EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and among
SUPERIOR CONSULTANT HOLDINGS CORPORATION,
a Delaware corporation
ENTERPRISE CONSULTING GROUP, INC., a Michigan corporation
AVIANT INFORMATION, INC., a California corporation
and
XXXXXXXXX CORPORATION, a Delaware corporation
AUGUST 20, 1998
TABLE OF CONTENTS
1. DEFINITIONS............................................................. 1
1.1 Accounts Receivable................................................... 1
1.2 Affiliate............................................................. 1
1.3 Assets................................................................ 1
1.4 Assumed Liabilities................................................... 1
1.5 Audited Financial Statements.......................................... 2
1.6 Benefit Plans......................................................... 2
1.7 Xxxx of Sale.......................................................... 2
1.8 Business.............................................................. 2
1.9 Buyer................................................................. 2
1.10 INTENTIONALLY OMITTED................................................ 2
1.11 Closing.............................................................. 2
1.12 Closing Date......................................................... 2
1.13 Code................................................................. 2
1.14 Compensation Arrangement............................................. 2
1.15 Competitive Business................................................. 2
1.16 Contracts............................................................ 3
1.17 Contract Rights...................................................... 3
1.18 Control.............................................................. 3
1.19 Current Balance Sheet................................................ 3
1.20 Current Financial Statements......................................... 3
1.21 Damages.............................................................. 3
1.22 Employees............................................................ 3
1.23 Encumbrances......................................................... 3
1.24 Environmental Laws................................................... 3
1.25 ERISA................................................................ 3
1.26 Escrow Account....................................................... 3
1.27 Escrow Agent......................................................... 3
1.28 Escrow Agreement..................................................... 4
1.29 Escrow Amount........................................................ 4
1.30 Excluded Assets...................................................... 4
1.31 Financial Statements................................................. 4
1.32 Fixed Assets......................................................... 4
1.33 Indemnified Parties.................................................. 4
1.34 Indemnifying Parties................................................. 4
1.35 INTENTIONALLY OMITTED................................................ 4
1.36 Intellectual Property................................................ 5
1.37 Knowledge............................................................ 5
1.38 Leased Premises...................................................... 5
1.39 Litigation........................................................... 5
1.40 Material Adverse Effect.............................................. 5
1.41 Over 90 Receivables.................................................. 5
1.42 Permits.............................................................. 5
1.43 Purchase Price....................................................... 5
1.44 Restricted Information............................................... 5
1.45 Seller............................................................... 6
1.46 Under 90 Receivables................................................. 6
1.47 Warranty Expenses.................................................... 6
1.48 Xxxxxxxxx............................................................ 6
2. SALE AND DELIVERY OF THE ASSETS......................................... 6
2.1 Sale of the Assets.................................................... 6
(a) Assets Transferred.................................................. 6
(b) Excluded Assets Not Transferred..................................... 7
2.2 Assumption of Liabilities............................................. 7
(a) Xxxx of Sale........................................................ 7
(b) Liabilities Remaining With Seller................................... 7
2.3 Purchase Price........................................................ 8
2.4 The Closing........................................................... 8
(a) Time and Place...................................................... 8
(b) Deliveries by Seller................................................ 9
(c) Deliveries by Buyer................................................. 9
(d) Post-Closing Deliveries............................................. 10
(e) Consents............................................................ 10
2.5 INTENTIONALLY OMITTED................................................. 10
2.6 Allocation of Purchase Price.......................................... 10
2.7 Re-conveyance of Accounts Receivable.................................. 10
2.8 Prorations and Adjustments............................................ 10
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXXXX.................. 11
3.1 Organization.......................................................... 11
3.2 Authorization......................................................... 12
3.3 No Violation.......................................................... 12
3.4 Ownership of the Assets............................................... 12
3.5 Financial Statements.................................................. 13
3.6 Litigation............................................................ 13
3.7 INTENTIONALLY OMITTED................................................. 14
3.8 Work in Process....................................................... 14
3.9 Fixed Assets.......................................................... 14
3.10 Leased Premises...................................................... 14
3.11 Change in Financial Condition and Assets............................. 14
3.12 Accounts Receivable.................................................. 14
3.13 Books and Records.................................................... 15
3.14 Contracts and Commitments............................................ 15
3.15 Permits.............................................................. 16
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3.16 Compliance With Laws................................................ 17
3.17 Employee Relations.................................................. 17
3.18 Absence of Certain Changes or Events................................ 18
3.19 Customers........................................................... 18
3.20 Suppliers........................................................... 18
3.21 Prepayments and Deposits............................................ 18
3.22 Trade Names and Other Intellectual Property......................... 19
3.23 Employment Agreements, Benefit Plans, etc........................... 19
3.24 Environmental Law................................................... 20
3.25 Taxes............................................................... 20
3.26 Computer and Other Systems.......................................... 21
3.27 Disclosure.......................................................... 21
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND SUPERIOR................... 21
4.1 Organization and Authority........................................... 21
4.2 Authorization........................................................ 22
4.3 No Violation......................................................... 22
4.4 Regulatory Approvals................................................. 22
5. PRE-CLOSING COVENANTS.................................................. 22
5.1 Access to Records and Properties of Seller........................... 22
(a) Access............................................................. 22
(b) Confidentiality.................................................... 23
(c) Survival........................................................... 23
5.2 Conduct of the Business of Seller Pending the Closing................ 23
(a) Operation in Ordinary Course....................................... 23
(b) Restricted Activities.............................................. 23
(c) No Actions to Violate Representations and Warranties............... 24
5.3 Consents and Notices................................................. 25
5.4 Regulatory Filings................................................... 25
5.5 No Shopping.......................................................... 25
(a) Actions Prohibited................................................. 25
(b) Damages to Buyer for Violation..................................... 26
5.6 Public Announcements................................................. 26
5.7 Reasonable Efforts to Satisfy Conditions............................. 27
6. CONDITIONS TO CLOSING.................................................. 27
6.1 Conditions to Each Party's Obligation to Consummate the Transactions. 27
(a) Approval of Seller's Shareholder................................... 27
(b) Regulatory Filings................................................. 27
(c) No Change in Law, Etc.............................................. 27
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6.2 Additional Conditions to Obligation of Buyer and Superior to Consummate
the Transactions..................................................... 27
(a) Representations and Warranties; Performance of Obligations of Seller
and Xxxxxxxxx........................................................ 27
(b) Consents........................................................... 28
(c) Opinion of Counsel to Seller....................................... 28
(d) Deliveries......................................................... 28
(e) INTENTIONALLY OMITTED.............................................. 28
(f) Legal Proceedings.................................................. 28
(g) No Change.......................................................... 28
(h) INTENTIONALLY OMITTED.............................................. 28
(i) Escrow Agreement................................................... 28
(j) Employment Agreements and Releases................................. 28
(k) Actions and Proceedings............................................ 28
6.3 Additional Conditions to Obligations of Seller and Xxxxxxxxx to
Consummate the Transactions.......................................... 29
(a) Representations and Warranties..................................... 29
(b) Performance of Obligations of Buyer and Superior................... 29
(c) Opinion of Counsel to Buyer........................................ 29
(d) Deliveries......................................................... 29
(e) Escrow Agreement................................................... 29
(f) Legal Proceedings.................................................. 29
(g) Employment Agreements.............................................. 29
(h) Actions and Proceedings............................................ 29
7. POST-CLOSING AGREEMENTS................................................ 30
7.1 Proprietary Information.............................................. 30
(a) Obligation of Seller and Xxxxxxxxx................................. 30
(b) Obligation of Buyer and Superior................................... 30
(c) Enforcement........................................................ 30
7.2 Non-Competition Agreement............................................ 30
(a) Obligation of Seller and Xxxxxxxxx................................. 30
(b) Reasonableness..................................................... 31
(c) Enforcement........................................................ 31
7.3 Sharing of Data...................................................... 31
7.4 Collection of Accounts Receivable.................................... 32
7.5 Use of Office Space.................................................. 32
7.6 Financial Information................................................ 33
7.7 Computer Network..................................................... 33
7.8 Use of Name.......................................................... 33
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.................. 34
8.1 Representations and Warranties....................................... 34
8.2 Survival of Covenants................................................ 34
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9. INDEMNIFICATION AND REIMBURSEMENT...................................... 34
9.1 Indemnification by Seller and Xxxxxxxxx.............................. 34
9.2 Indemnification By Buyer and Superior................................ 35
9.3 Notice and Defense of Claims......................................... 36
9.4 Cooperation.......................................................... 37
9.5 Confidentiality...................................................... 37
9.6 Time Period for Asserting Indemnification............................ 37
9.7 Exclusive Remedies................................................... 38
9.8 Limitations.......................................................... 38
10. TRANSFER AND SALES TAX................................................ 39
10.1 Payment............................................................. 39
11. TERMINATION OF AGREEMENT.............................................. 39
11.1 Termination by Lapse of Time........................................ 39
11.2 Termination by Agreement of the Parties............................. 39
11.3 Termination by Reason of Breach..................................... 39
(a) By Seller or Xxxxxxxxx............................................. 39
(b) By Buyer or Superior............................................... 39
11.4 Effect of Termination............................................... 40
12. BROKERS............................................................... 40
12.1 For Seller and Xxxxxxxxx............................................ 40
12.2 For Buyer and Superior.............................................. 40
13. MISCELLANEOUS......................................................... 40
13.1 Notices............................................................. 40
13.2 Successors and Assigns.............................................. 41
13.3 Entire Agreement; Attachments....................................... 41
13.4 Amendment; Waiver................................................... 42
13.5 Expenses............................................................ 42
13.6 Governing Law....................................................... 42
13.7 Article, Section and Paragraph Headings............................. 42
13.8 Severability........................................................ 42
13.9 Counterparts........................................................ 42
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SCHEDULES AND EXHIBITS
Schedule 1.4 Excluded Obligations
Schedule 1.22 Employees and Independent Contractors
Schedule 1.30 Excluded Assets
Schedule 2.1(a)* Value of Accounts Receivable
Schedule 3.1 Qualifications in Foreign Jurisdictions
Schedule 3.3 Consents and Approvals of Seller
Schedule 3.4 Encumbrances.
Schedule 3.6 Litigation
Schedule 3.8 Jobs in Process
Schedule 3.9 Fixed Assets
Schedule 3.11 Adverse Changes
Schedule 3.12 Accounts Receivable
Schedule 3.14 Contracts And Agreements
Schedule 3.15 Permits
Schedule 3.16 Notices of Violation or Noncompliance.
Schedule 3.17 Labor and Employment Matters
Schedule 3.18 Material Transactions
Schedule 3.19 Customers
Schedule 3.20 Suppliers
Schedule 3.21 Prepayments and Deposits
Schedule 3.22 Intellectual Property.
Schedule 3.23 Benefit Plans and Compensation Arrangements
Schedule 3.26 Computer and Other Systems
Schedule 4.3 Consents and Approvals of Buyer
* To be delivered at Closing
Exhibit 1.7 Xxxx of Sale, Assignment and Assumption Agreement
Exhibit 1.28 Escrow Agreement
Exhibit 6.2(c) Opinion of Seller's Counsel
Exhibit 6.3(c) Opinion of Buyer's Counsel
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ASSET PURCHASE AGREEMENT
------------------------
AGREEMENT made as of the 20th day of August, 1998 by and among SUPERIOR
CONSULTANT HOLDINGS CORPORATION, a Delaware corporation ("Superior") ENTERPRISE
CONSULTING GROUP, INC., a Michigan corporation ("Buyer"), AVIANT INFORMATION,
INC., a California corporation ("Seller") and XXXXXXXXX CORPORATION, a Delaware
corporation ("Xxxxxxxxx")
PRELIMINARY STATEMENT
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A. Seller is a wholly owned subsidiary of Xxxxxxxxx that provides health
care consulting services including information systems consulting and
assistance. Buyer is a wholly owned subsidiary of Superior that conducts
businesses providing similar services.
B. Buyer and Superior desire that Buyer purchase, and Seller and Xxxxxxxxx
desire that Seller sell, substantially all of the assets and business of Seller
(the "Business"), for the consideration set forth below and the assumption of
certain of Seller's liabilities set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement shall have the following meanings:
1.1. "ACCOUNTS RECEIVABLE" means all billed and unbilled accounts, accounts
receivable, notes and notes receivable existing on the Closing Date pertaining
to the Business (including any security held by Seller for the payment thereof)
and not previously retired or canceled.
1.2. "AFFILIATE" of a person means any person or entity which controls, is
controlled by or is under common control with such person.
1.3. "ASSETS" means all of the properties, assets and business of Seller
pertaining to the Business to be purchased by Buyer as described in Section
2.1(a), specifically excluding the Excluded Assets.
1.4. "ASSUMED LIABILITIES" means (i) those liabilities and obligations of
the Business outstanding on the Closing Date under the Contracts, the
Intellectual Property and the Permits (ii) obligations and liabilities under the
Contracts, the Intellectual Property and the Permits arising from or relating to
activities, events or occurrences happening on or after the Closing Date; (iii)
the obligations of Seller under that certain lease of office space located in
Beaverton, Oregon as contemplated in Section 7.5 and (iv) all other obligations
and liabilities arising from or relating to activities, events or occurrences
happening from the operation of the Business on and after the Closing Date; but
excluding in the case of clause (i) any obligation for borrowed money, for
inter-company advances or liabilities owed to Seller or its Affiliates and
excluding any obligation identified on Schedule 1.4 as an excluded obligation.
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1.5. "AUDITED FINANCIAL STATEMENTS" means the audited balance sheet and the
related audited statements of income, stockholders' equity and cash flows of
Xxxxxxxxx on a consolidated basis as of and for the fiscal year ended October
31, 1997.
1.6. "BENEFIT PLANS" means all "employee benefit plans," within the meaning
of Section 3(3) of ERISA (other than any plan which is exempt from Title I of
ERISA), for the employees or former employees of Seller or their dependents,
survivors or beneficiaries, which pertain to the Business or cover the Employees
and which are currently maintained by Seller and pertain to the Business, or in
which Seller is or was, at any time preceding the Closing Date, a participating
employer.
1.7. "XXXX OF SALE" means a Xxxx of Sale, Assignment and Assumption
Agreement substantially in the form attached hereto as Exhibit 1.7.
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1.8. "BUSINESS" has the meaning set forth in Recital B above.
1.9. "BUYER" means Enterprise Consulting Group, Inc., a Michigan
corporation.
1.10. INTENTIONALLY OMITTED
1.11. "CLOSING" means the closing of the transactions contemplated by this
Agreement.
