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Exhibit 10(z)
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
RGII TECHNOLOGIES, INC., BUYER
AUTOMATED INFORMATION MANAGEMENT, INC.
AND
CYNTHIA F. HARDY, SELLER
April 1, 2004
TABLE OF CONTENTS
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “ Agreement ”), is made as of April 1, 2004, by and among RGII TECHNOLOGIES, INC., a Maryland corporation (the “ Buyer ”), AUTOMATED INFORMATION MANAGEMENT, INC., a Maryland closely held corporation (the “ Company ”), and CYNTHIA F. HARDY (“ Seller ”). The Buyer, the Company and the Seller are referred to collectively herein as the “ Parties .”
RECITALS
WHEREAS, the Buyer desires to acquire all of the capital stock of the Company.
WHEREAS, the Seller is the record and beneficial owner of 100% of the issued and outstanding capital stock of the Company, which, as of the date hereof, consists of 1,000 shares of common stock, par value $.10 per share (the “ Company Shares ”).
WHEREAS, the Buyer desires to acquire and the Seller desires to sell, the Company Shares under the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS . “ Actual Working Capital ” has the meaning set forth in Section 2.5.1 below.
“ Affiliate ” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Exchange Act.
“ Affiliated Group ” means any affiliated group within the meaning of Code §1504(a) or any similar group defined under a similar provision of state, local or foreign law.
“ Agreement ” has the meaning set forth in the preface above.
“ Basket Amount ” has the meaning set forth in Section 7.5 below.
“ Buyer Party(ies) ” means the Buyer, its Affiliates and the officers, directors and representatives of such Persons; provided that (i) the Company shall be a Buyer Party after the Closing and (ii) neither the Seller nor any of the Seller’s Affiliates shall be a Buyer Party at any time.
“ Buye r” has the meaning set forth in the preface above.
“ Cash Closing Amount ” has the meaning set forth in Section 2.2 below.
“ Cash Purchase Price ” has the meaning set forth in Section 2.5.1 below.
“ CHC ” means Computer Horizons Corp., the parent of the Buyer.
“ Closing Date ” has the meaning set forth in Section 2.3 below.
“ Closing Payment Certificate ” has the meaning set forth in Section 2.4.1 below.
“ Closing ” has the meaning set forth in Section 2.3 below.
“ COBRA ” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code §4980B and of any similar state law. “ Code ” means the Internal Revenue Code of 1986, as amended.
“ Company Shares ” has the meaning set forth in the Recitals above.
“ Company’s Accountants ” means Deloitte & Touche LLP.
“ Company ” has the meaning set forth in the preface above.
“ Confidential Information ” means any information concerning the business and affairs of the Company that is not already generally available to the public.
“ Contract Disputes Act ” has the meaning set forth in Section 4.24.5 below.
“ Cost Accounting Standards ” means the United States Government Cost Accounting Standards as set forth in 48 C.F.R. 9904. “ Defense Articles ” has the meaning set forth in Section 4.30 below.
“ Defense Services ” has the meaning set forth in Section 4.30 below.
“ Determination ” has the meaning set forth in Section 2.4.2 below.
“ Direct Contract Costs ” means, with respect to any period, the aggregate amounts of labor and other direct expenses, including, without limitation, expenses for materials, subcontracts, consultants and travel.
“ Disclosure Schedules ” has the meaning set forth in Section 3.1 below.
“ Employee Benefit Plan ” means each “employee benefit plan” (as such term is defined in ERISA §3(3)) and each other employee benefit plan, program or arrangement of any kind that the Company maintains, to which the Company contributes or has any obligation to contribute, or with respect to which the Company has any Liability.
“ Employee Pension Benefit Plan ” has the meaning set forth in ERISA §3(2).
“ Employee Welfare Benefit Plan ” has the meaning set forth in ERISA §3(1).
“ Encumbrance ” means any equity, claim, lien, pledge, option, warrant, charge, demand, easement, security interest, mortgage, deed of trust, right-of-way, restriction, purchase rights, preemptive rights, encumbrance, right of setoff or adverse interest of any kind or character.
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“ Environmental Claim ” has the meaning set forth in Section 7.4 below.
“ Environmental, Health, and Safety Requirements ” shall mean all federal, state, local and foreign statutes, regulations, ordinances and other provisions having the force or effect of law, all judicial and administrative orders and determinations, all contractual obligations and all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as now or hereafter in effect.
“ ERISA Affiliate ” means each entity which is treated as a single employer with the Company for purposes of Code §414(b), (c), (m) and (o).
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.
“ ERISA Claim ” has the meaning set forth in Section 7.4 below.
“ Escrow Account ” shall have the meaning set forth in Section 2.6 below.
“ Escrow Agent ” shall have the meaning set forth in Section 2.6 below.
“ Escrow Amount ” shall have the meaning set forth in Section 2.6 below.
“ Exchange Act ” means the Exchange Act of 1934, as amended.
“ FAR ” has the meaning set forth in Section 4.24.3 below.
“ Fiduciary ” has the meaning set forth in ERISA §3(21).
“ Financial Statements ” has the meaning set forth in Section 4.7 below.
“ GAAP ” means United States generally accepted accounting principles as in effect from time to time.
