EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Agreement (the "Agreement") is entered into on March 27, 2002,
between Gates, XxXxxxxx & Company, an Ohio corporation ("Seller"), and Xxxxxx
Acquisition Sub, Inc., a Missouri corporation ("Purchaser") and wholly owned
subsidiary of TALX Corporation, a Missouri corporation. Purchaser and Seller are
referred to collectively herein as the "Parties". Capitalized terms are defined
in Section 1.
BACKGROUND
A. Seller currently owns all of the Acquired Assets (hereinafter defined)
of the UCBSG Business (hereinafter defined).
B. Seller now desires to sell the Acquired Assets, and Purchaser desires
to purchase the Acquired Assets, on the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual terms, conditions and other agreements set forth herein, intending to be
legally bound, the Parties hereby agree as follows:
SECTION 1. DEFINITIONS.
"Acquired Assets" means all right, title, and interest in and to the
assets of Seller listed on EXHIBIT 1(a) TO THE DISCLOSURE LETTER, which
includes, the following assets, (a) the Tangible Assets (as hereinafter
defined), (b) the Intangible Assets (as hereinafter defined), (c) the Contracts
(as hereinafter defined), and rights thereunder, (d) cash received equal to the
Deferred Revenue, (e) the aggregate goodwill of the
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UCBSG Business acquired in connection with Seller's prior acquisitions, as
reflected on EXHIBIT 1(a) TO THE DISCLOSURE LETTER and (f) the Customer Accounts
Receivable. The Acquired Assets shall not include the Excluded Assets
(hereinafter defined).
"Affiliate" means a Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with
another Person or beneficially owns or has the power to vote or direct the vote
of ten percent (10%) or more of the voting stock (or any other form of general
partnership, limited partnership or voting equity interest in the case of a
Person that is not a corporation) of such Persons. For purposes of this
definition, "control," including the terms "controlling," and "controlled,"
means the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
credit agreement, as trustee, partner or executor or otherwise.
"Affiliated Group" means any affiliated group within the meaning of the
Code (hereinafter defined) ss.1504(a).
"Agreement" shall mean collectively this "Asset Purchase Agreement"
including the Disclosure Letter and Exhibits hereto and thereto.
"Assumed Liabilities" means only those obligations of Seller under
Contracts, but only to the extent such obligations are to be performed after the
Closing Date and are accompanied by a correlated duty of performance or payment
(or Deferred Revenue otherwise included in the Acquired Assets) on the part of
the other party(s) thereto; it being understood that the term Assumed
Liabilities does not include any obligation or liability with
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respect to services or work performed by Seller under Contracts at any time on
or prior to the Closing Date.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Xxxx of Sale" has the meaning set forth in Section 10(a).
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect as of the Closing Date.
"Confidentiality Agreement" means that Agreement between Purchaser and
Seller dated December 19, 2001.
"Control Group" has the meaning as set forth in Code ss.414.
"Contracts" means any and all written contracts, including but not
limited to, the customer contracts, the partnership contracts and the vendor
services agreements, that support or are necessary to conduct the UCBSG Business
as it is currently conducted; provided, however, that the term Contracts shall
not be deemed to include that certain Venture Enterprise Agreement dated as of
October 1, 1998 between the Seller and Xxxxxx Xxxxxxxx LLP, as the same may have
been amended or supplemented from time to time after the date thereof.
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"Customer Accounts Receivable" means all those customer accounts
receivable as of the Closing Date, including without limitation, those accounts
receivable reflected on the aged trial balance as of March 25, 2002, which is
attached to EXHIBIT 1(a) OF THE DISCLOSURE LETTER.
"Damages" has the meaning set forth in Section 14(b) below.
"Deferred Revenue" means revenue generated from customers of the UCBSG
Business which relates to services to be rendered after the Closing Date.
"Disclosure Letter and Exhibits to the Disclosure Letter" have the
meaning set forth in Section 3 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), (d) Employee Welfare Benefit Plan or (e)
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Encumbrances" means any mortgage, encumbrance, charge, claim,
equitable interest, lien, option, pledge, security interest, or right of first
refusal, including any restriction on
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use, voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental, Health and Safety Laws" or "Environmental Laws" means
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Resource Conservation and Recovery Act of 1976, and the Occupational
Safety and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means LaSalle Bank National Association, a national
banking association duly organized and existing under the laws of the United
States of America, with its principal office in Chicago, Illinois.
"Escrow Agreement" means the escrow agreement executed by Purchaser and
Seller in the form of EXHIBIT A attached hereto.
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"Evaluation Material" shall have the meaning set forth in the
Confidentiality Agreement.
"Excluded Assets" means (a) the assets of Seller listed on EXHIBIT 1(b)
TO THE DISCLOSURE LETTER, (b) any rights of the Seller under this Agreement (or
any collateral agreement hereunder), (c) notes, (d) insurance polices, (e) cash
or cash equivalents except for cash received equal to Deferred Revenue, (f) any
assets with respect to Seller's Employee Benefit Plans (g) certain prepaid
expenses, (h) rights or obligations of Seller under or pursuant to that certain
Venture Enterprise Agreement dated as of October 1, 1998 between the Seller and
Xxxxxx Xxxxxxxx LLP, as the same may have been amended or supplemented from time
to time after the date thereof, or (i) all Seller's deferred taxes, and, any and
all other assets, rights, and claims of Seller not specifically included in the
Acquired Assets listed on Exhibit 1(a) to the Disclosure Schedule.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Indemnified Party" has the meaning set forth in Section 14(b) below.
"Indemnifying Party" has the meaning set forth in Section 14(b) below.
"Intangible Assets" means all intangible assets of Seller listed on
EXHIBIT 1(A) TO THE DISCLOSURE LETTER relating to its current UCBSG Business and
all Transferred Confidential Information (as defined in Section 12(f) hereof) of
Seller related to the UCBSG Business.
"Intellectual Property" means all of the following, including but not
limited to intellectual property of: (i) trademarks and service marks
(registered or unregistered), trade
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dress, trade names and other names and slogans embodying business or product
goodwill or indications of origin, all applications or registrations in any
jurisdiction pertaining to the foregoing and all goodwill associated therewith;
(ii) patents, patentable inventions, discoveries, improvements, ideas, know-how,
formula methodology, processes, technology and computer programs, software and
databases (including source code, object code, development documentation,
programming tools, drawings, specifications and data) and all applications or
registrations in any jurisdiction pertaining to the foregoing, including all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof; (iii) trade secrets, including confidential and other
non-public information, and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs, mask works or other
works, and applications or registrations in any jurisdiction for the foregoing;
(v) database rights; (vi) Internet Web sites, domain names and registrations or
applications for registration thereof; (vii) licenses, immunities, covenants not
to xxx and the like relating to any of the foregoing; (viii) books and records
describing or used in connection with any of the foregoing; and (ix) claims or
causes of action arising out of or related to infringement or misappropriation
of any of the foregoing.
"Knowledge" means information within the actual knowledge, of any of
Xxxxxxx Xxxx, Xxxxxxx Xxx, Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx or
Xxxxxx Xxxx.
"Leases" means all leases and/or subleases (including any amendments
thereto) under which Seller occupies any of its offices through which it
conducts the UCBSG Business and its other businesses.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international or other administrative order,
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constitution, law, ordinance, principle of common law, regulation, statute or
treaty, including but not limited to Environmental Laws and Occupational Safety
& Health Act of 1970, as amended.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
"Material Adverse Effect" means any material adverse effect on the
business, financial condition, results of operations, properties, the employees
on EXHIBIT 5(a) TO THE DISCLOSURE LETTER, or the Acquired Assets of the UCBSG
Business, taken as a whole.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" or "Parties" has the meaning set forth in the preface above.
"Permitted Encumbrances" means (i) liens for real estate and personal
property taxes not yet due and payable, (ii) statutory liens of landlords,
warehousemen, mechanics and materialmen incurred in the Ordinary Course of
Business for sums not yet due and payable, and (iii) those liens set forth on
EXHIBIT 1(c) TO THE DISCLOSURE LETTER.
"Person" means an individual, a partnership, a corporation, (including
limited liability companies) an association, a joint
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stock company, a trust, a joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Tangible Assets" means all machinery, equipment, and other tangible
personal property of Seller listed on EXHIBIT 1(a) TO THE DISCLOSURE LETTER
relating to the current UCBSG Business.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss.59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum tax or estimated tax, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any Exhibit or
attachment thereto, and including any amendment thereof.
"UCBSG Business" means the business of providing unemployment
compensation services including tax management and consulting, claims
management, account management, hearings representation, benefit charge
auditing, legislative services and not-for-profit services for the private and
public sector throughout the United States as such business is conducted by the
Seller on the date hereof.
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SECTION 2. BASIC TRANSACTION.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Purchaser agrees to purchase from Seller, and
Seller agrees to sell, assign, transfer, convey, and deliver to Purchaser, all
of the Acquired Assets at the Closing for the consideration specified below in
Section 2(c), free and clear of all Encumbrances, except for Permitted
Encumbrances. The Parties hereby agree that the Excluded Assets are not included
in this transaction and will remain with the Seller.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, Purchaser agrees to assume and become responsible
for only the Assumed Liabilities that arise, accrue or occur after the Closing.
