EXHIBIT 10.2
SHARE PURCHASE AGREEMENT
by and among
OMAHA HOLDINGS CORP.,
▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ JR.
NORTH TEXAS STEEL COMPANY, INC. PENSION PLAN
and
OTHER PARTIES IDENTIFIED ON SCHEDULE 1.3
Dated as of September 7, 2005
TABLE OF CONTENTS
Section 1. Purchase of Shares.......................................... 1
1.1 Transfer of Shares.......................................... 1
1.2 Purchase Price.............................................. 1
1.3 Payment of Purchase Price................................... 1
Section 2. Closing; Further Assurances; Related Matters................ 2
2.1 Closing..................................................... 2
2.2 Instruments of Conveyance................................... 2
2.3 Further Assurances.......................................... 3
Section 3. Representations and Warranties of the Sellers............... 3
3.1 Organization................................................ 3
3.2 Authorization............................................... 3
3.3 Absence of Restrictions and Conflicts....................... 4
3.4 Capitalization.............................................. 4
3.5 Ownership of Assets and Related Matters..................... 5
3.6 Financial Statements........................................ 6
3.7 Absence of Certain Changes or Events........................ 7
3.8 Legal Proceedings........................................... 8
3.9 Licenses, Permits, and Compliance with Law.................. 9
3.10 Company Contracts........................................... 9
3.11 Tax Returns; Taxes.......................................... 11
3.12 ERISA and Related Matters................................... 13
3.13 Employees and Labor Matters................................. 17
3.14 Intellectual Property....................................... 18
3.15 Brokers, Finders, and Investment Bankers.................... 18
3.16 Environmental Matters....................................... 19
3.17 Plant, Property and Equipment............................... 20
3.18 Insurance................................................... 21
3.19 Accounts Receivable......................................... 21
TABLE OF CONTENTS
(continued)
3.20 Inventories................................................. 22
3.21 Absence of Certain Business Practices....................... 22
3.22 Transactions with Affiliates................................ 22
3.23 Suppliers................................................... 22
3.24 Customers................................................... 23
3.25 Product Liabilities......................................... 23
3.26 Sufficiency of Assets....................................... XX
3.27 Capital Expenditures........................................ 23
3.28 Employee Consultations...................................... XX
Section 4. Representations and Warranties of the Buyer................. 24
4.1 Organization................................................ 24
4.2 Authorization............................................... 24
4.3 Absence of Restrictions and Conflicts....................... 24
4.4 Brokers, Finders, and Investment Bankers.................... 25
4.5 Purchase for Investment..................................... 25
4.6 Litigation.................................................. 26
4.7 Financing; Availability of Funds............................ 26
Section 5. Additional Covenants and Agreements......................... 26
5.1 Conduct of Business......................................... 26
5.2 Access to Information....................................... 28
5.3 Consents.................................................... 29
5.4 Reasonable Best Efforts..................................... 29
5.5 Fees and Expenses........................................... 29
5.6 Public Announcements........................................ 30
5.7 Covenant to Satisfy Conditions.............................. 30
5.8 Employees; Employee Benefits................................ 30
5.9 Intentionally Omitted....................................... 30
5.10 No Solicitation by the Buyer................................ 30
5.11 Intentionally Omitted....................................... 31
5.12 Retention of Records........................................ 31
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TABLE OF CONTENTS
(continued)
5.13 Investigation; Limited Representations and Warranties....... 31
5.14 Financing................................................... 31
5.15 Collection of Accounts Receivable........................... 31
5.16 Pension Contribution........................................ 31
5.17 Retirement Committees....................................... 32
Section 6. Restrictive Covenants....................................... 32
6.1 Definitions................................................. 32
6.2 Noncompetition.............................................. 32
6.3 Severability................................................ 33
6.4 Equitable Relief............................................ 33
Section 7. Conditions to Obligations of the Parties.................... 34
7.1 Conditions to Each Party's Obligations...................... 34
7.2 Conditions to Obligations of the Sellers.................... 34
7.3 Conditions to Obligations of the Buyer...................... 35
Section 8. Termination................................................. 36
8.1 Termination................................................. 36
8.2 Procedure and Effect of Termination......................... 37
Section 9. Indemnification............................................. 38
9.1 Indemnification Obligations of the Sellers.................. 38
9.2 Indemnification Obligations of the Buyer.................... 38
9.3 Indemnification Procedure................................... 39
9.4 Claims Period............................................... 40
9.5 Threshold and Cap Amounts................................... 40
9.6 Limitations on Indemnification.............................. 41
9.7 Exclusive Remedy............................................ 42
Section 10. Tax Matters................................................. 43
10.1 Preparation and Filing of Tax Returns....................... 43
10.2 Payment of Taxes............................................ 43
10.3 Tax Sharing Agreements...................................... XX
10.4 Carryforwards and Carrybacks................................ XX
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TABLE OF CONTENTS
(continued)
10.5 Refunds..................................................... XX
10.6 Tax Cooperation............................................. 44
10.7 Tax Indemnification......................................... 44
10.8 Tax Contests................................................ 44
10.9 Transfer Taxes.............................................. 44
10.10 Tax Procedures if Closing Does Not Occur at Fiscal Month End XX
Section 11. Miscellaneous............................................... 45
11.1 Notices..................................................... 45
11.2 Attachments................................................. 46
11.3 Successors in Interest...................................... 46
11.4 Number; Gender; Currency.................................... 46
11.5 Captions.................................................... 47
11.6 Certain Definitions......................................... 47
11.7 Controlling Law; Integration; Amendment..................... 50
11.8 Severability................................................ 50
11.9 Counterparts................................................ 51
11.10 Enforcement of Certain Rights............................... 51
11.11 Arbitration; Legal Proceedings.............................. 51
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement"), dated as of the ___th
day of July, 2005, is made and entered into by and among OMAHA HOLDINGS CORP., a
Delaware corporation (the "Buyer"), ▇▇▇▇▇ ▇▇▇▇, an individual, ▇▇▇▇▇▇ ▇▇▇▇, an
individual (the "Judds"), ▇▇▇▇▇▇ ▇▇▇▇ JR., an individual, NORTH TEXAS STEEL
COMPANY, INC. PENSION PLAN, and the other parties listed in Schedule 1.3. ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, Jr, North Texas Steel Company, Inc. Pension Plan
and [descendants] are each sometimes hereinafter referred to, individually, as a
"Seller" and, collectively, as the "Sellers." Certain capitalized words and
phrases used herein have the meanings set forth in Section 11.6.
W I T N E S S E T H:
WHEREAS, the Sellers own all of the outstanding shares of stock of North
Texas Steel Company, Inc., a Texas corporation ("NTSC" or the "Company");
WHEREAS, subject to the terms and conditions of this Agreement, the
Sellers desire to sell, and the Buyer desires to purchase, all of the
outstanding shares of North Texas Steel Company, Inc.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. Purchase of Shares.
1.1 Transfer of Shares. On the terms and subject to the conditions set
forth in this Agreement, at the Closing (as hereinafter defined), (a) the
Sellers agree to sell, assign, transfer, and deliver to the Buyer, and the Buyer
agrees to purchase from the Sellers, 2,673 shares of common stock of the Company
(the "North Texas Steel Company, Inc. Shares"), which North Texas Steel Company,
Inc. Shares constitute all of the outstanding shares of capital stock of the
Company. The North Texas Steel Company, Inc. Shares are sometimes referred to
herein as the "Shares."
1.2 Purchase Price. On the terms and subject to the conditions set forth
in this Agreement, in consideration for all of the Shares, the purchase price
(the "Purchase Price") for the Shares shall be ELEVEN MILLION DOLLARS
($11,000,000), which amount shall be paid at the Closing in accordance with
Section 1.3.
1.3 Payment of Purchase Price. At the Closing, the Buyer shall pay the
Purchase Price as follows:
(a) To the Sellers by wire transfer of NINE MILLION ONE HUNDRED
FIFTY THOUSAND DOLLARS ($9,150,000.00) in immediately available funds, in
the amounts and in accordance with Schedule 1.3, to an account or accounts
designated by the Sellers at or before the Closing;
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(b) To an account (the "North Texas Steel/Omaha Holdings Pension
Plan Joint Account," or simply "Pension Plan Joint Account") to be
designated pursuant to the terms of the North Texas Steel/Omaha Holdings
Pension Plan Joint Account Agreement by wire transfer the sum of ONE
MILLION THREE HUNDRED FIFTY THOUSAND DOLLARS ($1,350,000.00) in
immediately available funds to be held and distributed pursuant to the
terms of the Pension Plan Joint Account Agreement, as defined below; and
(c) To an account (the "North Texas Steel/Omaha Holdings Indemnity
Joint Account," or simply "Indemnity Joint Account") to be designated
pursuant to the terms of the North Texas Steel/Omaha Holdings Indemnity
Joint Account Agreement by wire transfer the sum of FIVE HUNDRED THOUSAND
DOLLARS ($500,000.00) by wire transfer (the "North Texas Steel/Omaha
Holdings Indemnity Joint Account Deposit" or simply "Indemnity Joint
Account Deposit") to be held and distributed pursuant to the terms of the
Indemnity Joint Account Agreement, as defined below.
Sellers and Buyer intend for the amounts set aside under Section 1.3(b) and (c)
immediately above (i) to be accounted for by the Sellers in accordance with the
"installment method" as provided in Section 453 of the Internal Revenue Code of
1986, as amended, for federal income tax purposes and (ii) to be treated as part
of an installment sale by the Sellers, with the none of the amounts so set aside
being treated as a "payment" to the Sellers in exchange for their stock until
the conditions for the disbursement of funds from the respective joint account
agreements have been satisfied and an actual disbursement of funds from the
respective joint accounts to the Sellers has been made and then only in the
amount of such disbursement received by the Sellers. To the extent, if any, that
Buyer or its agents are obligated to furnish Forms 1099-B or other applicable
information returns, it acknowledges that no portion of the amounts so set aside
shall be reported as gross proceeds or payment to any of the Sellers in the year
of the Closing. Notwithstanding anything herein to the contrary, Buyer makes no
representations, warranties, covenants or guarantees that the amounts set aside
pursuant to Sections 1.3(b) and (c) and any future payment to the Sellers
therefrom, qualify as an "installment method" under Section 453 of the Internal
Revenue Code of 1986, as amended, for federal (or state) income tax purposes.
Section 2. Closing; Further Assurances; Related Matters.
2.1 Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place not later than the third (3rd) business day following the
satisfaction or waiver of all of the conditions to Closing set forth in Section
7 hereof, at 10:00 a.m., local time, at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a
Professional Corporation, Fort Worth, Texas, or on such other date and at such
other time or place as the parties may agree. The date on which the Closing
occurs is sometimes referred to herein as the "Closing Date."
2.2 Instruments of Conveyance. At the Closing, each of the Sellers shall
deliver any and all share certificates representing the Shares owned by them to
the Buyer, duly endorsed in blank (or accompanied by duly executed stock powers)
and, where applicable, each of the Sellers shall deliver to the Buyer duly
executed share transfer forms for the Shares.
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2.3 Further Assurances. Each party hereto shall, on the Closing Date and
from time to time thereafter, at any other party's reasonable request and
without further consideration, execute and deliver to such other party such
instruments of transfer, conveyance, and assignment in addition to those
delivered pursuant to Section 2.2 as shall be reasonably requested to transfer,
convey, and assign the Shares to the Buyer.
Section 3. Representations and Warranties of the Sellers.
Subject to the exceptions specifically disclosed in writing in the
disclosure schedule (referencing the applicable paragraph and section of this
Agreement) supplied by NTSC to the Buyer on or prior to, and dated as of, the
date hereof and certified by an authorized officer of NTSC (the "Disclosure
Schedule"), (i) each Seller represents and warrants (severally as to itself,
himself or herself only and not as to any other Seller or the Company) to the
Buyer those matters set forth in Sections 3.1(a), 3.2, 3.3(a), 3.4 (b), 3.8(a),
3.15, 3.21 and 3.22(a) and (b) below, and (ii) ▇▇▇ ▇▇▇▇▇ represent and warrant
to the Buyer as to all other matters in this Section 3, notwithstanding that any
such representation may state that it is being made by the "Sellers", as
follows:
3.1 Organization.
(a) Each of the Sellers is an individual, trust or an entity duly
organized, validly existing, and in good standing (if applicable) under
the Laws of the jurisdiction of its organization.
(b) The Company is a business entity duly organized, validly
existing, and in good standing (if applicable) under the Laws of the
jurisdiction of its organization. The Company has all requisite corporate
power and authority to own, lease, and operate its properties and to carry
on its business as now being conducted. The Company is duly qualified to
transact business and is in good standing as a foreign entity in each
jurisdiction where the character of its current activities requires such
qualification, except where the failure to so qualify, individually or in
the aggregate, would not have a Material Adverse Effect or materially
impair or delay the Sellers' ability to effect the Closing.
(c) The Sellers have delivered to the Buyer true and correct copies
of the organizational documents of the Company, in each case as currently
in effect.
3.2 Authorization. Each Seller has the corporate or other or individual
power and authority to execute and deliver this Agreement and each Seller
Ancillary Agreement to be executed by it hereunder and perform its obligations
hereunder and thereunder. The execution and delivery of this Agreement and each
Seller Ancillary Agreement and the performance by each Seller of its covenants
and agreements hereunder and thereunder have been duly and validly authorized by
all necessary board, manager, shareholder, trustee or member action of such
Seller. This Agreement has been duly executed and delivered by each Seller and
constitutes, and each Seller Ancillary Agreement, when executed and delivered by
each Seller party thereto on the Closing Date, will constitute, a valid and
binding agreement of each such Seller, enforceable against each such Seller in
accordance with its terms, except that (a) such enforcement may be subject to
any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other Laws, now or hereafter in effect, relating to or limiting creditors'
rights generally and (b) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
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3.3 Absence of Restrictions and Conflicts.
Except as set forth or qualified in Section 3.3 of the Disclosure
Schedule, Sellers' execution, delivery, and performance of this Agreement
and the Seller Ancillary Agreements, Sellers' consummation of the
transactions contemplated by this Agreement and the Seller Ancillary
Agreements, and Sellers' fulfillment of and compliance with the terms and
conditions of this Agreement and the Seller Ancillary Agreements:
(a) do not and will not (as the case may be) violate, constitute a
breach or violation of or default under, permit the acceleration of any
obligation under or give rise to any right of termination under, any Law
or Order applicable to such Seller; and
(b) do not and will not (as the case may be) violate, constitute a
breach or violation of or default under, permit the acceleration of any
obligation under or give rise to any right of termination under, any
Company Contract (as hereinafter defined), and
(c) do not and will not (as the case may be) violate or conflict
with any term or provision of the charter documents, bylaws, operating
agreements or organizational documents of the Company. Except as set forth
in Section 3.3 of the Disclosure Schedule, no consent, Order, or
authorization of, or registration, declaration, or filing with, any
Governmental Authority, or with any third party with respect to any
agreement or arrangement referred to in clause (a) of the preceding
sentence, with respect to the Company, is required in connection with the
execution, delivery, or performance of this Agreement or the consummation
of the transactions contemplated by this Agreement.
3.4 Capitalization.
(a) Set forth in Section 3.4 of the Disclosure Schedule is a
complete and accurate list for the Company of: (i) its jurisdiction of
incorporation or organization, (ii) its authorized capital stock or share
capital (if applicable), (iii) the number of issued and outstanding shares
of its capital stock or share capital (if applicable) and (iv) the holder
or holders of such shares or other equity interests. All of the
outstanding Shares the Company, if applicable, are duly authorized,
validly issued, fully paid and non-assessable and are not subject to or
issued in violation of any preemptive right, subscription right or any
similar right under applicable Laws, organizational documents of the
Company or any agreement to which the Company is a party or is otherwise
bound. The Company does not own beneficially or otherwise, directly or
indirectly, any capital stock of, or other securities, equity or ownership
interest in, or has any obligation to form or participate in, any other
Person. 327 shares of capital stock of the Company are held by such
Company in its treasury.
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(b) The Sellers have good and marketable title to, and are the
record owners of, the outstanding North Texas Steel Company, Inc. Shares
owned by them, free and clear of any and all Liens. Except with respect to
transfer restrictions under applicable securities laws, no legend or other
similar item appears upon any certificates representing any shares of the
Company which constitutes a restriction on transfer or otherwise provides
any third party with rights with respect to the Shares.
