Exhibit 2.1
ASSET PURCHASE AGREEMENT
BETWEEN
WATERSIDE CAPITAL CORPORATION
AND
THE NETPLEX GROUP, INC.
AND
NETPLEX SYSTEMS, INC.
DATED AS OF
NOVEMBER __, 2002
SCHEDULES
Schedule 1.2(a) Owned Real Property
Schedule 1.2(b) Leased Real Property
Schedule 1.2(d)(1) Tangible Personal Property
Schedule 1.2(d)(2) Excluded Tangible Personal Property
Schedule 1.2(e) Inventories
Schedule 1.2(g) Contracts
Scheduled 1.2(h) Accounts Receivable
Schedule 1.2(j) Permits
Schedule 1.3(c) Other Assets
Schedule 1.4(a)(i) Tax Obligations
Schedule 1.4(b) Assumed Employee Obligations
Schedule 3.4 Required Consents
Schedule 3.11 Receivables
Schedule 3.14 Litigation
Schedule 3.19 Absence of Certain Changes
Schedule 3.26 List of Written Employee or Consultant Contracts
EXHIBITS
Exhibit A Netplex Systems' September 27, 2002 Unaudited Financial
Statements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with all Schedules and Exhibits
hereto, this "Agreement"), dated as of November __, 2002, is entered into by and
between Waterside Capital Corporation, a Virginia Corporation ("Buyer") and The
Netplex Group, Inc., a New York corporation ("Netplex Group"), Netplex Systems,
Inc., a Delaware corporation ("Netplex Systems," together with Netplex Group,
the "Sellers").
RECITALS
WHEREAS, Buyer is a venture capital company and is currently the senior
lender and principal investor in Sellers;
WHEREAS, Sellers are the owners and operators of a systems integration
business based in Charlotte, North Carolina consisting of all or substantially
all of the assets of Netplex Systems and certain other assets of Netplex Group
(the "Business") and have been attempting to sell the Business;
WHEREAS, Sellers are in default under the Addendum to Workout and
Collateral Release Agreement dated September 23, 2002 with Buyer, for, without
limitation, failing to pay dividends as required on Buyer's preferred stock in
Netplex Group (the "Default");
WHEREAS, As a result of the Default, Buyer has exercised its put rights
with respect to its preferred stock in Netplex Group in the principal amount of
$500,000;
WHEREAS, Buyer has located a company which meets its investment
criteria (the "Target Company") and which desires to acquire the Business;
WHEREAS, Target Company does not have the financial resources to
purchase the Business;
WHEREAS, Sellers are unable to finance the sale of the Business to
Target Company;
WHEREAS, Buyer has proposed to purchase the Business from Sellers in
exchange for the forgiveness of its loans to, and the release of all other
investments in (including without limitation Buyer's put of its Netplex Group
preferred stock), Sellers with the express purpose of transferring the Business
to Target Company on such terms and conditions as may be agreed to between Buyer
and Target Company;
WHEREAS, with the express understanding of the purpose for which Buyer
is entering into this Agreement as stated above, Sellers desire to sell, and
Buyer desires to buy, all or substantially all of the assets of Sellers used in
or relating to the operation of the Business on the terms and conditions set
forth in this Agreement;
THEREFORE, Sellers and Buyer agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Transfer of Assets. Sellers agree to sell, assign, transfer and
deliver to Buyer, and Buyer agrees to purchase and accept from Sellers, at the
Closing (as defined below), all of the assets and properties of Sellers, real
and personal, tangible and intangible, of every kind and description, wherever
located used by Sellers principally in connection with the Business, excluding
only those assets described in Section 1.3. The assets being sold hereunder are
collectively referred to as the "Purchased Assets."
1.2 Purchased Assets. The Purchased Assets specifically include, but
are not limited to, the following:
(a) Owned Real Property. All interests in real property owned by
Sellers and used principally in connection with the Business, which
interests are more particularly described on Schedule 1.2(a) (the
"Owned Real Property").
(b) Leased Real Property. Subject to receiving necessary approvals
from the applicable landlords, all of the Sellers' interests, if any,
in real property leased by Sellers from another and used in connection
with the Business (the "Leased Real Property"), which interests,
together with the leases relating thereto (the "Real Property Leases"),
are more particularly described on Schedule 1.2(b).
(c) Improvements. All buildings and other improvements, fixtures
and appurtenances owned by Sellers and located on the Owned Real
Property and all of Sellers' interest in any improvements, fixtures and
appurtenances located on the Leased Real Property (the "Improvements").
(d) Tangible Personal Property. All machinery, equipment,
computers, hardware equipment, software, tools, furniture, office
equipment, supplies, materials, vehicles and other items of tangible
personal property of every kind owned or leased by Sellers and used
principally in connection with the Business (wherever located and
whether or not carried on Sellers' books), including, without
limitation, those listed on Schedule 1.2(d)(1), but specifically
excluding those listed on Schedule (1.2(d)(2) (the "Tangible Personal
Property"), and any additions, improvements, replacements and
alterations thereto with any express or implied warranty by the
manufacturers or sellers of any item or component part thereof, and all
maintenance records and other documents relating thereto.
(e) Inventories. All inventories of the Business as of the
Effective Time (as defined below), including, without limitation, all
finished goods, work in process, raw materials, spare parts and all
other materials and supplies to be used or consumed in the production
of finished goods (the "Inventory"), including, but not limited to, the
Inventory described on Schedule 1.2(e).
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(f) Other Tangible Assets. All other tangible assets of Sellers of
every kind and description, real, personal or mixed, wherever located,
which are carried on the books of the Business or which are owned by
Sellers and used in connection with the Business.
(g) Contracts. All of Sellers' interest in all written contracts
and commitments incident or material to the Business including without
limitation, all purchase orders, including without limitation those
listed on Schedule 1.2(g) (the "Contracts"). Schedule 1.2(g) identifies
all material contracts and purchase orders originated in connection
with the Business and to which the Sellers are a party or subject.
(h) Accounts Receivable. All accounts receivable and trade
accounts due to Sellers in connection with the Business (the
"Receivables"), and the full benefit of any security therefor,
including without limitation of the foregoing, the accounts receivable
described in Schedule 1.2(h).
(i) Intellectual Property. All of the intellectual properties and
property rights that are owned, licensed or used by Sellers in
connection with the Business (other than any intellectual property
rights associated with names "Netplex" or "Netplex Systems" and any
derivations thereof), including, without limitation, the following, to
the extent used in connection with the Business: (i) all actual and
potential trademarks, service marks, trade names, logos and other
designations (the "Marks") and all United States, foreign and state
registrations and applications for registration relating to the Marks
(the "Trademark Registrations"); (ii) all works of authorship (the
"Works of Authorship") and all United States, foreign and state
copyright registrations and applications for registration relating to
the Works of Authorship (the "Copyright Registrations"); (iii) all
patented or patentable inventions (the "Inventions") and all United
States and foreign patents and applications for patent relating thereto
(the "Patents"); and (iv) all confidential or proprietary processes,
inventions patentable or not, formulas, technical data and other
similar information and technologies that are of commercial value to
the Business (the "Trade Secrets") (the Marks, the Trademark
Registrations, the Works of Authorship, the Copyright Registrations,
the Inventions, the Patents and the Trade Secrets being referred to
collectively herein as the "Intellectual Property"), together with all
goodwill related to the Intellectual Property, and any royalty and
other income from or related to the Intellectual Property accruing
after the Effective Time.
(j) Certificates/Permits. All permits, authorizations,
certificates, approvals and licenses relating to the operation of the
Business, including, but not limited to, any and all certifications,
qualifications and designations from any and all computer hardware and
software manufacturers and/or distributors, including, without
limitation, those listed on Schedule 1.2(j) (the "Permits").
