STOCK PURCHASE AGREEMENT
by and among
JUDGE IMAGING SYSTEMS, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇,
THE OTHER SECURITY HOLDERS OF
ON-SITE SOLUTIONS, INC.
and
ON-SITE SOLUTIONS, INC.
THIS STOCK PURCHASE AGREEMENT is dated as of May 1, 1998 by and among
ON-SITE SOLUTIONS, INC., a California corporation (the "Company"), ▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇"), all the other holders of securities issued by the Company as listed
on Schedule 1.1 (with ▇▇▇▇▇▇, the "Sellers"), jointly and severally, and JUDGE
IMAGING SYSTEMS, INC., a Delaware corporation ("Buyer").
BACKGROUND
The parties hereto desire to provide for the acquisition by Buyer from
Sellers of all of the Company's outstanding shares of capital stock, and
thereby, the Company's imaging and computer consulting businesses (the
"Business"). However, Buyer is not to acquire certain assets and liabilities.
The parties have agreed to accomplish the foregoing on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1. ACQUISITION OF STOCK.
1.1 Sale and Purchase of Shares.1 Sale and Purchase of Shares. Subject to
the terms and conditions of this Agreement, at the Closing (as herein defined),
each Seller shall sell, transfer and deliver to Buyer all the shares of the
common stock of the Company (having exercised all options for such shares), all
as set forth on Schedule 1.1 hereto, in the aggregate constituting all of the
outstanding shares of the Company's capital stock (collectively with respect to
all such shares owned by all Sellers, the "Shares"), and Buyer shall pay with
respect to the Shares the consideration set forth in Section 2.
1.2 Purchased Assets. Sellers represent that immediately after the Closing
Buyer shall own all of the outstanding capital stock of the Company and the
Company shall continue to own and have valid title in and to all of the tangible
and intangible properties and assets owned or held by the Company immediately
prior to the Closing and relating to or used or held for use in connection with
the Business, free and clear of all liens (except as set forth in the Disclosure
Statement pursuant to Section 5.3 hereof), including, without limitation, the
following assets and each of the assets listed or required to be listed on the
Disclosure Statement pursuant to Section 5.11 hereof, but excluding the Excluded
Assets (as herein defined) (the "Purchased Assets"):
(a) all cash;
(b) all accounts receivable;
(c) all supplies, machinery, furniture, equipment and other
personal property, including those set forth on
Schedule 1.2(c) hereto;
(d) all (i) fictitious business names, tradenames (including, but not
limited to the name "On-Site Solutions"), registered and unregistered
trademarks, service marks and related applications (the "Marks"), (ii) patents,
patent rights and patent applications (collectively, "Patents"), (iii)
copyrights in published and unpublished works ("Copyrights"), computer programs
and software, including the Company's website ("Software"), (iv) proprietary
formulas, trade secrets, confidential information, formulations and inventions
(whether or not patented) ("Trade Secrets"), and (v) licenses and permits issued
or granted by any person relating to any of the foregoing (collectively
"Intellectual Property") including those set forth on Schedule 1.2(d) hereto;
(e) all purchase orders, sales agreements, equipment leases,
distribution agreements, licensing agreements and other contracts, agreements
and commitments of Seller identified on Schedule 1.2(e) ("Contracts"), which
shall continue to be obligations of the Company;
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(f) all books and records relating to the Business and the Purchased
Assets (including such books and records as are contained in computerized
storage media), including all inventory, purchasing, accounting, sales, export,
import, manufacturing, marketing, banking and shipping records and all files,
contractor, consultant, customer/client and supplier lists, records, literature
and correspondence, and marketing materials;
(g) the leases related to the facility at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Facility") and to the facility at ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "Leases") and any deposit
related thereto;
(h) any other assets of the Business, including those set forth on
Schedule 1.2(h), which are of a nature not customarily reflected in the books
and records of a business, such as assets which have been written off for
accounting purposes but which are still used by or of value to Seller;
(i) all Authorizations (as defined in Section 5.5(b)) associated with
the Business and its operations;
(j) all intangible assets and goodwill associated with the Business
and its operations;
(k) any other assets which are located at the Facility, including
those set on Schedule 1.2(k);
(l) all employee records (excluding employment and non-competition
agreements);
(m) corporate records and seals, and tax returns and tax records; and
(n) The Company's Benefit Plans.
1.3 Excluded Assets.3 Excluded Assets. Notwithstanding anything to the
contrary in Section 1.1 or 1.2 of this Agreement, the following rights,
properties and assets shall not be included in the Purchased Assets (the
"Excluded Assets"), and the Company shall transfer the Excluded Assets out of
the Company immediately prior to Closing:
(a) except for the Leases and all deposits with respect thereto, all
ownership and other interests in real property, in each case together with all
buildings thereon;
(b) the note receivable from ▇▇▇▇▇▇ in the principal amount of $35,000,
which is to be cancelled prior to Closing (as hereinafter defined);
(c) tax refunds, insurance refunds and dividends, including those
related to ▇▇▇▇▇▇▇'▇ compensation, relating to the pre-Closing period, except to
the extent used by Buyer or the Company to set off against obligations of the
Sellers under Section 11.1, which Buyer and the Company are hereby authorized to
do;
(d) non-recourse notes receivable from employees executed in connection
with the exercise by such employees of their stock options to purchase stock of
the Company;
(e) assets located at the Facility which are owned by ▇▇▇▇▇▇ or other
employees in the nature of pictures, posters, photographs and original art; and
(f) client-owned assets located at the Facility as listed on Schedule
1.3(f). 1.4 Liabilities to be Retained by the Company.4 Liabilities to be
Retained by the Company.
(a) Subject to the terms and conditions of this Agreement, at the
Closing, the Company shall retain and thereafter in due course pay and fully
satisfy those liabilities, obligations and related expenses relating to the
pre-Closing period listed on Schedule 1.4; provided, however, that, to the
extent the aggregate amount of such retained liabilities exceeds $663,000, the
excess amount shall be deducted dollar for dollar from the EBIT of the Business
for 1998, calculated in accordance with and for the purposes of Section 2.1
below (the "Retained Liabilities").
(b) Except as otherwise specifically provided for in this Section 1.4,
whether or not disclosed elsewhere in or in connection with this Agreement,
Buyer shall not assume and the Company shall in accordance with the provisions
of this Agreement, be entitled to indemnification against any liabilities,
obligations or debts of the Company of any type or nature, including, without
limitation, the promissory notes issued to Judge Group by the Company in the
amount of $168,000, any unfunded pension liabilities, any medical, life or
disability insurance liabilities, any ▇▇▇▇▇▇▇ compensation claims, any local,
state, federal, payroll or other tax liabilities, liabilities relating to claims
for damages based upon the breach by the Company of any federal, state or local
environmental or occupational health and safety laws or regulations, liabilities
related to products liability, intellectual property infringement, tort claims
or other litigation, any undisclosed liabilities, liabilities incurred in
connection with the termination of any of the Contracts not transferred
hereunder, any liabilities related to or arising from the classification of
independent contractors, and tort claims asserted against the Company or claims
against the Company for breach of contract which are based on acts or omissions
of the Company occurring on or before the Closing.
SECTION 2. PURCHASE PRICE AND PAYMENT.
2.1 Purchase Price.1 Purchase Price.
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(a) The total consideration for the Shares shall be the assumption by
Buyer of the retained liabilities described in Section 1.4(a) plus monies earned
under Section 2.1(b), if any (the "Purchase Price").
(b) A portion of the Purchase Price shall be paid in the form of an
earnout (the "Earnout") with respect to the performance of the Business as it
was conducted by the Company and will be conducted by Buyer from April 1, 1998
to December 31, 1998 and from January 1, 1999 to December 31, 1999. The Earnout
shall be computed and paid as follows:
(i) Buyer shall pay Sellers an amount equal to 400% of
earnings before interest and taxes ("EBIT") of the Business for the period
commencing April 1, 1998 and ending on December 31, 1998, which EBIT amount
shall be accounted for under the accrual method of accounting in accordance with
Buyer's accounting policies and procedures and generally accepted accounting
procedures ("GAAP"); and
(ii) Buyer shall pay Sellers an amount equal to 200% of EBIT
of the Business for the period commencing January 1, 1999 and ending on December
31, 1999, which EBIT amount shall be accounted for under the accrual method of
accounting in accordance with Buyer's accounting policies and procedures and
GAAP.
(c) Payments required to be made under Section 2.1(b) above for each
earnout period, if any, shall be paid within one hundred and twenty (120) days
after the respective year end as follows:
(i) 1/2 of the total payment owed by Buyer to Sellers pursuant
to Section 2.1(b) shall be paid in cash;
(ii) 1/2 of the total payment owed by Buyer to Sellers
pursuant to Section 2.1(b) shall be paid in shares (the "Judge Shares") of the
unregistered common stock of The Judge Group, Inc. ("Judge Group") bearing the
appropriate restrictive legends as valued using the 30-calendar day average
closing price of the Judge Shares, as reported on the Nasdaq Stock Market, for
the period ending on last day of each earnout period specified in Section
2.1(b).
(d) The market price of the Judge Shares issued pursuant to Section
2.1(c)(ii) above, as reported on the Nasdaq Stock Market, are guaranteed to
appreciate by 33% prior to the first anniversary of the date of their issuance
to Sellers. If the market price of the Judge Shares has not so appreciated,
Buyer shall pay, or cause to be paid, to Sellers in cash within 15 days after
the last day of such one year period an amount equal to the difference between
the value of the Judge Shares on the date of issuance to Sellers plus 33% and
the 30 calendar day average closing price of the Judge Shares for the period
ending on the first anniversary of the stock issuance date.
(e) Notwithstanding the foregoing, payments required to be made under
Section 2.1(b) above, if any, shall only be deemed earned and owing to Sellers
in full so long as ▇▇▇▇▇▇, during the entire earnout period beginning on April
1, 1998 and ending on December 31, 1999: (i) has not voluntarily terminated his
employment with the Company or (ii) has not been terminated by the Company for
cause (as defined in the Employment Agreement defined below). If ▇▇▇▇▇▇
voluntarily terminates his employment or if he is terminated with cause, the
payments required to be made under Section 2.1(b) above, if any, shall be made
pro rata through the date of termination.
(f) If EBIT of the Business for the period commencing April 1, 1998 and
ending December 31, 1998 equals or exceeds $350,000, Judge Group shall forgive
the principal outstanding pursuant to the promissory notes issued by the Company
on March 11, March 12 and March 25, 1998, and any additional promissory notes
issued to the Company prior to the Closing (collectively, the "Notes"),
including all related accrued but unpaid interest. If EBIT of the Business for
the period ending December 31, 1998 is less than $350,000, then only a pro rata
portion of such principal and interest amount will be forgiven. Such portion
shall be calculated as follows:
x
---
350,000 = y
Where:
x equals EBIT of the Business for the period
beginning April 1, 1998 and ending December
31, 1998; and
y equals the percent of the Notes which
shall be forgiven.
The principal amount of the Notes, including related accrued
but unpaid interest, which has not been forgiven in accordance with this Section
2.1(f) shall then be subtracted dollar for dollar from earnings of the Business
when determining the 1998 EBIT amount for the purposes of Section 2.1(b) herein.
Any principal amount of the Notes which has been so subtracted from the earnings
of the Business in accordance with the preceding sentence shall be considered
forgiven and shall no longer be due and payable to Buyer or the Judge Group.
102
(g) Notwithstanding the foregoing, no portion of the principal amount
of the Notes will be forgiven if ▇▇▇▇▇▇'▇ employment with the Company is
terminated for any reason other than death, disability or termination by the
Company without cause.
(h) For purposes of calculating EBIT:
(i) The earn out shall include sales made since March 1, 1998
of FileNet product with profits/commission included, without regard to whether
or not FileNet applies any payments to past due Company indebtedness.
(ii) Buyer will maintain separate books and records for the
On-Site Business so that the earn out can be properly calculated; Buyer intends
that the On-Site Business will continue to be conducted primarily from the
Facility.
(iii) Sellers will receive credit for all revenues from
business opportunities for system integration which are identified by personnel
of the Business, even if such opportunities are worked on by other personnel of
Buyer, but in such case the expense of using Buyer personnel shall be a charge
to EBIT.
