ASSET PURCHASE AGREEMENT
Among
TEMPORARY SKILLS UNLIMITED, INC.,
dba TSU STAFFING,
XXXXXXX X. XXXXXX, XXXXX X. XXXXXX,
and
XXXXXXX BUSINESS SERVICES, INC.
Dated
May 31, 1999
TABLE OF CONTENTS
1. Purchase and Sale of Assets...................................................................................2
1.1 Equipment...........................................................................................2
1.2 Leases; Rental Agreements; Leasehold Improvements...................................................2
1.3 Customer Contracts..................................................................................3
1.4 Customer Lists......................................................................................3
1.5 Employee Lists and Files............................................................................3
1.6 Trade Names, Logos, Intellectual Property, Etc......................................................4
1.7 Manuals.............................................................................................4
1.8 Books and Records...................................................................................4
1.9 Goodwill............................................................................................5
1.10 Deposits and Prepaid Items.........................................................................5
1.11 Supplies...........................................................................................5
1.12 Other Property.....................................................................................5
1.13 Certain Accounts Receivable........................................................................5
2. Assets to be Excluded From Sale...............................................................................5
2.1 Cash................................................................................................5
2.2 Receivables.........................................................................................5
2.3 Employee Benefits; Pension Plans....................................................................6
2.4 Stale Dated Checks..................................................................................6
2.5 Vehicles and Personal Property..................................................................6
2.6 Affiliated Companies............................................................................6
2.7 Deposits and Prepaid Items......................................................................6
3. Other Agreements..............................................................................................6
3.1 Selling Shareholder's Noncompetition Agreement......................................................6
3.2 Assignment of Lease(s) and Contracts................................................................6
3.3 Employment Agreement................................................................................6
4. Effective Date and Transactions at and Subsequent to the Effective Date.......................................7
4.1 Closing and Effective Date..........................................................................7
4.2 Effective Date Obligations..........................................................................7
4.3 Obligations Subsequent to the Effective Date........................................................8
5. No Assumption of Liabilities; Employee Matters; Prorates; Lease and Rental Obligations........................9
5.1 No Assumption of Liabilities........................................................................9
5.2 Employee Matters....................................................................................9
5.3 Prorations.........................................................................................10
5.4 Lease and Rental Obligations.......................................................................10
5.5 Buyer's Right to Pay...............................................................................10
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6. Purchase Price; Payment......................................................................................11
6.1 Purchase Price.....................................................................................11
6.2 Allocation of Purchase Price.......................................................................11
6.3 Internal Revenue Service Form 8594.................................................................11
6.4 Payment of Purchase Price..........................................................................12
6.5 Adjustment of Purchase Price.......................................................................12
6.6 Selling Shareholder's Noncompetition Agreement.....................................................12
7. Representations and Warranties...............................................................................12
7.1 Selling Shareholder's and Seller's Representations and Warranties..................................12
(a) Organization..............................................................................12
(b) Corporate Authority.......................................................................13
(c) Effect of Agreement.......................................................................13
(d) Title and Condition of Assets.............................................................13
(e) Financial Statements; Tax Returns.........................................................14
(f) No Undisclosed Liabilities; Information...................................................15
(g) No Adverse Change.........................................................................15
(h) Trade Secrets; Complete and Authentic Documents and Lists.................................18
(i) Assignability; Consents...................................................................19
(j) Legal Proceedings; Liabilities; Solvency..................................................19
(k) Compliance with Laws......................................................................20
(l) Employment Matters........................................................................20
(i) Labor Matters................................................................20
(ii) Employment Compliance and Claims.............................................20
(iii) Employee Benefits....................................................21
(iv) Employment Agreements........................................................22
(v) Compensation.................................................................22
(vi) Severance....................................................................23
(m) Intellectual Property.....................................................................23
(n) Absence of Defaults.......................................................................24
(o) Taxes.....................................................................................24
(p) Books of Account..........................................................................25
(q) No Omission of Material Fact..............................................................26
(r) Workers' Compensation.....................................................................26
(s) Environmental Protections, Occupational Safety, and Other Statutes and Regulations........26
(t) Insurance.............................................................................28
(u) Leases................................................................................29
(v) Permits, Licenses and Compliance with Applicable Laws.................................29
(w) Brokers and Finders...................................................................29
(x) No Interest in Competitors, Etc.......................................................30
(y) Supplements to Representations, Warranties and Schedules..............................30
(z) Materiality Standard..................................................................30
(aa) Knowledge Standard....................................................................31
7.2 Buyer's Representations and Warranties.............................................................31
(a) Organization..............................................................................31
(b) Corporate Authority.......................................................................31
(c) Brokers and Finders.......................................................................31
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8. Covenants....................................................................................................32
8.1 Seller's and Selling Shareholder's Covenants.......................................................32
(a) Payment of Retained Liabilities...........................................................32
(b) Postclosing Inquiries.....................................................................32
(c) Change of Seller's Name...................................................................32
(d) Financial Reporting.......................................................................32
(e) Seller's Tax Liabilities..................................................................33
(f) Postclosing Action........................................................................33
(g) Tax Clearance.............................................................................33
(h) Covenant Not to Compete of Seller; Confidentiality........................................33
9. Effect of Survival of Representations and Warranties; Indemnification; Bulk Sales; Setoff....................35
9.1 Effect and Survival of Representations and Warranties by Seller and Selling Shareholder;
Indemnification by Seller and Selling Shareholder; Bulk Sales; Setoff..........................35
(a) True on Effective Date....................................................................35
(b) Survival Past Effective Date..............................................................35
(c) Indemnification by Seller and Selling Shareholder.........................................36
(d) Bulk Sales Indemnification................................................................36
(e) Buyer's Right of Setoff...................................................................37
9.2 Effect and Survival of Representations and Warranties of Buyer; Indemnification by Buyer...........37
(a) True on Effective Date....................................................................37
(b) Survival Past Effective Date..............................................................37
(c) Indemnification by Buyer..................................................................37
10. Conditions to Obligations to Close..........................................................................38
10.1 Conditions to Buyer's Obligations to Close........................................................38
(a) Continued Truth of Representations and Warranties.........................................38
(b) Performance of Covenants..................................................................38
(c) Authorization and Corporate Documents.....................................................38
(d) Delivery of Documents.....................................................................39
(e) No Litigation.............................................................................39
(f) Consents..................................................................................39
(g) No Material Adverse Change................................................................39
10.2 Conditions to Seller's Obligations to Close.......................................................39
(a) Continued Truth of Representations and Warranties.........................................39
(b) Authorization and Corporate Documents.....................................................39
(c) Performance...............................................................................39
11. Collection of Accounts Receivable...........................................................................39
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12. Miscellaneous...............................................................................................41
12.1 Waiver of Conditions..............................................................................41
12.2 Expenses..........................................................................................41
12.3 Further Assurances and Additional Instruments.....................................................41
12.4 Notices...........................................................................................42
12.5 Headings..........................................................................................42
12.6 Binding on Successors and Assigns.................................................................42
12.7 Governing Law.....................................................................................42
12.8 Intentionally Left Blank..........................................................................42
12.9 Entire Agreement; Amendment.......................................................................42
12.10 Recitals.........................................................................................42
12.11 Schedules........................................................................................42
12.12 Counterparts.....................................................................................42
12.13 Default and Remedies; Right of Offset............................................................42
12.14 Severability.....................................................................................43
12.15 Attorneys Fees...................................................................................43
12.16 Postjudgment Attorneys Fees......................................................................43
12.17 Cross Default....................................................................................43
12.18 Gender...........................................................................................43
12.19 Public Announcement..............................................................................43
12.20 Counsel..........................................................................................44
12.21 No Duress........................................................................................44
12.22 Time of Essence..................................................................................45
List of Schedules:
Number
1.1...............Equipment
1.2...............Leases; Rental Agreements; Leasehold Improvements
1.3...............Customer Contracts
1.4...............Customer Lists
1.5...............Employee Lists and Files
1.6...............Trade Names, Logo's, Etc.
1.10..............Deposits and Prepaid Items
1.12..............Other Property
2.5...............Excluded Equipment and Personal Property
3.1...............Selling Shareholder's Noncompetition Agreement
3.2...............Form of Assignment
3.3...............Employment Agreement
6.3...............Form 8594
6.4...............Promissory Note
7.1(h)............Business Relationships
7.1(i)............Assignability of Contracts
7.1(j)............Litigation
7.1(l)............Employment Matters
7.1(t)............Insurance
All schedules have been omitted. Copies will be furnished to the Commission
supplementally upon request.
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ASSET PURCHASE AGREEMENT
EFFECTIVE
DATE: May 31, 1999
PARTIES: TEMPORARY SKILLS UNLIMITED, INC., ("Seller")
a California corporation,
dba TSU Staffing
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx XX 00000
EIN: 00-0000000
XXXXXXX X. XXXXXX and ("Selling Shareholder")
XXXXX X. XXXXXX
0000 Xxxxx Xxxx Xxxx
Xxxx XX 00000
Xxxxxxx X. Xxxxxx
SS No.: ###-##-####
Xxxxx X. Xxxxxx
SS No.: ###-##-####
XXXXXXX BUSINESS SERVICES, INC., ("Buyer")
a Maryland corporation,
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx XX 00000-0000
EIN: 00-0000000
RECITALS:
WHEREAS, the Selling Shareholder is the owner of all of the outstanding
stock of Seller, a corporation, which is engaged in the business of providing
light industrial and clerical staffing on a temporary basis to clients primarily
engaged in administration, distribution and production operations;
WHEREAS, the Seller was incorporated in California on March 12, 1979;
WHEREAS, Buyer operates a temporary employee, employee services and
employee leasing business;
WHEREAS, Buyer desires to buy certain assets from the Seller;
WHEREAS, the Seller and Selling Shareholder wish to enter into an Asset
Purchase Agreement with Buyer, wherein Buyer will
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purchase from Seller certain assets designated in this Asset Purchase Agreement;
WHEREAS, Buyer, Selling Shareholder and Seller have negotiated the
general terms and conditions that are to govern the sale of certain assets
designated herein, all relating to Seller's business (the "Business") and
contained in a letter dated April 1, 1999;
WHEREAS, as contemplated in the negotiations, the parties now desire to
set forth certain representations, warranties, covenants, and agreements made as
an inducement to the execution and delivery of this Asset Purchase Agreement
(the "Agreement"); and
WHEREAS, as an integral part of this Agreement, Selling Shareholder
will execute a noncompetition agreement wherein Selling Shareholder will agree
not to compete with Buyer in the Restricted Area (as defined herein).
AGREEMENT:
NOW, THEREFORE, Buyer, Seller and Selling Shareholder agree as follows:
1. Purchase and Sale of Assets. Subject to the terms and conditions and
in reliance upon the representations, warranties, covenants, and agreements
contained in this Agreement, Seller shall sell, convey, transfer, assign, and
deliver to Buyer and Buyer shall purchase all of the following assets
(collectively called the "Assets") of Seller, as of the Effective Date, as
hereinafter defined. The Assets described below in Sections 1.3 through 1.9, and
the intangible assets identified in Section 1.12 of this Section 1, are
collectively called the "Intangibles":
1.1 Equipment. The equipment, furniture, fixtures, computers,
and supplies used in connection with the Business, which shall include, but not
be limited to, those items set forth on Schedule "1.1," which is attached
hereto, and by this reference incorporated herein, together with any
replacements or additions to the equipment, etc., made before the Effective Date
(the "Equipment").
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1.2 Leases; Rental Agreements; Leasehold Improvements. All
equipment leases, real property rental agreements or leases used in connection
with the operation of the Business as listed and described on Schedule "1.2,"
which is attached hereto and by this reference incorporated herein, and all
leasehold improvements installed or created by Seller on the premises that are
the subject of the real property leases or rental agreements identified on
Schedule "1.2." Notwithstanding the foregoing, the Seller shall sublease the
Concord corporate office to Buyer on a month-to-month basis during the
transition period. Buyer shall give Seller 60 days' notice of an intent to
terminate Buyer's occupancy of the Concord office.
1.3 Customer Contracts. The originals or copies (if Seller
cannot locate the originals) of all of Seller's written customer contracts
wherein Seller provides temporary employees and staffing services to its
customers (the "Customer Contracts"). A list of such Customer Contracts is
attached hereto, marked as Schedule "1.3," and by this reference incorporated
herein.