1.12. "CLOSING DATE" means August 20, 1998 or such other date as the
Closing shall actually occur.
1.13. "CODE" means the Internal Revenue Code of 1986, as amended.
1.14. "COMPENSATION ARRANGEMENT" means any compensation arrangement with
Employees or former Employees which is currently maintained by Seller and which
is not a Benefit Plan, including payroll practices as described in ERISA Reg.
(S)2510.3-1(b), any severance pay plan, arrangement or practice, percentage
compensation plan, executive compensation plan, bonus plan, incentive
compensation plan or arrangement, employee stock ownership or stock purchase
plan, deferred compensation agreement or arrangement to the extent such plan,
agreement or arrangement is not already included in the definition of Benefit
Plan.
1.15. "COMPETITIVE BUSINESS" means any business which (a) is conducted
within any geographical territory in which, on the Closing Date, Seller sells
the products or services sold or provided by the Business and (b) is engaged in
providing any product or service sold or provided by the Business within the one
year prior to the Closing Date or is competitive with the Business as conducted
on the Closing Date.
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1.16. "CONTRACTS" means the contracts, commitments, purchase orders,
licenses, leases, rights and other contract documents and agreements, whether
written or oral, which are to be assigned from Seller to Buyer at the Closing,
as identified in Schedule 3.14.
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1.17. "CONTRACT RIGHTS" means all of Seller's rights and interest in, to
and under the Contracts.
1.18. "CONTROL" of any person means the ability to direct or cause the
direction of the policies and management of such person, whether through the
ownership of voting securities, by contract or otherwise.
1.19. "CURRENT BALANCE SHEET" means the unaudited balance sheet of Seller
as of July 31, 1998.
1.20. "CURRENT FINANCIAL STATEMENTS" means the Current Balance Sheet and
the related unaudited statement of income of Seller as of and for the nine
months then ended.
1.21. "DAMAGES" means all claims, actions, assessments, liens,
encumbrances, judgments, losses, damages, liabilities (including strict
liabilities), costs and expenses, including but not limited to, interest,
penalties and reasonable attorneys' fees and expenses.
1.22. "EMPLOYEES" means all employees or independent contractors employed,
engaged or retained by Seller in connection with the Business on the Closing
Date, all of whom will be listed on Schedule 1.22 delivered at Closing.
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1.23. "ENCUMBRANCES" means all claims, liabilities, liens, mortgages,
pledges, security interests, charges, restrictions, prior assignments,
encumbrances and equities of any kind affecting the Assets.
1.24. "ENVIRONMENTAL LAWS" means all applicable foreign, federal, state,
regional, county and local administrative, regulatory and judicial laws, rules,
statutes, codes, ordinances, regulations, binding interpretations, binding
policies, licenses, permits, approvals, plans, authorizations, directives,
rulings, injunctions, decrees, orders, judgments, common law and any similar
items in effect on the date of this Agreement and through the Closing Date
relating to the protection of human health, safety, or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata).
1.25. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.26. "ESCROW ACCOUNT" means the account established under the Escrow
Agreement into which funds will be deposited by Buyer, to be held and disbursed
as directed in the Escrow Agreement.
1.27. "ESCROW AGENT" means First of America Bank, a national banking
association. The parties acknowledge that the Escrow Agent is not a party to
this Agreement and is not bound by any of the provisions hereof, and that the
Escrow Agent may assert this acknowledgment as
3
third party beneficiary in defense of any claim which seeks to impose upon the
Escrow Agent any liability or obligation based on an alleged violation of this
Agreement (but not in defense of any claim alleging violation of the Escrow
Agreement).
1.28. "ESCROW AGREEMENT" means the agreement among the parties hereto and
the Escrow Agent, of even date herewith in the form attached hereto as Exhibit
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1.28, pursuant to which the Escrow Agent agrees to hold the Escrow Amount in
----
escrow and to deliver such amounts according to the terms thereof.
1.29. "ESCROW AMOUNT" means the following amount, which shall be delivered
at Closing to the Escrow Agent in accordance with Section 2.4(c)(ii) to be held
and disbursed pursuant to the terms of the Escrow Agreement:
(a) 10% multiplied by the Purchase Price; plus
(b) the amount of (i) the Over 90 Receivables plus (ii) 50% multiplied by
the value of the Under 90 Receivables, in each case as determined pursuant to
Section 2.1(a)(i), deposited to secure collection of the Accounts Receivable
purchased by Buyer.
1.30. "EXCLUDED ASSETS" means those assets listed on Schedule 1.30 hereto.
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1.31. "FINANCIAL STATEMENTS" means the Audited Financial Statements and
the Current Financial Statements, collectively.
1.32. "FIXED ASSETS" means all of the machinery, equipment, computers,
telecommunication systems, fittings and other office equipment, furniture and
leasehold improvements, whether or not reflected as capital assets in the
accounting records of Seller, which are owned by Seller on the Closing Date and
used or useful in the Business.
1.33. "INDEMNIFIED PARTIES" means, as to a particular claim or
circumstance, all persons entitled to be indemnified under Article 9 in respect
thereof and "Indemnified Party" means any such person individually.
1.34. "INDEMNIFYING PARTIES" means, as to a particular claim or
circumstance, all persons required to provide indemnification under Article 9
in respect thereof and "Indemnifying Party" means any such person individually.
1.35. INTENTIONALLY OMITTED
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1.36. "INTELLECTUAL PROPERTY" means all right, title and interest of
Seller in and to all intellectual property rights pertaining to the Business
(other than any Excluded Assets), including but not limited to inventions,
discoveries, trade secrets, processes, formulae, know-how, patents, patent
applications, patent licenses, the name "Aviant Information, Inc." and any
variations thereof, customer lists, trademarks, trademark registrations,
trademark registration applications, trade dress, service marks, software
licenses, copyrights, copyright registrations, copyright registration
applications, technical expertise, research data and other similar property and
the registrations and applications for registration thereof owned or licensed by
Seller and used in the Business and licenses and other agreements to which
Seller is a party (as licensor or licensee) or by which Seller is bound relating
to any of the foregoing kinds of property or rights.
1.37. "KNOWLEDGE" or "to the knowledge" of the Seller, or words of similar
import, mean the actual current knowledge of the following persons after due
inquiry of employees and other officers or directors of Seller who would
reasonably be expected to know the matters within the scope of the
representation or warranty in question: Xxxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxx
Xxxxxxxx, Xxxx Xxxx, Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxx.
1.38. "LEASED PREMISES" means the premises currently occupied by the
Business, located at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxxxx.
1.39. "LITIGATION" means any litigation, suit, action, investigation (to
the best of Seller's knowledge), grievance, arbitration, proceeding or
controversy or claim before any court, administrative agency or other
governmental authority which, if adversely determined, would have a Material
Adverse Effect.
1.40. "MATERIAL ADVERSE EFFECT" means a material adverse effect (a) on the
Business or the Assets or the financial condition of the Business, in each case
taken as a whole, or (b) on the ability of Buyer after the Closing to carry on
the Business substantially in the same manner as it is presently being
conducted.
1.41. "OVER 90 RECEIVABLES" means those Accounts Receivable which on the
Closing Date have been outstanding for more than 90 days
1.42. "PERMITS" means all governmental licenses, permits certificates,
approvals, authorizations and orders material to the ability of Seller to
conduct the Business in the manner conducted, or own and operate the Assets in
the manner owned and operated, in the one year prior to the Closing Date, except
for Permits relating to discontinued lines of business.
1.43. "PURCHASE PRICE" means the purchase price payable for the Assets
pursuant to Section 2.3.
1.44. "RESTRICTED INFORMATION" means all documents, information and
records obtained by Superior or Buyer from Seller or its agents or
representatives regarding the Assets or the Business except for any of such
documents, information and records which (a) at the time of disclosure or
thereafter is generally available to the public (other than as a result of a
disclosure directly or indirectly by Superior or Buyer), (b) was available at
the time of disclosure to Superior
5
or Buyer from a source other than Seller or its officers, employees, agents or
attorneys, provided that such source is not and was not bound by a
confidentiality agreement or obligation with Seller, or (c) has been
independently developed by Superior or Buyer without violation of any of its
obligations hereunder.
1.45. "SELLER" means Aviant Information, Inc., a California corporation.
1.46. "UNDER 90 RECEIVABLES" means those Accounts Receivable which on the
Closing Date have been outstanding for 90 days or less.
1.47. "WARRANTY EXPENSES" means all Damages suffered by Superior, Buyer,
any of the Affiliates of either, and the officers, directors, employees, agents
and representatives of any of the foregoing, arising out of or incurred in
connection with any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Seller or Xxxxxxxxx under this
Agreement or under any agreement, document, or instrument delivered pursuant to
this Agreement.
1.48. "XXXXXXXXX" mean Xxxxxxxxx Corporation, a Delaware corporation.
2. SALE AND DELIVERY OF THE ASSETS
2.1. SALE OF THE ASSETS.
(a) Assets Transferred. Subject to and upon the terms and conditions of
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this Agreement, except as specifically provided in Section 2.1(b) hereof, at the
Closing, Seller shall sell, transfer, convey, assign and deliver to Buyer, and
Buyer shall purchase from Seller, free and clear of all liens, liabilities,
security interests, leasehold interests and encumbrances of any nature
whatsoever (except for statutory liens for taxes not yet due or as otherwise
expressly provided herein), all of the right, title and interest of Seller in
and to the properties, assets and other claims, rights and interests which on
the Closing Date are owned by Seller and which pertain to the Business,
including but not limited to:
(i) All Accounts Receivable. The parties hereto shall agree on the
value of the Accounts Receivable, excluding therefrom the value of any
Accounts Receivable which represent prepaid services, advance or forward
xxxxxxxx, retainer amounts or any other payments or xxxxxxxx for products or
services not delivered or performed as of the Closing Date, and shall deliver
at Closing a statement designated as Schedule 2.1(a), signed by the parties
---------------
hereto, setting forth the value as so determined, subject to adjustments
(which shall not be material individually or in the aggregate) in accordance
with Section 2.8 below, and specifying those Accounts Receivable which
constitute Under 90 Receivables and those which constitute Over 90
Receivables;
(ii) All prepaid expenses except those set forth on Schedule 1.30;
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(iii) All Contracts and Contract Rights, including but not limited to
all of Seller's rights to any security deposits thereunder and the right to
xxxx for all work performed thereunder after the Closing;
(iv) All books; payment records; accounts; databases, customer lists;
correspondence; employment and personnel records (to the extent permitted by
applicable law); and other useful business records, including electronic
media, and any confidential or other information which has been reduced to
written, graphic, electronic or other tangible media, utilized in the conduct
of or relating to the Business or the Assets, subject in each case to Seller's
right to retain copies thereof which Seller reasonably requires for its
ongoing operation, winding-up or dissolution (but which Seller may not
disclose or convey to any third party except for Seller's agents, attorneys
and accountants who have a need to know);
(v) All rights of Seller under express or implied warranties from the
suppliers of the Assets to the extent transferable (but excluding such rights
insofar as the same pertain to liabilities retained by Seller hereunder);
(vi) The Fixed Assets;
(vii) All Intellectual Property;
(viii) The Permits to the extent transferable; and
(ix) Except as specifically provided in Section 2.1(b) hereof, all
other assets, properties, claims, rights and interests of Seller which relate
to the Business and exist on the Closing Date, of every kind and nature and
description, whether tangible or intangible, real, personal or mixed.
(b) Excluded Assets Not Transferred. Notwithstanding the provisions of
-------------------------------
Section 2.1(a) above, the assets to be transferred to Buyer under this Agreement
shall not include any of the Excluded Assets. If any assets of the type
enumerated in Section 2.1(a) hereof are used both in the Business as well as in
other businesses of Seller as of or immediately prior to the date hereof,
Seller's right, title and interest in and to such assets shall be transferred by
Seller to Buyer pursuant to this Agreement unless they constitute Excluded
Assets.
2.2. ASSUMPTION OF LIABILITIES.
(a) Xxxx of Sale. At the Closing, Buyer and Superior shall execute and
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deliver the Xxxx of Sale, pursuant to which Buyer shall assume and agree to
perform, pay and discharge the Assumed Liabilities and Superior shall agree to
cause Buyer to do the same.
(b) Liabilities Remaining With Seller. Except as otherwise provided
---------------------------------
herein, Buyer shall not assume any of the liabilities of Seller and shall
purchase the Assets free and clear of all liens, mortgages, security interests,
encumbrances and claims and Buyer shall not be or become liable for any claims,
demands, liabilities or obligations not expressly assumed in this Agreement.
Without limiting the foregoing, Buyer shall not at the Closing assume or agree
to perform, pay or discharge, and Seller shall remain unconditionally liable
for, all obligations, liabilities and
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commitments, fixed or contingent, of Seller other than the Assumed Liabilities,
including but not limited to any of the following, except to the extent that
they constitute Assumed Liabilities:
(i) Severance, termination or other payments or benefits (including
but not limited to post-retirement benefits or accrued vacation pay), whether
owing under Seller's severance policy, any union contract or any employment
agreement to any Employees, liabilities arising under any federal, state or
local "plant closing law", liabilities for the withholding of income taxes,
unemployment insurance, FICA, Medicare and other required withholdings
relating to any Employee, and liabilities accruing under Seller's employee
benefit plans, retirement plans, pension plans or savings or profit sharing
plans, including but not limited to any obligations under Section 601 through
608 of ERISA;
(ii) Worker's compensation claims relating to any Employees;
(iii) Stock option or other stock-based awards made to any Employees
by Seller, if any;
(iv) Liabilities for any federal, state, local or foreign income taxes
(including interest, penalties and additions to such taxes) or any deferred
income taxes of Seller, or (except as provided in Section 10) liabilities for
any tax imposed upon, or incurred by, Seller, if any, in connection with or
related to this Agreement or the transactions contemplated hereby;
(v) Liabilities incurred in connection with violations of occupational
safety, wage, health, welfare, employee benefit or environmental laws or
regulations, which violations did not result from the action or inaction of
Buyer subsequent to the Closing Date;
(vi) Liabilities incurred by Seller for borrowed money;
(vii) Liabilities for professional errors or omissions attributable
to work performed by personnel of the Seller or the Business prior to the
Closing Date; and
(viii) All other liabilities of the Seller, whether or not
attributable to the Business, arising from or attributable to any period prior
to the Closing Date.