Purchaser does not and shall not assume any Liabilities of Seller other than the
Assumed Liabilities.
(c) Purchase Price. Subject to the terms and conditions of this
Agreement, Purchaser agrees to pay to Seller at the Closing Forty Three Million
Two Hundred Fifty Thousand Dollars ($43,250,000.00)(the "Purchase Price"). The
Purchase Price shall be paid by wire transfer of immediately available funds as
follows: (i) Purchaser shall wire Thirty Nine Million Two Hundred Fifty Thousand
Dollars ($39,250,000.00) directly to Seller and (ii) Purchaser shall wire Four
Million Dollars ($4,000,000.00) to the Escrow Agent, to be held in escrow, in
accordance with Section 2(g) below and the Escrow Agreement, for a period of
fifteen (15) months following the Closing Date and such amount shall be
available to satisfy indemnity obligations of Seller pursuant to Section 14
hereof. Seller shall provide to Purchaser the necessary instructions for wire
transfers of such funds at least two (2) business days prior to the Closing.
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(d) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Seller in Columbus,
Ohio, commencing at 10:00 a.m. local time on March 27, 2002 (the "Closing
Date").
(e) Intellectual Property Rights. Seller shall retain or otherwise own
all Intellectual Property not included in the Acquired Assets. Seller shall
provide the Purchaser with a non-exclusive license to use certain Intellectual
Property pursuant to the Intellectual Property License Agreement, the form of
which is attached as EXHIBIT F hereto.
(f) Completion of Transfers. Notwithstanding the foregoing, if the
assignment or transfer of any of the Contracts or the Assumed Liabilities would
cause a breach thereof or if no required consent to such assignment or transfer
has been obtained from the third parties involved, then such Contracts or
Assumed Liabilities shall not be assigned and transferred, but, instead, Seller
shall continue to hold its interests in such Contracts and/or Assumed
Liabilities in trust for the benefit of Purchaser, shall receive in trust and
remit as promptly as possible to Purchaser any money paid thereunder to Seller
and shall cooperate in any reasonable arrangement or action requested by
Purchaser (including without limitation, using commercially reasonable efforts
to obtain any required consents) to secure for Purchaser all rights and benefits
under such Contracts or Assumed Liabilities.
(g) Escrow Account. In connection with the Closing, Purchaser, Seller
and the Escrow Agent shall execute the Escrow Agreement, pursuant to which the
sum of $4,000,000.00 (the "Escrow Deposit") will be delivered by Purchaser to
the Escrow Agent to be held in escrow under the Escrow Agreement. Upon
termination of the Escrow Agreement, the Escrow Agent shall distribute the
portion of the Escrow Deposit remaining in escrow
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and all theretofore undistributed income earned thereon to the Seller in
accordance with the Escrow Agreement, except to the extent that some or all of
the Escrow Deposit has been returned to Purchaser pursuant to the terms of the
Escrow Agreement to satisfy any claims pursuant to Section 14(b) hereof.
(h) Net Customer Collections.
The Parties acknowledge and agree that all Customer Accounts Receivable
included in the Acquired Assets consist of both (i) the Customer Accounts
Receivable as of March 25, 2002, as set forth on EXHIBIT 1(a) TO THE DISCLOSURE
LETTER, plus (ii) any Customer Accounts Receivable arising in the Ordinary
Course of Business on March 26, 2002, and March 27, 2002; however, the Purchase
Price was determined based upon, among other things, only those Customer
Accounts Receivable existing as of March 25, 2002. In order to properly allocate
receivables and collections for March 26, 2002, and March 27, 2002, the Seller
shall provide to the Purchaser a true, accurate and complete statement of net
customer xxxxxxxx/receivables for March 26, 2002, and March 27, 2002. Such
statement shall be provided by Seller to Purchaser within ten (10) Business Days
following the Closing Date and shall set forth the net amount of (x) Customer
Accounts Receivable billed by Seller on March 26, 2002, and March 27, 2002, less
(y) cash collections on Customer Accounts Receivable on March 26, 2002, and
March 27, 2002 (the "Net Xxxxxxxx Amount"). If the Net Xxxxxxxx Amount is
positive, Purchaser shall pay the Net Xxxxxxxx Amount to Seller, and if the Net
Xxxxxxxx Amount is negative, Seller shall pay the Net Xxxxxxxx Amount to
Purchaser. Seller covenants and agrees that all xxxxxxxx and cash collections of
Customer Accounts Receivable on March 26, 2002 and March 27, 2002 were done in
the Ordinary Course of Business, consistent with the past practice of the
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UCBSG Business.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents
and warrants to Purchaser that the statements contained in this Section 3 are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 3), except as set forth in the disclosure letter dated of even date
herewith delivered by the Seller to the Purchaser (the "Disclosure Letter"). The
Disclosure Letter, including the Exhibits to the Disclosure Letter will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement, and shall be true, correct and complete as of the
date of this Agreement and will be true, correct and complete as of the Closing
Date.
(a) Organization of Seller. Seller is a corporation duly organized,
validly existing, and in good standing under the laws of Ohio. Seller is duly
qualified to do business in any state or jurisdiction in which it conducts its
business, and is not transacting any business in any state or jurisdiction
requiring a license therefore in which it is not licensed to transact business,
the violation of which would have a Material Adverse Effect. Seller has
delivered to Purchaser true, correct and complete copies of the Articles of
Incorporation and Code of Regulations of Seller as currently in effect. EXHIBIT
3(A) TO THE DISCLOSURE LETTER contains a complete and accurate list for Seller
of its name, jurisdiction of incorporation, and other jurisdictions in which it
has qualified as a foreign corporation to do business.
(b) Authorization of Transaction. Seller has or will have at Closing
full corporate power and authority to own, lease
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and operate the Acquired Assets and the UCBSG Business and carry on its UCBSG
Business as now being conducted and to execute and deliver this Agreement and
each of the agreements and documents identified in Section 10 to which Seller is
a party, and to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement and
each of the agreements and documents identified in Section 10 to which Seller is
a party constitutes the valid and legally binding obligation of Seller,
enforceable in accordance with its terms and conditions except as the foregoing
may be limited by the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors generally, including, without
limitation, the effect of any fraudulent or preferential transfer or conveyance
laws. The execution and delivery of this Agreement and each of the agreements
and documents identified in Section 10 to which Seller is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized, approved and ratified by all necessary action on the part of Seller.
Copies of all required resolutions, authorizations, consents, approvals and/or
ratifications are set forth on EXHIBIT 3(b) TO THE DISCLOSURE LETTER and no such
resolution, authorization, consent or approval has been altered, amended
rescinded, repealed or revoked.
(c) Noncontravention. Except those items that are set forth in SECTION
3(c) OF THE DISCLOSURE LETTER, neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller is subject or any provision of the
articles of incorporation or code
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of regulation of Seller or (ii) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Seller is a party or by which Seller is bound or to which any of its assets are
subject (or result in the imposition of any Encumbrance, except any Permitted
Encumbrance, upon any of the Acquired Assets). Except as set forth in SECTION
3(C) OF THE DISCLOSURE LETTER, Seller is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency or any third party in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Broker's or Finder's Fees. No broker, investment banker, financial
advisor or other person, other than Xxxxxxx, Xxxxxxx & Co., the fees and
expenses of which will be paid by Seller, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller. Seller has no Liability or obligation to pay any fees or
commissions to any other brokers, finder, or agent with respect to the
transactions contemplated by this Agreement for which Purchaser could become
liable or obligated, and Seller will indemnify and hold harmless the Seller for
any misrepresentation contained in this Section 3(d).
(e) Title to Assets. Except as set forth in SECTION 3(e) OF THE
DISCLOSURE LETTER, Seller has good and marketable title to the Acquired Assets,
free and clear of all Encumbrances, except the Permitted Encumbrances.
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(f) Financial Information.
(i) Set forth on EXHIBIT 3(f) TO THE DISCLOSURE LETTER are the
unaudited select balance sheet data of the UCBSG Business as of December 31 in
each of the years 2000 and 2001, and the related unaudited statements of income
for the years ended December 31, 1999, 2000 and 2001. The unaudited select
balance sheet data and the related unaudited statements of income were derived
from the books and records of the UCBSG Business. The unaudited statements of
income are true, correct and complete and have been prepared consistent with
past practice.
(ii) The Deferred Revenue is Five Hundred Eighteen Thousand Five
Hundred and Twelve Dollars ($518,512.00) as of March 25, 2002.
(g) Events Subsequent to Effective Date of Financial Information. Since
December 31, 2001, there has not been any loss of employees, loss of customers
or loss of data in computer systems related to the UCBSG Business that would
have a Material Adverse Effect. To Seller's Knowledge since December 31, 2001,
there has not been a material change in the business, financial condition,
operations, results of operations, or future prospects of the UCBSG Business
other than in the Ordinary Course of Business.
