OPTION AND ACQUISITION AGREEMENT
dated as of February 6, 1998
by and among
HEARST BUSINESS PUBLISHING, INC.,
COMP-EST, INC.
and
THE STOCKHOLDERS NAMED HEREIN
TABLE OF CONTENT
This Table of Contents is not part of the Agreement to which it is attached
but is inserted for convenience only.
Page
No.
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ARTICLE I.
OPTION AND PURCHASE PRICE
1.01 Option 1
1.02 Option Purchase Price 2
1.03 Exercise of Option 2
1.04 Joint Venture Agreement 2
1.05 Non-Competition Agreement 2
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.01 Purchase of the Assets 2
2.02 Excluded Assets 5
2.03 Assumed Liabilities 5
2.04 Liabilities Not Assumed 6
2.05 Proration of Lease Payments, Utility Charges and Other Payments 7
2.06 Proration of Taxes 7
2.07 Assets Purchase Price. 7
ARTICLE III.
PURCHASE AND SALE OF SHARES
3.01 Purchase of Shares 8
3.02 Shares Purchase Price. 8
ARTICLE IV.
CLOSING
4.01 Closing 8
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER
AND THE STOCKHOLDERS
5.01 Corporate Existence of Seller 9
5.02 Authority 9
5.03 Capitalization 9
5.04 Subsidiaries 9
5.05 No Conflicts 9
5.06 Governmental Approvals and Filings 10
5.07 Book and Records 10
5.08 Financial Statements and Condition 10
5.09 Taxes 12
5.10 Legal Proceedings 13
5.11 Compliance With Laws and Orders 13
5.12 Company Plans; ERISA 13
5.13 Real Property 15
5.14 Tangible Property 16
5.15 Intangible Property Rights 16
5.16 Contracts 16
5.17 Licenses 17
5.18 Title to Property 17
5.19 Entire Business 17
5.20 Insurance 18
5.21 Affiliate Transactions 18
5.22 Labor Relations 18
5.23 Brokers 18
5.24 Bank Accounts 18
5.25 Disclosure 18
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
6.01 Authority 19
6.02 No Conflicts 19
6.03 Title to Shares 19
6.04 Brokers 19
6.05 Disclosure 19
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
7.01 Corporate Existence 20
7.02 Authority 20
7.03 No Conflicts 20
7.04 Governmental Approvals and Filings 20
7.05 Legal Proceedings 20
7.06 Purchase for Investment 20
7.07 Brokers 20
7.08 Disclosure 21
ARTICLE VIII.
COVENANTS OF SELLER AND THE STOCKHOLDERS
8.01 Regulatory and Other Approvals 21
8.02 Investigation by Purchase 21
8.03 No Solicitation 22
8.04 Conduct of Business 22
8.05 Notice of Events 22
8.06 Disclosure Schedules 22
8.07 Financial Statements 22
8.08 Fulfillment of Conditions 23
8.09 Transfer Taxes 23
8.10 Certified Public Accountant 23
8.11 Intangible Property 23
ARTICLE IX.
COVENANTS OF PURCHASER
9.01 Regulatory and Other Approvals 24
9.02 Fulfillment of Conditions 24
ARTICLE X.
TRANSFERS OF SHARES, ADDITIONAL COVENANTS
10.01 Restrictions on Transfer; Legend 24
10.02 Failure to Comply 24
10.03 Assumed Company Plans; Certain Employee Matters. 24
10.04 Board of Directors 25
ARTICLE XI.
CONDITIONS TO OBLIGATIONS OF PURCHASER
11.01 Representations and Warranties 26
11.02 Performance 26
11.03 Officers' Certificates 26
11.04 Orders and Laws 26
11.05 Regulatory Consents and Approvals 26
11.06 Third Party Consents 26
11.07 Opinion of Counsel 26
11.08 Conveyancing Documents 27
11.09 Stock Certificates 27
11.10 Revenue Statement 27
ARTICLE XII.
CONDITIONS TO OBLIGATIONS OF'SELLER AND THE STOCKHOLDERS
12.01 Representations and Warranties 27
12.02 Performance 27
12.03 Officers' Certificate 27
12.04 Conveyancing Documents 27
12.05 Orders and Laws 27
12.06 Regulatory Consents; and Approvals 28
12.07 Opinion of Counsel 28
ARTICLE XIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
13.01 Survival of Representations; and Warranties 28
13.02 Termination of Certain Representations and Warranties 28
ARTICLE XIV.
INDEMNIFICATION
14.01 Indemnification. 29
14.02 Method of Asserting Claims 29
ARTICLE XV.
TERMINATION
15.01 Termination 31
15.02 Effect of Termination 31
ARTICLE XVI.
DEFINITIONS
16.01 Definitions 31
ARTICLE XVII.
MISCELLANEOUS
17.01 Notices 36
17.02 Entire Agreement 37
17.03 Expenses 37
17.04 Public Announcements; Confidentiality 37
17.05 Further Assurances 38
17.06 Waiver 38
17.07 Amendment 38
17.08 The Third Party Beneficiary 38
17.09 No Assignment: Binding Effect 38
17.10 Headings 38
17.11 Stockholders' Representative. 39
17.12 Invalid Provisions 39
17.13 Governing Law 39
17.14 Counterparts 40
Exhibits
Exhibit A - Joint Venture Agreement
Exhibit B - Non-Competition Agreement
Exhibit C - Assignment and Assumption Agreement
Exhibit D - ▇▇▇▇ of Sale
Exhibit E - Revenue Statement
Exhibit F - Form of Revenue Statement
Schedules
5.01 - Foreign Qualifications of Seller
5.05 - Conflicts
5.08 - Financial Statements and Condition
5.08(d)(v) - Salary Increases
5.09 - Taxes
5.10 - Legal Proceedings
5.11(b) - Violations of Environmental Laws
5.12 - Company Plans
5.13(a) - Real Property Leases
5.14 - Personal Property Leases
5.15 - Intangible Property
5.16(a) - Contracts
5.17 - Licenses
5.19 - Entire Business
5.20 - Insurance
5.21 - Affiliate Transactions
5.24 - Bank Accounts
6.03 - Share Ownership
10.03 - Assumed Plans
This OPTION AND ACQUISITION AGREEMENT (the "Agreement") dated as of
February 6, 1998 is made and entered into by and among the Motor Information
Systems Division of Hearst Business Publishing, Inc., a Delaware corporation
("Purchaser"), Comp-Est, Inc., an Ohio corporation ("Seller"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
an individual residing at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇"), ▇▇▇▇ ▇▇▇▇▇, an individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇▇, an individual residing at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Lumbaca"), ▇▇▇▇ ▇▇▇▇▇▇, an individual residing at ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual
residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇,
an individual residing ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("▇▇▇▇▇▇")
and ▇▇▇▇ ▇▇▇, an individual residing at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("▇▇▇" and, together with Trevethan, Baker, Lumbaca, Shanks, ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇, the "Stockholders"). Capitalized terms not otherwise defined herein
have the meanings set forth in Section 16.01.
WHEREAS, Seller is engaged in the business (the "Business") of developing,
marketing and distributing a collision estimating system (the "System"),
consisting of Purchaser's electronic database version of its Collision
Estimating Guides and Seller's application software, such System for use by the
insurance and automotive industries to prepare cost estimates for the repair of
damaged automobiles;
WHEREAS, the authorized capital stock of Seller consists of 750 shares of
common stock, no par value per share (the "Common Stock");
WHEREAS, the Stockholders own all of the issued and outstanding shares of
Common Stock (collectively, the "Shares");
WHEREAS, Seller and the Stockholders wish to grant an option in favor of
Purchaser, and Purchaser wishes to accept such option, which, in Purchaser's
sole discretion, will permit Purchaser to purchase, upon the terms and
conditions herein set forth, either (a) from Seller, substantially all of the
assets of Seller relating to the Business or (b) from the Stockholders (in lieu
of such sale of assets by Seller) all of the Shares.
WHEREAS, in connection with the granting of the option to Purchaser, Seller
and Purchaser desire to enter into a joint venture agreement with respect to the
marketing, development and distribution of the System in markets outside the
United States, Canada, Puerto Rico, and the geographic area generally known as
the Caribbean;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I.
OPTION AND PURCHASE PRICE
1.01 Option . On the terms and subject to the conditions set forth in this
Agreement, Seller and the Stockholders hereby irrevocably grant to Purchaser the
option (the "Option") (a) if the Asset Election (as hereinafter defined) is
given, to purchase all of the Assets (as hereinafter defined) or (b) if the
Stock Election (as hereinafter defined) is given, to purchase all of the Shares
(in lieu of the Assets), and upon exercise of the Option by Purchaser as
hereinafter provided, if the Asset Election is given, Seller agrees to sell,
transfer, assign, convey and deliver to Purchaser, all of the right, title and
interest as of the Closing Date of Seller in and to all of the Assets or, if the
Stock Election is given, the Stockholders, jointly and severally, agree to sell,
transfer, assign, convey and deliver to Purchaser all of the right, title and
interest now or hereafter owned or held by the Stockholders in and to the Shares
in lieu of such sale of Assets by Seller.
1.02 Option Purchase Price . The purchase price (the "Option Purchase
Price") for the Option granted to Purchaser pursuant to Section 1.01 shall be
One Million Dollars ($1,000,000), Nine Hundred Thousand Dollars ($900,000.00) of
which will be payable simultaneously with the parties' execution and delivery of
this Agreement by bank wire transfer in immediately available funds to a bank
account designated in writing by Seller prior to the date hereof, and One
Hundred Thousand Dollars ($100,000) of which has been deposited in escrow by
Purchaser with ▇▇▇ ▇▇▇▇▇▇, ▇▇. and shall be paid by him to Seller pursuant to an
escrow agreement and the terms of that certain letter of intent dated January 8,
1998 between Seller and Purchaser.
1.03 Exercise of Option . The Option may be exercised by Purchaser at any
time during the period beginning on that date which is eighteen (18) months
after the date of this Agreement and ending on that date (the "Option Expiration
Date") which is five (5) years after the date of this Agreement by giving notice
of exercise (the "Option Exercise Notice") of the Option on or prior to the
Option Expiration Date to Seller.
1.04 Joint Venture Agreement . On the date of this Agreement and as a
condition to Purchaser's obligation to purchase of the Option, Purchaser and
Seller shall have executed a Joint Venture Agreement (the "Joint Venture
Agreement") in substantially the form of Exhibit A hereto.
1.05 Non-Competition Agreement . On the date of this Agreement, and as a
condition to Purchaser's obligation to purchaser of the Option, ▇▇▇▇▇▇▇▇▇ shall
have executed and delivered to Purchaser a non-competition agreement in
substantially the form of Exhibit B hereto (the "Non-Competition Agreement").
Two Hundred Thousand Dollars ($200,000) of Option Purchase Price shall be
allocated to ▇▇▇▇▇▇▇▇▇ in consideration of ▇▇▇▇▇▇▇▇▇'▇ execution of such
Non-Competition Agreement.
