EXHIBIT 99.2
ASSET PURCHASE AGREEMENT
DATED NOVEMBER 10, 2005
BY AND AMONG
ACS STATE & LOCAL SOLUTIONS, INC.
AS SELLER,
AND
ARBOR E&T, LLC,
AS BUYER
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into as of November 10,
2005 by and among (i) ACS State & Local Solutions, Inc., a New York corporation
("Seller"), (ii) Arbor E&T, LLC, a Kentucky limited liability company ("Buyer"),
(iii) solely for the purpose of guaranteeing the performance by Buyer of its
obligations in Section 3 and its indemnification obligations in Section 13 of
this Agreement, Res-Care, Inc., a Kentucky corporation ("Res-Care"), and (iv)
solely for the purpose of guaranteeing the performance by Seller of its
indemnification obligations in Section 13 of this Agreement, Affiliated Computer
Services, Inc., a Delaware corporation ("ACS").
RECITAL:
A. WHEREAS, Seller is the owner of the Acquired Assets, through which
Seller operates the Subject Business;
B. WHEREAS, Seller is, directly or indirectly, a wholly-owned subsidiary
of ACS;
C. WHEREAS, Buyer is a wholly-owned subsidiary of Res-Care; and
D. WHEREAS, Seller desires to sell, convey, transfer and assign to Buyer,
and Buyer desires to purchase and acquire from Seller, all of the Acquired
Assets and Buyer has agreed to assume certain liabilities of Seller, upon the
terms and conditions set forth in this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing premises and the
warranties, representations, covenants and agreements contained herein, Seller
and Buyer agree as follows:
SECTION 1. CERTAIN DEFINITIONS:
As used in this Agreement the following terms will have the indicated
meanings:
"ACCOUNTS RECEIVABLE" shall mean all billed accounts receivable of the
Subject Business.
"ACQUIRED ASSETS" shall mean, other than for assets and properties falling
within the definition of the Excluded Assets, the following assets and
properties (i) Assumed Contracts, (ii) Tangible Personal Property, (iii)
Business Records, (iv) Goodwill, (vi) Transferable Permits, (vi) Owned
Intellectual Property and (viii) all other assets and properties that are owned
by Seller or any of its Affiliates and exclusively used or held for exclusive
use in the Subject Business.
"ACQUIRED BUSINESS" is defined in Section 8.5(b).
"ACS" is defined in the preamble to this Agreement.
ASSET PURCHASE AGREEMENT PAGE 1
"ACS LOGOS" shall mean the name, logo and other identifying names, marks
and slogans of ACS and any of its Affiliates.
"AFFILIATE" shall mean with respect to the indicated Person any other
Person who, directly or indirectly, controls, is controlled by, or is under
common control with, the indicated Person and also means any officer, director,
trustee, shareholder, manager, principal, partner or member of the indicated
Person or the other Person. For purposes of this definition, the terms
"control", "controlled by" and "under common control with" means the possession
directly or indirectly of the power to direct or cause the direction of the
management and policies of the indicated Person, whether through the ownership
of voting securities, by trust, management agreement, contract or otherwise.
"AGREEMENT" shall mean this Asset Purchase Agreement, as it may be amended
from time to time by agreement of the parties, and all Exhibits and Schedules
attached hereto together with any permitted or agreed updates or amendments to
such Exhibits and/or Schedules.
"APPLICABLE LAW" shall mean any applicable federal, state, local,
municipal, foreign or other law, statute, constitution, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Entity on or prior to the Closing Date.
"ASSUMED CONTRACTS" shall mean the Operating Contracts, the Customer
Contracts, the Intellectual Property Licenses, the Real Estate Leases and the
subleases set forth on Schedule 4.12.
"ASSUMED LIABILITIES" is defined in Section 2.3.
"BALANCE SHEETS" is defined in Section 4.5.
"BASKET AMOUNT" is defined in Section 13.3(a).
"BUSINESS DAY" shall mean any day other than Saturday, Sunday or a day on
which commercial banks in New York, New York are authorized or required to be
closed.
"BUSINESS PROPRIETARY INFORMATION" shall mean any and all information
related to or concerning the Subject Business which has not been, or is not
made, generally available to the public by Seller prior to the Closing Date.
"BUSINESS RECORDS" shall mean all business books, records, files and
papers, whether in hard copy or electronic format, of Seller used exclusively in
the Subject Business, including books of account, invoices, sales and
promotional literature, manuals and data, sales and purchase correspondence,
lists of present and former suppliers, lists of present and former customers,
documentation developed or used for accounting, marketing, or any other purpose
relating exclusively to the conduct of the Subject Business at any time prior to
the Closing except to the extent Seller or an Affiliate of Seller is required to
retain the originals pursuant to any Applicable Law and, in which case, Buyer
will be provided with a copy.
ASSET PURCHASE AGREEMENT PAGE 2
"BUYER" is defined in the preamble to this Agreement.
"BUYER EXPENSE" is defined in Section 11.13(a).
"BUYER PTO" shall mean all Paid Time Off of the Employees other than the
Seller PTO.
"BUYER REVENUE" is defined in Section 11.13(a).
"BUYER'S REP" is defined in Section 11.13(e).
"CLAIM NOTICE" is defined in Section 13.1.
"CLOSING" is defined in Section 3.1.
"CLOSING DATE" is defined in Section 3.1.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPETING BUSINESS" is defined in Section 8.5(a).
"CONFIDENTIALITY AGREEMENT" is defined in Section 6.1.
"CONTRACT" shall mean any written, oral or other agreement, contract,
subcontract, equipment lease or other lease, license agreement, understanding,
instrument, note, bond, mortgage, indenture, warranty, insurance policy, or
legally binding commitment or undertaking of any nature to which a Person is a
party or by which the assets or properties of a Person are bound.
"COPYRIGHTS" shall mean all domestic and foreign copyright interests in
any original work of authorship fixed in a tangible medium of expression,
whether registered or unregistered, including but not limited to all copyright
registrations or foreign equivalents, all applications for registration or
foreign equivalent, all moral rights, all common-law rights, and all rights to
register and obtain renewals and extensions of copyright registrations, together
with all other copyright interests accruing by reason of international copyright
convention, together with all income, royalties, damages and payments now or
hereafter due or payable with respect thereto and the right to ▇▇▇ for past,
present, or future infringement and to collect and retain all damages and
profits therefor.
"CURRENT BALANCE SHEET" is defined in Section 4.5(a).
"CUSTOMERS" shall mean the customers under the Customer Contracts.
"CUSTOMER CONTRACTS" shall mean the contracts listed on Schedule 4.13 and
those Contracts for the Subject Business that are entered into during the
Pre-Closing Period in accordance with Section 6.2.
ASSET PURCHASE AGREEMENT PAGE 3
"DAMAGES" shall mean any loss, damage, injury, liability, claim, demand,
amounts paid in settlement, judgment, award, fine, penalty, tax, fee (including
reasonable attorneys' fees), charge, cost (including costs of investigation),
amount due or expense of any nature, except Damages does not include the types
of damages described in Section 14.3. Such Damage or Damages shall be calculated
to be net of any tax benefits received or realized by a party in connection with
the Damage or Damages.
"DISPUTE" is defined in Sec. 14.16.
"DISQUALIFYING ACQUISITION" is defined in Section 8.5(c).
"DISQUALIFIED BUSINESS" is defined in Section 8.5(c).
"DOCUMENTATION" shall mean those materials developed for use in connection
with particular software in order to explain, instruct or clarify the
construction, operation, function, programming or features of the particular
software. Without limiting the generality of the foregoing, Documentation also
includes user and programming manuals, programmer notes, flow charts,
schematics, illustrations, logic diagrams, descriptions of data flows, data
structures, operating instructions, input information, training documents and
format and technical and functional specifications.
"DROP DEAD DATE" shall mean the date that is three months from the date of
the execution of this Agreement.
"EMPLOYEE BENEFIT PLANS" means any of the following arrangements under
which Seller, or any of its Affiliates, has any liability to provide benefits or
compensation to or on behalf of any Employee, or the spouse or dependents of any
Employee: (a) any employee welfare benefit plan within the meaning of Section
3(1) of ERISA, (b) any employee benefit plan within the meaning of Section 3(3)
of ERISA, (c) any employee pension benefit plan within the meaning of Section
3(2) of ERISA, and (d) any other material profit-sharing, deferred compensation,
incentive compensation, bonus, commission, stock option, stock purchase,
severance pay, unemployment benefit, vacation pay, savings, dependent care,
scholarship, accident, disability, weekly income, salary continuation or other
compensation or fringe benefit plan or program.
"EMPLOYEES" shall mean with respect to the Subject Business all full-time
and part-time employees, employees on workers' compensation, military leave,
maternity leave, leave under the Family and Medical Leave Act of 1993,
short-term disability, salary continuation, on layoff with recall rights, and
employees on other approved leaves of absence with a legal or contractual right
to reinstatement; provided that "Employees" shall not include Seasonal
Employees. A list of the Employees as of October 31, 2005 is set forth on
Schedule 4.17(a).
"EMPLOYEE PROCEEDING" shall mean any pending or threatened Legal
Proceeding raised or made by or on behalf of an Employee or any Seasonal
Employee that is based on an employer-employee relationship including, but not
limited to, claims of sexual harassment,
ASSET PURCHASE AGREEMENT PAGE 4
retaliation, wrongful termination, hostile work environment, employee benefits
and any similar claims.
"ENCUMBRANCE" shall mean any charge, encumbrance, encroachment, option,
right of first refusal, preemptive right or other material restriction of any
kind that is not inherent in the nature of, or normally characteristic of, the
particular asset or property in question.
"ENVIRONMENTAL LAWS" means all Applicable Laws pertaining to the
environment, natural resources, and public or employee health and safety as any
of same may be in effect on or prior to the Closing Date.
"ENVIRONMENTAL LIABILITIES" shall mean those liabilities of Seller from
the operation of the Subject Business prior to the Closing Date that arise from
or under any Environmental Law, including those consisting of or relating to:
(a) any environmental, health or safety matter or condition (including on-site
contamination or occupational safety, health and regulation of any chemical
substance or product); (b) any Damages from Seller's operation of the Subject
Business prior to the Closing Date that arise under any Environmental Law; (c)
financial responsibility under any Environmental Law for cleanup costs or
corrective action, including any cleanup, removal, containment or other
remediation or response actions required by any Environmental Law and for any
natural resource damages; or (d) any other compliance, corrective or remedial
measure required under any Environmental Law, including any applicable
Environmental Law relating to the release of Hazardous Materials. The terms
"removal", "remedial", and "response action" include the types of activities
covered by the United States Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (CERCLA).
"ENVIRONMENTAL VIOLATION" is defined in Section 4.18.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" is defined in Section 2.4.
"EXPIRATION DATE" is defined in Section 13.1.
"FINANCIAL STATEMENTS" is defined in Section 4.5(a).
"FIRST CAP LIMITATION" shall mean $10,000,000.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time through the Closing Date as
applied on a consistent basis from period to period by the Seller in the past as
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and the statements
and pronouncements of the Financial Accounting Standards Board.
"GOODWILL" shall mean the goodwill associated with the Subject Business.
ASSET PURCHASE AGREEMENT PAGE 5
"GOVERNMENTAL AUTHORIZATION" shall mean any permit, license, certificate,
franchise, permission, clearance, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Entity or pursuant to any Applicable Law; provided that
"Governmental Authorization" does not include Government Contracts or consent by
a Governmental Entity to the assignment of a Governmental Contract.
"GOVERNMENT CONTRACT" is defined in Section 4.23.
"GOVERNMENTAL ENTITY" shall mean any: (i) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign or other government; or
(iii) governmental or quasi-governmental authority of any nature including any
governmental division, department, agency, commission, instrumentality,
official, organization, unit or body and any court or other tribunal.
"HAZARDOUS MATERIALS" shall mean (i) any "hazardous substance" or
"pollutant" or "contaminant," as such terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act, (ii) any toxic or
hazardous substance, material or waste, (iii) "petroleum" as that term is
defined in the Resource Conservation and Recovery Act or (iv) any other
substance or waste which is regulated under any applicable Environmental Law
with respect to its discharge, release or disposal.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INCOME STATEMENTS" is defined in Section 4.5(a).
"INTELLECTUAL PROPERTY" shall mean Patent Rights, Trademark Rights,
Copyrights, Know-How, Software, Trade Secrets, Inventions and includes without
limitation, internet domain name registrations, designs, blueprints, drawings,
proprietary right or other intellectual property right or intangible asset or
right to use or exploit any of the foregoing.
"INTELLECTUAL PROPERTY LICENSES" shall mean those written Contracts that
provide for the license by a third party to Seller of Intellectual Property that
is exclusively used in the Subject Business.
"INVENTIONS" shall mean, whether or not patentable, novel devices,
processes, compositions of matter, methods, techniques, observations,
discoveries, apparatuses, formulas, machines, designs, expressions, theories and
ideas, and improvements thereto.
"KNOW-HOW" shall mean scientific, engineering, mechanical, electrical,
financial, marketing or practical knowledge or experience useful in the
operation of the Subject Business.
"KNOWLEDGE OF BUYER" shall mean the actual knowledge, after reasonable
inquiry, of any of ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇▇.
ASSET PURCHASE AGREEMENT PAGE 6
"KNOWLEDGE OF SELLER" and "SELLER'S KNOWLEDGE" shall mean the actual
knowledge, after reasonable inquiry, of any of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
"LEGAL PROCEEDING" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), hearing, inquiry, audit, examination or investigation
commenced, brought, conducted or heard by or before any court or other
Governmental Entity or any arbitrator or arbitration panel.
"LIABILITY" or "LIABILITIES" shall be broadly construed to mean all costs,
expenses, liabilities, duties, responsibilities, obligations, debts, claims,
loss, damages, demands, lawsuits, Taxes and all other forms and types of
liabilities and obligations of any nature whether fixed, contingent, liquidated,
unliquidated, and whether or not required by GAAP to be reflected on a financial
statement.
"LIEN" shall mean any lien, pledge, mortgage, deed of trust, attachment or
other security interest in an asset for the payment or performance of some debt
or obligation.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
business, operations, assets or financial condition of the Subject Business
taken as a whole, but excluding however material adverse effects to the extent
related to (i) business or economic conditions generally or the industries in
which the Subject Business operates, (ii) national or international political or
social conditions, including the engagement by the United States in hostilities,
whether or not pursuant to the declaration of a national emergency or war, or
the occurrence of any military or terrorist attack upon the United States, or
any of its territories, possessions, or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (iii)
financial, banking or securities markets (including any disruption thereof and
any decline in the price of any security or any market index and including
changes in interest or exchange rates), (iv) changes in United States generally
accepted accounting principles, (v) changes in Applicable Laws other than those
which would preclude, disrupt or hinder the Subject Business from conducting its
business in the ordinary course, or (vi) the announcement of, or the taking of
any action contemplated by, this Agreement.
"NECESSARY THIRD PARTY CONSENTS" is defined in Section 8.7.
"NON-COMPETITION PERIOD" is defined in Section 8.5(a).
"OPERATING CONTRACTS" shall mean all of the Contracts of Seller or its
Affiliates with vendors and suppliers pursuant to which all or substantially all
of the goods or services procured thereunder are used in the Subject Business,
including the Contracts listed on Schedule 4.14.
"OWNED INTELLECTUAL PROPERTY" shall mean all items of Intellectual
Property owned by Seller that are used exclusively or held for exclusive use in
the Subject Business.
"PAID TIME OFF" or "PTO" shall mean vacation, sick leave and other
personal leave time with respect to which an Employee is entitled to be paid
while off from work.
ASSET PURCHASE AGREEMENT PAGE 7
"PATENT RIGHTS" shall mean and include all domestic and foreign patents
(including without limitation certificates of invention and other patent
equivalents), provisional applications, patent applications and patents issuing
therefrom as well as any division, continuation or continuation in part,
reissue, extension, reexamination, certification, revival or renewal of any
patent, all Inventions and subject matter related to such patents, in any and
all forms, together with all income, royalties, damages and payments now or
hereafter due or payable with respect thereto and the right to ▇▇▇ for past,
present, or future infringement and to collect and retain all damages and
profits therefor.
"PERSON" shall mean any individual, corporation, general partnership,
limited partnership, limited liability partnership, limited liability company,
joint venture, estate, trust, company, firm or other legal enterprise,
association, organization and any Governmental Entity.
"PERMITTED EXCEPTIONS" shall mean (i) any Encumbrance or Lien that is not
material in amount or character, (ii) any Encumbrance or Lien that does not
singly or in the aggregate with other Encumbrances or Liens materially detract
from the value of the property to which it relates or materially detract from or
interfere with the use of property to which it relates in the ordinary conduct
of business as presently conducted, (iii) an Encumbrance or Lien arising in the
ordinary course of business that has not been filed of record and that relates
to an obligation as to which there is no material default on the part of Seller,
(iv) an Encumbrance or Lien for Taxes that are not yet due and payable or for
Taxes that are being contested in good faith by appropriate proceedings and as
to which adequate reserves have been established on the financial statements of
the Seller in accordance with GAAP, (v) Encumbrances against Contracts, leases,
subleases, equipment leases, licenses and similar agreements entered into in the
ordinary course of business, (vi) zoning, building, fire, health, environmental
and pollution control laws, ordinances, rules and safety regulations and other
similar restrictions, and (vii) Liens placed on the Acquired Assets by Buyer at
the time of Closing.
"PRE-CLOSING PERIOD" shall mean the period between the date of this
Agreement and the Closing Date.
"PUBLIC ELEMENTS" is defined in Section 4.10.
"PURCHASE PRICE" is defined in Section 2.2.
"REAL ESTATE LEASES" shall mean those real estate leases covering leased
premises that are used exclusively by the Subject Business.
"RECONCILIATION SCHEDULE" is defined in Section 11.13(f).
"REPRESENTATIVES" shall mean with respect to a particular Person, the
officers, directors, managers, members, employees, agents, attorneys,
accountants, advisors and other representatives of such Person.
