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Exhibit 2.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.,
FCI SERVICES INC., FORWARD COMMUNICATIONS INC.,
▇▇▇▇▇ ▇. ▇▇▇▇▇ AND ▇▇▇▇ ▇. ▇▇▇▇▇▇
DATED EFFECTIVE AS OF MAY 20, 1999
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
effective as of May 20, 1999 by and among ▇▇▇▇▇▇▇▇▇.▇▇▇, inc., a Delaware
corporation ("PURCHASER"), FCI Services Inc., a Texas corporation ("SERVICES"),
Inc., and Forward Communications Inc., a Texas corporation ("COMMUNICATIONS")
(Services and Communications are referred to in this Agreement individually as a
"COMPANY" and collectively as the "COMPANIES"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇ (together, the "SHAREHOLDERS").
RECITALS
A. The Boards of Directors of each of the Companies and the Purchaser
believe it is in the best interests of each company and their respective
stockholders that Purchaser acquire each of the Companies through the purchase
of the outstanding capital stock of the Companies owned by the Shareholders.
B. Pursuant to terms and conditions of this Agreement, all of the issued
and outstanding shares of capital stock of each of the Companies ("COMPANY
CAPITAL STOCK") shall be purchased for cash.
C. The Companies, the Shareholders, and the Purchaser desire to make
certain representations, warranties, and other agreements in connection with the
purchase hereby.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
intending to be legally bound hereby the parties agree as follows:
ARTICLE I
THE PURCHASE
1.1 THE PURCHASE. At the Closing (as defined in Section 1.3) and subject
to and upon the terms and conditions of this Agreement, each Shareholder shall
sell to the Purchaser, and the Purchaser shall purchase from each Shareholder,
that number of shares of Common Stock of the Companies set forth opposite the
names of such Shareholder on attached Schedule 1.1. Each Shareholder shall
transfer all of his or her right, title and interest in and to the Company
Capital Stock being conveyed hereby, free and clear of any lien, security
interest or other encumbrance of any nature and free of any claim by any person
to or against the Company Capital Stock.
1.2 PURCHASE PRICE. The Purchase price of the Company Capital Stock shall
be cash in the amount of $7,500,000, payable in the amounts set forth on
Schedule 1.1, by means of wire transfers pursuant to the wire transfer
instructions set forth on Schedule 1.2. (the "PURCHASE PRICE").
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1.3 CLOSING. Unless this Agreement is earlier terminated pursuant to
Section 8.1, the closing of the purchase of the Company Capital Stock (the
"CLOSING") will take place as promptly as practicable, but no later than five
(5) business days, following satisfaction or waiver of the conditions set forth
in Article VI, at the offices of the Purchaser, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, unless another place or time is agreed to by
Purchaser and the Companies. The date upon which the Closing actually occurs is
herein referred to as the "CLOSING DATE."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND SHAREHOLDERS
Except as disclosed in a document dated as of the date hereof
specifically referencing the appropriate schedule or section number to the
representations, warranties or covenants in this Agreement which reasonably
identifies the basis for an exception to a representation, warranty or covenant
in this Agreement and which is delivered by the Companies to Purchaser prior to
the execution of this Agreement (the "COMPANY SCHEDULES"), each of the Companies
and the Shareholders represent and warrant to Purchaser as set forth below.
2.1 ORGANIZATION OF THE COMPANIES. Each Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Each Company has the corporate power to own its properties and to carry
on its business as now being conducted. Each Company is duly qualified to do
business and in good standing as a foreign corporation in each jurisdiction in
which the failure to be so qualified would have, or would reasonably be expected
to have, a material adverse effect on the business, financial condition, results
of operations, assets (including intangible assets), liabilities or prospects of
such Company (hereinafter referred to as a "MATERIAL ADVERSE EFFECT"). Each
Company has delivered a true and correct copy of its Articles of Incorporation
and Bylaws, each as amended to date, to Purchaser.
2.2 COMPANY CAPITAL STRUCTURE.
(a) The authorized capital stock of each Company is as set forth in
SCHEDULE 2.2. The Company Capital Stock is held of record by the persons and in
the amounts set forth on SCHEDULE 1.1. All outstanding shares of Company Capital
Stock are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, the Articles of Incorporation
or Bylaws of any Company or any agreement to which any Company is a party or by
which it is bound.
(b) There are no options, warrants, calls, rights, commitments or
agreements of any character, written or oral, to which any Company is a party or
by which it is bound obligating any Company to issue, deliver, sell, repurchase
or redeem, or cause to be issued, delivered, sold,
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repurchased or redeemed, any shares of the capital stock of any Company or
obligating any Company to grant, extend, accelerate the vesting of, change the
price of, otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to any Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting stock of the Company. The holders
of Company Capital Stock have been or will be given, or shall have properly
waived, any required notice prior to the Closing, and all such rights will be
terminated at or prior to the Closing. As a result of the purchase hereby, the
Purchaser will be the record and sole beneficial owner of all capital stock of
the Company and rights to acquire or receive such capital stock.
2.3 SUBSIDIARIES. Each Company does not have and has never had any
subsidiaries and does not otherwise own and has never otherwise owned any shares
of capital stock or any interest in, or control, directly or indirectly, any
other corporation, partnership, association, joint venture or other business
entity.
2.4 AUTHORITY. Each Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of each Company. This Agreement
has been duly executed and delivered by each Company and constitutes the valid
and binding obligation of each Company, enforceable in accordance with its terms
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies. The execution and delivery of this Agreement by each Company does not,
and, as of the Closing, the consummation of the transactions contemplated hereby
will not, conflict with, or result in any violation of, or default under (with
or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "CONFLICT") (i) any provision of the Articles
of Incorporation or Bylaws of any Company or (ii) any mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to any Company or its properties or assets, except with respect to
the preceding clause (ii) for any Conflict which could not reasonably be
expected to have a Material Adverse Effect. No consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other federal, state, county, local or
foreign governmental authority, instrumentality, agency or commission
("GOVERNMENTAL ENTITY") or any third party (so as not to trigger any Conflict)
is required by or with respect to any Company in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for such other consents, waivers, authorizations,
filings, approvals and registrations which are set forth on SCHEDULE 2.4, and
(iv) where the failure to obtain or make any such consent, waiver, approval,
order, authorization, registration, declaration or filing could not reasonably
be expected to have a Material Adverse Effect.
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2.5 COMPANY FINANCIAL STATEMENTS. SCHEDULE 2.5 sets forth the Companies'
audited balance sheet as of December 31, 1998 on a combined basis with those of
Forward Freight, Inc. (the "BALANCE SHEET") and the related audited statements
of operations, shareholders' equity and cash flows for the twelve-month period
then ended and the footnotes thereto as well as the Companies' combined
unaudited balance sheet as of March 31, 1999 (the "INTERIM BALANCE SHEET") and
the related unaudited statements of operations for the three-month period then
ended (collectively, the "COMPANY FINANCIALS"). The Company Financials are
correct in all material respects and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
throughout the periods indicated and consistent with each other. The Company
Financials present fairly the financial condition and operating results of the
Companies as of the dates and during the periods indicated therein, subject to
normal year-end adjustments and the absence of full footnote disclosure in the
case of unaudited financial statements, which such adjustments will not be
material in amount or significance.
