ASSET PURCHASE AGREEMENT by and among Tri-Tel Communications, Inc. The CRS Group, Inc. and Corporate Resource Services, Inc., Dated as of May 7, 2013

ASSET PURCHASE AGREEMENT


by and among

Tri-Tel Communications, Inc.

 

The CRS Group, Inc.

 

and

Corporate Resource Services, Inc.,


Dated as of May  7, 2013

 

---

 

 

 

---

 

 

 

---

 

 

 

---

 

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 7 2013 (the “Execution Date”), by and among Tri-Tel Communications, Inc., a New York corporation (“Seller”), The CRS Group, Inc. a Delaware corporation (“Buyer”) and Corporate Resource Services, Inc., a Delaware corporation (“CRS”).  Seller, Buyer and CRS are referred to collectively herein as the “Parties.”

WHEREAS, Buyer desires to purchase from the Seller substantially all of the assets of the Summit Software division of Seller, subject to certain limited exceptions as hereinafter specified, and to assume certain limited liabilities and obligations of the Seller as hereinafter specified, all upon the terms and conditions herein contained;

WHEREAS, Seller desires to sell, transfer, convey, assign and deliver the same to Buyer upon the terms and conditions herein contained; and

NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants and agreements herein contained and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF ASSETS

On and subject to the terms and conditions of this Agreement, at the Closing, Seller shall, sell, assign, transfer, convey and deliver to Buyer, and Buyer shall, purchase and acquire from Seller, free and clear of all Encumbrances, all of Seller’s right, title and interest, as of the Closing, in and to the following assets, properties and rights that are used in connection with the Business as currently conducted by Seller (collectively, the “Purchased Assets”):

---

 

Notwithstanding anything to the contrary herein, Buyer shall not purchase from Seller any assets, properties and rights that are not included among the Purchased Assets (collectively, the “Excluded Assets”), listed on Seller’s Disclosure Schedule 1.2 and including, without limitation:

---

 

Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall assume and pay, honor, perform and discharge when due the following liabilities and obligations, to the extent arising and relating to the period after the Closing (collectively, the “Assumed Liabilities”):

Buyer shall not assume, and Seller shall remain exclusively obligated to discharge, all liabilities and obligations of Seller (whether known or unknown, including but not limited to any liabilities incurred with respect to the Seller Employee Plans) other than the Assumed Liabilities (collectively, the “Excluded Liabilities”).   

---

 

(ii) an Assignment and Assumption of Customer Contracts and liabilities associated with the Customer Contracts, executed by Seller evidencing the Seller’s assignment and the Buyer’s assumption of the Customer Contracts and liabilities associated with the Customer Contracts in the form attached hereto as Exhibit B;

(iii) the Business Records;

---

 

Section 1.7      Non-Assignable Assets

 

Notwithstanding anything in this Agreement to the contrary, to the extent that the assignment of any contracts or the transfer of any properties or assets requires the consent of any other Person or Governmental Authority and such consent has not been obtained, this Agreement shall not constitute an agreement to assign or transfer any such contracts, properties or assets or any claim, right or benefit arising thereunder or resulting therefrom if any such attempted assignment or transfer would constitute a breach or default thereunder or otherwise materially adversely affect the rights of Buyer thereunder.  If consent to the assignment or transfer of any such contracts, properties or assets is not obtained, or if an attempted assignment or transfer thereof in the absence of such a consent would be ineffective or would materially adversely affect the rights of Buyer thereunder, then, at Buyer’s request, Seller shall cooperate with Buyer in any reasonable arrangement designed to provide to Buyer the benefits under such contracts, properties or assets; provided that such cooperation by Seller shall not cause Seller to violate any terms of any such contract or any applicable Law; provided,  further, that Buyer shall assume all of the post-Closing liabilities and obligations of Seller under such contracts to the extent to which Buyer receives the post-Closing benefits thereof.  Notwithstanding the foregoing, nothing in this Section 1.7 shall require Buyer to waive any condition to Closing contained in Section 7.1 or 7.2 hereof or excuse Seller from making all deliveries required by Section 1.6(b).

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer that as of the date hereof and as of the Closing: 

---

 

Seller has all necessary power and authority, corporate and otherwise, to enter into this Agreement and the other agreements and instruments to be delivered by Seller pursuant to this Agreement and to carry out its obligations hereunder and thereunder.  The execution and delivery by Seller of this Agreement and the consummation by Seller of the transactions contemplated hereby and therby (the “Transactions”) have been duly authorized by all necessary corporate action on its part.  This Agreement has been duly executed and delivered by Seller and, assuming the due authorization, execution and delivery hereof by CRS and Buyer, constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Seller has heretofore furnished to Buyer true, complete and correct copies of its certificate of incorporation and bylaws (together, the “Seller Organizational Documents”).  Such Seller Organizational Documents are in full force and effect. 

The execution and delivery of this Agreement by Seller does not, and the consummation by Seller of the Transactions will not, (a) conflict with or violate the organizational documents of Seller, (b) conflict with or violate any Law or Order applicable to Seller, or by which Seller or any of its properties is bound, (c) result in a breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, or result in the creation of an Encumbrance on any of the Purchased Assets pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument or obligation, oral or written, to which Seller is a party or by which Seller or any of its properties is bound, or (d) require Seller to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority, except (i) as set forth in Section 2.4 of the Seller Disclosure Schedule, (ii) for any filings required pursuant to the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “Exchange Act”), or (iii) in the case of clauses (b) through (d) above, where such conflicts, violations, breaches, defaults or other acts or omissions could not reasonably be expected to have Seller Material Adverse Effect.