(h) Subsequent Events. Except as set forth in EXHIBIT 3(h) TO THE
DISCLOSURE LETTER, since December 31, 2001, the Seller has not entered into any
agreement, contract, equipment lease, or license (or series of related
agreements, contracts, leases, and licenses) outside the Ordinary Course of
Business relating to the UCBSG Business or any of the Acquired Assets. Without
limiting the foregoing, since December 31, 2001:
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(i) The Seller has not accelerated, terminated, modified, or
canceled any material agreement, contract, equipment lease, or license
(or series of related agreements, contracts, leases, and licenses)
relating to the UCBSG Business or any of the Acquired Assets;
(ii) Neither the Seller nor, to the Knowledge of Seller, has
any other Person imposed any Encumbrance upon any of the Acquired
Assets, except those that would be a Permitted Encumbrance;
(iii) The Seller has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation relating to any of
the Acquired Assets;
(iv) Seller has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) outside the
Ordinary Course of Business relating to any of the Acquired Assets or
the UCBSG Business;
(v) The Seller has not entered into any written employment
contract or collective bargaining agreement, or modified the terms of
any existing such contract or agreement with respect to the officers
and employees listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER;
(vi) Other than in the Ordinary Course of Business, the Seller
has not granted any increase in the base compensation of any of its
officers and employees listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER;
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(vii) Other than in the Ordinary Course of Business, the
Seller has not adopted, amended, modified or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its officers and employees listed
on EXHIBIT 5(a) TO THE DISCLOSURE LETTER (or taken any such action with
respect to any other Employee Benefit Plan); and
(viii) The Seller has not made any other changes in employment
terms for any of its officers and employees listed on EXHIBIT 5(a) TO
THE DISCLOSURE LETTER outside the Ordinary Course of Business.
(i) Legal Compliance. Except as disclosed in SECTION 3(i) OF THE
DISCLOSURE LETTER, Seller is not IN violation of any applicable federal, state,
local or foreign law, ordinance, statute, rule, regulation, order, judgment,
injunction, award, decree or requirement of any governmental or regulatory body,
court or arbitrator, which violation individually or in the aggregate could have
a Material Adverse Effect on the conditions of the Acquired Assets or the UCBSG
Business and Seller has not received any written notice that such violation is
being or may be alleged. The execution and delivery of this Agreement and the
agreements and documents identified in Section 10 hereof and the consummation of
the transaction contemplated hereby do not and will not constitute or result in
such violation.
(j) Real Property. Seller does not own any real property in connection
with its operations of the UCBSG Business. EXHIBIT 3(j) TO THE DISCLOSURE LETTER
lists all Leases. Seller has delivered to Purchaser correct and complete copies
of the Leases, amendments, estoppel certificates, subordination and
nondisturbance agreements, side letter agreements and any other
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documentation in Seller's possession regarding any of Seller's representations,
requirements, rights or duties under any Leases. The rights and obligations of
Seller and Purchaser as to each of the Leases listed on EXHIBIT 3(j) TO THE
DISCLOSURE LETTER are more specifically set forth in the Lease Services
Agreement, which is attached hereto and incorporated herein by this reference.
To Seller's Knowledge, with respect to each Lease listed in EXHIBIT 3(j):
(i) Seller has all right, title and interest of the Lessee
under the terms of such Leases, free of all Encumbrances, except
Permitted Encumbrances, on such leasehold rights, title and interest
and the Leases are legal, valid, binding, enforceable, obligations of
Seller and to Seller's Knowledge, the other party(s) thereto, and the
Leases, unless otherwise disclosed to Purchaser on EXHIBIT 3(j) TO THE
DISCLOSURE LETTER are in full force and effect;
(ii) no party to the Leases is in breach or default of any
term which is material, and no event has occurred which, with notice or
lapse of time, or both, would constitute a material breach or default
or permit termination, modification, or acceleration thereunder;
(iii) no party to the Leases has repudiated any material
provision thereof;
(iv) except as may otherwise be set forth in any written
amendments or modifications thereto, there are no disputes, agreements,
or forbearance programs in effect as to the Leases; and
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(v) with respect to each sublease constituting a Lease, the
representations and warranties set forth in subsections (i) through
(iv) above are, in all material respects, true and correct with respect
to the underlying lease.
(k) Tangible and Intangible Assets. The Tangible Assets are listed on
EXHIBIT 3(k) TO THE DISCLOSURE LETTER. The Intangible Assets are listed on
EXHIBIT 3(k) TO THE DISCLOSURE LETTER. Except as disclosed in SECTION 3(k) OF
THE DISCLOSURE LETTER, Seller is the sole and exclusive owner of, or leases or
has a license to use, the Tangible and Intangible Assets that are Acquired
Assets. Each such Tangible Asset has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear) as reasonably required for their use as presently conducted or
planned by Seller, and are free and clear of any Encumbrance, other than the
Permitted Encumbrances.
(l) Intangible Asset and Intellectual Property Rights.
(i) Seller shall retain or otherwise own all Intellectual Property
rights of Seller not referenced in EXHIBIT 3(k) TO THE DISCLOSURE
LETTER.
(ii) Intellectual Property rights not specifically transferred to
Purchaser hereunder shall remain with Seller and certain of such rights
shall be licensed to Purchaser pursuant to a separately executed
license agreement, the form of which is attached hereto as EXHIBIT F.
(iii) There is not and has not been any infringement, misappropriation
or other violation of any intellectual
20
property of a third party by Seller in connection with the conduct of
the UCBSG Business (including the provision of services and products of
the business), and there are no facts raising a likelihood of any such
violation. The use by Seller of the intellectual property used in the
UCBSG Business does not conflict with any rights of a third party.
(iv) To the Knowledge of Seller, there is not and has not been any
infringement, misappropriation or other violation of any intellectual
property used by Seller in the UCBSG Business, and there are no facts
raising a likelihood of any such violation.
(m) Contracts. (i) The Contracts are listed on EXHIBIT 3(m)(i) TO THE
DISCLOSURE LETTER.
(ii) With respect to each of the Contracts: (a) Each of the Contracts
is in full force and effect and is a legal, valid, binding, and enforceable
obligation of Seller, and to Seller's Knowledge, the other party(s) thereto,
subject to bankruptcy, insolvency, reorganization, and other laws of general
applicability regarding or affecting creditors' rights and general equity
principles; (b) nothing contained herein shall be construed to be a
representation and/or warranty that any Contract is assignable or transferable;
(c) to Seller's Knowledge, no other party is in breach or default, and no event
has occurred which with notice or lapse of time, or both would constitute a
breach or default, which breach or default would have a Material Adverse Effect;
and (d) the execution of this Agreement and/or the other agreements identified
in Section 10 hereof, and/or the Closing hereunder or thereunder do not and will
not constitute or result in, such a breach, violation or default on the part of
any party thereto, cause the acceleration
21
of any obligation of Seller, any other party thereto or the creation of a lien
upon the Acquired Assets.
(iii) Except as listed on EXHIBIT 3(m)(III) OF THE DISCLOSURE LETTER,
none of the Contracts contain restrictions on competition by Seller, involve a
sharing of payments or joint venture arrangement or require Seller to refer any
business or other matters to another Person.
(n) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Seller.
(o) Litigation and Proceedings. SECTION 3(o) OF THE DISCLOSURE LETTER
sets forth each instance, with respect to the Acquired Assets or the UCBSG
Business, in which Seller during the past two (2) years: (i) is or has been
subject to any outstanding injunction, judgment, order, decree, ruling, or
charge or (ii) is or has been a party to any action, suit, proceeding, hearing,
or investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. Other than those items set forth in SECTION 3(o) OF THE DISCLOSURE
LETTER, there are no actions, suits, proceedings, hearings, or investigations
that could result in any Material Adverse Effect.
(p) Employees. No individual in a key management position listed on
EXHIBIT 5(a) TO THE DISCLOSURE LETTER has submitted his/her resignation in
writing to Seller. Seller is not a party to or bound by any collective
bargaining agreement, nor has Seller experienced any strikes, grievances, claims
of unfair labor practices, or other collective bargaining disputes. To the best
of Seller's Knowledge, Seller has not committed any unfair labor practice.
Seller has no Knowledge of any organizational effort presently being made or
threatened by or on behalf of any
22
labor union with respect to the employees listed on EXHIBIT 5(a) TO THE
DISCLOSURE LETTER. Except as set forth in SECTION 3(p) OF THE DISCLOSURE LETTER,
Seller:
(i) has not made any commitments, in writing or otherwise, to
any current or former officer, director or employee on EXHIBIT 5(a) TO
THE DISCLOSURE LETTER regarding lifetime employment or employment for
any specified time period or retention as a consultant;
(ii) has not been served in writing that any current or former
officer, director or employee on EXHIBIT 5(a) TO THE DISCLOSURE LETTER
is asserting or will be asserting a claim for breach of contract,
breach of implied covenant of good faith and fair dealing, wrongful
termination, violation of public policy, negligent termination or other
claim based in tort or contract and relating to such person's
employment or termination from employment and there are no facts which
would justify such a claim; or
(iii) has not been served in writing that it has been charged
with, or deemed to be in violation of, any federal, state, or local law
that prohibits discrimination on the basis of sex, race, color,
religion, national origin, status as a handicapped individual,
disability, marital status, status as a Vietnam era veteran or a
disabled veteran, or sexual preference and there are no facts which
would justify such a claim.
