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EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is made this 2nd day
of November, 1998, by and between Anserphone, Inc., a Delaware corporation
("Buyer"), Protocol Holdings, Inc., a Delaware corporation and ultimate parent
of Buyer ("Parent"), Anserphone of New Orleans, Inc., a Louisiana corporation
(the "Seller") and ▇▇▇▇▇▇▇ ▇. Read, Jr. and ▇. ▇▇▇▇▇▇▇ Read (the "Stockholders",
and each individually, a "Stockholder").
W I T N E S S E T H :
- - - - - - - - - - -
WHEREAS, the Seller is principally engaged in the business of supplying
operator, answering and telemarketing services (the "Business") and is the end
user subscribers for certain toll free telephone numbers listed on Schedule
2.1(q) hereto (the "Toll Free Telephone Numbers");
WHEREAS, the Stockholders are presently the owners of all of the issued
and outstanding capital stock of the Seller; and
WHEREAS, the Seller desires to sell to Buyer, and Buyer desires to
purchase from the Sellers substantially all of its assets and operations subject
to certain liabilities, all in the manner and subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION.
1.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions of
this Agreement, on the Effective Date (as defined in Section 1.6 below), the
Seller shall, and the Stockholders shall cause the Seller to, sell, transfer,
convey, assign and deliver ("Transfer") to Buyer, and Buyer shall purchase,
acquire and accept from the Seller, the Business and all of such Seller's
rights, properties, assets, contracts, leases and businesses of every kind,
character and description, whether tangible or intangible, real, personal or
mixed, accrued, contingent or otherwise, and wherever located, less and except
the Excluded Assets (as defined in Section 1.2 below) (after giving effect to
the exclusion of the Excluded Assets, such assets are hereinafter collectively
referred to as the "Transferred Assets"), free and clear of all liens, claims
and encumbrances, including, without limitation:
(a) all machinery, equipment, furniture, office equipment, telephone
equipment, computers and computer equipment, spare parts, supplies, tools and
vehicles;
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In this Exhibit, "[***]" represents material omitted from this Exhibit and filed
separately with the Securities and Exchange Commission and for which
Confidential Treatment has been requested.
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(b) all of the Seller's right, title and interest in and to any income
and payments due to the Seller, including, without limitation, all accounts and
accounts receivable whether or not reflected on the Seller's books and records,
but expressly excluding the Excess Receivables (as defined in Section 9.2
hereof) and receivables due from employees, not in excess of $30,000, as listed
on Schedule 1.2(f) hereto;
(c) all letters of credit, leases of real and personal property, rental
agreements, commitments, insurance policies (other than the disability policies
listed on Schedule 1.2(c) hereto), purchase orders, sales orders, service
agreements, maintenance agreements, distribution agreements, supply agreements
and all other contracts, agreements and understandings, whether written or oral,
and all rights, claims and causes of action thereunder, whether pending or
inchoate;
(d) all prepaid assets and all deposits, refunds, rebates and other
rights to payment relating to the Transferred Assets;
(e) all intangible assets (including, without limitation, all issued
and applied for patents, trademarks, copyrights, trade names, trade secrets,
service marks, customer lists, relationships and arrangements with customers,
covenants not to compete, authors, designers and suppliers, inventions,
formulae, processes and permits, computer software and source code, and all
licenses, agreements and applications with respect to any of the foregoing, any
goodwill associated with any of the foregoing, and all claims and causes of
action relating to any of the foregoing, including claims and causes of action
for past infringement) arising from or utilized in the operations of the
Business, including the names "Anserphone" and "Anserve" and all derivations
thereof (subject to Section 9.4 hereof);
(f) to the extent transferable, all licenses, authorizations and
permits issued by any governmental agency relating to the Business or the
Transferred Assets, and all applications therefor pending; and
(g) all books, records and files (other than minute and stock books and
other similar corporate records) relating to the Business and the Transferred
Assets and the operations thereof for all periods ending on or before the
Effective Date, but excluding such items which relate to the Excluded Assets or
the liabilities of the Seller not assumed by Buyer.
1.2 EXCLUDED ASSETS. Notwithstanding anything in Section 1.1 to the
contrary, the Seller shall retain all of their right, title and interest in and
to all of, and shall not Transfer to Buyer any of, the following assets, rights
and properties (the "Excluded Assets"):
(a) all cash, and cash equivalents, of the Seller on the Effective
Date;
(b) all claims of the Seller in the action styled ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ V. EXECUTIVE SERVICES INC. AND ANSERPHONE OF NEW ORLEANS,
INC., Case No. 438911 Division D, currently pending in the 19th Judicial Court,
Parish of East Baton Rouge (the "ESI Action");
(c) the Excess Receivables (as defined in Section 9.2 below);
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(d) any proceeds and any other consideration paid or payable in
accordance with this Agreement and all rights of the Seller under this Agreement
or any agreement or instrument executed pursuant hereto or thereto, including,
without limitation, the Seller's rights to enforce Buyer's representations,
warranties and covenants hereunder and the obligations of Buyer to pay, perform
or discharge the Assumed Liabilities;
(e) all minute books, stock books and similar corporate records of the
Seller; and
(f) the items set forth on Schedule 1.2(f).
1.3 NO ASSUMPTION OF LIABILITIES. Except for the liabilities expressly
set forth on Schedule 1.3 hereto, Buyer shall not assume and shall have no
liability for, any liabilities or obligations of the Seller (or any predecessor
of the Seller, including, without limitations Anserve, Inc., a Louisiana
corporation ("Anserve")), known or unknown, fixed or contingent ("Liabilities")
including, without limitation, the following:
(a) any liability in respect of accounts payable;
(b) any liability in respect of any indebtedness whether or not secured
by the Transferred Assets;
(c) subject to Section 1.10(b) hereof, any liability for any Federal,
state, local or foreign income, capital gains, franchise taxes, taxes on
capital, sales and use tax, or employee withholding taxes (including, without
limitation, any deferred income tax liability and any penalties and interest
thereon);
(d) any liability for expenses incurred by, or for claims made against,
the Seller in connection with or resulting from or attributable to this
Agreement or the transactions contemplated hereby, if any;
(e) any liability for any investment banking, brokerage or similar
charge or commission, or any attorneys' or accountants' fees and expenses,
payable or incurred by the Seller in connection with the preparation,
negotiation, execution or delivery of this Agreement or the transactions
contemplated hereby;
(f) any liability of the Seller to Buyer arising out of any
misrepresentation or breach of any warranty of the Seller contained in this
Agreement or any of the schedules or exhibits hereto or in any certificate,
agreement, instrument or other document delivered pursuant hereto or out of the
failure of the Seller to perform any of their agreements or covenants contained
herein or therein or to perform or satisfy any of the Liabilities;
(g) any liability or obligation to employees including, without
limitation, liabilities and obligations in respect of compensation and severance
(including, without limitation, severance obligations arising as a result of the
transactions contemplated hereby) and any liability or obligation under any
employee pension, benefit or other plan; and
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(h) any other liability arising from or relating to the operation of
the Business (whether by the Seller or Anserve) on or prior to the Effective
Date to the extent not otherwise specifically set forth in this Section 1.3.
The Seller shall remain fully liable for, and shall promptly pay when due, all
such Liabilities.
1.4 [Intentionally Omitted]
1.5 PURCHASE PRICE.
(a) As the purchase price for all of the Transferred Assets (the
"Purchase Price"), (i) Buyer shall pay to the Seller an aggregate sum, subject
to adjustment as provided in Section 1.7 below, of [******] in cash (the "Cash
Purchase Price"), and (ii) Buyer shall cause Parent to issue [******] shares of
Common Stock of Parent (the "Parent Common Stock"), the further transfer of
which shall be restricted under the Securities Act of 1933 and as provided under
Section 2.2(f) hereof.
(b) The Cash Purchase Price shall be payable in the form of a bank
cashier's check, certified check or federal funds wire transfer to an account of
the Seller designated by it in writing prior to Closing and shall be due and
payable as follows: (i) [*******] at Closing and (ii) [******] on the earlier of
(x) one hundred fifty (150) days after Closing or (y) the final determination of
the Financial Statements as described in Section 1.7 below.
(c) The Parent Common Stock will be issued in the name of the Seller,
or its designees, and in amounts, as directed by the Seller in writing within
three (3) business days prior to Closing.
1.6 CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Seller's
counsel, in New Orleans, at 10:00 A.M., November 2, 1998, or at such other place
and/or on such other date and time as shall be agreed upon by Buyer and the
Seller (the "Effective Date"), which Closing shall be effective as of 12:01 a.m.
on the date of Closing.
1.7 EBITDA ADJUSTMENT TO PURCHASE PRICE.
(a) Within one hundred fifty (150) days after Closing, Buyer shall
cause KPMG Peat Marwick LLP to deliver to the Seller an audited balance sheet
and related statements of income, retained earnings and cash flows for the
Seller for its fiscal years ended December 31, 1997 (the "1997 Financial
Statements"), and for the 12-month periods ended October 31, 1998 (the "12-Month
Financial Statements"), all of which financial statements shall be prepared on a
pro forma basis, as though the Business conduct throughout the periods involved,
were conducted by the Seller and by Anserve as separate entities and in
accordance with generally accepted accounting principles ("GAAP") and the rules
and regulations of the Securities Exchange Commission applicable to financial
reporting of public companies.
(b) The Seller shall have forty-five (45) days from delivery of the
1997 Financial Statements and the 12-Month Financial Statements (collectively,
the "Financial Statements") to raise any objection thereto by delivery of
written notice to Buyer setting forth such
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objections in reasonable detail. In the event that the Seller shall fail to so
deliver such written objections with respect to any of the Financial Statements
within such 45-day period, then any such Financial Statements in respect of
which no such objection is so delivered shall be deemed final and binding on the
parties. In the event that any such objections are so delivered, Buyer and the
Seller shall attempt, in good faith, to resolve such objections and, if unable
to do so within fifteen (15) days of delivery of such objections, shall, within
five (5) business days thereafter designate a nationally recognized firm of
independent public accountants, mutually satisfactory to Buyer and the Seller
(the "Independent Accountants"). In the event that Buyer and the Seller are
unable to agree on the Independent Accountants within such 5-business day
period, the Independent Accountants shall be designated jointly by the
independent accountants of Buyer and the Seller within three (3) business days
thereafter. The Independent Accountants shall resolve all remaining objections
to the Financial Statements made by the Seller in accordance herewith within
thirty (30) days from its date of designation. The determination of the
Independent Accountants shall be final and binding on the parties. The fees and
expenses of the Independent Accountant shall be borne by the Stockholders,
jointly and severally, unless the determination of the Independent Accountants
shall result in an increase in the amount of the Purchase Price of more than ten
(10%) percent over the amount of the Purchase Price as determined from the
Financial Statements originally delivered to the Seller.