2.3. PURCHASE PRICE. The Purchase Price shall be an amount in cash equal
to (a)(i) $3,395,500 minus (ii) the value, as of the Closing Date, of customer
advances or prepayments which are not included in the Accounts Receivable, in
consideration for the Assets excluding the Accounts Receivable, plus (b) the
value of the Accounts Receivable as determined pursuant to Section 2.1(a)(i).
As detailed below, portions of the Purchase Price will be placed in escrow to
secure collection of the Accounts Receivable by Buyer following the Closing and
to secure Buyer against breaches of Seller's representations and warranties.
2.4. THE CLOSING.
(a) Time and Place. The Closing shall take place at the offices of
---------------
Buyer's counsel, or at such other location as the parties may agree, on August
20, 1998 or such other date as the
8
parties agree. The transfer of the Assets by Seller to Buyer shall be deemed to
occur at 11:59 p.m., Eastern daylight time, on the Closing Date.
(b) Deliveries by Seller. At the Closing:
---------------------
(i) Seller shall execute and deliver the Xxxx of Sale;
(ii) Seller and Xxxxxxxxx shall execute and deliver, or cause to be
executed and delivered, such certificates of Seller's officers and such other
documents evidencing satisfaction of the conditions specified in this
Agreement as Buyer shall reasonably request;
(iii) INTENTIONALLY OMITTED;
(iv) Seller and Xxxxxxxxx shall execute and deliver the Escrow
Agreement;
(v) Seller shall execute and deliver, or cause to be executed and
delivered, the statement setting forth the agreed-upon value of the Accounts
Receivable as contemplated by Section 2.1(a)(i); and
(vi) Seller shall execute and deliver, or cause to be executed and
delivered, such other documents, instruments or certificates as Buyer may
reasonably request in order to evidence the accuracy of Seller's
representations or compliance by Seller with its covenants hereunder.
(vii) Seller and Xxxxxxxxx shall cause to be delivered to Buyer and
Superior the opinion of counsel contemplated by Section 6.2(c).
(c) Deliveries by Buyer. At the Closing:
--------------------
(i) Buyer shall deliver to Seller, in immediately available funds by
wire transfer to an account designated by Seller, an amount equal to the
Purchase Price less the Escrow Amount;
(ii) Buyer shall deliver to the Escrow Agent, in immediately available
funds by wire transfer to the Escrow Account, the Escrow Amount, to be held
pursuant to the terms of the Escrow Agreement;
(iii) Buyer and Superior shall execute and deliver, or cause to be
executed and delivered, the Xxxx of Sale.
(iv) Buyer and Superior shall execute and deliver the Escrow
Agreement;
(v) Buyer shall execute and deliver, or cause to be executed and
delivered, the statement setting forth the agreed-upon value of the Accounts
Receivable as contemplated by Section 2.1(a)(i)and
9
(vi) Buyer and Superior shall execute and deliver, or cause to be
executed and delivered, such certificates of Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this
Agreement as Buyer shall reasonably request.
(vii) Buyer and Superior shall cause to be delivered to Seller and
Xxxxxxxxx the opinion of counsel contemplated by Section 6.3(c).
(d) Post-Closing Deliveries. At any time and from time to time after the
------------------------
Closing, at Buyer's request and without further consideration, Seller (or its
successors) promptly shall (and Xxxxxxxxx shall cause Seller or its successors
to) execute and deliver such documents and take such other action, as Buyer may
reasonably request to more effectively transfer, convey and assign to Buyer, and
to confirm Buyer's title to, all of the Assets and the Business, to put Buyer in
actual possession and operating control thereof, to assist Buyer in exercising
all rights with respect thereto and to carry out the purpose and intent of this
Agreement; provided, however, that nothing in this Section 2.4(d) shall require
Seller to expend any funds other than in payment of customary out-of-pocket
expenses or to indemnify any third party.
(e) Consents. Seller and Buyer each will use its best efforts to obtain
---------
as promptly as possible written consents to the transfer, assignment or
sublicense to Buyer of all Contracts and Permits being transferred pursuant to
Section 2.1(a) hereof where the approval or other consent of any other person is
required, but such efforts shall not require Seller or Buyer to pay any amount
or to incur any obligation, including but not limited to any obligation to
indemnify any third party. If any such approval or consent cannot be obtained,
Seller will cooperate with Buyer in any reasonable arrangement designed to
provide Buyer with substantially the same economic benefits as if such approval
or other consent had been obtained and the transfer effected on the Closing
Date.
2.5. INTENTIONALLY OMITTED
2.6. ALLOCATION OF PURCHASE PRICE. Within a reasonable time after the
Closing and before preparation of IRS Form 8594, Seller and Buyer will allocate
the Purchase Price among the Assets and Assumed Liabilities and will prepare IRS
Form 8594 in accordance with such allocation. Seller and Buyer agree that they
will not take any position which is materially inconsistent with such allocation
in preparing income, capital or franchise tax returns. Seller and Buyer
acknowledge that such allocation is the result of arm's length bargaining
regarding the fair market value of the Assets. Buyer and Seller shall each
file, with its respective federal income tax return for the year in which the
Closing occurs, IRS Form 8594. Buyer agrees to report the purchase of the
Assets, and Seller agrees to report the sale of the Assets, for income tax
purposes in a manner consistent with the information contained in IRS Form 8594.
2.7. RE-CONVEYANCE OF ACCOUNTS RECEIVABLE. For each Account Receivable
with respect to which there has been disbursed to Buyer funds from the Escrow
Account pursuant to the Escrow Agreement, Buyer shall re-convey the Account
Receivable to Seller, who thereafter shall be entitled to collect and retain the
proceeds thereof.
2.8. PRORATIONS AND ADJUSTMENTS.
10
(a) The operation of the Business and the income and normal operating
expenses, including without limitation Assumed Liabilities and prepaid expenses,
attributable thereto through 11:59 p.m. on the date of the Closing, shall be for
the account of Seller and thereafter for the account of Buyer. Adjustments
shall be made and paid at Closing to the extent feasible. A final accounting of
prorated items shall be made by Buyer and Seller, and the sum due from either to
the other pursuant to such accounting shall be paid in immediately available
funds within sixty (60) days after the Closing Date.
(b) Notwithstanding the foregoing, Seller and Buyer acknowledge that the
Accounts Receivable set forth on Schedule 2.1(a) and the customer advances and
---------------
prepayments not included in the Accounts Receivable as of the Closing Date will
be imprecise. Accordingly, Seller and Buyer agree to cooperate in preparing,
within thirty days after the Closing Date, an updated Schedule 2.1(a) to
---------------
accurately reflect the Accounts Receivable as of the Closing Date and an updated
calculation of the customer advances and prepayments not included in the
Accounts Receivable as of the Closing Date.
(c) To the extent that the updated calculation of customer advances and
prepayments not included in the Accounts Receivable as of the Closing Date is
greater or less than the amounts previously estimated for purposes of computing
the Purchase Price under Section 2.3, then (a) Buyer will promptly pay to
Seller, in immediately available funds, the amount by which the updated
calculation is less than the amount originally estimated or (b) Seller will
promptly pay to Buyer, in immediately available funds, the amount by which the
updated calculation is greater than the amount originally estimated.
(d) Buyer will also promptly (a) send to Seller a check in the amount of
50% of any net additional Under 90 Receivables reflected on such updated
Schedule 2.1(a) and (b) deliver to the Escrow Agent an amount equal to (i) any
---------------
additional Over 90 Receivables plus (ii) 50% of any additional Under 90
Receivables, in each case as reflected on such updated Schedule 2.1(a), to be
---------------
held in accordance with the terms of the Escrow Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND XXXXXXXXX
Seller and Xxxxxxxxx jointly and severally represent and warrant to Buyer and
Superior that the representations and warranties set forth herein are true and
correct as of the date of this Agreement and will be true and correct on the
Closing Date as if made on that date. The representations and warranties in this
Article 3 or in any document delivered to Buyer or Superior pursuant to this
Agreement are deemed to be material and Buyer and Superior are entering into
this Agreement relying on such representations and warranties.
3.1. ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of California and has
all requisite power and authority (corporate and other) to own its properties,
to carry on the Business as now being conducted, to execute and deliver this
Agreement, the Xxxx of Sale, the Escrow Agreement and all other documents and
instruments to be executed and delivered by it hereunder and to consummate the
transactions contemplated hereby and thereby. Xxxxxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power
11
and authority (corporate and other) to execute and deliver this Agreement, the
Escrow Agreement and all other documents and instruments to be executed and
delivered by it hereunder and to consummate the transactions contemplated hereby
and thereby. Seller is duly qualified to do business and is in good standing in
all jurisdictions in which the failure to be so qualified would have a Material
Adverse Effect. Schedule 3.1 contains a true, correct and complete list of all
------------
of the jurisdictions in which Seller has qualified to do business as of July 31,
1998.
3.2. AUTHORIZATION. The execution and delivery by Seller and Xxxxxxxxx of
this Agreement, the Escrow Agreement and all other agreements provided for
herein to which each is a party (including but not limited, in the case of
Seller, to the Xxxx of Sale), and the consummation of all transactions
contemplated hereby and thereby, has been duly authorized by all requisite
corporate action of Seller (subject to shareholder approval if required by
applicable law or Seller's Articles of Incorporation or Bylaws) and Xxxxxxxxx.
This Agreement and all such other agreements and obligations entered into and
undertaken by Seller or Xxxxxxxxx in connection with the transactions
contemplated hereby constitute (subject only to shareholder approval as
described above) the valid and legally binding obligations of Seller and
Xxxxxxxxx, enforceable against each in accordance with their respective terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, and by
principles of equity, whether applied in a proceeding at law or in equity.
3.3. NO VIOLATION. Except as specified in Schedule 3.3, the execution and
------------
delivery by Seller and Xxxxxxxxx and the performance by Seller and Xxxxxxxxx of
their respective obligations under this Agreement, the Xxxx of Sale, the Escrow
Agreement and the agreements provided for herein, and the consummation by Seller
and Xxxxxxxxx of the transactions contemplated hereby and thereby, will not,
with or without the giving of notice or the passage of time or both, (a) violate
the provisions of any law, rule or regulation applicable to Seller or Xxxxxxxxx;
(b) violate the provisions of the Articles of Incorporation or Bylaws of Seller
or Xxxxxxxxx; (c) violate any judgment, decree, order or award of any court,
governmental body or arbitrator which is binding on Seller or Xxxxxxxxx; or (d)
conflict with or result in the breach or termination of any term or provision
of, or constitute a default under, or cause any acceleration under, or cause the
creation of any lien, charge or encumbrance upon the Assets pursuant to, any
indenture, mortgage, deed of trust or other instrument or agreement to which
Seller is a party or by which it or any of the Assets are or may be bound,
other than with respect to obligations of Seller which will be discharged at or
prior to Closing and except, in the case of clauses (a), (c) and (d), for such
violations, conflicts, breaches, terminations, defaults, liens, charges and
encumbrances as would not have, individually or in the aggregate, a Material
Adverse Effect. Schedule 3.3 attached hereto sets forth a true, correct and
------------
complete list of all consents, approvals, permissions, licenses, authorizations
and other requirements prescribed by law, rule, regulation or by contract in
connection with the consummation by Seller or Xxxxxxxxx of the transactions
contemplated by this Agreement that, if not complied with by Seller or
Xxxxxxxxx, would result, individually or in the aggregate, in a Material Adverse
Effect.
3.4. OWNERSHIP OF THE ASSETS.
(a) Seller is, and at the Closing will be, the true and lawful owner of
the Assets to be conveyed by Seller, and will have the right to sell and
transfer to Buyer good and marketable
12
title to all Assets, free and clear of all Encumbrances, except for the Assumed
Liabilities, those Encumbrances listed on Schedule 3.4, the lien of taxes not
yet delinquent or the validity of which are being contested in good faith by
appropriate actions and other matters, including statutory liens, which would
not have a Material Adverse Effect. The delivery to Buyer of the instruments of
transfer of ownership contemplated by this Agreement will vest good and
marketable title to all Assets in Buyer, free and clear of all Encumbrances
except for the Assumed Liabilities, those Encumbrances listed on Schedule 3.4,
the lien of taxes not yet delinquent or the validity of which are being
contested in good faith by appropriate actions and other matters, including
statutory liens, which would not have a Material Adverse Effect.
(b) The Assets to be conveyed to Buyer hereunder constitute substantially
all properties, assets, rights and claims (other than Excluded Assets) which are
necessary to the conduct of the Business as currently conducted by Seller.
3.5. FINANCIAL STATEMENTS.
(a) Xxxxxxxxx has previously delivered to Buyer the Audited Financial
Statements. Seller has also previously delivered to Buyer its Current Balance
Sheet and the other Current Financial Statements. The Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied consistently with past practice, except for changes to past practice
required by generally accepted accounting principles and disclosed therein and
except that the Current Financial Statements do not include note information and
are subject to year-end adjustments which would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) The Financial Statements are accurate and complete (except for minor
matters which will not, individually or in the aggregate, result in a Material
Adverse Effect) and fairly present, as of their respective dates, the financial
condition, retained earnings (deficit), assets and liabilities of Xxxxxxxxx
(with respect to the Audited Financial Statements) and Seller (with respect to
the Current Financial Statements) and the respective results of operations and
(with respect to the Audited Financial Statements) cash flows of each for the
periods indicated, in accordance with generally accepted accounting principles
applied consistently with past practice (except for changes to past practice
required by generally accepted accounting principles and disclosed therein),
subject, in the case of the Current Financial Statements, to year-end
adjustments which would not, individually or in the aggregate, have a Material
Adverse Effect.
3.6. LITIGATION. Except as set forth on Schedule 3.6 attached hereto,
------------
Seller is not a party to any pending Litigation, neither the Business nor any of
the Assets are subject to any pending Litigation, and to Seller's knowledge it
has not been threatened with any Litigation which threat has not been resolved,
except for in each case Litigation that if not resolved favorably to Seller
would not have a Material Adverse Effect. Seller is not in violation of or in
default with respect to any judgment, order, award, writ, injunction, decree or
rule of any court, governmental authority or any regulation of any
administrative agency or governmental authority, where such violation or default
would have a Material Adverse Effect or would adversely affect the consummation
of the transactions contemplated hereby. Except as set forth in Schedule 3.6,
------------
Seller has not received notice of any product liability claim, warranty claim or
other claim
13
whatsoever which, if decided adversely, individually or in the aggregate would
have a Material Adverse Effect.