“ General Claim ” has the meaning set forth in Section 7.4 below.
“ Government Contract Bid ” means any offer, proposal or quote for goods or services to be delivered to or in support of a Governmental Authority under a proposed prime contract or a proposed subcontract (at any tier) under a proposed prime contract.
“ Government Contract ” means any contract of the Company with a Governmental Authority, including without limitation any blanket purchasing agreement or task order pursuant to such a contract; the term “Government Contract” also includes any subcontract (at any tier) of the Company with another entity that holds either a prime contract with such a Governmental Authority or a subcontract (at any tier) under such a prime contract.
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“ Government-Furnished Items ” has the meaning set forth in Section 4.24.19 below.
“ Governmental Authority ” means any government or political subdivision, whether federal, state, local or foreign, or any agency or instrumentality of any such government or political subdivision, or any federal, state, local or foreign court or arbitrator.
“ Indebtedness ” means without duplication, all indebtedness or other obligation of the Company for borrowed money. For the avoidance of doubt, all deferred rent or other lease obligations set forth on Schedule 4.12 (other than capitalized lease obligations) shall be specifically excluded from this definition of “Indebtedness.”
“ Independent Accounting Firm ” shall mean PriceWaterhouseCoopers LLP or such other nationally recognized accounting firm having no relationship with the Seller, the Company Buyer and CHC and mutually agreed upon by the Buyer and the Seller.
“ Indirect Costs ” means any fringe benefits, general and administrative expenses and overhead expenses.
“ Insurance Policies ” has the meaning set forth in Section 4.17 below.
“ Intellectual Property ” means: (a) all inventions, all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, divisions, extensions, and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names, and all goodwill associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including source code, executable code, data, databases and related documentation), and (g) all other proprietary rights.
“ IRS ” is the Internal Revenue Service of the United States Department of Treasury.
“ Employment Agreement ” has the meaning set forth in Section 6.2.8 below.
“ Knowledge ” means actual knowledge and the knowledge which a director, officer and Knowledgeable Employee should have in the reasonable performance of their duties. When used with respect to the Company, “Knowledge” means both (a) the Knowledge of the directors and officers of the Company and (b) the Knowledge of the Knowledgeable Employees.
“ Knowledgeable Employees ” means each of Seller, Michael Hardy, Bette Burgess, Deon Buffaloe, Gloria Butters and Beverly Jackson.
“ Law ” means any law, statute, code, ordinance, regulation or rule of any Governmental Authority.
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“ Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in real property held by the Company.
“ Leases ” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties and other agreements with respect thereto, pursuant to which the Company holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company.
“ Liability ” means any liability (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any liability for Taxes.
“ License ” means any security clearance, permit, license, variance, franchise, order, approval, consent, certificate, registration or other authorization of any foreign, federal, provincial, state and local governments, governmental agencies, judicial authority or regulatory body, and other similar rights.
“ Losses ” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Encumbrances, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.
“ Material Adverse Effect ” means, with respect to any Person, such state of facts, event(s), change(s) or effect(s) that had, has or would reasonably be expected to have a material adverse effect on the assets, business, financial condition, results of operations, customer, supplier or employee relations of such Person taken as a whole.
“ Material Lease ” means any Lease that is material to the business of the Company as presently conducted.
“ Most Recent Balance Sheet ” means the balance sheet contained within the Most Recent Financial Statements.
“ Most Recent Financial Statements ” has the meaning set forth in Section 4.7 below.
“ Most Recent Fiscal Month End ” has the meaning set forth in Section 4.7 below.
“ Most Recent Fiscal Year End ” has the meaning set forth in Section 4.7 below.
“ Multiemployer Plan ” has the meaning set forth in ERISA §3(37).
“ Non-Compete Agreements ” has the meaning set forth in Section 6.2.11 below.
“ Order ” means any order, judgment, ruling, injunction, assessment, award, decree or writ of any Governmental Authority.
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“ Ordinary Course of Business ” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
“ Organizational Conflict of Interest ” has the meaning set forth in Section 4.27 below.
“ Party ” has the meaning set forth in the preface above.
“ Permitted Encumbrances ” means (a) Encumbrances for Taxes or governmental charges or claims not yet due and payable, (b) statutory Encumbrances of landlords, carriers, warehousemen, mechanics and materialmen and other similar Encumbrances imposed by Law in the Ordinary Course of Business for sums not yet due and payable, and (c) easements, rights-of-way, restrictions and other similar charges or Encumbrances on real property, in each case which do not materially interfere with the ordinary conduct of the business of the Company.
“ Person ” means an individual, a partnership, a corporation, a limited liability entity, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority.
“ Pre-Closing Period ” has the meaning set forth in Section 8.2 below.
“ Pre-Closing Taxes ” has the meaning set forth in Section 7.3.3 below.
“ Prohibited Transaction ” has the meaning set forth in ERISA §406 and Code §4975.
“ Purchase Price ” has the meaning set forth in Section 2.7 below.
“ Related Party ” has the meaning set forth in Section 4.29 below.
“ Related Party Agreement ” has the meaning set forth in Section 4.29 below.
“ Related Party Obligation ” has the meaning set forth in Section 4.29 below.