(c) The Cash Purchase Price shall be adjusted in each of the following
instances, based on the Financial Statements, as finally determined in
accordance herewith, by the amount (the "Adjustment Amount") determined as
follows:
(i) in the event that the sum of [*********] (the "Adjustment
Target") shall exceed 12-Month EBITDA (as defined below) by more than [******]
(e.g. [**]), the Cash Purchase Price shall be reduced by an amount equal to
[****] for each $1.00 of the entire excess over 12 - month EBITDA (rounded down
to the nearest whole dollar); and
(ii) in the event that 12-Month EBITDA shall exceed the Adjustment
Target by more than [*****] (e.g. [**]), the Cash Purchase Price shall be
increased by an amount equal to [****] for each $1.00 of the entire excess over
the Adjustment Target (rounded down to the nearest whole dollar); and
Within thirty (30) business days of the final determinations of the Financial
Statements, the Seller shall pay to Buyer (whether or not the sum of such
Adjustment Amounts shall exceed the Cash Purchase Price) any Adjustment Amount
calculated pursuant to Section 1.7(c)(i) above, in the aggregate, by wire
transfer of immediately available funds to an account designated in writing by
Buyer and Buyer shall pay to the Seller the Adjustment Amount calculated
pursuant to 1.7(c)(ii) above.
(d) For purposes hereof, "12-Month EBITDA" shall mean the earnings of
the Seller (and Anserve) for the 12-month period ended October 31, 1998, as set
forth in the 12-Month Financial Statements before deduction for interest, taxes,
depreciation and amortization, in each case determined in accordance with GAAP,
as adjusted for extraordinary non-recurring income and expenditures as set forth
on Schedule 1.7(d) hereto, with respect to non-recurring income, to the extent
actually received and with respect to non-recurring expenditures, to the extent
actually incurred, and to the extent of the amounts thereof which Buyer
determines will not be incurred by it in the operation of the Business in the
ordinary course from and after the
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Effective Date.
1.8 EARN-OUT ADJUSTMENT.
(a) In addition to the Purchase Price payable pursuant to Section 1.5
above, Buyer shall pay additional amounts, and shall cause Parent to issue
additional shares of Parent Common Stock, upon the occurrence of the following
events and in the following amounts:
(i) in the event that Combined EBITDA for any of the calendar
years 1999 and/or 2000 shall be an amount equal to or greater than (A)
[***************] of the Target EBITDA for such calendar year and (B)
[**************] of the gross revenues of the Combined Business for such
calendar year, Buyer shall cause Parent to issue [******] shares of Parent
Common Stock for each such calendar year such event occurs; and
(ii) in the event that Combined EBITDA for any of the calendar
years 1999, 2000 and/or 2001 shall exceed [****************] of gross revenues
for the Combined Business for such calendar year and shall be (A) an amount
equal to or greater than [***************************************] , but not
greater than [*****************], of the Target EBITDA for such calendar year,
Buyer shall pay, in respect of any such calendar year in which such event
occurs, an amount equal to [**] of the amount of the excess over such Target
EBITDA, (B) an amount greater than [************************] , but not greater
than [************] , of the Target EBITDA for such calendar year, Buyer shall
pay, in respect of any such calendar year in which such event occurs, an amount
equal to [***********] of the amount of the excess over the Target EBITDA or (C)
an amount greater than [***************************] of the Target EBITDA for
such calendar year, Buyer shall pay, in respect of any such calendar year in
which such event occurs, an amount equal to [***********] of the excess over the
Target EBITDA.
(b) For purposes hereof, (i) "Combined EBITDA" shall mean the combined
earnings of the Combined Business before deduction for interest, taxes,
depreciation and amortization, as set forth in Parent's annual, audited
consolidating financial statements prepared in accordance with GAAP, but,
notwithstanding the forgoing, specifically excluding from any such earnings any
amounts received or receivable in respect of any accounts receivable, claims or
other rights constituting any portion of the Transferred Assets or arising out
of or in connection with this Agreement, (ii) "Combined Business" shall mean the
Business (including, without limitation, the business, formerly conducted by
Anserve) and the business of Anserphone Systems, Inc., an Alabama corporation,
acquired by Buyer on the Effective Date, as conducted by Buyer, and (iii)
"Target EBITDA" shall mean (A) for calendar year 1999, [*******************] of
the sum of (1) 12-month EBITDA plus (2) the 12-month EBITDA ("ASI 12-month
EBITDA") as defined in the Asset Purchase Agreement of even date herewith among
Buyer, Anserphone Systems, Inc., an Alabama corporation ("ASI") and the
shareholders of ASI named therein ("1999 Trigger"), (B) for calendar year 2000,
[************************] of the 1999 Trigger ("2000 Trigger") and (C) for
calendar year 2001, [**************************] of the 2000 Trigger.
(c) Amounts payable, and shares issuable, pursuant to Section 1.8(a)
above shall be determined annually, shall not be cumulative and shall be payable
promptly upon receipt by Buyer of the annual financial statements referred to in
Section 1.8(b)(i) above. With
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each such payment, or issuance, Buyer shall deliver a copy of such financial
statements, together with a reasonably detailed calculation of the amounts paid
and/or shares issued. Amounts shall be paid, and shares shall be issued, as
directed in writing by Seller. The number of shares of Parent Common Stock
issuable pursuant to Section 1.8(a)(i) above shall be subject to adjustment for
stock splits, reverse stock splits, recapitalizations and consolidations as
though outstanding on the record or effective date, as the case may be, of any
such event .
(d) Notwithstanding anything to the contrary contained in this Section
1.8, no amounts shall be payable, and no shares shall be issuable, in respect of
any calendar year in which both of the Stockholders shall have either
voluntarily terminated their employment with Buyer or Buyer shall have
terminated such employment for "cause", as defined in each such Stockholder's
employment agreement with Buyer.
1.9 [***********] .
(a) [*******************]
(b) [************************]
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1.10 PURCHASE PRICE ALLOCATION.
(a) The parties acknowledge and agree that the Purchase Price shall be
allocated among the Transferred Assets in accordance with Schedule 1060 of the
Internal Revenue Code of 1986, as amended (the "Code") and as set forth in a
written notice to the Seller promptly after the final determination of the
Financial Statements (the "Allocation Notice"). The parties shall not take any
position for purposes of Federal, state or local income taxes respecting the
allocation of the Purchase Price which is inconsistent with the allocation set
forth in such Allocation Notice.
(b) If, as a result of any allocation in the Allocation Notice, Seller
is required, pursuant to Section 1245 of the Code, to recapture depreciation
taken by Seller with respect to depreciable assets included in the Transferred
Assets, Buyer shall indemnify, and hold Seller harmless, on an after-tax basis,
for the difference between the tax incurred by Seller with respect to the amount
of such depreciation recapture on such assets at the ordinary income rate and
the amount of such tax Seller would have incurred had such depreciation
recapture amount been taxed at the long term capital gains rate, together with
any interest or penalties thereon incurred by Seller as a result of (i) Buyer's
failure to promptly pay to Seller amounts due pursuant to this Section 1.10 or
(ii) any tax audit related to the proper characterization of such allocation.
(c) Seller may claim any amounts pursuant to this Section 1.10 at any
time within fifteen days from delivery of the Allocation Notice by delivery of
written notice ("Adjustment Notice") to Buyer setting forth a reasonably
detailed calculation of the amount claimed, together with a copy of Seller's tax
returns on which such recapture income is reported. Buyer shall have fifteen
days from delivery of the Adjustment Notice to raise any objection thereto by
delivery of written notice setting forth such objections in reasonable detail.
In the event that Buyer shall fail to deliver such written objections with such
period, the calculation set forth in the Adjustment Notice shall be deemed final
and binding on the parties (unless the Internal Revenue Service, pursuant to a
tax audit, shall reallocate any allocation in the Allocation Notice) and Buyer
shall thereupon promptly pay to Seller the amount set forth in the Adjustment
Notice as directed therein. In the event that any such objections are delivered,
Buyer and the Seller shall attempt, in good faith, to resolve such objections
and if unable to do so within fifteen days from the delivery thereof, shall
promptly appoint a mutually acceptable independent certified public accountant
(who shall be the Independent Accountant, if one has been designated pursuant to
Section 1.7 above) whose determination with respect to such objection will be
final and binding on the parties. The cost of any such accountant will be shared
equally by Buyer and the Seller.
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE STOCKHOLDERS.
The Seller and the Stockholders hereby, jointly and severally, represent and
warrant to, and covenant and agree with, Buyer as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Seller is a
corporation duly organized, validly existing and in good standing and authorized
to exercise its corporate powers, rights and privileges under the laws of the
State of Louisiana with full corporate power and authority to own, lease and
operate its properties and to carry on its business as presently conducted by
it. Schedule 2.1(a) hereto sets forth all states and other jurisdictions in
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which the Seller is duly qualified and in good standing to do business as a
foreign corporation. There are no other states or jurisdictions in which the
character and location of the properties owned or leased by it, or the conduct
of its business makes such qualification necessary, except where failure to so
qualify would not have a material adverse effect on the financial condition,
business or operations of the Seller. Copies of the Seller's Articles of
Incorporation and all amendments thereto, and of the Seller's By-Laws, as
amended to date, are attached to Schedule 2.1(a) and are complete and correct.
To the best knowledge of the Seller and the Stockholders, the Seller's minute
books contain complete and accurate records of all meetings and other corporate
actions, including, without limitation, actions by unanimous written consent of
the Stockholders and board of directors of the Seller (including all committees
of its board of directors).
(b) AUTHORITY. The execution and delivery by the Seller and the
Stockholders of this Agreement and all of the agreements, schedules, exhibits,
documents and instruments specifically provided for hereunder to be executed
and/or delivered by any or all of them (all of the foregoing, including this
Agreement, being hereinafter sometimes collectively referred to as the "Executed
Agreements"), the performance by the Seller and any or all of the Stockholders
(to the extent that they are parties thereto) of their respective obligations
under the Executed Agreements, and the consummation of the transactions
contemplated by the Executed Agreements, have been duly and validly authorized
by all necessary corporate action on the part of the Seller and by the
Stockholders, and the Seller has all necessary corporate power and authority
with respect thereto. This Agreement has been, and upon Execution and delivery
of each of the other Executed Agreements such other Executed Agreements will be,
duly executed and delivered. Neither the execution and delivery by the Seller
and any or all of the Stockholders (to the extent that they are parties thereto)
of the Executed Agreements, nor the consummation of the transactions
contemplated hereby or thereby, nor the performance by the Seller and any or all
of the Stockholders (to the extent that they are parties thereto) of their
respective obligations under the Executed Agreements, shall (nor with the giving
of notice or the lapse of time or both would) (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or By-Laws of the
Seller, (ii) give rise to a default, or any right of termination, cancellation
or acceleration, or otherwise result in a loss of any material contractual
benefits to the Seller, under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which the Seller or any Stockholder is a party or by which it or
any of their properties or assets may be bound, (iii) violate, in any material
respect, any order, writ, injunction, decree, law, statute, rule or regulation
applicable to the Seller or any of the Stockholders or any of their respective
properties or assets, (iv) result in the creation or imposition of any lien,
claim, restriction, charge or encumbrance upon any of the properties or assets
of the Seller, or (v) interfere with or otherwise materially and adversely
affect the ability of the Seller to carry on its business as now conducted.
