Exhibit 10.22
ASSET PURCHASE AGREEMENT
by and between
COMPUTER CONTACT SERVICE, INC.
and
EDLA STAFFING SERVICES, LLC
Dated as of March 30, 2007
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this “ Agreement
”) is entered into as of March 30, 2007, between Computer
Contact Service, Inc., a California corporation (“
Seller ”), Stanley Harper and Troy Davis
(collectively, the “ Shareholders ”, and
collectively with the Seller, the “ Seller Parties
”) on the one hand, and EDLA Staffing Services, LLC, a
California limited liability company (“ Buyer
”), on the other hand. Capitalized terms used in this
Agreement and not otherwise defined have the meanings stated in
Annex 1 .
A. Seller owns certain assets used in the conduct of
its business of providing temporary staffing, employment and
related services (the “ Business ”), as more
particularly described in this Agreement.
B. Seller desires to sell, transfer and assign to Buyer, and Buyer
desires to purchase and assume from Seller, certain assets and
related liabilities on the terms and conditions set forth in this
Agreement.
NOW THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
ARTICLE I PURCHASE AND SALE OF ASSETS;
ASSIGNMENT AND ASSUMPTION OF LIABILITIES
1.1 Sale of Assets .
1.1.1 Purchased Assets . At the Closing, upon the
terms and subject to the conditions set forth in this Agreement,
Seller will transfer, assign, convey and deliver to Buyer, and
Buyer will purchase from Seller, all of the assets of Seller
related to the Business, other than the Retained Assets (the
“ Purchased Assets ”), free and clear of all
liens, charges, claims and encumbrances, including but not limited
to the following:
(a) all of Seller’s right, title and interest in and to the
Contracts listed on Schedule 5.12 ;
(b) all of Seller’s right, title and interest in and to the
Intellectual Property listed on Schedules 5.11.1 and 5.11.2
;
(c) all of Seller’s right, title and interest in and to all
the Tangible Assets of the Business (other than the Personal
Property);
(d) all of Seller’s right, title and interest in and to all
the Intangible Assets of the Business (other than the Personal
Property)
(e) all of Seller’s leasehold interests in all real estate
used in the Business, including, but not limited to, the facilities
and, unless the leases relating to such facilities provide
otherwise, all improvements, fixtures and fittings thereon, and
easements, rights-of-way, and other appurtenants thereto; and
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(f) all of the goodwill of the Business.
1.1.2 Updates to Schedules . Each of the Schedules
referenced in Section 1.1.1 will be updated by Seller within
two (2) Business Days prior to the anticipated Closing Date such
that the following will be included among the Purchased Assets as
of such Closing Date: (i) those contracts, agreements and
arrangements entered into by Seller prior to the Closing Date; and
(ii) any rights in and to additional tangible assets or customer
obtained or acquired by Seller prior to the Closing Date.
1.2 Retained Assets . Seller will not sell, transfer,
assign or convey to Buyer and will specifically retain only the
following assets and rights as of the Closing Date (collectively,
the “ Retained Assets ”):
1.2.1 all of Seller’s right, title and interest in and
to Seller’s accounts receivable and cash accounts as of the
Closing Date; and
1.2.2 the two vehicles identified on Schedule 1.2.2
and those other items of personal property listed on Schedule
1.2.2 (collectively, the “ Personal Property
”);
1.3 Assumption of Liabilities . On the Closing Date,
Buyer will assume and agrees to pay, perform and discharge as and
when due only those liabilities related to the Purchased Assets
arising in the Ordinary Course after the Closing Date
(collectively, the “ Assumed Liabilities ”).
Buyer’s assumption of the Assumed Liabilities will be
effected by Buyer’s delivery to Seller of a duly executed
Assignment and Assumption Agreement on the Closing Date. Buyer
further acknowledges and agrees that to the extent that Seller
requires and obtains Third Party Consents with respect to any
Contract, Seller and Buyer will effect a novation of such Contract
to Buyer.