"RES-CARE" is defined in the preamble to this Agreement.
ASSET PURCHASE AGREEMENT PAGE 8
"RETAINED BUSINESS" shall mean all businesses and operations of any type
or character of the Seller and its Affiliates other than the Subject Business.
"RETAINED LIABILITIES" is defined in Section 2.5.
"SCHEDULES" or "SCHEDULE" shall mean a numbered Schedule attached to or
accompanying this Agreement.
"SCHEDULE UPDATES" is defined in Section 6.4.
"SEASONAL EMPLOYEES" shall mean those individuals who, under the terms of
applicable Customer Contracts, are placed on Seller's payroll system for a
limited duration and are engaged in the Subject Business. Such individuals are
not included within the definition of "Employees" but those Seasonal Employees
that are employed as of October 31, 2005 are set forth on Schedule 4.17(a).
"SECOND CAP LIMITATION" shall mean an amount equal to the Purchase Price.
"SELLER" is defined in the preamble to this Agreement.
"SELLER EMPLOYEE BENEFIT PLANS" is defined in Section 4.17(b).
"SELLER GUARANTEE OBLIGATIONS" is defined in Section 8.7(c).
"SELLER EXPENSE" is defined in Section 11.13(a).
"SELLER PTO" shall mean, without duplication (i) accrued and unused
vacation time as of the Closing Date of those Employees who were employed by
predecessors to Seller and that Seller has accrued and carried as a liability on
its balance sheet for the Subject Business and (ii) accrued and unused vacation
time as of the Closing Date of the Employees that is required by Applicable Law
to be paid to the Employees upon their termination of employment with Seller,
unless and to the extent that under Applicable Law such vacation time is carried
over by an Employee from Seller to Buyer.
"SELLER REVENUE" is defined in Section 11.13(a).
"SELLER'S FACILITIES" shall mean the leased premises covered by the Real
Estate Leases that are occupied by the Subject Business.
"SELLER INFORMATION" is defined in Sec. 12.4.
"SELLER'S MARKS" is defined in Section 8.6.
"SELLER'S REP" is defined in Section 11.13(e).
"SHARED SERVICES" is defined in Section 8.4.
ASSET PURCHASE AGREEMENT PAGE 9
"SOFTWARE" shall mean materials associated with software systems used
exclusively by the Subject Business consisting of: (i) any and all computer
software, including all Source Code and object code, (ii) machine readable
databases and compilations, including any and all data and collections of data,
(iii) Documentation and (iv) all content contained on the internet site of the
Subject Business.
"SOURCE CODE" will be deemed to mean the instruction set for the
applicable Software, or portion thereof, including comments and procedural code,
such as compilation switches, job control language statements and a description
of the system/program generation procedure, in a form intelligible to human
programmers and capable of being readily translated into object code for
execution on computer equipment through assembly or compiling, together with the
documentation required to facilitate such translation, assembly and compiling;
including, without limitation, programmers' notes, technical and functional
specifications, flow charts, schematics, test programs, statements of principles
of operations, architectural and design standards and descriptions of data
flows, data structures and control logic.
"STRADDLE PERIOD" is defined in Sec. 11.13(b).
"SUBJECT BUSINESS" shall mean that sub-line business unit of Seller known
as the "Workforce and Community Solutions" that provides (i) job counseling, job
training, job placement, job retention and related employer services for
eligible program participants and other "One-Stop Constituents" in furtherance
of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act
(PRWORA) and the 1998 Workforce Investment Act (WIA) and (ii) alternative
education services that assist with youth in danger of being expelled from
school.
"TANGIBLE PERSONAL PROPERTY" shall mean all equipment, office equipment,
furniture, furnishings, computer equipment, printers, servers, switches, spare
parts, materials, machinery, tools, vehicles and all other items of tangible
personal property exclusively used or held for exclusive use in the Subject
Business, including without limitation the tangible personal property listed on
Schedule 4.9(a).
"TAX" or "TAXES" shall mean (i) any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any Governmental Entity
including income, franchise, profits, gross receipts, unrelated business taxable
income, minimum, alternative or add-on minimum, estimated, ad valorem,
value-added, sales, use, service, real or personal property, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, transfer and gains
taxes, (ii) customs, duties, imposts, charges, levies or other similar
assessments of any kind, and (iii) interest, penalties and additions to tax.
"TAX RETURN" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Entity in
connection with the determination, assessment, collection or
ASSET PURCHASE AGREEMENT PAGE 10
payment of any Tax or in connection with the administration, implementation or
enforcement of or compliance with any Applicable Law relating to any Tax.
"THIRD PARTY RIGHTS" is defined in Section 4.10.
"TRADE SECRETS" shall mean any formula, design, device or compilation, or
other information which is used or held for use by a business, which gives the
holder thereof an advantage or opportunity for advantage over competitors which
do not have or use the same, and which is not generally known by the public.
Trade Secrets can include, by way of example, formulas, Source Code, market
surveys, market research studies, information contained on drawings and other
documents, and information relating to research, development or testing.
"TRADEMARK RIGHTS" shall mean and includes all domestic and foreign
trademarks, trade dress, service marks, trade names, icons, logos, slogans, and
any other indicia of source or sponsorship of goods and services, designs and
logotypes related to the above, in any and all forms, whether registered or
unregistered, and all trademark registrations and applications for registration
related to such trademarks (including, but not limited to intent to use
applications), together with any and all accounts, contract rights, warranties,
litigation claims and rights, and the right to ▇▇▇ for past, present, or future
infringement and to collect and retain all damages and profits therefore and all
income, royalties, damages and payments now or hereafter due or payable with
respect thereto.
"TRANSACTION" shall mean the transactions contemplated by the Transaction
Documents.
"TRANSACTION DOCUMENTS" shall mean this Agreement, the Transition Services
Agreement, and the other agreements and instruments delivered at Closing
pursuant to this Agreement.
"TRANSFERABLE PERMITS" shall mean all Governmental Authorizations held by
the Seller exclusively with respect to the Subject Business that can be
transferred by assignment to Buyer under Applicable Law without consent of the
applicable Governmental Entity.
"TRANSFERRED EMPLOYEES" shall mean those of the Employees who accept
employment with the Buyer in connection with the Transaction.
"TRANSFER TAXES" is defined in Section 11.9.
"TRANSITION SERVICES AGREEMENT" is defined in Section 8.4.
"TYPE A SPECIAL REPRESENTATIONS" shall mean the representations and
warranties contained in Sections 4.17 (Employees and Employee Benefit Plans),
4.18 (Environmental Matters) and 4.21 (Taxes).
"TYPE B SPECIAL REPRESENTATIONS" shall mean the representations and
warranties contained in Sections 4.1 (Organization and Good Standing), 4.2
(Authorization, Execution and Validity) and 4.8 (Title to Acquired Assets).
ASSET PURCHASE AGREEMENT PAGE ▇▇
"▇▇▇▇ ▇▇▇" means the Worker Adjustment and Retraining Notification Act of
1988.
SECTION 2. SALE AND PURCHASE, PURCHASE PRICE, ETC.
2.1 Purchase and Sale of Acquired Assets. At the Closing, Seller shall
sell, transfer, assign, convey and deliver to Buyer, and Buyer shall acquire,
accept and purchase from Seller, the Acquired Assets, free and clear of all
Liens and Encumbrances other than Permitted Exceptions, all upon the terms and
subject to the conditions set forth in this Agreement.
2.2 Purchase Price. At the Closing, Buyer shall pay to Seller Sixty-Nine
Million Dollars ($69,000,000) (the "Purchase Price"). In addition, Buyer shall
pay to Seller cash in the amount of any deposits that are transferred to Buyer
pursuant to Section 8.9. Such payments shall be made by wire transfer of
immediately available funds in U.S. Dollars at the Closing to an account
designated by Seller to Buyer at least one Business Day prior to the Closing
Date.
2.3 Assumed Liabilities. As further consideration for the conveyance of
the Acquired Assets from Seller to Buyer, Buyer agrees to assume at the Closing
the following described liabilities of Seller and its Affiliates (referred to
herein as the "Assumed Liabilities"): (i) all Liabilities arising from and after
the Closing Date under the Assumed Contracts, (ii) all Liabilities arising out
of Buyer's operation of the Subject Business under the Transferable Permits,
(iii) all Liabilities arising out of Buyer's ownership and operation of the
Acquired Assets and the Subject Business from and after the Closing Date, (iv)
all Buyer PTO that arises prior to the Closing Date, (v) Buyer's severance and
termination obligations as provided in Section 8.1(a), and (vi) Buyer's
responsibility for any WARN Act liability or liability under any similar
Applicable Law as provided in Section 8.2.
2.4 Excluded Assets. To avoid any confusion and to remove all doubt, it is
expressly agreed and understood that Seller is not selling, conveying or
assigning to Buyer (i) any cash, (ii) Accounts Receivable, (iii) any unbilled
accounts receivable or work in progress that has not yet been billed but relates
to work or services performed or accrued prior to the Closing Date and any other
revenues or fees that relate to work or services performed prior to the Closing
Date, (iv) working capital of the Subject Business (including deposits;
provided, however, that if Buyer purchases a deposit pursuant to Section 2.2,
such deposit will not be an Excluded Asset but will be an Acquired Asset), (v)
the bank accounts and lock boxes of the Subject Business, and (vi) any property
or asset of Seller or any of its Affiliates, whether real, personal or mixed, or
tangible or intangible, that is not expressly and specifically described within
the definition of the Acquired Assets (collectively, the "Excluded Assets").
2.5 Retained Liabilities. The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid and performed solely by Seller.
"Retained Liabilities" shall mean all Liabilities of the Seller or its
Affiliates arising from their operation of the Subject Business prior to the
Closing Date except for those obligations of Buyer as set forth in Section
2.3(iv) through (vi). Except for those obligations of Buyer as set forth in
Section 2.3(iv) through (vi), the Retained Liabilities shall include (i)
Liabilities arising from the acts or omissions of Seller or its Affiliates in
the operation of the Subject Business prior to the Closing Date, (ii)
Liabilities arising prior to the Closing Date under the Assumed Contracts, and
(iii) Liabilities arising out of
ASSET PURCHASE AGREEMENT PAGE 12
Seller's or its Affiliate's ownership and operation of the Acquired Assets prior
to the Closing Date.
2.6 Software. Seller shall have no responsibility to Buyer or any other
Person to provide upgrades, updates, support or maintenance with respect to any
Software included within the Acquired Assets.
2.7 Bulk Transfer Law. Buyer and Seller hereby waive compliance with the
requirements of any applicable bulk sales law provisions of the Uniform
Commercial Code of the jurisdictions in which the Acquired Assets are situated
or which may otherwise be applicable to the Transaction. This provision shall
not be deemed to limit the indemnity provided in Section 13 hereof.
SECTION 3. CLOSING
3.1 Closing. The Closing of the transactions contemplated hereby (the
"Closing") shall occur on or before the fifth (5th) Business Day (the "Closing
Date") following satisfaction or waiver of all of the conditions to Closing of
Seller and Buyer set forth in Sections 9 and 10 and shall take place at the
offices of Seller's counsel at 10:00 a.m., local time at the place of Closing.
Notwithstanding the foregoing, the parties will endeavor in good faith to
effectuate the Closing simultaneously in different locations to avoid the travel
and additional expense of requiring all parties to be simultaneously located in
the same place. In connection therewith the parties will deliver, in escrow to
opposing counsel and other appropriate parties, all assignments, instructions,
documents, certificates, wire transfer instructions, escrow instructions and
other matters and things necessary to effect Closing in such manner. Upon
consummation, the Closing shall be effective as of 12:01 a.m. on the Closing
Date.
3.2 Closing Deliveries By Seller. At the Closing, Seller shall make, or
cause to be made, the following deliveries to Buyer:
(a) One or more Bills of Sale in the form of Exhibit A attached hereto
conveying the Acquired Assets to Buyer and those additional conveyance
instruments reasonably necessary to convey the Acquired Assets to Buyer;
(b) A certificate of the secretary of Seller certifying (i) the
resolutions authorizing the Transaction and the execution and delivery of the
Transaction Documents and (ii) the incumbency of Seller's officers;
(c) Seller's certificate as required by Section 9.3;
(d) An appropriate Certificate issued by the Secretary of State of the
State of New York dated effective no earlier than ten (10) Business Days before
the Closing Date stating that Seller is in existence and is in good standing
under the laws of that state and a certificate of qualification of Seller as a
foreign entity authorized to do business in the states set forth on Schedule
3.2(d), each dated not more than thirty (30) calendar days prior to the Closing
Date;
(e) The consents referred to in Section 9.4;
ASSET PURCHASE AGREEMENT PAGE 13
(f) The Transition Services Agreement described in Section 8.4 executed by
Seller;
(g) The release of any recorded Lien (other than a Lien filed with respect
to equipment leases) encumbering the Acquired Assets; and
(h) Any other items required by the Transaction Documents or as reasonably
requested by Buyer to fully consummate the transactions contemplated by this
Agreement.
3.3 Closing Deliveries by Buyer. At the Closing, Buyer shall make the
following deliveries to Seller:
(a) Payment of the Purchase Price to Seller and payment of any funds to
Seller for deposits, each as described in Section 2.2;
(b) A certificate of the secretary of Buyer certifying (i) the resolutions
authorizing the Transaction and the execution and delivery of the Transaction
Documents and (ii) the incumbency of Buyer's officers;
(c) Buyer's certificate as required by Section 10.3;
(d) An Assumption Agreement in the form of Exhibit B, executed by Buyer,
pursuant to which Buyer assumes the Assumed Liabilities;
(e) The Transition Services Agreement described in Section 8.4 executed by
Buyer;
(f) An appropriate Certificate issued by the Secretary of State of the
Commonwealth of Kentucky dated effective no earlier than ten (10) Business Days
before the Closing Date stating that Buyer is in existence and is in good
standing under the laws of that state; and
(g) Any other items required by the Transaction Documents or as reasonably
requested by Seller to fully consummate the transactions contemplated by this
Agreement.
3.4 Closing Proceedings. All proceedings to be taken and all documents to
be executed and delivered by all parties at the Closing shall be deemed to have
been taken and executed simultaneously, and no proceedings shall be deemed taken
nor any documents executed or delivered until all have been taken, executed and
delivered.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer as follows:
4.1 Organization and Good Standing. Seller is a corporation duly
incorporated and validly existing under the laws of New York and is qualified
and in good standing to transact business in each jurisdiction in which such
qualification is required by law. Schedule 4.1 sets forth a list of all states
in which the Seller is qualified to transact business with respect to the
Subject Business. Seller has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Transaction Documents and
to consummate the Transaction.
ASSET PURCHASE AGREEMENT PAGE 14
Seller has all corporate power needed to own or lease and operate its assets and
to carry on its business as it is now being conducted.
4.2 Authorization, Execution and Validity. The execution, delivery and
performance of the Transaction Documents by Seller and the consummation by
Seller of the Transaction have been duly authorized by all necessary corporate
action. Each of the Transaction Documents to be executed and delivered by
Seller, when duly and validly executed and delivered by Seller, will constitute
the legal, valid and binding obligations of Seller, and will be enforceable
against Seller in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.
4.3 Non-Contravention. Except as set forth on Schedule 4.3, neither the
execution, delivery or performance by Seller of the Transaction Documents nor
the consummation by Seller of the Transaction will directly or indirectly, with
or without notice or lapse of time or both (i) contravene, conflict with or
result in a violation of any of the provisions of Seller's articles of
organization, by-laws or any resolution adopted by the directors of Seller, (ii)
give any Person the right to challenge the Transaction or to exercise any remedy
or obtain any relief under any Applicable Law or any order, writ, injunction,
judgment or decree to which Seller or any of the Acquired Assets is subject,
(iii) give any Governmental Entity the right to revoke, withdraw, suspend,
cancel, terminate or modify, any Transferable Permit, (iv) contravene, conflict
with or result in a violation or breach of, or result in a default under, any
provision of any Assumed Contract or give any Person the right to (a) declare a
default or exercise any remedy under any Assumed Contract, (b) accelerate the
maturity or performance of any Assumed Contract, or (c) cancel, terminate or
modify any Assumed Contract, (v) except for Permitted Exceptions, result in the
imposition or creation of any Lien or Encumbrance upon or with respect to any
Acquired Asset, or (vi) result in a violation or breach of, or result in a
default under a material Contract to which Seller is a party, except in the case
of clauses (iv), (v) and (vi) such contraventions, conflicts, violations,
breaches, defaults, Liens or Encumbrances which would not have individually or
in the aggregate a Material Adverse Effect.
4.4 Legal Proceedings. Except as set forth on Schedule 4.4, there is no
pending Legal Proceeding and, to the Knowledge of Seller, no Person has
threatened to commence any Legal Proceeding against Seller with respect to the
Subject Business or any Acquired Asset or that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Transaction. Seller is not subject to any order, writ, injunction, judgment
or decree that relates in any material way to the Transaction or any of the
Acquired Assets.
4.5 Financial Statements.
(a) Attached hereto as Schedule 4.5 are true and complete copies of the
unaudited Statement of Net Assets before Intercompany Debt for the Subject
Business as of June 30, 2004, June 30, 2005 and September 30, 2005
(collectively, the "Balance Sheets" and the Statement of Net Assets before
Intercompany Debt for the Subject Business as of September 30, 2005, the
"Current Balance Sheet") and the related unaudited statements of income for each
of the years ended June 30, 2004 and June 30, 2005 and the related unaudited
statements of income for the three months ended September 30, 2005
(collectively, the "Income Statements") (the Balance
ASSET PURCHASE AGREEMENT PAGE 15
Sheets and the Income Statements collectively referred to as the "Financial
Statements"). The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of the Subject
Business, as applicable, in conformity with GAAP consistently applied, except as
set forth therein and except that the Balance Sheets do not contain information
regarding stockholders' equity or intercompany debt and (iii) fairly present in
all material respects the Subject Business' financial position as of the
respective dates thereof and its results of operations for the periods then
ended. The books and records of Seller have been kept on the accrual basis for
all accounting periods covered by the Financial Statements.
