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Exhibit 10.1
ASSET PURCHASE AGREEMENT
By and Among
GLOBAL EMPLOYMENT HOLDINGS, INC.
CAREER BLAZERS PERSONNEL SERVICES,
INC.
CAREER BLAZERS CONTINGENCY PROFESSIONALS,
INC.
CAREER BLAZERS PERSONNEL SERVICES OF
WASHINGTON, D.C., INC.
AND
CAPESUCCESS LLC
Dated as of December 29, 2006
Execution
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT
(this " Agreement ") is dated as of December 29, 2006,
by and among Global Employment Holdings, Inc., a Delaware
corporation (the " Buyer "), Career Blazers Personnel
Services, Inc., a New York corporation, Career Blazers Contingency
Professionals, Inc., a New York corporation, and Career Blazers
Personnel Services of Washington, D.C., Inc., a District of
Columbia corporation (each of such corporations, a " Seller
Constituent "; collectively, the " Seller "), and
CapeSuccess LLC, a Delaware limited liability company (the "
Seller Parent "). Unless otherwise set forth herein,
capitalized terms used herein shall have the meanings assigned to
such terms in Section 1.
RECITAL:
WHEREAS, the Buyer desires to
purchase from the Seller, and the Seller desires to sell to the
Buyer, substantially all of the property, assets and Business (as
defined herein) of the Seller, and to assume certain obligations
and liabilities of the Seller as specifically set forth herein, all
upon terms and subject to the conditions hereinafter set forth in
this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration
of the mutual representations, warranties, covenants, promises and
agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
mutually acknowledged, the Buyer and the Seller agree as
follows:
1. CERTAIN
DEFINITIONS . As used herein the following terms not otherwise
defined have the following respective meanings:
" 2006 Unused Sick/Vacation
Payments " shall mean any payment owed by Seller to any
Employee for unused sick or vacation time for the year 2006.
" Accounts Receivable "
shall mean (a) all trade accounts receivable and other rights
to payment from customers of the Seller and the full benefit of all
security for such accounts or rights to payment, including all
accounts receivable representing amounts receivable in respect of
products sold or services rendered to customers of the Seller,
(b) all other accounts or notes receivable of the Seller, and
the full benefit of all security for such accounts or notes and (c)
any claim, remedy or other right related to any of the
foregoing.
" Adverse Consequences "
shall mean all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens,
expenses, and fees, including court costs and reasonable
attorneys’ fees and expenses.
" Affiliate " shall mean as
applied to any specified Person, any other Person, directly or
indirectly, controlling, controlled by or under common control with
such specified Person.
" Assets " shall mean, with
respect to any Person, such Person’s property and assets,
real, personal or mixed, tangible and intangible, of every kind and
description.
" Assumed Liabilities "
shall have the meaning as set forth below in Section 2.3.
" Basis " shall mean any
past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis
for any specified consequence.
" Best Efforts " shall mean
the efforts that a prudent Person desirous of achieving a result
would use in similar circumstances to achieve that result as
expeditiously as possible; provided; however, that a Person
required to use Best Efforts under this Agreement will not be
thereby required to take actions that would result in a material
adverse change in the benefits to such Person of this Agreement and
the transactions contemplated hereby or to dispose of or make any
change to its business, expend any material funds or incur any
other material burden.
" Business " shall mean the
business, Assets, properties, rights and operations of the Seller,
whether or not reflected on the Books and Records of the Seller,
that are primarily used in, or primarily pertain to or relate to,
the provision of temporary and permanent employment staffing and
contingency services.
" Change of Control Bonus "
shall mean any bonus payable to any Employee by Seller as a result
of the consummation of the transactions contemplated under this
Agreement.
" Code " shall mean the
Internal Revenue Code of 1986, as amended.
" Confidential Information
" shall mean any information relating to either Party, including,
without limitation, information relating to products, services,
research, markets, developments, inventions, designs and finances,
and whether in tangible, intangible, electronic or other form,
which is made available to the other party in connection with the
transactions contemplated by this Agreement.
" Contingency Employees "
shall mean employees of the Seller who are employed by the Seller
as part of its contingency services.
" Deposit Amount " has the
meaning as set forth below in Section 2.5
" Deposit Escrow Agent "
has the meaning as set forth below in Section 2.6.
" Deposit Escrow Agreement
" has the meaning as set forth below in Section 2.6.
" Effective Time " means
the time at which the Closing is consummated.
" Employee Plans " shall
mean all "employee benefit plans" as defined by Section 3(3)
of ERISA, all specified fringe benefit plans as defined in
Section 6039D of the Code, and all other bonus, incentive
compensation, deferred compensation, profit sharing, stock option,
stock appreciation right, stock bonus, stock purchase, employee
stock ownership, savings, severance, supplemental unemployment,
layoff, salary continuation, retirement, pension, health, life
insurance, disability, accident, group insurance, vacation,
holiday, sick leave, fringe benefit or welfare plan, and any other
employee benefit plan, policy, or practice (whether qualified
or
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nonqualified), that (i) is maintained or contributed to by
the Seller or with respect to which the Seller has or may have any
liability, and (ii) provides benefits, or describes policies
or procedures applicable, to any current or former director,
officer or employee of the Seller or the dependents of any thereof,
regardless of how (or whether) liabilities for the provision of
benefits are accrued or assets are acquired or dedicated with
respect to the funding thereof.
" Employees " shall mean
all Staff Employees, Contingency Employees and Temporary Employees
of the Seller.
" Employment Taxes " means
payroll, employment, employee’s income withholding, foreign
or domestic withholding, social security, unemployment taxes, fee,
assessment, levy, tariff charge or duty of any kind whatsoever and
any interest, penalty, addition or additional amount thereon
imposed, assessed or collected by or under the authority of any
governmental body or payable under any Tax sharing arrangement or
other contract .
" Encumbrance " shall mean
any claim, lien, pledge, option, charge, easement, security
interest, right of way, encroachment, reservation, restriction,
encumbrance, or other right of any Person, or any other restriction
or limitation of any nature whatsoever.
" ERISA " shall mean the
Employee Retirement Income Security Act of 1974, as amended.
" Escrow Agreements " shall
mean the Deposit Escrow Agreement and the Indemnity Escrow
Agreement.
" Excluded Assets " shall
have the meaning as set forth below in Section 2.2.
" Excluded Liabilities "
shall have the meaning as set forth below in Section 2.4.
" Final Net Working Capital
" shall have the meaning set forth below in
Section 2.9(a).
" Financial Statements "
shall have the meaning as set forth below in Section 4.7.
" GAAP " shall mean
generally accepted accounting principles for financial reporting in
the United States applied on a basis consistent with the basis on
which the Financial Statements were prepared.
" Hired Employees " shall
have the meaning as set forth below in Section 3.3(a).
" Indemnity Escrow Agent "
has the meaning as set forth below in Section 2.6.
" Indemnity Escrow
Agreement " has the meaning as set forth below in
Section 2.6.
" Indemnity Escrow Amount "
has the meaning as set forth below in Section 2.6.
" IRS " shall mean the
United States Internal Revenue Service.
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" Knowledge " shall mean
with respect to the Seller the actual knowledge of Caress Kennedy
or Michael Roth after reasonable investigation. With respect to any
other Person, "Knowledge" shall mean the actual knowledge, after
reasonable investigation, of such individual, or of the senior
management of such entity who were primarily responsible for the
matter in question.
" Largest Customer " shall
mean the largest customer of the Seller in terms of revenue as
previously identified and agreed upon by the Seller and the
Buyer.
" Largest Customer Contract
" shall mean the existing contract by and between the Seller and
the Largest Customer.
" Largest Customer Earnout
Payment " shall have the meaning as set forth below in
Section 2.6.
" Liability " shall mean
with respect to any Person, any liability or obligation of such
Person of any kind, character or description, whether known or
unknown, absolute or contingent, accrued or unaccrued, disputed or
undisputed, liquidated or unliquidated, secured or unsecured, joint
or several, due or to become due, vested or unvested, executory,
determined, determinable or otherwise, and whether or not the same
is required to be accrued on the financial statements of such
Person.
