SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 5, 1998
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THE JUDGE GROUP, INC.
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(Exact name of registrant as specified in charter)
Pennsylvania 0-21963 23-1726661
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
Two Bala Plaza, Suite 405, Bala Cynwyd, Pennsylvania 19004
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 610-667-7700
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Not Applicable.
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets
On March 5, 1998, Judge Technical Services, Inc. ("JTS"), a wholly owned
subsidiary of the registrant, purchased substantially all of the assets of
Information Solutions, Inc. ("ISI") and ISI Systems, Inc. ("ISI Systems")
pursuant to an Asset Purchase Agreement dated as of March 5, 1998 among JTS,
ISI, ISI Systems and John Runyon, the sole stockholder of both ISI and ISI
Systems. ISI and ISI Systems were engaged in the permanent and contract
placement businesses. The purchased assets consisted, among other things, of
customer and supplier contracts, accounts receivable, tangible personal property
and goodwill. The purchase price paid by JTS to ISI and ISI Systems was (i)
$3,932,400.90 cash which was derived from the remaining proceeds of the
registrant's initial public offering in February 1997 and from working capital,
(ii) 100,000 shares of the unregistered common stock of the registrant (plus
possible additional cash consideration to the extent that the market value of
such common stock on March 5, 1999 is less than $15 per share), (iii)
subordinated promissory notes in the principal amount of $640,000 and (iv) an
earnout of a minimum of $250,000 and a maximum of $750,000 to be paid pursuant
to a subordinated promissory note. The registrant guaranteed JTS' obligations to
pay the purchase price to ISI and ISI Systems. There was no material
relationship between registrant and any of the principals of ISI or ISI Systems.
This acquisition is further described in the press release dated March 6, 1998,
a copy of which has been filed as an exhibit to this report.
Pursuant to Rule 3-05(b)(2)(i) of Regulation S-X, no financial statements
for ISI or ISI Systems are included in this report.
Item 7. Financial Statements and Exhibits
Exhibit 2 -- Asset Purchase Agreement dated as of March 5, 1998 among JTS, ISI,
ISI Systems and John Runyon.
Exhibit 99 -- Press Release dated March 6, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE JUDGE GROUP, INC.
By: /s/ Martin E. Judge, Jr.
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Martin E. Judge, Jr.
Chief Executive Officer
Date: March 19, 1998
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EXHIBIT 2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
JUDGE TECHNICAL SERVICES, INC.
INFORMATION SOLUTIONS, INC.,
ISI SYSTEMS, INC.
AND
JOHN J. RUNYON
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TABLE OF CONTENTS
SECTION 1. ACQUISITION OF ASSETS..................................... 1
1.1 Purchased Assets.......................................... 1
1.2 Excluded Assets........................................... 2
1.3 Liabilities to be Assumed by Buyer........................ 3
SECTION 2. PURCHASE PRICE AND PAYMENT................................ 3
2.1 Purchase Price............................................ 3
2.2 Closing Adjustments....................................... 5
2.3 Allocation of Consideration............................... 6
SECTION 3. CLOSING................................................... 6
3.1 Time and Place of Closing................................. 6
3.2 Deliveries at the Closing................................. 6
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND
SHAREHOLDER............................................... 7
4.1 Organization and Good Standing............................ 7
4.2 Power and Authorization................................... 7
4.3 No Conflicts.............................................. 7
4.4 Brokers................................................... 8
4.5 Compliance with Laws...................................... 8
4.6 Securities Laws Matters................................... 9
4.7 Litigation................................................ 10
4.8 Financial Statements...................................... 10
4.9 Accounts Receivable....................................... 11
4.10 Personal Property......................................... 11
4.11 List of Properties, Contracts, etc........................ 11
4.12 Contracts................................................. 13
4.13 Intellectual Property..................................... 13
4.14 Customers and Suppliers................................... 13
4.15 Taxes..................................................... 13
4.16 Employee Benefits......................................... 14
4.17 Labor Matters............................................. 16
4.18 Employees................................................. 17
4.19 Full Disclosure........................................... 17
4.20 Net Asset Guarantee....................................... 18
4.21 Absence of Changes or Events.............................. 18
4.22 Affiliate Agreements...................................... 19
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER................... 19
5.1 Organization and Good Standing............................ 20
5.2 Power and Authorization................................... 20
5.3 No Conflicts.............................................. 20
5.4 Brokers................................................... 21
5.5 Capital Structure......................................... 21
SECTION 6. EMPLOYEE BENEFITS AND EMPLOYMENT.......................... 21
6.1 Employment................................................ 21
6.2 Employee Pension Benefit Plans............................ 21
6.3 Employee Welfare Benefit Plans............................ 22
6.4 Vacation and Holidays..................................... 22
6.5 Health Continuation Coverage.............................. 22
6.6 Health Insurance Portability and Accountability Act....... 22
6.7 Reporting and Disclosure Requirements..................... 22
6.8 Employee Records.......................................... 22
SECTION 7. CERTAIN CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS....... 22
7.1 Representations and Warranties............................ 22
7.2 Performance of Covenants.................................. 23
7.3 Net Asset Value........................................... 23
7.4 Approvals................................................. 23
7.5 Legal Matters............................................. 23
7.6 No Material Adverse Change................................ 23
7.7 Opinion of Counsel........................................ 23
7.8 Closing Certificates...................................... 23
SECTION 8. CERTAIN CONDITIONS PRECEDENT TO OBLIGATIONS OF
SHAREHOLDER AND SELLERS................................... 23
8.1 Representations and Warranties............................ 24
8.2 Performance of Covenants.................................. 24
8.3 Approvals................................................. 24
8.4 Legal Matters............................................. 24
8.5 Lease..................................................... 24
8.6 Closing Certificates...................................... 24
SECTION 9. CERTAIN POST-CLOSING MATTERS; COVENANTS .................. 24
9.1 Confidential Information.................................. 24
9.2 Covenant Not to Compete................................... 24
9.3 Pursuit of Authorizations................................. 25
9.4 Assignment of Purchased Assets; Consents.................. 26
9.5 Rule 144.................................................. 26
9.6 Doubtful Account Reserve Payment.......................... 26
9.7 Use of Name; Dissolution of ISI Systems................... 26
9.8 Audited Financial Statements.............................. 27
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SECTION 10. INDEMNIFICATION........................................... 27
10.1 Indemnification by Sellers................................ 27
10.2 Indemnification by Buyer.................................. 27
10.3 Inter-Party Claims........................................ 27
10.4 Third Party Claims........................................ 27
10.5 Limitations............................................... 28
10.6 Right of Set-Off.......................................... 28
SECTION 11. MISCELLANEOUS............................................. 29
11.1 Knowledge................................................. 29
11.2 Survival of Representations and Warranties................ 29
11.3 Further Assurances........................................ 29
11.4 Costs and Expenses........................................ 29
11.5 Notices................................................... 30
11.6 Assignment and Benefit.................................... 30
11.7 Settlement of Disputes.................................... 31
11.8 Amendment, Modification and Waiver........................ 31
11.9 Governing Law; Consent to Jurisdiction.................... 31
11.10 Section Headings and Defined Terms........................ 32
11.11 Severability.............................................. 32
11.12 Counterparts.............................................. 32
11.13 Entire Agreement, etc..................................... 32
EXHIBIT I - Form of Employment Agreement
EXHIBIT II - Form of Earnout Note
EXHIBIT III - Form of First Note
EXHIBIT IV - Form of Second Note
EXHIBIT V - Form of Bill of Sale, Assignment and Assumption
EXHIBIT VI - Form of Opinion of Sellers' and Shareholder's Counsel
EXHIBIT VII - Form of Subordination Agreement
SCHEDULE 1.1(c) - Tangible Assets
SCHEDULE 1.1(d) - Intellectual Property
SCHEDULE 1.1(e) - Assumed Contracts
SCHEDULE 1.1(h) - Other Assets of Sellers
SCHEDULE 2.3 - Allocation of Consideration
SCHEDULE 6.1 - Employee List
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is dated as of March 5, 1998 by and between
INFORMATION SOLUTIONS, INC., a Michigan corporation ("Information Solutions"),
ISI SYSTEMS, INC., a Michigan corporation ("ISI Systems" and together with
Information Solutions, the "Sellers"), JOHN J. RUNYON ("Shareholder") and JUDGE
TECHNICAL SERVICES, INC., a Pennsylvania corporation ("Buyer").
BACKGROUND
The parties hereto desire to provide for the acquisition by Buyer of
certain assets of Sellers relating to, used, or held for use in its permanent
and contract placement businesses (the "Business"), but excluding certain other
assets and liabilities, all on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1. ACQUISITION OF ASSETS.
1.1 Purchased Assets. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers shall, and Shareholder shall cause Sellers
to, sell, convey, assign, transfer and deliver to Buyer all of Sellers' right,
title and interest in and to all of the tangible and intangible properties and
assets owned or held by Sellers and relating to or used or held for use in
connection with the Business, free and clear of all liens (except as set forth
in the Disclosure Statement pursuant to Section 4.3 hereof), including, without
limitation, the following assets owned or held by Sellers and each of the assets
listed or required to be listed on the Disclosure Statement pursuant to Section
4.12 hereof, but excluding the Excluded Assets (as herein defined) (the
"Purchased Assets"):
(a) Cash, which must equal or exceed $50,000;
(b) Accounts Receivable;
(c) all supplies, machinery, furniture, equipment and other personal
property, including those set forth on Schedule 1.1(c) hereto;
(d) all inventions, whether or not patented, know-how, domestic and
foreign letters patent, patent applications, patent licenses, software licenses
and know-how licenses (including but not limited to the names "ISI" and
"Information Solutions"), trade secrets (including but not limited to all
results of research and development), trade names, trademarks, service-marks,
copyrights, trademark registrations and applications, service mark registrations
and applications, copyright registrations and applications and rights-to-use
(collectively "Intellectual Property") as set forth on Schedule 1.1(d) hereto;
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(e) all right, title and interest in, to and under all purchase orders,
sales agreements, equipment leases, distribution agreements, licensing
agreements and other contracts, agreements and commitments of Sellers
("Contracts") identified on Schedule 1.1(e);
(f) copies of all books and records predominantly relating to the
Business and the Purchased Assets (including such books and records as are
contained in computerized storage media), including all inventory, purchasing,
accounting, sales, export, import, manufacturing, marketing, banking and
shipping records and all files, contractor, consultant, customer/client and
supplier lists, records, literature and correspondence, and marketing materials
excluding tax returns;
(g) the lease (the "Lease") related to the facility at 8625 Richardson
Road, Suite 100, Walled Lake, Michigan 48390 (the "Facility");
(h) any other assets of Sellers' Business including those set forth on
Schedule 1.1(h) which are of a nature not customarily reflected in the books and
records of a business, such as assets which have been written off for accounting
purposes but which are still used by or of value to Sellers;
(i) all Authorizations (as defined in Section 4.5(b)) associated with
the Sellers' Business and its operations;
(j) all intangible assets and goodwill associated with the Sellers'
Business and its operations; and
(k) any other assets of Seller which are located at the Facility.