1.4 Excluded Liabilities . Seller will retain, and
Buyer will not assume, all liabilities other than the Assumed
Liabilities, including but not limited to the following: (i)
Seller’s payables as of the Closing Date; (ii) any
liabilities under the Contracts arising from claims made or
payments due and payable before the Closing Date; (iii) claims made
or payments due and payable with respect to the conduct of the
Business prior to the Closing Date; or (iv) liabilities under or in
connection with any Plans accruing prior to the Closing Date
(collectively, the “ Excluded Liabilities
”).
ARTICLE II PURCHASE PRICE; PAYMENT
2.1 Purchase Price . Buyer will purchase the
Purchased Assets and assume the Assumed Liabilities subject to the
terms and conditions hereof.
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2.2 Payment of Purchase Price .
2.2.1 At Closing . Following execution of this
agreement, Buyer will pay Seller an amount equal to Six Hundred
Thousand Dollars ($600,000), to be paid in cash or by
cashier’s check drawn on a California bank insured by the
FDIC, of which Two Hundred Thousand Dollars ($200,000) will paid by
Buyer as a down payment to Seller, and the balance of Four Hundred
Thousand Dollars ($400,000) shall be paid on the Closing Date. In
addition, Buyer shall deliver to Seller a Warrant, in a form to be
agreed upon by the parties.
2.2.2 Post-Closing . The balance of the Purchase
Price, or Five Hundred Sixty-Two Thousand Five Hundred Dollars
($562,500), will be paid by Buyer to Seller in accordance with the
terms and conditions of a promissory note (the “
Promissory Note ”), in the form attached hereto as
Exhibit “A,” and will deliver such executed Promissory
Note to Seller at the Closing, as hereinafter defined. The
obligations of Buyer pursuant to the Promissory Note shall be
secured by a guarantee agreement (the “ Guarantee
Agreement ”) to be executed by Larry Eastland in the form
attached hereto as Exhibit “B” and delivered to Seller
at the Closing, as hereinafter defined. In addition, at the
Closing, as hereinafter defined, Buyer shall execute and deliver to
the Shareholders a factoring agreement (the “ Factoring
Agreement ”) in the form attached hereto as Exhibit
“C,” pursuant to which the Shareholders shall provide
financing services to Buyer.
2.3 Tax Allocation . The Purchase Price will be
allocated to broad categories constituting components of the
Purchased Assets as follows:
2.3.1 Fifty Thousand Dollars ($50,000) for the covenants not
to compete of the Shareholders;
2.3.2 One Hundred Thousand Dollars ($100,000) for the
Purchased Assets referenced in Sections 1.1.1(a), (b), (c), (d)
and (e) ; and
2.3.3 The remainder for the Purchased Assets referenced in
Section 1.1.1(f) .
Each party will report the Transactions in accordance with the
agreed upon allocation for all federal, state, local and other tax
purposes, but such allocation will not constrain reporting for
other purposes.
2.4 Payment of Taxes . Buyer and Seller will each pay
one-half of any and all sales, transfer or use taxes due as a
result of the Transactions.
ARTICLE III CLOSING
3.1 Closing Date . The closing of the Transactions
(the “ Closing ”) will take place on the
Business Day immediately following the day upon which each of the
conditions precedent to the obligations of the parties as set forth
in Article IV have been satisfied or have been waived by the party
for whom such action is a condition, or on such earlier date as
Buyer and Seller may mutually agree (the “ Closing
Date ”). The parties agree to use their collective
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commercially reasonable efforts to cause the Closing to occur on or
before May 31, 2007.
3.2 Location of Closing . The Closing will take place
at the offices of Seller’s counsel, 2049 Century Park East,
Suite 3110, Los Angeles, CA 90067, or at such other location as
mutually agreed by the parties.