" Most Recent Financial
Statements " shall have the meaning set forth below in Section
4.7.
" Net Working Capital "
means (a) the amount of the consolidated current assets of the
Seller included in the Transferred Assets, minus (b) the
amount of the consolidated current liabilities of the Seller
included in the Assumed Liabilities, all as determined in
accordance with GAAP. The calculation of Net Working Capital shall
be made in a manner consistent with the treatment of the items
listed on Exhibit C.
" Net Working Capital
Target " shall mean eight hundred eighty five thousand dollars
($885,000).
" Net Working Capital
Deficiency " shall have the meaning set forth below in Section
2.9(d).
" Net Working Capital
Excess " shall have the meaning set forth below in
Section 2.9(d).
" Ordinary Course of
Business " shall mean an action taken by a Person only if that
action: (i) is consistent with the past practices of such
Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person; (ii) does not require
authorization by the board of directors or shareholders of such
Person (or by any Person or similar or group of Persons exercising
similar authority); and (iii) such action does not involve an
Affiliate of that Person.
" Party " shall mean the
Buyer or the Seller.
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" Performance Bonuses "
shall mean any bonus payable to any Employees based on the overall
performance of the Business or any segment thereof, including the
performance bonus payable to Caress Kennedy for the year 2006.
" Permitted Encumbrance "
shall mean as applied to any Asset, any Encumbrance described in
Schedule 1 .
" Permits " shall mean the
licenses and permits of the Seller, including all renewals
thereof.
" Person " shall mean any
natural person, corporation, limited liability company,
partnership, organization, trust, firm, joint venture, joint-stock
company, association, unincorporated entity, or organization or
entity of any kind.
" Personal Property Leases
" shall mean leases of personal property.
" Proceeding " shall mean
any action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or
private) commenced, brought, conducted or heard by or before, or
otherwise involving, any governmental agency or court or similar
body or arbitrator.
" Purchase Price Adjustment
Statement " shall have the meaning set forth in Section
2.9(d).
" Real Estate Leases "
shall mean the real estate leases described in
Schedule 2.1(a).
" Real Property " shall
mean the building, plants and other structures or improvements
thereon relating to the properties described in the Real Estate
Leases, and, to the extent covered by the Real Estate Leases, any
and all fixtures, machinery, installations, equipment and other
property attached thereto or located thereon.
" Restrictive Agreements "
shall mean all agreements to which the Seller or its Affiliates are
a party which restrict or otherwise place limitations on employees
or former employees of the Seller and its ability to engage in
certain activities related to the Business, including but not
limited to (i) the employee’s (or former
employee’s) solicitation of any customer or employee of the
Seller and (ii) the employee’s (or former
employee’s) ability to own any interest in, manage, control,
finance, invest in, consult with, render services for a Person from
whom such the employee (or former Employee) is restricted pursuant
to the terms of such agreements.
" Security Interest " shall
mean any mortgage, pledge, lien, Encumbrance, charge, or other
security interest, other than (a) mechanic’s,
materialmen’s, and similar liens, (b) liens for Taxes
not yet due and payable (c) purchase money liens and liens
securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
" Staff Employees " shall
mean non-temporary employees of the Seller which are not
Contingency Employees.
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" Subsidiary " shall mean
as applied to any specified Person, any other Person of which such
specified Person shall at the time own, directly or indirectly,
through a Subsidiary or otherwise, at least a majority of the
outstanding capital stock (or other beneficial interests) entitled
to vote generally.
" Tax " or " Taxes "
shall mean any income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium,
property, environmental, windfall profit, customs, vehicle,
airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, foreign or
domestic withholding, social security, unemployment, disability,
real property, personal property, sales, use, transfer, value
added, alternative, add-on minimum and other tax, fee, assessment,
levy, tariff, charge or duty of any kind whatsoever and any
interest, penalty, addition or additional amount thereon imposed,
assessed or collected by or under the authority of any governmental
body or payable under any tax sharing arrangement or other contract
and any obligation to indemnify, assume or succeed to a Tax
Liability of any other Person.
" Tax Return " shall mean
any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to
be filed with or submitted to, any governmental body in connection
with the determination, assessment, collection or payment of any
Tax or in connection with the administration, implementation or
enforcement of or compliance with any applicable law relating to
any Tax.
" Temporary Employee "
shall mean an employee of the Seller other than a Staff Employee or
a Contingency Employee.
" Transferred Assets "
shall have the meaning as set forth below in Section 2.1.
2. SALE AND PURCHASE
2.1 Agreement to Purchase and
Sell Assets . Subject to the terms and conditions set forth in
this Agreement, the Seller agrees to sell, assign, transfer and
deliver to the Buyer, and the Buyer agrees to purchase, acquire and
take assignment and delivery from the Seller, at the Closing (as
hereinafter defined in Section 3.1), all of the Seller’s
rights, title and interest in and to all of the Seller’s
Assets, wherever located, used or held for use in the Business as
of the Effective Time, free and clear of all Encumbrances other
than the Permitted Encumbrances, including without limitation the
following (but excluding the Excluded Assets as hereinafter defined
in Section 2.2) (the " Transferred Assets "):
(a) the
Real Estate Leases described on Schedule 2.1(a) .
(b) any
and all, fixtures, machinery, equipment, furniture, tools, spare
parts, supplies, materials and other tangible personal property,
usually located on or at, or used in conjunction with the Business
(wherever located and whether or not carried on the Seller’s
Books and Records), together with any express or implied warranty
by the manufacturers or sellers or lessors of any item or component
thereof, to the extent transferable without notice to,
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or consent from, any third party and all maintenance records and
other documents relating thereto (collectively, the "
Equipment ");
(c) the
Personal Property Leases to which the Seller is a party;
(d) all
contracts and agreements for the purchase or sale of goods,
materials and/or services and all other contracts, commitments and
agreements of the Seller entered into in the Ordinary Course of
Business prior to the Effective Time;
(e) the
Permits, in each case to the extent transferable to the Buyer;
(f) the
intangible property of any nature owned by the Seller or in which
the Seller has any interest, and including, without limitation, all
goodwill relating to, arising from or used in connection with the
Business, all copyrights and logos, customer lists, supplier lists,
telephone and telecopy numbers, domain names, trade secrets,
patents, trademarks, candidate lists, software, databases,
websites, URLs, service marks and trade names (and the goodwill
connected with the use of any of the foregoing) (the "
Intangibles ");
(g) all
books, records, files, plans, blueprints, drawings, designs,
specifications, credit information, business records and plans,
personnel records, studies, surveys, reports, correspondence, sales
and promotional literature and other selling material, computer
software and related documentation, databases and other data used
or held for use in connection with or relating to the Business ("
Books and Records "), other than any such Books and Records
embodying or pertaining to any Excluded Asset or Excluded
Liability;
(h) claims
against third parties whether choate or inchoate, known or unknown,
contingent or non-contingent, including insurance claims for
casualty losses, related to events occurring prior to the Effective
Time, including but not limited to those set forth on
Schedule 2.1(h) ;
(i) all
insurance benefits, including rights, proceeds and settlements
arising from or relating to the Transferred Assets or the Assumed
Liabilities and any occurrence of events, actions or omissions
related thereto prior to the Effective Time, including but not
limited to those set forth on Schedule 2.1(i) ;
(j) all
rights relating to deposits and prepaid expenses and claims for
refunds and rights to offset in respect thereof;
(k) all
rights relating to claims for rebates or refunds or credits of
Employment Taxes;
(l) Accounts
Receivable;
(m) account
balances remaining in Seller’s operating account pursuant to
Section 8.1; and
(n) all
notes receivable shown on the Most Recent Financial Statements.
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2.2 Excluded Assets .