1.2 Excluded Assets. Notwithstanding anything to the contrary in Section
1.1 of this Agreement, the following rights, properties and assets shall not be
included in the Purchased Assets (the "Excluded Assets"):
(a) All employee records (excluding employment and non-competition
agreements);
(b) Sellers' Employee Benefit Plan(s) (as defined below) and all
obligations related thereto;
(c) All ownership, leasehold and other interests in real property, in
each case together with all buildings thereon;
(d) Sellers' tax returns and records;
(e) All assets of ISI Systems other than inventory and equipment.
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1.3 Liabilities to be Assumed by Buyer. Subject to the terms and conditions
of this Agreement, at the Closing, Buyer shall assume and thereafter in due
course pay and fully satisfy all liabilities, obligations and related expenses
arising after the Closing pursuant to the terms of the Contracts, accrued
compensation, accrued expenses and current short term notes (including those
payable to First Chicago NBD) payables accrued and recorded on Sellers' books as
of the Closing as set forth on Schedule 1.1(e) hereof.
Except as otherwise specifically provided for in this Section 1.3, Buyer
shall not assume, or in any way be liable or responsible for, any liabilities,
obligations or debts of either Seller of any type or nature, including, without
limitation, liabilities arising under all Contracts not identified on Schedule
1.1(e), any related unfunded pension liabilities, any medical, life, disability
insurance liabilities, any workman compensation claims, any local, state,
federal, payroll or other tax liabilities, liabilities relating to claims for
damages based upon the breach by either Seller of any federal, state or local
environmental or occupational health and safety laws or regulations, liabilities
related to products liability, tort claims or other litigation, any undisclosed
liabilities, liabilities incurred for the costs and expenses of negotiating and
consummating the transactions contemplated by this Agreement, liabilities
incurred in connection with the termination of any of the Contracts to be
transferred hereunder for which consent of the other party thereto is required
but not obtained, any liabilities related to the classification of independent
contractors, tort claims asserted against either Seller or claims against either
Seller for breach of contract which are based on acts or omissions of either
Seller occurring on, before or after the Closing.
SECTION 2. PURCHASE PRICE AND PAYMENT.
2.1 Purchase Price.
(a) The total consideration for the Purchased Assets shall be the cash
and stock paid at Closing plus the assumption of the specified liabilities
pursuant to Section 1.3 hereof and monies earned or paid in the form of notes
described under paragraphs (b), (c) and (d) below or pursuant to paragraph (e)
below, if any, and minus the amount of the Closing Adjustment, as provided in
Section 2.2 hereof (the "Purchase Price"). At Closing $3,932,400.90 of the
Purchase Price shall be paid to Sellers by wire transfer pursuant to
instructions previously provided by Sellers to Buyer for that purpose and, in
addition, 100,000 shares of The Judge Group, Inc.'s ("Judge Group") unregistered
common stock (the "Shares") bearing the appropriate restrictive legend shall be
delivered to Information Solutions. The Purchase Price received shall be first
allocated to Sellers' accounts receivables and other tangible assets and
thereafter to goodwill.
(b) An additional portion of the Purchase Price shall be paid in the
form of an earnout (the "Earnout") with respect to the performance of the
Business as it was conducted by Sellers from January 1, 1998 to the Closing Date
and from the Closing Date to December 31, 1998 (the "Earnout Period"). The
Earnout shall be computed and paid as follows:
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(i) Buyer shall pay Information Solutions $250,000;
(ii) If the earnings of the Business before interest, taxes and
depreciation plus the "Addbacks" of "Capital Market", rent and other expenses as
mutually agreed upon by the parties ("EBITD") (described more fully in
subparagraph (vi) below) for the Earnout Period accounted for under the accrual
method of accounting in accordance with Buyer's accounting policies and
procedures and generally accepted accounting principles ("GAAP") exceed
$600,000, Buyer shall pay Information Solutions $1.60 for each additional dollar
of EBITD earned from $600,001 up to $725,000;
(iii) If EBITD for the Earnout Period exceeds $725,000, Buyer shall
pay Information Solutions $2.40 for each additional dollar of EBITD earned from
$725,001 up to $850,000;
(iv) Payments required to be made under subparagraphs (i), (ii) and
(iii) above, if any, shall be deemed earned and owing to Information Solutions;
provided, however, that (A) no payment shall be made if Shareholder terminates
his employment with Buyer or if Buyer terminates Shareholder's employment
pursuant to Sections 4.3(i) or (ii) of the Employment Agreement, a form of which
is attached hereto as Exhibit I, at any time during the Earnout Period, (B) the
maximum $750,000 amount of potential Earnout shall be payable if Buyer
terminates Shareholder without "cause" pursuant to Section 4.4 of the Employment
Agreement, and (C) if Shareholder has been terminated for "cause" other than
pursuant to Section 4.3(i) or (ii) of the Employment Agreement or terminates his
employment as a result of death or disability, such payments shall be deemed
earned and owing to Information Solutions as of the date of such termination
(determined by calculating the Earnout as if the Earnout Period had ended on the
date of termination).
(v) Subject to subparagraph (iv) above, payments earned and owing
under paragraphs (i), (ii) and (iii) above, if any, shall be paid with Buyer's
two (2) year unsecured promissory note bearing interest at 8% per annum payable
in equal quarterly payments of principal and interest commencing March 31, 1999
in the form attached as Exhibit II hereof (the "Earnout Note");
(vi) In connection with the operation of the Business during the
Earnout Period, Buyer agrees that for purposes of determining EBITD it will not
charge any overhead expense to the Business without the agreement of Information
Solutions.
The term "Capital Market" expenses means legal and accounting fees and
other expenses incurred by Seller in connection with the redemption of its stock
from a former shareholder and the evaluation, negotiation and sale of Seller's
assets culminating with this Agreement.
(c) At Closing, Buyer shall issue Information Solutions a two (2) year
unsecured promissory note (the "First Note") in the amount of $340,000 bearing
interest at 8% with equal payments of principal made monthly commencing April 1,
1998 in the form attached as Exhibit III hereto; and
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(d) At Closing, Buyer shall issue Information Solutions a two (2) year
unsecured promissory note (the "Second Note" and collectively with the Earnout
Note and the First Note, the "Notes") in the amount of $300,000 bearing interest
at 8% with equal monthly payments of principal plus interest commencing April 1,
1998 in the form attached as Exhibit IV hereto, which shall be paid so long as
Shareholder is employed by Buyer or has been terminated by Buyer for any reason
other than "cause" (as defined in the Employment Agreement) and has complied
with Section 9.2 hereof and Section 5.1 of the Employment Agreement.
(e) On the first anniversary of the Closing (the "Anniversary Date"),
if the 30-day average stock price of Judge Group common stock, as reported on
the Nasdaq Stock Market, is not at least $15.00 per share, Buyer shall pay or
cause to be paid to Information Solutions by wire transfer within fifteen (15)
business days thereafter an amount equal to the difference between $15.00 and
the 30-day average closing price of the shares for the period ending on the
Anniversary Date times 100,000.
2.2 Closing Adjustments.
(a) Except as otherwise mutually agreed among the parties hereto, the
following items shall be apportioned and prorated, on a daily basis, between the
Sellers and the Buyer as of 12:00 midnight on February 28, 1998 (the "Effective
Date"):
(i) all general real estate taxes and personal property taxes;
(ii) all utilities;
(iii) all items for which payment has been received by the Seller
and for which services have not been rendered;
(iv) all payroll obligations including deduction and payment to
appropriate state and federal authorities for income tax withholding, FICA,
FUTA, SUI;
(v) supplies and equipment delivered after Closing; and
(vi) all commissions payable to staff employees shall be
attributable to the sale to which they relate. The party who receives the
revenue associated with the sale will be responsible to pay the commission.
(b) On or before March 31, 1998, the Seller shall present to the Buyer
a Schedule of the adjustments in Section 2.2(a) and (c) showing the computation
thereof.
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(c) On or before March 31, 1998, the Purchase Price shall be adjusted
(if required) as follows:
(i) the Purchase Price shall be increased by the amount by which
the Net Assets (as defined in Section 4.20) as of February 28, 1998 exceed
$675,000; or
(ii) the Purchase Price shall be decreased by the amount by which
the Net Assets as of February 28, 1998 are less than $675,000.
2.3 Allocation of Consideration. The Purchase Price shall be allocated
among the Purchased Assets as set forth on Schedule 2.3 hereto. The parties
shall report this transaction for tax purposes consistently with such
allocation.
SECTION 3. CLOSING.
3.1 Time and Place of Closing. The closing of the purchase and sale of the
Purchased Assets (the "Closing") pursuant to this Agreement shall take place on
March 5, 1998 at the offices of Drinker Biddle & Reath LLP ("DBR") located at
1000 Westlakes Drive, Suite 300, Berwyn, Pennsylvania 19312 commencing at 10:00
A.M., local time or at such other date, time or place as may be agreed to by
Buyer and Sellers (the "Closing Date").
3.2 Deliveries at the Closing. At the Closing, in addition to the other
actions contemplated elsewhere herein:
(a) Sellers shall deliver, or shall cause to be delivered, to Buyer the
following:
(i) a bill of sale satisfactory to Buyer transferring title to all
of the Purchased Assets in the form attached as Exhibit V hereto;
(ii) such other instruments of transfer as shall be necessary or
appropriate to vest in Buyer good and marketable title to the Purchased Assets;
(iii) assignments satisfactory to Buyer of all Contracts whenever
necessary;
(iv) Opinion letter of Seller's Counsel in the form attached hereto
as Exhibit VI;
(v) Subordination Agreement in the form attached hereto as Exhibit
VII; and
(vi) Documents evidencing the assignment of the Lease.
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(b) Buyer shall deliver, or shall cause to be delivered, to Sellers the
Purchase Price in accordance with Section 2.1 and the Employment Agreement.
(c) Buyer shall deliver to Sellers an assumption of liabilities
agreement in the form attached hereto as Exhibit V.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND SHAREHOLDER.
Certain representations and warranties made by Sellers and Shareholder are
modified as and to the extent set forth in the Disclosure Statement which has
previously been delivered to Buyer at least two (2) business days prior to the
date hereof (the "Disclosure Statement") or as otherwise provided herein.
Shareholder and each Seller represent and warrant to Buyer as of the date of
this Agreement as follows:
4.1 Organization and Good Standing. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it. Each Seller is duly
qualified to do business and is in good standing in each jurisdiction in which
failure to be so qualified would have an adverse effect on the Business or the
Purchased Assets. The Disclosure Statement sets forth a complete and accurate
list with respect to each Seller of all its affiliates, each jurisdiction where
it or an affiliate is authorized to do business, and each Seller's
capitalization (including the identity of each Seller's stockholders and the
number of shares held by each stockholder).