1.4 Customer Lists. All of Seller's customers and clients are
set forth and listed on Schedule "1.4," attached hereto, and by this reference
incorporated herein (the "Customer Lists"). In addition to the above-referenced
Customer Lists, on the Effective Date, Seller shall transfer to Buyer, by hand
delivery, a hard copy or by electronic means, Seller's complete Customer Lists
and customer information that is in Seller's possession and such information
that is stored in Seller's computers or on disks.
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1.5 Employee Lists and Files. Seller has two (2) distinctly
different types of employees. One group consists of employees who currently
perform the function of operating the Business of the Seller ("Staff
Employees"). The other group of employees are those who perform services for the
customers of Seller in the capacity of a temporary employee ("Temporary
Employees"). Reference to employees, without reference to "staff" or
"temporary," shall include both Staff Employees and Temporary Employees. The
information contemplated by this Section 1.5, shall be set forth on Schedule
"1.5," attached hereto and by this reference incorporated herein. The
information contemplated for Schedule "1.5" at Section 1.5(a) and Section 1.5(b)
shall be either on Schedule "1.5" or maintained at the existing situs where the
operations of Seller occur, in either written or accessible electronic form. Any
information that is to be delivered pursuant to Section 1.5(a) or 1.5(b), but
that is not attached to this Agreement, is incorporated into this Agreement as
though fully set forth herein. Seller shall affirmatively state on Schedule
"1.5" the information that will not be attached to the Agreement and describe
the exact location of such information and whether such information is in hard
copy or electronic form or both. Seller certifies that all such information is
complete, accurate and readily accessible to Buyer:
(a) A list of Seller's Temporary Employees, all data
from the Temporary Employees' employment applications and the Temporary
Employees' work history ("Temporary Employee Files");
(b) A list of all of Seller's Temporary Employees who
received any form of compensation from Seller during the period of January 1,
1997, through the Effective Date ("Written Temporary Employee List");
(c) A written list of all of Seller's Staff Employees
("Staff Employee List");
(d) The originals and/or legible copies of all Staff
Employees' employment applications, complete personnel files and work history
while employed by Seller ("Staff Employee Files");
(e) The names, titles and current salaries of all
officers, directors and Staff Employees of Seller;
(f) The wage rates and commission schedules (or
ranges, if applicable) for each class of exempt and nonexempt, salaried and
hourly Staff Employees of Seller;
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(g) All scheduled or contemplated increases in Staff
Employee compensation or bonuses;
(h) All scheduled or contemplated Staff Employee
promotions;
(i) All vacation time due each Staff Employee; and
(j) All sick time due each Staff Employee.
1.6 Trade Names, Logos, Intellectual Property, Etc. All United
States and foreign trademarks, copyrights, service marks, and trade names used
or owned by Seller, including, specifically, "Temporary Skills Unlimited" and
"TSU Staffing," all registrations for them, all applications pending for them,
and rights and privileges that accrue therefrom and trademarks and logos, patent
and patent applications, employee covenants and agreements respecting
intellectual property used or owned by Seller in connection with the Business,
which are set forth on Schedule "1.6," which is attached hereto, and by this
reference incorporated herein, and any and all variations thereof.
1.7 Manuals. All of Seller's manuals, written warranties,
operating forms, forms of contracts, and agreements used for customers,
application forms, reference check forms, standard operating procedures, and
other similar forms and documents used in the Business or respecting the Assets.
1.8 Books and Records. Legible copies of all of Seller's
books, records, computer programs, and related software, financial statements
and tax returns used in connection with the Business which shall be made
available to Buyer upon reasonable request.
1.9 Goodwill. Seller's goodwill.
1.10 Deposits and Prepaid Items. All of Seller's deposits and
prepaid expenses of any kind or nature which are set forth and described, along
with the amounts thereof, on Schedule "1.10" attached hereto, and by this
reference incorporated herein (the "Deposits").
1.11 Supplies. All of Seller's inventory of supplies (e.g.,
paper, forms, writing equipment, cleaning supplies) and like kind or consumable
materials utilized in the normal and ordinary operation of the Business.
1.12 Other Property. All assignable rights and other property,
tangible or intangible, including Seller's telephone numbers and yellow page
contract or advertising, used in the Business, as set forth on Schedule "1.12,"
which is attached hereto and by this reference incorporated herein ("Other
Property"), and except the assets described in Section 2 below.
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1.13 Certain Accounts Receivable. All of Seller's accounts
receivable for services provided during the weeks ending May 2, May 9, May 16,
and May 23, 1999, which have the same invoice date as such weeks' ending dates
and that are still outstanding as of the Effective Date, subject to Buyer's
right to transfer and sell back to Seller such accounts receivable that Buyer
has not collected within 90 days after the Effective Date, as more particularly
described at Section 11. Seller shall provide to Buyer a detailed list of said
accounts receivable aging and those accounts receivable that are still
outstanding as of the close of business on May 28, 1999, by overnight courier to
be received by Buyer on Sunday, May 30, 1999. The accounts receivable
information described herein shall be delivered to Buyer at Buyer's corporate
office or such other location as designated by Buyer.
2. Assets to be Excluded From Sale. The Assets to be sold under this
Agreement shall not include the following:
2.1 Cash. Cash and cash equivalents earned up to the Effective
Date.
2.2 Receivables. Those Seller receivables, except those
referred to in Section 1.13 above, both internal or external, that result from
Seller's Business. Buyer will, however, collect all of Seller's accounts
receivable for 90 days after the Effective Date. Receivables include, but are
not limited to, reimbursement for embezzlement through the criminal law system
and/or civil law system, existing judgments and monies collected thereon, and
suits in progress or later filed (including actions in contract or tort) to the
extent each relates to underlying matters that took place prior to the Effective
Date.
2.3 Employee Benefits; Pension Plans. Any employee benefit,
health or welfare plan, profit sharing or pension plans of Seller and policies
entered into or issued under the employee benefit, profit sharing or pension
plans; provided, however, that Buyer shall reimburse and pay to Seller the
amount of premiums actually paid by Seller for Seller's Employees' medical plans
and life insurance plans for the month of June 1999.
2.4 Stale Dated Checks. Stale dated checks written by Seller.
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2.5 Vehicles and Personal Property. The Vehicles and personal
property listed on Schedule "2.5," which is attached hereto, and by this
reference incorporated herein.
2.6 Affiliated Companies. The stock or ownership interest in
any other corporation or entity owned or controlled by Seller or Selling
Shareholder.
2.7 Deposits and Prepaid Items. All deposits and prepaid
expenses, except those listed on Schedule "1.10" to be paid for by Buyer to
Seller pursuant to Section 4.3(d).
3. Other Agreements. At Closing, as hereinafter defined, Seller,
Selling Shareholder, Buyer, and others shall execute and deliver to one another
the following agreements, as appropriate:
3.1 Selling Shareholder's Noncompetition Agreement. Selling
Shareholder, at Closing, shall each have executed and delivered to Buyer a
separate covenant not to compete ("Selling Shareholder's Noncompetition
Agreement") restricting each Selling Shareholder's ability to compete with Buyer
for five (5) years after the Effective Date. A copy of the Selling Shareholder's
Noncompetition Agreement, as hereinafter defined, is attached hereto, marked as
Schedule "3.1," and by this reference incorporated herein.
3.2 Assignment of Lease(s) and Contracts. Effective on the
Effective Date, as hereinafter defined, Seller, Buyer and Seller's landlord
shall execute an Assignment of Lease ("Assignment") for each lease described in
Schedule "1.2." Each Assignment by Seller shall contain the consent to
assignment by the landlord, the lessor, or the other contracting party, as the
case may be. A copy of the form of Assignment is attached hereto, marked as
Schedule "3.2."
3.3 Employment Agreement. At Closing, as hereinafter defined,
Xxxxxxx X. Xxxxx and Buyer shall enter into an employment agreement ("Employment
Agreement") wherein Xxxxxxx X. Xxxxx shall be employed by Buyer on a full-time
basis subject to the terms and conditions contained therein. A copy of the
Employment Agreement is attached hereto, marked as Schedule "3.3," and by this
reference incorporated herein.
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4. Effective Date and Transactions at and Subsequent to the Effective
Date.
4.1 Closing and Effective Date. The Closing of the sale and
purchase of Assets (the "Closing") shall conclude on Tuesday, June 1, 1999. The
effective date of this Agreement shall be 12:01 a.m., on May 31, 1999, which
shall hereafter be referred to as the "Effective Date."
4.2 Effective Date Obligations.
(a) Seller, as necessary to effectuate the purpose
and intent hereof, shall execute and deliver to Buyer such bills of sale,
assignments and other documents and instruments of assignment, transfer and
conveyance, and consents and waivers in such form as shall be satisfactory to
counsel for Buyer and counsel for Seller, as are necessary to vest in Buyer good
and marketable title to all of the Assets, free and clear of any lien,
encumbrance or security interest.
(b) Seller shall deliver to Buyer possession of the
Customer Lists, Customer Contracts, Temporary Employee Files, Written Temporary
Employee List, and Staff Employee Files. Seller shall also deliver the following
items that are in Seller's possession: computer hardware, software and/or disks
containing the above information, sales materials, catalogs, brochures, price
lists, advertising and marketing materials, and similar materials and other
similar documents respecting the Assets and the Business. Delivery may be deemed
completed by properly identifying such items that shall be located at Seller's
Premises.
(c) Seller shall execute and deliver to Buyer the
Assignment(s) of such leases and rental agreements as described on Schedule
"1.2," with appropriate landlord, lessor or other contracting party consents.
(d) Seller, Selling Shareholder and Buyer shall
execute and deliver any and all such documents, instruments and agreements
described in Section 3, including, specifically, the Selling Shareholder's
Noncompetition Agreement among Seller, Buyer and Selling Shareholder, which are
required to consummate this transaction in accordance with the terms of this
Agreement.
(e) Buyer shall deliver to Seller the amount of the
purchase price and the note as consideration for the Assets as determined
pursuant to this Agreement.
(f) Buyer shall deliver to each Selling Shareholder
the sums set forth in the Selling Shareholder's
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Noncompetition Agreement.
(g) Seller shall have terminated its Staff Employees
as of the end of business on May 30, 1999, and shall have paid the Staff
Employees their regular compensation on or before June 2, 1999, for the Staff
Employees' services through May 31, 1999. By June 2, 1999, Seller shall pay its
Staff Employees any and all amounts that may be due to said Staff Employees for
their employment with Seller which shall include, if any, health benefits and
accrued sick leave, or other accrued obligations of the Seller to the Staff
Employees.
(h) On June 14, 1999, Seller shall pay to Buyer the
full amount of the accrued vacation time of Seller's Employees as of the
Effective Date. Buyer shall assume Seller's Employees' accrued vacation time as
of the Effective Date.
4.3 Obligations Subsequent to the Effective Date.
(a) No later than Friday, June 4, 1999, Seller shall
pay its payroll obligations for all of its Temporary Employees for services
rendered up to and including 12:00 midnight, May 30, 1999, by payment to the
Temporary Employees, who have submitted the required time cards by Thursday,
June 3, 1999, all amounts of compensation, bonuses, incentive payments, fringe
benefits, or any other amount then accrued and due and payment of all payroll
obligations and the filing of all returns, including taxes and other direct
expenses when such obligations become due, with quarterly payments and
adjustments on or before the due date for such obligations. Seller shall make
adequate provision for the payment of the foregoing obligations that are not yet
due and upon request from Buyer, provide Buyer with proof of Seller's ability to
satisfy such obligations. Such payroll obligations shall include payment of
wages, benefit payments, vacation, pension contributions, income tax,
withholding, FICA obligations, workers' compensation premiums and costs,
unemployment and other payroll obligations which are the obligation of Seller
directly, or that sum or amount which is withheld from Temporary Employees'
compensation, pursuant to either federal, state or local statute or law. Seller
shall provide Buyer proof of such payment within ten (10) days after each due
date of any return for the period ending June 30, 1999, or later, relating to
said payroll obligations and shall afford Buyer an opportunity to inspect its
books and records to verify that said payments were paid in full. Seller's final
payment to its Temporary Employees shall be accompanied with a notice of
termination of employment of said Temporary Employees, as of May 30, 1999.
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(b) Buyer shall pay certain Temporary Employees of
Seller for services of such Temporary Employees that occurred before the
Effective Date, but for which no Temporary Employees' time card was submitted to
Seller by Thursday, June 3, 1999. Buyer shall be entitled to the full amount of
the account receivable from Seller's customer as it relates to such Temporary
Employees, including the profit margin.