(iv) There shall be no deduction from EBIT for capital
provided to the Business by Buyer and the annual charge to the Business for all
accounting, insurance and other general corporate services and overhead shall
not exceed the amount incurred by the Company in its last fiscal year.
(v) The time of ▇▇▇▇▇▇ and other Business personnel shall be
billed at rates agreed to by ▇▇▇▇▇▇ and Buyer when working on projects of Buyer
that are not part of the Business.
(vi) All charges against EBIT shall be made without
duplication.
(i) Each Seller acknowledges that the Buyer and the Company will
operate the Business in their sole discretion, and there is no assurance that
the Business will be operated so as to maximize the Earnout. Neither Judge Group
nor the Buyer shall have any obligation to make any loan or contribute any
capital to the Company. Accordingly, each Seller hereby waives any claim that
the Earnout could have been greater had the Company or the Business been
operated in any particular manner, except to the extent that the Sellers can
show that Buyer operated the Company with the specific willful intent of
minimizing the Earnout without any other business purpose for its actions.
2.2 Dispute Resolution Procedures.2 Dispute Resolution Procedures. In the
event that the parties are unable to resolve any differences with respect to the
Earnout and/or EBIT amounts calculated pursuant Section 2.1, the Earnout and
EBIT amounts as calculated by Buyer shall be submitted to a firm of certified
public accountants (the "Dispute Auditors"), reasonably acceptable to both
parties, for resolution. If the issues in dispute are submitted to the Dispute
Auditors for resolution, (a) each party will furnish to the Dispute Auditors
such workpapers and other documents and information relating to the disputed
issues as the Dispute Auditors may request and are available to that party or
its subsidiaries (or its independent public accountants), and will be afforded
the opportunity to present to the Dispute Auditors any material relating to the
determination and to discuss the determination with the Dispute Auditors; (b)
the determination of the Earnout or EBIT amount, as applicable, by the Dispute
Auditors, together with a written explanation of how the issues resolved by the
Dispute Auditors impacted the original Earnout or EBIT amount calculated by
Buyer, delivered to both parties by the Dispute Auditors, will be binding and
conclusive on the parties; and (c) with respect to the resolution of disputes
arising pursuant to Section 2.1, Sellers and Buyer agree to share evenly the
fees and expenses of the Dispute Auditors.
SECTION 3. CLOSING.
3.1 Time and Place of Closing.1 Time and Place of Closing. The
closing of the purchase and sale of the Purchased Assets (the "Closing")
pursuant to this Agreement shall take place on May 1, 1998 at the offices of
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ commencing at 10:00 A.M., local time or at such other date,
time or place as may be agreed to by Buyer and Seller (the "Closing Date").
3.2 Deliveries at the Closing.2 Deliveries at the Closing. At the Closing,
in addition to the other actions contemplated elsewhere herein:
(a) Sellers shall deliver, or shall cause to be delivered, to Buyer the
following:
(i) certificates representing all of the Shares, duly endorsed
for transfer or with stock powers affixed thereto executed in blank in proper
form for transfer either (A) with signature guaranteed by a member bank of the
Federal Reserve System or a member of the New York Stock Exchange; or (B) with
signature guaranteed by a notary public and accompanied by a satisfactory legal
opinion as to execution and effectiveness of the transfer;
(ii) a release and terminations of all options for Shares in
the form attached as Exhibit I hereto;
103
(iii) such other instruments and documents as shall be
necessary or appropriate to retain in the Company good and marketable title to
the Purchased Assets;
(iv) assignments and consents as to all Contracts whenever
necessary;
(v) the opinion letter of Sellers' counsel in the form
attached as Exhibit II hereto ("Opinion of Seller's Counsel");
(vi) assignments and/or consents as to the Leases;
(vii) the Employment Agreement executed by ▇▇▇▇▇▇ in the form
attached as Exhibit III hereto (the "Employment Agreement");
(viii) the instruments and documents under which the Excluded
Assets were transferred out of the Company; and (ix) a waiver signed by the
spouse of each Seller.
(b) Buyer shall deliver, or shall cause to be delivered, to ▇▇▇▇▇▇ the
Employment Agreement, executed by the Company.
(c) ▇▇▇▇▇▇ shall deliver the Employment Agreement to Buyer.
SECTION 4. REPRESENTATIONS AND WARRANTIES REGARDING SELLERS.
Sellers, jointly and severally, but severally only as to Sections 4.1,
4.2(a) and 4.3(a), hereby represent and warrant to Buyer as of the date of this
Agreement and as of the Closing Date as follows:
4.1 Power and Authorization. Each Seller has full capacity, legal
right, power and authority to enter into and perform its obligations under this
Agreement and under the other agreements and documents (the "Seller Transaction
Documents") required to be delivered by such Seller prior to or at the Closing.
The execution, delivery and performance by each Seller of this Agreement and the
Seller Transaction Documents have been duly authorized by all necessary
corporate action. This Agreement has been duly and validly executed and
delivered by each Seller and constitutes the legal, valid and binding obligation
of each Seller enforceable against it in accordance with its terms. When
executed and delivered as contemplated herein, each of the Seller Transaction
Documents shall constitute the legal, valid and binding obligation of each
Seller which is a party thereto, enforceable against it in accordance with its
terms.
4.2 No Conflicts.
(a) Except as described in the Disclosure Statement previously
delivered to Buyer (the "Disclosure Statement"), the execution, delivery and
performance of this Agreement and the Seller Transaction Documents do not and
will not (with or without the passage of time or the giving of notice):
(i) violate or conflict with the certificate or articles of
incorporation or bylaws (or other organizational documents) of any Seller, or
any law (including, without limitation, principles of common law), statute,
regulation, permit, license, certificate, judgment, order, award or other
decision or requirement of any arbitrator, court, government or governmental
agency or instrumentality (domestic or foreign) (collectively, "Laws"), binding
upon any Seller;
(ii) violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any agreement
or other obligation to which any Seller is a party or by which it or any of its
assets are bound, or give to others any rights (including rights of termination,
foreclosure, cancellation or acceleration), in or with respect to any Seller or
any of such Seller's assets including, without limitation, any of the Shares; or
(iii) result in, require or permit the creation or imposition
of any restriction, mortgage, deed of trust, pledge, lien, security interest or
other charge, claim or encumbrance of any nature upon or with respect to the
Shares, or any other material assets of any Seller.
(b) The Disclosure Statement describes each consent or approval of, or
registration, notification, filing and/or declaration with, any court,
government or governmental agency or instrumentality, creditor, lessor or other
person required to be given or made by any Seller in connection with the
execution, delivery and performance of this Agreement and the other agreements
and instruments contemplated herein. Except as described in the Disclosure
Statement, all such consents, approvals, registrations, notifications, filings
and declarations have been obtained or made or will be obtained or made prior to
the Closing without payment of premium or penalty by, or loss of benefit to, the
Company or any Company Subsidiary.
(c) There are no judicial, administrative or other governmental
actions, proceedings or investigations pending or, to the knowledge of any
Seller, threatened, that question any of the transactions contemplated by, or
the validity of, this Agreement or any of the other agreements or instruments
contemplated hereby or which, if adversely determined, could have an adverse
effect upon the ability of any Seller to enter into or perform its obligations
under this
104
Agreement or any such other agreements or instruments. No Seller has received
any request from any governmental agency or instrumentality for information with
respect to the transactions contemplated hereby.
4.3 Ownership of the Shares.
(a) Each Seller owns the Shares ascribed to it on Schedule 1.1,
beneficially and of record, free and clear of any restriction, mortgage, deed of
trust, pledge, lien, security interest or other charge, claim or encumbrance
("Lien"). Except as described in the Disclosure Statement, there are no
shareholder or other agreements affecting the right of any Seller to convey the
Shares to Buyer or any other right of any Seller with respect to the Shares, all
of which agreements shall be terminated prior to Closing, and each Seller has
the absolute right, authority, power and capacity to sell, assign and transfer
the Shares owned by such Seller to Buyer free and clear of any Lien (except for
restrictions imposed generally by applicable securities laws). Upon delivery to
Buyer of the certificates for and terminations of options relating to the Shares
at the Closing, Buyer will acquire good, valid and marketable title to the
Shares, and will own all of the outstanding capital stock of the Company, free
and clear of any Lien (except for applicable securities laws restrictions).
(b) Capitalization. The Company's authorized, issued and outstanding
capital stock and its other securities are fully and accurately described in the
Disclosure Statement. All of the options having been exercised as described in
the Disclosure Statement, no person has any preemptive or other similar rights
with respect to any such equity interests or other securities and there are no
offers, options, warrants, rights, agreements or commitments of any kind
(contingent or otherwise) relating to the issuance, conversion, registration,
voting, sale or transfer of any equity interests or other securities of the
Company (including, without limitation, the Shares) or obligating the Company or
any other person to purchase or redeem any such equity interests or other
securities. The Shares constitute all of the issued and outstanding shares of
capital stock of Company, and have been duly authorized and are validly issued
and outstanding, fully paid and nonassessable, and have been issued in
compliance with applicable securities and other Laws.
(c) Except as described in the Disclosure Statement, the Business is
and has been conducted solely by and through the Company and no other person,
and the Company does not directly or indirectly own, control or have any
investment or other interest in any corporation, partnership, joint venture,
business trust or other entity and the Company has not the agreed, contingently
or otherwise, to share any profits, losses, costs or liabilities, or to
indemnify any person or entity or to guaranty the obligations of any person or
entity.
4.4 Brokers. No person acting on behalf of any Seller or any of their
affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement, except for ▇▇▇▇▇ ▇▇▇▇, who is due a
fee to be paid by Buyer.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE COMPANY.
Certain representations and warranties made by Sellers and the Company
are modified as and to the extent set forth in the Disclosure Statement or as
otherwise provided herein. Subject to the foregoing, the Company and Sellers
jointly and severally (but severally only as to Section 5.6) represent and
warrant to Buyer as of the date of this Agreement as follows:
5.1 Organization and Good Standing.1 Organization and Good Standing.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it. The Company is duly qualified to do business and is in good
standing in each jurisdiction in which failure to be so qualified would have an
adverse effect on the Business or the Purchased Assets. The Disclosure Statement
sets forth a complete and accurate list with respect to the Company of all its
affiliates, each jurisdiction where it or an affiliate is authorized to do
business, and the Company's capitalization (including the identity of each
stockholders and the number of shares held by each).
5.2 Power and Authorization.2 Power and Authorization. The Company has
full legal right, power and authority to enter into and perform its obligations
under this Agreement and the Seller Transaction Documents). The execution,
delivery and performance by the Company of this Agreement and the Seller
Transaction Documents have been duly authorized by all necessary action. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. When executed and delivered as
contemplated herein, each of the Seller Transaction Documents shall constitute
the legal, valid and binding obligation of the Company, enforceable against it
in accordance with its terms.
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5.3 No Conflicts.
(a) Except as described in the Disclosure Statement, the execution,
delivery and performance of this Agreement and the Seller Transaction Documents
do not and will not (with or without the passage of time or the giving of
notice):
(i) violate or conflict with any law, regulation, permit,
license, certificate, judgment, order, award or other decision or requirement of
any arbitrator, court, government or governmental agency or instrumentality
(domestic or foreign) (collectively, "Laws"), binding upon it that is likely to
have an adverse effect on the Business;
(ii) violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any Contract,
or give to others any rights (including rights of termination, foreclosure,
cancellation or acceleration) in or with respect to any of the Purchased Assets;
(iii) violate or conflict with any provision of the Company's
Articles of Incorporation or by-laws;
(iv) result in, require or permit the creation or imposition
of any restriction, mortgage, deed of trust, pledge, lien, security interest or
other charge, claim or encumbrance of any nature upon or with respect to the
Purchased Assets that is likely to, either individually or in the aggregate,
have a material adverse effect on the Purchased Assets;
(v) cause Buyer or the Company to become subject to, or become
liable for the payment of any tax, except for the Company's prorated portion of
accrued ad valorem taxes; or (vi) cause any of the Purchased Assets to be
reassessed or revalued by any taxing authority or governmental body.