(q) Employee Benefits.
(i) EXHIBIT 3(q) TO THE DISCLOSURE LETTER lists each Employee
Benefit Plan and compensation policy or arrangement
23
(including severance) to which Seller contributes for the employees
listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER. Seller has made
available to Purchaser a true and complete copy of each such Employee
Benefit Plan.
(ii) Seller and other members of the Controlled Group that
include Seller do not contribute to, have never contributed to, or have
never been required to contribute to any Multiemployer Plan. Seller and
other members of the Controlled Group do not have any Liability
(including withdrawal Liability) under any Multiemployer Plan. To the
Knowledge of Seller, Seller and the Controlled Group are in material
compliance with all laws and regulations concerning the Employee
Benefit Plans.
(r) Environment, Health, and Safety. To Seller's Knowledge, as to each
of the Acquired Assets and the UCBSG Business, the Seller has complied with all
Environmental, Health, and Safety Laws, except where such failure would not have
a Material Adverse Effect, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure to comply.
(s) Licenses. Except as set forth in SECTION 3(s) OF THE DISCLOSURE
LETTER Seller has all licenses, permits, orders or approvals of, and have made
all required registrations with, any federal, state, or foreign governmental or
regulatory body that are required to conduct, or material to the conduct of, the
UCBSG Business (collectively, "Licenses"). All Licenses are in full force and
effect; no violations are or have been recorded in respect of any Licenses; and
no proceeding is pending against
24
Seller which would have a Material Adverse Effect. Set forth on EXHIBIT 3(s) TO
THE DISCLOSURE LETTER is a list of the Licenses.
(t) Tax Matters. Except as set forth on EXHIBIT 3(t) OF THE DISCLOSURE
LETTER, Seller has, and as of the Closing Date will have, paid and discharged
all Taxes, excepting such taxes, assessments and other levies which will not be
due until or after the Closing Date.
(i) Seller has timely filed or extended or caused to be filed
or extended with the appropriate government entity all Tax Returns and
reports required to be filed by or on behalf of it with respect to the
Acquired Assets and the UCBSG Business. All Tax Returns, including any
amended Tax Returns, are true, correct, and complete in all material
respects. (ii) All Taxes with respect to the UCBSG Business or the
Acquired Assets (whether or not reflected in Tax Returns as filed)
payable by Seller with respect to all periods have been fully and
timely paid, and, to the Knowledge of Seller, there are no grounds for
the assertion or assessment of any additional material Taxes against
Seller with respect to such periods.
(iii) None of the Acquired Assets or Assumed Liabilities are
subject to or constitute a safe harbor lease within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the
Tax Equity and Fiscal Responsibility Act of 1982. None of the Acquired
Assets has been financed with or directly or indirectly secures any
industrial revenue bonds or debt the interest on which is tax-exempt
under Section 103(a) of the Code.
(iv) None of the Acquired Assets is tax-exempt use
25
property within the meaning of Section 168(h) of the Code.
(v) None of the Acquired Assets is subject to, and none of the
Assumed Liabilities is a Tax allocation, Tax sharing, or Tax
indemnification agreement.
(vi) There are no liens for Taxes upon any of the Acquired
Assets, except liens for Taxes not yet due and payable. The
transactions contemplated by this Agreement will not give rise to (a)
the creation of any Liens against the Acquired Assets or the UCBSG
Business in respect of any Taxes or (b) the assertion of any additional
Taxes against the Acquired Assets or the UCBSG Business.
(vii) None of the Assumed Liabilities is an obligation to
make a payment that will not be deductible under Section 280G of the
Code.
(viii) Except as set forth on EXHIBIT 3(t) OF THE DISCLOSURE
LETTER, Seller, with respect to the Acquired Assets or the UCBSG
Business, is not liable for Taxes to any non-U.S. taxing authority.
(ix) None of the activities of the UCBSG Business constitutes
or has constituted a permanent establishment in any foreign country, as
defined in any applicable Tax treaty or convention between the United
States and such foreign country.
(x) None of the Acquired Assets consist of stock in a
corporation.
26
(xi) Seller has not made any change to the UCBSG Business
with respect to its Tax Accounting or any Tax election.
(xii) None of the Acquired Assets is a joint venture,
partnership or other arrangement or entity that could be treated as a
partnership for federal income tax purposes.
(u) Necessary Property. The Acquired Assets, together with the rights
of Purchaser under the agreements delivered by Seller pursuant to Section 10
hereof constitute all of the property and property rights used, held for use or
necessary for the conduct of the UCBSG Business in the manner and to the extent
presently conducted by Seller.
(v) Undisclosed Liabilities. Except as disclosed in SECTION 3(V) OF THE
DISCLOSURE LETTER or except for Liabilities set forth in the Financial
Statements, the Seller has no Knowledge of any Liability which would have a
Material Adverse Effect.
(w) Customer Accounts Receivable.
Set forth on EXHIBIT 1(a) TO THE DISCLOSURE LETTER is a true, accurate and
complete list of all the Customer Accounts Receivable of the UCBSG Business as
of March 25, 2002. Such accounts receivable, together with any accounts
receivable arising between such date and the Closing Date (the "Accounts
Receivable"), are (to the extent not yet paid in full) valid, genuine and
existing and arose in the Ordinary Course. The Accounts Receivable are not
subject to any counterclaim, set-off, defense or Encumbrance.
27
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Seller that the statements contained in this Section
4 are true, correct and complete as of the date of this Agreement and will be
true, correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4).
(a) Organization of Purchaser. Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. Purchaser has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of Purchaser, enforceable
in accordance with its terms and conditions except as the foregoing may be
limited by the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
rights or remedies of creditors generally, including, without limitation, the
effect of any fraudulent or preferential transfer or conveyance laws.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
its articles of incorporation or bylaws or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
28
instrument, or other arrangement to which Purchaser is a party or by which it is
bound or to which any of its assets are subject. Purchaser does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. No broker, investment banker, financial advisor or
other person, other than CIBC World Markets Corp., the fees and expenses of
which will be paid by Purchaser, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser. Purchaser has no Liability or obligation to pay any fees
or commissions to any other broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Seller could become liable
or obligated, and Purchaser will indemnify and hold harmless the Seller for any
misrepresentation contained in this Section 4(d).
(e) Litigation. To Purchaser's Knowledge, there is no suit, action,
proceeding or investigation, pending or threatened, that would materially and
adversely affect Purchaser's ability to perform its obligations under this
Agreement or the transactions contemplated hereby.
SECTION 5. REPRESENTATIONS AND COVENANTS OF PARTIES WITH RESPECT TO
EMPLOYEES. The Parties agree and covenant to the following:
(a) Hiring of Employees. Purchaser shall offer to employ all of the
employees listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER pursuant to the terms
and conditions herein. The employment of each such employee shall commence
effective on the
29
first day following the Transfer Date (as such term is defined in the Employee
Services Agreement) on which such employee reports to work for Purchaser. The
terms of such employment shall include salaries that are commensurate with the
salaries paid by Seller as of the Transfer Date and employee benefits (including
medical, disability, severance pay, life insurance, vacation and retirement
benefits) that are not substantially less in the aggregate than those provided
on the Transfer Date to such employees of the Seller. The Seller shall not grant
any increase in the salary or other employee benefits provided to the employees
listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER between the date hereof and the
Transfer Date outside of the Ordinary Course of Business. Seller shall notify
Purchaser in writing of any proposed changes to the salaries or other employee
benefits to be provided to any such employees in advance of the effectiveness of
any such changes. For purposes of this Agreement, salary or salaries shall
initially be the amount listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER by each
employee's name. The Seller acknowledges that, except as indicated on EXHIBIT
5(a) TO THE DISCLOSURE LETTER, none of the employees on EXHIBIT 5(a) TO THE
DISCLOSURE LETTER are on long-term or short-term disability at the time of
execution of this Agreement.
