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EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is made this
5th day of June, 1998, by and between TELESERVICES ACQUISITION SUB 1 INC., a
Delaware corporation ("Buyer"), TELESERVICES HOLDINGS CORPORATION., a Delaware
corporation and ultimate parent of Buyer ("Parent"), PROTOCOL COMMUNICATIONS
SERVICES, INC., a Massachusetts corporation (the "Seller") and Xxxxx Xxxxxxxx
and Xxxxxxx Xxxxx (the "Stockholders", and each individually, a "Stockholder").
W I T N E S S E T H :
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WHEREAS, the Seller is principally engaged in the business of
supplying telemarketing services (the "Business") and is the end user subscriber
for certain toll free telephone numbers listed on Schedule 2.1(q) hereto (the
"Toll Free Telephone Numbers");
WHEREAS, the Stockholders are presently the owners of all of
the issued and outstanding capital stock of the Seller; and
WHEREAS, the Seller desires to sell to Buyer, and Buyer
desires to purchase from the Seller substantially all of its assets and
operations subject to certain liabilities, all in the manner and subject to the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
1. TERMS OF ACQUISITION.
1.1 PURCHASE AND SALE OF ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date (as defined in Section 1.6
below), the Seller shall, and the Stockholders shall cause the Seller to, sell,
transfer, convey, assign and deliver ("Transfer") to Buyer, and Buyer shall
purchase, acquire and accept from the Seller, all of the Seller's rights,
properties, assets, contracts, leases and businesses of every kind, character
and description, whether tangible or intangible, real, personal or mixed,
accrued, contingent or otherwise, and wherever located, less and except the
Excluded Assets (as defined in Section 1.2 below) (after giving effect to the
exclusion of the Excluded Assets, such assets are hereinafter collectively
referred to as the "Transferred Assets"), free and clear of all liens, claims
and encumbrances, including, without limitation:
(a) all cash and cash equivalents;
(b) all machinery, equipment, furniture, office equipment,
telephone equipment, computers and computer equipment, spare parts, supplies,
tools and vehicles;
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In this Exhibit, "[***]" represents material omitted from this Exhibit and filed
separately with the Securities and Exchange Commission and for which
Confidential Treatment has been requested.
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(c) all of the Seller's right, title and interest in and
to any income and payments due the Seller, including, without limitation, all
accounts and accounts receivable whether or not reflected on the Seller's books
and records;
(d) all letters of credit, leases of real and personal
property, rental agreements, commitments, insurance policies, purchase orders,
sales orders, service agreements, maintenance agreements, distribution
agreements, supply agreements and all other contracts, agreements and
understandings, whether written or oral, and all rights, claims and causes of
action thereunder, whether pending or inchoate;
(e) all prepaid assets and all deposits, refunds, rebates
and other rights to payment relating to the Transferred Assets or Assumed
Liabilities, (as defined in Section 1.3 below);
(f) all intangible assets (including, without limitation,
all issued and applied for patents, trademarks, copyrights, trade names, trade
secrets, service marks, customer lists, relationships and arrangements with
customers, covenants not to compete, inventions, formulae, processes and
permits, computer software and source code, and all licenses, agreements and
applications with respect to any of the foregoing, any goodwill associated with
any of the foregoing, and all claims and causes of action relating to any of the
foregoing, including claims and causes of action for past infringement) arising
from or utilized in the operations of the Business, including the name "Protocol
Communications Services";
(g) to the extent transferable, all licenses,
authorizations and permits issued by any governmental agency relating to the
Business or the Transferred Assets, and all applications therefor pending; and
(h) all books, records and files relating to the Business
and the Transferred Assets and the operations thereof for all periods ending on
or before the Closing Date, but excluding such items which relate to the
Excluded Assets or the liabilities of the Seller not assumed by Buyer.
1.2 EXCLUDED ASSETS. Notwithstanding anything in Section 1.1
to the contrary, the Seller shall retain all of its right, title and interest in
and to all of, and shall not Transfer to Buyer any of, the following assets,
rights and properties (the "Excluded Assets"):
(a) any proceeds and any other consideration paid or
payable in accordance with this Agreement and all rights of the Seller under
this Agreement or any agreement or instrument executed pursuant hereto or
thereto, including, without limitation, the Seller's right to enforce Buyer's
representations, warranties and covenants hereunder and the obligations of Buyer
to pay, perform or discharge the Assumed Liabilities;
(b) all minute books, stock books and similar corporate
records of the Seller; and
(c) the items set forth on Schedule 1.2(c).
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1.3 ASSUMPTION OF LIABILITIES. Subject to the terms and
conditions of this Agreement, on the Closing Date, Buyer shall assume and agree
to pay, perform and discharge when due only the following liabilities and
obligations of the Seller and no others:
(a) liabilities and obligations of the Seller in respect
of the accounts payable of the Seller set forth in the 12-Month Financial
Statements (as defined in Section 1.7(a) hereof) and accounts payable of the
Seller, and other non-material liabilities less than or equal to $25,000,
incurred by the Seller in the ordinary course of business since the date thereof
to the extent outstanding on the Closing Date, in each case exclusive of any
such accounts payable in respect of personal expenses of the Stockholders;
(b) liabilities and obligations of the Seller in respect
of Funded Debt (as defined in Section 1.7(d) hereof) to the extent set forth in
the Closing Date Financial Statements;
(c) liabilities and obligations of the Seller to Xxxxxxx
X. Xxxxx under the pension plan referred to in Schedule 2.1(t) hereto (the
"Assumed Pension Obligations"); and
(d) obligations of the Seller for performance after the
Closing under the agreements set forth on Schedule 2.1(v) hereto.
1.4 EXCLUDED LIABILITIES. "Excluded Liabilities" shall mean,
and Buyer shall not assume and shall have no liability for, any liabilities or
obligations of the Seller not specifically set forth in Section 1.3 above,
including, without limitation, the following:
(a) any liability of the Seller for any Federal, state,
local or foreign income, capital gains or franchise taxes or taxes on capital
(including, without limitation, any deferred income tax liability and any
penalties and interest thereon);
(b) any liability for expenses incurred by, or for claims
made against, the Seller in connection with or resulting from or attributable to
this Agreement or the transactions contemplated hereby, if any;
(c) any liability for any investment banking, brokerage or
similar charge or commission, or any attorneys' or accountants' fees and
expenses, payable or incurred by the Seller in connection with the preparation,
negotiation, execution or delivery of this Agreement or the transactions
contemplated hereby;
(d) any liability of the Seller to Buyer arising out of
any misrepresentation or breach of any warranty of the Seller contained in this
Agreement or any of the schedules or exhibits hereto or in any certificate,
agreement, instrument or other document delivered pursuant hereto or out of the
failure of the Seller to perform any of its agreements or covenants contained
herein or therein or to perform or satisfy any of the Excluded Liabilities;
(e) any liability under any employee pension, benefit or
other plan other than the Assumed Pension Obligation; and
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(f) any other liability arising from or relating to the
operation of the Business on or prior to the Closing Date to the extent not
specifically set forth in Section 1.3(a), (b), (c), or (d) above.
The Seller shall remain fully liable for, and shall promptly pay when due, the
Excluded Liabilities.
1.5 PURCHASE PRICE.
(a) As the purchase price for all of the Transferred
Assets (the "Purchase Price"), (i) Buyer shall pay to the Seller an aggregate
sum, subject to adjustment as provided in Section 1.7 below, of [******] in cash
(the "Cash Purchase Price")and (ii) Buyer shall cause Parent to issue [******]
shares of Class A Common Stock of Parent (the "Parent Common Stock") which
Parent agrees shall be equal to [****] of the outstanding capital stock of
Parent after completion of Phase I and Phase II Acquisitions, the further
transfer of which shall be restricted under the Securities Act of 1933, as
amended (the "Securities Act") and as provided under Section 2.2(e) hereof. For
purposes hereof, (i) "Phase I Acquisition" shall mean the acquisition by Buyer
of the businesses of Operators Standing By, Inc., Sweet, Xxxxxx and Xxxxx, Inc.,
U.S. Telefactors Corporation and Protocol Communications Services, Inc. and
"Phase II Acquisitions" shall mean the acquisition by Buyer or its affiliates of
businesses comparable in revenues and earnings, in the aggregate, to the Phase I
Acquisitions and which acquisitions shall occur on or before March 31, 1999.
(b) The Cash Purchase Price shall be payable in cash at
Closing by wire transfer of immediately available funds as follows: (i) [******]
to an account of the Seller designated in writing by the Seller allocated and
(ii) [******] to the account of Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, LLP, as
escrow agent ("Escrow Agent") designated in the escrow agreement annexed hereto
as Exhibit A (as the same may be amended from time to time, the "Escrow
Agreement"), to be held and disbursed by the Escrow Agent pursuant to the terms
thereof.
1.6 CLOSING DATE. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxxx,
Calamari & Xxxxxxx, 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00
A.M., June 5, 1998, or at such other place and/or on such other date and time as
shall be agreed upon by Buyer and the Seller (the "Closing Date").
1.7 PURCHASE PRICE ADJUSTMENT.
(a) Within one hundred twenty (120) days after Closing,
Buyer shall cause KPMG Peat Marwick LLP to deliver to the Seller an audited
balance sheet and related statements of income, retained earnings and cash flows
for the Seller's fiscal year ended December 31, 1997 (the "1997 Financial
Statements"), and for the 12-month period ended March 31, 1998 (the "12-Month
Financial Statements"), all of which financial statements shall be prepared in
accordance with generally accepted accounting principles ("GAAP") and the rules
and regulations of the Securities Exchange Commission applicable to financial
reporting of public companies.