3.7. INTENTIONALLY OMITTED
3.8. WORK IN PROCESS. Schedule 3.8 provides a complete listing as of July
------------
31, 1998 of all jobs in process related to the Business, the costs of each
incurred through July 31, 1998 and the estimated costs of completion as of July
31, 1998. The estimations of the costs of completion, including but not limited
to the assumptions used in deriving them, are reasonable for the industry in
which the Business operates and are consistent with Seller's past practices.
The percentage of total income for each fixed-price job in process which Seller
has recognized as of the Closing Date does not exceed the percentage of
completion of such job as of the Closing Date. For purposes hereof, a "fixed
price" job is one which provides a fixed dollar payment to Seller or the
Business for completion of the job. Since July 31, 1998, there has been no
change in the information contained in Schedule 3.8 which Seller believes will
------------
have a Material Adverse Effect.
3.9. FIXED ASSETS. Schedule 3.9 sets forth a true, correct and complete
------------
list of all Fixed Assets as of July 31, 1998 having on an individual basis a
book value or a fair market value in excess of $500. Except as set forth in
Schedule 3.9, the Fixed Assets taken as a whole are in good condition and repair
------------
and are sufficiently operational to enable Buyer to conduct the Business in
essentially the same manner in which it has been conducted by Seller.
3.10. LEASED PREMISES.
(a) The Leased Premises comply in all material respects, with the
requirements of all building, zoning, subdivision, health, safety,
environmental, pollution control, waste products, sewage control and all other
applicable statutes, laws, codes, ordinances, rules, orders, regulations and
decrees of any and all government agencies, except for such failures to comply
as have not had and will not have a Material Adverse Effect. There is no uncured
breach of any material condition or requirement imposed by, or pursuant to, any
permit or license issued with respect to the Leased Premises. There is no
action pending or, to the best of Seller's knowledge, threatened by any
government agencies claiming that the Leased Premises violates any government
regulations or threatening to shut down the Business or the use of the Assets or
to prevent the Assets from being used as presently used.
(b) All Fixed Assets located in the buildings located on or included in
the Leased Premises are in good condition and repair, normal wear and tear
excepted.
3.11. CHANGE IN FINANCIAL CONDITION AND ASSETS. Except as set forth on
Schedule 3.11 attached hereto, since July 31, 1998 there has been no change (not
-------------
including world events or general economic conditions) in the Business or the
Assets which has had a Material Adverse Effect. Seller has no knowledge of any
existing or threatened occurrence, event or development which it believes will
have a Material Adverse Effect.
3.12. ACCOUNTS RECEIVABLE. Schedule 3.12 sets forth a true, correct and
-------------
complete list, as of July 31, 1998, of all current Accounts Receivable,
including an aging thereof and all
14
amounts credited against such receivables under any rebate, discount, or
allowance policies. All such Accounts Receivable arose out of the sales of
products or services in the ordinary course of business and, except as set forth
on Schedule 3.12, Seller has no knowledge that any such Account Receivable is
not collectible in the face value amount thereof in the ordinary course, using
normal collection procedures, subject to non-collectible accounts in amounts
consistent with Seller's normal collection experience, net of returns as set
forth thereon. Since July 31, 1998, there has been no change in the information
contained in Schedule 3.12 which would have a Material Adverse Effect.
-------------
3.13. BOOKS AND RECORDS. The general ledgers and books of account of
Seller with respect to the Business and the Assets, all federal, state and local
income, franchise, property and other tax returns filed by Seller with respect
to the Business or the Assets, and all other books and records of Seller with
respect to the Business and the Assets, are in all material respects complete
and correct and have been maintained in accordance with good business practice
and in accordance with all applicable procedures required by laws and
regulations other than any inaccuracy, omission or variance from such practice
and procedures which has no Material Adverse Effect.
3.14. CONTRACTS AND COMMITMENTS.
(a) Schedule 3.14 attached hereto contains a true, complete and correct
-------------
list of the following contracts and agreements as of July 31, 1998, whether
written or oral, which relate to the Business:
(i) All loan agreements, indentures, mortgages and guaranties by which
the Assets are bound;
(ii) All pledges, conditional sale or title retention agreements,
security agreements, equipment obligations, personal property leases and lease
purchase agreements relating to any of the Assets to which Seller is a party
or by which any of the Assets is bound;
(iii) INTENTIONALLY OMITTED
(iv) All sales agreements, service agreements and client contracts to
which Seller is a party which provide for payment or receipt by Seller of more
than $10,000;
(v) All agency, distributor, sales representative and similar
agreements to which Seller is a party which provide for payment or receipt by
Seller of more than $10,000;
(vi) All written return policies and warranties, and to Seller's
knowledge, all oral return policies and warranties, relating to products or
services provided by the Business as the same are currently in effect or may
have been in effect from time to time since March 1, 1997, as well as any
exception to such policies, all agreements to which Seller is a party relating
to cooperative advertising arrangements, all written rebate, discount or
allowance arrangements and to Seller's knowledge, all oral rebate, discount or
allowance arrangements; and
15
(vii) All other contracts, agreements or other binding arrangements,
whether written or oral, which are material to the Business as conducted as of
the date hereof and the Closing Date or the Assets taken as a whole.
(b) Schedule 3.14 also identifies the Contracts, which shall be assigned
-------------
by Seller to Buyer. Except as set forth on Schedule 3.14:
-------------
(i) Each Contract is a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and by principles of
equity (whether considered in a proceeding at law or in equity) and Seller
has no knowledge that any Contract is not a valid and binding agreement of the
other parties thereto;
(ii) Seller has fulfilled all material obligations required pursuant
to the Contracts to have been performed by it prior to the date hereof, and
Seller is aware of no reason that it would not have been able to fulfill, when
due, all of the obligations under the Contracts which remain to be performed
after the date hereof;
(iii) Seller is not (and to the best of Seller's knowledge no other
party is) in breach of or default in any material respect under any Contract,
and no event has occurred which with the passage of time or giving of notice
or both would constitute such a default, result in a loss of rights or result
in the creation of any lien, charge or encumbrance, thereunder;
(iv) Except as set forth on Schedule 3.3, the continuation, validity
------------
and effectiveness of each Contract would not be affected by the transfer
thereof to Buyer under this Agreement and all such Contracts are assignable to
Buyer without the consent of any other party.
(c) True, correct and complete copies of all of the written Contracts have
been delivered by Seller to Buyer. True, correct and complete written
descriptions of all of the oral Contracts have been delivered by Seller to
Buyer. Since July 31, 1998, to the knowledge of Seller there has been no change
in the information contained in Schedule 3.14 which would have a Material
-------------
Adverse Effect.
3.15. PERMITS. Seller has all Permits, other than those the absence of
which would not have a Material Adverse Effect, copies of which Permits will be
provided to Buyer upon request. Seller has not engaged in any activity which
would cause or, to the knowledge of Seller, allow revocation or suspension of
any such Permit and no action or proceeding looking to or contemplating the
revocation or suspension of any such Permit is pending or, to the knowledge of
Seller, threatened. Except as set forth on Schedule 3.15, there are no existing
-------------
defaults or events of default or events or state of facts which with notice or
lapse of time or both would constitute a default by Seller under any Permit,
except any such default or event of default which would not have a Material
Adverse Effect. Except as set forth on Schedule 3.15, all Permits are
-------------
transferable to Buyer and the consummation of the transactions contemplated by
this Agreement will in no
16
way affect the continuation, validity or effectiveness of the Permits or require
the consent of any third party under any such Permit which consent has not been
obtained.
3.16. COMPLIANCE WITH LAWS. Seller is not in violation of, and the
Business does not violate, any law, regulation or ordinance (including but not
limited to laws, regulations or ordinances relating to building, zoning,
environmental, disposal of hazardous substances, land use or similar matters)
relating to the Assets or the operation of the Business, the violation of which
would have a Material Adverse Effect. Except as set forth on Schedule 3.16,
-------------
Seller has not received any notice or communication from any federal, state or
local governmental or regulatory authority or otherwise of any such violation or
noncompliance.
3.17. EMPLOYEE RELATIONS.
(a) To the extent they relate to the Employees, Seller is in compliance in
all material respects, with all material federal, state and local laws
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice, and there are no material arrearages in the payment of wages or taxes
or workers compensation assessments or penalties
(b) Except as set forth on Schedule 3.17:
-------------
(i) None of the Employees are represented by any labor union.
(ii) There is no material labor grievance pending against or affecting
Seller with respect to the Employees and no unfair labor practice complaint
against Seller with respect to the Employees pending before the National Labor
Relations Board or any state or local agency affecting Seller.
(iii) There is no pending labor strike or other material labor
trouble affecting Seller. There is no petition pending before the National
Labor Relations Board and no question concerning any petition is presently
being raised or, to the knowledge of Seller, is threatened respecting the
Employees or former Employees.
(iv) There is no pending litigation, or other proceeding or basis for
an unasserted claim against Seller based on any Employee's or group of
Employees' employment relationship with Seller (insofar as such relationship
pertains to the Business), including but not limited to claims for contract,
tort, discrimination, employee benefits or wrongful termination. No charges
against Seller with respect to any Employee or former Employee are pending
before the Equal Employment Opportunity Commission or any state, local or
foreign agency responsible for the prevention of unlawful employment
practices.
(v) Seller has not received notice of the intent of any federal,
state, local or foreign agency responsible for the enforcement of labor or
employment laws to conduct an investigation against Seller with respect to the
Employees or former Employees and, to the knowledge of Seller, no such
investigation is in progress.
17
(c) Seller has previously provided Buyer with a true, correct and complete
list of Seller's payroll for the Employees as of July 31, 1998 and will deliver
a true, correct and complete list of Seller's payroll for the Employees as of
the Closing Date.
(d) INTENTIONALLY OMITTED
(e) There are no employees or independent contractors, other than those
listed on Schedule 1.22, whose contributions to the Business within the last
-------------
twelve months have been, or are currently, material to the successful conduct of
the Business in the manner heretofore conducted.
3.18. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
Schedule 3.18 attached hereto, since April 30, 1998, Seller has not entered into
-------------
any material transaction with respect to the Business which is not in the usual
and ordinary course of business, and, without limiting the generality of the
foregoing, Seller has not:
(a) Mortgaged, pledged or subjected to lien, charge or other encumbrance
any of the Assets;
(b) Sold or purchased, assigned or transferred any material assets used in
the operation of the Business;
(c) Suffered any casualty losses to the Assets, whether insured or
uninsured, and whether or not in the control of Seller, in excess of $50,000 in
the aggregate, or waived any rights of any value unless such loss or waiver is
reflected in the Current Financial Statements;
(d) Suffered any Material Adverse Effect.
Seller has provided to Buyer a true, complete and accurate list of Seller's
backlog as of the last day of month from October, 1997 through July, 1998.
3.19. CUSTOMERS. Schedule 3.19 sets forth a true, correct and complete
-------------
list of the names of the customers of the Business which accounted for dollar
volumes of purchases from Seller related to the Business, for the nine months
ended July 31, 1998, in excess of $10,000. None of the customers listed on
Schedule 3.19 has notified Seller that it intends to discontinue its
-------------
relationship with Seller, except as set forth on such Schedule.
3.20. SUPPLIERS. Schedule 3.20 sets forth a true, correct and complete
-------------
list of the names of the suppliers of Seller relating to the Business which
accounted for dollar volumes of purchases by Seller, for the nine months ended
July 31, 1998, in excess of $10,000. Seller is not a party to any requirements
contract relating to the purchase of property used in the conduct of the
Business. None of the suppliers listed on Schedule 3.20 has notified Seller
-------------
that it intends to discontinue its relationship with Seller, except as set forth
on such Schedule.
3.21. PREPAYMENTS AND DEPOSITS. Except as reflected on Schedule 3.21,
-------------
Seller has no prepayments or deposits from customers for products to be shipped,
or services to be performed, after the Closing Date relating to the Business.
18
3.22. TRADE NAMES AND OTHER INTELLECTUAL PROPERTY. Schedule 3.22 attached
-------------
hereto sets forth a true, correct and complete list and, where appropriate, a
description of, all Intellectual Property. Other than as set forth on Schedule
--------
3.22, during Seller's existence the only name used in connection with the
----
Business by Seller is its corporate name set forth in the preamble of this
Agreement. Except as otherwise disclosed in Schedule 3.22, Seller is the sole
-------------
and exclusive owner, free and clear of all Encumbrances, of all Intellectual
Property applicable to the Business and all designs, permits, labels and
packages used on or in connection therewith, and Seller has not received notice
of any claim against Seller that any of its operations, activities, products or
publications used in connection with the Business infringes on any patent,
trademark, trade name, copyright or other property right of a third party, or
that it is illegally or otherwise using the trade secrets, formulae or any
property rights of others. Seller has taken all steps it deems reasonably
necessary to protect its right, title and interest in and to the Intellectual
Property. Except as set forth in Schedule 1.30 or as indicated in Schedule
3.22, there is no property that is not owned or leased by Seller but that is
used by Seller in the operation of the Business of the type which, if owned or
leased by Seller, would constitute Intellectual Property (other than property
the unavailability of which to Buyer would not have a Material Adverse Effect).
3.23. EMPLOYMENT AGREEMENTS, BENEFIT PLANS, ETC.
(a) Seller has no written employment or other written agreements, and to
the knowledge of Seller has no verbal employment, consulting or other similar
agreements, with any of the Employees, except as disclosed in Schedule 3.23.
-------------
(b) Seller does not maintain or, except as disclosed in Schedule 3.23,
-------------
contribute to, any Benefit Plan or Compensation Arrangement.
(c) Each of the Benefit Plans and Compensation Arrangements disclosed in
Schedule 3.23 has been duly adopted as required and operated in material
-------------
compliance with its provisions and is in material compliance with all applicable
requirements of ERISA and the Code, including the timely adoption of necessary
amendments and submissions thereof to the Internal Revenue Service, where
required.
(d) Each of the Benefit Plans disclosed in Schedule 3.23 which is intended
-------------
to be a qualified plan under Section 401(a) of the Code has received a favorable
determination of the Internal Revenue Service to that effect. To the knowledge
of Seller, no event has occurred which would cause the loss of qualification
under Section 401(a) of the Code or the imposition of any liability, penalty or
tax thereunder with respect to the operation of such Benefit Plans which in each
case would result in a Material Adverse Effect. To the extent that the failure
to do same would result in a Material Adverse Effect, Seller has (i) timely made
all contributions required to be made to each of the Benefit Plans by law or by
the terms of the Benefit Plan and (ii) has timely complied with all material
reporting and disclosure requirements applicable to each of the Benefit Plans
under ERISA and the Code. To the extent same would result in a Material Adverse
Effect, Seller has not materially breached any of the fiduciary responsibility
provisions of Title I of ERISA nor engaged in any transaction prohibited under
Section 406 or 407 of ERISA or Section 4975 of the Code.