(b) There are no liabilities of the Subject Business that are required to
be disclosed in the Current Balance Sheet in accordance with GAAP, other than
the liabilities (i) reflected on the Current Balance Sheet, (ii) incurred since
the date of the Current Balance Sheet in the ordinary course of business, (iii)
incurred with respect to intercompany activities or (iv) that would not result
in a Material Adverse Effect on the Subject Business.
4.6 Accounts Receivable. All Accounts Receivable that are reflected on the
Balance Sheet are bona fide receivables for goods and/or services actually
delivered or rendered, subject to reserves for non-collection that have been
determined on a basis consistent with past practices.
4.7 Absence of Changes. Except as set forth on Schedule 4.7, since
September 30, 2005: (a) there has not been any material adverse change in the
business, assets, operations, or financial condition of the Subject Business
taken as a whole; (b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the Acquired
Assets (whether or not covered by insurance); (c) Seller has not made any pledge
of any of the Acquired Assets or otherwise permitted any of the Acquired Assets
to become subject to any Lien or Encumbrance other than the Permitted
Exceptions; (d) Seller has not made any change in the operation or manner of
conducting the Subject Business, other than changes in the ordinary and usual
course of business consistent with past practice, none of which, individually or
in the aggregate, has had or is anticipated to have a Material Adverse Effect;
(e) Seller has not implemented wage increases that are not fully allowable under
the Customer Contracts and which are not consistent with Seller's past
practices; (f) there has not been a cancellation or termination by a material
Customer of or material supplier to the Subject Business; (g) there has not been
a loss of Employees where such loss has had or will have a Material Adverse
Effect; and (h) Seller has not agreed or committed to take any of the actions
referred to in any of the clauses referred to in this Section 4.7.
4.8 Title to Acquired Assets. At the Closing, Seller or one or more of its
Affiliates will have good and valid title to all of the Acquired Assets free and
clear of all Liens and Encumbrances other than the Permitted Exceptions.
4.9 Tangible Personal Property and Sufficiency of Assets. Schedule 4.9(a)
contains a list of fixed assets that are exclusively used or held for exclusive
use by Seller in the Subject Business, including items of Tangible Personal
Property. Except as provided on Schedule 4.9(b), the Acquired Assets together
with the rights of Buyer under the Transition Services Agreement constitute the
assets and rights sufficient to conduct the Subject Business in the same manner
and condition as conducted on the date hereof and as of the Closing Date, except
for assets, properties and rights that are not, singly or in the aggregate,
material.
ASSET PURCHASE AGREEMENT PAGE 16
4.10 Seller Owned Intellectual Property. Schedule 4.10(a) contains a list
of all material items of Owned Intellectual Property. Seller is not obligated to
make any payment to any Person for the use of any Owned Intellectual Property.
Seller has not developed jointly with any other Person any Owned Intellectual
Property with respect to which such other Person has any rights. At the Closing,
Seller or one or more of its Affiliates will have good and valid title to the
Owned Intellectual Property, including those items of Owned Intellectual
Property that have been created or contributed to by an Employee or consultant,
free and clear of all Liens and Encumbrances other than the Permitted
Exceptions. Except as set forth on Schedule 4.10(b): (i) there are no pending,
or to the Knowledge of Seller, threatened written claims against Seller alleging
that use of the Owned Intellectual Property by Seller in connection with the
Subject Business infringes or conflicts with the Intellectual Property rights of
another Person ("Third Party Rights"); (ii) Seller has not received any written
communications alleging that Seller has violated or, by using the Owned
Intellectual Property in connection with the Subject Business as now conducted,
would violate any Third Party Rights or that any Owned Intellectual Property is
invalid or unenforceable; (iii) to the Knowledge of Seller, no consent judgment
or Legal Proceeding exists which would prevent Seller from using any of the
Owned Intellectual Property in the Subject Business as now conducted; and (iv)
to the Knowledge of Seller, no other Person is infringing, misappropriating or
making any unlawful use of any Owned Intellectual Property. Notwithstanding the
foregoing, the Owned Intellectual Property may contain immaterial components or
elements of content that are generally known to others or otherwise in the
public domain (such immaterial components or elements of content are
collectively referred to as "Public Elements"). To the extent the Intellectual
Property embodied in such Public Elements is not protectable by any party under
any Applicable Law, Seller does not warrant that Seller owns or has an exclusive
right to exploit the Intellectual Property embodied in the Public Elements, but
Seller does warrant that its use of the Public Elements is unrestricted and (a)
does not infringe on any Third Party Rights and (b) Seller may use the Public
Elements free of any claims of any third party, including claims for royalty or
other compensation.
4.11 Assumed Contracts. Seller has delivered to Buyer accurate and
complete copies of the Assumed Contracts, including all amendments thereto, that
are listed on Schedules 4.12 (except for any oral Contracts noted therein), 4.13
and 4.14. Each Assumed Contract is valid and in full force and effect and is
enforceable by Seller in accordance with its terms, subject to laws of general
application relating to bankruptcy, fraudulent conveyance, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive
relief and other equitable remedies. Seller is not in material breach or default
under any Assumed Contract, and, to the Knowledge of Seller, no other Person is
in breach or default under any Assumed Contract. Except as set forth on Schedule
4.11 or as would not be reasonably expected to have a Material Adverse Effect,
no event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time or both) will or could reasonably be expected to
(i) result in a default or breach of any provision of any Assumed Contract, (ii)
give any Person the right to declare a breach or default or exercise any remedy
under any Assumed Contract, (iii) give any Person the right to accelerate the
maturity or performance of any Assumed Contract, or (iv) give any Person the
right to cancel, terminate or modify any Assumed Contract. Except as set forth
on Schedule 4.11, Seller has not received any written notice or other written
communication regarding any actual or possible breach or default under any
Assumed Contract. Seller has not
ASSET PURCHASE AGREEMENT PAGE 17
waived any of its material rights under any Assumed Contract other than in the
ordinary course of business. Except as set forth on Schedule 4.11, the Assumed
Contracts represent all of the Contracts of Seller and/or its Affiliates
relating to the Subject Business.
4.12 Additional Warranties Regarding Real Estate Leases. All of the Real
Estate Leases and the real property locations that are used by the Subject
Business are set forth on Schedule 4.12. Except as otherwise described in
Schedule 4.12, Seller is the owner and holder of all the leasehold interests and
estates purported to be granted by the Real Estate Leases and enjoys peaceful
possession thereof.
4.13 Additional Warranties Regarding Customer Contracts. All of the
Customer Contracts as of the date hereof are listed or described on Schedule
4.13. Seller is in compliance in all material respects with the terms,
provisions and conditions of each Customer Contract that are binding upon
Seller. Except as would not result in a Material Adverse Effect, neither Seller
nor any other party has terminated, canceled or waived any term or condition of
any Customer Contract.
4.14 Additional Warranties Regarding Operating Contracts. Except for any
Operating Contract that is administered at a facility that is being transferred
with the Subject Business, all of the Operating Contracts for which the amounts
paid by the Seller for goods and services in excess of $200,000 for the year
ended June 30, 2005 and which cannot be cancelled upon 30 days prior written
notice are listed or described on Schedule 4.14. All of the Operating Contracts
are sufficient for the normal and customary operation of the Subject Business
and none of the Operating Contracts requires Seller to purchase goods or
services in excess of the normal and customary operation of the Subject
Business.
4.15 Licensed Intellectual Property. Schedule 4.15(a) sets forth a
complete list of all Intellectual Property Licenses other than licenses for
commercial "off the shelf" Software. Schedule 4.15(b) sets forth a complete list
of all written Contracts that provide for the license by a third party to Seller
of Intellectual Property that is used in both the Subject Business and the
Retained Business other than licenses for commercial "off the shelf" Software.
Neither the Seller nor, to the Seller's Knowledge, any other party, is in breach
of or default, in any material respect, under any Intellectual Property License.
To the Seller's Knowledge, each Intellectual Property License is valid and in
full force and effect. Except as set forth on Schedule 4.15(c), the Intellectual
Property Licenses, including licenses for commercial "off the shelf" Software
used exclusively in the Subject Business, are free and clear of Liens other than
Permitted Exceptions and will be assigned to Buyer at the Closing for no
additional fee; provided, however, there may be fees that Buyer will have to pay
for continued use of such Intellectual Property Licenses.
4.16 Owned Real Estate. Seller does not own any fee real estate that is
used exclusively in the Subject Business.
4.17 Employees and Employee Benefit Plans.
(a) Except as stated on such schedule, Schedule 4.17(a) contains a list of
all Employees as of October 31, 2005 and correctly reflects, in all material
respects, the
ASSET PURCHASE AGREEMENT PAGE 18
identification number assigned to each Employee by Seller, the position, the ACS
seniority date and the salary or hourly rate of each Employee. If there are any
changes to the information shown on Schedule 4.17(a) during the Pre-Closing
Period, then on a weekly basis Seller shall notify Buyer in writing of the
specific changes. No later than one (1) Business Day before Closing, Seller
shall deliver to Buyer an updated Schedule 4.17(a) which shall incorporate all
previous changes and which shall then become the final Schedule 4.17(a) for
purposes of this Agreement. Seller is not now, nor has it ever been, a party to
any collective bargaining agreement or similar labor contract with a labor union
involving any of the Employees of the Subject Business, and to Seller's
Knowledge, there is no pending application or petition for an election of or for
certification of a collective bargaining agent with respect to the Employees of
the Subject Business. With respect to the Employees of the Subject Business,
there is no presently pending or existing, or to Seller's Knowledge, threatened
labor strike, slowdown, picketing or work stoppage. Except as set forth on
Schedule 4.17(a), all of the Employees are "at will" employees and there is no
employment contract, severance agreement or similar agreement between Seller and
any current or former Employee. Seller is in compliance in all material respects
with all Applicable Laws and Contracts relating to employment, employment
practices, wages, bonuses and terms and conditions of employment with respect to
the Employees, including employee compensation matters.
(b) Schedule 4.17(b) sets forth a complete and correct list of all
Employee Benefit Plans maintained or contributed to by the Seller in respect of
or for the benefit of the Employees (the "Seller Employee Benefit Plans"). With
respect to the Employees of the Subject Business, (i) Seller is not, and has not
been, a party to any "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA and (ii) Seller does not have, and has not had, any
obligation to contribute to any such multiemployer plan.
(c) With respect to each Seller Employee Benefit Plan: (i) the Seller is
in compliance in all material respects with the applicable provisions of ERISA
and the Code and the regulations thereunder; (ii) to the Seller's Knowledge,
there has been no violation of ERISA's fiduciary obligations nor any prohibited
transaction (within the meaning of Section 406 of ERISA and Section 4975 of the
Code); (iii) no plan has any liability for any federal, state, local or foreign
taxes; and (iv) all reports required to be filed (if any) with all Governmental
Entities have been filed with respect to each such plan.
(d) Except as set forth on Schedule 4.17(d), no Employee of the Subject
Business will be entitled to any additional monetary benefit (including, without
limitation, the acceleration of time of payment or vesting schedule) as a result
of the consummation of the Transaction.
4.18 Environmental Matters. Seller, in conducting the Subject Business, is
in compliance with all applicable Environmental Laws, except for any
non-compliance as would not reasonably be expected to result, individually or in
the aggregate, in material liability under or relating to the Environmental
Laws. There is no material violation of any Environmental Laws (such violation
being referred to herein as an "Environmental Violation") by Seller with respect
to any of the Seller's Facilities which imposes any material liability on the
owner or operator of such property for any environmental condition or hazard,
including, but not limited to, any liability for cleanup or remediation of any
environmental condition or hazard or which would otherwise obligate the owner or
operator or, with the passage of time, could cause the
ASSET PURCHASE AGREEMENT PAGE 19
owner or operator to be obligated to clean up, remedy or otherwise restore to a
former condition, by itself or jointly with others, any contaminated surface
water, ground water, soil or any natural resources associated therewith. Seller,
in conducting the Subject Business, has not received any written notice or other
written communication from any Person that alleges that Seller is not in
compliance with any Environmental Law except for any non-compliance as would not
reasonably be expected to result, individually or in the aggregate, in material
liability under or relating to the Environmental Laws. This Section 4.18
includes the sole and exclusive representations and warranties with respect to
matters relating to Environmental Laws under any and all Transaction Documents.
4.19 Compliance with Applicable Law. Seller, in conducting the Subject
Business, has complied with all Applicable Laws, except where the failure to
comply with such Applicable Law has not had and will not have a Material Adverse
Effect and except as set forth on Schedule 4.4. Except as set forth on Schedule
4.4, Seller has not received any written notice or other written communication
from any Governmental Entity regarding any actual or possible violation of, or
failure to comply with, any Applicable Law, in conducting the Subject Business.
4.20 Governmental Authorizations. The Governmental Authorizations held by
Seller with respect to the Subject Business, which are set forth on Schedule
4.1, are valid and in full force and effect, and collectively constitute all
Governmental Authorizations materially necessary to enable Seller to conduct the
Subject Business as now being conducted. Seller has complied in all material
respects with the terms and requirements of the Governmental Authorizations held
by Seller with respect to the Subject Business. Seller has not received any
notice or other communication from any Governmental Entity regarding (a) any
actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization with respect to the Subject
Business, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Governmental Authorization with
respect to the Subject Business.
4.21 Taxes. Except as set forth on Schedule 4.21, Seller has filed or
caused to be filed in a timely manner all Tax Returns affecting the Subject
Business or the Acquired Assets as have been required under Applicable Law and
has paid (except amounts for Taxes being diligently contested in good faith by
appropriate procedures and disclosed in Schedule 4.21) all required Taxes or
similar assessments affecting the Subject Business, including any interest,
penalties or additions attributable thereto shown as due on all such filings.
Taxes which Seller was required by law to withhold or collect in respect of the
Subject Business have been withheld or collected and have been paid over to the
proper Governmental Entity or are properly held by such entity for such payment
when due and payable.
4.22 Affiliate Transactions. Except as set forth on Schedule 4.22 or as
contemplated in the Transition Services Agreement, neither the Seller nor any of
its Affiliates provides or causes to be provided to the Subject Business any
material assets, services or facilities. The Subject Business does not provide
or cause to be provided to the Seller or any of its Affiliates any material
assets, services or facilities.
4.23 Government Contracts.
ASSET PURCHASE AGREEMENT PAGE 20
(a) Except as set forth on Schedule 4.23(a), no material Assumed Contract
between the Seller and any Governmental Entity that pertains to the Subject
Business (a "Government Contract") has a currently incurred or currently
projected, material cost overrun and, to Seller's Knowledge, the cost
accounting, estimating and property systems relating to the Government Contracts
are in compliance in all material respects with Applicable Laws and Contract
provisions, including applicable cost principles and applicable cost accounting
standards.
(b) Except as set forth on Schedule 4.23(b), Seller, with respect to the
Subject Business, has not received any written notice from any Governmental
Entity regarding its actual or threatened disqualification, suspension, or
debarment from contracting with any Governmental Entity including without
limitation any show cause notice or cure notice, notice of termination for
default, or notice for deductive change or, in the case of any notification of
termination for convenience, any such notifications which in the aggregate or
individually could have a Material Adverse Effect.
(c) Except as set forth on Schedule 4.23(c), in addition to the foregoing,
Seller has not received any written notice or other written communication from
any Governmental Entity, with respect to the Subject Business, with respect to
any claims or proceedings under the False Claims Act or other relevant statutes
on any Government Contract for the three years preceding the Closing.
4.24 Bank Accounts; Lock Boxes. Set forth on Schedule 4.24 is a list of
all banks or other financial institutions with which the Seller has an account
or maintains a lock box or safe deposit box for the exclusive benefit of the
Subject Business, showing the type and account number of each such account, lock
box and safe deposit box and the names of the persons authorized as signatories
thereon or to act or deal in connection therewith.
4.25 Brokerage Fees. Except as set forth on Schedule 4.25, no Person
acting on behalf of the Seller is entitled to any brokerage or finder's fee or
commission in connection with the Transaction.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the Closing Date as follows:
5.1 Organization and Good Standing Buyer is a limited liability company
duly organized and validly existing under the laws of the Commonwealth of
Kentucky, and is qualified and in good standing to transact business in each
jurisdiction in which such qualification is required by law. Buyer has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Transaction Documents and to consummate the Transaction.
5.2 Authorization, Execution and Validity. The execution, delivery and
performance of the Transaction Documents by Buyer and the consummation by Buyer
of the Transaction have been duly authorized by all necessary corporate action
and no other action on the part of it is necessary with respect thereto. Each of
the Transaction Documents to be executed and delivered by Buyer, when duly and
validly executed and delivered by Buyer, will constitute the valid and
ASSET PURCHASE AGREEMENT PAGE 21
binding obligations of Buyer, and will be enforceable against Buyer in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization and
similar laws affecting creditors generally and by the availability of equitable
remedies.
5.3 Non-Contravention. Neither the execution, delivery or performance by
Buyer of the Transaction Documents nor the consummation by Buyer of the
Transaction will directly or indirectly, with or without notice or lapse of time
or both (i) contravene, conflict with or result in a violation of any of the
provisions of Buyer's organization or operating agreement or any resolution
adopted by Buyer's members or managers, (ii) give any Person the right to
challenge the Transaction or to exercise any remedy or obtain any relief under
any Applicable Law or any order, writ, injunction, judgment or decree to which
Buyer is subject, or (iii) contravene, conflict with or result in a violation or
breach of, or result in a default under, any material Contract to which Buyer is
a party except such contraventions, conflicts, breaches or defaults which would
not have individually or in the aggregate a material adverse effect on Buyer. To
the Knowledge of Buyer, Buyer is not aware of any dispute, claim, event,
condition, fact or circumstance whether existing or that may have existed in the
past involving Buyer or any of its Affiliates and any Customer or any of such
Customer's Affiliates that could result in such Customer refusing to consent to
the assignment to Buyer of the affected Customer Contract or that could result
in such Customer consenting to such assignment, but upon unreasonable terms and
conditions as compared to other consents to assignments of Customer Contracts.