(c) Seller agrees to reimburse Buyer for all holiday
pay paid in connection with May 31, 1999 (Memorial Day) within seven (7) days of
presentment of total actual holiday pay paid by Buyer to all former Employees of
Seller.
(d) No later than June 14, 1999, Buyer shall pay to
Seller, the amount, if any, for the items listed on Schedule "1.10," which have
been acquired by Buyer.
5. No Assumption of Liabilities; Employee Matters; Prorates; Lease and
Rental Obligations.
5.1 No Assumption of Liabilities. Except as provided in
Section 5.4 below, it is expressly understood and agreed that Buyer shall not
assume, nor shall it be liable for, and Seller and Selling Shareholder shall
retain and pay or perform, any liability, indebtedness (including, without
limitation, indebtedness to current shareholder or former shareholders,
directors, officers or employees of Seller), obligation, claim against or
contract of Seller of any kind or nature whatsoever, at any time existing or
asserted, whether or not accrued, whether fixed, contingent or otherwise,
whether known or unknown, and whether or not recorded on the books and records
of Seller, including, without limitation, any tax liability, any liability in
respect of employment matters, labor relations or practices, any environmental,
safety or health liability, or any liability for legal, accounting (except for
the accounting fees incurred for the audit of the financial statements of
December 27, 1998, performed by Xxxxxx & Xxxxxx, P.C., CPA's, pursuant to letter
of engagement dated April 19, 1999) and other expenses of Seller or Selling
Shareholder in connection with the preparation and execution of this Agreement
and the consummation of the transactions contemplated by this Agreement.
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5.2 Employee Matters. Seller shall be responsible for all
wages, bonuses, commissions, vacations, accrued vacation time, accrued sick
leave, medical, fringe and/or profit sharing benefits or contributions that are
earned, accrued or may accrue or COBRA continuation health coverage as to any
current or former Employees, the withholdings, workers' compensation, payroll
deductions, benefits and claims of its Staff Employees and Temporary Employees
through the Effective Date. Any claim or cost associated with or arising from
any claim of any of Seller's Staff Employees or Temporary Employees, from
Seller's termination of any Staff Employee or Temporary Employee, any grievance
or claim of any nature arising out of any labor agreements or other employment
relationship between Seller and its Staff Employees or Temporary Employees, any
claim for unemployment compensation, or any claim arising out of Seller's or
Selling Shareholder's activities prior to the Effective Date shall be the
responsibility of Seller and/or Selling Shareholder, as the case may be. Buyer
shall have no obligation to employ any Staff Employee or Temporary Employee of
Seller, but Buyer may interview Seller's current Staff Employees or Temporary
Employees and consider employing them. The parties agree that Buyer shall not be
deemed to be the employer for any Staff Employee or Temporary Employee claims or
actions that arose or accrued while employed by Seller or Selling Shareholder
whether or not later hired by Buyer.
Seller shall, within 30 days of the Effective Date, calculate
the bonuses and commissions due to its Staff Employees for all periods prior to
the Effective Date and provide funds to Buyer to allow Buyer to make such
payment on Seller's behalf to such Staff Employees. Seller and Selling
Shareholders shall be liable for all such obligations and if a dispute should
arise relating to such Pre-effective Date employment or compensation, Seller and
Selling Shareholders shall indemnify and defend Buyer and hold Buyer harmless
from any and all liability relating thereto, including any attorneys fees and
costs incurred by Buyer relating to any such claims or disputes.
5.3 Prorations. Insurance, personal property taxes and
assessments, rents, utility charges, any prepaid items, and similar items, if
applicable, shall be prorated as of the Effective Date. Said prorations shall be
based on the number of calendar days of the relevant period. At the Closing or
such later time when such prorations have been determined, Seller shall present
to Buyer a statement of prorations, which shall be adjusted after the Closing by
cash payment from one party to the other due within 30 days of demand.
5.4 Lease and Rental Obligations. Buyer shall assume the
leases and rental obligations set forth on Schedule "1.2," if any, by way of
assignment of such lease or rental agreement from
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the Seller to Buyer, from and after the Effective Date, provided each lease or
rental agreement is (i) not in default in payment or performance of any
obligations relating to said lease or rental agreement, and (ii) properly
assigned with the consent of the landlord or lessor who shall certify that the
lease or rental agreement is not in default, that all obligations have been paid
in full, that there are no deferred obligations not yet due and that Seller has
performed all other acts required of Seller.
5.5 Buyer's Right to Pay. In the event Seller fails to make
any payment of taxes, assessments, lease or rental payments, insurance premiums,
or other charges that Seller is required to pay to third parties under this
Agreement, Buyer shall have the right, but not the obligation, to pay the same
after having first given Seller 14 days' advance written notice of its intention
to pay said amount, Seller shall have 14 days from the date of said notice to
object to any such payment being made. Any such objection shall be in writing
and faxed or delivered to Buyer within said 14-day period. Seller will reimburse
Buyer for any such payment immediately upon Buyer's demand, together with
interest at the same rate provided in the Note from the date of Buyer's payment
until Seller reimburses Buyer. Any such payment by Buyer shall not constitute a
waiver by Buyer of any remedy available by reason of Seller's default for
failure to make the payments nor shall constitute a waiver by Seller of any
remedy available to Seller against Buyer or the third party as a result of such
payment being made over Seller's objection. Buyer may exercise the right of
offset (as described at Section 12.13) to collect any amount due under this
Section.
6. Purchase Price; Payment.
6.1 Purchase Price. The purchase price for the Assets, except
for certain accounts receivable referred to at Section 1.13, shall be Eight
Million Six Hundred Forty-five Thousand Dollars ($8,645,000), plus One Million
Seven Hundred Ninety-seven Thousand Three Hundred Sixty-six Dollars ($1,797,366)
for certain accounts receivable, for a total of Ten Million Four Hundred
Forty-two Thousand Three Hundred Sixty-six Dollars ($10,442,366) (the "Purchase
Price"), allocated as follows:
(a) Equipment and Leasehold
Improvements $ 286,535
(b) Seller's covenant not
to compete $ 20,000
(c) Goodwill $ 8,338,465
----------
Subtotal $ 8,645,000
----------
- 12 -
(d) Certain Accounts Receivable $ 1,797,366
Total $10,442,366
===========
6.2 Allocation of Purchase Price. The Purchase Price
allocation shall be in accordance with the governing provisions of Section 1060
of the Internal Revenue Code.
6.3 Internal Revenue Service Form 8594. Each party shall
prepare and file with the Internal Revenue Service Form 8594, setting forth the
allocations stated above and such allocations shall be in compliance with
Section 1060 of the Internal Revenue Code. An identical copy of the filled-in
Form 8594, is to be filed with Seller's and Buyer's respective tax returns for
the tax period in which this transaction occurs. A copy of said Form 8594 is
attached hereto, marked as Schedule "6.3," and by this reference incorporated
herein.
6.4 Payment of Purchase Price. The Purchase Price will be paid
to Seller as follows:
(a) At Closing, a portion of the Purchase Price, in
the form of wire transfer in the amount of Nine Million Five Hundred
Seventy-seven Thousand Eight Hundred Sixty-six Dollars ($9,577,866), will be
paid by Buyer to Seller.
(b) The balance of the Purchase Price of Eight
Hundred Sixty-four Thousand Five Hundred Dollars ($864,500), shall be paid to
Seller in accordance with the terms of a promissory note in the form attached
hereto as Schedule "6.4" ("Note"), which Note shall be delivered to Seller at
Closing.
6.5 Adjustment of Purchase Price. The Purchase Price may be
adjusted in accordance with the provisions of this Agreement, including, but not
limited to, Sections 11 and 12.13.
6.6 Selling Shareholder's Noncompetition Agreement. By
separate agreement, as described in Section 3.1, and in consideration of payment
of sums specified therein, Xxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx have each
agreed not to compete with Buyer after the Effective Date within a certain
geographical area and for a specified period of time.
- 13 -
7. Representations and Warranties.
7.1 Selling Shareholder's and Seller's Representations and
Warranties. Selling Shareholder and Seller, jointly and severally, represent and
warrant to Buyer as follows:
(a) Organization. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of California, is qualified to do business in each other jurisdiction where the
conduct of its Business or the ownership of its properties requires such
qualification, and has full corporate power, authority and legal right to carry
on its Business as presently conducted, to own and operate its properties and
Assets, and to execute, deliver and perform this Agreement to sell Assets.
Copies of Seller's Articles of Incorporation and Bylaws have been delivered to
Buyer and are complete and correct as at the date hereof. Seller's minute books,
which Buyer has received and reviewed during Buyer's due diligence, contain a
complete and accurate record of all corporate resolutions and other corporate
action of its shareholders and board of directors. Seller has not issued and
there are not outstanding any warrants, options or other rights to acquire
shares of Seller.
(b) Corporate Authority. The execution, delivery and
performance by Seller and Selling Shareholder of this Agreement and the
consummation of the transaction contemplated by this Agreement, have, with
respect to Seller, been duly and properly unanimously authorized by the board of
directors and shareholders of Seller, and violates no agreement between Seller
and/or Selling Shareholder and any third party. This Agreement has been duly and
validly executed and delivered by each of Seller and Selling Shareholder,
respectively, and constitutes a valid and binding obligation of Seller and
Selling Shareholder, respectively, enforceable against Seller and/or Selling
Shareholder in accordance with its terms.
(c) Effect of Agreement. The execution, delivery and
performance of this Agreement by Seller and Selling Shareholder in consummation
of the transaction contemplated hereby will not:
(i) violate any provision of law, statute, rule
or regulation or any judgment, order, writ, or decree of any court applicable to
Seller or Selling Shareholder; or
(ii) result in the breach of or conflict with
any term, covenant, condition, or provision of, result in the modification or
termination of, or constitute a default under the Articles of Incorporation or
Bylaws of the Seller; or
- 14 -
(iii) render Seller insolvent when considering
all of the assets and liabilities of Seller; or
(iv) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under any
material terms, conditions or provisions of any note, bond, mortgage, indenture,
license, permit, lease, agreement, or other instrument or obligation to which
Seller is, or Selling Shareholder is, a party or by which Seller, Selling
Shareholder, or the Assets may be bound; or
(v) result in the creation or imposition of any
lien of any kind or nature against Seller or any of the Assets.
(d) Title and Condition of Assets. All of the Assets
exist and are in the possession of Seller. Seller has good and marketable title
to all of the Assets, free and clear of all liens, mortgages, pledges, charges,
obligations, security interests, or encumbrances of any kind or character,
including, without limitation, any legal, equitable or beneficial claim by any
third party. The sale and transfer of the Assets to Buyer, pursuant to the terms
hereof, will vest in Buyer good and marketable title thereto, free and clear of
all liens, encumbrances, obligations, security interests and other title defects
of any nature whatsoever. Neither Seller nor Selling Shareholder have notice of
any violation of any regulation, ordinance, law, order, or requirement relating
to the Business or its Assets. The Assets being sold constitute all of the
properties and assets necessary to conduct the Business, as currently being
conducted, and as conducted by Seller during the period covered by the financial
statements.
Seller and/or Selling Shareholder, as necessary shall
have delivered to Buyer forms of release, termination or wavier of any lien,
encumbrance or security interest that may exist against the Assets. The forms of
release, termination or waiver shall specifically include Uniform Commercial
Code ("UCC") termination statements or release statements as they relate to any
security interest of a third party to the Assets, including, specifically,
termination statements from the following secured parties:
Secured Party Filing Date Filing Number
------------- ----------- -------------
1) Westamerica Bank 08/01/91 91167271
0000 Xx. Xxxxxx Xxxx., #000
Xxxxxx Xxxxx, Xxxxxxxxxx
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2) Westamerica Bank 12/30/91 91275183
0000 X Xxxxxxxxx Xxxx., #X
Xxx Xxxxxx, Xxxxxxxxxx
3) Westamerica Bank 08/12/94 94165670
000 Xxxxxx Xxxxxx
Xxxxxxxxx XX 00000
4) Bank of America 12/07/98 9834460381
NT&SA BLS 1738
XX Xxx 0000
Xxxxxxxx XX 00000-0000
All Equipment is in good operating condition and
repair (ordinary wear and tear excepted), is performing satisfactorily, and is
available for immediate use in the conduct of the Business. All such Equipment
is in compliance in all respects with all applicable statutes, ordinances,
rules, and regulations.