(c) INTERESTS IN OTHER ENTITIES. Except as set forth in Schedule 2.1(c)
hereto, the Seller does not (i) own, directly or indirectly, of record or
beneficially, any shares of voting stock or other equity securities of any other
corporation or entity, (ii) have any ownership interest, direct or indirect, of
record or beneficially, in any entity, or (iii) have any obligation, direct or
indirect, present or contingent, to purchase or subscribe for any interest in,
advance or loan monies to, or in any way make investments in, any person or
entity, or to share any profits or capital investments in other persons or
entities, or both.
(d) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS. Except as
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set forth in Schedule 2.1(d) hereto, no approval, consent, compliance,
exemption, authorization or other action by, or notice to or filing with, any
governmental authority or any other entity, and no lapse of a waiting period, is
necessary or required to be obtained by the Seller or any Stockholder in
connection with the execution, delivery or performance by any of them, of this
Agreement, any of the Executed Agreements or the transactions contemplated
hereby.
(e) PROJECTIONS. The Seller has delivered to Buyer a set of projections
(the "Projections"), a copy of which is attached hereto as Schedule 2.1(e),
which the Seller and the Stockholders have been advised are material to Buyer in
its decision to enter into this Agreement. The Projections are based on the best
estimates of the Seller and the Stockholders derived from reasonable
expectations at the time the Projections were made, and the Seller and the
Stockholders believe that Buyer is justified in relying thereon, there being,
however, no guarantee of the achievement of the Projections.
(f) FINANCIAL STATEMENTS. The Seller has delivered to Buyer true and
complete copies of its and Anserve's unaudited balance sheets as of December 31,
1996, and the related statements of income, retained earnings and cash flows for
the period then ending (the "1996 Financial Statements"), true and complete
copies of its and Anserve's unaudited balance sheets as of December 31, 1997,
and the related statements of income, retained earnings and cash flows for the
period then ending (the "1997 Financial Statements") and true and complete
copies of its and Anserve's unaudited balance sheets for the eight month period
ended August 31, 1998 (the "Interim Balance Sheet"), and the related statements
of income, retained earnings and cash flows for the period then ending
(collectively, with the Interim Balance Sheet, the "Interim Financial
Statements"). All of such financial statements, including any notes thereto,
were prepared on a consistent basis throughout the periods involved and such
fairly present the financial position of the Seller and Anserve at the dates
thereof and the results of its operations for the periods as indicated. The
books and records of the Seller and Anserve are in all material respects
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition and
results of operations of the Seller and Anserve as set forth in the financial
statements referred to herein.
(g) ABSENCE OF UNDISCLOSED LIABILITIES. To the best of the Seller's and
the Stockholders' knowledge, the Seller does not have any liabilities,
commitments or obligations, whether accrued, absolute, contingent or otherwise
which have not been (i) in the case of liabilities, commitments and obligations
of a type customarily reflected on the corporate balance sheet of the Seller or
Anserve, reflected on the Interim Balance Sheet in accordance with GAAP,
incurred, consistent with past practice, in the ordinary course of business
since the date of the Interim Balance Sheet and which are not material either
individually or in the aggregate or (ii) in the case of all other types of
liabilities and obligations, described in Schedule 2.1(g) hereto.
(h) ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in Schedule 2.1(h) hereto, since August 31, 1998, neither the Seller nor Anserve
have:
(i) suffered any material adverse change in their working capital,
condition (financial or otherwise), assets, liabilities, business, operations or
prospects;
(ii) incurred any material liabilities or obligations except items
incurred in the ordinary course of business and consistent with past practice,
none of which
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exceeds $10,000 (counting obligations or liabilities arising from one
transaction or a series or similar transactions, and all periodic installments
or payments under any lease or other agreement providing for periodic
installments or payments, as a single obligation or liability), or experienced
any increase in, or change in any assumption underlying or methods of
calculating, any bad debt, contingency or other reserves;
(iii) permitted or allowed, or agreed to permit or allow, any of
their property or assets (real, personal or mixed, tangible or intangible) to be
subjected to any mortgage, pledge, lien, security interest, encumbrance,
restriction or charge of any kind in excess of $10,000 in the aggregate, except
encumbrances disclosed on Schedule 2.1(h) hereto and which will be discharged on
or prior to the Effective Date ;
(iv) written off, or agreed to write off, as uncollectible any notes or
accounts receivable, except for write-offs in the ordinary course of business
and consistent with past practice, none of which are material;
(v) canceled any debts or waived or suffered to lapse any claims or
rights of substantial value, or sold, transferred, or otherwise disposed of any
of their properties or assets (real, personal or mixed, tangible or intangible)
or agreed to do any of the foregoing, except in the ordinary course of business
and consistent with past practice;
(vi) disposed of or suffered to lapse any rights to use any Toll Free
Telephone Number listed on Schedule 2.1(q) hereof, patent, trademark, trade name
or copyright, or disposed of or disclosed (except as necessary in the conduct of
their business) to any person any trade secret, formula, process or know-how or
agreed to do any of the foregoing;
(vii) granted, or agreed to grant, any general increase in the
compensation of officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any increase
in the compensation payable or to become payable to any officer or employee,
and, unless otherwise set forth in Schedule 2.1(h), no such increase is
customary on a periodic basis or is required by agreement or understanding;
(viii) made, or agreed to make, any single capital expenditure or
commitment in excess of $10,000 for additions to property, plant, equipment or
intangible assets or made, or agreed to make, aggregate capital expenditures and
commitments in excess of $10,000 (on a consolidated basis), for additions to
property, plant, equipment or intangible assets, other than the New Equipment
set forth on Schedule 1.3 hereto;
(ix) made any change in any method of accounting or accounting
practice; or
(x) sold, transferred or leased, or agreed to sell, transfer or lease,
any properties or assets (real, personal or mixed, tangible or intangible) to,
or entered into any agreement or arrangement with, any of its officers,
directors, debtholders, stockholders or employees or any "affiliate" or
"associate" of any of its officers, directors, noteholders, stockholders or
employees (as such terms are defined in Rule 405 promulgated under the
Securities Act and as used herein "Associate" and "Affiliate"), except for
Seller's purchase of the
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business and assets of Anserve described in such Schedule 2.1 (h).
(i) TAX MATTERS. Except as set forth in Schedule 2.1(i) hereto, each of
the Seller and Anserve have filed with the appropriate governmental agencies all
Federal, state, local or foreign tax returns and reports required to be filed by
them ("Returns"), have paid in full or made adequate provision for the payment
of, all taxes of every nature, including, but not limited to, income, sales,
franchise and withholding taxes ("Taxes"), together with interest, penalties,
assessments and deficiencies owed by them with respect to all periods covered by
such Returns, and all such Returns were correct and complete in all respects.
Neither the Seller nor Anserve are currently the beneficiary of any extension of
time within which to file any Returns. The Seller has previously provided Buyer
with true and complete copies of all such Returns filed within the past 3 years.
The provisions for income and other Taxes reflected on the Interim Balance Sheet
are adequate for all accrued and unpaid taxes of the Seller and Anserve as of
the date of the Interim Balance Sheet, whether (i) incurred in respect of or
measured by income of the Seller and/or Anserve for any periods prior to the
close of business on that date, or (ii) arising out of transactions entered
into, or any state of facts existing, on or prior to that date. The provisions
for Taxes reflected on the books of account of the Seller are adequate for all
Taxes of Seller which accrued since the date of the Interim Balance Sheet. There
are no filed or other known tax liens upon any property or assets of the Seller.
Neither the Seller nor Anserve have waived any statute of limitations in respect
of Taxes or executed or filed with any governmental authority any agreement
extending the period for the assessment or collection of any Taxes, and neither
is a party to any pending or, to the Seller's or any Stockholder's best
knowledge, threatened action or proceeding by any governmental authority for the
assessment or collection of Taxes. To the best knowledge of the Seller and the
Stockholders, no issue has arisen in any examination of the Seller or Anserve by
any governmental authority that if raised with respect to any other period not
so examined would, if upheld, result in a material deficiency for any other
period not so examined. There is no unresolved written claim by a governmental
authority in any jurisdiction where the Seller or Anserve do not file Returns
that the Seller or Anserve is or may be subject to taxation by such
jurisdiction. There has been no examination or audit with respect to Taxes with
respect to any year. Each of the Seller and Anserve have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.
(j) LITIGATION. Except as set forth in Schedule 2.1(j) hereto, there
are no suits or actions, or administrative, arbitration or other proceedings or
governmental investigations, pending, or to the best knowledge of the Seller and
the Stockholders, threatened against or affecting, or which may affect, the
Seller, Anserve, or any of their properties, assets or businesses or the
transactions contemplated hereby. To the best knowledge of the Seller and the
Stockholders, there are no outstanding judgments, orders, stipulations,
injunctions, decrees or awards against the Seller or Anserve which are not
satisfied.