Notwithstanding anything set forth herein to the contrary, the
Transferred Assets shall not include the following and such shall
remain the property of and responsibility of the Seller following
the Closing (collectively, the " Excluded Assets "):
(a) the
Seller’s rights under this Agreement, including all proceeds
paid or payable to the Seller in connection with this
Agreement;
(b) any
cash of the Seller on hand or in banks as of the Effective Time
except account balances remaining in Seller’s operating
account pursuant to Section 7;
(c) the
corporate minute books and stock records of the Seller;
(d) any
of the Seller’s right to Tax rebates or refunds, or similar
refunds, credits or rebates in respect of periods prior to the
Effective Time other than those related to Employment Taxes;
(e) all
causes of action to the extent relating to the Excluded Assets or
Excluded Liabilities;
(f) all
Employee Plans of the Seller or covering any of the Employees to
the extent such Employee Plans represent an asset of the
Seller;
(g) the
Sellers’ Assets, rights and ownership interests listed on
Schedule 2.2(g);
(h) any
Books and Records embodying or pertaining to the Excluded
Assets;
(i) any
Real Estate Leases other than those listed on
Schedule 2.1(a);
(j) all
the outstanding stock of Career Blazers Management Company, Inc., a
New York corporation, Career Blazers Service Company, Inc., a
Delaware corporation, Career Blazers Consulting Services, Inc., a
New York corporation, Career Blazers New York, Inc., a New York
corporation, Career Blazers Learning Center of Los Angeles, Inc., a
California corporation; or
(k) all
insurance policies of the Seller and the rights thereunder (except
to the extent specified in Sections 2.1(h) or 2.1(i)).
2.3 Agreement to Assign and
Assume Liabilities . At the Closing, on and subject to the
terms and conditions set forth in this Agreement, the Buyer agrees
to assume to the extent arising from and related to the Business
and the Transferred Assets all the Liabilities of the Seller other
than the Excluded Liabilities (collectively, the " Assumed
Liabilities ").
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2.4 Excluded Liabilities .
Notwithstanding anything in this Agreement to the contrary, neither
the Buyer nor its Affiliates shall assume and in no event shall be
deemed to have assumed, any of the following Liabilities of the
Seller or any of its Affiliates (the " Excluded Liabilities
"):
(a) any
of the Seller’s obligations under this Agreement or the
agreements entered into in connection herewith;
(b) any
Liability of the Seller or its Affiliates to any shareholder or
Affiliate of the Seller;
(c) any
Liability of the Seller in respect of events occurring after the
Effective Time;
(d) any
Liability of the Seller or its Affiliates for any indebtedness for
money borrowed;
(e) any
Change of Control Bonuses or Performance Bonuses;
(f) any
2006 Unused Sick/Vacation Payments, including to Temporary
Employees; and
(g) any
Liability of the Seller described on Schedule 2.4(g)
.
The Seller shall be responsible for and shall pay or otherwise
satisfy the Excluded Liabilities.
2.5 Purchase Price; Payments at
Closing . The purchase price to be paid by the Buyer to the
Seller for the Transferred Assets shall be (i) Nine Million
Dollars ($9,000,000), as adjusted pursuant to Section 2.9
below (the " Cash Purchase Price Component "), plus
(ii) the assumption of the Assumed Liabilities and
(iii) any Largest Customer Earnout Payment (in the aggregate,
the " Purchase Price "). A portion of the Purchase Price
shall be paid on or before January 3, 2007 by delivery of Five
Hundred Thousand Dollars ($500,000) (the " Deposit Amount ")
to the Deposit Escrow Agent as provided in Section 2.6 below.
The remaining portion of the Purchase Price (other than the Largest
Customer Earnout) shall be paid to the Seller at the Closing by:
(a) the assumption of the Assumed Liabilities;
(b) delivery of the Indemnity Escrow Amount to the Indemnity
Escrow Agent as provided in Section 2.8; and (c) delivery
to the Seller of the Cash Purchase Price Component less the
Deposit Amount and the Indemnity Escrow Amount. At the Closing, the
Deposit Escrow Agent shall deliver the Deposit Amount to the
Seller.
2.6 Largest Customer Earnout
Payment . On November 30, 2008, provided that the amount
of gross revenues received from the Largest Customer Contract for
the period from January 1, 2008 through November 1, 2008
(on an annualized basis) is at least equal to 80% of the amount of
gross revenues received from the Largest Customer Contract for the
period from January 1, 2006 through December 31, 2006 and
the Largest Customer has not delivered to the Buyer a written
notice of termination of the Largest Customer Contract nor have the
pricing terms with respect to the Largest Customer Contract been
changed by the Largest Customer to make them more than 20% less
favorable to the Buyer than under the terms in the Largest Customer
Contract as of the date of this Agreement, the Buyer will pay to
the Seller an additional One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) in cash (the " Largest Customer Earnout
Payment "). If the Largest Customer Earnout Payment is not
payable on November 30, 2008, it shall be paid on
January 31, 2009 if the amount of gross revenues received from
the Largest Customer Contract for the period from January 1,
2008 through
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December 31, 2008 is at least equal to 80% of the amount of
gross revenues received from the Largest Customer Contract for the
period from January 1, 2006 through December 31, 2006 and
the Largest Customer has not delivered to the Buyer a written
notice of termination of the Largest Customer Contract nor have the
pricing terms with respect to the Largest Customer Contract been
changed by the Largest Customer to make them more than 20% less
favorable to the Buyer than under the terms in the Largest Customer
Contract as of the date of this Agreement.
2.7 Deposit Escrow . On or
before January 3, 2007 the Buyer shall deposit an amount equal
to the Deposit Amount with an escrow agent jointly selected by the
Buyer and the Seller (the " Deposit Escrow Agent "). The
parties acknowledge and agree that the Deposit Escrow Amount shall
be used for the purpose of securing the Buyer’s obligations
to consummate the transactions contemplated by this Agreement. The
Deposit Amount shall be administered in accordance with the
provisions of an Deposit Escrow Agreement substantially in the form
attached hereto as Exhibit A (the " Deposit Escrow
Agreement "). The Deposit Escrow Amount shall be held as a
trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of
the Buyer and its Affiliates and the Seller and its Affiliates and
shall be held and disbursed solely for the purposes and in
accordance with the respective terms thereof. At the Closing, the
Deposit Escrow Agent shall deliver the Deposit Amount to the Seller
and the Deposit Amount shall be applied to the Cash Purchase Price
Component pursuant to Section 2.5; provided, however:
(a) If
the Buyer and the Seller mutually terminate this Agreement prior to
the Closing pursuant to Section 10.1(b), the Buyer will be
entitled to a refund of the Deposit Amount;
(b) If
the Buyer terminates this Agreement prior to the Closing pursuant
to Section 10.1(c) or Section 10.1(d), the Buyer will be
entitled to a refund of the Deposit Amount; and
(c) If
the Seller terminates this Agreement prior to the Closing pursuant
to Section 10.1(c) or Section 10.1(e), the Seller will be
entitled to retain the Deposit Amount.
2.8 Indemnification Escrow
. At Closing, the Buyer shall deposit an amount equal to One
Million Three Hundred Fifty Thousand Dollars ($1,350,000) (the "
Indemnity Escrow Amount ") with an escrow agent jointly
selected by the Buyer and the Seller (the " Indemnity Escrow
Agent "). The parties acknowledge and agree that the Indemnity
Escrow Amount shall be used for the purpose of securing the
Seller’s indemnification obligations pursuant to
Section 12 and the Seller’s purchase price adjustment
obligations, if any, pursuant to Section 2.9 to the extent
such obligations are equal to or less than $250,000. The Indemnity
Escrow Amount shall be administered in accordance with the
provisions of an Indemnity Escrow Agreement substantially in the
form attached hereto as Exhibit B (the " Indemnity
Escrow Agreement "). The Indemnity Escrow Amount shall be held
as a trust fund and shall not be subject to any lien, attachment,
trustee process or any other judicial process of any creditor of
the Buyer and its Affiliates and the Seller and its Affiliates and
shall be held and disbursed solely for the purposes and in
accordance with the respective terms thereof.
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2.9 Purchase Price
Adjustment .
(a) As
soon as practicable, but not later than thirty (30) days after
the Closing Date, the Seller will prepare and deliver to the Buyer
the calculation of the actual Net Working Capital of the Seller as
of the Effective Time (the " Final Net Working Capital ")
and the calculation of the amount of any overpayment or
underpayment of Purchase Price as a result of the difference
between the Final Net Working Capital and the Net Working Capital
Target (the " Purchase Price Adjustment Statement "). The
Buyer shall give the Seller and its advisors reasonable access to
the Seller’s Books and Records and personnel needed to
prepare the Purchase Price Adjustment Statement.