(b) There are no judicial, administrative or other governmental
actions, proceedings or investigations pending against the Company or, to the
knowledge of the Company, threatened, that question any of the transactions
contemplated by, or the validity of, this Agreement or any of the other
agreements or instruments contemplated hereby or which, if adversely determined,
is likely to have an adverse effect upon the ability of the Company to enter
into or perform its obligations under this Agreement or any such other
agreements or instruments. The Company has not received any request from any
governmental agency or instrumentality for information with respect to the
transactions contemplated hereby.
5.4 Brokers.4 Brokers. No person, acting on behalf of the Company or
its affiliates or under the authority of any of the foregoing is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee,
directly or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
5.5 Compliance with Laws.5 Compliance with Laws.
(a) Except as described in the Disclosure Statement, the operation of
the Business and the Purchased Assets is, and at all times during the last three
years has been, in compliance in all material respects with all applicable Laws;
and the Company has not had any basis to expect, and has not received, with
respect to the Purchased Assets or the operation of the Business, during the
last three years, any notice, order or other communication from any governmental
agency or instrumentality of any alleged, actual, or potential violation of or
failure to comply with any Law.
(b) All federal, foreign, state, local and other governmental consents,
licenses, permits, franchises, grants and authorizations (collectively,
"Authorizations") required for the operation of the Business as currently
conducted and as conducted during the last three years are, except as otherwise
described in the Disclosure Statement, in full force and effect without any
default or violation thereunder by the Company or by any other party thereto and
the Company has not received any notice of any claim or charge that the Company
is or within the last three years had been in violation of or in default under
any such Authorization. Except as described in the Disclosure Statement: (i) no
proceeding is pending or, to the knowledge of the Company, threatened by any
person to revoke or deny the renewal of any Authorization; and (ii) the Company
has been notified that any such Authorization may not in the ordinary course be
renewed upon its expiration or that by virtue of the transactions contemplated
hereby any such Authorization may not be granted or renewed or transferred to
Buyer.
5.6 Securities Laws Matters.
(a) Each Seller acknowledges that the Judge Shares and the monies
earned pursuant to Sections 2(b) through (g) hereof, if any (the "Securities")
will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from such registration becomes
or is available.
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(b) Each Seller represents and warrants that the residence and
principal place of business of such Seller is located in the states reflected in
Schedule 1.1 and that Buyer has not communicated with such Seller with respect
to the offer or sale of the Securities at any time such Seller was located in
any other State.
(c) Each Seller represents and warrants that:
(i) such Seller is well versed in financial matters and has
such knowledge and experience in financial and business matters and that it is
fully capable of understanding the merits and risks of the investment being made
in the Securities and the risks involved in connection therewith;
(ii) such Seller is acting herein for such Seller's own
account and is acquiring the Securities for investment without a view to the
resale or other distribution thereof. Such Seller is financially able to hold
the Securities for long-term investment, believes that the nature and amount of
the Securities to be acquired hereunder is consistent with such Seller's overall
investment program and financial position, and recognizes that there are
substantial risks involved in an investment in the Securities; and
(iii) such Seller has received and reviewed the prospectus
related to the initial public offering of Judge Group common shares, its annual
report on Form 10-K for the year ended December 31, 1997 and each report on Form
8-K filed by Judge Group subsequent to its Form 10-K.
(d) Each Seller acknowledges and agrees that Buyer may, if it so
desires, permit transfers, or authorize its transfer agent to permit transfers,
of the Securities only when such Securities have been registered under the
Securities Act or when the request for transfer is accompanied by satisfactory
assurance (including, if requested, an opinion of counsel acceptable to Buyer)
that the sale or proposed transfer does not require registration under the
Securities Act, and each Seller agrees that a legend to such effect will be
placed on the Securities.
5.7 Litigation. Except as described in the Disclosure Statement, there are
no, and during the last three years there have not been any, claims, actions,
suits, proceedings (arbitration or otherwise) or investigations involving or
affecting the Business or the Purchased Assets before or by any court or
governmental agency or instrumentality, or before an arbitrator of any kind; and
no pending claim, action, suit, proceeding or investigation, if determined
adversely, would either individually or in the aggregate have a material adverse
effect on the Business, or would result in a liability in excess of $2,000 in
the case of any single action or $5,000 in the case of all such actions in the
aggregate. To the knowledge of the Sellers, except as described in the
Disclosure Statement, no such claim, action, suit, proceeding or investigation
is presently threatened or contemplated and there are no facts which could
reasonably serve as a basis for any such claim, action, suit, proceeding or
investigation. There are no unsatisfied judgments, penalties or awards against
or affecting the Business.
5.8 Financial Statements.
(a) The unaudited statements of income of the Business for the 12-month
periods ended December 31, 1996 and 1997, reviewed for 1996 by Corby & Corby,
independent certified public accountant, a correct and complete copy of which is
attached hereto as part of Schedule 5.8 of the Disclosure Statement, are true
and correct in all material respects and present fairly the financial position
of the Business of the Company and the results of its operations for the fiscal
periods then ended, and includes all adjustments which are necessary for a fair
presentation of the information shown. Except as described in the Disclosure
Statement, such unaudited statements of income are prepared and consistently
applied in accordance with past practice.
(b) The unaudited statements of income of the Business for the months
ended January and February, 1998, a correct and complete copy of which is
attached hereto as part of Schedule 5.8 of the Disclosure Statement, are true
and correct in all material respects and present fairly the financial position
of the Business of the Company and the results of its operations for the period
then ended, and includes all adjustments which are necessary for a fair
presentation of the information shown. Except as described in the Disclosure
Statement, such unaudited statements of income are consistently applied in
accordance with past practice.
(c) The unaudited balance sheet of the Business at January 31, 1998
(the "Balance Sheet"), a correct and complete copy of which is attached hereto
as part of Schedule 5.8 of the Disclosure Statement, is true and complete in all
material respects and presents fairly the assets and liability of the Business
of the Company as of such date, and includes all adjustments which are necessary
for a fair presentation of the information shown. Except as described in the
Disclosure Statement, such balance sheet is consistently applied in accordance
with past practice.
(d) The Balance Sheet reflects all liabilities of the Company, whether
absolute, accrued or contingent, as of the respective dates thereof of the type
required to be reflected or disclosed in a balance sheet (or the notes thereto)
prepared in accordance with GAAP. Except as identified in the Disclosure
Statement or Schedule 1.4, the Company does not have any liabilities or
obligations of any nature that are not reflected on the Balance Sheet other than
current liabilities (within the meaning of GAAP) incurred since the date thereof
in the ordinary course of business consistent in nature and amount with past
practice and which are neither material in
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amount nor inconsistent with any of the representations and warranties contained
herein. Except as described in the Disclosure Statement or Schedule 1.4, there
is no basis for the assertion against the Company of any liability (other than
current liabilities referred to above) not fully reflected or reserved against
in the Balance Sheet.
(e) Except as identified in the Disclosure Statement, the Balance Sheet
reflects reserves or other appropriate provisions at least equal to reasonably
anticipated liabilities, losses and expenses of the Company as of the respective
dates thereof whether or not required to be disclosed by GAAP, including without
limitation those with respect to income and other taxes (including alternative
minimum tax), warranty claims, bad debts, unsalable inventories, salaries,
vacation pay, and plans and programs (including medical and other benefits
programs) for the benefit of present and former employees.
5.9 Accounts Receivable. All accounts receivable reflected on the Balance
Sheet and included in the Purchased Assets have been acquired or have arisen
only in the ordinary course of business, consistent with past practice, and are
not subject to defenses, set-offs or counterclaims. Except as described in the
Disclosure Statement, all of such accounts receivable are generally due within
30 days after being accrued on the books of the Company and have been collected,
or are collectible within 90 days after billing, in the full aggregate recorded
amounts thereof, less, in the case of the accounts receivable reflected on the
Balance Sheet, the amount of the allowance for doubtful accounts shown on the
Balance Sheet. The allowance for such doubtful accounts on the Balance Sheet has
been determined in conformity with GAAP consistently applied with past practice.
Schedule 5.9 of the Disclosure Statement lists the Business's accounts
receivable as of the date specified thereon, in each case specifying the account
debtor, the face amount of the receivable and the age of the receivable.
5.10 Personal Property. Except as described in the Disclosure Statement:
(a) the Company has good and valid title to all of the Purchased Assets free and
clear of any restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance; and (b) all Purchased Assets
owned or leased by the Company are in the possession or under the control of the
Company, are suitable for the purposes for which they are currently being used
and are of a condition, nature and quantity sufficient for the conduct of the
Business as it is presently conducted.
5.11 List of Properties, Contracts, etc. The Disclosure Statement lists or
adequately describes the following:
(a) Each vehicle, item of machinery, equipment and other tangible asset
(other than real property) included in the Purchased Assets with a fair market
or book value in excess of $1,000 in respect of any item, and the location
thereof;
(b) Each Authorization employed in the Business;
(c) All Marks, Patents, Copyrights, Trade Secrets and Software, and all
licenses and permits issued or granted by any person relating to any of the
foregoing, owned, leased, used or held by, granted to or licensed by the Company
as either licensor or licensee, together with all other interests therein
granted by the Company to any other person and all agreements with respect to
any of the foregoing to which the Company is a party (including secrecy and
non-disclosure agreements with current or former employees, consultants or
contractors);
(d) Each contract, agreement or commitment which restricts or purports
to restrict any business activities or freedom of the Company or the Company's
officers, employees or consultants to engage in the Business or to compete with
any person;
(e) Each contract involving the performance of services or delivery of
goods or materials by or to the Company;
(f) Each contract, agreement or commitment relating to the Business to
which the Company is a party or is otherwise bound providing for payments
(contingent or otherwise) to or by any person or entity based on sales,
purchases or profits, other than direct payments for goods, and each other
contract, agreement or commitment relating to the Business to which the Company
is a party or by which it or any Purchased Assets are otherwise bound which is
material to its business, operation, financial condition or prospects;
(g) Each form of contract, agreement or commitment used by the Company
as a standard form in the ordinary course of the Business;
(h) A summary of each policy and binder of insurance, owned by, or
maintained in the preceding two years for the benefit of, or respecting which
any premiums are paid directly or indirectly by the Company relating to the
Business;
(i) Each insurance claim made or loss incurred in the preceding two
years pursuant to any workers' compensation, liability or other insurance policy
for a claim in excess of $5,000; and
(j) Each outstanding power-of-attorney or similar power relating to the
Business granted by the Company for any purpose whatsoever.
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The Company has furnished and will furnish or make available to Buyer
true and complete copies of each agreement, plan and other document required to
be disclosed on the Disclosure Statement.
5.12 Contracts. Except as described in the Disclosure Statement, each
Contract was made in the ordinary course of business, is in full force and
effect and is valid, binding and enforceable against the parties thereto in
accordance with its terms. Except as described in the Disclosure Statement, the
Company has performed all obligations required to be performed by it under each
such Contract, and no condition exists or event has occurred which with notice
or lapse of time would constitute a default or a basis for delay or
non-performance by the Company or, to the best knowledge of the Company, by any
other party thereto. The Company does not have any liabilities, whether fixed or
contingent, relating to or arising out of contracts with the United States
government or any agency thereof or any other customers, including, but not
limited to, claims arising out of pricing provisions therein. There is no
contractual or other requirement for any employee of the Business to obtain or
maintain a security clearance with respect to any governmental agency or
instrumentality. Except as described in the Disclosure Statement, each other
party to each such Contract has consented or been given sufficient notice (where
such consent or notice is necessary) that the same shall remain in full force
and effect following the Closing.
5.13 Intellectual Property.
(a) The Disclosure Statement sets forth a true and complete list or
description of all Intellectual Property;
(b) Except as otherwise described in the Disclosure Statement: (i) the
Company owns or has the exclusive perpetual right to use, without payment to any
other party, all Intellectual Property; (ii) no other person has any rights in
or to any of the Intellectual Property including, without limitation, any rights
to royalties or other payments with respect to, or rights to market or
distribute any of, the Intellectual Property); (iii) the rights of the Company
in and to any of the Intellectual Property will not be limited or otherwise
affected by reason of any of the transactions contemplated hereby; (iv) the
Intellectual Property is sufficient for the conduct of the Company's business as
such is presently conducted and proposed to be conducted; and (v) none of the
Intellectual Property infringes or is alleged to infringe any trademark,
copyright, patent or other proprietary rights of any person;
(c) All employees of the Company or other persons or entities involved
with the development, implementation, use or marketing of any Intellectual
Property have entered into written agreements assigning to the Company all
rights to any intellectual property related to the Company's business;
(d) The Company has not, since December 31, 1997, except in the
ordinary course of business consistent with past practices, transferred to any
person or entity any rights to any Intellectual Property.