---

 

Except as disclosed in Section 2.6 of the Seller Disclosure Schedule, as of the date hereof (a) there is no private or governmental action, suit, proceeding, litigation, arbitration, or investigation, criminal prosecution or inquiry (“Action”) concerning Seller or the Purchased Assets pending or, to the knowledge of the Seller, threatened and (b) there is no legally binding judgment, decree, order, injunction, decision or award of any Governmental Authority (“Order”) against Seller or the Purchased Assets that, in either case, affects or is reasonably likely to affect the Purchased Assets or Seller’s performance of its obligations under this Agreement.

Section 2.7 of the Seller Disclosure Schedule sets forth a true and complete list of the employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) currently maintained, sponsored or contributed to by Seller or any entity that would be deemed a “single employer” with Seller within the meaning of Section 414(b), (c), (m) or (o) of the Code, and all bonus, stock option, stock purchase, stock appreciation right, incentive, deferred compensation, supplemental retirement, post-retirement or post-termination health or welfare benefit, severance, welfare, medical, life, vacation, sickness, change in control, death benefit and other similar fringe and employee benefit plans, programs, policies and arrangements, and all employment and consulting agreements, in each case for the benefit of, or relating to, any employee or former employee of Seller (including their beneficiaries) (collectively, the “Seller Employee Plans”). Except as set forth in Section 2.7 of the Seller Disclosure Schedule, with respect to any of the Seller Employee Plans, (i) each Seller Employee Plan (other than a Multiemployer Plan) intended to qualify under Section 401(a) of the Code is so qualified and has received a favorable determination letter from the Internal Revenue Service (the “IRS”) or, pursuant to Revenue Proceeding 2005-16, may rely upon an opinion or advisory letter; (ii) no such Seller Employee Plan is a “multiemployer plan” within the meaning of Section 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code (a “Multiemployer Plan”) or a single employer pension plan within the meaning of Section 4001(a)(15) of ERISA that is subject to Sections 4063 and 4064 of ERISA (a “Multiple Employer Plan”), and no withdrawal liability exists with respect to any Multiemployer Plan or Multiple Employer Plan; (iii) there has been no “prohibited transaction” within the meaning of Section 4975(c) of the Code or Section 406 of ERISA, involving the assets of any of the Seller Employee Plans; (iv) no “accumulated funding deficiency” (within the meaning of Section 412 of the Code and Section 302 of ERISA) has been incurred, and no excise or other Taxes have been incurred or are due and owing by Seller with respect to any of the Seller Employee Plans because of any failure to comply with the minimum funding standards of the Code and ERISA; (v) no Action has been instituted or is threatened against or with respect to any Seller Employee Plan (other than routine claims for benefits and appeals of such claims); (vi) each Seller Employee Plan (other than a Multiemployer Plan) complies and has been maintained and operated in accordance with its terms and applicable Law, including, without limitation, ERISA and the Code; (vii) no Seller Employee Plan (other than a Multiemployer Plan) is under audit or investigation by the IRS, U.S. Department of Labor or any other Governmental Authority; (viii) except as required by Section

---

 

4980B(f) of the Code, no Seller Employee Plan provides medical, death or welfare benefits (whether or not insured) with respect to current or former employees of Seller beyond their retirement or other termination of employment; and (ix) the consummation of the Transactions (either alone or in conjunction with any other event) will not entitle any current or former employee of Seller to any payment (whether of severance pay, unemployment compensation, golden parachute, bonus or otherwise) or increase the amount of compensation due to any employee of Seller. 

Section 2.8 of the Seller Disclosure Schedule lists the material Permits required in connection with the operation of the Business as it is now being operated and conducted by Seller (collectively, “Seller Permits”).  Seller is in compliance with the terms and conditions of such Seller Permits, and, as of the date hereof, no revocation, suspension or cancellation of any such Seller Permit is pending or, to the knowledge of the Seller, threatened.

Except as set forth in Section 2.10 of the Seller Disclosure Schedule, Seller has made available to Buyer a correct and complete copy of each Assumed Contract, or in the case of an oral Assumed Contract, a correct and complete written description thereof.  With respect to each Assumed Contract, except as set forth in Section 2.10 of the Seller Disclosure Schedule:  (i) the Assumed Contract is a legal, valid and binding obligation of the parties thereto and is in full force and effect; (ii) Seller is not in breach of or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by Seller under the Assumed Contract; and (iii) to Seller’s knowledge, no other party to an Assumed Contract is in breach of or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by such other party, under any such Assumed Contract.

---

 

The Business has been operated since January 4, 2008 in compliance in all material respects with all Laws applicable thereto. 

Except as set forth in Section 2.14 of the Seller Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Seller and any such fee or commission shall be borne by the Seller.

Section 2.15 of the Seller Disclosure Schedule sets forth a complete and accurate list of all Intellectual Property owned or licensed by Seller and used or useful in connection with the Business (collectively, the “Business Intellectual Property”), and, to the Seller’s knowledge, the Business Intellectual Property is sufficient for the conduct of the Business as currently conducted.

---

 

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF BUYER AND CRS

Buyer and CRS hereby represent and warrant to the Seller as of the date hereof and as of the Closing that, except as set forth in the disclosure schedule delivered by Buyer to Seller and attached hereto and made a part hereof (the “Buyer Disclosure Schedule”):

Each of CRS and Buyer is duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has the requisite corporate power and authority to enter into, execute and deliver this Agreement, consummate the Transactions, and to carry out its obligations hereunder.  The execution and delivery by each of CRS and Buyer of this Agreement and the consummation by each of CRS and Buyer of the Transactions have been duly authorized by all necessary corporate action on its part.  This Agreement has been duly executed and delivered by each of CRS and Buyer, and constitutes the legal, valid and binding obligation of CRS and Buyer, enforceable against CRS and Buyer in accordance with the terms hereof (except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization, arrangement, voidable preference and other similar laws relating to or affecting the rights of creditors generally and except as the same may be subject to the effect of general principles of equity).