5.4 Legal Proceedings. There is no pending Legal Proceeding and, to the
Knowledge of Buyer, no Person has threatened to commence any Legal Proceeding
that involves or could result in a claim against Buyer or that challenges, or
that may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Transaction. Buyer is not subject to any order, writ,
injunction, judgment or decree that relates in any material way to the
Transaction or any of the Acquired Assets.
5.5 Financial Resources. Buyer has presently, and at the time of Closing
will have, the financial resources necessary to pay the Purchase Price, to
conduct the Subject Business following Closing and to perform all of Buyer's
obligations to Seller under the Transaction Documents.
5.6 Brokerage Fees. Except as set forth on Schedule 5.6, no Person acting
on behalf of the Buyer is entitled to any brokerage or finder's fee or
commission in connection with the Transaction.
SECTION 6. CERTAIN PRE-CLOSING COVENANTS OF SELLER
6.1 Access and Investigation. Without limitation of Seller's
representations, warranties, covenants and agreements set forth in the
Transaction Documents or Buyer's rights and remedies arising in connection with
any breach thereof, Buyer acknowledges that Seller has provided to Buyer prior
to signing this Agreement reasonable access to Seller's Representatives and to
Seller's Business Records, Tax Returns and other documents and information
relating to the Subject Business as requested by Buyer. During the Pre-Closing
Period and subject to Section 7.2, the Non-Disclosure Agreement dated August 11,
2005, between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ &
ASSET PURCHASE AGREEMENT PAGE 22
Co. Incorporated, as agent for ACS, and Buyer (the "Confidentiality Agreement"),
Applicable Laws and doctrines of attorney-client privilege, Seller shall (a)
provide Buyer and its Representatives with such additional reasonable access to
Seller's Business Records, Tax Returns and other documents and information
relating to the Subject Business and (b) provide Buyer and its Representatives
with such additional financial, operating and other data and information
regarding the Subject Business as Buyer may reasonably request. Buyer's access
shall not unreasonably interfere with Seller's continuing operation of the
Subject Business and shall in all cases be subject to Seller's reasonable
safety, security and privacy policies. Except for those Employees and Customers
listed on Schedule 6.1, without Seller's prior written consent, Buyer may not
contact any Employee, Seasonal Employee or Customer. To the extent Buyer does
contact any of the Employees or Customers listed on Schedule 6.1, Buyer agrees
that such contact (i) will be coordinated in advance with Seller and, if Seller
elects, shall include Seller, (ii) will be limited to only those purposes
reasonably necessary for Buyer to conduct its due diligence review in connection
with this Agreement, and (iii) shall not unreasonably interfere with Seller's
continuing operation of the Subject Business and shall in all cases be subject
to Seller's reasonable safety, security and privacy policies.
6.2 Operation of the Subject Business. During the Pre-Closing Period:
(a) Seller shall conduct the Subject Business in the ordinary course and
in substantially the same manner as such business has been conducted prior to
the date of this Agreement and, except as permitted in Section 6.2(c), with
respect to the Subject Business Seller shall not make any expenditures or
payments outside the ordinary course of business and Seller shall cause the
Subject Business to (x) collect all Accounts Receivable in accordance with past
practice and (y) pay all accounts payable in accordance with past practice;
(b) Seller shall use commercially reasonable efforts to preserve intact
the current business organization of the Subject Business, keep available the
services of its Employees (other than ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇)
and maintain its relations and goodwill with all suppliers, customers,
landlords, creditors and other Persons having business relationships with the
Subject Business;
(c) Except as may be required under an Assumed Contract, Seller shall not
make any capital expenditure with respect to the Subject Business, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of Seller during the Pre-Closing Period, do not exceed $100,000;
(d) Other than in the ordinary course of business, Seller shall not (i)
sell or otherwise dispose of, or lease or license, any of the Acquired Assets,
(ii) abandon, waive or relinquish any of the Acquired Assets except for
immaterial assets acquired, leased, licensed or disposed of by Seller or (iii)
take an action or fail to take an action that would materially impair Seller's
rights in the Subject Business or the Acquired Assets;
(e) Other than in the ordinary course of business and consistent with past
practices, and except for bonuses that Seller may pay in connection with the
Closing of the Transaction, Seller shall not (i) pay any bonus or make any
profit-sharing payment, cash incentive payment or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or
ASSET PURCHASE AGREEMENT PAGE 23
other compensation or remuneration payable to, any of the Employees or (ii) hire
any new employee for the Subject Business whose aggregate annual compensation is
expected to exceed $100,000 per year;
(f) Other than in the ordinary course of business, Seller shall not (i)
renegotiate any Customer Contract that will be assigned to Buyer at Closing upon
terms and conditions that on the whole are less favorable to Seller or (ii)
negotiate any new customer contract that will be assigned to Buyer at Closing
upon terms and conditions that on the whole are less favorable to Seller than
Seller generally enjoys under existing Customer Contracts; and in the event of
any doubt as to the relative favorableness of terms, Seller agrees to consult
with the Buyer;
(g) Seller shall not fail to maintain the Acquired Assets or the Subject
Business, as a whole, in good repair, order and condition as the Acquired Assets
and Subject Business exist on the date hereof, reasonable wear and tear
excepted;
(h) Except as required by Applicable Law, Seller shall not change (or
permit to be changed) any accounting or Tax procedure that impacts the Subject
Business;
(i) Other than in the ordinary course of business consistent with past
practice, Seller shall not enter into any transaction or Contract with an
Affiliate that relates to the Subject Business;
(j) Seller shall not waive any material rights of the Subject Business;
and
(k) Seller shall not agree or commit to take any of the actions described
in clauses (c) through (j) above.
Notwithstanding the foregoing, Seller may take any action described in clauses
(a) through (k) above if Buyer gives its prior written consent to the taking of
such action by Seller, which consent will not be unreasonably withheld,
conditioned or delayed. Nothing contained in this Agreement shall give Buyer,
directly or indirectly, the right to control or direct the operations of the
Subject Business or the Acquired Assets prior to the Closing Date.
6.3 Notification. During the Pre-Closing Period, Seller shall promptly
notify Buyer in writing of the discovery by Seller of: (a) any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by Seller or Buyer in this Agreement; (b) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute an inaccuracy in or
breach of any representation or warranty made by Seller or Buyer in this
Agreement if (i) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (ii) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (c) any breach of
any covenant or obligation of Seller or Buyer; and (d) any event, condition,
fact or circumstance that would make the timely satisfaction of any of the
conditions set forth in Section 9 impossible or unlikely.
ASSET PURCHASE AGREEMENT PAGE 24
6.4 Schedule Updates. Seller shall have the right from time to time and at
any time prior to the Closing Date to update any of the Schedules with respect
to any fact, circumstance, occurrence, happening, event or other matter not
existing or not within Seller's Knowledge as of the date of this Agreement
which, if existing or within Seller's Knowledge as of the date of this
Agreement, would have been required to be set forth or described in the
applicable Schedule (any one or more of such updates is referred to herein as
"Schedule Updates"). Seller shall provide Schedule Updates promptly upon
learning of the new or discovered fact, circumstance, discovery, occurrence,
happening, event or other matter. The Schedule Updates will be deemed to have
cured any breach of any representation or warranty made in this Agreement for
purposes of determining whether or not the condition set forth in Section 9.1
have been satisfied as of the Closing Date, but not for purposes of determining
whether or not the other conditions set forth in Section 9 have been satisfied;
provided, however, that no Schedule Updates shall affect Seller's indemnity
obligations set forth in Section 13.1. To the Seller's Knowledge, as of the date
hereof, there are no items that are required to be disclosed on a Schedule
pursuant to the terms of this Agreement that are not so disclosed.
6.5 No Negotiation. During the Pre-Closing Period, neither Seller nor any
of its Representatives will, either directly or indirectly solicit or encourage
the initiation of any inquiry, proposal or offer from any Person (other than
Buyer), participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Buyer) or consider, entertain or accept any proposal or offer from any Person
(other than Buyer) relating to a possible sale, lease or other disposition of
the Acquired Assets.
6.6 Consents. Seller shall use its commercially reasonable efforts to
procure the third party consents which are described in Section 8.7 and Buyer
shall provide commercially reasonable cooperation to Seller. Notwithstanding the
foregoing, Seller shall not be required to pay or contribute to any consent fee
required by any third party.
6.7 Commercially Reasonable Efforts. Seller shall take, and shall cause
its Representatives to take, all commercially reasonable efforts to cause the
conditions set forth in Section 9 hereof to be promptly satisfied.
SECTION 7. CERTAIN PRE-CLOSING COVENANTS OF BUYER
7.1 Notification. During the Pre-Closing Period, Buyer shall promptly
notify Seller in writing of the discovery by Buyer of: (a) any event, condition,
fact or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by Buyer or Seller in this Agreement; (b) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute an inaccuracy in or
breach of any representation or warranty made by Buyer or Seller in this
Agreement if (i) such representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event, condition, fact or
circumstance, or (ii) such event, condition, fact or circumstance had occurred,
arisen or existed on or prior to the date of this Agreement; (c) any breach of
any covenant or obligation of Buyer or Seller; and (d) any event, condition,
fact or circumstance that would make the timely satisfaction of any of the
conditions set forth in Section 10 impossible or unlikely.
ASSET PURCHASE AGREEMENT PAGE 25
7.2 Non-Disclosure of Proprietary Data. From the date of this Agreement
and through the Closing Date, except as required by Applicable Law, neither
Buyer nor any of its Affiliates or their Representatives shall, at any time,
make use of, divulge or otherwise disclose, directly or indirectly, any Business
Proprietary Information unless such Business Proprietary Information either (i)
is or becomes generally available and known to the public or (ii) is the subject
of prior written approval of Seller. The foregoing notwithstanding, Buyer's
obligations as set forth in the Confidentiality Agreement shall survive and
continue until the Closing Date and, if the Closing does not occur, such
obligations shall survive and continue in accordance with the terms and
conditions of the Confidentiality Agreement.
7.3 Commercially Reasonable Efforts. Buyer shall take, and shall cause its
Representatives to take, all commercially reasonable efforts to cause the
conditions set forth in Section 10 hereof to be promptly satisfied.
7.4 Access to Certain Customers and Employees. To the extent Buyer does
contact any of the Employees or Customers listed on Schedule 6.1, Buyer agrees
to comply with its obligations set forth in Section 6.1.
7.5 Lien Searches. In the event Buyer conducts any Lien searches with
respect to Seller or the Subject Business and Buyer receives the results of any
such searches, Buyer agrees to provide copies of such information to Seller in a
prompt manner so that Seller can satisfy its obligations set forth in Section
3.2(g).
SECTION 8. ADDITIONAL MATTERS
8.1 Employee Matters.
(a) At such time during the Pre-Closing Period as Seller and Buyer shall
agree, but in no event later than three (3) days prior to Closing, Buyer shall
offer employment to substantially all of the Employees (subject to Buyer's
reasonable, customary employment screening involving criminal background and
drug testing), provided that with respect to any Employee on workers'
compensation, military leave, maternity leave, leave under the Family and
Medical Leave Act of 1993, short-term disability, salary continuation, on layoff
with recall rights, or on other approved leave of absence with a legal or
contractual right to reinstatement, Buyer's offer of employment will occur at
such time as such Employee returns to work. From and after the date hereof,
Buyer shall offer employment to substantially all of those Seasonal Employees
that Seller is required to employ under the terms of the applicable Customer
Contracts (subject to Buyer's reasonable, customary employment screening
involving criminal background and drug testing). Such offers of employment by
Buyer shall be at the same or substantially comparable positions as such persons
held with Seller and at the same or substantially comparable compensation levels
as with Seller. In addition, Buyer shall provide the Transferred Employees with
savings plans, welfare benefit plans and other employee benefit plans, programs
and policies, including, without limitation the right to rollover 401(k) plan
balances or plan loans (collectively, the "Buyer's Plans") that are provided to
Buyer's other employees, provided that (i) this obligation shall not arise while
benefits similar to Seller's current benefits are continued under Seller's plans
or plans adopted by Buyer that substantially mirror Seller's plans in accordance
with the terms of the
ASSET PURCHASE AGREEMENT PAGE 26
Transition Services Agreement described in Section 8.4, and (ii) Buyer shall not
be required to make a 401(k) plan available to the Transferred Employees until
60 days after the expiration of the Transition Services Agreement described in
Section 8.4. In the event Buyer does not offer employment to an Employee or a
Seasonal Employee, Buyer agrees to reimburse Seller for the costs of all
severance and termination obligations incurred with respect to such Employee or
Seasonal Employee. In addition, with respect to the Employees and Seasonal
Employees that Buyer offers employment to, Buyer agrees to reimburse Seller for
the costs of all severance and termination obligations incurred with respect to
such Employees or Seasonal Employees except for any severance or termination
obligations related to (i) an Employee or Seasonal Employee who fails to pass
Buyer's reasonable, customary drug testing given in connection with employment
or (ii) an Employee or Seasonal Employee who does not accept Buyer's offer of
employment that complies with the terms of this Section 8.1(a).
(b) Buyer shall provide each Transferred Employee with full credit for all
purposes (including eligibility, participation and vesting) under the Buyer's
Plans (including 401(k) plans (if applicable) and PTO and severance plans or
policies) for (i) service with Seller and its Affiliates and (ii) service
credited under the comparable Seller's Employee Benefit Plans for employment
other than with Seller and its Affiliates; provided, however, that in no event
shall Buyer be required to provide any service credit to any Transferred
Employee to the extent the provision of such credit would result in any
duplication of benefits. Buyer agrees to permit the Transferred Employees to use
their accrued Paid Time Off after the Closing.
(c) In connection with Buyer's Plans that are welfare plans, Buyer shall
cause any restrictions on coverage for pre-existing conditions, requirements for
evidence of insurability or waiting periods to be waived for the Transferred
Employees; provided that any such waiver shall not result in greater coverage
for a Transferred Employee than the coverage such Transferred Employee was
entitled to under Seller Employee Benefit Plans.
(d) On and after the Closing Date, the Transferred Employees shall not
accrue benefits under or remain covered under Seller's Employee Benefit Plans.
(e) Seller shall provide each Employee and Seasonal Employee with a notice
under COBRA as required by Applicable Law.
8.2 WARN Act Requirements. On and after the Closing Date, Buyer shall be
responsible with respect to Transferred Employees, Seasonal Employees and their
respective beneficiaries for compliance with the WARN Act and any other similar
Applicable Law, including any requirement to provide for and discharge any and
all notifications, benefits, and liabilities to Transferred Employees, Seasonal
Employees and government agencies that might be imposed as a result of the
consummation of the transactions contemplated by this Agreement or otherwise.
Buyer shall not take any action after the Closing Date that would cause any
termination of employment of any employees employed by Seller or any Affiliate
prior to the Closing Date to constitute a "plant closing" or "mass layoff" under
the WARN Act or any similar Applicable Law that would result in liability or
notice obligation to Seller or create any liability to Seller for employment
terminations under Applicable Law. Buyer and Seller agree that Buyer's
responsibility with respect to liability under the WARN Act and any other
similar Applicable Law will be limited in the event such liability arises (i)
from the fact that the
ASSET PURCHASE AGREEMENT PAGE 27
Employees do not accept Buyer's offer of employment, which offer shall comply
with the provisions of Section 8.1(a), or (ii) due to the pre-Closing acts of
Seller that resulted in termination of employment of Employees such that more
than one-half of the terminations resulting in WARN Act liability occurred prior
to the Closing Date.
8.3 Shared Facilities. Attached hereto as Schedule 8.3 is a list of the
leased real estate facilities that are occupied (i) by the Subject Business and
(ii) either by the Retained Business or by an Affiliate of Seller. With respect
to the Orlando and Atlanta locations listed on Schedule 8.3, Seller plans to
relocate the Employees located at such facilities prior to the Closing Date so
that Buyer will not need the use of such facilities after the Closing Date. With
respect to the Teaneck location listed on Schedule 8.3, Seller shall permit
Buyer to use such facility as provided in the Transition Services Agreement.
8.4 Shared Services. Seller or its Affiliates provide the following
services and functions ("Shared Services") to the Subject Business: management,
treasury, payroll and cash management, corporate level finance and accounting,
facilities management, marketing and communication, tax, acquisitions with
corporate vendors, legal, information systems, human resources and business
development support, which services and functions are not included as part of
the sale of the Acquired Assets hereunder. Buyer acknowledges that it will be
responsible to provide to the Subject Business replacement services and
functions for the Shared Services from and after Closing. In connection
therewith, Seller and its applicable Affiliates and the Buyer will enter into a
Transition Services Agreement in the form attached hereto as Exhibit C (the
"Transition Services Agreement") at the Closing pursuant to which Seller and its
applicable Affiliates will provide certain of the Shared Services to the Subject
Business for limited periods of time from and after the Closing Date for
compensation as set forth in the Transition Services Agreement.
8.5 Noncompetition, Nonsolicitation and Nondisparagement.
(a) Except as provided below, for a period of five years commencing on the
Closing Date (the "Non-Competition Period"), Seller agrees not to, and agrees to
cause its Affiliates not to, sell or provide any services in the United States
of America in competition with the services sold or provided by the Subject
Business as of the Closing Date (the "Competing Business"). Notwithstanding the
foregoing, "Competing Business" shall not include state-wide eligibility
outsourcing opportunities or the provision of eligibility determination,
eligibility screening, risk assessment, case management, and any related
personnel services.
(b) Notwithstanding the provisions of Section 8.5(a), Seller and its
Affiliates shall be permitted to acquire (i) a business or Person (whether
through the acquisition of assets, securities or other ownership interests or
the effecting of a merger, consolidation, share exchange, business combination,
reorganization or recapitalization or other similar transaction) (the "Acquired
Business") that is engaged in the Competing Business but only if the Competing
Business conducted by the Acquired Business (A) generates no more than $25
million of revenue during the Acquired Business's most recently completed fiscal
year and (B) constitutes no more than 15% of the gross revenues of the Acquired
Business for its most recently completed fiscal year, and (ii) up to 5% of the
securities of any Person engaged in a Competing Business.