(k) Records. Copies of all records, technical data, asset ledgers,
books of account, inventory records, budgets, customer and supplier
lists, sales literature, catalogues, trade lists, advertising and
promotional materials, payroll and personnel records, computer
programs, manuals, technical manuals, correspondence and other files or
records of Sellers created or maintained in connection with the
Business.
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(l) Claims. All of Sellers' rights to any choses in action,
claims, causes or rights of action arising in connection with the
Business.
(m) Prepaid Expenses; Deposits. All prepaid expenses and deposits
paid by Sellers with respect to the Business, including, without
limitation, lease and utility deposits and prepayments under any leases
or other Contracts.
(n) Goodwill. Any and all of Sellers' goodwill in and going
concern value of the Business.
(o) Other Intangibles. All other intangible assets of any kind or
description, wherever located, which are carried on the books of the
Business or which are owned by Sellers and principally used in
connection with the operations of the Business, including, without
limitation: all records of sales, customers lists and suppliers lists
relating to the Business; all the rights, title and interest of the
Sellers in the agreements entered into by the Sellers relating
principally to the Business, either with customers or suppliers or any
other party (other than this Agreement), including without limiting the
generality of the foregoing, all rights, title and interest of the
Sellers in the unfilled orders received by the Sellers principally in
connection with the Business and in the commitments in favor of the
Sellers for supplies of goods and services entered into in the ordinary
course of business for use principally in connection with the Business
whether or not there are any written contracts in respect thereto,
including without limiting the generality of the foregoing; and all the
rights title and interest of the Sellers in personnel records,
inspection records and other records, books, documents and data bases
recorded or stored by means of any device, including in electronic
form, relating to the Business, the Purchased Assets and those
employees who are, pursuant to the provisions of this Agreement, to be
employed by the Buyer as are in the possession or under the control of
the Sellers provided that the Sellers shall be entitled to retain the
originals and will provide to Buyer copies in lieu thereof of any such
personnel records, inspection records and other records, books,
documents and data bases that are necessary for the Sellers to perform
Sellers' obligations (a) under this Agreement, (b) under law, or (c) to
third parties (e.g., continuing obligations, if any, of Sellers to
employees); and provided further that, for the avoidance of doubt, the
foregoing, and the Purchased Assets generally, do not include the
corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals,
minute books, stock transfer books, blank stock certificates, and any
other documents, records or files relating to the organization,
maintenance or existence of the Sellers. Notwithstanding any provision
to the contrary in this subsection (o), Sellers shall be entitled to
retain the originals, and will provide to Buyer copies in lieu thereof,
of any such assets that are necessary for Sellers to perform Sellers'
obligations under (i) this Agreement; (ii) under law; or (iii) to third
parties.
1.3 Excluded Assets. The following assets shall be excluded from the
Purchased Assets and shall be retained by Sellers:
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(a) Insurance. All insurance policies relating to the Business,
including policies relating to property, liability, business
interruption, health and workers' compensation and lives of officers of
Sellers.
(b) Assets of Benefit Plans. Pension, profit sharing or savings
plans and trusts and the assets thereof.
(c) Other Assets. Any contracts or assets specifically listed on
Schedule 1.3.
1.4 Liabilities.
(a) The Purchased Assets shall be sold and conveyed to Buyer free
and clear of all liabilities, obligations, liens, security interests
and encumbrances whatsoever (other than Permitted Liens as defined in
Section VII); provided, however, that Buyer will assume at Closing the
obligations of Sellers relating to the Business and described in
Section 1.4(b) below. The Purchased Assets shall include all of the
assets principally required to operate the Business in the manner
presently operated by Sellers. Buyer shall in no event assume or be
liable for any liability or obligation of Sellers not specifically
assumed pursuant to this Section 1.4 and in instruments of assumption
delivered by it at Closing, and Sellers shall retain responsibility for
all other liabilities and obligations with respect to it, whether or
not accrued and whether or not disclosed, contingent or otherwise.
Specifically, but without limiting the generality of the foregoing,
Buyer shall not assume any liability or obligation of Sellers in
respect to:
(i) any tax obligation(s) of Sellers, except for the tax
obligations consisting of solely of nondelinquent payroll, real
estate, sales tax obligations on margin escrow sales payable with
cash received from SBM and Arrow Electronics and Mecklenburg
County revenue taxes obligation) which will be estimated as set
forth on Schedule 1.4(a)(i);
(ii) any indebtedness of the Sellers to its creditors,
shareholders or any other person or entity, other than liabilities
assumed under Section 1.4(b) below;
(iii) any liability under any contract not assumed by Buyer
under Section 1.4(b) including any liability arising out of or
relating to Sellers' credit facilities or any security interest
related thereto;
(iv) any liability under any contract assumed by Buyer
pursuant to Section 1.4(b) which arises after the Effective Time
but which arises out of or relates to any breach thereof that
occurred prior to the Effective Time;
(v) the use, storage, transportation, discharge, handling or
disposal of any hazardous materials prior to the Effective Time;
(vi) employees or former employees of Sellers, including any
liability for accrued salaries, wages, payroll taxes, severance
pay entitlements, health, medical, retirement, vacation or
deferred compensation benefits or any other
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obligations or expenses arising out of or relating to the
employment by Sellers of its employees (including any amounts
owing to certain Netplex Systems employees due to earnout
agreements with the Sellers), or Sellers' termination of any
employees, including any terminations effected by Sellers
pursuant to or in connection with this Agreement, except for
liabilities assumed in Section 1.4(b).
(vii) all liabilities and costs under the Consolidated Omnibus
Budget Reconciliation Act, as amended ("COBRA") (including
liabilities for violations thereof and excluding premium
obligations elected by employees and their dependents who are plan
participants) for all "qualifying events" (as defined in COBRA)
occurring with respect to employees and their dependents prior to
and on the Closing Date, including qualifying events that occur as
a result of the sale of the Purchased Assets contemplated by this
Agreement.
(b) As the sole exception to the provisions of paragraph (a)
above, Buyer will assume at Closing the following obligations of
Sellers:
(i) All expenses and liabilities identified in the Netplex
Systems' September 27, 2002 Financial Statements, which shall
consist solely of the liabilities relating to and arising out of
the ordinary course of operations of the Business;
(ii) All other obligations, expenses and liabilities of the
Sellers relating to the Business and that have arisen in the
ordinary course of the Business between September 27, 2002 and the
Closing Date, but which are not identified or included in the
Netplex Systems September 27, 2002 Financial Statements,
consisting solely of the following:
(A) obligations under the material Contracts acquired
pursuant to Section 1.2(g) and the Real Property Leases, to
the extent that such obligations are not performed prior to
the Effective Time and accrue subsequent to the Effective Time
(other than liability arising under such contracts arising out
of or relating to a breach which occurred prior to the
Effective Time);
(B) obligations to complete jobs requiring the
furnishing of materials or services, which jobs have been
accepted in the ordinary course of business of the Business
since September 27, 2002 but not completed as of the Effective
Time; and
(C) obligations under purchase orders for materials and
supplies necessary to the operation of the Business, which
purchase orders have been entered into in the ordinary course
of business of the Business since September 27, 2002 but not
satisfied as of the Closing Date; and
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(D) tax obligations consisting solely of nondelinquent
payroll, real estate, sales tax obligations on margin escrow
sales payable with cash received from SBM and Arrow
Electronics and Mecklenburg County revenue taxes obligations
which will be estimated and included as a separately
identified item on the September 27, 2002 Financial
Statements.
(E) liability for accrued salaries, wages, payroll
taxes, health, medical, vacation benefits or any other
obligations or expenses arising out of or relating to the
employment by Sellers of its employees as set forth, and only
to the extent set forth, in Schedule 1.4(b)
1.5 Confirmation of Filing of State Sales Tax Returns and Payment of
State Sales Tax. Sellers shall completely and accurately file any and all state
sales tax returns with respect to the receivables to be assumed by Buyer and
identified in the Purchased Assets when due. Sellers shall provide written
confirmation to Buyer of payment of all such amounts upon filing such returns.