---

 

The execution and delivery of this Agreement by CRS and Buyer do not, and the consummation by Buyer of the Transactions will not, (a) conflict with or violate the organizational or governing documents of CRS or Buyer, (b) conflict with or violate any Law or Order applicable to CRS or Buyer or by which CRS or Buyer or any of their properties is bound, (c) result in a breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument or obligation to which CRS or Buyer is a party or by which CRS or Buyer or any of their properties is bound, or (d) require CRS or Buyer to obtain any consent, approval, authorization or permit of, or to make any filing with or notification to, any Governmental Authority, except (i) as set forth in Section 3.2 of the Buyer Disclosure Schedule, (ii) for any filings required by the Exchange Act, and (iii) in the case of clauses (b) through (d) above, where such conflicts, violations, breaches, defaults or other failures or occurrences would not prohibit, prevent, enjoin, restrict or materially impair or delay any of the Transactions.

Except as disclosed in Section 3.3 of the Buyer Disclosure Schedule, as of the date hereof, (a) there is no Action pending or, to the knowledge of Buyer, threatened against CRS or Buyer before any Governmental Authority that, if adversely determined, would prohibit, prevent, enjoin, restrict or materially impair or delay any of the Transactions, and (b) there is no Order against CRS or Buyer that would prohibit, prevent, enjoin, restrict or materially impair or delay any of the Transactions.

No broker, finder or investment banker is entitled to any brokerage, finder’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of CRS or Buyer, and any such fee or commission shall be borne by Buyer.

ARTICLE IV

COVENANTS OF SELLER

Except as otherwise contemplated by this Agreement or as disclosed in Section 4.1 of the Seller Disclosure Schedule, or unless Buyer shall give its prior written consent, between the date of this Agreement and the Closing Date or the earlier termination of this Agreement, Seller shall (i) conduct the Business in the ordinary course of business and in a manner consistent with past practice and (ii) use commercially reasonable efforts to preserve intact its current business organization, keep available the services of its current employees and maintain satisfactory relationships with its customers, clients, suppliers and others having business relationships with it.  Buyer agrees to cooperate reasonably with Seller in connection with the foregoing.  Without limiting the generality of the foregoing, and except as contemplated by this Agreement or disclosed in Section 4.1 of the Seller Disclosure Schedule, Seller shall not, between the date of this Agreement and the Closing Date or the

---

 

earlier termination of this Agreement, do or agree to do any of the following without the prior written consent of Buyer and Seller:

Seller shall give prompt notice to Buyer if any of the following occurs after the date of this Agreement: (i) there has been a material failure of Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; (ii) receipt by Seller of any material notice or other material communication from any Governmental Authority in connection with the Transactions; (iii) the occurrence of an event which would cause a representation or warranty made in Article II to become untrue, or that would or reasonably could cause a condition in Section 7.2 not to be satisfied; or (iv) the commencement or threat, in writing, of any Action against the Seller, or any of their properties, with respect to the Transactions. No such notice to Buyer shall have any effect on the determination of whether or not any of the conditions to Closing or to the consummation of the Transactions have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.

---

 

On the Execution Date, the Seller shall deliver to Buyer for filing, the documents necessary to forfeit the trade name of Summit Software; provided, that Buyer hereby agrees not to file such documents until on or after the Closing Date.  After the Closing Date, neither Seller nor any of its Affiliates, shall transact business as, or use in the conduct of its businesses or otherwise, the name Summit Software or any other similar names.  From and after the Closing, Seller covenants and agrees not to and to cause its Affiliates not to use or otherwise employ any of the trade names, corporate names, d/b/a’s or similar Intellectual Property rights utilized by Seller in the conduct of the Business, which rights are included in the Purchased Assets purchased hereunder.  If the Closing does not take place on or by the Outside Date and this Agreement has been terminated, Buyer shall promptly return to the Seller the documents delivered by it on the Execution Date pursuant to this Section 4.4.

Seller shall pay all employees of the Business for services rendered by said employees through the day prior to the Closing Date.

 

The Seller covenants and agrees that, except as otherwise contemplated by this Agreement or unless Buyer shall give its prior written consent, Seller shall not between the date of this Agreement and the Closing Date or the earlier termination of this Agreement, take or fail to take, or agree to take or fail to take, any action which would make any representation or warranty made by Seller, herein untrue or incorrect in any material respect.

---

 

ARTICLE V

COVENANTS OF BUYER

Buyer covenants and agrees that, except as otherwise contemplated by this Agreement or unless the Seller shall give its prior written consent, Buyer shall not between the date of this Agreement and the Closing Date or the earlier termination of this Agreement, take or fail to take, or agree to take or fail to take, any action which would make any representation or warranty made by Buyer, herein untrue or incorrect in any material respect.

.  Buyer shall give prompt written notice to the Seller if any of the following occurs after the date of this Agreement: (i) there has been a material failure of Buyer to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; (ii) receipt by CRS or Buyer of any material notice or other communication from any Governmental Authority in connection with the Transactions; (iii) the occurrence of an event which would cause a condition in Section 7.3 not to be satisfied; or (iv) the commencement or threat, in writing, of any Action against CRS or Buyer, or any of their properties, with respect to the Transactions. No such notice to Seller shall have any effect on the determination of whether or not any of the conditions to Closing or to the consummation of the Transactions have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.

Notwithstanding anything to the contrary herein, after the Closing Date, Seller and/or its duly authorized representatives shall have the right, during reasonable business hours and upon three (3) Business Days’ notice, to inspect, examine and make copies of the business records included in the Purchased Assets reasonably necessary for the purpose of addressing audit and regulatory matters with any Governmental Authority.  The right of Seller to inspect, examine and make copies of such Business Records under this Section 5.3 shall survive for a period of five (5) years from the Closing Date. 