5.14 Software.
(a) The Disclosure Statement contains a complete and accurate list of
all computer software that is owned by the Company (the "Owned Software"). The
Company has exclusive rights and title to the Owned Software, free and clear of
all claims, including claims or rights of joint owners and employees, agents,
consultants, customers, licensees or any other parties who may have been
involved in the development, creation, marketing, maintenance, enhancement or
licensing of such computer software. No person or entity is infringing on any
rights of the Company with respect to the Owned Software. None of the Owned
Software infringes any Intellectual Property or other rights of any person.
Except as set forth in the Disclosure Statement, the Owned Software is not so
functionally dependent on any Licensed Software (as defined below) that it
cannot operate independently of such Licensed Software in the manner in which it
is intended. No Owned Software has been published or disclosed by the Company to
any other parties except to customers and consultants of the Company pursuant to
contracts requiring such other parties to keep the Owned Software confidential.
No party has any rights to recreate the Owned Software. All employees of the
Company or other persons or entities involved with the development of the Owned
Software have entered into written agreements assigning to the Company all
rights thereto;
(b) The Disclosure Statement contains a complete and accurate list of
all software, other than generally available software (such as Excel, Microsoft
Word and the like) and generally available system development tools, for which
the Company is a licensee, lessee or otherwise has obtained the right to use
software (the "Licensed Software"). The Disclosure Statement also sets forth (i)
a list of all license fees, rents, royalties or other charges that the Company
is required or obligated to pay with respect to Licensed Software and (ii) a
complete list of all license agreements relating to Licensed Software. The
Company has the right and license to use, sublicense, modify and copy all
Licensed Software, free and clear of any limitations or encumbrances except as
may be set forth in any license agreements listed in Disclosure Statement. There
is no default by the Company of any provision of any such license agreement
pursuant to which it has rights to use the Licensed Software. The Company has
not published or disclosed any Licensed Software to any other party except, in
the case of Licensed Software that the Company leases or markets to others, in
accordance with and as permitted by any license, lease or similar agreement
relating to the Licensed Software and
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except pursuant to contracts with customers of the Company requiring such other
customers to keep the Licensed Software confidential.
(c) The Owned Software and Licensed Software constitute all software,
other than generally available software and generally available system
development tools, used by the Company (collectively referred to in this
Agreement as the "Company's Software"). The Company Software operates in
accordance with the warranties contained in the documentation supplied to
customers, except where the failure to so operate can be corrected in the
ordinary course of business. Provided that any necessary consents identified in
the Disclosure Statement are obtained from the licensors thereof, the
transactions contemplated herein will not cause a breach under any licenses or
similar agreements relating to the Company's Software or impair or limit Buyer's
rights in the Company's Software.
(d) Except as set forth in the Disclosure Statement, the Company has
not granted any marketing rights in the Company's Software to any third party.
Other than in the ordinary course of business, the Company has not granted any
licenses or other rights and the Company has no obligation to grant licenses or
other rights with respect to the Company's Software. The Disclosure Statement
lists and separately identifies all agreements pursuant to which the Company has
been granted rights to market software owned by third parties.
(e) No claims with respect to the Company's Software or Intellectual
Property have been asserted or, to the knowledge of the Company, are threatened
by any person nor does the Company know of any valid grounds for any bona fide
claims (i) to the effect that the manufacture, sale or use of any product or
process as now used or offered or proposed for use or sale by the Company
infringes on any copyright, trade secret, patent or other proprietary right of
any person, (ii) against the use by the Company of any Intellectual Property or
the Company's Software used in the business of the Company as currently
conducted or proposed to be conducted, or (iii) challenging the ownership,
validity or effectiveness of any of the Intellectual Property or the Company's
Software.
(f) Except as set forth in Schedule 5.14 of the Disclosure schedule,
the Company's Software is Year 2000 compliant and records, stores, processes and
presents calendar dates falling on or after January 1, 2000 in the same manner
and with the same functionality, completeness and accuracy as calendar dates
falling on or before December 31, 1999.
5.15 Customers and Suppliers. No present customer or supplier has
terminated or materially reduced, or has given notice that it intends to
terminate or materially reduce, the amount of business done with the Company
with respect to the Business. The Company is not aware of any such intention on
the part of any such customer, supplier or vendor, whether or not in connection
with the transactions contemplated hereunder. There are no and during the last
two years there have not been any disputes or controversies involving, in the
aggregate, more than $5,000 between the Company and any customer, supplier or
other person regarding the quality, merchantability or safety of, or involving a
claim of breach of warranty which has not been fully resolved with respect to
warranties provided by the Business.
5.16 Taxes.
(a) All federal, state, local and foreign returns and reports relating
to Taxes (as defined herein), or extensions relating thereto, required to be
filed by or with respect to the Company have been timely and properly filed, and
all such returns and reports are correct and complete.
(b) All federal, state, local and foreign income, profits, franchise,
sales, use, payroll, premium, occupancy, property, severance, excise,
withholding, customs, unemployment, transfer and other taxes, including
interest, additions to tax and penalties (collectively "Taxes") due or properly
shown to be due on any return referred to in Section 5.16(a) with respect to
taxable periods ending on or prior to, and the portion of any interim period up
to, the date hereof have been fully and timely paid or, in the case of Taxes not
yet due, fully provided for on the Interim Balance Sheet or, in the case of
Taxes accruing after the date of such financial statement, on the books of
account of the Company; and there are no levies, liens, or other encumbrances
relating to Taxes existing, threatened or pending with respect to any asset of
the Company.
(c) Except as described in the Disclosure Statement, no issues have
been raised with any representative or employee of the Company (and are
currently pending) by the Internal Revenue Service ("IRS") or any other taxing
authority in connection with any of the returns and reports referred to in
subsection (a) above and no waivers of statutes of limitations have been given
or requested with respect to any such returns and reports or with respect to any
Taxes.
(d) The Disclosure Statement identifies all federal, state, local and
foreign income, franchise and sales and use tax returns of or with respect to
the Company which have been examined since the year stated therein, or which are
currently under examination, by the IRS or by other taxing authorities, or with
respect to which the applicable statute of limitations (including all extensions
and tolling periods) has not yet run. Except as and to the extent shown on such
Disclosure Statement, all deficiencies asserted or assessments made as a result
of such examinations have been fully paid, and there are no other unpaid
deficiencies asserted or assessments made by any taxing authority against the
Company.
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(e) The Disclosure Statement lists all elections by or with respect to
Company for federal or state income or franchise tax purposes that are currently
applicable. The Company has not: filed any consent under section 341(f)(1) of
the Internal Revenue Code of 1986, as amended (the "Code") or agreed to have the
provisions of Code section 341(f)(2) apply to any dispositions of "subsection
(f) assets" as such term is defined in Code section 341(f)(4); agreed to or is
required to make any adjustments under Code section 481(a) by reason of a change
in accounting method or otherwise; employed the LIFO method of accounting for
inventories for federal income tax purposes; made a transfer of intangible
property on which Code section 367(d) or 482 will require the recognition of
additional income for any period after the date hereof; or owned stock in a
"passive foreign investment company" within the meaning of Code section 1296(a).
The books and records of the Company are sufficient to prove the correctness of
all tax returns for open tax years and to determine and to prove the adjusted
tax basis for federal income tax purposes of each asset of the Company.
(f) The Company is not a party to any tax sharing agreement or tax
indemnification agreement.
5.17 Employee Benefits
(a) The Disclosure Statement contains a complete and correct list of
all benefit plans, arrangements, commitments and payroll practices (whether or
not employee benefit plans ("Employee Benefit Plans") as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
including, without limitation, sick leave, vacation pay, severance pay, salary
continuation for disability, consulting or other compensation arrangements,
retirement, deferred compensation, bonus, incentive compensation, stock
purchase, stock option, health including hospitalization, medical and dental,
life insurance and scholarship programs maintained for the benefit of any
present or former employees of the Company or any ERISA Affiliate (as defined
below) or to which the Company or any ERISA Affiliate has contributed or is or
was within the last three years obligated to make payments. The Company has
delivered to Buyer, with respect to all such plans, arrangements, commitments
and practices, true, complete and correct copies of the following: all plan
documents, handbooks, manuals, collective bargaining agreements and similar
documents governing employment policies, practices and procedures; the most
recent summary plan descriptions and any subsequent summaries of material
modifications and all other material employee communications discussing any
employee benefit; Forms series 5500 as filed with the IRS for the three most
recent plan years; the most recent report of the enrolled actuary for all
defined benefit plans, funded welfare plans or other plans requiring actuarial
valuation; all trust agreements with respect to employee benefit plans; plan
contracts with service providers or with insurers providing benefits for
participants or liability insurance for fiduciaries and other parties in
interest or bonding; most recent annual audit and accounting of plan assets for
all funded plans; and most recent IRS determination letter for all plans
qualified under Code section 401(a). As used herein, "ERISA Affiliate" shall
refer to any trade or business, whether or not incorporated, under common
control with the Company within the meaning of Section 414(b), (c), (m) or (o)
of the Code.
(b) With respect to each Employee Benefit Plan required to be listed on
the Disclosure Statement: (i) each Employee Benefit Plan has been administered
in compliance with its terms, and is in compliance in all material respects with
the applicable provisions of ERISA, the Code and all other applicable laws
(including, without limitation, funding, filing, termination, reporting and
disclosure and continuation coverage obligations pursuant to Title V of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"));
(ii) the Company has made or provided for all contributions required under the
terms of such Plans; (iii) no "Employee Pension Benefit Plan" (as defined in
Section 3(2) of ERISA) has been the subject of a "reportable event" (as defined
in Section 4043 of ERISA) and there have been no "prohibited transactions" (as
described in Section 4975 of the Code or in Part 4 of Subtitle B of Title I of
ERISA) with respect to any Employee Benefit Plan; (iv) there are and during the
past three years there have been no inquiries, proceedings, claims or suits
pending or threatened by any governmental agency or authority or by any
participant or beneficiary against any of the Employee Benefit Plans, the assets
of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of any of such Employee Benefit Plans
with respect to the design or operation of the Employee Benefit Plans; (v) the
actuarial present value of accumulated benefits (both vested and unvested) of
each of the Employee Pension Benefit Plans which are defined benefit plans, are
fully funded in accordance with the actuarial assumptions used by the Pension
Benefit Guaranty Corporation ("PBGC") to determine the level of funding required
in the event of the termination of such Plan; (vi) each Employee Pension Benefit
Plan which is intended to be "qualified" within the meaning of Section 401(a) of
the Code is and has from its inception been so qualified, and any trust created
pursuant to any such Employee Pension Benefit Plan is exempt from federal income
tax under Section 501(a) of the Code and the IRS has issued each such Plan a
favorable determination letter which is currently applicable; and (vii) neither
Company nor any ERISA Affiliate is aware of any circumstance or event which
would jeopardize the tax-qualified status of any such Employee Pension Benefit
Plan or the tax-exempt status of any related trust, or which would cause the
imposition of any liability, penalty or tax under ERISA or the Code with respect
to any Employee Benefit Plan.
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(c) Neither Company nor any ERISA Affiliate maintains or has ever
maintained or been obligated to contribute to a "Multiemployer Plan" (as such
term is defined by Section 3(37) of ERISA).
(d) With respect to each Employee Benefit Plan maintained by Company or
any ERISA Affiliate: (i) no unsatisfied liabilities to participants, the IRS,
the United States Department of Labor ("DOL"), the PBGC or to any other person
or entity have been incurred as a result of the termination of any Employee
Benefit Plan; (ii) no Employee Pension Benefit Plan, which is subject to the
minimum funding requirements of Part 3 of subtitle B of Title I of ERISA or
subject to Section 412 of the Code, has incurred any "accumulated funding
deficiency" within the meaning of Section 302 of ERISA or Section 412 of the
Code and there has been no waived funding deficiency within the meaning of
Section 303 of ERISA or Section 412 of the Code; and (iii) there has been no
event with respect to an Employee Pension Benefit Plan which would require
disclosure under Sections 4062(c), 4063(a) or 4041(e) of ERISA.