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.01 Purchase of the Assets . If Purchaser delivers the Option Exercise
Notice on or prior to the Option Expiration Date requesting that Seller sell to
Purchaser substantially all of the Assets the (the "Asset Election"), then on
the terms and subject to the conditions set forth in this Agreement and except
as provided in Section 2.02 and Section 3.01, on the Closing Date, Seller agrees
to sell, transfer, assign, convey and deliver to Purchaser, and Purchaser agrees
to purchase, acquire and accept from Seller, all of the right, title and
interest as of the Closing Date of Seller in and to all of the assets,
properties and rights owned by Seller, or used or held for use by Seller in the
operation of the Business, of every type and description, real, personal and
mixed, tangible and intangible, wherever located and whether or not reflected on
the Books and Records of Seller (the foregoing are hereinafter collectively
referred to as the "Assets"), free and clear of all Liens. Except as provided in
Section 2.02, the Assets include, without limitation, all of the right, title
and interest of Seller in or to the following to the extent owned, used or held
for use by Seller in the operation of the Business and existing on the Closing
Date (and whether or not in existence on the date hereof):
(a) Cash . All cash on hand or in banks, cash equivalents, marketable and
non-marketable securities and other investments, all rights in any
funds of any nature (including, without limitation, funds relating to
vacation pay, workers' compensation, unemployment compensation and
other employee benefits), bank and security accounts, safe deposit
boxes and vaults and insurance policies, wherever maintained or held;
(b) Real Property Leases . (i) The leases and subleases of real property
set forth on Schedule 5.13(a) hereto as to which Seller is the lessor
or sublessor and (ii) all leases and subleases of real property set
forth on Schedule 5.13(a) hereto as to which Seller is lessee or
sublessee, together with any options to purchase the underlying
property and leasehold improvements thereon set forth on Schedule
5.13(a) hereto, and in each case all other rights, subleases,
licenses, permits, prepaid rent, deposits and profits appurtenant to
or related to such leases and subleases (the leases and subleases
described in clauses (i) and (ii) together with all leases and
subleases of real property which will be entered into between the date
of this Agreement and the Closing Date are hereinafter collectively
referred to as the "Real Property Leases");
(c) Inventory . All inventories of raw materials, work-in-process,
finished goods, merchandise, products under research and development,
demonstration equipment, office and other supplies, parts, packaging
materials and other accessories related thereto which are held at, or
are in transit from or to, the locations at which the Business is
conducted, or located at suppliers' premises or customers' premises on
consignment, in each case which are used or held for use by Seller in
the conduct of the Business, including any of the foregoing purchased
subject to any conditional sales or title retention agreement in favor
of any other Person, together with all rights or Seller against
suppliers of any of the foregoing with respect thereto (the
"Inventory");
(d) Accounts Receivable . All trade accounts receivable and all notes,
bonds and other evidences of indebtedness of and rights to receive
payments arising out of sales occurring in the conduct of the Business
prior to the Closing Date and the security agreements related thereto,
including any rights of Seller with respect to any third party
collection proceedings or any other Actions or Proceedings which have
been commenced in connection therewith (the "Accounts Receivable");
(e) Tangible Personal Property . All furniture, fixtures, equipment,
machinery, spare parts and other tangible personal property, other
than Inventory, used or held for use in the conduct of the Business at
the location at which the Business is conducted or at suppliers'
premises or customers' premises on consignment or otherwise used or
held for use by Seller in the conduct of the Business, including any
of the foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other Person (the "Tangible
Property");
(f) Personal Property Leases . (i) The leases or subleases of Tangible
Property set forth on Schedule 5.14 hereto as to which Seller is the
lessor or sublessor and (ii) all leases of Tangible Property set forth
on Schedule 5.14 hereto as to which Seller is the lessee or sublessee,
together with any options to purchase or sell the underlying property
set forth on Schedule 5.14 hereto (the leases and subleases described
in clauses (i) and (ii), together with all leases and subleases of
Tangible Property which will be entered into between the date of this
Agreement and the Closing Date, are hereinafter collectively referred
to as the "Personal Property Leases");
(g) Business Contracts . All Contracts (other than the Real Property
Leases, the Personal Property Leases and the Accounts Receivable) to
which Seller is a party and which are utilized in the conduct of the
Business, including without limitation all Contracts relating to
suppliers, sales representatives, distributors, consultants, purchase
orders, marketing and purchasing arrangements and manufacturing
arrangements, including all Contracts entered into between the date of
this Agreement and the Closing Date (the "Business Contracts");
(h) Prepaid Expenses . All prepaid expenses relating to the Business;
(i) Intangible Property . All Intangible Property relating to the
Business;
(j) Licenses All licenses, certificates, permits, franchises, approvals
and authorizations and applications for any of the foregoing
(including but not limited to computer software licenses) utilized in
the conduct of the Business (the "Business Licenses");
(k) Security Deposits . All security deposits deposited by or on behalf of
Seller (including but not limited to those made as lessee or sublessee
under the Real Property Leases or the Personal Property Leases);
(l) Balance Sheet Assets . Those assets, properties and rights of Seller
reflected on the Final Balance Sheet (as hereinafter defined) or
otherwise referred to in this Agreement or any Schedule hereto,
subject to changes in the ordinary course of business through the
Closing Date;
(m) Books and Records . All Books and Records used or held for use in the
conduct of the Business or otherwise relating to Seller or its assets
or properties;
(n) Warranties . All rights of Seller under or pursuant to all warranties,
representations and guarantees made by suppliers, manufacturers and
contractors in connection with products sold to or services provided
to Seller for its Business, or affecting the property, machinery or
equipment used by Seller in the conduct of the Business, or relating
to any property leased by Seller pursuant to the Real Property Leases
to be purchased by Purchaser hereunder or the Personal Property Leases
to be purchased by Purchaser hereunder; and
(o) Telephone Numbers . All transferable telephone exchange numbers.
To the extent that assignment hereunder by Seller to Purchaser of any Real
Property Lease, Personal Property Lease, Business Contract or Business License
is not permitted or is not permitted without the consent of any third party,
this Agreement shall not be deemed to constitute an undertaking to assign the
same if such consent is not given or if such an undertaking otherwise would
constitute a breach of or cause a loss of benefits thereunder. Seller will, and
the Stockholders will cause Seller to, use its best efforts to obtain any and
all such third party consents. If any third party consent is not obtained before
the Closing, Seller will cooperate with Purchaser in any reasonable arrangement
designed to provide to Purchaser after the Closing the benefits under the
applicable Real Property Lease, Personal Property Lease, Business Contract or
Business License, including enforcement for the benefit of Purchaser of any and
all rights of Seller against any other Person arising out of breach or
cancellation by such other Person and including, if so requested by Purchaser,
acting as an agent on behalf of Purchaser, or as Purchaser shall otherwise
reasonably require.
2.02 Excluded Assets . Any provision of this Agreement to the contrary
notwithstanding, Purchaser shall not acquire and there shall be excluded from
the Assets the following (the "Excluded Assets"):
(a) Minute Books. The minute books, stock transfer books and corporate seal
of Seller (collectively, the "Minute Books");
(b) Automobile Lease. The rights of Seller under the Personal Property
Lease set forth in Schedule 5.14 relating to the Nissan Maxima Automobile used
by ▇▇▇▇▇;
(c) Joint Venture Agreement. All rights of Seller under the Joint Venture
Agreement; and
(d) Other Matters. All rights of Seller under this Agreement and the
documents and other papers delivered to Seller by Purchaser pursuant to this
Agreement.
2.03 Assumed Liabilities . Except as may be specifically excluded pursuant
to the provisions of this Agreement, subject to the terms and conditions set
forth herein, and except as provided in Section 2.04 and Section 3.01, Purchaser
agrees that, on the Closing Date, Purchaser shall assume and thereafter pay,
perform or discharge when due or required to be performed, as the case may be,
the following obligations and liabilities of Seller to the extent existing on
the Closing Date (the "Assumed Liabilities"):
(a) Real Property Lease Obligations. All obligations of Seller under the
Real Property Leases to the extent arising and to be performed on or after the
Closing Date;
(b) Personal Property Lease Obligations. All obligations of Seller under
the Personal Property Leases to the extent arising and to be performed on or
after the Closing Date;
(c) Business Contract Obligations. All obligations of Seller under the
Business Contracts to the extent arising and to be performed on or after the
Closing Date;
(d) Business License Obligations. All obligations of Seller under the
Business Licenses to the extent arising and to be performed on or after the
Closing Date; and
(e) Balance Sheet Liabilities. All undischarged liabilities and obligations
of Seller which relate to the conduct of the Business prior to the Closing Date
and are reflected on the Final Balance Sheet to the extent such liabilities (i)
are properly recorded thereon, (ii) have been incurred in the ordinary course of
business consistent with past practice without violation of this Agreement and
(iii) are of the same type and nature as those liabilities of Seller set forth
on the December 31, 1997 balance sheet of Seller included in the Financial
Statements (as hereinafter defined).
2.04 Liabilities Not Assumed . Any provision of this Agreement to the
contrary notwithstanding (and without implication that Purchaser is assuming any
liability not expressly excluded and, where applicable, without implication that
any of the following have been included in the Assumed Liabilities), the
following liabilities (the "Excluded Liabilities") of Seller are excluded and
shall not be assumed or discharged by Purchaser:
(a) Taxes. Any liability for Taxes incurred or accrued on or prior to the
Closing Date;
(b) Related Parties. Any liabilities to, or for the benefit of, any
Stockholder, any Affiliate of any Stockholder or of Seller, any
director or officer of any of the foregoing or of Seller or any
Associate of any of the foregoing or of Seller;
(c) Product Liability. Any warranty liabilities of Seller with respect to
any products or services sold or provided prior to the Closing Date;
(d) Intellectual Property Claims. Any liabilities of Seller arising out of
infringement of the Intangible Property rights of any Person;
(e) Violations of Laws. Any liabilities arising out of violations of any
Laws or Orders, including, without limitation, liabilities under any
Environmental Law and under any rules or regulations promulgated by
the EEOC or OSHA;
(f) Litigation. Any liabilities in respect of any Action or Proceeding;
(g) Excluded Assets. Any liabilities arising out of, relating to or
otherwise in respect of the Excluded Assets;
(h) Indebtedness. Any liabilities arising out of, relating to or otherwise
in respect of indebtedness for borrowed money, including without
limitation, guarantees, lines of credit and letters of credit;
(i) Company Plans; Employees. Except as expressly provided in Section
10.03, any liabilities arising out of or in connection with any
Company Plan or otherwise in connection with the employment of any
employee;
(j) Joint Venture Agreement. Any liabilities arising out of, relating to
or otherwise in respect of, Seller's interest in the Joint Venture
Agreement.
(k) Other Matters. Without limitation by the specific enumeration of the
foregoing, any liabilities not expressly assumed by Purchaser pursuant
to the provisions of Section 2.03.
The assumption by Purchaser of the liabilities of Seller herein provided for,
and the transfer thereof by Seller, shall in no way expand the rights or
remedies of any third party against Purchaser or Seller as compared to the
rights and remedies which such third party would have had against Seller had
Purchaser not assumed such liabilities. Without limiting the generality of the
preceding sentence, the assumption by Purchaser of said liabilities shall not
create any third party beneficiary rights. Seller shall pay, perform and
discharge when due all of those liabilities which Purchaser has not specifically
agreed to assume pursuant to the provisions of Section 2.03.
2.05 Proration of Lease Payments, Utility Charges and Other Payments . If
the Closing Date shall fall an a date other than the date on which payments are
due with respect to (a) any Real Property Lease or Personal Property Lease, (b)
insurance or (c) utility or similar regular periodic charges with respect to the
Assets for which a final billing has not been received by Seller, any
installment of rental payments, insurance premiums and any such utility or
similar charge payable with respect to the current period in which the Closing
Date occurs shall be paid by Seller on the basis of the actual number of days
elapsed from the first day of such period to the Closing Date and the balance
shall be paid by Purchaser.
2.06 Proration of Taxes . All property taxes, ad valorem taxes and special
assessments payable with respect to a taxable period beginning and ending before
the Closing Date, but not yet due as of the Closing Date, with respect to any
Assets shall be paid by Seller. In the case of any such taxes or assessments
payable with respect to a taxable period beginning before the Closing Date and
ending after the Closing Date, but not yet due as of the Closing Date, Seller
shall pay that portion of such taxes times a fraction, the numerator of which is
the number of days from the beginning of such taxable period through and
including the Closing Date, and the denominator of which is 365, and the balance
shall be paid by Purchaser.
2.07 Assets Purchase Price.
(a) Amount. The purchase price (the "Assets Purchase Price") for the Assets
shall be the sum of (i) Seven Hundred and Fifty Thousand Dollars ($750,000) (the
"Base Cash Payment"), plus (ii) the Revenue Payment plus (iii) the assumption by
Purchaser of the Assumed Liabilities. The Base Cash Payment and the Revenue
Payment shall be payable on the Closing Date by bank wire transfer in
immediately available funds to a bank account designated in writing by Seller
not less than three (3) Business Days before the Closing Date.
(b) Allocation. At the Closing the Assets Purchase Price will be allocated
among the Assets for all purposes (including Tax and financial accounting
purposes) in a manner consistent with Section 1060 of the Code. Seller shall be
responsible for the preparation and filing of all returns, documents, statements
and other forms that are required to be submitted to any federal, state or local
taxing, authority in connection with the Purchase Price Allocation; provided
that Purchaser shall approve all returns, documents, statements and other forms
to be filed pursuant to this Section 2.07(b). Each of the parties hereto will
not take a position on any Tax Return, before any governmental agency charged
with the collection of any Tax, or in any judicial proceeding, that is in any
way inconsistent with the statements to be prepared by Seller pursuant to this
Section 2.07(b) and will cooperate with each other in timely filing, consistent
with such allocation, any reports required (including, without limitation, Form
8594) by the IRS.