ARTICLE VI

ADDITIONAL AGREEMENTS OF THE PARTIES

Upon reasonable prior notice, either Party shall afford to the officers, employees, accountants, counsel and other agents and representatives of the other Party reasonable access at reasonable times, during the period prior to the Closing Date or the earlier termination of this Agreement, to all of the Party’s properties, books, contracts, commitments and records related to the Business.  In addition, during such period, each Party shall furnish to the other Party all information concerning the Business and Party’s properties and personnel related to the Business as either Party may reasonably request, and shall make available to Buyer and/or Seller the appropriate individuals (including attorneys,

---

 

accountants and other professionals) for discussion of the Business and Sellers’ properties and personnel related to the Business as Buyer may reasonably request.  Notwithstanding the foregoing, no such review, inquiry or investigation shall affect any representations or warranties of any of the Parties herein or the conditions to the obligations of any of the Parties.

Each of the Parties agrees that no press release or announcement concerning this Agreement or the Transactions shall be issued by it or any of its Affiliates without the prior consent of the other Parties (which consent shall not be unreasonably withheld or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case such Party shall use its commercially reasonable efforts to allow the other Party reasonable time to comment on such release or announcement in advance of such issuance.

Buyer shall pay, when due, all transfer, documentary, sales, use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of purchase of the Purchased Assets by the Buyer and shall, at its own expense, file all necessary Returns and other documentation with respect to such Taxes, fees and charges.  Seller shall cooperate with Buyer in the preparation and execution of these Returns, or other documentation.

---

 

Seller shall use its commercially reasonable efforts to, on or prior to the Closing Date, obtain from the counterparty to each contract, agreement, lease, license or other instrument set forth in Section 2.4 of the Seller Disclosure Schedule, such counterparty’s required consent to the Transactions, in the case of any Assumed Contracts, on terms reasonably acceptable to Buyer (the “Consents”). 

From and after the date of this Agreement, until the earlier of the Closing or the termination of this Agreement pursuant to Section 10.1, (i) Seller shall, and shall cause their respective representatives, directors, officers, partners, employees, counsel, members, accountants, advisors and other authorized representative (collectively, “Representatives”) terminate any existing discussions with third parties relating to any sale of Seller, any sale of the Business or any sale of the Purchased Assets, any merger of Seller or any joint venture or business combination involving Seller; and (ii) the Seller shall not and each shall cause their respective Representatives not to, directly or indirectly, initiate, solicit or engage in discussions or negotiations with, or provide any information to, or otherwise cooperate with, encourage or assist, any third party regarding any such transaction described in inquiries or proposals described in (i) above.  Seller agrees to immediately advise the Buyer of any inquiries or proposals received from third parties regarding any such transaction.

THE SHARES OF COMMON STOCK IN CORPORATE RESOURCE SERVICES, INC. (THE “COMPANY”) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND SHALL NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO THE COMPANY (2) TO A NON-U.S. PERSON (AS THAT TERM IS DEFINED IN RULE 902 UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING

---

 

THE REQUIREMENTS OF REGULATION S UNDER THE SECURITIES ACT (INCLUDING THE PRELIMINARY NOTES THERETO), (3) PURSUANT TO ANOTHER APPLICABLE EXEMPTION OR EXCLUSION FROM THE REGISTRATION REQUIREMENT OF THE SECURITIES ACT OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE U.S. STATE SECURITIES LAWS AND THE SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION AFTER, IN THE CASE OF TRANSFERS PURSUANT TO CLAUSES (2) OR (3) OF THIS LEGEND, THE TRANSFEROR HAS FURNISHED TO THE COMPANY AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH AN EXEMPTION OR EXCLUSION IS AVAILABLE.

ARTICLE VII

CONDITIONS TO THE CLOSING

The respective obligations of each Party to consummate the Transactions shall be subject to the satisfaction or waiver (where permissible), on or prior to the Closing Date, of the following condition:  no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order (whether temporary, preliminary or permanent) that is then in effect and has the effect of making the Transactions illegal or otherwise preventing or prohibiting consummation of the Transactions.

The obligation of Buyer to consummate the Transactions shall also be subject to the satisfaction or waiver (where permissible), on or prior to the Closing Date, of each of the following conditions:

---

 

The obligation of Seller to consummate the Transactions shall also be subject to the satisfaction or waiver (where permissible), on or prior to the Closing Date, of each of the following conditions:

---

 

ARTICLE VIII

TERMINATION

This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing Date:

ARTICLE IX

INDEMNIFICATION PROVISIONS

Seller agrees that it shall indemnify, defend and hold harmless Buyer, CRS and each of their officers, directors, Affiliates, partners, stockholders, employees, agents and other representatives (collectively, the “Buyer Indemnified Parties”) from and against any damages, claims, losses, liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees) (each, a “Liability” and, collectively, “Liabilities”) incurred by any of the foregoing Persons:

 Buyer agrees that it shall indemnify, defend and hold harmless Seller and its officers, directors, Affiliates, partners, members, managers, employees, agents and other representatives from and against any Liabilities incurred by any of the foregoing Persons arising out of (i) any inaccuracy or breach of any representation or warranty of Buyer contained in Article III of this Agreement, (ii) any breach of any covenant or agreement of Buyer contained in this Agreement, (iii) any of the Assumed Liabilities or (iv) the operation of the Business from and after the Closing.

For purposes of this Article IX, any Party entitled to be indemnified under Article IX is referred to herein as an “Indemnified Party,” and any Party obligated to provide indemnification under Article IX is referred to herein as an “Indemnifying Party.”  The obligations and liabilities of the Parties under this Article IX with respect to, relating to or arising out of claims of third parties

---

 

(individually, a “Third Party Claim” and, collectively, the “Third Party Claims”) shall be subject to the following terms and conditions:

Except as set forth in Sections 4.3 and 10.9 and the immediately following sentence, the remedies provided in this Article IX shall be the sole and exclusive remedies of the Parties with respect to any claim hereunder.  Notwithstanding the foregoing, each Party agrees and acknowledges that nothing in this Agreement (including this Article IX shall limit or restrict any Parties’ rights to maintain or recover any amounts in connection with any action or claim based upon fraud, intentional misrepresentation or willful or criminal misconduct or deceit.

