EXHIBIT 10.20
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STOCK PURCHASE AGREEMENT
By and Among
Mac-Gray Services, Inc.,
("Buyer")
Copico, Inc.
("Company")
and
Stockholders Named Herein
("Stockholders")
March 31, 1998
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STOCK PURCHASE AGREEMENT
INDEX
Page
SECTION 1. SALE OF SHARES AND PURCHASE PRICE............................... 2
1.01 Transfer of Company Shares..................................... 2
1.02 Purchase Price................................................. 2
1.02A Purchase Price Adjustment...................................... 3
1.03 Calculation of Purchase Price.................................. 3
1.04 Payment of Purchase Price...................................... 3
1.05 Closing. ..................................................... 4
1.06 Stockholder Action............................................. 4
1.07 Further Assurances............................................. 4
1.08 Transfer Taxes................................................. 4
1.09 Deposit........................................................ 5
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDERS..................................................
2.01 Making of Representations and Warranties....................... 5
2.02 Organization and Qualifications of the Company................. 5
2.03 Capital Stock of the Company; Beneficial Ownership............. 6
2.04 Subsidiaries; Investments...................................... 6
2.05 Authority...................................................... 6
2.06 Real and Personal Property..................................... 7
2.07 Vending Service Agreements..................................... 9
2.08 Equipment...................................................... 9
2.09 Title.......................................................... 9
2.10 Financial Statements........................................... 10
2.11 Taxes.......................................................... 11
2.12 Collectibility of Accounts Receivable.......................... 12
2.13 Inventories.................................................... 12
2.14 Absence of Certain Changes..................................... 13
2.15 Ordinary Course................................................ 14
2.16 Banking Relations.............................................. 14
2.17 Intellectual Property.......................................... 14
2.18 Contracts...................................................... 16
2.19 Litigation..................................................... 17
2.20 Compliance with Laws........................................... 18
2.21 Insurance...................................................... 18
2.22 Warranty or Other Claims....................................... 18
2.23 Powers of Attorney............................................. 18
2.24 Finder's Fee................................................... 18
2.25 Permits; Burdensome Agreements................................. 18
Execution Copy
(i)
Page
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2.26 Corporate Records; Copies of Documents......................... 19
2.27 Transactions with Interested Persons........................... 19
2.28 Employee Benefit Programs...................................... 19
2.29 Environmental Matters.......................................... 21
2.30 List of Directors and Officers................................. 22
2.31 Employees; Labor Matters....................................... 22
2.32 Non-Foreign Status............................................. 23
2.33 [Intentionally Omitted]........................................ 23
2.34 Customers, Distributors and Suppliers.......................... 23
2.35 [Intentionally Omitted.]....................................... 24
2.36 Stock Repurchase............................................... 24
2.37 Disclosure..................................................... 24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.............. 24
3.01 Company Shares................................................. 24
3.02 Authority...................................................... 24
3.03 Finder's Fee................................................... 25
3.04 Agreements..................................................... 25
3.05 Investment Representations..................................... 25
SECTION 4. COVENANTS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS............................................ 26
4.01 Making of Covenants and Agreements............................. 26
4.02 Conduct of Business............................................ 26
4.03 Consents....................................................... 27
4.04 Notice of Default.............................................. 28
4.05 Consummation of Agreement...................................... 28
4.06 Cooperation of the Company and the Principal Stockholders...... 28
4.07 No Solicitation of Other Offers................................ 28
4.08 Confidentiality................................................ 29
4.09 Tax Returns.................................................... 29
4.10 Filing Cooperation............................................. 29
4.11 No Transfer of Securities...................................... 30
SECTION 4A. COVENANTS OF THE STOCKHOLDERS OTHER THAN THE
PRINCIPAL STOCKHOLDERS................................ 30
4A.01 Making of Covenants and Agreements............................. 30
4A.02 No Solicitation of Other Offers................................ 30
4A.03 Confidentiality................................................ 30
4A.04 Filing Cooperation............................................. 30
4A.05 No Transfer of Securities...................................... 31
Execution Copy
(ii)
Page
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER......................... 31
5.01 Making of Representations and Warranties....................... 31
5.02 Organization of Buyer.......................................... 31
5.03 Capitalization................................................. 31
5.04 Authority of Buyer............................................. 31
5.05 Litigation..................................................... 32
5.06 Finder's Fee................................................... 32
SECTION 6. COVENANTS OF BUYER.............................................. 32
6.01 Making of Covenants and Agreements............................. 32
6.02 Confidentiality................................................ 32
6.03 Consents....................................................... 33
6.04 Consummation of Agreement...................................... 33
SECTION 7. CONDITIONS...................................................... 33
7.01 Conditions to the Obligations of Buyer......................... 33
7.02 Conditions to Obligations of the Company and the Stockholders.. 36
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED..................... 37
8.01 Termination.................................................... 37
8.02 Effect of Termination.......................................... 38
8.03 Right to Proceed............................................... 38
SECTION 9. SURVIVAL........................................................ 38
9.01 Survival of Warranties......................................... 38
SECTION 10. INDEMNIFICATION................................................ 39
10.01 Indemnification by the Stockholders............................ 39
10.02 Limitations on Indemnification by the Stockholders............. 39
10.03 Indemnification by Buyer....................................... 40
10.04 Limitation on Indemnification by Buyer......................... 40
10.05 Notice; Defense of Claims...................................... 40
SECTION 11. MISCELLANEOUS.................................................. 41
11.01 Fees and Expenses.............................................. 41
11.02 Governing Law.................................................. 41
11.03 Notices........................................................ 41
11.04 Entire Agreement............................................... 42
11.05 Assignability; Binding Effect.................................. 42
11.06 Captions and Gender............................................ 43
11.07 Execution in Counterparts...................................... 43
11.08 Amendments..................................................... 43
Execution Copy
(iii)
Page
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11.09 Publicity and Disclosures...................................... 43
11.10 Dispute Resolution............................................. 43
11.11 Specific Performance........................................... 44
Execution Copy
(iv)
STOCK PURCHASE AGREEMENT
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AGREEMENT entered into as of March 31, 1998 by and among Mac-Gray Services,
Inc., a Delaware corporation ("Buyer"), Copico, Inc., a Massachusetts
corporation (the "Company"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the
"Principal Stockholders") and the other holders of shares of capital stock or
options, warrants or other securities exercisable for or convertible into
capital stock of the Company, each of whom is listed on Exhibit A attached
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hereto (together with the Principal Stockholders, the "Stockholders" and,
individually, each a "Stockholder").
W I T N E S S E T H
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WHEREAS, as of the date hereof, the Principal Stockholders and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ are the record and beneficial owners of all of the issued and
outstanding common stock, no par value per share (the "Common Stock"), of the
Company;
WHEREAS, immediately prior to the Closing (as hereinafter defined), the
Company shall issue to each of ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, 1% of the then outstanding Common Stock of the Company on a fully-
diluted basis;
WHEREAS, immediately prior to the Closing, the 250 shares of Class A
preferred stock, par value $.01 per share ("Class A Preferred Stock"), of the
Company held by the Massachusetts Capital Resource Company ("MCRC"), which
represents all of the issued and outstanding shares of the Company's Class A
Preferred Stock, shall be converted solely into 250 shares of the Company's
Common Stock;
WHEREAS, immediately prior to the Closing, the Company shall redeem,
through an increase in the Company's bank line of credit or through a direction
of portions of the Cash Payment (as described in Section 1.02), all of the
issued and outstanding shares of its Class B preferred stock, par value $.01 per
share ("Class B Preferred Stock"), from the holders thereof for the entire
outstanding principal balance plus accrued but unpaid dividends thereon through
the date of such redemption;
WHEREAS, at the Closing, the Stockholders shall be the record and
beneficial owners of all of the issued and outstanding capital stock of the
Company, which shall consist entirely of 1,289 shares of Common Stock (the
"Company Shares");
WHEREAS, Buyer is a wholly-owned subsidiary of ▇▇▇-▇▇▇▇ Corporation, a
Delaware corporation ("Parent"); and
WHEREAS, subject to the terms and conditions set forth herein, the
Stockholders desire to sell all of the Company Shares to Buyer, and Buyer
desires to acquire all of the Company Shares from the Stockholders.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. SALE OF SHARES AND PURCHASE PRICE.
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1.01 Transfer of Company Shares. At the Closing, each Stockholder shall
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deliver or cause to be delivered to Buyer certificates representing all of the
Company Shares owned by such Stockholder as set forth on Exhibit A, which
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collectively shall represent all of the issued and outstanding capital stock of
the Company. Such stock certificates shall be duly endorsed in blank for
transfer or shall be presented with stock powers duly executed in blank, with
such signature guarantees and such other documents as may be reasonably required
by Buyer to effect a valid transfer of such Company Shares by such Stockholder,
free and clear of any and all liens, encumbrances, charges or claims. Each
Stockholder by execution of this Agreement hereby appoints Buyer as his
attorney-in-fact to effectuate transfer of the Company Shares at the Closing.