ARTICLE III.
PURCHASE AND SALE OF SHARES
3.01 Purchase of Shares . If Purchaser delivers the Option Exercise Notice
on or prior to the Option Expiration Date and includes with the Option Exercise
Notice a written notice requesting that the Stockholders sell to Purchaser all
of the Shares (the "Stock Election") then, on the Closing Date, the Stockholders
will sell to Purchaser all of the Shares in lieu of Seller selling the Assets to
Purchaser and Purchaser assuming the Assumed Liabilities pursuant to Article II.
If the Stock Election is given, in lieu of the transactions described in Article
II, the Stockholders agree to sell to Purchaser, and Purchaser agrees to
purchase from the Stockholders, all the Shares free and clear of all Liens.
3.02 Shares Purchase Price.
(a) Amount. The purchase price for the Shares (the "Shares Purchase
Price") shall be the sum of (a) the Base Cash Payment and (b) the Revenue
Payment. The Shares Purchase Price shall be payable on the Closing Date by
bank wire transfer in immediately available funds to the bank accounts and
in the amounts designated in writing by the Stockholders' Representative
not less than three (3) Business Days before the Closing Date.
(b) Allocation. 20% of the aggregate Shares Purchase Price shall be
allocated to ▇▇▇▇▇▇▇▇▇ in consideration of ▇▇▇▇▇▇▇▇▇'▇ execution of the
Non-Competition Agreement and shall be deemed received by ▇▇▇▇▇▇▇▇▇ out of
the Shares Purchase Price paid to ▇▇▇▇▇▇▇▇▇ for the Shares to be sold by
him.
ARTICLE IV.
CLOSING
4.01 Closing . The Closing of the transactions contemplated by Article
II or, if the Stock Election is given, Article III will take place at the
offices of The Hearst Corporation, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other place as Purchaser and Seller (or, if the Stock
Election is given, the Stockholders' Representative) mutually agree, at
10:00 A.M. local time, on the Closing Date.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE STOCKHOLDERS
Seller and each of the Stockholders, jointly and severally, hereby
represent and warrant to Purchaser as follows:
5.01 Corporate Existence of Seller . Seller is a corporation duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation. Seller has all requisite corporate power and
authority to carry on its business as it has been and is currently being
conducted, to own, lease and operate the properties and assets used in
connection therewith and to execute and deliver this Agreement and to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Seller is duly qualified, licensed or admitted to do
business and is in good standing in those jurisdictions specified in
Schedule 5.01, which are the only jurisdictions in which the ownership use
or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary,
except for those jurisdictions in which the adverse effects of all such
failures by Seller to be qualified, licensed or admitted and in good
standing could not in the aggregate reasonably be expected to have a
material adverse effect on the business, assets, properties, condition
(financial or otherwise) or results of operations of Seller (a "Material
Adverse Effect"). Seller has prior to the execution of this Agreement
delivered or made available for inspection to Purchaser true and complete
copies of the certificate of incorporation and by-laws of Seller as
currently in effect.
5.02 Authority . The execution and delivery by Seller of this
Agreement, the performance by Seller of its obligations hereunder and the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate actions on the part of Seller. This Agreement has
been duly and validly executed and delivered by Seller and constitutes a
legal, valid and binding obligation of Seller enforceable against Seller in
accordance with its terms.
5.03 Capitalization . The capital stock of Seller consists solely of
750 shares of Common Stock, of which only the Shares are issued and
outstanding. The Shares are duly authorized and are validly issued, fully
paid and non-assessable. There is no outstanding warrant, option or other
commitment (collectively, a "Purchase Option") pursuant to which Seller may
be required to issue any of its capital stock, whether upon conversion of
securities or otherwise. There is no outstanding commitment of any kind
convertible into such capital stock and there is no agreement or
understanding with respect to the voting of such capital stock.
5.04 Subsidiaries . Seller does not own, directly or indirectly, any
capital stock of, or other interest in, any other Person.
5.05 No Conflicts . Except as set forth an Schedule 5.05 hereto, the
execution and delivery by Seller of this Agreement do not, and the
performance by Seller of its obligation under this Agreement and the
consummation of the transactions contemplated hereby will not (with or
without notice or lapse of time or both): (a) conflict with or result in a
violation or breach of any of the articles of incorporation or by-laws of
Seller; (b) conflict with or result in a violation or breach of any Law or
Order applicable to Seller, or any of its assets and properties; or (c) (i)
conflict with or result in a violation or breach of, (ii) constitute a
default under, (iii) require Seller to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a
result or under the terms of, or (iv) result in the creation or imposition
of any Lien upon Seller or any of its assets and properties under, any
material Contract or material License to which Seller is a party or by
which any of its assets and properties is bound.
5.06 Governmental Approvals and Filings . No consent, approval or
action of, filing, with or notice to any Governmental or Regulatory
Authority on the part of Seller is required in connection with the
execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby.
5.07 Book and Records . The Minute Books as made available to Purchase
prior to the execution of this Agreement contain a true and complete
record, in all material respects, of all action taken at all meetings and
by all written consents in lieu of meetings of the stockholders, the boards
of directors and committees of the boards of directors of Seller.
5.08 Financial Statements and Condition . (a) Prior to the execution
of this Agreement, Seller has delivered to Purchaser true and complete
copies of the unaudited balance sheets of Seller as of and for the fiscal
period then ended, December 31, 1995, and the unaudited balance sheet, and
statements of operations as of and for the fiscal period then ended
November 30, 1997 (collectively, the "Financial Statements"). All such
Financial Statements fairly present in all material respects the financial
condition and results of operations of Seller as of the respective dates
thereof and for the respective periods covered thereby. Comp-Est and
▇▇▇▇▇▇▇▇▇ (but not the other Stockholders) further represent and warrant
(i) that the unaudited balance sheets and statement of operations of Seller
as of, and for the period then ended, December 31, 1997 will be prepared in
the same manner, and the results will not be materially less favorable than
the unaudited balance sheet and statement of operation of Seller as of, and
for the period then ended, November 30, 1997, and (ii) that the unaudited
balance sheets and the statement of operations of Seller as of, and for the
fiscal period then ended, December 31, 1995 are consistent with all tax
returns filed by Seller for the period ended December 31, 1995.
(b) Except for the execution and delivery of this Agreement and the
transactions to take place pursuant hereto, since the Financial Statement
Date there has not been any change, event or development which has had or
is reasonably expected to have a Material Adverse Effect.
(c) Since the Financial Statement Date, Seller has not incurred any
liabilities of a kind required by GAAP to be set forth on a balance sheet,
other than liabilities incurred in the ordinary course of business, none of
which is material to Seller's financial condition or Business.
(d) Except as set forth on Schedule 5.08 or as expressly authorized or
required by this Agreement, since the Financial Statement Date Seller has
not, and covenants and agrees that from the date of this Agreement until
the Closing Date Seller will not have:
(i) amended its certificate of incorporation or by-laws or comparable
instruments or entered into a Business Combination (as hereinafter defined)
with any other Person, or changed or agreed to rearrange in any material
respect the character of its business;
(ii) issued, sold or purchased options or rights to subscribe to, or
entered into any contracts or commitments to issue, sell or purchase, any
shares of its capital stock;
(iii) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to its stockholders, or made any direct
or indirect redemption, retirement, purchase or other acquisition of any
shares of its capital stock; provided, however, that after the date of this
Agreement Seller may pay cash distributions to the Stockholders if
immediately following the payment of such cash distributions Seller's Net
Assets are not less than $125,000,00; provided, further, however, that
notwithstanding anything contained in this Agreement to the contrary, if
the Stock Election is given, immediately preceding the Closing, the Seller
may distribute its interests in the Joint Venture Agreement to the
Stockholders or an entity wholly-owned by the Stockholders;
(iv) knowingly waived any right of material value to its business;
(v) made any wage or salary increase or other compensation payable or
to become payable or bonus, or increase in any other direct or indirect
compensation, for or to any of its officers, directors, employees,
consultants, agents or other representatives, or any accrual for or
commitment or agreement to make or pay the same, other than increases made
in the ordinary course of business consistent with past practice provided,
however, that the increase in ▇▇▇▇▇▇▇▇▇'▇ salary set forth on Schedule
5.08(d)(v) is not in the ordinary course of business nor consistent with
past practice;
(vi) entered into any transactions with any of its Affiliates,
stockholders, officers, directors, employees, consultants, agents or other
representatives (other than employment arrangements made in the ordinary
course of business consistent with past practice), or any Affiliate of any
stockholder, officer, director, consultant, employee, agent or other
representative;
(vii) made any payment or commitment to pay any severance or
termination pay to any Person or any of its officers, directors, employees,
consultants, agents or other representatives, other than payments or
commitments to pay such Persons or its officers, directors, employees in
the ordinary course of business;
(viii) (A) entered into any Real Property Lease (provided, however
that Seller may enter into a new Real Property Lease with respect to the
relocation or renewal of a Real Property Lease for the primary office of
Seller), (B) sold, abandoned or made any other disposition of any of its
assets or properties other than in the ordinary course of business
consistent with past practice; or (C) granted or suffered any Lien on any
of its assets or properties other than Permitted Liens and sales of
inventory in the ordinary course of business;
(ix) except for inventory or equipment acquired in the ordinary course
of business, made any acquisition of all or any part of the assets,
properties, capital stock or business of any other Person; or
(x) made any change in accounting methods or practices or made any
changes in depreciation or amortization policies or rates adopted by it;
(xi) entered into any Contract or renewed, amended or modified any
Contract containing any provision or covenant prohibiting or materially
limiting the ability of Seller to engage in any business activity or
compete with any Person;
(xii) issued any note, bond or other debt security, created, incurred
or assumed any indebtedness for borrowed money, or guaranteed any
indebtedness for borrowed money or any capitalized lease obligation in an
aggregate amount exceeding $100,000.00;
(xiii) entered into any Contract or renewed, amended or modified any
Contract of a nature required to be disclosed on Schedule 5.16(a), except
for those Contracts made in the ordinary course of business consistent with
past practice within the 12 months prior to the date of this Agreement
except that all such contracts shall comply with the terms of the Database
License Agreement;
(xiv) made any capital expenditures or commitments for capital
expenditures in an aggregate amount exceeding $40,000.00 except for those
capital expenditures for computer equipment made in the ordinary course of
business consistent with past practice; or
(xv) entered into, amended or terminated any (A) employment agreement
or (B) adopted, entered into or amended any arrangement which is, or would
be, a Company Plan.
5.09 Taxes . (a) Seller has validly elected to be an "S corporation"
(within the meaning of Section 1361(a)(1) of the Code), for federal income
tax purposes as of January 1, 1997, and has maintained its status as an "S
corporation" through the date hereof. Seller has validly elected to be an
"S corporation" in all state and local jurisdictions where it would, absent
such an election, be subject to corporate income or franchise tax, and has
maintained its status as an "S corporation" in such jurisdictions at all
times thereafter. No state of facts exists or existed which presents or
presented any risk that Seller's status as an "S corporation" is or was
subject to termination or revocation.
(b) Except as set forth on Schedule 5.09: (i) all Tax Returns required
to be filed with respect to Seller or Seller's business have been timely
filed, copies of which have been delivered to the Purchaser, and such Tax
Returns are true, correct and complete in all material respects; (ii)
Seller has paid to the appropriate Tax authority all Taxes shown on such
Tax Returns or otherwise due or claimed to be due from it by any Tax
authority; (iii) no adjustments relating to such Tax Returns have been
proposed formally or informally by any Tax authority and no basis exists
for any such adjustment; (iv) there are no disputes, claims or pending or
threatened actions or proceedings against Seller for the assessment or
collection of Taxes against Seller; (v) Seller has not executed or filed
any consent or agreement to extend the period of assessment or collection
of any Taxes or filing of any Tax Return; (vi) no consent under Section
341(f) of the Code has been filed with respect to Seller; (vii) there are
no Tax liens on any assets of Seller; (viii) Seller has not been a member
of an affiliated group (within the meaning of Section 1504(a)(1) of the
Code) filing a consolidated Tax Return; (ix) Seller has no liability to any
person pursuant to any Tax sharing or similar agreement or understanding
relating to the payment of any Taxes; (x) Seller and each Shareholder are
not and have not been at any time a "foreign person" as defined in Sections
1445(f)(3) and 1446(e) of the Code and are not and have not at any time
been a United States real property holding corporation as described in
Section 897(c)(2) of the Code; and (xi) there are no requests for
information currently outstanding that could affect the Taxes associated
with the business, assets or properties of Seller.