(e) All reports, informational returns, and information required to be
filed with the DOL, IRS and PBGC or with plan participants and their
beneficiaries with respect to each employee benefit plan required to be listed
on the Disclosure Statement have been filed and all annual reports (including
Form 5500 series) of such Plans were certified without qualification by each
Plan's accountants and actuaries.
(f) All employee benefit plans required to be listed on the Disclosure
Statement may, without liability, be amended, terminated or otherwise
discontinued except as specifically prohibited by federal law.
(g) Any bonding required under ERISA with respect to any Employee
Benefit Plan required to be listed on the Disclosure Statement has been obtained
and is in full force and effect and no funds held by or under the control of the
Company or any ERISA Affiliate are plan assets.
(h) Except as described in the Disclosure Statement, neither Company
nor any ERISA Affiliate maintains any retired life and/or retired health
insurance plans which provide for continuing benefits or coverage for any
employee or any beneficiary of an employee after such employee's termination of
employment.
(i) Except as set forth on the Disclosure Statement, the consummation
of the transactions contemplated by this Agreement will not, alone or together
with any other event, (i) entitle any person to severance pay, unemployment
compensation or any other payment, (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due to any such employee, or
(iii) result in any liability under Title IV of ERISA or otherwise.
(j) The Company intends to terminate the Company's stock option plan,
SIMPLE ▇▇▇ plan, and Code section 125 plan as of the Closing Date.
(k) There has been no violation of the "continuation coverage
requirements" of section 4980B of the Code and part 6 of Subtitle B of Title I
of ERISA with respect to any "Employee Welfare Benefit Plan" (as defined in
section 3(1) of ERISA) to which such continuation coverage requirements apply.
(l) There has been no violation of the health insurance obligations
imposed by section 9801 of the Code and Part 7 of Subtitle B of Title I of ERISA
("HIPAA") with respect to any Employee Welfare Benefit Plan which is a group
health plan (as defined in section 5000(b)(1) of the Code or Part 6 of Subtitle
B of Title I of ERISA) to which such insurance obligations apply.
5.18 Labor Matters.
(a) Except as described in the Disclosure Statement: (i) to the
knowledge of the Company, no application or petition for certification of a
collective bargaining agent is pending and none of the employees of the Company
engaged in the Business are, or during the last two years have been, represented
by any union or other bargaining representative; (ii) to the knowledge of the
Company, during the last two years, no union has attempted to organize any group
of the Company's employees engaged in the Business, and no group of the
Company's employees engaged in the Business has sought to organize themselves
into a union or similar organization for the purpose of collective bargaining;
(iii) during the last two years there has not been and there is not currently
pending any labor arbitration or proceeding in respect of the grievance of any
employee engaged in the Business, any application, charge or complaint filed by
any employee or union with the National Labor Relations Board or any comparable
state or local agency, any strike, slowdown, picketing or work stoppage by any
employees at the Facility, any lockout of any such employees or any labor
trouble or other labor-related controversy, occurrence or condition; (iv) no
agreement restricts the Company from relocating or closing the Facility or any
portion thereof; and (v) to the knowledge of the Company, no such agreement,
action, proceeding or occurrence is threatened or contemplated by any person.
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(b) Except as described in the Disclosure Statement with respect to the
Business and the Facility, the Company has not been cited for violations of the
Occupational Safety and Health Act of 1970, 29 U.S.C. sec. 651 et seq. ("OSHA"),
any regulation promulgated pursuant to OSHA, or any other statute, ordinance,
rule, or regulation establishing standards of workplace safety, or paid any
fines or penalties with respect to any such citation. Except as described in the
Disclosure Statement: (i) there have not been any inspections of the Facility by
representatives of the Occupational Safety and Health Administration or any
other government agency vested with authority to enforce any statute, ordinance,
rule or regulation establishing standards of workplace safety; (ii) to the
knowledge of the Company, no representative of any such government agency has
attempted to conduct any such inspection or sought entry to the Facility for
that purpose; (iii) the Company has not been notified of any complaint or charge
filed by any employee or employee representative with any such government agency
which alleges that the Company has violated OSHA or any other statute,
ordinance, rule or regulation establishing standards of workplace safety; (iv)
the Company has not been notified that any employee or employee representative
of the Business has requested that any such government agency conduct an
inspection of the Facility to determine whether violations of OSHA or any other
such statute, ordinance, rule or regulation may exist; and (v) the Company does
not maintain any condition, process, practice or procedure at the Facility which
would be deemed a material violation of OSHA or any other statute, ordinance,
regulation or rule establishing standards or workplace safety.
(c) Attached to the Disclosure Statement are true and correct copies of
each OSHA Form No. 200 completed and maintained by the Company at the Facility
for the last two years.
5.19 Directors, Officers and Employees.19 Directors, Officers and Employees.
The Disclosure Statement sets forth the following information for each director,
officer and employee of the Company and for each consultant and independent
contractor regularly retained, whose aggregate compensation for the fiscal year
ended December 31, 1997 exceeded $40,000 or whose current aggregate annual rate
of compensation exceeds such amount (including each such person on leave or
layoff status): name and job title; current annual rate of compensation
(identifying bonuses separately) and any change in compensation since December
31, 1997; vacation accrued and service credited for purposes of vesting and
eligibility to participate in applicable Employee Benefit Plans; and any
automobile leased or owned by the Company primarily for use by any of the
foregoing persons. Except as described in the Disclosure Statement, none of the
Company's employees, directors or officers is a party to, or is otherwise bound
by, any agreement or arrangement with any person or entity other than the
Company which limits or adversely affects the performance of his or her duties,
the ability of the Company to conduct its businesses, or his or her freedom to
engage in any of the businesses conducted by Company (including, without
limitation, any confidentiality, non-competition or proprietary rights
agreement). The Disclosure Statement describes each employment, severance,
change of control, consulting, commission, agency and representative agreement
or arrangement to which the Company is a party or is otherwise bound, including,
without limitation, all agreements and commitments relating to wages, hours or
other terms or conditions of employment (other than unwritten employment
arrangements terminable at will without payment of any contractual severance or
other amount).
5.20 Full Disclosure.
(a) All documents and other papers delivered by or on behalf of the
Company in connection with the transactions contemplated by this Agreement are
accurate and complete in all material respects and are authentic. No
representation or warranty of the Company contained in this Agreement or the
Disclosure Statement contains any untrue statement of a material fact or omits
to state a fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading in any
material respect.
(b) Except as described in this Agreement or the Disclosure Statement
and except for material adverse affects directly attributable to the Company's
present insolvent financial condition, there is no fact known to the Company
(other than general economic or industry conditions) which materially adversely
affects or, so far as the Company can reasonably foresee, materially threatens,
the assets, business, prospects, financial condition or results of operations of
the Business or the ability of the Company to perform this Agreement.
5.21 Absence of Changes or Events. Except as described on the Disclosure
Statement and except for actions taken after the date hereof pursuant to a
specific covenant hereunder, since February 10, 1998 the Company has not:
(a) declared or paid any dividend or other distribution or payment in
respect of the shares of capital stock of the Company or any repurchase or
redemption of any such shares of capital stock or other securities;
(b) discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any liabilities which the
failure to pay or discharge has caused or will cause any material damage or risk
of material loss to Purchased Assets or the Business;
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(c) sold, assigned or transferred any of its assets or properties
except in the ordinary course of business consistent with past practice;
(d) created, incurred, assumed or guaranteed any indebtedness for money
borrowed, or mortgaged, pledged or subjected to any Lien, any of its Purchased
Assets, other than the liens, if any, for current taxes not yet due and payable;
(e) made or suffered any amendment or termination of any Contract to
which it is a party or by which it is bound or canceled, modified or waived any
debts or claims held by it, other than in the ordinary course of business
consistent with past practice, or waived any right of substantial value, whether
or not in the ordinary course of business;
(f) suffered any damage, destruction or loss, whether or not covered by
insurance, of any item carried on its books of account at more than $1,000, or
suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility services required to conduct its Business;
(g) suffered any decrease in its retained earnings or working capital,
or any material adverse change in its Business;
(h) suffered any adverse change or any threat of an adverse change in
its relation with, or any loss or threat of loss of, any of its customers other
than usual attrition in the ordinary course of customers that are not
individually or in the aggregate material to the Business;
(i) made any capital expenditure or capital addition or betterment
except such as may be involved in ordinary repair, maintenance and replacement
of its Purchased Assets;
(j) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its shareholders, directors, officers, employees or independent
contractors, or made any increase in, or any addition to, other benefits to
which any of its shareholders, directors, officers or employees may be entitled;
(k) changed any of the accounting principles followed by it or the
methods of applying such principles; or
(l) entered into any material transaction or any transaction other than
in the ordinary course of business consistent with past practice.
5.22 Insurance.
(a) The description of the policies and binders of insurance contained
in the Disclosure Statement identifies: (i) the respective issuers and
expiration dates thereof; (ii) deductible amounts and amounts of coverage
available and outstanding thereunder; (iii) whether such policies and binders
are "claims made" or "occurrences" policies, (iv) all self-insurance programs or
arrangements and (v) any retrospective premium adjustments of which the Company
has knowledge. Such policies and binders are issued by insurance companies
reasonably believed by Company to be financially sound and reputable, are
sufficient for compliance with all requirements of Laws and all agreements to
which the Company is a party or by which it or its assets are bound, are valid
and enforceable policies, and, except as described in the Disclosure Statement,
will not be affected by, terminate or lapse by reason of the transactions
contemplated by this Agreement.
(b) Except as described in the Disclosure Statement, the Company has
not received (i) any notice of cancellation of any policy or binder of insurance
required to be identified in the Disclosure Statement or refusal of coverage
thereunder; (ii) any notice that any issuer of such policy or binder has filed
for protection under applicable bankruptcy or insolvency laws or is otherwise in
the process of liquidating or has been liquidated; or (iii) any other indication
that any such policy or binder may no longer be in full force or effect or that
the issuer of any such policy or binder may be unwilling or unable to perform
its obligations thereunder. The Company has not, within the last five years,
been refused any insurance nor has its coverage been limited.
5.23 Affiliate Agreements. Except as described in the Disclosure Statement,
there are no, and during the last 3 years there have not been any agreements,
arrangements or understandings between the Company on the one hand and any
Seller or any present or former director, shareholder or officer of any Seller
or the Company or any member of the immediate family of or any person or entity
controlling or controlled by any of such persons (a "Related Party"). Except as
described in the Disclosure Statement, no such Related Party has, or during the
last 3 years has had: any interest in any property (real or personal, tangible
or intangible) sold to, purchased by or otherwise used in or pertaining to the
business of the Company; or any direct or indirect interest in any person or
entity which has had business dealings or a financial interest in any
transaction with the Company or which is in competition with any business of the
Company. Except as described in the Disclosure Statement, all agreements and
arrangements between the Company and all Related Parties are terminable by the
Company, upon less than ten days notice, without payment of penalty or premium
of any kind. None of Sellers has any claim or right against the Company except
as described in the Disclosure Statement.
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5.24 Environmental Matters.
(a) Except as described in the Disclosure Statement:
(i) The Company, including all of its businesses and
operations are and always have been operated in compliance
with all Environmental Laws (as defined below);
(ii) There are no conditions on, about, beneath or arising
from any real property which is now owned, used or leased to or by the Company
("Current Real Property") which might, under any Environmental Law, (A) give
rise to liability or the imposition of a statutory lien, or (B) which would or
may require any "Response," "Removal" or "Remedial Action" (as those terms are
defined below) or any other action, including without limitation reporting,
monitoring, cleanup or contribution;
(iii) There were no conditions on, about, beneath or arising
from any real property which was, but is no longer, owned, used or leased to or
by the Company ("Former Real Property"), during the period of such ownership,
use, or lease, which might, under any Environmental Law, (A) give rise to
liability or the imposition of a statutory lien, or (B) which would or may
require any "Response," "Removal" or "Remedial Action" or any other action,
including without limitation reporting, monitoring, cleanup or contribution;
(iv) The Company has not received any notification of a
release or threat of a release of a "Hazardous Substance" (as defined below)
with respect to any Current Real Property or Former Real Property;
(v) No Hazardous Substances have been used, handled,
generated, processed, treated, stored, transported to or from, released,
discharged or disposed of by the Company or any third party on, about or beneath
any Current Real Property.