“ Release of Claims ” has the meaning set forth in Section 6.2.9 below.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Seller ” has the meaning set forth in the preface above.
“ Subsidiary ” means any corporation with respect to which a specified Person (or a Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors.
“ Tax ” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code §59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.
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“ Tax Asset ” means any net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction or any other credit or tax attribute that could be carried forward or back to reduce income or franchise Taxes (including, without limitation, deductions and credits related to alternative minimum Taxes) and losses or deductions deferred by the Code or other applicable Law.
“ Tax Claims ” has the meaning set forth in Section 7.4 below.
“ Tax Return ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes filed or required to be filed with a Governmental Authority, including any schedule or attachment thereto, and including any amendment thereof.
“ Taxing Authority ” means any Governmental Authority (whether federal, state, local, municipal, foreign or otherwise) responsible for the imposition, collection or administration of any Tax.
“ Technical Data ” has the meaning set forth in Section 4.30 below.
“ Transfer Taxes ” has the meaning set forth in Section 8.4 below.
“ Transaction Documents ” means, collectively, this Agreement, the Employment Agreements, the Release of Claims, the Non-Compete Agreement and the other documents and instruments to be executed and or delivered in connection with the transactions contemplated by this Agreement.
“ United States Government ” means the government of the United States of America, its agencies and instrumentalities.
“ Working Capital ” means the difference (whether positive or negative) of (a) the current assets of the Company as of the Closing Date, minus (b) the current liabilities of the Company as of the Closing Date, in each case as determined in accordance with GAAP immediately prior to the consummation of the purchase and sale of the Company Shares contemplated hereby. Notwithstanding the foregoing, the Parties intend that “current liabilities” taken into account in computing Working Capital shall include (without limitation) all liabilities for accrued or deferred Taxes allocable to taxable periods or a portion thereof ending on or before the Closing Date, balance sheet reserves for billings in excess of revenues, 401(k) plan withholdings, bonus plan accruals and the amount of transaction expenses, if any, payable after the Closing and not otherwise paid out of the Cash Closing Amount and bonuses, if any, that may become payable to Company employees after Closing as set forth on Schedule 1 hereto.
“ Working Capital Threshold ” means $1,100,000.
2. PURCHASE AND SALE OF THE COMPANY SHARES .
2.1 Basic Transaction . On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Seller, and the Seller agrees to sell to the Buyer, 100% of the issued and outstanding Company Shares for the consideration specified below in this Section 2. The purchase price for the Company Shares is $13,725,000 increased by
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the amount Actual Working Capital exceeds the Working Capital Threshold and decrease the amount Actual Working Capital is less than the Working Capital Threshold.
2.2 Cash Closing Amount . In consideration for the sale by the Seller of the Company Shares to the Buyer, at the Closing, the Buyer shall pay to the Seller $12,725,000 plus the amount by which Working Capital is estimated to exceed the Working Capital Threshold, if applicable, or minus the amount by which the Working Capital Threshold is estimated to exceed Working Capital, if applicable, such estimate as determined in accordance with Section 2.4.1 (together, the “ Cash Closing Amount ”), by wire transfer of immediately available funds to Seller’s account; and in addition the Buyer shall deposit $1,000,000 into escrow pursuant to Section 2.6 hereof.
2.3 The Closing . The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Reed Smith LLP, 1301 K Street, N.W., Suite 1100 - East Tower, Washington, DC 20005, commencing at 10:00 a.m. local time on the date of this Agreement or such other date as the Buyer and the Seller may agree (the “Closing Date”) and the Closing shall be deemed to have occurred as of 12:01 a.m. on the Closing Date. At the Closing, (i) the Seller will deliver to the Buyer the various certificates, instruments, and documents referred to in Section 6.2 below, (ii) the Buyer will deliver to the Seller the various certificates, instruments, and documents referred to in Section 6.3 below, (iii) Seller will deliver to the Buyer stock certificates representing all of Seller’s Company Shares, endorsed in blank or accompanied by duly executed assignment documents, (iv) the Buyer will deliver to the Seller the Cash Closing Amount specified in Section 2.2 above and (v) Buyer will deliver the Escrow Amount to the Escrow Agent.
2.4 Determination of Working Capital Adjustment .
2.4.1 Determination of Estimated Working Capital . Not later than three, nor more than five business days prior to the Closing Date, the Seller shall prepare and deliver to the Buyer a certificate certifying the Seller’s good faith estimate of the Working Capital of the Company as of the Closing Date, and including an estimated unaudited balance sheet of the Company as of the Closing Date and also certifying that as of Closing, Company shall have no long term Indebtedness. Such determination of Working Capital shall be in accordance with GAAP and consistent with the Company’s historical financial statements. As promptly as practicable but not later than one business day prior to the Closing, the Buyer shall identify any adjustments that it believes are required to the certificate delivered by the Seller. If the Seller disputes any such adjustments, the Buyer and the Seller shall use reasonable best efforts to resolve such dispute, after which the Seller shall re-deliver to the Buyer the certificate with such adjustments as the Parties have agreed are appropriate. (The form of certificate finally delivered pursuant to this Section 2.4.1 and acceptable to the Buyer and the Seller is referred to herein as the “ Closing Payment Certificate ” and shall be used to determine the Cash Closing Amount under Section 2.2 .)