4.2 Power and Authorization. Each Seller has full legal right, power and
authority to enter into and perform its obligations under this Agreement, the
Employment Agreement, and the other agreements and documents required to be
delivered by it prior to or at the Closing (the "Seller Transaction Documents").
The execution, delivery and performance by each Seller of this Agreement and the
Seller Transaction Documents have been duly authorized by all necessary action.
This Agreement has been duly and validly executed and delivered by each Seller
and constitutes the legal, valid and binding obligation of each Seller,
enforceable against it in accordance with its terms. When executed and delivered
as contemplated herein, each of the Seller Transaction Documents shall
constitute the legal, valid and binding obligation of each Seller, enforceable
against it in accordance with its terms.
4.3 No Conflicts.
(a) Except as described in the Disclosure Statement, the execution,
delivery and performance of this Agreement and the Seller Transaction Documents
do not and will not (with or without the passage of time or the giving of
notice):
(i) violate or conflict with any law, regulation, permit, license,
certificate, judgment, order, award or other decision or requirement of any
arbitrator, court, government or governmental agency or instrumentality,
domestic or foreign, (collectively, "Laws"), binding upon Shareholder or either
Seller that is likely to have an adverse effect on the Business;
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(ii) violate or conflict with, result in a breach of, or constitute
a default or otherwise cause any loss of benefit under any Contract, or give to
others any rights (including rights of termination, foreclosure, cancellation or
acceleration) in or with respect to any of the Purchased Assets;
(iii) result in, require or permit the creation or imposition of
any restriction, mortgage, deed of trust, pledge, lien, security interest or
other charge, claim or encumbrance of any nature upon or with respect to the
Purchased Assets that is likely to, either individually or in the aggregate,
have a material adverse effect on the Purchased Assets;
(iv) cause Buyer to become subject to, or become liable for the
payment of any tax except for Buyer's prorated portion of accrued taxes
described in Section 2.2(a); or
(v) cause any of the Purchased Assets to be reassessed or revalued
by any taxing authority or governmental body.
(b) There are no judicial, administrative or other governmental
actions, proceedings or investigations pending against Shareholder or either
Seller or, to the knowledge of Shareholder or either Seller, threatened, that
question any of the transactions contemplated by, or the validity of, this
Agreement or any of the other agreements or instruments contemplated hereby or
which, if adversely determined, is likely to have an adverse effect upon the
ability of Shareholder or either Seller to enter into or perform its obligations
under this Agreement or any such other agreements or instruments. Neither
Shareholder nor Sellers have received any request from any governmental agency
or instrumentality for information with respect to the transactions contemplated
hereby.
4.4 Brokers. No person, acting on behalf of Shareholder or either Seller or
its affiliates or under the authority of any of the foregoing is or will be
entitled to any brokers' or finders' fee or any other commission or similar fee,
directly or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
4.5 Compliance with Laws.
(a) Except as described in the Disclosure Statement: the operation of
the Business and the Purchased Assets is, and at all times during the last two
(2) years has been, in compliance in all material respects with all applicable
Laws; and neither Shareholder nor Sellers have had any basis to expect, and have
not received, with respect to the Purchased Assets or the operation of the
Business, during the last two (2) years, any notice, order or other
communication from any governmental agency or instrumentality of any alleged,
actual, or potential violation of or failure to comply with any Law.
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(b) All material federal, foreign, state, local and other governmental
consents, licenses, permits, franchises, grants and authorizations
(collectively, "Authorizations") required for the operation of the Business as
currently conducted and as conducted during the last two (2) years are, except
as otherwise described in the Disclosure Statement, in full force and effect
without any default or violation thereunder by either Seller or by any other
party thereto and neither Shareholder nor Sellers have received any notice of
any claim or charge that either Seller is or within the last two (2) years had
been in violation of or in default under any such Authorization. Except as
described in the Disclosure Statement: (i) no proceeding is pending or, to the
knowledge of Shareholder or either Seller, threatened by any person to revoke or
deny the renewal of any Authorization; and (ii) neither Shareholder nor Sellers
have been notified that any such Authorization may not in the ordinary course be
renewed upon its expiration or that by virtue of the transactions contemplated
hereby any such Authorization may not be granted or renewed or transferred to
Buyer.
4.6 Securities Laws Matters
(a) Information Solutions acknowledges that Shares and the monies
earned pursuant to Section 2.1(b) through 2.1(d) herein, if any (the
"Securities"), hereunder will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), and must be held indefinitely unless
subsequently registered under the Securities Act or unless an exemption from
such registration becomes or is available.
(b) Information Solutions represents and warrants that its principal
place of business is located in the State of Michigan and that Buyer has not
communicated with Information Solutions with respect to the offer or sale of the
Securities at any time while Information Solutions was located in any other
state.
(c) Information Solutions represents and warrants that:
(i) It is well versed in financial matters and has such knowledge
and experience in financial and business matters and that it is fully capable of
understanding the merits and risks of the investment being made in the
Securities and the risks involved in connection therewith;
(ii) It is acting herein for its own account and is acquiring the
Securities for investment without a view to the resale or other distribution
thereof. It is financially able to hold the Securities for long-term investment,
believes that the nature and amount of the Securities to be acquired hereunder
is consistent with its overall investment program and financial position, and
recognizes that there are substantial risks involved in an investment in the
Securities;
(iii) It is an "accredited investor" as defined in Rule 501(a) of
Regulation D under the Securities Act; and
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(iv) It has received and reviewed the prospectus related to the
initial public offering of Judge Group common shares, its annual report on Form
10-K for the year ended December 31, 1996 and its quarterly reports on Form 10-Q
for the three months ended March 31, 1997, June 30, 1997, and September 30,
1997.
(d) Information Solutions acknowledges and agrees that Buyer may, if it
so desires, permit transfers, or authorize its transfer agent to permit
transfers, of the Securities only when such Securities have been registered
under the Securities Act or when the request for transfer is accompanied by
satisfactory assurance (including, if requested, an opinion of counsel
acceptable to Buyer) that the sale or proposed transfer does not require
registration under the Securities Act, and each Seller agrees that a legend to
such effect will be placed on the Securities.
4.7 Litigation. Except as described in the Disclosure Statement, there are
no, and during the last two (2) years there have not been any, claims, actions,
suits, proceedings (arbitration or otherwise) or investigations involving or
affecting the Business or the Purchased Assets before or by any court or
governmental agency or instrumentality, or before an arbitrator of any kind; and
no pending claim, action, suit, proceeding or investigation, if determined
adversely, would either individually or in the aggregate have a material adverse
effect on the Business, or would result in a liability in excess of $5,000 in
the case of any single action or $10,000 in the case of all such actions in the
aggregate. To the knowledge of Shareholder and Sellers, except as described in
the Disclosure Statement, no such claim, action, suit, proceeding or
investigation is presently threatened or contemplated and there are no facts
which could reasonably serve as a basis for any such claim, action, suit,
proceeding or investigation. There are no unsatisfied judgments, penalties or
awards against or affecting the Business.
4.8 Financial Statements.
(a) The unaudited statements of income of the Business for the 12-month
periods ended December 31, 1996 and 1997, compiled for 1996 and reviewed for
1997 by Ronald D. Framchi, P.C., independent certified public accountant, a
correct and complete copy of which is attached hereto as part of Schedule 4.8 of
the Disclosure Statement, are true and correct in all material respects and
present fairly the financial position of the Business of the Sellers and the
results of their operations for the fiscal periods then ended, in conformity
with GAAP consistently applied in accordance with past practice, and includes
all adjustments which are necessary for a fair presentation of the information
shown.
(b) The unaudited statement of income of the Business for the two-month
period February 28, 1998, reviewed by Ronald D. Framchi, P.C., independent
certified public accountant, a correct and complete copy of which is attached
hereto as part of Schedule 4.8 of the Disclosure Statement, are true and correct
in all material respects and present fairly the financial position of the
Business of the Sellers and the results of their operations for the period then
ended, in conformity with GAAP applied on a consistent basis, and includes all
adjustments which are necessary for a fair presentation of the information
shown.
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(c) The unaudited balance sheet of the Business at February 28, 1998
(the "Balance Sheet"), reviewed by Ronald D. Framchi, P.C.; independent
certified public accountant, a correct and complete copy of which is attached
hereto as part of Schedule 4.8 of the Disclosure Statement, is true and complete
in all material respects and presents fairly the assets and liability of the
Business of the Sellers as of such date, in conformity with GAAP applied on a
consistent basis, and includes all adjustments which are necessary for a fair
presentation of the information shown.
4.9 Accounts Receivable. All accounts receivable reflected on the Balance
Sheet and included in the Purchased Assets have been acquired or have arisen
only in the ordinary course of business, consistent with past practice, and are
not subject to defenses, set-offs or counterclaims. All of such accounts
receivable are generally due within 30 days after being accrued on the books of
the Sellers and have been collected, or are collectible within 180 days after
billing, in the full aggregate recorded amounts thereof, less, in the case of
the accounts receivable reflected on the Balance Sheet, an allowance for
doubtful accounts in the amount of $20,000 (the "Doubtful Account Reserve") as
shown on the Balance Sheet. The Doubtful Account Reserve has been mutually
agreed to by Sellers and Buyer. Schedule 4.9 of the Disclosure Statement lists
the Business's accounts receivable as of the Balance Sheet date, specifying the
account debtor, the face amount of the receivable and the age of the receivable.
4.10 Personal Property. Except as described in the Disclosure Statement:
(a) the Sellers have good and valid title to all of the Purchased Assets free
and clear of any restriction, mortgage, deed of trust, pledge, lien, security
interest or other charge, claim or encumbrance; and (b) all Purchased Assets
owned or leased by the Sellers are in the possession or under the control of the
Sellers are suitable for the purposes for which they are currently being used
and are of a condition, nature and quantity sufficient for the conduct of the
Business as it is presently conducted.
4.11 List of Properties, Contracts, etc. The Disclosure Statement lists or
adequately describes the following:
(a) Each vehicle, item of machinery, equipment and other tangible
asset (other than real property) included in the Purchased Assets with a fair
market or book value in excess of $1,000 in respect of any item, and location
thereof;
(b) Each Authorization employed in the Business;
(c) Each (i) fictitious business name, tradename, registered and
unregistered trademark, service mark and related application (the "Marks"), (ii)
patent, patent right and patent application (collectively, "Patents"), (iii)
copyright in published and material unpublished works ("Copyrights"), computer
programs and software, including Sellers' website ("Software"), (iv) proprietary
formula, trade secret, formulation and invention ("Trade Secrets"), and (v)
license and permit issued or granted by any person relating to any of the
foregoing; in each case included in the Purchased Assets and owned, leased, used
or held by, granted to or licensed by either Seller as either licensor or
licensee, together with all other interests therein granted by either Seller to
any other person and all agreements with respect to any of the foregoing to
which either Seller is a party. (All employees have signed non-disclosure
agreements in the form listed in subparagraph (g) below.)