1.02 Purchase Price. In consideration of the sale by the Stockholders to
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Buyer of the Company Shares and in reliance upon the representations and
warranties of the Company and the Stockholders contained herein and made at the
Closing and subject to satisfaction of all of the conditions contained herein,
Buyer agrees that at the Closing it will deliver to the Stockholders in the
proportions set forth on Exhibit A:
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(i) Two hundred fifty thousand (250,000) shares of common
stock, par value $.01 per share, of Parent (the "Parent Shares"); and
(ii) A cash payment (subject to adjustment as set forth in
Section 1.02A, and including the Deposit distributed by the Escrow Agent (each
as defined in Section 1.09 hereof) pursuant to Section 1.09 hereof) equal to:
(A) ten million nine hundred fifty thousand dollars
($10,950,000); less
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(B) the sum of (x) the aggregate principal indebtedness of
the Company (as hereinafter defined) outstanding on the Closing Date (as
hereinafter defined), including, without limitation, all such indebtedness to
State Street Bank and Trust Company and MCRC (which indebtedness shall include
the indebtedness (if any) to redeem all of the Class B Preferred Stock), plus
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(y) all accrued interest thereon and all fees, premiums, penalties and other
costs related to the transfer, assumption or prepayment of such indebtedness by
Buyer on the Closing Date (the "Closing Indebtedness")
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(the "Cash Payment," and together with the Parent Shares, the "Purchase Price");
provided that the amount described in clause (C) above shall not include up to
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two hundred thousand dollars ($200,000) of debt (inclusive of any accrued
interest thereon) which remains outstanding on the Closing Date if the proceeds
therefrom were used by the Company to directly fund the purchase price of
capital equipment for deals signed and installed by the Company between January
26, 1998 and the Closing Date (the "Approved Capital Expenditures").
1.02A Purchase Price Adjustment. The Company shall obtain a report as of
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the close of business on the business day immediately preceding the Closing from
each bank that the Company maintains a checking or deposit account setting forth
the amount of cash available in each such account ("Available Cash"). Subject to
compliance with Section 4 hereof, including specifically and without limitation
Section 4.02(i) hereof, in the event the Closing does not occur on a date on
which the Company makes payments on its loans from State Street Bank and Trust
Company and MCRC, the Company shall be permitted to pay the aggregate amount of
Available Cash in such bank accounts to reduce the amount of outstanding debt
(including interest thereon) immediately prior to the Closing. Alternatively,
the Buyer shall pay to the Stockholders the aggregate amount of any such
Available Cash by increasing the Cash Payment by the aggregate amount of such
Available Cash.
1.03 Calculation of Purchase Price. At the Closing, the Stockholders
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shall deliver to Buyer a certificate signed by each of the Stockholders which
sets forth the calculation of the Cash Payment (including any prepayment made,
or change in the Cash Payment requested, pursuant to Section 1.02A), including,
without limitation, the true and correct amounts of the Closing Indebtedness and
the Approved Capital Expenditures, which certificate shall constitute a
representation by each Stockholder to Buyer as to the truth and correctness of
the calculation and the amounts set forth therein.
1.04 Payment of Purchase Price. At the Closing and subject to the terms
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and conditions of this Agreement, Buyer shall deliver to each Stockholder (i) a
certificate representing the number of Parent Shares set forth opposite such
Stockholder's name in Exhibit A attached hereto and (ii) the cash amount
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representing such Stockholder's proportional share of the Cash Payment, set
forth opposite such Stockholder's name in Exhibit A attached hereto, by
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certified or cashier's check or wire transfer made payable to such Stockholder,
or other method acceptable to the Stockholders.
1.05 Closing. Subject to the terms and conditions of this Agreement, the
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closing of the purchase and sale provided for in this Agreement (the "Closing")
shall be held at the offices of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP at Exchange Place,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M. Eastern Standard Time
on the date that is five (5) business days after the conditions set forth in
Section 7 hereof are satisfied or, if applicable, waived or at such other place
or date or time as may be mutually agreed upon by the parties (the "Closing
Date").
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1.06 Stockholder Action.
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(a) By executing and delivering this Agreement, each Stockholder
hereby agrees that as to any action required or permitted to be taken by the
Stockholders hereunder, from the date hereof and through and including the
Closing Date, such action may be taken by Stockholders holding in the aggregate
51% or more of the Company Shares. Such actions shall include, without
limitation, the power:
(i) to waive any condition to the obligations of the Company
and the Stockholders to consummate the transactions contemplated by this
Agreement;
(ii) to execute and deliver all ancillary agreements,
certificates and documents, and to make representations and warranties therein,
on behalf of each Stockholder in connection with the consummation of the
transactions contemplated by this Agreement; and
(iii) to do or refrain from doing any further act or deed on
behalf of each Stockholder relating to the subject matter of this Agreement, as
fully and completely as each such Stockholder could do if personally present.
(b) Buyer shall be entitled to rely conclusively on the instructions
and decisions of Stockholders holding in the aggregate 51% or more of the
Company Shares as to any actions required or permitted to be taken by the
Stockholders hereunder, and no party hereunder shall have any cause of action
against Buyer for any action taken in good faith by Buyer in reliance upon the
instructions or decisions of such Stockholders.
1.07 Further Assurances. The Stockholders from time to time after the
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Closing at the request of Buyer and without further consideration shall execute
and deliver instruments of transfer and assignment and take such other action as
Buyer may reasonably require to more effectively transfer and assign to, and
vest in, Buyer the Company Shares and all rights thereto, and to fully implement
the provisions of this Agreement.
1.08 Transfer Taxes. All transfer taxes, fees and duties, if any, under
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applicable law incurred in connection with the sale and transfer of the Company
Shares under this Agreement will be borne and paid by the Stockholders, and the
Stockholders shall promptly reimburse the Company and Buyer for any such tax,
fee or duty which any of them is required to pay under applicable law.
1.09 Deposit. Concurrently with the execution of this Agreement, Buyer
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and the Company shall direct State Street Bank and Trust Company, as escrow
agent (the "Escrow Agent") to continue holding $400,000 (including any interest
or other income earned thereon, the "Deposit") pursuant to that certain Deposit
Escrow Agreement, which direction shall include further instructions as follows:
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(i) In the event this Agreement is terminated pursuant to Section
8.01(iii) or, as a result solely of Buyer's material failure to perform its
obligations hereunder, pursuant to Section 8.01(iv) hereof, such Deposit shall
be paid to the Company or its designee(s) as liquidated damages in full
compensation for and paid as an exclusive remedy for, any damages the Company or
the Stockholders may sustain thereby;
(ii) In the event this agreement is terminated pursuant to Section
8.01(i), Section 8.01(ii) or Section 8.01(iv) (other than as described in
Section 1.09(i) above), such Deposit shall be paid to Buyer or its designee; or
(iii) In the event this Agreement is not terminated, on the Closing
Date, the parties hereto shall direct the Escrow Agent to disburse the Deposit
in a manner so that it constitutes a portion of the Cash Payment.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
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PRINCIPAL STOCKHOLDERS.
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2.01 Making of Representations and Warranties. As a material inducement
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to Buyer to enter into this Agreement and consummate the transactions
contemplated hereby, the Company and each of the Principal Stockholders jointly
and severally hereby make to Buyer the representations and warranties contained
in this Section 2. No Stockholder shall have any right of indemnity or
contribution from the Company with respect to the breach of any representation
or warranty hereunder.
2.02 Organization and Qualifications of the Company. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of The Commonwealth of Massachusetts with full corporate power and authority to
own or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is currently
conducted or proposed to be conducted. The copies of the Company's Articles of
Organization, as amended to date, certified by the Secretary of State of The
Commonwealth of Massachusetts, and of the Company's by-laws, as amended to date,
certified by the Company's Clerk, and heretofore delivered to Buyer's counsel,
are complete and correct, and no amendments thereto are pending. The Company is
duly qualified to do business as a foreign corporation in each jurisdiction
where the nature of its properties or the conduct of its business makes its
qualification so necessary, except where the failure to be so qualified would
not have a material adverse effect on the business, assets, properties, results
of operations, financial condition or prospects (a "Material Adverse Effect") of
the Company.
2.03 Capital Stock of the Company; Beneficial Ownership. The authorized
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capital stock of the Company consists of (i) 200,000 shares of Common Stock,
(ii) 250 shares of Class A Preferred Stock, and (iii) 1,750 shares of Class B
Preferred Stock, of which 1,000, 250 and 1,200 shares, respectively, are duly
and validly issued, outstanding, fully paid and
5
nonassessable and of which 199,000, 0 and 550 shares, respectively, are
authorized but unissued. There are no outstanding options, warrants, rights,
commitments, preemptive rights or agreements of any kind for the issuance or
sale of, or outstanding securities convertible into, any additional shares of
capital stock of any class of the Company. All of the Company's equity and debt
securities have been offered, sold and issued in compliance with, or under an
exemption from registration under, applicable Federal and state securities laws.
Except as set forth in Schedule 2.03 attached hereto, there are no voting
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trusts, voting agreements, proxies or other agreements, instruments or
undertakings with respect to the voting of the Company Shares to which the
Company or any of the Stockholders is a party.
2.04 Subsidiaries; Investments. The Company neither has, nor has it ever
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had, any subsidiaries, interests in joint ventures or partnerships or holds
equity or debt securities in any other entity.
2.05 Authority. The Company has full right, authority and power to enter
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into this Agreement and each agreement, document and instrument to be executed
and delivered by the Company pursuant to this Agreement and to carry out the
transactions contemplated hereby and thereby. The execution, delivery and
performance by the Company of this Agreement and each such other agreement,
document and instrument have been duly authorized by all necessary action of the
Company and no other action on the part of the Company is required in connection
therewith.