(k) COMPLIANCE WITH APPLICABLE LAW. Each of the Seller and Anserve are,
and at all times since January 1, 1995, have been in compliance in all material
respects with all Federal, state, local and foreign laws, statutes, ordinances,
regulations, and administrative rulings (collectively "Laws"), promulgated by
any governmental or regulatory authority applicable to the Seller and Anserve or
to the conduct of the Business or operations of the Seller or Anserve or to the
use of their properties and assets, including, without limitation, all
environmental Laws and all Laws relating to the Toll Free Telephone Numbers. The
Seller has
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not received, and the Seller and the Stockholders do not know of the issuance or
threatened issuance of, any notices of violation or alleged violation of any
laws by the Seller or Anserve. Neither the Seller nor the Stockholders know of
any pending legislation in the State of Louisiana applicable to the Seller or to
the conduct of business or operations of the Seller which, if enacted, could
have a material adverse effect on the business, results of operations, financial
position or prospects of the Seller or the value of its properties or assets
(l) ENVIRONMENTAL MATTERS. Except as set forth on Schedule 2.1(l)
hereto:
(i) neither the Seller (which term, for the purposes of this
representation, shall include Anserve) nor its operations or the real property
leased by the Seller as set forth in Schedule 2.1(n) hereto (the "Facility") are
subject to any outstanding written order, consent decree or settlement agreement
with any person relating to (A) any Environmental Laws (as defined in below),
(B) any Environmental Claim (as defined below), or (C) any Hazardous Materials
Activity (as defined below) that, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on the business,
results of operations, financial position or prospects of the Seller or the
value of its properties or assets;
(ii) the Seller has not received any letter or request for information
under Section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9604) or any comparable state law;
(iii) there are, and to the Seller's and the Stockholders' knowledge,
have been no conditions, occurrences, or Hazardous Materials Activities which
could reasonably be expected to form the basis of an Environmental Claim against
the Seller or that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect on the business, results of
operations, financial position or prospects of the Sellers or the value of its
properties or assets;
(iv) neither the Seller nor, to the Seller's and the Stockholders'
knowledge, any predecessor of the Seller, has filed at any time any notice under
any Environmental Law indicating past or present treatment of Hazardous
Materials at the Facility, and none of the Seller's operations involves the
generation, transportation, storage, or disposal of hazardous waste, as defined
under 40 C.F.R. Parts 260-270 or any state equivalent; and
(v) compliance with all current or reasonably foreseeable future
requirements pursuant to or under Environmental Laws will not have, individually
or in the aggregate, a reasonable possibility of giving rise to a material
adverse effect on the business, results of operations, financial position or
prospects of the Seller or the value of its properties or assets.
(vi) Notwithstanding anything in this Section 2.1(l) to the contrary,
no event or condition has occurred or is occurring with respect to the Seller
relating to any Environmental Law, any Release (as defined in subsection (vii)
below) of Hazardous Materials, or any Hazardous Material Activity, including any
matter disclosed on Schedule 2.1(l), which, individually or in the aggregate,
has had or could reasonably be expected to have a material adverse effect on the
business, results of operations, financial position or prospects of the Seller
or
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the value of its properties or assets.
(vii) The following terms used in this Section 2.1(l) shall have the
following meanings:
(A) "Environmental Laws" shall mean any and all current statutes,
ordinances, orders, rules regulations, guidance documents, judgments,
governmental authorizations, or any other requirements of governmental
authorities relating to (1) environmental matters, including those relating to
any Hazardous Materials Activity (as defined below) or (2) the generation, use,
storage, transportation, Release or disposal of Hazardous Materials (as defined
below), in any manner applicable to the Seller or the Facility.
(B) "Environmental Claim" shall mean any investigation, notice, notice
of violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other person, arising (1) pursuant to or in connection with any actual or
alleged violation of any Environmental Laws, (2) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(3) in connection with any actual or alleged damage, injury, threat or harm to
natural resources or the environment.
(C) "Hazardous Materials" shall mean (1) any chemical, material or
substance at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "biohazardous waste",
"pollutant", "toxic pollutant", "contaminant", "restricted hazardous waste",
"infectious waste", "toxic substances", or any other term or expression intended
to define, list or classify substances by reason of properties harmful to
health, safety or the indoor or outdoor environment (including harmful
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP toxicity" or words of
similar import under any applicable Environmental Laws), (2) any oil, petroleum,
petroleum fraction or petroleum derived substance, (3) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (4) any flammable
substances or explosives, (5) any radioactive materials, (6) any
asbestos-containing materials, (7) urea formaldehyde foam insulation, (8)
electrical equipment which contains oil or dielectric fluid containing
polychlorinated biphenyls, (9) pesticides, and (10) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by
governmental authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any other persons in the vicinity of the
Facility or to the indoor or outdoor environment.
(D) "Hazardous Materials Activity" shall mean any past, current,
proposed or threatened activity, event or occurrence involving any Hazardous
Materials, including the use, manufacture, possession, storage, holding,
presence, existence, location, Release (as defined below), threatened Release,
discharge, placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposal, disposition or handling of
any Hazardous Materials, and any corrective action or response action with
respect to any of the foregoing.
(E) "Release" shall mean any release, spill, emission, leaking,
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pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), including the movement of any Hazardous Materials through the air,
soil, surface water or ground water.
(m) PERMITS. A list of all permits, approvals, licenses, certificates,
franchises, authorizations, consents and orders ("Permits") necessary and
material to the operation of the business of the Seller in the manner in which
it is presently conducted is set forth on Schedule 2.1(m) hereto. All such
Permits are valid and remain in full force and effect. The Seller has not
engaged in any activity which would cause revocation or suspension of any such
Permits and no action or proceeding looking to or contemplating the revocation
or suspension of any thereof is pending or threatened. To the best knowledge of
the Seller and the Stockholders, no additional Permits will be required to
permit the Seller to continue their business substantially in the manner it is
presently conducted after the consummation of the transactions contemplated
hereby.
(n) TITLE TO PROPERTIES. The Transferred Assets constitute all assets
which have been used in the Business (whether by the Seller or Anserve) since
December 31, 1997, and which are necessary for the conduct of the Business,
except as set forth in Schedule 2.1(n) hereto, and except for the Excluded
Assets. The Seller does not own any real property. Except as set forth in
Schedule 2.1(n) hereto, the Seller has good title to all of the properties and
assets (personal and mixed, tangible and intangible) reflected on the Interim
Balance Sheet or thereafter acquired or which it purports to own (except
properties or assets sold or otherwise disposed of in the ordinary course of
business consistent with past practice subsequent to the date of the Interim
Balance Sheet which in the aggregate did not have a book value in excess of
$10,000), free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever. Schedule 2.1(n) also contains an accurate
list and a brief description of all (i) leases (whether by or to the Seller) and
contracts and commitments for the purchase or sale or lease (whether as lessor
or lessee), of the Seller with respect to real property and (ii) leases (whether
by or to the Seller) and title retention or conditional sales agreements and
other security devices of the Seller with respect to items of personal property
having a book value in excess of $5,000. There are no existing defaults by the
Seller under any of the agreements set forth in Schedule 2.1(n) and no event of
default has occurred which (whether with or without notice, lapse of time or
both) would constitute a default by the Seller thereunder. All lessors
thereunder have consented (where such consent is necessary) to the consummation
of the transactions contemplated by this Agreement without requiring
modification of the rights and obligations of the Seller thereunder. All of the
tangible property (whether owned or leased) included in the Transferred Assets
are located at the real property leased by the Seller as set forth in Schedule
2.1(n) hereto.
(o) ACCOUNTS RECEIVABLE; FIXED ASSETS.
(i) The accounts receivable reflected on the Interim Balance Sheet
arose in the ordinary course of business for services performed or goods
delivered and none are subject to any offsets. The accounts receivable of the
Seller which were thereafter added arose in the ordinary course of business for
services performed or goods delivered and none are subject to any offsets. Set
forth on Schedule 2.1(o) is a true and complete list of the Seller's accounts
receivable as of September 30, 1998, and aging with respect thereto. At least
ninety five
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(95%) percent of the Closing Receivables (as defined in Section 9.2 hereof) will
be good and collectible in the ordinary course of business at the aggregate
amounts recorded on the Seller's books of account.
(ii) Schedule 2.1(o) hereto contains a complete and accurate list
of all machinery, equipment and other fixed assets of the Seller (the
"Equipment") having a book value in excess of $500. Each such item of Equipment
is in good operating condition, normal wear and tear excepted, and is fit for
its intended use. Each such item has been maintained, in all material respects,
in accordance with prudent business practice and no such maintenance has been
deferred.
(p) INTELLECTUAL PROPERTY. Schedule 2.1(p) hereto lists all licenses,
patents, copyrights, or trademarks owned or used by the Seller and Anserve in
the conduct of the Business and all applications therefor (the "Intellectual
Property"). No officer or director, Stockholder or employee of the Seller nor
any of their Affiliates or Associates has any ownership or other interest in any
of the Intellectual Property. To the best knowledge of the Sellers and the
Stockholders, none of the Intellectual Property is being infringed upon by, or
infringes, any licenses, patents, copyrights, trademarks or other intellectual
property rights of any other person or entity. Except as set forth in Schedule
2.1(p), the validity of the Intellectual Property and the title thereto of the
Seller has not been questioned in any litigation or governmental inquiry or
proceeding to which the Seller, is a party, and, to the best knowledge of the
Seller and the Stockholders, no such litigation, governmental inquiry or
proceeding is threatened. The conduct of the business of the Seller as presently
conducted does not conflict with valid licenses, trademarks, trademark rights,
trade names, trade name rights, service marks or patents of others in any way
likely to affect adversely, in any material respect, the Intellectual Property.
(q) TOLL FREE TELEPHONE NUMBERS. Schedule 2.1(q) hereto sets forth a
complete list of all Toll Free Telephone Numbers owned or used by the Seller and
Anserve in the conduct of the Business. No officer or director, Stockholder or
employee of the Seller nor any of its Affiliates or Associates has any ownership
or other interest in the Toll Free Telephone Numbers. Neither the Seller nor
Anserve have warehoused, brokered or hoarded (as those terms are defined in the
Second Report and Order and Further Notice of Proposed Rulemaking in CC Docket
No. 95-155, Released April 11, 1997, by the Federal Communications Commission
("FCC")) any of the Toll Free Telephone Numbers in violation of any applicable
FCC rules or regulations.
(r) INSURANCE. Schedule 2.1(r) hereto contains a complete and correct
list of all policies of insurance in which the Seller, Anserve or their officers
or directors (in such capacity) are an insured party, beneficiary or loss
payable payee. Complete and accurate copies of all such policies have been
previously provided to the Buyer. Such policies are in full force and effect
and, in the reasonable judgment of the Seller and the Stockholders, provide the
type and amount of coverage reasonably required for the Business.
(s) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 2.1(s) hereto
contains a complete and correct list showing (i) the name of each bank in which
the Seller has an account or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto, and (ii) the names of all
persons, if any, holding powers of attorney from the Seller.
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(t) EMPLOYEE ARRANGEMENTS; ERISA. The Seller has (i) no union,
collective bargaining, employment, management, severance or consulting
agreements to which the Seller is a party or are otherwise bound, and (ii) no
deferred compensation agreements, pension and retirement plans, profit-sharing
plans, stock purchase and stock option plans. Schedule 2.1(t) hereto contains a
true and complete list of all compensation, incentive, bonus, severance,
disability, hospitalization, medical insurance, life insurance and other
employee benefit plans, programs or arrangements maintained by the Seller or
under which the Seller has any material obligations (other than obligations to
make current wage or salary payments) in respect of, or which otherwise cover,
any of the current or former officers, employees or consultants of the Seller,
or its beneficiaries (each an "Employee Benefit Plan" and collectively the
"Employee Benefit Plans"). No Employee Benefit Plan is subject to Title IV of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code"). All
contributions to and payments from the Employee Benefit Plans which may have
been required to be made in accordance with the Employee Benefit Plans have been
made or are properly accrued and reflected on the Balance Sheets or the books
and records of the Seller. Schedule 2.1(t) hereto also lists the names,
compensation and all accrued and unused vacation and sick time of all persons
employed by the Seller. The Seller has no Employee Benefit Plans which are
qualified for Federal income tax exemption under Sections 401 and 501 of the
Code.