No claim shall be brought under Section 9.1 or 9.2 unless the Indemnified Parties, or any of them, at any time prior to the applicable Survival Date, gives the Indemnifying Party (i) written notice of the existence of any such claim, specifying the nature and basis of such claim and the amount thereof, to the extent known or (ii) written notice pursuant to Section 9.3 of any Third Party Claim, the existence of which might give rise to such a claim.  Upon the giving of such written notice pursuant to the preceding sentence, the Indemnified Parties, or any of them, shall have the right to commence legal proceedings subsequent to the Survival Date for the enforcement of their rights under Section 9.1 or 9.2.

No Indemnified Party’s right to indemnification under this Article IX shall be affected by any investigation conducted by, or any knowledge of, any Indemnified Party related to (i) any representation or warranty of the Seller set forth in Article II or (ii) any covenant of the Seller in this Agreement, whether conducted or acquired before or after the date of this Agreement or on or after the Closing Date.

---

 

ARTICLE X

GENERAL PROVISIONS

The representations and warranties made by the Seller in Article II of this Agreement shall survive the Closing until the date that is 24 months after the Closing Date; provided,  however that the representations and warranties made by the Seller in Section 2.13 hereof shall terminate when the applicable statutes of limitations with respect to the liabilities in question expire (after giving effect to any extensions or waivers thereof).  The representations and warranties made by Buyer in Article III of this Agreement shall survive the Closing until the date that is 24 months after the Closing Date.  The covenants and agreements of the Parties shall survive until they terminate in accordance with their own terms.  Disclosure by any Party in any section of its disclosure schedule shall be deemed disclosure with respect to all applicable sections so long as it is readily apparent from the context that the disclosure in one section is also applicable to such other sections.  The date upon which any representation, warranty, covenant or agreement contained in this Agreement shall terminate, if any, is called the “Survival Date.”

All notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confirmation of receipt) or (b) one Business Day following the day sent by nationally-recognized overnight courier (with written confirmation of receipt), in each case at the following addresses (or to such other address as a Party may have specified by notice given to the other Party pursuant to this provision):

Corporate Resource Services, Inc.
160 Broadway, 13^th Floor
New York, NY  10038
Telephone: (212) 346-7960
Attention:  John P. Messina

with a copy to:

Carter Ledyard & Milburn LLP
2 Wall St.
New York, NY  10005
Telephone: (212) 732-3200
Attention:  Steven J. Glusband
                  Justin A. Greenblum

Tri-Tel Communications, Inc.
160 Broadway, 2^nd Floor
New York, New York 10038

---

 

Telephone: (212) 346-7960
Attention: Gina L. Russo

with a copy to:

Michael J.Agusta, Esq., P.C.

1012 Maple Drive

Franklin Square, New York 11010

Telephone: (516) 355-2070 ext. 12

Attention Michael J. Agusta, Esq.

 

Any notice or other communication that has been given or made as of a date that is not a Business Day shall be deemed to have been given or made on the next succeeding day that is a Business Day.

The headings contained in this Agreement and the disclosure schedules are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or the disclosure schedules.  Unless the context of this Agreement otherwise requires, words of any gender are deemed to include each other gender and words using the singular or plural number also include the plural or singular number, respectively.

This Agreement, together with the exhibits, appendicies and schedules attached hereto, and any other agreement or certificates delivered pursuant hereto constitute the entire agreement, and supersede all prior agreements and undertakings, both written and oral, between the parties hereto with respect to the subject matter hereof.

Neither this Agreement nor any rights or obligations hereunder shall be assigned by any Party without the prior written consent of the other Party.  This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and its successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under this Agreement, other than Article IX hereof (which are intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons).

This Agreement shall be governed by, and construed in accordance with, the Laws of the State of New York applicable to contracts executed in and to be performed entirely in that State, without giving effect to any choice or conflict of law provision or rule, whether in the State of New York or any other jurisdiction, that would cause the Laws of any jurisdiction other than the State of New York to apply.  The Parties hereto hereby irrevocably submit to the jurisdiction of any state or federal court sitting in the County of New York, State of New York, and, only after the Closing, any other court in which a Third Party Claim is asserted for which an Indemnified Party is entitled to indemnification under Article IX, in any action or proceeding arising out of or relating to this Agreement, and the

---

 

Parties hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined exclusively in such state or federal court.  The Parties hereto hereby irrevocably waive, to the fullest extent permitted by Law, any objection which they or any of them may now or hereafter have to the laying of the venue of any such action or proceeding brought in any such court, and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

This Agreement may be executed and delivered (including by facsimile transmission or .pdf) in one or more counterparts, and by the parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

In case any provision in this Agreement shall be held invalid, illegal or unenforceable in a jurisdiction, such provision shall be modified or deleted, as to the jurisdiction involved, only to the extent necessary to render the same valid, legal and enforceable, and the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby nor shall the validity, legality or enforceability of such provision be affected thereby in any other jurisdiction.

Except as otherwise expressly provided herein, all fees, costs and expenses incurred in connection with this Agreement and the Transactions shall be paid by the Party incurring the same, regardless of the termination, if any, of this Agreement pursuant to Section 8.1.

---

 

This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the Seller, Buyer, and CRS (with respect to any provision applicable to them). 

Any Party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other Party hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the Party to be bound.  The failure of any Party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

ARTICLE XI

CERTAIN DEFINITIONS

For purposes of this Agreement, the term:

“Action” shall have the meaning ascribed to it in Section 2.6.

“Affiliate” of a Person means a Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the first mentioned Person. For the purposes of this Agreement the Parties shall not be deemed to be Affiliates.