2.6 NO UNDISCLOSED LIABILITIES. Except as set forth in SCHEDULE 2.6, each
Company does not have any liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type, whether accrued, absolute,
contingent, matured, unmatured or other (which is required to be reflected in
financial statements in accordance with generally accepted accounting
principles), which individually or in the aggregate, has not been reflected in
the Interim Balance Sheet.
2.7 NO CHANGES. Except as set forth in SCHEDULE 2.7, since the date of
the Interim Balance Sheet, there has not been, occurred or arisen any:
(a) transaction by any Company except in the ordinary course of
business as conducted on the date of the Interim Balance Sheet and consistent
with past practices;
(b) amendments or changes to the Articles of Incorporation or Bylaws
of any Company;
(c) capital expenditure or commitment by any Company, either
individually or in the aggregate, exceeding $25,000;
(d) destruction of, damage to or loss of any material assets,
business or customer of any Company (whether or not covered by insurance),
having a loss value in excess of $25,000;
(e) labor trouble or claim of wrongful discharge or other unlawful
labor practice or action;
(f) change in accounting methods or practices (including any change
in depreciation or amortization policies or rates) by any Company;
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(g) revaluation by any Company of any of its assets, in excess of
$25,000;
(h) declaration, setting aside or payment of a dividend or other
distribution with respect to the capital stock of any Company, or any direct or
indirect redemption, purchase or other acquisition by any Company of any Company
Capital Stock, or any split, combination or reclassification in respect of any
shares of Company Capital Stock, or any issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock;
(i) increase in the salary or other compensation payable or to become
payable by any Company to any of its officers or directors and, except in the
ordinary course of business, to any employees or advisors, or the declaration,
payment or commitment or obligation of any kind for the payment of a bonus or
other additional salary or compensation to any such person except as otherwise
contemplated by this Agreement;
(j) sale, lease, license or other disposition of any of the assets or
properties of any Company, except in the ordinary course of business as
conducted on that date and consistent with past practices;
(k) amendment or termination of any material contract, agreement or
license to which any Company is a party or by which it is bound;
(l) loan by any Company to any person or entity, incurrence by any
Company of any indebtedness, guaranteeing by any Company of any indebtedness,
issuance or sale of any debt securities of any Company or guaranteeing of any
debt securities of others, or creation of any security interest in any of any
Company's assets or properties, except for commercial loans not exceeding
$25,000 in the aggregate and incurred in the ordinary course of business, and
advances to employees for travel and business expenses in the ordinary course of
business, consistent with past practices;
(m) waiver or release of any right or claim of any Company, including
any write-off or other compromise of any account receivable of any Company not
in the ordinary course of business;
(n) commencement or notice or threat of commencement of any lawsuit
or proceeding against or investigation of any Company or its affairs, or any
reasonable basis for any of the foregoing;
(o) notice of any claim or potential claim of ownership by a third
party of Company Intellectual Property Rights (as defined in Section 2.11 below)
or of infringement by any Company of any third party's intellectual property
rights;
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(p) material change in pricing or royalties set or charged by any
Company to its customers or licensees or in pricing or royalties set or charged
by persons who have licensed Company Intellectual Property Rights to any
Company;
(q) event or condition of any character that has or could be
reasonably expected to have a Material Adverse Effect on any Company; or
(r) negotiation or agreement by any Company or any officer or
employees thereof to do any of the things described in the preceding clauses (a)
through (q) (other than negotiations with Purchaser and its representatives
regarding the transactions contemplated by this Agreement).
2.8 TAX AND OTHER RETURNS AND REPORTS.
(a) DEFINITION OF TAXES. For the purposes of this Agreement, "TAX"
or, collectively, "TAXES", means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) TAX RETURNS AND AUDITS. Except as set forth in SCHEDULE 2.8:
(i) Each Company, as of the Closing, will have prepared and filed
all required federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to any and all Taxes concerning or
attributable to such Company or its operations and such Returns are true and
correct and have been completed in accordance with applicable law.
(ii) Each Company, as of the Closing: (A) will have paid or
accrued all Taxes it is required to pay or accrue and (B) will have withheld
with respect to its employees all federal and state income taxes, FICA, FUTA and
other Taxes required to be withheld.
(iii) Each Company has not been delinquent in the payment of any
Tax nor is there any Tax deficiency outstanding, proposed or assessed against
such Company, nor has any Company executed any waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(iv) No audit or other examination of any Return of any Company
is currently in progress, nor has any Company been notified of any request for
such an audit or other examination.
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(v) Each Company does not have any liabilities for unpaid
federal, state, local and foreign Taxes which have not been accrued or reserved
against on the Balance Sheet, whether asserted or unasserted, contingent or
otherwise, and each Company does not have any knowledge of any basis for the
assertion of any such liability attributable to any Company, or its assets or
operations.
(vi) Each Company has provided to Purchaser copies of all federal
and state income and all state sales and use Tax Returns for all periods since
the date of such Company's incorporation.
(vii) There are (and as of immediately following the Effective
Date there will be) no liens, pledges, charges, claims, security interests or
other encumbrances of any sort ("LIENS") on the assets of any Company relating
to or attributable to Taxes.
(viii) Each Company does not have any knowledge of any basis for
the assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of any Company.
(ix) Each Company's assets are not treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(x) As of the Closing, there will not be any contract, agreement,
plan or arrangement to which any Company is a party, including but not limited
to the provisions of this Agreement, covering any employee or former employee of
any Company that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Sections 404, 280G or 162
of the Code.
(xi) Each Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by such Company.
(xii) Each Company is not a party to a tax sharing or allocation
agreement nor does any Company owe any amount under any such agreement.
(xiii) Each Company is not, nor has it been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(xiv) No adjustment relating to any Return filed by any Company
has been proposed formally or, to the knowledge of any Company, informally by
any tax authority to any Company or any representative thereof.
(xv) Each Company's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal income tax
deductions is accurately reflected on such Company's tax books and records.
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2.9 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement
(non-compete or otherwise), commitment, judgment, injunction, order or decree to
which any Company is a party or otherwise binding upon any Company which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice of any Company, any acquisition of property (tangible or
intangible) by any Company or the conduct of business by any Company. Without
limiting the foregoing, each Company has not entered into any agreement under
which any Company is restricted from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
2.10 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) Each Company does not own real property, nor has any Company ever
owned any real property. SCHEDULE 2.10(a) sets forth a list of all real property
currently, or at any time in the past, leased by each Company, the name of the
lessor, the date of the lease and each amendment thereto and, with respect to
any current lease, the aggregate annual rental and/or other fees payable under
any such lease. All such current leases are in full force and effect, are valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default).