2.4.2 Determination of Actual Working Capital . Within 45 days after the Closing Date, the Buyer will prepare and deliver to the Seller a certificate, signed by Buyer, certifying the Buyer’s determination of the actual Working Capital of the Company as of the Closing Date, and identifying any adjustments to the Purchase Price as a result of such amounts
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being greater or less than the amounts set forth on the Closing Payment Certificate. If the Seller does not object to Buyer’s certificate within 30 days after receipt, or accepts such certificate during such 30 day period, the Purchase Price shall be adjusted as set forth in Buyer’s certificate, and payment made in accordance with Section 2.5 . If the Seller objects to the Buyer’s certificate, the Seller shall notify the Buyer in writing of such objection within 30 days after the Seller’s receipt thereof (such notice setting forth in reasonable detail the basis for such objection). During such 30 day period, the Buyer shall permit the Seller access to such work papers relating to the preparation of the Buyer’s certificate, as may be reasonably necessary to permit the Seller to review in detail the manner in which the Buyer’s certificate was prepared. The Buyer and the Seller shall thereafter negotiate in good faith to resolve any such objections. If the Buyer and the Seller are unable to resolve all of such differences within twenty (20) calendar days of the Buyer’s receipt of Seller’s objections, the items in dispute will be referred for determination as promptly as practicable to the Independent Accounting Firm, which shall be jointly engaged by the Buyer, on the one hand, and the Seller, on the other hand, pursuant to an engagement letter in customary form which each of the Buyer and the Seller shall execute. If PriceWaterhouseCoopers LLP is unable to serve as the Independent Accounting Firm and the Buyer and the Seller have failed to reach agreement on an Independent Accounting Firm within ten (10) calendar days following the termination of the twenty (20) calendar-day period referred to in the immediately preceding sentence, then the Independent Accounting Firm shall be selected by the American Arbitration Association. The Independent Accounting Firm shall prescribe procedures for resolving the disputed items and in all events shall make a written determination, with respect to such disputed items only, whether and to what extent, if any, the Closing Payment Certificate and the accompanying calculations of the Working Capital and/or Indebtedness of the Company at Closing require adjustment based on the terms and conditions of this Agreement (the “ Determination ”). The Determination shall be based solely on presentations with respect to such disputed items by the Buyer and the Seller to the Independent Accounting Firm and not on the Independent Accounting Firm’s independent review; provided, that such presentations shall be deemed to include, without limitation, any work papers, records, accounts or similar materials delivered to the Independent Accounting Firm by the Buyer or the Seller in connection with such presentations and any materials delivered to the Independent Accounting Firm in response to requests by the Independent Accounting Firm. Each of the Buyer and the Seller shall use its reasonable best efforts to make its presentation as promptly as practicable following submission to the Independent Accounting Firm of the disputed items, and each such party shall be entitled, as part of its presentation, to respond to the presentation of the other party and any question and requests of the Independent Accounting Firm. The Buyer and the Seller shall instruct the Independent Accounting Firm to deliver the Determination to the Buyer and the Seller no later than thirty (30) calendar days following the date on which the disputed items are referred to the Independent Accounting Firm. In deciding any matter, the Independent Accounting Firm (i) shall be bound by the provisions of this Section 2.4.2, (ii) may not assign a value to any item greater than the greatest value for such item claimed by either the Buyer or the Seller or less than the smallest value for such item claimed by the Buyer or the Seller, and (iii) shall be bound by the express terms, conditions and covenants set forth in this Agreement, including the definition of Working Capital contained herein. In the absence of fraud or manifest error, the Determination shall be conclusive and binding upon the Buyer and the Seller. The Independent Accounting Firm shall consider only those items and amounts in the Buyer’s certificate which the Buyer and the Seller were unable to resolve. The determination of the
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Independent Accounting Firm shall be final, conclusive, non-appealable and binding upon the Buyer and the Seller for all purposes hereunder. All fees and expenses (including reasonable attorney’s fees and expenses and fees and expenses of the Independent Accounting Firm) incurred in connection with any dispute over the Buyer’s certificate shall be borne by the Parties based on the percentage which the portion of the contested amount not awarded to each Party bears to the amount actually contested by such Party.
2.5 Adjustment to Cash Closing Amount .
2.5.1 The Working Capital amount determined in accordance with Section 2.4.2 (the “Actual Working Capital”) shall be used to calculate post closing adjustments to the Cash Closing Amount by calculating the difference between $12,725,000, plus the amount by which Actual Working Capital exceeds the Working Capital Threshold, if applicable, or minus the amount by which the Working Capital Threshold exceeds the Actual Working Capital, if applicable (the “Cash Purchase Price”). If the Cash Purchase Price is less than the Cash Closing Amount, then the Seller shall pay to the Buyer an amount equal to such deficiency (plus interest thereon at an annual rate of 4% from the Closing Date to the date of payment).
2.5.2 If the Cash Purchase Price is greater than the Cash Closing Amount, then the Buyer shall pay to the Seller an aggregate amount equal to the amount of such excess (plus interest thereon at an annual rate of 4% from the Closing Date to the date of payment).