(b) The Seller shall have forty-five (45) days from
delivery of the 1997 Financial Statements and the 12-Month Financial Statements
(collectively, the "Financial
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Statements") to raise any objection thereto by delivery of written notice to
Buyer setting forth such objections in reasonable detail. In the event that the
Seller shall fail to so deliver such written objections with respect to any of
the Financial Statements within such 45-day period, then any such Financial
Statements in respect of which no such objection is so delivered shall be deemed
final and binding on the parties. In the event that any such objections are so
delivered, Buyer and the Seller shall attempt, in good faith, to resolve such
objections and, if unable to do so within fifteen (15) days of delivery of such
objections, shall, within five (5) business days thereafter designate a
nationally recognized firm of independent public accountants, mutually
satisfactory to Buyer and the Seller (the "Independent Accountants"). In the
event that Buyer and the Seller are unable to agree on the Independent
Accountants within such 5-business day period, the Independent Accountants shall
be designated jointly by the independent accountants of Buyer and the Seller
within three (3) business days thereafter. The Independent Accountants shall
resolve all remaining objections to the Financial Statements made by the Seller
in accordance herewith within thirty (30) days from their date of designation.
The determination of the Independent Accountants shall be final and binding on
the parties. The fees and expenses of the Independent Accountant shall be borne
by the Stockholders, jointly and severally, unless the determination of the
Independent Accountants shall result in an increase in the amount of the
Purchase Price of more than ten (10%) percent over the amount of the Purchase
Price as determined from the Financial Statements originally delivered to
Seller.
(c) The Cash Purchase Price shall be adjusted in each of
the following instances, based on the Financial Statements, as finally
determined in accordance herewith, by the amounts ("Adjustment Amounts")
determined as follows:
(i) in the event that the Seller shall have
outstanding on March 31, 1998, Net Funded Debt (as defined below) in excess of
[******], the Cash Purchase Price shall be reduced by an amount equal to such
excess;
(ii) in the event that the sum of [******] shall
exceed 12-Month EBITDA (as defined below) by more than [*******] (E.G., [**]),
the Cash Purchase Price shall be reduced by an amount ---- equal to [****] for
each $1.00 of such excess (rounded down to the nearest whole dollar); and
(iii) in the event that 12-Month EBITDA shall exceed
the sum of [*******] by more than [******] (E.G., [***]), the Cash Purchase
Price shall be increased by an amount equal to [****] for each $1.00 of
such excess (rounded down to the nearest whole dollar).
Within three (3) business days of the final determinations of the applicable
Financial Statements (e.g., the Financial Statements from which each Adjustment
Amount is to be calculated), (A) the Seller shall pay to Buyer (whether or not
the sum of such Adjustment Amounts shall exceed the Cash Purchase Price) each
Adjustment Amount calculated pursuant to Sections 1.7(c)(i) and 1.7(c)(ii) above
in the aggregate, by wire transfer of immediately available funds to an account
designated in writing by Buyer. Buyer shall pay to the Seller the Adjustment
Amount calculated pursuant to 1.7(c)(iii), net of any unpaid Adjustment Amounts
due to Buyer pursuant to Sections 1.7(c)(i) and 1.7(c)(ii) above, on terms to be
agreed upon by Buyer and the Seller.
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(d) For purposes hereof, (i) "Funded Debt" shall mean the
remainder of all indebtedness of the Seller for borrowed money outstanding on
March 31, 1998 (including, without limitation, capitalized lease obligations),
exclusive of indebtedness incurred under the revolving credit facility referred
to in Schedule 2.1(v) hereto, but only to the extent incurred in order to fund
the Seller's working capital requirements, including distributions to fund the
Stockholders' 1997 Federal and state tax liability in respect of earnings of the
Seller, and (ii) "12-Month EBITDA" shall mean the earnings of the Seller for the
12-month period ended March 31, 1998, before deduction for interest, taxes,
depreciation and amortization, in each case determined in accordance with GAAP
and before deduction in respect of [******] in non-recurring charges mutually
agreed to by Buyer and the Seller and, as set forth on the 12-Month Financial
Statements.
(e) The parties acknowledge and agree that the Purchase
Price shall be allocated among the Transferred Assets in accordance with
Schedule 1.7(e) hereto. The parties shall not take any position for purposes of
Federal, state or local income taxes respecting the allocation of the Purchase
Price which is inconsistent with the allocation set forth on such Schedule.
2. REPRESENTATIONS AND WARRANTIES.
2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
STOCKHOLDERS. The Seller and the Stockholders hereby, jointly and severally,
represent and warrant to, and covenant and agree with, Buyer as follows:
(a) ORGANIZATION, GOOD STANDING AND POWER. The Seller is a
corporation duly organized, validly existing and in good standing and authorized
to exercise its corporate powers, rights and privileges under the laws of the
State of Massachusetts with full corporate power and authority to own, lease and
operate its properties and to carry on its business as presently conducted by
it. Schedule 2.1(a) hereto sets forth all states and other jurisdictions in
which the Seller is duly qualified and in good standing to do business as a
foreign corporation. There are no other states or jurisdictions in which the
character and location of the properties owned or leased by it, or the conduct
of its business makes such qualification necessary except those in which the
failure to so qualify would not have a material adverse effect on Seller. Copies
of the Seller's Articles of Incorporation and all amendments thereto, and of the
Seller's By-Laws, as amended to date, are attached to Schedule 2.1(a) and are
complete and correct.
(b) [INTENTIONALLY OMITTED]
(c) AUTHORITY. The execution and delivery by the Seller
and the Stockholders of this Agreement and all of the agreements, schedules,
exhibits, documents and instruments specifically provided for hereunder to be
executed and/or delivered by any or all of them (all of the foregoing, including
this Agreement, being hereinafter sometimes collectively referred to as the
"Executed Agreements"), the performance by the Seller and any or all of the
Stockholders (to the extent that they are parties thereto) of their respective
obligations under the Executed Agreements, and the consummation of the
transactions contemplated by the Executed Agreements, have been duly and validly
authorized by all necessary corporate action on the part of the Seller and by
the Stockholders, and the Seller has all necessary corporate power with respect
thereto. The Executed Agreements are, or when executed and delivered by the
delivering parties shall be, the valid and binding obligations of the delivering
parties, enforceable in accordance with
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their respective terms, except to the extent that enforceability may be limited
by the operation of bankruptcy, insolvency or similar laws. Neither the
execution and delivery by the Seller and any or all of the Stockholders (to the
extent that they are parties thereto) of the Executed Agreements, nor the
consummation of the transactions contemplated thereby, nor the performance by
the Seller and any or all of the Stockholders (to the extent that they are
parties thereto) of their respective obligations under the Executed Agreements,
shall (nor with the giving of notice or the lapse of time or both would) (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or By-Laws of the Seller, (ii) give rise to a default, or any
right of termination, cancellation or acceleration, or otherwise result in a
loss of contractual benefits to the Seller, under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which the Seller or any Stockholder is a party
or by which it or any of its properties or assets may be bound, (iii) violate
any law, statute, rule or regulation, or to the knowledge of the Seller and the
Stockholders, any order, writ, injunction or decree, applicable to the Seller or
any of the Stockholders or any of their respective properties or assets, (iv)
result in the creation or imposition of any lien, claim, restriction, charge or
encumbrance upon any of the properties or assets of the Seller, or (v) interfere
with or otherwise materially and adversely affect the ability of the Seller to
carry on its business as now conducted.
(d) INTERESTS IN OTHER ENTITIES. Except as set forth in
Schedule 2.1(d) hereto, the Seller does not (i) own, directly or indirectly, of
record or beneficially, any shares of voting stock or other equity securities of
any other corporation or entity, (ii) have any ownership interest, direct or
indirect, of record or beneficially, in any entity, or (iii) have any
obligation, direct or indirect, present or contingent, to purchase or subscribe
for any interest in, advance or loan monies to, or in any way make investments
in, any person or entity, or to share any profits or capital investments in
other persons or entities, or both.
(e) GOVERNMENTAL AUTHORIZATIONS; THIRD PARTY CONSENTS.
Except as set forth in Schedule 2.1(e) hereto, no approval, consent, compliance,
exemption, authorization or other action by, or notice to or filing with, any
governmental authority or any other entity, and no lapse of a waiting period, is
necessary or required to be obtained by the Seller or any Stockholder in
connection with the execution, delivery or performance by any of them, of this
Agreement, any of the Executed Agreements or the transactions contemplated
hereby.
(f) PROJECTIONS. The Seller has delivered to Buyer a set
of projections (the "Projections"), a copy of which is attached hereto as
Schedule 2.1(f), which the Seller and the Stockholders have been advised are
material to Buyer in its decision to enter into this Agreement. The Projections
are based on the best estimates of the Seller and the Stockholders derived from
reasonable expectations at the time the Projections were made, and the Seller
and the Stockholders believe that Buyer is justified in relying thereon, there
being, however, no guarantee of the achievement of the Projections.
(g) FINANCIAL STATEMENTS; MINIMUM NET WORTH.