(b) Each Company has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens (as defined in Section 2.8(b)(vii)),
except as reflected in the Company Financials or in SCHEDULE 2.10(b) and except
for liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which are not material in character, amount or extent, and
which do not materially detract from the value, or materially interfere with the
present use, of the property subject thereto or affected thereby.
(c) Each Company has sole and exclusive ownership, free and clear of
any Liens, of all customer files and other customer information relating to such
Company's current and former customers (the "CUSTOMER INFORMATION"). No person
other than a Company possesses any claim or rights with respect to use of the
Customer Information.
2.11 INTELLECTUAL PROPERTY.
Schedule 2.11 sets forth all trade names, trademarks, service marks,
and copyrights and their registrations and other intellectual property, owned by
a Company or in which it has any rights or licenses, together with a brief
description of each. The Stockholders have no knowledge of any infringement or
alleged infringement by others of any of the Companies' trade names, trademarks,
service marks, or copyrights or other intellectual property rights. The
Companies have not infringed, nor are they now infringing, on any trade name,
trademark,
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service ▇▇▇▇, or copyright or other intellectual property rights belonging to
any other person, firm, or corporation. Except as set forth in Schedule 2.11,
the Companies are not parties to any license, agreement, or arrangement, whether
as licensor, licensee, franchisor (other than as franchisor pursuant to the
franchise agreements set forth in Schedule 2.11), franchisee, or otherwise, with
respect to any trade names, trademarks, service marks, or applications for them,
or any copyrights or other intellectual property rights. The Companies own, or
hold adequate licenses or other rights to use, all trade names, trademarks,
service marks, and copyrights and other intellectual property rights necessary
for their business as now conducted by them, and that use does not, and will
not, conflict with, infringe on, or otherwise violate any rights of others.
2.11A Y2K COMPLIANCE
Each Company has taken reasonable steps to ensure that its products
(including existing products and technology and products and technology
currently under development) will accurately record, store, process, calculate
and present calendar dates falling on and after (and if applicable, spans of
time including) January 1, 2000, and will calculate any information dependent on
or relating to such dates in the same manner, and with the same functionality,
data integrity and performance, as the products record, store, process,
calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates (collectively,
"YEAR 2000 COMPLIANT"). Each Company has taken reasonable steps to ensure that
its products will lose no functionality with respect to the introduction of
records containing dates falling on or after January 1, 2000. All of the
Companies' internal computer and technology products and systems are Year 2000
Compliant.
2.12 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Except as set forth on SCHEDULE 2.12(a), each Company does not
have, is not a party to and is not bound by:
(i) any collective bargaining agreements,
(ii) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations,
(iii) any bonus, deferred compensation, pension, profit sharing
or retirement plans, or any other employee benefit plans or arrangements,
(iv) any employment or consulting agreement, contract or
commitment (excluding "at will" employee relationships) with an employee or
individual consultant or salesperson or any consulting or sales agreement,
contract or commitment under which any firm or other organization provides
services to any Company,
(v) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation rights plan or stock purchase plan, any of
the benefits of which will be
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increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement,
(vi) any fidelity or surety bond or completion bond,
(vii) any lease of personal property having a value individually
in excess of $50,000,
(viii) any agreement of indemnification or guaranty,
(ix) any agreement, contract or commitment containing any
covenant limiting the freedom of any Company to engage in any line of business
or to compete with any person,
(x) any agreement, contract or commitment relating to capital
expenditures and involving future payments in excess of $50,000,
(xi) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
outside the ordinary course of the Companies' business,
(xii) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit, including guaranties referred to in clause
(viii) hereof,
(xiii) any purchase order or contract for the purchase of raw
materials involving $50,000 or more,
(xiv) any construction contracts,
(xv) any distribution, joint marketing or development agreement,
(xvi) any agreement pursuant to which any Company has granted or
may grant in the future, to any party, a source-code license or option or other
right to use or acquire source-code, or
(xvii) any other agreement, contract or commitment that involves
$50,000 or more or is not cancelable without penalty within thirty (30) days.
(b) Except for such alleged breaches, violations and defaults, and
events that would constitute a breach, violation or default with the lapse of
time, giving of notice, or both, as are all noted in SCHEDULE 2.12(b), each
Company has not breached, violated or defaulted under, or received notice that
it has breached, violated or defaulted under, any of the terms or
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conditions of any End-User License or any agreement, contract or commitment
required to be set forth on SCHEDULE 2.12(a) or SCHEDULE 2.11(b) (any such
agreement, contract or commitment, a "CONTRACT"). Each Contract is in full force
and effect and, except as otherwise disclosed in SCHEDULE 2.12(b), is not
subject to any material default thereunder, of which any Company has knowledge,
by any party obligated to a Company pursuant thereto. Following the Closing,
each Company will be permitted to exercise all of such Company's rights under
the Contracts without the payment of any additional amounts or consideration
other than ongoing fees, royalties or payments which such Company would
otherwise be required to pay had the transactions contemplated by this Agreement
not occurred.
2.13 INTERESTED PARTY TRANSACTIONS. Except as set forth on SCHEDULE 2.13,
no officer, director or shareholder of any Company (nor any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership or
corporation in which any of such persons has or has had an interest), has or has
had, directly or indirectly, (i) an economic interest in any entity which
furnished or sold, or furnishes or sells, services or products that any Company
furnishes or sells, or proposes to furnish or sell, (ii) an economic interest in
any entity that purchases from or sells or furnishes to, any Company, any goods
or services or (iii) a beneficial interest in any contract or agreement set
forth in SCHEDULE 2.12(a) or SCHEDULE 2.11(b); provided, that ownership of no
more than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed an "economic interest in any entity" for
purposes of this Section 2.13.
2.14 COMPLIANCE WITH LAWS. Except as set forth in Schedule 2.14, each
Company has complied in all material respects with, is not in material violation
of, and has not received any notices of violation with respect to, any foreign,
federal, state or local statute, law or regulation.
2.15 LITIGATION. Except as set forth in SCHEDULE 2.15, there is no
action, suit or proceeding of any nature pending, or to the Companies'
knowledge, threatened against any Company, its properties or any of its officers
or directors, in their respective capacities as such. Except as set forth in
SCHEDULE 2.15, there is no investigation pending or threatened against any
Company, its properties or any of its officers or directors by or before any
Governmental Entity. SCHEDULE 2.15 sets forth, with respect to any pending or
threatened action, suit, proceeding or investigation, the forum, the parties
thereto, the subject matter thereof and the amount of damages claimed or other
remedy requested. No Governmental Entity has at any time challenged or
questioned the legal right of any Company to manufacture, offer or sell any of
its products in the present manner or style thereof.