(vi) During the Company's ownership, use or lease of the
Former Real Property, no Hazardous Substances were used,
handled, generated, processed, treated, stored, transported to or from,
released, discharged or disposed of by the Company or any third party on, about
or beneath the former Real Property;
(vii) There are no above or underground storage tanks,
asbestos containing materials, or transformers containing or contaminated with
PCB's on, about or beneath the Current Real Property. During the Company's
ownership, use or lease of the Former Real Property, there were no above or
underground storage tanks, asbestos containing materials, or transformers
containing or contaminated with PCB's on, about or beneath the Former Real
Property.
(viii) The Company has not received notice and does not have
actual or constructive knowledge of:
(A) any claim, demand, investigation, enforcement
action, Response, Removal, Remedial Action, statutory lien or other governmental
or regulatory action instituted or threatened against the Company or the
Current, or Former Real Property pursuant to any of the Environmental Laws;
(B) any claim, demand notice, suit or action, made or
threatened by any person against the Company;
the Current Real Property or the Former Real Property relating to (1) any form
of damage, loss or injury resulting from, or claimed to result from, any
Hazardous Substance on, about, beneath or arising from the Current or Former
Real Property or (2) any alleged violation of the Environmental Laws by the
Company; or
(C) any communication to or from any governmental or
regulatory agency arising out of or in connection
with Hazardous Substances on, about, beneath, arising from or generated at the
Current Real Property or Former Real Property, including without limitation, any
notice of violation, citation, complaint, order, directive, request for
information or response thereto, notice letter, demand letter or compliance
schedule.
(ix) No wastes generated by the Company have ever been
directly or indirectly sent, transferred, transported to, treated, stored, or
disposed of at any site listed or formally proposed for listing on the National
Priority List promulgated pursuant to "CERCLA" (as defined below) or to any site
listed on any state list of sites requiring or recommended for investigation or
clean-up. None of the Current Real Property or Former Real Property is listed on
the National Priorities List or any state list of sites requiring or recommended
for investigation or clean up.
(b) As used in this Agreement:
(i) the term "Environmental Laws" means all Laws concerning
or relating to industrial hygiene or protection of
human health or the environment.
(ii) the terms "Response," "Removal" and "Remedial Action"
shall have the meanings ascribed to them in Sections 101(23)-101(25) of the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
as amended by the Superfund Amendments and Reauthorization Act ("▇▇▇▇"), 42
U.S.C. ▇▇.▇▇. 9601(23)-9601(25).
(iii) The term "Hazardous Substances" or "Hazardous
Substance" shall mean any substance regulated under any of the Environmental
Laws including, without limitation, any substance which is: (A) petroleum,
asbestos or asbestos-containing material, or polychlorinated biphenyls; (B)
defined, designated or listed as a
115
"Hazardous Substance" pursuant to Sections 307 and 311 of the Clean Water Act,
33 U.S.C. ss.ss.1317, 1321, Section 101(14) of CERCLA, 42 U.S.C. ss.9601; (C)
listed in the United States Department of Transportation Hazardous Material
Tables, 49 C.F.R. ss.172.101; (D) defined, designated or listed as a "Hazardous
Waste" under Section 1004(5) of the Resource and Conservation and Recovery Act,
42 U.S.C. 6903(5).
5.25 Books and Records.
(a) The copies of the certificates or articles of incorporation of the
Company, as certified by the Secretary of State of its jurisdiction of
incorporation, and of its bylaws (or of its other comparable organizational
documents), as certified by its secretary, which have been delivered to Buyer
are true, complete and correct and are in full force and effect as of the date
hereof.
(b) The stock records of the Company fairly and accurately reflect the
record ownership of all of its outstanding shares of capital stock. The minute
books of the Company contain complete and accurate records of all meetings held
of, and corporate action taken by, the shareholders, the board of directors and
each committee of the board of directors of the Company and no meetings of such
shareholders or of such board of directors or committee have been held for which
minutes have not been prepared and included in such minute books. The other
books and records of the Company, including financial records and books of
account, are complete and accurate in all material respects and have been
maintained in accordance with sound business practices. Complete and accurate
copies, as of the date hereof, of all such minute books and stock records have
been made available to Buyer.
(c) The books and records of the Company accurately and fairly reflect
its income, expenses, assets and liabilities and the Company maintains internal
accounting controls which provide reasonable assurance that: (i) transactions
are executed in accordance with management's authorization; (ii) transactions
are recorded as necessary to permit preparation of reliable financial statements
and to maintain accountability for earnings and assets; (iii) access to assets
is permitted only in accordance with management's authorization; (iv) the
recorded accountability of all assets is compared with existing assets at
reasonable intervals; and (v) all intercompany transactions, charges and
expenses among or between the Company, and Seller and/or their affiliates are
accurately reflected at fair arms length value in all financial statements.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Sellers as of the date of this
Agreement as follows:
6.1 Organization and Good Standing. Buyer is a Pennsylvania corporation
duly organized and validly existing under the laws of the Commonwealth of
Pennsylvania and has all necessary corporate power and authority to carry on its
business as presently conducted, to own and lease the assets which it owns and
leases and to perform all its obligations under each agreement and instrument by
which it is bound.
6.2 Power and Authorization.2 Power and Authorization. Buyer has full legal
right, power and authority to enter into and perform its obligations under this
Agreement and under the other agreements and documents (the "Buyer Transaction
Documents") required to be delivered by it prior to or at the Closing. The
execution, delivery and performance by Buyer of this Agreement and the Buyer
Transaction Documents have been duly authorized by all necessary corporate
action. This Agreement has been duly and validly executed and delivered by Buyer
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms. When executed and delivered as contemplated
herein, each of the Buyer Transaction Documents shall constitute the legal,
valid and binding obligation of Buyer, enforceable against it in accordance with
its terms.
6.3 No Conflicts.
(a) The execution, delivery and performance of this Agreement and the
Buyer Transaction Documents do not and will not (with or without the passage of
time or the giving of notice):
(i) violate or conflict with any provision of Buyer's Articles
of Incorporation, by-laws or of any Law binding upon Buyer; or
(ii) violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any material
agreement or other material obligation to which Buyer is a party.
(b) No consents or approvals of, or registrations, notifications,
filings and/or declarations with, any court, government or governmental agency
or instrumentality, creditor, lessor or other person are required to be given or
made by Buyer in connection with the execution, delivery and performance of this
Agreement and the other agreements and instruments contemplated herein, other
than such as have been obtained or made or which the failure to obtain would not
have a material adverse affect on Buyer's ability to consummate the transactions
contemplated herein and therein.
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(c) There are no judicial, administrative or other governmental
actions, proceedings or investigations pending or, to the knowledge of Buyer,
threatened, that question any of the transactions contemplated by this Agreement
or the validity of this Agreement or any of the other agreements or instruments
contemplated hereby or which, if adversely determined, would have an a material
adverse effect upon the ability of Buyer to enter into or perform its
obligations under this Agreement or any of the other agreements or instruments
contemplated hereby. Buyer has not received any request from any governmental
agency or instrumentality for information with respect to the transactions
contemplated hereby.
6.4 Brokers. No person acting on behalf of Buyer or any of its affiliates
or under the authority of any of the foregoing is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee, directly or
indirectly, from any of such parties in connection with any of the transactions
contemplated by this Agreement, other than ▇▇▇▇▇ ▇▇▇▇, whose fees and expenses
shall be paid by Buyer.
6.5 Capital Structure. The capital structure of the Buyer is as presented
in its most recent filings with the U.S. Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
6.6 Judge Group Shares. Upon issuance in accordance with the terms of
Section 2.1 hereof, the Judge Shares will be duly and validly authorized and
issued, fully paid and non-assessable.
6.7 Investment. Buyer is acting herein for Buyer's own account and is
acquiring the Shares for investment without a view to the resale or other
distribution thereof. Buyer is financially able to hold the Shares for long-term
investment, believes that the nature and amount of the Shares to be acquired
hereunder is consistent with Buyer's overall investment program and financial
position, and recognizes that there are substantial risks involved in an
investment in the Shares.
SECTION 7. EMPLOYEE BENEFITS AND EMPLOYMENT.
7.1 Employment. The employees of the Company are listed on Schedule 7.1
attached hereto which also states their rates of pay prior to the Closing.
Employees who continue such employment immediately after the closing shall be
referred to as "Transferred Employees" for purposes of this Agreement. Anything
contained in or implied by the provisions of this Section 7.1 to the contrary
notwithstanding, the provisions of this Section shall not create any third-party
beneficiary rights in any person, including any Transferred Employee.
7.2 Employee Pension Benefit Plans. The benefits under any Employee
Pension Benefit Plan maintained by the Company which have accrued to any
Transferred Employee as of the Closing Date shall be frozen as of the Closing
Date and no further benefits shall accrue under any such Employee Pension
Benefit Plan with respect to such Transferred Employee. Except as provided in
Section 1.4 hereof, the Company shall be indemnified against any liability or
responsibility for any such Employee Pension Benefit Plan after the Closing Date
as provided in this Agreement.
7.3 Employee Welfare Benefit Plans. After the Closing Date, the Company
intends to continue the Employee Welfare Benefit Plans maintained by the Company
prior to the Closing for the benefit of the Transferred Employees in accordance
with the terms and conditions of such Employee Welfare Benefit Plans; however,
the Company reserves the right to terminate such Employee Welfare Benefit Plans
at any time. After the Closing Date, the Company intends to terminate the Code
section 125 plan maintained by the Company as soon as possible after the Closing
Date.
In addition, Buyer shall not be liable or responsible for and the
Company shall be indemnified, as provided in this Agreement, against any injury
sustained prior to the Closing Date that is related to a workers' compensation
claim.
7.4 Vacation and Holidays. After the Closing, the Company will provide
the same vacations and holidays to the Transferred Employees as provided by the
Company as of January 1, 1998 except that the Company will not permit the use of
any vacation carried over from 1996 or prior years. In the case of the
Transferred Employees, the Company shall, at the election of each Transferred
Employee, credit such Transferred Employee with said accrued vacation.
7.5 Health Continuation Coverage. The Company shall be responsible for all
health continuation coverage and notice obligations ("COBRA") imposed by section
4980B of the Code and Part 6 of Subtitle B of Title I of ERISA whether such
obligation arose before or after the Closing Date.
Sellers represent that the Company is not liable for any claims
resulting from a COBRA obligation which arose prior to the Closing Date.
7.6 Health Insurance Portability and Accountability Act. The Company shall
be responsible for all health insurance obligations imposed by section 9801 of
the Code and Part 7 of Subtitle B of Title I of ERISA ("HIPAA") with respect to
any Employee Welfare Benefit Plan which is a group health plan (as defined under
Section 5000(b)(1) of the Code or Part 6 of Subtitle B of Title I of ERISA)
whether such obligation arose before or after the Closing Date.
In accordance with this Agreement, Sellers shall indemnify Buyer and
the Company against any claims resulting from a HIPAA obligation which arose
prior to the Closing Date.
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7.7 Employee Records. After the Closing the Company shall have full access
to all employee records relating to the Transferred Employees.
SECTION 8. CERTAIN CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
The obligation of Buyer to consummate the acquisition of the Purchased
Assets is subject to the fulfillment by or at the Closing of each of the
following conditions:
8.1 Representations and Warranties. The Company's and Sellers'
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Closing and shall then be true and
correct.
8.2 Performance of Covenants. The Company and Sellers shall have performed
or complied with all of the agreements, covenants and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing.
8.3 Approvals. The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been obtained
and no such consent or approval: (a) shall have been conditioned upon the
modification, cancellation or termination of any lease, commitment, agreement,
easement, right or Authorization included in the Purchased Assets; or (b) shall
impose on the Buyer or the Company any condition or provision or requirement not
imposed upon Sellers or, if imposed on Sellers, that is more restrictive on
Buyer or the Company than on Sellers.
8.4 Legal Matters. The Closing shall not violate any order or decree of
any court or governmental body of competent jurisdiction and no suit, action,
proceeding or investigation shall have been brought or threatened by any person
(other than the Buyer or an affiliate of Buyer) which questions the validity or
legality of this Agreement or the transactions contemplated hereby.