(i) The Seller has delivered to Buyer true and
complete copies of its unaudited balance sheets as of December 31, 1996, and
related statements of income, retained earnings and cash flows for the period
then ending (the "1996 Financial Statements"), true and complete copies of its
unaudited balance sheets as of December 31, 1997, and related statements of
income, retained earnings and cash flows for the period then ending and true and
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complete copies of its unaudited balance sheet as of March 31, 1998 (the
"Interim Balance Sheet"), and related statements of income, retained earnings
and cash flows for the period then ending (collectively, with the Interim
Balance Sheet, the "Interim Financial Statements"). All of such financial
statements, including any notes thereto, were prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved subject, in
respect of the Interim Financial Statements, to normal year-end audit
adjustments, none of which are material (except as may be otherwise expressly
stated in said financial statements and notes thereto or in Schedule 2.1(g)
hereto) and such financial statements and notes thereto fairly present the
financial position of the Seller at the dates thereof and the results of its
operations for the periods as indicated. The books and records of the Seller are
in all material respects complete and correct, have been maintained in
accordance with good business practices, and accurately reflect the basis for
the financial condition and results of operations of the Seller as set forth in
the financial statements referred to herein.
(ii) As of June 1, 1998, the Seller shall have had a
Net Worth equal to or greater than [******]. For purposes hereof "Net Worth"
shall mean the excess of (A) the total Transferred Assets of the Seller as of
June 1, 1998, over (B) the total Assumed Liabilities of the Seller as of such
date, in each case, determined in accordance with GAAP.
(h) ABSENCE OF UNDISCLOSED LIABILITIES. The Seller does
not have any liabilities, commitments or obligations, whether accrued, absolute,
contingent or otherwise which have not been (i) in the case of liabilities,
commitments and obligations of a type customarily reflected on the corporate
balance sheet of the Seller, reflected on the Interim Balance Sheet in
accordance with GAAP, incurred, consistent with past practice, in the ordinary
course of business since the date of the Interim Balance Sheet and which are not
material either individually or in the aggregate or (ii) in the case of all
other types of liabilities and obligations, described in Schedule 2.1(h) hereto.
(i) ABSENCE OF CERTAIN CHANGES. Except as and to the
extent set forth in Schedule 2.1(i) hereto, since December 31, 1997, the Seller
has not:
(i) suffered any material adverse change in its
working capital, condition (financial or otherwise), assets, liabilities,
business or operations;
(ii) incurred any material liabilities or obligations
except items incurred in the ordinary course of business and consistent with
past practice, none of which exceeds $5,000 (counting obligations or liabilities
arising from one transaction or a series or similar transactions, and all
periodic installments or payments under any lease or other agreement providing
for periodic installments or payments, as a single obligation or liability), or
experienced any increase in, or change in any assumption underlying or methods
of calculating, any bad debt, contingency or other reserves;
(iii) paid, discharged or satisfied any claim,
liabilities or obligations (absolute, accrued, contingent or otherwise) other
than the payment, discharge or satisfaction in the ordinary course of business
and consistent with past practice of liabilities and obligations reflected or
reserved against in the Interim Balance Sheet or incurred in the ordinary course
of business and consistent with past practice since the date of the Interim
Balance Sheet;
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(iv) permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to be subjected to any
mortgage, pledge, lien, security interest, encumbrance, restriction or charge of
any kind;
(v) written off as uncollectible any notes or accounts
receivable, except for write-offs in the ordinary course of business and
consistent with past practice, none of which are material;
(vi) canceled any debts or waived any claims or rights
of substantial value, or sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
in the ordinary course of business and consistent with past practice;
(vii) disposed of or permitted to lapse any rights to
use any Toll Free Telephone Number listed on Schedule 2.1(q) hereof, patent,
trademark, trade name or copyright, or disposed of or disclosed (except as
necessary in the conduct of its business) to any person any trade secret,
formula, process or know-how;
(viii) granted any general increase in the
compensation of officers or employees (including any such increase pursuant to
any bonus, pension, profit-sharing or other plan or commitment) or any increase
in the compensation payable or to become payable to any officer or employee,
and, unless otherwise set forth in Schedule 2.1(i), no such increase is
customary on a periodic basis or is required by agreement or understanding;
(ix) made any single capital expenditure or commitment
in excess of $10,000 for additions to property, plant, equipment or intangible
assets or made aggregate capital expenditures and commitments in excess of
$50,000 (on a consolidated basis), for additions to property, plant, equipment
or intangible assets;
(x) declared, paid or set aside for payment any
dividend or other distribution in respect of its capital stock;
(xi) made any change in any method of accounting or
accounting practice;
(xii) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with,
any of its officers, directors, debtholders, stockholders or employees or any
"affiliate" or "associate" of any of its officers, directors, noteholders,
stockholders or employees (as such terms are defined in Rule 405 promulgated
under the Securities Act and as used herein "Associate" and "Affiliate"), except
for compensation to officers and employees at rates not materially exceeding the
rates of compensation paid during the year ended December 31, 1997;
(xiii) paid any amount in respect of indebtedness for
borrowed money except for regularly scheduled payments of principal and interest
in accordance with the terms thereof; or
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(xiv) agreed, whether in writing or otherwise, to take
any action described in this Section unless such action is specifically excepted
from this Section or described in Schedule 2.1(i).
(j) TAX MATTERS. Except as set forth in Schedule 2.1(j)
hereto, the Seller has filed with the appropriate governmental agencies all
Federal, state, local or foreign tax returns and reports required to be filed by
it ("Returns"), has paid in full or made adequate provision for the payment of,
all taxes of every nature, including, but not limited to, income, sales,
franchise and withholding taxes ("Taxes"), together with interest, penalties,
assessments and deficiencies owed by it (whether or not shown on any Returns),
and to its knowledge all such Returns were correct and complete in all respects.
The Seller is not currently the beneficiary of any extension of time within
which to file any Returns. The Seller has previously provided Buyer with true
and complete copies of all such Returns filed within the past 5 years. The
provisions for income and other Taxes reflected on the Interim Balance Sheet are
adequate for all accrued and unpaid taxes of the Seller as of the date of the
Interim Balance Sheet, whether (i) incurred in respect of or measured by income
of the Seller for any periods prior to the close of business on that date, or
(ii) arising out of transactions entered into, or any state of facts existing,
on or prior to that date. The provision for Taxes reflected on the books of
account of the Seller is adequate for all Taxes of said entity which accrued
since the date of the Interim Balance Sheet. There are no filed or other known
tax liens upon any property or assets of the Seller. The Seller has not waived
any statute of limitations in respect of Taxes or executed or filed with any
governmental authority any agreement extending the period for the assessment or
collection of any Taxes, and it is not a party to any pending or, to the
Seller's or any Stockholder's knowledge, threatened action or proceeding by any
governmental authority for the assessment or collection of Taxes. To the
knowledge of the Seller and the Stockholders, no issue has arisen in any
examination of the Seller by any governmental authority that if raised with
respect to any other period not so examined would, if upheld, result in a
material deficiency for any other period not so examined. There is no unresolved
written claim by a governmental authority in any jurisdiction where the Seller
does not file Returns that the Seller is or may be subject to taxation by such
jurisdiction. There has been no examination or audit with respect to Taxes with
respect to any year. The Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(k) LITIGATION. Except as set forth in Schedule 2.1(k)
hereto, there are no suits or actions, or administrative, arbitration or other
proceedings or governmental investigations, pending, or to the best knowledge of
the Seller and the Stockholders, threatened against or affecting, or which, if
adversely determined, would have a material adverse effect on the Seller or any
of its properties, assets or businesses or the transactions contemplated hereby.
To the best knowledge of the Seller and the Stockholders, there are no
outstanding judgments, orders, stipulations, injunctions, decrees or awards
against the Seller which are not satisfied.
(l) COMPLIANCE WITH APPLICABLE LAW. The Seller is, and at
all times since its formation has been in all material respects in compliance
with all Federal, state, local and foreign laws, statutes, ordinances,
regulations, and administrative rulings (collectively "Laws"), promulgated by
any governmental or regulatory authority applicable to the Seller or to the
conduct of the business or operations of the Seller or to the use of its
properties and assets, including, without limitation, all environmental Laws and
all Laws relating to the Toll Free Telephone Numbers. The Seller has not
received, and the Seller and the Stockholders do not know of the
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issuance or threatened issuance of, any notices of violation or alleged
violation of any laws by the Seller. Neither the Seller nor the Stockholders
know of any pending or proposed legislation applicable to the Seller or to the
conduct of business or operations of the Seller which, if enacted, could have a
material adverse effect on the business, results of operations, financial
position or prospects of the Seller or the value of its properties or assets.
(m) PERMITS. A list of all permits, approvals, licenses,
certificates, franchises, authorizations, consents and orders ("Permits")
necessary to the operation of the business of the Seller in the manner in which
it is presently conducted is set forth on Schedule 2.1(m) hereto. All such
Permits are valid and remain in full force and effect. The Seller has not
engaged in any activity which would cause revocation or suspension of any such
Permits and no action or proceeding looking to or contemplating the revocation
or suspension of any thereof is pending or threatened. No additional Permits
will be required to permit the Seller to continue its business substantially in
the manner it is presently conducted after the consummation of the transactions
contemplated hereby, except those the failure of which to obtain would not have
a material adverse effect on Seller.