This Agreement and each agreement, document and instrument constitute, or
when executed and delivered will constitute, valid and binding obligations of
the Company enforceable against the Company in accordance with their terms,
except as limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting enforcement of
creditors' rights and (ii) general principles of equity that restrict the
availability of equitable remedies. The execution, delivery and performance by
the Company of this Agreement and each such agreement, document and instrument:
(A) does not and will not violate any provision of the
Articles of Organization or by-laws or any similar organizational documents of
the Company;
(B) does not and will not violate any federal, state or
local laws applicable to the Company or require the Company to obtain any
approval, consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made; and
(C) does not and will not result in a breach of, constitute
a default under, accelerate any obligation under, or give rise to a right of
termination of any indenture or loan or credit agreement or any other agreement,
contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to which the
Company is a party or by which the property of the Company is bound or affected,
or result in the creation or imposition of any mortgage, pledge, lien,
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security interest or other charge or encumbrance on the Company's assets or on
the capital stock of the Company, except as specifically identified in Schedule
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2.05 attached hereto.
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2.06 Real and Personal Property.
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(a) Real Property. All of the real property owned or leased by the
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Company is identified in Schedule 2.06(a) attached hereto (herein referred to as
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the "Owned Real Property" or the "Leased Real Property," as the case may be, or
collectively as the "Real Property.")
(i) Title. Except as set forth in Schedule 2.06(a) attached
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hereto, the Company has good, clear, record and marketable title to (A) all
Owned Real Property and (B) enforceable leasehold interests in the Leased Real
Property, in each case free and clear of all easements, covenants, restrictions,
leases, mortgages, liens, assessments, claims, rights, judgments, encroachments
or other matters affecting title (collectively, "Encumbrances"), other than:
(x) easements, covenants, restrictions and similar
encumbrances that do not and could not materially interfere with the use of the
Owned Real Property as currently used and improved; and
(y) minor encroachments that do not and could not
materially adversely affect the value or use of the Owned Real Property as
currently used and improved and that could be removed without material cost.
((x) and (y) are collectively referred to as "Permitted Encumbrances"), except
as set forth in Schedule 2.06(a) attached hereto. The Company has good, clear,
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record and marketable title to enforceable leasehold interests in the Leased
Real Property, in each case free and clear of all Encumbrances other than
Permitted Encumbrances, subject only to the right of reversion of the lessor,
except as set forth in Schedule 2.06(a).
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(ii) Status of Leases. All leases of Leased Real Property or
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of Owned Real Property are identified in Schedule 2.06(a) attached hereto, and
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true and complete copies thereof have been delivered to Buyer. Each of said
leases has been duly authorized and executed by the parties thereto and is in
full force and effect. To the knowledge of the Company and the Principal
Stockholder, the Company is not in default under any of said lease nor has it
received any written notice thereof, nor has any event occurred which, with
notice or the passage of time, or both, would give rise to such a default. To
the knowledge of the Company and the Principal Stockholders, none of the other
parties to said leases is in default thereunder and there is no event which,
with notice or the passage of time, or both, would give rise to such a default.
After giving effect to the transactions contemplated by this Agreement, each of
said leases will be fully enforceable by the Company against the other party
thereto.
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(iii) Consents. Except as set forth in Schedule 2.06(a)
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attached hereto, no approval is required with respect to the transactions
contemplated by this Agreement from the other parties to any lease of the Leased
Real Property, from the holder of any Encumbrance on any Owned Real Property, or
from any regulatory authority, no filing with any regulatory authority is
required in connection therewith, and to the extent that any such consents,
approvals or filings are required, the Company or the Principal Stockholders
will obtain or complete them before the Closing.
(iv) Condition of Real Property. There are no material defects
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in the physical condition of any land, buildings or improvements constituting
part of the Real Property, including, without limitation, structural elements,
mechanical systems, parking and loading areas, and all such buildings and
improvements are in good operating condition and repair and have been well
maintained.
(v) Compliance with the Law. The Company has not received any
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notice from any governmental authority of any violation of any law, ordinance,
regulation, license, permit or authorization issued with respect to any Real
Property that has not been heretofore corrected, and no such violation exists
which should have a material adverse effect on the operation or value of any
Real Property. All improvements located on or constituting part of the Real
Property and their use and operation by the Company were and are now in
compliance in all material respects with all applicable laws, ordinances,
regulations, licenses, permits and authorizations, except as set forth in
Schedule 2.06(a) attached hereto. No approval or consent to the transactions
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contemplated by this Agreement is required of any governmental authority with
jurisdiction over any aspect of the Real Property or its use or operations,
except where the failure to obtain such approval or consent would not have a
material adverse effect on the operation or value of the Real Property. The
Company has not received any notice of any real estate tax deficiency or
assessment which has not been satisfied nor is it aware of any proposed material
deficiency, claim or assessment with respect to any of the Real Property, or any
pending or threatened condemnation thereof.
(b) Personal Property. A complete description of the machinery and
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equipment of the Company is contained in Schedule 2.06(b) attached hereto.
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Except as specifically disclosed in said Schedule or the Base Balance Sheet (as
hereinafter defined), the Company has good and marketable title to all of its
personal property. None of such personal property or assets is subject to any
mortgage, pledge, lien, conditional sale agreement, security interest,
encumbrance or other charge, except as specifically disclosed in said Schedule
or in the Base Balance Sheet. The Base Balance Sheet reflects all personal
property of the Company. Except as otherwise specified in Schedule 2.06(b)
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attached hereto, all leasehold improvements, furnishings, machinery and
equipment of the Company are in good repair, have been well maintained and
substantially comply with all applicable laws, ordinances and regulations, and
such machinery and equipment is in good operating condition, ordinary wear and
tear expected; and neither the Company nor any of the Principal Stockholders of
any pending or threatened change of any such law, ordinance or regulation which
could materially adversely affect the Company or its businesses.
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2.07 Vending Service Agreements. Schedule 2.07 attached hereto lists all
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of the contracts, understandings and arrangements, whether written or oral,
including any tenancy at will, under which the Company is bound, or to which the
Company is a party, which relate to the placement of photocopier machines (the
"Vending Service Agreements"). Schedule 2.07 attached hereto contains a true,
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correct and complete list of all Vending Service Agreement locations, Vending
Service Agreement expirations, the number of photocopiers at each Vending
Service Agreement location, vend prices, net revenues after commission for each
Vending Service Agreement location and whether the terms of such Vending Service
Agreement require the consent or approval of or prior notice to any third party
as a result of the consummation of the transactions contemplated by this
Agreement. True and correct copies of all the Vending Service Agreements have
been delivered or made available to Buyer prior to the date hereof. Each of the
Vending Service Agreements is valid, in full force and effect and binding upon
the Company and the other parties thereto in accordance with its respective
terms. Neither the Company, nor, to the knowledge of the Company and the
Principal Stockholders, any other party is in default under or in arrears in the
performance, payment or satisfaction of any agreement or condition on its part
to be performed or satisfied under any Vending Service Agreement, nor, to the
knowledge of the Company and the Principal Stockholders, does any condition
exist that with notice or lapse of time or both would constitute such a default,
and no waiver or indulgence has been granted by any lessee under any Vending
Service Agreement. The Company has not received notice of, nor does the Company
or any Principal Stockholder have knowledge of any fact which would result in,
the termination, repudiation or breach of any Vending Service Agreement. After
giving effect to the transactions contemplated by this Agreement, each of the
Vending Service Agreements will be valid and effective in accordance with its
terms, and fully enforceable by the Company against the other party thereto.
2.08 Equipment. The photocopier machines that are the subject of the
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Vending Service Agreements listed in Schedule 2.07 constitute all of the
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photocopier machines which are owned and/or operated by the Company, except for
photocopier machines held in inventory as set forth in Schedule 2.08 attached
-------------
hereto. Schedule 2.08 attached hereto includes a true, correct and complete
-------------
list of: (i) all of the photocopier machines and change machines installed at
the Vending Service Agreement locations listed in Schedule 2.07 and (ii) all of
-------------
the inventory of new photocopier machines of the Company (collectively, the
"Equipment"). All of the Equipment is in good operating condition, ordinary
wear and tear excepted.
2.09 Title. Except as set forth in Schedule 2.09 attached hereto, the
----- -------------
Company has good and valid title to, or a valid leasehold interest in, all of
their Equipment, Vending Service Agreements and the other properties and assets
which are used in their business or otherwise material to their financial
condition, free and clear of any mortgage, pledge, lien, conditional sale
agreement, security interest, encumbrance or other charge.
9
2.10 Financial Statements.
--------------------
(a) The Company has delivered to Buyer the following financial
statements, copies of which are attached hereto as Schedule 2.10:
-------------
(b) Balance sheets of the Company as of January 31, 1996, 1997 and
1998 (the January 31, 1998 balance sheet being referred to herein as the "Base
Balance Sheet") and statements of income and retained earnings and statements of
cash flows for the three (3) years then ended, of which the consolidated
statements have been, or, in the case of the January 31, 1998 financial
statement, are being audited by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C., independent public
accountant.
(c) A balance sheet of the Company as of February 28, 1998 and
statements of income and retained earnings and statements of cash flows for the
one-month period then ended, certified by the Company's Treasurer or Chief
Financial Officer.
Said financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied consistently during the periods
covered thereby, are complete and correct in all material respects and present
fairly in all material respects the financial condition of the Company at the
dates of said statements and the results of operations for the periods covered
thereby.
(d) As of the date of the Base Balance Sheet, the Company does not
have, nor will it have, any liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, liabilities for taxes due or then accrued or
to become due, or contingent or potential liabilities relating to activities of
the Company or the conduct of its business prior to the date of the Base Balance
Sheet, regardless of whether claims in respect thereof had been asserted as of
such date), except liabilities stated or adequately reserved against on the Base
Balance Sheet or reflected in Schedules furnished to Buyer hereunder as of the
date hereof, or immaterial liabilities incurred in the ordinary course of
business of the Company in existence as of the date of such Base Balance Sheet
which are not required to be reflected in such Base Balance Sheet or the notes
thereto under GAAP.