(e) Financial Statements; Tax Returns. The audited
financial statements of the Seller for the 52-53 week year ended December 27,
1998, fairly presents, in all material respects, the financial position and the
results of its operations and its cash flows for the year ended December 1998
(the "December 27, 1998 Statements"). The reviewed financial statements of the
Seller for the 52-53 week year ended December 28, 1997, fairly presents, in all
material respects, the financial position and the results of its operations for
the year then ended. The unaudited balance sheet and income statement of the
Seller as of March 31, 1999, for the three (3) month period then ended (the
"Short 1999 Financial Statements"), fairly presents the financial position of
the Seller as of March 31, 1999, and the results of operations for the three (3)
month period then ended and have been prepared in a manner substantially
consistent with the December 27, 1998 Statements. To the best of Seller's and
Selling Shareholder's knowledge, there are no adjustments that would be required
on audit of the Short 1999 Financial Statements that would, individually or in
the aggregate, have a material negative effect upon the Seller's reported
financial condition. All activity of Seller is reported in Seller's financial
statements. There are no related party transactions, except for the real
property lease for the office building in Concord, California.
The December 28, 1997 Statements, the December 27,
1998 Statements, and the Short 1999 Financial Statements have been provided to
Buyer at the direction of Selling Shareholder and Seller during Buyer's due
diligence review of Seller's
- 16 -
Business. Each of the above financial statements, although not attached to this
Agreement, is incorporated herein by reference, as though fully set forth
herein.
(f) No Undisclosed Liabilities; Information. None of
the Assets are subject to any liability or obligation that was required to be
included or adequately reserved against in the December 27, 1998 Statements, the
Short 1999 Financial Statements or described in the notes thereto and was not so
included, reserved against, or described in accordance with generally accepted
accounting principles consistently applied in the preparation of such
December 27, 1998 Statements or the Short 1999 Financial Statements.
Seller and Selling Shareholder have notified Buyer,
in writing, of any material change not in the ordinary course of business and of
any governmental complaints, investigations or hearings of which it or they have
been advised or the institution or settlement of litigation, and has kept Buyer
fully informed of such events.
(g) No Adverse Change. Since December 27, 1998 (the
"Statement Date"), there has been no material adverse change in the Assets, the
Business, or the liabilities, financial condition, properties, prospects,
revenues, or operations of Seller other than changes in the ordinary course of
business, none of which, individually or in the aggregate, have been materially
adverse to Seller's financial position. Without limiting the generality of the
foregoing, since the Statement Date, Seller has not:
(i) made any change in the Assets, the Business,
or the earnings, prospects, or condition (financial or otherwise) of Seller,
except changes in the ordinary course of business, none of which has been
materially adverse;
(ii) made any payments or distribution of the
Assets (whether in cash, securities, properties, or otherwise) in the form of
management fees, salaries or bonuses to any officers, directors or employees of
Seller, including, without limitation, Selling Shareholder, except for salaries,
bonuses and 'S' Corporation distributions paid to employees, officers or
directors in the ordinary course of business;
(iii) incurred any commitment or liability by or
on behalf of Seller not in the ordinary course of business or the making of any
acquisition or purchase by or on behalf of Seller not in the ordinary course of
business;
(iv) entered into any other transaction that
- 17 -
has resulted or will result in the transfer by Seller of any of the Assets;
(v) amended the Articles of Incorporation or
Bylaws of the Seller;
(vi) increased or experienced any adverse change
in any assumption underlying any method of calculating bad debts, contingencies
or other reserves from that reflected in the December 27, 1998 Statements;
(vii) canceled or waived any claim or right of
substantial value or sold, transferred, distributed, or otherwise disposed of
any of its assets, including, without limitation, any of the Assets (whether in
cash, securities, properties, or otherwise), except for a fair consideration in
the ordinary course of business;
(viii) made any capital expenditure or
commitment for additions to property, leasehold interests or equipment having an
aggregate cost in excess of $20,000, except for equipment leases with aggregate
lease payments totalling not more than $2,000;
(ix) experienced any damage, destruction or
loss, whether or not covered by insurance, materially adverse to the Assets or
the Business;
(x) made or agreed to make any increase in the
compensation payable to any of the officers, directors or employees of Seller,
including, without limitation, Selling Shareholder, except for compensation
increases made in the ordinary course of business;
(xi) lost any key employees or key salespersons
of Seller, except as disclosed to Buyer in writing;
(xii) paid any severance or termination pay to
any key employee, officer or director of Seller, including, without limitation,
Selling Shareholder;
(xiii) directly or indirectly made any loan or
advance to any officer, director or employee of Seller, including, without
limitation, Selling Shareholder;
(xiv) entered into or amended any bonus,
incentive, compensation, deferred compensation, profit-sharing, retirement,
pension, group insurance or other employee benefit plan or any employment or
consulting agreement, except for the 1999 annual Company incentive plan;
- 18 -
(xv) changed the methods of accounting or
accounting principles or practices of Seller or Selling Shareholder set forth in
or reflected by the December 27, 1998 Statements;
(xvi) permitted or allowed any of the Assets to
be subject to any lien;
(xvii) incurred any liabilities by or on behalf
of Seller other than liabilities incurred in the ordinary course of business,
none of which has had a material adverse effect on the Business or the financial
condition of Seller;
(xviii) guaranteed, indemnified or otherwise
caused Seller to be liable for the obligations or liabilities of another;
(xix) prepaid any obligation of Seller, except
in the ordinary course of business;
(xx) entered into any transaction or contract,
or amended or terminated any transaction or contract, with respect to the
Business, except normal transactions or contracts consistent in nature and scope
with prior practices and entered into in the ordinary course of business in
arms-length transactions, none of which transactions or contracts, or amendments
or terminations thereof, could reasonably be expected to have a material adverse
effect on the Assets or the Business, or the financial condition or prospects
thereof;
(xxi) changed in any material respect the
business policies or practices of Seller or failed to operate the Business
diligently, in good faith, and in the ordinary course so as to preserve such
Business intact, to retain the services of the present employees and agents of
Seller, and to preserve the business relationship of Seller with, and the
goodwill of Seller's customers, suppliers and others;
(xxii) agreed, whether in writing or not, to do
any of the foregoing;
(xxiii) discovered or determined that any
employee, customer or other party has embezzled or misappropriated funds from
Seller;
(xxiv) failed to perform all of Seller's
material obligations under agreements, contracts or commitments and instruments
relating to or affecting the Business of the Seller; or
- 19 -
(xxv) cancelled or failed to maintain all
insurance coverages on the Business, Assets and Employees of Seller.
(h) Trade Secrets; Complete and Authentic Documents
and Lists. The Customer Lists, Customer Contracts and Employee Files are the
originals of such documents and represent all of the documents and instruments
relating to such Customer Lists, Customer Contracts and Employee Files. The
Customer Lists, Customer Contracts and Employee Files (collectively
"Information") are trade secrets and Seller and Selling Shareholder have taken
steps and made reasonable efforts to protect and maintain secrecy of the
Information. There are no other Customer Lists, Customer Contracts and Employee
Files which are not included in the transaction contemplated by this Agreement.
The Customer Lists represent a true and accurate description of all of the
Seller's data base of the past and present customers of Seller, as the same
relates to the Business. All of the present customers of Seller are included on
the Customer Lists. Except as disclosed on Schedule "7.1(h)" attached hereto,
neither Seller nor Selling Shareholder have any knowledge of (a) any actual or
contemplated termination, cancellation or limitation of, or any modification or
change in, the business relationship of Seller with any such current customers
(except for the completion of contracts with customers in the ordinary course of
the Business), or (b) any present or future condition, state of facts or
circumstances (other than those affecting Seller's industry generally), which
has affected or may affect adversely and materially the Business or has
prevented or may prevent the Business from being conducted after the date hereof
in essentially the same manner as currently conducted, and as previously
conducted by Seller, as reflected in the Financial Statements.
(i) Assignability; Consents. Except as disclosed on
Schedule "7.1(i)" attached hereto, each Asset, including, specifically, Customer
Lists and Employee Files being transferred herein, is assignable. All Customer
Contracts that are assignable will be assigned. Any Customer Contract that is
not assignable will have been identified to Buyer, in writing, ten (10) days
prior to the Effective Date. Any assignment constitutes a legal, valid and
binding obligation of Seller which is enforceable against Seller by Buyer.
Seller has obtained the written consent or waiver of
every person or entity whose consent or waiver is necessary, for the
consummation of any of the transactions contemplated by this Agreement.
- 20 -
No consent, authorization or approval of, or
exemption by or filing with any governmental, public or self-regulatory body or
authority is required in connection with the execution, delivery and performance
by Seller of this Agreement or any of the instruments or agreements referred to
in this Agreement, or the taking of any action contemplated by this Agreement.
(j) Legal Proceedings; Liabilities; Solvency. Except
as disclosed on Schedule "7.1(j)," there is no claim, action, suit, proceeding,
arbitration, investigation, or inquiry pending before any federal, state,
municipal, foreign, or other court or any governmental, administrative or
self-regulatory body or agency, or any private arbitration tribunal, or
threatened against, relating to or affecting Seller, Selling Shareholder, or any
of the Assets or the Business, or the transactions contemplated by this
Agreement, nor is there any basis for any such claim, action, suit, proceeding,
arbitration, investigation, or inquiry which may have any adverse effect upon
the Assets or the Business or the transactions contemplated by this Agreement.
Neither Seller nor any officer, director, partner, agent, or employee of Seller,
including, without limitation, Selling Shareholder, has been permanently or
temporarily enjoined or barred by order, judgment or decree of any court or
other tribunal or any agency or self-regulatory body from engaging in or
continuing any conduct or practice in connection with the Business. There is not
in existence at present any order, judgment or decree of any court or other
tribunal or any agency or self-regulatory body to which Seller, Selling
Shareholder, or the Business or the Assets are subject or by which they are
bound. Neither Seller nor Selling Shareholder are in default under any order,
license, regulation, or demand of any federal, state or municipal or other
governmental agency or self-regulatory body or with respect to any order, writ,
injunction, or decree of any court.
Seller is solvent and there are no facts, material or
information that has not been disclosed to Buyer that, if known, would disclose
Seller as insolvent. The sale of the Assets contemplated by this Agreement will
not render Seller insolvent and all debts of Seller will be paid when due.
(k) Compliance with Laws. The operation of the
Business does not violate any applicable federal, state or local ordinance,
administrative regulation, restrictive covenant, or provision of law. No
government approval or filing or registration with any government authority is
required for the making and performance by Seller of this Agreement.
- 21 -
(l) Employment Matters.
(i) Labor Matters.
(1) Seller is not a party or otherwise
subject to any collective bargaining or other agreement governing the wages,
hours or terms of employment of its Employees. Temporary Employees may or may
not be labor union members.
(2) There is no (a) unfair labor
practice complaint against Seller pending before the National Labor Relations
Board or any other governmental authority; (b) labor strike, slowdown or work
stoppage actually occurring or, to the best of the knowledge of Seller and the
Selling Shareholder, threatened against Seller; (c) representation petition
respecting Seller's Employees pending before the National Labor Relations Board,
or (d) grievance or any arbitration proceeding pending arising out of or under
collective bargaining agreements applicable to Seller.
(3) Seller has not experienced any
primary work stoppage or other organized work stoppage involving its Employees
in the past two (2) years.
(ii) Employment Compliance and Claims.
(1) Seller has complied with all
applicable laws, rules and regulations with respect to all labor and employment
laws, including provisions thereof relating to wages, hours, equal employment
opportunity, collective bargaining, pension and welfare benefit plans, and the
payment of its withholding obligations, social security and other taxes;
(2) The Seller is in compliance with the
terms and provisions of the Immigration and Nationality Act, as amended (the
"Immigration Act"), in all material respects. For each Employee (as defined in 8
C.F.R. section 274a.1(f)(1996) of the Seller for whom compliance with the
Immigration Act by the Company is required, the Seller has obtained and retained
a complete and true copy of each such Employee's Form I-9 (Employment
Eligibility Verification Form) as required by 8 C.F.R. section
274a2(b)(2)(1996). The Seller has not been cited, fined, served with a Notice of
Intent to Fine or with a Cease and Desist Order, nor has any action or
administrative proceeding been initiated or threatened against the Seller, by
reason of any actual or alleged failure to comply with the Immigration Act;
- 22 -
(3) Except as disclosed on Schedule
"7.1(l)," there are no pending claims and, to Seller's best knowledge, no
threatened claims by or on behalf of any of its Employees under any federal,
state or local labor or employment laws or regulations, including, but without
limiting the generality of the foregoing, the Immigration Reform and Control Act
of 1986, as amended, and the Consolidated Omnibus Reconciliation Act, as
amended, those related to wages, hours (including payment of overtime required
by state or federal law), Equal Employment Opportunity, pension and welfare
benefits plans and the payment of state and federal payroll taxes, including
Social Security taxes.