(u) CERTAIN BUSINESS MATTERS. Except as set forth in Schedule 2.1(u)
hereto (i) the Seller is not a party to or bound by any distributorship,
dealership, sales agency, franchise or similar agreement which relates to the
sale, distribution or servicing of the Toll Free Telephone Numbers or services
related thereto, (ii) the Seller does not have any sole-source supplier of
significant goods or services (other than utilities) with respect to which
practical alternative sources are not available on comparable terms and
conditions, (iii) there are not pending and, to the Seller's and the
Stockholders' best knowledge there are not threatened, any labor negotiations
involving or affecting the Seller and, to the Seller's and the Stockholders'
best knowledge, no organizing activities involving union representation exist in
respect of any of their employees, (iv) the Seller neither gives nor is bound by
any express warranties relating to its services and, to the best knowledge of
the Seller and the Stockholders, there has been no assertion of any breach of
warranties which could have a material adverse effect on the Business or
condition (financial or otherwise) of the Seller and, to the best knowledge of
the Seller and the Stockholders, there are no problems or potential problems
with respect to any product sold or services provided by the Seller which could
have a material adverse effect on the Business, (v) the Seller is not a party to
or bound by any agreement which limits its freedom to compete in any line of
business or with any person or entity, (vi) the Seller is not a party to or
bound by any agreement which based on current economic circumstances will result
in a material loss when performed, and (vii) the Seller is not a party to or
bound by any agreement or involved in any transaction in which any officer,
director, debtholder or Stockholder, or any Affiliate or Associate of any such
person has, or had when made, a direct or indirect material interest.
(v) CONTRACTS. Schedule 2.1(v) hereto contains a complete and correct
list and brief description of any and all material contracts, commitments,
obligations and undertakings, written or oral, involving amounts in excess of
$10,000, to which the Seller is a party or otherwise bound. True and complete
copies of all contracts, commitments, obligations and undertakings set forth in
Schedule 2.1(v) hereto have been furnished to Buyer, and except as expressly
stated in Schedule 2.1(v), each of them is in full force and effect, and to the
Seller's and
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the Stockholders' best knowledge, (a) no person or entity which is a party
thereto or otherwise bound thereby is, to the best knowledge of the Seller and
the Stockholders, in default thereunder, and (b) no event, occurrence, condition
or act exists which, with the giving of notice or the lapse of time or both,
would give rise to a default or right of cancellation thereunder, the Seller is
not in default thereunder and no event, occurrence, condition or act exists by
or on behalf of the Seller which, with the giving of notice or the lapse of time
or both would give rise to a default by the Seller thereunder, there have been
no threatened cancellations thereof and there are no outstanding disputes
thereunder. To the best of the Seller's and the Stockholders' knowledge there is
no reason why any of the contracts listed on Schedule 2.1(v), could not be
continued between Buyer and the Seller's contractual partners on the same terms
and conditions as currently apply. Neither the Seller nor any Stockholder has
any reason to believe that any of the Seller's contractual partners will
terminate its relationship with the Seller as a result of the acquisition of the
Seller's assets by Buyer.
(w) BROKERS. No agent, broker, person or firm acting on behalf of the
Seller or the Stockholders or under the authority of any of the foregoing, is or
shall be entitled to a brokerage commission, finder's fee, or other like payment
in connection with any of the transactions contemplated hereby, from the Seller
or any of the Stockholders.
(x) DISCLOSURE. No representation or warranty made by the Seller or the
Stockholders herein or in any of the Executed Agreements omits or will omit to
state a material fact necessary in order to make the statements therein not
misleading.
(y) [Intentionally omitted].
(z) DISCLOSURE SCHEDULES. All schedules to this Agreement are integral
parts to this Agreement. Nothing in a schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, unless the
schedule identifies the reason for the exception. The Seller and the
Stockholders are responsible for preparing and arranging the schedules
corresponding to the lettered and numbered paragraphs contained herein.
Disclosure made in a specific schedule shall not be deemed to have been
disclosed with respect to any other schedule unless a cross-reference appears.
(aa) PRINCIPAL PLACE OF BUSINESS; RESIDENCE. The Seller's principal
place of business is located at ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
▇▇▇▇▇▇▇ ▇. Read, Jr. resides at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇. ▇▇▇▇▇▇▇ Read resides at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each of the
Stockholders severally represents and warrants to, and covenants and agrees with
Buyer, with respect to such Stockholder as follows:
(a) CAPACITY; VALIDITY. Such Stockholder has the legal capacity to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly executed by such
Stockholder.
(b) RIGHTS TO TOLL FREE TELEPHONE NUMBERS. Such Stockholder does not
own or possess any rights in or to the Toll Free Telephone Numbers listed on
Schedule 2.1(q)
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hereto.
(c) INVESTMENT INTENT. Such Stockholder acknowledges that none of the
shares of Parent Common Stock are registered under the Securities Act or any
state securities laws. The shares of Parent Common Stock are being acquired by
such Stockholder for investment purposes only and not with a view to the
distribution or resale thereof. Such Stockholder has no present intention to
sell or otherwise dispose of the Parent Common Stock, except in compliance with
the provisions of the Securities Act.
(d) INFORMATION. Such Stockholder (i) has such knowledge and experience
in financial and business affairs that he/she is capable of evaluating the
merits and risks involved in purchasing the Parent Common Stock, (ii) is able to
bear the economic risks involved in purchasing the Parent Common Stock, and
(iii) has had the opportunity to ask questions of, and receive answers from,
Parent and persons acting on Parent's behalf concerning the terms and conditions
of the Parent Common Stock and to obtain any additional information in
connection therewith.
(e) ACCREDITATION. Such Stockholder is an "accredited investor" within
the meaning of Regulation D of the Securities Act of 1933.
(f) RESTRICTIONS ON TRANSFER.
(i) Such Stockholder agrees that he will not transfer or otherwise
dispose of (each, a "Transfer") any of the shares of Parent Common Stock (or any
interest therein) except upon the terms and conditions specified herein and such
Stockholder will cause any subsequent holder of such Stockholder's shares of
Parent Common Stock to agree to take and hold the shares of Parent Common Stock
subject to the terms and conditions of this Agreement, if such shares of Parent
Common Stock are required to include a legend pursuant to Section 2.2(f)(ii)
hereof.
(ii) Each certificate representing the shares of Parent Common
Stock issued to the Stockholders or to any subsequent stockholder shall include
a legend in the following form; PROVIDED, HOWEVER, that such legend shall not be
required (and shall be removed) if a Transfer is being made in connection with a
sale of shares of Parent Common Stock registered under the Securities Act, or in
connection with a sale in compliance with Rule 144 under the Securities Act, as
such Rule may be amended from time to time (each a "Public Sale"):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAW, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION THEREOF OR A VALID EXEMPTION
THEREFROM.
(iii) Notwithstanding anything to the contrary in this Section
2.2(f), such Stockholder shall not Transfer any of the shares of Parent Common
Stock except to the extent permitted, and in accordance with, the Shareholders
Agreement referred to in Section 4.1(i) hereof.
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2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to, and covenants and agrees with, the Seller as follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business as presently conducted by it and is
qualified in each other jurisdiction in which qualification is required for it
to own, lease and operate its properties and carry on its business as presently
conducted by it, except to the extent that failure to so qualify would not have
a material adverse effect on the financial condition, business or operations of
Buyer.
(b) AUTHORITY. The execution and delivery by Buyer of this
Agreement and of each of the other Executed Agreements to which it shall be a
party, the performance by Buyer of its obligations under this Agreement or such
Executed Agreements and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Buyer, and Buyer has all necessary corporate power with
respect thereto. This Agreement and the Executed Agreements are, or when
executed and delivered by Buyer shall be, the valid and binding obligations of
Buyer, enforceable in accordance with their respective terms, except to the
extent that enforceability may be limited by the operation of bankruptcy,
insolvency or similar laws. Neither the execution and delivery by Buyer of the
Executed Agreements, nor the consummation of the transactions contemplated
thereby, nor the performance by Buyer of its obligations under the Executed
Agreements, shall (nor with the giving of notice or the lapse of time or both
would) (i) conflict with or result in a breach of any provision of the Articles
of Incorporation or By-Laws of Buyer, (ii) violate any order, writ, injunction,
decree, law, statute, rule or regulation or (iii) interfere with or otherwise
materially and adversely affect the ability of Buyer to carry on its business as
now conducted.
(c) BROKERS. No agent, broker, person or firm acting on behalf of
Buyer or under its authority is or shall be entitled to a brokerage commission,
finder's fee, or other like payment in connection with any of the transactions
contemplated hereby.
2.4 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent represents and
warrants to Seller and each of the Stockholders as follows:
(a) CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 15,000,000 shares of Common Stock, par value $.001 per share, of
which 100,000 shares are designated Class B Common Stock ("Class B Stock") and
(ii) 7,000,000 shares of Series A Preferred Stock, par value $.001 per share. No
more than 10,000,000 shares of Common Stock are issued and outstanding or are
reserved for issuance against outstanding options and warrants, of which 90,500
shares are Class B Stock, and 6,520,000 shares of Series A Preferred Stock are
issued and outstanding. The shares of the Parent Common Stock being transferred
to the Stockholders in accordance herewith shall be duly and validly issued and
fully paid and non-assessable.
(b) ORGANIZATION, STANDING AND POWER. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own, lease and operate its
properties and to carry on its business
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as presently conducted by it and is qualified in each other jurisdiction in
which qualification is required for it to own, lease and operate its properties
and carry on its business as presently conducted by it, except to the extent
that failure to so qualify would not have a material adverse effect on the
financial condition, business or operations of Parent.
(c) AUTHORITY. The execution and delivery by Parent of this
Agreement and of each of the other Executed Agreements to which it shall be a
party, the performance by Parent of its obligations under this Agreement or such
Executed Agreements and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Parent, and Parent has all necessary corporate power with
respect thereto. This Agreement and the Executed Agreements to which Parent
shall be a party are, or when executed and delivered by Parent shall be, the
valid and binding obligations of Parent, enforceable in accordance with their
respective terms, except to the extent that enforceability may be limited by the
operation of bankruptcy, insolvency or similar laws. Neither the execution and
delivery by Parent of such Executed Agreements, nor the consummation of the
transactions contemplated thereby, nor the performance by Parent of its
obligations under such Executed Agreements, shall (nor with the giving of notice
or the lapse of time or both would) (i) conflict with or result in a breach of
any provision of the Certificate of Incorporation or By-Laws of Parent, (ii)
violate any order, writ, injunction, decree, law, statute, rule or regulation or
(iii) interfere with or otherwise materially and adversely affect the ability of
Parent to carry on its business as now conducted.