2.16 INSURANCE. Each Company maintains valid and enforceable insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, and operations of such Company, and such insurance policies and
fidelity bonds, which are identified in SCHEDULE 2.16, contain provisions which
are reasonable and customary in such Company's industry, and there is no claim
by any Company pending under any of such policies or bonds as to which coverage
has been questioned, denied or disputed by the underwriters of such policies or
bonds.
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All premiums due and payable under all such policies and bonds have been paid
and each Company is otherwise in material compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). Each Company has no knowledge of any threatened termination
of, or material premium increase with respect to, any of such policies.
2.17 MINUTE BOOKS. The minute books of each Company made available to
counsel for Purchaser are the only minute books of such Company and contain a
reasonably accurate summary of all meetings of directors (or committees thereof)
and shareholders or actions by written consent since the time of incorporation
of such Company.
2.18 ENVIRONMENTAL MATTERS.
(a) HAZARDOUS MATERIALS. Each Company has not operated any
underground storage tanks, and has no knowledge of the existence, at any time,
of any underground storage tank (or related piping or pumps), at any property
that any Company has at any time owned, operated, occupied or leased. No
Hazardous Materials (as defined below) are present as a result of the actions or
omissions of any Company, or, to the Companies' knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property, including
the land and the improvements, ground water and surface water thereof, that any
Company has at any time owned, operated, occupied or leased.
(b) HAZARDOUS MATERIALS ACTIVITIES. Each Company has not transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any law in effect on or before the
Closing, nor has any Company disposed of, transported, sold, or manufactured any
product containing a Hazardous Material (any or all of the foregoing being
collectively referred to as "HAZARDOUS MATERIALS ACTIVITIES") in violation of
any rule, regulation, treaty or statute promulgated by any Governmental Entity
in effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) PERMITS. Each Company currently holds all environmental
approvals, permits, licenses, clearances and consents (the "ENVIRONMENTAL
PERMITS") necessary for the conduct of such Company's Hazardous Material
Activities and other businesses of such Company as such activities and
businesses are currently being conducted.
(d) ENVIRONMENTAL LIABILITIES. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
Companies' knowledge, threatened concerning any Environmental Permit, Hazardous
Material or any Hazardous Materials Activity of any Company. Each Company is not
aware of any fact or circumstance which could involve any Company in any
environmental litigation or impose upon any Company any environmental liability.
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(e) DEFINITION OF "HAZARDOUS MATERIALS". As used herein, "HAZARDOUS
MATERIALS" shall mean any substance that has been designated by any Governmental
Entity or by applicable federal, state or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or the environment, including, without
limitation, PCBs, asbestos, oil and petroleum products, urea-formaldehyde and
all substances listed as a "hazardous substance," "hazardous waste," "hazardous
material" or "toxic substance" or words of similar import, under any law,
including but not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended; the Resource Conservation
and Recovery Act of 1976, as amended; the Federal Water Pollution Control Act,
as amended; the Clean Air Act, as amended, and the regulations promulgated
pursuant to such laws.
2.19 BROKERS' AND FINDERS' FEES; THIRD PARTY EXPENSES. Except as set
forth on SCHEDULE 2.19, each Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.20 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) PLANS. Schedule 2.20 hereto contains a true and complete list of
all the following agreements or plans of the Companies which are in effect and
which pertain to any of the Personnel:
(i) "employee welfare benefit plans" and "employee pension
benefit plans," as defined in Sections 3(l) and 3(2), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA");
(ii) any other pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, vacation,
severance, disability, health, hospitalization, medical, life insurance, vision,
dental, prescription drug, supplemental unemployment, layoff, automobile,
apprenticeship and training, day care, scholarship, group legal benefits, fringe
benefits, or other employee benefit plan, program, policy, or arrangement,
whether written or unwritten, formal or informal, which the Companies maintain
or to which the Companies have any outstanding, present, or future obligation to
contribute to or make payments under, whether voluntary, contingent, or
otherwise (the plans, programs, policies, or arrangements described in clauses
(i) or (ii) are herein collectively referred to as the " Plans").
(iii) The Companies do not presently contribute and/or have
never contributed or been obligated to contribute to a multiemployer plan as
defined in section 3(37)(A) of ERISA.
(iv) No Plan is subject to Title IV of ERISA.
(v) No Plan has been terminated nor has any accumulated
funding deficiency (as defined in Code Section 412(a)) been incurred, nor has
any waiver from the Internal Revenue Service been received or requested.
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(j) EMPLOYMENT MATTERS. Each Company (i) is in compliance in all
material respects with all applicable foreign, federal, state and local laws,
rules and regulations respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld all amounts required by law or by agreement to be
withheld from the wages, salaries and other payments to Employees; (iii) is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing; and (iv) is not liable for any payment to any
trust or other fund or to any governmental or administrative authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice).
(k) LABOR. No work stoppage or labor strike against any Company is
pending or, to the best knowledge of the Companies, threatened. Except as set
forth in SCHEDULE 2.20(c), each Company is not involved in or, to the knowledge
of any Company, threatened with, any labor dispute, grievance, or litigation
relating to labor, safety or discrimination matters involving any Employee,
including, without limitation, charges of unfair labor practices or
discrimination complaints, which, if adversely determined, would, individually
or in the aggregate, result in liability to any Company. Each Company has not
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act which would, individually or in the aggregate, directly or
indirectly result in a liability to any Company. Except as set forth in SCHEDULE
2.20(c), each Company is not presently, nor has it been in the past, a party to,
or bound by, any collective bargaining agreement or union contract with respect
to Employees and no collective bargaining agreement is being negotiated by any
Company.
2.21 EMPLOYEES. To the Companies' knowledge, no employee of any Company
(i) is in violation of any term of any employment contract, patent disclosure
agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by any
Company because of the nature of the business conducted or presently proposed to
be conducted by any Company or to the use of trade secrets or proprietary
information of others and (ii) has given notice to any Company, nor is any
Company otherwise aware, that any employee intends to terminate his or her
employment with any Company.
2.22 NO INTERFERENCE OR CONFLICT. To the knowledge of the Companies, no
shareholder, officer, employee or consultant of any Company is obligated under
any contract or agreement subject to any judgment, decree or order of any court
or administrative agency that would interfere with such person's efforts to
promote the interests of the Companies or that would interfere with the
Companies' business. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Companies' business as presently conducted or proposed to
be conducted nor any activity of such officers, directors, employees or
consultants in connection with the carrying on of the Companies' business as
presently conducted or currently proposed to be conducted, will, to the
knowledge of any Company, conflict with or result in a
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breach of the terms, conditions or provisions of, or constitute a default under,
any contract or agreement under which any of such officers, directors, employees
or consultants is now bound.