(iii) Employee Benefits. Schedule "7.1(l),"
lists all pension, retirement, profit sharing, deferred compensation, bonus,
commission, incentive, life insurance, health and disability insurance,
hospitalization, and all other employee benefit plans or arrangements
(including, without limitation, any contracts or agreements with trustees,
insurance companies, or others relating to any such employee benefit plans or
arrangements) established or maintained by Seller (the "Plans"), and complete
and accurate copies of all of the Plans have been provided to Buyer. None of the
Plans is a defined benefit pension plan under Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Seller does maintain a salary reduction plan
[commonly known as a 401(k) Plan] for its Employees. Seller does not maintain
any other pension, profit sharing or any other type of qualified retirement
plan. No pension plan or trust has been terminated, which termination could
result in the imposition of a lien on any property of Seller or Selling
Shareholder and there have been no "reportable events" (as that term is defined
in Section 4043 of ERISA) since the effective date of ERISA; no pension plan or
trust has incurred any "accumulated funding deficiency" (as such term is defined
in Section 302 of ERISA) whether or not waived, since the effective date of
ERISA; and the required allocations and contributions to pension plans will not
violate Section 415 of the Code. Buyer will have no liability with respect to
any obligation relating to this Section.
Neither Seller, nor Selling Shareholder, nor
any member of a Controlled Group of which Seller is a member ["Controlled Group"
means all members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which, together
with the Seller are treated as a single employer under Section 414(b) or 414(c)
of the Code] nor any pension, profit sharing, 401(k), or any other type of
retirement plan ("Plan") or any of them will (i) engage in any "prohibited
transaction" as such term is defined in Section 4.06 or Section 2003(a) of
ERISA; (ii) incur any "accumulated funding deficiencies" (as such term is
- 23 -
defined in Section 3.02 of ERISA) whether or not waived; (iii) terminate any
Plan in a manner which could result in the imposition of a lien on any property
of the Seller or any member of the Controlled Group pursuant to Section 4068 of
ERISA; or (iv) violate state or federal securities laws applicable to any Plan.
(iv) Employment Agreements. Each of Seller's
employees is an "at-will" employee and there are no written employment,
commission or compensation agreements of any kind between Seller and any of its
Employees. Schedule "7.1(l)," lists all Seller's employment or supervisory
manuals, employment or supervisory policies, and written information generally
provided to Employees (such as applications or notices), and true and complete
copies of those manuals, policies and written information have been provided to
Buyer. Seller does not have any agreements or understandings with its Employees
except as reflected in the items listed in Schedule "7.1(l)."
- 24 -
(v) Compensation. Schedule "1.5," contains a
complete and accurate list of all officers, Employees or consultants of Seller,
specifying their names and job designations, the total amount paid or payable as
compensation to each Employee of Seller, and the basis of such compensation,
whether fixed or commission or a combination thereof, and accrued benefits for
such persons as of the date of this Agreement. Since December 27, 1998, Seller
has not increased the rate of compensation or made any bonuses to any Staff
Employees or Temporary Employees, except as is paid in Seller's ordinary course
of business or except as disclosed to Buyer. There are no amounts owing to
Seller from any of the Staff Employees or Temporary Employees or shareholders of
Seller or to any of such Staff Employees or Temporary Employees from Seller.
Seller shall be responsible for payment of all wages, benefits and claims of its
Staff Employees and Temporary Employees, including, but not limited to, any
claim arising out of the transaction contemplated by this Agreement.
Seller has, as of the Effective Date,
terminated all Staff Employees of Seller. Seller has, as of the date of final
payment due to Temporary Employees, terminated the Temporary Employees effective
the day prior to the Effective Date. Seller shall have complied with all laws
regarding termination of employees, including, specifically, and without
limiting the generality of the foregoing, the Consolidated Omnibus Budget
Reconciliation Act ("COBRA") and the Worker Adjustment and Retraining
Notification Act ("WARN Act") and Seller is solely responsible for all
liabilities arising from such termination, including, without limitation,
accrued compensation, vacation pay, fringe benefits, and payments to the
employees of any benefits before the Effective Date.
(vi) Severance. Seller has no severance pay
plan, policy, practice, or agreement with any of its Employees.
- 25 -
(m) Intellectual Property. Schedule "1.6" contains a
correct and complete list and a brief description of all United States and
foreign trademarks, service marks, trade names, copyrights, including
registrations and application, patent and patent applications, if any, and
employee covenants and agreements respecting intellectual property ("Trade
Rights") in which Seller now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Seller, and also indicating which of such Trade Rights are registered. All Trade
Rights registrations and all pending registrations and applications have been
properly made and filed and, to Seller's knowledge, all filings to preserve such
registrations and applications have been made with the appropriate government
agencies, and all annuity, maintenance, renewal, and other fees relating to
registrations or applications are current. In order to conduct the Business of
Seller as such is currently being conducted, Seller does not require any Trade
Rights that it does not already have. To Seller's knowledge, Seller is not
infringing and has not infringed on any Trade Rights of another in the operation
of its Business, nor is any other person infringing on the Trade Rights of
Seller. Seller has not intentionally granted any license or made any assignment
of any Trade Rights and, to Seller's knowledge, no other person has any right to
use any Trade Rights owned or held by Seller. Seller does not pay any royalties
or other consideration for the right to use any Trade Rights of others. Seller
is not aware of any inquiries or investigations challenging or threatening to
challenge the right, title and interest of Seller with respect to its continued
use and right to preclude others from using any Trade Rights of Seller. Seller
has not been presented with claims nor served in any litigation challenging or
threatening to challenge the right, title and interest of Seller with respect to
its continued use and right to preclude others from using any Trade Rights of
Seller. To Seller's knowledge, all Trade Rights of Seller are valid, enforceable
and in good standing, and there are no equitable defenses to enforcement based
on any act or omission of Seller.
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(n) Absence of Defaults. Neither Seller nor Selling
Shareholder are in default of any lease, contract, note, indenture, loan
agreement, or any other agreement or arrangement, or any court order which
affects the Assets and to which Seller is, or Selling Shareholder is, a party or
by which it, or they, is bound or affected, and neither the execution of this
Agreement nor the consummation of any transaction contemplated by this Agreement
will result in any breach or violation of, acceleration of the maturity of or
constitute a default under, any such lease, contract, note, indenture, loan
agreement, or agreement or arrangement or any court order. Seller has obtained
or will obtain prior to the Effective Date, the consent or waiver of any person,
entity or court not a party to this Agreement whose consent or waiver is
necessary in the opinion of Buyer's counsel for the consummation of this
transaction contemplated by this Agreement.
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(o) Taxes. Seller and Selling Shareholder are and
shall be liable and responsible for and shall pay all taxes of every kind and
nature including income, sales, foreign, receipts, profits, franchise, use,
occupation, real and personal property, excise, unemployment, employment, social
security, employee withholding, unemployment insurance, workers' compensation,
pension benefit guaranty corporation premiums, and other federal, state or local
taxes (including interest and penalties) payable as a result of the operation of
the Business and the consummation of the transaction contemplated by this
Agreement. Seller and Selling Shareholder have timely filed all federal, state,
foreign, and/or local tax returns and tax information returns required to be
filed and has paid all taxes, interest, deficiencies, and penalties due and
payable with respect to the income, operation or properties of Seller, Selling
Shareholder, or the Business, and have paid or have established adequate
reserves for the payment of all taxes which have or may have become due pursuant
to such returns or pursuant to any assessment received by Seller or Selling
Shareholder. Seller and Selling Shareholder have made and will make, provision
for the payment of all taxes, whether then due or not, interest payments,
deficiencies and penalties accruable for the United States or any other taxing
authority and neither is delinquent in the payment of any installment or
obligation of any kind or nature of any tax or government charge of any nature
whatsoever, including (by way of illustration and not limitation) all income,
sales, unemployment, Federal Insurance Contribution Act (FICA) taxes. Except for
payroll taxes accrued on wages as of the Effective Date, which Seller has made
appropriate accommodations to pay in a timely fashion, there are no taxes owed
or owing by Seller or Selling Shareholder which, if not paid by Seller or
Selling Shareholder, as the case may be, could or may result in a claim, charge,
tax, lien, or assessment being asserted against the Assets or against Buyer
under a theory of transferee liability based on equitable principles, statute or
contract. There are no tax liens of any kind or nature that are an encumbrance
against the Assets.
Buyer has been furnished by Seller true and complete
copies of all federal and state income or franchise tax returns for the Seller
for all periods ending on and after December 31, 1995. There are no income tax
audit reports, statements of deficiencies, closing, or other agreements received
by the Seller or on behalf of the Seller relating to any tax matter referenced
in this Section. Seller has never been a member of an affiliated group filing
consolidated returns. The Seller does not do business in or derive income from
any state, local, territorial, or foreign taxing jurisdiction other than those
for which all such returns have been furnished to Buyer.
The above-referenced tax returns of Seller have
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never been audited by a government or taxing authority, nor is any such audit in
process, pending or threatened (either in writing or verbally, formally or
informally). No deficiencies exist or have been asserted (either in writing or
verbally, formally or informally) or are expected to be asserted with respect to
tax obligations of the Seller, and Seller has not received notice (either in
writing or verbally, formally or informally) and Seller and Selling Shareholder
do not expect to receive notice that it has not filed a return or paid taxes
required to be filed or paid by Seller or Selling Shareholder. The Seller is
neither a party to any action or proceeding for assessment or collection of
taxes, nor has such event been asserted or threatened (either in writing or
verbally, formally or informally) against the Seller or any of its assets. No
waiver or extension of any statute of limitations is in effect with respect to
taxes or returns of the Seller. Seller has disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662.
Seller has elected by consent of Selling Shareholder
to be taxed under the Subchapter S provisions of the Internal Revenue Code.
Seller and Selling Shareholder have properly filed, reported and paid taxes in
accordance with federal and California state law (including, specifically, the
corporate level tax due to the State of California) with respect to Seller's and
Selling Shareholder's status under Subchapter S.
(p) Books of Account. The books of account of Seller
reflect all of the items of income and expense (including accruals) and all
assets and liabilities of Seller, as they relate to the Business, in accordance
with generally accepted accounting principles consistently applied.
(q) No Omission of Material Fact. No Schedule,
attachment, written statement, document, certificate, representation, warranty,
or other items prepared or supplied to Buyer in connection with this Agreement
by Seller or Selling Shareholder, or in connection with the transaction
contemplated by this Agreement, contains or will contain any untrue statement of
a material fact, or omits or will omit to state a material fact necessary to
make statements contained therein not misleading. No responsible officer or
director of Seller has concealed any fact known to such person to have a
material adverse effect upon the Assets, the Business, or the existing or
expected financial condition, operating results, customer relations, or employee
relations of the Business.
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(r) Workers' Compensation. Seller has timely filed
all workers' compensation applications, forms, returns, and documents required
to be filed and shall have paid its premiums, charges and assessments that have
accrued, or are due, or may become due under its regular premium payment
schedule or pursuant to an audit. Seller and Selling Shareholder have made
provision for payments, after the Effective Date, of amounts, if necessary, for
premiums, claims, costs, expenses, charges, and assessments that have accrued or
may become due after the Effective Date for activity, claims, adjustments, or
accrual before the Effective Date. No audit, examination or investigation is
presently being conducted or threatened by any carrier or former carrier of
Seller's workers' compensation coverage other than the annual workers'
compensation audit. All information, applications, reports, or instruments
submitted to Seller's workers' compensation carrier (past or present) and any
regulatory or government authority were truthful, accurate and contained no
information that was misleading or omitted from the information necessary to
make the same not misleading to such carrier regarding issues concerning
Seller's experience rating and the status of Seller's stock ownership and
identification of the true owners of such stock. The workers' compensation and
unemployment insurance ratings and contributions of Seller, as disclosed to
Buyer, are true and accurate.
(s) Environmental Protections, Occupational Safety,
and Other Statutes and Regulations.
(i) Seller is presently and has at all times in
the past been in compliance with all rules, regulations and orders of each
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality with jurisdiction over the Business,
including, but not limited to, all environmental and safety laws, rules and
regulations with respect to real and personal property used in the Business.