3. PRE-CLOSING COVENANTS. The Stockholders and the Seller jointly and
severally covenant and agree to perform or take any and all such actions to
effectuate the following from the date hereof until the Effective Date:
3.1 INVESTIGATION BY BUYER. Buyer may, prior to the Effective Date,
through its representatives (including its counsel, accountants and consultants)
make such investigations of the properties, offices and operations of the Seller
and such audit of the financial condition of the Seller as it deems necessary or
advisable in connection with the transactions contemplated hereby, including,
without limitation, any investigation enabling it to familiarize itself with
such properties, offices, operations and financial condition; such investigation
shall not, however, affect the Seller's or the Stockholders' representations,
warranties and agreements hereunder. The Seller and the Stockholders shall
permit Buyer and its authorized representatives to have, after the date hereof,
full access to the premises and to all books and records and Returns of the
Seller and Buyer shall have the right to make copies thereof and excerpts
therefrom. The Seller and the Stockholders shall furnish Buyer with such
financial and operating data and other information with respect to the Seller as
Buyer may from time to time reasonably request.
3.2 CARRY ON IN ORDINARY COURSE. Except with Buyer's prior written
consent, the Seller shall, and each Stockholder shall cause the Seller to, carry
on its business diligently and substantially in the same manner as heretofore
conducted, and shall not (a) enter into or agree to enter into any extraordinary
transaction, contract, lease or commitment, (i) declare any dividends, nor make
any distributions or payments to the Stockholders other than employment
compensation to the extent that any such action could cause any condition set
forth in Section 4.1 hereof not to
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be satisfied on or prior to Closing, (ii) redeem any shares of any Seller's
capital stock or issue any capital stock or enter into any agreement which
grants a right to acquire any Seller's capital stock to the extent that any such
action could cause any condition set forth in Section 4.1 hereof not to be
satisfied on or prior to Closing, (iii) increase the compensation of any
employee of the Seller, other than ordinary year-end increases or enter into any
severance agreement or employment agreement with any employee of the Seller;
(iv) loan or advance any amounts to any officer, director, Stockholder or
employee of the Seller or enter into any agreement with any of the foregoing or
any person related to any of the foregoing, to the extent that any such action
could cause any condition set forth in Section 4.1 hereof not to be satisfied on
or prior to Closing, (v) acquire or dispose of any assets, other than
acquisitions or dispositions in the ordinary course of business not material in
amount or to the Business, and (vi) encumber or commit to encumber any of its
assets to the extent that any such action could cause any condition set forth in
Section 4.1 hereof not to be satisfied on or prior to Closing, (vii) take any
action, or suffer any action to be taken, which could cause any of the
representations or warranties of any Stockholders or the Seller contained herein
not to be true and correct on and as of the Effective Date, (viii) repay
(including by way of offset) any indebtedness for borrowed money except for
regularly scheduled payments thereof in accordance therewith to the extent that
any such action could cause any condition set forth in Section 4.1 hereof not to
be satisfied on or prior to Closing, or (ix) enter into any agreement to take
any of the foregoing actions.
3.3 OTHER TRANSACTIONS. From the date hereof until the Effective Date,
the Seller and the Stockholders shall not, and shall cause the Seller's
directors, officers, stockholders, employees, agents and Affiliates or
Associates not to, directly or indirectly, solicit or initiate the submission of
proposals from, or solicit, encourage, entertain or enter into any arrangement,
agreement or understanding with, or engage in any negotiations with, or furnish
any information to, any person, other than Buyer or a representative thereof,
with respect to the acquisition of all or any part of the business or assets of
the Seller or any of its securities. Should the Seller or any of its Affiliates
or Associates, during such period, receive any offer or inquiry relating to such
acquisition, or obtain information that such an offer is likely to be made, they
will provide Buyer with immediate written notice thereof, which notice will
include the identity of the prospective offeror and the price and terms of any
offer.
3.4 CONSENTS. The Stockholders shall cause the Seller to, and the
Seller shall, use its best efforts to obtain in writing, prior to the Effective
Date, all consents, approvals, waivers, authorizations and orders necessary or
reasonably required in order to permit it to effectuate this Agreement and to
consummate the transactions contemplated hereby (collectively, "Consents"). All
such Consents will be in writing and copies thereof will be delivered to Buyer
promptly after the Seller's receipt thereof but no later than immediately prior
to Closing.
3.5 SUPPLEMENTAL DISCLOSURE. The Stockholders and the Seller agree
that, with respect to their representations and warranties made in this
Agreement, they will have a continuing obligation, ending on the Effective Date,
to promptly supplement or amend the schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement and on the Effective Date, would have been required to be set forth or
described in the schedules hereto.
3.6 PUBLIC ANNOUNCEMENTS. The Stockholders and Buyer agree that they
will consult with each other before issuing any press releases or otherwise
making any public statements with respect to this Agreement or the transactions
contemplated hereby and any press release or any public statement shall be
subject to mutual agreement of the parties, except as may be required by the
disclosure obligations of Buyer under applicable securities laws.
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4. CONDITIONS TO CLOSING.
4.1 CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligation of Buyer
to close under this Agreement is subject to the satisfaction of the following
conditions any of which may be waived by Buyer in writing at or prior to
Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the Effective Date, the
Stockholders and the Seller shall have complied with and duly performed all
agreements and conditions on their part to be complied with and performed
pursuant to or in connection with this Agreement on or before the Effective
Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Stockholders and the Seller contained in this Agreement, or otherwise
made in connection with the transactions contemplated hereby, shall be true and
correct in all material respects on and as of the Effective Date with the same
force and effect as though such representations and warranties had been made on
and as of the Effective Date.
(c) LOSS, DAMAGE OR DESTRUCTION. Between the date hereof and the
Effective Date there shall not have been any loss, damage or destruction to or
of any of the assets, property or business of the Seller in excess of $10,000 in
the aggregate, whether or not covered by insurance, nor shall the assets,
properties, business or prospects of the Seller have been adversely affected in
any way as a result of any fire, accident, or other casualty, war, civil strife,
riot or act of God or the public enemy or otherwise.
(d) NO LEGAL PROCEEDINGS. No court or governmental action or proceeding
shall have been instituted or threatened to restrain or prohibit the
transactions contemplated hereby, and on the Effective Date there will be no
court or governmental actions or proceedings pending or threatened against or
affecting the Seller which involve a demand for any judgment or liability,
whether or not covered by insurance, and which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of the Seller.
(e) CERTIFICATE. Buyer shall have received a certificate dated the
Effective Date and executed by the Stockholders and an authorized officer of the
Seller to the effect that the conditions expressed in Sections 4.1(a), 4.1(b),
4.1(c) and 4.1(d) have been fulfilled.
(f) CONSENTS. Buyer shall have received all Consents necessary to
effectuate this Agreement and to consummate the transactions contemplated
hereby.
(g) EMPLOYMENT AGREEMENTS. Buyer shall have entered into Employment
Agreements with ▇▇▇▇▇▇▇ ▇. Read, Jr. and ▇. ▇▇▇▇▇▇▇ Read, in form and substance
satisfactory to Buyer.
(h) SHAREHOLDERS AGREEMENT. The Stockholders shall have entered into a
Shareholders Agreement, in form and substance satisfactory to Buyer.
(i) NAME CHANGE. Buyer shall have received a duly authorized and
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executed document which amends the certificate of incorporation of the Seller to
change the Seller's name to a name other than Anserphone or Anserve, or any
derivative thereof or any similar name, and is otherwise in form for filing with
the Secretary of State of the State of Louisiana.
(j) CERTIFICATES OF STATUS. Buyer shall have received certificates from
the Secretary of State of the State of Louisiana and of each jurisdiction set
forth in Schedule 2.1(a) hereto, providing that the Seller has filed its most
recent annual report, has not filed articles of dissolution and is in good
standing in each such jurisdiction.
(k) OPINION OF COUNSEL. The Stockholders shall have furnished Buyer
with a favorable opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C., counsel for the Seller
and the Stockholders, dated as of the Effective Date, and in form and substance
satisfactory to Buyer.
(l) BILLS OF SALE. Buyer shall have received such bills of sale, deeds
of transfer, assignments and other documents in form and substance satisfactory
to Buyer conveying the Transferred Assets to Buyer.
(m) APPROVAL OF BUYER'S LENDER. Buyer shall have received the approval
of its lender to effectuate this Agreement and to consummate the transactions
contemplated hereby.
4.2 CONDITIONS OF THE STOCKHOLDERS' AND THE SELLER'S OBLIGATIONS TO
CLOSE. The obligations of the Stockholders and the Seller to close under this
Agreement are subject to the following conditions any of which may be waived by
the Seller in writing at or prior to Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the Effective Date, Buyer
shall have complied with and duly performed all agreements and conditions on its
part to be complied with and performed pursuant to or in connection with this
Agreement on or before the Effective Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in this Agreement, shall be true and correct in all material
respects on and as of the Effective Date with the same force and effect as
though such representations and warranties had been made on and as of the
Effective Date.
(c) CLOSING CERTIFICATE. The Stockholders shall have received a
certificate dated the Effective Date and executed by an authorized officer of
Buyer to the effect that the conditions contained in Section 4.2(a) and (b) have
been fulfilled.
5. FURTHER ASSURANCES. From time to time after the Closing, and without
further consideration, the Seller shall execute and deliver such other
instruments of conveyance, assignment, transfer and delivery and take such other
actions as Buyer may reasonably request in order more effectively to Transfer to
Buyer, to place Buyer in possession or control of, all of the rights,
properties, assets and businesses intended to be Transferred hereunder, to
assist in the collection of any and all such rights, properties and assets, and
to enable Buyer to exercise and to enjoy all of the rights and benefits of the
Seller with respect thereto.
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6. TRANSFER TAXES. The Seller shall pay all income and gains taxes, if
any, incurred in connection with the transactions contemplated by this
Agreement, subject to section 1.10 hereof. Except as hereinabove provided, the
party hereto which is responsible under applicable law shall bear and pay in
their entirety all other taxes and registration and transfer fees, if any,
payable by reason of the Transfer of the Transferred Assets pursuant to this
Agreement. Each party hereto will cooperate to the extent practicable in
minimizing all taxes (other than income taxes) and fees levied by reason of the
Transfer of the Transferred Assets.