(c) Schedule 5.09 lists all income, franchise and similar Tax Returns
(federal, state, local and foreign) filed by Seller for which the statute
of limitations has not expired and indicates those Tax Returns which have
been audited and those which are the subject of audit.
5.10 Legal Proceedings . Except as set forth on Schedule 5.10, (a) (i)
there are no Actions or Proceedings pending against Seller or any of its
assets and properties; and (ii) to the Knowledge of Seller and the
Stockholders, there are no Actions or Proceedings threatened against Seller
or any of its assets and properties; and (b) there are no Orders
outstanding against Seller.
5.11 Compliance With Laws and Orders . (a) Seller is not nor has it
been in violation of or in default under any Law or Order applicable to
Seller or any of its assets and properties the effect of which,
individually or in the aggregate with other such violations and defaults,
has had or could reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.1(b), Seller is in compliance
with Environmental Laws, Seller has not received any written notice, report
or other information regarding any actual or alleged material violation of
Environmental Laws, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective obligations
relating to the Seller or its facilities arising under any Environmental
Laws, the subject of which would have a Material Adverse Effect. This
Section 5.11(b) contains the sole and exclusive representations and
warranties of the Seller with respect to any Environmental Laws.
5.12 Company Plans; ERISA . Except as disclosed on Schedule 5.12,
neither Seller nor any entity required to be aggregated with either Seller
under Code 414(b), (c), (m) or (o) or ERISA 4001 (each an "ERISA
Affiliate") sponsors, maintains, has any obligation to contribute to, has
liability under or is otherwise a party to, any Company Plan. With respect
to each Company Plan, to the extent applicable:
(a) Such Company Plan has been maintained and operated in material
compliance with its terms and with the applicable provisions of ERISA, the
Code and all to applicable governmental laws and regulations;
(b) All contributions required by law or any Company Plan or
applicable collective bargaining agreement to have been made under any such
Company Plan to any fund, trust, or account established thereunder or in
connection therewith have been made by the due date thereof, and all such
payments that are accrued but not yet due are properly reflected on the
Financial Statements;
(c) Each such Company Plan intended to qualify under Code 401(a) is
the subject of a favorable unrevoked determination letter issued by the IRS
as to its qualified status under the Code, and no circumstances have
occurred that would adversely affect the tax qualified status of any such
Company Plan:
(d) No Company Plan is or ever has been subject to Part III of
Subtitle B of Title I of ERISA or Code 412;
(e) There is no material suit, action, dispute, claim, arbitration or
legal, administrative or other proceeding or governmental investigation
pending, or to the Knowledge of Seller threatened, alleging any breach of
the terms of any such Company Plan or of any fiduciary duties thereunder or
violation of any applicable Law with respect to any such Company Plan;
(f) Neither Seller nor any "party in interest" (as defined in ERISA
3(14)) nor any "disqualified person" (as defined in Code 4975) with respect
to any such Company Plan has engaged in a non-exempt "prohibited
transaction" within the meaning of Code 4975 or ERISA 406;
(g) (i) No Company Plan that is a "welfare benefit plan" as defined in
ERISA 3(l) provides for continuing benefits or coverage for any participant
or beneficiary of a participant after such participant's termination of
employment, except to the extent required by law; (ii) there has been no
violation of Code 4980B or ERISA 601-608 with respect to any such Company
Plan that could result in any material liability; (iii) no such Company
Plans are "multiple employer welfare arrangements" within the meaning of
ERISA 3(40); (iv) with respect to any such Company Plans that are
self-insured, all claims made pursuant to any such Company Plan that have
not yet been paid are set forth on Schedule 5.12, together with an estimate
thereof; no such claim could, in the aggregate, result in an uninsured
liability in excess of $20,000 per participant or covered dependent, and
all such claims could not result in an uninsured liability of more than
$20,000 in the aggregate for all participants and covered dependents
combined, and are estimated as set forth on Schedule 5.12; (v) Seller does
not maintain or have any obligation to contribute to any "voluntary
employees' beneficiary association" within the meaning of Code 501(c)(9) or
other funding arrangement for the provision of welfare benefits (such
disclosure to include the amount of any such funding); and (vi) no amounts
are required in connection with any such Company Plan to be included in
income under Code 105(h) and (vii) all Company Plans which provide medical,
dental health or long-term disability benefits are fully insured and claims
with respect to any participant or covered dependent under such Company
Plan could not result in any uninsured liability to the Company, or the
Purchaser;
(h) Neither Seller or any ERISA Affiliate has ever had any obligation
to contribute to any Multi-Employer Plan; and
(i) With respect to each such Company Plan, true, correct, and
complete copies of the applicable following documents have been delivered
to Purchaser: (i) all current Company Plan documents and related trust
documents, and any amendment thereto; (ii) Forms 5500, financial
statements, and actuarial reports for the last three (3) Company Plan
years; (iii) the most recently issued IRS determination letter; (iv)
summary plan descriptions; and (v) all general written communications to
employees relating to such Company Plans; provided that a communication
need not be provided to Purchaser under clause (v) if it is not material,
is not readily available and was last provided to participants before the
third Company Plan year to precede the current Company Plan year.
No event has occurred and no condition exists, with respect to any
Company Plan, that has subjected or could subject Seller, any of its
Affiliates or Associates, any Company Plan, or Purchaser or any of its
Affiliates or Associates (by virtue of the transactions contemplated
hereby), or any plan maintained by Purchaser or any of its Affiliates, to
any material tax, fine, penalty or other liability (other than a liability
arising in the normal course to make contributions or payments, as
applicable, when ordinarily due under a plan assumed hereunder). Purchaser,
and its Affiliates, including on and after the Closing, the Seller, shall
have no liability for, under, with respect to or otherwise in connection
with any Company Plan of the Seller or any Affiliate of the Seller, which
liability arises under ERISA or the Code, by virtue of the Seller or any
Affiliate of the Seller being aggregated in a controlled group or
affiliated service group with any ERISA Affiliate for purposes of ERISA or
the Code at any relevant time prior to the Closing. Except for the Assumed
Plans, no Company Plan is or will be directly or indirectly binding on
Purchaser by virtue of the transactions contemplated hereby. Purchaser
shall have no liability or obligation with respect to any Company Plan that
is not an Assumed Plan. No Company Plan listed on Schedule 5.12 that is not
an Assumed Plan (or related funding vehicle) has any surplus or unallocated
forfeitures. No Company Plan exists which could result in the payment of
money or any other property or rights, or accelerate or provide any other
rights or benefits, to any current or former employee of Seller (or other
current or former service provider thereto) that would not have been
required but for the transactions provided for herein, and neither Seller
nor any of Seller's respective Affiliates or Associates is a parry to any
plan, program, arrangement or understanding that would result, separately
or in the aggregate, in the payment (whether in connection with any
termination of employment or otherwise) of any "excess parachute payment"
within the meaning of Code 280G with respect to a current or former
employee of, or current or former independent contractor to, Seller. Seller
does not maintain any Company Plan which provides severance benefits to
current or former employees or other service providers of Seller. Each
Company Plan listed on Schedule 5.12 may be amended and terminated in
accordance with their terms, and, except as disclosed on Schedule 5.12,
each such Company Plan provides for the unrestricted right (other than as
may be required by applicable law) of the Seller to amend or terminate such
Company Plan. All accrued contributions, premiums and other payments that
would be (without regard to the transactions contemplated hereby), but are
not yet, due from Seller or its Affiliates or Associates to (or under) any
Company Plan listed on Schedule 5.12 have been adequately and properly
provided for on the Financial Statements or disclosed to the Purchaser.
Except as set forth on Schedule 5.12, (i) there are no impediments to any
transfers provided for under Section 10.03, and (ii) no penalties will be
imposed by any funding agent or vehicle on account of or otherwise with
respect to any such transfer.
5.13 Real Property . (a) Schedule 5.13(a) contains a true and correct
list of each parcel of real property leased by Seller (as lessor or
lessee). Seller does not own any real property.
(b) Seller has a valid and subsisting leasehold estate in and the
right to quiet enjoyment of the real properties leased by it as lessee
under leases referred to in paragraph (a) above for the full term of the
lease thereof. Each such lease is a legal, valid and binding agreement,
enforceable in accordance with its terms, of Seller and, to the Knowledge
of Seller and the Stockholders, of each other Person that is a party
thereto, and Seller is not in default (or with the giving of notice or
lapse of time or both, would be in default) in any material respect
thereunder.
(c) Seller has delivered or made available for inspection to Purchaser
prior to the execution of this Agreement true and complete copies of all
leases referred to in paragraph (a) above.
(d) To the Knowledge of Seller and the Stockholders the improvements
on the real property identified in Schedule 5.13(a) are in all material
respects in good operating condition and in a state of good maintenance and
repair, ordinary wear and tear excepted, are adequate and suitable for the
purposes for which they are presently being used and, to the Knowledge of
Seller and the Stockholders, there are no condemnation or appropriation
proceedings pending or threatened against any of such real property or the
improvements thereon.
5.14 Tangible Property . Seller is in possession of and has good title
to, or has valid leasehold interests in or valid rights under License or
Contract to use, all Tangible Property which is used in, and individually
or in the aggregate with other such property is material to, the Business
or Seller. All such Tangible Property is free and clear of all Liens, other
than Permitted Liens and is in all material respects in good working order
and condition, ordinary wear and tear excepted. Schedule 5.14 hereto sets
forth a true, correct and complete list of all Licenses and Contracts
(whether written or oral) pursuant to which Seller has obtained the right
to use any Tangible Property. Seller has heretofore delivered or made
available for inspection to Purchaser true and complete copies of the
Licenses and Contracts described on Schedule 5.14.
5.15 Intangible Property Rights . Schedule 5.15 hereto discloses all
Intangible Property which is used in the Business, each of which Seller
either has all right, title and interest in or a valid and binding license
to use (and Schedule 5.15 hereto sets forth which of such Intangible
Property is held by license). All registrations with and applications to
Governmental or Regulatory Authorities in respect of Intangible Property
owned by Seller and disclosed in Schedule 5.15 hereto are valid and in full
force and effect, and there are no material restrictions on the direct or
indirect transfer of any license, or any interest therein, held by Seller
in respect of Intangible Property disclosed in Schedule 5.15. Seller is not
in default (or with the giving of notice or lapse of time or both, would be
in default) in any material respect under any license to use the Intangible
Property disclosed in Schedule 5.15. To the knowledge of Seller and the
Stockholders, the Intangible Property disclosed in Schedule 5.15 is not
being infringed by any other Person and Seller is not infringing any
Intangible Property Rights of any other Person.
5.16 Contracts . (a) Schedule 5.16(a) hereto (with paragraph
references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts (true and complete copies
or, if oral, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto, have been
delivered or made available for inspection to Purchaser prior to the
execution of this Agreement), to which Seller is a party or by which any of
its assets and properties is bound:
(i) all Contracts (excluding Company Plans) providing for a commitment
of employment or consultation services for a specified or unspecified term,
the name, position and rate of compensation of each Person party to such
Contract and the expiration date of each such Contract;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or materially limiting the ability of Seller to engage
in any business activity or compete with any Person or prohibiting or
materially limiting the ability of any Person to compete with Seller;
(iii) all Contracts relating to partnerships, joint ventures or other
similar profit sharing arrangements with any Person;
(iv) all Contracts relating to Intangible Property;
(v) all Contracts relating to Indebtedness of Seller in excess of
$25,000 individually;
(vi) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees which in any case involve an
exclusive grant of right to distribute products or services and cannot be
terminated on thirty (30) days or less notice without penalty to Seller;
(vii) all Contracts relating to (A) the future disposition or
acquisition of any assets and properties, other than dispositions or
acquisitions in the ordinary course of business, and (B) any Business
Combination;
(viii) all Contracts between or among Seller, on the one hand, and any
Stockholder, officer, director or Affiliate of Seller on the other hand;
(ix) all Contracts made outside the ordinary course of business of
Seller;
(x) all collective bargaining Contracts; and
(xi) all other Contracts which cannot be terminated on thirty (30)
days or less notice without penalty to Seller.