2.23 GOVERNMENTAL AUTHORIZATIONS AND LICENSES. Each Company possesses all
material consents, licenses, permits, grants or other authorizations issued to
such Company by a Governmental Entity (i) pursuant to which such Company
currently operates or holds any interest in any of its properties or (ii) which
is required for the operation of its business or the holding of any such
interest therein (collectively called "COMPANY AUTHORIZATIONS"), which Company
Authorizations are in full force and effect and constitute all Company
Authorizations required to permit each Company to operate or conduct its
business or hold any interest in its properties or assets.
2.24 REPRESENTATIONS COMPLETE. None of the representations or warranties
made by the Companies in this Agreement (as modified by the Company Schedules),
nor any statement made in any schedule or certificate furnished by the Companies
pursuant to this Agreement, or furnished in or in connection with documents
mailed or delivered to the shareholders of the Companies in connection with
soliciting their consent to this Agreement, contains or will contain at the
Closing, any untrue statement of a material fact, or omits or will omit at the
Closing to state any material fact necessary in order to make the statements
contained herein or therein, in the light of the circumstances under which made,
not misleading.
2.25 DISCLOSURE. No statement by the Companies or the Shareholders
contained in this Agreement and the exhibits attached hereto and any written
statement or certificate furnished or to be furnished to Purchaser pursuant
hereto or in connection with the transactions contemplated hereby (when read
together) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as disclosed in a document dated as of the date hereof
specifically referencing the appropriate schedule or section number to the
representations, warranties or covenants in this Agreement which reasonably
identifies the basis for an exception to a representation, warranty or covenant
in this Agreement and which is delivered by Parent to the Companies prior to the
execution of this Agreement (the "PURCHASER SCHEDULES") , Purchaser represents
and warrants to the Companies and Shareholders as follows:
3.1 ORGANIZATION, STANDING AND POWER. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has the corporate power to own its properties and to carry
on its business as now being conducted and is duly qualified to do business and
is in good standing as a foreign corporation in
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each jurisdiction in which the failure to be so qualified would have a material
adverse effect on Purchaser as a whole.
3.2 AUTHORITY. Purchaser has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and constitutes the valid and binding obligations of
Purchaser, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. The execution and delivery of
this Agreement by Purchaser does not, and, as of the Closing, the consummation
of the transactions contemplated hereby will not, constitute a Conflict with (i)
any provision of the Certificate of Incorporation or Bylaws of Purchaser or (ii)
any mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Purchaser or their properties or
assets, except, with respect to the preceding clause (ii), for any Conflict
which could not reasonably be expected to have a material adverse effect on the
business, financial condition, results of operations, assets (including
intangible assets), liabilities or prospects of Purchaser ("PURCHASER MATERIAL
ADVERSE EFFECT"). No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or any third
party (so as not to trigger any Conflict) is required by or with respect to
Purchaser in connection with Purchaser's execution and delivery of this
Agreement or its consummation of the transactions contemplated hereby, except
for such other consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings which are set forth on SCHEDULE 3.2, and
where the failure to obtain or make any such consent, waiver, approval, order,
authorization, registration, declaration or filing could not reasonably be
expected to have a Purchaser Material Adverse Effect.
3.3 LITIGATION. There is no action, suit, proceeding, claim, arbitration
or investigation pending, or as to which Purchaser has received any notice of
assertion against Purchaser, which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay any of the transactions contemplated by this
Agreement.
3.4 DISCLOSURE. No statement by Purchaser contained in this Agreement and
the exhibits attached hereto and any written statement or certificate furnished
or to be furnished to the Companies and Shareholders pursuant hereto or in
connection with the transactions contemplated hereby (when read together)
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
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ARTICLE IV
[OMITTED]
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 ACCESS TO INFORMATION. Each party shall afford the others and their
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Closing to (a) all of its
properties, books, contracts, commitments and records, and (b) all other
information concerning its business, properties and personnel (subject to
restrictions imposed by applicable law) as the others may reasonably request,
subject, in the case of Purchaser, to reasonable limits on access to its
technical and other nonpublic information. No information or knowledge obtained
in any investigation pursuant to this Section 5.1 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions of the
parties to consummate this Agreement.
5.2 CONFIDENTIALITY. Each party agrees to keep information or knowledge
obtained in any investigation pursuant hereto, or pursuant to the negotiation
and execution of this Agreement or the effectuation of the transactions
contemplated hereby, confidential, and also agrees not to use such knowledge or
information; provided, however, that the foregoing shall not apply to
information or knowledge which (a) a party can demonstrate was already lawfully
in its possession on a non-confidential basis prior to the disclosure thereof by
the other party, (b) is generally known to the public and did not become so
known through any violation of law, (c) became known to the public through no
fault of such party, (d) is later lawfully acquired by such party from other
sources, (e) is required to be disclosed by order of court or government agency
with subpoena powers or is required to be disclosed under applicable federal
securities laws or (f) which is disclosed in the course of any litigation
between any of the parties hereto.
5.3 EXPENSES. If the sale hereby is not consummated, all fees and
expenses incurred in connection with this agreement including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties ("THIRD PARTY EXPENSES") incurred by a party
in connection with the negotiation and effectuation of the terms and conditions
of this Agreement and the transactions contemplated hereby shall be the
obligation of the respective party incurring such fees and expenses.
5.4 PUBLIC DISCLOSURE. Unless otherwise required by law (including,
without limitation, federal and state securities laws) prior to the Closing, no
disclosure (whether or not in response to an inquiry) of the subject matter of
this Agreement shall be made by any party hereto unless approved by Purchaser
and the Company prior to release, provided that such approval shall not be
unreasonably withheld or delayed.
5.5 CONSENTS. Each Company shall use its commercially reasonable efforts
to obtain the consents, waivers and approvals of parties to any Contract as may
be required in connection
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with the sale hereby, or for any such Contract to remain in full force and
effect without limitation, modification or alteration after the Closing (all of
such consents, waivers and approvals are set forth in Company Schedules) so as
to preserve all rights of and benefits to each Company and Purchaser thereunder.
5.6 FIRPTA COMPLIANCE. On or prior to the Closing Date, each Company
shall deliver to Purchaser a properly executed statement in a form reasonably
acceptable to Purchaser for purposes of satisfying Purchaser's obligations under
Treasury Regulation Section 1.1445-2(c)(3).