7. INDEMNIFICATION.
7.1 SURVIVAL OF REPRESENTATIONS. The representations and warranties of
the Stockholders in this Agreement or in any document delivered pursuant hereto
shall survive the Effective Date for a period of three (3) years and shall then
terminate; PROVIDED, HOWEVER, that (i) any such representation and warranty
shall survive the time it would otherwise terminate only with respect to claims
of which notice has been given as provided in this Agreement prior to such
termination and (ii) such time limitation shall not apply to the representations
and warranties set forth in Sections 2.1(i), 2.1(l) and 2.1(n) hereof, which
shall survive until the expiration of the applicable statute of limitations.
7.2 INDEMNITORS; INDEMNIFIED PERSONS. For purposes of this Section 7,
each party which, pursuant to this Section 7, shall agree to indemnify any other
person or entity shall be referred to, as applicable, as the "Indemnitor", and
each such person and entity who is entitled to be indemnified by any Indemnitor
shall be referred to as the "Indemnified Person" with respect to such
Indemnitor.
7.3 INDEMNITY OF THE SELLER AND THE STOCKHOLDERS. The Seller and the
Stockholders hereby jointly and severally agree to indemnify, hold harmless, pay
and reimburse, Buyer and its directors, officers, agents and employees from and
against any and all claims, liabilities, losses, damages and expenses incurred
by such Indemnified Persons (including reasonable attorneys' fees and
disbursements) which shall be caused by or related to or shall arise out of (a)
any material breach or alleged breach of any representation or warranty of the
Seller and the Stockholders contained in this Agreement, (b) any breach of any
covenant or agreement of the Seller or the Stockholders contained in the
Agreement, (c) any failure by the Seller to satisfy the Liabilities and (d) use
by Seller of the name Anserphone pursuant to Section 9.4 hereof, and shall
reimburse such Indemnified Persons for all costs and expenses (including
reasonable attorneys' fees and disbursements) as they shall be incurred, in
connection with paying, investigating, preparing for or defending any action,
claim, investigation, inquiry or other proceeding, whether or not in connection
with pending or threatened litigation, which shall be caused by or related to or
shall arise out of such breach or alleged breach, whether or not any such
Indemnified Person shall be named as a party thereto and whether or not any
liability shall result therefrom.
7.4 INDEMNITY OF BUYER. Buyer hereby agrees to indemnify, hold
harmless, pay and reimburse the Stockholders and the Seller and the Seller's
directors, officers, agents and employees from and against any and all claims,
liabilities, losses, damages and expenses incurred by them (including reasonable
attorneys' fees and disbursements) which shall be caused by or related to or
shall arise out of (a) any material breach or alleged breach of any
representation or warranty of Buyer contained in this Agreement and (b) any
breach of any covenant or agreement of Buyer contained in the Agreement and
shall reimburse such Indemnified Persons for all costs
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and expenses (including reasonable attorneys' fees and disbursements) as shall
be incurred, in connection with paying, investigating, preparing for or
defending any action, claim, investigation, inquiry or other proceeding, whether
or not in connection with pending or threatened litigation, which shall be
caused by or related to or shall arise out of such breach or alleged breach,
whether or not such Indemnified Persons shall be named as a party thereto and
whether or not any liability shall result therefrom.
7.5 PROCEDURES FOR INDEMNIFICATION. Promptly after becoming aware of a
claim for indemnification hereunder (including a claim or suit by a third
party), such Indemnified Person shall notify the Indemnitor of the commencement
of such claim, but failure to so notify the Indemnitor shall not relieve the
Indemnitor from any liability which the Indemnitor may have hereunder or
otherwise, unless the Indemnitor shall be materially prejudiced by such failure
or unless such failure is intentional. If the Indemnitor does not object in
writing to any indemnification claim (other than a third party claim) within
five days of receiving notice thereof, the Indemnified Person shall be entitled
to promptly recover from the Indemnitor (including by way of offset) the amount
of such claim, and no later objection by the Indemnitor shall be permitted. In
the event that the Indemnitor contests such claim, the parties shall attempt to
resolve the dispute in good faith, but if they have not done so within ten days
after the Indemnitor received notice thereof, then any of such parties may
pursue such other remedies as may be available to it, hereunder, at law or
otherwise.
7.6 DEFENSE OF THIRD PARTY CLAIMS. The Indemnitor shall assume the
defense of any third party action or proceeding, including the employment of
counsel reasonably satisfactory to the Indemnified Person, and shall pay the
fees and disbursements of such counsel. In the event, however, that such
Indemnified Person shall reasonably determine in its judgment that having common
counsel would present such counsel with a conflict of interest or alternative
defenses shall be available to an Indemnified Person or if the Indemnitor shall
fail to assume the defense of the action or proceeding in a timely manner, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such action or proceeding and the Indemnitor shall pay the reasonable fees
and disbursements of such counsel; PROVIDED, HOWEVER, that the Indemnitor shall
not be required to pay the fees and disbursements of more than one separate
counsel for all Indemnified Persons in any jurisdiction in any single action or
proceeding. The Indemnified Person shall also have the right to participate in
any action or proceeding defended by the Indemnitor and to retain its own
counsel at such Indemnified Person's own expense, so long as such participation
does not interfere with the Indemnitor's control of such litigation. The
Indemnitor further agrees that it shall not, without the prior written consent
of the Indemnified Person settle or compromise or consent to the entry of any
judgment in any action or proceeding in respect of which indemnification may be
sought hereunder unless such settlement, compromise or consent shall include an
unconditional release of each Indemnified Person under Section 7.2 or Section
7.3, as the case may be, from all liability arising out of such claim, action,
suit or proceeding. In the event that, upon the failure of the Indemnitor to
assume to defense of any action or proceeding in a timely manner, the
Indemnified Person shall defend, such Identified Person shall be entitle to
settle, compromise or consent to the entry of any judgment, without the consent
of the Indemnitor and without affecting its rights against Indemnitor hereunder.
8. NON-COMPETITION; CONFIDENTIALITY.
8.1 NON-COMPETITION. Following the Effective Date and for a period of
five
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(5) years thereafter (the "Non-Competition Period"), the Seller and the
Stockholders shall not, directly or indirectly, (a) engage in any business or
activity that competes with Buyer's or any of its affiliate's outsourced client
telemarketing/teleservices business, anywhere in the contiguous United States;
(b) enter the employ of any person or entity engaged in any business or activity
that competes with any such business or render any consulting or other services
to any person or entity for use in or with the effect of competing with any such
business; or (c) have an interest in any business or activity that competes with
any such business, in any capacity, including, without limitation, as an
investor, partner, stockholder, officer, director, principal, agent, employee,
or creditor; PROVIDED, HOWEVER, that nothing herein shall prevent the purchase
or ownership by any Stockholder of less than 5% of the outstanding equity
securities of any class of securities of a company registered under Section 12
of the Securities and Exchange Act of 1934, as amended. Notwithstanding the
foregoing, in the event that a Stockholder's employment with Buyer is terminated
by Buyer without cause (as defined in any employment agreement entered into by
such Stockholder and Buyer); the Non-Competition Period shall terminate with
respect to such Stockholder on the later to occur of the second anniversary of
the effective date of such termination and the third anniversary of the
Effective Date.
8.2 NO COMPETING INTERESTS. Each Stockholder hereby represents and
warrants to Buyer that he has no ownership or other interest in any business or
activity that competes, directly or indirectly, with the Business.
8.3 NON-DISRUPTION. During the Non-Competition Period, the Seller and
the Stockholders shall not, directly or indirectly, interfere with, disrupt or
attempt to disrupt any present or prospective relationship, contractual or
otherwise, between the Seller or any of its Affiliates, on the one hand, and any
of their customers, suppliers or employees, on the other hand.
8.4 CONFIDENTIALITY. The Seller and the Stockholders shall not at any
time, directly or indirectly, use communicate, disclose or disseminate any
Confidential Information in any manner whatsoever (except to his personal
financial or legal advisors and as may be required under legal process by
subpoena or other court order; provided that, the Seller or any Stockholder will
take reasonable steps to give the Buyer sufficient prior written notice in order
to contest such requirement or order). "Confidential Information" means any and
all information (oral or written) relating to the Buyer or any person
controlling, controlled by, or under common control with the Buyer or any of
their respective activities, including, but not limited to, information relating
to trade secrets, proprietary information, software, software codes,
advertising, sales, marketing and other materials customers and supplier lists,
data processing reports, customer sales analyses, invoice, price lists or
information, and information pertaining to any governmental investigation,
except such information which is generally known in the industry or in the
public domain (such information not being deemed to be in the public domain
merely because it is embraced by more general information which is in the public
domain), other than as a result of a breach of the provisions hereof.
8.5 REMEDIES UPON BREACH. The Seller and the Stockholders acknowledge
and agree that (a) Buyer shall be irreparably injured in the event of a breach
by the Seller or a Stockholder of any of the obligations under this Section 8;
(b) monetary damages shall not be an adequate remedy for such breach; (c) Buyer
shall be entitled to injunctive relief, in addition to any other remedy which it
may have, in the event of any such breach; and (d) the existence of any claims
which the Seller or Stockholder may have against Buyer, whether under this
Agreement or
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otherwise, shall not be a defense to the enforcement by Buyer of any of its
rights under this Agreement.
9. POST-CLOSING COVENANTS.
9.1 REPURCHASE OBLIGATION. (a) The Seller shall have the option,
exercisable at any time on or after January 1, 2000 and prior to December 31,
2002, to require Buyer to repurchase all, or any part of the [******] shares of
PHI Common Stock issued to the Seller pursuant to Section 1.5(a) hereof (as the
same may have been readjusted for stock splits, reverse stock splits,
recapitalizations or other adjustments, the "Option Shares"), to the extent
that, at the time of such exercise, Buyer shall have legally available funds
therefor. The option may be exercised by delivery of an irrevocable notice of
exercise, accompanied by the certificate(s) representing such Option Shares duly
endorsed in blank, with all necessary stock transfer stamps annexed thereto and
otherwise in form for transfer. Such notice shall certify that such Option
Shares are owned, and are being transferred, free and clear of all liens claims
and encumbrances, and that no rights with respect thereto have been granted to
any other party. Notwithstanding the foregoing, in the event that Buyer shall
provide written notice to Seller that Parent intends to conduct a public
offering of its capital stock, Seller shall have thirty (30) days from receipt
of such notice to exercise the option (in which case the provisions of Section
9.1(c) below shall not apply) or such option shall expire.
(b) The purchase price for the Option Shares shall be [****]
[*************************************************************]
payable, in cash, by
wire transfer to an account or accounts designated in the notice of exercise,
within 120 days from receipt by Buyer of the notice of exercise and share
certificate(s) required pursuant to Section 9.1(a) above.