ASSET PURCHASE AGREEMENT PAGE 28
(c) Notwithstanding the provisions of Section 8.5(a), Seller and its
Affiliates shall not be prohibited from acquiring an Acquired Business where the
Competing Business conducted by the Acquired Business either (i) generates more
than $25 million of revenue during the Acquired Business's most recently
completed fiscal year or (ii) constitutes more than 15% of the gross revenues of
the Acquired Business for its most recently completed fiscal year (a
"Disqualifying Acquisition," and the portion of the Acquired Business that is a
Competing Business being the "Disqualified Business"), provided that Seller or
its Affiliate, as applicable, offer to sell and assign the Disqualified Business
(and associated liabilities) obtained and assumed, directly or indirectly, in
the Disqualifying Acquisition for cash to Buyer within 90 days of the
consummation of the Disqualifying Acquisition at the fair market value of such
Disqualified Business (and associated liabilities). The terms and conditions of
such sale shall include, at the option of Seller or its Affiliate, as
applicable, (i) (A) an assignment by Seller or its Affiliate, as applicable, to
Buyer of its rights to the extent related to the Disqualifying Acquisition under
the acquisition and related documents under which it acquired such Disqualified
Business and (B) a consent by the seller of such Disqualified Business
acknowledging such assignment and agreeing that Buyer may enforce such
acquisition and related documents against such seller or (ii) representations,
warranties and indemnification provisions substantially similar to those made in
favor of Seller or its Affiliates, as applicable, under such acquisition and
related documents. Representatives of Seller or its Affiliates, as applicable,
and Buyer shall meet within 15 days of the date such offer is made and attempt
mutually to determine in good faith such fair market value. If Buyer and Seller
or its Affiliates, as applicable, are unable to determine a mutually acceptable
fair market value within 20 days after their initial meeting, Buyer and Seller
or its Affiliates, as applicable, shall mutually engage (and share equally in
the fees and expenses of) an investment banking firm to determine within 20 days
of such firm's engagement the fair market value of the Disqualified Business
(and associated liabilities), which determination shall be binding upon Buyer
and Seller or its Affiliates, as applicable, for purposes of Seller's or its
Affiliate's, as applicable, offer to sell the Disqualified Business to Buyer as
contemplated herein. Seller or its Affiliate, as applicable, shall not be
obligated to keep its offer to Buyer open for more than 20 days after final
determination of the fair market value of the Disqualified Business (and the
associated liabilities). In the event Buyer does not close on the sale of the
Disqualified Business within 75 days of Buyer's acceptance of Seller's or its
Affiliate's, as applicable, offer or Buyer does not accept the offer within 20
days after final determination of such fair market value, Seller and its
Affiliates shall be permitted to keep and operate, or divest, such Disqualified
Business (and associated liabilities) in Seller's or its Affiliate's, as
applicable, sole discretion and the restrictions of Section 8.5(a) shall not
apply to the Disqualified Business.
(d) Notwithstanding the provisions of Section 8.5(a), should any Person
engaged in a Competing Business acquire Seller or any of its Affiliates,
directly or indirectly, by merger, acquisition or a purchase of substantially
all of the assets or stock of Seller or its Affiliate, this Section 8.5 shall
not apply to the acquiring party or any of its Affiliates (other than Seller and
its pre-closing Affiliates) so long as (i) following such acquisition such
Competing Business shall not be conducted, directly or indirectly, through
Seller, any of its pre-closing Affiliates or any of their successors or
assignees and (ii) none of Seller, its pre-closing Affiliates, any of their
successors or assignees or their executive officers shall provide substantial
assistance to the Competitive Business.
ASSET PURCHASE AGREEMENT PAGE 29
(e) In the event of a breach by Seller or any of its Affiliates of the
terms of this Section 8.5, Buyer shall be entitled, if it shall so elect, to
institute legal proceedings to obtain damages for any such breach, or to enforce
the specific performance of such terms by Seller (or such applicable Affiliate
of Seller) and to enjoin Seller (or such applicable Affiliate of Seller) from
any further violation and to exercise such remedies cumulatively or in
conjunction with all other rights and remedies provided by Applicable Law.
Seller acknowledges that the remedies at law for any breach by Seller or its
Affiliates of the provisions of this Section 8.5 may be inadequate and that
Buyer shall be entitled to injunctive relief against Seller (or such applicable
Affiliate of Seller) in the event of any breach.
(f) Notwithstanding the provisions of Section 8.5(a), nothing herein shall
in any way restrict or limit the rights of Seller or any of its Affiliates or
any successor thereof to do any of the following: (i) to engage in the Competing
Business under one or more contracts as long as the anticipated annual revenues
from such Competing Business under a particular contract do not exceed $1
Million per year or (ii) to engage in incidental Competing Business under one or
more contracts as long as (a) with respect to a particular customer contract,
the Competing Business is incidental to, or bundled with, the provision of other
services under such contract, (b) with respect to a particular customer
contract, the other services constitute the majority of the services to be
provided under such contract, (c) the anticipated annual revenues from the
incidental Competing Business under such contract do not exceed $1 Million per
year, and (d) the anticipated annual revenues from incidental Competing Business
services provided by Seller or its Affiliates under customer contracts do not
exceed $25 million per year. Notwithstanding the provisions of Section 8.5(a),
nothing herein shall in any way restrict or limit the rights of Seller or any of
its Affiliates to enter into any subcontracting arrangement with a third party
who is not an Affiliate of Seller in order for such third party to engage in the
Competing Business with respect to a particular customer contract where the
revenues related to such Competing Business would exceed the thresholds set
forth in this Section 8.5(f).
(g) For a period of three (3) years commencing on the Closing Date, Seller
and its Affiliates will not employ any Transferred Employee or a Seasonal
Employee employed by Buyer; provided that the foregoing shall not in any way
restrict or limit the rights of Seller or any of its Affiliates to employ a
Transferred Employee or a Seasonal Employee who (i) is terminated by the Buyer
or any of its Affiliates, (ii) responds to a general employment advertisement by
Seller or any of its Affiliates in the ordinary course of its business, or (iii)
contacts Seller or any of its Affiliates for employment on such Transferred
Employee's or Seasonal Employee's own initiative without any solicitation from
Seller or any of its Affiliates so long as such Transferred Employee was not
listed on Schedule 8.5(g). For a period of three (3) years commencing on the
Closing Date, Seller shall not, directly or indirectly, (i) solicit the
Customers of the Subject Business as of the Closing Date for work that is
performed by the Subject Business as of the Closing Date, (ii) cause or induce
any Customer, supplier or Employee of the Subject Business as of the Closing
Date or any Person who held such position within the year preceding the Closing
Date to cease doing business with Buyer and instead to do business with a
competitor of Buyer or (iii) otherwise interfere with Buyer's relationship with
the Customers and suppliers of the Subject Business with respect to work
performed by the Subject Business as of the Closing Date; provided, however,
that nothing in this Section 8.5(g) shall be interpreted (A) to restrict or
prohibit Seller from conducting business that does not constitute the Competing
Business or (B) to restrict Seller from taking any of the actions permitted by
Sections 8.5(b), (c) or (f).
ASSET PURCHASE AGREEMENT PAGE 30
(h) For a period of fifteen (15) months after the Closing Date, Seller
shall cause its executive officers and directors not to disparage in the context
of the Subject Business either Buyer or its operations, the Subject Business or
the Employees of the Subject Business; provided, however, that the foregoing
obligation will not limit, in any way, any statements made in connection with a
Legal Proceeding or as required by Applicable Law. In addition, for a period of
fifteen (15) months after the Closing Date, if Buyer learns that one of Seller's
employees is disparaging Buyer or its operations in the context of the Subject
Business, the Subject Business or the Employees of the Subject Business, and
Buyer delivers to Seller written notice of the facts regarding such
disparagement, Seller shall take reasonable action to cause such employee to
discontinue such disparagement during such period of time.
(i) The necessity of protection against competition from Seller and its
Affiliates and the nature and scope of such protection has been carefully
considered by the parties to this Agreement based upon the consultation with and
advice from their respective legal counsel. The parties agree and acknowledge
(i) that the duration, scope and geographic areas applicable to the covenants
contained in this Section 8.5 are fair, reasonable and necessary, and do not
impose a greater restraint than is necessary to protect the goodwill or other
business interest of the Subject Business and Buyer's investment therein and its
business goodwill, (ii) that adequate compensation has been received by Seller
for such obligations, and (iii) that these obligations do not prevent Seller and
its Affiliates from conducting the Retained Business. If any provision of this
Section 8.5 is held to be illegal, invalid or unenforceable under present or
future laws effective during the Non-Competition Period, in lieu of such
illegal, invalid or unenforceable provision, there shall be added automatically
a provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable, but no such
added provision shall be broader or result in a greater limitation of the
activities of Seller or its Affiliates than is provided in this Section 8.5 on
the date hereof. If the automatic reformation provision contained in this
Section 8.5(i) for any reason fails or is held to be illegal, invalid or
unenforceable, the parties request that the Governmental Entity or
arbitrator(s), as the case may be, making such determination interpret, alter,
amend and modify the terms of this Section 8.5 to include as much of the scope,
time period and geographic area specified therein as may be possible without
rendering any provision of this Section 8.5, illegal, invalid or unenforceable,
but no such modified term shall be broader or result in a greater limitation of
the activities of Seller and its Affiliates than is provided in this Section 8.5
on the date hereof.
8.6 Seller's Marks. Buyer acknowledges and agrees that, other than as
provided for in this Section 8.6, it is not obtaining any rights or licenses
with respect to the names "ACS", "Affiliated Computer Services, Inc." or the ACS
Logos or any confusingly similar derivative thereof or associated logos or trade
dress (the "Seller's Marks"). Buyer agrees, on behalf of itself and its
Affiliates, not to use or seek to register any trade name, service ▇▇▇▇,
trademark or domain name identical with or confusingly similar to Seller's
Marks. Buyer shall discontinue use of the Seller's Marks as soon as practicable
after the Closing Date, but not more than 30 days after the Closing Date;
provided, the Buyer will not use after the Closing Date stationery, contracts,
purchase orders, agreements and other business forms and writings containing
Seller's Marks that could create any confusion as to the contracting party.
Notwithstanding the foregoing, Buyer shall have the right to use any of the
Seller Marks for internal purposes only in the same manner used prior to the
Closing to the extent that such marks are included in any existing stock of
employee training manuals, operating procedures manuals or other similar
ASSET PURCHASE AGREEMENT PAGE 31
internal documents used in the Subject Business as of the Closing Date until
such time as such materials are replaced in the ordinary course of business but
in no event later than 180 days after the Closing Date. Buyer agrees to
indemnify Seller against any Damages arising in connection with Buyer's use of
the Seller Marks.
8.7 Third Party Consents.
(a) Seller and Buyer agree that the third party consents that are listed
on Schedule 8.7(a) and which the underlying Contract has not expired or
terminated prior to the Closing Date shall be all of the third party consents
needed to satisfy the condition precedent described in Section 9.4 (the
"Necessary Third Party Consents"). Buyer agrees to assume all risk and liability
resulting from the failure to obtain any other third party consents that are
required in connection with the sale and assignment of the Subject Business and
the Acquired Assets from Seller to Buyer, but are not treated as between Seller
and Buyer as Necessary Third Party Consents. Buyer agrees to cooperate in good
faith with Seller and take all commercially reasonable actions, other than the
payment of consent money, in connection with obtaining the Necessary Third Party
Consents and the release of Seller or its Affiliates with respect to a
guarantee, if any, that is associated with a Necessary Third Party Consent.
Buyer understands that certain of the Assumed Contracts are in the name of one
of Seller's Affiliates and the parties agree to use commercially reasonable
efforts, other than the payment of consent money, in connection with obtaining
the consent of the third party.
(b) As soon as practicable after the date hereof, Buyer and Seller agree
to work in good faith to begin notifying the Customers, suppliers and other
Persons having current business relationships with the Subject Business that the
Subject Business is under contract to be sold to Buyer, and Buyer and Seller
agree to cooperate in good faith and to take all commercially reasonable and
necessary actions, other than the payment of consent money to a third party,
required to assign to Buyer each Assumed Contract and obtain a release of Seller
and its Affiliates with respect to any Assumed Contract guarantees. In addition,
within 10 days after the Closing Date, Buyer shall confirm, in writing, to all
Customers, suppliers and other Persons having current business relationships
with the Subject Business that the Subject Business has been sold to Buyer; and
the form of such notice shall be reasonably acceptable to Seller and shall
additionally contain a provision in all notices to vendors and suppliers under
the Operating Contracts assigned to Buyer that the Seller shall not be
responsible for the payment for any goods or services that are provided under
the Operating Contracts from and after the Closing Date. Except with respect to
the Necessary Third Party Consents that are not waived by Buyer, if Seller is
unable to obtain the requisite consent to assignment of any Assumed Contract or
the release of Seller or its Affiliates with respect to a guarantee of any
Assumed Contract prior to the Closing Date, the obtaining of such consent shall
not be a condition to Closing. If Buyer and Seller should determine that any
consent to assignment to Buyer is reasonably necessary to the continued
operation of the Subject Business either commercially or in accordance with
Applicable Law, then, except where such action would be unlawful or prohibited
by the affected Assumed Contract, Seller shall retain the affected Assumed
Contract and shall enter into an arrangement with Buyer to provide Buyer with
the benefits of such Assumed Contract until such Assumed Contract is properly
assigned to Buyer or expires at the earliest opportunity in accordance with its
terms, provided, that Buyer shall perform Seller's obligations thereunder
ASSET PURCHASE AGREEMENT PAGE 32
arising after the Closing and Buyer shall indemnify Seller against any Damages
arising in connection therewith from and after the Closing.
(c) From and after the date hereof, Seller and Buyer shall cooperate for
the purpose of causing Buyer to be substituted, as of the Closing Date, for
Seller and its Affiliates and Buyer shall use commercially reasonable efforts to
cause the release of Seller and its Affiliates, as of the Closing Date, with
respect to each letter of credit, guaranty, bond or other indemnity obligation
of Seller or any of its Affiliates with respect to the Subject Business
(collectively, the "Seller Guarantee Obligations") listed on Schedule 8.7(c);
provided, however, that Buyer will not have any obligation to pay any fees or
expenses in connection with obtaining any such release and substitution other
than the costs and expenses associated with the replacement bonds or other
sureties. In addition, with respect to any other Seller Guarantee Obligation
that the parties become aware of, Buyer agrees that it will cooperate for the
purpose of causing Buyer to be substituted, as of the Closing Date, for Seller
and its Affiliates and use commercially reasonably efforts to cause the release
of Seller and its Affiliates, as of the Closing Date. Buyer agrees to be
responsible for all of the normal fees of Seller and its Affiliates and all
Damages incurred by Seller or any of its Affiliates under any Seller Guarantee
Obligation or any drawing made or acceptance delivered thereunder with respect
to events giving rise to liability under any Seller Guarantee Obligation
occurring from and after the Closing Date.
8.8 Governmental Filings
(a) In furtherance and not in limitation of the foregoing, the Seller and
the Buyer shall use their commercially reasonable efforts to file Notification
and Report Forms under the HSR Act and similar applications with any other
applicable Governmental Entity whose Governmental Authorization is required, or
with which a premerger notification is required, in connection with the
consummation of the Transaction as promptly as practicable following the date
hereof and in any event no later than five (5) days following the date hereof.
Seller and Buyer shall equally split all filing fees associated with the HSR
Act. Seller and Buyer shall take all commercially reasonable steps to request
early termination from the Federal Trade Commission. Seller and the Buyer, and
their respective Affiliates, shall cooperate and use their respective
commercially reasonable efforts (i) to obtain any Governmental Authorization
required for the Closing (including through compliance with the HSR Act), to
respond to any requests for information from a Governmental Entity, and (ii) to
contest and resist any Legal Proceeding and to have vacated, lifted, reversed,
or overturned any Legal Proceeding (whether temporary, preliminary or permanent)
that restricts, prevents or prohibits the consummation of the Transaction. To
the extent permitted by Applicable Law, Buyer and the Seller shall provide the
other the opportunity to make copies of all material correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or its representatives, on the one hand, and any Governmental Entity, on
the other hand, with respect to this Agreement or the Transaction. Each of Buyer
and Seller, or their counsel, as appropriate, will be given notice of and a
reasonable opportunity to participate in contacts with any Governmental Entity
regarding antitrust or merger control matters. Any documents filed pursuant to
Item 4(c) of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Notification and Report Form or
communications regarding the same or documents or information submitted in
response to any request for additional information or documents pursuant to the
HSR Act which reveal the Seller's or Buyer's, or their Affiliates' negotiation
objectives or strategies or purchase price expectations
ASSET PURCHASE AGREEMENT PAGE 33
shall be retained by outside counsel and shall not be disclosed to such outside
counsel's client, absent prior written consent of the party that produced such
material in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ process. Buyer and Seller acknowledge that all
such information provided pursuant to the foregoing sentence shall be subject to
the terms of the Confidentiality Agreement.
(b) Buyer and Seller shall notify and keep the other advised as to (i) any
material communication from the Federal Trade Commission, the Department of
Justice or any other Governmental Entity regarding any of the Transactions
contemplated hereby and (ii) any Legal Proceeding pending or known to such party
or, to its knowledge, threatened, which challenges the Transactions contemplated
hereby. Except as provided herein, Buyer and Seller shall not take any action
inconsistent with their obligations under this Agreement which would materially
hinder or delay the consummation of the transactions contemplated by this
Agreement.
(c) Buyer and Seller acknowledge and agree that the consents contemplated
by this Section 8.8 are limited to the consent of a Governmental Entity under
the HSR Act and do not extend to any consents required under any Government
Contract.
8.9 Deposits. During the Pre-Closing Period, the parties agree to work
together in good faith to determine which deposits will be transferred to Buyer
at the Closing and the price to be paid by Buyer for such deposits.