2.5.3 All payments to be made to either the Buyer or the Seller pursuant to this Section 2.5 shall be made by wire transfer of immediately available funds to Seller’s account or Buyer’s account, as applicable, within three (3) business days after the date on which Actual Working Capital is finally determined pursuant to Section 2.4 above.
2.6 Escrow . At the Closing, Buyer shall withhold $1,000,000 (the “ Escrow Amount ”), from the Seller and shall instead deliver the Escrow Amount to an escrow agent selected by Buyer and reasonably acceptable to Seller (the “ Escrow Agent ”) for deposit into escrow (the “ Escrow Account ”). The Escrow Amount shall be held pursuant to the provisions of an escrow agreement in the form of Exhibit A hereto (the “ Escrow Agreement ”). The Escrow Amount will be available to compensate Buyer for Losses as provided in Sections 7.1 and 7.3. To the extent that there is an Escrow Amount remaining in the Escrow Account which has not been reserved for claims under the Escrow Agreement, such Escrow Amount will be released to the Seller on the earlier of: (i) the date the financial statements of the Company have been audited by an auditor designated by CHC or (ii) March 31, 2005.
2.7 Purchase Price . The purchase price for the Company Shares shall be the sum of the Cash Purchase Price plus the Escrow Amount.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION .
Except for those representations and warranties expressly set forth in this Article 3, Seller makes no other representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever concerning the organization, business, assets, liabilities and operations of the Company or any other matters.
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3.1 Representations and Warranties of the Seller . Except as set forth in the attached disclosure schedules delivered by the Seller to the Buyer on the date hereof (the “ Disclosure Schedules ”), Seller represents and warrants to the Buyer that the statements contained in this Section 3.1 are correct and complete. The Disclosure Schedules shall be arranged according to the numbered and lettered paragraphs in this Section 3.1 , and any disclosure shall qualify (x) the corresponding paragraph in this Section 3.1 and (y) any other paragraph(s) in this Section 3.1 only to the extent that such disclosure clearly states that it also qualifies or applies to such other paragraph(s).
3.1.1 Authorization of Transaction . Seller has full power and authority to execute and deliver this Agreement and to perform Seller’s obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions, except as enforceability may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws from time to time in effect affecting the enforcement of creditors’ rights generally. Seller is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.
3.1.2 Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority to which Seller or the Company is subject, (B) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which Seller or the Company is a party or by which Seller or the Company is bound or to which any of Seller’s or the Company assets is subject, or (C) result in the imposition or creation of an Encumbrance upon or with respect to the Company Shares.
3.1.3 Brokers’ Fees . Except for Aronson Capital Advisors LLC, 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.
3.1.4 Ownership of Shares . Seller holds of record and owns beneficially all one thousand (1,000) of the issued and outstanding Company Shares, free and clear of all Taxes and Encumbrances. At the Closing, Seller represents the Company Shares will be transferred to Buyer or its designated Affiliate, whereupon the transferee will acquire good, valid and marketable title to the Company Shares free and clear of all Encumbrances. Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that could require Seller to sell, transfer, or otherwise dispose of any capital stock of the Company. Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Company, and there are no issued or outstanding options, warrants, purchase rights, shares, subscription rights, conversion rights, preemptive rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock.
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3.2 Representations and Warranties of the Buyer . Except as set forth in the attached Disclosure Schedules, the Buyer represents and warrants to the Seller that the statements contained in this Section 3.2 are correct and complete. The Disclosure Schedules shall be arranged according to the numbered and lettered paragraphs in this Section 3.2 , and any disclosure shall qualify (x) the corresponding paragraph in this Section 3.2 and (y) any other paragraph(s) in this Section 3.2 only to the extent that such disclosure clearly states that it also qualifies or applies to such other paragraph(s).
3.2.1 Organization of the Buyer . The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.
3.2.2 Authorization of Transaction . The Buyer has full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions, except as enforceability may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws from time to time in effect affecting the enforcement of creditors’ rights generally. The Buyer need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any Governmental Authority in order to consummate the transactions contemplated by this Agreement.
3.2.3 Noncontravention . Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority to which the Buyer is subject or any provision of its certificate of incorporation or bylaws or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets is subject.
3.2.4 Brokers’ Fees . The Buyer 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 Seller could become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
Except as set forth in the attached Disclosure Schedules, the Seller hereby represents and warrants to the Buyer that the statements contained in this Section 4 are correct and complete. The Disclosure Schedules shall be arranged according to the numbered and lettered paragraphs in this Section 4 , and any disclosure shall qualify (x) the corresponding paragraph in this Section 4 and (y) any other paragraph(s) in this Section 4 only to the extent that such disclosure clearly states that it also qualifies or applies to such other paragraph(s). The Seller and the Company hereby acknowledge that nothing in the Disclosure Schedules shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the applicable Disclosure Schedule(s) identifies such exception with particularity. Without limiting the generality of the foregoing, the mere listing (or inclusion of a copy) of a document or other item
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shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself). Except for those representations and warranties expressly set forth in Article 3 and this Article 4, Seller makes no other representations or warranties, express or implied, at law or in equity, of any kind or nature whatsoever concerning the organization, business, assets, liabilities and operations of the Company or any other matters.