3.3 Deliveries by Seller . At or prior to each
Closing, as applicable, Seller will deliver to Buyer:
3.3.1 duly executed copies of the Transaction Documents not
previously delivered to Buyer;
3.3.2 copies of all Third Party Consents listed on
Schedule 5.12.6 that have been obtained prior to the Closing
not previously delivered to Buyer;
3.3.3 an updated set of Schedules 1.1.1(a) through
(e) ;
3.3.4 copies of all Contracts not previously delivered to
Buyer;
3.3.5 at the Closing, a certificate of the President of
Seller certifying that (i) the conditions set forth in Section
4.2 have been satisfied by Seller; and (ii) to Seller’s
Knowledge, there has not been, nor has any event occurred that
would reasonably be expected to result in, a Material Adverse
Effect;
3.3.6 the 2005 financial statements, internally prepared by
Seller without review by Seller’s accountant;
3.3.7 resolutions and related documents necessary to approve
the Seller’s sale, transfer and assignment of the Purchased
Assets to the Buyer;
3.3.8 resignations of the Employees and documentation
reasonably satisfactory to Buyer to necessary to permit the hiring
by Buyer of the Employees following the Closing Date; and an
opinion of Seller counsel reasonably satisfactory to Buyer
regarding those matters listed on Schedule 3.3.9 ; and
3.3.9 all other documents, instruments and writings required
to be delivered by the Selling Parties on or prior to the Closing
Date pursuant to this Agreement.
3.4 Deliveries by Buyer . At or prior to the Closing,
as applicable, Buyer will deliver to Seller:
3.4.1 duly executed copies of the Transaction Documents not
previously delivered to Seller;
3.4.2 at the Closing, a certificate of the President of
Buyer certifying that: (i) the conditions set forth in Section
4.3.2 and Section 4.3.3 have been satisfied by Buyer;
and (ii) to Buyer’s Knowledge, there has not been, nor has
any event occurred, that could reasonably be expected to result in
a Material Adverse Effect;
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3.4.3 all other documents, instruments and writings required
to be delivered by the Buyer on or prior to the Closing Date
pursuant to this Agreement.
ARTICLE IV CONDITIONS OF CLOSING
4.1 Conditions Precedent to Closing . The respective
obligations of each party to effect each Closing are subject to the
satisfaction of each of the following conditions, unless waived in
writing by both parties at or before such Closing:
4.1.1 No Government Actions . No court or any other
Governmental Entity has issued an order restraining or prohibiting
the Transactions herein contemplated, no Governmental Entity has
commenced or threatened in writing to commence any action or suit
before any court of competent jurisdiction or other Governmental
Entity that seeks to restrain or prohibit the consummation of the
Transactions herein contemplated or otherwise seeks a remedy which
would prohibit or materially and adversely affect the consummation
of the Transactions contemplated hereby, and no statute, rule or
regulation has been enacted by any Governmental Entity that makes
the consummation of the Transactions contemplated hereby illegal.
4.1.2 No Material Adverse Effect . There has not
been, nor has any event occurred that could reasonably be expected
to result in, a Material Adverse Effect.
4.2 Conditions to Obligations of Buyer . The
obligation of Buyer to effect the Closing is subject to the
satisfaction (or waiver by Buyer) at or before the Closing of the
following conditions:
4.2.1 Transaction Documents . Seller will have
executed and delivered each of the Transaction Documents to which
it is a party on or before the Closing Date.
4.2.2 Third Party Consents . Seller will have
obtained the required Third Party Consents on or before the
Closing.
4.2.3 Representation and Warranties . The
representations and warranties of Seller contained herein will be
true and correct in all material respects as of the Closing Date,
as if made as of the Closing Date.
4.2.4 Covenants . Seller has performed in all
material respects the covenants and obligations required to be
performed by it on or before the Closing Date.