(b) Employment Terms. Seller shall terminate the employment of all
employees listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER effective as of the
end of the business day on the Transfer Date. Seller makes no representations as
to whether any employee will accept employment with Purchaser. The employees who
accept employment with Purchaser shall be referred to as the "Transferred
Employees". For purposes of this Agreement, Transferred Employees shall not
include any of Seller's employees who are listed on EXHIBIT 5(a) as being
30
currently on a paid or unpaid leave of absence, or are on sick or disability
leave, but were providing services to Seller prior to such leave or disability,
until such person reports to work for the Purchaser; and Seller shall continue
to provide compensation and benefits to such person until the person reports to
work with the Purchaser. Nothing in this Agreement shall be construed as
limiting in any way the right of Purchaser after the Transfer Date to terminate
the employment of any Transferred Employee at any time, to change his or her
salary or wages or to modify benefits or other terms and conditions of
employment of Transferred Employees as long as any changes to salary or wages
are done in accordance with Purchaser's normal compensation practices and as
long as any modification to benefits or other terms and conditions of employment
of any Transferred Employee apply generally to employees of Purchaser's
business, provided, however, that without limiting the right of the Purchaser to
terminate the employment of any Transferred Employee after the Transfer Date,
Purchaser shall not reduce the salary or wages of any Transferred Employee for
at least twelve (12) months following the Transfer Date.
(c) Seller's and Purchaser's Obligations With Respect to Transferred
Employees. With respect to each Transferred Employee:
(i) Seller shall be responsible for, and shall indemnify and
hold harmless Purchaser against, any actions, claims or proceedings
brought by or on behalf of any Transferred Employee at any time,
including, but not limited to, wrongful termination, breach of
fiduciary duty, discrimination, sexual harassment, workers compensation
or other employment-related matter ("Employee Claims"), to the extent,
but only to the extent, such claims are based upon actions, events or
circumstances which occurred on or before the Transfer Date and not the
result of any action of
31
Purchaser (except that Purchaser's acquisition of the UCBSG Business as
contemplated hereby shall not constitute an action of Purchaser for
purposes of this Section (c)(i)). Purchaser shall be responsible for,
and shall indemnify and hold Seller harmless against any Employee
Claims to the extent, but only to the extent, such claims are based
upon actions, events or circumstances which occur after the Transfer
Date.
(ii) Seller shall be responsible for all benefits provided
pursuant to all of Seller's Employee Benefit Plans, including, but not
limited to, deferred compensation, non-qualified and incentive plans or
policies with respect to services rendered on or before the Transfer
Date.
(iii) Seller's welfare benefit plans shall be responsible for
welfare benefit claims relating to the Transferred Employees incurred
on or prior to the Transfer Date (in accordance with the terms of such
plans) or during any period for which a Transferred Employee shall
elect continuation coverage as described in Section 5(c)(v)(C) below
under such welfare benefit plans with respect to a "qualifying event"
occurring on or before the Transfer Date, and Purchaser's welfare plans
shall assume responsibility for all welfare benefit claims relating to
Transferred Employees incurred after the Transfer Date to the extent
such claim is covered by such plans and the Transferred Employee was
enrolled for such coverage.
(iv) Purchaser shall cause all Transferred Employees to be
covered by Purchaser's severance pay plan and each such Transferred
Employee shall be credited with such employee's service with Seller for
purposes of determining benefits
32
under such plan, based on the years of service shown for such employee
on EXHIBIT 5(a) TO THE DISCLOSURE LETTER.
(v) With respect to each Transferred Employee:
(A) Purchaser shall waive pre-existing condition
exclusions, evidence of insurability provisions, waiting
period requirements or any similar provisions under any
employee benefit plan or compensation arrangements maintained
or sponsored by or contributed to by Purchaser for such
Transferred Employee on or after the Transfer Date; provided
such conditions, waiting periods, exclusions or similar
provisions did not preclude coverage for such Transferred
Employee as of the Transfer Date under the comparable plans of
Seller.
(B) Purchaser shall recognize the service of each
Transferred Employee with Seller prior to the Transfer Date
for all purposes under each of Purchaser's employee benefit
plans, programs and policies (including, but not limited to,
vacation and severance).
(C) Seller shall be responsible for satisfying
obligations under Section 601 et. seq. of ERISA and Section
4980B of the Code ("COBRA"), to provide continuation coverage
to or with respect to any Transferred Employee or
non-transferred employee of the UCBSG Business in accordance
with law with
33
respect to any "qualifying event" occurring on or before the
Transfer Date. Purchaser shall be responsible for satisfying
obligations under COBRA to provide continuation coverage to or
with respect to any Transferred Employee in accordance with
law with respect to any "qualifying event" which occurs after
the Transfer Date.
(D) Purchaser shall be responsible for, and shall
indemnify and hold Seller harmless against, all workers
compensation benefits paid or payable to the Transferred
Employees after the Transfer Date with respect to claims made
by Transferred Employees arising, accruing and occurring after
the Transfer Date.
(E) Seller shall pay Transferred Employees on the
Transfer Date for any vacation days that have accrued to the
benefit of such employee but are unused as of the Transfer
Date.
(vi) Purchaser represents that it does not currently
contemplate an office closing involving, or mass lay-off of Transferred
Employees, or any terminations that in the aggregate would constitute a
mass lay-off of Transferred Employees, within eighteen (18) months
following the Transfer Date. Purchaser shall indemnify and hold Seller
harmless against any Liability which may be incurred or suffered by
Seller under the Worker Adjustment and Retraining Notification Act or
any similar state law arising out of, or relating to, any actions taken
by Purchaser with respect to the Transferred Employees on or after the
Transfer Date.
SECTION 6. SELLER PRE-CLOSING COVENANTS. The Seller agrees as follows
with respect to the period between the execution of this Agreement and the
Closing.
(a) General. The Seller will use its commercially reasonable efforts to
take all actions and to do all things
34
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Section 8 below).
(b) Notices and Consents. Seller will give notices to third parties,
and Seller will use its commercially reasonable efforts to obtain any third
party consents that Purchaser may reasonably request in connection with the
matters referred to in Section 3(m) above. The Seller will give any notices to,
make any filings with, and use its commercially reasonable efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
pursuant to any Legal Requirement applicable to Seller in connection with the
matters referred to herein.
(c) Operation of the UCBSG Business. Seller will not engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business with respect to the Acquired Assets or the UCBSG Business.
Without limiting the generality of the foregoing, Seller will not sell, lease,
transfer, assign or impose an Encumbrance upon any of the Acquired Assets other
than in the Ordinary Course of Business without the written approval of
Purchaser.
(d) Preservation of the UCBSG Business. Seller will use commercially
reasonable efforts to keep the UCBSG Business and related properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees; provided, nothing herein shall require Seller to
materially alter its present business practices.
(e) Full Access. Seller will permit representatives of Purchaser to
have full access during normal business hours (8:30
35
am to 5:00 pm local time) to all premises, properties, personnel, books, records
(including Tax records), contracts, and documents of or pertaining to the
Acquired Assets and the UCBSG Business. All information gathered herein shall be
Confidential Material and subject to the Confidentiality Agreement.
(f) Notice of Developments. The Seller will give prompt written notice
to the Purchaser of any development causing a breach of any of its own
representations and warranties. No disclosure by the Parties pursuant to this
Section 6(f), however, shall be deemed to amend or supplement the Disclosure
Letter or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant. Seller shall give prompt written notice to Purchaser upon
learning of any Basis which is a breach of Purchaser's representations.
(g) Insurance. Seller will use commercially reasonable efforts to
maintain in effect insurance coverage against loss of or damage to the Acquired
Assets and against the liabilities and risks of the Acquired Assets in the
amounts and kinds not less favorable than those currently in effect and maintain
the same through the Closing Date.
(h) Maintenance of Records. Seller will maintain and continue to keep
the books, accounts and records related to the operation of the UCBSG Business
in the usual manner and consistent with prior practice.
(i) Compliance with Laws. Seller will use commercially reasonable
efforts to comply with all laws, rules, regulations, orders and decrees of any
governmental body or authority, including but not limited to, Environmental
Laws.
(j) Other Consents. Seller will make commercially reasonable efforts to
assist Purchaser in obtaining the approvals
36
that may be necessary to consummate the transactions described in this
Agreement.
(k) Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, Seller shall use commercially reasonable
efforts to conduct the UCBSG Business in such a manner so that the
representations and warranties contained in this Agreement hereof shall continue
to be true and accurate on and as of the Closing Date.
SECTION 7. PURCHASER PRE-CLOSING COVENANTS. The Purchaser agrees as
follows with respect to the period between the execution of this Agreement and
the Closing.
(a) General. The Purchaser will use commercially reasonable efforts to
take all actions and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 9 below).
(b) Notice of Developments. The Purchaser will give prompt written
notice to the Seller of any development causing a breach of any of its own
representations and warranties. Purchaser shall give prompt notice to Seller
upon learning of any Basis which causes a breach of any of Seller's
representations; provided however, that this Section 7(b) shall in no way limit
or waive the remedies available to Purchaser under this Agreement.
(c) Confidentiality. The Parties will treat and hold as confidential
all of the Evaluation Material, refrain from using any of the Evaluation
Material except in connection with this Agreement. In the event that a Party is
requested or required (by oral question or request for information or documents
in any
37
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Evaluation Material, that Party will notify the
other Party promptly of the request or requirement so that the other Party may
seek an appropriate protective order or waive compliance with the provisions of
this Section 7(c). If, in the absence of a protective order or the receipt of a
waiver hereunder, either such Party is, on the advice of counsel, compelled to
disclose any Evaluation Material to any tribunal or else stand liable for
contempt, such Party may disclose the Evaluation Material to the tribunal;
provided, however, that the disclosing Party shall use its reasonable efforts to
obtain, at the reasonable request of the other Party, an order or other
assurance that confidential treatment will be accorded to such portion of the
Evaluation Material required to be disclosed as such Party shall designate.