SECTION 9. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER
The obligation of Buyer to consummate the Transaction is subject to the
satisfaction or waiver by Buyer if not satisfied, at or prior to the Closing, of
each of the following conditions:
9.1 Accuracy of Representations. Each of the representations and
warranties made by Seller in this Asset Purchase Agreement shall be true and
correct, each as of the date originally made and as of the Closing Date (unless
a representation and warranty expressly relates to an earlier date) after
considering all Schedule Updates made by the Seller pursuant to Section 6.4.
9.2 Performance of Covenants. All of the covenants and obligations that
Seller is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all material respects.
9.3 Bring Down Certificate. Seller shall prepare and deliver to Buyer a
Certificate signed by an officer of Seller certifying to the fulfillment of the
foregoing two conditions set forth in Sections 9.1 and 9.2.
9.4 Consents. All Necessary Third Party Consents shall have been obtained
and shall be in full force and effect without any material limitation,
restriction or condition not already applicable to Seller being imposed on
Buyer.
9.5 No Material Adverse Change. Since the date of this Agreement, there
has not been any material adverse change in the business, operations, assets,
results of operations or financial condition of Seller, and no event has
occurred or circumstance exists that would reasonably result in such a material
adverse change.
ASSET PURCHASE AGREEMENT PAGE 34
9.6 No Restraints or Legal Proceedings. No temporary restraining order,
preliminary or permanent injunction or other order preventing the consummation
of the Transaction shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Applicable Law enacted or
deemed applicable to the Transaction that makes consummation of the Transaction
illegal. No Person shall have commenced or threatened to commence any Legal
Proceeding challenging the Transaction or seeking the recovery of a material
amount of Damages in connection with the Transaction.
9.7 Closing Deliveries. Seller stands ready to execute and deliver to
Buyer at Closing the items set forth in Section 3.2.
9.8 HSR Waiting Period. The applicable waiting period under the HSR Act
shall have expired or early termination shall have been granted.
9.9 Customer Visits. Buyer shall be reasonably satisfied, in its
reasonable discretion, with respect to the visits with the Customers set forth
on Schedule 6.1.
SECTION 10. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligations of Seller to consummate the Transaction is subject to the
satisfaction or waiver by Seller if not satisfied, at or prior to the Closing,
of the following conditions:
10.1 Accuracy of Representations. Each of the representations and
warranties made by Buyer in this Asset Purchase Agreement shall be true and
correct, each as of the date originally made and as of the Closing Date (unless
a representation and warranty expressly relates to an earlier date) after
considering all Schedule Updates made by the Seller pursuant to Section 6.4.
10.2 Performance of Covenants. All of the covenants and obligations that
Buyer is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all material respects.
10.3 Bring Down Certificate. Buyer shall prepare and deliver to Seller a
Certificate signed by an officer of Buyer certifying to the fulfillment of the
foregoing two conditions set forth in Sections 10.1 and 10.2.
10.4 No Restraints or Legal Proceedings. No temporary restraining order,
preliminary or permanent injunction or other order preventing the consummation
of the Transaction shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Applicable Law enacted or
deemed applicable to the Transaction that makes consummation of the Transaction
illegal. No Person shall have commenced or threatened to commence any Legal
Proceeding challenging the Transaction or seeking the recovery of a material
amount of Damages in connection with the Transaction.
10.5 Closing Deliveries. Buyer stands ready to pay the Purchase Price and
to execute and deliver to Seller at Closing the items set forth in Section 3.3.
ASSET PURCHASE AGREEMENT PAGE 35
10.6 HSR Waiting Period. The applicable waiting period under the HSR Act
shall have expired or early termination shall have been granted.
10.7 No Material Adverse Change. Since the date of this Agreement, there
has not been any material adverse change in the business, operations, assets,
results of operations or financial condition of Seller that would reasonably
result in a material increase in the indemnity obligations of Seller under
Section 13.2 or no event has occurred or circumstance exists that would result
in a material adverse change that would reasonably result in a material increase
in the indemnity obligations of Seller under Section 13.2.
10.8 Consents. All Necessary Third Party Consents shall have been obtained
and shall be in full force and effect.
SECTION 11. POST-CLOSING COVENANTS OF SELLER AND BUYER
11.1 Further Assurances. From and after the Closing Date and from time to
time thereafter, each party will do, execute, acknowledge, deliver and file, or
cause to be done, executed, acknowledged, delivered and filed, all such acts,
instruments of sale, transfer, conveyance, assignment and delivery, consents,
assurances, powers of attorney and other instruments as may be reasonably
requested by the other in order to carry out the terms and provisions of this
Agreement, including the vesting in Buyer of good and valid title in and to the
Acquired Assets as of the Closing Date.
11.2 Collection of Amounts after the Closing Date. If after the Closing
Date, Buyer or Seller receives any amounts in payment of obligations owed to the
other party, then the receiving party agrees to promptly notify the other party
of such receipt and to promptly remit to the other party the full amount of such
payments. Seller agrees to reasonably cooperate with Buyer in connection with
notifying Customers of new lockbox and remittance information for periods from
and after the Closing Date.
11.3 Payment of Accounts Payable. Seller agrees to pay the accounts
payable of the Subject Business that arise prior to the Closing Date in the
ordinary course as they become due. If, after the Closing Date, Seller shall
make payment on account of the Subject Business, then Seller agrees to notify
Buyer of such payment and the details thereof and Buyer agrees to promptly remit
to Seller the full amount of such payments.
11.4 Access To Business Records. After the Closing Date and upon
reasonable notice and during Buyer's normal business hours, Buyer shall grant
Seller and its Representatives access to the Business Records for purposes of
Tax Return preparation and Tax reporting and all other business purposes
requested by Seller.
11.5 Allocation of Purchase Price. Prior to the Closing Date, Buyer and
Seller shall use commercially reasonable efforts to agree on estimated
allocations of the Purchase Price and any other payments made by Buyer pursuant
to this Agreement to the extent necessary to permit the filing of timely Tax
Returns for Transfer Taxes. The Purchase Price shall be allocated among the
Acquired Assets in accordance with an allocation schedule to be prepared in good
faith using fair market values by Seller and Buyer within 180 days of the
Closing Date. Seller
ASSET PURCHASE AGREEMENT PAGE 36
and Buyer shall each complete and separately file Form 8594 with their
respective Tax Returns for the year in which the Closing Date occurs.
11.6 Cooperation. After the Closing Date, upon Seller's request (at
Seller's expense) and without necessity of subpoena, Buyer shall, and shall
cause its Representatives and its Affiliates and their Representatives to, fully
cooperate with Seller and its Representatives for purposes of permitting Seller
to address and respond to matters that arise as a result of or otherwise relate
to Seller's or its Affiliate's prior ownership of the Subject Business and the
Acquired Assets, whether or not related to this Agreement, any matters for which
Seller or its Affiliates have or may have an obligation (including an indemnity
obligation), and any claims made by or against Seller or any of its Affiliates
for which such cooperation is, in Seller's opinion, necessary or appropriate.
Such cooperation shall include (i) upon reasonable notice to the Buyer,
reasonable access to the Buyer's and its Affiliates' officers, directors,
employees, auditors, counsel, representatives, properties, books, records and
operating instructions and procedures, (ii) providing reasonable assistance to
Seller or its Affiliates in connection with any pending or threatened Legal
Proceedings, including preparation for any Legal Proceedings such as discovery,
depositions and similar activities and (iii) the right to make and retain copies
of all pertinent documents and records relating to any such matters. Seller
shall have the right to retain, at its expense, a copy of all business and
employment records and other documents the originals of which are part of the
Acquired Assets. Seller's or its Affiliate's access shall not unreasonably
interfere with Buyer's operation of the Subject Business and, subject to Section
11.7, shall be subject to Buyer's reasonable safety, security and privacy
policies.
11.7 Legal Privileges. Seller and Buyer acknowledge and agree that all
attorney-client, work product and other legal privileges that may exist with
respect to the Subject Business and the Acquired Assets prior to the Closing
shall, from and after the Closing Date, be deemed to be joint privileges of
Seller and Buyer. Both Seller and Buyer shall use all commercially reasonable
efforts after the Closing Date to preserve all such privileges and neither
Seller nor Buyer shall knowingly waive any such privilege without the prior
written consent of the other party which consent shall not be unreasonably
withheld or delayed.
11.8 Tax Matters. From and after Closing, Seller and Buyer shall each (i)
provide the other party with such assistance as may be reasonably requested in
connection with the preparation of any Tax Return or any audit or other
examination by any Governmental Entity or Legal Proceeding involving or relating
to liability for Taxes, (ii) retain and provide to the other party all records
and other information that may be relevant to any such Tax Return, audit or
examination, proceeding or determination and (iii) provide the other party with
any final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax Return of
the other party for any period, in each case only to the extent such matters
pertain to the Acquired Assets or the Subject Business. Without limiting the
generality of the foregoing, each of Buyer and Seller shall retain, until the
expiration of the applicable statutes of limitation (including any extensions
thereof), copies of all Tax Returns, supporting work schedules and other records
relating to Tax periods or portions thereof ending on or prior to the Closing
Date, in each case only to the extent such matters pertain to the Acquired
Assets or the Subject Business. Buyer will be responsible for the preparation
and filing of all Tax Returns for the Subject Business and Acquired Assets for
all periods that Buyer
ASSET PURCHASE AGREEMENT PAGE 37
operates the Subject Business (whether or not such operation is indirectly
through the Transition Services Agreement) from and after the Closing Date.
Seller shall be entitled to all refunds and credits (including interest thereon)
of Taxes for any tax period ending before the Closing Date.
11.9 Transfer Taxes. Except for sales and use taxes as noted below, all
other transfer, stamp, duty and similar Taxes assessed or payable by state and
local taxing authorities in connection with the transfer of the Acquired Assets
or other transactions contemplated by this Agreement ("Transfer Taxes"),
regardless of whether such Transfer Taxes become due or payable on or after the
Closing Date, shall be paid by the party legally responsible therefor; provided
that the other party shall reimburse the party legally responsible therefor for
one-half of the Transfer Taxes (excluding any interest or penalties arising as a
result of any action or inaction by the party legally responsible therefor on or
after the Closing Date) actually paid by the party legally responsible therefor
promptly upon presentation of reasonable documentation evidencing payment of
same. With respect to any sales and use taxes that may be assessed or payable in
connection with the transfer of the Acquired Assets or the other transactions
contemplated by this Agreement, the parties agree that Seller shall determine,
collect from Buyer and remit such taxes to the applicable Governmental Entity.
After Seller determines the amount of sales and use taxes payable in connection
with the Transaction, Seller shall notify Buyer of the amount and Buyer agrees
to promptly remit such amount to Seller. The parties agree that Buyer shall be
entitled to a credit from Seller under the provisions of Section 11.13 of this
Agreement in an amount equal to one-half of the sales and use taxes payable.
11.10 Audits of Customer Contracts. If the Buyer shall be notified or
shall otherwise learn of any review, audit or other examination relating to any
Customer Contract that relates in whole or in part to any period of time before
the Closing Date, then Buyer shall promptly notify Seller in writing of such
review, audit or other examination. Seller shall have the right at its expense
to participate in and control the conduct of such review, audit or other
examination to the extent that it relates to a potential adjustment for which
Seller might be liable or to which Seller might be entitled. Buyer shall
cooperate with Seller or its Affiliates as provided in Section 11.6 with respect
to such review, audit or other examination. As to reviews, audits or other
examinations that relate to periods of time before and after the Closing Date,
neither Buyer nor Seller shall enter into any compromise or agree to settle any
claim or other matter pursuant to any such review, audit or other examination
that would adversely affect the other party without the written consent of the
other party, which consent may not be unreasonably withheld, conditioned or
delayed.
11.11 Payment of Seller PTO. After the Closing, Seller shall pay the
Seller PTO to those Employees entitled to such Seller PTO in accordance with the
applicable provisions of Seller's Employee Benefit Plans and Applicable Law.
11.12 Customer and other Business Relationships. For a period of six (6)
months after the Closing, Seller agrees to reasonably cooperate with Buyer in
its efforts to continue and maintain for the benefit of Buyer those business
relationships Seller had for the benefit of the Subject Business prior to the
Closing, including relationships with lessors, Transferred Employees, regulatory
authorities, licensors, Customers, suppliers and others and Seller will refer
any inquiries regarding the Subject Business to Buyer; provided, however, that
such
ASSET PURCHASE AGREEMENT PAGE 38
cooperation by Seller shall not require any expenditure of money by Seller. In
addition, for a period of six (6) months after the Closing, Buyer agrees to
provide reasonable assistance to Seller with respect to eligibility
opportunities; provided, however, that such cooperation by Buyer shall not
require any expenditure of money by Buyer.
11.13 Allocation of Items of Revenue and Expense and Post Closing True
Ups.
(a) General Rules. As used herein the term "Revenue" shall mean the
revenue of the Subject Business and the term "Expense" shall mean the operating
expenses and other expenses of the Subject Business. Seller and Buyer have
agreed that (i) Seller is entitled to all Revenue that is attributable to or
relates to the operation of the Subject Business prior to the Closing Date
("Seller Revenue") including Seller Revenue that is collected on or after the
Closing Date, (ii) Seller is responsible for the payment of all Expense that is
attributable to or relates to the operation of the Subject Business prior to the
Closing Date ("Seller Expense"), (iii) Buyer is entitled to receive all Revenue
that is attributable to or relates to the operation of the Subject Business on
or after the Closing Date ("Buyer Revenue") and (iv) Buyer is responsible for
the payment of all Expense that is attributable to or relates to the operation
of the Subject Business on and after the Closing Date ("Buyer Expense"). The
parties agree to the following terms and provisions to effect the foregoing
agreements.
(b) Straddle Periods. As used herein a "Straddle Period" shall mean the
applicable period of time in question that commences before the Closing Date and
ends on or after the Closing Date. To the extent any item of Revenue or any item
of Expense (including any prepaid Expense of Seller) is attributable to or
relates to a Straddle Period, then such item shall be apportioned between and
allocated to Seller and Buyer on a per diem basis. For example if the Straddle
Period is thirty (30) days and the Closing Date falls on the 11th day, then the
allocation and apportionment shall be 1/3rd to Seller and 2/3rds to Buyer. It is
agreed and understood that under certain Customer Contracts Revenue may be
attributable to or relate to monthly, quarterly or annual periods depending upon
the attainment of certain goals and objectives or otherwise and that such
periods may be Straddle Periods. Seller and Buyer agree that all such Revenue
attributable to or relating to any Straddle Period shall be apportioned between
and allocated to Seller and Buyer in accordance with the apportionment described
above.
(c) Payment of Expense. Seller agrees that prior to Closing it will pay
Seller Expense in the ordinary course of business and that Seller will continue
to pay Seller Expense after Closing until all Seller Expense has been paid in
full in the ordinary course of business. Buyer agrees that on and after Closing
it will pay all of Buyer Expense in the ordinary course of business. If Buyer
shall pay any of Seller Expense, then Seller shall reimburse Buyer for such
payments. If Seller shall pay any of Buyer Expense, then Buyer shall reimburse
Seller for such payments. The provisions of this sub-section shall be effected
by the process described in Section 11.13(f).
(d) Collection of Revenue. Seller agrees that if it collects or otherwise
comes into possession of the proceeds of collection of Buyer Revenue, then
Seller shall turn over such proceeds to Buyer. Buyer agrees that if it collects
or otherwise comes into possession of the proceeds of collection of Seller
Revenue, then Buyer shall turn over such proceeds to Seller. The
ASSET PURCHASE AGREEMENT PAGE 39
provisions of this sub-section shall be effected by the process described in
Section 11.13(f). In addition, the parties agree that collections from a
particular Customer shall be allocated to the invoice(s) that are identified on
a remittance advice, and, in the event the remittance advice does not clearly
identify the invoice being paid, Seller and Buyer shall jointly contact the
Customer to determine the invoice and, in the event the Customer cannot identify
which invoice has been paid, the parties agree that collections shall be
allocated first to the oldest outstanding invoice from such Customer. Any
partial payments received with respect to a Straddle Period shall be shared by
Seller and Buyer pro rata to their respective allocable interests in the invoice
to which such partial payment relates.
(e) Appointment of Seller's Rep and Buyer's Rep. Seller shall designate
one or more representatives (collectively, "Seller's Rep") who shall represent
Seller with respect to all matters involving this Section. Likewise, Buyer shall
designate one or more representatives (collectively, "Buyer's Rep") who shall
represent Buyer with respect to all matters involving this Section. Such
designations shall be made within five (5) Business Days following the date of
this Agreement by written notice to the other party. Seller's Rep and Buyer's
Rep shall meet as soon as possible following their designations to discuss any
additional procedures and processes that are not covered herein that are
necessary, advisable or appropriate to the implementation of the agreements
described in Section 11.13(a).
(f) True Ups. Seller's Rep and Buyer's Rep shall be responsible for the
preparation of schedules (referred to in each instance as a "Reconciliation
Schedule"). The first Reconciliation Schedule shall cover the applicable periods
prior to Closing and through the period ending on the last day of the month
following the month in which Closing occurs demonstrating (i) Seller Revenue,
Seller Expense, Buyer Revenue and Buyer Expense, (ii) the recipient of Revenue
and the payer of Expense and (iii) a reconciliation of the amount Seller owes
Buyer and the amount Buyer owes Seller. Seller's Rep and Buyer's Rep shall
prepare subsequent Reconciliation Schedules on the same basis for every
succeeding two calendar month period until such time as Seller and Buyer agree
otherwise or until such time as Seller has received all Seller Revenue, Seller
has been reimbursed for all Buyer Expense paid by Seller and Buyer has been
reimbursed for all Seller Expense paid by Buyer. All Reconciliation Schedules
shall be due no later than ten (10) Business Days following the end of the
period which it covers. No later than the last day of the month following the
end of the period covered by the Reconciliation Schedule, Seller will pay Buyer
all sums of money that Seller owes to Buyer, and Buyer will pay Seller all sums
of money that Buyer owes to Seller, all as shown on the Reconciliation Schedule.