(e) As of the date hereof and as of the Closing, the Company has not
had, nor will it have, any liabilities of any nature, whether accrued, absolute,
contingent or otherwise, asserted or unasserted, known or unknown (including,
without limitation, liabilities as guarantor or otherwise with respect to
obligations of others, liabilities for taxes due or then accrued or to become
due, or contingent or potential liabilities relating to activities of the
Company or the conduct of its business prior to the date hereof or the Closing,
regardless of whether claims in respect thereof had been asserted as of such
date), except liabilities (i) stated or adequately reserved against on the Base
Balance Sheet or the notes thereto, (ii) reflected in Schedules furnished to
Buyer hereunder on the date hereof, or (iii) incurred after the date of
10
the Base Balance Sheet in the ordinary course of business of the Company except
as prohibited by this Agreement.
2.11 Taxes.
-----
(a) The Company has paid or caused to be paid all federal, state,
local, foreign and other taxes, including, without limitation, income taxes,
estimated taxes, capital gains taxes, alternative minimum taxes, excise taxes,
sales taxes, goods and services taxes, use taxes, value-added taxes, gross
receipts taxes, franchise taxes, capital stock taxes, employment and payroll-
related taxes, withholding taxes, stamp taxes, transfer taxes, windfall profit
taxes, environmental taxes and property taxes, whether or not measured in whole
or in part by net income, and all deficiencies, or other additions to tax,
interest, fines and penalties owed by it (collectively, "Taxes"), required to be
paid by it through the date hereof whether disputed or not. All Taxes and other
assessments and levies which the Company is required to withhold or collect have
been withheld and collected and have been paid over to the proper governmental
authorities within the time required by applicable law.
(b) The Company has in accordance with applicable law filed all
federal, state, local and foreign tax returns and all other materials required
to be filed by it through the date hereof and will continue to do so in respect
of any fiscal period ending on or prior to the Closing Date, and all such
returns correctly and accurately set forth the amount of any Taxes relating to
the applicable period. A list of federal, state, local and foreign income tax
returns filed with respect to the Company for taxable periods on or after
January 31, 1993 is set forth in Schedule 2.11 attached hereto, and said
-------------
Schedule indicates those returns that have been audited or currently are subject
of an audit. For each taxable period of the Company ended on or after January
31, 1993, the Company has delivered to Buyer correct and complete copies of all
federal, state, local and foreign tax returns, examination reports and
statements of deficiencies assessed against or agreed to by the Company.
(c) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting or, to the knowledge of the Company and
the Principal Stockholders, threatening to assert against the Company, any
deficiency or claim for additional Taxes. No claim has ever been made by an
authority in a jurisdiction where the Company does not file reports and returns
that the Company is or may be subject to taxation by that jurisdiction. There
are no security interests on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Taxes. The Company
has never entered into a closing agreement pursuant to Section 7121 of the
Internal Revenue Code of 1986, as amended (the "Code").
(d) Except as set forth in Schedule 2.11 attached hereto, there has
-------------
not been any audit of any tax return filed by the Company, no such audit is in
progress, and the Company has not been notified by any tax authority that any
such audit is contemplated or pending. Except as set forth in Schedule 2.11, no
-------------
extension of time with respect to any date on which a tax return was or is to be
filed by the Company is in force, and no waiver or
11
agreement by the Company is in force for the extension of time for the
assessment or payment of any Taxes.
(e) The Company has never been (or has ever had any liability for
unpaid Taxes because it once was) a member of an "affiliated group" (as defined
in Section 1504(a) of the Code). Except as set forth in Schedule 2.11 attached
-------------
hereto, the Company has never filed, and has never been required to file, a
consolidated, combined or unitary tax return with any other entity. Except as
set forth in Schedule 2.11, the Company does not own, nor has it ever owned, a
-------------
direct or indirect interest in any trust, partnership, corporation or other
entity. Except as set forth in Schedule 2.11 attached hereto, the Company is not
-------------
a party to any tax sharing agreement. The Company is not, nor could it be
liable for any Taxes of any other person or entity.
(f) For purposes of this Agreement, all references to sections of
the Code shall include any predecessor provisions to such Sections and any
similar provisions of federal, state, local or foreign law.
2.12 Collectibility of Accounts Receivable. All of the accounts
-------------------------------------
receivable of the Company shown or reflected on the Base Balance Sheet or
existing at the date hereof (less the reserve for bad debts set forth on the
Base Balance Sheet) are or will be at the Closing valid and enforceable claims,
fully collectible and subject to no setoff or counterclaim. The Company does not
have any accounts or loans receivable from any person, firm or corporation which
is affiliated with the Company or from any director, officer or employee of the
Company, except as disclosed in Schedule 2.12 attached hereto, and all accounts
-------------
and loans receivable from any such person, firm or corporation shall be paid in
cash prior to the Closing.
2.13 Inventories. Except as disclosed in Schedule 2.13, all items in the
----------- -------------
inventories of the Company shown on the Base Balance Sheet or existing at the
date hereof are of a quality and quantity useable, saleable or leasable in the
ordinary course of business of the Company. Except as disclosed in Schedule
--------
2.13, said inventories reflect write-downs to realizable values in the case of
----
items which are below standard quality or have become obsolete or unsaleable or
unleasable (except at prices less than cost) in the ordinary course of the
business of the Company. No such write-downs since February 1, 1998 have had a
material adverse effect on the financial condition or results of operations of
the Company. The values of the inventories stated in the Base Balance Sheet and
any subsequent financial statements of the Company reflect the normal inventory
valuation policies of the Company and were determined at the lower of cost or
market in accordance with generally accepted accounting principles, practices
and methods consistently applied. Purchase commitments for parts are not in
excess of normal requirements and none are at prices materially in excess of
current market prices. Except as disclosed in Schedule 2.13, all inventory
-------------
items are located on the Owned Real Property or the Leased Real Property. Since
the date of the Base Balance Sheet, no inventory items have been used, sold,
leased or disposed of except through installations in the ordinary course of
business at locations covered by a Vending Services Agreement, or through sales
or leases in the ordinary course of business, and all such installations, sales
and leasing commitments for the
12
producers of the Company are at prices not less than inventory values plus
installation, selling or leasing expenses.
2.14 Absence of Certain Changes. Except as disclosed in Schedule 2.14
-------------------------- -------------
attached hereto, since the date of the Base Balance Sheet there has not been:
(a) Any change in the financial condition, properties, assets,
liabilities, business or operations of the Company, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has had a Material Adverse Effect on the Company;
(b) Any contingent liability incurred by the Company as guarantor or
otherwise with respect to the obligations of others or any cancellation of any
material debt or claim owing to, or waiver of any material right of, the
Company;
(c) Any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date;
(d) Any material obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including, without limitation, liabilities for Taxes due or to become
due or contingent or potential liabilities relating to products or services
provided by the Company or the conduct of the business of the Company since the
date of the Base Balance Sheet regardless of whether claims in respect thereof
have been asserted), incurred by the Company other than obligations and
liabilities incurred in the ordinary course of business consistent with the
terms of this Agreement (it being understood that product or service liability
claims shall not be deemed to be incurred in the ordinary course of business);
(e) Any purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company other than in the ordinary course of
business;
(f) Any damage, destruction or loss, whether or not covered by
insurance, which has had a Material Adverse Effect on the Company;
(g) Any declaration, setting aside or payment of any dividend by the
Company, or the making of any other distribution in respect of the capital
stock, or other ownership interests, of the Company, or any direct or indirect
redemption, purchase or other acquisition by the Company of its own capital
stock, or other ownership interests;
(h) Any labor trouble or claim of unfair labor practices involving
the Company, any change in the compensation payable or to become payable by the
Company to any of its officers, employees, agents or independent contractors
other than normal merit
13
increases in accordance with its usual practices, or any bonus payment or
arrangement made to or with any of such officers, employees, agents or
independent contractors;
(i) Any change with respect to the officers or management of the
Company;
(j) Any payment or discharge of a material lien or liability of the
Company which was not shown on the Base Balance Sheet or incurred in the
ordinary course of business thereafter;
(k) Any obligation or liability incurred by the Company to any of
its officers, directors, stockholders or employees, or any loans or advances
made by the Company to any of its officers, directors, stockholders or
employees, except normal compensation and expense allowances payable to officers
or employees;
(l) Any change in accounting methods or practices, credit practices
or collection policies used by the Company;
(m) Any other transaction entered into by the Company other than
transactions in the ordinary course of business;
(n) Any waiver of any valuable right of, or cancellation of any debt
or claim held by, the Company; or
(o) Any agreement or understanding whether in writing or otherwise,
for the Company to take any of the actions specified in paragraphs (a) through
(n) above.
2.15 Ordinary Course. Since the date of the Base Balance Sheet, the
---------------
Company has conducted its business only in the ordinary course and consistently
with its prior practices.
2.16 Banking Relations. All of the arrangements which the Company has
-----------------
with any banking institution are completely and accurately described in Schedule
--------
2.16 attached hereto, indicating with respect to each of such arrangements the
----
type of arrangements maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.17 Intellectual Property.