SECTION 8. CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Seller hereunder are, at the option of Seller, subject to the conditions that,
at the Closing Date:
(a) Accuracy of Representations and Warranties. The representations and
warranties made by Purchaser herein shall be true and correct in all material
respects except for those representation and warranties that are qualified as to
materiality which shall be true and correct in all respects on the Closing Date
and which in the event of a delayed closing shall be confirmed in writing at the
Closing by Purchaser.
(b) Performance by Purchaser. All of the terms and conditions of this
Agreement to be complied with and performed by Purchaser on or before the
Closing Date shall have been complied with and performed in all material
respects, including, without limitation, the delivery of each of the items to be
delivered under Section 11 hereof.
38
(c) Legal Challenge. No suit, action or other proceeding brought by any
federal or state government or agency shall be pending, and no claim by any such
authority shall have been asserted, before any court or governmental agency in
which it is or will be sought to restrain or prohibit the consummation of the
transactions contemplated hereby.
(d) Non-Performance. If any of the conditions contained in this Section
8 shall not be fulfilled or performed at or before the Closing Date, Seller may,
by written notice to Purchaser, terminate all its obligations hereunder (except
as otherwise provided herein) and where the non-performance or non-fulfillment
of a condition is as a result of a breach of any covenant, representation or
warranty on the part of Seller herein contained, may bring an action against
Purchaser for damages suffered by Seller, provided that any of the conditions
may be waived in whole or part.
SECTION 9. CONDITIONS TO OBLIGATIONS OF PURCHASER. The obligations of
Purchaser hereunder are, at the option of Purchaser, subject to the conditions
that, at the Closing Date:
(a) Accuracy of Representations and Warranties. The representations and
warranties, made by Seller herein and in the Disclosure Letter and Exhibits
thereto shall be true and correct in all material respects except for those
representation and warranties that are qualified as to materiality which shall
be true and correct in all respects on the Closing Date and which in the event
of a delayed closing, shall be confirmed in writing at the Closing by Seller;
(b) Performance by Seller. All of the terms and conditions of this
Agreement to be complied with and performed by Seller on or before the Closing
Date shall have been complied with and performed in all material respects,
including, without
39
limitation, the delivery of each of the items to be delivered under Section 9
hereof;
(c) Legal Challenge. No suit, action or other proceeding shall be
pending before any court or governmental agency, and no claim shall have been
asserted, in which it is or will be sought to restrain or prohibit or to obtain
damages or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby;
(d) Non-Performance. If any of the conditions contained in this Section
9 shall not be fulfilled or performed at or before the Closing Date, Purchaser
may, by written notice to Seller, terminate all its obligations hereunder and
where the non-performance or non-fulfillment of a condition is as a result of a
breach of any covenant, representation or warranty on the part of Seller herein
contained, may bring an action against Seller for damages suffered by Purchaser,
provided that any of the conditions may be waived in whole or part.
SECTION 10. ACTIONS AT CLOSING BY SELLER. At the Closing, Seller shall
execute and deliver to Purchaser:
(a) A Xxxx of Sale transferring the Acquired Assets (the "Xxxx of
Sale") in the form attached hereto as EXHIBIT B;
(b) A Lease Services Agreement in the form attached hereto as EXHIBIT
C;
(c) A Transition Services Agreement (the "Transition Services
Agreement") in the form attached hereto as EXHIBIT D;
(d) An Employee Services Agreement in the form attached hereto as
EXHIBIT E;
40
(e) An Intellectual Property License Agreement in the form attached
hereto as EXHIBIT F;
(f) An Assignment and Assumption Agreement in the form of EXHIBIT G;
(g) Certificates of incumbency for certain officers of Seller attached
hereto in the form of EXHIBIT H;
(h) The Escrow Agreement, duly executed by the Seller;
(i) Wire transfer of the Deferred Revenue amount in immediately
available funds to account of Purchaser, as designated in writing by Purchaser
prior to the Closing Date; and
(j) Such other documents as may be necessary or appropriate, in the
reasonable opinion of Purchaser or its counsel, to evidence the authorization
of, and to effect the transactions contemplated by, this Agreement.
SECTION 11. ACTIONS AT CLOSING BY PURCHASER. At or prior to the
Closing, Purchaser shall execute and deliver to Seller:
(a) A Lease Services Agreement in the form attached hereto as EXHIBIT
C;
(b) An Assignment and Assumption Agreement in the form of EXHIBIT G;
(c) The Transition Services Agreement in the form attached hereto as
EXHIBIT D;
41
(d) An Employee Services Agreement in the form attached hereto as
EXHIBIT E;
(e) An Intellectual Property License in the form attached hereto as
EXHIBIT F;
(f) Wire transfers of the Purchase Price in immediately available funds
to accounts of Seller and the Escrow Agent in accordance with Sections 2(c) and
2(g), as designated in writing by Seller prior to the Closing Date;
(g) Deliver certificates of incumbency for certain officers of
Purchaser in the form attached hereto as EXHIBIT I;
(h) The Escrow Agreement, duly executed by the Purchaser and the Escrow
Agent; and
(i) Deliver such other documents as may be necessary or appropriate, in
the reasonable opinion of Seller or their counsel, to evidence the authorization
of, and to effect the transactions contemplated by, this Agreement.
SECTION 12. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request. The cost and expenses of such requested further actions shall be borne
in a manner as is mutually agreeable to the parties.
42
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Seller each of the other Parties will cooperate
with the contesting or defending Party and its counsel in the contest or
defense, make available its personnel, and provide such testimony and access to
its books and records as shall be reasonably necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 14 below). Unless otherwise agreed by the
Parties, the obligations of the Parties contained in this Section 12(b) shall
terminate on the two year anniversary of the Closing Date; provided, however,
that the obligations with respect to any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand that is the subject matter of
this Section 12(b) that is pending on the two year anniversary date of the
Closing Date shall continue until such time as such matter is finally resolved.
(c) No Solicitation. Purchaser acknowledges and agrees that the
employees of the UCBSG Business listed on EXHIBIT 5(a) TO THE DISCLOSURE LETTER
shall remain the employees of the Seller up to and including the Transfer Date.
Seller agrees that it shall not directly or indirectly during the twelve (12)
months following the Closing Date (the "Non-Solicitation Period") solicit,
encourage to leave employment, or hire any of the employees of the UCBSG
Business listed on EXHIBIT 5(a) OF THE DISCLOSURE
43
LETTER, except that Seller may hire any such employee who responds to a
general solicitation for employment that is not directed or targeted at such
employees and that is not otherwise intended to circumvent the obligations of
the Seller contained in this Section 12(c).
(d) Non-Competition. Seller acknowledges and agrees that Seller's
reputation and goodwill is an integral part of the success of the UCBSG
Business. If Seller deprives Purchaser of the UCBSG Business' goodwill or in any
manner utilizes the UCBSG Business' reputation and goodwill in competition with
Purchaser, Purchaser will be deprived of the benefits it has paid for pursuant
to this Agreement. Purchaser acknowledges and agrees that Seller shall continue
to use Seller's reputation and goodwill in connection with the operation of
Seller's other businesses, and that such use shall not constitute a breach of
this Section. Accordingly, as an inducement for Purchaser to enter into this
Agreement, each of Seller and its Affiliates, including without limitation
Nationwide Corporation, Nationwide Mutual Insurance Company and Nationwide
Mutual Fire Insurance Company, agrees that for a period ending two (2) years
after the Closing Date (the "Restricted Period"), it shall not, directly or
indirectly, anywhere in the United States, own, manage, operate, control or
participate in the ownership, management, operation or control of, or be
connected as a partner, consultant or lender with, any profit or non-profit
company or organization that, directly competes with the UCBSG Business as such
business exists immediately prior to the Closing provided, however, that the
running of such time period shall be tolled during any period of time in which
any of Seller or its Affiliates violates this paragraph, and, provided further,
that the foregoing shall not prohibit Seller or its Affiliates from acquiring,
and subsequently owning and operating any company that would otherwise be
prohibited hereby that may conduct unemployment
44
compensation business, as long as unemployment compensation business as
described above is not the predominant business of the acquired company. In the
event the agreement in this Section 12(d) shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the maximum period of time for which it may be enforceable and/or over the
maximum geographical area as to which it may be enforceable and/or to the
maximum extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
(e) Tax Covenants.