(n) TITLE TO PROPERTIES. The Transferred Assets constitute
all assets which have been used in the Business since December 31, 1997, except
worn out or obsolete equipment disposed of in the ordinary course of business,
and which are necessary for the conduct of the Business. The Seller does not own
any real property. Except as set forth in Schedule 2.1(n) hereto, the Seller has
good title to all of the properties and assets (personal and mixed, tangible and
intangible) reflected on the Interim Balance Sheet or thereafter acquired or
which it purports to own (except properties or assets sold or otherwise disposed
of in the ordinary course of business consistent with past practice subsequent
to the date of the Interim Balance Sheet which in the aggregate did not have a
book value in excess of $5,000), free and clear of all mortgages, liens,
pledges, charges or encumbrances of any nature whatsoever, except those referred
to in the Interim Balance Sheet. Schedule 2.1(n) also contains an accurate list
setting forth all (i) real property leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by the Seller and (ii) significant personal property leased by
or to the Seller or subject to a title retention or conditional sales agreement
or other security device. All leases listed in Schedule 2.1(n) are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect, except to the extent that enforceability may be limited by the
operation of bankruptcy, insolvency or similar laws; there are no existing
defaults by the Seller thereunder; no event of default has occurred which
(whether with or without notice, lapse of time or both) would constitute a
default by the Seller thereunder; and all lessors under such leases have
consented (where such consent is necessary) to the consummation of the
transactions contemplated by this Agreement without requiring modification of
the rights and obligations of the Seller under such leases. All of the tangible
property (whether owned or leased) included in the Transferred Assets are
located at the real property leased by the Seller as set forth in Schedule
2.1(n) hereto.
(o) ACCOUNTS RECEIVABLE; FIXED ASSETS.
(i) The accounts receivable reflected on the Interim
Balance Sheet are good and collectible in the ordinary course of business at the
aggregate recorded amounts thereof, less the amount of the reserve for bad
accounts reflected therein, and are not subject to any offsets. The accounts
receivable of the Seller which were thereafter added are good and collectible in
the ordinary course of business at the aggregate amounts recorded on the books
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of account, less the amount of the reserve for bad accounts reflected therein
(which reserve has been established on a basis consistent with prior practice
and in accordance with GAAP) and are not subject to any offsets. Set forth on
Schedule 2.1(o) hereto is a true and complete list of the Seller's accounts
receivable as of May 31, 1998, and aging with respect thereto.
(ii) Schedule 2.1(o) hereto contains a complete and
accurate list of all machinery, equipment and other fixed assets of the Seller
(the "Equipment") having a book value in excess of $1,000. Each such item of
Equipment is in good operating condition, normal wear and tear excepted, and is
fit for its intended use. Each such item has been maintained, in all material
respects, in accordance with its manufacturer's recommended maintenance practice
and with prudent business practice and no such maintenance has been deferred.
(p) INTELLECTUAL PROPERTY. Schedule 2.1(p) hereto lists
all licenses, patents, copyrights, or trademarks owned or used by the Seller in
the conduct of its business and all applications therefor (the "Intellectual
Property"). No officer or director, stockholder or employee of the Seller nor
any of their Affiliates or Associates has any ownership or other interest in any
of the Intellectual Property. To the knowledge of the Seller and the
Stockholders, none of the Intellectual Property is being infringed upon by, or
infringes, any licenses, patents, copyrights, trademarks or other intellectual
property rights of any other person or entity. Except as set forth in Schedule
2.1(p), the validity of the Intellectual Property and the title thereto of the
Seller have not been questioned in any litigation or governmental inquiry or
proceeding to which the Seller, is a party, and, to the best knowledge of the
Seller and the Stockholders, no such litigation, governmental inquiry or
proceeding is threatened. To the Seller's knowledge, the conduct of the business
of the Seller as presently conducted does not conflict with valid licenses,
trademarks, trademark rights, trade names, trade name rights, service marks or
patents of others in any way likely to affect adversely, in any material
respect, the Intellectual Property.
(q) TOLL FREE TELEPHONE NUMBERS. Schedule 2.1(q) hereto
sets forth a complete list of all Toll Free Telephone Numbers owned or used by
the Seller in the conduct of its business. No officer or director, stockholder
or employee of the Seller nor any of their Affiliates or Associates has any
ownership or other interest in the Toll Free Telephone Numbers. The Seller has
not warehoused, brokered or hoarded (as those terms are defined in the Second
Report and Order and Further Notice of Proposed Rulemaking in CC Docket No.
95-155, Released April 11, 1997, by the Federal Communications Commission
("FCC")) any of the Toll Free Telephone Numbers in violation of any applicable
FCC rules or regulations.
(r) INSURANCE. Schedule 2.1(r) hereto contains a complete
and correct list and copies of all policies of insurance in which the Seller or
its officers or directors (in such capacity) is an insured party, beneficiary or
loss payable payee. Such policies are in full force and effect and in the
reasonable judgment of the Seller and the Stockholders provide the type and
amount of coverage reasonably required for the business of the Seller.
(s) BANK ACCOUNTS AND POWERS OF ATTORNEY. Schedule 2.1(s)
hereto contains a complete and correct list showing (i) the name of each bank in
which the Seller has an account or safe deposit box and the names of all persons
authorized to draw thereon or have access thereto, and (ii) the names of all
persons, if any, holding powers of attorney from the Seller.
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(t) EMPLOYEE ARRANGEMENTS; ERISA. The Seller has no union,
collective bargaining, employment, management, or consulting agreements to which
the Seller is a party or is otherwise bound. Schedule 2.1(t) hereto contains a
true and complete list of all pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, severance,
disability, hospitalization, medical insurance, life insurance and other
employee benefit plans, programs or arrangements maintained by the Seller or
under which the Seller has any material obligations (other than obligations to
make current wage or salary payments) in respect of, or which otherwise cover,
any of the current or former officers, employees or consultants of the Seller,
or their beneficiaries (each an "Employee Benefit Plan" and collectively the
"Employee Benefit Plans"). Except as set forth in Schedule 2.1(t) hereto, no
Employee Benefit Plan is subject to Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 412 of the Internal
Revenue Code of 1986, as amended (the "Code"). The Seller has provided Buyer
true and complete copies of all Forms 5500 (with attached schedules) filed
during the three most recently ended plan years for each Employee Benefit Plan.
Except as set forth on Schedule 2.1(t) hereto, all Employee Benefit Plans
comply, in all material respects, in form, operation and administration with
their respective provisions, the applicable provisions of ERISA, the Code and
other applicable laws. All contributions to and payments from the Employee
Benefit Plans which may have been required to be made in accordance with the
Employee Benefit Plans, and when applicable, ERISA and the Code, have been made
or are properly accrued and reflected on the Balance Sheets or the books and
records of the Seller. Schedule 2.1(t) hereto also lists the names and
compensation of all persons employed by the Seller. Except as set forth on
Schedule 2.1(t) hereto, the Seller has no Employee Benefit Plans which are
qualified for Federal income tax exemption under Sections 401 and 501 of the
Code.
(u) CERTAIN BUSINESS MATTERS. Except as set forth in
Schedule 2.1(u) hereto (i) the Seller is not a party to or bound by any
distributorship, dealership, sales agency, franchise or similar agreement which
relates to the sale, distribution or servicing of the Toll Free Telephone
Numbers or services related thereto, (ii) the Seller does not have any
sole-source supplier of significant goods or services (other than utilities)
with respect to which practical alternative sources are not available on
comparable terms and conditions, (iii) there are not pending and, to the
Seller's and the Stockholders' knowledge there are not threatened, any labor
negotiations involving or affecting the Seller and, to the Seller's and the
Stockholders' knowledge, no organizing activities involving union representation
exist in respect of any of its employees, (iv) the Seller neither gives nor is
bound by any express warranties relating to its services and, to the knowledge
of the Seller and the Stockholders, there has been no assertion of any breach of
warranties which could have a material adverse effect on the business or
condition (financial or otherwise) of the Seller and, to the knowledge of the
Seller and the Stockholders, there are no problems or potential problems with
respect to any product sold or services provided by the Seller, (v) the Seller
is not a party to or bound by any agreement which limits its freedom to compete
in any line of business or with any person or entity, (vi) the Seller is not a
party to or bound by any agreement which based on current economic circumstances
will result in a loss when performed, and (vii) the Seller is not a party to or
bound by any agreement or involved in any transaction in which any officer,
director, debtholder or stockholder, or any Affiliate or Associate of any such
person has, or had when made, a direct or indirect material interest.
(v) CONTRACTS. Schedule 2.1(v) hereto contains a complete
and correct list of any and all material contracts, commitments, obligations and
undertakings, written or oral, to which the Seller is a party or otherwise
bound. True and complete copies of all contracts,
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commitments, obligations and undertakings set forth in Schedule 2.1(v) hereto
have been furnished to Buyer, and except as expressly stated in Schedule 2.1(v),
each of them is in full force and effect, no person or entity which is a party
thereto or otherwise bound thereby is, to the knowledge of the Seller and the
Stockholders, in default thereunder, and no event, occurrence, condition or act
exists which, with the giving of notice or the lapse of time or both, would give
rise to a default or right of cancellation thereunder, and the Seller is not in
default thereunder and no event, occurrence, condition or act exists by or on
behalf of the Seller which, with the giving of notice or the lapse of time or
both would give rise to a default by the Seller thereunder, and to the Seller's
and the Stockholders' best knowledge, there have been no threatened
cancellations thereof and there are no outstanding disputes thereunder. To the
Seller's and the Stockholders' knowledge there is no reason why any of the
contracts listed on Schedule 2.1(v), could not be continued between Buyer and
the Seller's contractual partners on the same terms and conditions as currently
apply. Neither the Seller nor any Stockholder has any reason to believe that any
of the Seller's contractual partners will terminate its relationship with the
Seller as a result of the acquisition of the Seller's assets by Buyer.