8.5 No Material Adverse Change. There shall not have been any material
adverse change or threat of material adverse change in the Company, the Business
or the Purchased Assets, or in any development of a nature that is, or is likely
to be materially adverse to the Company, the Business or the Purchased Assets
since February 10, 1998.
8.6 Opinion of Counsel. Buyer shall have received the Opinion of Seller's
Counsel dated as of the Closing.
8.7 Closing Certificates. The Buyer shall have received certificates from
the Seller Representative (as defined in Section 12.14), dated the Closing Date,
certifying in such detail as the Buyer may reasonably request that the
conditions specified in Sections 8.1, 8.2 and 8.3 hereof have been fulfilled.
Seller Representative's liability for such certificates shall be subject to the
last paragraph of Section 11.1.
8.8 Employment Agreement. ▇▇▇▇▇▇ shall have executed and delivered the
Employment Agreement.
8.9 Payment of Affiliated Indebtedness; Company Indebtedness.
(a) Except as expressly provided herein, the Sellers shall have caused
all indebtedness to the Company from any Sellers, all Related Parties and all
affiliates of any Seller to have been paid in full prior to Closing.
(b) The Company shall have caused the aggregate amount of all bank
debt, notes payable and other consolidated indebtedness of the Company (other
than trade accounts payable) as of the Closing, and the aggregate amount of all
trade accounts payable of the Company, all of which shall be bona fide
obligations incurred in the ordinary course of business consistent with past
practice, not to exceed the amounts set forth in Schedule 1.4.
(c) The Company shall have caused all liens in favor of Silicon Valley
Bank to be released of record and otherwise, assuming that Buyer satisfies the
condition in Section 9.7. 8.10 Resignation of Directors and Officers. Buyer
shall have received resignations from such of the officers and directors of the
Company as Buyer shall have requested.
SECTION 9. CERTAIN CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
The obligation of Sellers to consummate the sale of the Purchased
Assets is subject to the fulfillment by or at the Closing of each of the
following conditions:
9.1 Representations and Warranties. Buyer's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as at
the Closing and shall then be true and correct.
9.2 Performance of Covenants. Buyer shall have performed or complied
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing.
9.3 Approvals. The consent or approval of all persons described on the
Disclosure Statement pursuant to Sections 5.5(b) and 5.12 shall have been
obtained.
9.4 Legal Matters. The Closing shall not violate any order or decree of
any court or governmental body of competent jurisdiction and no suit, action,
investigation, or legal or administrative proceeding shall have been brought
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or threatened by any person (other than Sellers or an affiliate of any Seller)
which questions the validity or legality of this Agreement or the transactions
contemplated hereby.
9.5 Closing Certificates. The Sellers shall have received certificates
from the Buyer, dated the Closing Date, certifying in such detail as the Seller
may reasonably request that the conditions specified in Sections 9.1 and 9.2
hereof have been fulfilled.
9.6 Employment Agreement. The Company shall have executed and delivered
the Employment Agreement.
9.7 Bank Debt. Buyer shall have paid off Silicon Valley Bank in the amount
set forth in Schedule 1.4.
SECTION 10. CERTAIN POST-CLOSING MATTERS; COVENANTS
10.1 Confidential Information. From and after the Closing, unless expressly
consented to in writing by Buyer, Sellers shall not, and shall use best efforts
to cause all Transferred Employees and others not to, directly or indirectly,
use or disclose to any third person, any trade secret, financial data, customer
list, pricing or marketing policies or plans or other proprietary or
confidential information relating to the Business.
10.2 Covenant Not to Compete. ▇▇▇▇▇▇ agrees that, unless acting with the
prior written consent of the Buyer, neither he will not, directly or indirectly,
(a) engage in the business of, or own, manage, operate, finance, join,
control or participate in the ownership, management, operation, financing or
control of, or be connected as an partner, principal, agent, representative,
consultant, advisor or otherwise with, or use or permit its or his name to be
used in connection with, any business or enterprise engaged in the business of
permanent or contract placement, personnel consulting services, project
management services or imaging and computer consulting services anywhere in
Michigan, Pennsylvania, California, Connecticut, Massachusetts, New York, New
Jersey, Virginia or Florida (the "Territory"), from the date hereof until the
earlier of (i) the third anniversary of the Closing Date or (ii) the
Non-Competition Termination Date (as defined in the Employment Agreement);
(b) for a period of three years after the Closing Date, in any manner
induce or attempt to influence any employee of or independent contractor to the
Buyer or the Company or any of its affiliates to terminate such employment or
relationship;
(c) for a period of three years after the Closing Date, in any manner
contact, induce, solicit or influence any client or customer of the Business or
of the Buyer or the Company or any of their affiliates to cause such client or
customer to terminate its relationship with the Business, the Company and/or
Buyer; or
(d) for a period of three years after the Closing Date, utilize or
disclose any information concerning proprietary or confidential information in
respect to the Purchased Assets.
In the event that the provisions of this Section 10.2 should ever be
deemed to exceed the time or geographic limitations or any other limitations
permitted by applicable law in any jurisdiction, then such provisions shall be
deemed reformed in such jurisdiction to the maximum extent permitted by
applicable law. ▇▇▇▇▇▇ specifically acknowledges and agrees that the foregoing
restrictions are reasonable and necessary to protect the legitimate interests of
the Buyer and the Company, that the Buyer would not have entered into this
Agreement in the absence of such restrictions, that any violation of such
restrictions will result in irreparable injury to the Buyer and the Company,
that the remedy at law for any breach of the foregoing restrictions will be
inadequate, and that, in the event of any such breach, the Buyer and the
Company, in addition to any other relief available to it, shall be entitled to
temporary injunctive relief before trial from any court of competent
jurisdiction as a matter of course and to permanent injunctive relief without
the necessity of quantifying actual damages.
10.3 Employment Agreement Acknowledgment. ▇▇▇▇▇▇ acknowledges and agrees
that the non-competition covenants set forth in Section 5.1 of the Employment
Agreement constitute a material part of the consideration given by ▇▇▇▇▇▇, an
officer and shareholder of the Company, as part of the sale of the Business, the
related goodwill and the Purchased Assets to Buyer through the sale of the
Shares.
10.4 Pursuit of Authorizations. Sellers shall use their best efforts to
take, or cause to be taken, such action, to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the provisions
of this Agreement and under applicable law to transfer any Intellectual Property
to the Buyer and/or the Company and, at the expense of Buyer, to permit the
Buyer and/or the Company to promptly obtain all governmental consents, licenses,
permits, franchises, grants or other authorizations which are used in the
Business ("Authorizations") and are required for the Business and operations of
the Buyer and/or the Company after the Closing.
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10.5 Remittance of Payments. From and after the Closing, Sellers shall
immediately remit to the Company, in the form received, any payments which they
or any affiliate may receive (such as payments of accounts receivable) which
properly belong to the Company.
SECTION 11. INDEMNIFICATION
11.1 Indemnification by Sellers. Sellers shall jointly and severally
indemnify, defend and hold harmless Buyer and the Company and Buyer's and the
Company's officers, directors, employees and shareholders and their heirs,
representatives, successors and assigns, against and in respect of any and all
losses, costs, expenses, claims, damages, obligations and liabilities, including
interest, penalties and reasonable attorneys fees and disbursements ("Damages"),
which Buyer, the Company or any such person may suffer, incur or become subject
to arising out of, based upon or otherwise in respect of:
(a) any inaccuracy in or breach of any representation or warranty of
Sellers or the Company made in or pursuant to this Agreement, or any Seller
Transaction Document;
(b) any breach or nonfulfillment of any covenant or obligation of
Sellers (including ▇▇▇▇▇▇) contained in this Agreement or any Seller Transaction
Document;
(c) the operations of the Company, the Business or the Purchased Assets
and all acts and omissions of the Company and all facts, events and
circumstances relating to the Company, its financial condition or the business
on or prior to the Closing Date, including without limitation repayment of the
Notes, whether or not described in the Disclosure Statement except to the extent
expressly to be retained by the Company pursuant to Section 1.4; and
(d) the manufacture, distribution and/or use of the Intellectual
Property, including any claim of infringement upon a third-party right in such
Intellectual Property.
In the event Buyer makes any indemnification claim against Sellers
prior to Buyer's payments which may be required pursuant to Section 2.1(b)
through (g) herein, then the Buyer shall have the right, notwithstanding and in
addition to any other rights which Buyer may have with respect to the Sellers or
against any other person or entity, to set-off such claim for indemnification
against such payments. To the extent the Buyer does not set-off such
indemnification claim against such payment, the Sellers shall pay promptly same
to Buyer, but only to the extent of such payments received by the Sellers and,
as to any breach of Sections 4.1, 4.2(a), 4.3(a) or 5.6, only the Seller or
Sellers responsible for the breach shall have indemnification liability.
11.2 Indemnification by Buyer. Buyer shall indemnify and hold Sellers
harmless against and in respect of any and all Damages which Seller may suffer,
incur or become subject to arising out of, based upon or otherwise in respect
of:
(a) any inaccuracy in or breach of any representation or warranty of
Buyer made in or pursuant to this Agreement or any Buyer Transaction Document;
(b) any breach or nonfulfillment of any covenant or obligation of Buyer
contained in this Agreement or any Buyer Transaction Document; and
(c) the operation by Buyer of the Business and the Purchased Assets
after the Closing Date, or the failure to satisfy any liability or other
obligation of the Company to be retained pursuant to Section 1.4 herein.
11.3 Inter-Party Claims. Any party seeking indemnification pursuant to this
Section 11 (the "Indemnified Party") shall notify the other party or parties
from whom such indemnification is sought (the "Indemnifying Party") of the
Indemnified Party's assertion of such claim for indemnification, specifying the
basis of such claim. The Indemnified Party shall thereupon give the Indemnifying
Party reasonable access to the books, records and assets of the Indemnified
Party which evidence or support such claim or the act, omission or occurrence
giving rise to such claim and the right, upon prior notice during normal
business hours, to interview any appropriate personnel of the Indemnified Party
related thereto.
11.4 Third Party Claims.
(a) Each Indemnified Party shall promptly notify the Indemnifying Party
of the assertion by any third party of any claim with respect to which the
indemnification set forth in this Section relates (which shall also constitute
the notice required by Section 11.3). The Indemnifying Party shall have the
right, upon notice to the Indemnified Party within 20 business days after the
receipt of any such notice, to undertake the defense of or, with the consent of
the Indemnified Party (which consent shall not unreasonably be withheld), to
settle or compromise such claim. The failure of the Indemnifying Party to give
such notice and to undertake the defense of or to settle or compromise such a
claim shall constitute a waiver of the Indemnifying Party's rights under this
Section 11.4(a) and shall preclude the Indemnifying Party from disputing the
manner in which the Indemnified Party may conduct the defense of such claim or
the reasonableness of any amount paid by the Indemnified Party in satisfaction
of such claim.
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(b) The election by the Indemnifying Party, pursuant to Section
11.4(a), to undertake the defense of a third-party claim shall not preclude the
party against which such claim has been made also from participating or
continuing to participate in such defense, so long as such party bears its own
legal fees and expenses for so doing.
11.5 Limitations and Requirements. Sellers shall have no obligation to
indemnify Buyer or any other person against Damages pursuant to Section 11.1(a)
of this Agreement arising out of or based upon any inaccuracy in or breach of
any representation or warranty made in or pursuant to this Agreement or any
Transaction Document unless and until the aggregate of all such Damages suffered
or incurred by Buyer and such persons exceeds $10,000; in which event Buyer and
such persons shall be entitled to indemnification for the full amount of all
Damages suffered or incurred in excess of such $10,000 amount; provided,
however, that the above limitation shall not be applicable to any claim for
Damages pursuant to Sections 11.1(b)-(d) or based upon a breach of any
representation or warranty made in or pursuant to Sections 5.6, 5.9 or 5.16
hereof.
11.6 Exclusivity. Buyer shall have no claim against Sellers in connection
with this Agreement except as specifically set forth in this Agreement.
SECTION 12. MISCELLANEOUS.