4.1 Organization, Qualification, and Corporate Power . The Company is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. The Company has all requisite corporate power and authority to own, lease and operate the assets owned, leased and operated by it and to carry on its business as currently being conducted and contemplated top be conducted by it. The Company is duly authorized to conduct business and is in good standing under the laws of each jurisdiction where such qualification is required except where the failure would not have a Material Adverse Effect. Schedule 4.1 identifies the directors and officers of the Company. The Seller and the Company have delivered to the Buyer correct and complete copies of the certificate of incorporation and bylaws of the Company (as amended to date). The minute books (containing the records of meetings of the stockholders, the board of directors, and any committees of the board of directors), the stock certificate books, and the stock record books of the Company are correct, accurate and except as provided on Schedule 4.1, complete in all material respects.
4.2 Capitalization . The entire authorized capital stock of the Company consists of 10,000 shares of common stock, $.10 par value per share, of which 1,000 shares are issued and outstanding and 9,000 shares are authorized but unissued. All of the issued and outstanding Company Shares have been duly authorized, are validly issued, fully paid, and nonassessable, free of preemptive rights, and are held of record, and beneficially owned, by the Seller. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, preemptive rights, exchange rights, or other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights with respect to the Company, nor has the Company committed to issue any of the foregoing. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company.
4.3 Noncontravention . Except as set forth on Schedule 4.3 , neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any constitution, statute, regulation, rule, injunction, judgment, Order, charge, or other restriction of any Governmental Authority to which the Company is subject or any provision of the certificate of incorporation or bylaws of the Company, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice, report or other filing (whether with a Governmental Authority or other third party) or give rise to any payments or compensation under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which it is bound or to which any of its assets is subject (iii) or result in the imposition of any Encumbrance upon any of the Company Shares or the Company’s assets. Except as set forth in Schedule 4.3 , neither the Company nor the Seller needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval of
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any Governmental Authority in order for the Parties to consummate the transactions contemplated by this Agreement.
4.4 Brokers’ Fees . Except as set forth on Schedule 4.4 , the Company 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.
4.5 Title to Assets . The Company has good and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Encumbrances, excluding Permitted Encumbrances and except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.
4.6 Subsidiaries . The Corporation has no Subsidiaries. Except as set forth on Schedule 4.6 , the Company (i) has never had a Subsidiary and (ii) does not own or hold the right to acquire any shares of stock or any other security or interest in any other Person.
4.7 Financial Statements . Attached hereto as Exhibit B are the following Company financial statements (collectively, the “ Financial Statements ”): (i) audited balance sheets, statements of income, statements of cash flows and changes in stockholders’ equity, as of and for the fiscal years ended December 31, 2001 and December 31, 2002 and December 31, 2003, along with the related notes thereto (the “ Most Recent Fiscal Year End ”) for the Company; and (ii) unaudited balance sheet and statements of income, changes in stockholders’ equity, and cash flows (the “ Most Recent Financial Statements ”) as of and for the two months ended February 29, 2004 (the “ Most Recent Fiscal Month End ”) for the Company. The Financial Statements (including the notes thereto) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except that the unaudited interim financial statements will not contain any footnotes, may not contain all adjustments required by GAAP and will be subject to year-end adjustment); present fairly the financial condition, the results of operations, shareholders’ equity and cash flow of the Company in all material respects; are correct and complete; and are consistent with the books and records of the Company.
4.8 Events Subsequent to Most Recent Fiscal Year End . Except as set forth on Schedule 4.8 , since the Most Recent Fiscal Year End, there has not been any change in the business, financial condition, operations, results of operations, assets, customer, supplier or employee relations (other than changes in general economic conditions) which has had, or is reasonably likely to have, a Material Adverse Effect on the Company or its business as presently conducted. Without limiting the generality of the foregoing, since that date: 4.8.1 the Company has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, that are material, either individually or in the aggregate, to the Company’s business, outside the Ordinary Course of Business;
4.8.2 the Company has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) either involving more than $25,000 or outside the Ordinary Course of Business;
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4.8.3 no party (including the Company) has accelerated, terminated, made material modifications to, or cancelled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) involving more than $25,000 to which the Company is a party or by which it is bound nor, to the Knowledge of the Seller and the Company, threatened any of the foregoing actions;
4.8.4 except for Permitted Encumbrance, the Company has not caused or permitted any Encumbrance to be imposed upon any of its assets, tangible or intangible, that are material, either individually or in the aggregate, to the Company’s business;
4.8.5 the Company has not made any capital expenditure (or series of related capital expenditures) either involving more than $10,000 or outside the Ordinary Course of Business;
4.8.6 the Company has not made any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions);
4.8.7 the Company has not issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any indebtedness for borrowed money or capitalized lease obligation either involving more than $5,000 singly or $20,000 in the aggregate and has not repaid or returned any note, bond or other debt of the Company;
4.8.8 the Company has not incurred, created or otherwise become liable for any Indebtedness and has not delayed or postponed the payment of accounts payable and other Liabilities outside the Ordinary Course of Business;