19
(e) INTENTIONALLY OMITTED
(f) Except as required under Section 4980B of the Code and Sections 601
through 608 of ERISA, no Benefit Plan provides health or life insurance benefits
for retirees or future retirees which would result in a Material Adverse Effect.
(g) INTENTIONALLY OMITTED
3.24. ENVIRONMENTAL LAW. The Leased Premises are not listed or, to
Seller's knowledge, proposed for listing on the National Priorities List or
listed on the Comprehensive Environmental Response, Compensation, Liability
Information System List or any comparable list maintained by any foreign,
federal, state, regional, county or local authority. There are no proceedings
pending, or to the knowledge of Seller, threatened, under any Environmental Law
against or affecting Seller, or the Leased Premises in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, would have a Material Adverse Effect. To the knowledge of Seller,
Seller is not in default with respect to any order of any court or governmental
authority or arbitration board or tribunal with respect to any Environmental Law
to the extent such default would have a Material Adverse Effect.
3.25. TAXES. Except as set forth on Schedule 3.25:
-------------
(a) To the extent that they could become a lien upon any of the Assets or
result in a Material Adverse Effect, Seller has paid or made adequate provision
on its books and records for the payment of all Federal, state, local and
foreign taxes, including withholding taxes, unemployment insurance
contributions, FICA, Medicare and penalties or other payments required, as the
case may be, to be paid or accrued in respect of its business, assets and
employees for all periods up to and including the Closing Date (whether or not
assessed), and is not in default in payment of any such tax and has duly filed
all tax reports and returns required in connection therewith to be filed by it.
(b) Seller has received no notice of any tax deficiency outstanding,
proposed or assessed against it, nor has it executed any waiver of any statute
of limitations on the assessment or collection of any tax or executed or filed
with the Internal Revenue Service or any other taxing authority any agreement
now in effect extending the period for assessment or collection of any taxes,
which in any case could have a Material Adverse Effect. There are no material
tax liens upon, pending against or, to the knowledge of Seller, threatened
against any of the Assets.
20
3.26. COMPUTER AND OTHER SYSTEMS. To Seller's knowledge, the computer
systems and other business systems (including but not limited to telephone and
voice mail systems) and associated and peripheral equipment, computer software,
technical and other documentation currently used by Seller in the operation of
the Business and data entered into or created by the foregoing from time to time
constitute all such items necessary for the operation of the Business in
substantially the manner operated as of the Closing Date. Seller has no
knowledge that any of such items is not Year 2000 Compliant except as specified
in Schedule 3.26. For purposes hereof, "Year 2000 Compliant" means that such
-------------
systems (a) can process, manipulate and store data relating to dates after
December 31, 1999 as well as dates on or prior thereto; (b) can interpret and
respond to two-digit year date input in a manner that resolves any ambiguity as
to the century in which the year occurs; and (c) will function accurately and
without interruption before, during, and after January 1, 2000, without any
adverse change in operations associated with the advent of the new century.
Except as specified in Schedule 3.26, disaster recovery plans are in effect and
-------------
are adequate to ensure that such systems can be replaced or substituted without
material disruption to the business of Seller. Except as specified in Schedule
--------
3.26, Seller has valid licenses for all software used by it in the conduct of
----
the Business for which licenses are required.
3.27. DISCLOSURE. No representation or warranty by Seller in this
Agreement or in any Exhibit or Schedule hereto, or in any certificate delivered
or to be delivered pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit any material fact
necessary in order to make the statements contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND SUPERIOR
Buyer and Superior jointly and severally represent and warrant to Seller and
Xxxxxxxxx that the representations and warranties set forth herein are true and
correct as of the date of this Agreement and will be true and correct on the
Closing Date as if made on that date. The representations and warranties in
this Article 4 or in any document delivered to Seller or Xxxxxxxxx pursuant to
this Agreement are deemed to be material and Seller and Xxxxxxxxx are entering
into this Agreement relying on such representations and warranties.
4.1. ORGANIZATION AND AUTHORITY. Buyer is duly organized and validly
existing and in good standing under the laws of the State of Michigan, and has
requisite power and authority (corporate and other) to own its properties and to
carry on its business as now being conducted. Buyer has full power to execute
and deliver this Agreement, the Xxxx of Sale, the Escrow Agreement and all other
documents and instruments to be executed and delivered hereunder and to
consummate the transactions contemplated hereby and thereby. Superior is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority (corporate
and other) to execute and deliver this Agreement, the Xxxx of Sale, the Escrow
Agreement and all other documents and instruments to be executed and delivered
by it hereunder and to consummate the transactions contemplated hereby and
thereby.
21
4.2. AUTHORIZATION. The execution and delivery of this Agreement, the Xxxx
of Sale, the Escrow Agreement and all other agreements provided for herein by
Buyer and Superior, and the consummation by Buyer and Superior of all
transactions contemplated hereby and thereby, have been duly authorized by all
requisite corporate action of Buyer and Superior. This Agreement and all such
other agreements and obligations entered into and undertaken in connection with
the transactions contemplated hereby constitute the valid and legally binding
obligations of Buyer and Superior, enforceable against each in accordance with
their respective terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors
rights generally and by principles of equity, whether applied in a proceeding at
law or in equity.
4.3. NO VIOLATION. The execution and delivery by Buyer and Superior and
performance by Buyer and Superior of their respective obligations under this
Agreement, the Xxxx of Sale, the Escrow Agreement and all other agreements
provided for herein by Buyer, and the consummation by Buyer of the transactions
contemplated hereby and thereby, will not, with or without the giving of notice
or the passage of time or both, (a) violate the provisions of any law, rule or
regulations applicable to Buyer or Superior; (b) violate the provisions of the
Articles of Incorporation or Bylaws of Buyer or Superior; or (c) violate any
judgment, decree, order or award of any court, governmental body or arbitrator
applicable to Buyer or Superior. Schedule 4.3 attached hereto sets forth a
------------
true, correct and complete list of all consents, approvals, permissions,
licenses, authorizations and other requirements prescribed by law, rule,
regulation or by contract in connection with the consummation by Buyer and
Superior of the transactions contemplated by this Agreement that, if not
complied with by Buyer or Superior, would result, individually or in the
aggregate, in a material adverse effect on the ability of either to perform its
obligations under this Agreement.
4.4. REGULATORY APPROVALS. All consents, approvals, authorizations and
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by Buyer or Superior and which are necessary for the
consummation by Buyer or Superior of the transactions contemplated by this
Agreement have been, or will be prior to the Closing Date, obtained and
satisfied.
5. PRE-CLOSING COVENANTS
5.1. ACCESS TO RECORDS AND PROPERTIES OF SELLER.
-
(a) Access. Between the date of this Agreement and the Closing Date,
--- ------
subject to applicable laws, rules and regulations and to fiduciary and privacy
obligations of which Seller will advise Buyer in writing, Seller shall afford
the officers, attorneys, accountants and other authorized representatives of
Buyer reasonable access upon reasonable notice and during normal business hours
to all personnel, offices, properties, books and records of Seller (including
but not limited to documentation of any of the matters set forth in Seller's
representations and warranties in Article 3), so that Buyer may have full
opportunity to make such investigation as it shall desire to make of the
management, business, properties and affairs of the Business (provided that such
access is not unreasonably disruptive to the normal business operations of
Seller), and Buyer shall be permitted to make abstracts from, or copies of, all
such books and records. Seller shall furnish
22
to Buyer such financial and operating data and other information as to the
Assets and the Business as Buyer shall reasonably request. In connection
therewith, Buyer shall have the right to contact and hold discussions with
Seller's customers, suppliers and the landlord of the Leased Premises; provided,
that Buyer shall not contact any of such parties without first notifying Seller
and shall cooperate with Seller in structuring such contacts so as to provide
minimal disruption to Seller's business.
(b) Confidentiality. Between the date of this Agreement and the Closing
----------------
Date, each of Buyer and Superior shall, and shall cause its representatives to,
keep all Restricted Information confidential, and without the prior written
consent of Seller, each of Buyer and Superior shall not, and shall cause its
representatives not to, disclose the Restricted Information in any manner
whatsoever, in whole or in part, or use the Restricted Information for any
purpose other than evaluating the transactions contemplated by this Agreement;
provided, however, that each of Buyer and Superior and its representatives may
provide such Restricted Information in response to judicial or administrative
process or applicable governmental laws, rules, regulations, orders or
ordinances, but only that portion of the Restricted Information which, on the
advice of counsel, is legally required to be furnished and provided that
Superior or Buyer notifies Seller of its obligation to provide such Restricted
Information prior to such disclosure and fully cooperates with Seller to protect
the confidentiality of such Restricted Information under applicable law. The
Restricted Information, and all copies thereof, will be destroyed or returned
immediately, without retaining any copies thereof, if this Agreement is
terminated prior to the Closing.
(c) Survival. The provisions of Section 5.1(b) shall survive any
---------
termination of this Agreement.
5.2. CONDUCT OF THE BUSINESS OF SELLER PENDING THE CLOSING.
(a) Operation in Ordinary Course. From the date hereof to the Closing,
-----------------------------
except as expressly contemplated by this Agreement or to the extent that Buyer
shall otherwise consent in writing, Seller shall operate the Business as
presently operated and only in the ordinary course, and, consistent with such
operation, Seller shall use its best efforts to preserve the present Employees,
reputation and business organization of Seller and the relationship of Seller
with persons having business dealings with it.
(b) Restricted Activities. From the date hereof to the Closing, except as
----------------------
expressly contemplated by this Agreement or to the extent that Buyer shall
otherwise consent in writing, Seller shall not, and shall not agree to:
(i) effect any amendment to its Articles of Incorporation or Bylaws
which would impair the ability of Seller to consummate the transactions
contemplated hereunder;
(ii) mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of the Assets except for statutory liens for amounts not yet
due;
23
(iii) sell, assign, or transfer any of the Assets, except in the
ordinary course of business and except for excess and obsolete items sold as
scrap to parties other than customers and competitors of the Business;
(iv) merge or consolidate with or into any corporation or other
entity;
(v) compromise any claims, or waive any rights, of material value to
the Business;
(vi) modify, amend, alter or terminate any of the Contracts except for
modifications, amendments, alterations or terminations which, individually or
in the aggregate, would not result in a Material Adverse Effect;
(vii) take or omit to take any act constituting a breach or default
under any contract, indenture or agreement by which any of the Assets are
bound except those which, individually or in the aggregate, would not have a
Material Adverse Effect;
(viii) fail to use best efforts to (A) preserve the possession,
control and good condition of the Assets and Business, (B) keep in faithful
service its present officers and key Employees, (C) preserve the goodwill of
its customers, suppliers, agents, brokers and others having business relations
with the Business, and (D) keep and preserve the Business existing on the date
hereof until the Closing Date;
(ix) fail to operate the Business and maintain its books, accounts and
records in the customary manner and in accordance with past practice;
(x) INTENTIONALLY OMITTED
(xi) enter into any new, or amend or modify any existing, collective
bargaining agreement affecting the Employees;
(xii) enter into any joint venture, partnership or other arrangement
for the conduct of the Business;
(xiii) INTENTIONALLY OMITTED
(xiv) INTENTIONALLY OMITTED
(xv) INTENTIONALLY OMITTED
(xvi) make any capital investment in any subsidiary, joint venture or
other person or entity.
(c) No Actions to Violate Representations and Warranties. Seller and
-----------------------------------------------------
Xxxxxxxxx shall each refrain from taking any action which would render any
representation and warranty contained in Article 3 hereof inaccurate at any time
between the date hereof and the Closing Date, including as of the Closing Date,
and shall promptly advise Buyer of any inaccuracy or breach of
24
any representation and warranty, covenant, condition or obligation of Seller or
Xxxxxxxxx contained in this Agreement. Buyer and Superior shall each refrain
from taking any action which would render any representation and warranty
contained in Article 4 hereof inaccurate at any time between the date hereof and
the Closing Date, including as of the Closing Date, and shall promptly advise
Seller of any inaccuracy or breach of any representation and warranty, covenant,
condition or obligation of Buyer or Superior contained in this Agreement.
5.3. CONSENTS AND NOTICES. Promptly after the date hereof, Seller and
Buyer shall cooperate and use their best efforts to obtain all consents,
waivers, approvals and authorizations which may be necessary to effectuate this
Agreement and to consummate the transactions contemplated hereby in accordance
with the terms hereof, or to continue in effect and to assure that Seller (prior
to Closing) and Buyer (from and after the Closing) shall continue to be entitled
to all of the benefits of the Contracts, instruments, licenses, Permits,
authorizations, commitments and orders of Seller and shall give all notices to
third parties required to be given in contemplation and as a result of the
transactions contemplated by this Agreement.
5.4. REGULATORY FILINGS. The parties hereto shall prepare and give or make
any necessary notices or filings under any other Federal, state or foreign laws,
rules and regulations to effectuate this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof.
5.5. NO SHOPPING.
(a) Actions Prohibited. Until such time, if any, as this Agreement is
-------------------
terminated pursuant to Article 11, neither Seller nor Xxxxxxxxx shall directly
or indirectly, through any director, officer, agent, financial adviser or
otherwise, solicit, initiate or encourage submission of proposals or offers from
any person relating to any acquisition or purchase of all or a substantial
portion of the Assets or the Business in any form or any equity interest in the
Seller to the extent it would impair the closing of the transactions
contemplated hereunder. Except in connection with the proper discharge, with
the advice of counsel, by the directors of Seller or Xxxxxxxxx of their
fiduciary duties under applicable law, neither Seller nor Xxxxxxxxx shall
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Except in connection with the proper
discharge, with the advice of counsel, by the directors of Seller or Xxxxxxxxx
of their fiduciary duties under applicable law, each of Seller and Xxxxxxxxx
shall use its best efforts to cause all materials previously furnished to any
third party, that relate to any proposed sale of all or a substantial portion of
the Assets or the Business in any form or any equity interest in the Seller, to
be promptly returned to Seller or Xxxxxxxxx, to the extent that Xxxxxxxxx or
Seller have the right to require such materials to be returned, and shall cease
any negotiations conducted in connection therewith or otherwise conducted with
any such parties. Seller shall promptly notify Buyer if any such proposal or
offer, or any inquiry or contract with any person with respect thereto, is made
and shall provide Buyer with a copy of any written proposal or offer.