5.7 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions
provided in this Agreement, each of the parties hereto shall use its
commercially reasonable efforts to ensure that its representations and
warranties remain true and correct in all material respects, and to take
promptly, or cause to be taken, all actions, and to do promptly, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
hereby, to obtain all necessary waivers, consents and approvals, to effect all
necessary registrations and filings, and to remove any injunctions or other
impediments or delays, legal or otherwise, in order to consummate and make
effective the transactions contemplated by this Agreement for the purpose of
securing to the parties hereto the benefits contemplated by this Agreement;
provided that Purchaser shall not be required to agree to any divestiture by
Purchaser or any Company or any of Purchaser's subsidiaries or affiliates of
shares of capital stock or of any business, assets or property of Purchaser or
its subsidiaries or affiliates or any Company or its affiliates, or the
imposition of any material limitation on the ability of any of them to conduct
their businesses or to own or exercise control of such assets, properties and
stock.
5.8 NOTIFICATION OF CERTAIN MATTERS. The Companies shall give prompt
notice to Purchaser, and Purchaser shall give prompt notice to the Companies, of
(i) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any representation or warranty of a
Company and Purchaser, respectively, contained in this Agreement to be untrue or
inaccurate at or prior to the Closing and (ii) any failure of a Company or
Purchaser, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 5.8 shall not
limit or otherwise affect any remedies available to the party receiving such
notice.
5.9 CERTAIN BENEFIT PLANS. At or prior to the Closing, the Companies
shall terminate their existing profit sharing plan and cause the assets of the
Plan to be distributed among its participants.
5.10 COMPANY'S AUDITORS. Each Company will use its commercially
reasonable efforts to cause its management and its independent auditors to
facilitate on a timely basis (i) the preparation of financial statements
(including pro forma financial statements if required) as required by Purchaser
to comply with applicable SEC regulations, (ii) the review of each
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Company's audit work papers for up to the past two fiscal years, including
interim periods and access for review or examination of selected interim
financial statements and data, and (iii) the delivery of such representations
from each Company's independent accountants as may be reasonably requested by
Purchaser or its accountants.
5.11 NON-COMPETITION AGREEMENTS. Each Company and Shareholder shall
deliver or use reasonable efforts to cause to be delivered to Purchaser an
executed Non-Competition Agreement in substantially the form attached hereto as
EXHIBIT C concurrently with the execution of this Agreement from each of the
persons listed on SCHEDULE 5.11.
5.12 RELEASES OF LIABILITY. Purchaser shall use its best efforts to
obtain the release of the Shareholders from any personal liability or contingent
liability due to their guaranty of any obligations of the Companies identified
in SCHEDULE 5.12. If any such release is not obtainable, Purchaser shall
indemnify the Shareholders against any liability therefor.
5.13 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party hereto, at
the request of the other party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO THE CLOSING
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO CLOSE. The respective
obligations of each party to this Agreement to close the transaction provided
for herein shall be subject to the satisfaction at or prior to the Closing of
the following conditions:
(a) GOVERNMENT APPROVALS. All approvals of governments and
governmental agencies necessary to consummate the transactions hereunder shall
have been received.
(b) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of this Agreement shall be in effect.
(c) OPINION. Shareholders shall have received an opinion of
Purchaser's counsel in the form attached hereto as Exhibit D.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANIES. The
obligations of each Company to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by the Companies:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date, except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date, except, in all such cases, for such
breaches, inaccuracies or omissions of such representations and warranties which
have neither had nor reasonably would be expected to have a material adverse
effect on Purchaser; and the Company shall have received a certificate to such
effect signed on behalf of Purchaser by a duly authorized officer of Purchaser.
(b) AGREEMENTS AND COVENANTS. Purchaser shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by them on or prior to the
Closing, and the Companies shall have received a certificate to such effect
signed by a duly authorized officer of Purchaser.
(c) OPINION. Shareholders shall have received the opinion of
Purchaser's counsel substantially in the form of Exhibit D.
(d) EMPLOYMENT AGREEMENT. Purchaser shall have executed and delivered
the Employment Agreement with ▇▇▇▇ ▇▇▇▇▇▇ in the form attached hereto as Exhibit
E.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to consummate and the transactions contemplated by this
Agreement shall be subject to the satisfaction at or prior to the Closing of
each of the following conditions, any of which may be waived, in writing,
exclusively by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES AT SIGNING. The representations
and warranties of each Company and Shareholder contained in this Agreement shall
have been true and correct in all material respects (except for those
representations and warranties which are by their terms qualified by a standard
of materiality, which representations and warranties shall have been true and
correct in all respects) as of the date of this Agreement.
(b) REPRESENTATIONS AND WARRANTIES AT CLOSING. The representations
and warranties of each Company and Shareholder contained in this Agreement shall
be true and correct in all material respects (except for those representations
and warranties which are by their terms qualified by a standard of materiality,
which representations and warranties shall be true and correct in all respects)
on and as of the Closing Date (without regard to any updates to the Company
Schedules, unless otherwise agreed by Purchaser), except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such date), with the same force and effect as if
made on and as of the Closing Date, except, in all such
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cases, for such breaches, inaccuracies or omissions of such representations and
warranties which have neither had nor reasonably would be expected to have a
substantial adverse effect on the business, financial condition, results of
operations, assets, liabilities or prospects of the Companies or Purchaser
(hereinafter referred to as a "SUBSTANTIAL ADVERSE EFFECT"); and Purchaser shall
have received a certificate to such effect signed on behalf of each Company by
an executive officer of each Company.
(c) AGREEMENTS AND COVENANTS. Each Company and Shareholder shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or prior to
the Closing (excluding solely the covenants of Section 5.5, the satisfaction of
which shall not constitute a condition to Purchaser's obligations to consummate
the transactions contemplated by this Agreement), except for non-performance of
such agreements and covenants which neither has, nor reasonably could be
expected to have, a Substantial Adverse Effect, and Purchaser shall have
received a certificate to such effect signed by a duly authorized officer of the
Company.
(d) NON-COMPETITION AND EMPLOYMENT AGREEMENTS. ▇▇▇▇▇ ▇. ▇▇▇▇▇ shall
have executed and delivered to Purchaser a Consulting and Non-Competition
Agreement in the form attached hereto as EXHIBIT C, and ▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
have executed and delivered to Purchaser an Employment Agreement in the form
attached hereto as EXHIBIT E.
(e) SUBSTANTIAL ADVERSE CHANGE. There shall not have occurred any
adverse change in the business, assets (including intangible assets),
liabilities, financial condition, results of operations or prospects of the
Companies since the date of this Agreement having a Substantial Adverse Effect.
(f) OPINION. Purchaser shall have received an opinion of
Shareholders' counsel in the form attached hereto as Exhibit F.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION.
(1) Purchaser's Losses. (a) Shareholders severally agree to indemnify and
hold harmless Purchaser and the Company and their respective directors,
officers, employees, representatives, agents and attorneys, successors and
assigns from, against and in respect of any and all Purchaser's Losses (as
defined below) suffered, sustained, incurred or required to be paid by any of
them by reason of (i) any representation or warranty made the Company or
Shareholders in or pursuant to this Agreement being untrue or incorrect in any
respect; and (ii) any failure by the Company or Shareholders to observe or
perform their covenants and agreements set forth in this Agreement or any other
agreement or document executed by them in connection with the transactions
contemplated hereby.