1.6 Condition Precedent to Buyer's Obligation. Buyer's obligation to
purchase the Business hereunder, is contingent upon the written commitment of
the Target Company to acquire the Business from Buyer on terms and conditions
satisfactory to the Buyer in its sole and absolute discretion.
ARTICLE II
CONSIDERATION
2.1 Purchase Price. In consideration for the Purchased Assets, Buyer
shall cancel and consider as paid in full all debt (inclusive of interest) owed
by Sellers to Buyer, consider all preferred stock (inclusive of dividends) to be
issued by Sellers to Buyer (which Sellers hereby acknowledge is in default) as
redeemed in full and, contingent on Closing hereunder, hereby waives and
releases, to the fullest extent permitted by law, any and all claims, rights and
causes of action, whether known or unknown that Buyer had or currently has
against the Sellers arising out of or relating to Addendum to Workout and
Collateral Release Agreement, dated September 23, 2002, the Workout and
Collateral Release Agreement, dated May 15, 2002 and the Master Agreement dated
September 28, 2001 all by and among The Netplex Group, Netplex Systems and
Waterside Capital Corporation. The total amount of debt to be cancelled and
preferred stock to be treated as redeemed is $1,761,290 and shall include:
(a) The Secured Commercial Note dated September 28, 2001 made by
Netplex Group to the order of Buyer, in the original principal amount
of $900,000, and a current principal balance of $733,291 and interest
in the amount of $5,500 through the Closing Date;
(b) The Secured Commercial Note dated May 15, 2002 made by Netplex
Systems to the order of Buyer, in the original principal amount of
$500,000, with a current principal balance of $500,000 and interest in
the amount of $3,750 through the
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Closing Date (together with the Secured Commercial Note described in
Section 2.1(a) above, the "Secured Commercial Notes");
(c) 500 Shares of Netplex Group Class F Preferred Stock with a
redemption value of $500,000 and unpaid dividends in the amount of
$18,750 through the Closing Date.
2.2 Allocation. The Purchase Price, including any post-closing
adjustments, shall be allocated for all purposes, including federal and state
tax reporting purposes, among the Purchased Assets and assumed liabilities (as
described in Section 1.4) in accordance with the values stated on Seller's
Balance Sheet attached hereto as a part of Exhibit A, it being agreed that the
amount of the excess of the Purchase Price over such values shall be allocated
to goodwill Each of the parties acknowledges its understanding of the
requirement under Section 1060 of the Internal Revenue Code for the filing by
each of Form 8594 for their respective tax years in which the Closing occurs.
Each of the Sellers and Buyer agrees to allocate the Purchase Price among the
Purchased Assets in accordance with the allocations described above.
2.3 Noncompetition. In order to ensure to Buyer and Buyer's assigns
the full benefits of the Purchased Assets and the Business, Sellers, for itself
and its affiliates, and Xxxxx Xxxxx and Xxxx Xxxxx (who have signed this
agreement in their individual capacities solely to evidence their agreement and
consent to this noncompetition provision and are, for purposes of this Section
2.3 only, included within the term "Sellers") agree that for a period of two (2)
years after the Closing Date Sellers shall not: (i) engage, directly or
indirectly, as proprietor, partner, shareholder, director, officer, employee,
agent, consultant, or any other capacity or manner whatsoever, in any business
activity competitive with the Business, or (ii) solicit the trade or patronage
of any persons or businesses who were customers or clients of the Business in
the two year period immediately preceding the Closing Date; provided however,
that nothing contained in this paragraph shall prevent Sellers from purchasing
or causing or permitting to be purchased for its direct or indirect benefit
securities of any corporation whose securities are regularly traded on any
securities exchange so long as such purchases shall not result in the direct or
indirect beneficial ownership by any of Sellers, at any time while the foregoing
restrictions remain in effect, of more than one percent (1%) of any outstanding
class of equity securities of any corporation engaged, directly or through
subsidiaries, in any business activities competitive with the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Netplex Group and Netplex Systems, jointly and severally, represent and
warrant to Buyer as follows:
3.1 Organization and Good Standing; Governing Documents. Each of the
Sellers is a corporation duly organized, validly existing and in good standing
under the laws of their respective states of incorporation. Sellers have the
requisite corporate power and authority to own, operate and lease the Purchased
Assets and to conduct the operations of the Business as
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presently conducted. Sellers are duly qualified to do business as foreign
corporations and are in good standing in all other jurisdictions in which the
character of the property owned, leased or operated by it or the nature of the
Business conducted by it makes such qualification necessary. Sellers have
previously delivered to Buyer true and complete copies of their respective
Bylaws and charter documents including all amendments to each.
3.2 Authority. Sellers have the requisite corporate power and
authority to execute and deliver this Agreement and to perform the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
have been duly and validly authorized by all necessary corporate and shareholder
action on the part of Sellers. This Agreement has been, or, with respect to
agreements to be executed at the Closing, will be duly executed and delivered by
Sellers and each constitutes or will constitute when executed and delivered a
valid and binding obligation of Sellers, enforceable against Sellers in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting the rights and remedies of creditors, and
subject to the further qualification that (a) the remedy of specific performance
or injunctive or other equitable relief is discretionary with the court before
which any proceeding therefor may be brought; and (b) rights to indemnification
may be limited by law or public policy.
3.3 No Conflict or Breach. The execution, delivery and performance of
this Agreement do not and will not:
(a) conflict with or constitute a violation of the charter or
bylaws of the respective Sellers;
(b) conflict with or constitute a violation of any law, statute,
judgment, order, decree or regulation of any legislative body, court,
administrative agency, governmental authority or arbitrator applicable
to or relating to Sellers or the Purchased Assets;
(c) conflict with, constitute a default under, result in a breach
or acceleration of or, except as set forth on Schedule 3.4, require
notice to or the consent of any third party under any contract,
agreement, commitment, lease, mortgage, note, license or other
instrument or obligation to which Sellers are party or by which they
are bound or by which the Purchased Assets are affected; or
(d) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever on any of the Purchased Assets.
The representations and warranties set forth in this Section 3.3 are
conditioned upon payment of the Purchase Price on the date hereof in accordance
with Section 2.1.
3.4 Consents and Approvals. Schedule 3.4 describes (a) each consent,
approval, authorization, registration or filing with any federal, state or local
judicial or governmental authority or administrative agency; and (b) each
consent, approval, authorization of or notice to any other third party, which is
required in connection with the valid execution and delivery by
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Sellers of this Agreement or the consummation by Sellers of the transactions
contemplated herein (the items described in clauses (a) and (b), collectively,
the "Required Consents").
3.5 Financial Statements. Sellers have previously delivered or made
available to Buyer true and complete copies of (a) all financial statements
provided or required to be provided to the Securities and Exchange Commission
for Sellers most recently completed fiscal year and interim financial statements
for Sellers' operations up through September 27, 2002 (collectively the
"Financial Statements" and with respect to each of the Sellers the "Netplex
Systems Financial Statements" and the "Netplex Group Financial Statements"
copies of which are attached hereto as Exhibit A). The Financial Statements have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved and:
(a) are true, complete and correct in all material respects;
(b) are materially in accordance with the books and records of
Sellers; and
(c) present fairly the assets, liabilities and financial condition
of Sellers in all material respects as of the respective dates thereof,
and the results of operations for the periods then ending.
The Financial Statements have been prepared in accordance with the books and
records of Netplex Group and fairly present the financial condition of Netplex
Systems as of the date indicated thereon. To the Sellers' knowledge, Sellers
have no liability or obligation, whether accrued, absolute or contingent, that
is not reflected or reserved against in the Financial Statements as of the date
of such Financial Statements. To the Sellers' knowledge, any items of income or
expense which are unusual or of a nonrecurring nature are separately disclosed
in the Financial Statements as of the date of such Financial Statements.