(b) Within
thirty (30) days of receiving the Purchase Price Adjustment
Statement, the Buyer will notify the Seller of any dispute with
respect to the Purchase Price Adjustment Statement, specifying the
dispute in reasonable detail. If the Buyer does not notify the
Seller of a dispute within this period, the Purchase Price
Adjustment Statement shall be final and binding.
(c) If
the Buyer timely notifies the Seller of a dispute under
Section 2.9(b) above, and the dispute is not resolved within
seven (7) days after the date of such notice, the Seller and
the Buyer will select an independent accounting firm (excluding any
accounting firm used by a party hereto) to resolve the disputed
items and make a determination of the proposed adjustments with
respect to the Purchase Price Adjustment Statement. If the Seller
and the Buyer cannot agree on such an independent accounting firm
within three (3) business days, each of the Seller and the
Buyer shall select such an independent accounting firm and those
two firms shall select a third such independent accounting firm to
resolve the disputed items and make a determination of the proposed
adjustments with respect to the Purchase Price Adjustment
Statement. Such determination will be made within sixty
(60) days after such selection and will be binding upon the
parties hereto. The fees, costs and expenses of the accounting firm
so selected will be borne by the party whose positions generally
did not prevail in such determination, or if the accounting firm
determinates that neither party could be fairly found to be the
prevailing party, the such fees, costs and expenses will be borne
50% by the Seller and 50% by the Buyer.
(d) If
the Final Net Working Capital is more than $60,000 greater than the
Net Working Capital Target as reflected in the Purchase Price
Adjustment Statement, within three (3) business after the
Purchase Price Adjustment Statement becomes final and binding on
the parties, the Buyer shall cause the payment of an amount equal
to the difference between the Final Net Working Capital and the Net
Working Capital Target to an account specified by the Seller.
(e) If
the Final Net Working Capital is more than $60,000 less than the
Net Working Capital Target as reflected in the Purchase Price
Adjustment Statement, within three (3) business after the
Purchase Price Adjustment Statement becomes final and binding on
the parties, (i) the Buyer and Seller shall jointly instruct
the Indemnity Escrow Agent to release an amount equal to the Net
Working Capital Deficiency (but not exceeding $250,000) from the
Indemnity Escrow Amount to an account specified by the Buyer, and
(ii) the Seller shall cause the payment to Buyer of an amount
by which any such Net Working Capital Deficiency that exceeds
$250,000.
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2.10 Tax Cooperation;
Allocation of Taxes and Purchase Price .
(a) The
Buyer and the Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such
information and assistance relating to the Business (including,
without limitation, access to Books and Records) as is reasonably
necessary for the audit by any taxing authority, and the
prosecution or defense of any claim, suit or proceeding relating to
any Tax. The Buyer and the Seller shall retain all Books and
Records with respect to Taxes pertaining to the Business for a
period of at least six (6) years following the Closing Date.
The Buyer and the Seller shall cooperate with each other in the
conduct of any audit or other proceeding relating to Taxes
involving the Business.
(b) Except
to the extent accounted for in calculating the Net Working Capital
and assumed by the Buyer, all rent, utilities, real property Taxes,
personal property Taxes and similar ad valorem obligations levied
with respect to the Business for a period which includes (but does
not end on) the day of the Effective Time (collectively, the "
Apportioned Obligations ") shall be apportioned between the
Buyer and the Seller based on the number of days of such period
included in the taxable period before the Effective Time (with
respect to any such taxable period, the " Pre-Effective Time Tax
Period ") and the number of days of such taxable period on and
after the Effective Time (with respect to any such taxable period,
the " Post-Effective Time Tax Period "). The Seller shall be
liable for the proportionate amounts of such Apportioned
Obligations that are attributable to the Pre-Effective Time Tax
Period and the Buyer shall be liable for the proportionate amounts
of such Apportioned Obligations that are attributable to the
Post-Effective Time Tax Period. Upon receipt of any bill for real
or personal property taxes relating to the Business, each of the
Buyer and the Seller shall present a statement to the other setting
forth the amount of reimbursement to which each is entitled under
this Section 2.10(b) together with such supporting evidence as
is reasonably necessary to calculate the proration amount. The
proration amount shall be paid by the party owing it to the other
within twenty (20) business days after delivery of such statement.
In the event that either the Buyer or the Seller shall make any
payment for which it is entitled to reimbursement under this
Section 2.10(b), the other party shall make such reimbursement
promptly but in no event later than twenty (20) business days
after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with
such supporting evidence as is reasonably necessary to calculate
the amount of reimbursement.
(c) All
excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, property, transfer and similar Taxes,
levies, charges and fees (collectively, " Transfer Taxes ")
incurred in connection with the transactions contemplated by this
Agreement shall be borne 50% by the Seller and 50% by the Buyer.
The Buyer and the Seller shall cooperate in providing each other
with any appropriate resale exemption certifications and other
similar documentation. If the Seller is required by applicable law
to make the filings, reports, or returns with respect to any
applicable Transfer Taxes, the Seller shall do so, and the Buyer
shall cooperate with respect thereto as necessary and shall
reimburse the Seller for half of the amount of such Transfer Taxes
and for half of the cost of preparing the related filings, reports
or returns.
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(d) At
least ten (10) days prior to the Closing, the Buyer shall
provide the Seller a proposed allocation of the Purchase Price
among the Assets acquired by the Buyer. Such allocation is intended
to comply with the requirements of Section 1060 of the Code.
Prior to the Closing, the Buyer and the Seller shall mutually agree
on a final allocation of the Purchase Price among the Assets
acquired by the Buyer. The Seller and the Buyer shall deliver
within 30 days after the Closing Date and shall file
Form 8594 with their respective Tax Returns consistent with
such final allocation. The parties shall treat and report the
transaction contemplated by this Agreement in all respects
consistently for purposes of any Tax, including the calculation of
gain, loss and basis with reference to the Purchase Price
allocation made pursuant to this Section 2.9. The parties
shall not take any action or position inconsistent with the
obligations set forth in this Agreement. The Seller agrees to
indemnify and hold the Buyer and its Affiliates harmless and the
Buyer hereby agrees to indemnify and hold the Seller harmless, from
and against any and all losses, liabilities and expenses (including
additional income taxes and reasonable fees and disbursements of
counsel) that may be incurred by the indemnified party as a result
of the failure of the indemnifying party so to report the sale and
purchase of the Transferred Assets acquired by the Buyer hereunder
as required by applicable Laws.
2.11 Effective Time . The
Seller and the Buyer agree that, notwithstanding the actual date of
the Closing pursuant to this Agreement, the intent of the parties
is that for economic, accounting and Tax purposes the sale of the
Business and the Transferred Assets and the assumption of the
Assumed Liabilities shall be deemed to have occurred at the
Effective Time.
3. CLOSING .
3.1 Time and Place . The
closing of the sale and purchase of the Transferred Assets and the
assignment and assumption of the Assumed Liabilities (the "
Closing ") shall be held at the offices of McCarter &
English, LLP, Four Gateway Center, 100 Mulberry Street, Newark, New
Jersey 07102 as early as practicable upon the satisfaction of the
conditions set forth in Article 6 and Article 7, but in
no event later than February 28, 2007, or such other date as
the Parties shall otherwise mutually agree upon (the " Closing
Date "). Subject to the provisions of Article 10, failure
to consummate the purchase and sale provided for in this Agreement
on the date and time and at the place determined pursuant to this
Section 3.1 will not result in the termination of this
Agreement and will not relieve any party of any obligation under
this Agreement except as otherwise provided for in
Article 10.
3.2 Transactions at Closing
. At the Closing:
(a) The
Seller shall duly execute and deliver to the Buyer such deeds,
bills of sale, certificates of title, stock powers and other
instruments of assignment or transfer with respect to the
Transferred Assets as the Buyer may reasonably request to vest in
the Buyer good record and marketable title to all of the
Transferred Assets, in each case subject to no Encumbrance except
for Permitted Encumbrances.