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(b) "Purchaser's Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with Shareholders' consent, which consent
may not be unreasonably withheld), losses, obligations, liabilities, liens,
deficiencies, costs (including, without limitation, reasonable attorneys' fees),
penalties, fines, interest, monetary sanctions and expenses, including, without
limitation, reasonable attorneys' fees and costs incurred to comply with
injunctions and other court and agency orders, and other costs and expenses
incident to any suit, action, investigation, claim or proceeding or to establish
or enforce Purchaser's or such other persons' right to indemnification
hereunder.
(2) Shareholders' Losses. (a) Purchaser and the Company jointly and
severally agree to indemnify and hold harmless Shareholders, and their
respective representatives, agents, attorneys, successors and assigns from,
against, for and in respect of any all Shareholders' Losses (defined below)
suffered, sustained, incurred or required to be paid by either Shareholder by
reason of (i) any representation or warranty made by Purchaser in or pursuant to
this Agreement being untrue or incorrect in any respect; (ii) any failure by
Purchaser to observe or perform its covenants and agreements set forth in this
Agreement or any other agreement or document executed by it in connection with
the transactions contemplated hereby; (iii) those liabilities, obligations,
claims, contingencies and encumbrances accruing or arising after the Closing in
connection with the business of the Company, except to the extent that such
liabilities, obligations, claims, contingencies or encumbrances are attributable
to a breach of warranty, representation or covenant by the Company and/or
Shareholders prior to the Closing; or (iv) those matters described in Section
5.12.
(b) "Shareholders' Losses" shall mean all damages (including, without
limitation, amounts paid in settlement with Purchaser's consent, which consent
may not be reasonably withheld), losses, obligations, liabilities, claims,
deficiencies, costs (including, without limitation, reasonable attorneys' fees)
and expenses, including, without limitation, reasonable attorneys' fees and
costs incurred to comply with injunctions and other court and agency orders, and
other costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish or enforce Shareholders' or such other persons' right
to indemnification hereunder.
(3) Notice of Loss. Except to the extent set forth in the next sentence,
Purchaser and Shareholders will not have any liability under the indemnity
provisions of this Agreement with respect to a particular matter unless a notice
setting forth in reasonable detail the breach or other matter which is asserted
has been given to the Indemnifying Party (defined below) and, in addition, if
such matter arises out of a suit, action, investigation, proceeding or claim,
such notice is given promptly, but in any event within ten (10) days after the
Indemnified Party (defined below) is given notice of the claim or the
commencement of the suit, action, investigation or proceeding. Notwithstanding
the preceding sentence, failure of the Indemnified Party to give notice
hereunder shall not release the Indemnifying Party from its obligations under
this Article, except to the extent the Indemnifying Party is actually prejudiced
by such failure to give notice. With respect to Purchaser's Losses,
Shareholders, jointly and severally, shall be the Indemnifying Party and
Purchaser, the Company and their respective directors, officers, employees,
representatives, agents
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and attorneys shall be Indemnified Parties. With respect to Shareholders'
Losses, Purchaser shall be the Indemnifying Party and Shareholders and their
respective directors, officers, employees, representatives, agents and attorneys
shall be the Indemnified Party.
(4) Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding ("Action") for which indemnification might be
claimed by an Indemnified Party, the Indemnifying Party shall be entitled to
defend, contest or otherwise protect against any Action at its own cost and
expense, and the Indemnified Party must cooperate in any such defense or other
action. The Indemnified Party shall have the right, but not obligation, to
participate at its own expense in defense thereof by counsel of its choosing,
but the Indemnifying Party shall be entitled to control the defense unless the
Indemnified Party has relieved the Indemnifying Party from liability with
respect to the particular matter or the Indemnifying Party fails to assume
defense of the matter. In the event the Indemnifying Party fails to defend,
contest or otherwise protect in a timely manner against any such Action, the
Indemnified Party shall have the right, but not obligation, to defend, contest
or otherwise protect against the same and make any compromise or settlement
thereof and recover the entire cost thereof from the Indemnifying Party
including, without limitation, reasonable attorneys' fees, disbursements and all
amounts paid as a result of such Action or the compromise or settlement thereof;
provided, that the Indemnified Party must send a written notice to the
Indemnifying Party of any such proposed settlement or compromise, which
settlement or compromise the Indemnifying Party may reject, in its reasonable
judgment, within thirty days of receipt of notice. Failure to reject such notice
within such thirty day period shall be deemed acceptance of such settlement or
compromise. The Indemnified Party shall have the right to effect a settlement or
compromise over the objection of the Indemnifying Party; provided, that if (i)
the Indemnifying Party is contesting such claim in good faith or (ii) the
Indemnifying Party has assumed the defense from the Indemnified Party, the
Indemnified Party waives any right to indemnity therefor. If the Indemnifying
Party undertakes the defense of such matters, the Indemnified Party shall not,
so long as the Indemnifying Party does not abandon the defense thereof, be
entitled to recover from the Indemnifying Party any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation undertaken by Indemnified
Party with prior written consent of Indemnifying Party.
(5) Cooperation. The Company, Purchaser, Shareholders and each of their
Affiliates, successors and assigns shall cooperate with each other in the
defense of any suit, action, investigation, proceeding or claim by a third party
and, during normal business hours, shall afford each other access to their books
and records and employees relating to such suit, action, investigation,
proceeding or claim and shall furnish each other all such further information
that they have the right and power to furnish as may reasonably be necessary to
defend such suit, action, investigation, proceeding or claim, including, without
limitation, reports, studies, correspondence and other documentation relating to
EPA, OSHA, and EEOC matters.
(6) Waiver of Contribution and Indemnification. Shareholders hereby waive
and release any rights of indemnification or contribution they may have against
the Companies as a result of payments made under this Article.
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(7) Time to Assert Claims. Any claim asserted pursuant to Section 7.1(1)
or (2) above must be asserted by written notice given by one party to the other
on or before the later of (i) the date of the release of the first audit report
of Purchaser containing combined financial statements of Purchaser and the
Companies and (ii) the date which is one (1) year from the date of Closing or
the expiration of the statute of limitations period with respect to claims based
on breaches of representations concerning taxes or environmental matters.
(8) Access to Records. Shareholders, or their agents, shall be afforded
reasonable access to Purchaser's and each Company's books and records during
normal business hours upon reasonable notice for the purpose of verifying any
claim against Shareholders hereunder. Shareholders or their agents may be
required to sign an appropriate confidentiality agreement prior to any
inspection of books and records hereunder. Purchaser or its agents shall be
afforded reasonable access to the Shareholders' and each Company's books and
records during normal business hours upon reasonable notice for the purpose of
verifying any claim against Purchaser hereunder. Purchaser or its agents may be
required to sign an appropriate confidentiality agreement prior to any
inspection of books and records hereunder.