4.2.5 Employees . The Employees of Seller identified
on Schedule 4.2.5 shall have agreed to be hired as employees of
Buyer immediately following the Closing Date.
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4.3 Conditions to Obligations of Seller . The
obligation of Seller to effect the Closing is subject to the
satisfaction (or waiver by Seller) on or before the Closing, of the
following conditions:
4.3.1 Transaction Documents . Buyer will have
executed and delivered each of the Transaction Documents to which
it is a party on or before the Closing.
4.3.2 Representations and Warranties . The
representations and warranties of Buyer contained herein will be
true and correct in all material respects as of the Closing Date,
as if made as of the Closing Date.
4.3.3 Covenants . Buyer has performed in all material
respects the covenants and obligations required to be performed by
it at or before the Closing Date.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
SELLER
The Seller Parties jointly and severally represent and warrant to
Buyer that, except as otherwise indicated on Seller’s
Disclosure Schedules attached hereto:
5.1 Organization and Related Matters . Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California. Seller has all
necessary corporate power and authority to own its properties and
to carry on its business as presently conducted and is duly
qualified or licensed to do business as a foreign corporation in
good standing in all jurisdictions in which the nature of its
businesses requires licensing or qualification, except where the
failure to be so qualified or licensed would not, individually or
in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
5.2 Authorization; No Conflicts . Seller has all
necessary corporate power and authority to execute, deliver and
perform this Agreement and to sell, convey and assign the Purchased
Assets in accordance with the terms hereof. The execution,
delivery and performance of this Agreement by Seller have been duly
and validly authorized by all necessary corporate action on
Seller’s part. This Agreement has been duly executed and
delivered by Seller and constitutes Seller’s legally valid
and binding obligation, enforceable against Seller in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting
creditors rights generally. Seller’s execution,
delivery and performance of this Agreement will not violate, or
constitute a breach or default under, Seller’s bylaws or
certificate of incorporation. Seller’s execution,
delivery and performance of this Agreement will not violate any
Law.
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5.3 Governmental Consents; Compliance with Laws .
5.3.1 Governmental Consents and Permits . No
Approvals by any Governmental Entity are required in connection
with the execution or performance of this Agreement by Seller. The
Permits listed in Schedule 5.3.1 (a) constitute all the
Permits required for the lawful ownership or occupancy of the
Purchased Assets and the lawful operation of the Business; and (b)
are valid, unimpaired and in full force and effect, are not
adversely affected by the Transactions, and may be validly conveyed
to Buyer in connection with the Transactions. Seller is not in
default or violation of any such Permit. No notice, charge,
claim, Proceeding or assertion has been received by Seller or has
been filed related to any such Permit. No suspension,
cancellation or termination of any such Permit is threatened or
imminent. Since January 1, 2000, Seller has not entered into any
agreement with, had any dispute with, or, to their Knowledge, been
investigated by, any Governmental Agency, community group or other
third party.
5.3.2 General Compliance . Seller and the
Shareholders have operated the Business in compliance with all
applicable Governmental Regulations, and all required Filings have
been timely and properly made. To Seller’s knowledge, Seller
has not received any written notice from any Governmental Entity
that any of the Purchased Assets are in material violation of any
applicable Law. Since January 1, 2000, Seller has not
conducted any material internal investigation concerning any actual
or alleged material violation of any applicable Governmental
Regulations on the part of Seller or any of its officers,
directors, employees or agents.
5.4 Legal Proceedings . There is no Order or Action
pending or, to Seller’s Knowledge, threatened against or
affecting Seller that individually or when aggregated with one or
more other Orders or Actions has or if determined adversely would
reasonably be expected to have a Material Adverse Effect.