25
(b) Damages to Buyer for Violation. Seller acknowledges that Buyer:
-------------------------------
(i) has spent, and will be required to spend, substantial time and
effort in examining the business, properties, affairs, financial condition and
prospects of the Business;
(ii) has incurred, and will continue to incur, substantial fees and
expenses in connection with such examination, the preparation of this
Agreement and the accomplishment of the transactions contemplated hereunder;
and
(iii) will be unable to evaluate and, possibly, make investments in
or acquire other entities, as an alternative to the Assets and the Business,
due to the limited number of personnel available for the aforesaid purpose and
the constraints of time.
Therefore, to induce Buyer to enter into this Agreement, if Seller directly
or indirectly, through any director, officer, agent, financial adviser or
otherwise, solicits, initiates or encourages submission of proposals or offers
from any person relating to any acquisition or purchase of all or a portion of
the Assets or the Business in any form or any equity interest in the Seller, to
the extent it would prevent the closing of the transactions contemplated
hereunder, or if Seller participates in any negotiations regarding, or furnishes
to any other person any information with respect to, or otherwise cooperates in
any way with, or assists or participates in, facilitates or encourages, any
effort or attempt by any other person to do or seek any of the foregoing, then
Buyer shall be entitled to receive, and Seller shall promptly pay to Buyer on
demand, all of the documented expenses of the Buyer reasonably incurred in
connection with the transactions contemplated under this Agreement, including
but not limited to reasonable fees and disbursements of the Buyer's counsel,
accountants, financial advisors and other consultants or agents. The
obligations to pay such expenses shall survive any termination of this
Agreement.
The foregoing amounts shall be payable to Buyer notwithstanding that any
action taken by the directors of Seller or Xxxxxxxxx which may give rise to the
obligation to pay may have been in accordance with the fiduciary duties of the
directors. The parties acknowledge that the amount to be paid hereunder is to
compensate Buyer for its time, efforts and expenses in connection with this
transaction and is not a penalty.
5.6. PUBLIC ANNOUNCEMENTS. The parties will cooperate in the issuance of
any press releases or otherwise in the making of any public statements with
respect to the transactions contemplated hereby. The parties agree that prior
to the Closing Date, except as otherwise required by law, any and all public
announcements or other public communications concerning this Agreement or the
transactions contemplated hereby shall be subject to the approval of all parties
hereto, which approval shall not be unreasonably withheld; provided, however,
that any party may make any public disclosure it believes in good faith is
required by law or regulation, including, without limitation, any disclosures
made necessary by the status of any Affiliate of Seller or Buyer as a public
company (in which case the disclosing party will advise the other party prior to
making the disclosure) and shall, insofar as may be practicable, reflect in such
disclosure substantially all reasonable comments of the other parties.
26
5.7. REASONABLE EFFORTS TO SATISFY CONDITIONS. Seller and Xxxxxxxxx shall
each use all reasonable efforts to cause the conditions to the obligations of
Buyer and Superior contained in Sections 6.1 and 6.2 hereof to be satisfied to
the extent that the satisfaction of such conditions is in the control of Seller
or Xxxxxxxxx, and Buyer and Superior shall each use all reasonable efforts to
cause the conditions to the obligations of Seller and Xxxxxxxxx contained in
Sections 6.1 and 6.3 hereof to be satisfied to the extent that the satisfaction
of such conditions is in the control of Buyer or Superior; provided, however,
that the foregoing shall not constitute a limitation upon the covenants and
obligations of the parties hereto otherwise expressly set forth in this
Agreement.
6. CONDITIONS TO CLOSING
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO CONSUMMATE THE TRANSACTIONS.
The respective obligations of each party hereto to consummate the transactions
contemplated hereunder are subject to the satisfaction or, where permissible
under applicable law, waiver, on or prior to the Closing Date, of the following
conditions:
(a) Approval of Seller's Shareholder. If, and to the extent required by
---------------------------------
the California Corporation Code or the Articles of Incorporation, as amended, or
the Bylaws, as amended, of Seller, this Agreement and the transactions
contemplated hereunder shall have been approved by the shareholder of Seller.
(b) Regulatory Filings. All applicable waiting periods with respect to
-------------------
any regulatory filings made pursuant to Section 5.4 hereof shall have expired or
been terminated.
(c) No Change in Law, Etc. No statute, rule, regulation, executive order,
----------------------
decree, injunction or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or governmental
authority which prohibits the consummation of the transactions contemplated
hereunder or which would make such consummation illegal.
6.2. ADDITIONAL CONDITIONS TO OBLIGATION OF BUYER AND SUPERIOR TO
CONSUMMATE THE TRANSACTIONS. The obligation of Buyer and Superior to consummate
the transactions contemplated hereunder is also subject to the satisfaction or
waiver by Buyer or Superior, on or prior to the Closing Date, of the following
conditions:
(a) Representations and Warranties; Performance of Obligations of Seller
--------------------------------------------------------------------
and Xxxxxxxxx.
--------------
(i) The representations and warranties of Seller and Xxxxxxxxx set
forth in Article 3 hereof and in all agreements, documents and instruments
executed and delivered pursuant hereto or in connection with the closing of
the transactions contemplated hereunder shall be true and correct in all
material respects on the Closing Date as though made on and as of the Closing
Date, and Seller and Xxxxxxxxx shall have provided updated information for all
Schedules required to be furnished by either hereunder and that provide
information as of the Closing Date so that such Schedules are true and correct
as of the Closing Date.
27
(ii) Each of Seller and Xxxxxxxxx shall have performed in all material
respects the agreements, covenants and obligations necessary to be performed
by it prior to the Closing Date.
(b) Consents. All consents required for Closing specified on Schedule 3.3
---------
shall have been obtained.
(c) Opinion of Counsel to Seller. On the closing Date, Seller and
-----------------------------
Xxxxxxxxx shall have caused to be delivered to Buyer and Superior an opinion of
counsel in form and substance reasonably satisfactory to Buyer and Superior,
dated the Closing Date, substantially in the form of Exhibit 6.2(c) hereto.
--------------
(d) Deliveries. Seller and Xxxxxxxxx shall have delivered to Buyer and
-----------
Superior the documents and instruments specified in Section 2.4(b).
(e) INTENTIONALLY OMITTED
(f) Legal Proceedings. There shall not be pending or threatened (A) any
------------------
effective injunction or restraining order prohibiting the transactions
contemplated by this Agreement, (B) any legal proceeding seeking such an
injunction or order or seeking damages from Buyer in connection with those
transactions, or (C) any legal proceeding which has or will have may have a
Material Adverse Effect.
(g) No Change. Since the date of the Current Financial Statements, no
---------
change in the Business or the financial condition of the Business, or any
material loss or casualty to the Assets, shall have occurred which has had or
will have a Material Adverse Effect.
(h) INTENTIONALLY OMITTED
(i) Escrow Agreement. Seller, Xxxxxxxxx and the Escrow Agent shall have
----------------
executed and delivered the Escrow Agreement.
(j) Employment Agreements and Releases. Each of Xxxxxx Xxxxxxxx and Xxxxx
----------------------------------
X. Xxxxxxxx shall have entered into employment or contracting arrangements
satisfactory to Buyer. With respect to all non-competition and non-disclosure
covenants or agreements in favor of Seller and applicable to Employees who will
be employed by Buyer, Seller shall have (i) executed and delivered written
releases releasing all such Employees from the provisions thereof (except for
the provisions thereof preventing competition with Seller or Xxxxxxxxx in fields
or lines of business unrelated to the Business) or (ii) at Buyer's request,
assigned to Buyer all of such obligations which are assignable.
(k) Actions and Proceedings. All actions, proceedings, instruments and
------------------------
documents required to carry out the transactions contemplated hereunder shall
have been reasonably satisfactory to counsel to Buyer and Superior, and Seller
and Xxxxxxxxx shall have delivered such additional certificates and other
documents as Buyer or Superior shall have reasonably requested to consummate the
transactions contemplated hereunder.
28
6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER AND XXXXXXXXX TO
CONSUMMATE THE TRANSACTIONS. The obligations of Seller and Xxxxxxxxx to
consummate the transactions contemplated hereunder are also subject to the
satisfaction or waiver by Seller or Xxxxxxxxx, on or prior to the Closing Date,
of the following conditions:
(a) Representations and Warranties. The representations and warranties
-------------------------------
of Superior and Buyer set forth in Article 4 and in all agreements, documents
and instruments executed and delivered pursuant hereto or in connection with the
closing of the transactions contemplated hereunder shall be true and correct in
all material respects on the Closing Date as though made on and as of the
Closing Date and Buyer and Superior shall have provided updated information for
all Schedules required to be furnished by either hereunder so that such
Schedules are true and correct as of the Closing Date.
(b) Performance of Obligations of Buyer and Superior. Each of Buyer and
-------------------------------------------------
Superior shall have performed in all material respects the agreements, covenants
and obligations necessary to be performed by it prior to the Closing Date.
(c) Opinion of Counsel to Buyer. On the Closing Date, Buyer and Superior
----------------------------
shall have caused to be delivered to Seller and Xxxxxxxxx an opinion of counsel
in form and substance reasonably satisfactory to Seller and Xxxxxxxxx, dated the
Closing Date, substantially in the form of Exhibit 6.3(c) hereto.
--------------
(d) Deliveries. Buyer and Superior shall have delivered to Seller and
-----------
Xxxxxxxxx the consideration and the other documents and instruments specified in
Section 2.4(c).
(e) Escrow Agreement. Buyer, Superior and the Escrow Agent shall have
----------------
executed and delivered the Escrow Agreement and Buyer shall have delivered to
the Escrow Agent the Escrow Amount.
(f) Legal Proceedings. There shall not be pending or threatened (A) any
------------------
effective injunction or restraining order prohibiting the transactions
contemplated by this Agreement or (B) any legal proceeding seeking such an
injunction or order or seeking damages from Seller in connection with those
transactions.
(g) Employment Agreements. Existing employment agreements between Seller
---------------------
(or its predecessor in interest) and any of the Employees shall have been
terminated by mutual written consent of Seller and each such Employee.
(h) Actions and Proceedings. All actions, proceedings, instruments and
------------------------
documents required to carry out the transactions contemplated hereunder shall
have been reasonably satisfactory to counsel to Seller and Xxxxxxxxx, and Buyer
and Superior shall have delivered such additional certificates and other
documents as Seller or Xxxxxxxxx shall have reasonably requested to consummate
the transactions contemplated hereunder.
29
7. POST-CLOSING AGREEMENTS
7.1. PROPRIETARY INFORMATION.
(a) Obligation of Seller and Xxxxxxxxx. Each of Seller and Xxxxxxxxx
----------------------------------
agrees that following the Closing Date it shall hold in confidence, and use all
reasonable efforts (at least equal to the efforts used to protect Seller's own
confidential or proprietary information) to have all officers, shareholders,
directors and personnel hold in confidence, (a) all knowledge and information of
a secret or confidential nature with respect to the Business and (b) all
financial information regarding Buyer provided in connection herewith and shall
not disclose, publish or make use of the same without the consent of Buyer,
except to the extent that (i) such information shall have become public
knowledge other than by breach of this Agreement by Seller, (ii) to the extent
the same is financial information of Buyer or Superior, such information is
available to Seller or Xxxxxxxxx from a person other than persons who have
agreed not to disclose, publish or make use of such information or (iii) Seller
or Xxxxxxxxx is required to disclose such information to comply with applicable
law (provided that prior to any such disclosure Seller shall consult with Buyer
in an effort to minimize any harm to the competitive position of Buyer and/or
the Business arising from such disclosure).
(b) Obligation of Buyer and Superior. Each of Buyer and Superior agrees
--------------------------------
that following the Closing Date it shall hold in confidence all information
regarding Seller or Xxxxxxxxx other than information regarding the Business or
the Assets, and shall not disclose, publish or make use of the same without the
consent of Seller, except to the extent that (i) such information shall have
become public knowledge other than by breach of this Agreement by Buyer, or by
any other persons who have agreed not to disclose, publish or make use of such
information, (ii) to the extent the same is financial information of Seller or
Xxxxxxxxx, such information is available to Buyer or Superior from a person
other than persons who have agreed not to disclose, publish or make use of such
information or (iii) Buyer or Superior is required to disclose such information
to comply with applicable law (provided that prior to any such disclosure Buyer
shall consult with Seller in an effort to minimize any harm to the competitive
position of Seller arising from such disclosure).
(c) Enforcement. Each of the parties hereto agrees that the remedy at law
-----------
for any breach of this Section 7.1 may be inadequate and that upon any breach
the party or parties to whom any obligation of confidentiality is owed under
this Section shall be entitled to seek injunctive relief in addition to any
other remedy it may have.
7.2. NON-COMPETITION AGREEMENT.
(a) Obligation of Seller and Xxxxxxxxx. For a period of three years after
----------------------------------
the Closing Date, each of Seller and Xxxxxxxxx agrees that it will not, and will
use its best efforts to cause its corporate Affiliates not to, directly or
indirectly, without the prior written consent of the Buyer, engage in any
Competitive Business or recruit or solicit any employee or consultant of the
Business or of the Buyer to discontinue such employment or engagement, seek to
employ or retain any such employee or consultant or cause any business, person,
firm or corporation to seek or solicit the employment or retention of any such
employee or consultant (except in each instance
30
for the engagement of a consultant as an independent contractor under
circumstances which would not result in competitive harm or disadvantage to the
Business and/or the Buyer). Nothing contained in this Section 7.2(a) shall
prohibit Seller, Xxxxxxxxx or their Affiliates from owning, in the aggregate, up
to 5% of the issued and outstanding voting stock of a corporation which may be
engaged in any Competitive Business and whose shares are listed for trading on a
national or regional stock exchange or traded on the over-the-counter market.
Nothing contained in this Section 7.2(a) shall prohibit or restrict Seller or
its Affiliates from (i) discharging warranty or similar obligations or
liabilities relating to services performed or products sold prior to the Closing
Date or obligations under licenses not included in the Contracts (including but
not limited to the license agreement among Xxxxxxxxx, Xxxxxxxxx Communications,
Inc. and Xyplex, Inc.) or (ii) enforcing their rights under contracts, leases,
licenses, purchase orders, commitments or similar items, which rights have not
been assigned to Buyer.
(b) Reasonableness. The parties hereto agree that the duration and
--------------
geographic scope of, and the activities restrained by, the non-competition
provisions set forth in this Section 7.2 are reasonable. If any court
determines that the provisions' duration, geographic scope, activities
restrained or any combination thereof are unreasonable and that the provisions
for that reason or to that extent are unenforceable, the parties agree that the
provision shall remain in full force and effect for the greatest time period, in
the greatest geographic area and with respect to the broadest ranges or types of
activity that would not render it unenforceable.