“Agreement” shall have the meaning ascribed to it in the Preamble.

“Assumed Contracts” shall have the meaning ascribed to it in Section 1.1(d).

“Assumed Liabilities” shall have the meaning ascribed to it in Section 1.3.

 “Bill of Sale” shall have the meaning ascribed to it in Section 1.6(b)(i).

“Business” means all of the business engaged in by the Summit Software division of Seller, including the development, marketing and sale of software for the professional employer organization industry

“Business Day” means any calendar day which is not a Saturday, Sunday or federal holiday.

“Business Intellectual Property” has the meaning given to that term in Section 2.15.

“Business Records” shall have the meaning ascribed to it in Section 1.1(c).

“Buyer” shall have the meaning ascribed to it in the Preamble.

---

 

“Buyer Disclosure Schedule” shall have the meaning ascribed to it in the preamble to Article III.

“Closing” shall have the meaning ascribed to it in Section 1.6(a).

“Closing Date” shall have the meaning ascribed to it in Section 1.6(a).

“Code” means the Internal Revenue Code of 1986, as amended.

“Consents” shall have the meaning ascribed to it in Section 6.5.

 “Control” (including the terms “Controlled by” and “under common Control with”) means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

“CRS” shall have the meaning ascribed to it in the Preamble.

“CRS Shares” shall mean the shares of common stock of CRS, par value $0.0001 per share.

“Employee Assets” shall have the meaning ascribed in Section 1.1(b).

“Employment Agreements” shall have the meaning ascribed to it in Section 7.2(e).

“Encumbrance” means any charge, claim, community property interest, condition, easement, covenant, warrant, demand, encumbrance, equitable interest, lien, deed of trust, mortgage, option, purchase right, pledge, hypothecation, security interest, right of first refusal or other right of third parties or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership, the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement or any purchase option, call or similar right.

“Environmental, Health and Safety Laws” means all Laws, Permits and contracts or agreements with Governmental Authorities relating to or addressing pollution or protection of the environment, public health and safety, or employee health and safety, including the Solid Waste Disposal Act, as amended, 42 U.S.C. §6901, et seq., the Clean Air Act, as amended, 42 U.S.C. §7401 et seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251 et seq., the Emergency Planning and Community Right-to-Know Act, as amended, 42 U.S.C. §11001 et seq., CERCLA, the Hazardous Materials Transportation Uniform Safety Act, as amended, 49 U.S.C. §1804 et seq., the Occupational Safety and Health Act of 1970, as amended, the regulations promulgated thereunder, and any similar Laws and other requirements having the force or effect of Law, and all Orders issued or promulgated thereunder, and all related common law theories.

“ERISA” shall have the meaning ascribed to it in Section 2.7.

“Exchange Act” shall have the meaning ascribed to it in Section 2.4.

“Excluded Assets” shall have the meaning ascribed to it in Section 1.2.

---

 

“Excluded Liabilities” shall have the meaning ascribed to it in Section 1.4.

“Excluded Industry” shall mean all of the business of Seller that does not relate to the operation of Summit Software.

“Execution Date” shall have the meaning ascribed to it in the Preamble.

“Financial Statements” shall have the meaning ascribed to it in Section 2.5(a).

“Fixed Assets” shall have the meaning ascribed to it in Section 1.1(a).

“GAAP” means United States generally accepted accounting principles consistently applied.

“Governmental Authority” means any federal, state or local government, governmental, regulatory or administrative authority, agency, self-regulatory body, instrumentality or commission, and any court, tribunal or judicial or arbitral body (including private bodies) and any political or other subdivision, department or branch of any of the foregoing. 

“Hazardous Materials” means any hazardous or toxic chemicals, materials or substances, pollutants, contaminants, or crude oil or any fraction thereof (including as such terms are defined under any Environmental, Health and Safety Law).

“Intellectual Property” means all rights of Seller in and to (a) patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations in part, revisions, extensions, reexaminations, provisionals, divisions, renewals, revivals, and foreign counterparts thereof and all registrations and renewals in connection therewith, (b) trademarks, service marks, trade dress, logos, trade names and corporate names and other indicia of origin and corporate branding, assumed names and dbas, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (c) works of authorship, copyrightable works, copyrights and all applications, registrations and renewals in connection therewith, (d) mask works and all applications, registrations and renewals in connection therewith, (e) trade secrets, inventions and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals, assembly, test, installation, service and inspection instructions and procedures, technical, operating and service and maintenance manuals and data, hardware reference manuals and engineering, programming, service and maintenance notes and logs), (f) Internet addresses, uniform resource locaters, domain names, Websites and Web pages, (g) any and all other intellectual property and proprietary rights, (h) company-wide telephone numbers.

“Indemnified Party” shall have the meaning ascribed to it in Section 9.3.

“Indemnifying Party” shall have the meaning ascribed to it in Section 9.3.

“IRS” shall have the meaning ascribed to it in Section 2.7.

---

 

“Laws” means any federal, state or local statute, law, rule, ordinance, code or regulation of any Governmental Authority.

“Lease” shall have the meaning ascribed to it in Section 7.2(h).

“Liability” and, collectively, “Liabilities” shall have the meaning ascribed to it in Section 9.1.

“Multiemployer Plan” shall have the meaning ascribed to it in Section 2.7.

“Multiple Employer Plan” shall have the meaning ascribed to it in Section 2.7.

“Order” shall have the meaning ascribed to it in Section 2.6.

“Outside Date” shall have the meaning ascribed to it in Section 8.1(b).

“Parties” shall have the meaning ascribed to it in the Preamble.

“Permits” means permits, certificates, licenses, approvals and other authorizations from Governmental Authorities.