(b) Each Contract disclosed in Schedule 5.16(a) is in full force and
effect and constitutes a legal, valid and binding agreement, enforceable in
accordance with its terms, of Seller and, to the Knowledge of Seller and
the Stockholders, of each other party thereto, and neither Seller nor, to
the Knowledge of Seller and the Stockholders, any other party to such
Contract is in violation or breach of or default under any such Contract
(or with notice or lapse of time or both, would be in violation or breach
of or default under any such Contract).
5.17 Licenses . Schedule 5.17 hereto contains a true and complete list
of all Licenses which Seller has obtained in connection with the Business
or the Assets and, to the knowledge of Seller and the Stockholders, no
others are required to be obtained by it. Prior to the execution of this
Agreement, Seller has delivered or made available for inspection to
Purchaser true and complete copies of all such Licenses. Each such License
is in full force and effect.
5.18 Title to Property . Seller has good and indefeasible title to all
the Assets, free and clear of all Liens, other than Permitted Liens. At the
Closing, Seller will have (and, unless the Stock Election is given, Seller
will convey to Purchaser) good and valid title to all of the Assets free
and clear of all Liens, other than Permitted Liens.
5.19 Entire Business . The sale of the Assets or the Shares to
Purchaser pursuant to this Agreement will convey to Purchaser all of the
assets and properties used or held for use by Seller in connection with the
conduct of the Business as heretofore conducted (except, if the Stock
Election is not given, for the Excluded Assets). Except as set forth in
Schedule 5.19, there are no facilities, services, assets or properties
shared with any other Person which are owned, used or held for use by
Seller in the conduct of the Business.
5.20 Insurance . Schedule 5.20 hereto contains a true and complete
list of all material insurance policies currently in effect that insure the
business, operations or employees of Seller or affect or relate to the
ownership, use or operation of any of the assets and properties of Seller
and that (i) have been issued to Seller or (ii) have been issued to any
Person (other than Seller) for the benefit of Seller. Except as set forth
in Schedule 5.20, the insurance coverage provided by the policies described
in clause (i) above will not terminate or lapse by reason of the
transactions contemplated by this Agreement. Each policy referred to in
clause (i) above is valid and binding and in full force and effect, and no
premiums due thereunder have not been paid and Seller has not received any
notice of cancellation or termination in respect of any such policy or is
in default thereunder in any material respect.
5.21 Affiliate Transactions . As of the date of this Agreement, except
as set forth in Schedule 5.21, (i) there is no Indebtedness between Seller,
on the one hand, and any officer, director, employee, stockholder or
Affiliate of Seller, on the other, (ii) no such officer, director,
employee, stockholder or Affiliate provides or causes to be provided any
assets, services, facilities or goods to Seller (other than pursuant to an
employment arrangement entered into in the ordinary course of business of
Seller) and (iii) Seller is not a party to any Contract for any assets,
services, facilities or goods with any such officer, director, employee,
stockholder or Affiliate of Seller.
5.22 Labor Relations . No employee of Seller is presently a member of
a collective bargaining unit and, to the Knowledge of Seller and the
Stockholders, there are no threatened or contemplated attempts to organize
for collective bargaining purposes any of the employees of Seller. Since
January 1, 1995, there has been no work stoppage, strike or other concerted
action by employees of Seller.
5.23 Brokers . All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller directly
with Purchaser without the intervention of any Person on behalf of Seller
in such manner as to give rise to any claim by any Person against Purchaser
for a finder's fee, brokerage commission or similar payment.
5.24 Bank Accounts . Schedule 5.24 hereto lists (i) all bank, trust,
checking, savings, custody and other accounts (including without limitation
any trading or other accounts maintained with any brokerage, investment
banking or commodity trading firms) and lock boxes or safe deposit boxes of
Seller in which there are or may be deposited monies or other assets of
Seller, (ii) an indication of the purposes of each of such accounts and
lock boxes or safe deposit boxes, (iii) any and all persons authorized to
make withdrawals or other transfers from such accounts or lock boxes or
safe deposit boxes, (iv) each bank at which Seller has borrowing authority
and (v) a true, correct and complete list of any and all persons authorized
to exercise such borrowing authority.
5.25 Disclosure . No representation or warranty of Seller contained
herein contains any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements contained herein
not misleading.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants as to such Stockholder (and not as to any other Stockholder) to
Purchaser as follows:
6.01 Authority . Such Stockholder has all requisite power and legal
capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by such Stockholder and constitutes a legal, valid
and binding obligation of such Stockholder enforceable against such
Stockholder in accordance with its terms.
6.02 No Conflicts . The execution and delivery by such Stockholder of
this Agreement do not, and the performance by such Stockholder of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby will not (with or without notice or lapse of time or
both): (a) conflict with or result in a violation or breach of any Law or
Order applicable to such Stockholder, or any of its assets and properties;
or (b)(i) conflict with or result in a violation or breach of, (ii)
constitute a default under, (iii) require such Stockholder to obtain any
consent, approval or action of, make any filing with or give any notice to
any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon such Stockholder or any of its
assets and properties under, any material Contract or material License to
which such Stockholder is a party or by which any of its assets and
properties is bound.
6.03 Title to Shares . Such Stockholder owns the Shares opposite its
name on Schedule 6.03, beneficially and of record, free and clear of all
Liens. Except for this Agreement, there are no outstanding Purchase Options
with respect to such Stockholder's Shares and such Stockholder is not bound
by any Contract relating to its Shares. If the Stock Election is given, at
the Closing such Stockholder will transfer to Purchaser good and valid
title to the Shares owned by it that are transferred to Purchaser, free and
clear of all Liens.
6.04 Brokers . All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by such Stockholder
directly with Purchaser without the intervention of any Person on behalf of
such Stockholder in such manner as to give rise to any valid claim by any
Person against Purchaser or Seller for a finder's fee, brokerage commission
or similar payment.
6.05 Disclosure . No representation or warranty of such Stockholder
contained herein contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained
herein not misleading.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller and the
Stockholders as follows:
7.01 Corporate Existence . Purchaser is a corporation duly organized,
validly existing and in good standing under the Laws of its jurisdiction of
incorporation. Seller has all requisite corporate power and authority to
carry on its business as it has been and is currently being conducted, to
own, lease and operate the properties and assets used in connection
therewith and to execute and deliver this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated
hereby.
7.02 Authority . The execution and delivery by Purchaser of this
Agreement, the performance by Purchaser of its obligations hereunder and
the transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of Purchaser. This Agreement
has been duly and validly executed and delivered by Purchaser and
constitutes a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms.
7.03 No Conflicts . The execution and delivery by Purchaser of this
Agreement do not, and the performance by Purchaser of its obligations under
this Agreement and the consummation of the transactions contemplated hereby
will not (with or without notice or lapse of time or both): (a) conflict
with or result in a violation or breach of any of the certificate of
incorporation or by-laws of Purchaser; (b) conflict with or result in a
violation or breach of any Law or Order applicable to Purchaser or any of
its assets and properties; or (c) (i) conflict with or result in a
violation or breach of, (ii) constitute a default under, (iii) require
Purchaser to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, or
(iv) result in the creation or imposition of any Lien upon Purchaser or any
of its assets or properties under, any material Contract or material
License to which Purchaser is a party or by which any of its assets and
properties is bound.
+
7.04 Governmental Approvals and Filings . No consent, approval or
action of, filing with or notice to any Governmental or Regulatory
Authority on the part of Purchaser is required in connection with the
execution, delivery and performance of this Agreement or the consummation
of the transactions contemplated hereby.
7.05 Legal Proceedings . There are no Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened against Purchaser or any of
its assets and properties which could reasonably be expected to result in
the issuance of an Order restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by
this Agreement.
7.06 Purchase for Investment . If the Stock Election is given, the
Shares acquired pursuant thereto will be acquired by Purchaser for its own
account for the purpose of investment. Purchaser will refrain from
transferring or otherwise disposing of any of the Shares acquired by
Purchaser, or any interest therein, in such manner as to cause Seller to be
in violation of the registration requirements of the Securities Act of
1933, as amended, or applicable state securities or blue sky laws.
7.07 Brokers . All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser
directly with Seller and the Stockholders without the intervention of any
Person on behalf of Purchaser in such manner as to give rise to any valid
claim by any Person against Seller or the Stockholders for a finder's fee,
brokerage commission or similar payment.
7.08 Disclosure . No representation or warranty of Purchaser contained
herein contains any untrue statement of material fact or omits to state a
material fact necessary in order to make the statements contained herein
not misleading.
ARTICLE VIII.
COVENANTS OF SELLER AND THE STOCKHOLDERS
Seller and each of the Stockholders, severally and not jointly,
covenants and agrees with Purchaser that, at all times from and after the
date hereof until the Closing Date, Seller and such Stockholder will comply
with all covenants and provisions of this Article VIII, except to the
extent Purchaser may otherwise consent in writing and except that neither
Seller nor any Stockholder shall be obligated to comply with the covenants
and provisions contained in Sections 8.06 and 8.08 unless and until
Purchaser delivers the Option Exercise Notice.
8.01 Regulatory and Other Approvals . Seller will, and such
Stockholder will cause Seller to, (a) take all commercially reasonable
steps necessary or desirable, and proceed diligently and in good faith and
use all commercially reasonable efforts, as promptly as practicable to
obtain all consents, approvals or actions of, to make all filings with and
to give all notices to Governmental or Regulatory Authorities or any other
Person required of Seller to consummate the transactions contemplated
hereby, (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as such
Governmental or Regulatory Authorities or other Persons may reasonably
request and (c) provide reasonable cooperation to Purchaser in obtaining
all consents, approvals or actions of, making all filings with and giving
all notices to Governmental or Regulatory Authorities or other Persons
required of Purchaser to consummate the transactions contemplated hereby.
Seller will provide prompt notification to Purchaser when any such consent,
approval, action, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise Purchaser of
any communications (and, unless precluded by Law, provide copies of any
such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement.
8.02 Investigation by Purchase . Seller will, and such Stockholder
will cause Seller to, (a) provide Purchaser and its officers, employees,
counsel, accountants, financial advisors, consultants and other
representatives (together, "Representatives") with access, upon reasonable
prior notice and during normal business hours, to all officers, employees,
agents and accountants of Seller and its assets and properties and books
and records, but only to the extent that such access does not unreasonably
interfere with the business and operations of Seller, and (b) furnish
Purchaser and such other Persons with all such information and date
(including without limitation copies of Contracts, Licenses, Company Plans,
monthly financial statements and other books and records) concerning the
business and operations of Seller as Purchaser or any of such other Persons
reasonably may request in connection with such investigation. All
information and data provided to Purchaser and its Representatives pursuant
to this Section 8.02 will be subject to the provisions of Section 17.04.
8.03 No Solicitations . Prior to the termination of this Agreement
neither Seller nor such Stockholder will take, and the Representatives of
Seller and such Stockholder will not take, directly or indirectly, any
action to initiate, assist, solicit, negotiate or accept any offer from any
Person to engage in any Business Combination. For purposes hereof,
"Business Combination" means any merger, consolidation or combination to
which Seller is a party, any sale, dividend, split or other disposition of
capital stock or other equity interest of Seller or any sale, dividend or
other disposition of all or substantially all of the assets and properties
of Seller.
8.04 Conduct of Business . Seller will, and such Stockholder will
cause Seller to, conduct its business only in the ordinary course of
business consistent with past practice and in such a manner so that the
representations and warranties contained in Article V shall continue to be
true and correct on and as of the Closing Date. Without limiting the
generality of the foregoing, Seller will, and such Stockholder will cause
Seller to, use commercially reasonable efforts to (a) preserve intact the
present business organization and reputation of Seller, (b) keep available
(subject to dismissals and retirements in the ordinary course of business)
the services of the key officers and employees of Seller in all material
respects, (c) maintain the assets and properties of Seller in good working
order and condition, ordinary wear and tear excepted, (d) comply, in all
material respects, with all Laws and Orders, (e) without prior written
consent of Purchaser, not undertake any of the actions specified in Section
5.08(d) hereof, (f) maintain in full force and effect substantially the
amounts and coverages of insurance as in the past and as set forth in
Schedule 5.20, (g) pay, perform and discharge, when due, in the ordinary
course of business all of its obligations under the Real Property Leases,
Personal Property Leases, Business Contracts and Business Licenses and (h)
maintain the good will of key customers and suppliers of Seller.