(c) There are no subscriptions, options, convertible securities,
calls, puts, rights, warrants, or other agreements, claims, or commitments
of any nature whatsoever obligating the Company to purchase, redeem,
issue, transfer, deliver, or sell, or cause to be purchased, redeemed,
issued, transferred, delivered, or sold, additional shares or other
securities of the Company. There are no dividends which have accrued or
been declared but are unpaid on the shares or equity of the Company and
there are no stock appreciation, phantom stock, or similar rights with
respect to the shares or equity of the Company. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to
vote (or convertible into or exchangeable for securities with the right to
vote).
3.5 Ownership of Assets and Related Matters.
(a) Real Property. Section 3.5(a)(1) of the Disclosure Schedule sets
forth a correct and complete list of all real property currently owned by
the Company (the "Real Property"). Section 3.5(a)(2) of the Disclosure
Schedule sets forth a correct and complete list of all leases and
agreements (the "Real Property Leases") granting the Company possession of
or rights to real property (the "Leased Property") together with the date
of and parties to each such Real Property Lease and each amendment,
modification or supplement thereto and any other material agreement under
which the Company uses, occupies or has the right to use or occupy, now or
in the future. Section 3.5(a)(3) of the Disclosure Schedule sets forth a
complete list of the recent appraisals commissioned by the Company
concerning certain of the Real Property, true and correct copies of which
previously have been provided to the Buyer. The Company has (i) good and
indefeasible title to the Real Property and to all the buildings,
structures and improvements located thereon and (ii) a valid and binding
leasehold interest in the Leased Property (in each case, free and clear of
all Liens except Permitted Liens (as hereinafter defined)). The Real
Property and Leased Property are sometimes referred to herein,
collectively, as the "Properties"). Except for the Properties, no other
properties or interest in real property are used or held for use in the
Business. The Company enjoys peaceful and undisturbed possession under all
such Real Property Leases. Each parcel of Real Property has access to a
public street.
(b) Systems. Except as disclosed in Section 3.27 of the Disclosure
Schedule, all water, gas, electrical, steam, compressed air, computer,
telecommunications, sanitary and storm sewage lines and systems and other
similar systems necessary for the use of the Real Property as it is
currently used are installed and operating in a manner sufficient to
enable the Real Property to continue to be used and operated in the manner
currently being used and operated, except as would not materially impair
the current use of the Real Property, and to the knowledge of Sellers such
systems are not presently in need of any substantial repair to enable them
to be operated in substantially the same manner as currently being
operated (subject to routine maintenance and repair). Each parcel of Real
Property has access to a public street sufficient to enable it to continue
to be used and operated in the manner currently being used and operated.
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(c) Structures. Except as shown on surveys of the Real Property
delivered by the Company to Buyer, as same may be modified by any updated
surveys to be delivered by the Company to Buyer, and except as to minor
encroachments within the definition of Permitted Liens in 3.5(e), all
buildings, plants and structures and other improvements on any parcel of
Real Property lie wholly within the boundaries of the Real Property and do
not encroach upon the property of, or otherwise conflict with the property
rights of, any other Person..
(d) Personal Property. Section 3.5(d) of the Disclosure Schedule
sets forth a correct and complete list of all leases and agreements
granting the Company, directly or indirectly, possession of or rights to
personal property ("Personal Property") and requiring lease payments in
excess of $10,000 per annum (the "Personal Property Leases"), and such
Personal Property is free and clear of all Liens of any kind except
Permitted Liens; and also sets forth all a correct and complete list of
perfected security interests ("Personal Property Security
Interests")constituting Liens on the Personal Property securing payment of
indebtedness in excess of $10,000.00. All of the Personal Property used,
held for use in the Business is in all material respects in the condition
required of such Personal Property by the terms of the Personal Property
Lease applicable thereto during the term of such lease and upon the
expiration thereof.
(e) Ownership. Except for (i) assets leased under the Real Property
Leases and the Personal Property Leases, (ii) assets subject to the
Personal Property Security Interests and (iii) software licensed to the
Company, all assets of the Company are owned by the Company free and clear
of all Liens (other than the (A) liens for utilities and current taxes not
yet due and payable, (B) mechanics', carriers', workers', repairers',
materialmen's, warehousemen's and other similar liens arising or incurred
in the ordinary course of business, (C) utility easements, covenants and
restrictions of record, and (D) any other Liens that, individually or in
the aggregate, do not materially interfere with the continued use and
operation of the assets to which they relate in the operation of the
Business as currently conducted (clauses (A) through (D), collectively,
"Permitted Liens")). With respect to the Real Property, the term
"Permitted Liens" shall include minor encroachments on or imperfections of
title, and zoning laws and other land use restrictions, none of which
materially detracts from the value or impairs the current use of the Real
Property or the current operations of the Company.
3.6 Financial Statements.
(a) The Sellers have delivered to the Buyer the following: (i) the
audited balance sheets (the "Audited Balance Sheet") and related audited
annual statements of income of the Company as of and for the fiscal year
ended June 30, 2004 (the "Audited Financial Statements"); and (ii) the
unaudited balance sheets (the "Interim Balance Sheet") of the Company as
of June 30, 2005 (the "Balance Sheet Date") and the related unaudited
statements of income for the twelve (12)-month period then ended (together
with the Interim Balance Sheet, the "Interim Financial Statements"). The
Audited Financial Statements and the Interim Financial Statements are
hereinafter referred to, collectively, as the "Financial Statements
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(b) Copies of the Financial Statements are attached as Section 3.6
of the Disclosure Schedule. Except as otherwise indicated thereon, the
balance sheets included in the Financial Statements fairly present, in all
material respects, the financial condition of the Company, as of the
respective dates thereof, and the statements of income of the Company
included in the Financial Statements fairly present, in all material
respects, the results of operations of the Company for the respective
periods set forth therein, in each case in accordance with generally
accepted accounting principles in the United States applied consistently
with past practices ("GAAP"), subject, in the case of the Interim
Financial Statements, to normal year-end adjustments and the absence of
footnotes.
(c) No Undisclosed Material Liabilities. Except as specified in
Section 3.6 of the Disclosure Schedule and liabilities incurred in the
ordinary course of business consistent with past practice since the
Balance Sheet Date, and subject, in the case of the Interim Financial
Statements, to normal year-end adjustments and the absence of footnotes,
there are no liabilities of the Company of any kind whatsoever (whether
accrued, contingent, absolute, due, to become due, determined,
determinable or otherwise) required by GAAP to be reflected on a balance
sheet except for liabilities or obligations reflected or reserved against
in the Audited Balance Sheet or the Interim Balance Sheet.
3.7 Absence of Certain Changes or Events. Except as disclosed in Section
3.7 of the Disclosure Schedule, since the Balance Sheet Date, the Company has
conducted its business only in the ordinary course substantially in the same
manner as previously conducted, and during such period there has not been, with
respect to the Company, any:
(a) event, change, effect, occurrence, development or state of
circumstances or facts that, individually or in the aggregate, that to the
knowledge of Sellers has had, or is reasonably likely to have, a Material
Adverse Effect;
(b) amendment or other change in its charter documents, bylaws,
operating agreements or organizational documents;
(c) declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of its capital stock, or any
repurchase, redemption or other acquisition by it of any outstanding
shares of its capital stock or other securities;
(d) amendment of any material term of any of its outstanding
securities;
(e) making of any loan, advance or capital contributions to or
investment in any Person;
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(f) (i) material damage, destruction or other casualty Loss (whether
or not covered by insurance) affecting the Business or assets of, or
property owned, leased or otherwise used by it, (ii) sale (except for
inventory in the ordinary course of business) lease, alteration or other
disposition of, or write down of the book value of (except under
accounting practices and principles applied for amortization and
depreciation thereof for the period ending on the date of the applicable
balance sheet) any of its material assets that individually have a book
value in excess of $15,000 or any of its items of property, plant and
equipment that in the aggregate had a book value in excess of $15,000,
(iii) mortgage, pledge or imposition of any Lien (other than a Permitted
Lien) upon any of its material assets, or (iv) except in the ordinary
course of business consistent with past practice, sale or other
disposition of, or termination, lapse or other expiration of, the rights
to the use of any of its Intellectual Property (as hereinafter defined);
(g) entry into, amendment to, termination of, or receipt of notice
of termination of any contract involving its commitment extending for more
than one year and involving a total remaining commitment by it of at least
$50,000;
(h) change in its Tax or accounting principles, methods or
practices;
(i) capital expenditure, or commitment for a capital expenditure in
excess of $50,000 individually for additions or improvements to its
property, plant and equipment;
(j) (i) cancellation or intentional waiver of any of its known
claims or rights with a value to it in excess of $25,000, or (ii)
settlement or compromise of any material actions, other than such actions
in which the amount paid in settlement or comprise, including the cost to
it of complying with any provisions of such settlement or compromise other
than cash payments, does not exceed $25,000 without regard to any amount
covered by insurance;
(k) acquisition or disposition after the date of this Agreement of
any portion of the Business or assets (except for the sale of inventory in
the ordinary course of business) other than in the ordinary course of
business; or
(l) agreement (whether written or oral) by it to do any of the
foregoing.
3.8 Legal Proceedings. Except as listed in Schedule 3.8 of the Disclosure
Schedule:
(a) there is no claim, action, suit, proceeding or governmental
investigation pending (as that term is defined in Section 11.6) or, to the
knowledge of each Seller, threatened against such Seller, by or before any
Governmental Authority or by any third party that (i) challenges the
validity of this Agreement, or (ii) would be reasonably likely to
adversely affect or restrict the Seller's ability to consummate the
transactions contemplated hereby.
(b) there is no claim, action, suit, proceeding or governmental
investigation pending (as that term is defined in Section 11.6) or, to the
knowledge of ▇▇▇ ▇▇▇▇▇, threatened against the Company, by or before any
Governmental Authority or by any third party that (i) if finally
determined adversely, are reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect or result in Losses of more
than $50,000 (exclusive of any matters not involving the Company or the
Business), (ii) challenges the validity of this Agreement, or (iii) would
be reasonably likely to adversely affect or restrict the Sellers' ability
to consummate the transactions contemplated hereby.
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3.9 Licenses, Permits, and Compliance with Law. Section 3.9 of the
Disclosure Schedule sets forth a true and complete list of each franchise,
license, permit, authorization, consent, Orders and approval of, or
registration, declaration or filing with, any Governmental Authority
(collectively, "Permits") issued or granted to the Company that is material to
the conduct of the Business under all applicable Laws. Except as set forth in
Section 3.9(a) of the Disclosure Schedule, each such Permit is valid and in full
force and effect and (a) the Company has complied in all material respects with
the terms and conditions of such Permit and is not in material default and no
condition exists that with notice or lapse of time or both would constitute a
material default thereunder and (b) no such Permit will be subject to
suspension, material modification, revocation or nonrenewal as a result of the
execution and delivery of this Agreement or the Seller Ancillary Agreements or
the consummation of the transactions contemplated hereby and thereby. To the
knowledge of Sellers, the Company has all material Permits necessary for the
conduct of the Business as presently conducted. All such Permits which are held
in the name of a Seller, any employee, officer, director, shareholder, agent or
otherwise on behalf of the Company shall be deemed included under this Section
3.9. The Company is, and has been since January 1, 1998, and the Business is,
and has been since January 1, 1998, conducted in compliance in all material
respects with all Laws applicable to it or the conduct or operation of the
Business or the ownership or use of its assets. There are no proceedings pending
or, to the knowledge of the Sellers, threatened, that would reasonably be likely
to result in the revocation, cancellation or suspension of any such material
Permits by any Governmental Authority. No investigation or review by any
Governmental Authority with respect to the Company or any of its respective
business, facilities, operations, or agreements that could be reasonably
expected to result in a Material Adverse Effect is pending or, to the knowledge
of the Sellers, threatened, nor, to the knowledge of the Sellers, has any
Governmental Authority indicated an intention to conduct the same.
3.10 Company Contracts.
(a) Section 3.10(a) of the Disclosure Schedule sets forth a correct
and complete list of all Company Contracts (as hereinafter defined).
Correct and complete copies of all written Company Contracts have been
made available to the Buyer. "Company Contracts" means the following
contracts, agreements, commitments, arrangements, understandings, or other
instruments (in each case whether oral or written, but only to the extent
legally binding) to which the Company is a party (excluding any insurance
contracts and excluding any prime contracts the terms of which may be
incorporated by reference into any Company Contracts):
(i) indentures, security agreements, or other agreements and
instruments relating to the borrowing of money, the extension of
credit or the granting of Liens (other than Permitted Liens);
(ii) management, employment, or consulting agreements, or
arrangements or agreements related to temporary services of any kind
that require payments greater than $50,000 annually;
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(iii) union or other collective bargaining agreements;
(iv) sales agency, manufacturer's representative, and
distributorship agreements or other distribution or commission
arrangements requiring payments in excess of $50,000 per annum;
(v) licenses of patent, trademark, software (excluding
standard "off the shelf" software or software with annual license
payments less than $20,000), copyrights, know-how, and other
intellectual property rights requiring payments in excess of $50,000
per annum;
(vi) any contract that requires the Company to conduct
business exclusively with one or more Persons in any particular
geographic area or with respect to any particular product or
service;
(vii) any contract presently in effect, whether or not fully
performed, between the Company, on the one hand, and any current or
former officer, director, consultant or other employee (or group
thereof) retained or employed by any Seller, Company, or any current
or former shareholder or member (or group of shareholders or
members) of any Seller and the Company, on the other hand requiring
payments in excess of $50,000 per annum;
(viii) any conditional sale or other title retention
agreement, equipment obligation, or lease purchase agreement
involving (in the aggregate) amounts in excess of $50,000 to which
the Company is a party;
(ix) any power of attorney given by Seller to the Company or
to any Person, firm or corporation or otherwise relating to the
assets of the Company;
(x) any partnership or joint venture contracts to which the
Company is a party;
(xi) any bonds or agreements of guarantee or indemnification
in which the Company acts as surety, guarantor or indemnitor with
respect to any obligation (fixed or contingent) in excess of
$25,000;
(xii) any contract providing for future payments in excess of
$25,000 that are conditioned, in whole or in part, on a change in
control of the Company and that would be triggered by the
transactions contemplated by this Agreement;
(xiii) agreements, orders, or commitments, whether or not made
in the ordinary course of business, for the purchase of services,
inventories, materials, supplies, or products from any single
supplier for an amount in excess of $100,000 per annum;
(xiv) agreements, orders, or commitments, whether or not made
in the ordinary course of business, for the sale of products or
services to any single customer for an amount in excess of $100,000
per annum;
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(xv) agreements for capital expenditures in excess of $50,000
for any single project;
(xvi) agreements which, by their terms, prohibit or restrict
the ability of the Company to compete or solicit customers anywhere
in the world;
(xvii) agreements relating to the acquisition or sale of, or
undertaking to capitalize the Company, business, division, or other
enterprise, whether in the form of stock purchase, asset
acquisition, capital contribution agreement or otherwise;
(xviii) Real Property Leases;
(xix) Personal Property Leases; and
(xx) other than as addressed above, other agreements,
contracts, and commitments that involve payments or receipts of more
than $50,000 per annum and that were entered into other than in the
ordinary course of business (but excluding any insurance contracts).
(b) Except as set forth in Section 3.10(b) of the Disclosure
Schedule, and assuming due and valid authorization, execution and delivery
by all other parties (and to the knowledge of Sellers no other party
claims that any Company Contract was not so duly and validly authorized,
executed and delivered), all Company Contracts listed in Section 3.10(a)
of the Disclosure Schedule are in full force and effect in all material
respects and are valid, binding and enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity. Each Company, as the case
may be, has performed in all material respects all obligations required to
be performed by it to date under the Company Contracts and neither the
Company nor, to the knowledge of the Sellers, any other party to a Company
Contract has materially breached or improperly terminated any Company
Contract or is in material default under any Company Contract by which it
is bound and, to the knowledge of the Sellers, there exists no condition
or event which after notice or lapse of time or both would constitute any
such material breach, termination or material default.
(c) All written Company Contracts that have been made available to
the Buyer and are listed in Section 3.10(a) of the Disclosure Schedule are
(except as disclosed in Section 3.10(a) of the Disclosure Schedule)
complete and correct copies of such Company Contracts, and include all
amendments and modifications thereto. Section 3.10(c) of the Disclosure
Schedule sets forth a true, correct and complete summary of the material
terms and provisions of each oral Company Contract (as amended or
modified).