(i) For any personal property, ad valorem and any other
similar local or state taxes relating solely to the Acquired Assets or
the UCBSG Business for any taxable year or period prior to the Closing
and ending after the Closing (a "Straddle Period"), Seller shall pay to
Purchaser within fifteen (15) days after the date on which Taxes are
paid by Purchaser with respect to such periods an amount that relates
to the portion of such taxable period ending on the Closing Date to the
extent that such Taxes are not paid by Seller prior to Closing. For
purposes of this Section, the portion of such Tax that is allocated to
the Seller shall be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction, the numerator of which is the
number of days in the taxable period ending on the Closing Date, the
denominator of which is the number of days in the entire taxable
period. Any credits relating to the taxable period that begins before
and ends after the Closing Date shall be taken into account as though
the relevant taxable period ended on the Closing Date. Any
determinations necessary to give effect to the allocations
45
described in this Section shall be made in a manner consistent with the
prior practice of the UCBSG Business, except for changes required by
changes in law or fact.
(ii) All Taxes on income incurred in connection with the
transaction contemplated hereby, including the transfer of the Acquired
Assets, the assumption of the Assumed Liabilities or the provision of
services pursuant to the Transition Services Agreement, shall be borne
by Seller.
(f) Confidentiality.
(i) Seller acknowledges that the Transferred Confidential Information
of Seller is valuable and proprietary to the UCBSG Business and agrees not to,
directly or indirectly, use, publish, disseminate, describe or otherwise
disclose any Transferred Confidential Information relating to the UCBSG Business
without the prior written consent of Purchaser and/or its Affiliates except as
required by law.
(ii) For purposes of this Agreement, the phrase "Transferred
Confidential Information" means all trade secrets and any and all other
information not publicly available or generally available to the industry which
relates solely and exclusively to the UCBSG Business. Seller recognizes and
agrees that all documents and objects containing any Transferred Confidential
Information, whether developed by Seller or by someone else for Seller, will
after the Closing Date become the exclusive property of Purchaser. In the event
that Seller is requested or required by law (whether by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose any of the Transferred Confidential Information,
Seller will provide Purchaser with prompt prior written notice of such request
or requirement so that Purchaser may seek a protective order or other
appropriate remedy and/or consent in writing to
46
such disclosure. In the event that such protective order or other remedy is not
obtained and Purchaser has not consented in writing to such disclosure, and
Seller is, in the reasonable opinion of its counsel, compelled to disclose the
Transferred Confidential Information to any tribunal or else stand liable for
contempt or other penalty, Seller may furnish only that portion of the
Transferred Confidential Information that Seller is advised by counsel is
legally required.
(iii) Seller hereby grants to Purchaser and its Affiliates an
irrevocable, unconditional, world-wide, perpetual right to use and disclose the
Shared Confidential Information, but only to the extent necessary to conduct the
UCBSG Business and comply with any Legal Requirement.
(iv) For purposes of this Agreement, the phrase "Shared Confidential
Information" means all trade secrets and any and all other information not
publicly available or generally available to the industry other than the
Transferred Confidential Information, which relates to the UCBSG Business.
Purchaser recognizes and agrees that all documents and objects containing any
Shared Confidential Information will after the Closing Date remain the exclusive
property of Seller.
(g) Payments Received.
Except as provided for in the Transition Services Agreement, the
Parties agree that, after the Closing Date, they shall hold and shall
promptly transfer and deliver to the other Party hereto, from time to
time as and when received by them and in the currency received by them,
any cash, checks with appropriate endorsements (using their reasonable
best efforts not to convert such checks into cash), or other property
that they may receive on or after the Closing Date which properly
belongs to another Party, including, without
47
limitation, any payments of Customer Accounts Receivable, and shall
account to the other for all such receipts. From and after the Closing
Date, Purchaser shall have the right and authority to endorse without
recourse the name of Seller on any check or any other evidences of
indebtedness received by Purchaser on account of the Customer Accounts
Receivable transferred to the Purchaser under this Agreement. In the
event of a dispute between the Parties regarding their respective
obligations under this Section 12(g), the Parties shall cooperate and
act in good faith to promptly resolve such dispute and, in connection
with such cooperation, allow each other reasonable access to the
records of the other relating to such disputed item. The terms of this
Section 12(g)shall be subject to the obligations of the parties
pursuant to Section 29 of the Transition Services Agreement.
(h) Remedies. Seller acknowledges and agrees that a breach of the
covenants contained in this Section 12 will cause irreparable damage to
Purchaser, the exact amount of which will be difficult to ascertain, and that
the remedies at law for any such breach will be inadequate. Accordingly, Seller
agrees that if Seller breaches the covenants contained in this Section 12 in
addition to any other remedy that may be available at law or in equity,
Purchaser shall be entitled to specific performance and injunctive relief.
SECTION 13. TERMINATION.
(a) Termination of Agreement. Except as provided in this Agreement, the
Parties may terminate this Agreement as provided below:
(i) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing;
48
(ii) Purchaser may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (A) in the event
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, or (B) if the
Closing shall not have occurred on or before May 31, 2002 by reason of
the failure of any condition precedent hereunder (unless the failure
results primarily from Purchaser itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) Seller may terminate this Agreement by giving written
notice to Purchaser at any time prior to the Closing (A) in the event
Purchaser has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, or (B) if
the Closing shall not have occurred on or before May 31, 2002, by
reason of the failure of any condition precedent hereunder hereof
(unless the failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 13(a) above, except as provided herein, all rights and
obligations of the Parties hereunder shall terminate without any Liability of
any Party to any other Party (except for any Liability of any Party then in
breach).
SECTION 14. MISCELLANEOUS.
(a) Survival of Representations and Warranties. Unless otherwise stated
herein, all of the representations and warranties of the Parties contained in
this Agreement shall survive the Closing for fifteen (15) months. The
representations and warranties contained in Sections 3(b) and 3(e)
(authorization
49
and title) shall survive for two (2) years and the representations and
warranties contained in Section 3(q) and 3(t) (ERISA and Tax) shall survive
until the expiration of the applicable statutes of limitations, including any
suspensions, tollings or extensions thereof. If notice of indemnification is
given in accordance with Section 14 hereof before the expiration of the
applicable time referenced above, the representation or warranty applicable to
such claim shall survive until resolution of such claim and related matter. If
notice of indemnification is not timely given as described herein, then such
surviving representation and warranty shall expire and be terminated as provided
in this Agreement.
(b) Indemnification; Mediation and Litigation.
(i) Indemnification. Seller shall be liable for and defend,
indemnify, and hold Purchaser and its Affiliates wholly harmless from
and against any and all liability, loss, cost and expense whatsoever
(including reasonable fees of legal counsel and related disbursements)
(together, "Damages") incurred by Purchaser or its Affiliates as a
result of or related to: (i) any breach of or any inaccuracy in, any of
the representations, warranties, covenants and agreements of Seller
contained in this Agreement, in any certificate or Disclosure Letter or
Exhibit delivered pursuant hereto, or any agreement executed and
delivered in connection with the transactions contemplated under this
Agreement; (ii) any demands, claims, actions or cause of actions of
whatever kind or character arising out of or in connection with the
Acquired Assets or the UCBSG Business prior to Closing; (iii) Seller's
negligent or wrongful performance or non-performance of its obligations
pursuant to this Agreement or any other agreement provided for or
contemplated herein, (iv) any Liability of Seller or the UCBSG Business
which is not an
50
Assumed Liability (including, without limitation, any Liabilities
related to the litigation matters currently pending against Seller or
its Affiliates described on EXHIBIT 3(o) OF THE DISCLOSURE LETTER or
otherwise or any Liabilities related to any claim or threatened claim
of Aramark Corporation with respect to matters related to periods on or
prior to the Closing Date), (v) the assertion of any claim relating to
Seller's liability for its own Taxes or its liability, if any, for
Taxes of others (for example, by reason of transferee liability or
application of Treas. Reg. Section 1.1502-6); or (vi) the assertion of
any claim for Taxes claimed or assessed against the Acquired Assets or
the UCBSG Business (a) for any taxable period ending on or before the
Closing Date or (b) for any taxable period to the extent such assertion
constitutes a breach of any of the representations or warranties
contained in Section 3(t) hereof, including in either case any Losses
sustained in a tax period of Purchaser ending after the Closing Date
arising out of the settlement or other resolution of a proposed tax
adjustment which relates to a tax period ending on or before the
Closing Date.