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(b) The
Buyer shall duly execute and deliver to the Seller such instruments
of assumption with respect to the Assumed Liabilities as the Seller
may reasonably request.
(c) The
Seller will deliver to the Buyer the various certificates,
instruments and documents referred to in Section 6 below.
(d) The
Buyer will deliver to the Seller the various certificates,
instruments and documents referred to in Section 7 below.
(e) The
Buyer shall deliver the Purchase Price less the Indemnity Escrow
Amount to the Seller and the Indemnity Escrow Amount to the
Indemnity Escrow Agent, in each case by wire transfer of
immediately available funds.
(f) The
Buyer, the Seller and Indemnity Escrow Agent shall execute and
deliver the Indemnity Escrow Agreement.
(g) The
Seller shall deliver to the Buyer and the Buyer shall deliver to
the Seller all other previously undelivered documents required to
be delivered by the Seller to the Buyer or by the Buyer to the
Seller at or prior to the Closing pursuant to this Agreement.
3.3 Employees of the
Business .
(a) The
Buyer shall employ all of the Employees as of the Closing Date
(except with respect to the Employees identified in writing by
Buyer at least three business days prior to the Closing) on the
same terms and conditions of their current employment (such
Employees who are employed by the Buyer are hereinafter referred to
as " Hired Employees ") and the Seller agrees to transfer or
cause to be transferred the employment of such Employees effective
as of the Closing Date.
(b) Buyer
will permit Hired Employees to begin participation under Buyer
health and welfare plans as of the first day of the calendar month
following employment by Buyer and generally provide credit to such
employees for continuity of service dating to their hire with the
Seller. Buyer will permit Hired Employees to roll over balances
from Seller’s qualified 401(k) plan into Buyer’s 401(k)
plan.
(c) The
Seller shall have no responsibility for the provision of
continuation coverage as to the benefits under any Employee Plan
which is subject to the continuation coverage requirements of Code
Section 4980B and Sections 601-608 of ERISA or similar
provisions of state law (" COBRA "). Instead, the Buyer will
be responsible for making continuation coverage under COBRA
available (i) to any person who had timely elected such
coverage as of the Effective Time (or is still eligible as of the
Effective Time to so elect and does timely elect such coverage)
under such an Employee Plan in accordance with and to the extent
required by COBRA, and (ii) to any Eligible Individual who
experiences a "qualifying event," as defined in Code
Section 4980B(f)(3), after the Effective Time in accordance
with the requirements of COBRA.
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(d) The
Seller shall pay all Change of Control Bonuses and 2006 Unused
Sick/Vacation Payment which have been earned.
(e) The
provisions of this Agreement are for the benefit of the Buyer and
its Affiliates and the Seller and its Affiliates only and no
employee of the Seller or any other Person shall have any rights
hereunder. Nothing herein expressed or implied shall confer upon
any employee of the Seller, or legal representatives or
beneficiaries thereof, any rights or remedies, including any right
to employment or continued employment for any specified period or
to be covered under or by any employee benefit plan or arrangement,
or shall cause the employment status of any employee to be other
than terminable at will.
(f) The
Seller hereby covenants and agrees that at the request and expense
of the Buyer, from time to time, and without further consideration,
the Seller and its Affiliates shall take all such actions
reasonably necessary to enforce the terms of the Restrictive
Agreements and shall cooperate with the Buyer in any such actions
taken by the Buyer to enforce the terms thereof.
4. REPRESENTATIONS AND
WARRANTIES OF THE SELLER AND THE SELLER PARENT . Each Seller
Constituent and the Seller Parent, jointly and severally,
represents and warrants to the Buyer as follows:
4.1 Organization; Authority;
Binding Effect . Each Seller Constituent is a corporation duly
organized and validly existing in the State of its incorporation
and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted. The
Seller has all requisite power and authority to execute and deliver
this Agreement and to perform all of its agreements and obligations
under this Agreement in accordance with its terms, and such action
has been duly authorized by all necessary action by the
Seller’s shareholders and board of directors. This Agreement
has been duly executed and delivered by the Seller and constitutes
the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except to the
extent such enforceability is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other law affecting or relating to
creditors’ rights generally and general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4.2 Subsidiaries . Except
as set forth on Schedule 4.2 hereto, the Seller does
not have any Subsidiaries and does not own or hold, of record
and/or beneficially, any shares of any class of the capital stock
of any corporation or any legal and/or beneficial interests in any
partnerships, limited liability companies, business trusts or joint
ventures or in any unincorporated trade or business
enterprises.
4.3 Non-Contravention .
Neither the execution and delivery of this Agreement by the Seller
nor the consummation by the Seller of the transactions contemplated
hereby will constitute a violation of, or be in conflict with,
constitute or create a default under, or result in the creation or
imposition of any liens upon any property of the Buyer or the
Transferred Assets pursuant to (i) the respective charter
documents or by-laws of the Seller, each as amended to date;
(ii) any agreement or commitment to which the Seller is a
party or by which the Seller or any of its
15
properties is bound or to which the Seller or any of its
properties is subject; or (iii) any statute or any judgment,
decree, order, regulation or rule of any court or governmental
authority relating to the Seller.
4.4 Consents and Permits .
Except as set forth on Schedule 4.4 hereto, no material
notice to, consent, approval, order or authorization of, or
declaration or filing with, any governmental agency or authority or
other Person is required to be obtained or made by the Seller in
connection with the consummation of the transactions contemplated
by this Agreement. Schedule 4.4 lists all material
Permits obtained or required to be obtained by the Seller or any of
its employees and under which the Seller or any of its employees is
operating or bound. Such Permits (A) constitute all Permits
used or required in the conduct of the Business as presently
conducted, (B) are in full force and effect, (C) have not
been violated and (D) to the knowledge of the Seller are not
subject to any pending or threatened proceeding seeking their
revocation or limitation. To the Seller’s Knowledge, no
investigation or review by any governmental entity of the Seller or
any of its employees is pending or threatened, and no governmental
entity has notified the Seller of its intention to conduct any such
investigation or review. To the Knowledge of the Seller, the
consummation of the transactions contemplated by this Agreement
will not adversely impact any of the Permits or require any action
to be taken with respect thereto.
4.5 Title to Assets; Absence of
Encumbrances . The Seller has good and transferable title to
the Transferred Assets, free and clear of all Encumbrances other
than Permitted Encumbrances.
4.6 Brokers’ Fees.
The Seller has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
4.7 Financial Statements.
Attached hereto as Schedule 4.7 are the following
consolidated financial statements (collectively the " Financial
Statements "): unaudited balance sheets and statements of
operations, members’ deficit and cash flows as of and for the
fiscal years ended December 31, 2004 and December 31,
2005 of the Seller and unaudited balance sheets and statements of
operations and cash flows of the Seller as of and for the period
ended October 29, 2006 (the " Most Recent Financial
Statements "). The Financial Statements (including any notes
thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present
fairly in all respects the consolidated financial condition of the
Seller, as appropriate, as of such dates and the results of
operations and cash flow of the Seller for such periods, are
correct and complete, and are consistent with the Books and Records
of the Seller, as appropriate (which Books and Records are
materially correct and complete).
4.8 Undisclosed Liabilities; No
Material Change . The Seller has no material Liability (and
there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any material Liability),
except for (a) Liabilities set forth in the balance sheet
included in the Most Recent Financial Statements (including in any
notes thereto), (b) Liabilities which have arisen after the
date of the
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Most Recent Financial Statements in the Ordinary Course of
Business, (c) Liabilities disclosed in the disclosure
schedules to this Agreement, and (d) Liabilities incurred in
connection with this Agreement. Since December 31, 2005, there
has not been (a) any material adverse change in the
Transferred Assets or the operations or condition (financial or
otherwise) of the Business or of the Seller; or (b) any actual
or threatened trouble or disruption of the Seller’s relations
with its material customers. Since December 31, 2005, the
Seller has conducted the Business only in the ordinary course
consistent with past practice and has not entered into any
transaction, contract or arrangement, or made any payment or
distribution, except in the ordinary course of business, consistent
with past practice.
4.9 Legal Compliance .
Except as set forth on Schedule 4.9 hereto, the Seller
has complied in all material respects with all applicable laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or
commenced against any of them alleging any failure so to
comply.