3.11 Tax Returns; Taxes.
(a) Since January 1, 1998, either a Seller, an Affiliate of a Seller
or the Company (i) has timely filed or caused to be filed on a timely
basis with the appropriate taxing authorities all material Tax Returns
required to be filed by or with respect to the Company, or with respect to
which the Company could have liability, and (ii) has paid or made adequate
provision for the payment of all Taxes shown to be due on such Tax
Returns. Such Tax Returns are correct and complete in all material
respects.
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(b) There are no Liens for Taxes with respect to the assets of the
Company (except for statutory Liens for current taxes not yet delinquent).
Except as set forth in Section 3.11(b) of the Disclosure Schedule, Sellers
have received no notice that the Tax Returns applicable to the Company are
currently being audited or examined by any taxing authority. There is no
material unpaid tax deficiency, determination or assessment currently
outstanding against the Company or, to the knowledge of the Sellers, any
claim for additional Taxes. There are no outstanding agreements or waivers
extending the statute of limitations relating to the assessment of Taxes
applicable to the Company.
(c) Since January 1, 1998, the Company has complied in all material
respects with all applicable Laws relating to the collection or
withholding of Taxes.
(d) Except as set forth in Section 3.11(d) of the Disclosure
Schedule, the Company has not incurred any Taxes after the Balance Sheet
Date, other than in the ordinary course of business consistent with past
practice.
(e) The Company (i) is not, and has not made an election to be
treated as, a "consenting corporation" under ss. 341(f) of the Code and
(ii) is not, and has not been, a "personal holding company" within the
meaning of ss. 542 of the Code.
(f) Since January 1, 1998, the Company has not been a member of a
combined, consolidated, affiliated or unitary group for Tax filing
purposes.
(g) The Company is not, nor has ever been, a party to any Tax
sharing indemnity or similar agreement allocating tax liability that will
not be terminated on the Closing Date without any future liability to such
Company (including for past Taxes).
(h) The Company has not incurred any liability to make or possibly
make any payments, either alone or in conjunction with any other payments,
that:
(i) are non-deductible under, or would otherwise constitute a
"parachute payment" within the meaning of, ss. 280G of the Code (or
any corresponding provision of state, local or foreign income Tax
Law) or
(ii) are or may be subject to the imposition of an excise Tax
under ss. 4999 of the Code.
(i) The Company has not agreed to, and is not required to, make any
adjustments or changes either on, before or (as a consequence of any
action taken by the Sellers) after the Closing Date, to its accounting
methods pursuant to ss. 481 of the Code (or similar provisions of state,
local or foreign Law), and neither the Internal Revenue Service nor any
other tax authority has proposed any such adjustments or changes in the
accounting methods.
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(j) Since January 1, 1998, no claim has to the knowledge of the
Sellers ever been made by any Taxing authority in a jurisdiction in which
any Seller (or its Affiliates, as appropriate) does not file Tax Returns
to be filed with respect to the Business that any such Tax Returns should
be filed.
(k) The Company is not, nor has ever been, a "United States real
property holding corporation" within the meaning of ss. 897(c)(2) of the
Code.
(l) The Company will not, as a consequence of any action taken by
the Sellers, be required to include in income during a taxable period that
ends after the Closing Date any income that economically accrued and was
accounted for prior to the Closing Date by reason of the installment
method of accounting, the completed method of accounting, or otherwise,
but excluding any and all estimates made with respect to jobs accounted
for under the percentage of completion method consistently applied, and
excluding the effect of any subsequent accounting method change, unless
such accounting method change is required by the Code or the Internal
Revenue Service.
(m) For U.S. federal income tax purposes: Section 3.11(m) of the
Disclosure Schedule sets forth the name, address, U.S. taxpayer
identification number of NTSC.
3.12 ERISA and Related Matters.
(a) Section 3.12(a) of the Disclosure Schedule lists all deferred
compensation, pension, profit-sharing, and retirement plans, and all
bonus, welfare, severance pay, and other "employee benefit plans" (as
defined in Section 3(3) of ERISA), fringe benefit or stock option plans,
including individual contracts, employee agreements, programs, or
arrangements, or any other material compensation commitment, payroll
practice or method of contribution or compensation, whether formal or
informal, providing the benefits, whether or not written, which have been
participated in, or maintained by the Company or with respect to which
contributions have been made or obligations assumed by the Company in
respect of the Company (including health, life insurance, and other
benefit plans maintained for former employees or retirees) at any time
between January 1, 1998 and the date hereof. Said plans or other
arrangements are sometimes individually referred to in this Agreement as a
"Company Benefit Plan" and sometimes collectively referred to in this
Agreement as the "Company Benefit Plans." Copies of all Company Benefit
Plans and related documents, including those setting out the Company's
personnel policies and procedures, and including any insurance contracts,
trust agreements, or other arrangements under which benefits are provided,
as currently in effect, and descriptions of any such plan which are not
written have been made available to the Buyer.
(b) Except as disclosed in Section 3.12(b) to the Disclosure
Schedule: Since January 1, 1998,
(i) The Company and each ERISA Affiliate has fulfilled its
obligations, to the extent applicable, under the minimum funding
requirements of Section 302 of ERISA and Section 412 of the Code,
with respect to each "employee benefit plan" (as defined in Section
3(3) of ERISA) to which those minimum funding requirements are
applicable. The Company Benefit Plan is in substantial compliance
with, and has been administered in all material respects in
accordance with their written terms and consistent with, the
presently applicable provisions of ERISA, the Code, and state Law
including but not limited to the satisfaction of all applicable
reporting and disclosure requirements under the Code, ERISA, and
state Law. For purposes of this Agreement "ERISA Affiliate" shall
mean each person (as defined in Section 3(9) of ERISA) which
together with the Company, would be deemed to be a member of the
same "controlled group," within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
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(ii) No non-exempt "prohibited transaction," as defined in
Section 406 of ERISA and Section 4975 of the Code, has occurred in
respect of any such Company Benefit Plan which would have a Material
Adverse Effect, and no civil or criminal action brought pursuant to
Part 5 of Title I or ERISA is pending or, to the knowledge of the
Sellers, is threatened in writing or orally against any fiduciary of
any such plan. Neither the Company nor any administrator of the
Company Benefit Plan (or agent or delegate of any of the foregoing)
have engaged in any transaction, taken any action or failed to take
any action giving rise to any direct or indirect liability (by
indemnity or otherwise) for a breach of any fiduciary, co-fiduciary
or other duty under ERISA which would have a Material Adverse
Effect.
(iii) No Company Benefit Plan and no employee benefit plan of
an ERISA Affiliate that in either case is an "employee pension
benefit plan," within the meaning of Section 3(2) of ERISA and that
is subject to Title IV of ERISA (all such plans are referred to
herein as "Company Pension Benefit Plans"), has an accumulated
funding deficiency (as that term is defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived. The Pension
Benefit Guaranty Corporation ("PBGC") has not instituted proceedings
to terminate the Company Pension Benefit Plan that is a "defined
benefit plan" within the meaning of Section 3(35) of ERISA or to
appoint a trustee or administrator of any such defined benefit plan;
to the knowledge of the Sellers, no circumstances exist that
constitute grounds under Section 4042 of ERISA entitling the PBGC to
institute any such proceeding; no liability to the PBGC or under
Title IV of ERISA has been incurred or is expected with respect to
any such defined benefit plan that could reasonably be expected to
result in liability to the Company or ERISA Affiliate other than for
premiums pursuant to Section 4007 of ERISA which are not yet due and
payable; no such defined benefit plan has been terminated by the
Company or any ERISA Affiliate; and there has been no "reportable
event" within the meaning of Section 4043 of ERISA and the
regulations and interpretations thereunder which has not been fully
and accurately reported in a timely fashion, as required, or which,
whether or not reported, would constitute grounds for the PBGC to
institute termination proceedings with respect to the Company
Pension Benefit Plan. Except as set forth in Section 3.12(b)(iii) of
the Disclosure Schedule, the present value of all accrued benefits,
whether forfeitable or not, under the Company Benefit Plans subject
to Title IV of ERISA, as determined by each plan's actuary based
upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such plan's actuary with respect
to such plan, do not as of the latest valuation date exceed the then
current value of the assets of such plans allocable to such accrued
benefits.
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(iv) Neither the Company nor any employer referred to in
Section 3.12(b) above maintains, nor has contributed within the past
five (5) years to, any multiemployer plan within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA. No such employer currently
has any liability to make withdrawal liability payments to any
multiemployer plan. There is no pending dispute between any such
employer and any multiemployer plan concerning payment of
contributions or payment of withdrawal liability payments.
(v) Neither the Company nor an ERISA Affiliate is presently
liable, nor does it have potential material liability, under
Sections 4063 or 4064 of ERISA, and the Company or ERISA Affiliates
can, whether by reason of the transactions contemplated by this
Agreement or otherwise, be treated as a withdrawing substantial
employer under a Company Pension Benefit Plan to which more than one
employer makes contributions. The Company is not currently, and will
not at any time be by virtue of any action heretofore taken or to be
taken prior to the Closing Date, subject to a requirement to provide
security under Section 401(a)(29) of the Code, nor shall any asset
of the Company be subject to a lien by reason of the provisions of
Section 412(n) of the Code.
(vi) Except as set forth in Section 3.12(b)(vi) of the
Disclosure Schedule, the Internal Revenue Service has issued a
favorable determination letter with respect to each Company Benefit
Plan that is intended to be qualified under Section 401(a) of the
Code. None of the Sellers or the Company is aware of any facts that
would adversely affect the qualified status of the Company Benefit
Plan that is intended to so qualify.
(vii) No material oral or written representation or
communication with respect to any aspect of the Company Benefit Plan
has been made by authorized officers or managers of the Company to
employees of the Company prior to the Closing Date that was not in
accordance with the written or otherwise preexisting terms and
provisions of such Company Benefit Plan in effect at the time when
the representation or communication was made, except for any
amendments required by Law or a Governmental Authority and except
for any actions that would not have a Material Adverse Effect.
Except as set forth in Section 3.12(b)(vii) of the Disclosure
Schedule, there are no unresolved claims or disputes under the terms
of, or in connection with, the Company Benefit Plan (other than
routine undisputed claims for benefits under the Company Benefit
Plan), and no action, legal or otherwise, has been commenced with
respect to any claim (including claims for benefits under Company
Benefit Plan).
-15-
(viii) Except as disclosed in Section 3.12(b)(viii) of the
Disclosure Schedule, the Company does not maintain any Company
Benefit Plan that provides post-retirement medical benefits (other
than those which are required by law), post-retirement death
benefits, or other post-retirement or post-employment welfare
benefits. A copy of any written description of any such
post-retirement welfare benefits that has been provided to employees
has been made available to the Buyer. Copies of each plan document,
insurance contract, or other written instrument providing for any
such post-retirement welfare benefits, together with a description
of any advance funding arrangement that has been established to fund
such post-retirement welfare benefits, also have been made available
to the Buyer. Section 3.12(b)(viii) of the Disclosure Schedule
contains a list of those persons who are currently retired with a
right to any such future post-retirement welfare benefits and also
contains a list of employees who would be currently eligible for any
such post-retirement welfare benefits if they retired and satisfied
any waiting period provided for under the applicable plan.
(ix) All contributions (including all employer contributions
and employee salary reduction contributions) or insurance premiums
that are due have been paid with respect to the Company Benefit
Plan, and all contributions or insurance premiums for any period
ending on or before the Closing Date that are not yet due have been
paid or will have been paid with respect to such Company Benefit
Plan or accrued, in each case in accordance with GAAP.
(x) The Company Benefit Plan is not nor at any time was funded
through a "welfare benefit fund," as defined in Section 419(e) of
the Code. No benefits under the Company Benefit Plan are or at any
time have been provided through a "voluntary employees' beneficiary
association" (within the meaning of Section 501(c)(9) of the Code)
or a "supplemental unemployment benefit plan" (within the meaning of
Section 501(c)(17) of the Code).
(xi) As of the Balance Sheet Date, unfunded liabilities under
all Company Benefit Plans have been accrued in accordance with GAAP,
subject to normal year-end adjustments and the absence of footnotes.
(xii) Except as disclosed in Section 3.12(b)(xii) of the
Disclosure Schedule, the Company does not maintain any Company
Benefit Plan providing deferred or stock-based compensation that is
not reflected in the Financial Statements.
(xiii) The Company has reserved all rights necessary to amend
or terminate the Company Benefit Plan that is subject to Title I of
ERISA (exclusive of any underlying insurance or service contracts)
without the consent of any other person.
(xiv) Except as set forth in Section 3.12(b)(xiv) of the
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not (i) entitle any current or
former employee (or spouse, dependent or other family member of such
employee) of the Company to severance pay, unemployment compensation
or any payment contingent upon a change in control or ownership of
the Company or (ii) accelerate the time of payment or vesting, or
increase the amount, of any compensation due to any such employee or
former employee (or any spouse, dependent, or other family member of
such employee).
-16-
3.13 Employees and Labor Matters. Except as set forth in Section 3.13 of
the Disclosure Schedule,
(a) The Company is not a party to or bound by any labor agreement or
collective bargaining agreement;
(b) there is, and since January 1, 2000 there has been, no strike,
dispute (other than routine individual grievances) work stoppage,
slowdown, walkout or lockout pending or, to the knowledge of the Sellers,
threatened, against or affecting the Company;
(c) to the knowledge of the Sellers, no union organizational
activity, proceeding or campaign is in progress with respect to the
employees of the Company (the "Employees") and no organizational efforts
concerning representation exists respecting such Employees;
(d) The Company is not engaged in or has received any written notice
during the current or preceding year of, any unfair labor practice;
(e) there is no unfair labor practice charge or complaint against
the Company pending or, to the knowledge of the Sellers, threatened,
before the United States National Labor Relations Board or any other
Governmental Authority, including without limitation any foreign agency or
authority, having jurisdiction thereof;
(f) The Company has not received notice of, and there are no pending
or, to the knowledge of the Sellers, threatened, grievances or arbitration
proceedings against the Company pending under any collective bargaining
agreements;
(g) there are no pending or, to the knowledge of the Sellers,
threatened, charges against the Company or any current or former Employee
of such Company before the United States Equal Employment Opportunity
Commission or other Governmental Authority responsible for the prevention
of unlawful employment practices;
(h) The Company has not received written notice since January 1,
2000 of the intent of any Governmental Authority responsible for the
enforcement of labor or employment Laws to conduct an investigation of or
affecting such Company and no such investigation is in progress;
(i) The Company is in material compliance with all federal, state,
provincial, local and foreign labor Laws and there are no pending or, to
the knowledge of the Sellers, threatened, claims in this regard against
the Company before a Governmental Authority;
(j) none of the Sellers or the Company is currently engaged or
obligated to engage in collective bargaining negotiations with respect to
the Company; and
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(k) since January 1, 2000, to the extent applicable, each of the
Sellers and the Company have complied in all respects with the Worker's
Adjustment and Retraining Notification Act of 1988, as amended (the "WARN
Act") or with any similar foreign Law, including by furnishing any
required notice of any "plant closing," "mass layoff" or collective
dismissal, as applicable, in respect of any termination of Employees or
former Employees of the Company.