4.8.9 the Company has not amended, cancelled, compromised, waived, or released any right or claim (or series of related rights and claims) either involving more than $10,000 or outside the Ordinary Course of Business and has not accelerated collection of accounts receivable, delayed payment of accounts payable;
4.8.10 the Company has not granted any license or sublicense of any rights under or with respect to any Intellectual Property that is material, either individually or in the aggregate, to the Company’s business;
4.8.11 there has been no change made or authorized in the certificate of incorporation or bylaws of the Company;
4.8.12 the Company has not issued, sold, exchanged, or otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock;
4.8.13 the Company has not declared, set aside, or paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock, or granted any Person any option or other right to acquire any shares of capital stock or other securities of the Company;
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4.8.14 the Company has not experienced any damage, destruction, or loss (whether or not covered by insurance) to property that is material, either individually or in the aggregate, to the Company’s business;
4.8.15 the Company has not made any loan to, or entered into any other transaction with, any of its directors, officers, and employees;
4.8.16 the Company has not entered into any employment contract or collective bargaining agreement, written or oral, or modified the terms of any existing such contract or agreement;
4.8.17 other than in the Ordinary Course of business, the Company has not granted any increase in the compensation of any of its directors, officers or employees;
4.8.18 the Company has not adopted, amended, modified, or terminated, in any material respect, any bonus, profit sharing, incentive, severance, employee benefit or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);
4.8.19 except as set forth on Schedule 4.8, the Company has not entered into or modified any retention, severance or incentive agreement related to the transactions contemplated by this Agreement;
4.8.20 the Company has not made any other change in employment terms, compensation or benefits for any of its directors, officers, and employees;
4.8.21 the Company has not changed any method or principle of accounting except to the extent required by GAAP or as advised by the Company’s independent accountant;
4.8.22 the Company has not made any material Tax election, or settled any Tax liability; and
4.8.23 the Company has not committed to or agreed to undertake any of the foregoing.
4.9 Undisclosed Liabilities . Except as disclosed on Schedule 4.9, the Company has no Liability (and, to the Knowledge of the Company and the Seller, there is no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand pending or threatened against the Company that would reasonably be expected to give rise to any Liability), except for (i) Liabilities set forth on the Most Recent Balance Sheet, and (ii) Liabilities which have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business or as a result of the transactions contemplated hereby (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law).
4.10 Legal Compliance . Each of the Company and its predecessors and Affiliates has complied with all applicable Laws and Orders, and no action, suit, proceeding, hearing,
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investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply.
4.11 Tax Matters .
4.11.1 The Company has duly and timely filed all Tax Returns required to have been filed by it. All such Tax Returns are true, correct and complete in all respects. Except as set forth in the Disclosure Schedules, all Taxes required to have been paid by the Company (whether or not shown on any Tax Return) have been paid. The Company is not currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by a Taxing Authority in writing (or, to the Knowledge of the Seller or the Company, made in any other manner), for a jurisdiction where the Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Encumbrances on any of the assets of the Company that arose in connection with any failure (or alleged failure) to pay any Tax.
4.11.2 The Company has complied with all applicable laws regarding payment and withholding of Taxes and has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other Person.
4.11.3 Neither the Seller nor any director or officer (or employee responsible for Tax matters) of the Company expects any Taxing Authority to assess against the Company any additional Taxes with respect to any taxable period for which Tax Returns have been filed by or on behalf of the Company. There is no dispute or claim concerning any Tax Liability of the Company either (A) claimed or raised by any Taxing Authority in writing or (B) as to which the Seller or the Company has Knowledge based upon personal contact with any agent of such Taxing Authority. Schedule 4.11 lists all federal, state, local, and foreign income Tax Returns filed with respect to the Company for taxable periods commencing July 1, 1995 and ended on or before December 31, 2003, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The Seller and the Company have delivered to the Buyer correct and complete copies of all such federal income Tax Returns, examination reports with respect to such income Tax Returns, and statements of income Taxes assessed against or agreed to by the Company since July 1, 1995 which were not shown on the face of such income Tax Return.
4.11.4 The Company has not executed any agreement waiving any statute of limitations in respect of assessment or collection of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency that has continuing effect, or granted any power of attorney in respect to the Company with respect to any matter related to Taxes which is currently in force. There are no agreements currently in effect between the Company and any Tax Authority with respect to the payment in installments of any tax liability after the Closing Date.
4.11.5 The Company has not filed a consent under Code §341(f) concerning collapsible corporations. The Company has not made any payments, is not obligated to make any payments in connection with the transactions contemplated by this Agreement that would be
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excess parachute payments within the meaning of Code § 280G. The Company has not been a United States real property holding corporation within the meaning of Code §897(c)(2) during the applicable period specified in Code §897(c)(l)(A)(ii). Except as provided on the Disclosure Schedules, the Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code §6662. The Company is not a party to any Tax allocation or sharing agreement. The Company (A) has never been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) and (B) does not have any Liability for the Taxes of any Person (other than the Company) under Treasury Regulation §1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. The Company does not have a “net required payments balance” as defined in Section 7519 of the Code.