12.1 Knowledge. All references in this Agreement to Sellers' knowledge
respecting a particular matter shall conclusively be deemed and presumed to
include, without limitation, all facts, circumstances and conditions known to
any Seller or any officer of the Company regarding such matter.
12.2 Survival of Representations and Warranties.
(a) The representations and warranties made by the parties in this
Agreement and in the certificates, documents, Schedules and Exhibits delivered
pursuant hereto shall survive the consummation of the transactions herein
contemplated until March 31, 2000, except that the representations and
warranties set forth in Sections 5.13, 5.14 and 5.16 shall remain in force for a
period corresponding to that of the applicable statute of limitations. Anything
in this Agreement to the contrary notwithstanding, the representations and
warranties of Sellers hereunder, and the right of Buyer to indemnification for
breach thereof, shall not be affected by any investigation of the Company or its
subsidiaries made by Buyer or its agents or representatives.
(b) The disclosures in the Disclosure Statement shall relate only to
the representations and warranties to which they expressly refer and to no other
representation or warranty in this Agreement. In the event of any inconsistency
between the statements made in the body of this Agreement and those contained in
the Disclosure Statement (other than an express exception to a specifically
identified statement), those in this Agreement shall control.
12.3 Further Assurances. Each party hereto shall use best efforts to comply
with all requirements imposed hereby on such party and to cause the transactions
contemplated hereby to be consummated as contemplated hereby, and shall, from
time to time and without further consideration, either before or after the
Closing, execute such further instruments, and take such other actions, as any
other party hereto shall reasonably request in order to fulfill its obligations
under this Agreement and to effectuate the purposes of this Agreement and to
provide for the orderly and efficient transition of the Business. Each party
shall promptly notify the other parties of any event or circumstance known to
such party that could prevent or delay the consummation of the transactions
contemplated by this Agreement, or which would indicate a breach or
non-compliance with any of the terms, conditions, representations, warranties or
agreements of any of the parties to this Agreement.
12.4 Costs and Expenses. Except as otherwise expressly provided herein,
each party shall bear its own expenses in connection herewith. Any and all
transfer, documentary and similar taxes and recording and filing fees incurred
in connection with the transactions contemplated herein shall be borne equally
by Sellers and by Buyer.
12.5 Notices. All notices or other communications permitted or required
under this Agreement shall be in writing and shall be sufficiently given if and
when hand delivered to the persons set forth below, or if sent by documented
overnight delivery service or registered or certified mail, postage prepaid,
return receipt requested, or by telegram, telex or telecopy, receipt
acknowledged, addressed as set forth below or to such other person or persons
and/or at such other address or addresses as shall be furnished in writing by
any party hereto to the others. Any such notice or communication shall be deemed
to have been given as of the date received, in the case of personal delivery, or
on the date shown on the receipt or confirmation therefor in all other cases.
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To Buyer:
---------
Judge Imaging Services, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To Sellers:
-----------
c/o ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
12.6 Assignment and Benefit.
(a) Sellers shall not assign this Agreement or any rights hereunder, or
delegate any obligations hereunder, without the prior written consent of Buyer.
Subject to the foregoing, this Agreement and the rights and obligations set
forth herein shall inure to the benefit of, and be binding upon, the parties
hereto, and each of their respective successors, heirs and assigns.
(b) This Agreement shall not be construed as giving any person, other
than the parties hereto and their permitted successors, heirs and assigns, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any of the provisions herein contained, this Agreement and all provisions and
conditions hereof being intended to be, and being, for the sole and exclusive
benefit of such parties, and permitted successors, heirs and assigns and for the
benefit of no other person or entity.
12.7 Settlement of Disputes. Except for disputes covered by Section 2.2,
the parties will attempt in good faith to resolve any and all controversies of
every kind and nature between the parties to this Agreement arising out of or in
connection with the existence, construction, validity, interpretation or
meaning, performance, non-performance, enforcement, operation, breach,
continuance or termination of this Agreement (each, a "Dispute") promptly by
negotiations between senior executives of the parties who have authority to
settle the Dispute (and who do not have direct responsibility for administration
of this Agreement). The disputing party shall give the other party written
notice of the Dispute. Within twenty days after receipt of said notice, the
receiving party shall submit to the other a written response. The notice and
response shall include (a) a statement of each party's position and a summary of
the evidence and arguments supporting its position, and (b) the name and title
of the executive who will represent that party. The executives shall meet at a
mutually acceptable time and place within thirty days of the date of the
disputing party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
Dispute. If the matter has not been resolved within sixty days of the disputing
party's notice, or if the party receiving said notice will not meet within
thirty days, the Dispute shall be submitted to arbitration in accordance with
the rules of the American Arbitration Association. The parties further agree
that all matters shall be governed by the laws of the Commonwealth of
Pennsylvania. The parties further agree that any arbitration conducted pursuant
to this section, shall be held in Philadelphia, Pennsylvania before a panel of
three arbitrators, one selected each of the parties and the third select by the
arbitrators selected by the parties. All deadlines specified in this Section may
be extended by mutual agreement. In any such arbitration proceeding, the
prevailing party, as determined by the arbitrator, shall be entitled to payment
of its cost of arbitration, including attorney's fees, to the extent deemed
equitable by the arbitrator.
12.8 Amendment, Modification and Waiver. The parties may, by mutual
agreement, amend or modify this Agreement in any respect, and Buyer and Seller
Representative may: (a) extend the time for the performance of any of the
obligations of the other, (b) waive any inaccuracies in representations and
warranties by the other, (c) waive compliance by the other with any of the
obligations contained in this Agreement, and (d) waive the fulfillment of any
condition precedent to the performance under this Agreement of the waiving
party. Any such amendment, modification, extension or waiver shall be in
writing. The waiver by a party of any breach of any provision of this Agreement
shall not constitute or operate as a waiver of any other breach of such
provision or of any other provision hereof, nor shall any failure to enforce any
provision hereof operate as a waiver of such provision or of any other provision
hereof.
12.9 Governing Law; Consent to Jurisdiction. This Agreement is made
pursuant to, and shall be construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania (and United States federal law, to the extent
applicable), irrespective of the principal place of business, residence or
domicile of the parties hereto, and without giving effect to otherwise
applicable principles of conflicts of law. Any of the parties, before or during
the arbitration contemplated by Section 12.7, may apply to a court as set forth
below for a temporary restraining order or
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preliminary injunction or similar equitable relief to protect its interests
pending completion of such arbitration proceedings and, in particular, to
enforce the provisions of Section 12.7 and to aid the arbitration contemplated
thereby. For this purpose, each party agrees that suit may be instituted in any
federal court in the Eastern District of Pennsylvania or in ▇▇▇▇▇▇▇▇▇▇ County
state court in the Commonwealth of Pennsylvania, and each party waives any
objection which such party may now or hereafter have to the laying of the venue
of any such action, suit or proceeding, and irrevocably submits to the
jurisdiction of any such court. Any and all service of process and any other
notice in any such action, suit or proceeding shall be effective against any
party if given as provided in Section 12.5 herein. Nothing contained in this
Section 12.9, in Section 12.7 or elsewhere herein, shall be deemed to affect the
right of any party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
jurisdiction other than Pennsylvania. Nothing contained herein or in any
Transaction Document shall prevent or delay Buyer or Sellers from seeking, in
any court of competent jurisdiction, specific performance or other equitable
remedies in the event of any breach or intended breach by Sellers or Buyer of
any of its obligations hereunder.
12.10 Section Headings and Defined Terms. The section headings contained
herein are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Agreement. The terms defined herein and in
any agreement executed in connection herewith include the plural as well as the
singular and the singular as well as the plural. Except as otherwise indicated,
all agreements defined herein refer to the same as from time to time amended or
supplemented or the terms thereof waived or modified in accordance herewith and
therewith.
12.11 Severability. The invalidity or unenforceability of any particular
provision, or part of any provision, of this Agreement shall not affect the
other provisions or parts hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions or parts were omitted.
12.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto by executing a counterpart hereof, but all of such
counterparts together shall be deemed to be one and the same instrument. It
shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
12.13 Entire Agreement, etc. This Agreement, together with the Disclosure
Statement and the agreements, Schedules, appendices and certificates referred to
herein or delivered pursuant hereto, constitute the entire agreement between the
parties hereto with respect to the purchase and sale of the Purchased Assets and
supersede all prior agreements and understandings. All Schedules, Exhibits and
appendices attached hereto and referred to herein are hereby incorporated herein
and made a part hereof as if fully set forth herein. The submission of a draft
of this Agreement or portions or summaries thereof does not constitute an offer
to purchase or sell the Purchased Assets, it being understood and agreed that
neither Buyer nor Sellers shall be legally obligated with respect to such a
purchase or sale or to any other terms or conditions set forth in such draft or
portion or summary unless and until this Agreement has been duly executed and
delivered by all parties.
12.14 Appointment of Seller Representative.
(a) Each of the Sellers hereby irrevocably appoints ▇▇▇▇▇ ▇▇▇▇▇▇ to be
the representative of the Sellers (including any successor, the "Seller
Representative") and irrevocably authorizes Seller Representative to take all
actions, exercise all powers and execute all documents as Seller Representative
may deem necessary or desirable in connection with this Agreement and the
transactions contemplated thereby. The Buyer and after the Closing the Company
shall be entitled to rely upon any communication, instrument or document signed
or sent by the Seller Representative. All documents executed and all actions
taken by Seller Representative shall be binding and enforceable upon all of the
Sellers as though each Seller had executed such document and or taken such
action.
(b) In the event of the resignation, death or other inability to serve
of Seller Representative, the Sellers shall appoint a successor Seller
Representative by majority vote (based upon the number of Shares in the Company
held by the Sellers immediately prior to the Closing) and Buyer shall be
entitled to rely upon any notification of a new Seller Representative believed
by Buyer to be genuine. Buyer shall be protected in dealing with the Seller
Representative before receipt of actual notice that the Seller Representative
has been replaced and if the Seller Representative has resigned, died or is
otherwise unable to serve, Buyer may deal with the Seller Representative or his
estate or another Seller of Buyer's choosing, who shall serve as Seller
Representative until replaced in accordance with this Section. Buyer shall not
be deemed to have any knowledge of any replacement of the Seller Representative
until receipt of written notice signed by Seller Representative, his executor or
a majority in interest of the Sellers.
(c) Buyer shall send all payments, certificates evidencing the Judge
Shares and all notices to the Seller Representative at the notice address set
forth in Section 12.5 and Seller Representative shall have complete
responsibility to distribute such payments, certificates and notices among the
Sellers, and each Seller hereby releases Buyer, the Company and all of their
affiliates, shareholders, directors, officers, employees and agents from any
claim or
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liability in connection therewith. The relationship and liabilities of
the Sellers and the Seller Representative inter se. shall be governed by such
other agreements as the Sellers and the Seller Representative shall deem
appropriate, but Buyer shall not be affected by or have any liability with
respect to any such agreement. All payments due from Buyer to the Sellers,
hereunder, if any, shall be sent at Buyer's option by check to the address set
forth in Section 12.5 or by wire transfer to an account specified by Seller
Representative.
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement, all as of the date first above written.
JUDGE IMAGING SYSTEMS, INC.
/s/ ▇▇▇▇▇ Person
Title: CEO
ON-SITE SOLUTIONS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇
GUARANTEE
The Judge Group, Inc., a Pennsylvania corporation ("Judge
Group"), hereby guarantees the payment of Buyer's obligations set forth in
Section 2 of this Agreement, including Buyer's obligations to make payments
pursuant to the Earnout, but Judge Group shall otherwise have no liability or
obligation in connection with this Agreement or the transactions contemplated
hereby.
With respect to such obligations of the Buyer guaranteed
hereby, Judge Group hereby waives any right to require Sellers to (a) first
proceed against Buyer or (b) pursue any other remedy in Sellers' power
whatsoever. Judge Group waives any defense arising by reason of any disability,
bankruptcy or other similar defense of Buyer except as expressly provided in
this Agreement.
Judge Group authorizes Buyer or its successors and assigns,
without notice, demand or consent to or from Judge Group and without affecting
Judge Group's liability hereunder, from time to time, to amend, compromise,
extend, accelerate or otherwise change the time of payment of or otherwise
change the terms of such obligations guaranteed hereby.
THE JUDGE GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
President
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