(c) Enforcement. Seller agrees that damages are an inadequate remedy for
-----------
any breach of the provisions of Section 7.2(a) and that Buyer, whether or not it
is pursuing any potential remedies at law, shall be entitled to equitable relief
in the form of preliminary and permanent injunctions without bond or other
security upon any actual or threatened breach of this non-competition provision.
If Seller shall violate Section 7.2(a), the duration of the prohibitions
contained in Section 7.2(a) automatically shall be extended for a period equal
to the period during which Seller shall have been in violation of Section
7.2(a). The covenants contained in Section 7.2(a) are deemed to be material and
Buyer is entering into this Agreement relying on such covenants.
7.3. SHARING OF DATA. Seller and Xxxxxxxxx each shall have the right, for
a period of four years following the Closing Date (or, with respect to tax
matters, such longer period, not exceeding the expiration of limitations periods
with respect thereto, as shall be reasonably necessary), to have reasonable
access to such books, records and accounts, including financial and tax
information, correspondence, production records, employment records and other
similar information as are transferred to Buyer pursuant to the terms of this
Agreement for the limited purposes of concluding its involvement in the Business
prior to the Closing Date and for complying with its obligations under
applicable securities, tax, environmental, employment or other laws and
regulations. Seller and Xxxxxxxxx each shall also have the right, for a period
of eighteen months following the Closing Date, to have reasonable access to such
books and records of Buyer as are reasonably necessary for the limited purpose
of enabling Seller or Xxxxxxxxx to evaluate the notice given by Buyer under the
provisions contemplated by the Escrow Agreement by verifying the collection or
non-collection of Accounts Receivable. Buyer shall have the right, for a period
of four years following the Closing Date, to have reasonable access to those
books, records and accounts, including financial and tax information,
correspondence, employment
31
records and other records which are retained by Seller pursuant to the terms of
this Agreement to the extent that any of the foregoing relates to the Business
transferred to Buyer hereunder or is otherwise needed by Buyer in order to
comply with its obligations under applicable securities, tax, environmental,
employment or other laws and regulations.
7.4. COLLECTION OF ACCOUNTS RECEIVABLE. Buyer agrees that it shall use its
reasonable efforts (at least equal to the customary efforts of Buyer in
collecting its own accounts receivable) to collect the accounts receivable
included among the Assets prior to asserting any claim against the Escrow
Account with respect to uncollected Accounts Receivable as contemplated in the
Escrow Agreement. Nothing in this Section 7.4 shall impose upon Buyer any
obligation to retain counsel or commence litigation or other legal proceedings
as a condition to asserting any claim for indemnification.
7.5. USE OF OFFICE SPACE.
(a) Simi Valley.
-----------
(i) The parties acknowledge that Seller currently occupies the Leased
Premises located in Simi Valley, California as a sublessee of Xxxxxxxxx. The
Buyer intends to utilize other premises for the conduct of the Business
conducted at such location but the parties anticipate that a transition period
will be necessary while Buyer investigates the availability of other premises.
For a period of ninety days following the Closing Date, Buyer shall be
entitled to occupy and use, in its conduct of the Business, without charge or
cost, the Leased Premises located in Simi Valley (or other premises located in
the building in which the Leased Premises are located, under the conditions
set forth in subsection (ii) below). Following the expiration of such ninety
day period, Buyer shall be entitled, for an additional period of three months,
to continue to occupy and use such premises in its conduct of the Business at
a cost equal to the direct out-of-pocket cost to Xxxxxxxxx for such space of
$.51 per square foot per month, without markup or additional charge.
(ii) Seller may at its option request that Buyer vacate the Leased
Premises and occupy other premises within the same building for the term
specified in subsection (i) above, provided that (A) Seller makes available to
Buyer substitute premises within such building containing an equivalent number
of net usable square feet as the Leased Premises, (B) Seller or Xxxxxxxxx pays
all of Buyer's out-of-pocket moving expenses, plus the lost productivity
suffered by Buyer as a result of any move calculated on the basis of the
number of billable hours lost multiplied by the applicable billing rates for
such personnel; provided that the obligation of Seller and/or Xxxxxxxxx to
reimburse Buyer for lost productivity shall not exceed (1) $72,000, if Buyer
determines that the simulation center located at the Leased Premises need not
be moved from its existing location, or (2) $92,000, if Buyer determines that
the simulation center should be moved from its existing location. Buyer shall
determine whether the simulation center should be moved based on its
evaluation in the exercise of its reasonable business judgment as to whether,
following any move, the simulation center will be secure from use by others
and will afford Buyer's personnel unrestricted access thereto during normal
business hours. If Buyer determines that the simulation center should be
moved, Seller and Buyer will cooperate in determining a new location for the
simulation center.
32
(b) St. Louis. The parties further acknowledge that Seller currently
---------
occupies additional leased premises located in St. Louis, Missouri. The Buyer
intends to utilize other premises for the conduct of the Business conducted at
such location but the parties further anticipate that a transition period will
be necessary while Buyer investigates the availability of other premises. For a
period of up to six months following the Closing Date, Buyer shall be entitled
to occupy and use, in its conduct of the Business and without violating the
terms of Seller's lease for the premises, the leased premises located in St.
Louis and shall pay to Seller on a pass-through basis monthly rent in the amount
of $2,105, representing the rent payable by Seller under its lease for such
premises.
7.6. FINANCIAL INFORMATION. Seller and Xxxxxxxxx agree to assist Buyer and
Superior in developing financial and other information that may be necessary for
the presentation by either Buyer or Superior of historical and pro forma
financial information which it may be required to file or prepare, as a result
of the consummation of the transactions contemplated hereunder, under the
Securities Exchange Act of 1934 and applicable regulations thereunder. Buyer
and Superior will engage Superior's independent public accountants, Xxxxx
Xxxxxxxx LLP, to perform necessary audit services in connection with the
development of such financial information. Buyer and Superior will use their
reasonable efforts to negotiate a fixed fee arrangement with Xxxxx Xxxxxxxx LLP
for the performance of such audit services. Seller and Xxxxxxxxx, on the one
hand and Buyer and Superior, on the other, shall each pay one-half of the fees
and expenses of Xxxxx Xxxxxxxx LLP payable in connection with its performance of
such services.
7.7. COMPUTER NETWORK. The parties acknowledge that Seller's employees are
currently installing a separate computer network for the corporate office of
Xxxxxxxxx (the "Corporate Network") and that Seller's employees currently
maintain a computer network for the corporate office and other operating units
of Xxxxxxxxx (the "Company Network"). Buyer agrees to use its reasonable
efforts to (a) complete the installation of the Corporate Network following the
Closing at no cost to Xxxxxxxxx or its Affiliates and (b) maintain the Company
Network for a period of 30 days after the Closing Date in a manner comparable to
the manner in which Seller currently maintains the Company Network at no cost to
Xxxxxxxxx or its Affiliates (but not requiring more than 32 man-hours of work
for such maintenance). In addition, as long as Buyer maintains the Business in
the building located at 0000 Xxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxxxx, Buyer will
forward all electronic mail that it receives for employees of Xxxxxxxxx or any
of its Affiliates to Xxxxxxxxx or such Affiliate.
7.8. USE OF NAME. Seller and Xxxxxxxxx acknowledge and agree that from and
after the Closing, Buyer may use the name "Aviant" and "Aviant Information" in
connection with Buyer's performance of the Assumed Liabilities or as reasonable
in connection with the use of the Assets in the operation of the Business, and
further agree that after the Closing, neither Xxxxxxxxx nor Seller will use such
name other than as necessary in connection with the winding up of Seller's
business
33
8. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1. REPRESENTATIONS AND WARRANTIES.
(a) The representations and warranties of Seller and Xxxxxxxxx shall be
deemed to be material to Buyer and Superior and to have been relied upon by
Buyer and Superior notwithstanding any investigation heretofore or hereafter
made or omitted by each (except for information of which Buyer or Superior is
actually aware which indicates that any representation and warranty is untrue)
and shall continue in full force and effect through the second anniversary of
the Closing Date, at which time they shall terminate except (i) as to claims
which are asserted by third parties prior to such date and notice of which shall
have been given by the Buyer or Superior to Seller or Xxxxxxxxx prior to such
date and (ii) the representations and warranties set forth in Section 3.25,
which shall continue in full force and effect until the 60th day following the
expiration of the applicable statute of limitation (giving effect to any
waivers, mitigations or extension thereof).
(b) The representations and warranties of Buyer and Superior shall be
deemed to be material to Seller and Xxxxxxxxx and to have been relied upon by
Seller and Xxxxxxxxx notwithstanding any investigation heretofore or hereafter
made or omitted by it (except for information of which Seller or Xxxxxxxxx is
actually aware which indicates that any representation and warranty is untrue)
and shall continue in full force and effect through the second anniversary of
the Closing Date, at which time they shall terminate except as to claims which
are asserted by third parties prior to such date and notice of which shall have
been given by Seller or Xxxxxxxxx to Buyer or Superior prior to such date
(c) Notwithstanding the foregoing, (i) any cause of action based on fraud,
fraudulent misrepresentation or fraudulent breach of warranty may be brought at
any time until the expiration of the relevant statute of limitations, and (ii)
any representation or warranty in respect of which indemnity may be sought shall
survive the time at which it would otherwise terminate if notice of the
incorrectness or breach shall have been given to the party against whom such
indemnity may be sought prior to such time.
8.2. SURVIVAL OF COVENANTS. All covenants made in this Agreement which by
their terms are to be performed in whole or in part after the Closing shall
survive the Closing until they are performed.
9. INDEMNIFICATION AND REIMBURSEMENT
9.1. INDEMNIFICATION BY SELLER AND XXXXXXXXX.
(a) Seller and Xxxxxxxxx jointly and severally agree to indemnify, defend
and hold harmless Buyer, Superior and any parent, subsidiary or Affiliate
thereof and all directors, officers, employees, agents and consultants of each
of the foregoing from and against any and all Warranty Expenses, and from and
against any and all Damages suffered, incurred or imposed upon such party with
respect to any claim resulting from or relating to any of the following:
(i) INTENTIONALLY OMITTED
34
(ii) failure by Seller or Xxxxxxxxx to pay and perform promptly when
due all of its obligations, liabilities and debts related to the Business
(other than the Assumed Liabilities);
(iii) any breach or default prior to the Closing Date by Seller or
Xxxxxxxxx under any of the assumed Contracts;
(iv) failure by Seller to comply with any bulk sales or similar laws
applicable to the transactions contemplated hereby;
(v) accounts receivable assigned to Buyer at closing which remain
uncollected six months after the Closing Date and for which Buyer has not
recovered the full amount under the provisions of the Escrow Agreement;
provided, however that in exchange for payment therefor, Buyer shall reassign
such accounts to Seller; and
(vi) any other liability (other than an Assumed Liability) respecting
the Business or any of the Assets which is attributable to services performed,
products sold, actions taken, or errors or omissions made, by the Seller prior
to the Closing Date (including without limitation any liability pursuant to
warranty claims made by present or former customers of the Business relating
to services provided or goods sold prior to the Closing Date), whether or not
the premise upon which liability is asserted became manifest before Closing or
the liability was first asserted before Closing.
(b) Buyer and Superior each agrees that prior to settling with any third
party any individual warranty or errors and omission claim in excess of $10,000
for which indemnity may be sought from Seller or Xxxxxxxxx hereunder, Buyer will
give ten (10) days' written notice to Seller and Xxxxxxxxx of the existence and
circumstances of such claim and the amount or value proposed to be paid or given
in settlement thereof, and shall consult with Seller and Xxxxxxxxx regarding any
objections of Seller or Xxxxxxxxx to the terms or conditions of such settlement.
If either Seller or Xxxxxxxxx object to the terms thereof, then it shall have
the right to assume the defense of the claim in the manner set forth in Section
9.3(b) and subject to the conditions set forth therein.
(c) The parties acknowledge that Buyer shall be entitled to invoke the
provisions of the Escrow Agreement with respect to indemnity claims for items
covered thereby but that the provisions of the Escrow Agreement shall not be
deemed exclusive.
9.2. INDEMNIFICATION BY BUYER AND SUPERIOR.
(a) Buyer and Superior jointly and severally shall indemnify, reimburse,
and hold harmless Seller, Xxxxxxxxx and any parent, subsidiary or Affiliate
thereof and all directors, officers, employees, agents and consultants of each
of the foregoing from and against any and all Damages suffered, incurred, or
sustained by Seller, with respect to any claim resulting from or relating to any
of the following:
35
(i) any misrepresentation, breach of warranty, or nonfulfillment of
any agreement or covenant on the part of Buyer or Superior under this
Agreement or other agreement, document, or instrument delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby and
referred to herein or in the Schedules hereto; and
(ii) the operation of the Business after the Closing (other than those
arising out of contracts, commitments, or agreements of Seller not assumed by
Buyer) including, but not limited to, any failure by Buyer to pay and perform
promptly when due any of the Assumed Liabilities, any breach or default after
the Closing Date by Buyer under any of the Contracts, Permits or Intellectual
Property and any other liability respecting the Business or any of the Assets
that is attributable to services performed, products sold, actions taken or
errors or omissions made by Buyer after the Closing Date.
9.3. NOTICE AND DEFENSE OF CLAIMS.
(a) Except with respect to claims for which Buyer seeks recovery under the
Escrow Agreement and not the provisions of this Article 9 (which shall be
governed by the terms of the Escrow Agreement), an Indemnified Party shall give
prompt written notice in accordance with Section 13.1 to all Indemnifying
Parties of any claim or event known to it for which the Indemnified Party
believes it is entitled to indemnification pursuant to this Article 9, stating
the nature and basis of said claims or events and the amounts thereof, to the
extent known. In the case of any claim, action or proceeding brought by a third
party (a "Claim"), a copy of any Claim, process or legal pleadings with respect
thereto shall be given promptly (and in any event within ten days) after any
such documents are received by the Indemnified Party.
(b) The Indemnifying Party shall, at its own expense, be entitled to
participate in and, to the extent that it shall wish, assume the defense of any
such Claim. If the Indemnifying Party elects to assume control of such defense
or settlement, it shall conduct such defense or settlement by retaining
experienced counsel reasonably satisfactory to the Indemnified Party and in such
event, except as provided below, no compromise or settlement shall be agreed or
made without the Indemnified Party's written consent, which shall not be
unreasonably withheld. In any case, the Indemnified Party shall have the right
to employ its own counsel and such counsel may participate in such action, but
the fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless the Indemnified Party has reasonably concluded (based upon an
opinion of counsel a copy of which is provided to the Indemnifying Party) that
there may be a conflict of interest between the Indemnifying Parties and the
Indemnified Party in the conduct of the defense of such action.