“Permitted Encumbrances” means (i) Encumbrances for Taxes not yet due and payable or being contested in good faith by appropriate proceedings and for which there are adequate reserves in the Financial Statements; (ii) workers or unemployment compensation liens arising in the ordinary course of the Business; and (iii) mechanic’s, materialman’s, supplier’s, vendor’s or similar liens arising in the ordinary course of the Business securing amounts that are not delinquent.

“Person” means an individual, corporation, partnership, Limited Liability Company, association, trust, unincorporated organization or other entity.

“Purchase Price” shall have the meaning ascribed to it in Section 1.5(a).

“Purchased Assets” shall have the meaning ascribed to it in Section 1.1.

“Representatives” shall have the meaning ascribed to it in Section 6.6.

“Restrictive Covenants” shall have the meaning ascribed to it in Section 4.3(c).

“Restricted Period” shall have the meaning ascribed to it in Section 4.3(a).

“Restricted Territories” for purposes of this agreement, the following jurisdictions shall be considered Restricted Territories: Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Florida, Georgia, Iowa, Idaho, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Missouri, Montana, North Carolina, North Dakota, New Hampshire, New Jersey, New Mexico, New York, Ohio, Ontario, Pennsylvania, South Carolina, Tennessee, Texas, Utah and Virginia.

“Return” means, with respect to Taxes, any report, return, statement, estimate, declaration, form or other information required to be supplied to a Governmental Authority in connection with Taxes.

---

 

“Securities Act” shall have the meaning ascribed to it in Section 1.5(b).

“Seller” shall have the meaning ascribed to it in the Preamble.

“Seller Disclosure Schedule” means the disclosure schedule delivered by Seller and attached hereto and made a part hereof.

“Seller Employee Plans” shall have the meaning ascribed to it in Section 2.7.

“Seller Employees” shall have the meaning ascribed to it in Section 2.12(a).

“Seller Organizational Documents” shall have the meaning ascribed to it in Section 2.3.

“Seller Material Adverse Effect” means a material adverse effect on (A) the Business or the Purchased Assets or (B) the ability of the Seller to consummate the Transactions, except in each case for any such effect resulting from, arising out of or relating to (i) general economic conditions in the United States of America or changes therein which affects the business of the temporary and permanent placement of employees generally and not the Seller in particular; (ii) national or international political conditions, including any engagement in or escalation of hostilities, pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack; or (iii) the taking of any action by Buyer or any of its Affiliates.

“Seller Permits” shall have the meaning ascribed to it in Section 2.8.

“Special Tax Losses” means and includes any and all Losses sustained, suffered or incurred by the Buyer or CRS arising from or in connection with Taxes payable by the Seller with respect to any period ending on or prior to the Closing Date (or the portion ending on the Closing Date of any period that includes but does not end on the Closing Date) or the untruth, inaccuracy or breach of the representations and warranties of the Seller contained in Section 2.13.

“Subsidiary” means any Person with respect to which a specified Person directly or indirectly (A) owns a majority of the equity interests, (B) has the power to elect a majority of that Person’s board of directors or similar governing body, or (C) otherwise has the power, directly or indirectly, to direct the business and policies of that Person.

“Survival Date” shall have the meaning ascribed to it in Section 10.1.

“Tax” or “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including:  taxes or other charges on or with respect to income, franchise, windfall or other profits, gross receipts, property, sales, use, equity interests, payroll, employment, social security, workers’ compensation, unemployment compensation or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license, registration and documentation fees; and customers’ duties, tariffs and similar charges.

“Third Party Claim” and, collectively, “Third Party Claims” shall have the meaning ascribed to it in Section 9.3.

---

 

“Transactions” shall have the meaning ascribed to it in Section 2.2.

“Transfer” shall have the meaning ascribed to it in Section 6.7.

 

[Signature page follows]

---

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the date first written above.

 

 

 

 

 

 

---

 

Appendix 1

Registration Rights

If at any time during the period beginning the 1^st day of July 2013 until the 30^th day of June 2018, (the “Registration Period”) (i) CRS proposes to register its shares of common stock, par value $0.0001 per share (“Company Shares”) under the Securities Act in connection with the public offering of such shares for cash (a “Proposed Registration”) other than a registration statement on Form S-8 or Form S-4 or any successor or other forms promulgated for similar purposes and a Registration Statement covering the CRS Shares is not effective, CRS shall, at such time, promptly give the Seller written notice of such Proposed Registration.  The Seller shall have ten (10) Business Days from its receipt of such notice to deliver to CRS a written request specifying the amount of CRS Shares (the “Registrable Securities”) that the Seller intends to sell and its intended method of distribution.  Upon receipt of such request, CRS shall use its best efforts to cause all the Registrable Securities which CRS has been requested to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of the Seller; provided, however, that CRS shall have the right to postpone or withdraw any registration effected pursuant to this Section 1 without obligation to the Seller.  If, in connection with any underwritten public offering for the account of CRS or for shareholders of CRS that have contractual rights to require CRS to register Company Shares, the managing underwriter(s) thereof shall impose a limitation on the number of Company Shares which may be included in a registration statement because, in the judgment of such underwriter(s), marketing or other factors dictate such limitation is necessary to facilitate such offering, then CRS shall be obligated to include in the registration statement only such limited portion of the Registrable Securities with respect to which the Seller has requested inclusion hereunder as such underwriter(s) shall permit.  Any exclusion of Registrable Securities shall be made pro rata among the holders of Company Shares seeking to include Company Shares in a registration statement, in proportion to the number of Company Shares sought to be included by such holders; provided, however, that CRS shall not exclude any Registrable Securities unless CRS has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in the registration statement or are not entitled to pro rata inclusion with the Registrable Securities; and provided, further, that, after giving effect to the immediately preceding proviso, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the right to include such securities in the registration statement.