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(d) Each contract, agreement or commitment which restricts or purports
to restrict any business activities or freedom of either Seller or the officers,
employees or consultants of either Seller to engage in the Business or to
compete with any person;
(e) Each Contract involving the performance of services or delivery of
goods or materials by or to either Seller;
(f) Each contract, agreement or commitment relating to the Business to
which either Seller is a party or is otherwise bound providing for payments
(contingent or otherwise) to or by any person or entity based on sales,
purchases or profits, other than direct payments for goods, and each other
contract, agreement or commitment relating to the Business to which either
Seller is a party or by which it or any Purchased Assets are otherwise bound
which is material to its business, operation, financial condition or prospects;
(g) Each form of contract, employee non-disclosure and non-competition
agreement or commitment used by either Seller as a standard form in the ordinary
course of the Business;
(h) A summary of each policy and binder of insurance, owned by, or
maintained in the preceding two (2) years for the benefit of, or respecting
which any premiums are paid directly or indirectly by either Seller relating to
the Business;
(i) Each insurance claim made or loss incurred in the preceding two
(2) years pursuant to any workers' compensation, liability or other insurance
policy for a claim in excess of $5,000; and
(j) Each outstanding power-of-attorney or similar power relating to
the Business granted by either Seller for any purpose whatsoever.
Each Seller has furnished or, on request, will furnish or make available to
Buyer true and complete copies of each agreement, plan and other document
required to be disclosed on the Disclosure Statement.
4.12 Contracts. Except as described in the Disclosure Statement, each
Contract was made in the ordinary course of business, is in full force and
effect and is valid, binding and enforceable against the parties thereto in
accordance with its terms. Except as described in the Disclosure Statement, each
Seller has performed all obligations required to be performed by it under each
such Contract, and no condition exists or event has occurred which with notice
or lapse of time would constitute a default or a basis for delay or
non-performance by either Seller or, to the best knowledge of Sellers, by any
other party thereto. Neither Seller has any liabilities, whether fixed or
contingent, relating to or arising out of contracts with the United States
government or any
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agency thereof or any other customers, including, but not limited to, claims
arising out of pricing provisions therein. There is no contractual or other
requirement for any employee of the Business to obtain or maintain a security
clearance with respect to any governmental agency or instrumentality. Except as
described in the Disclosure Statement, each other party to each such Contract
has consented or been given sufficient notice (where such consent or notice is
necessary) that the same shall remain in full force and effect following the
Closing.
4.13 Intellectual Property. Except as otherwise described in the Disclosure
Statement, Sellers are the sole owners or have the exclusive perpetual right to
use without consideration, all Intellectual Property, free and clear of any
lien, security interest, restriction, encumbrance or other adverse claim;
neither Seller has granted or licensed to any person any rights with respect to
any Intellectual Property and no other person has any rights in or to any of the
Intellectual Property (including, without limitation, any rights to market or
distribute any of the Intellectual Property); the rights of Sellers in and to
any of the Intellectual Property will not be limited or otherwise affected by
reason of any of the transactions contemplated hereby; and the Intellectual
Property is sufficient for the conduct of the Business as it is presently
conducted. The Intellectual Property does not infringe and, to either Seller's
knowledge, is not alleged to have infringed any trademark, copyright, patent or
other proprietary right of any person.
4.14 Customers and Suppliers. No present customer or supplier has
terminated or materially reduced, or has given notice that it intends to
terminate or materially reduce, the amount of business done with Sellers with
respect to the Business. Neither Shareholder nor Sellers are aware of any such
intention on the part of any such customer, supplier or vendor, whether or not
in connection with the transactions contemplated hereunder. There are no and
during the last two (2) years there have not been any disputes or controversies
involving, in the aggregate, more than $5,000 between either Seller and any
customer, supplier or other person regarding the quality, merchantability or
safety of, or involving a claim of breach of warranty which has not been fully
resolved with respect to warranties provided by the Business.
4.15 Taxes. All federal, state, local and foreign income, profits,
franchise, sales, use, value added, payroll, premium, occupancy, property,
severance, excise, withholding, customs, unemployment, transfer and other taxes,
including interest, additions to tax and penalties (collectively "Taxes")
relating to the Business due or properly shown to be due on any return filed by
Sellers with respect to taxable periods ending on or prior to, and the portion
of any interim period up to, the date hereof have been either fully accrued or
fully and timely paid; and there are no levies, liens, or other encumbrances
relating to Taxes existing, threatened or pending with respect to any Purchased
Asset.
4.16 Employee Benefits.
(a) The Disclosure Statement contains a complete and correct list of
all benefit plans, arrangements, commitments and payroll practices (whether or
not employee benefit plans) ("Employee Benefit Plans") as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including, without limitation, sick leave, vacation
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pay, severance pay, salary continuation for disability, consulting or other
compensation arrangements, retirement, deferred compensation, bonus, incentive
compensation, stock purchase, stock option, health including hospitalization,
medical and dental, life insurance and scholarship programs maintained for the
benefit of any present or former employees of the Business.
(b) With respect to each Employee Benefit Plan required to be listed
on the Disclosure Statement: (i) each Employee Benefit Plan has been
administered in compliance with its terms, and is in compliance in all material
respects with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), and all other applicable Laws (including, without
limitation, the funding and prohibited transaction provisions of ERISA and the
Code, continuation coverage obligations pursuant to Title V of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), and the Family
and Medical Leave Act of 1993 ("FMLA")); (ii) the Sellers have made or provided
for all contributions required under the terms of such Plans; (iii) there are
and during the past three (3) years there have been no inquiries, proceedings,
claims or suits pending or threatened by any governmental agency or authority or
by any participant or beneficiary against any of the Employee Benefit Plans, the
assets of any of the trusts under such Plans or the Plan sponsor or the Plan
administrator, or against any fiduciary of any of such Employee Benefit Plans
with respect to the design or operation of the Employee Benefit Plans; (iv) each
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA) which is
intended to be "qualified" within the meaning of Section 401(a) of the Code is
and has from its inception been so qualified, and any trust created pursuant to
any such Employee Pension Benefit Plan is and has been from its inception exempt
from federal income tax under Section 501(a) of the Code and the IRS has issued
each such Plan a favorable determination letter which is currently applicable or
an application for such a determination letter shall be made prior to the
expiration of the applicable remedial amendment period; (v) neither Sellers nor
any ERISA Affiliate is aware of any circumstance or event which would jeopardize
the tax-qualified status of any such Employee Pension Benefit Plan or the
tax-exempt status of any related trust; and (vi) Sellers and their ERISA
Affiliates have, prior to the Closing, delivered to Buyer, with respect to all
Employee Benefit Plans listed in the Disclosure Statement, true, complete and
correct copies of the following: all plan documents, handbooks, manuals,
collective bargaining agreements and similar documents governing employment
policies, practices and procedures; all the most recent summary plan
descriptions and any subsequent summaries of material modifications and all
other material employee communications discussing any employee benefit; Forms
5500 (including audit reports) as filed with the IRS for the most recent four
(4) plan years; the most recent report of the enrolled actuary for all plans
requiring actuarial valuation; all trust agreements with respect to employee
benefit plans; plan contracts with service providers and plan contracts with
insurers providing benefits for participants or liability insurance for
fiduciaries and other parties in interest or bonding; most recent annual audit
and accounting of plan assets for all funded plans; and most recent IRS
determination letter for all plans qualified under Section 401(a) of the Code.
As used herein, "ERISA Affiliate" shall refer to any trade or business, whether
or not incorporated, under common control with the Seller within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
(c) Neither Sellers nor any ERISA Affiliate maintains or has ever
maintained or been obligated to contribute to a "Multiemployer Plan" (as such
term is defined by
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Section 4001(a)(3) of ERISA), and neither Seller is bound by any collective
bargaining agreement or legally binding arrangement to maintain or contribute to
any Employee Benefit Plan.
(d) Neither Sellers nor any ERISA Affiliate maintains or has ever
maintained or been obligated to contribute to a Defined Benefit Plan (as defined
in Section 3(35) of ERISA).
(e) All reports and information required to be filed with the
Department of Labor and IRS or with plan participants and their beneficiaries
with respect to each Employee Benefit Plan required to be listed on the
Disclosure Statement have been filed and all annual reports (including Form 5500
series) of such Plans were certified, if applicable, without qualification by
each Plan's accountants and actuaries. There has been no material change with
regard to any such Employee Benefit Plan since the last annual report.
(f) All Employee Benefit Plans required to be listed on the Disclosure
Statement may, without liability, be amended, terminated or otherwise
discontinued except as specifically prohibited by federal law.
(g) Any bonding required under ERISA with respect to any Employee
Benefit Plan required to be listed on the Disclosure Statement has been obtained
and is in full force and effect and no funds held by or under the control of the
Sellers or any ERISA Affiliate are plan assets.
(h) Neither Sellers nor any ERISA Affiliate maintains any retired life
and/or retired health insurance plans which provide for continuing benefits or
coverage for any employee or any beneficiary of an employee after such
employee's termination of employment.
(i) Neither Sellers nor any ERISA Affiliate is bound by any collective
bargaining agreement of legally binding arrangement to maintain or contribute to
any Employee Benefit Plan.
(j) There has been no material violation of the "continuation coverage
requirements" of "group health plans" of former section 162(k) of the Code (as
in effect for tax years beginning on or before December 31, 1988) and of section
4980B of the Code (as in effect for tax years beginning on and after January 1,
1989) and Part 6 of Subtitle B of Title I of ERISA with respect to any group
health plan to which such continuation coverage requirements apply.
(k) There has been no material violation of the health insurance
obligation is imposed by section 9801 of the Code and Part 7 of Subtitle B of
Title I of ERISA ("HIPAA") with respect to any Employee Benefit Plan which is a
group health plan (as defined under Section 5000(b) (1) of the Code or Part 6 of
Subtitle B of Title I of ERISA) to which such insurance obligations apply.
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4.17 Labor Matters.
(a) Except as described in the Disclosure Statement: (i) to the
knowledge of Shareholder and Sellers, no application or petition for
certification of a collective bargaining agent is pending and none of the
employees of either Seller engaged in the Business are, or during the last two
(2) years have been, represented by any union or other bargaining
representative; (ii) to the knowledge of Shareholder and Sellers, during the
last two (2) years, no union has attempted to organize any group of the
employees of either Seller engaged in the Business, and no group of the
employees of either Seller engaged in the Business has sought to organize
themselves into a union or similar organization for the purpose of collective
bargaining; (iii) during the last two (2) years there has not been and there is
not currently pending any labor arbitration or proceeding in respect of the
grievance of any employee engaged in the Business, any application, charge or
complaint filed by any employee or union with the National Labor Relations Board
or any comparable state or local agency, any strike, slowdown, picketing or work
stoppage by any employees at the Facility, any lockout of any such employees or
any labor trouble or other labor-related controversy, occurrence or condition;
(iv) no agreement restricts either Seller from relocating or closing the
Facility or any portion thereof; and (v) to the knowledge of Shareholder and
Sellers, no such agreement, action, proceeding or occurrence is threatened or
contemplated by any person.