3.14 Intellectual Property. Section 3.14 of the Disclosure Schedule sets
forth a correct and complete list, with applicable expiration dates,
jurisdictions and registration and application numbers, of: (a) all material
patents, trade secrets, trademarks, service marks, logos, designs, Internet
domain names and trade names (including all federal, state, and foreign
registrations pertaining thereto), copyright registrations, and all pending
applications for any of the foregoing, owned by the Company (collectively, the
"Proprietary Intellectual Property"); and (b) all material patents, trademarks,
service marks, logos, designs, Internet domain names, trade names, copyrights,
technology, and processes that are used by the Company pursuant to a license
granted by a third party (except for licenses of "off the shelf" software and
licenses of software requiring payments less than $20,000 per year)
(collectively, the "Licensed Intellectual Property", and, together with the
Proprietary Intellectual Property, the "Intellectual Property"). Each of the
applications to register or obtain any copyrights, patents or trademarks listed
in Section 3.14 of the Disclosure Schedule is pending and in good standing
without final rejection or denial or challenge of any kind. Other than as set
forth in Section 3.14 of the Disclosure Schedule, there are no unregistered
trademarks, service marks, logos, designs or copyrights that are material to the
conduct of the Business as presently conducted. The Company is the sole and
exclusive owner of the Intellectual Property or is licensed to use or otherwise
carry legally enforceable rights to use such Intellectual Property. Items
constituting that part of the Intellectual Property that have been duly
registered or filed with or issued by the appropriate authorities in the various
countries are indicated in Section 3.14 of the Disclosure Schedule and, to the
knowledge of the Sellers, such registrations, filings and issuances remain in
effect. No claims are pending or, to the knowledge of the Sellers, are
threatened, against the Company by any Person (i) with respect to the use of,
(ii) challenging or questioning the validity or enforceability of any license or
agreement relating to, or (iii) asserting an ownership interest in or right to
use, any Intellectual Property. To the knowledge of the Sellers, the
Intellectual Property is valid and enforceable and the current use by the
Company of the Intellectual Property neither infringes on the rights of any
third party nor constitutes an unauthorized use or misappropriation of any
Intellectual Property owned by or licensed to the Company by any third party,
including Employees. To the knowledge of the Sellers, except (A) for licenses of
"off the shelf" software and licenses of software requiring payments less than
$20,000 per year, or (B) as otherwise expressly provided in any contract,
agreement or commitment identified in Section 3.14 of the Disclosure Schedule,
neither the Sellers nor the Company have any obligation to compensate others for
the use of the Intellectual Property. In addition, except as otherwise expressly
provided in any contract, agreement or commitment identified in Section 3.14 of
the Disclosure Schedule, neither the Sellers nor the Company have granted to any
other Person any license or other right to use the Intellectual Property,
whether or not requiring payment.
3.15 Brokers, Finders, and Investment Bankers Except for ▇▇▇▇▇▇▇
Acquisition Services Co. (who is reported to have a separate agreement or
understanding for splitting brokerage fees with ▇▇▇▇ ▇▇▇▇▇▇ Group, Inc.), the
Sellers have not engaged any broker, finder, investment banker, or other
intermediary or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, finders' fees, or other similar fees in
connection with the transactions contemplated by this Agreement.
-18-
3.16 Environmental Matters.
(a) The Sellers have made readily available to the Buyer, prior to
the date of this Agreement, all environmental assessments conducted on
behalf of or which are in the possession or control of the Sellers or the
Company since January 1, 2000 that relate to operations at any of the
facilities or properties of the Company for the past five (5) years.
(b) Except as set forth in Section 3.16(b) of the Disclosure
Schedule,
(i) To the knowledge of the Sellers, the Company is in
material compliance with all Environmental Laws and any similar
foreign Laws and has obtained and is in material compliance with all
permits required under any Environmental Law and any similar foreign
Law for the operation of its Business; such permits are valid and in
full force and effect and, assuming compliance by the Buyer after
the Closing Date with applicable requirements thereunder, will not
be terminated or impaired or become terminable, in whole or in part,
as a result of the transactions contemplated hereby;
(ii) The Company has not since January 1, 1998, and to the
knowledge of Sellers has not prior to that date, received any
written claim, notice, demand letter or request for information
alleging that the Company may be in violation of, or have any
material unpaid liability under, any Environmental Law;
(iii) The Company has not been served with or received notice
of any outstanding written order, decree or injunction or other
arrangement with any Governmental Authority, and is not subject to
any written indemnity or other written agreement with any third
party, pursuant to which it has any material unpaid liability or
remedial obligation under any Environmental Law or with respect to
any Hazardous Material;
(iv) Sellers have received no notice that any of the Real
Property is listed or proposed for listing on the National
Priorities List pursuant to the United States Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. ss. 9601, et seq.) ("CERCLA"), or any similar
federal, state or foreign list of sites evidencing Hazardous
Materials contamination of such Real Property and/or requiring
investigation or clean-up;
(v) Sellers have received no notice that any Lien has been
imposed on any of the Real Property by any Governmental Authority at
the federal, state, or local level in connection with the presence
of any Hazardous Material on or off any of the Real Property.
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(vi) To the knowledge of the Sellers, during the Sellers' use
or ownership of the Real Property or, to the knowledge of the
Sellers, during the use or ownership of the Real Property by any
other party, including prior owners or operators, there have been no
Releases by the Company on, into or from the Real Property
(including, without limitation, soils, groundwater, surface water,
buildings and other structures) currently owned, leased, operated,
managed or controlled by it that have caused Hazardous Material
contamination resulting in any material unpaid liability under any
Environmental Law; and to the knowledge of the Sellers, none of the
Real Property contains any damaged friable asbestos-containing
materials or underground storage tanks;
(vii) To the knowledge of the Sellers, during the Sellers' use
or ownership of the Real Property or, to the knowledge of the
Sellers, during the use or ownership of the Real Property by any
other party, including prior owners or operators, there were no
Releases by the Company on, into or from the Real Property formerly
owned, leased, operated, managed or controlled by the Company that
caused Hazardous Material contamination during such period of
ownership, lease, operation, management or control;
(viii) The Company does not have any material assessed and
unpaid liability under any Environmental Law arising out of any
Hazardous Material contamination at any other location (including,
without limitation, any location to which any Hazardous Material has
been generated, treated, stored or disposed by or on behalf of the
Company) and, based on present uses and current applicable
Environmental Laws, the Sellers have no knowledge of any facts or
circumstances that could result in a material liability under any
Environmental Law; and
(ix) The Company has not been served with notice or citation
in any civil, criminal or administrative actions, suits, hearings or
proceedings, and has received no written notices of violation
pending or, to the knowledge of the Sellers, threatened, against the
Company under any Environmental Law.
3.17 Plant, Property and Equipment. With respect to the plants, offices
and other facilities located on the Properties and the current use thereof by
the Company, except as set forth in Section 3.17 of the Disclosure Schedule,
(a) the structures and equipment owned or used by the Company are,
except for vehicles and machinery undergoing repair in the ordinary course
of business, in good operating condition and repair, ordinary wear and
tear excepted;
(b) The Company has not received written notification that it is in
violation of any applicable material building, zoning, health or other
similar land use Law in respect of their operations or the Properties;
(c) no condemnation of any portion of the Properties has occurred
since January 1, 2000 and the Company has not received any written notice
from a Governmental Authority related to any future, proposed or
threatened condemnation of any portion of the Properties; and
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(d) No real property owned by the Sellers is necessary for the
operation of the Business of the Company.
3.18 Insurance.
(a) The insurance policies maintained with respect to the Company
and its business, assets and properties as of the date hereof are listed
in Section 3.18(a) of the Disclosure Schedule. All such policies are in
full force and effect, all premiums due and payable under such policies
have been paid, and no notice of cancellation or termination has been
received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation or
termination.
(b) There is no material default by the Company or, to the knowledge
of the Sellers, any other Person, with respect to any provision contained
in any such policy or binder listed in Section 3.18(a) of the Disclosure
Schedule, nor has there been, to the knowledge of the Sellers, any
material failure by the Company to give notice of, or to present, any
claim under any such policy or binder in a timely fashion or in the manner
or detail required by the policy or binder.
3.19 Accounts Receivable.
(a) All accounts receivable and notes due and uncollected of the
Company reflected on the Interim Balance Sheet or arising subsequent to
the date of the Interim Balance Sheet (i) have arisen from bona fide
transactions in the ordinary course of business of the Company; and (ii)
represent valid obligations due to the Company enforceable in accordance
with their terms, except that (a) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other Laws, now or hereafter in effect, relating to or limiting creditors'
rights generally and (b) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor
may be brought. Except with respect to "Retainage Not Due Receivables" as
defined below, at least ninety percent (90%) of the Net Accounts
Receivable existing as of the Closing Date will be fully collectible in
accordance with the prior commercial practices employed by the Business by
no later than March 31, 2006. "Retainage Not Due Receivables" refers to
those claims for retainage under construction contracts and subcontracts,
all of which will be fully collectible in accordance with the prior
commercial practices employed by the Business, but without reference to an
outside date. Except as disclosed in Section 3.19 of the Disclosure
Schedule, the Company owns its accounts receivable, free and clear of all
Liens.
(b) Since the date of the Interim Balance Sheet, there have not been
any write-offs of any notes or accounts receivable of the Company in
excess of applicable reserves nor is there any such write-off which has
not been made by which is required to be made consistent with past
practices, as of the date of this Agreement, except for write-offs which
were made in the ordinary course of business and consistent with past
practice.
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3.20 Inventories. The inventories of the Company are reflected on the
Interim Balance Sheet and in their respective books and records in accordance
with GAAP, subject to normal year-end adjustments and the absence of footnotes.
Except as set forth in Section 3.20 of the Disclosure Schedule, since the
Balance Sheet Date, there have not been any write-downs of the value of, or
establishment of any reserves against, any inventory, except for write-downs and
reserves that were made in the ordinary course of business and that have not
had, either individually or in the aggregate, a Material Adverse Effect.
3.21 Absence of Certain Business Practices. To the knowledge of the
Sellers, since January 1, 2000, none of the Sellers or any of their Affiliates
nor any officer, director, employee or agent of any thereof, or any Person known
to be acting on their behalf has breached, to the extent applicable, (i) the
terms of the OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions, dated December 17, 1997, or (ii) the United
States Foreign Corrupt Practice Act. Each Seller represents and warrants only to
its own activities related to the forgoing.
3.22 Transactions with Affiliates.
(a) Except as set forth in Section 3.22(a) of the Disclosure
Schedule, none of the Company Contracts between the Company, on the one
hand, and the Sellers or any of their Affiliates, on the other hand, will
continue in effect after the Closing, provided that each Seller other than
▇▇▇ ▇▇▇▇▇ makes such representation only as to Company Contracts between
the Company and such Seller.
(b) After the Closing neither the Sellers nor any of their
Affiliates will have any interest in any property (real or personal,
tangible or intangible) or contract used in or pertaining to the Business.
Neither the Sellers nor any of their Affiliates have any direct or
indirect ownership interest in any Person (other than the Company) in
which the Company has any direct or indirect ownership interest or with
which the Company competes or has a business relationship. Except as set
forth in Section 3.22(b) of the Disclosure Schedule, neither the Sellers
nor any of their Affiliates (other than the Company) provide any services
to the Company.
3.23 Suppliers.
(a) Except as set forth in Section 3.23(a) of the Disclosure
Schedule, between the Balance Sheet Date and the date of this Agreement,
the Company has not entered into or made any contract or commitment with
any supplier other than in the ordinary course of business. Except for the
suppliers named in Section 3.23(b) of the Disclosure Schedule, the Company
does not have any supplier (other than another Company) the purchases from
which have constituted or constitute five percent (5%) or more of the
aggregate purchases from suppliers of the Company during the period from
July 1, 2004 to June 30, 2005. Except as set forth in Section 3.23(c) of
the Disclosure Schedule, since the Balance Sheet Date, no supplier has
given the Company notice of cancellation, termination or other material
alteration of the terms of any material Company Contract governing its
relationship with the Company, or notified the Company in writing of any
intention to materially alter its relationship with the Company, change
its prices or modify its pricing policies for goods or services provided
to such Company, effective prior to, as of or within one year after the
Closing Date, except in the ordinary course of business.
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(b) Each of the Company's agreements with its suppliers (i) has been
negotiated in arm's-length transactions and (ii) does not, individually or
in the aggregate, require purchases by the Company of items in excess of
its reasonably predicted requirements.
3.24 Customers. Except for the customers named in Section 3.24(a) of the
Disclosure Schedule, the Company does not have any customer to which it has made
more than five percent (5%) of its aggregate sales during the period from July
1, 2004 to June 30, 2005. Except as set forth in Section 3.24(b) of the
Disclosure Schedule, since the Balance Sheet Date, no customer has given the
Company notice of cancellation, termination or other material alteration of its
relationship with the Company or under any material Company Contract between
such customer and the Company or notified the Company in writing of any
intention to materially alter its relationship with the Company, seek to change
the prices or modify the pricing policies for goods or services provided by the
Company under any Company Contract or other agreement between such customer and
the Company, effective prior to, as of or within one year after the Closing
Date, except in the ordinary course of business.
3.25 Product Liabilities.
(a) Except as set forth on Section 3.25(a) of the Disclosure
Schedule, since January 1, 2003, Sellers have received no notice of
citations or decisions by any Governmental Authority that any product
sold, marketed or distributed by the Company is defective, fails to meet
standards promulgated by such Governmental Authority or is misbranded and
no Governmental Authority has ordered a recall of a product sold, marketed
or distributed by the Company.
(b) Except as set forth on Section 3.25(b) of the Disclosure
Schedule, (i) since January 1, 2003, there has not been any product
liability claim asserted against the Company with respect to any product
sold by the Company that resulted, individually, in a Loss of more than
$50,000 or, together with all other such claims, resulted in Loss of more
than $100,000, and (ii) there are no product liability claims with respect
to such products pending, or, to the knowledge of the Sellers, threatened,
against or directly affecting the Company that could reasonably be
expected to, individually, result in a Loss of more than $50,000 or,
together with all other such claims, result in Loss of more than $100,000.
3.26 Assets Used in Business. Except as disclosed in Section 3.26 of the
Disclosure Schedule, the property and assets owned, licensed or leased by the
Company constitute all of the property and assets used or held for use in
connection with the Business as currently conducted on the date of this
Agreement.
3.27 Capital Expenditures. There are no material capital expenditures that
to the knowledge of Sellers will be required within twelve (12) months of the
date hereof to enable the Business to be operated in substantially the same
manner as currently operated that are not identified in Section 3.27 of the
Disclosure Schedule.
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3.28 Intentionally Omitted.
3.29 Former Lines of Business. The Company has no liabilities or
obligations (to employees or former employees, or otherwise) arising out of the
discontinuance or disposal by the Company of any former line of business prior
to the Closing.
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT OR THE SELLER ANCILLARY DOCUMENTS, NEITHER THE SELLERS NOR THE COMPANY
MAKES ANY REPRESENTATION OR WARRANTY EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN
RESPECT OF THE COMPANY OR ANY OF THE ASSETS, LIABILITIES OR OPERATIONS OF THE
COMPANY, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY, FITNESS
FOR ANY PARTICULAR PURPOSE OR THE VIABILITY OR LIKELIHOOD OF SUCCESS OF THE
BUSINESS OR ANY OF ITS PRODUCTS, AND THE SELLERS EXPRESSLY DISCLAIM ANY SUCH
REPRESENTATION OR WARRANTY.
Section 4. Certain Covenants, Representations and Warranties of the Buyer.
The Buyer hereby represents and warrants to the Sellers as follows:
4.1 Organization. The Buyer is a business entity duly organized, validly
existing, and in good standing (if applicable) under the Laws of the
jurisdiction of its organization, and is duly qualified to transact business and
is in good standing as a foreign entity in each jurisdiction where the character
of its current activities requires such qualification.
4.2 Authorization. The Buyer has the corporate or company power and
authority to execute and deliver this Agreement and the Buyer Ancillary
Agreements to be executed by it and perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement and the Buyer Ancillary
Agreements and the performance by the Buyer of its covenants and agreements
hereunder and thereunder have been duly and validly authorized by all necessary
board, manager, shareholder or member action of the Buyer. This Agreement has
been duly executed and delivered by the Buyer and constitutes, and the Buyer
Ancillary Agreements, when executed and delivered by the Buyer on the Closing
Date, will constitute, a valid and binding agreement of the Buyer, enforceable
against the Buyer in accordance with its terms, except that (a) such enforcement
may be subject to any bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other Laws, now or hereafter in effect, relating to or
limiting creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
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4.3 Absence of Restrictions and Conflicts. The execution, delivery, and
performance of this Agreement and the Buyer Ancillary Agreements, the
consummation of the transactions contemplated by this Agreement and the Buyer
Ancillary Agreements, and the fulfillment of and compliance with the terms and
conditions of this Agreement and the Buyer Ancillary Agreements do not and will
not (as the case may be) violate or conflict with, constitute a breach or
violation of or default under, permit the acceleration of any obligation under
or give rise to any right of termination under, (a) any term or provision of the
charter documents, bylaws, operating agreements or organizational documents of
the Buyer, (b) any agreement or other obligation or instrument to which the
Buyer is bound or by which the Buyer or any of its assets or properties are
bound or subject, or (c) any Law or Order. No consent, Order, or authorization
of, or registration, declaration, or filing with, any Governmental Authority, or
with any third party with respect to any agreement or arrangement referred to in
clause (b) of the preceding sentence, with respect to the Buyer, is required in
connection with the execution, delivery, or performance of this Agreement or the
consummation of the transactions contemplated by this Agreement.