5.5 Financial Statements . Seller has delivered to
Buyer true, correct and complete copies of the Financials and the
Interim Financials. The Financials and Interim Financials are
in accordance with Seller’s books and records, and fairly
present the financial condition and the results of operations,
changes in stockholders’ equity and cash flow of Seller as at
the respective dates of and for the periods referred to in the
Financials and Interim Financials, all in accordance with GAAP,
subject, in the case of the Interim Financials, to the absence of
notes (that, if presented, would not differ materially from those
included in the Financials). The Financials and Interim
Financials reflect the consistent application of GAAP throughout
the periods involved.
5.6 No Adverse Change . Since the date of the Interim
Financials, (a) Seller has operated the Business diligently and
only in the Ordinary Course; and (b) there has been no: (i)
Material Adverse Effect; (ii) property damage or destruction
resulting in a loss or cost to Seller of more than $20,000 in the
aggregate, whether or not covered by insurance; (iii) adverse
change, or, to Seller or the Shareholders’ Knowledge,
indication or threat of future adverse change, in Seller’s
cost structure, including any key Employee requests or demands for
increases in salary or benefits; or (iv) Listed Action.
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5.7 Subsidiaries; Conduct of Business . Seller (a)
does not own or control, nor has it ever owned or controlled,
directly or indirectly, any interest in any other corporation,
association or other business entity; and (b) is not a participant
in any joint venture, partnership or similar arrangement. Seller
and the Shareholders have conducted the Business only through
Seller and are not currently conducting any other businesses or
activities related to the Business through any other entities.
5.8 Purchased Assets . Seller has all rights, power
and authority to sell, convey, assign, transfer and deliver to
Buyer, in accordance with the terms of this Agreement,
Seller’s interest in the Purchased Assets free and clear of
all liens, charges, claims and encumbrances. The Purchased
Assets have no encumbrances or liens placed on them by Seller or
with respect to any indebtedness of Seller.
5.9 Real Property; Title to Contributed Assets; No
Encumbrances . Seller does not own any real property and
has never owned any real property. Seller’s only leased
real property is its leasehold interest in Seller’s
headquarters located at 1550 Skyway Drive, Suite 200, Bakersfield,
California 93308. Seller has delivered to Buyer an accurate and
complete copy of such lease. There exists no event of default
on the part of Seller under the headquarters lease. The
headquarters lease constitutes all of the real property used in the
Business. No portion of the leased real property, or any
buildings or improvement located on the leased real property,
violates any applicable Governmental Regulation. All of the
Purchased Assets and rights relating to the Business are held by,
and all agreements, obligations and transactions relating to the
Business have been entered into, incurred, and conducted by, Seller
rather than any of its Affiliates, including any Shareholder.
5.10 Condition and Sufficiency of Assets . The
headquarters lease and the Tangible Assets (whether leased or
owned) are in good operating condition and repair (and none is in
need of maintenance or repairs except for the ordinary, routine
maintenance and repairs that are not material in nature or cost)
and are adequate and reasonably suitable for the operation of the
Business. No condemnation or other proceeding is pending or,
to their Knowledge, threatened, that would adversely affect
Buyer’s use of the leased real property after the Closing
Date.
5.11 Intellectual Property .
5.11.1 List . Schedule 5.11.1 accurately
identifies all of the Intellectual Property used at any time in the
Business that is registered with any governmental authority (the
“ Registered Rights ”). Seller is the sole and
exclusive holder of record of the Registered Rights in the records
of the United States Patent and Trademark Office, and with respect
to state, international or foreign rights, in the records of
another registration authority. As a result of the IP
Assignments, Buyer will own the Registered Rights free and clear of
any Encumbrances or any obligation, interest or restriction under
any license or other agreement, and the Registered Rights are
valid, subsisting and free of any defect in form or compliance with
requirements of any applicable registration authority that could
render them invalid, expired, or abandoned. No rights or
licenses have been granted to any other Person with respect to any
of such Intellectual Property.