(b) Except as described in the Disclosure Statement with respect to
the Business and the Facility, neither Seller has been cited for violations of
the Occupational Safety and Health Act of 1970, 29 U.S.C. sec. 651 et seq.
("OSHA"), any regulation promulgated pursuant to OSHA, or any other statute,
ordinance, rule, or regulation establishing standards of workplace safety, or
paid any fines or penalties with respect to any such citation. Except as
described in the Disclosure Statement: (i) there have not been any inspections
of the Facility by representatives of the Occupational Safety and Health
Administration or any other government agency vested with authority to enforce
any statute, ordinance, rule or regulation establishing standards of workplace
safety; (ii) to the knowledge of Shareholder and Sellers, no representative of
any such government agency has attempted to conduct any such inspection or
sought entry to the Facility for that purpose; (iii) neither Seller has been
notified of any complaint or charge filed by any employee or employee
representative with any such government agency which alleges that either Seller
has violated OSHA or any other statute, ordinance, rule or regulation
establishing standards of workplace safety; (iv) neither Seller has been
notified that any employee or employee representative of the Business has
requested that any such government agency conduct an inspection of the Facility
to determine whether violations of OSHA or any other such statute, ordinance,
rule or regulation may exist; and (v) neither Seller maintains any condition,
process, practice or procedure at the Facility which would be deemed a material
violation of OSHA or any other statute, ordinance, regulation or rule
establishing standards or workplace safety.
(c) Attached to the Disclosure Statement are true and correct copies
of each OSHA Form No. 200 completed and maintained by Sellers at the Facility
for the last two (2) years.
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4.18 Employees. The Disclosure Statement sets forth the following
information for each employee of each Seller engaged in the Business (including
each such person on leave or layoff status) (collectively, the "Employees"):
employee name and job title; current annual rate of compensation (identifying
bonuses separately) and any change in compensation since December 31, 1997;
vacation accrued and service credited for purposes of vesting and eligibility to
participate in applicable Employee Benefit Plans; description of any material
pre-existing condition known to either Seller with respect to any applicable
Employee Benefit Plan; and any automobile leased or owned by either Seller
primarily for use by any of the foregoing persons. Except as described in the
Disclosure Statement, none of Employees is a party to, or is otherwise bound by,
any agreement or arrangement with any person or entity other than Sellers which
limits or adversely affects the performance of his or her duties, the ability of
Sellers to conduct the Business, or his or her freedom to engage in the Business
(including, without limitation, any confidentiality, non-competition,
non-solicitation or proprietary rights agreement). The Disclosure Statement
lists or describes each employment, severance, change of control, consulting,
commission, agency and representative agreement or arrangement relating to the
Business to which either Seller is a party or is otherwise bound, including,
without limitation, all agreements and commitments relating to wages, hours or
other terms or conditions of employment including, but not limited to, any oral
or written agreements or promises relating to the granting of an ownership or
profit-sharing interest in the Business (other than unwritten employment
arrangements terminable at will without payment of any contractual severance or
other amount). Each Seller has properly classified as "employees," and has paid
all required withholding taxes with respect to, all persons who qualify as
employees under the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
4.19 Full Disclosure.
(a) All documents and other papers delivered by or on behalf of
Shareholder and each Seller in connection with the transactions contemplated by
this Agreement are accurate and complete in all material respects and are
authentic. No representation or warranty of Shareholder or Sellers contained in
this Agreement or the Disclosure Statement contains any untrue statement of a
material fact or omits to state a fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading in any material respect.
(b) Except as described in this Agreement or the Disclosure Statement,
there is no fact known to Shareholder or Sellers (other than general economic or
industry conditions) which materially adversely affects or, so far as
Shareholder or Sellers can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition or results of operations of the
Business or the ability of Shareholder or either Seller to perform this
Agreement.
4.20 Net Asset Guarantee. Information Systems represents, warrants,
covenants and guarantees that the book value of the tangible Purchased Assets
delivered to Buyer (which Purchased Assets shall include cash or equivalents of
not less than $50,000) pursuant to Section 1.1 less the liabilities assumed by
Buyer pursuant to Section 1.3 (the "Net Assets") shall be at least $675,000.
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4.21 Absence of Changes or Events. Except as described on the Disclosure
Statement and except for actions taken after the date hereof pursuant to a
specific covenant hereunder, since the December 31, 1997 date neither of the
Sellers have:
(a) declared or paid any dividend or other distribution or payment in
respect of the shares of capital stock of either Seller or any repurchase or
redemption of any such shares of capital stock or other securities;
(b) discharged or satisfied any lien or encumbrance, or paid any
liabilities, other than in the ordinary course of business consistent with past
practice, or failed to pay or discharge when due any liabilities which the
failure to pay or discharge has caused or will cause any material damage or risk
of material loss to Purchased Assets or the Business;
(c) sold, assigned or transferred any of its Assets or properties
except in the ordinary course of business consistent with past practice;
(d) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected to any Lien, any of its
Purchased Assets, other than the liens, if any, for current taxes not yet due
and payable;
(e) made or suffered any amendment or termination of any Contract to
which it is a party or by which it is bound or canceled, modified or waived any
debts or claims held by it, other than in the ordinary course of business
consistent with past practice, or waived any right of substantial value, whether
or not in the ordinary course of business;
(f) suffered any damage, destruction or loss, whether or not covered
by insurance, of any item carried on its books of account at more than $1,000,
or suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility services required to conduct its Business;
(g) suffered any decrease in its retained earnings or working capital,
or any material adverse change in its Business;
(h) suffered any adverse change or any threat of an adverse change in
its relation with, or any loss or threat of loss of, any of its customers other
than usual attrition in the ordinary course of customers that are not
individually or in the aggregate material to the Business;
(i) made any capital expenditure or capital addition or betterment
except such as may be involved in ordinary repair, maintenance and replacement
of its Purchased Assets;
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(j) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its shareholders, directors, officers, employees or independent
contractors, or made any increase in, or any addition to, other benefits to
which any of its shareholders, directors, officers or employees may be entitled;
(k) changed any of the accounting principles followed by it or the
methods of applying such principles; or
(l) entered into any material transaction or any transaction other
than in the ordinary course of business consistent with past practice.
4.22 Affiliate Agreements. Except as described in the Disclosure Statement,
there are no agreements, arrangements or understandings between either Seller on
the one hand and Shareholder or any present or former director, shareholder or
officer of either Seller or any member of the immediate family of or any person
or entity controlling or controlled by any of such persons (a "Related Party").
No such agreements or arrangements between either Seller and all Related Parties
are included in the Purchased Assets, except for the Consulting Agreement with
MJ Consulting (an entity controlled by the spouse of Mr. Eric A. Fris, Jr.).
Shareholder has no ownership interest in any supplier or contractor of either
Seller.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Shareholder and each Seller as of
the date of this Agreement as follows:
5.1 Organization and Good Standing. Buyer is a Pennsylvania corporation
duly organized and validly existing under the laws of the Commonwealth of
Pennsylvania and has all necessary corporate power and authority to carry on its
business as presently conducted, to own and lease the assets which it owns and
leases and to perform all its obligations under each agreement and instrument by
which it is bound.
5.2 Power and Authorization. Buyer has full legal right, power and
authority to enter into and perform its obligations under this Agreement and
under the other agreements and documents (the "Buyer Transaction Documents")
required to be delivered by it prior to or at the Closing. The execution,
delivery and performance by Buyer of this Agreement and the Buyer Transaction
Documents have been duly authorized by all necessary corporate action. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms. When executed and delivered as contemplated herein,
each of the Buyer Transaction Documents shall constitute the legal, valid and
binding obligation of Buyer, enforceable against it in accordance with its
terms.
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5.3 No Conflicts.
(a) The execution, delivery and performance of this Agreement and the
Buyer Transaction Documents do not and will not (with or without the passage of
time or the giving of notice):
(i) violate or conflict with any provision of Buyer's Articles of
Incorporation, by-laws or of any Law binding upon Buyer; or
(ii) violate or conflict with, result in a breach of, or
constitute a default or otherwise cause any loss of benefit under any material
agreement or other material obligation to which Buyer is a party.
(b) No consents or approvals of, or registrations, notifications,
filings and/or declarations with, any court, government or governmental agency
or instrumentality, creditor, lessor or other person are required to be given or
made by Buyer in connection with the execution, delivery and performance of this
Agreement and the other agreements and instruments contemplated herein, other
than such as have been obtained or made or which the failure to obtain would not
have a material adverse affect on Buyer's ability to consummate the transactions
contemplated herein and therein.
(c) There are no judicial, administrative or other governmental
actions, proceedings or investigations pending or, to the knowledge of Buyer,
threatened, that question any of the transactions contemplated by this Agreement
or the validity of this Agreement or any of the other agreements or instruments
contemplated hereby or which, if adversely determined, would have an a material
adverse effect upon the ability of Buyer to enter into or perform its
obligations under this Agreement or any of the other agreements or instruments
contemplated hereby. Buyer has not received any request from any governmental
agency or instrumentality for information with respect to the transactions
contemplated hereby.
5.4 Brokers. No person acting on behalf of Buyer or any of its affiliates
or under the authority of any of the foregoing is or will be entitled to any
brokers' or finders' fee or any other commission or similar fee, directly or
indirectly, from any of such parties in connection with any of the transactions
contemplated by this Agreement, other than Argentum Partners, whose fees and
expenses shall be paid by Buyer.
5.5 Capital Structure. The capital structure of the Buyer is as presented
in its most recent filings with the U.S. Securities and Exchange Commission (the
"SEC") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
SECTION 6. EMPLOYEE BENEFITS AND EMPLOYMENT.
6.1 Employment.
(a) Buyer will offer employment to each employee of the Business
listed on Schedule 6.1 attached hereto at a rate of pay at least equal to such
employee's rate of pay (base and bonus) in effect on, and with such benefits as
shall be, in the aggregate, generally comparable to
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such employee's benefits immediately prior to, the Closing Date. Employees who
accept such employment shall be referred to as "Transferred Employees" for
purposes of this Agreement. Each Seller shall be responsible for any severance
pay obligations with respect to individuals employed in the Business who are not
Transferred Employees and whose employment with Sellers is terminated. Anything
contained in or implied by the provisions of this Section 6.1 to the contrary
notwithstanding, the provisions of this Section shall not create any third-party
beneficiary rights in any person, including any Transferred Employee.
(b) Each Transferred Employee wishing to be eligible to receive stock
option grants pursuant to The Judge Group, Inc. 1996 Incentive Stock Option and
NonQualified Stock Option Plan for Key Employees and Non-Employee Directors
will, after a period of consideration ending on July 31, 1998, be required to
sign Buyer's NonSolicitation and Confidentiality Agreement in order to receive
options; Each Seller agrees to assist Buyer in obtaining such executed
agreements from the Transferred Employees.