4.4 Brokers, Finders, and Investment Bankers. Except for Terra Nova
Capital, the Buyer has not engaged any broker, finder, investment banker, or
other intermediary or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees, finders' fees, or other similar fees in
connection with the transactions contemplated by this Agreement.
4.5 Purchase for Investment.
(a) The Buyer is acquiring the Shares solely for investment for its
own account and not with the view to, or for resale in connection with,
any "distribution" (as such term is used in Section 2(11) of the
Securities Act of 1933, as amended (the "Securities Act")) thereof. The
Buyer understands that the Shares have not been registered under the
Securities Act or any state or foreign securities Laws by reason of
specified exemptions therefrom that depend upon, among other things, the
bona fide nature of its investment intent as expressed herein and as
explicitly acknowledged hereby and that under such Laws and applicable
regulations such securities may not be resold without registration under
the Securities Act or under applicable state or foreign Law unless an
applicable exemption from registration is available.
(b) The Buyer is an "accredited investor" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act.
(c) Buyer has such knowledge and experience in financial and
business matters in general and with respect to businesses of a nature
similar to the business of NTSC so as to be capable of evaluating the
merits and risks of, and making an informed business decision with regard
to, the acquisition of the Shares.
(d) To the extent it believes appropriate prior to signing this
Agreement, Buyer (i) has received all the information it has deemed
necessary to make an informed investment decision with respect to the
execution of this Agreement and the acquisition of the Shares, (ii) has
had the opportunity to conduct adequate due diligence and review the
information provided or made available to it by NTSC; (ii) has had the
unrestricted opportunity to make such investigation as it has desired
pertaining to NTSC and the acquisition of the Shares and to verify the
information that is, and has been made, available to it; and (iv) has had
the opportunity to ask questions of NTSC regarding NTSC's business
operations and financial condition.
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4.6 Litigation. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of the Buyer, threatened
against the Buyer, by or before any Governmental Authority or by any third party
that challenges the validity of this Agreement or that would be reasonably
likely to adversely affect or restrict the Buyer's ability to consummate the
transactions contemplated hereby.
4.7 Financing; Availability of Funds. The Buyer has received a financing
term sheet in the form attached hereto as Schedule 4.7 (the "Term Sheet"). All
fees required to be paid under the Term Sheet have been paid in full. At the
Closing Date, upon receipt of the financing contemplated by the Term Sheet (the
"Financing"), the Buyer will have sufficient immediately available funds, in
cash, to pay the Purchase Price and to pay any other amounts payable in cash by
the Buyer pursuant to this Agreement.
4.8 The Buyer has advised the Sellers, and will promptly advise the
Sellers, in writing of every fact and or condition known to or hereafter
discovered by the Buyer prior to Closing, as a result of its independent review
and analysis referred to in Section 4.11, or otherwise, which would make any of
the warranties and representations of the Sellers untrue in any material
respect.
4.9 The Buyer and the Company will comply in all respects with the WARN
Act or with any similar foreign Law, including by furnishing any required notice
of any "plant closing," "mass layoff" or collective dismissal, as applicable, in
respect of any termination of Employees or former Employees of the Company after
the Closing Date.
4.10 The Buyer shall cause the Company to maintain in full force and
effect, from the Closing Date through the applicable Claims Periods, insurance
on the Company's business, assets and properties, for coverage and in amounts
not less than the coverage under the policies listed in Section 3.18(a) of the
Disclosure Schedule, to the extent such coverage remains available on
commercially available terms.
4.11 The Buyer has conducted its own independent review and analysis of
the business, operations, technology, assets, liabilities, results of
operations, financial condition and prospects of the Company and acknowledges
that the Sellers have provided it with access to the personnel, properties,
premises and records of the Company for this purpose.
Section 5. Additional Covenants and Agreements.
5.1 Conduct of Business. Except as expressly provided for herein or as
consented to by the Buyer (which consent shall not be withheld unreasonably,
delayed or conditioned), during the period from the date of this Agreement to
the Closing Date, ▇▇▇ ▇▇▇▇▇ shall cause the Company to act and carry on its
Business only in the ordinary course of business consistent with past practice
and, to the extent consistent therewith, use all reasonable efforts to preserve
intact its current business organizations, keep available the services of its
current key officers and Employees and preserve the goodwill of those engaged in
material business relationships with such Company. To that end, without limiting
the generality of the foregoing, ▇▇▇ ▇▇▇▇▇ shall not permit the Company to,
without the prior consent of the Buyer (which consent shall not be withheld
unreasonably, delayed or conditioned):
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(a) (i) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, securities or other property) in
respect of, any of its outstanding capital stock, (ii) split, combine or
reclassify any of its outstanding capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of its outstanding capital stock, or (iii)
purchase, redeem or otherwise acquire any shares of outstanding capital
stock or any rights, warrants or options to acquire any such shares;
(b) issue, sell, grant, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into or exchangeable for, or any rights, warrants or options
to acquire, any such shares, voting securities or convertible or
exchangeable securities;
(c) amend its charter documents, bylaws, operating agreements or
organizational documents;
(d) directly or indirectly acquire, make any investment in, or make
any capital contributions to, any person other than in the ordinary course
of business consistent with past practice;
(e) directly or indirectly sell, pledge or otherwise dispose of or
encumber any of its properties or assets that are material to its
Business, except for sales, pledges or other dispositions or encumbrances
in the ordinary course of business consistent with past practice;
(f) (i) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person or (ii) make any loans or advances to
any other Person, other than short-term credit extended to customers in
the ordinary course of business consistent with past practice;
(g) make any new capital expenditure or expenditures not otherwise
in accordance with the Capital Expenditure Plan;
(h) enter into, amend or terminate any Company Contract or knowingly
waive release or assign any material rights or claims, other than in the
ordinary course of business consistent with past practice;
(i) enter into any compromise or settlement of, or take any other
material action with respect to, any litigation, action, suit, claim,
proceeding or investigation other than the prosecution, defense and
settlement of routine litigation, actions, suits, claims, proceedings or
investigation in the ordinary course of business;
(j) grant or agree to grant to any officer, Employee or consultant
any increase in wages or bonus, severance, profit sharing, retirement,
deferred compensation, insurance or other compensation or benefits, or
establish any new compensation or benefit plans or arrangements, or amend
or agree to amend any existing Company Benefit Plans, except as may be
required under existing agreements or by Law;
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(k) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation, stock
option, insurance or other compensation or benefits;
(l) make any material oral or written representation or
communication with respect to any aspect of the Company Benefit Plans to
employees of the Company that are not in accordance with the written or
otherwise preexisting terms and provisions of such Company Benefit Plans
in effect at the time when the representation or communication is made,
except for representations or communications concerning amendments to the
Company Benefit Plans that are required by Law or a Governmental
Authority, and except for any actions that would not have a Material
Adverse Effect;
(m) enter into or amend any employment, consulting, severance or
similar agreement or arrangement with any individual, except with respect
to new hires of non-officer Employees in the ordinary course of business
consistent with past practice;
(n) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other material reorganization;
(o) make or rescind any material Tax election or settle or
compromise any material income Tax liability;
(p) make any change in any method of accounting or accounting
practice or policy, except as required by any changes in GAAP;
(q) enter into any agreement, understanding or commitment that
restrains, limits or impedes its ability to compete with or conduct the
Business or any line of business;
(r) plan, announce, implement or effect any reduction in force,
lay-off, early retirement program, severance program or other program or
effort concerning the termination of employment of its Employees;
(s) except as otherwise permitted in the other subsections of this
Section 5.1, intentionally take any action that would result in any of its
representations and warranties set forth in this Agreement becoming
untrue; or
(t) authorize any of, or commit or agree to take any of, the
foregoing actions in respect of which it is restricted by the provisions
of this Section 5.1.
5.2 Access to Information.
(a) Between the date of this Agreement and the Closing, ▇▇▇ ▇▇▇▇▇
shall (i) give the Buyer and its authorized representatives reasonable
access to all books, records, offices and other facilities and properties
of the Company; (ii) permit the Buyer to make such inspections thereof as
the Buyer may reasonably request; and (iii) cause the officers of the
Company to furnish the Buyer with such financial and operating data and
other information with respect to the Business and properties of the
Company as the Buyer may from time to time reasonably request; provided,
however, that any such investigation shall be conducted during normal
business hours under the supervision of the Company's personnel and in
such a manner as to maintain the confidentiality of this Agreement and the
transactions contemplated hereby and not interfere unreasonably with the
Business operations of the Sellers or the Company.
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(b) All information concerning the Sellers or the Company furnished
or provided by the Sellers, the Company or their representatives to the
Buyer or its representatives (whether furnished before or after the date
of this Agreement) shall be held subject to the confidentiality provisions
set forth in the Nondisclosure Agreement dated May 12, 2005, by and among
Luther Capital Management, Inc. and the Company.
5.3 Consents.
(a) Each of the parties hereto shall cooperate, and use its
reasonable best efforts, to (i) defend against any lawsuits or other legal
proceedings, whether judicial or administrative, at law or in equity,
challenging this Agreement, the Seller Ancillary Agreements, or the
consummation of the transactions contemplated hereby and thereby,
including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Authority vacated, stayed or reversed
and (ii) make all filings and obtain all Permits of governmental
authorities and other third parties necessary to consummate the
transactions contemplated by this Agreement, including, without
limitation, the consents of the Governmental Authorities set forth in
Section 5.3 of the Disclosure Schedule, in the most expeditious manner
practicable. In addition to the foregoing, the Buyer agrees to provide
such assurances as to financial capability, resources and creditworthiness
as may be reasonably requested by any third party whose consent or
approval is sought in connection with the transactions contemplated
hereby.
(b) With respect to any agreements for which any required consent or
approval is not obtained prior to the Closing, the Buyer and ▇▇▇ ▇▇▇▇▇
shall each use their reasonable best efforts to obtain any such consent or
approval after the Closing Date, in the most expeditious manner
practicable, until such consent or approval has been obtained.
5.4 Reasonable Best Efforts. Each of the parties shall cooperate, and use
its reasonable best efforts to take, or cause to be taken, all action, and to
do, or cause to be done, all things necessary, proper or advisable to consummate
the transactions contemplated by this Agreement.
5.5 Fees and Expenses. The Sellers will pay all costs and expenses
incurred by the Sellers in connection with the transactions contemplated by this
Agreement (including, without limitation, accountants' fees and expenses, but
excluding the attorneys fees of ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PC
incurred by ▇▇▇ ▇▇▇▇▇, and of Jenkens & ▇▇▇▇▇▇▇▇▇, P.C. incurred by the ▇▇▇▇▇
and ▇▇▇▇▇▇ families). The Buyer shall bear all such costs and expenses incurred
by it in connection with the transactions contemplated by this Agreement, and
shall pay the attorneys fees of ▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, PC
incurred by ▇▇▇ ▇▇▇▇▇, and of Jenkens & ▇▇▇▇▇▇▇▇▇, P.C. incurred by the ▇▇▇▇▇
and ▇▇▇▇▇▇ families. All costs and expenses incurred by the Company in
connection with the transactions contemplated by this Agreement, other than fees
payable to the brokers listed in Section 3.15 hereof, shall be borne by the
Company.
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5.6 Public Announcements. Upon execution of this Agreement, no party shall
make any public announcements regarding this Agreement or the transactions
contemplated by this Agreement to the financial community, government agencies,
employees or the general public without the prior written approval of ▇▇▇ ▇▇▇▇▇
and the Buyer.
5.7 Covenant to Satisfy Conditions. Each individual Seller will use its
reasonable best efforts to ensure that the conditions set forth in Section 7
hereof are satisfied, insofar as such matters are within the actual control of
such individual Seller, and the Buyer will use its reasonable best efforts to
ensure that the conditions set forth in Section 7 hereof are satisfied, insofar
as such matters are within the control of the Buyer.
5.8 Employees; Employee Benefits.
(a) For the period beginning on the Closing Date, the Buyer shall
cause the Company to provide each Employee with such compensation and
benefit programs as the Buyer determines, in its sole discretion, shall be
provided to the Employees. The Buyer shall not be required to provide or
maintain any particular plan or benefit which was provided to, or
maintained for, the Employees prior to the Closing.
(b) After the Closing Date, the Buyer shall cause the Company to
indemnify and hold harmless the Sellers and their Affiliates and their
officers, directors, employees, Affiliates and agents and the fiduciaries
(including plan administrators) of the Company Benefit Plans, from and
against, any and all Losses relating to or arising out of (i) subject to
Section 5.16 hereof, all salaries, bonuses, commissions, vacation
entitlements and other benefits accrued by the Company but unpaid as of
the Closing, and (ii) any claims of, or damages or penalties sought by,
any Employee, or any governmental entity on behalf of or concerning any
Employee, with respect to any act or failure to act by the Buyer or its
Affiliates to the extent arising from the employment, discharge, layoff or
termination of any Employee following the Closing Date.
(c) The Buyer shall cause the Company to indemnify and hold the
Sellers harmless from, all liability for retiree medical and life
insurance benefits payable on and after the Closing Date to retirees of
the Company.
Buyer shall not be required to make any payment in order to cause the Company to
do any of the foregoing.
5.9 Intentionally Omitted.
5.10 No Solicitation by the Buyer. For a period of two (2) years following
the date hereof, if this Agreement is terminated for any reason pursuant to
Section 8, neither the Buyer nor its representatives, agents, shareholders or
Affiliates, shall, directly or indirectly, solicit for employment or hire any
Employee, agent or contractor of the Company other than through public medium
advertising, job fairs or other general solicitations not aimed at the
Employees, agents or contractors of the Company.
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5.11 Intentionally Omitted.
5.12 Retention of Records. The Buyer agrees that it will maintain, for at
least five (5) years or such longer time as may be required by Law (the
"Retention Period"), the books, records and documents of the Company existing as
of the Closing Date. During normal business hours, the Buyer shall afford, and
shall cause the Company to afford, the Sellers and their respective
representatives full access, for reasonable purposes, to such books, record and
documents at all times during the Retention Period.
5.13 Intentionally omitted.
5.14 Financing. The Buyer shall use commercially reasonable efforts to
obtain the Financing and to satisfy the conditions set forth in the Term Sheet
or the related Financing agreements. The Buyer shall provide prompt written
notice to the Sellers of any financing party's refusal or stated intent to
refuse to provide the Financing.
5.15 Collection of Accounts Receivable. It is agreed and acknowledged that
the representation in the second sentence of Section 3.20(a) (the
"Collectibility Representation") is based on the assumption that the Buyer will
collect the accounts receivable as of the Closing Date in accordance with prior
commercially reasonable practices of the Business and that amounts received
shall be applied to the oldest accounts receivable first unless there is a bona
fide dispute between the account debtor and the Buyer. In the event that the
Buyer makes an indemnification claim arising out of the Collectibility
Representation, upon payment of such claim by the Sellers, the Buyer shall
assign, or cause the Company to assign, free and clear of any and all Liens, to
the Sellers all right, title and interest in and to the accounts receivable
subject to such claim and the Sellers shall thereafter be entitled to endeavor
to collect such accounts receivable for their own account.
5.16 Pension Contribution. Between the date hereof and the Closing Date,
the Buyer and Sellers (other than the Pension Plan in its capacity as one of the
Sellers) shall also establish an account with a financial institution acceptable
to the Buyer and Sellers to be subject to the joint direction of a
representative to be named by the Buyer and a representative to be named by the
Sellers which shall be funded on the Closing Date by the sums to be paid by
Buyer pursuant to Section 1.3(b) in the amount of $1,350,000 pursuant to the
Pension Plan Joint Account Agreement to be executed by the parties at Closing,
to be in form and substance acceptable to the parties. Notwithstanding anything
herein, or in any other agreement executed in connection herewith, to the
contrary, the Buyer's exclusive remedies for any shortfall in funding of the
Pension Plan, for any breach of the representations and warranties in Section
3.12, and for any other claim related to the Pension Plan, shall be the
disbursement of funds pursuant to the Pension Plan Joint Account Agreement.