(w) BROKERS. Except for Geneva Corporate Finance, Inc.,
the fees of which shall be borne by the Seller, no agent, broker, person or firm
acting on behalf of the Seller or the Stockholders or under the authority of any
of the foregoing, is or shall be entitled to a brokerage commission, finder's
fee, or other like payment in connection with any of the transactions
contemplated hereby, from the Seller or any of the Stockholders.
(x) DISCLOSURE. No representation or warranty made by the
Seller or the Stockholders herein or in any of the Executed Agreements contains
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements therein not misleading.
(y) AFFILIATED TRANSACTIONS. Except as set forth in
Schedule 2.1(y) hereto, no Stockholder (i) is a party to any agreement,
transaction or arrangement (oral or written) with or involving the Seller or any
Associate or Affiliate of the Seller or any of its stockholders, or (ii) has any
claim, monetary or otherwise, of any sort against the Seller. Notwithstanding
anything to the contrary contained herein, each Stockholder hereby releases and
discharges the Seller from all claims, actions or suits that any of them now has
or may hereafter have against the Seller which would affect the Transferred
Assets.
(z) CLAIMS AGAINST THE SELLER. Except as set forth in
Schedule 2.1(z) hereto, the Seller has no debts, obligations or liabilities
owing to the Stockholders and, to the best knowledge of the Seller, nothing
exists that could give rise to a claim by the Stockholders of any such debts,
obligation or liability of the Seller to the Stockholders.
(aa) DISCLOSURE SCHEDULES. All schedules to this Agreement
are integral parts to this Agreement. Nothing in a schedule shall be deemed
adequate to disclose an exception to a representation or warranty made herein,
unless the schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail, including by explicit
cross-reference to another schedule to this Agreement. The Seller and the
Stockholders are responsible for preparing and arranging the schedules
corresponding to the lettered and numbered paragraphs contained herein.
Disclosure made in a specific schedule shall not be
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deemed to have been disclosed with respect to any other schedule unless an
explicit cross-reference appears.
(bb) PRINCIPAL PLACE OF BUSINESS; RESIDENCE. The Seller's
principal place of business is located at 00 Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx. Xxxxx Xxxxxxxx resides at 00 Xxxxxxxx Xxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxxxxxxx. Xxxxxxx Xxxxx resides at 000 Xxxxxxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx.
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
of the Stockholders severally represents and warrants to, and covenants and
agrees with Buyer, with respect to such Stockholder as follows:
(a) CAPACITY; VALIDITY. Such Stockholder has the legal
capacity to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed by such Stockholder and constitutes a valid and binding obligation of
such Stockholder enforceable against him in accordance with its terms.
(b) RIGHTS TO TOLL FREE TELEPHONE NUMBERS. Such
Stockholder does not own or possess any rights in or to the Toll Free Telephone
Numbers listed on Schedule 2.1(q) hereto.
(c) INVESTMENT INTENT. Such Stockholder acknowledges that
none of the shares of Parent Common Stock are registered under the Securities
Act or any state securities laws. The shares of Parent Common Stock are being
acquired by such Stockholder for investment purposes only and not with a view to
the distribution or resale thereof. Such Stockholder has no present intention to
sell or otherwise dispose of the Parent Common Stock, except in compliance with
the provisions of the Securities Act.
(d) RESTRICTIONS ON TRANSFER.
(i) Such Stockholder agrees that he will not transfer
or otherwise dispose of (each, a "Transfer") any of the shares of Parent Common
Stock (or any interest therein) except upon the terms and conditions specified
herein and such Stockholder will cause any subsequent holder of such
Stockholder's shares of Parent Common Stock to agree to take and hold the shares
of Parent Common Stock subject to the terms and conditions of this Agreement, if
such shares of Parent Common Stock are required to include a legend pursuant to
Section 2.2(e)(ii) hereof.
(ii) Each certificate representing the shares of
Parent Common Stock issued to the Stockholders or to any subsequent stockholder
shall include a legend in the following form; PROVIDED, HOWEVER, that such
legend shall not be required (and shall be removed), and all other restrictions
on transfer herein provided shall be removed, if a Transfer is being made as
part of with a sale of shares of Parent Common Stock registered under the
Securities Act, or in connection with a sale in compliance with Rule 144 under
the Securities Act, as such Rule may be amended from time to time (each a
"Public Sale"):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
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STATE SECURITIES LAW, AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION THEREOF OR A VALID
EXEMPTION THEREFROM.
(iii) Notwithstanding anything to the contrary in this
Section 2.2(e), such Stockholder shall not Transfer any of the shares of Parent
Common Stock except to the extent permitted, and in accordance with, the
Stockholders Agreement referred to in Section 4.1(h) hereof.
2.3 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to, and covenants and agrees with, the Seller as
follows:
(a) ORGANIZATION, STANDING AND POWER. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own, lease
and operate its properties and to carry on its business as presently conducted
by it and is qualified in each other jurisdiction in which qualification is
required for it to own, lease and operate its properties and carry on its
business as presently conducted by it, except to the extent that failure to so
qualify would not have a material adverse effect on the financial condition,
business or operations of Buyer.
(b) AUTHORITY. The execution and delivery by Buyer of this
Agreement and of each of the other Executed Agreements to which it shall be a
party, the performance by Buyer of its obligations under this Agreement or such
Executed Agreements and the consummation of the transactions contemplated hereby
and thereby, have been duly and validly authorized by all necessary corporate
action on the part of Buyer, and Buyer has all necessary corporate power with
respect thereto. This Agreement and the Executed Agreements are, or when
executed and delivered by Buyer shall be, the valid and binding obligations of
Buyer, enforceable in accordance with their respective terms, except to the
extent that enforceability may be limited by the operation of bankruptcy,
insolvency or similar laws. Neither the execution and delivery by Buyer of the
Executed Agreements, nor the consummation of the transactions contemplated
thereby, nor the performance by Buyer of its obligations under the Executed
Agreements, shall (nor with the giving of notice or the lapse of time or both
would) (i) conflict with or result in a breach of any provision of the
Certificate of Incorporation or By-Laws of Buyer, (ii) violate any order, writ,
injunction, decree, law, statute, rule or regulation or (iii) interfere with or
otherwise materially and adversely affect the ability of Buyer to carry on its
business as now conducted.
(c) BROKERS. No agent, broker, person or firm acting on
behalf of Buyer or under its authority is or shall be entitled to a brokerage
commission, finder's fee, or other like payment in connection with any of the
transactions contemplated hereby.
2.4 REPRESENTATIONS AND WARRANTIES OF PARENT. Parent
represents and warrants to Seller and each of the Stockholders as follows:
(a) CAPITALIZATION. The authorized capital stock of Parent
consists of (i) 15,000,000 shares of Common Stock, par value $.001 per share, of
which 100,000 shares are designated Class B Common Stock ("Class B Stock") and
(ii) 7,000,000 shares of Series A Preferred Stock, par value $.001 per share.
2,485,000 shares of Common Stock are issued and
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outstanding or are reserved for issuance against outstanding options and
warrants, of which 90,500 shares are Class B Stock, and 6,520,000 shares of
Series A Preferred Stock are issued and outstanding. The shares of the Parent
Common Stock being transferred to the Stockholders in accordance herewith shall
be duly and validly issued and fully paid and non-assessable. The transfer of
such shares of Parent Common Stock to the Stockholders as provided herein shall
vest the Stockholders with good and marketable title to the Parent Common Stock,
free and clear of all liens, charges, claims and encumbrances.
(b) ORGANIZATION, STANDING AND POWER. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with full corporate power and authority to own, lease
and operate its properties and to carry on its business as presently conducted
by it and is qualified in each other jurisdiction in which qualification is
required for it to own, lease and operate its properties and carry on its
business as presently conducted by it, except to the extent that failure to so
qualify would not have a material adverse effect on the financial condition,
business or operations of Parent.
(c) AUTHORITY. The execution and delivery by Parent of
this Agreement and of each of the other Executed Agreements to which it shall be
a party, the performance by Parent of its obligations under this Agreement or
such Executed Agreements and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
corporate action on the part of Parent, and Parent has all necessary corporate
power with respect thereto. This Agreement and the Executed Agreements to which
Parent shall be a party are, or when executed and delivered by Parent shall be,
the valid and binding obligations of Parent, enforceable in accordance with
their respective terms, except to the extent that enforceability may be limited
by the operation of bankruptcy, insolvency or similar laws. Neither the
execution and delivery by Parent of such Executed Agreements, nor the
consummation of the transactions contemplated thereby, nor the performance by
Parent of its obligations under such Executed Agreements, shall (nor with the
giving of notice or the lapse of time or both would) (i) conflict with or result
in a breach of any provision of the Certificate of Incorporation or By-Laws of
Parent, (ii) violate any order, writ, injunction, decree, law, statute, rule or
regulation or (iii) interfere with or otherwise materially and adversely affect
the ability of Parent to carry on its business as now conducted.