(ii) None of the local, state or federal
governments have given notice to Seller or Selling Shareholder that Seller or
the Business is not in compliance with any law, rule, regulation, or order; none
of the federal Environmental Protection Agency, or state agencies having
jurisdiction over environmental matters, any other state environmental agency,
or the Occupational Safety and Health Administration ("OSHA") is engaged in an
investigation of Seller or the Business with regard to the operation of the
Business or the condition of the Business premises.
(iii) Except for small amounts of cleaning
supplies, toner, flux remover and P.C. board cleaner, which are used in the
ordinary course of the Business, neither Seller nor
- 30 -
Selling Shareholder have any knowledge that any Hazardous Substance is or has
been used, treated, stored, disposed of, released, spilled, refined, generated,
manufactured, transported, or otherwise handled on or at any of the locations
where the Business is or has operated (a "Location") or any property adjacent to
the Location, or has otherwise come to be located on or under a Location, and
all operations conducted at any Location are in compliance with all
Environmental Laws; no Asbestos-Containing Material is present in any of the
improvements at any Location or is otherwise located thereon, and all Locations
and all operations conducted thereon, are in compliance with all federal and
state statutes and regulations relating to Asbestos, and no underground storage
tanks, whether in use, abandoned or decommissioned are on or under any Location.
(iv) For purposes of this Agreement, the
following are defined:
(1) The term "Environmental Laws" means
any and all present federal, state and local laws (whether under common law,
statute, rule, regulation, or otherwise), permits, licenses, ordinances, and
other requirements of governmental authorities relating to the protection of
human health or the environment or to any Hazardous Substance. Such laws
include, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act; Resource Conservation and Recovery Act; Clean
Water Act; Clean Air Act; Hazardous Materials Transportation Act; Toxic
Substances Control Act; Occupational Safety and Health Act; and their state and
local counterparts.
(2) The term "Hazardous Substance" is used
in this Agreement in its very broadest sense, and refers to materials that,
because of their quantity, concentration or physical, chemical or infectious
characteristics, may cause or pose a threat or potential hazard to human health
or the environment when stored, used, treated, held, existing, released,
emitted, discharged, generated, processed, manufactured, abated, removed,
disposed of, transported, or otherwise handled. "Hazardous Substance" shall
include, but shall not be limited to, (a) any chemical, compound, material,
mixture, or substance that is now or hereafter defined or listed in, or
otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous
waste," "toxic waste," "infectious waste," "toxic substance," "toxic pollutant,"
or any other formulation intended to define, list or classify substance by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or "EP toxicity," and (b)
Asbestos, Asbestos-Containing Material, petroleum, petroleum products, including
crude oil and any fraction thereof, natural
- 31 -
gas, natural gas liquids, liquified natural gas, synthetic gas usable for fuel
(or mixtures of natural gas and such synthetic gas).
(v) Seller has disclosed and made available
to Buyer true, complete and correct copies or results of any reports, studies,
analysis, tests, monitoring, correspondence with governmental agencies, or other
documents in the possession of or initiated by Seller or otherwise known to
Seller and pertaining to the existence of Hazardous Substances, to compliance
with Environmental Laws, or to any other environmental concern relating to the
Assets or Seller's Business.
(t) Insurance. Seller now has and has had insurance
coverage to fully protect, indemnify and reimburse it from and against losses or
damage arising from fire, theft or other casualties, liability for injury to or
death of any person, and for damage to any property, workers' compensation and
in general such other insurance as may be usual or customary in the Business.
All of the Assets are covered by such fire, casualty, general liability, and
other insurance policies issued by reputable companies in amounts, scope and
coverage which are adequate and reasonable in light of existing conditions.
Schedule "7.1(t)" sets forth a correct and complete list and description of all
of the policies of insurance and fidelity or surety bonds carried by the Seller.
Seller has not failed to give any notice or present any claim under any
insurance policy. Seller has not received any notices or failed to act on any
recommendations by any insurance company that issued a policy, by any Board of
Fire Underwriters or other body exercising similar functions or by any
governmental authority requiring or recommending any repairs or other work to be
done on or with respect to any of the Assets or requiring or recommending any
equipment or facilities to be installed on or in connection with any of the
Assets. The workers' compensation and unemployment insurance ratings and
contributions of Seller, as disclosed to Buyer, are true and accurate. Seller
and Selling Shareholder have no knowledge of any proposed increase therein and
know of no conditions or circumstances applicable to the Business which might
result in such increase.
(u) Leases. Schedule "1.2" is a true and accurate
list of the leases or arrangements, if any, under which Seller leases, holds or
operates any property used in the Business.
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The leases are valid, subsisting, in full force and
effect, binding and enforceable in accordance with their terms, there exists no
default by Seller (or event or condition which, with notice or lapse of time, or
both would constitute a default) under the leases or agreements with respect to
any term of the leases. There are no deposits, rent escalations or deferred
obligations on such leases not disclosed in this Agreement. There is no pending
or threatened condemnation or similar proceedings affecting the leased
properties included among the Assets, nor are they the subject of any special
assessment, and Seller has not received notice that any proceeding or special
assessment is pending or has been proposed.
All leases are bona fide, arms-length transactions.
The landlords or lessors of the above-referenced leases are not parties that are
related to Seller or Selling Shareholder, except for the lease of the Concord,
California, real property and office space where the Seller's corporate offices
are situated, which are owned by the Selling Shareholders.
(v) Permits, Licenses and Compliance with Applicable
Laws. Seller has all material permits, licenses and approvals of governmental
and administrative authorities to own and lease the Assets and to carry on the
Business as presently conducted. Such permits, licenses and approvals which are
material to the conduct of the Business are in full force and effect and no
suspension or cancellation of them is pending nor are such proceedings
threatened. Seller is not in default under or in violation of any respect under
any executive, legislative, judicial, or administrative ruling, order, writ,
injunction, or decree. Seller, in the conduct of the Business, is in compliance
in all material respects with all federal, state and local laws, statutes,
ordinances, and regulations, the failure to comply with which would have a
material adverse effect on the Business or the Assets, including, but not
limited to, those relating to wages, hours, discrimination of employment,
collective bargaining, payment and withholding of taxes, zoning, occupancy,
occupational, safety and health, immigration, and Environmental Laws.
(w) Brokers and Finders. Seller has employed Xxxx
Xxxxxxxx of Xxxx Xxxxxxxx & Company, as its agent and broker in connection with
the transaction contemplated by this Agreement. Seller and Selling Shareholder
shall be obligated to said agent and broker for any and all claims, costs, fees,
commissions, or charges by said agent and broker for a brokerage commission,
finder's fee or other like payment, and Seller and Selling Shareholder shall
indemnify and defend Buyer against any such claims, costs, fees, or charges.
- 33 -
Neither Seller nor Selling Shareholder have employed
another broker or other finder in connection with the transaction contemplated
by this Agreement and neither have taken any action that would give rise to a
valid claim against any party for a brokerage commission, finder's fee or other
like payment. Seller and Selling Shareholder shall indemnify and defend Buyer
from any claims against Buyer by a broker or finder asserting a claim by or
through Seller or Selling Shareholder.
(x) No Interest in Competitors, Etc. Neither the
Seller, Selling Shareholder, nor any officer, director or employee of the Seller
or any immediate family member or spouse of Selling Shareholder or trust for
their benefit, directly or indirectly, owns any interest in or controls or is an
employee, officer, director, or partner of, or participant in or consultant to,
any corporation, partnership, limited partnership, joint venture, association,
or other entity which is a competitor, creditor, debtor, supplier, or customer
of Seller or has any type of business, commercial, consulting, or professional
relationship with Seller, except that Xxxxxxx X. Xxxxx, in his business known as
Printing Plus, is a supplier of printing services to Seller.
(y) Supplements to Representations, Warranties and
Schedules. From time to time prior to the Effective Date, Seller and Selling
Shareholder will have promptly modified, represented, supplemented, or amended
the representations, warranties and Schedules with respect to any matter that,
if existing or occurring at the date of the Agreement, would have been required
to be set forth or described in any of the above representations or warranties
or any Schedule hereto or as part of the Agreement. No modification, supplement
or amendment of any representation or Schedule made pursuant to this Section
7.1(y) will be deemed to cure any breach of any representation of or warranty
made in this Agreement unless Buyer specifically agrees thereto in writing.
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(z) Materiality Standard. Seller and Selling
Shareholder shall not be in breach or violation of Seller's and Selling
Shareholder's representations and warranties contained in this Section 7.1
unless the representation, warranty or omission is material. The words
"material," "materiality" or words of similar import employed in this Agreement
with reference to any representation, warranty or omission made by Seller or
Selling Shareholder shall be conclusively presumed to mean any and all loss,
damage, diminution in value, liability, costs, expenses, attorney fees, and
amounts paid in settlement if it exceeds $5,000 in any single instance. A
misrepresentation or omission of more than one representation and warranty, each
of which is less than $5,000, is material if such misrepresentations or
omissions are in the aggregate, in excess of $20,000.
(aa) Knowledge Standard. The words "known," "to the
knowledge of," "to the best knowledge of," "aware," or words of similar import
employed in this Agreement with reference to Seller or Selling Shareholder shall
be conclusively presumed to mean that the Seller or Selling Shareholder has made
reasonable and diligent efforts under the circumstances to become knowledgeable
in order to allow Seller and Selling Shareholder to make informed disclosures
with respect to the representations and warranties contained herein; in the case
of the Seller, "knowledge" shall be deemed to be the individual and collective
knowledge (as defined above) of the Seller's directors, officers, director of
business development, the controller, and the Selling Shareholders.
7.2 Buyer's Representations and Warranties. Buyer represents
and warrants to Seller as follows:
(a) Organization. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of Maryland, is qualified to do business in each other jurisdiction where the
conduct of its business or the ownership of its properties requires such
qualification, and has full corporate power, authority and legal right to carry
on its business as presently conducted.
(b) Corporate Authority. The consummation of the
transaction contemplated by this Agreement will be duly and properly authorized
by the board of directors of Buyer and will violate no agreement between Buyer
and any third party. The execution, delivery and performance by Buyer of this
Agreement does not contravene any law, regulation, rule, or order binding on it
or its Articles of Incorporation or Bylaws and will not contravene the
provisions of or constitute a default under any indenture, mortgage, contract or
other agreement or instrument to which the Buyer is a party or by which the
Buyer may be bound or affected.
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(c) Brokers and Finders. Buyer has not employed any
broker or finder in connection with the transaction contemplated by this
Agreement and has taken no action that would give rise to a valid claim against
any party for a brokerage commission, finder's fee or other like payment. Buyer
hereby agrees to indemnify and defend Seller from any claims against Seller by a
broker or finder asserting a claim by or through the Buyer.
8. Covenants.
8.1 Seller's and Selling Shareholder's Covenants. Seller and
Selling Shareholder agree to do all of the following, unless the Buyer shall
otherwise consent in writing:
(a) Payment of Retained Liabilities. Seller and
Selling Shareholder shall pay and discharge in full all of their respective
obligations, debts, and liabilities as required pursuant to this Agreement or
otherwise, as they become due and payable, whether before or after the Effective
Date, in accordance with their terms.
(b) Postclosing Inquiries. After the Effective Date,
Seller and Selling Shareholder shall respond and provide all information and
documents requested of them in connection with any inquiries, demands or filing
requirements by any and all court orders, lawfully issued subpoenas or
government authorities, whether federal, state, local, or private, as such
inquiries may relate to Seller's or Selling Shareholder's activity prior to the
Effective Date. Seller and Selling Shareholder agree to reimburse Buyer for any
out-of-pocket costs and consequential damages to Buyer as a result of Seller's
or Selling Shareholder's breach of this provision. Buyer shall promptly notify
Seller and Selling Shareholder of any notice received by Buyer that may result
in an obligation of Seller or Selling Shareholder with respect to any
"postclosing inquiry" as described in this Section 8.1(b).
(c) Change of Seller's Name. At or prior to the
Effective Date, Seller and/or Selling Shareholder shall have taken all action
necessary and appropriate to transfer its corporate name, assumed business name
or any other trade names to Buyer. The action taken by Seller or Selling
Shareholder shall permit or allow Buyer to register, own or legally commence use
of Seller's name, assumed business name and any such trade names. Buyer's nonuse
of such corporate name, assumed business name or trade names shall not be
considered a waiver of Seller's or Selling Shareholder's obligations herein.