---------------------
(a) Except as described in Schedule 2.17 attached hereto, the
-------------
Company has exclusive ownership of, or exclusive license to use, all patent,
copyright, trade secret, trademark, or other proprietary rights (collectively,
"Intellectual Property") used or to be used in the business of the Company as
presently conducted or contemplated. All of the rights of the Company in such
Intellectual Property are freely transferable. There are no claims or demands of
any other person pertaining to any of such Intellectual Property and no
proceedings have been instituted, or are pending or threatened, which challenge
the rights of the Company
14
in respect thereof. Except as described in Schedule 2.17, the Company has the
-------------
right to use, free and clear of claims or rights of other persons, all customer
lists, designs, manufacturing or other processes, computer software, systems,
data compilations, research results and other information required for or
incident to its products or its business as presently conducted or contemplated.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Company are listed in Schedule 2.17 attached hereto. All of
-------------
such patents, patent applications, trademark registrations, trademark
applications and registered copyrights have been duly registered in, filed in or
issued by the United States Patent and Trademark Office or such other applicable
governmental office or authority under the jurisdiction of which the Company
conduct business, as the case may be, and have been properly maintained and
renewed in accordance with all applicable provisions of applicable law and
administrative regulations.
(c) All licenses or other agreements under which the Company is
granted rights in Intellectual Property are listed in Schedule 2.17 attached
-------------
hereto. All said licenses or other agreements are in full force and effect,
there is no material default by any party thereto, and, except as set forth in
Schedule 2.17 attached hereto, all of the rights of the Company thereunder will
-------------
continue in full force and effect upon consummation of the transactions
contemplated hereby. To the knowledge of the Company and the Principal
Stockholders, the licensors under said licenses and other agreements have and
had all requisite power and authority to grant the rights purported to be
conferred thereby. True and complete copies of all such licenses or other
agreements, and any amendments thereto, have been provided to Buyer.
(d) All licenses or other agreements under which the Company has
granted rights to others in Intellectual Property owned or licensed by the
Company are listed in Schedule 2.17 attached hereto. All of said licenses or
-------------
other agreements are in full force and effect and, to the knowledge of the
Company and the Principal Stockholders, there is no material default by any
party thereto, and, except as set forth in Schedule 2.17 attached hereto, all of
-------------
the rights of the Company thereunder will continue in full force and effect upon
consummation of the transactions contemplated hereby. True and complete copies
of all such licenses or other agreements, and any amendments thereto, have been
provided to Buyer.
(e) The Company has taken all steps required in accordance with
sound business practice to establish and preserve its ownership of all material
Intellectual Property rights with respect to its products, services and
technology. The Company has required all professional and technical employees
and other employees having access to valuable non-public information of the
Company, to execute agreements under which such employees are required to convey
to the Company ownership of all inventions and developments conceived or created
by them in the course of their employment and to maintain the confidentiality of
all such information of the Company. The Company has not made any such
information available to any person other than employees of the Company, except
pursuant to written agreements requiring the recipients to maintain the
confidentiality of such information and appropriately
15
restricting the use thereof. Neither the Company nor any Principal Stockholder
has any knowledge of any infringement by others of any material Intellectual
Property rights of the Company.
(f) To the knowledge of the Company and its Principal Stockholders,
the present and contemplated business, activities, products and services of the
Company do not infringe any Intellectual Property of any other person. No
proceeding charging the Company with infringement of any adversely held
Intellectual Property has been filed or is threatened to be filed. To the
knowledge of the Company, there exists no unexpired patent or patent application
which includes claims that would be infringed by or otherwise adversely affect
the products, activities or business of the Company. To the knowldge of the
Company and the Principal Stockholders, the Company is not making unauthorized
use of any confidential information or trade secrets of any person, including,
without limitation, to the knowledge of the Company, any former employer of any
past or present employee of the Company. Except as set forth in Schedule 2.17,
-------------
neither the Company nor, to the knowledge of the Company and the Principal
Stockholders, any of its employees have any agreements or arrangements with any
persons other than the Company related to confidential information or trade
secrets of such persons or restricting any such employee's ability to engage in
business activities of any nature. The activities of their employees on behalf
of the Company do not violate any such agreements or arrangements known to the
Company.
2.18 Contracts. Except for contracts, commitments, plans, agreements and
---------
licenses described in Schedule 2.18 attached hereto (true and complete copies of
-------------
which have been delivered to Buyer) and excluding Vending Service Agreements,
the Company is not a party to, nor is it subject to:
(a) Any plan or contract providing for bonuses, pensions, options,
stock purchases, deferred compensation, retirement payments, profit sharing,
collective bargaining or the like, or any contract or agreement with any labor
union;
(b) Any employment contract, consulting contract or contract for
services which is not terminable within thirty (30) days by the Company without
liability for any penalty or severance payment;
(c) Any contract or agreement for the purchase of any commodity,
material or equipment except purchase orders in the ordinary course for less
than $10,000 each, such orders not exceeding $50,000 in the aggregate;
(d) Any other contracts or agreements creating any obligations of
the Company of $10,000 or more with respect to any such contract or agreement
not specifically disclosed elsewhere under this Agreement;
(e) Any contract or agreement providing for the purchase of all or
substantially all of its requirements of a particular product from a supplier;
16
(f) Any contract or agreement which by its terms does not terminate
or is not terminable without penalty by the Company or its successors within one
(1) year after the date hereof;
(g) Any contract or agreement for the sale or lease of its products
not made in the ordinary course of business;
(h) Any contract with any sales agent or distributor of products of
the Company;
(i) Any contract containing covenants limiting the freedom of the
Company to compete in any line of business or with any person or entity;
(j) Any contract or agreement for the purchase of any fixed asset
for a price in excess of $10,000, whether or not such purchase is in the
ordinary course of business;
(k) Any license agreement (as licensor or licensee);
(l) Any indenture, mortgage, promissory note, loan agreement,
guaranty or other agreement or commitment for the borrowing of money;
(m) Any contract or agreement with any officer, employee, director
or stockholder of the Company or with any persons or organizations controlled by
or affiliated with any of them; or
(n) Any contract, agreement or understanding whether in writing or
otherwise for the Company to take any of the actions specified in paragraphs (a)
through (m) above.
To the Company's knowledge, the Company is not in default (beyond all
applicable grace periods) under any such contracts, commitments, plans,
agreements or licenses described in said Schedule or has any knowledge of
conditions or facts which, with notice or the passage of time, or both, would
constitute a default (beyond all applicable grace periods).
2.19 Litigation. Schedule 2.19 attached hereto lists all currently
---------- -------------
pending litigation and governmental or administrative proceedings or
investigations to which the Company is a party. Except for matters described in
Schedule 2.19 attached hereto, there is no litigation or governmental or
-------------
administrative proceeding or investigation pending or, to the knowledge of the
Company and the Principal Stockholders, threatened against the Company or its
affiliates (including, without limitation, directors and officers) which may
have, either individually or in the aggregate, a Material Adverse Effect on the
Company, or which would prevent or hinder the consummation of the transactions
contemplated by this Agreement. With respect to each matter set forth therein,
Schedule 2.19 attached hereto sets forth a description of the matter,
-------------
17
the forum (if any) in which it is being conducted, the parties thereto and the
type and amount of relief sought.
2.20 Compliance with Laws. Except as set forth in Schedule 2.20 attached
-------------------- -------------
hereto and to the Company's and the Principal Stockholder's knowledge, the
Company is in compliance in all material respects with all applicable statutes,
ordinances, orders, judgments, decrees, rules and regulations promulgated by any
federal, state, municipal or foreign entity, agency, court or other governmental
authority applicable to it or to the conduct of its business, and the Company
has not received notice of a violation or alleged violation of any such statute,
ordinance, order, rule or regulation, except where the failure to be in such
compliance would not have, either individually or in the aggregate, a Material
Adverse Effect on the Company, and the Company has not received notice of a
material violation or alleged material violation of any such statute, ordinance,
order, rule or regulation.
2.21 Insurance. The physical properties, assets, business, operations,
---------
employees, officers and directors of the Company are insured to the extent
disclosed in Schedule 2.21 attached hereto, and all such insurance policies and
-------------
arrangements are disclosed in said Schedule. There is no claim by the Company
pending under any such policies as to which coverage has been questioned, denied
or disputed by the insurer. Said insurance policies and arrangements are in
full force and effect, all premiums due with respect thereto are currently paid,
and the Company is in compliance in all material respects with the terms
thereof. Said insurance is adequate and customary for the business engaged in
by the Company and is sufficient for compliance by the Company with all
requirements of law and all agreements and leases to which the Company is a
party.
2.22 Warranty or Other Claims. There are no existing or threatened
------------------------
product liability, warranty or other similar claims, or any facts upon which a
material claim of such nature could be based, against the Company for products
or services which are defective or fail to meet any product or service
warranties except as disclosed in Schedule 2.22 hereto. No claim has been
-------------
asserted against the Company for renegotiation or price redetermination of any
business transaction, and there are no facts upon which any such claim could be
based.
2.23 Powers of Attorney. Neither the Company nor any Stockholder has any
------------------
outstanding power of attorney.
2.24 Finder's Fee. The Company has not incurred or become liable for any
------------
broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
2.25 Permits; Burdensome Agreements. Schedule 2.25 lists all material
------------------------------ -------------
permits, registrations, licenses, franchises, certifications and other approvals
(collectively, the "Approvals") required from federal, state or local
authorities in order for the Company to conduct its business. The Company has
obtained all such Approvals, which are valid and in full force and effect, and
is operating in material compliance therewith. Except as disclosed in
18
Schedule 2.25 or in any other Schedule hereto, the Company is not subject to or
-------------
bound by any agreement, judgment, decree or order which may have, either
individually or in the aggregate, a Material Adverse Effect on the Company.