Sellers hereby irrevocably appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇ as "Seller's Representative"
for the purpose of and with authority to issue any notice or directive and to
exercise all other rights of Sellers with respect to the Pension Plan Joint
Account and the Indemnity Joint Account; with ▇▇▇▇▇ ▇▇▇▇ to serve as successor
Seller's Representative in the event of his death, resignation or inability to
serve; and with ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., to serve as successor Seller's
Representative in the event of ▇▇▇▇▇ ▇▇▇▇'▇ death, resignation or inability to
serve. The last Seller's Representative serving, where there is no successor
Seller's Representative willing or able to serve, may by written instrument
appoint a successor Seller's Representative to serve in the event of the death,
resignation or inability to serve of the said last Seller's Representative. All
actions taken by Seller's Representative shall be binding upon all Sellers.
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5.17 Retirement Committees. Between the date hereof and the Closing Date,
effective as the Closing Date, by written consent (i) the NTSC Compensation &
Benefits Committee shall appoint the NTSC Retirement Committee (with individual
committee membership to be appointed by Omaha Holdings Corp. at a later date) to
replace the NTSC Retirement Committee and the current plan administrator under
the applicable Company Benefit Plan and (ii) the Board of Directors of North
Texas Steel Company, Inc. shall (except as provided in (i) above) remove all
power, authority and obligation previously given to the NTSC Compensation &
Benefits Committee under the Company Benefit Plans and approve amendment to the
applicable Company Benefit Plans in furtherance thereof.
Section 6. Restrictive Covenants.
6.1 Definitions. For the purposes of this section:
(a) "Company Activities" means the fabrication of steel of the type
conducted, offered, or provided by the Company as of the date hereof;
(b) "Noncompetition Period" or "Nonsolicitation Period" means the
period beginning on the Closing Date and ending on the fifth (5th)
anniversary of the Closing Date;
(c) "Territory" means the area where customers and actively sought
prospective customers of the Company are located.
6.2 Noncompetition.
(a) Acknowledgment. Each Seller acknowledges that the Company
conducts the Company Activities throughout the Territory and that to
protect adequately the interest of the Buyer in the Business and goodwill
of the Company, it is essential that any noncompetition covenant with
respect thereto cover all Company Activities and the entire Territory for
the duration of the Noncompetition Period.
(b) Noncompetition Covenant. Each Seller hereby agrees, for itself
only, that it will not, during the Noncompetition Period, directly,
indirectly or by assisting others, conduct Company Activities in the
Territory or otherwise engage in, or have an equity or profit interest in,
any business that conducts the Company Activities in the Territory.
Notwithstanding anything in this Agreement to the contrary, the
acquisition by a Seller of up to two percent (2%) of any company whose
common stock is publicly traded on a national securities exchange or in
the over-the-counter market shall not be deemed to be the conduct of a
Company Activity. The Buyer acknowledges that in the course of acquiring
business entities or assets ("Acquired Entities"), a Seller may wish to
acquire an Acquired Entity that engages in the Company Activities as part
of its business activities. The Buyer agrees that nothing in this
Agreement shall prevent any Seller from acquiring (and, thereafter, owning
and operating) an Acquired Entity during the Noncompetition Period that
engages in the Company Activities, provided that the revenues derived from
the Company Activities by the Acquired Entity do not exceed ten percent
(10%) of the total revenue of the Acquired Entity during any twelve month
period during the Noncompetition Period.
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(c) Nonsolicitation. Each Seller hereby agrees that it will not,
during the Nonsolicitation Period, directly, indirectly or by assisting
others, solicit to employ any Employee, other than through public medium
advertising, job fairs or other general solicitations and other than those
individuals listed in Section 6.2(c) of the Disclosure Schedule.
Furthermore, each Seller hereby agrees that it will not, during the
Nonsolicitation Period, directly or indirectly or by assisting others,
solicit any customer who is a customer as of or at any time before the
Closing Date of Company to terminate, change or alter in any way its
business relationship or any agreement with the Company, nor to establish
a business relationship or enter into an agreement with Seller in a
competitive manner.
6.3 Severability. The parties hereto recognize that the Laws and public
policies of the various States of the United States and legal jurisdictions
outside the United States may differ as to the validity and enforceability of
the covenants similar to those set forth in Section 6.2(b). It is the intention
of the parties that the provisions of Section 6.2(b) be enforced to the fullest
extent of the Laws and policies of each jurisdiction in which enforcement may be
sought and that the invalidity or unenforceability (or modification to conform
to such Laws) of any provision of Section 6.2(b) shall not render invalid, void,
unenforceable, or impair, the remainder of the provisions of Section 6.2(b) or
the enforcement of such provision in any other jurisdiction in which enforcement
may be sought. Accordingly, if a judicial or arbitral determination is made that
any of the provisions of this Agreement constitutes an unreasonable or otherwise
unenforceable restriction against the Sellers, the provisions of this Agreement
shall be rendered void only to the extent that such judicial or arbitral
determination finds such provisions to be unreasonable or otherwise
unenforceable with respect to the Sellers. In this regard, the Sellers hereby
agree that any judicial or arbitral authority construing this Agreement shall be
empowered to sever any portion of the Territory, any prohibited business
activity or any time period from the coverage of this Agreement, and to apply
the provisions of this Agreement to the remaining portion of the Territory, the
remaining business activities, and the remaining time period not so severed by
such judicial or arbitral authority.
6.4 Equitable Relief. Each Seller hereby agrees that any remedy at law for
any breach of the provisions contained this Agreement shall be inadequate and
that the Buyer shall be entitled to seek equitable relief in addition to any
other remedy the Buyer might have under Section 6 of this Agreement. Nothing in
this Section 6.4 will limit any rights or remedies otherwise available to the
Buyer under Law.
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Section 7. Conditions to Obligations of the Parties
7.1 Conditions to Each Party's Obligations. The respective obligation of
each party to consummate the transactions contemplated herein is subject to the
satisfaction or written waiver at or prior to the Closing of the following
conditions:
(a) Injunction. There will be no effective Order of any nature
issued by a Governmental Authority to the effect that the transactions
contemplated herein may not be consummated as provided in this Agreement,
no proceeding or lawsuit will have been commenced by any Governmental
Authority for the purpose of obtaining any such Order and no written
notice will have been received from any Governmental Authority indicating
an intent to restrain, prevent, materially delay or restructure the
transactions contemplated by this Agreement.
(b) Regulatory Approvals. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, all
Governmental Authorities required in connection with the execution,
delivery or performance of this Agreement or consummation of the
transactions contemplated hereby will have been obtained or any such
filings which only require notifying a Governmental Authority shall have
been filed.
7.2 Conditions to Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated hereby are further subject
to the satisfaction (or waiver) at or prior to the Closing of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Buyer contained in Section 4 of this Agreement shall be
true and correct in all material respects at the date hereof and shall be
true and correct in all material respects as of the Closing Date as if
made at and as of such time, except for (i) changes permitted or
contemplated by this Agreement, and (ii) representations and warranties
which are as of a specific date;
(b) Performance of Obligations. The Buyer shall have performed in
all material respects its covenants and obligations under this Agreement
required to be performed by it at or prior to the Closing pursuant to the
terms hereof;
(c) Buyer Certificate. An authorized officer of the Buyer shall have
executed and delivered to the Sellers a certificate as to compliance with
the conditions set forth in Sections 7.2(a) and (b); and
(d) Buyer Ancillary Documents. The Buyer shall have delivered, or
caused to be delivered, to the Sellers the following:
(i) the Purchase Price;
(ii) a good standing certificate for the Buyer from its state
of incorporation as of a date within twenty (20) days to the Closing
Date;
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(iii) a certificate from the Secretary of the Buyer,
certifying (A) as to the Buyer's certificate of incorporation and
bylaws, (B) as to the due adoption by its Board of Directors
authorizing the execution and delivery of this Agreement and the
Buyer Ancillary Agreements and the taking of any and all actions
deemed necessary or advisable to consummate the transactions
contemplated hereby and thereby, and (C) that no further corporate
or company action is required to authorize the transactions
contemplated by this Agreement and the Buyer Ancillary Agreements;
and
(iv) an incumbency certificate of the Buyer certifying as to
the names and signatures of the officers of the Buyer authorized to
sign this Agreement and the Buyer Ancillary Agreements.
7.3 Conditions to Obligations of the Buyer. The obligations of the Buyer
to consummate the transactions contemplated hereby are further subject to the
satisfaction (or waiver) at or prior to the Closing of the following conditions:
(a) Representations and Warranties. The representations and
warranties contained in Section 3 of this Agreement shall be true and
correct in all respects at the date hereof and shall be true and correct
in all respects as of the Closing Date as if made at and as of such time,
except for (i) changes permitted or contemplated by this Agreement, (ii)
representations and warranties which are as of a specific date and (iii)
failures to comply with the foregoing condition that individually or in
the aggregate would not have a Material Adverse Effect;
(b) Performance of Obligations. Each Seller shall have performed in
all material respects its covenants and obligations under this Agreement
required to be performed by it at or prior to the Closing pursuant to the
terms hereof;
(c) Required Consents. The consents or waivers of those
non-Governmental Authorities set forth in Section 7.3(c) of the Disclosure
Schedule required to be obtained in connection with the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby shall have been obtained;
(d) Resignations. To the extent requested by Buyer, the directors
and officers of the Company as set forth in Section 7.3(d) of the
Disclosure Schedule shall have tendered their resignations as officers and
directors of the Company;
(e) Real Estate Title. All Real Property located in the United
States shall be properly titled and recorded in the name of North Texas
Steel Company, Inc. and the Buyer shall have received reasonably
satisfactory evidence of the foregoing;
(f) Financing. The Buyer shall have consummated the Financing;
(g) Sellers Certificate. Each Seller shall have executed and
delivered to the Buyer a certificate as to compliance with the conditions,
as applicable to each such Seller, set forth in Sections 7.3(a) and (b);
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(h) Pension Contribution. The Sellers shall have established, or
caused the Company to have established, the cash contribution to the
Pension Plan and established the Escrow in accordance with Section 5.16;
(i) Seller Ancillary Documents. The Sellers shall have delivered, or
caused to be delivered, to the Buyer the following:
(i) the documents and instruments described in Section 2.2;
(ii) [a duly executed FIRPTA Certificate, in substantially the
same form as Exhibit 7.3(i)(vi) hereto, which shall establish that
the transactions contemplated hereby are exempt from withholding
under Section 1445 of the Code;]
(iii) a good standing certificate (or comparable documents in
the appropriate jurisdiction) for the Company from the state of
incorporation as of a date within twenty (20) days to the Closing
Date;
(iv) a certificate from the Secretary of the Company, or other
authorized officer, certifying as to the Company's certificate or
articles of incorporation and bylaws;
(v) a certificate from the Secretary of each Seller that is
not a natural person, or other authorized officer; certifying (A) as
to such Seller's certificate or articles of incorporation or other
comparable organizational documents or trust indenture, (B) as to
the due adoption by its Board of Directors or Board of Managers or
Trustees, as the case may be, authorizing the execution and delivery
of this Agreement and the Seller Ancillary Agreements and the taking
of any and all actions deemed necessary or advisable to consummate
the transactions contemplated hereby and thereby, and (C) that no
further corporate or other action is required to authorize the
transactions contemplated by this Agreement and the Seller Ancillary
Agreements;
(vi) the shareholder register and share certificates
(including, without limitation, the instruments set forth in Section
2.2), insofar as applicable, the minute book and all books, papers,
records, and other property belonging to the Company, provided that
the Sellers may excise from such books, papers or records,
confidential information not relating to the Company;
(vii) an incumbency certificate of each Seller that is not a
natural person certifying as to the names and signatures of the
officers of each of the Sellers that is not a natural person
authorized to sign this Agreement and the Seller Ancillary
Agreements.
Section 8. Termination.
8.1 Termination. This Agreement may be terminated at any time at or prior
to the Closing:
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(a) in writing, by mutual consent of the parties hereto;
(b) by written notice from the Buyer to the Sellers, if any
condition to the obligation of the Buyer to consummate the transactions
contemplated hereby set forth in Section 7.3 becomes incapable of
satisfaction prior to the Outside Date (as hereinafter defined) and shall
not have been waived by the Buyer, unless the failure of consummation is
the result of a material breach of the Agreement by the Buyer;
(c) by written notice from the Sellers to the Buyer, if any
condition to the obligation of the Sellers to consummate the transactions
contemplated hereby set forth in Section 7.2 becomes incapable of
satisfaction prior to the Outside Date and shall not have been waived by
the Sellers, unless the failure of consummation is the result of a
material breach of the Agreement by the Sellers;
(d) by written notice by the Buyer or the Sellers, if the Closing
has not occurred on or prior to [September 30,] 2005 (the "Outside Date"),
unless the failure of consummation is the result of a material breach of
the Agreement by the party seeking to terminate this Agreement; or
(e) by written notice by the Buyer or the Sellers, if any
Governmental Authority issues an order permanently enjoining, restraining
or otherwise prohibiting the consummation of the transactions contemplated
hereby and such order shall become final and non-appealable.
8.2 Procedure and Effect of Termination. In the event of the termination
of this Agreement and the abandonment of the transactions contemplated hereby
pursuant to Section 8.1 hereof, written notice thereof shall forthwith be given
by the Sellers, on the one hand, or the Buyer, on the other hand, so terminating
to the other parties, and this Agreement shall become null and void and have no
effect and the transactions contemplated hereby shall be abandoned. If this
Agreement is terminated pursuant to Section 8.1 hereof:
(a) each party shall redeliver all documents, work papers and other
materials of the other parties relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the
party furnishing the same or, upon prior written notice to such party,
shall destroy all such documents, work papers and other materials and
deliver notice to the parties seeking destruction of such documents that
such destruction has been completed, and all confidential information
received by any party hereto with respect to the other party shall be
treated in accordance with the Confidentiality Provisions;
(b) all filings, applications and other submissions made pursuant
hereto shall, at the option of the Sellers, and to the extent practicable,
be withdrawn from the agency or other Person to which made; and
(c) there shall be no liability or obligation hereunder on the part
of the Sellers, the Company, the Buyer or any of their respective
directors, officers, employees, Affiliates, controlling Persons, agents or
representatives, except (i) to the extent that such termination results
from a material breach by a party of any representation, warranty,
covenant or agreement in this Agreement; and (ii) except that the
obligations provided for in this Section 8.2 and Sections 5.5, 5.6, 5.10,
11.1, 11.7 and 11.11 hereof and in the Confidentiality Provisions shall
survive any such termination.
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Section 9. Indemnification.
9.1 Joint and Several Indemnification Obligations of the Sellers. Except
to the extent otherwise provided in this Section 9, the Sellers shall, jointly
and severally, indemnify, defend, and hold harmless the Buyer and its officers,
directors, employees, and Affiliates, and each of the heirs, executors,
successors, and assigns of any of the foregoing (collectively, the "Buyer
Indemnified Parties") from, against, and in respect of any and all Losses
arising out of or relating to:
(a) any breach or inaccuracy of any representation or warranty made
by the Sellers in this Agreement or any certificate or document delivered
pursuant to this Agreement (provided, that with respect to any breach of
(i) the representations and warranties in Section 3.12 which directly
relate to the Pension Plan, the remedies under the Pension Plan Joint
Account Agreement entered pursuant to Section 5.16 shall be Buyer's
exclusive remedies and (ii) the representations and warranties in Section
3.4(b), the remedies under Section 9.9 shall be Buyer's exclusive
remedies); and
(b) any breach of any covenant, agreement, or undertaking made by
the Sellers in this Agreement.
9.2 Indemnification Obligations of the Buyer. (a) The Buyer shall
indemnify and hold harmless the Sellers and their respective officers,
directors, employees, and Affiliates, and each of the heirs, executors,
successors, and assigns of any of the foregoing (collectively, the "Seller
Indemnified Parties") from, against, and in respect of any and all Losses
arising out of or relating to:
(a) any breach or inaccuracy of any representation or warranty made
by the Buyer in Section 4;
(b) any breach of any covenant, agreement, or undertaking made by
the Buyer in this Agreement; and
(c) the conduct of the business of the Company and its subsidiaries
after the Closing Date.