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5.11.2 Licensed Intellectual Property . Schedule
5.11.2 accurately identifies all of the Intellectual Property
used or potentially used in the Business and licensed from a third
party by Seller (the “ Licensed Rights ,” and,
together with the Registered Rights, the “ Intellectual
Property Rights ”). Seller holds valid, currently
effective, and transferable licenses to the Licensed Rights, which
licenses have been disclosed to Buyer and are accurately referenced
in Schedule 5.11.2 .
5.11.3 Ownership of Rights . Seller owns or holds a
license to the right to use all the Intellectual Property necessary
for the conduct of the Business as now conducted or proposed to be
conducted, without any conflict with or infringement of the rights
of others.
5.11.4 No Conflicts . No Seller Party has
(a) received any notice alleging that any of the Intellectual
Property Rights is invalid or making any claim as to any of the
Intellectual Property Rights; or
(b) received any notice of any default or alleged default, or state
of facts that, with notice or the lapse of time, or both, would
constitute a default on the part of any Party in the performance of
any obligation under any license or other instrument under which
Seller used or uses any Intellectual Property. To their
Knowledge, the Business as presently conducted or proposed to be
conducted does not infringe any patent, trademark, copyright or
other intellectual property right of any third party. The
consummation of the Transactions will not result in the loss or
impairment of any Intellectual Property material to the Business.
To their Knowledge, no third party has infringed, or is
infringing, any of the Intellectual Property.
5.12 Contracts .
5.12.1 Material Contracts . Schedule 5.12
lists all of the Material Contracts applicable to the Business.
5.12.2 Copies . Seller has furnished to Buyer true,
correct and complete copies of all of the Material Contracts or any
other Contract required to be listed on any Schedule.
5.12.3 Compliance . Seller and, to their Knowledge,
the other parties to the Material Contracts have complied with such
Contracts in all material respects, all of which are valid, binding
and enforceable and will not be adversely affected by the
Transactions.
5.12.4 No Default . Each Material Contract is in full
force and effect, and there exists no event or condition that, with
or without notice or lapse of time, would be a default under them,
give rise to a right to accelerate or terminate any of the Material
Contracts’ provisions, or give rise to any encumbrance on any
Purchased Asset.
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5.12.5 No Renegotiation . There are no renegotiations
of or written threats to renegotiate any material amounts paid or
payable to Seller under the Material Contracts, with any Person
having the contractual or statutory right to demand or require such
renegotiation. Neither Seller nor the Shareholders have
received any demand for such renegotiation in respect of any such
Material Contract. No customer has delivered notice to Seller
asserting that any material adjustments are required to the terms
of any Material Contracts.
5.12.6 No Consents . No notice, consent or approval
of any party to any Material Contract is
required in connection with the Contribution or the Transactions,
except such as have been obtained as of the Closing Date (each of
which required consents is listed on Schedule 5.12.6 ).
5.12.7 Purchase Commitments . None of Seller’s
purchase commitments under any of the Material Contracts is in
excess of the normal requirements of the Business in the
Ordinary
Course or at a price that is excessive relative to prevailing
practices in the industry for arms-length transactions.
5.13 Suppliers . Schedule 5.13 lists
Seller’s ten (10) largest suppliers of goods or services
(measured by dollar volume of purchases) during calendar year 2005
and during the period January 1, 2006 through October 31, 2006 and
the dollar amounts and percentages of the business that each such
supplier represented during such periods. Seller is not
engaged in any dispute with any such supplier. To their
Knowledge (a) no such supplier is considering termination,
nonrenewal, or any adverse modification of its arrangements with
Seller, and (b) the Transactions will not adversely affect the
Business’ relationship with any such supplier.
5.14 Customers . Schedule 5.14 lists
Seller’s twenty (20) largest customers (measured by dollar
volume of purchases) during calendar year 2005 and during the
period January 1, 2006 through October 31, 2006 and the dollar
amounts and percentages of the business that each such customer
represented during such periods. Seller is not engaged in any
dispute with any such customer. To their Knowledge
(a) no such customer is considering termination, nonrenewal, or any
adverse modification of its arrangements or course of dealing with
Seller, and
(b) the Transactions will not adversely affect Business’
relationship with any of such customers.