8.05 Notice of Events . Seller shall, and such Stockholder shall cause
Seller to, promptly notify Purchaser of (a) any event, condition or
circumstance occurring from the date hereof through the Closing Date, that
would constitute a violation or breach in any material respect of this
Agreement by any of them and (b) any event, occurrence, transaction or
other item which would have been required to have been disclosed by any of
them on any Schedule or statement delivered hereunder had such event,
occurrence, transaction or item existed on the date hereof, other than
items arising in the ordinary course of business which would not render any
representation or warranty of any of them materially misleading.
8.06 Disclosure Schedules . If Purchaser delivers the Option Exercise
Notice on or prior to the Option Expiration Date, Seller shall deliver to
Purchaser, no later than five (5) Business Days prior to the Closing Date,
updated and corrected Schedules 5.05, 5.12, 5.13(a), 5.14, 5.15, 5.16(a),
5.17, 5.20 and 5.24 to this Agreement solely to reflect all actions taken
by Seller after the date hereof which are not prohibited by Section 8.04.
8.07 Financial Statements . (a) As soon as available, but in any event
within 90 days after the end of each fiscal year of Seller, Seller will
deliver to Purchaser a copy of the balance sheet of Seller as at the end of
such fiscal year and the related statements of income, stockholders' equity
and cash flows of Seller for such fiscal year.
(b) As soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods in each fiscal
year of Seller, Seller will deliver to Purchaser a copy of the balance
sheet of Seller as at the end of each such quarter and the related
statements of income, stockholders' equity and cash flows of Seller for
such quarterly period and the portion of the fiscal year of Seller through
such date.
(c) All financial statements referred to in Section 8.7(a) and Section
8.7(b) above shall be accompanied by a certificate of the chief financial
officer of Seller certifying to the effect that such financial statements,
present fairly the financial condition of Seller in accordance with GAAP
(except as otherwise disclosed therein and concurred to by the chief
financial officer). The last balance sheet of Seller to be delivered
pursuant to Section 8.7(a) or Section 8.7(b), as the case may be, prior to
the Closing Date is hereinafter referred to as the "Final Balance Sheet."
8.08 Fulfillment of Conditions . If Purchaser gives the Option
Exercise Notice on or prior to the Option Expiration Date, Seller and the
Stockholders will take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Purchaser contained in this Agreement.
8.09 Transfer Taxes . Seller shall pay all Transfer Taxes arising out
of or in connection with the transactions effected pursuant to this
Agreement, and shall indemnify, defend, and hold harmless Purchaser with
respect to such Transfer Taxes; provided, however, that if the Stock
Election is given then the Stockholders, jointly and severally, shall pay
and indemnify Purchaser for such Transfer Taxes in lieu of Seller. Seller
or the Stockholders, as the case may be, shall file all necessary
documentation and Tax Returns with respect to such Transfer Taxes.
8.10 Certified Public Accountant . Seller shall, and such Stockholder
shall cause Seller to, promptly, but in any event within 60 days after the
execution of this Agreement, engage a Certified Public Accounting firm,
reasonably acceptable to Purchaser, to maintain the books of account of
Seller and to prepare financial statements of Seller, in accordance with
GAAP.
8.11 Intangible Property . Seller shall, and such Stockholder shall
cause Seller to, promptly and from time to time, as appropriate, file all
documents with respect to any of Seller's Intangible Property with the U.S.
Patent and Trademark Office, the U.S. Copyright Office or any other
federal, state, local or foreign governmental agency or authority necessary
or proper to protect such Intangible Property including, without
limitation, Seller's rights in the name "Comp-Est" and all copyrights in
the Software, and shall further take such actions as necessary to protect
such Intangible Property from infringement, misappropriation or other
violations of Seller's Intangible Property rights by third parties.
ARTICLE IX.
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller and the Stockholders that
at all times from and after the date hereof until the Closing Date,
Purchaser will comply with all covenants and provisions of this Article IX,
except to the extent Seller may otherwise consent in writing and except
that Purchaser shall not be obligated to comply with the covenants and
provisions contained in Sections 9.02 unless and until Purchaser delivers
the Option Exercise Notice.
9.01 Regulatory and Other Approvals . Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts,
as promptly as practicable to obtain all consents, approvals or actions of,
to make all filings with and to give all notices to Governmental or
Regulatory Authorities or any other Person required of Purchaser to
consummate the transactions contemplated hereby, (b) provide such other
information and communications to such Governmental or Regulatory
Authorities or other Persons as such Governmental or Regulatory Authorities
or other Persons may reasonably request and (c) provide reasonable
cooperation to Seller in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to Governmental or
Regulatory Authorities or other Persons required of Seller or the
Stockholders to consummate the transactions contemplated hereby. Purchaser
will provide prompt notification to Seller and the Stockholders when any
such consent, approval, action, filing or notice referred to in clause (a)
above is obtained, taken, made or given, as applicable, and will advise
Seller of any communications (and, unless precluded by Law, provide copies
of any such communications that are in writing) with any Governmental or
Regulatory Authority or other Person regarding any of the transactions
contemplated by this Agreement.
9.02 Fulfillment of Conditions . If Purchaser gives the Option
Exercise Notice on or prior to the Option Expiration Date, Purchaser will
take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith to satisfy each condition to the obligations
of Seller and the Stockholders contained in this Agreement.
ARTICLE X.
TRANSFERS OF SHARES, ADDITIONAL COVENANTS
10.01 Restrictions on Transfer; Legend . Each Stockholder agrees that
until the Closing Date, except in connection with the transactions
contemplated by this Agreement or as otherwise consented to in writing by
Purchaser, such Stockholder shall not Transfer any Shares to any Person.
Each certificate evidencing Shares shall bear a legend substantially as
follows:
The securities represented hereby are subject to restrictions on
transfer contained in an Option and Acquisition Agreement dated
as of February 6, 1998, a copy of which is on file at the
principal office of Seller.
10.02 Failure to Comply . Any purported Transfer of Shares in
violation of this Agreement shall be void and of no force or effect, and no
such Transfer shall be made o recorded on the books of Seller.
10.03 Assumed Company Plans; Certain Employee Matters.
(a) Assumed Plans. If the Stock Election is not given, as of the
Closing Date, Purchaser, the Stockholders and Seller shall cause Purchaser
to assume sponsorship of the Company Plans listed on Schedule 10.03 hereto.
The Company Plans assumed by Purchaser under the foregoing provisions of
this Section 10.03(a) shall be referenced to herein as the "Assumed Plans."
Purchaser, the Stockholders and Seller shall use their reasonable best
efforts to cooperate in the execution of any documents, adoption of any
corporate resolutions or the taking of any other reasonable actions to
effectuate such sponsorship and related transfers of trust assets as
applicable or other funding vehicle and insurance contracts. After the date
hereof, the Stockholders and Seller shall provide any information and
assistance reasonably requested by Purchaser in connection with Purchaser's
efforts to maintain the Assumed Plans (or their successors) in accordance
with all applicable requirements, and in connection with the fulfillment by
Purchaser of any reporting, disclosure or filing requirements arising after
the date hereof with respect to the Assumed Plans.
(b) Non-Transferred Employees. Nothing in this Section 10.03 shall be
deemed to impose upon Purchaser any liabilities or responsibilities
regarding individuals who do not become employees of Purchaser, including
without limitation liabilities or responsibilities for (i) pension,
retirement, profit-sharing, savings, medical, dental, disability income,
life insurance or accidental death benefits, whether insured or
self-insured, whether funded or unfunded, (ii) workers' compensation (both
long term and short term) benefits, whether insured or self-insured,
whether or not accruing or based upon exposure to conditions prior to the
date of this Agreement or for claims incurred or for disabilities
commencing prior to the Closing Date or (iii) severance benefits; provided
that Purchaser shall be liable and responsible to such individuals and
their beneficiaries and dependents with respect to Assumed Plans that (A)
are intended to be qualified under Section 401(a) of the Code to the extent
that such Company Plans must be administered with respect to benefits which
accrued thereunder prior to the Closing Date and (B) are subject to Section
4980B of the Code and ERISA Section 601 et. seq.
(c) Severance Expressly Excluded. Without limiting the generality of
any other responsibilities of Seller, Seller shall be (prior to and after
the date hereof) solely responsible for any severance pay obligations
arising prior to or through the Closing Date.
(d) Withdrawal Liabilities. Notwithstanding any provision of this
Agreement to the contrary, Seller shall be solely responsible for any
withdrawal liability incurred with respect to any multiemployer plan to
which Seller has an obligation to contribute which arises as a result of or
in connection with the transactions contemplated by this Agreement.
10.04 Board of Directors . Immediately following the execution of this
Agreement, Seller and the Stockholders will take all actions necessary to
cause the board of directors of Seller (the "Board") to be structured to
consist of one non-voting member designated by Purchaser (the "Purchaser
Designee"), and Seller and the Stockholders will take all actions necessary
to cause the Purchaser Designee to become a member of the Board on the date
hereof. Thereafter, at each annual or special meeting of stockholders of
Seller, or the taking of action by written consent of stockholders of
Seller with respect to which the members of the Board are to be elected,
Purchaser shall have the right pursuant to this Agreement to designate one
non-voting director. If necessary to effectuate the placement of the
Purchaser Designee, Seller shall, at its sole option, (a) expand the size
of the Board and/or (b) solicit the resignations of the appropriate number
of directors, in either case, to the extent necessary to permit the
Purchaser Designee to participate on the Board.
ARTICLE XI.
CONDITIONS TO OBLIGATIONS OF PURCHASER
If Purchaser delivers the Option Exercise Notice on or prior to the
Option Expiration Date, the obligations of Purchaser to purchase the Assets
or the Shares, as the case may be, are subject to the fulfillment, on or
before the Closing Date, of each of the following conditions (all or any of
which may be waived in whole or in part by Purchaser in its sole
discretion):
11.01 Representations and Warranties . The representations and
warranties made by Seller and the Stockholders contained in this Agreement,
shall be true, correct and complete in all material respects on and as of
the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier
than the Closing Date, on and as of such earlier date.
11.02 Performance . Seller and each of the Stockholders shall have
performed and complied with, in all material respects, the agreements,
covenants and obligations required by this Agreement to be so performed or
complied with by it on or before the Closing Date.
11.03 Officers' Certificates . (a) Seller shall have delivered to
Purchaser a certificate, dated the Closing Date and executed by an
executive officer of Seller and (b) each Stockholder shall have delivered
to Purchaser a certificate, dated the Closing Date, each to the effect of
the matters set forth in section 11.01 and 11.02.
11.04 Orders and Laws . There shall not be in effect on the Closing
Date, any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by
this Agreement.
11.05 Regulatory Consents and Approvals . All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit Purchaser, Seller and the Stockholders to
perform their obligations under this Agreement and to consummate the
transactions contemplated hereby shall have been duly obtained, made or
given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated
by this Agreement shall have occurred.
11.06 Third Party Consents . The third party consents (or in lieu
thereof waivers) required to be obtained to consummate the transactions
contemplated by this Agreement shall have been obtained, except for those
consents which the failure to obtain would not have a Material Adverse
Effect.
11.07 Opinion of Counsel . Purchaser shall have received the opinion
of counsel to Seller and the Stockholders, dated the Closing Date, in form
and substance customary for transactions of the type contemplated by this
Agreement and reasonably satisfactory to Purchaser.
11.08 Conveyancing Documents . If the Stock Election is not given,
Seller shall have executed and delivered to Purchaser an Assignment and
Assumption Agreement (the "Assignment and Assumption Agreement") in
substantially the form of Exhibit C hereto and a ▇▇▇▇ of Sale (the "▇▇▇▇ of
Sale") in substantially the form of Exhibit D hereto, and such further
instruments and documents as may be reasonably requested by Purchaser in
order to complete the transfer of the Assets to Purchaser.