- 36 -
(d) Financial Reporting. Seller and Selling
Shareholder acknowledge that Buyer is a publicly-held company, subject to the
reporting provisions of Section 13 of the Securities Exchange Act of 1934, as
amended (the "Act"), and that Buyer may be required by the Act and the rules and
regulations of the Securities and Exchange Commission to include audited
financial statements including balance sheets and income statements of the
Business for the three (3) prior fiscal years in reports filed by Buyer. If
required by Buyer, Seller and Selling Shareholder shall use their best efforts,
at Buyer's request, both before and after the Effective Date, to assist Buyer in
obtaining and preparing audited financial statements for three (3) years, such
efforts to include, but not be limited to, cooperating by signing customary
representation letters required by Buyer's independent auditors, as well as
making all records, accounts and files, financial or otherwise, available
pertaining to the Business. If the records and other information pertaining to
the Business are included with or reported together or in combination with any
other business or businesses, Seller and Selling Shareholder shall make all such
records available so as to permit Buyer or its accountants to make appropriate
allocations and perform all such calculations necessary to complete its audit.
The cost of obtaining audited financial statements for any years not heretofore
audited, and any expenses incurred in connection with the audit of the Financial
Statements shall be paid by Buyer.
(e) Seller's Tax Liabilities. Seller and/or Selling
Shareholder agree to be liable and responsible for and shall pay all taxes of
every kind and nature including, if applicable, income, sales or use, transfer,
stamp duties, filing fees, and other federal, state or local taxes (including
interest and penalties) payable as a result of the sale of Assets and the
consummation of the transaction contemplated by this Agreement, including, but
not limited to, any applicable sales or use tax incurred in connection with
Seller's operation of the Business, including sales or use tax imposed on (i)
all prior sales of inventory and noninventory items or services that are subject
to sales or use tax that are unpaid at the Effective Date, and (ii) all interest
and penalties thereon.
(f) Postclosing Action. Upon the reasonable request
of Buyer after Closing, Seller and Selling Shareholder will take all action and
will execute all documents and instruments necessary or desirable to consummate
and give effect to the purchase.
(g) Tax Clearance. Seller shall have obtained, and
delivered to Buyer at the Effective Date, a tax clearance certificate for
Seller's tax obligations pursuant to California
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Revenue and Taxation Code section 6812 (Sales Tax), if applicable, and
California Unemployment Insurance Code section 1732 (Employment Taxes). Seller
shall have obtained any and all other certificates, releases or consents of any
other governmental authority or as required by any law that would cause or
result in Buyer acquiring the Assets from Seller, subject to a claim or lien in
favor of a governmental authority.
(h) Covenant Not to Compete of Seller;
Confidentiality.
(i) For purposes hereof, all confidential
information with respect to the Business (including, without limitation, its
trade secrets including (1) proprietary information of Seller; (2) information
treated by Seller as confidential; (3) methods utilized by Seller in the conduct
of the Business; (4) Seller's rates of pay, profit margins, recruiting methods,
and techniques, and (5) information about the names of Staff Employees and
Temporary Employees and customers) constitute "Company Confidential
Information." Seller acknowledges that it had in the past and will continue to
have access to Company Confidential Information, and that improper use or
revelation of the same by it could cause serious injury to the business of
Buyer. For five (5) years following the Effective Date, Seller will not use or
disclose to any other party Company Confidential Information, which shall have
come or shall hereinafter come into its possession, for its own private benefit
or, directly or indirectly, for the benefit of any business which is or may be
similar or competitive with the business of the Buyer, including, specifically,
any business which is involved in any way with the temporary employment,
payrolling services or employee leasing business in the marketing area that is
located in the following cities and counties where such cities are located:
Concord/Walnut Creek, Contra Costa County; Pleasanton/Dublin, Alameda County;
Fairfield, Xxxxxx County; Stockton, San Xxxxxxx County; Sacramento, Sacramento
County; Modesto, Stanislaus County; Napa, Napa County; Fremont, Alameda County,
and Roseville, Placer County, and the surrounding marketing area of each city,
all of which are located in California, and other such areas where Seller is
conducting business, seeking prospective customers or investigating new office
locations ("Restricted Area").
(ii) For five (5) years following the Effective
Date, Seller shall not directly or indirectly own, manage, operate, join,
control, or participate in the ownership, management, operation, or control of
and/or assist, or be connected in any manner, directly or indirectly, with any
business that is similar to that of the Business being sold to Buyer herein,
including, but not limited to, employee leasing, payrol-
- 38 -
ling services and the temporary employment business in the Restricted Area
(whether as an officer, director, manager, partner, shareholder, member,
proprietor, investor, associate, employee, consultant, or otherwise), nor shall
Seller divert or attempt to divert from Buyer any past, present or prospective
Staff Employees, Temporary Employees or customers of the Business, or of the
other businesses of the Buyer in the Restricted Area.
(iii) Seller agrees that the forgoing
restrictions are reasonable under the circumstances, considering the fact that
Seller is selling to Buyer the Business; however, if it shall be finally
determined by any court of competent jurisdiction that the scope or duration of
the restrictions is unreasonable, then the court so holding may enforce such
reasonable restrictions as the court deems necessary to protect the rights and
interests of the Buyer to the fullest extent permissible by law.
(iv) In the event of a dispute regarding the
restrictive covenant contained in this Section 8.1(h), the covenant shall be
deemed to have the duration specified in Section 8.1(h)(ii) computed and
extended from the date such relief is granted regarding such dispute, as if such
date was the initial Commencement Date of this covenant; provided, however, the
full term of the covenant shall be reduced by the time expired between the date
the covenant originally began to run and the date of the first violation of the
covenant.
(v) In the event that the Restricted Area or the
time for which the obligations of Seller under this Section 8.1(h) are reduced
as a result of any legal action, claim, request for relief, or legislative
enactment, the amounts to be paid, if any, in accordance with Section 6.1 above
shall not be reduced or otherwise modified unless such reduction in the
Restricted Area of the time results from any legal action initiated by Seller.
(vi) Seller acknowledges that any violation of
the provisions of this Section 8.1(h) will cause serious and irreparable damage
to Buyer. Seller further acknowledges that it might not be possible to measure
such damages in money. Accordingly, Seller further acknowledges that, in the
event of breach or threatened breach of the provisions of this Section 8.1(h),
Buyer, in addition and as a supplement to such other rights and remedies,
including recovery of money damages, may seek an injunction or restraining
order, restraining Seller from performing any act in violation of the provisions
of this Section 8.1(h).
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9. Effect of Survival of Representations and Warranties;
Indemnification; Bulk Sales; Setoff.
9.1 Effect and Survival of Representations and Warranties by
Seller and Selling Shareholder; Indemnification by Seller and Selling
Shareholder; Bulk Sales; Setoff.
(a) True on Effective Date. The representations and
warranties made by Seller and Selling Shareholder in this Agreement shall be
true on the Effective Date.
(b) Survival Past Effective Date. Except as otherwise
provided herein, notwithstanding any investigation by Buyer, the representations
and warranties of Seller and Selling Shareholder in this Agreement shall survive
for 24 months (and then expire) and shall not merge in the performance of any
obligation by any party to this Agreement. Buyer must assert a claim against
Seller and Selling Shareholder with respect to such representations and
warranties prior to the expiration of the 24-month period, by giving notice
thereof pursuant to the provisions of Section 9.1(c) hereof, in order for such
claim to survive beyond 24 months.
(c) Indemnification by Seller and Selling
Shareholder. Seller and Selling Shareholder shall, jointly and severally,
indemnify Buyer, defend Buyer and hold Buyer harmless, on an after-tax basis,
from and against any and all damages, liens, taxes, assessments, premium
charges, obligations, recoveries, deficiencies, losses, claims, liabilities,
demands, charges, suits, interest, penalties, costs or expenses, whether
accrued, contingent or otherwise (including, but not limited to, court costs and
reasonable attorneys fees) (collectively the "Losses") to which Buyer may be
subjected or which Buyer may incur resulting from or arising out of:
(i) any misrepresentation or breach of any
of the representations, warranties or covenants of Seller or Selling Shareholder
contained herein or in any documents, certificates, Schedules, or exhibits given
or delivered to Buyer by or on behalf of Seller or Selling Shareholder pursuant
to or in connection with this Agreement;
(ii) any other breach of this Agreement by
Seller or Selling Shareholder;
(iii) the conduct of the Business prior to
and through the Effective Date; or
(iv) any transferee or successor liability
imposed on Buyer by statute, case law or any other manner
whatsoever.
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The Buyer shall promptly notify Seller and Selling
Shareholder of the existence of any Losses or other matters to which Seller's
and Selling Shareholder's indemnification obligation would apply, and give the
Seller and Selling Shareholder a reasonable opportunity to defend the same at
Seller's and Selling Shareholder's own expense, and with counsel of Seller's and
Selling Shareholder's own selection reasonably satisfactory to Buyer. Buyer
shall, at all times, also have the right to fully participate in the defense, at
its own expense. If Seller or Selling Shareholder, within a reasonable time
after that notice, but not later than 15 days, fail to defend, the Buyer shall
have the right, but not the obligation, to undertake the defense of, and to
compromise or settle (exercising reasonable business judgment) the Losses or
other matter on behalf, for the account, and at the risk, of the Seller and
Selling Shareholder.
(d) Bulk Sales Indemnification. It will not be
practical to comply or attempt to comply with the procedures of the Uniform
Commercial Code - Bulk Transfers Law, if applicable, or any similar law of any
state which may be asserted to be applicable to the transaction contemplated in
this Agreement. Accordingly, to induce Buyer to waive any requirement for
compliance with the procedures of any Bulk Sales Law, Seller and Selling
Shareholder agree that the indemnity provisions of Section 9.1(c) above, shall
apply to any claim asserted against Buyer arising out of, or resulting from the
failure of Buyer, Seller, or Selling Shareholder to comply with or perform any
actions in connection with, in preparation for, or incident to, the transactions
anticipated in this Agreement which might be required under the terms and
provisions under any Uniform Commercial Code - Bulk Transfers Law or similar
law, or which may be asserted to be applicable.
(e) Buyer's Right of Setoff. After 14 days written
notice to Seller and Selling Shareholder, stating the nature and the amount of
Losses, and Seller's or Selling Shareholder's failure to cure such Losses, Buyer
shall have the immediate and unrestricted right of setoff against the amount of
any payments otherwise due Seller pursuant to this Agreement and the Note, for
the amount of any Losses whether accrued, contingent or otherwise (including
court costs and attorneys fees) to which Buyer may be subjected or which Buyer
may incur, arising out of or otherwise based upon Seller's or Selling
Shareholder's failure or breach of the representations, warranties or covenants
contained in this Agreement.
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9.2 Effect and Survival of Representations and Warranties of
Buyer; Indemnification by Buyer.
(a) True on Effective Date. The representations and
warranties made by Buyer in this Agreement shall be true on the Effective Date.
(b) Survival Past Effective Date. Except as otherwise
provided herein, the representations and warranties of Buyer in this Agreement
shall survive for a period of 24 months following the Effective Date. Seller
must assert the claim against Buyer with respect to such representations and
warranties prior to the expiration of the survival period by giving notice
thereof pursuant to Section 9.2(c), in order for such claim to survive beyond 24
months.
(c) Indemnification by Buyer. Buyer shall indemnify
Seller, defend Seller and hold Seller harmless, on an after-tax basis, from and
against any and all Losses to which Seller may be subjected or which Seller may
incur resulting from or arising out of:
(i) any misrepresentation or breach of any of
the representations and warranties of Buyer contained herein or in any
documents, certificates, Schedules, or exhibits given or delivered to Seller by
or on behalf of Buyer pursuant to or in connection with this Agreement.
(ii) any other breach of this Agreement by
Buyer; or
(iii) the conduct of the Business after the
Effective Date.
Seller shall promptly notify Buyer of the existence of any
Losses or other matters to which Buyer's indemnification obligation would apply,
and give Buyer a reasonable opportunity to defend the same at Buyer's own
expense, and with counsel of Buyer's own selection reasonably satisfactory to
Seller. Seller shall, at all times, also have the right to fully participate in
the defense, at its own expense. If Buyer, within a reasonable time after that
notice, but no later than 15 days, fails to defend, Seller shall have the right,
but not the obligation to, undertake the defense of, and to compromise or settle
(exercising reasonable business judgment) the Losses or other matter on behalf,
for the account, and at the risk, of Buyer.