4.11.6 The unpaid Taxes of the Company (A) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the Most Recent Balance Sheet (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing its Tax Returns.
4.11.7 The Company will not be required to include any item of income in, nor will the Company exclude any item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any change in method of accounting for a taxable period ending on or prior to the Closing Date under Code §481(c) (or any corresponding or similar provision of state, local or foreign income Tax law). The Company is not a party to any “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date that would have continuing effect after the Closing Date. The Company has no (A) gain from intercompany transaction which has been deferred pursuant to Treasury Regulations Section 1.1502-13 or any excess loss account described in Treasury Regulations Section 1.1502-13 (or any corresponding or similar provision of state, local or foreign income Tax law) arising in any taxable period or portion thereof ending before the Closing Date; (B) installment sale or open transaction disposition made on or prior to the Closing Date, income from which would be required to be reported by the Company after the Closing Date; or (C) prepaid income amount received on or prior to the Closing Date not required to have been reported in computing taxable income for periods ending on or before the Closing Date, except, in each case, to the extent adequately reserved for in the Most Recent Financial Statement or arising in the Ordinary Course of Business since the Most Recent Fiscal Month End .
4.11.8 The Company has had in effect at all times since July 1, 1999 a valid election under Section 1362(a) of the Code to be treated as an S corporation, and since that date has validly been treated in a similar manner for purposes of the income tax laws of all states in which it has been subject to taxation where analogous treatment is legally available. Neither the Seller nor the Company has taken or omitted to take any action which action or inaction would cause the Company to cease to be treated as an S Corporation for federal and applicable state and local Tax purposes for any period since July 1, 1999.
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4.12 Real Property .
4.12.1 The Company does not own any real property.
4.12.2 Schedule 4.12 sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document). The Company has delivered to the Buyer a true and complete copy of each such Lease document, and in the case of any oral Lease, a written summary of the material terms of such Lease. With respect to each of the Leases which is a Material Lease:
4.12.2.1. such Lease is legal, valid, binding, enforceable and in full force and effect;
4.12.2.2. the transaction contemplated by this Agreement does not require the consent of any other party to such Lease, will not result in a breach of or default under such Lease, and will not otherwise cause such Lease to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing;
4.12.2.3. the Company’s possession and quiet enjoyment of the Leased Real Property under such Lease has not been disturbed and, to the Knowledge of the Seller and the Company, there are no disputes with respect to such Lease;
4.12.2.4. neither the Company nor any other party to the Lease is in breach or default under such Lease, and, to the Knowledge of the Seller and the Company, 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;
4.12.2.5. no security deposit or portion thereof deposited with respect to such Lease has been applied in respect of a breach or default under such Lease which has not been redeposited in full;
4.12.2.6. the Company does not owe, nor will it owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;
4.12.2.7. the other party to such Lease is not an affiliate of, and otherwise does not have any economic interest in, the Company;
4.12.2.8. the Company has not subleased, licensed or otherwise granted any Person the right to use or occupy such Leased Real Property or any portion thereof;
4.12.2.9. the Company has not collaterally assigned or granted any other security interest in such Lease or any interest therein; and
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4.12.2.10. there are no liens or encumbrances on the estate or interest created by such Lease.
4.13 Intellectual Property . Schedule 4.13 (i) lists all patents, registrations and applications for registration of Intellectual Property owned by the Company, (ii) lists all trade names, domain names and material unregistered trademarks owned by the Company, (iii) describes all material inventions and material unregistered copyrights owned by the Company, (iv) lists all software developed and/or owned by the Company, and (v) lists all material trade secrets of the Company. The Company owns, free from any Encumbrance, or has a valid, enforceable and fully paid up license or other right to use, all material Intellectual Property used in the business of the Company or necessary to operate the business of the Company as currently conducted. All Intellectual Property owned or used by the Company in the operation of its business as of the date hereof will be owned or available for use by the Company on identical terms and conditions immediately following the Closing. The Company has taken all necessary action, performed all customary acts, and has paid all fees and taxes (to the extent applicable), required to protect and maintain in full force and effect all Intellectual Property owned by the Company. No claim by any third party has been made contesting the validity, enforceability, use or ownership of the Intellectual Property owned or used by the Company, and Seller and Company have no Knowledge of any basis for such claim. Neither the Company nor the Seller has received any notices (including any cease-and -desist letters or offers to license) alleging infringement or misappropriation of any third party Intellectual Property. To the Knowledge of the Company and the Seller, no third party is infringing, misappropriating or otherwise engaging in unauthorized use of the Intellectual Property of the Company. Except as set forth on Schedule 4.13 , each current and former employee, consultant and officer of the Company has executed an agreement with the Company requiring such employee, consultant or officer to maintain the confidentiality of the Company’s proprietary information and assign all Intellectual Property developed by such employee, consultant or officer to the Company or its designee. The Company has not interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of third parties.
4.14 Sufficiency of Assets . The Company owns and has good and marketable title, free and clear of Encumbrances, to all of its assets. The Company owns or has a valid leasehold interest in all of the tangible and intangible assets (including, without limitation, all buildings, machinery, equipment, and other tangible assets) necessary for the conduct of its business as presently conducted. Each such tangible asset is fr | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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