11.09 Stock Certificates . If the Stock Election is given, the
Stockholders shall have delivered to Purchaser stock certificates
evidencing all of the Shares, accompanied by stock powers executed by each
such Stockholder in blank, and Seller shall have delivered the Minute Books
to Purchaser.
11.10 Revenue Statement . If the Stock Election is given, Purchaser
and the Stockholders' Representative shall have agreed to the Revenue
Statement to be attached hereto as Exhibit E which shall be prepared with
reference to the procedures set forth on Exhibit F attached hereto.
ARTICLE XII.
CONDITIONS TO OBLIGATIONS OF SELLER AND THE STOCKHOLDERS
If Purchaser delivers the Option Exercise Notice on or prior to the
Option Expiration Date, the obligations of Seller and the Stockholders
hereunder are subject to the fulfillment, on or before the Closing Date, of
each of the following conditions (all or any of which may be waived in
whole or in part by Seller (or, if the Stock Election is given, the
Stockholder's Representative) in its sole discretion):
12.01 Representations and Warranties . The representations and
warranties made by Purchaser in this Agreement shall be true and correct in
all material respects on and as of the Closing Date as though made on and
as of the Closing Date.
12.02 Performance . Purchaser shall have performed and complied with,
in all material respects, the agreements, covenants and obligations
required by this Agreement to be so performed or complied with by Purchaser
on or before the Closing Date.
12.03 Officers' Certificate . Purchaser shall have delivered to Seller
and the Stockholders a certificate, dated the Closing Date and executed by
an executive officer of Purchaser to the effect of the matters set forth in
Section 12.01 and 12.02.
12.04 Conveyancing Documents . If the Stock Election is not given,
Purchaser shall have executed and delivered to Seller the Assignment and
Assumption Agreement and the ▇▇▇▇ of Sale.
12.05 Orders and Laws . There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by
this Agreement.
12.06 Regulatory Consents and Approvals . All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory
Authority necessary to permit Seller, the Stockholders and Purchaser to
perform their obligations under this Agreement and to consummate the
transactions contemplated hereby shall have been duly obtained, made or
given and shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated
by this Agreement shall have occurred.
12.07 Opinion of Counsel . Seller and the Stockholders shall have
received the opinion of counsel to Purchaser, dated the Closing Date and
customary for transactions of the type contemplated by this Agreement and
reasonably satisfactory to Seller.
ARTICLE XIII.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
13.01 Survival of Representations and Warranties . Except as provided
in Section 13.02, the representations, warranties, covenants and agreements
of each of the parties hereto contained in this Agreement and in the
certificates to be delivered by Seller and the Stockholders pursuant to
Section 11.03 and by Purchaser pursuant to Section 12.03 will survive the
Closing Date (a) until sixty (60) days after the expiration of all
applicable statutes of limitation (including all periods of extension,
whether automatic or permissive) with respect to the representations and
warranties contained in Sections 5.01, 5.02, 5.03, 5.09, 5.11 (but only
insofar as Section 5.11 relates to Environmental Laws), 5.12, 5.18, 5.19,
6.01, 6.03, 7.01, 7.02 and 7.07, (b) until eighteen (18) months following
the Closing Date in the case of all other representations and warranties
and any covenant or agreement to be performed prior to the Closing Date or
(c) with respect to each other covenant or agreement contained in this
Agreement, for a period of twelve (12) months following the last date on
which such covenant is to be performed or, if no such date is specified,
indefinitely, except that any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with clause (a), (b)
or (c) above will continue to survive if a Claim Notice shall have been
timely given under Article XIV on or prior to such termination date, until
the related claim for indemnification has been satisfied or otherwise
resolved as provided in Article XIV.
13.02 Termination of Certain Representations and Warranties . Anything
in this Agreement to the contrary notwithstanding, if the Stock Election is
given, the representations, warranties, covenants and agreements of Seller
contained in this Agreement will terminate at, and not survive, the Closing
Date; but such termination shall not affect the obligations of the
Stockholders hereunder.
ARTICLE XIV.
INDEMNIFICATION
14.01 Indemnification.
(a) Seller and the Stockholders, jointly and severally, shall
indemnify Purchaser, its Affiliates and their respective officers,
directors, employees and agents in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (a) any misrepresentation, breach of
warranty or breach of any covenant or agreement on the part of Seller
contained in this Agreement or in the certificate to be delivered by Seller
pursuant to Section 11.03 or (ii) any Excluded Liability (without regard to
whether or not the Stock Election is given). Seller and the Stockholders
will have no obligation to indemnify Purchaser with respect to the matters
described in this Section 14.01(a) until the total of all Damages with
respect to such matters exceeds $50,000 and then only for the amount by
which such Damages exceeds $50,000. Thereafter, Seller and the Stockholders
will, jointly and severally, be obligated to indemnify Purchaser up to a
maximum aggregate amount equal to either (i) the Asset Purchase Price in
the event the Asset Election is given, or (ii) the Stock Purchase Price in
the event the Stock Election is given (after which point the Seller and the
Stockholders will have no obligation to indemnify the Purchaser from and
against and further Damages).
(b) Each Stockholder, severally and not jointly, shall indemnify
Purchaser, its Affiliates and their respective officers, directors,
employees and agents in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them
or to which any of them becomes subject, resulting from, arising out of or
relating to any misrepresentation or breach of warranty contained in
Article VI or any breach of any covenant or agreement on the part of such
Stockholder (and not of any other Stockholder) contained in this Agreement
or in the certificate to be delivered by such Stockholder pursuant to
Section 11.03.
(c) Purchaser shall indemnify Seller (provided, however, that Seller
shall not be so indemnified if the Stock Election is given) and each
Stockholder, their Affiliates and their respective officers, directors,
employees and agents in respect of, and hold each of them harmless from and
against, any and all Losses suffered, incurred or sustained by any of them
or to which any of them becomes subject, resulting from, arising out of or
relating to (i) any misrepresentation, breach of warranty or breach of any
covenant or agreement on the part of Purchaser contained in this Agreement
or in the certificate delivered by Purchaser pursuant to Section 12.03 or
(ii) if the Stock Election is not given, any Assumed Liability. Purchaser
will have no obligation to indemnify Seller and the Stockholders with
respect to the matters described in Section 14.01(c) until the total of all
Damages with respect to such matters exceeds $50,000 and then only for the
amount by which such Damages exceed $50,000. Thereafter, Purchaser will be
obligated to indemnify Seller and the Stockholders up to a maximum
aggregate amount equal to $1,000,000.
14.02 Method of Asserting Claims . The party making a claim under this
Article XIV is referred to as the "Indemnified Party" and the party against
whom such claims are asserted under this Article XIV is referred to as the
"Indemnifying Party." All claims by any Indemnified Party under this
Article XIV shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from such Indemnified Party by a third party,
said Indemnified Party shall promptly notify in writing the Indemnifying
Party of such claim or demand, specifying the basis for such claim or
demand, and the amount or the estimated amount thereof to the extent then
determinable (which estimate shall not be conclusive of the final amount of
such claim and demand; the "Claim Notice"); provided, however, that any
failure to give such Claim Notice will not be deemed a waiver of any rights
of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced by such failure. The
Indemnifying Party shall have the right to control the defense of such
claim or demand and shall retain counsel (who shall be reasonably
acceptable to the Indemnified Party) to represent the Indemnified Party and
shall pay the reasonable fees and disbursements of such counsel with regard
thereto; provided, however, that any Indemnified Party is hereby authorized
prior to the date on which it receives written notice from the Indemnifying
Party designating such counsel, to retain counsel, whose reasonable fees
and expenses shall be at the expense of the Indemnifying Party, to file any
motion, answer or other pleading and take such other action which it
reasonably shall deem necessary to protect its interests or those of the
Indemnifying Party until the date on which the Indemnified Party receives
such notice from the Indemnifying Party. After the Indemnifying Party shall
retain such counsel, the Indemnified Party shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party. The Indemnifying Party shall not, in
connection with any proceedings or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior
to the selection of counsel by the Indemnifying Party). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which
the Indemnifying Party defends. A claim or demand may not be settled by the
Indemnifying Party without the prior written consent of the Indemnified
Party (which consent will not be unreasonably withheld) unless, as part of
such settlement, the Indemnified Party shall receive a full and
unconditional release reasonably satisfactory to the Indemnified Party. If
the Indemnifying Party elects to defend a claim or demand, the Indemnified
Party shall not pay or settle such claim or demand without the consent of
the Indemnifying Party.
(b) In the event any Indemnified Party shall have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to
the Indemnifying Party.
(c) After delivery of a Claim Notice, so long as any right to
indemnification exists pursuant to this Article XIV, the affected parties
each agree to retain all books and records related to such Claim Notice. In
each instance, the Indemnified Party shall have the right to be kept fully
informed by the Indemnifying Party and its legal counsel with respect to
any legal proceedings. Any information or documents made available to any
party hereunder and designated as confidential by the party providing such
information or documents and which is not otherwise generally available to
the public and not already within the knowledge of the party to whom the
information is provided (unless otherwise covered by the confidentiality
provisions of any other agreement among the parties hereto, or any of
them), and except as may be required by applicable law, shall not be
disclosed to any third Person (except for the representatives of the party
being provided with the information, in which event the party being
provided with the information shall request its representatives not to
disclose any such information which it otherwise required hereunder to be
kept confidential).
ARTICLE XV.
TERMINATION
15.01 Termination . This Agreement shall terminate as follows:
(a) on the day following the Option Expiration Date in the event that
the Option Exercise Notice is not delivered on or prior to the Option
Expiration Date in accordance with Section 1.03;
(b) at any time by mutual written consent of Purchaser and Seller; or
(c) by either party by giving written notice to the other party at any
time prior to the Closing Date in the event the other party has breached
any representation, warranty, covenant or other agreement contained in this
Agreement in any material respect and the breach has continued without cure
for a period of thirty (30) days after the notice of the breach (provided
that the party giving such notice is not also in breach of any provision of
this Agreement at the time such notice is given).
15.02 Effect of Termination . If this Agreement is validly terminated
pursuant to Section 15.01, (a) this Agreement will forthwith become null
and void, except that the provisions with respect to expenses in Sections
17.02 and confidentiality in Section 17.04 will continue to apply following
any such termination, and (b) there will be no liability or obligation on
the part of Seller, the Stockholders or Purchaser (or any of their
Affiliates or their respective officers, directors, employees or agents);
provided, however, that if such termination shall result from a willful
breach by a party of the provisions contained in this Agreement, such party
shall remain fully liable for any and all Losses sustained by the other
parties hereto as a result of such breach.
ARTICLE XVI.
DEFINITIONS
16.01 Definitions . (a) As used in this Agreement, the following
defined terms shall have the meanings indicated below:
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
"Affiliate" means any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common
control with the Person specified.
"Agreement" means this Option and Acquisition Agreement and the
Exhibits and the Schedules hereto, as the same shall be amended from time
to time.
"Associate" means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner
or is the beneficial owner, directly or indirectly, of ten percent (10%) or
more of any class of equity securities, any trust or estate in which such
Person has a substantial benefit interest or as to which such Person serves
as a trustee or in a similar capacity and any relative or spouse of such
Person, or any relative of such spouse, who has the same home as such
Person or any child or sibling of such Person or of such Person's spouse.
"Books and Records" means all files, documents, instruments, papers,
books and records, including without limitation ledgers, journals, deeds,
title policies, contracts and other agreements, licenses, computer files
and programs, retrieval programs and environmental studies and plans,
financial statements, Tax Returns and related work papers and letters from
accountants, and the Minute Books.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the States of New York and Ohio are authorized or
obligated to close.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations
promulgated thereunder.
"Closing" means the closing of the transactions contemplated by
Article II, or, if the Stock Election is given, the transactions
contemplated by Article III.
"Closing Date" means (a) the fifth Business Day after the day on which
the conditions precedent to the transactions contemplated by the Option
Exercise Notice and the Stock Election, if given, as specified in Articles
XI and XII shall be satisfied or waived, or (b) such other date as
Purchaser and Seller (or, if the Stock Election is given, the Stockholders'
Representative) mutually agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Company Plan" means any written or unwritten plan, fund, program,
understanding, policy, arrangement, contract or commitment, whether
qualified or not qualified for federal income tax purposes, whether formal
or informal, whether for the benefit of a single individual or more than
one individual whether or not subject to ERISA, which is in the nature of
(a) an employee pension benefit plan (as defined in ERISA 3(2)), (b) an
employee welfare benefit plan (as defined in ERISA 3(l)) or (c) on
incentive, deferred compensation, or other benefit arrangement for
employees, former employees, independent contractors, former independent
contractors or their dependents or their beneficiaries.