(b) Buyer hereby releases the Seller Indemnified Parties now and
forever, from any and all causes of action, claims, demands or
liabilities, whether direct or indirect, relating to, or arising from the
existence of toxic or hazardous wastes or materials of any kind on the
Real Property or arising from any use of the Real Property; provided that
this release shall not release any claim arising out of a breach of the
representation and warranty contained Section 3.16. In addition, Buyer
shall indemnify and hold harmless the Seller Indemnified Parties from,
against, and in respect of any and all Losses arising out of or relating
to the use, spill, disposal, manufacture, storage or release of any
hazardous or toxic wastes, substances, chemicals or materials by Buyer or
the Company or by any of Buyer's or the Company's agents, contractors,
employees, invitees, tenants, successors or assigns on or upon the
Property. The foregoing indemnification shall include, without limitation,
any costs or expenses assessed against or incurred after the date of this
Agreement by the Sellers as a result of any removal or remedial
obligations imposed with respect to the Property under any Environmental
Laws.
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9.3 Indemnification Procedure.
(a) Promptly after receipt by a Buyer Indemnified Party or a Seller
Indemnified Party (hereinafter referred to as, collectively, an
"Indemnified Party") of notice by a third party of any claim or the
commencement of any action or proceeding with respect to which such
Indemnified Party may be entitled to receive payment from the other party
for any Losses (ignoring, for this purpose, the Threshold Amount (as
hereinafter defined)), such Indemnified Party shall promptly notify the
Buyer or the Sellers, as the appropriate indemnifying party or
representative thereof (the "Indemnifying Party"), of such claim or of the
commencement of such action or proceeding; provided, however, that the
failure to so notify the Indemnifying Party shall not affect the
indemnification obligations hereunder in the absence of actual prejudice.
The Indemnifying Party shall have the right, upon written notice delivered
to the Indemnified Party within twenty (20) days thereafter, to assume the
defense of such action or proceeding, including the engagement of counsel
reasonably satisfactory to the Indemnified Party and the payment of the
fees and disbursements of such counsel. In the event, however, that the
Indemnifying Party declines or fails to assume the defense of the action
or proceeding or to employ counsel reasonably satisfactory to the
Indemnified Party, in either case within such 20-day period, then such
Indemnified Party may employ counsel to represent or defend it in any such
action or proceeding, and the Indemnifying Party shall pay the reasonable
fees and disbursements of such counsel as incurred; provided, however,
that the Indemnifying Party shall not be required to pay the fees and
disbursements of more than one counsel for all Indemnified Parties in any
jurisdiction in any single action or proceeding; provided, further, that
if, under applicable standards of professional conduct and in the good
faith judgment of counsel to both the Indemnified Party and the
Indemnifying Party, a conflict with respect to any significant issue
between any Indemnified Party and the Indemnifying Party exists in respect
of such claim, the Indemnifying Party shall pay the reasonable fees and
expenses of such additional counsel as may be required to be retained in
order to resolve such conflict. In any action or proceeding with respect
to which indemnification is being sought hereunder, the Indemnified Party
or the Indemnifying Party, whichever is not assuming the defense of such
action, shall have the right to participate in such litigation and to
retain its own counsel at such party's own expense. The Indemnifying Party
or the Indemnified Party, as the case may be, shall at all times use
reasonable efforts to keep the Indemnifying Party or the Indemnified
Party, as the case may be, reasonably apprised of the status of the
defense of any action, the defense of which it is maintaining, and to
cooperate in good faith with each other with respect to the defense of any
such action.
(b) No Indemnified Party may settle or compromise any claim or
consent to the entry of any judgment with respect to which indemnification
is being sought hereunder without the prior written consent of the
Indemnifying Party, unless such settlement, compromise, or consent
includes an unconditional release of the Indemnifying Party from all
liability arising out of such claim and is not conditioned upon the
payment of any amount by the Indemnifying Party (or for which
indemnification may be sought hereunder), or does not contain or result in
any restriction, interference, or condition that would apply to such
Indemnifying Party or its Affiliates or to the conduct of any of their
respective businesses (whether through injunctive or equitable relief or
otherwise). An Indemnifying Party may not, without the prior written
consent of the Indemnified Party, settle or compromise any claim or
consent to the entry of any judgment with respect to which indemnification
is being sought hereunder unless (i) the Indemnifying Party shall pay or
cause to be paid all amounts arising out of such settlement or judgment
concurrently with the effectiveness thereof; (ii) the terms or effect of
the settlement shall not encumber any of the assets of any Indemnified
Party or any Affiliate thereof, or contain or result in any restriction,
interference or condition that would apply to such Indemnified Party or
its Affiliates or to the conduct of any of their respective businesses;
and (iii) the Indemnifying Party shall obtain, as a condition of such
settlement, a complete unconditional release of each Indemnified Party.
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(c) In the event an Indemnified Party shall claim a right to payment
pursuant to this Agreement, such Indemnified Party shall send written
notice of such claim to the appropriate Indemnifying Party. Such notice
shall specify the basis for such claim. As promptly as possible after the
Indemnified Party has given such notice, such Indemnified Party and the
appropriate Indemnifying Party shall establish the merits and amount of
such claim (by mutual agreement or in accordance with Section 11.11
hereof) and, within five (5) business days of the final determination of
the merits and amount of such claim, the Indemnifying Party shall pay to
the Indemnified Party immediately available funds in an amount equal to
such claim as determined hereunder; provided, however, that other than as
specifically set forth herein, if the Sellers are the Indemnifying Party
all amounts to be paid by them to the Indemnified Parties shall be paid
pursuant to the terms of the Indemnity Joint Account Agreement, as
applicable.
9.4 Claims Period. For purposes of this Section 9, a "Claims Period" shall
be the period during which a claim for indemnification may be asserted under
this Section 9 by an Indemnified Party, which period shall begin on the Closing
Date and terminate on the earlier of (i) the termination date of the Indemnity
Joint Account Agreement, or (ii) the date on which there are no funds remaining
in the Indemnity Joint Account Agreement. Notwithstanding the foregoing, if
prior to the close of business on the last day of the Claims Period, an
Indemnifying Party shall have been properly notified of a claim for indemnity
hereunder and such claim shall not have been finally resolved or disposed of at
such date, such claim shall continue to survive and shall remain a basis for
indemnity hereunder until such claim is finally resolved or disposed of in
accordance with the terms hereof. Any claim for indemnity for which an
Indemnifying Party shall not have been properly notified prior to the close of
business on the last day of the applicable Claims Period shall be barred, and
the Indemnifying Party shall have no liability therefor to the Indemnified
Party.
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9.5 Threshold and Cap Amounts. Notwithstanding anything in this Agreement
to the contrary, in no event shall the Sellers have any liability for Losses
arising under this Agreement, the Indemnity Joint Account Agreement or any other
agreement (other than Losses for any breach of the representations and
warranties in Section 3.12 related to the Pension Plan and excluding Losses
covered by Section 9.9) executed in connection herewith or therewith, until the
aggregate of all such Losses for which indemnification is sought therefor
exceeds FIFTY THOUSAND DOLLARS ($50,000.00) (the "Threshold Amount"), after
which the Buyer shall be entitled to be fully indemnified for all Losses that,
in the aggregate, are in excess of the Threshold Amount, subject to the other
terms of Section 9. The aggregate liability of all Sellers for all Losses under
this Agreement, the Indemnity Joint Account Agreement or any other agreement
(other than Losses for any breach of the representations and warranties in
Section 3.12 related to the Pension Plan and excluding Losses covered by Section
9.9) executed in connection herewith or therewith shall be limited to FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) (the "Aggregate Cap"), provided that the
Aggregate Cap shall be reduced to $300,000.00 on January 30, 2007, further
reduced to $200,000.00 on July 30, 2007, further reduced to $100,000.00 on July
30, 2008, and further reduced on July 30, 2009, to zero; provided further,
however, while it is agreed that the Aggregate Cap shall be reduced as
aforesaid, no amount of the Indemnity Joint Account Deposit otherwise payable to
the Sellers that would reduce the Indemnity Joint Account Deposit below an
amount sufficient to indemnify the Buyer Indemnified Parties for Losses which
have been asserted by them and which have not been barred pursuant to Section
9.4, shall be paid to Sellers, but instead shall be retained as a part of the
Indemnity Joint Account Deposit, until such Losses are finally resolved. The
parties agree that the indemnification provided hereunder is a "claims made"
indemnity not a "claims paid" indemnity. Each Seller's liability for Losses
under this Section 9 shall be limited to an amount equal to the result of
multiplying the Aggregate Cap times their respective Ownership Percentage, and
shall be subject to satisfaction solely out of the funds on deposit pursuant to
the Indemnity Joint Account Agreement. Notwithstanding the foregoing, Losses
arising pursuant to any matter constituting fraud under applicable Law by the
Sellers shall not be subject to the Threshold Amount or the Aggregate Cap,
provided that liability for any matter constituting fraud shall be several only,
that is, no Seller shall be liable for the fraud of any other Seller. As used in
this Agreement, "fraud" and "fraud under applicable Law" shall mean actual
fraud, and Losses from the "actual fraud" of any Seller shall not be deemed to
have been suffered or incurred by a Buyer Indemnified Party unless such Losses
were caused by a representation and warranty of such Seller in this Agreement
that was (i) false, (ii) positively asserted with the knowledge of such Seller
of its falsity when made, (iii) made by such Seller with the intent that it be
acted upon by Buyer, and (iv) relied upon by Buyer.
9.6 Limitations on Indemnification. Notwithstanding anything contained
herein to the contrary:
(a) The amount of Losses to which an Indemnified Party may be
entitled to be indemnified against and reimbursed for under this Section 9
shall be (i) reduced by any indemnity or other recovery under any contract
between an Indemnified Party and any third party and (ii) reduced by any
insurance proceeds received by an Indemnified Party with respect to such
Losses. The parties shall cooperate with each other with respect to making
claims under any contracts between the Company and any third parties which
agreements provide indemnification or similar rights for the benefit of
the Company.
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(b) If the Indemnifying Party makes any payment (or a payment is
made from the deposit under the Indemnity Joint Account Agreement, then to
the extent it is chargeable to such Indemnifying Party) under this Section
9 with respect to any Losses, the Indemnifying Party shall be subrogated,
to the extent of such payment, to the rights of the Indemnified Party
against any insurer or other party with respect to such Losses, and the
Indemnified Party shall assign to the Indemnifying Party any and all
rights with respect to which and to the extent to which indemnification
shall have been sought or made under this Agreement, and the Indemnified
Party shall not take any action which directly or indirectly would affect
such claims that the Indemnifying Party may have with respect thereto and
shall cooperate fully with the Indemnified Party in pursuing such claims.
(c) No Indemnifying Party shall be liable hereunder (and no
Indemnified Party shall be entitled to payment from the deposit under the
Indemnity Joint Account Agreement) for any special, consequential,
punitive or loss of opportunity damages of any kind or nature (other than
for any such damages actually incurred by an Indemnified Party to an
unaffiliated third party).
(d) Attorney, consultant, and other professional fees and
disbursements incurred by an Indemnified Party in connection with this
Section 9 shall be reasonable and based only on time actually spent which
shall be charged at no more than such professional's standard hourly rate.
9.7 Exclusive Remedy. Except (a) for a breach of any representation or
warranty in Section 3.4(b), (b) for a breach of any representation or warranty
in Section 3.12 related to the Pension Plan, (c) for a breach of any
representation, warranty, or covenant as a result of any matter constituting
fraud under applicable Law, and (d) remedies available under the Seller
Ancillary Agreements, the Buyer Ancillary Agreements and the Confidentiality
Provisions, following the Closing, the indemnification provisions of this
Section 9 shall be the exclusive remedy of the parties hereto against any other
party with respect to matters arising under or in connection with this Agreement
and the transactions contemplated hereby, and satisfaction of the claims of
Buyer Indemnified Parties shall be limited to the remedies under the Indemnity
Joint Account Agreement.
9.8 Indemnity Joint Account Agreement. Between the date hereof and the
Closing Date the Buyer and Sellers shall also establish an account with a
financial institution acceptable to the Buyer and Sellers, to be subject to the
joint direction of a representative to be named by the Buyer and Seller's
Representative (as identified in Section 5.16), and to be funded by the sums to
be paid by Buyer pursuant to Section 1.3(c), pursuant to the Indemnity Joint
Account to be executed by the parties at Closing, to be in form and substance
acceptable to the parties.
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9.9 Indemnification Obligations of Sellers as to Stock Ownership. Except
to the extent otherwise provided in Sections 9.6(c) and (d), each individual
Seller shall, severally and not jointly, indemnify, defend, and hold harmless
the Buyer Indemnified Parties from, against, and in respect of any and all
Losses arising out of or relating to any breach or inaccuracy of such Seller's
representations and warranties made in Section 3.4(b) as to such Seller's
Shares.
Section 10. Tax Matters.
10.1 Preparation and Filing of Tax Returns. The Sellers in charge of the
day to day operations of the Company will prepare and timely file, or will cause
to be prepared and timely filed, all appropriate Federal, state, provincial,
local and foreign Tax Returns in respect of the Company and its assets or
activities that are required to be filed on or before the Closing Date. The
Company shall not file any new Tax Returns described in the preceding sentence
without first delivering a copy of such Tax Returns to the Buyer and accepting
any changes to such Tax Returns that the Buyer reasonably requests. The Buyer
will prepare or cause to be prepared and will timely file or cause to be timely
filed all other Tax Returns required of the Buyer and its subsidiaries and
Affiliates (including the Company), or in respect of their assets or activities.
Any such Tax Returns that include periods ending on or before the Closing Date
or that include the assets or activities of the Company prior to the Closing
Date will, insofar as they relate to the Company, be on a basis consistent with
the last previous such Tax Returns filed in respect of the Company, unless the
Sellers or the Buyer, as the case may be, reasonably conclude(s), and notifies
the other party in writing, that there is no reasonable basis for such position.
The Buyer shall not file any Tax Return with respect to the Company, or with
respect to its assets or activities, that includes periods ending on or before
the Closing Date or that include the assets or activities the Company prior to
the Closing Date without first delivering a copy of such Tax Return to ▇▇▇ ▇▇▇▇▇
and accepting any changes to such Tax Returns that ▇▇▇ ▇▇▇▇▇ reasonably request.
None of the Buyer or its Affiliates will file any amended Tax Returns for any
periods for or in respect of the Company (or its assets or activities) with
respect to which the Buyer is not obligated to prepare or cause to be prepared
the original such Tax Returns pursuant to this Section 10.1 without the prior
written consent of ▇▇▇ ▇▇▇▇▇, which consent shall not be unreasonably withheld,
provided, however, the Buyer, without consent of the Sellers, may amend such Tax
Returns due to any carryback of any net operating loss, net capital loss,
charitable contribution or other carryback item arising after the Closing Date.
10.2 Payment of Taxes. The Sellers in charge of the day to day operations
of the Company shall timely cause the Company to pay (a) all Income Taxes, and
all Taxes shown as due other than Income Taxes, with respect to Tax Returns
which such Sellers are obligated to prepare and file or cause to be prepared and
filed pursuant to Section 10.1 and (b) all Taxes other than Income Taxes due on
or before the Closing Date for which no Tax Return is required to be filed. The
Buyer shall cause the Company to pay (Buyer shall not be obligated or liable to
make any payment in order to cause the Company to make such payments hereunder)
(a) all Income Taxes, and all Taxes shown as due other than Income Taxes, with
respect to Tax Returns which the Buyer is obligated to prepare and file or cause
to be prepared and filed pursuant to Section 10.1 and (b) all Taxes other than
Income Taxes due and payable after the Closing Date for which no Tax Return is
required to be filed.
10.3 Intentionally Omitted.
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10.4 Intentionally Omitted.
10.5 Intentionally Omitted.
10.6 Tax Cooperation. Each of the Buyer and the Sellers will provide the
other party with such information and records and make such of its
representatives available as may reasonably be requested by such other party in
connection with the preparation of any Tax Return or any audit or other
proceeding that relates to the Company. The Buyer will prepare or cause the
Company to prepare, within sixty (60) days after the Closing Date, in a manner
consistent with past practice, the Tax work paper preparation package or
packages necessary to enable the Sellers to prepare Tax Returns the Sellers are
obligated to prepare or cause to be prepared pursuant to Section 10.1..