4.10 Tax Matters . Except
as set forth on Schedule 4.10 hereto, the Seller does
not owe any material Taxes, nor has any authority made any claim
against the Sellers for Taxes, for which the Buyer could be held
liable and there are no Security Interests on any of the Assets of
the Sellers that arose in connection with any failure (or alleged
failure) to pay any Tax. All Tax Returns required to be filed by or
with respect to the Seller have been filed on a timely basis
(taking into account all applicable extensions). Other than amounts
for any unpaid Taxes of the Seller that have been adequately
accrued or reserved (in accordance with GAAP) on the balance sheet
contained in the Most Recent Financial Statements, all Taxes
required to be paid or withheld by the Seller (whether or not shown
in any Tax Return) have been timely paid in full and/or timely
withheld and either have been duly and timely paid over to the
appropriate Tax Authority or been properly set aside for such
purpose and will be duly and timely paid to the appropriate Tax
Authority, and all such filed Tax Returns were true, correct and
complete. No federal, state, local or foreign audits are presently
pending with regard to any Taxes or Tax Returns of the Seller or
the Seller Parent. Neither the Seller nor the Seller Parent has
executed any waiver of the statute of limitations on or extending
the period for the assessment of collection of any Tax from the
Seller or the Seller Parent. Neither the Seller nor the Seller
Parent have any liability for unpaid Taxes that has not been
adequately accrued or reserved (in accordance with GAAP) on the
Most Recent Financial Statements, and since the date of the Most
Recent Financial Statements neither the Seller nor the Seller
Parent has incurred any liability for Taxes other than in the
ordinary course of business on in connection with the transaction
contemplated under this Agreement.
4.11 Real Property .
(a) The
Seller does not own any Real Property.
(b)
Schedule 4.11(b) sets forth the address of each parcel
of Real Property subject to any Real Estate Lease, and a true and
complete list of all Real Estate Leases for each such leased Real
Property (including the date and name of the parties to such Lease
document).
17
The Seller has delivered or made available to the Buyer a true
and complete copy of each such Real Estate Lease document, and in
the case of any oral Lease, a written summary of the terms of such
Lease. Except as set forth in Schedule 4.11(b) , with
respect to each of the Real Estate Leases:
(i) such
Lease is legal, valid, binding, enforceable and in full force and
effect;
(ii) assuming
that the Parties obtain the consent of the landlord under each Real
Estate Lease, the transaction contemplated by this Agreement does
not require the consent of any other party to such Lease and will
not result in a breach of or default under such Real Estate Lease,
and will not otherwise cause such Real Estate Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on
identical terms following the Closing;
(iii) none
of the Seller Constituents or any other party to any Real Estate
Lease is in breach or default under such Lease, and no event has
occurred or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute such a breach or
default, or permit the termination, modification or acceleration of
rent under such Lease;
(iv) the
Seller does not owe, and will not owe in the future, any brokerage
commissions or finder’s fees with respect to any Real Estate
Lease for which the Buyer could be held liable;
(v) the other party to each Real Estate Lease is not an
Affiliate of, and otherwise does not have any economic interest in,
the Seller;
(vi) the
Seller has not collaterally assigned or granted any other Security
Interest in such Real Estate Lease or any interest therein; and
(vii) there are no Encumbrances on the Seller’s estate
or interest created by such Real Estate Lease, other than Permitted
Encumbrances.
(c) Except
as set forth in Schedule 4.11(c) , the leased Real
Property identified in Schedule (b)4.11(b) comprise all of
the real property used in, or otherwise related to, the Business;
and the Seller is not a party to any agreement or option to
purchase any real property or interest therein.
4.12 Transferred Assets .
All of the tangible Transferred Assets are (a) in good
operating condition and repair (subject only to ordinary wear and
tear), (b) are usable in the ordinary course of the Business
consistent with past practice and (c) are in the possession or
under the control of the Seller. The Transferred Assets are all the
Assets necessary for the conduct of the Businesses as presently
conducted; provided, however, that for the avoidance of doubt, the
Seller does not own or lease any of the assets utilized in
connection with the performance of certain outsourced back-office
services provided to the Seller pursuant to the Outsourcing
Agreement dated September 26, 2002, as amended by the 2006
Addendum thereto, by and between Career Blazers Personnel Services,
Inc., and Employbridge Holding Company (the " Employbridge
Agreement ").
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4.13 Contracts .
Schedule 4.13 lists the following contracts and other
agreements to which the Seller is a party:
(a) any
agreement (or group of related agreements) for the lease of
personal property to or from any Person providing payments by the
Seller in excess of Ten Thousand Dollars ($10,000) per year;
(b) any
agreement (or group of related agreements), the performance of
which will extend over a period of more than one year or which
provide for payments by the Seller in excess of Ten Thousand
Dollars ($10,000) per year;
(c) any
agreement concerning a partnership or joint venture;
(d) any
agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation
or providing severance benefits, other than notices of termination
and separation agreements entered into in contemplation of the
Closing hereunder; or
(e) any
agreement under which the Seller has advanced or loaned any amount
to any of its directors, officers, and employees.
The Seller has delivered or made
available to the Buyer a correct and complete copy of each written
agreement listed in Schedule 4.13 . With respect to
each such agreement, except as set forth in
Schedule 4.13 : (1) the agreement is legal, valid,
binding, enforceable, and in full force and effect;
(2) assuming that all required third-party consents are
obtained, the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in
Section 2 above); (3) assuming that all required
third-party consents are obtained, the Seller is not, and to the
Knowledge of the Seller no other party is, in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and
(4) the Seller has not, and to the Knowledge of the Seller no
other party has, repudiated any provision of the agreement.
4.14 Notes and Accounts
Receivable. All notes and Accounts Receivable of the Seller are
reflected properly on the Most Recent Financial Statements, are
valid receivables subject to no setoffs or counterclaims to the
Knowledge of the Seller, are current and to the Knowledge of the
Seller collectible, subject only to the reserve for bad debts set
forth on the face of the balance sheet contained in the Most Recent
Financial Statements (including in any notes thereto) as adjusted
for the passage of time through the Effective Time in accordance
with the past custom and practice of the Seller.
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4.15 Insurance .
Schedule 4.15 sets forth the following information with
respect to each insurance policy to which the Seller is a party or
under which the Seller has been covered or which involves the
Business: the name of the insurer, the name of the policyholder,
and the name of each covered insured; the policy number and the
period of coverage; and the scope and amount of coverage. With
respect to each such insurance policy: (a) the policy is
legal, valid, binding, enforceable, and in full force and effect;
(b) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in
Section 2 above); (c) neither the Seller nor any other
party to the policy is in breach or default (including with respect
to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; (d) no party
to the policy has repudiated any provision thereof; and (e) to
the Knowledge of the Seller, all claims of which the Seller has
Knowledge for which there is a Basis have been made under the
appropriate policy.
4.16 Litigation .
Schedule 4.16 sets forth each instance in which the
Seller (a) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (b) is a party or, to the
Seller’s Knowledge, is threatened to be made a party to any
action, suit, proceeding, hearing, or investigation of, in, or
before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any
arbitrator. The Seller does not have any reason to believe that any
such action, suit, proceeding, hearing, or investigation not
disclosed on Schedule 4.16 may be brought, nor, to the
Seller’s Knowledge, is any such action, suit, proceeding,
hearing or investigation threatened against, the Seller.
4.17 Employees .
(a) The
Seller is not a party to or bound by any collective bargaining
agreement, nor has the Seller experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining
disputes. The Seller has not committed any unfair labor practice.
To the Seller’s Knowledge, there is no organizational effort
presently being made or threatened by or on behalf of any labor
union with respect to employees of the Seller.