Schedule 2.25 lists all registrations, certifications and similar approvals
-------------
necessary or customary in the Company's business for use in the licensing,
marketing, maintenance, leasing, sales and distribution of the Company's
products and services.
2.26 Corporate Records; Copies of Documents. The corporate record and
--------------------------------------
minute books of the Company accurately record all corporate action taken by
their respective stockholders and board of directors and committees. The copies
of the corporate records of the Company, as made available to Buyer for review,
are true and complete copies of the originals of such documents. The Company
has made available for inspection and copying by Buyer and its counsel true and
correct copies of all documents referred to in this Section or in the Schedules
delivered to Buyer pursuant to this Agreement.
2.27 Transactions with Interested Persons. Except as set forth in
------------------------------------
Schedule 2.27 attached hereto, neither the Company any Stockholder, officer,
-------------
supervisory employee or director of the Company nor, to the knowledge of the
Company and the Principal Stockholders, any of their respective spouses or
family members, owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director or in another similar
capacity of, any competitor or supplier of the Company or any organization which
has a material contract or arrangement with the Company. Except as set forth in
Schedule 2.27 attached hereto, there are no loans, leases or other continuing
-------------
transactions between the Company and any present, or former, stockholder,
director, officer or employee or, to the knowledge of the Company and the
Principal Stockholders, any member of such stockholder's, director's, officer's
or employee's immediate family, or any business organization controlled by any
such stockholder, director, officer, employee or his or her immediate family.
2.28 Employee Benefit Programs. Schedule 2.28 lists every Employee
------------------------- -------------
Program (as defined below) that has been maintained (as defined below) by the
Company at any time during the three-year period ending on the Closing Date.
(a) Each Employee Program which has ever been maintained by the
Company and which has at any time been intended to qualify under Section 401(a)
or 501(c)(9) of the Code has received a favorable determination or approval
letter from the IRS regarding its qualification under such Section and has, in
fact, been qualified under the applicable section of the Code from the effective
date of such Employee Program through and including the Closing (or, if earlier,
the date that all of such Employee Program's assets were distributed). No event
or omission has occurred which would cause any such Employee Program to lose its
qualification under the applicable Code section.
(b) The Company and the Principal Stockholders do not know and have
no reason to know, of any failure of any party to comply with any laws
applicable to the
19
Employee Programs that have been maintained by the Company. With respect to any
Employee Program ever maintained by the Company, there has occurred no
"prohibited transaction," as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Code,
or breach of any duty under ERISA or other applicable law (including, without
limitation, any health care continuation requirements or any other tax law
requirements, or conditions to favorable tax treatment, applicable to such
plan), which could result, directly or indirectly, in any taxes, penalties or
other liability to the Company or Buyer. No litigation, arbitration,
governmental administrative proceeding (or investigation) or other proceeding
(other than those relating to routine claims for benefits) is pending or
threatened with respect to any such Employee Program. No Employee Program has
any material unfunded or underfunded obligation to provide benefits to any past,
current or future participant therein.
(c) Neither the Company nor any Affiliate (as defined below) (i) has
ever maintained any Employee Program which has been subject to Title IV of ERISA
(including, but not limited to, any Multiemployer Plan (as defined below)) or
(ii) has ever provided health care or any other non-pension benefits to any
employees after their employment is terminated (other than as required by Part 6
of Subtitle B of Title I of ERISA) or has ever promised to provide such post-
termination benefits.
(d) With respect to each Employee Program maintained by the Company
within the three (3) years preceding the Closing, complete and correct copies of
the following documents (if applicable to such Employee Program) have previously
been delivered to Buyer: (i) all documents embodying or governing such Employee
Program, and any funding medium for the Employee Program (including, without
limitation, trust agreements), as they may have been amended; (ii) the most
recent IRS determination or approval letter with respect to such Employee
Program under Code Section 401 or 501(c)(9), and any applications for
determination or approval subsequently filed with the IRS; (iii) the three (3)
most recently filed IRS Forms 5500, with all applicable schedules and
accountants' opinions attached thereto; (iv) the summary plan description for
such Employee Program (or other descriptions of such Employee Program provided
to employees) and all modifications thereto; (v) any insurance policy (including
any fiduciary liability insurance policy) related to such Employee Program; (vi)
any documents evidencing any loan to an Employee Program that is a leveraged
employee stock ownership plan; and (vii) all other materials reasonably
necessary for Buyer to perform any of its responsibilities with respect to any
Employee Program subsequent to the Closing (including, without limitation,
health care continuation requirements).
(e) For purposes of this Section:
(i) "Employee Program" means (A) all employee benefit plans
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) all stock option plans, bonus or
20
incentive award plans, severance pay policies or agreements, deferred
compensation agreements, supplemental income arrangements, vacation plans, and
all other employee benefit plans, agreements and arrangements not described in
(A) above. In the case of an Employee Program funded through an organization
described in Code Section 501(c)(9), each reference to such Employee Program
shall include a reference to such organization.
(ii) An entity "maintains" an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity, or their spouses, dependents or beneficiaries.
(iii) An entity is an "Affiliate" of the Company if it would
have ever been considered a single employer with the Company under ERISA Section
4001(b) or part of the same "controlled group" as the Company for purposes of
ERISA Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or non-pension)
employee benefit plan to which more than one employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
2.29 Environmental Matters.
---------------------
(a) Except as set forth in Schedule 2.29 attached hereto, to the
-------------
knowledge of the Company and the Principal Stockholders, (i) the Company has
never generated, transported, used, stored, treated, disposed of or managed any
Hazardous Waste (as defined below); (ii) no Hazardous Material (as defined
below) has ever been or is threatened to be spilled, released or disposed of at
any site presently or formerly owned, operated, leased or used by the Company,
or has ever been located in the soil or groundwater at any such site; (iii) no
Hazardous Material not properly containerized under applicable law has ever been
transported from any site presently or formerly owned, operated, leased or used
by the Company for treatment, storage or disposal at any other place; (iv) the
Company does not presently own, operate, lease or use, nor has it previously
owned, operated, leased or used, any site on which underground storage tanks are
or were located; and (v) no lien has ever been imposed by any governmental
agency on any property, facility, machinery or equipment owned, operated, leased
or used by the Company in connection with the presence of any Hazardous
Material.
(b) Except as set forth in Schedule 2.29 attached hereto, to the
-------------
knowledge of the Company and the Principal Stockholders, (i) the Company does
not have any material liability under, nor has it ever violated, any
Environmental Law (as defined below); (ii) the Company, any property owned,
operated, leased or used by it, and any facilities and operations thereon, are
presently in compliance with all applicable Environmental Laws; (iii) the
Company has never entered into, nor has it ever been subject to any judgment,
consent
21
decree, compliance order or administrative order with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry or formal or informal
complaint or claim with respect to any environmental or health and safety matter
or the enforcement of any Environmental Law; and (iv) the Company does not have
any reason to believe that any of the items enumerated in clause (iii) of this
Subsection will be forthcoming.
(c) Except as set forth in Schedule 2.29 attached hereto, no site
-------------
owned, operated, leased or used by the Company contains any asbestos or
asbestos-containing material, any polychlorinated biphenyls (PCBs) or equipment
containing PCBs, or any urea formaldehyde foam insulation.
(d) The Company has provided to Buyer copies of all documents,
records, and information available to the Company concerning any environmental
or health and safety matter relevant to the Company, whether generated by the
Company or others, including, without limitation, environmental audits,
environmental risk assessments, site assessments, documentation regarding off-
site disposal of Hazardous Materials, spill control plans and reports,
correspondence, permits, licenses, approvals, consents and other authorizations
related to environmental or health and safety matters issued by any governmental
agency.
(e) For purposes of this Section 2.29, (i) "Hazardous Material"
shall mean and include any hazardous waste, hazardous material, hazardous
substance, petroleum product, oil, toxic substance, pollutant, contaminant or
other substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance or by-law at the
foreign, federal, state or local level, whether existing as of the date hereof,
previously enforced or subsequently enacted; and (iv) "Company" shall mean and
include the Company and all other entities for whose conduct the Company is or
may be held responsible under any Environmental Law.
2.30 List of Directors and Officers. Schedule 2.30 attached hereto
------------------------------ -------------
contains a true and complete list of all current directors and officers of the
Company. In addition, Schedule 2.30 attached hereto contains a list of all
-------------
managers, employees and consultants of the Company who, individually, have
received or are scheduled to receive compensation from the Company for the
fiscal year ending January 31, 1998, in excess of $50,000. In each case, such
Schedule includes the current job title and aggregate annual compensation of
each such individual.