3. COVENANTS. The Stockholders and the Seller jointly and
severally covenant and agree to perform or take all reasonable actions to
effectuate the following from the date hereof until the Closing Date:
3.1 INVESTIGATION BY BUYER. Buyer may, prior to the Closing
Date, through its representatives (including its counsel, accountants and
consultants) make such investigations of the properties, offices and operations
of the Seller and such audit of the financial condition of the Seller as it
deems necessary or advisable in connection with the transactions contemplated
hereby, including, without limitation, any investigation enabling it to
familiarize itself with such properties, offices, operations and financial
condition; such investigation shall not, however, affect the Seller's or the
Stockholders' representations, warranties and agreements hereunder. The Seller
and the Stockholders shall permit Buyer and its authorized representatives to
have, after the date hereof, full access to the premises and to all books and
records and Returns of the Seller and Buyer shall have the right to make copies
thereof and excerpts therefrom. The Seller and the
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Stockholders shall furnish Buyer with such financial and operating data and
other information with respect to the Seller as Buyer may from time to time
reasonably request.
3.2 CARRY ON IN ORDINARY COURSE. Except with Buyer's prior
written consent, the Seller shall, and each Stockholder shall cause the Seller
to, carry on its business diligently and substantially in the same manner as
heretofore conducted, and shall not (a) enter into or agree to enter into any
extraordinary transaction, contract, lease or commitment, (i) declare any
dividends, nor make any distributions or payments to the Stockholders other than
employment compensation, (ii) redeem any shares of the Seller Stock, (iii)
increase the compensation of any employee of the Seller, other than ordinary
year-end increases or enter into any severance agreement or employment agreement
with any employee of the Seller; (iv) loan or advance any amounts to any
officer, director, stockholder or employee of the Seller or enter into any
agreement with any of the foregoing or any person related to any of the
foregoing, (v) acquire or dispose of any assets, other than in the ordinary
course of business, and (vi) encumber or commit to encumber any of its assets,
(vii) take any action, or suffer any action to be taken, which could cause any
of the representations or warranties of any Stockholders or the Seller contained
herein not to be true and correct on and as of the Closing Date, or (viii) enter
into any agreement to take any of the foregoing actions.
3.3 OTHER TRANSACTIONS. The Seller and the Stockholders shall
not, and shall cause the Seller's directors, officers, stockholders, employees,
agents and Affiliates or Associates not to, directly or indirectly, solicit or
initiate the submission of proposals from, or solicit, encourage, entertain or
enter into any arrangement, agreement or understanding with, or engage in any
negotiations with, or furnish any information to, any person, other than Buyer
or a representative thereof, with respect to the acquisition of all or any part
of the business or assets of the Seller or any of its securities. Should the
Seller or any of its Affiliates or Associates, during such period, receive any
offer or inquiry relating to such acquisition, or obtain information that such
an offer is likely to be made, they will provide Buyer with immediate written
notice thereof, which notice will include the identity of the prospective
offeror and the price and terms of any offer.
3.4 CONSENTS. The Stockholders shall cause the Seller to, and
the Seller shall, use its best efforts to obtain in writing, prior to the
Closing Date, all consents, approvals, waivers, authorizations and orders
necessary or reasonably required in order to permit it to effectuate this
Agreement and to consummate the transactions contemplated hereby (collectively,
"Consents"). All such Consents will be in writing and copies thereof will be
delivered to Buyer promptly after the Seller's receipt thereof but no later than
immediately prior to Closing.
3.5 SUPPLEMENTAL DISCLOSURE. The Stockholders and the Seller
agree that, with respect to their representations and warranties made in this
Agreement, they will have a continuing obligation prior to Closing to promptly
supplement or amend the schedules hereto with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this Agreement
and on the Closing Date, would have been required to be set forth or described
in the schedules hereto.
3.6 PUBLIC ANNOUNCEMENTS. The Stockholders and Buyer agree
that they will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
transactions contemplated hereby and any press
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release or any public statement shall be subject to mutual agreement of the
parties, except as may be required by the disclosure obligations of Buyer under
applicable securities laws.
4. CONDITIONS TO CLOSING.
4.1 CONDITIONS OF BUYER'S OBLIGATION TO CLOSE. The obligation
of Buyer to close under this Agreement is subject to the satisfaction of the
following conditions any of which may be waived by Buyer in writing at or prior
to Closing:
(a) DUE DILIGENCE. Buyer shall have completed, to its
satisfaction, its business, legal, tax and accounting due diligence.
(b) AGREEMENTS AND CONDITIONS. On or before the Closing
Date, the Stockholders and the Seller shall have complied with and duly
performed all agreements and conditions on their part to be complied with and
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
(c) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Stockholders and the Seller contained in this Agreement,
or otherwise made in connection with the transactions contemplated hereby, shall
be true and correct in all material respects on and as of the Closing Date with
the same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
(d) LOSS, DAMAGE OR DESTRUCTION. Between the date hereof
and the Closing Date there shall not have been any loss, damage or destruction
to or of any of the assets, property or business of the Seller in excess of
$50,000 in the aggregate, whether or not covered by insurance, nor shall the
assets, properties, business or prospects of the Seller have been adversely
affected in any way as a result of any fire, accident, or other casualty, war,
civil strife, riot or act of God or the public enemy or otherwise.
(e) NO LEGAL PROCEEDINGS. No court or governmental action
or proceeding shall have been instituted or threatened to restrain or prohibit
the transactions contemplated hereby, and on the Closing Date there will be no
court or governmental actions or proceedings pending or threatened against or
affecting the Seller which involve a demand for any judgment or liability,
whether or not covered by insurance, and which may result in any material
adverse change in the business, operations, properties or assets or in the
condition, financial or otherwise, of the Seller.
(f) CERTIFICATE. Buyer shall have received a certificate
dated the Closing Date and executed by the Stockholders and an authorized
officer of the Seller to the effect that the conditions expressed in Sections
4.1(b), 4.1(c), 4.1(d) and 4.1(e) have been fulfilled.
(g) CONSENTS. Buyer shall have received all Consents
necessary to effectuate this Agreement and to consummate the transactions
contemplated hereby.
(h) EMPLOYMENT AGREEMENTS. Buyer shall have entered into
Employment Agreements with Xxxxx Xxxxxxxx and Xxxxxxx Xxxxx, in form and
substance satisfactory to Buyer.
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(i) STOCKHOLDERS AGREEMENT. The Stockholders shall have
entered into a Stockholders Agreement, in form and substance satisfactory to
Buyer.
(j) ESCROW AGREEMENT. The Seller and the Escrow Agent
shall have entered into the Escrow Agreement.
(k) NAME CHANGE. Buyer shall have received a duly
authorized and executed document which amends the certificate of incorporation
of the Seller to change Seller's name to a name other than Protocol
Communications Services, or any derivative thereof or any similar name, and is
otherwise in form for filing with the Secretary of State of the Commonwealth of
Massachusetts.
(l) CERTIFICATES OF STATUS. Buyer shall have received
certificates from the Secretary of State of Massachusetts and of each
jurisdiction set forth in Schedule 2.1(a) hereto, providing that the Seller has
filed its most recent annual report, has not filed articles of dissolution and
is in good standing in each such jurisdiction.
(m) OPINION OF COUNSEL. The Stockholders shall have
furnished Buyer with a favorable opinion of Mesirov Xxxxxx Xxxxx Xxxxxx &
Xxxxxxxx, LLP, counsel for the Seller and the Stockholders, dated as of the
Closing Date, and in form and substance satisfactory to Buyer.
(n) CERTIFICATE OF NET WORTH. Buyer shall have received a
certificate from the Stockholders certifying that on and as of June 1, 1998, the
Net Worth of the Seller is not less than [******].
(o) BILLS OF SALE. Buyer shall have received such bills of
sale, deeds of transfer, assignments and other documents in form and substance
satisfactory to Buyer conveying the Transferred Assets to Buyer.
(p) PHASE I ACQUISITIONS. Parent or a wholly-owned
subsidiary thereof shall have successfully acquired the stock or assets of each
of the Phase I Acquisitions.
4.2 CONDITIONS OF THE STOCKHOLDERS' AND THE SELLER'S
OBLIGATIONS TO CLOSE. The obligations of the Stockholders and the Seller to
close under this Agreement are subject to the following conditions any of which
may be waived by the Seller in writing at or prior to Closing:
(a) AGREEMENTS AND CONDITIONS. On or before the Closing
Date, Buyer shall have complied with and duly performed all agreements and
conditions on its part to be complied with and performed pursuant to or in
connection with this Agreement on or before the Closing Date.
(b) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer contained in this Agreement, shall be true and correct
in all material respects on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing Date.
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(c) CLOSING CERTIFICATE. The Stockholders shall have
received a certificate dated the Closing Date and executed by an authorized
officer of Buyer to the effect that the conditions contained in Section 4.2(a)
and (b) have been fulfilled.
(d) ESCROW AGREEMENT. Buyer and the Escrow Agent shall
have entered into the Escrow Agreement.
(e) OPINION OF COUNSEL. Buyer and Parent shall have
furnished to the Seller with a favorable opinion of Xxxxxxxxx Xxxxxxx, counsel
for Buyer and Parent, dated as of the Closing Date.
(f) LEASE AGREEMENT. Buyer or Parent and the Stockholders
shall have entered into a Lease Agreement for property located at 00 Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx, in form and substance satisfactory to the
parties.