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5.15 Environmental Matters .
5.15.1 The Business and all of the Purchased Assets and any
other assets owned, leased or operated by Seller in connection with
the Business at any time (collectively “ Business
Assets ”) are, and have been, operated and maintained in
compliance with all applicable Environmental Laws. No event
has occurred that, with or without the passage of time or the
giving of notice or both, would constitute non compliance with, or
violation of, any Environmental Laws with respect to the Business,
the Business Assets or Seller’s operations of or at any of
the forgoing.
5.15.2 None of the Business Assets contains any above ground
or underground storage tanks or Hazardous Materials.
5.15.3 Neither Seller nor any of Seller’s predecessor
companies has at any time (a) manufactured, refined, treated,
stored, used, generated or handled Hazardous Materials, (b)
released, discharged, dumped or disposed of Hazardous Materials on
or onto the Business Assets or any other property not then fully
licensed and permitted for such action and otherwise in compliance
with all Environmental Laws, or (iii) arranged for or permitted
such manufacture, refining, treatment, storage, use, generation,
transportation, handling, release, discharge, dumping or
disposal.
5.15.4 None of the Business Assets or any off-site, third
party owned or leased property to which any Hazardous Materials of
Seller or the Business have been transported is listed, or to their
Knowledge, proposed for listing, on the National Priorities List
under CERCLA, or on any similar state or local registry or
inventory of hazardous waste sites maintained, and neither Seller
nor any of its predecessor companies has received notice that any
such site is considered to be a potentially responsible
party” or as liable in any way for remediation or clean-up of
any condition with respect to any Business Asset or such off-site
location.
5.15.5 Seller has not used, occupied or operated, or
permitted any use, occupancy or operation of, the Business or the
Business Assets in a manner that has given or would give rise to
any liabilities under Environmental Laws or with respect to
Hazardous Materials.
5.15.6 Seller has not by Contract, consent order, other
agreement or operation of law, assumed
(a) any obligations or liabilities of any other Person arising
under any Environmental Law, or
(b) responsibility for, either directly or indirectly, the
remediation of any condition arising from or relating to the
release or threatened release of Hazardous Materials.
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5.16 Employee Plans and Benefits .
5.16.1 General . Schedule 5.16 lists each
Plan, and correct and complete copies of each Plan and any related
trust or other funding vehicle have been furnished to Buyer by
Seller. Seller has also furnished to Buyer, with respect to
each Plan, the most recent statement of any separate investment
fund created under it and, as to any Plan subject to ERISA the most
recent actuarial report, IRS determination letter, Summary Plan
Description, Summary of Material Modifications, and Annual Report
on Form 5500. Neither Seller nor any ERISA Affiliate has ever
contributed to or otherwise participated in, or has ever been
required to contribute to or otherwise participate in, any
“multiemployer plan” as defined in Section 4001(a)(3)
of ERISA, any Plan that is or was subject to Title IV of ERISA or
Section 412 of the Code, or any “multiple employer
plan” within the meaning of Section 413(c) of the Code.
5.16.2 Qualified Plans . With respect to each
Qualified Plan:
(a) the Qualified Plan and its associated trust are qualified in
form and in operation and exempt from federal tax under Sections
401(a) and 501(a), respectively, of the Code, and have been
operated and administered in accordance with their terms and in
compliance with ERISA, the Code, and other applicable Governmental
Regulations, and to their Knowledge, nothing has occurred that
could adversely effect the qualified status of the Qualified
Plan;
(b) the Qualified Plan is not subject to Title IV of ERISA or
Section 412 of the Code, and all contributions to the Qualified
Plan have been made timely; and
(c) all amendments required to bring the Qualified Plan into
conformity with any of the applicable provisions of ERISA and the
Code have been duly adopted within the remedial amendment period
permitted under Section 401(b) of the Code.