Seller and Buyer can agree to net the amounts so that only one payment need be
made. Any payments not made at time shall be considered in default and shall
bear interest at 12% per annum until paid. Seller's Rep and Buyer's Rep can
agree to make adjusting interim payments at any time and such interim payments
shall be appropriately accounted for in the Reconciliation Schedule covering the
period during which such interim payments are made.
(g) Cooperation. Seller and Buyer agree to cooperate with each other and
deal in good faith in all matters regarding this Section and to take such
actions and implement such decisions as are necessary, advisable or appropriate
to efficiently and expeditiously implement the provisions of this Section.
Seller and Buyer agree to exchange such information, books and
ASSET PURCHASE AGREEMENT PAGE 40
other records necessary, advisable or appropriate to assist each other in the
administration of this Section. Seller and Buyer each agree that they will not
compromise, settle, adjust or otherwise take any action that is detrimental with
respect to the other party's Revenue or Expense without the written consent of
the other party.
SECTION 12. TERMINATION
12.1 Termination of Agreement. This Agreement may be terminated on or
prior to the Closing in the following manners only:
(a) by Buyer if the Closing has not taken place on or before the Drop Dead
Date other than as a result of any failure on the part of Buyer to comply with
or perform any material covenant or obligation of Buyer set forth in this
Agreement or as a result of any material breach by Buyer of its representations
and warranties set forth in this Agreement;
(b) by Seller if the Closing has not taken place on or before Drop Dead
Date other than as a result of any failure on the part of the Seller to comply
with or perform any material covenant or obligation of Seller set forth in this
Agreement or as a result of any material breach by Seller of its representations
and warranties set forth in this Agreement;
(c) by Seller if there is a material breach of or failure by Buyer to
perform in any material respect any of its obligations under the Transaction
Documents, which breach or failure is not cured within 30 days after written
notice thereof describing the default is given to Buyer (provided, however, that
no cure period or notice is required to be given by Seller if Buyer has breached
its obligation to pay the Purchase Price), but only if Seller is not in material
breach of its covenants under the Transaction Documents;
(d) by Buyer if there is a material breach of or failure by Seller to
perform in any material respect any of its obligations under the Transaction
Documents, which breach or failure is not cured within 30 days after written
notice thereof describing the default is given to Seller, but only if Buyer is
not in material breach of its covenants under the Transaction Documents;
(e) by either party if a Governmental Entity shall have issued an order,
decree or ruling or taken any other action (which order, decree or ruling the
parties shall use their reasonable commercial efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the Transaction, and
such order, decree, ruling or other action shall have become final and
nonappealable;
(f) by written agreement of Seller and Buyer; or
(g) by Seller in order to sell the Subject Business or the Acquired Assets
to a third party.
12.2 Termination Procedures. If Buyer wishes to terminate this Agreement
pursuant to Sections 12.1(a), (d), or (e), then Buyer shall deliver to Seller a
written notice stating that Buyer is terminating this Agreement and setting
forth a description of the basis upon which Buyer is terminating this Agreement.
If Seller wishes to terminate this Agreement pursuant to Sections
ASSET PURCHASE AGREEMENT PAGE 41
12.1(b), (c), or (e), then Seller shall deliver to Buyer a written notice
stating that the Seller is terminating this Agreement and setting forth a
description of the basis upon which the Seller is terminating this Agreement.
12.3 Effect of Termination.
(a) If this Agreement is terminated pursuant to Section 12.1, all further
obligations of the parties under this Agreement shall terminate; provided,
however, that: (i) no party shall be relieved of any obligation or liability
arising from any prior breach by such party of any provision of this Agreement;
and (ii) the parties shall, in all events, remain bound by and continue to be
subject to the provisions set forth in Sections 7.2, 12.4 and 14. THE PARTIES
AGREE THAT DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AVAILABLE TO EITHER
SELLER OR BUYER FOR A BREACH OF THIS AGREEMENT THAT RESULTS IN THE TERMINATION
OF THIS AGREEMENT WITHOUT A CLOSING HAVING OCCURRED AND ALL OTHER REMEDIES,
INCLUDING SPECIFIC PERFORMANCE, ARE EXPRESSLY HEREBY WAIVED.
(b) Seller agrees to pay to Buyer a termination fee in the amount of $2.5
Million but only if Seller terminates this Agreement pursuant to Section
12.1(g).
12.4 Nondisclosure and Covenant. Buyer agrees that if this Agreement shall
terminate without the Closing having occurred, then Buyer agrees (i) to promptly
return to Seller all hard copy embodiments of data and information concerning
the Seller and the Subject Business that Buyer acquired from Seller, any
Affiliate of Seller or Seller's Representatives ("Seller Information"), (ii) to
promptly erase or delete all soft copy embodiments of Seller Information and to
certify to Seller in writing that it has fully complied with the foregoing,
(iii) to never use the Seller Information for any purpose and (iv) to never
disclose the Seller Information to any Person. Notwithstanding the foregoing,
Buyer may use the Seller Information in connection with Legal Proceedings to
which Seller and Buyer are parties regarding any disputes involving the
Transaction Documents and/or the Transaction. Furthermore, Buyer agrees that if
this Agreement shall terminate without the Closing having occurred, then for a
period ending on the second anniversary of such termination (i) Buyer will not
use, and will cause its Affiliates not to use, any of the Seller Information in
Buyer's or any of its Affiliates' business, (ii) Buyer will not hire any
Employee or Seasonal Employee of Seller except employment arising as a result of
bone fide public solicitations and advertisements not directed at, or made
available for, Seller's Employees or Seasonal Employees and (iii) Buyer will not
disclose to any Person any customer list or contact for any Customer of Seller.
Seller acknowledges that Buyer's business is directly competitive with the
Subject Business and the parties shall be entitled to compete with one another
either prior to the Closing or after termination without a Closing; provided,
however, Buyer shall have no right to use any Seller Information in competition
with Seller.
SECTION 13. INDEMNIFICATION
13.1 Survival of Representations, Warranties, Covenants and Agreements.
The representations, warranties, covenants and agreements made by Seller and
Buyer in this Agreement shall survive the Closing but shall expire on their
respective Expiration Dates (herein so called) as follows:
ASSET PURCHASE AGREEMENT PAGE 42
(a) with respect to each of the representations and warranties of the
Seller and Buyer contained in this Agreement (except for the Type A Special
Representations and the Type B Special Representations) and the post-Closing
indemnity obligations set forth in this Agreement related thereto, the
Expiration Date is fifteen (15) months after the Closing Date;
(b) with respect to the Type A Special Representations and the
post-Closing indemnity obligations set forth in this Agreement related thereto,
the Expiration Date is the 30th day after the expiration of the applicable
statute of limitations (after taking into account any waivers or extensions
thereof) for which claims can be asserted with respect to the matters covered
thereby;
(c) with respect to the Type B Special Representations and the
post-Closing indemnity obligations set forth in this Agreement related thereto,
there shall be no expiration of such representations and related indemnity;
(d) with respect to any agreement or covenant of the parties set forth in
this Agreement that was required to be performed at or prior to the Closing and
the post-Closing indemnity obligations set forth in this Agreement related
thereto, the Expiration Date is twelve (12) months after the Closing Date;
(e) except as otherwise provided in this Section 13.1, with respect to any
agreement or covenant of the parties set forth in this Agreement that is
required to be performed after the Closing, the Expiration Date is the date
twelve (12) months after the date on which such agreement or covenant has been
performed in accordance with its terms; and
(f) with respect to the indemnity obligations set forth in Sections
13.2(d) through 13.2(n) and Sections 13.4(c) through (k), there shall be no
expiration of such obligations.
Except to the extent otherwise expressly provided in this Section 13.1, the
representations, warranties, agreements and covenants made by Buyer and Seller
in this Agreement shall survive the Closing but shall expire at 11:59 p.m.
Dallas, Texas time on their applicable Expiration Dates; provided that if at any
time on or prior to the applicable Expiration Date, a party delivers to the
other party a written notice (a "Claim Notice") alleging a breach of any of the
representations, warranties, covenants or agreements made by the receiving party
and asserting a claim for indemnification under this Section 13, then the claim
shall survive the applicable Expiration Date until such time as such claim is
fully and finally resolved. Notwithstanding the foregoing, a claim will not
survive more than six (6) months following the applicable Expiration Date unless
the party delivering the Claim Notice is appropriately pursuing the claim
(except that in the case of a third party claim, such six month period will be
suspended (if necessary) in order to take into account the timing and activity
of the underlying claim or action giving rise to the third party claim) or
formally initiates the dispute resolution procedures of Section 14.16 prior to
the end of the six (6) month period.
13.2 Indemnification by Seller. From and after the Closing Date, but
subject to the provisions of Section 13.3, Seller shall hold harmless and
indemnify Buyer and its Affiliates
ASSET PURCHASE AGREEMENT PAGE 43
from and against any and all Damages which are suffered or incurred by Buyer or
its Affiliates or to which Buyer or its Affiliates have otherwise become subject
(regardless of whether or not such Damages relate to any third party claim) and
which arise from or as a result of:
(a) any breach or inaccuracy of any representation or warranty of the
Seller contained in this Agreement other than the Type A Special Representations
and the Type B Special Representations;
(b) any breach or inaccuracy of the Type A Special Representations and the
Type B Special Representations;
(c) any breach or non-performance of any agreement or covenant of the
Seller set forth in this Agreement, whether required to be performed at, prior
to or after the Closing;
(d) the Retained Liabilities;
(e) any broker's or finder's fees, commissions or similar payments based
upon any agreement or understanding between Seller or its Affiliates and a third
party regarding the transactions contemplated by this Agreement;
(f) a Permitted Exception encumbering an Acquired Asset prior to the
Closing Date other than those described in items (vi) and (vii) of the Permitted
Exceptions definition;
(g) any of Seller's Employee Benefit Plans that were provided to the
Employees prior to the Closing Date except for the Buyer PTO and Buyer's
obligations set forth in Sections 8.1 and 8.2;
(h) Liabilities of the Seller or its Affiliates arising from the operation
of the Subject Business prior to the Closing Date or the ownership or operation
of the Acquired Assets prior to the Closing Date except for the Buyer PTO;
(i) noncompliance by Seller with any bulk transfer laws or fraudulent
transfer law with respect to the transactions contemplated by this Agreement;
(j) Environmental Liabilities arising from the operation of the Subject
Business prior to the Closing Date;
(k) any of Seller's obligations to the Employees with respect to their
employment with Seller prior to the Closing Date except for the Buyer PTO and
Buyer's obligations set forth in Sections 8.1 and 8.2;
(l) any Legal Proceeding with respect to the Subject Business or the
Acquired Assets that is pending prior to the Closing Date, including those
specifically set forth on Schedule 4.4;
(m) any Legal Proceeding brought after the Closing Date that arises from
the operation of the Subject Business or the ownership or operation of the
Acquired Assets prior to the Closing Date but only to the extent Damages are
allocable to pre-Closing Date acts or omissions; and
ASSET PURCHASE AGREEMENT PAGE 44
(n) Employee Proceedings relating to an Employee's or Seasonal Employee's
employment with Seller prior to the Closing Date, except for any Employee
Proceeding related to the Buyer PTO or Buyer's obligations set forth in Sections
8.1 and 8.2.
Buyer hereby acknowledges, except with respect to the representations and
warranties in Section 4.11 and Seller's related indemnification obligations, (i)
that the Seller has not made any guarantee or other form of assurance of the
continuation of the Customer Contracts or the Customer relationships from and
after the Closing, (ii) that the Buyer is assuming all risk associated with (a)
any one or more Customers failing to renew or terminating its Customer Contract
or putting its contract out for bid or re-bid or (b) otherwise losing Customer
business and (iii) the Seller has not agreed to indemnify the Buyer for any
Damages the Buyer may suffer as a result of the loss of any Customer Contract or
the other loss of Customer business.
13.3 Limits on Seller's Indemnification. Notwithstanding anything to the
contrary contained herein, the following provisions shall limit the Seller's
liability for indemnification under Section 13.2:
(a) Seller shall have no obligation to provide indemnification for Damages
pursuant to Section 13.2 (a) except to the extent that the aggregate amount of
all such Damages pursuant to Section 13.2 (a) exceeds $1,000,000 (the "Basket
Amount") in which case Seller shall be liable to Buyer for Damages in excess of
the Basket Amount, but up to an amount equal to the First Cap Limitation.
(b) Seller shall be obligated to pay Damages under Section 13.2(c) without
regard to the Basket Amount, but subject to the First Cap Limitation except that
Seller's covenants and agreements set forth in Sections 8.5 (Noncompete,
Nonsolicitation and Nondisparagement), 11.2 (Collection of Amounts after Closing
Date), 11.3 (Payment of Accounts Payable), 11.9 (Transfer Taxes), 11.10 (Audits
of Customer Contracts), 11.11 (Payment of Seller PTO) and 11.13 (Allocation of
Items of Revenue and Expense and Post Closing True Ups) shall not be subject to
the First Cap Limitation, but shall be subject to the Second Cap Limitation.
(c) Seller shall be obligated to pay Damages under Sections 13.2(b) and
Sections 13.2(d) through 13.2(m) without regard to the Basket Amount, but
subject to the Second Cap Limitation.
13.4 Indemnification by Buyer. From and after the Closing Date, but
subject to the provisions of Section 13.5, Buyer shall hold harmless and
indemnify Seller and its Affiliates from and against any and all Damages which
are suffered or incurred by Seller or its Affiliates or to which Seller or its
Affiliates may otherwise become subject (regardless of whether or not such
Damages relate to any third party claim) and which arise from or as a result of:
(a) any breach or inaccuracy of any representation or warranty of Buyer
contained in this Agreement;
(b) any breach or non-performance of any agreement or covenant of the
Buyer set forth in this Agreement that was required to be performed at, prior to
or after the Closing;
ASSET PURCHASE AGREEMENT PAGE 45
(c) the Assumed Liabilities;
(d) all Liabilities of the Buyer and its Affiliates arising from the
ownership or use of the Acquired Assets or from the operation of the Subject
Business from and after the Closing Date, which shall include Liabilities
arising from the acts or omissions of Buyer and its Affiliates in the operation
of the Subject Business from and after the Closing Date;
(e) any broker's or finder's fees, commissions or similar payments based
upon any agreement or understanding between Buyer or its Affiliates and a third
party regarding the transactions contemplated by this Agreement;
(f) any of Buyer's Employee Benefit Plans that are provided to the
Employees from and after the Closing Date;
(g) Environmental Liabilities arising from the operation of the Subject
Business from and after the Closing Date;
(h) any of Buyer's obligations to the Employees with respect to their
employment with Buyer from and after the Closing Date, Buyer's obligation with
respect to the Buyer PTO and Buyer's obligations set forth in Sections 8.1 and
8.2;
(i) any Legal Proceeding with respect to the Subject Business or the
Acquired Assets that is brought from and after the Closing Date except to the
extent such Damages are allocable to pre-Closing Date acts or omissions;
(j) Employee Proceedings relating to an Employee's or Seasonal Employee's
employment with Buyer from and after the Closing Date, and any Employee
Proceeding related to the Buyer PTO or Buyer's obligations set forth in Sections
8.1 and 8.2; and
(k) Buyer's obligations set forth in Section 8.7(c).
13.5 Limits on Buyer's Indemnification. Notwithstanding anything to the
contrary contained herein, the following provisions shall limit the Buyer's
liability for indemnification under Section 13.4:
(a) Buyer shall have no obligation to provide indemnification for Damages
pursuant to Section 13.4(a) except to the extent that the aggregate amount of
all such Damages pursuant to Section 13.4(a) exceeds the Basket Amount in which
case Buyer shall be liable to Seller for Damages in excess of the Basket Amount,
but up to an amount equal to the First Cap Limitation.
(b) Buyer shall be obligated to pay Damages under Section 13.4(b) without
regard to the Basket Amount, but subject to the First Cap Limitation except that
Sections 8.1 (Employee Matters), 8.2 (WARN Act Requirements), 8.6 (Seller's
Marks), 8.7(c) (Third Party Consents), 11.2 (Collection of Amounts after Closing
Date), 11.3 (Payment of Accounts Payable), 11.9 (Transfer Taxes), 11.10 (Audit
of Customer Contracts) and 11.13 (Allocation of Items of Revenue and Expense and
Post Closing True Ups) shall not be subject to the First Cap Limitation, but
shall be subject to the Second Cap Limitation.
ASSET PURCHASE AGREEMENT PAGE 46
(c) Buyer shall be obligated to pay Damages under Sections 13.4(c) through
13.4(k), without regard to the Basket Amount, but subject to the Second Cap
Limitation.
13.6 Claim Procedure Not Involving Third Party Claims. Any party seeking
indemnification from the other party for Damages not involving a third party
claim, demand or Legal Proceeding shall give written notice to the party from
whom indemnification is sought and shall include in such written notice
reasonably detailed information regarding the fact, event or circumstance
resulting in such Damages and a reasonable description of such Damages and how
such Damages are computed. The indemnifying party shall have twenty (20)
Business Days to object to such claim for Damages and to then promptly submit
such claim to the dispute resolution provisions of Section 14.16, and failing to
timely object and submit, shall promptly pay to the indemnified party an amount
sufficient to fully indemnify the indemnified party against such Damages.
13.7 Interest. Any party who is required to hold harmless, indemnify,
compensate or reimburse any indemnified party pursuant to this Section 13 with
respect to any Damages shall also be liable to such indemnified party for
interest on the amount of such Damages for the period commencing five (5)
Business Days after the date on which the indemnifying party received the
indemnity notice in accordance with Section 13.6 or 13.8, as the case may be,
and ending on the date on which the liability of the indemnifying party to such
indemnified party is fully paid at a rate of 6% per annum; provided however, if
the indemnifying party timely objects to such claim and the claim is then
submitted to the dispute resolution provisions of Section 14.16, interest will
not commence to accrue until five (5) Business Days after the claim is resolved
unless the arbitrator makes a determination that the indemnifying party's
defense to such claim was not made in good faith, in which case interest shall
accrue commencing five (5) Business Days after the date on which the
indemnifying party received the indemnity notice in accordance with Section 13.6
or 13.8, as the case may be.