3.6 Books and Records. Sellers have previously delivered to Buyer true
and complete copies of the books and records of Sellers relating to the
Purchased Assets. Such books and records are true, accurate and complete in all
material respects and have been maintained in accordance with generally accepted
accounting principles applied on a consistent basis.
3.7 Title to and Sufficiency of Assets. Sellers have good and
marketable title to all of the Purchased Assets, free and clear of any liens,
encumbrances, claims, security interests, mortgages or pledges of any nature
(collectively, "Liens"), except for Permitted Liens. The Purchased Assets
constitute all of the assets, tangible and intangible, of any nature whatsoever,
required to operate the Business in the manner presently operated by Sellers.
3.8 Tangible Personal Property. Each item of Tangible Personal
Property is in good operating order, condition and repair, is suitable for
immediate use in the ordinary course of business of the Business, is free from
material defects, is merchantable and is of a quality and quantity presently
usable in the ordinary course of business of the Business, ordinary wear and
tear expected. No item of Tangible Personal Property is in need of repair or
replacement other than as part of routine maintenance in the ordinary course of
business.
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3.9 Inventories. All items included in the Inventory (i) are in good
condition, not obsolete and are not materially defective; (ii) are useable or
saleable within 6 months from the date hereof in the ordinary course of business
of the Business and at the current operating profit margins of Sellers; (iii)
are located on the premises acquired hereunder and (iv) have been acquired by
Sellers only in bona fide transactions entered into in the ordinary course of
business. The quantities of each item of Inventory are not excessive, but are
reasonable in the present circumstances of the Business.
3.10 Contracts. Sellers have delivered to Buyer true and complete
copies of all written Contracts and true and complete memoranda describing all
oral Contracts, including any and all amendments and other modifications
thereto. To Sellers' knowledge, each of the Contracts is valid, binding and
enforceable in accordance with its terms and is in full force and effect.
Sellers have not waived any of its rights under, or modified the terms of, any
Contract orally or by a pattern of practice or otherwise. To Sellers' knowledge,
no Contract will result in a loss upon completion of performance, and no
purchase commitment is in excess of the normal requirements of the Business or
at excessive prices. To Sellers' knowledge, there are no existing defaults, and
no events or circumstances have occurred which, with or without notice or lapse
of time or both, would constitute defaults, under any of the Contracts. The
assignment of the Contracts by Sellers to Buyer will not, with respect to any
Contract, (i) constitute a default thereunder; (ii) require the consent of any
person or party, except for the Required Consents; or (iii) affect the
continuation, validity and effectiveness thereof or the terms thereof. There are
no renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any material amounts paid or payable to Sellers under any Contract,
and Sellers have received no demands for such renegotiation.
3.11 Receivables. To Sellers' knowledge, all Receivables reflected on
the Netplex Systems Financial Statements and all Receivables presently owing and
to be owing at the Effective Time, in each case net of the reserves established
and reflected on the Netplex Systems' Financial Statements, are, and at the
Closing Date will be, legal, valid and binding obligations, and are collectible
in full at face value (net of the reserves established and reflected in the
Netplex Systems' Financial Statements. All such Receivables represent or will
represent sales actually made or services actually performed in the ordinary
course of business of the Business. There are no set-offs, counterclaims or
disputes asserted with respect to any Receivables, and no discount or allowance
from any Receivables has been made or agreed to. The reserves established for
doubtful or uncollected accounts as shown on the Netplex Systems' Financial
Statements are consistent in amount to those historically established with
respect to the accounts receivable of the Business. Schedule 3.11 contains a
complete and accurate list of all Receivables as of the date of the Netplex
Systems' Financial Statements, and identifies the aging of any such Receivables.
3.12 Intellectual Property. Except for the intellectual property rights
associated with the names "Netplex" or "Netplex Systems," and any derivations
thereof Sellers own all right, title and interest in and to each item included
in the Intellectual Property, free and clear of any Liens or licenses (other
than Permitted Liens (as defined in Article VII). Sellers have not licensed any
of the Intellectual Property to any third party, and no third party otherwise
has any right to use any of the Intellectual Property. There are no claims in
writing or suits against Sellers
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challenging Sellers' ownership of or right to use any of the Intellectual
Property. There are no claims in writing or suits against Sellers alleging that
any of the Intellectual Property or any of Sellers' use of the Intellectual
Property infringes any rights of any third parties.
3.13 Major Suppliers and Customers. Sellers are not, for each supplier
of goods or services to the Business to whom Sellers paid more than $10,000, in
the aggregate, during the 12 months ended on October 25, 2002, and each customer
of the Business who paid Sellers more than $10,000, in the aggregate, during
such period, engaged in any dispute with any of such suppliers or customers.
Sellers have no reason to believe that the sale of the Purchased Assets
hereunder will have any material adverse effect on the business relationship of
any such suppliers or customers with the Business.
3.14 Litigation. Except as disclosed in public filings with the SEC or
set forth in Schedule 3.14, there are no claims, actions, suits, arbitration
proceedings, inquiries, hearings, injunctions or investigations ("Claims")
pending, or to the Sellers' knowledge, threatened in writing, against Sellers
with respect to the Business. To Sellers' knowledge, no Claim, either
individually or when considered in the aggregate with other Claims, if resolved
adversely to Sellers, will materially and adversely affect the financial
condition or properties (including, without limitation, the Purchased Assets) of
the Business. To Sellers' knowledge, there are no facts or circumstances which
could serve as the basis for any Claim against Sellers involving the Business or
the Purchased Assets, or, by virtue of the execution, delivery and performance
of this Agreement, against Buyer.
3.15 Compliance with Decrees and Laws. To Sellers' knowledge, there is
not outstanding or threatened, in writing, any order, writ, injunction or decree
of any court, governmental agency or arbitration tribunal against or involving
the Business. To Sellers' knowledge, Sellers are currently in material
compliance with all laws, statutes, rules, regulations, orders and licensing
requirements ("Rules") of federal, state, local and foreign agencies and
authorities applicable to the business, properties and operations of the
Business (including, without limitation, those relating to antitrust and trade
regulation, civil rights, labor and discrimination, safety and health). To
Sellers' knowledge, there has been no allegation in writing of any violation of
any such Rules, and no investigation or review by any federal, state or local
body or agency is pending or threatened in writing with respect to the Business.
3.16 Permits. To Sellers' knowledge, Sellers have obtained all permits,
authorizations, certificates, approvals, licenses, exemptions and
classifications required for the conduct of the Business and the ownership and
operation of the Purchased Assets. To Sellers' knowledge, Sellers are not in
violation of any of the Permits, and no proceedings are pending or, to Sellers'
knowledge threatened, to revoke or limit any Permit.