6.2 Employee Pension Benefit Plans. The benefits under any Employee Pension
Benefit Plan (as defined in Section 3(2) of ERISA) maintained by either Sellers
which have accrued to any Transferred Employee as of the Closing Date shall be
frozen as of the Closing Date and no further benefits shall accrue under any
such Employee Pension Benefit Plan with respect to such Transferred Employee.
Buyer assumes no responsibility with respect to any such Employee Pension
Benefit Plan.
6.3 Employee Welfare Benefit Plans. Buyer shall assume and continue the
Employee Welfare Benefit Plans (as defined in Section 3(1) of ERISA) maintained
by either Seller as of the Closing Date with respect to the Transferred
Employees in accordance with the terms and conditions of this Section 6.3 and
such Employee Welfare Benefit Plans. However, Buyer reserves the right to
modify, amend, suspend, or terminate such Employee Welfare Benefit Plans at any
time after the Closing Date. Notwithstanding the foregoing, Sellers shall remain
responsible and liable for any acts or omissions by Sellers with respect to such
Employee Welfare Benefit Plans occurring prior to the Closing Date.
In addition, each Seller shall remain responsible for any injury
sustained prior to the Closing Date that is related to a worker's compensation
claim prior to the Closing Date.
6.4 Vacation and Holidays. Buyer will provide to the Transferred Employees
the same vacations and holidays as provided by Sellers through December 31, 1997
except that Buyer will not permit the use of any vacation carried over from 1997
or prior years.
6.5 Health Continuation Coverage. Each Seller shall be responsible for all
health continuation coverage requirements of the Code and ERISA for all periods
prior to the Closing Date. Buyer shall be responsible for all health
continuation coverage requirements of the Code and ERISA for Transferred
Employees for all periods subsequent to the Closing Date.
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6.6 Health Insurance Portability and Accountability Act. Each Seller shall
be responsible for all health insurance obligations imposed by HIPAA with
respect to any Employee Welfare Benefit Plan which is a group health plan (as
defined under Section 5000(b)(1) of the Code or Part 6 of Subtitle B of Title I
of ERISA) for all periods prior to the Closing Date. Buyer shall be responsible
for all HIPAA obligations with respect to any Employee Welfare Benefit Plan
which is a group health plan and which is assumed by Buyer for Transferred
Employees for all periods subsequent to the Closing Date.
6.7 Reporting and Disclosure Requirements. Each Seller shall be responsible
for filing all annual reports and satisfying all other reporting and disclosure
requirements with respect to any Employee Benefit Plan for all Plan Years ending
prior to the Closing Date.
6.8 Employee Records. Each Seller shall grant Buyer full access to all
employee records relating to the Transferred Employees.
SECTION 7. CERTAIN CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
The obligation of Buyer to consummate the acquisition of the Purchased
Assets is subject to the fulfillment by or at the Closing of each of the
following conditions:
7.1 Representations and Warranties. The representations and warranties of
Shareholder and each Seller contained in this Agreement shall be deemed to have
been made again at and as of the Closing and shall then be true and correct.
7.2 Performance of Covenants. Shareholder and each Seller shall have
performed or complied with all of the agreements, covenants and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing.
7.3 Net Asset Value. Sellers shall have delivered to Buyer at the Closing
Net Assets worth at least $675,000.
7.4 Approvals. The consent or approval of all persons necessary for the
consummation of the transactions contemplated hereby shall have been obtained
and no such consent or approval: (a) shall have been conditioned upon the
modification, cancellation or termination of any lease, commitment, agreement,
easement, right or Authorization included in the Purchased Assets; or (b) shall
impose on the Buyer, any condition, provision or requirement not presently
imposed upon Sellers, and which is described in the Disclosure Statement, or any
condition that would be more restrictive after the Closing on Buyer, than the
conditions presently imposed on Sellers.
7.5 Legal Matters. The Closing shall not violate any order or decree of any
court or governmental body of competent jurisdiction and no suit, action,
proceeding or investigation shall have been brought or threatened by any person
(other than the Buyer or an affiliate of Buyer) which questions the validity or
legality of this Agreement or the transactions contemplated hereby.
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7.6 No Material Adverse Change. There shall not have been any material
adverse change or threat of material adverse change in the Business or the
Purchased Assets since February 28, 1998, or in any development of a nature that
is, or is likely to be materially adverse to the Business or the Purchased
Assets since that date.
7.7 Opinion of Counsel. Buyer shall have received the opinion satisfactory
to Buyer of Williams, Williams, Ruby & Plunkett, counsel for Shareholder and
Sellers, in the form attached hereto as Exhibit VI dated as of the Closing.
7.8 Closing Certificates. The Buyer shall have received certificates from
the Sellers, dated the Closing Date, certifying in such detail as the Buyer may
reasonably request that the conditions specified in Sections 7.1, 7.2 and 7.3
hereof have been fulfilled.
SECTION 8. CERTAIN CONDITIONS PRECEDENT TO OBLIGATIONS OF SHAREHOLDER AND
SELLERS.
The obligation of Shareholder and Sellers to consummate the sale of the
Purchased Assets is subject to the fulfillment by or at the Closing of each of
the following conditions:
8.1 Representations and Warranties. Buyer's representations and warranties
contained in this Agreement shall be deemed to have been made again at and as at
the Closing and shall then be true and correct.
8.2 Performance of Covenants. Buyer shall have performed or complied with
all of the agreements, covenants and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
8.3 Approvals. The consent or approval of all persons described on the
Disclosure Statement pursuant to Sections 4.5(b) and 4.12 shall have been
obtained.
8.4 Legal Matters. The Closing shall not violate any order or decree of any
court or governmental body of competent jurisdiction and no suit, action,
investigation, or legal or administrative proceeding shall have been brought or
threatened by any person (other than Seller or an affiliate of Seller) which
questions the validity or legality of this Agreement or the transactions
contemplated hereby.
8.5 Lease. Buyer shall have entered into the Lease.
8.6 Closing Certificates. The Sellers shall have received certificates from
the Buyer, dated the Closing Date, certifying in such detail as the Sellers may
reasonably request that the conditions specified in Sections 8.1 and 8.2 hereof
have been fulfilled.
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SECTION 9. CERTAIN POST-CLOSING MATTERS; COVENANTS
9.1 Confidential Information. From and after the Closing, unless expressly
consented to in writing by Buyer, Shareholder and the Sellers shall not, and
shall use best efforts to cause all Transferred Employees and others to,
directly or indirectly, use or disclose to any third person, any trade secret,
financial data, customer list, pricing or marketing policies or plans or other
proprietary or confidential information relating to the Business.
9.2 Covenant Not to Compete. Shareholder agrees that, unless acting with
the prior written consent of the Buyer, he will not, directly or indirectly,
(a) for a period of two (2) years after the Closing Date, within 100
miles of any office location for which Shareholder has management
responsibility, or for a period of one (1) year after the Closing Date and
within 100 miles of a location in which there is any office or facility of the
Buyer: (i) without the prior written approval of Buyer, which approval may be
granted or denied in the sole discretion of the Buyer, directly or indirectly,
own, manage, operate, control, be employed by, consult with, participate in, or
be connected in any manner with the ownership, management, operation, or control
of any business which engages, directly or indirectly, in the (a) placement of
technical personnel or (b) business of providing technical project management
services in competition with the Buyer's business as conducted on the date
hereof; (ii) be or become a stockholder, partner, owner, officer, director or
employee or agent of, or a consultant to or give financial or other assistance
to, any person or entity considering engaging in any such activities or so
engaged; (iii) seek in competition with the business of Buyer to procure orders
from or do business with any customer of Buyer for which Buyer has provided
services in the preceding twelve (12) months; (iv) solicit, or contact with a
view to the engagement or employment by, any person or entity of any person who
is an employee or contractor of Buyer; (v) seek to contract with or engage (in
such a way as to adversely affect or interfere with the business of Buyer) any
person or entity who has been contracted with or engaged to manufacture,
assemble, supply or deliver products, goods, materials or services to Buyer;
(vi) engage in or participate in any effort or act to induce any of the
customers, associates, consultants, or employees of Buyer or any of its
affiliates to take any action which is materially disadvantageous to Buyer or
any of its affiliates; provided, however, that nothing herein shall prohibit the
Shareholder and his affiliates from owning as passive investors, in the
aggregate not more than 5% of the outstanding publicly traded stock of any
corporation so engaged; and
(b) for a period of two (2) years after the Closing Date, in any manner
contact, induce, solicit or influence any client of the Business or of the Buyer
or any of its affiliates to cause such client to terminate its relationship with
the Business and/or Buyer.
In the event that the provisions of this Section 9.2 should ever be deemed
to exceed the time or geographic limitations or any other limitations permitted
by applicable law in any jurisdiction, then such provisions shall be deemed
reformed in such jurisdiction to the maximum permitted by applicable law.
Shareholder and each Seller specifically acknowledge and agree that
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the foregoing restrictions are reasonable and necessary to protect the
legitimate interests of Buyer, that Buyer would not have entered into this
Agreement in the absence of such restrictions, that any violation of such
restrictions will result in irreparable injury to the Buyer, that the remedy at
law for any breach of the foregoing restrictions will be inadequate, and that,
in the event of any such breach, the Buyer, in addition to any other relief
available to it, shall be entitled to temporary injunctive relief before trial
from any court of competent jurisdiction as a matter of course and to permanent
injunctive relief without the necessity of quantifying actual damages.
(c) If Buyer shall fail to pay any Seller any amount required to be
paid by Buyer hereunder or under the Notes, and such failure shall be continuing
for 90 days after written notice from such Seller to Buyer, such Seller shall be
released from the non-competition provision set forth in this Section 9.2;
provided, however, that the exercise by Buyer of any right of set-off as
provided in Section 10.6 hereof shall not release such Seller from the
non-competition provision set forth in this Section 9.2.
9.3 Pursuit of Authorizations. Shareholder and each Seller shall use his or
its best efforts to take, or cause to be taken, such action, to execute and
deliver, or cause to be executed and delivered, such additional documents and
instruments and to do, or cause to be done, all things necessary, proper or
advisable under the provisions of this Agreement and under applicable law to
transfer any Intellectual Property to the Buyer and, at the expense of Buyer, to
permit the Buyer to promptly obtain all governmental consents, licenses,
permits, franchises, grants or other authorizations which are used in the
Business ("Authorizations") and are required for the Business and operations of
the Buyer after the Closing.
9.4 Assignment of Purchased Assets; Consents. Prior to the Closing Date and
for a period of one year thereafter, Shareholder and Sellers shall use
reasonable efforts to obtain all non-governmental approvals, consents or waivers
necessary to assign to Buyer the Purchased Assets (the "Interests"), as soon as
practicable; provided, however, Shareholder and Sellers shall not be obligated
to pay any consideration therefor to the third party from whom such approval,
consent or waiver is requested. To the extent any of the approvals, consents or
waivers referred to above have not been obtained by Shareholders and Sellers,
Sellers' only obligations with respect thereto shall be to use their reasonable
efforts during the remaining term of such Interest to: (i) cooperate with Buyer
in any reasonable and lawful arrangements designed to provide the benefits of
such Interest to Buyer so long as Buyer reimburses Sellers for all payments,
charges or other liabilities made or suffered by Sellers in connection
therewith; and (ii) enforce, at the request of Buyer and for the account of
Buyer, any rights of Seller arising from such Interest against such issuer
thereof or the other party or parties thereto (including the right to elect to
terminate any such Interest in accordance with the terms thereof upon the
written advice of Buyer).