Purchaser shall be liable for and defend, indemnify, and hold
Seller wholly harmless from and against any and all Damages incurred by
Seller or its Affiliates, as a result of or related to: (i) any breach
of or any inaccuracy in any of the representations, warranties,
covenants and agreements of Purchaser contained in this Agreement or in
any certificate or Exhibit delivered pursuant hereto or any agreement
executed and delivered in connection with the transaction contemplated
under this Agreement; (ii) any demands, claims, actions or cause of
actions of whatever kind or character arising out of or in connection
with Purchaser's operation of the UCBSG Business or use of the Acquired
Assets after the Closing Date (except to the extent
51
of Seller's indemnity obligations set forth herein); (iii) Purchaser's
negligent or wrongful performance or non-performance of its obligations
pursuant to this Agreement or any other agreement provided for or
contemplated herein; and (iv) any Liability that is an Assumed
Liability.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any Party by a third party in respect of which indemnity may be
sought pursuant to this Section 14, such Party (the "Indemnified
Party") shall promptly notify the person against whom such indemnity
may be sought (the "Indemnifying Party") in writing; provided however,
that the right of a person to be indemnified hereunder in respect of
claims made by a third person shall not be adversely affected by a
failure to give such notice unless, and then only to the extent that,
an indemnifying Party is actually damaged thereby. The Indemnifying
Party shall have the right, upon written notice to the Indemnified
Party, to retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and shall pay such fees and
expenses of such counsel related to such proceeding, provided that the
Indemnifying Party has unconditionally acknowledged to the Indemnified
Party in writing its obligation to indemnify the person to be
indemnified hereunder with respect to such third person claim. In any
such proceeding, any 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 unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the contrary,
(ii) the Indemnifying Party has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Party, (iii)
the named parties in any such proceeding (including any
52
impleaded parties) include both the Indemnified Party and the
Indemnifying Party and representation of both Parties by the same
counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceeding in
the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for the
Indemnified Party, and that all such fees and expenses shall be
reimbursed as they are incurred. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its
written consent (unless such Indemnifying Party has not exercised its
right to defend such claim in accordance with the terms hereof), but if
settled with such consent or if there be a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify any Indemnified
Party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an Indemnified Party shall have requested an Indemnifying
Party to reimburse an Indemnified Party for fees and expenses of
counsel as contemplated by the third sentence of this Section 14, the
Indemnifying Party agrees that it shall be liable for any settlement of
any proceeding effected without its written consent if such settlement
is entered into more than 30 days after receipt by such Indemnifying
Party of the aforesaid notice of such claim. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Party is or could have been a party
and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject
matter of such proceeding.
53
Notwithstanding anything herein to the contrary, (i) no claim
by any Indemnified Party against an Indemnifying Party, which claim
relates to a breach of a representation or warranty made in this
Agreement may be made unless notice of such breach is given prior to
the expiration date of such representation or warranty, as such
expiration is set forth in this Section 14; (ii) the Indemnifying Party
shall not have the obligation to make any indemnity payments under this
Section 14 with respect to a claim of a breach of a representation or
warranty (other than with respect to a breach of a representation or
warranty contained in Section 3(f)(ii) or 3(t)) until the aggregate
amount of all Damages incurred by the Indemnified Party with respect to
breaches of all representations or warranties for which the
Indemnifying Party would be liable under this Section exceeds on a
cumulative basis an amount equal to Five Hundred Thousand Dollars
($500,000) (the "Threshold"), and then, its liability will be limited
to amounts over the Threshold. The maximum aggregate liability of
Seller under this Section 14 with respect to breaches of
representations and warranties shall be Twenty Million Dollars
($20,000,000).
(ii) Alternative Dispute Resolution. Except as otherwise
provided herein, in case any disagreement of whatever nature arising
out of or relating to this Agreement or the breach, termination,
enforceability or validity thereof ("Dispute") shall arise between the
Parties hereto, the Parties shall first attempt in good faith to
resolve the Dispute promptly by negotiation between executives who have
authority to settle the Dispute. If the Dispute cannot be resolved
through negotiation, either party may initiate mediation of the Dispute
as hereinafter provided.
54
If the Dispute has not been resolved by negotiation as
hereinabove provided, the Parties shall make a good faith attempt to
settle the Dispute by mediation pursuant to the provisions of this
Section 15. Unless the Parties agree otherwise, the mediation shall be
conducted in accordance with the Commercial Mediation Rules of the AAA
then in effect by a mediator who (i) has the qualifications and
experience set forth in paragraph (c) of this Section 15 and (ii) is
selected as provided in paragraph (d) of this Section 15.
Unless the Parties agree otherwise, the mediator shall be a
lawyer (i) who is or has been a partner in (or counsel to) a highly
respected law firm for at least fifteen (15) years as a practicing
attorney specializing in either general commercial litigation or
general corporate and commercial matters and (ii) who has had both
training and experience as a mediator.
Either party (the "Initiating Party") may initiate mediation
of the Dispute by giving the other party (the "Recipient Party")
written notice (a "Mediation Notice") setting forth a list of the names
and resumes of qualifications and experience of three impartial persons
who the Initiating Party believes would be qualified as a mediator
pursuant to the provisions of paragraph (c) hereof. Within fifteen (15)
days after the delivery of the Mediation Notice, the Recipient Party
shall give a counter-notice (the "Counter-Notice") to the Initiating
Party in which the Recipient Party may designate a person to serve as
the mediator from among the three (3) persons listed by the Initiating
Party in the Mediation Notice (in which event such designated person
shall be the mediator). If none of the persons listed in the Mediation
Notice is designated by the Recipient Party to serve as the mediator,
the Counter-
55
Notice should set forth a list of the names and resumes of three (3)
impartial persons who the Recipient Party believes would be qualified
as a mediator pursuant to the provisions of paragraph (c) hereof.
Within ten (10) days after the delivery of the Counter-Notice, the
Initiating Party may designate a person to serve as the mediator from
among the three (3) persons listed by the Recipient Party in the
Counter-Notice (in which event such designated person shall be the
mediator). If the Parties cannot agree on a mediator from the three (3)
impartial nominees submitted by each party, each party shall strike two
(2) names from the other Party's list, and the two (2) remaining
persons on both lists will jointly select as the mediator any person
who has the qualifications and experience set forth in paragraph (c)
hereof. If they are unable to agree, then the President of the AAA will
select the mediator.
Within thirty (30) days after the mediator has been selected
as provided above, both Parties and their respective attorneys shall
meet with the mediator for one (1) mediation session of at least six
(6) hours, it being agreed that each Party representative attending
such mediation session shall be an executive with authority to settle
the Dispute. If the Dispute cannot be settled at such mediation session
or at any mutually agreed continuation thereof, either Party may give
the other and the mediator a written notice declaring the mediation
process at an end. The costs of the mediation shall be shared equally
between the Parties.
(iii) Litigation. If the dispute has not been resolved by
non-binding mediation as provided for in (b) above within ninety (90)
days of the initiation of such procedure, then either Party may
initiate litigation; provided, however, that if one party has requested
the other
56
to participate in a non-binding procedure and the other has failed to
participate, the requesting party may file litigation prior to the
lapse of the ninety (90) day period.
(iv) Attorneys' Fees. If either party brings any action or
proceeding to interpret or enforce this Agreement, or for damages for
any alleged breach hereof, the prevailing party shall be entitled to
recover reasonable attorneys' fees and costs.
(v) Jurisdiction and Venue. The parties hereby agree that all
litigation resulting under this Agreement shall be under the sole and
exclusive jurisdiction of the appropriate state or federal court in the
County of Franklin, State of Ohio, and the parties hereby submit to
exclusive jurisdiction and venue thereunder and that all mediation
proceedings shall take place in Columbus, Ohio.
(c) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party prior to making the disclosure).
(d) No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(e) Entire Agreement. This Agreement (including the Disclosure Letter
and documents referred to herein and therein) constitutes the entire agreement
between the Parties and
57
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof. This Agreement shall not supersede or affect the
Confidentiality Agreement, which shall remain in full force and effect, but will
terminate at the Closing. If there is any conflict between this Agreement and
any of the other documents referenced in this Agreement, then the terms and
provisions of this Agreement shall control.
(f) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party (which approval shall not be unreasonably withheld).
(g) Counterparts. This Agreement may be executed in one or more
counterparts, and each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
(h) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two (2)
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
58
If to Purchaser:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxx
Xx. Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Copy each to:
R. Xxxxxxx Xxxx and Xxxx X. Xxxxx
Xxxxx Xxxx LLP
000 Xxxxx Xxxxxxxx, Xxxxx 0000
Xx. Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller:
Xxxxx X. Xxxxxxxxx
President and Chief Operating Officer
0000 Xxxx Xxx Xxxxx
Xxxxxxxx, XX 00000-0000
Tel: 000-000-0000
Fax: 000-000-0000
With copy to:
Xxxx X. Xxxxxxx
Senior Counsel
Xxx Xxxxxxxxxx Xxxxx 0-00-00
Xxxxxxxx, XX 00000
Tel.:(000) 000-0000
Fax: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telex, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are
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to be delivered by giving the other Party notice in the manner herein set forth.
(j) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Ohio without giving effect to
any choice or conflict of law provision or rule (whether of the State of Ohio or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Ohio.
(k) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Purchaser and Seller. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(1) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(m) Expenses. The Seller and the Purchaser will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Disclosure Letter identified in this Agreement are incorporated herein by
reference and made a part hereof.
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REMAINDER OF PAGE LEFT BLANK INTENTIONALLY
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SELLER
GATES, XXXXXXXX & COMPANY,
an Ohio corporation
By: /s/ Xxxxx Xxxxxxxxx
-------------------------
Title: President and COO
----------------------
PURCHASER
XXXXXX ACQUISITION SUB, INC.
a Missouri corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Title: President and Chief
Executive Officer
----------------------
The Registrant agrees to furnish supplementally a copy of any omitted schedule
to the Commission upon request.
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