3.17 Taxes. Sellers have properly completed, duly and timely filed in
correct form with the appropriate United States, state and local governmental
agencies and with the appropriate foreign countries and political subdivisions
thereof, all tax returns, reports and declarations of estimated tax (the "Tax
Returns") required to be filed in connection with the Business and the Purchased
Assets before the Effective Time. All Tax Returns are accurate, complete and
correct as filed and to Sellers' knowledge, Sellers have paid in full or, in the
case
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of taxes not yet due, made adequate provision in its financial statements for
all amounts shown to be due thereon. All United States, state and local income,
profits, franchise, sales, use, occupancy, property, severance, excise, value
added, withholding and other taxes, and all taxes owing to any foreign countries
and political subdivisions thereof (including interest, penalties and any
additions to tax) (the "Taxes") due from or claimed to be due by each taxing
authority in respect of Sellers, the Business or the Purchased Assets, for all
periods through the date of this Agreement, have been, and for all periods
through the Effective Time will be, fully paid or adequately provided for in the
financial statements of Sellers. Sellers have timely made and will timely make
all withholdings of tax required to be made under all applicable United States,
state and local tax regulations, and such withholdings have either been paid or
will be paid to the respective governmental agencies or set aside in accounts
for such purpose or accrued, reserved against and entered upon the books of
Sellers. Estimated income taxes which are not yet due to be paid to the Internal
Revenue Service or any state or local taxing authority have been accrued,
reserved against and entered upon the books of Sellers. All Tax Returns required
to be filed after the date hereof by Sellers, shall, in each case, be prepared
and filed by Sellers in a manner consistent in all respects (including elections
and accounting methods and conventions) with such Tax Return most recently filed
by Sellers in the relevant jurisdiction prior to the date hereof, except as
otherwise required by law or regulation or agreed to by Buyer. If any such Tax
Return required to be filed after the date hereof shall reflect any new
elections or the adoption of any new accounting methods or conventions or other
similar items, the reflection or adoption of any such items shall, except to the
extent such particular reflection or adoption is required to comply with any law
or regulation, be subject to the prior written approval of Buyer. All
deficiencies asserted as a result of any examinations of the Tax Returns have
been paid or adequately provided for in the Financial Statements, and no issue
has been raised by a taxing authority in any such examination which, if raised
with regard to any other period not so examined, would be expected to result in
a proposed deficiency for any other period not so examined. Buyer will not have
any liability, either in its own right or as a transferee, for Taxes in excess
of the amount paid or reserved for any period prior to the Closing. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return, or the period for assessment or collection of any
Taxes. Sellers are not a party to any pending action or proceeding, nor to
Sellers' knowledge, is there threatened any action or proceeding, by any
governmental authority for assessment or collection of taxes, and Sellers have
not been notified in writing by any governmental authority that an audit or
review of any tax matter is contemplated. There are no tax liens (other than
liens for taxes for current and subsequent years which are not yet due and
payable) upon any of the Purchased Assets. Sellers are not "foreign persons"
within the meaning of Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code"), and Buyer has no obligation under Section 1445 of the Code
to withhold taxes from the Purchase Price due to Sellers.
3.18 Employees; Compensation; Benefit Plans. Sellers have previously
given to Buyer a complete and correct list of the name, age, position, rate of
compensation and any incentive compensation arrangements, bonuses or commissions
or fringe or other benefits, whether payable in cash or in kind, of each current
employee, director, independent contractor, consultant and agent of Sellers who
is associated with the Business and each other person to whom Sellers pay
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or provide, or have an obligation, agreement (written or unwritten), policy or
practice of paying or providing, retirement, health, welfare or other benefits
of any kind or description whatsoever.
3.19 Absence of Certain Changes. Except as described in Schedule 3.19,
since the Netplex Systems' Financial Statements, Sellers have conducted the
operations and business of the Business only in the ordinary course consistent
with past practices and has not:
(a) Suffered any damage, destruction or loss to any material asset
of the Business, whether or not covered by insurance;
(b) Sold, transferred, distributed or otherwise disposed of any
assets used in the operation of the Business, except for in the
ordinary course of business;
(c) Other than in the ordinary course of business, made or entered
into any general wage or salary increase to its directors, officers or
employees who provide services to the Business;
(d) Received any written notice (or, with respect to King
Pharmaceuticals only, oral notice) that any supplier or customer has
terminated or threatened to terminate any contract, lease, license
relationship or commitment relating to the conduct of the Business or
the Purchased Assets to which Sellers are bound;
(e) Incurred any obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become due), or
paid any monies except normal trade or business obligations incurred in
the ordinary course of business consistent with past practices;
(f) Suffered, permitted, committed or incurred any default in any
liability or obligation which has resulted in or will result in
liabilities, losses, damages, injuries or claims exceeding $10,000 in
the aggregate;
(g) Introduced any new method of management, operations or
accounting;
(h) Suffered any material adverse change in the condition
(financial or otherwise), results of operations or business of the
Business or the Purchased Assets, or any other event or condition of
any character that might reasonably be expected to have a material
adverse effect on the Business or the Purchased Assets;
(i) To Sellers' knowledge, suffered, permitted or incurred the
imposition of any lien or encumbrance upon any of the Purchased Assets,
except for Permitted Liens;
(j) Declared or paid any dividend on, or made or committed to make
any other distribution or payment in respect of, any shares of its
stock or other securities;
(k) Except in the ordinary course of business, and only with
respect to the Business, changed the size or composition of its
employee work force, entered into any union contract, or adopted any
new pension, benefit or severance plan.
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3.20 Product Warranties. To Sellers' knowledge, there are no continuing
or outstanding warranties applicable to goods or products manufactured or sold
by Sellers except for warranties implied by law, or given by Sellers in the
ordinary course of business.
3.21 Related Party Transactions The Real Property Leases, leases of
Tangible Personal Property, Contracts and Commitments do not include any
agreement with, or any other commitment to (a) any shareholder owning a greater
than 10% interest in Sellers; (b) any officer or director of Sellers; (c) any
person related by blood or marriage to any such shareholder, officer, or
director; or (d) any corporation, partnership, trust or other entity in which
Sellers or any such officer, director or related person has an equity or
participating interest of 10% or more.
3.22 Brokers. No finder, broker, agent or other intermediary has acted
for or on behalf of Sellers in connection with the transactions contemplated by
this Agreement, and there are no claims for any brokerage commission, finder's
fee or similar payment due from Sellers.
3.23 Names. Since January 1, 1999, Netplex Systems has not been known
by or conducted business under any other name other than Netplex Systems, Inc.
or Lakeview Technology Solutions, Inc. All assets and rights relating to the
Business are held by, and all agreements, obligations, expenses and transactions
relating to the Business have been entered into, incurred and conducted by
Sellers.
3.24 Solvency. Netplex Systems is not now insolvent, and will not be
rendered insolvent by any of the transactions contemplated by this Agreement. In
addition, immediately after giving effect to the consummation of the
transactions contemplated by this Agreement, (a) Netplex Systems will be able to
pay its debts as they become due; (b) Netplex Systems will not have unreasonably
small assets with which to conduct its present or proposed business; and (c)
taking into account all pending and threatened litigation, final judgments
against Netplex Systems in actions for money damages are not reasonably
anticipated to be rendered at a time when, or in amounts such that, Netplex
Systems will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum probable amount of such judgments
in any such actions and the earliest reasonable time at which such judgments
might be rendered) as well as all other obligations of Netplex Systems. The cash
available to Netplex Systems, after taking into account all other anticipated
uses of the cash, will be sufficient to pay all such debts and judgments
promptly in accordance with their terms. As used in this Section, (i)
"insolvent" means that the sum of the present fair saleable value of Netplex
Systems' assets does not and will not exceed its debts and other probable
liabilities; and (ii) "debts" includes any legal liability, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed or contingent, disputed
or undisputed or secured or unsecured.
3.25 Disclosure. To Sellers' knowledge, no representation, warranty or
statement made by Sellers in this Agreement, or any document furnished or to be
furnished to Buyer pursuant to this Agreement, contains or will contain any
untrue statement of a material fact, or omits or will omit to state any material
fact necessary to make the statements contained herein or therein not materially
misleading. The fact that Sellers have delivered copies of certain documents to
Buyer shall not constitute disclosure of facts required to be disclosed on any
Schedule to this Agreement, unless such document is expressly referenced in such
Schedule.