Notwithstanding anything in this Section 9.3(b) to the contrary, if with
respect to a Claim, a settlement offer is made by the applicable third party
claimant which would release the Indemnified Party from further liability solely
upon payment of money damages and without requiring admission of any of the
claims asserted in the Claim, the Indemnifying Party notifies the Indemnified
Party in writing of the Indemnifying Party's willingness to accept the
settlement offer and pay the amount called for by such offer and the Indemnified
Party declines to accept such offer, then (i) the Indemnified Party may continue
to contest such Claim, free of any participation
36
by the Indemnifying Party, and (ii) if the Indemnified Party fails to resolve
such claim (by settlement, a final non-appealable order or otherwise) for an
amount which is less than the amount of the rejected settlement offer, the
amount of any ultimate liability with respect to such claim that the
Indemnifying Party has an obligation to pay hereunder shall be limited to the
lesser of (A) the amount of the settlement offer that the Indemnified Party
declined to accept plus the actual reasonable out of pocket fees and expenses
incurred by the Indemnified Party relating to such Claim through the date of its
rejection of the settlement offer or (B) the aggregate Damages of the
Indemnified Party with respect to such Claim. If the Indemnifying Party makes
any payment on any Claim, the Indemnifying Party shall be subrogated, to the
extent of such payment, to all rights and remedies of the Indemnified Party to
any insurance benefits or other claims of the Indemnified Party with respect to
such Claim.
(c) If the Indemnifying Party does not elect to assume the defense or
settlement of a Claim as provided above, the Indemnified Party may engage
independent counsel selected by the Indemnified Party to assume the defense and
may contest, pay, settle or compromise any such claim on such terms and
conditions as the Indemnified Party may determine. The fees and disbursements
of such counsel shall constitute Damages for which indemnification shall be made
hereunder.
(d) Each Indemnified Party and each Indemnifying Party, as the case may
be, shall be kept fully informed of any Claim at all stages thereof whether or
not such party is represented by its own counsel.
9.4. COOPERATION. The parties hereto agree to render to each other such
assistance as they may reasonably require of each other and to cooperate in good
faith with each other in order to ensure the proper and adequate defense of any
claim, action, suit or proceeding brought by any third party. Where counsel has
been selected by the Indemnifying Parties or by an Indemnified Party, the
Indemnifying Parties or the Indemnified Party, as the case may be, shall be
entitled to rely upon the advice of such counsel in the conduct of the defense.
9.5. CONFIDENTIALITY. The parties agree to cooperate in such a manner as
to preserve in full the confidentiality of all confidential business records and
the attorney-client and work product privileges. In connection therewith, each
party agrees that (a) it will use all reasonable efforts, in any action, suit or
proceeding in which it has assumed or participated in the defense, to avoid
production of confidential business records (consistent with applicable law and
rules of procedure) and (b) all communications between any party hereto and
counsel responsible for or participating in the defense of any action, suit or
proceeding shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work product privilege.
9.6. TIME PERIOD FOR ASSERTING INDEMNIFICATION. The indemnification
provided in this Article 9 shall be effective only as of the Closing Date. A
claim for indemnification pursuant to this Article must be asserted by delivery
of a notice as required in Section 9.3 within the following periods:
37
(a) Except as provided in subsection (c) below, with respect to claims
based on a breach of any representation or warranty of any party contained
herein, within the survival period for the specific representation or warranty
as determined pursuant to Article 8.
(b) With respect to claims based upon the nonfulfillment of any covenant
contained in this Agreement or in any agreement or document to be delivered
pursuant to this Agreement, on or prior to the later of (i) the second
anniversary of the Closing Date, (ii) two years after the latest date on which
fulfillment of the covenant is required hereunder or (iii) the expiration of
such longer period, if any, as may be specified with respect to any covenant.
(c) Claims based on Sections 9.1(a)(ii), (iv) or (vi) or Section
9.2(a)(ii) may be made at any time.
(d) With respect to Warranty Expenses or any other claims, on or prior to
the second anniversary of the Closing Date.
9.7. EXCLUSIVE REMEDIES.
Except with respect to a violation of Section 5.5, 7.1 or 7.2 or as
contemplated by the Escrow Agreement:
(a) the remedies provided in Section 9.1 shall constitute the exclusive
remedy against Seller or Xxxxxxxxx by any party indemnified under Section 9.1
for any claim in connection with this Agreement, including any claim of the type
referred to in Section 9.1(a); and
(b) the remedies provided in Section 9.2 shall constitute the exclusive
remedy against Buyer or Superior by any party indemnified under Section 9.2 for
any claim in connection with this Agreement, including any claim of the type
referred to in Section 9.2(a).
9.8. LIMITATIONS. Notwithstanding the foregoing:
(a) In no event shall Seller or Xxxxxxxxx be liable to any Indemnified
Party for Damages pursuant to this Article 9 which, when added to all Damages
paid by Seller and Xxxxxxxxx in the aggregate exceeds the Purchase Price.
(b) In no event shall Buyer or Superior be liable to any Indemnified Party
for Damages pursuant to this Article 9 which, when added to all Damages paid by
Buyer and Superior in the aggregate exceeds the Purchase Price.
(c) Any indemnification by Seller or Xxxxxxxxx pursuant to Section 9.1
shall not be required unless and until the aggregate amount of all Damages
payable by Seller or Xxxxxxxxx exceeds $50,000; provided, that once such Damages
exceed such amount, Seller and Xxxxxxxxx shall indemnify the Buyer and Superior
for all Damages and not merely for Damages in excess of such amount.
38
(d) Any indemnification by Buyer or Superior pursuant to Section 9.2 shall
not be required unless and until the aggregate amount of all Damages payable by
Buyer or Superior exceeds $50,000; provided, that once such Damages exceed such
amount, Buyer and Superior shall indemnify Seller and Xxxxxxxxx for all Damages
and not merely for Damages in excess of such amount.
10. TRANSFER AND SALES TAX
10.1. PAYMENT. Buyer shall be responsible for and shall pay all filing
and recording, sales, use and transfer taxes and fees, if any, upon the sale or
transfer of any of the Assets hereunder, but not any income, intangibles or
similar taxes payable by Seller or its shareholder by reason of the transactions
contemplated hereunder.
11. TERMINATION OF AGREEMENT
11.1. TERMINATION BY LAPSE OF TIME. This Agreement shall terminate if the
transactions contemplated hereby have not been consummated by 5:00 p.m., Detroit
time, on September 30, 1998, unless (a) such date is extended by the written
consent of all of the parties hereto, in which case the Agreement shall not
terminate until 5:00 p.m., Detroit time, on the date as so extended; (b) any
regulatory approval required for the consummation of the transactions
contemplated hereby, for which application has been made and is pending, has
neither been granted nor refused, in which case the Closing Date shall be
extended until the fifth business day following the grant or refusal of all such
regulatory approvals (or the expiration of the applications therefor); or (c)
the transactions contemplated hereby have not been consummated due to a breach
by one party of its obligations hereunder and on such date such party shall
continue to be in breach of any of its obligations hereunder, in which case only
Seller (in the case of a breach by Buyer) or Buyer (in the case of a breach by
Seller) may terminate the Agreement on such date.
11.2. TERMINATION BY AGREEMENT OF THE PARTIES. This Agreement may be
terminated by the mutual written agreement of the parties hereto. In the event
of such termination by agreement, Buyer shall have no further obligation or
liability to Seller under this Agreement, and Seller shall have no further
obligation or liability to Buyer under this Agreement, except as provided in the
agreement to terminate.
11.3. TERMINATION BY REASON OF BREACH.
(a) By Seller or Xxxxxxxxx. This Agreement may be terminated by Seller
-----------------------
if, as of the Closing Date, there shall have occurred (i) a material breach of
any of the representations or warranties of Buyer or Superior under this
Agreement or (ii) a material failure by Buyer or Superior to perform any
condition or obligation required to be performed by it under this Agreement, in
either case which has not been remedied as of the date of termination.
(b) By Buyer or Superior. This Agreement may be terminated by Buyer or
---------------------
Superior if, as of the Closing Date, there shall have occurred (i) a material
breach of any of the representations or warranties of Seller or Xxxxxxxxx under
this Agreement or (ii) a material failure
39
by Seller or Xxxxxxxxx to perform any condition or obligation required to be
performed by it under this Agreement, in either case which has not been remedied
as of the date of termination.
11.4. EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to Section 11.1, all further obligations of the parties
under this Agreement shall terminate without further liability of any party to
another; provided that a termination under Section 11.1(c) or under Section 11.3
by reason of a breach of an obligation hereunder shall not relieve any party of
any liability for such breach.
12. BROKERS
12.1. FOR SELLER AND XXXXXXXXX. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
Seller and Xxxxxxxxx without the intervention of any person or entity in any
manner which may give rise to any valid claim against Buyer or Superior for a
finder's fee, brokerage commission or other like payment. Each of Seller and
Xxxxxxxxx agrees to indemnify and hold harmless Buyer and Superior against any
claims or liabilities asserted against it by any person acting or claiming to
act as a broker or finder on behalf of Seller or Xxxxxxxxx.
12.2. FOR BUYER AND SUPERIOR. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by Buyer and
Superior without the intervention of any other person in any manner which may
give rise to any valid claim against Seller or Xxxxxxxxx for a finder's fee,
brokerage commission or other like payment. Each of Buyer and Superior agrees
to indemnify and hold harmless Seller and Xxxxxxxxx against any claims or
liabilities asserted against it by any person acting or claiming to act as a
broker or finder on behalf of Buyer or Superior.
13. MISCELLANEOUS
13.1. NOTICES. All notices and other communications pursuant to this
Agreement will be in writing and will be deemed to have been duly given or made
if (a) delivered personally, (b) sent by a nationally-recognized overnight air
courier service or mailed by registered or certified mail (postage prepaid,
return receipt requested), to the parties at the following addresses (or at such
other address for a party as may be specified by like change of address) or (c)
sent by electronic transmission, with confirmation of good transmission, to the
telecopier number specified below:
if to Buyer or Superior, to:
Superior Consultant Holdings Corporation
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Vice President and General Counsel
Fax: (000) 000-0000
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with copies to:
Xxxxxx X. Xxxxxx, Esq.
Butzel Long
000 X. Xxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
if to Seller or Xxxxxxxxx, to:
x/x Xxxxxxxxx Xxxxxxxxxxx.
0000 X. Xxxxxxxx Xxx.
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Fax: (000) 000-0000
with copies to:
Sidley & Austin
000 Xxxx Xxxxx Xx., 00/xx/ Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
1.1. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No party hereto may assign all or a portion of its rights
and obligations hereunder without the prior written consent of the other party,
except that Buyer may assign all or a portion of its rights and obligations
hereunder to an Affiliate of Buyer whether now existing or hereafter created
(but such assignment will not relieve Buyer of any obligation under this
Agreement) and Seller may after the Closing assign all or a portion of its
rights and obligations hereunder to an Affiliate of Seller whether now existing
or hereafter created (but such assignment will not relieve Seller of any
obligation under this Agreement). Any assignment in contravention of this
provision shall be void. Notwithstanding any possible inference herein to the
contrary, none of the parties hereto intends for this Agreement to create any
right or obligation except as between Seller and Xxxxxxxxx, on the one hand, and
Buyer and Superior, on the other, and no other person shall be treated as a
third-party beneficiary hereof.
1.2. ENTIRE AGREEMENT; ATTACHMENTS.
(a) This Agreement (including the Exhibits and Schedules hereto), together
with the Escrow Agreement any other documents and agreements entered into in
connection herewith and referred to herein or in the Schedules hereto, set forth
the entire understanding among the parties relating to the subject matter
thereof, and supersede all prior agreements, arrangements, understandings,
negotiations or discussions.
(b) If the provisions of any Schedule or Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of the
Agreement shall prevail. The Exhibits
41
and Schedules attached hereto or to be attached hereafter are hereby
incorporated as integral parts of this Agreement.
1.3. AMENDMENT; WAIVER. This Agreement may be amended only by a written
-
instrument signed by the parties hereto. No provisions of this Agreement may be
waived except by an instrument in writing signed by the party granting such
waiver. No failure or delay by any party in exercising any right or remedy
hereunder shall operate as a waiver thereof, and a waiver of a particular right
or remedy on one occasion shall not be deemed a waiver of any other right or
remedy or a waiver on any subsequent occasion. The consummation of the Closing
shall not constitute a waiver of any covenant, representation or warranty
contained in this Agreement, unless the same is waived by an instrument in
writing signed by the party granting such waiver.
1.4. EXPENSES. Except as otherwise expressly provided herein, Buyer and
Superior, on the one hand, and Seller and Xxxxxxxxx, on the other, shall each
pay its own expenses in connection with this Agreement and the transactions
contemplated hereby.
1.5. GOVERNING LAW. This agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to
any choice of law principles which would require the application of the law of
any other jurisdiction.
1.6. ARTICLE, SECTION AND PARAGRAPH HEADINGS. The section headings of this
Agreement are for the convenience of the parties only and in no way alter,
modify, amend, limit, or restrict the contractual obligations of the parties.
1.7. SEVERABILITY. If any term or provision of this Agreement, which is
not in itself material to the transactions contemplated hereby, or the
application of any such term or provision to any circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement or the
application to other persons and circumstances shall not be affected thereby and
each term and provision hereof shall be enforced to the fullest extent permitted
by law.
1.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of and on the date first above written.
SUPERIOR CONSULTANT HOLDINGS CORPORATION,
a Delaware corporation
/s/ Xxxxx X. House
By: ____________________________________________________
Chief Financial Officer, Vice President, Treasurer,
Assistant Secretary
Its: ___________________________________________________
ENTERPRISE CONSULTING GROUP, INC.,
a Michigan corporation (Buyer)
/s/ Xxxxx X. House
By: _________________________________________________
Assistant Secretary
Its: _________________________________________________
AVIANT INFORMATION, INC.,
a California corporation (Seller)
/s/ Xxxx X. Xxxx
By: _________________________________________________
Vice President
Its: _________________________________________________
XXXXXXXXX CORPORATION,
a Delaware corporation
/s/ Xxxx X. Xxxx
By: _________________________________________________
Vice President
Its: _________________________________________________
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