2.31 Employees; Labor Matters. The Company employ a total of
------------------------
approximately 71 full-time employees and 45 part-time employees. The Company do
not employ a total of 100 or more employees (excluding employees who work less
than 20 hours per week or who have worked for the Company less than six (6) of
the last twelve (12) months) and will not have employed 100 or more employees at
any point during the 90 days prior to and including the
22
Closing Date. The Company is not delinquent in payments to any of its employees
for any wages, salaries, commissions, bonuses or other direct compensation for
any services performed for it to the date hereof or amounts required to be
reimbursed to such employees. Upon termination of the employment of any of said
employees, neither the Company nor Buyer will by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing be
liable to any of said employees for so-called "severance pay" or any other
payments, except as set forth in Schedule 2.31. The Company does not have any
-------------
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment, except
as set forth in said Schedule. To the Company's knowledge, the Company is in
compliance with all applicable laws and regulations respecting labor,
employment, fair employment practices, work place safety and health, terms and
conditions of employment and wages and hours. There are no charges of employment
discrimination or unfair labor practices, nor are there any strikes, slowdowns,
stoppages of work or any other concerted interference with normal operations
which are existing, pending or, to the Company's knowledge, threatened against
or involving the Company. No question concerning representation exists
respecting any employees of the Company. There are no grievances, complaints or
charges that have been filed against the Company under any dispute resolution
procedure (including, but not limited to, any proceedings under any dispute
resolution procedure under any collective bargaining agreement) that might have
a Material Adverse Effect on the Company taken as a whole, and there is no
arbitration or similar proceeding pending and no claim therefor has been
asserted. No collective bargaining agreement is in effect or is currently being
or is about to be negotiated by the Company. The Company has not received any
information indicating that any of its employment policies or practices is
currently being audited or investigated by any federal, state or local
government agency. To the Company's knowledge, the Company is, and at all times
since its organization has been, in compliance with the requirements of the
Immigration Reform Control Act of 1986.
2.32 Non-Foreign Status. The Company is not a "foreign person" within the
------------------
meaning of Section 1445 of the Code and Treasury Regulations Section 1.1445-2.
2.33 [Intentionally Omitted].
-----------------------
2.34 Customers, Distributors and Suppliers. Schedule 2.34 sets forth any
------------------------------------- -------------
customer, sales representative or distributor (whether pursuant to a commission,
royalty or other arrangement) which accounts for more than 1% of the sales of
the Company on a consolidated basis for the twelve (12) months ended January 31,
1998 (collectively, the "Customers and Distributors"). Schedule 2.34 lists all
-------------
of the suppliers of the Company to whom during the fiscal year ended January 31,
1998, the Company made payments aggregating $50,000 or more, showing, with
respect to each, the name, address and dollar volume involved (the "Suppliers").
During the last twelve (12) months, no Customer, Distributor or Supplier has
canceled, materially modified, or otherwise terminated its relationship with the
Company, or has decreased materially its services, supplies or materials to the
Company or its usage or purchase of the services or products of the Company, nor
to the knowledge of the Company,
23
does any Customer, Distributor or Supplier have any plan or intention to do any
of the foregoing.
2.35 [Intentionally Omitted.]
2.36 Stock Repurchase. Except as set forth in Schedule 2.36, the Company
---------------- -------------
has not redeemed or repurchased any of its capital stock.
2.37 Disclosure. The representations, warranties and statements contained
----------
in this Agreement and in the Certificates, Exhibits and Schedules delivered by
the Company pursuant to this Agreement to Buyer do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
-------------------------------------------------------------
As a material inducement to Buyer to enter into this Agreement and
consummate the transactions contemplated hereby, each Stockholder hereby
severally and not jointly makes to Buyer each of the representations and
warranties set forth in this Section 3 with respect to such Stockholder. No
Stockholder shall have any right of indemnity or contribution from the Company
with respect to the breach of any representation or warranty hereunder.
3.01 Company Shares. Such Stockholder owns of record and beneficially the
--------------
number of Company Shares set forth opposite such Stockholder's name in Exhibit A
---------
attached hereto. Such Company Shares are, and when delivered by such Stockholder
to Buyer pursuant to this Agreement will be, duly authorized, validly issued,
fully paid, nonassessable and free and clear of any and all liens, encumbrances,
restrictions on transfer, charges or claims, under Article 8 of any applicable
state version of the Uniform Commercial Code, including but not limited to
Massachusetts and Delaware, or otherwise, except restrictions on transferability
under applicable securities laws.
3.02 Authority. Such Stockholder has full right, authority, power and
---------
capacity to enter into this Agreement and each agreement, document and
instrument to be executed and delivered by or on behalf of such Stockholder
pursuant to this Agreement and to carry out the transactions contemplated hereby
and thereby. This Agreement and each agreement, document and instrument
constitute, or when executed and delivered will constitute, a valid and binding
obligation of such Stockholder, enforceable in accordance with their respective
terms, and such Stockholder has full power and authority to transfer, sell and
deliver the Company Shares to Buyer pursuant to this Agreement. The execution,
delivery and performance of this Agreement and each such agreement, document and
instrument:
24
(i) does not and will not violate any federal, state or local
laws applicable to such Stockholder or require such Stockholder to obtain any
approval, consent or waiver from, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made; and
(ii) does not and will not result in a breach of, constitute a
default under, accelerate any obligation under, or give rise to a right of
termination of, any indenture or loan or credit agreement or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization,
order, writ, judgment, injunction, decree, determination or arbitration award to
which such Stockholder is a party or by which the property of such Stockholder
is bound or affected, or result in the creation or imposition of any mortgage,
pledge, lien, security interest or other charge or encumbrance on any assets of
the Company or on the Company Shares owned by such Stockholder.
3.03 Finder's Fee. Such Stockholder has not incurred or become liable for
------------
any broker's commission or finder's fee relating to or in connection with the
transactions contemplated by this Agreement.
3.04 Agreements. Each such Stockholder who is employed by the Company is
----------
not a party to any non-competition, trade secret or confidentiality agreement
with any party other than the Company. There are no agreements or arrangements
not contained herein or disclosed in a Schedule hereto, to which such
Stockholder is a party relating to the business of the Company or to such
Stockholder's rights and obligations as a stockholder, director or officer of
the Company. Such Stockholder does not own, directly or indirectly, on an
individual or joint basis, any material interest in, or serve as an officer or
director of, any customer, competitor or supplier of the Company, or any
organization which has a contract or arrangement with the Company. Such
Stockholder has not at any time transferred any of the stock of the Company held
by or for such holder to any employee of the Company, which transfer constituted
or could be viewed as compensation for services rendered to the Company by said
employee. The execution, delivery and performance of this Agreement will not
violate or result in a default or acceleration of any obligation under any
contract, agreement, indenture or other instrument involving the Company to
which such Stockholder is a party.
3.05 Investment Representations. In connection with the purchase and sale
--------------------------
of the Parent Shares by and to the Stockholders as contemplated by Section 1.02
above, each Stockholder hereby represents and warrants to Buyer as follows:
(a) Such Stockholder is purchasing the Parent Shares for his own
account for investment only, and not for resale or with a view to the
distribution thereof.
(b) Such Stockholder has had such an opportunity as he has deemed
adequate to obtain from Buyer such information as is necessary to permit him to
evaluate the merits and risks of an investment in Buyer and has consulted with
his own advisers with respect to his investment in Buyer.
25
(c) Except as set forth in Schedule 3.05, such Stockholder is an
-------------
"accredited" investor within the meaning of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act").
(d) Such Stockholder has sufficient experience in business, financial
and investment matters to be able to evaluate the risks involved in the purchase
of the Parent Shares and to make an informed investment decision with respect to
such purchase.
(e) Such Stockholder can afford a complete loss of the value of the
Parent Shares and is able to bear the economic risk of holding the Parent Shares
for an indefinite period.
(f) Such Stockholder understands that the Parent Shares are not
registered under the Act or any applicable state securities or "blue sky" laws
and may not be sold or otherwise transferred or disposed of in the absence of an
effective registration statement under the Act (e.g., an effective registration
statement on Form S-1 covering the resale of the Parent Shares by the
Stockholder, such as is referred to in Section 7.02(h) hereof) and under any
applicable state securities or "blue sky" laws (or exemptions from the
registration requirements thereof). Such Stockholder further acknowledges that
certificates representing the Parent Shares will bear restrictive legends
reflecting the foregoing.
SECTION 4. COVENANTS OF THE COMPANY AND THE PRINCIPAL
-----------------------------------------------------
STOCKHOLDERS.
------------
4.01 Making of Covenants and Agreements. The Company and the Principal
----------------------------------
Stockholders jointly and severally hereby make the covenants and agreements set
forth in this Section 4 and the Principal Stockholders agree to cause the
Company to comply with such agreements and covenants.
4.02 Conduct of Business. Between the date of this Agreement and the
-------------------
Closing Date, the Company will:
(a) Conduct its business only in the ordinary course and refrain from
changing or introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices;
(b) Refrain from making any purchase, sale or disposition of any
asset or property other than in the ordinary course of business, from purchasing
any capital asset costing more than $50,000 and from mortgaging, pledging,
subjecting to a lien or otherwise encumbering any of its properties or assets
other than in the ordinary course of business;
26
(c) Refrain from incurring any contingent liability as a guarantor or
otherwise with respect to the obligations of others, and from incurring any
other contingent or fixed obligations or liabilities except in the ordinary
course of business;
(d) Refrain from making any change or incurring any obligation to
make a change in its Articles of Organization, by-laws or similar organizational
documents or authorized or issued capital stock or ownership interests;
(e) Refrain from declaring, setting aside or paying any dividend,
making any other distribution in respect of its capital stock or ownership
interests, or making any direct or indirect redemption, purchase or other
acquisition of its stock or ownership interests;
(f) Refrain from making any change in the compensation payable or to
become payable to any of its officers, employees, agents or independent
contractors;
(g) Refrain from prepaying any loans (if any) from its stockholders,
officers or directors or making any change in its borrowing arrangements;
(h) Refrain from changing accounting policies or procedures;
(i) Pay all accounts payable and other accrued expenses in the
ordinary course of business and in a manner consistent with past practice unless
they are being disputed in good faith;
(j) Use its best efforts to prevent any change with respect to its
management and supervisory personnel and banking arrangements;
(k) Use its best efforts to keep intact its business organization, to
keep available its present officers and employees and to preserve the goodwill
of all suppliers, customers, independent contractors and others having business
relations with it;
(l) Have in effect and maintain at all times all insurance of the
kind, in the amount and with the insurers set forth in Schedule 2.21 attached
-------------
hereto or equivalent insurance with any substitute insurers approved in writing
by Buyer; and
(m) Permit Buyer and its authorized representatives to have full
access to all its properties, assets, contracts, books, tax returns, records,
accounting, financial and other business files and information and furnish to
Buyer or its authorized representatives such financial and other information
with respect to its business or properties as Buyer may from time to time
reasonably request.