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3.26 Employees. The Sellers are not a party to or bound by any contract
or commitment to pay any management fee pertaining to the Business. The Sellers
do not have any written employment contract or consulting contract with any
employees or consultants of the Business other than those contracts identified
in Schedule 3.26. Schedule 3.26 also sets out (i) the names of all employees or
consultants used in the operation of the Business ("Netplex Systems'
Employees"), (ii) their annual salary or remuneration, (iii) their job titles,
(iv) their total length of employment including any prior employment as
disclosed in the Sellers' records that would affect calculation of years of
service for purposes of benefit entitlement (including statutory notice or
statutory severance pay) or pension entitlement, and (v) other terms and
conditions of their employment.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia.
4.2 Authority. Buyer has the requisite corporate power and authority
to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby and
thereby, have been duly and validly authorized by all necessary corporate and
shareholder action on the part of Buyer. This Agreement has been duly executed
and delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the rights and
remedies of creditors, and subject to the further qualification that (a) the
remedy of specific performance or injunctive or other equitable relief is
discretionary with the court before which any proceeding therefor may be
brought; and (b) rights to indemnification may be limited by law or public
policy.
4.3 Brokers. Buyer has retained no finder, broker, agent or other
intermediary to act for or on behalf of Buyer in connection with the
transactions contemplated by this Agreement, and no party has made any claims
for any brokerage commission, finder's fee or similar payment due from Buyer.
ARTICLE V
COVENANTS OF SELLERS
Sellers covenant and agree with Buyer as follows:
5.1 Access and Information. Sellers shall permit Buyer and its
counsel, accountants and other representatives full access during normal
business hours, and after reasonable prior written notice, to all the
properties, assets, books, records, agreements and other documents of Sellers
concerning the Purchased Assets. Sellers shall furnish to Buyer and its
representatives all information concerning the Purchased Assets or the Business
as Buyer may reasonably request.
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Sellers shall permit and facilitate communications between Buyer and Sellers'
suppliers, customers, landlords and other persons having relationships with the
Business; provided, however, that Sellers shall have the right to participate in
(and Buyer shall provide notice to Sellers prior to) each communication between
Buyer and such parties.
5.2 Termination of Sellers' Employees; Settlement of Obligations of
Sellers. Immediately prior to the Effective Time, Sellers shall use its best
efforts to seek the resignation of each of the Netplex Systems' employees listed
on Schedule 3.26 (the "Netplex Systems' Employees"), and shall make adequate
provisions for a settlement of all obligations of Sellers to such employees,
including accrued salaries, wages, payroll taxes, any severance pay
entitlements, health, medical, retirement, vacation or deferred compensation
benefits and any other obligations and expenses of any kind or description of
Sellers arising out of or relating to the employment by Sellers (except for
liabilities assumed under Section 1.4(b)).
5.3 Sunterra Bankruptcy Claim. Sellers shall, in addition to its
obligation to indemnify and hold Buyer harmless under Article VIII, hold Buyer
and its assigns harmless and indemnify them against any and all loss, damage
(including, without limitation, all foreseeable and unforeseeable consequential
damages), claim, obligation, liability, penalty, fine, cost and expense
(including, without limitation, reasonable attorneys' and consultants' fees and
costs and expenses incurred in investigating, preparing, defending against or
prosecuting any litigation, or claim brought against Buyer by or on behalf of
Sunterra.
With regard to the Sunterra Bankruptcy Claim ("Sunterra Claim"), the
Buyer shall (i) assign Seller all rights and remedies to the contract between
Netplex Systems and Sunterra from which the Sunterra Claim arose, (ii) assign
Seller all rights and remedies to the contract between Netplex Systems and any
supplier that provided goods and services related to the Sunterra Claim, (iii)
promptly notify Seller in writing of any correspondence regarding the Sunterra
Claim, and (iv) provide Sellers all further information and documentation
reasonably requested by the Sellers defend the Sunterra Claim.
Sellers shall retain sole control of the defense and prosecution of the
Sunterra Claim including the employment of counsel or accountants at its cost
and expense. The Buyer shall have the right to employ counsel separate from
counsel employed by the Sellers in any such action and to participate therein,
but the fees and expenses of such counsel shall be at the Buyer's own expense.
Buyer shall cooperate in the defense and prosecution of the Sunterra Claim and
shall furnish such records, information and testimony and shall attend such
conferences, discovery proceedings and trials as may be reasonably requested in
connection therewith at the Buyer's own expense.
5.4 Bonuses and Earnout Payment. Sellers shall at closing deliver in
readily available funds the "Earnout" payments due to J. Xxxxx Xxxxx and Xxxxxxx
Xxxxxx. In addition, Sellers shall pay to Buyer and its assigns a total
principal amount of $22,708 for past due employee bonuses. Such amount shall be
payable in twelve equal monthly installments without interest, due on the first
of each month commencing on December 1, 2002. In the event any of such twelve
payments is more than ten (10) days late then a late charge equal to 10% of such
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payment shall be due, the entire remaining principal balance shall become
immediately due and payable and shall accrue interest at the rate of 19% per
annum.
ARTICLE VI
MUTUAL COVENANTS
Buyer covenants and agrees with Sellers, and Sellers, jointly and
severally, covenant and agree with Buyer as follows:
6.1 Best Efforts. The Buyer and the Sellers, respectively, shall use
its best efforts to make or obtain all consents, approvals, authorizations,
registrations and filings with all federal, state or local judicial or
governmental authorities or administrative agencies as are required in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, Sellers shall use their best efforts to obtain as
promptly as possible all other Required Consents.
6.2 Confidentiality. In recognition of the confidential nature of
certain of the information which will be provided to each party by the other,
the Buyer and the Sellers, respectively, agree to retain in confidence, and to
require its directors, officers, employees, consultants, professional
representatives and agents (collectively, its "Representatives") to retain in
confidence all information transmitted or disclosed to it by the other, and
further agrees that it will not use for its own benefit and will not use or
disclose to any third party, or permit the use or disclosure to any third party
of, any information obtained from or revealed by the other, except that each of
Buyer and Sellers may disclose the information to those of its Representatives
who need the information for the proper performance of their assigned duties
with respect to the consummation of the transactions contemplated hereby. In
making such information available to its Representatives, each of Buyer and
Sellers shall take any and all precautions necessary to ensure that its
Representatives use the information only as permitted hereby. Notwithstanding
anything to the contrary in the foregoing provisions, such information may be
disclosed (a) where it is necessary to any regulatory authorities or
governmental agencies; (b) if it is required by court order or decree or
applicable law; (c) if it is ascertainable or obtained from public or published
information; (d) if it is received from a third party not known to the recipient
to be under an obligation to keep such information confidential; (e) if the
recipient can demonstrate that such information was in its possession prior to
disclosure thereof in connection with this Agreement; or (f) by Buyer to any
potential subsequent purchaser or assignee of the Purchased Assets. If either
party shall be required to make disclosure of any such information by operation
of law, such disclosing party shall give the other party prior notice of the
making of such disclosure and shall use all reasonable efforts to afford such
other party an opportunity to contest the making of such disclosure.
6.3 Employees. Buyer will use its best efforts to employ on and after
the date hereof all of the Netplex Systems' Employees whose names are listed in
Schedule 3.26 on similar terms and conditions of employment as are in effect on
the date hereof. Sellers will use its best efforts to seek the resignation of
each of Netplex Systems' Employees as of the Effective Date.
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6.4 Warranty Claims. Sellers shall be responsible for and covenants
that it shall satisfy all valid warranty claims asserted by customers of the
Business after the Closing Date in connection with products and services
provided to such customers by the Sellers through the Effective Time. Buyer
shall administer and service any and all such warranty claims on behalf of the
Sellers. The Sellers agree to pay to the Buyer on demand the Buyer's costs
incurred in connection with any and all such administration and service
(consisting of the Buyer's labor costs and out-of-pocket expenses). In addition,
Buyer shall have no liability in connection with such warranty claims or the
administration and service of the same and the Sellers shall indemnify and hold
the Buyer harmless from and against any losses, liabilities, costs or expenses
(including reasonable attorneys' fees) incurred by the Buyer in connection
therewith.