(g) PHASE I ACQUISITIONS. Parent or a wholly-owned
subsidiary thereof shall have successfully acquired the stock or assets of each
of the Phase I Acquisitions.
5. FURTHER ASSURANCES. From time to time after the Closing,
and without further consideration, the Seller shall execute and deliver such
other instruments of conveyance, assignment, transfer and delivery and take such
other actions as Buyer may reasonably request in order more effectively to
Transfer to Buyer, to place Buyer in possession or control of, all of the
rights, properties, assets and businesses intended to be Transferred hereunder,
to assist in the collection of any and all such rights, properties and assets,
and to enable Buyer to exercise and to enjoy all of the rights and benefits of
the Seller with respect thereto.
6. TRANSFER TAXES. The Seller shall pay all income, gains and
excise taxes, if any, incurred in connection with the transactions contemplated
by this Agreement. With respect to any item that is exempt from sales or use tax
on any basis, Buyer shall deliver to the Seller such certificates for such
exemption as the Seller may reasonably request. Except as hereinabove provided,
the party hereto which is responsible under applicable law shall bear and pay in
their entirety all other taxes and registration and transfer fees, if any,
payable by reason of the Transfer of the Transferred Assets pursuant to this
Agreement. Each party hereto will cooperate to the extent practicable in
minimizing all taxes (other than income taxes) and fees levied by reason of the
Transfer of the Transferred Assets.
7. INDEMNIFICATION.
7.1 SURVIVAL OF REPRESENTATIONS. The representations and
warranties of the Stockholders in this Agreement or in any document delivered
pursuant hereto shall survive the Closing Date for a period of two years and
shall then terminate; PROVIDED, HOWEVER, that (i) any such representation and
warranty shall survive the time it would otherwise terminate only with respect
to claims of which notice has been given as provided in this Agreement prior to
such termination and (ii) such time limitation shall not apply to the
representations and warranties set forth in Sections 2.1(h), 2.1(j), 2.1(l) and
2.1(n) hereof, which shall survive until the expiration of the applicable
statute of limitations.
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7.2 INDEMNITORS; INDEMNIFIED PERSONS. For purposes of this
Section 7, each party which, pursuant to this Section 7, shall agree to
indemnify any other person or entity shall be referred to, as applicable, as the
"Indemnitor", and each such person and entity who is entitled to be indemnified
by any Indemnitor shall be referred to as the "Indemnified Person" with respect
to such Indemnitor.
7.3 INDEMNITY OF THE SELLER AND THE STOCKHOLDERS. The Seller
and the Stockholders hereby jointly and severally agree to indemnify, hold
harmless and reimburse Buyer and its directors, officers, agents and employees
from and against any and all claims, liabilities, losses, damages and expenses
incurred by such Indemnified Persons (including reasonable attorneys' fees and
disbursements) which shall be caused by or related to or shall arise out of any
(a) breach or alleged breach of any representation or warranty of the Seller and
the Stockholders contained in this Agreement, (b) any breach of any covenant or
agreement of Seller or the Stockholders contained in the Agreement and (c) any
failure by Seller to satisfy the Excluded Liabilities, and shall reimburse such
Indemnified Persons for all costs and expenses (including reasonable attorneys'
fees and disbursements) as they shall be incurred, in connection with paying,
investigating, preparing for or defending any action, claim, investigation,
inquiry or other proceeding, whether or not in connection with pending or
threatened litigation, which shall be caused by or related to or shall arise out
of such breach or alleged breach, whether or not any such Indemnified Person
shall be named as a party thereto and whether or not any liability shall result
therefrom. The Stockholders and the Seller further agree that they shall not,
without the prior written consent of Buyer settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder unless
such settlement, compromise or consent shall include an unconditional release of
each Indemnified Person under this Section 7.3 from all liability arising out of
such claim, action, suit or proceeding.
7.4 INDEMNITY OF BUYER. Buyer hereby agrees to indemnify, hold
harmless and reimburse the Stockholders and the Seller and the Seller's
directors, officers, agents and employees from and against any and all claims,
liabilities, losses, damages and expenses incurred by them (including reasonable
attorneys' fees and disbursements) which shall be caused by or related to or
shall arise out of (a) any breach or alleged breach of any representation or
warranty of Buyer contained in this Agreement, (b) any breach of any covenant or
agreement of Buyer contained in the Agreement and (c) any Assumed Liability and
the operation of the business after Closing, and shall reimburse such
Indemnified Persons for all costs and expenses (including reasonable attorneys'
fees and disbursements) as shall be incurred, in connection with paying,
investigating, preparing for or defending any action, claim, investigation,
inquiry or other proceeding, whether or not in connection with pending or
threatened litigation, which shall be caused by or related to or shall arise out
of such breach or alleged breach, whether or not such Indemnified Persons shall
be named as a party thereto and whether or not any liability shall result
therefrom. Buyer further agrees that it shall not, without the prior written
consent of the Seller, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder unless such settlement,
compromise or consent shall include an unconditional release of the Stockholders
and the Seller under this Section 7.4 from all liability arising out of such
claim, action, suit or proceeding.
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7.5 LIMITATION ON INDEMNIFICATION. No Indemnified Person shall
be entitled to assert any claim for indemnification arising out of a breach of
representation or warranty under Section 7.3(a) or 7.4(a) hereof until such time
as all such claims for indemnification shall exceed $30,000 in the aggregate,
and then only to the extent of such excess. Further, the dollar amount of the
indemnification obligations in respect of such claims for a breach of
representations or warranties under each of Section 7.3(a) and 7.4(c) may not
exceed, in the aggregate, the Cash Purchase Price (the "Claims Limitation"),
unless the Indemnitor shall have provided information to Buyer or the Seller, as
the case may be, in connection herewith, or made representations or warranties
hereunder which, in either case the Indemnitor knew or should have known were
inaccurate or misleading, or omitted facts necessary to make them not
misleading, in which event the Claims Limitation shall not apply.
7.6 SPECIAL TAX INDEMNITY OF BUYER. Buyer hereby agrees to
indemnify, hold harmless and reimburse the Seller from and against any and all
income taxes imposed upon the Seller pursuant to Section 1374 of the Code
("Section 1374 Taxes") and any interest in connection therewith (other than
interest arising as a result of any late filing by the Seller) as a result of
the Transfer and for all costs and expenses (including reasonable attorneys'
fees and disbursements) as shall be incurred in connection with paying,
investigating, preparing for or defending any action, claim, audit or other
proceeding relating to such Section 1374 Taxes, whether or not any liability
shall result therefrom. Notwithstanding the foregoing, Buyer shall have no
liability hereunder for Section 1374 Taxes or associated costs and expenses, to
the extent such Section 1374 Taxes or associated costs and expenses arise as a
result of:
(a) the Seller reporting an amount of Section 1374 Taxes
in excess of $25,000 on its Federal income tax return for the period
including the Closing Date, or subsequently amending such return to
reflect an amount of Section 1374 Taxes in excess of such amount;
(b) the Seller consenting to any adjustment of the amount
of Section 1374 Taxes due with respect to the Transfer without the
prior written consent of Buyer;
(c) any Section 1374 Taxes which are not directly
attributable to the Transfer including, without limitation, any Section
1374 Taxes arising out of Seller's business operations during its
taxable year including the Closing Date; and
(d) any Section 1374 Taxes in excess of the amount
initially reported by the Seller on its Federal income tax return for
the period including the Closing Date arising as a result of a breach
of any of the representations and warranties of Seller contained in
Section 7.7 hereof.
7.7 SPECIAL REPRESENTATIONS OF SELLER. In connection with
Section 7.6(d) hereof, the Seller represents and warrants to Buyer as follows:
(a) the Seller purchased the shares of the Seller's Common
Stock owned by Xxxxxxx X. Xxxxx (representing 51% of the outstanding
shares of the Seller's Common Stock) for $23,000 and other
consideration described in that certain Stock Purchase Agreement, dated
November 19, 1990, and no other compensation was paid by the Seller to
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Xxxxxxx X. Xxxxx in connection with the purchase of such shares except
as set forth in such Stock Purchase Agreement or disclosed in writing
to Buyer;
(b) neither the Seller nor any of its shareholders
received any offer to purchase the stock of the Seller for an amount in
excess of $46,000 or the assets of Seller for an amount in excess of
$532,000 (including assumption of liabilities) or negotiated any such
purchase during the period from January 1, 1990, through December 31,
1991;
(c) the Seller properly elected to be taxed as an S
corporation under Section 1361 of the Code, effective as of January 1,
1991, and has qualified as an S corporation at all times thereafter;
(d) the Seller's U.S. Corporation Income Tax Return for
1990, as well as its balance sheet as of December 31, 1990, as
furnished to Buyer, are true and correct in all material respects;
(e) not more than twenty-five percent (25%) of the persons
reflected on the Seller's various customer lists as of December 31,
1990, remain on the Seller's customer lists as of the date hereof; and
(f) none of the Seller, or any of its officers, directors
or shareholders is aware of any fact not previously disclosed to Buyer
that would result in the valuation of Seller's stock on December 31,
1990, being in excess of $46,000.
7.8 PROCEDURES FOR INDEMNIFICATION; DEFENSE. Promptly after
receipt by an Indemnified Person of notice of the commencement of any action or
proceeding with respect to which indemnification may be sought hereunder, such
Indemnified Person shall notify the Indemnitor of the commencement of such
action or proceeding, but failure to so notify the Indemnitor shall not relieve
the Indemnitor from any liability which the Indemnitor may have hereunder or
otherwise, unless the Indemnitor shall be materially prejudiced by such failure.