5.16.3 Plans . With respect to each Plan:
(a) no Proceeding has been asserted, instituted or, to their
Knowledge, is threatened or pending against the Plan, any of its
trustees or fiduciaries, any of the Shareholders, Seller, or any of
the assets of any trust or the Plan, and, to their Knowledge, no
fact exists that could give rise to any claim, audit, or
investigation involving any Plan;
(b) the Plan has been maintained in accordance with both its terms
and the applicable provisions of ERISA, the Code, and other
applicable Governmental Regulations, and all contributions to the
Plan have been made timely;
(c) no “prohibited transaction,” as that term is
defined in Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to the Plan (and the Transactions will not
constitute, or directly or indirectly result in, such a
“prohibited transaction”) that could subject any Party,
any officer, director or employee of any Party, or any trustee,
administrator or other fiduciary, to a Tax or other liability in
connection with prohibited transactions under ERISA or the
Code;
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(d) the Plan is not under audit or otherwise subject to scrutiny by
the IRS, the Department of Labor, or any other Governmental
Agency;
(e) there are no violations of ERISA or other applicable
Governmental Regulations with respect to (i) Filings regarding the
Plan with the Secretary of Labor, Secretary of the Treasury, or any
other Governmental Agency, or (ii) furnishing any documents,
notices, or other disclosures to participants or beneficiaries of
the Plan, as required by ERISA, the Code, or other applicable
Governmental Regulations;
(f) the Plan could not be subject to any Taxes or penalties or
fines, whether under ERISA, the Code, or otherwise;
(g) the Plan does not provide welfare benefits (whether insured or
not) with respect to current or former of employees of Seller or
its Affiliates after retirement or other termination of service,
other than as required by COBRA and the Plan has been operated in
compliance with COBRA to the extent applicable;
(h) the Plan does not provide for severance benefits of any kind
and the Plan is not a “nonqualified deferred compensation
plan” as defined in Section 409A(d)(1) of the Code;
(i) the execution of this Agreement or the consummation of the
transactions contemplated hereby will not constitute a triggering
event under the Plan which (either alone or upon the occurrence of
any additional or subsequent event) will or may result in any
payment (whether of severance pay or otherwise), “parachute
payment” (as such term is defined in Section 280G(b)(2) of
the Code), acceleration, vesting, or increase in benefits to any
present or former employee or director of Seller or its Affiliates;
and
(j) the Plan can be amended, terminated or otherwise discontinued
by its sponsor at any time without any liability to Seller, and
Seller has not classified any individual as an independent
contractor, consultant, or non-employee, who, according to the
terms of the Plan or applicable Governmental Regulations, should
have been classified as an employee.
5.17 Employees; Labor Matters .
5.17.1 List . Schedule 5.17 contains:
(a) a list of the names, office locations, and compensation of all
full and part time Employees of the Business, and the names of all
Seller’s officers; and
(b) a description of all employee “perks” or other
benefit practices not stated in the Plans, or in Seller’s
employee handbook, for all Employees.
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5.17.2 No Liability . The consummation of the
Transactions will not give rise to any liability of Seller for
severance pay, termination pay, accrued vacation, accrued days of
sick pay or any similar payment, other than as specified in this
Agreement with respect to liabilities accruing after the Closing
Date with respect to the Employees.
5.17.3 Compliance . Seller is in compliance with all
applicable Government Regulations respecting employment practices,
terms and conditions of employment (including employment
eligibility under the Immigration Reform and Control Act of 1986,
as amended), wages and hours, equal employment opportunity, and the
payment of social security and similar taxes and are not engaged in
any unfair labor practice. Seller is not liable for any claims for
past due wages or any penalties for failure to comply with any of
the foregoing.
5.17.4 Labor Unrest . Seller is not a party to any
labor agreement with respe