6.5 No Implied Representations, Indemnifications or Warranties. Buyer
stipulates and agrees that it is purchasing the Purchased Assets without any
representation, indemnification or warranty by Sellers except as set forth in
this Agreement.
ARTICLE VII
CLOSING
7.1 Closing. The closing of the sale of the Purchased Assets (the
"Closing") shall take place at the offices of Buyer in Norfolk at 10:00 a.m.,
local time, on November 1, 2002 (the "Closing Date"), or such other date as may
be mutually agreed upon by the parties hereto; provided, however, as follows:
(a) if one or more conditions to this Agreement is not satisfied by such date,
the party benefiting from such condition may elect, in its sole discretion, one
or more postponements of the Closing for the purpose of enabling such condition
to be satisfied; and (b) notwithstanding the provisions of the preceding clause
(a), in no event may the Closing be postponed beyond November, 5, 2002. For the
purposes of passage of title and risk of loss, allocation of expenses,
adjustments and other economic or financial effects of the transactions
contemplated hereby, the Closing when completed shall be deemed to have occurred
at 12:01 a.m., local time, on the Closing Date (the "Effective Time").
7.2 Deliveries by Sellers. At the Closing, Sellers shall deliver or
cause to be delivered to Purchaser the following:
(a) A certificate of the President of each of Sellers confirming
that the representations, warranties and covenants of each of the
Sellers are true and correct as of the Closing Date.
(b) A copy of all corporate resolutions authorizing the execution,
delivery and performance of the Sellers' Agreements, and the
consummation of the transactions contemplated therein, accompanied by
the certification of the Secretary of each of the Sellers to the effect
that such resolutions are in full force and effect and have not been
amended, modified or rescinded.
(c) Good standing certificates from the Secretary's of State of
the States of Delaware, New York and North Carolina;
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(d) Evidence of the removal of any Liens (other than Permitted
Liens) including, but not limited to releases from any of Sellers'
lenders or other creditors that have any Lien applying to the Purchase
Assets;
(e) Evidence that all Required Consents have been obtained or
satisfied;
(f) Assignments and Assumption of Leases or subleases transferring
Sellers' leasehold interests in the Real Property Leases or subleases
to Buyer (the "Assignment and Assumption"), in the form reasonably
acceptable to Buyer;
(g) Bills of Sale and Assignment and such other instruments of
transfer as Buyer may request to convey and vest in Buyer all of
Sellers' right, title and interest in and to all of the remaining
Purchased Assets, free and clear of all Liens (other than Permitted
Liens), in the form reasonably acceptable to Buyer. For purposes of
this Agreement, the term "Permitted Liens" means (i) Liens for Taxes
not yet due and payable; (ii) any liens created by operation of law for
lessors; and (iii) any imperfections of title or encumbrances that will
not have a material adverse effect on the Business.
7.3 Deliveries by Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Sellers the following:
(a) An Instrument of Assumption of the liabilities to be assumed
by Buyer pursuant to Section 1.4(b), in a form reasonably acceptable to
Sellers; and
(b) The original Secured Commercial Notes marked "Cancelled - Paid
in Full", the Preferred Stock Certificate of Netplex Systems, Inc. and
a written statement relinquishing any and all right to the Preferred
Stock of The Netplex Group, Inc..
(c) Evidence of cancellation of all UCC filings related to the
Sellers.
7.4 Deliveries by Sellers and Buyer. Each of Sellers and Buyer shall
execute and deliver, or cause to be executed and delivered, to the other an
Assignment and Assumption of Leases or subleases transferring Sellers' leasehold
interests in the Real Property Leases or subleases to Buyer (the "Assignment and
Assumption"), in the form reasonably acceptable to Buyer and Sellers.
7.5 Further Assurances. Sellers shall, at any time on or after the
Closing Date, take any and all steps reasonably requested by Buyer to place
Buyer in possession and operating control of the Purchased Assets and the
Business, and will do, execute, acknowledge and deliver all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be reasonably requested by Buyer for the more effective transfer to and
reduction to possession of Buyer, or its successors or assigns, of any of the
Purchased Assets.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Seller. Each of the Sellers, jointly and
severally, shall indemnify, defend and hold harmless Buyer and its officers,
directors and affiliates (the "Buyer Indemnitees") from, against and with
respect to any and all action or cause of action, loss, damage (including,
without limitation, all foreseeable and unforeseeable consequential damages),
claim, obligation, liability, penalty, fine, cost and expense (including,
without limitation, reasonable attorneys' and consultants' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding, demand or request for action by any
governmental or administrative entity), of any kind or character (a "Loss")
arising out of or in connection with any of the following:
(a) any breach of any of the representations or warranties of
Sellers contained in or made pursuant to this Agreement or any transfer
instrument or other certificate or document delivered by Sellers
pursuant to this Agreement;
(b) any failure by Sellers to perform or observe, or to have
performed or observed, in full, any covenant, agreement, obligation or
condition to be performed or observed by it pursuant to this Agreement;
(c) any and all liabilities and obligations of Sellers, of any
kind or nature whatsoever, whether accrued, absolute, contingent or
otherwise, known or unknown, except for obligations expressly assumed
by Buyer under Section 1.4(b);
(d) any noncompliance with the provisions of any applicable bulk
sales or fraudulent transfer laws (if applicable with respect to the
transactions contemplated by this Agreement);
(e) any use, release, threatened release, emission, generation,
storage, transportation, disposal or arrangement for the disposal of
any hazardous materials by Sellers or any prior owner or operator of
the Purchased Assets to Sellers' knowledge, including, without
limitation, the cost of any environmental response action or liability
under the Comprehensive Environmental Response, Compensation and
Liability Act whether such Loss accrues, is required or is necessary
prior to the Effective Time, to the full extent that such Loss is
attributable, in whole or in part, directly or indirectly, to the
presence, use, emission, generation, storage, transportation, release,
threatened release, disposal, or arrangements for disposal of Hazardous
Materials by any person on the property included in the Purchased
Assets or on any other properties to which Sellers, its subsidiaries or
affiliates or any other prior owner or operator of the Purchased Assets
has sent or arranged for the disposal of Hazardous Materials prior to
the Effective Time (all terms used in this paragraph (e) shall be given
the meaning provided under the Environmental Laws); or
(f) any product or component thereof manufactured, distributed or
sold by, or any services provided by, Sellers prior to the Effective
Time, provided that the
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indemnification under this subsection will only come into effect after
Buyers have diligently pursued all rights against third parties under
the applicable contracts.
8.2 Notice of Claim. When seeking to be indemnified hereunder, the
Buyer, shall promptly notify Seller in writing of any claim for recovery,
specifying in reasonable detail the nature of the Loss. The Buyer shall provide
to the Sellers as promptly as practicable thereafter all information and
documentation reasonably requested by the Sellers to verify the claim asserted.
The failure of the Buyer to notify the Sellers on a timely basis will not
relieve the Sellers of any liability that it may have to the Buyer, except to
the extent that the Buyer demonstrates that the defense of such action is
prejudiced by the Sellers' failure to give such notice.
8.3 Defense. If the facts pertaining to a Loss arise out of the claim
of any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Sellers may, by giving written
notice to the Buyer within 30 days following its receipt of the notice of such
claim, elect to assume the defense or the prosecution thereof, including the
employment of counsel or accountants at its cost and expense; provided, however,
that the Sellers can only assume the defense if (i) it provides evidence
acceptable to the Buyer that it will have the financial resources to defend the
claim and satisfy its indemnification obligations; (ii) it obtains counsel which
is satisfactory to the Buyer; (iii) the third party claim involves only money
damages and does not seek an injunction or other equitable relief; and (iv) the
Indemnifying Party conducts the defense of the claim actively and diligently.