9.5 Rule 144. The Buyer covenants that it will cause Judge Group to (i) use
its best efforts to comply with the current public information requirements of
Rule 144(c)(1) under the Securities Act; and (ii) at all such times as Rule 144
is available for use by the holders of the Securities, the Buyer will furnish
each such holder upon request with all information within the possession of the
Buyer required for the preparation and filing of Form 144.
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9.6 Doubtful Account Reserve Payment. On September 30, 1998, Buyer agrees
to pay to Information Solutions the amount, if any, which equals the portion of
the Doubtful Account Reserve which remains unused as of September 5, 1998,
provided, however, that the Doubtful Account Reserve may only be debited with
respect to those specific accounts receivable which are included in the
Purchased Assets that have not been collected by Buyer as of September 5, 1998.
On September 30, 1998, Information Solutions shall pay to Buyer the amount, if
any, by which the actual amount of uncollected accounts receivable which are
included in the Purchased Assets exceeds the Doubtful Account Reserve as of
September 5, 1998; and Buyer shall assign such accounts to Information
Solutions.
9.7 Use of Name; Dissolution of ISI Systems. From and after the Closing,
Sellers (and any shareholders, principals or officers of Sellers) shall not use
for any purpose, the names "ISI," "Information Solutions" or any similar
sounding name or any variant thereof, except that (i) ISI Systems may continue
to use such names solely for the purpose of dissolving, winding up and
liquidating its corporate existence, which it hereby covenants to do as soon as
reasonably practicable; and (ii) Information Solutions shall, as soon as
reasonably practicable, change its name on all applicable governing instruments
and documents including, without limitation, its articles of incorporation, bank
deposit or money market accounts and other similar items.
9.8 Audited Financial Statements. Upon the request of Buyer, Shareholder
and each Seller shall, at the expense of Buyer, take, or cause to be taken by
their accountants, such action as is necessary to provide to Buyer audited
financial statements of Sellers, and appropriate accountant's consents, that
comply with the requirements of Regulation S-X under the Securities Exchange Act
of 1934, as amended.
SECTION 10. INDEMNIFICATION
10.1 Indemnification by Sellers.
(a) Each Seller shall indemnify and hold Buyer and Buyer's officers,
directors, employees and shareholders harmless against and in respect of any and
all losses, costs, expenses, claims, damages, obligations and liabilities,
including interest, penalties and reasonable attorneys fees and disbursements
("Damages"), which Buyer or any such person may suffer, incur or become subject
to arising out of, based upon or otherwise in respect of: (i) any inaccuracy in
or breach of any representation or warranty of Shareholder or either Seller made
in or pursuant to this Agreement, or any Seller Transaction Document; (ii) any
breach or nonfulfillment of any covenant or obligation of Shareholder or either
Seller contained in this Agreement or any Seller Transaction Document; (iii) any
liability or other obligation of either Seller not expressly assumed by Buyer
pursuant to Section 1.3.
10.2 Indemnification by Buyer. Buyer shall indemnify and hold Sellers and
Sellers' officers, directors and shareholders harmless against and in respect of
any and all Damages
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which either Seller may suffer, incur or become subject to arising out of, based
upon or otherwise in respect of: (a) any inaccuracy in or breach of any
representation or warranty of Buyer made in or pursuant to this Agreement or any
Buyer Transaction Document; (b) any breach or nonfulfillment of any covenant or
obligation of Buyer contained in this Agreement or any Buyer Transaction
Document; and (c) the operation or failure to perform by Buyer of the Business
and the Purchased Assets after the Closing Date, including any liability or
other obligation of Seller assumed by Buyer pursuant to Section 1.3 herein.
10.3 Inter-Party Claims. Any party seeking indemnification pursuant to this
Section 10 (the "Indemnified Party") shall notify the other party or parties
from whom such indemnification is sought (the "Indemnifying Party") of the
Indemnified Party's assertion of such claim for indemnification, specifying the
basis of such claim. The Indemnified Party shall thereupon give the Indemnifying
Party reasonable access to the books, records and assets of the Indemnified
Party which evidence or support such claim or the act, omission or occurrence
giving rise to such claim and the right, upon prior notice during normal
business hours, to interview any appropriate personnel of the Indemnified Party
related thereto.
10.4 Third Party Claims.
(a) Each Indemnified Party shall promptly notify the Indemnifying
Party of the assertion by any third party of any claim with respect to which the
indemnification set forth in this Section relates (which shall also constitute
the notice required by Section 10.3). The Indemnifying Party shall have the
right, upon notice to the Indemnified Party within twenty (20) business days
after the receipt of any such notice, to undertake the defense of or, with the
consent of the Indemnified Party (which consent shall not unreasonably be
withheld), to settle or compromise such claim. The failure of the Indemnifying
Party to give such notice and to undertake the defense of or to settle or
compromise such a claim shall constitute a waiver of the Indemnifying Party's
rights under this Section 10.4(a) and shall preclude the Indemnifying Party from
disputing the manner in which the Indemnified Party may conduct the defense of
such claim or the reasonableness of any amount paid by the Indemnified Party in
satisfaction of such claim.
(b) The election by the Indemnifying Party, pursuant to Section
10.4(a), to undertake the defense of a third-party claim shall not preclude the
party against which such claim has been made also from participating or
continuing to participate in such defense, so long as such party bears its own
legal fees and expenses for so doing.
10.5 Limitations. Sellers shall have no obligation to indemnify Buyer or
any other person against Damages pursuant to Section 10.1(a) of this Agreement
arising out of or based upon any inaccuracy in or breach of any representation
or warranty made in or pursuant to this Agreement or any Transaction Document
unless and until the aggregate of all such Damages suffered or incurred by Buyer
and such persons exceeds $10,000; in which event Buyer and such persons shall be
entitled to indemnification for the full amount of all Damages suffered or
incurred.
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10.6 Right of Set-Off.
(a) Upon the terms and subject to the conditions set forth in this
Section 10.6, Buyer shall have the right to set-off, against any amount which
may be owed by Buyer to Sellers pursuant to this Agreement any amount owed by
Sellers to Buyer, or any other person pursuant to this Agreement. The exercise
of such right of set-off by Buyer shall not constitute an event of default under
any obligation owed by Buyer to either Seller.
(b) In the event that Buyer elects to exercise the right of set-off
provided for herein, Buyer shall provide Sellers with at least 14 days prior
written notice of such election. If (i) Sellers fail to pay to Buyer the amount
claimed to be owed (and for which Buyer seeks to exercise its right of set-off
pursuant to this Section 10.6), and (ii) prior to the expiration of such 14 day
period, Sellers notify Buyer in writing of its disagreement with Buyer's
exercise of the right of set-off provided for herein, Buyer shall be entitled,
upon the expiration of such 14 day period, to exercise its right of set-off
provided for herein by delivering the amount sought to be set-off by Buyer to an
escrow account (the "Escrow Account") pending resolution of such dispute
pursuant to arbitration, as provided for in Section 11.7 hereof. Such escrowed
funds, including all interest accruing thereon, if any, shall be held in the
Escrow Account until such time as the dispute is resolved by the panel of
arbitrators, as provided in Section 11.7 hereof, and shall be released by the
escrow agent only as expressly directed by said arbitrators.
SECTION 11. MISCELLANEOUS.
11.1 Knowledge. All references in this Agreement to Shareholder's or either
Seller's knowledge respecting a particular matter shall conclusively be deemed
and presumed to include, without limitation, all facts, circumstances and
conditions known to Shareholder or either Seller regarding such matter.
11.2 Survival of Representations and Warranties.
(a) The representations and warranties made by the parties in this
Agreement and in the certificates, documents, Schedules and Exhibits delivered
pursuant hereto shall survive the consummation of the transactions herein
contemplated for a period of two (2) years, except that the representations and
warranties set forth in Section 4.15 shall remain in force for a period
corresponding to that of the applicable statute of limitations. Anything in this
Agreement to the contrary notwithstanding, the representations and warranties of
Shareholder and either Seller hereunder, and the right of Buyer to
indemnification for breach thereof, shall not be affected by any investigation
of either Seller or its subsidiaries made by Buyer or its agents or
representatives.
(b) The disclosures in the Disclosure Statement shall relate only to
the representations and warranties to which they expressly refer and to no other
representation or warranty in this Agreement. In the event of any inconsistency
between the statements made in the body of this Agreement and those contained in
the Disclosure Statement (other than an express exception to a specifically
identified statement), those in this Agreement shall control.
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11.3 Further Assurances. Each party hereto shall use best efforts to comply
with all requirements imposed hereby on such party and to cause the transactions
contemplated hereby to be consummated as contemplated hereby, and shall, from
time to time and without further consideration, either before or after the
Closing, execute such further instruments, and take such other actions, as any
other party hereto shall reasonably request in order to fulfill its obligations
under this Agreement and to effectuate the purposes of this Agreement and to
provide for the orderly and efficient transition of the Business to Buyer. Each
party shall promptly notify the other parties of any event or circumstance known
to such party that could prevent or delay the consummation of the transactions
contemplated by this Agreement, or which would indicate a breach or
non-compliance with any of the terms, conditions, representations, warranties or
agreements of any of the parties to this Agreement.
11.4 Costs and Expenses. Except as otherwise expressly provided herein,
each party shall bear its own expenses in connection herewith. Any and all
transfer, documentary and similar taxes and recording and filing fees (other
than sales and use taxes which shall be borne by Buyer) incurred in connection
with the transactions contemplated herein shall be borne equally by Sellers and
by Buyer, except that any filing fees required by the U.S. Patent and Trademark
Office with respect to the assignments of the patents and patent applications
included in the Intellectual Property shall be borne by Buyer.
11.5 Notices. All notices or other communications permitted or required
under this Agreement shall be in writing and shall be sufficiently given if and
when hand delivered to the persons set forth below, or if sent by documented
overnight delivery service or registered or certified mail, postage prepaid,
return receipt requested, or by telegram, telex or telecopy, receipt
acknowledged, addressed as set forth below or to such other person or persons
and/or at such other address or addresses as shall be furnished in writing by
any party hereto to the others. Any such notice or communication shall be deemed
to have been given as of the date received, in the case of personal delivery, or
on the date shown on the receipt or confirmation therefor in all other cases.
To Buyer:
Judge Technical Services, Inc.
Two Bala Plaza, Suite 405
Bala Cynwyd, PA 19004
Attention: Richard T. Furlano, President
Telecopier: (610) 664-7090
To Sellers and Shareholder:
John J. Runyon
8625 Richardson Road, Suite 100
Walled Lake, MI 48390
Telecopier: 248-360-4453
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11.6 Assignment and Benefit.