(9) Limitations on Indemnification. Notwithstanding anything to the
contrary, no Indemnifying Party shall have any liability (for indemnification or
otherwise) or obligation to indemnify and Indemnified Party until the total of
all Losses exceeds $150,000 and then, the Indemnifying Party shall be liable for
all amounts of such Losses; provided that, in no event shall an Indemnifying
Party have any liability (for indemnification or otherwise) or obligation to
indemnify an Indemnified Party for any amounts of any Losses in excess of an
aggregate amount of $1,000,000 (other than with respect to third party claims
arising under Sections 2.8, 2.15 or 2.18). The limitations provided for in this
Section shall be aggregated with the limitations set forth in Section 7.2(9) of
the Agreement and Plan of Merger dated the date hereof among Purchaser and the
Shareholders, among others.
(10) Sole Remedy. The provisions of this Article VII shall be the sole
remedies of the parties for any claim arising under this Agreement or as a
result of the dealings of the parties leading up to and embodied in this
Agreement, except with respect to acts or omissions constituting fraud or
intentional misrepresentation.
7.2 RESOLUTION OF CONFLICTS; ARBITRATION.
(i) In case of any dispute between the parties under the
indemnification provisions of this Agreement or the Escrow Agreement, the
Shareholders and Purchaser shall attempt in good faith to agree upon the rights
of the respective parties with respect to each of such claims.
(ii) If no such agreement can be reached after good faith
negotiation, either Purchaser or the Shareholders may demand arbitration of the
matter unless the amount of the damage or loss is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in
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either such event the matter shall be settled by arbitration conducted by one
arbitrator. Purchaser and the Shareholders shall agree on such arbitrator;
provided that if Purchaser and the Shareholders cannot agree on such arbitrator,
either Purchaser or the Shareholders can request that the American Arbitration
Association ("AAA") select the arbitrator. The arbitrator selected by AAA shall
determine the dispute in accordance with Article VII of this Agreement. The
arbitrator shall set a limited time period and establish procedures designed to
reduce the cost and time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the arbitrator, to discover
relevant information from the opposing parties about the subject matter of the
dispute. The arbitrator shall rule upon motions to compel or limit discovery and
shall have the authority to impose sanctions, including attorneys' fees and
costs, to the same extent as a court of competent law or equity, should the
arbitrator determine that discovery was sought without substantial justification
or that discovery was refused or objected to without substantial justification.
The decision of the arbitrator as to the validity and amount of any claim in
such Officer's Certificate (as defined in the Escrow Agreement) shall be binding
and conclusive upon the parties to this Agreement. Such decision shall be
written and shall be supported by written findings of fact and conclusions which
shall set forth the award, judgment, decree or order awarded by the arbitrator.
(iii) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Dallas County, Texas under the rules then in effect of the American Arbitration
Association.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 TERMINATION. Subject to the provisions of Sections 8.2 and 8.3 below,
this Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of the Company and Purchaser;
(b) by Purchaser or the Company if: (i) the Closing has not occurred
before 5:00 p.m. (Central time) on June 30, 1999 (provided that the right to
terminate this Agreement under this clause 8.1(b)(i) shall not be available to
any party whose willful failure to fulfill any obligation hereunder has been the
primary cause of, or resulted in, the failure of the Closing to occur on or
before such date); (ii) there shall be a final nonappealable order of a federal
or state court in effect preventing consummation of this Agreement; or (iii)
there shall be any statute, rule, regulation or order enacted, promulgated or
issued or deemed applicable to this Agreement by any governmental entity that
would make consummation of this Agreement illegal;
(c) by Purchaser if there shall be any action taken, or any statute,
rule, regulation or order enacted, promulgated or issued or deemed applicable to
this Agreement, by any Governmental Entity, which would: (i) prohibit
Purchaser's or the Companies' ownership or operation of all or any portion of
the business of the Companies or (ii) compel Purchaser or the
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Companies to dispose of or hold separate all or a material portion of the
business or assets of the Companies or Purchaser as a result of this Agreement;
(d) by Purchaser if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of the
Companies and (i) such breach has not been cured within ten (10) business days
after written notice to the Companies (provided that, no cure period shall be
required for a breach which by its nature cannot be cured), and (ii) as a result
of such breach the conditions set forth in Section 6.3(a) or 6.3(b), as the case
may be, would not then be satisfied;
(e) by any Company if it is not in material breach of its obligations
under this Agreement and there has been a breach of any representation,
warranty, covenant or agreement contained in this Agreement on the part of
Purchaser and (i) such breach has not been cured within ten (10) business days
after written notice to Purchaser (provided that, no cure period shall be
required for a breach which by its nature cannot be cured), and (ii) as a result
of such breach the conditions set forth in Section 6.2(a) or 6.2(b), as the case
may be, would not then be satisfied.
8.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
as provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Purchaser or any Company, or
their respective officers, directors or stockholders, provided that each party
shall remain liable for any breaches of this Agreement prior to its termination;
and provided further that, the provisions of Sections 5.3 and 5.4 and Articles
VIII and IX of this Agreement shall remain in full force and effect and survive
any termination of this Agreement.
8.3 AMENDMENT. Except as is otherwise required by applicable law after
the shareholders of each Company approve this Agreement, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
8.4 EXTENSION; WAIVER. At any time prior to the Closing, Purchaser and
the Company may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations of the other party hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
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ARTICLE IX
GENERAL PROVISIONS
9.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with acknowledgment of complete transmission)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
If to the Companies
or the Shareholders:
FCI Services Inc.
Forward Communications Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
Glast, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, PC
2200 One Galleria Tower
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇
If to Purchaser:
▇▇▇▇▇▇▇▇▇.▇▇▇, inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
Wood, Exall & Bonnet, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
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9.2 INTERPRETATION. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
9.4. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, the Schedules and
Exhibits hereto, and the documents and instruments and other agreements among
the parties hereto referenced herein: (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof; (b) are not intended to confer upon any
other person any rights or remedies hereunder; and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.
9.5. SEVERABILITY. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.6. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
Each of the parties hereto agrees that process may be served upon them in any
manner authorized by the laws of the State of Texas for such persons and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.
9.7. RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.8 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the
consummation of the Mergers and shall (except to the extent that survival is
necessary to resolve unsatisfied claims) terminate on the
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later of one (1) year after the Closing Date or the expiration of the relevant
statute of limitations period with respect to tax or environmental matters.
9.9 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
-----SIGNATURES FOLLOW------
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IN WITNESS WHEREOF, the Purchaser, the Companies and the Stockholders have
caused this Agreement to be signed by their duly authorized respective officers,
all as of the date first written above.
▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
FCI SERVICES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
FORWARD COMMUNICATIONS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, President
THE STOCKHOLDERS
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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