(c) Notwithstanding the forgoing, in the event that (i) the
repurchase of the Option Shares would result in the occurrence of an event of
default under any credit facility of Buyer or any of its affiliates or (ii)
Parent shall propose to conduct an underwritten public offering of its
securities in which the managing underwriter shall be of the belief that any
such exercise or repurchase is reasonably likely to have an adverse effect on
the success of such offering, the Buyer may rescind such exercise and forego
such repurchase until the earlier to occur of (A) such time as no such event of
default would result, (B) the completion of such public offering or (C) 180 days
from its receipt of the notice of exercise, on which event the option shall be
again exercisable. [***********************************]
9.2 COLLECTION OF ACCOUNTS RECEIVABLE. (a) From and after
Closing, Buyer shall collect, and promptly deposit, all accounts receivable of
the Seller as of the Effective Date ("Closing Receivables"), in the ordinary
course of business and shall not discount, except in the
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ordinary course of business consistent with the past practice of the Seller, any
such accounts receivable or permit any account debtor any right of set-off for
claims arising out of or in connection with the conduct of the Business after
Closing.
(b) At such time as Buyer shall have received, in cleared funds,
[******] in respect of the Closing Receivables and/or the Closing Receivables as
defined in the ASI Agreement ("Collection Threshold"), all amounts thereafter
collected thereon shall be shared by Buyer and the Seller (i) [***] to the
Seller ("Excess Receivables") and (ii) [***] to Buyer. Buyer shall make payments
to the Seller in respect of the Excess Receivables promptly after then end of
each month. Until such time as Buyer shall make payments of amounts due to the
Seller pursuant to this Section 9.2, Buyer shall hold the amounts thereof in
trust for the Seller, but shall not be obligated to segregate any such amounts.
All payments received from account debtors of Buyer shall be applied first
against the oldest outstanding undisputed obligations of such account debtor to
Buyer, notwithstanding any direction of such account debtor to the contrary. In
the event that Buyer shall receive written notice from any account debtor which
shall dispute the amount of any Closing Receivable, or shall be otherwise unable
to collect any Closing Receivable, the Seller shall cooperate with, and assist,
Buyer in the resolution of such dispute, if any, and the collection of such
receivable. Buyer shall not otherwise be obligated to commence any action
against, or alter its relationship with, any such account debtor. At the request
of Buyer, and upon Buyer's assignment to the Seller of any disputed Closing
Receivable or Closing Receivable which is more than 90 days past due, Seller
shall pay to Buyer the full amount thereof, to the extent, but only to the
extent, that the Collection Threshold has not then been met. At the request of
the Seller, Buyer shall assign to the Seller all Closing Receivables which are
more than 150 days past day upon Seller's payment to Buyer of the full amount
thereof, to the extent, but only to the extent, that the Collection Threshold
has not been met. To the extent that the Seller shall utilize the capability of
the Buyer (i.e., personnel, facilities, etc.) in the collection of such assigned
Closing Receivables, the Seller shall pay to the Buyer a factoring fee of
fifteen (15%) percent of all collections thereon.
(c) In furtherance and not in limitation of Buyer's rights hereunder,
Buyer is hereby expressly authorized, and is hereby irrevocably appointed as
attorney-in-fact, with full power of substitution, to act in Seller's name and
stead, to take any and all actions it may, in its discretion, deem necessary to
collect all Closing Receivables, to endorse the Seller's name on any and all
instruments and other payments thereon or with respect thereto and to deposit
all payments, in any form received, in accounts of Buyer, subject to Buyers
obligations pursuant to Section 9.2 (b) above. This power of attorney is coupled
with an interest.
(d) It is expressly acknowledged and agreed that any amount received by
a stockholder in respect of a Closing Receivable shall be deemed to have been
received by him as an employee of Buyer and on its behalf.
9.3 PAYMENTS OF INVOICES
(a) To the extent that the Seller or Buyer (the "Invoiced Party") shall
receive invoices, or shall otherwise be required to pay amounts, which
represent, in whole or in part, liabilities (such as utility and phone bills,
ordinary maintenance contracts, sales commissions, etc., relating to periods
either before or after the Closing) and which, pursuant to the terms hereof, are
to be satisfied by the other (the "Responsible Party"), the Invoiced Party may,
in its discretion, (a) pay such amounts and demand payment from the Responsible
Party, provided that no individual
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amount exceeds $1,000, (b) demand payment from the Responsible Party prior to
any such payment by the Invoiced Party or (c) demand that the Responsible Party
make such payment directly, provided that if only a portion is due from the
Responsible Party and a portion from the Invoiced Party, the Invoiced Party
shall make payment of its portion to the Responsible Party simultaneously with
such request.
(b) Upon any demand by an Invoiced Party pursuant to Section
9.3 above, whether for payment to the Invoiced Party or to a third party
obligee, shall promptly make such payment.
(c) Each party shall maintain copies of invoices and records
of payments in respect of all payments made by them pursuant to this Section 9.3
and, upon request, promptly provide copies thereof to the other.
(d) Each party shall have the right to set-off against amounts
due to the other, amounts due to it from the other which shall not be paid in
accordance herewith.
9.4 USE OF ANSERPHONE NAME. Notwithstanding the transfer to
Buyer at Closing of the name "Anserphone of New Orleans", Buyer hereby consents
to the use of such name solely for purposes of identifying the Seller as the
plaintiff in the ongoing prosecution of the action referred to in Section 1.2
(b) hereof.
9.5 NEW EQUIPMENT PAYMENTS. Buyer shall reimburse the Seller
for Seller's cost for the items of Equipment set forth in Schedule 2.1(g) (iii)
within thirty (30) days from the Effective Date.
9.6 EMPLOYEE VACATION ACCRUALS. Buyer agrees to credit all
former employees of the Seller, which become employees of the Buyer, with the
vacation and sick day accruals set forth in Schedule 9.6 hereof, in accordance
with the policies, with respect to vacation and sick days set forth in such
Schedule 2.1(t) hereto.
10. MISCELLANEOUS PROVISIONS.
10.1 CONFIDENTIALITY. The Seller, the Stockholders and Buyer
agree not to, directly or indirectly, without the prior written consent of the
other, use or disclose to any person, firm or corporation, any materials or
information obtained in Buyer's due diligence investigation of the Seller not a
part of the Purchased Assets, or any of the terms of this Agreement, except as
may be required by the disclosure obligations of Buyer under applicable
securities laws or as may be required to be disclosed to the attorneys and/or
accountants of the parties hereto in connection with the transactions
contemplated hereby.
10.2 NOTIFICATION. Each party hereto shall give the other
party or parties hereto prompt written notice of (a) the existence of any fact
or the occurrence of any event which constitutes, or with the giving of notice
or the passage of time or both would constitute, a breach of any representation
or warranty of the party giving such notice made herein or pursuant hereto and
(b) the taking of any action by the party giving such notice that would breach
or violate, or constitute a default under, any agreement or covenant of such
party made herein or pursuant hereto. The giving of any such notice shall not
affect, modify or limit in any way any
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representation, warranty, agreement or covenant of the parties made herein or
pursuant hereto.
10.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
10.4 NOTICES. All notices, requests, demands and other communications
which are required or may be given pursuant to the terms of this Agreement shall
be in writing and shall be deemed duly given when delivered by hand, or posted
in the United States mail by registered or certified mail with postage pre-paid,
return receipt requested, (a) if to Buyer, to Protocol Acquisition Sub 2, Inc.,
c/o Protocol Communications, Inc. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; copy to ▇▇▇▇▇▇▇, Calamari & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., facsimile number: (212)
213-1199, and (b) if to the Seller or the Stockholders, to ▇▇▇▇▇▇▇ ▇. Read and
▇. ▇▇▇▇▇▇▇ Read, ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; copy to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address(es) as shall
be specified by like notice to the other parties.
10.5 AMENDMENTS. This Agreement may be amended or modified at any time
prior to the Effective Date, but only by a written instrument executed by all of
the parties hereto.
10.6 ENTIRE AGREEMENT. This Agreement (together with the other
agreements, certificates, instruments and documents delivered pursuant hereto)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
10.7 APPLICABLE LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the
internal laws of the State of Delaware. The parties hereby consent to the
exclusive jurisdiction of Federal and Louisiana courts located in the St.
Tammany Parish and agree that service of process by certified mail, return
receipt requested, shall constitute personal service for all purposes hereof.
10.8 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Date by any of the following:
(a) By mutual written agreement of Buyer and the Seller;
(b) By either Buyer or the Seller, if the Closing has not occurred by
November 15, 1998, upon written notice by such terminating party, provided that
at the time such notice is given a material breach of this Agreement by such
terminating party shall not be the principal reason for the Closing's failure to
occur;
(c) Subject to the provisions of Section 10.9 hereof, by Buyer, by
written notice to the Seller, if there has been a material violation or breach
of any of the Stockholders' or the Seller's covenants or agreements made herein
or in connection herewith or if any representation or warranty of the
Stockholders or the Seller made herein or in connection herewith proves to be
materially inaccurate or misleading; or
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(d) Subject to the provisions of Section 10.9 hereof, by the
Seller, by written notice to Buyer, if there has been a material violation or
breach of any of Buyer's covenants or agreements made herein or in connection
herewith or if any representation or warranty of Buyer made herein or in
connection herewith proves to be materially inaccurate or misleading.
10.9 EFFECTS OF TERMINATION. If this Agreement is terminated as
provided in Section 10.8 hereof, then this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto
(or any of their respective stockholders, officers, directors or employees),
except based on the agreements contained in Sections 7.3 and 7.4 hereof;
PROVIDED, HOWEVER, that if Buyer terminates this Agreement pursuant to Section
10.8(c) hereof, or the Seller terminates this Agreement pursuant to Section
10.8(d) hereof, the non-terminating party shall remain liable for any breach
hereof.
10.10 HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
10.11 FEES AND DISBURSEMENTS. Buyer shall pay its own expenses, and the
fees and disbursements of the counsel, accountants or auditors retained by it in
connection with the preparation, execution and delivery of this Agreement and
the fees and expenses and disbursements of the counsel to the Seller and the
Stockholders shall be paid by the Stockholders.
10.12 ASSIGNMENT. This Agreement may not be assigned by the Seller or
any Stockholder without the prior written consent of Buyer.
10.13 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
10.14 SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
[NEXT PAGE IS SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this
Asset Purchase Agreement the day and year first above written.
ANSERPHONE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name:
Title:
PROTOCOL HOLDINGS, INC.
with respect only to Sections 1.5(a) and 2.4 hereof
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name:
Title: President
ANSERPHONE OF NEW ORLEANS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Read, Jr.
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Read, Jr.
Title: Vice-president
STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇ ▇. Read, Jr.
------------------------------
▇▇▇▇▇▇▇ ▇. Read, Jr.
/s/ ▇. ▇▇▇▇▇▇▇ Read
------------------------------
▇. ▇▇▇▇▇▇▇ Read
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