If the Indemnitor shall so elect, the Indemnitor may assume the defense of such
action or proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall pay the fees and
disbursements of such counsel. In the event, however, that such Indemnified
Person shall reasonably determine in its judgment that having common counsel
would present such counsel with a conflict of interest or alternative defenses
shall be available to an Indemnified Person or if the Indemnitor shall fail to
assume the defense of the action or proceeding in a timely manner, then such
Indemnified Person may employ separate counsel to represent or defend it in any
such action or proceeding and the Indemnitor shall pay the reasonable fees and
disbursements of such counsel; PROVIDED, HOWEVER, that the Indemnitor shall not
be required to pay the fees and disbursements of more than one separate counsel
for all Indemnified Persons in any jurisdiction in any single action or
proceeding. In any action or proceeding the defense of which the Indemnitor
shall assume, the Indemnified Person shall have the right to participate in such
litigation and to retain its own counsel at such Indemnified Person's own
expense except as otherwise provided above in this Section 7.5, so long as such
participation does not interfere with the Indemnitor's control of such
litigation.
8. NON-COMPETITION; CONFIDENTIALITY.
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8.1 NON-COMPETITION. Following the Closing Date and for a
period of three (3) years thereafter (the "Non-Competition Period"), the Seller
and the Stockholders shall not, directly or indirectly, (a) engage in any
business or activity that competes with the business in which the Seller or any
of its Affiliates is then engaged, anywhere in the United States and elsewhere
in the world (the "Business"); (b) enter the employ of any person or entity
engaged in any business or activity that competes with the Business or render
any consulting or other services to any person or entity for use in or with the
effect of competing with the Business; or (c) have an interest in any business
or activity that competes with the Business, in any capacity, including, without
limitation, as an investor, partner, stockholder, officer, director, principal,
agent, employee, or creditor; PROVIDED, HOWEVER, that nothing herein shall
prevent the purchase or ownership by any Stockholder of less than 5% of the
outstanding equity securities of any class of securities of a company registered
under Section 12 of the Securities and Exchange Act of 1934, as amended, and any
stock hereafter owned of Parent.
8.2 NO COMPETING INTERESTS. Each Stockholder hereby represents
and warrants to Buyer that he has no ownership or other interest in any business
or activity that competes, directly or indirectly, with the Business.
8.3 NON-DISRUPTION. Following the Closing Date and for a
period of five (5) years thereafter, the Seller and the Stockholders shall not,
directly or indirectly, interfere with, disrupt or attempt to disrupt any
present or prospective relationship, contractual or otherwise, between the
Seller or any of its Affiliates, on the one hand, and any of its customers,
suppliers or employees, on the other hand.
8.4 CONFIDENTIALITY. The Seller and the Stockholders shall not
use for his own behalf or divulge to any other person or entity any confidential
information or trade secrets of or relating to Buyer in any manner whatsoever
(except as authorized and required in connection with the Stockholders'
relationship with Buyer or any of its affiliates during the term of such
relationship or except as may be required under legal process by subpoena or
other court order; PROVIDED, HOWEVER, that the Stockholder shall give Buyer
prompt prior written notice thereof in order to contest such requirement or
order). As used herein, confidential information shall consist of all
information, knowledge or data relating to Buyer or any of its affiliates
(including, without limitation, all information relating to inventions,
procedures and operations, processes and methods, financial information,
customer and prospective customer lists, prices and trade practices) which is
not in the public domain or otherwise published or publicly available.
8.5 REMEDIES UPON BREACH. The Seller and the Stockholders
acknowledge and agree that (a) Buyer shall be irreparably injured in the event
of a breach by a Stockholder of any of his obligations under this Section 8; (b)
monetary damages shall not be an adequate remedy for such breach; (c) Buyer
shall be entitled to injunctive relief, in addition to any other remedy which it
may have, in the event of any such breach; and (d) the existence of any claims
which Stockholder may have against Buyer, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Buyer of any of its
rights under this Agreement.
9. MISCELLANEOUS PROVISIONS.
9.1 CONFIDENTIALITY. The Seller, the Stockholders and Buyer
agree not to, directly or indirectly, without the prior written consent of the
other, use or disclose to any person,
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firm or corporation, any materials or information obtained in Buyer's due
diligence investigation of Seller not a part of the Purchased Assets, or any of
the terms of this Agreement, except as may be required by the disclosure
obligations of Buyer under applicable securities laws or as may be required to
be disclosed to the attorneys and/or accountants of the parties hereto in
connection with the transactions contemplated hereby.
9.2 NOTIFICATION. Each party hereto shall give the other party
or parties hereto prompt written notice of (a) the existence of any fact or the
occurrence of any event which constitutes, or with the giving of notice or the
passage of time or both would constitute, a breach of any representation or
warranty of the party giving such notice made herein or pursuant hereto and (b)
the taking of any action by the party giving such notice that would breach or
violate, or constitute a default under, any agreement or covenant of such party
made herein or pursuant hereto. The giving of any such notice shall not affect,
modify or limit in any way any representation, warranty, agreement or covenant
of the parties made herein or pursuant hereto.
9.3 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
9.4 NOTICES. All notices, requests, demands and other
communications which are required or may be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed duly given when delivered by
hand, telecopied or posted in the United States mail by registered or certified
mail with postage pre-paid, return receipt requested, (a) if to Buyer, to
Teleservices Holdings Corporation, c/x Xxxxxxx, Calamari & Xxxxxxx, 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq., facsimile
number: (000) 000-0000; and (i) if to the Seller or the Stockholders, to 000
Xxxxxxxxxx Xxxx, Xxxxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxx, facsimile
number: (000) 000-0000, or to such other address(es) as shall be specified by
like notice to the other parties.
9.5 AMENDMENTS. This Agreement may be amended or modified at
any time prior to the Closing Date, but only by a written instrument executed by
all of the parties hereto.
9.6 ENTIRE AGREEMENT. This Agreement (together with the other
agreements, certificates, instruments and documents delivered pursuant hereto)
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings,
oral and written, among the parties hereto with respect to the subject matter
hereof.
9.7 APPLICABLE LAW. This Agreement and the legal relations
among the parties hereto shall be governed by and construed in accordance with
the internal laws of the State of New York. The parties hereby consent to the
exclusive jurisdiction of Federal and New York State courts located in the
County of New York and agree that service of process by certified mail, return
receipt requested, shall constitute personal service for all purposes hereof.
9.8 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date by any of the following:
(a) By mutual written agreement of Buyer and the Seller;
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(b) By either Buyer or the Seller, if the Closing has not
occurred within thirty (30) days after execution of this agreement, upon written
notice by such terminating party, provided that at the time such notice is given
a material breach of this Agreement by such terminating party shall not be the
principal reason for the Closing's failure to occur;
(c) Subject to the provisions of Section 9.9 hereof, by
Buyer, by written notice to the Seller, if there has been a material violation
or breach of any of the Stockholders' or the Seller's covenants or agreements
made herein or in connection herewith or if any representation or warranty of
the Stockholders or the Seller made herein or in connection herewith proves to
be materially inaccurate or misleading when made; or
(d) Subject to the provisions of Section 9.9 hereof, by
the Seller, by written notice to Buyer, if there has been a material violation
or breach of any of Buyer's covenants or agreements made herein or in connection
herewith or if any representation or warranty of Buyer made herein or in
connection herewith proves to be materially inaccurate or misleading when made.
9.9 EFFECTS OF TERMINATION. If this Agreement is terminated as
provided in Section 9.8 hereof, then this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of any party hereto
(or any of their respective stockholders, officers, directors or employees),
except based on the agreements contained in Section 7.3 and 7.4 hereof;
PROVIDED, HOWEVER, that if Buyer terminates this Agreement pursuant to Section
9.8(c) hereof, or the Seller terminates this Agreement pursuant to Section
9.8(d) hereof, the non-terminating party shall remain liable for any breach
hereof.
9.10 HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
9.11 FEES AND DISBURSEMENTS. Buyer shall pay its own expenses,
and the fees and disbursements of the counsel, accountants or auditors retained
by it in connection with the preparation, execution and delivery of this
Agreement and the fees and expenses and disbursements of the counsel to the
Seller and the Stockholders shall be paid by the Stockholders.
9.12 ASSIGNMENT. This Agreement may not be assigned by the
Seller without the prior written consent of Buyer. This Agreement may not be
assigned by Buyer, except for an assignment by Buyer to any Affiliate, without
the prior written consent of the Seller.
9.13 BINDING EFFECT; BENEFITS. This Agreement shall inure to
the benefit of, and be binding upon, the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective heirs, legal representatives, successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.14 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such
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prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this
Stock Purchase Agreement the day and year first above written.
TELESERVICES ACQUISITION SUB 1 INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------------
Title: Chairman
TELESERVICES HOLDINGS CORPORATION
with respect only to Sections 1.5(a) and 2.4 hereof
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------------
Title: Chairman
PROTOCOL COMMUNICATIONS
SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------------------
Title: President
STOCKHOLDERS:
/s/ Xxxxx Xxxxxxxx
----------------------------------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
----------------------------------------------------
Xxxxxxx Xxxxx
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