (whether voluntary or involuntary, affirmative
or negative, and whether imposed or created by operation of Law or otherwise)
in, on or with respect to, or pledge of, any Assets and Properties or equity
interests, whether now owned or hereafter acquired, or any other interest in
Assets and Properties or equity interests designed to secure the repayment of
Debt or any other obligation, whether arising by Contract, operation of Law or
otherwise, or any Contract to give any of the foregoing, and including any
conditional sale or other title retention agreement and any financing lease
having substantially the same effect as any of the foregoing.
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"LOSS" means any and all damages (including consequential, punitive and
exemplary), fines, penalties, judgments, deficiencies, losses, costs and
expenses, including court costs, reasonable fees of attorneys, accountants and
other experts and other reasonable expenses of any Claim.
"MATERIAL ADVERSE EFFECT" means (i) with respect to any Person a material
adverse effect upon (A) the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of such Person and its
subsidiaries, taken as a whole, or (B) the ability of such Person to perform its
obligations under the Agreement or any of the Closing Documents or to consummate
the transactions contemplated thereby, or (ii) in the case of the
representations and warranties with respect to the Company set forth in Article
III, any act, omission, event, circumstance or condition which alone could
reasonably be expected to result in Losses or Liabilities of the Company in
excess of $5,000 per occurrence or which, together with all other acts,
omissions, events, circumstances and conditions could reasonably be expected to
result in Losses or Liabilities of the Company in excess of $15,000 in the
aggregate (this clause (ii) also identifying matters which, as to any Person,
would be considered "material"). Any determination as to whether any act,
omission, event, circumstance or condition has a Material Adverse Effect on or
is material to any Person shall be made only after taking into account all
effective insurance coverage and effective indemnification with respect to such
act, omission, event, circumstance or condition to the extent such insurance
coverage or indemnification is not disputed.
"PERMITTED ENCUMBRANCES" means any and all: (i) Liens for Taxes if the
same shall at the time not be delinquent or thereafter may be paid without
penalty; (ii) Liens consisting of minor easements, zoning restrictions or other
restrictions on the use of real property that do not materially affect the value
of the Assets and Properties encumbered thereby or materially impair the ability
of the Company to use such Assets and Properties in its business; (iii) Liens of
landlords, mechanics, materialmen, warehousemen, carriers or other statutory
Liens securing obligations that are not yet due and are incurred in the ordinary
course of business; and (iv) Liens resulting from deposits to secure payments of
workmen's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids or
Contracts in the ordinary course of business.
"PERSON" means any individual, firm, corporation, trust, association,
company, limited liability company, joint stock company, partnership, joint
venture, Governmental Authority or other entity or enterprise.
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"PRE-CLOSING TAXES" has the meaning specified in Section 5.08(b) of the
Agreement.
"PROHIBITED TRANSACTION" has the meaning specified in Section 3.18(d) of
the Agreement.
"PROPERTY RECORDS" means all documents or records, of any nature, relating
to the ownership or operation of any Assets and Properties of the Company.
"PURCHASE PRICE" has the meaning specified in Section 2.02 of the
Agreement.
"PURCHASER" has the meaning specified in the introductory paragraph of the
Agreement.
"PURCHASER INDEMNIFIED PERSONS" has the meaning specified in Section 8.02
of the Agreement.
"PURCHASER REPRESENTATIVES" has the meaning specified in Section 5.01 of
the Agreement.
"QUALIFIED PLANS" has the meaning specified in Section 3.18(b) of the
Agreement.
"RECEIVABLES" has the meaning specified in Section 3.14 of the Agreement.
"RECEIVABLES SCHEDULE DATE" has the meaning specified in Section 3.14 of
the Agreement.
"RELATED SCHEDULES" means schedules which set forth all capital
expenditures of, and all transfers or payments of cash or other Assets and
Properties between, the Company and its Affiliates for and during the periods
covered by each of the Financial Statements included in Schedule 3.06.
"RELEASE" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment (including the abandonment or discarding of barrels, containers
and other closed receptacles).
"RESERVES" has the meaning specified in Section 3.14 of the Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLERS" has the meaning specified in the introductory paragraph of the
Agreement.
"SELLER INDEMNIFIED PERSONS" has the meaning specified in Section 8.01 of
the Agreement.
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"STOCK" has the meaning specified in the recitals of the Agreement.
"STOCK CONSIDERATION" has the meaning specified in Section 2.02 of the
Agreement.
"STOCK CONSIDERATION SHARES" has the meaning specified in Section 4.02 of
the Agreement.
"TAXES" or "TAX" means any and all taxes, assessments, imposts,
deductions, charges, withholdings, claims and levies assessed or imposed by any
Governmental Authority and all Liabilities with respect thereto, including any
penalties, interest, additions to tax, sales, use, transfer, stock transfer,
real property transfer, recording, gains, stamp, documentary, income, franchise,
excise and property taxes, charges and similar levies and fees.
"TPG" has the meaning specified in the introductory paragraph of the
Agreement.
"UNAUDITED FINANCIAL STATEMENTS" has the meaning specified in Section 3.06
of the Agreement.
"UNITED STATES" and "U.S." mean the United States of America and its
territories and possessions.
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