"Contract" means any contracts, agreements, understandings, leases,
evidences of Indebtedness, mortgages, indentures, commitments, security
agreements or other legally binding arrangements.
"Database License Agreement" means the Database License Agreement
dated November 11, 1996 between Purchaser and Seller.
"Damages" means the amount of any loss, liability, claim, damage or
expense (including costs of investigation and defense and reasonable
attorneys' fees) whether or not involving a third party claim.
"EEOC" means the Equal Employment Opportunity Commission.
"Environmental Law" means any Law or Order relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes (including
Hazardous Material) into the environment (including without limitation,
ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes (including Hazardous Material), including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, as amended,
and the rules and regulations promulgated thereunder and any similar state
statute, as such Environmental Laws are enacted and in effect on or prior
to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that is a member of a group of which Seller is a member and
which is treated as a single employer under Section 414 of the Code.
"Financial Statement Date" means December 31, 1997.
"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic
or foreign state, county, city or other political subdivision.
"Hazardous Material" means (A) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is
or could become friable, urea formaldehyde foam insulation and transformers
or other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances", "hazardous wastes," hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances," "toxic pollutants" or words of similar import under any
Environmental Law; and (C) any other chemical or other material or
substance, exposure to which is prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental Law.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of
the obligations described in clauses (i) through (iv) above of any other
Person.
"Intangible Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service ▇▇▇▇ rights, service names and service name rights, brand names,
operating and applications computer software (including object and source
codes), and related documentation, databases, know how, technical
knowledge, trade secrets, secret formulas, customer lists, business and
marketing plans, inventions, copyrights and copyright rights, and all
pending applications for and registrations of patents, trademarks, service
marks and copyrights, both foreign and domestic.
"IRS" means the United States Internal Revenue Service.
"Knowledge of Seller and the Stockholders" means the knowledge of each
Stockholder and each officer and director of Seller after due inquiry;
provided, however, that knowledge of _______________ means __________'s
actual knowledge.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, security interest, lien or other
encumbrance.
"Loss" means any and all damages, fines, penalties, deficiencies,
losses, expenses (including without limitation reasonable fees of
attorneys), liens and other obligations.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Assets" means, as of any date, the amount by which (i) the Assets
as of such date exceed (ii) the Assumed Liabilities as of such date;
provided, however, that if the Stock Election is given, Net Assets shall
mean the amount by which (i) the total assets of Seller as of such date
exceed (ii) the total liabilities of Seller as of such date. Net Assets
shall be calculated in accordance with GAAP applied on a basis consistent
with the preparation of the Financial Statements.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"OSHA" means the Occupational Safety and Health Administration.
"PBGC" means the Pension Benefit Guaranty Corporation established
under ERISA.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii)
any statutory Lien arising in the ordinary course of business by operation
of Law with respect to a Liability that is not yet due or delinquent and
(iii) any minor imperfection of title or similar Lien which individually or
in the aggregate with other such Liens could not reasonably be expected to
materially adversely affect the use of the property subject to such Lien or
the value of such property.
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other
business organization, trust, union, association or Governmental or
Regulatory Authority.
"Revenue Payment" means an amount in cash equal to the product of (a)
(i) the number of customers of the Business on the Closing Date determined
by reference to the Revenue Statement multiplied by (ii) the average annual
revenue per customer of the Business for the System, exclusive of Revenues
from the sale or leasing of equipment by Seller, determined by reference to
the Revenue Statement and (b) 1.66.
"Revenue Statement" means the statement of Revenues to be attached
hereto on the Closing Date as Exhibit E, which will contain the calculation
of the Revenues of the Business, the number of customers of the Business
and the average annual revenue per customer of the Business, which shall be
prepared in the form of, and shall be agreed upon pursuant to the procedure
set forth on, Exhibit F attached hereto.
"Revenues" means gross income from all licenses and sales of the
System, exclusive of (i) income earned from the sale or leasing of
equipment, (ii) earned sales commissions, (iii) receivables more than
ninety (90) days past due, (iv) shipping and handling charges and (v)
Taxes.
"Tax Returns" means any return, report, information return or other
document filed or required to be filed with any federal, state, local or
foreign Governmental or Regulatory Authority in connection with the
determination, assessment or collection of any Taxes.
"Taxes" means any and all federal, state, local or foreign taxes of
any kind (together with any interest, penalties, or additional amounts
imposed on or with respect thereto) imposed by any government or taxing
authority including without limitation, all federal, state, foreign and
local income, profits, franchise, sales, use, occupation, property, excise,
ad valorem, employment or other taxes.
"Transfer" shall mean the making of any sale, exchange, assignment or
gift of the granting of any security interest, pledge or other encumbrance
in, or of the creation of, any voting trust or other agreement or
arrangement with respect to the transfer of voting rights in, the Shares,
or the creation of any other claim thereto or any other transfer or
disposition whatsoever, whether voluntary or involuntary, affecting the
right, title or interest or possession in or to the Shares.
"Transfer Taxes" means any sales, use, transfer, real property
transfer, recording, stock transfer and other similar taxes and fees.
Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or
plural number also include the plural or singular number, respectively;
(iii) the terms "hereof," "herein," "hereby" and derivative or similar
words refer to this entire Agreement; (iv) the terms "Article" or "Section"
refer to the specified Article or Section of this Agreement; and (v) the
phrase "ordinary course of business" refers to the business of Seller. All
accounting terms used herein and not expressly defined herein shall have
the meanings given to them under GAAP. Any representation or warranty
contained herein as to the enforceability of a Contract shall be subject to
the effect of any bankruptcy, insolvency, reorganization, moratorium or
other similar law affecting the enforcement of creditors' rights generally
and to general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).
ARTICLE XVII.
MISCELLANEOUS
17.01 Notices . All notices, requests, consents, waivers and other
communications hereunder must be in writing and will be deemed to have been
duly given only if delivered personally or by facsimile transmission or
mailed (first class postage prepaid) to the parties at the following
addresses or facsimile numbers:
If to Seller or the Stockholders, to:
Comp-Est, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, #▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇, Esq.
If to Purchaser, to:
Motor Information Systems Division,
Hearst Business Publishing, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: Vice President and General Manager
with copies to:
The Hearst Corporation
Office of the General Counsel
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attn: General Counsel
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice is received by any other Person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this Section). Any party
from time to time may change its address, facsimile number or other information
for the purpose of notices to that party by giving notice specifying such change
to the other party hereto.
17.02 Entire Agreement . This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
17.03 Expenses . Whether or not the transactions contemplated by this
Agreement shall be consummated, except as expressly provided herein, each
of the parties hereto shall pay its own expenses (including, without
limitation, attorney's and accountants' fees and out-of-pocket expenses)
incident to this Agreement and the transactions contemplated hereby.
17.04 Public Announcements; Confidentiality . No publicity release or
public announcement concerning this Agreement or the transactions
contemplated hereby shall be made by any party hereto or its Affiliates
without advance approval thereof by each of the other parties hereto. While
this Agreement is in effect and after this Agreement terminates, each party
hereto and its Affiliates shall keep confidential, and shall not disclose,
the terms of this Agreement to any other Person without the prior written
consent of each other party hereto unless (i) the disclosure is in response
to legal order or subpoena, (ii) the terms are readily ascertainable from
pubic or published information, or trade sources (without violation of the
foregoing provisions of this sentence), (iii) the disclosure is (A) in
connection with any Action or Proceeding in respect of this Agreement or
(B) to a Governmental or Regulatory Authority the filing with or consent of
which is required in connection with the transactions contemplated by this
Agreement or (iv) the disclosure is to any officer, director, employee or
agents of any party hereto or of any of its Affiliates and such Person
needs to know such information for purposes of consummating the
transactions contemplated by or the performance of this Agreement, provided
that the disclosing party shall use its best efforts to cause such officer,
director, employee or agent to hold such information in confidence.
Notwithstanding anything herein to the contrary, Purchaser, Seller and the
Stockholders agree that Purchaser shall be entitled to disclose such of the
terms of this Agreement as it deems appropriate, in its sole discretion, to
any of its value added resellers, provided that the Purchaser shall use its
best efforts to cause any value added reseller receiving such information
to hold such information in confidence.
17.05 Further Assurances . At any time and from time to time after the
Closing Date at the request of Purchaser, and without further
consideration, Seller and the Stockholders shall execute and deliver such
other instruments of sale, transfer, conveyance, assignment and
confirmation and take such other action as Purchaser may reasonably deem
necessary or desirable in order to transfer, convey and assign more
effectively to Purchaser, the Assets or the Shares, as the case may be, and
to put Purchaser in actual possession and control of the Assets and to
assist Purchaser with in exercising all rights with respect thereto.
17.06 Waiver . Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition.
No waiver by any party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on any future
occasion.
17.07 Amendment . This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
17.08 The Third Party Beneficiary . The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any
other Person other than any Person entitled to indemnity under Article XIV.
17.09 No Assignment; Binding Effect . Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt
to do so will be void. Notwithstanding the preceding sentence, Purchaser
may assign any or all of its rights, interests and obligations hereunder to
(a) any successor in interest, prior to the Closing, to all or
substantially all of the assets and properties of Purchaser or (b) any
wholly-owned subsidiary of Purchaser or any such successor, in each case
without the consent of (but with notice to) Seller or the Stockholders;
provided, however, that Purchaser shall remain primarily liable hereunder
following each such assignment referred to in clause (a) or clause (b).
This Agreement is binding upon, inures to the benefit of and is enforceable
by the parties hereto and their respective successors and permitted
assigns.
17.10 Headings . The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
17.11 Stockholders' Representative.
(a) Each Stockholder hereby irrevocably constitutes and appoints
▇▇▇▇▇▇▇▇▇ (in such capacity, "Stockholders' Representative") as such
Stockholder's attorney-in-fact and agent in connection with all actions to
be taken by the Stockholders pursuant to Section 3.02, Section 4.01 and
Articles XII and XIV (including the settlement of indemnification claims
and the decision to pursue legal action against other Persons on behalf of
the Stockholders).
(b) Each Stockholder hereby agrees that:
(i) in all matters in which action by the Stockholders'
Representative is required or permitted, the Stockholders'
Representative is authorized to act on behalf of such Stockholder,
notwithstanding any dispute or disagreement among the Stockholders or
between any Stockholder and the Stockholders' Representative, and
Purchaser shall be entitled to rely on any and all action taken by the
Stockholders' Representative under this Agreement without any
liability to, or obligation to inquire of, any of the other
Stockholders, notwithstanding any knowledge on the part of Purchaser
of any such dispute or disagreement;
(ii) notice to the Stockholders' Representative, delivered in the
manner provided in Section 17.01, shall be deemed to be notice to all
Stockholders for the purposes of this Agreement; and
(iii) the power and authority of the Stockholders'
Representative, as described in this Agreement, shall continue in
force until all rights and obligations of the Stockholders under this
Agreement shall have terminated, expired or been fully performed.
(c) Each Stockholder shall severally indemnify the Stockholders'
Representative against any Losses (except such as result from such
Stockholders' Representative's gross negligence or willful misconduct) that
such Stockholder may suffer or incur in connection with any action or
omission of such person as the Stockholders' Representative. The
Stockholders' Representative shall not be liable to any Stockholder with
respect to any action or omission taken or omitted to be taken by the
Stockholders' Representative pursuant to this Section 17.11, except for the
Stockholders' Representative's gross negligence or willful misconduct.
17.12 Invalid Provisions . If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement
will not be materially and adversely affected thereby, (a) such provision
will be fully sever able, (b) this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision had never comprised
a part hereof, (c) the remaining provisions of this Agreement will remain
in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (d) in lieu of
such illegal, invalid or unenforceable provision, there will be added
automatically as a part of this Agreement a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
17.13 Governing Law . This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable
to a Contract executed and performed in such State without giving effect to
the conflicts of laws principles thereof.
17.14 Counterparts . This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officer of each party hereto as of the date first above written.
HEARST BUSINESS PUBLISHING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
COMP-EST, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President