(a) Neither Shareholder nor Sellers shall assign this Agreement or any
rights hereunder, or delegate any obligations hereunder, without the prior
written consent of Buyer. The foregoing notwithstanding, subject to compliance
with all applicable federal and state securities laws, Sellers shall have the
right to assign, pledge or hypothecate the Securities. Subject to the foregoing,
this Agreement and the rights and obligations set forth herein shall inure to
the benefit of, and be binding upon, the parties hereto, and each of their
respective successors, heirs and assigns.
(b) This Agreement shall not be construed as giving any person, other
than the parties hereto and their permitted successors, heirs and assigns, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any of the provisions herein contained, this Agreement and all provisions and
conditions hereof being intended to be, and being, for the sole and exclusive
benefit of such parties, and permitted successors, heirs and assigns and for the
benefit of no other person or entity
11.7 Settlement of Disputes. The parties will attempt in good faith to
resolve any and all controversies of every kind and nature between the parties
to this Agreement arising out of or in connection with the existence,
construction, validity, interpretation or meaning, performance, non-performance,
enforcement, operation, breach, continuance or termination of this Agreement
(each, a "Dispute") promptly by negotiations between senior executives of the
parties who have authority to settle the Dispute. The disputing party shall give
the other party written notice of the Dispute. Within twenty days after receipt
of said notice, the receiving party shall submit to the other a written
response. The notice and response shall include (a) a statement of each party's
position and a summary of the evidence and arguments supporting its position,
and (b) the name and title of the executive who will represent that party. The
executives shall meet at a mutually acceptable time and place within thirty days
of the date of the disputing party's notice and thereafter as often as they
reasonably deem necessary to exchange relevant information and to attempt to
resolve the Dispute. If the matter has not been resolved within sixty days of
the disputing party's notice, or if the party receiving said notice will not
meet within thirty days, the Dispute shall be submitted to arbitration in
accordance with the rules of the American Arbitration Association. The parties
further agree that all matters shall be governed by the laws of the Commonwealth
of Pennsylvania. The parties further agree that any arbitration conducted
pursuant to this section, shall be held in Philadelphia, Pennsylvania before a
panel of three (3) arbitrators, one selected each of the parties and the third
select by the arbitrators selected by the parties. All deadlines specified in
this Section may be extended by mutual agreement.
11.8 Amendment, Modification and Waiver. The parties may, by mutual
agreement, amend or modify this Agreement in any respect, and Buyer and Sellers
may: (a) extend the time for the performance of any of the obligations of the
other, (b) waive any inaccuracies in
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representations and warranties by the other, (c) waive compliance by the other
with any of the obligations contained in this Agreement, and (d) waive the
fulfillment of any condition precedent to the performance under this Agreement
of the waiving party. Any such amendment, modification, extension or waiver
shall be in writing. The waiver by a party of any breach of any provision of
this Agreement shall not constitute or operate as a waiver of any other breach
of such provision or of any other provision hereof, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
11.9 Governing Law; Consent to Jurisdiction. This Agreement is made
pursuant to, and shall be construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania (and United States federal law, to the extent
applicable), irrespective of the principal place of business, residence or
domicile of the parties hereto, and without giving effect to otherwise
applicable principles of conflicts of law. Any of the parties, before or during
the arbitration contemplated by Section 11.7, may apply to a court as set forth
below for a temporary restraining order or preliminary injunction or similar
equitable relief to protect its interests pending completion of such arbitration
proceedings and, in particular, to enforce the provisions of Section 11.7 and to
aid the arbitration contemplated thereby. For this purpose, each party agrees
that suit may be instituted in any federal court in the Eastern District of
Pennsylvania or in Montgomery County state court in the Commonwealth of
Pennsylvania, and each party waives any objection which such party may now or
hereafter have to the laying of the venue of any such action, suit or
proceeding, and irrevocably submits to the jurisdiction of any such court. Any
and all service of process and any other notice in any such action, suit or
proceeding shall be effective against any party if given as provided in Section
11.5 herein. Nothing contained in this Section 11.9, in Section 11.7 or
elsewhere herein, shall be deemed to affect the right of any party to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction other than
Pennsylvania. Nothing contained herein or in any Transaction Document shall
prevent or delay Buyer, Shareholder or Sellers from seeking, in any court of
competent jurisdiction, specific performance or other equitable remedies in the
event of any breach or intended breach by Shareholder, Sellers or Buyer of any
of his or its obligations hereunder.
11.10 Section Headings and Defined Terms. The section headings contained
herein are for reference purposes only and shall not in any way affect the
meaning and interpretation of this Agreement. The terms defined herein and in
any agreement executed in connection herewith include the plural as well as the
singular and the singular as well as the plural. Except as otherwise indicated,
all agreements defined herein refer to the same as from time to time amended or
supplemented or the terms thereof waived or modified in accordance herewith and
therewith.
11.11 Severability. The invalidity or unenforceability of any particular
provision, or part of any provision, of this Agreement shall not affect the
other provisions or parts hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions or parts were omitted.
11.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original; and any person may
become a party hereto
31
<PAGE>
by executing a counterpart hereof, but all of such counterparts together shall
be deemed to be one and the same instrument. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for any
of the other counterparts.
11.13 Entire Agreement, etc. This Agreement, together with the Disclosure
Statement and the agreements, Exhibits, Schedules, appendices and certificates
referred to herein or delivered pursuant hereto, constitute the entire agreement
between the parties hereto with respect to the purchase and sale of the
Purchased Assets and supersede all prior agreements and understandings. All
Schedules, Exhibits and appendices attached hereto and referred to herein are
hereby incorporated herein and made a part hereof as if fully set forth herein.
The submission of a draft of this Agreement or portions or summaries thereof
does not constitute an offer to purchase or sell the Purchased Assets, it being
understood and agreed that neither Buyer, Shareholder nor Sellers shall be
legally obligated with respect to such a purchase or sale or to any other terms
or conditions set forth in such draft or portion or summary unless and until
this Agreement has been duly executed and delivered by all parties.
32
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement, all as of the date first above written.
JUDGE TECHNICAL SERVICES, INC.
By: /s/ Richard T. Furlano
---------------------------------------
Richard T. Furlano, President
INFORMATION SOLUTIONS, INC.
By: /s/ John J. Runyon
---------------------------------------
John J. Runyon, Chief Executive Officer
ISI SYSTEMS, INC.
By: /s/ John J. Runyon
---------------------------------------
John J. Runyon, President
(X) /s/ John J. Runyon
---------------------------------------
John J. Runyon
GUARANTEE
The Judge Group, Inc., a Pennsylvania corporation ("Judge Group"), hereby
guarantees the payment of Buyer's obligations set forth in Section 2 of this
Agreement, including Buyer's obligations to make payments pursuant to the Notes.
THE JUDGE GROUP, INC.
By: /s/ Richard T. Furlano
---------------------------------------
Richard T. Furlano, President
<PAGE>
33
EXHIBIT 99
THE-JUDGE-GROUP (JUDG)
The Judge Group, Inc. Acquires Information
Solutions, Inc.
Business Editors/Computers & Electronic Writers
BALA CYNWYD, Pa. -- (BUSINESS WIRE) -- March 6, 1998 -- The Judge Group, Inc.
(NASDAQ: JUDG), one of the leading IT and staffing solutions providers,
announced today it has acquired the assets of Information Solutions, Inc. (ISI),
a nationwide provider of IT staffing services. ISI's 25 employees will join The
Judge Group's contract placement division, Judge Technical Services. The
addition of ISI will expand Judge Technical Services' presence in the Midwest.
ISI operated profitably in 1997 while generating about $7 million in revenue
during the year.
ISI serves its customers across the United States from its office in Detroit,
Michigan and recently established a presence in the United Kingdom. ISI
specialists are qualified to consult, teach, implement and service today's most
advanced information systems. From client/server to mainframe systems, or from
the most popular CASE/4GL development and programmer productivity tools to
outstanding credentials in data and voice communications and network
implementations, ISI provides a wide range of IT solutions in order to meet its
clients' IT needs.
ISI was founded in 1986 by John Runyon to provide IT solutions in a timely and
cost-effective manner for a variety of organizations worldwide. ISI employs
information technology specialists, with the most current, state of the art
skills that are needed to meet client's requirements and their dynamic changing
environment. John Runyon, Chief Executive Officer, will continue to operate the
business and become Vice President of the Midwest Region for Judge Technical
Services, the contract placement division of The Judge Group.
"The Judge Group is a growing, dynamic force in the rapidly expanding IT
industry," added Mr. Runyon. "We are very excited about the tremendous
opportunities and benefits which will be presented to both our customers and
employees. We expect to significantly contribute to the future success of The
Judge Group."
Richard T. Furlano, President of Judge Technical Services, Inc. commented, "We
are extremely happy that our national presence is being expanded by the
complement of staffing services that ISI provides. We are also thrilled that
John Runyon will now play an important role in expanding our presence in IT
Staffing internationally as well as in the United States. Throughout his career,
John has worked extensively in the consulting services industry in Australia and
we are looking forward to applying his expertise to ultimately expand globally."
<PAGE>
Commenting on the acquisition, Martin Judge, Jr., Chairman and Chief Executive
Officer of The Judge Group said, "The Judge Group is committed to building
shareholder value in part by expanding our presence in the IT contract staffing
portion of our total IT solutions business. This is the first step in what we
hope will be an active year of acquisitions for us in 1998. We finished 1997 as
a $100 million corporation. Our goal is to have a revenue "run rate" twice that
a year from now through a combination of internal growth and acquisitions."
The Judge Group, Inc., one of the leading IT and staffing solutions provider,
services the information technology and engineering needs of its clients through
the following four complementary operating units: the Contract Placement
business, which provides IT and engineering personnel on a contract basis; the
Permanent Placement business, which provides IT and engineering personnel on a
permanent basis; the Information Management Solutions business, which provides
consulting, networking, imaging, document management, workflow and document
conversion services; and finally the IT Training business, which provides
standard and customized IT training on established and emerging software
applications for Corporate America and Government.
This news release is being made pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Certain matters contained in
this news release, including but not limited to, the likelihood of the company
regaining momentum in its contract placement business, ability to improve the
performance of its document management and imaging business, the ability to
successfully consummate and integrate its acquisitions, its ability to build
shareholder value and expressions of optimism about opportunities in its various
business areas may constitute forward-looking statements. Any one, or all, of
the following factors could cause actual financial results to differ materially
from those financial results mentioned in the forward-looking statements:
unavailability of qualified technical consultants; the Company's ability to
reduce costs and improve revenues in its Document Management, Imaging and
Network Services business; to successfully implement its acquisition strategy,
to manage its growth and to respond to technological developments; industry
competition factors and other risks identified in filings with Securities and
Exchange Commission.
For more information, contact Richard T. Furlano at (610) 667-7700 or
[email protected].