The Buyer shall have the right to employ counsel separate from counsel employed
by the Sellers in any such action and to participate therein, but the fees and
expenses of such counsel shall be at the Buyer's own expense. Whether or not the
Sellers chooses so to defend or prosecute such claim, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall furnish such
records, information and testimony and shall attend such conferences, discovery
proceedings and trials as may be reasonably requested in connection therewith.
8.4 Other Remedies. Except with respect to a Loss arising out of a
breach of contract claim for which Buyer shall be limited to claims for
indemnification under this Section 8, the foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory, equitable or common
law remedy any party may have as a result of a Loss.
8.5 Right to Offset. Sellers and Buyer agree that if Buyer should
suffer any Loss described in Section 8.1 above, then, in addition to, and
without limitation of, any other rights or remedies to which Buyer may be
entitled as a result of such Loss, Buyer shall have the right to offset the
amount of such Loss against any payment or payments which may be due to Sellers
from Buyer.
8.6 Reduction by Insurance Proceeds. The amount payable by an Sellers
to an Buyer with respect to a Loss shall be reduced by the amount of any
insurance proceeds received by the Buyer with respect to the Loss, and each of
the parties hereby agrees to use its best efforts to collect any and all
insurance proceeds to which it may be entitled in respect of any Loss.
8.7 Time for Claims. Any claim asserted with respect to the items
enumerated in Sections 8.1 must be submitted to the Sellers in writing, or
invoked in official proceedings,
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within 24 months after the Effective Time, except for claims for Losses
resulting from a breach of Sellers' representations and warranties set forth in
Section 3.17, which may be made within the time period required under the
applicable statute of limitations.
8.8 Limitation. Notwithstanding the provisions of Section 8.1, Sellers
shall not have any indemnification obligation under Section 8.1(a) of this
Agreement unless and until the aggregate amount of the Losses of the Buyer
exceeds $50,000 in the aggregate, whereupon the Sellers shall be liable to
indemnify the Buyer to the extent of the entire amount of such Losses.
ARTICLE IX
MISCELLANEOUS
9.1 Survival of Representations. All representations and warranties of
the parties hereto contained in this Agreement or otherwise made in writing in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement and the Closing hereunder for a period of 18
months, except for representations and warranties with respect to taxes. The
right to indemnification, payment of damages or other remedy based on the
representations and warranties of Sellers, and on covenants, agreements and
obligations herein of Sellers will not be affected by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired), at any time, whether before or after the execution and delivery of
this Agreement or the Closing Date, with respect to the accuracy or inaccuracy
of or compliance with, any such representation, warranty, covenant, agreement or
obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance with any
covenant, agreement, or obligation, will not affect the right to
indemnification, payment of damages or other remedy based on such
representation, warranty, covenant, agreement or obligation.
9.2 Bulk Sales. The parties agree to waive the requirements, if any,
of all applicable bulk sales laws. As an inducement to Buyer to enter into such
waiver, Netplex Systems represents and warrants that it will not be rendered
insolvent by the transactions contemplated by the Buyer Agreements, and all
debts, obligations and liabilities relating to the Business that are not
expressly assumed by Buyer under this Agreement will be promptly paid and
discharged by Sellers as and when they become due. Sellers represent and warrant
that the sale of the Purchased Assets pursuant to this Agreement does not
constitute a "bulk sale" within the meaning of applicable law.
9.3 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense. However, in the event the sale of the Purchased Assets
is not consummated as a result of Sellers' breach of this Agreement or other
failure on the part of Sellers to close, then in addition to any other liability
which Sellers' may have to Buyer, Sellers shall pay all of Buyer's expenses
incurred in connection with this transaction, including without limitation all
attorney's fees.
9.4 Publicity. Each of the Sellers and Buyer, respectively, agrees it
will not make any press releases or other announcements prior to the Closing
with respect to the transactions
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contemplated hereby, except as required by applicable law, without the prior
approval of the other party.
9.5 Best Efforts. Each party hereto agrees to use its best efforts to
satisfy the conditions to the Closing set forth in this Agreement and otherwise
to consummate the transactions contemplated by this Agreement.
9.6 Notices. All notices, demands and other communications made
hereunder shall be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by facsimile
(with telephone confirmation), and shall be deemed to have been given or made
when personally delivered, the day following the date deposited with such
overnight courier service or when transmitted to facsimile machine and confirmed
by telephone, addressed to the respective parties at the following addresses (or
such other address for a party as shall be specified by like notice):
If to Sellers:
Netplex Systems, Inc.
0000 Xxxxxx Xxxxxx Xxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx, President
Facsimile: 703/716-1110
If to Buyer:
Waterside Capital Corporation
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: J. Xxxx Xxxxxxxx
Facsimile: 757/626-0114
With a copy (which shall not constitute notice) to:
Xxxxxxx X. Best, III, P.C.
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Best, III, Esq.
Telephone: 757/000-0000
Facsimile: 757/624-1900
9.7 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia applicable to agreements made and to be performed
entirely within such state.
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9.8 Jurisdiction. Any action or proceeding seeking to enforce any
provision, or based on any right arising out of, this Agreement shall be brought
against any of the parties in the courts of the Commonwealth of Virginia, City
of Norfolk, or if it has, or can acquire, jurisdiction, in the United States
District Court for the Eastern District of Virginia, and each of the parties
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such action or proceeding and waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
9.9 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Buyer may assign this Agreement and its rights and obligations
hereunder to any party, provided such party agrees to undertake all
responsibilities and obligations of Buyer hereunder. In the event Buyer assigns
this Agreement, then Buyer shall have no further obligation to Seller as of the
date of such assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by Sellers without the prior written
consent of Buyer, and any purported assignment without such consent shall be
void.
9.11 Third Party Beneficiaries. Except as otherwise specifically
provided in Section 9.10 above, none of the provisions of this Agreement or any
document contemplated hereby is intended to grant any right or benefit to any
person or entity which is not a party to this Agreement.
9.12 Headings. The article and Section headings contained in this
Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
9.13 Amendments. Any waiver, amendment, modification or supplement of
or to any term or condition of this Agreement shall be effective only if in
writing and signed by all parties hereto, and the parties hereto waive the right
to amend the provisions of this Section orally.
9.14 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
9.15 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.
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9.16 Specific Performance. Sellers acknowledge that the Purchased
Assets are unique and that if Sellers fail without reasonable cause to
consummate the transactions contemplated by this Agreement such failure will
cause irreparable harm to Buyer for which there will be no adequate remedy at
law. Buyer shall be entitled, in addition to its other remedies at law or at
equity, to specific performance of this Agreement if Sellers shall, without
cause, refuse to consummate the transactions contemplated by this Agreement.
9.17 Severability. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement shall not be in any way impaired, and the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement, and there shall be automatically added in lieu thereof a provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
9.18 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto constitute the entire contract between the parties hereto pertaining to
the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings between the parties with respect to such subject
matter including, without limitation, the letter of intent reached on or about
October 8, 2002, which is hereby expressly terminated.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Assert
Purchase Agreement to be signed by its duly authorized officer as of the date
first above written.
WATERSIDE CAPITAL CORPORATION
By:_______________________________________
J. Xxxx Xxxxxxxx, President
THE NETPLEX GROUP, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
NETPLEX SYSTEMS, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
THE UNDERSIGNED, XX. XXXX XXXXX AND MR. XXXXX XXXXX, HEREBY EXECUTE THIS
AGREEMENT INDIVIDUALLY TO MANIFEST THEIR AGREEMENT TO BE PERSONALLY BOUND BY
SECTIONS 2.3, NONCOMPETITION AND 9.8, JURISDICTION.
_______________________________________
Xxxx X. Xxxxx, Individually
_______________________________________
Xxxxx X. Xxxxx, Individually
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