13.8 Claim Procedure Involving Third Party Claims. In the event of the
assertion or commencement by a third party of any demand, claim or Legal
Proceeding against an indemnified party with respect to which the indemnifying
party may become obligated to indemnify pursuant to this Section 13, the
indemnified party shall provide prompt written notice to the indemnifying party
of the assertion or commencement of such third-party demand, claim or Legal
Proceeding but in any event within twenty (20) days of such assertion or
commencement; provided, however, that the failure to deliver such notice shall
not relieve the indemnifying party from any liability under this Section 13
except to the extent that the indemnifying party is prejudiced by late
notification. The indemnifying party shall have the right, at its election, to
proceed with the defense of such demand, claim or Legal Proceeding; provided,
that the indemnifying party shall not have the right to settle, adjust or
compromise such demand, claim or Legal Proceeding without the consent of the
indemnified party which consent shall not be unreasonably withheld, conditioned
or delayed. Notwithstanding the foregoing, the indemnified party shall have the
right to retain counsel of its choice at its own expense and participate in the
defense of such demand, claim or Legal Proceeding. If the indemnifying party
elects not to proceed with the defense of such demand, claim or Legal
Proceeding, the indemnified party shall defend such demand, claim or Legal
Proceeding on its own; provided, that the indemnified party shall not have the
right to settle, adjust or compromise such claim or Legal Proceeding without the
consent of the indemnifying party which consent
ASSET PURCHASE AGREEMENT PAGE 47
will not be unreasonably withheld, conditioned or delayed. If the indemnifying
party does not assume the defense of any such demand, claim or Legal Proceeding,
then (i) all reasonable attorneys' fees and other costs and expenses relating to
the defense shall be Damages to the extent that the indemnified party is
determined to be entitled to indemnification pursuant to this Section 13, and
(ii) the indemnifying party shall make available to the indemnified party any
documents and materials in its possession or control that may be necessary to
the defense.
13.9 Sole Remedy. EXCEPT IN THE CASE OF ACTUAL FRAUD AND ASSUMING THE
CLOSING SHALL OCCUR, THE INDEMNIFICATION PROVISIONS CONTAINED IN THIS SECTION
SHALL CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF BUYER AGAINST SELLER FOR ANY
AND ALL BREACHES OF SELLER'S WARRANTIES, REPRESENTATIONS, COVENANTS AND
AGREEMENTS ARISING UNDER THIS AGREEMENT OR OTHERWISE IN CONNECTION WITH THE
TRANSACTION. NOTWITHSTANDING THE FOREGOING, BUYER MAY SEEK AND OBTAIN SPECIFIC
PERFORMANCE OF SELLER'S COVENANTS IN SECTION 8.5 OF THIS AGREEMENT AND THE OTHER
TRANSACTION DOCUMENTS ARE SUBJECT TO THE REMEDIES STATED THEREIN.
13.10 Limitation to Reference. All references to "this Agreement" in this
Section 13 shall be deemed to refer only to this Asset Purchase Agreement and
its schedules and shall not refer to any other Transaction Document.
SECTION 14. MISCELLANEOUS PROVISIONS
14.1 Fees and Expenses and Attorneys' Fees. Buyer and Seller shall each
bear and pay their own respective fees, costs and expenses (including legal fees
and accounting fees) that have been incurred or that will be incurred by such
party in connection with the Transaction Documents and the Transaction. If any
action or proceeding relating to the Transaction Documents, the Transaction or
the enforcement of any provision of this Agreement or the Transaction Documents
is brought against any party hereto, the prevailing party shall be entitled to
recover from the non-prevailing party reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which the prevailing party may
be entitled.
14.2 Notices. All notices or other communications ("notices") required or
permitted by this Agreement shall be sufficiently given if in writing and (i)
personally delivered, by any courier service such as Federal Express or United
Parcel Service, (ii) mailed by registered or certified mail, return receipt
requested, first class postage prepaid, or (iii) sent by facsimile transmission
(FAX) with an accompanying telephone call to the person being noticed. All
notices shall be deemed to have been given either (a) if personally delivered,
then at the time of actual delivery thereof to any person entitled to receive
such notice or officer or employee thereof, (b) if mailed, then at the
completion of the third full calendar day following the mailing thereof or (c)
if faxed, then upon the successful completion of the FAX transmission and the
accompanying telephone call. For purposes of this Agreement, the following
addresses and telephone and FAX numbers shall be used:
If to Seller: ACS State & Local Solutions, Inc.
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
ASSET PURCHASE AGREEMENT PAGE 48
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Affiliated Computer Services, Inc.
Attention: General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
And a copy to: ▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Buyer: Arbor E&T, LLC
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as hereafter
shall be designated in writing by the applicable party sent in accordance
herewith. Notwithstanding any other provision of this Agreement, if any
notification, communication or action is required or permitted to be given or
taken within a certain period of time and the last date for doing so falls on a
day that is not a Business Day, then the last day for such notification,
communication or action shall be extended to the first day thereafter that is a
Business Day.
14.3 Limitation On Damages. EACH PARTY AGREES THAT NO PARTY WILL BE LIABLE
FOR (i) EXEMPLARY, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES,
INCLUDING LOST PROFITS AND LOST REVENUES OR (ii) "COSTS OF COVER" (INCLUDING,
WITHOUT LIMITATION, COSTS OF PROCURING SUBSTITUTE PRODUCTS OR SERVICES) WHICH
ARISE DIRECTLY OR INDIRECTLY OUT OF THE PURCHASE, SALE AND/OR USE OF THE
PRODUCTS AND/OR SERVICES REFERENCED IN THIS AGREEMENT WHETHER SUCH DAMAGES ARE
ASSERTED IN AN ACTION BROUGHT IN CONTRACT, IN TORT OR PURSUANT TO SOME OTHER
THEORY AND WHETHER THE POSSIBILITY OF SUCH DAMAGES WAS MADE KNOWN OR WAS
FORESEEABLE. ACCORDINGLY, EACH PARTY AGREES TO
ASSET PURCHASE AGREEMENT PAGE 49
ASSUME THE RESPONSIBILITY FOR INSURING AGAINST OR OTHERWISE BEARING THE RISK OF
GREATER DAMAGES. THE LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION ARE
INTENDED TO LIMIT THE LIABILITY OF EACH PARTY AND WILL APPLY NOTWITHSTANDING THE
FAILURE OF THE ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
14.4 Disclaimer. BUYER ACKNOWLEDGES THAT EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED IN SECTION 4, (i) SELLER HAS NOT MADE ANY REPRESENTATION OR WARRANTY
REGARDING THE ACQUIRED ASSETS, (ii) THE ACQUIRED ASSETS THAT ARE "GOODS" FOR
PURPOSES OF ARTICLE 2 OF THE UNIFORM COMMERCIAL CODE ARE SOLD, DELIVERED AND
FURNISHED TO BUYER "AS IS" AND "WHERE IS" AND "WITH ALL FAULTS" and (iii) SELLER
DISCLAIMS ANY IMPLIED WARRANTY WITH RESPECT TO NON-INFRINGEMENT,
MERCHANTABILITY, DESIGN, CONDITION, DURABILITY, PERFORMANCE, QUALITY, CAPACITY,
TECHNICAL COMPATIBILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ACQUIRED
ASSETS.
14.5 Publicity. No party to this Agreement or its respective Affiliates
will issue any press release or make any public statement regarding this
Agreement or the Transaction, or regarding any of the other transactions
contemplated by this Agreement, without the prior written consent of the other
party (which consent shall not be unreasonably withheld), except that nothing in
this Section 14.5 shall prohibit a party from complying with the requirements of
any regulatory authority, Governmental Authority or any Applicable Law.
14.6 Headings. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
14.7 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement. This Agreement may be signed in
counterpart signature pages. The Transaction Documents may be executed and
delivered by facsimile transmissions and a facsimile signature (or PDF email of
signature pages) of any party shall be effective as an original signature.
14.8 Governing Law. UNLESS OTHERWISE EXPRESSLY PROVIDED FOR IN THE
TRANSACTION DOCUMENTS OTHER THAN THIS AGREEMENT, ALL OF THE TRANSACTION
DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL BE GOVERNED BY, CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, AND ENFORCEABLE UNDER, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE IN NEW YORK AND THAT ARE TO BE WHOLLY
PERFORMED IN NEW YORK WITHOUT REFERENCE TO THE CHOICE-OF-LAW PRINCIPLES OF NEW
YORK. WITHOUT LIMITATION OF THE PROVISIONS OF SECTION 14.16, VENUE FOR ANY
ACTION BROUGHT UNDER THE TRANSACTION DOCUMENTS SHALL BE IN THE APPROPRIATE
FEDERAL AND STATE COURTS LOCATED IN NEW YORK.
ASSET PURCHASE AGREEMENT PAGE 50
14.9 Successors and Assigns. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder nor by reason hereof nor any of the
documents executed in connection herewith may be assigned or delegated by any
party without the consent of the other parties, except that prior to Closing,
upon notice to Seller, Buyer may assign all rights and obligations under this
Agreement to a wholly-owned subsidiary of Res-Care provided that no such
assignment shall relieve Buyer or Res-Care of its obligations hereunder. Any
assignment or delegation in violation of this Section shall be void and
ineffective. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns.
14.10 Waiver. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
14.11 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
14.12 Severability. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
14.13 Parties in Interest. None of the provisions of this Agreement is
intended to provide any rights or remedies to any Person other than the parties
hereto and their respective successors and permitted assigns, if any.
14.14 Entire Agreement. The Transaction Documents set forth the entire
understanding of the parties hereto relating to the subject matter hereof and
thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof and thereof. The
Exhibits and Schedules and the other agreements identified in this Agreement are
incorporated herein by reference and made a part hereof. BUYER HEREBY AFFIRMS TO
SELLER THAT IN MAKING ITS DECISION TO ACQUIRE THE SUBJECT BUSINESS IT IS NOT
RELYING ON ANY REPRESENTATIONS OR PROMISES OF SELLER OTHER THAN THOSE
REPRESENTATIONS AND PROMISES OF SELLER EXPRESSLY CONTAINED IN THIS WRITTEN
AGREEMENT. SELLER HEREBY AFFIRMS TO BUYER THAT IN MAKING ITS DECISION TO SELL
THE SUBJECT BUSINESS IT IS NOT RELYING ON ANY REPRESENTATIONS OR PROMISES OF
ASSET PURCHASE AGREEMENT PAGE 51
BUYER OTHER THAN THOSE REPRESENTATIONS AND PROMISES OF BUYER EXPRESSLY CONTAINED
IN THIS WRITTEN AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN SELLER AND
BUYER.
14.15 Construction. For purposes of this Agreement, whenever the context
requires the singular number shall include the plural, and vice versa and the
masculine, feminine and neuter genders shall each be deemed to include the
others. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP. The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement. As
used in this Agreement, the words "include" and "including" and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words "without limitation." Except as otherwise
indicated, all references in this Agreement to "Sections", "Schedules" and
"Exhibits" refer to Sections of this Agreement and Schedules and Exhibits
attached to this Agreement. The reference to a particular "Section" shall mean
all matter included within that particular Section, such that, for example, a
reference to Section 14 shall mean and include all of Sections 14.1 thru 14.19,
inclusive and a reference to Section 14.16 shall mean all matter within Section
14.16 (a) thru (d), inclusive. The term "material" shall mean that a particular
matter or thing is important in the context of the Transaction taken as a whole.
Unless otherwise specifically provided, use of the word "or" in this Agreement
shall not be deemed to create an exclusive alternative.
14.16 Dispute Resolution. Subject to the provisions of Section 14.16(c),
any controversy or claim (a "Dispute") arising from or in connection with the
Transaction Documents, an alleged breach of the Transaction Documents or the
relationship of the parties under the Transaction Documents, whether based on
contract, tort, common law, equity, statute, regulation, order or otherwise,
shall be resolved as follows:
(a) Informal Resolution. First, upon written request of any party to the
Dispute, each party to the Dispute will appoint a designated representative. The
task of the designated representatives will be to meet for the purpose of
endeavoring to resolve such Dispute. The designated representatives shall have
the authority to make binding decisions and/or commitments on behalf of each
Person they represent. The designated representatives shall meet as often as
they reasonably deem necessary to resolve the Dispute without the necessity of
any formal proceeding. Unless delay would impair a party's rights under
applicable statutes of limitations, formal proceedings (including arbitration)
for the resolution of a Dispute may not be commenced until the earlier of: (i)
the designated representatives concluding in good faith that amicable resolution
through continued negotiation of the matter does not appear likely or (ii) the
expiration of the thirty (30) day period immediately following the initial
request to negotiate the Dispute.
(b) Arbitration. Failing resolution pursuant to subsection (a) next above,
the Dispute shall be finally settled by binding arbitration under the Commercial
Arbitration Rules established by the American Arbitration Association then in
effect as follows. Any party may initiate the arbitration following failure of
informal resolution of the Dispute pursuant to Section 14.16(a) by filing a
demand for arbitration with the American Arbitration Association, and
simultaneously delivering a copy of such demand to the other parties involved in
the Dispute. Unless otherwise
ASSET PURCHASE AGREEMENT PAGE 52
agreed by the parties, all such claims shall be arbitrated in New York, New
York. In any Dispute involving a claim equal to or less than $1 million, a
single arbitrator shall be employed and in any Dispute involving a claim in
excess of $1 million, three arbitrators shall be employed. Any arbitrator
employed shall act under the Commercial Rules of the American Arbitration
Association except as modified herein, and each arbitrator shall be a business
attorney in practice for at least 15 years, with substantial experience in the
negotiating and drafting of business acquisition agreements, and versed in New
York law. Unless the parties mutually agree upon the arbitrator(s) within thirty
(30) days of a demand for arbitration, the arbitrator(s) shall be selected by
the American Arbitration Association. Any arbitrator employed shall be bound by
the limitations of liability and other provisions of this Agreement, including
the governing law provision. It is the intent of the parties that the
arbitration shall be conducted in an efficient, economical and expeditious
manner. Accordingly, the parties shall meet in a pre-hearing conference as
promptly as practicable after selection of the arbitrator(s) to establish the
scope and extent of all discovery and the schedule of the arbitration. Discovery
shall be limited to that necessary to resolve the disputed issues, in the
judgment of the arbitrator(s). If any party wishes to take discovery, including
document productions, interrogatories or depositions, a request to do so must be
submitted to the arbitrator(s) in accordance with the procedures determined at
the pre-hearing conference. The arbitrator(s) may allow limited discovery, all
of which must be completed within twenty (20) Business Days of the arbitrators'
directive unless extended for good cause by the arbitrator(s). The decision of
the arbitrator(s) as to the validity and amount of Damages shall be binding and
conclusive upon the parties to this Agreement. The arbitrator(s) shall issue
such decision, including a brief statement of the reasons for the award and the
calculation of damages awarded, within twenty-five (25) Business Days after
completion of the arbitration hearing and deliver such decision to the parties
involved in the Dispute. Judgment upon any award rendered by the arbitrator(s)
may be entered in any court having jurisdiction. The non-prevailing parties
shall pay the reasonable expenses (including attorneys' fees) of the prevailing
party and the arbitrator fees and administrative expenses associated with the
arbitration.
(c) Excluded Disputes. The following matters are excluded from the Dispute
resolution requirements of this Section: (i) a cross-claim pursuant to an
indemnification obligation set forth in this Agreement in a proceeding filed by
a third party; (ii) a Dispute regarding ownership, infringement or violation of
intellectual property rights; (iii) Disputes involving Section 8.5 of this
Agreement and (iv) any formal proceedings commenced to avoid expiration of any
applicable limitations period, to preserve a superior position with respect to
other creditors or to seek temporary, preliminary or permanent injunctive
relief. The filing of a court action to enable the recording of a notice of
pending action, receivership, or injunction shall not constitute a violation of
this Section.
(d) Other Resolution. If a Dispute cannot be fully or finally resolved
pursuant to the preceding provisions of this Section, the parties may seek
resolution by litigation or other proceedings.
14.17 Time of Essence. With respect to a specific date or specific time
period set forth herein, time is of the essence.
14.18 Disclosure Schedules. The information in the Schedules constitutes
(i) exceptions
ASSET PURCHASE AGREEMENT PAGE 53
to particular representations, warranties, covenants and obligations of Seller
as set forth in this Agreement, (ii) lists of specific items or people as set
forth in this Agreement, or (iii) descriptions of items referred to in this
Agreement. In the event there is any inconsistency between the statements in
this Agreement and other statements in the Schedules, other than as set forth in
clause (i), (ii) or (iii) in the preceding sentence, the statements in this
Agreement will control. Inclusion of information in the Schedules shall not
constitute an admission or raise any inference that such information rises to a
level of materiality or is determinative of any standard of materiality. Matters
disclosed on a Schedule shall be deemed to be disclosed with respect to those
sections of the Agreement to which such disclosure expressly relates and not to
any other provision of this Agreement.
14.19 Seller Party. To the extent any of the Acquired Assets are owned by
Concera Corporation and such Acquired Assets cannot be assigned to Seller prior
to the Closing Date, Concera Corporation shall be treated as the "Seller" of
such Acquired Assets under this Agreement for all purposes, including, but not
limited to, any related indemnity obligations set forth in Section 13 hereof.
[Signature Page Follows]
ASSET PURCHASE AGREEMENT PAGE 54
The parties hereto have caused this Agreement to be executed and delivered
as of the date and year first above written.
SELLER:
ACS STATE & LOCAL SOLUTIONS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
BUYER:
ARBOR E&T, LLC
By: /s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇
Vice President
As to matters described in Section 14.19 of this Agreement.
CONCERA CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
For the limited purpose of guaranteeing the performance of Seller's
indemnification obligations under Section 13 of this Agreement.
ACS:
AFFILIATED COMPUTER SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
For the limited purpose of guaranteeing the performance by Buyer of its
obligations in Section 3 and Buyer's indemnification obligations in Section 13
of this Agreement.
RES-CARE:
RES-CARE, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇
Chief Development Officer