(b) The
Seller is (i) in compliance with all applicable federal, state
and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment, health
and safety and wages and hours (including but not limited to the
classification and/or treatment of employees as exempt or
non-exempt), in each case, with respect to employees and with the
terms of all employment agreements, (ii) has withheld all
amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to employees, and (iii) is
not liable in any respect for any arrears of wages or any Taxes or
any penalty for failure to comply with any of the foregoing. There
are no pending, or, to the Seller’s Knowledge, threatened,
claims, charges or actions pending against the Seller before the
Equal Employment Opportunity Commission or similar state, federal
or local agency or under any worker’s compensation policy or
long-term disability policy nor are any claims, controversies,
investigations or suits pending or, to the Seller’s
Knowledge, threatened, with respect to such laws or agreements,
either by private individuals or by governmental agencies; and all
employees are at-will. All persons who have performed services for
the Seller and have been classified as independent contractors have
satisfied the requirements of law to be so classified, and the
Seller has fully and accurately reported their compensation on IRS
Forms 1099 or other applicable tax forms for independent
contractors when required to do so.
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(c)
Schedule 4.17 sets forth (i) a complete list of
all Staff Employees currently employed by the Seller, (ii) the
respective employment dates and job titles of each such person, and
(iii) categorization of each such person as a full-time or
part-time employee.
4.18 Employee Benefits
.
(a)
Schedule 4.18(a) contains a complete and correct list
of all Employee Plans. No Employee Plan is a defined benefit plan
(as defined in Section 414(l) of the Code) and no Employee Plan is
subject to Title IV of ERISA. No Employee Plan is a "Multiemployer
Plan" within the meaning of Section 4001(a)(3) of ERISA.
Schedule 4.18(a) identifies as such any Employee Plan
that is a plan intended to meet the requirements of Section 401(a)
of the Code.
(b) The
Seller does not have any Liability or Knowledge of any facts or
circumstances that might give rise to any Liability, and the
transactions contemplated hereby will not result in any Liability
(i) for the termination of or withdrawal from any employee
pension benefit plan subject to Title IV of ERISA under
Sections 4062, 4063 or 4064 of ERISA, (ii) for any lien
imposed under Section 302(f) of ERISA or Section 412(n) of the
Code, (iii) for any interest payments required under Section
302(e) of ERISA or Section (m) of the Code, (iv) for any
excise tax imposed by Section 4971 of the Code, (v) for
any minimum funding contributions under Section 302(c)(11) of ERISA
or Section 412(c)(11) of the Code, or (vi) for withdrawal
from any Multiemployer Plan under Section 4201 of ERISA.
(c) To
the Seller’s Knowledge, the Seller has, at all times,
complied, and currently complies, in all material respects with all
applicable laws that regulate the Employee Plans.
(d) There
is no material pending or, to the Seller’s Knowledge,
threatened proceeding relating to any Employee Plan, nor to the
Seller’s Knowledge is there any Basis for any such
proceeding.
(e) The
Seller has maintained workers’ compensation coverage as
required by applicable state law through purchase of insurance and
not by self-insurance.
(f) Except
as set forth on Schedule 4.18(f) , the consummation of
the transactions contemplated hereby will not accelerate the time
of vesting or the time of payment, or increase the amount, of
compensation due to any director, employee, officer, former
employee or former officer of the Seller. No legally binding
representations have been made to any employee or former employee
of the Seller promising or guaranteeing any employer payment or
funding for the continuation of medical, dental, life or disability
coverage for any period of time beyond the end of the current plan
year (except to the extent of coverage required under COBRA or
applicable state insurance laws).
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4.19 Ownership . All of the
outstanding equity interests of each Seller Constituent are owned
and held, directly or indirectly, by the Seller Parent, in each
case free and clear of all Encumbrances, are fully paid and
nonassessable, and no Person has any right to acquire any of such
equity interests. There are no outstanding interests or securities
convertible, exercisable or redeemable for any equity interest in a
Seller Constituent, or rights, warrants, puts, calls or options
relating to such an equity interest.
4.20 Intellectual Property
. (i) The Seller owns (or has adequate rights to use pursuant
to license, sublicense, agreement or permission) all trademarks,
trade names, service marks, copyrights, software, trade secrets or
know-how (collectively, " Intellectual Property ") used by
the Seller in the Business free and clear of any lien, mortgage,
security interest, pledge, restriction, defect of title or other
claim, charge or encumbrance except as set forth on
Schedule 4.20 ; (ii) in connection with the
operation of the Business, the Seller does not infringe upon or
unlawfully or wrongfully use any material Intellectual Property
owned or claimed by any other Person; (iii) the Seller owns or
has the lawful right to use all Intellectual Property that is used
in the operation of the Business in the ordinary course or
otherwise; (iv) the Seller is not in default under, and has not
received any notice of any claim of infringement or any other claim
or proceeding relating to any of the Intellectual Property; or
(v) no present or former employee of the Seller and no other
person owns or has any proprietary, financial or other interest,
direct or indirect, in whole or in part, in any of the Intellectual
Property, or in any application therefor, which the Seller owns,
possesses or uses in its operations as now or heretofore
conducted.
4.21 Disclosure . No
representation or warranty hereunder or information contained in
any Schedule or any certificate, statement or other document
delivered by the Seller in connection herewith contains any untrue
statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein or
herein not misleading. There is no fact known to the Seller which
might materially and adversely affect the Business or the
Transferred Assets that has not been disclosed to the Buyer in this
Agreement or a certificate, statement or other document delivered
by the Seller.
5. REPRESENTATIONS AND
WARRANTIES OF THE BUYER . The Buyer represents and warrants to
the Seller as follows:
5.1 Organization and Standing
of the Buyer . The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of Delaware.
The Buyer has all requisite power and authority to execute and
deliver this Agreement and to perform all of its agreements and
obligations under this Agreement in accordance with its terms, and
such action has been duly authorized by all necessary action by the
Buyer’s shareholders and board of directors.
5.2 Corporate Approval; Binding
Effect . This Agreement has been duly executed and delivered by
the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its
terms, except to the extent such enforceability is subject to the
effect of any applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other law affecting or
relating to creditors’ rights generally and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
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5.3 Non-Contravention .
Neither the execution and delivery of this Agreement by the Buyer
nor the consummation by the Buyer of the transactions contemplated
hereby will constitute a violation of, or be in conflict with,
constitute or create a default under, or result in the creation or
imposition of any liens upon any property of the Buyer pursuant to
(a) the charter documents or by-laws of the Buyer, each as
amended to date; (b) any agreement or commitment to which the
Buyer is a party or by which the Buyer or any of its properties is
bound or to which the Buyer or any of its properties is subject; or
(c) any statute or any judgment, decree, order, regulation or
rule of any court or governmental authority relating to the
Buyer.
5.4 Consents . No material
consent, approval or authorization of, or registration,
designation, declaration or filing with, any governmental agency or
authority or other Person is required in connection with the
consummation by the Buyer of any transaction contemplated hereby,
except where the failure to obtain any such consent, approval or
authorization or to so register, qualify or file would not
reasonably be expected to adversely effect the Buyer’s
ability to consummate the transactions contemplated hereby.
5.5 Capitalization .
Following the Closing the Buyer will have sufficient capitalization
to conduct the Business and to pay its Liabilities, including the
Assumed Liabilities, as they become due.
5.6 Due Diligence Review .
The Buyer acknowledges that it has completed to its satisfaction
its own due diligence investigation with respect to the Seller. The
Buyer acknowledges and agrees that, except for the representations
and warranties of the Seller contained in Section 4, it is
purchasing the Transferred Assets, assuming the Assumed Liabilities
and acquiring the Business operated by the Seller therewith on an
AS IS/WHERE IS basis. The Buyer further acknowledges and agrees
that upon consummation of the transactions contemplated hereby, it
will have no further recourse against the Seller or its Affiliates
with respect to this Agreement and the transactions contemplated
hereby except for claims for indemnification made pursuant to and
in accordance with Article 12 and except for claims
(a) relating to fraud and willful misconduct on the
Seller’s part and (b) claims in connection with the
enforcement of the Indemnity Escrow Agreement.
6. CONDITIONS PRECEDENT
TO THE BUYER’S OBLIGATIONS . The obligation of the Buyer
to consummate the Closing shall be subject to the satisfaction at
or prior to the Closing of each of the following conditions (to the
extent noncompliance is not waived in writing by the Buyer):
6.1 Transfer Documents .
The Seller shall have executed and delivered a Bill of Sale,
Assignment and Assumption Agreement, Assignment of Trademarks and
other documents reasonably required by the Buyer to evidence the
transfer of the Transferred Assets by the Seller.