10.7 Tax Contests.
(a) If a claim is made by any taxing authority which, if successful,
might result in an indemnity payment to any member of the Buyer
Indemnified Parties, the Indemnified Party will promptly notify the
Indemnifying Party of such claim (a "Tax Claim"); provided, however, that
the failure to give such notice will not affect the indemnification
provided hereunder except to the extent the Indemnifying Party has
actually been prejudiced as a result of such failure.
(b) With respect to any Tax Claim relating to Taxes and relating to
a taxable period ending on or before the Closing Date or to any other
taxable period in which the Company joined in filing any Consolidated Tax
Return, the Sellers will control all proceedings and may make all
decisions in connection with such Tax Claim (including selection of
counsel) and, without limiting the foregoing, may in their sole discretion
pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with any taxing authority with respect thereto, and may,
in their sole discretion, either pay the Tax claimed and ▇▇▇ for a refund
where applicable Law permits such refund suits or contest the Tax Claim in
any permissible manner. The Buyer will control all proceedings and may
make all decisions in connection with any Tax Claim other than a Tax Claim
described in the first sentence of this Section 10.8(b) or a Tax Claim
described in Section 10.8(c) (including selection of counsel).
(c) Each of the Buyer, the Company and their respective Affiliates,
on the one hand, and the Sellers and their respective Affiliates, on the
other, will cooperate in contesting any Tax Claim, which cooperation will
include the retention and (upon request) the provision to the requesting
party of records and information which are reasonably relevant to such Tax
Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
10.8 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including penalties and interest), incurred in
connection with, or as a result of, the Buyer's acquisition of the Shares or any
other action contemplated by this Agreement will be paid as follows: (a)
one-half by the Buyer and one-half by the Sellers, in the case of amounts
payable to jurisdictions outside of the United States and (b) by the Sellers, in
the case of amounts payable to the United States or to jurisdictions within the
United States.
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Section 11. Miscellaneous.
11.1 Notices. All notices, communications and deliveries hereunder shall
be made in writing signed by the party making the same, shall specify the
section hereunder pursuant to which it is given or being made, and shall be
delivered personally or by telecopy transmission or sent by registered or
certified mail or by any express mail or courier delivery service (with postage
and other fees prepaid) as follows:
To the Sellers:
c/o ▇▇▇▇▇▇ ▇. or ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
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To the Buyer:
Omaha Holdings Corp.
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇@▇▇▇▇▇.▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Such notice shall be
effective upon the date of delivery or refusal of delivery, if sent by personal
delivery, registered, certified, or express mail, or courier delivery, or upon
transmission by telecopy transmission, if immediately confirmed by telephone or
electronic means.
11.2 Attachments. All schedules (including the Disclosure Schedule),
annexes and exhibits attached hereto are hereby incorporated into this Agreement
and are hereby made a part hereof as if set out in full in this Agreement.
11.3 Successors in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and each of their respective
successors and permitted assigns. No party may assign this Agreement or its
rights hereunder without, if a Seller intends to assign, the consent of the
Buyer or, if the Buyer intends to assign, the consent of the Sellers, which
consent, in either case, will not be unreasonably withheld or delayed; provided,
however, that the Buyer may assign its rights and interests under this Agreement
to any Affiliate which assumes the Buyer's obligations (provided, that, the
Buyer shall remain subject to any such obligations).
11.4 Number; Gender; Currency. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders. Unless
otherwise expressly noted to the contrary, all references in this Agreement to
"dollars" or "$" shall mean United States dollars.
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11.5 Captions. The titles, captions, and table of contents contained in
this Agreement are inserted herein only as a matter of convenience and for
reference and in no way define, limit, extend, or describe the scope of this
Agreement or the intent of any provision hereof. Unless otherwise specified to
the contrary, all references to sections are references to sections of this
Agreement and all references to exhibits, annexes and schedules are references
to exhibits, annexes and schedules to this Agreement.
11.6 Certain Definitions. For purposes of this Agreement:
(a) "Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person;
(b) "Business" means the fabrication of steel operations of the
Company;
(c) "Business Day" shall mean a day (not being a Saturday or Sunday)
on which banks are open for normal banking business in New York;
(d) "Buyer Ancillary Agreements" means each other certificate,
instrument and agreement to be executed and delivered by the Buyer in
connection with this Agreement, including the Pension Plan Joint Account
Agreement and the Indemnity Joint Account Agreement;
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any regulations or published ruling promulgated or
issued thereunder;
(f) "Consolidated Tax Returns" means Tax Returns which include the
Company, on the one hand, and the Sellers or any of its subsidiaries or
Affiliates (other than the Company), on the other hand;
(g) "Control", when used with respect to any specified Person, means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract, or otherwise, and "controlling" and "controlled" have meanings
correlative to the foregoing;
(h) "Environmental Laws" mean any and all Laws, permits or
agreements entered into, issued, or promulgated by any Governmental
Authority, relating to the protection of the environment or human health,
preservation of reclamation of natural resources, or to the management or
any Release of Hazardous Materials, including, but not limited to, CERCLA,
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
U.S.C. ss. 136 et seq.), the United States Federal Water Pollution Control
Act (33 U.S.C. ss. 1251 et seq.), the United States Clean Air Act of 1970
(42 U.S.C. ss. 740 et seq.), the Occupational Safety and Health Act, as
amended (29 U.S.C. ss. ▇▇▇ ▇▇ ▇▇▇.), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Toxic Substances
Control Act of 1976 (42 U.S.C. ss. ▇▇▇▇ ▇▇ ▇▇▇.), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. ss.
▇▇▇▇▇, ▇▇ ▇▇▇.), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Safe Drinking Water Act of 1974 (42
U.S.C. ss. 300f et seq.), the United States Hazardous Materials
Transportation Act (49 U.S.C. ss. 180 et seq.), and any similar or Law,
and all amendments thereto or regulations promulgated thereunder effective
as of the date of this Agreement;
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(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations or published
rulings promulgated or issued thereunder;
(j) "Governmental Authority" means any supranational, national,
sovereign, federal, state, local or foreign government or any political
subdivision thereof or any court of competent jurisdiction, administrative
agency or commission or other governmental entity or instrumentality or
official exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government whether domestic
or foreign;
(k) "Hazardous Material" means any pollutant, contaminant or waste,
or any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substance, waste, chemical, material, constituent or any
substance waste or material having any constituent elements displaying the
foregoing characteristics, in each case regulated under any Environmental
Law and including without limitation, asbestos, polychlorinated biphenyls,
petroleum, its derivatives, byproducts and other hydrocarbons;
(l) "Income Taxes" means all Taxes based upon, measured by, or
calculated with respect to (i) net income or profits (including any
capital gains, minimum taxes and any Taxes on items of tax preference, but
not including sales, use, real property gains, real or personal property,
gross or net receipts, transfer or other similar Taxes) or (ii) multiple
bases (including corporate franchise, doing business or occupation Taxes)
if one or more of the bases upon which such Tax may be based upon,
measured by, or calculated with respect to is described in clause (i) of
this definition;
(m) "Law" means any common law and any international, foreign,
federal, state and local statutes, treaties, rules, guidelines having the
force of law, regulations, ordinances, codes and administrative or
judicial precedents having the force of law and in effect prior to the
Closing, including without limitation the interpretation thereof by any
Governmental Authority charged with the enforcement thereof having the
force of law;
(n) "Liens" mean any pledge, lien, mortgage, encumbrance or security
interest of any kind or nature whatsoever;
(o) "Loss" or "Losses" means any and all claims, liabilities,
obligations, losses, costs, expenses, penalties, fines, judgments, and
damages whenever arising or incurred (including, without limitation,
amounts paid in settlement [subject to the provisions regarding settlement
under Section 9.3], costs of investigation, reasonable attorneys' and
accountants' fees and expenses, removal costs, remediation costs, closure
costs and expenses of investigation and ongoing monitoring) incurred, but
subject to the obligation of Buyer or any Indemnified Party to mitigate
any Loss against which it is indemnified;
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(p) "Material Adverse Effect" means any change or effect that is
materially adverse to (i) the condition (financial or otherwise),
business, assets, liabilities (actual or contingent), properties,
operations or results of operations of the Company, taken as a whole or
(ii) the ability of the Sellers to consummate the transactions
contemplated hereby; provided, however, that changes or effects relating
to (a) any adverse change or effect attributable to conditions affecting
the industry in which the Company participates, the U.S. economy as a
whole or capital markets in general or markets in which the Company
operates, which does not materially and disproportionately affect the
Company and its employees, taken as a whole; (b) any adverse change or
effect attributable to the reaction of employees, customers or suppliers
of the Company to the announcement of the transactions contemplated
hereby; (c) any adverse change or effect arising from or relating to any
changes required by GAAP in accounting requirements or principles, or in
applicable laws or the interpretation thereof which does not materially
and disproportionately affect the Company; or (d) the failure of the
Company to meet any projected financial or other results (provided,
however, that if the cause of the Company's failure to meet its projected
financial or other results would be in and of itself a Material Adverse
Effect as otherwise defined herein, without reference to this subsection
(d), then such cause shall still be a Material Adverse Effect), in each
case, shall not be deemed to constitute a "Material Adverse Effect" and
shall not be considered in determining whether a "Material Adverse Effect"
has occurred.
(q) "Net Accounts Receivable" means the accounts receivable of the
Business less the Company's allowance for doubtful accounts established in
accordance with GAAP;
(r) "Order" means any judgment, order, writ, injunction, award,
decision, stipulation, settlement, process, ruling, subpoena, verdict or
decree entered by any Governmental Authority or arbitrator entered prior
to the Closing;
(s) The Company's "ordinary course of business" includes large
construction contracts and subcontracts with general contractors and
subcontractor/suppliers, which contracts and subcontracts frequently
involve projects in excess of $500,000.00 in services, equipment and
materials furnished by and to the Company.
(t) "Ownership Percentage" means the relative ownership by a Seller
of shares of stock in the Company, expressed as a percentage of all issued
and outstanding shares of stock in the Company.
(u) "Pending," when used in the context of investigations, reviews,
actions, grievances, complaints, violations, proceedings, disputes or like
matters, shall refer to only such matters as are within the knowledge of
Sellers.
(v) "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization, or
other entity or any government or any agency or political subdivision
thereof;
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(w) "Release" shall have the meaning ascribed to it in ss. 101(22)
of CERCLA (42 U.S.C. ss. 9601(22));
(x) "Seller Ancillary Agreements" means each other certificate,
instrument and agreement to be executed and delivered by one or more
Sellers in connection with this Agreement, including the Pension Plan
Joint Account Agreement and the Indemnity Joint Account Agreement;
(y) "Tax" or "Taxes" means any federal, state, provincial, local, or
foreign income, gross receipts, license, payroll, employment, excise,
severance, escheat, stamp, occupation, premium, windfall profits,
environmental, customs duty, capital stock, franchise, profits,
withholding, social security, unemployment, workers' compensation,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or
other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not, and any such amounts incurred
as a consequence of being a transferee or member of a combined,
consolidated, affiliated or member group for tax purposes;
(z) "Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto and any amendment thereof; and
(aa) "To the knowledge of the Sellers" or any similar phrase
contained in this Agreement shall mean to the actual knowledge of Sellers
after reasonable investigation. "Reasonable investigation" by an
individual holding a position as an officer of the Company shall be deemed
to be such investigation as an individual holding a similar position in a
similar size company could reasonably be expected to undertake.
(bb) "Pension Plan" means the plan named the North Texas Steel
Company, Inc. Pension Plan.
11.7 Controlling Law; Integration; Amendment. This Agreement shall be
governed by and construed and enforced in accordance with the internal Laws of
the State of Texas. Except as hereinafter provided, this Agreement supersedes
all negotiations, agreements, and understandings among the parties with respect
to the subject matter hereof, including, without limitation, the Letter of
Intent; provided, however, the Confidentiality Provisions shall remain in full
force and effect. This Agreement and the Confidentiality Provisions, together
with the Seller Ancillary Agreements and the Buyer Ancillary Agreements to which
the Buyer, on the hand, and one or more Sellers, on the other hand, are parties,
constitute the entire agreement among the parties hereto. This Agreement may not
be amended, modified, or supplemented except by written agreement of the Buyer
and the Sellers. No provision of this Agreement shall be construed against or
interpreted to the disadvantage of any party hereto by any Governmental
Authority by reason of such party or its counsel having or being deemed to have
structured or drafted such provision.
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11.8 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by Law, the parties hereto waive any
provision of Law which renders any such provision prohibited or unenforceable in
any respect.
11.9 Counterparts. This Agreement may be executed in counterparts each of
which shall be deemed an original and all of which together shall constitute one
and the same agreement.
11.10 Enforcement of Certain Rights. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person,
other than the parties hereto, and their successors or permitted assigns, any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, or result in such Person being deemed a third-party beneficiary of
this Agreement.
11.11 Arbitration; Legal Proceedings.
(a) Any controversy, claim, or question of interpretation in dispute
between the Sellers, on one hand, and the Buyer, on the other hand (the
Sellers, on one hand, and the Buyer, on the other hand, each being
referred to as a "party") arising out of or relating to this Agreement or
the breach thereof shall be finally settled by arbitration in Fort Worth,
Texas, under the then-effective Commercial Arbitration Rules of the
American Arbitration Association as modified by this Agreement, and
judgment on the award rendered by the arbitrators may be entered in any
U.S. federal or state court having jurisdiction. The award rendered by the
arbitrators shall be final and binding on the parties and not subject to
further appeal. Such arbitration can be initiated by written notice by
either party (the "Claimant") to the other party, which notice shall
identify the Claimant's selected arbitrator. The party receiving such
notice (the "Respondent") shall identify its arbitrator within ten (10)
business days following its receipt of such notice. The arbitrator
selected by the Claimant and the arbitrator selected by the Respondent
shall, within fifteen (15) business days of their appointment, select a
third neutral arbitrator. In the event that they are unable to do so,
either party may request the American Arbitration Association to appoint
the third neutral arbitrator. The arbitrators shall have the authority to
award any remedy or relief that a court in Texas could order or grant,
including, without limitation, specific performance of any obligation
created under this Agreement, the issuance of injunctive or other
provisional relief, or the imposition of sanctions for abuse or
frustration of the arbitration process. The arbitration award will be in
writing and specify the factual and legal basis for the award.
(b) It is the intent of the parties that any arbitration shall be
concluded as quickly as reasonably practicable. Unless the parties
otherwise agree, once commenced, the hearing on the disputed matters shall
be held four days a week until concluded with each hearing date to begin
at 9:00 a.m. and to conclude at 5:00 p.m. The arbitrators shall use all
reasonable efforts to issue the final award or awards within a period of
ten business days after closure of the proceedings. Failure of the
arbitrators to meet the time limits of this Section 11.11(b) shall not be
a basis for challenging the award.
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(c) The arbitrators shall instruct the non-prevailing party to pay
all costs of the proceedings, including the fees and expenses of the
arbitrators and the reasonable attorneys' fees and expenses of the
prevailing party. If the arbitrators determine that there is not a
prevailing party, each party shall be instructed to bear its own costs and
to pay one-half of the fees and expenses of the arbitrators.
(d) Each party hereto hereby agrees that any legal proceeding
instituted to enforce an arbitration award hereunder will be brought in
the U.S. federal or state courts situated in Fort Worth, Tarrant County,
Texas, and hereby submits to personal jurisdiction therein and irrevocably
waives any objection as to venue therein, and further agrees not to plead
or claim in any such court that any such proceeding has been brought in an
inconvenient forum. Each such Person irrevocably consents to service of
process in any such proceeding by the mailing of copies thereof by
certified mail, postage prepaid, to such Person's address for notices
under this Agreement.
[Signatures follow on next page.]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date and year first above written.
Omaha Holdings Corp.
By: ______________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
[Sellers' Signatures follow on next page.]
_________________________________________ _______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________________ _______________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Individually, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
as Successor Trustee of Trust Agreement
_________________________________________ _______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
_________________________________________ _______________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
_________________________________________ ▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually and as Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually, of the ▇▇▇▇▇▇ Family Trust, fbo ▇▇▇▇▇ ▇. ▇▇▇▇▇
and as Trustee of the ▇▇▇▇▇▇ Family Trust
for the Benefit of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ _______________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
The ▇▇▇▇▇ National Bank, Trustee, _______________________________________________
North Texas Steel Co., Inc. Pension Plan ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By: _____________________________________ _______________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. Cyrus
Senior Vice President and Trust Officer