10. Conditions to Obligations to Close.
10.1 Conditions to Buyer's Obligations to Close. The
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obligations of Buyer under this Agreement are subject to the satisfaction, prior
to or at the Effective Date, of each of the following conditions precedent:
(a) Continued Truth of Representations and
Warranties. All of the representations and warranties made by Seller and/or
Selling Shareholder in this Agreement will be true on the Effective Date.
(b) Performance of Covenants. Either prior to or at
Effective Date, Seller or Selling Shareholder, as the case may be, will have
performed and complied with all of the covenants, agreements, obligations, and
conditions required by this Agreement to be performed or complied with by Seller
or Selling Shareholder by that date.
(c) Authorization and Corporate Documents. The
execution and delivery by Seller of this Agreement, and the transaction
contemplated by this Agreement, will have been duly authorized by the board of
directors and shareholders of Seller as required by law, and Seller will have
delivered to Buyer complete and correct copies, certified by its secretary or
assistant secretary, of all resolutions and any other documents or instruments
affecting such authorization.
(d) Delivery of Documents. All documents and
instruments required to be delivered to Buyer by Seller or Selling Shareholder
at the Effective Date will have been tendered for delivery to Buyer by Seller or
Selling Shareholder.
(e) No Litigation. No litigation will have been
commenced or threatened which would prevent or limit the ability of Buyer,
Seller, or Selling Shareholder to consummate the transaction contemplated by
this Agreement or any other suit which, if resolved adversely to such party,
would materially and adversely affect the Business, the Assets, or the financial
condition, property, or prospects of the Business or such party.
(f) Consents. All consents, approvals, permits,
licenses, and authorizations of any person, shareholders of Seller, landlord,
lessor, government authorities, courts, or private agencies, which, in the
opinion of counsel for Buyer, are necessary or appropriate in connection with
the consummation of the transaction contemplated by this Agreement, shall have
been obtained to the satisfaction of Buyer and its counsel.
(g) No Material Adverse Change. There will have
occurred no material adverse change in the Business, the Assets, or the business
prospects or financial condition, of the Business from December 27, 1998,
through the Effective Date.
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10.2 Conditions to Seller's Obligations to Close. The
obligations of Seller under this Agreement are subject to the satisfaction,
prior to or at the Effective Date, of each of the following conditions
precedent:
(a) Continued Truth of Representations and
Warranties. All representations and warranties made by Buyer in this Agreement
will be true on the Effective Date.
(b) Authorization and Corporate Documents. The
Closing of the transaction contemplated by this Agreement, will have been duly
authorized by the board of directors of Buyer and Buyer will have delivered to
Seller complete and correct copies, certified by its secretary or assistant
secretary, of all resolutions and other documents or instruments affecting such
authorizations.
(c) Performance. Either prior to or at the Effective
Date, Buyer will have performed and complied with all of the agreements,
obligations and conditions required by this Agreement to be performed or
complied with by Buyer by that date.
11. Collection of Accounts Receivable. At the close of business on
May 28, 1999, Seller shall deliver to Buyer, by overnight courier, for receipt
on Sunday, May 30, 1999, (i) a detailed list of the accounts receivable aging
described at Section 1.13 that Buyer is purchasing from Seller, and (ii) other
accounts receivable of Seller described in Section 2.2, other than accounts
receivable for services provided during the week ending May 30, 1999.
Seller shall deliver to Buyer, for receipt on Monday, June 7, 1999, a
detailed list of all of Seller's accounts receivable resulting from Seller's
Business. The Seller's accounts receivable aging to be delivered to Buyer shall
include (i) accounts receivable purchased by Buyer pursuant to Section 1.13, and
(ii) the other accounts receivable of Seller described in Section 2.2,
including, specifically, but without limiting the generality of the foregoing,
accounts receivable for services provided during the week ending May 30, 1999,
which have the same invoice date, May 30, 1999.
The title and ownership of the accounts receivable described in Section
2.2 are retained by Seller.
For a 90-day period following the Effective Date, Buyer shall conduct
the collection, allocation and distribution of the collections of all of the
accounts receivable in compliance with the provisions of this Section 11.
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Buyer will remit cash collections of the accounts receivable described
in Section 2.2 to the Seller on a weekly basis after the Buyer has first
collected and retained cash receipts from all accounts receivable, an amount
equal to the amount paid to the Seller, at Closing, for those accounts
receivable which were purchased by Buyer pursuant to Section 1.13. If Buyer does
not collect within the 90-day collection period from all accounts receivable an
amount equal to the amount paid to the Seller, at Closing, for those accounts
receivable which were purchased by Buyer pursuant to Section 1.13, within seven
(7) days from demand by Buyer, the Seller shall purchase from the Buyer (at no
discount) the uncollected accounts receivable that were originally purchased
from Seller pursuant to Section 1.13 and shall pay to Buyer an amount equal to
the difference between the amount paid for such accounts receivable pursuant to
Section 1.13 and the amount collected within the 90-day collection period from
all of the accounts receivable described in Section 1.13 and Section 2.2. If
Seller does not make such payment within seven (7) days of Buyer's demand,
Buyer, at Buyer's discretion, may offset such amount against the amount owing to
Seller on the Note or take other action. Buyer will provide Seller with mutually
agreeable documentation, such as a xxxx of sale to sell back to Seller any
uncollected accounts receivable that was purchased and described at Section
1.13. If any of the accounts receivable are collected by Buyer after the 90-day
collection period and after Seller has made payment of a shortfall, if any,
Buyer shall remit the funds to Seller at least weekly.
Neither party will charge the other for processing the accounts
receivable as described above. Buyer shall return all of the original
information related to Seller's account's receivable for the period prior to the
Closing on the date which is 90 days after the Effective Date.
Buyer shall be entitled to any account receivable that is attributable
to services that were rendered by Seller's Temporary Employees prior to Closing,
if Buyer paid the Temporary Employees based on a time record that was submitted
to Buyer after Seller made its final payroll for Temporary Employees.
12. Miscellaneous.
12.1 Waiver of Conditions. Any of the conditions set forth in
this Agreement may be waived, in whole or in part, by the party for whom the
condition benefits. Any such waiver shall be in writing, and no such waiver or
failure to insist on strict compliance with any covenant, condition or agreement
herein shall operate as a waiver of, or estoppel with respect to any subsequent
or other failure.
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12.2 Expenses. Each party shall pay its own fees and expenses
incurred in connection with this Agreement, including, but not limited to,
attorneys and accountants fees, without regard to whether the purchase of the
Assets, as contemplated herein, is consummated.
12.3 Further Assurances and Additional Instruments.
(a) Upon the reasonable request of Buyer at any time
and from time to time following the Effective Date, Selling Shareholder and
Seller, its officers or directors, or both, as appropriate, without further
consideration shall execute and deliver to Buyer such further documents or
instruments of assignment, transfer, conveyance, endorsement, direction, or
authorization as Buyer or its counsel may reasonably request in order to perfect
the title of Buyer, or its successors and assigns in and to the Assets or
otherwise to fulfill the purpose and intent of this Agreement.
(b) At any reasonable time or times following the
Effective Date, but only to the extent reasonably necessary to the conduct of
the Business, Seller shall allow employees, attorneys, accountants, and other
authorized representatives of Buyer free and full access to Seller's and/or
Selling Shareholder's books, records, documents and correspondence, as it
relates to the Business, and shall make the same available to Buyer at a
mutually agreeable place.
12.4 Notices. Any notice, request, instruction, or other
document or instrument required or permitted by this Agreement shall be in
writing and shall be given to either Seller, Selling Shareholder or Buyer and
shall be deemed to have been given on the date when such notice, request,
instruction, or other document or instrument is personally delivered or 48 hours
after deposited in the United States Mail, registered or certified, postage
prepaid and addressed to the appropriate party at the address set forth on page
1 of this Agreement or to such other address as may be given by notice as
provided herein.
12.5 Headings. The underlined paragraph and subparagraph
headings used in this Agreement are for convenient reference only and are not
intended to affect the meaning or construction of any provision of this
Agreement.
12.6 Binding on Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of Buyer, Seller, Selling Shareholder
and their respective successors, heirs, devisees, transferees and assigns.
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12.7 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the state of California, without regard
to any applicable conflicts of law rules thereof.
12.8 Intentionally Left Blank.
12.9 Entire Agreement; Amendment. This Agreement and the
collateral documents and instruments called for herein to consummate this
transaction and the agreements referred to in Section 3, comprise the entire
agreements of the parties and may not be amended or modified, except by written
agreement of the parties. No provision of the aforementioned agreements may be
waived, except in writing, and only in the specific instance and for the
specific purposes for which given.
12.10 Recitals. The Recitals set forth above shall and are
hereby incorporated and made a part of this Agreement.
12.11 Schedules. The Schedules attached hereto and referred to
herein are part of this Agreement for all purposes. The terms which are defined
in this Agreement shall have the same meaning when used in the Schedules hereto.
12.12 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when fully and
properly executed, shall be deemed to be an original.
12.13 Default and Remedies; Right of Offset. If any party
defaults in the performance of any term, covenant, condition, or obligation
under this Agreement, the nondefaulting party may pursue any and all remedies
available to such party. The rights and remedies provided herein are cumulative
and not exclusive of any other right or remedy provided by law. In addition to
any other remedies which Buyer may have against Seller at law or pursuant to
this Agreement, Buyer may offset against payment of the Note or any other amount
payable to Seller, any and all amounts to which Buyer is entitled pursuant to
this Agreement.
12.14 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforcement of any such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties waive any provision of law which
renders any provision hereof prohibited or enforceable in any respect.
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12.15 Attorneys Fees. In the event it is necessary for any
party hereto to institute a proceeding in connection with this Agreement or
breach thereof, the prevailing party in such proceeding shall be entitled to
reimbursement for its reasonable attorneys costs, expenses and attorneys fees
incurred, including fees incurred on any appeal or review and in any claim
enforcement in the United States Bankruptcy Courts.
12.16 Postjudgment Attorneys Fees. If the services of an
attorney are required by any party to enforce a judgment rendered in connection
with this Agreement, the judgment creditor shall be entitled to reasonable
attorneys fees, costs and other expenses, and such fees, costs and expenses
shall be recoverable as a separate item. This provision shall be severable from
all other provisions of this Agreement, shall survive any judgment, and shall
not be deemed merged into the judgment.
12.17 Cross Default. Any default under this Agreement shall be
deemed a default under the agreements referred to in Section 3; any default
under the agreements referred to in Section 3 shall be a default under this
Agreement.
12.18 Gender. In construing this instrument and whenever the
context hereof so requires, the masculine gender includes the feminine and
neuter and the singular includes the plural.
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12.19 Public Announcement. Seller, Selling Shareholder and
Buyer shall agree as to the content of the announcement of this transaction to
the public. Seller and Selling Shareholder acknowledge that Buyer is a publicly
held company, subject to specific reporting and announcement provisions of the
Securities Exchange Act of 1934, as amended (the "Act"), relating to material
transactions. The execution and performance of this Agreement may be determined
to be a material transaction to Buyer. The parties agree that the Buyer will
make the first announcement regarding this transaction in the appropriate manner
and at the appropriate time. Seller and Selling Shareholder acknowledge their
respective duty of confidentiality to Buyer under the Act and each agrees,
jointly and severally with the other, to indemnify Buyer for any liability
incurred by Buyer for Seller's or Selling Shareholder's failure to adhere to the
provisions of this Section 12.19. Seller and Selling Shareholder shall take all
reasonable steps to prevent disclosures by the employees of the Business;
provided, however, neither Seller nor Selling Shareholder shall be held
accountable for employee disclosures beyond Seller's or Selling Shareholder's
reasonable control. After the Effective Date, there shall be no further
restriction regarding an announcement of the transaction which is the subject of
this Agreement.
12.20 Counsel. Each party has been represented by its counsel
in connection with the negotiation and preparation of this Agreement and,
consequently, each party hereby waives the application of any rule of law to the
effect that any provision of this Agreement will be interpreted or construed
against the party whose counsel prepared the same.
12.21 No Duress. This Agreement has been negotiated at
arms-length and neither party has acted under economic or other type of threat,
coercion, influence, or duress.
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12.22 Time of Essence. Time is expressly declared to be
strictly of the essence of this Agreement and the performance of each and every
provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this 31st day of May, 1999.
Seller: Temporary Skills Unlimited, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, President
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Secretary
Selling Shareholder: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Buyer: Xxxxxxx Business Services, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx
Vice President - Finance
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