6.2 Officer’s
Certificate . The Seller shall have delivered to the Buyer in
writing, at and as of the Closing, and certified by the secretary,
assistant secretary, or equivalent officer of each Seller
Constituent, the following: (i) the certificate of
incorporation of each Seller
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Constituent certified by the Secretary of State of the state of
its organization, (ii) the bylaws of each Seller Constituent,
and (iii) the resolutions of the board of directors of each
Seller Constituent and the stockholders of each Seller Constituent
authorizing the execution and delivery of this Agreement and the
transactions contemplated hereby.
6.3 No Proceedings . No
Proceedings shall be pending, threatened or anticipated against the
Seller or the Buyer, seeking to enjoin, or materially adversely
affecting, the consummation of the transactions contemplated by
this Agreement.
6.4 Proceedings and Documents
Satisfactory . All proceedings in connection with the
transactions contemplated by this Agreement and all certificates
and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be satisfactory
in all reasonable respects to the Buyer and to the Buyer’s
counsel, and the Buyer shall have received the originals or
certified or other copies of such records and documents as the
Buyer may reasonably request.
6.5 Indemnity Escrow
Agreements . The Seller shall have delivered the Indemnity
Escrow Agreement.
6.6 Material Consents . The
Seller shall have obtained all consents and approvals with respect
to the transactions contemplated by this Agreement set forth on
Schedule 6.6 .
6.7 Employment . Caress
Kennedy shall have delivered an employment agreement with the Buyer
in form and substance reasonably satisfactory to the Buyer.
6.8 Release of Liens . All
liens on the Transferred Assets shall have been removed or
discharged, and the Seller shall have provided the Buyer evidence
of such removal acceptable to the Buyer in its sole discretion.
7. CONDITIONS PRECEDENT
TO THE SELLER’S OBLIGATIONS . The obligation of the
Seller to consummate the Closing shall be subject to the
satisfaction, at or prior to the Closing, of each of the following
conditions (to the extent noncompliance is not waived in writing by
the Seller):
7.1 Purchase Price .
Payment of the Purchase Price as set forth in Section 2.5.
7.2 Assumption Documents .
The Buyer shall have executed and delivered an Assignment and
Assumption Agreement and other documents reasonably required by the
Seller to evidence the assumption of the Assumed Liabilities by the
Buyer.
7.3 Officer’s
Certificate . The Buyer shall have delivered to the Seller in
writing, at and as of the Closing, and certified by the secretary,
assistant secretary, or equivalent officer of the Buyer, the
following: (i) the certificate of incorporation of the Buyer,
certified by the Secretary of State of the state of its
organization, (ii) the bylaws of the Buyer, and (iii) the
resolutions of the board of directors of the Buyer authorizing the
execution and delivery of this Agreement and the transactions
contemplated hereby.
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7.4 No Proceedings . No
Proceedings shall be pending, threatened or anticipated against the
Seller or the Buyer, seeking to enjoin, or materially adversely
affecting, the consummation of the transactions contemplated by
this Agreement.
7.5 Proceedings and Documents
Satisfactory . All proceedings in connection with the
transactions contemplated by this Agreement and all certificates
and documents delivered to the Seller in connection with the
transactions contemplated by this Agreement shall be satisfactory
in all reasonable respects to the Seller and its counsel, and the
Seller shall have received the originals or certified or other
copies of all such records and documents as the Seller may
reasonably request.
7.6 Indemnity Escrow
Agreement . The Buyer shall have delivered the Indemnity Escrow
Agreement.
8. COVENANTS OF THE
SELLER .
8.1 Access and
Investigation . Between the date of this Agreement and the
Closing Date, the Seller will (a) furnish Buyer with copies of
all such contracts, books and records, and other existing documents
and data as Buyer may reasonably request, and (b) furnish
Buyer with such additional financial, operating, and other data and
information as Buyer may reasonably request.
8.2 Operation of the Business
of the Seller . Between the date of this Agreement and the
Closing Date, the Seller will (and Parent Seller shall cause Seller
to):
(a) except
as otherwise provided in this Agreement, conduct the business of
the Seller only in the ordinary course of business, consistent with
past practice;
(b) use
their Best Efforts to preserve intact the current business
organization of the Seller, keep available the services of the
current officers, employees, and agents of the Seller, and maintain
the relations and goodwill with suppliers, customers, landlords,
creditors, employees, agents, and others having business
relationships with the Seller;
(c) confer
with Buyer concerning operational matters of a material nature;
(d) keep
in full force and effect insurance comparable in amount and scope
of coverage to insurance now carried with respect to the business
of Seller;
(e) perform
in all material respects all obligations under leases, agreements,
contracts and instruments relating to or affecting the business of
Seller;
(f) maintain
the books of account and records of the business of Seller in the
usual, regular and ordinary manner;
(g) comply
in all material respects with all statutes, laws, ordinances, rules
and regulations applicable to the conduct of the business of
Seller;
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(h) not
enter any employment agreement or commitment to employees of the
business of Seller or effect any increase in the compensation or
benefits payable or to become payable to any officer, director or
employee of the business of Seller;
(i) create
or permit to exist any encumbrance on the Transferred Assets;
(j) not
enter into or modify any agreement or contract included in the
Transferred Assets (other than any extension or renewal of the
Largest Customer Contract or the Employbridge Agreement), or sell,
lease, license or otherwise dispose of any Transferred Asset (other
than dispositions of obsolete assets in the ordinary course of
business); and
(k) otherwise
report periodically to Buyer concerning the status of the business,
operations, and finances of the Seller.
8.3 Negative Covenant .
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, the Seller will
not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed
in Section 4.8 is likely to occur.
8.4 Notification . Between
the date of this Agreement and the Closing Date, the Seller will
promptly notify the Buyer in writing if the Seller becomes aware of
any fact or condition that causes or constitutes a breach of any of
the Seller’s representations and warranties as of the date of
this Agreement, or if the Seller becomes aware of the occurrence
after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence
or discovery of such fact or condition. Should any such fact or
condition require any change in the Schedules hereto if the
Schedules were dated the date of the occurrence or discovery of any
such fact or condition, the Seller will promptly deliver to the
Buyer a supplement to the Schedules specifying such change. During
the same period, the Seller will promptly notify the Buyer of the
occurrence of any event that may make the satisfaction of the
conditions in Article 6 impossible or unlikely.
8.5 No Negotiation . Until
such time, if any, as this Agreement is terminated pursuant to
Article 10, the Seller will not directly or indirectly
solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to,
or consider the merits of any unsolicited inquiries or proposals
from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the
ordinary course of business) of the Seller, or any of the capital
stock of the Seller, or any merger, consolidation, business
combination, or similar transaction involving the Seller.
8.6 Best Efforts . Between
the date of this Agreement and the Closing Date, the Seller will
use its Best Efforts to cause the conditions in Article 6 to
be satisfied.
8.7 Cash in Operating
Account . The Seller will, on the Closing Date, cause its
operating deposit account to have a balance equal to the aggregate
amount of any checks previously issued in payment of Assumed
Liabilities which have not previously been paid. The
26
amount of the balance in Seller’s operating account shall
be a Transferred Asset and included in the calculation of Final Net
Working Capital. Thereafter, Seller shall not issue any additional
checks against its operating account nor otherwise permit the funds
in its operating account to be used for any purpose other than to
pay outstanding checks as they are presented for payment. Sixty
(60) days following the Closing Date, the Seller will close
its operating account and forward any remaining balance to the
Buyer.
8.8 Consent to Certain
Leases . The Seller will use its Best Efforts before Closing to
obtain any consents to assignment with respect to the assignment of
leases listed as items 3, 4 and 5 of Schedule 4.4.
9. COVENANTS OF THE
BUYER .
9.1 Best Efforts . Between
the date of this Agreement and the Closing Date, the Buyer will use
its Best Efforts to cause the conditions in Article 7 and
Section 6.6 to be satisfied.
9.2 Replacement of Letter of
Credit . The Buyer will, within thirty days following the
Closing Date, obtain the release and termination of the letter of
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