In addition to performing its obligations hereunder, including without limitation those pursuant to Section 1 above, CRS shall:

3.            SUSPENSIONS.

(a)      Black-Out Period.  Upon the occurrence of a material development involving CRS after the Effective Date, the disclosure of which would have, in the good faith judgment of CRS and its outside legal counsel, a Material Adverse Effect on CRS and its shareholders, CRS shall have the right to suspend the use of the Registration Statement for a period of not more than ten consecutive calendar days or more than thirty (30) calendar days in any twelve month period, provided that at least thirty (30) calendar days must elapse between any such suspensions (a “Black-out Period”).

(b)      Notice of Suspension.  Notwithstanding anything to the contrary contained herein, if the use of the Registration Statement is suspended by CRS, CRS shall promptly give written notice of the suspension to the Seller and shall promptly notify it in writing as soon as the use of the Registration Statement may be resumed.  Notwithstanding anything herein to the contrary, CRS shall cause its transfer agent to deliver Company Shares to a transferee of the Seller in connection with any sale of Registrable Securities that was executed prior to the Seller’s receipt of the notice of a Black-out Period.

4.            OBLIGATIONS OF THE SELLER.

In connection with the registration of Registrable Securities pursuant to a Registration Statement, and as a condition to CRS’s obligations hereunder, the Seller shall: 

---

 

(a)      timely furnish to CRS in writing such information regarding itself and the intended method of disposition of such Registrable Securities as CRS shall reasonably request in order to effect the registration thereof;

(b)      upon receipt of written notice from CRS of the happening of any event of the kind described in Section 2(d) or (e) above or of the commencement of a Black-out Period, immediately discontinue any sale or other disposition of such Registrable Securities pursuant to such Registration Statement until the filing of an amendment or supplement to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, or until withdrawal of the stop order referred to in Section 2(e) above, or the termination of the Black-out Period, as the case may be; provided, that such notice from CRS shall not effect any sale executed by the Seller prior to the Seller’s receipt of such notice;

(c)      to the extent required by applicable law, deliver a prospectus to the purchaser of such Registrable Securities; and

(d)      notify CRS when it has sold all of the Registrable Securities held by it pursuant to either the Registration Statement or Rule 144.

5.            INDEMNIFICATION.

In the event that any Registrable Securities are included in a Registration Statement under this Agreement:

(a)      To the extent permitted by law, CRS shall indemnify and hold harmless the Seller, the officers, directors, employees, agents and representatives of the Seller, and each person, if any, who controls the Seller within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), against any losses, claims, damages, liabilities or reasonable out-of-pocket expenses (whether joint or several) (collectively, including legal or other expenses reasonably incurred in connection with investigating or defending same, “Losses”), insofar as any such Losses arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein (in the case of any preliminary or final prospectus, in the light of the circumstances under which they were made), not misleading.  Subject to the provisions of Section 5(c) below, CRS will reimburse the Seller, and each such officer, director, employee, agent, representative or controlling person, for any reasonable legal or other out-of-pocket expenses as incurred by any such entity or person in connection with investigating or defending any Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any Loss if such settlement is effected without the consent of CRS (which consent shall not be unreasonably withheld), nor shall CRS be obligated to indemnify any person for any Loss to the extent that such Loss is (i) based upon and is in conformity with written information furnished by such person expressly for

---

 

use in such Registration Statement or (ii) based on a failure of such person to deliver or cause to be delivered the final prospectus contained in the Registration Statement and made available by CRS, if such delivery is required by applicable law.  CRS shall not enter into any settlement of a Loss that does not provide for the unconditional release of the Seller from all liabilities and obligations relating to such Loss.

(b)      To the extent permitted by law, the Seller shall indemnify and hold harmless CRS, the officers, directors, employees, agents and representatives of CRS, and each person, if any, who controls CRS within the meaning of the Securities Act or the Exchange Act, against any Losses to the extent (and only to the extent) that any such Losses are based upon and in conformity with written information furnished by the Seller expressly for use in such Registration Statement. Subject to the provisions of Section 5(c) below, the Seller will reimburse any reasonable legal or other expenses as incurred by CRS and any such officer, director, employee, agent, representative, or controlling person, in connection with investigating or defending any such Loss; provided, however, that the foregoing indemnity shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Seller (which consent shall not be unreasonably withheld); and provided, further, that, in no event shall any indemnity under this Section 5(b) exceed the net proceeds resulting from the sale of the Registrable Securities sold by the Seller under such Registration Statement.

(c)      Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 5, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the reasonably incurred fees and expenses of one such counsel for all indemnified parties to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate under applicable standards of professional conduct due to actual or potential conflicting interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 5 with respect to such action, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 5 or with respect to any other action unless the indemnifying party is materially prejudiced as a result of not receiving such notice.

(d)      In the event that the indemnity provided in paragraph (a) or (b) of this Section 5 is unavailable or insufficient to hold harmless an indemnified party for any reason, CRS and the Seller agree, severally and not jointly, to contribute to the aggregate Losses to which CRS or the Seller may be subject in such proportion as is appropriate to reflect the relative fault of CRS and the Seller in connection with the statements or

---

 

omissions which resulted in such Losses; provided, however, that in no case shall the Seller be responsible for any amount in excess of the net proceeds resulting from the sale of the Registrable Securities sold by it under the Registration Statement.  Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by CRS or by the Seller.  CRS and the Seller agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation, which does not take account of the equitable considerations, referred to above.  Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation.  For purposes of this Section 5, each person who controls the Seller within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee, agent or representative of the Seller shall have the same rights to contribution as the Seller, and each person who controls CRS within the meaning of either the Securities Act or the Exchange Act and each officer, director, employee, agent or representative of CRS shall have the same rights to contribution as CRS, subject in each case to the applicable terms and conditions of this paragraph (d).

(e)      The obligations of CRS and the Seller under this Section 5 shall survive the completion of any offering or sale of Registrable Securities pursuant to a Registration Statement under this Agreement, or otherwise.

 

 

---