4.03 Consents. Prior to the Closing Date, the Company and the Principal
--------
Stockholders shall make all filings with and notifications of governmental
authorities, regulatory agencies and other entities required to be made by such
parties in connection with
27
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby; and the Company and the Principal Stockholders
shall obtain all authorizations, waivers, consents and permits, in form and
substance reasonably satisfactory to Buyer, from all third parties, including,
without limitation, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties, required to permit the continuation of
the business of the Company and the consummation of the transactions
contemplated by this Agreement, and to avoid any breach, default, termination,
acceleration or modification of any material agreement, contract, lease or
permit as a result of, or in connection with, the execution and performance of
this Agreement.
4.04 Notice of Default. Promptly upon the occurrence of, or promptly upon
-----------------
the Company or any Principal Stockholder becoming aware of the impending or
threatened occurrence of, any event which would cause or constitute a breach or
default, or would have caused or constituted a breach or default had such event
occurred or been known to the Company or such Principal Stockholder prior to the
date hereof, of any of the representations, warranties or covenants of the
Company or the Principal Stockholders contained in or referred to in this
Agreement or in any Schedule or Exhibit referred to in this Agreement, the
Company or the Principal Stockholders shall give detailed written notice thereof
to Buyer and the Company and the Principal Stockholders shall use their best
efforts to prevent or promptly remedy the same.
4.05 Consummation of Agreement. The Company and each Principal Stockholder
-------------------------
shall use its or his best efforts to perform and fulfill all conditions and
obligations on their parts to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be fully
carried out. To this end, the Company will obtain prior to the Closing all
necessary authorizations or approvals of its stockholders and board of
directors.
4.06 Cooperation of the Company and the Principal Stockholders. The
---------------------------------------------------------
Company and each of the Principal Stockholders shall cooperate with all
reasonable requests of Buyer and Buyer's counsel in connection with the
consummation of the transactions contemplated hereby.
4.07 No Solicitation of Other Offers. Unless and until this Agreement
-------------------------------
shall have been terminated, neither the Company nor any of the Principal
Stockholders shall, nor shall the Company permit any of its directors, officers,
employees or agents to, directly or indirectly, (i) take any action to solicit,
initiate submission of or encourage, proposals or offers from any person
relating to any acquisition or purchase of all or (other than in the ordinary
course of business) a portion of the assets of, or any equity interest in, the
Company, any merger or business combination with the Company or any public or
private offering of interests in the Company (an "Acquisition Proposal"), (ii)
participate in any discussions or negotiations regarding an Acquisition Proposal
with any person or entity other than Buyer and its representatives, (iii)
furnish any information or afford access to the properties, books or records of
the Company to any person or entity that may consider making or has made an
offer with respect to an Acquisition Proposal other than Buyer and its
representatives, or
28
(iv) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to do any of
the foregoing. The Company will promptly notify Buyer upon receipt of any offer
or indication that any person is considering making an offer with respect to an
Acquisition Proposal or any request for information relative to the Company or
for access to the properties, books and records of the Company, and will
promptly reject any such offer or request.
4.08 Confidentiality. The Company and the Principal Stockholders agree
---------------
that, unless and until the Closing has been consummated, each of the Company,
its officers, directors, agents and representatives and the Principal
Stockholders will hold in strict confidence, and will not use, any confidential
or proprietary data or information obtained from Buyer with respect to its
business or financial condition except for the purpose of evaluating,
negotiating and completing the transactions contemplated hereby. Information
generally known in Buyer's industry or which has been disclosed to the Company
or the Principal Stockholders by third parties which have a right to do so shall
not be deemed confidential or proprietary information for purposes of this
Agreement. If the transactions contemplated by this Agreement are not
consummated, the Company and the Principal Stockholders will return to Buyer (or
certify that they have destroyed) all copies of such data and information,
including, but not limited to, financial information, customer lists, business
and corporate records, worksheets, test reports, tax returns, lists, memoranda
and other documents prepared by or made available to the Company or the
Principal Stockholders in connection with the transactions.
4.09 Tax Returns. The Company and the Principal Stockholders shall
-----------
cooperate with Buyer to permit the Company in accordance with applicable law to
promptly prepare and file on or before the due date or any extension thereof all
federal, state and local tax returns required to be filed by the Company with
respect to taxable periods ending on or before the Closing.
4.10 Filing Cooperation. The Company and the Principal Stockholders shall
------------------
cooperate with Buyer and it agents in connection with any filings to be made by
Buyer, including, without limitation, filings under (i) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"),
(ii) the Securities Act, including, but not limited to, the filing of a
Registration Statement on Form S-1 or, if necessary, Form S-4, with the
Securities and Exchange Commission (the "SEC"), or (iii) the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and shall furnish all information
required in connection therewith. Such cooperation shall include, but not be
limited to, obtaining any consent to inclusion of the Company's financial
statements and the audit reports with respect thereto in any filing made
pursuant to any federal or state securities laws (and any public disclosure
related thereto), whether before or after the Closing. The Principal
Stockholders acknowledge and agree that they have provided this Section of this
Agreement to the Company's outside accountants and have obtained assurances that
such accountants will provide such consent.
29
4.11 No Transfer of Securities. Unless and until this Agreement shall
-------------------------
have been terminated in accordance with its terms, no Principal Stockholder
shall directly or indirectly exchange, deliver, assign, pledge, encumber or
otherwise transfer or dispose of any of the capital stock of the Company
(including any options in respect thereof), nor shall any Principal Stockholder
directly or indirectly grant any right of any kind to acquire, dispose of, vote
or otherwise control in any manner any such securities.
SECTION 4A. COVENANTS OF THE STOCKHOLDERS OTHER THAN THE
--------------------------------------------------------
PRINCIPAL STOCKHOLDERS.
----------------------
4A.01 Making of Covenants and Agreements. Each Stockholder, other than
----------------------------------
the Principal Stockholders, severally and not jointly hereby makes the covenants
and agreements set forth in this Section 4A with respect to such Stockholder.
4A.02 No Solicitation of Other Offers. Unless and until this Agreement
-------------------------------
shall have been terminated, such Stockholder shall not, directly or indirectly,
(i) take any action to solicit, initiate submission of or encourage an
Acquisition Proposal, (ii) participate in any discussions or negotiations
regarding an Acquisition Proposal with any person or entity other than Buyer and
its representatives, (iii) furnish any information or afford access to the
properties, books or records of the Company to any person or entity that may
consider making or has made an offer with respect to an Acquisition Proposal
other than Buyer and its representatives, or (iv) otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do any of the foregoing.
4A.03 Confidentiality. Such Stockholder agrees that, unless and until
---------------
the Closing has been consummated, such Stockholder will hold in strict
confidence, and will not use, any confidential or proprietary data or
information obtained from Buyer with respect to its business or financial
condition except for the purpose of evaluating, negotiating and completing the
transactions contemplated hereby. Information generally known in Buyer's
industry or which has been disclosed to such Stockholder by third parties which
have a right to do so shall not be deemed confidential or proprietary
information for purposes of this Agreement. If the transactions contemplated by
this Agreement are not consummated, such Stockholder will return to Buyer (or
certify that they have destroyed) all copies of such data and information,
including, but not limited to, financial information, customer lists, business
and corporate records, worksheets, test reports, tax returns, lists, memoranda
and other documents prepared by or made available to such Stockholder in
connection with the transactions.
4A.04 Filing Cooperation. Such Stockholder shall cooperate with Buyer
------------------
and it agents in connection with any filings to be made by Buyer, including,
without limitation, filings under (i) the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, (ii) the
Securities Act, including, but not limited to, the filing of a Registration
Statement on Form S-1 or, if necessary, Form S-4, with the SEC, or (iii) the
Exchange Act, and shall furnish all information required in connection
therewith. No such
30
Stockholder shall be responsible for any fee applicable to any such filing or
for any portion of the costs of the Buyer's and Parent's legal, accounting and
other professional fees.
4A.05 No Transfer of Securities. Unless and until this Agreement shall
-------------------------
have been terminated in accordance with its terms, such Stockholder shall not
directly or indirectly exchange, deliver, assign, pledge, encumber or otherwise
transfer or dispose of any of the capital stock of the Company (including any
options in respect thereof), nor shall such Stockholder directly or indirectly
grant any right of any kind to acquire, dispose of, vote or otherwise control in
any manner any such securities.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
--------------------------------------------------
5.01 Making of Representations and Warranties. As a material inducement to
----------------------------------------
the Company and the Stockholders to enter into this Agreement and consummate the
transactions contemplated hereby, Buyer hereby makes the representations and
warranties to the Company and the Stockholders contained in this Section 5.
5.02 Organization of Buyer. Buyer is a corporation duly organized, validly
---------------------
existing and in good standing under the laws of the State of Delaware with full
corporate power to own or lease its properties and to conduct its business in
the manner and in the places where such properties are owned or leased or such
business is conducted by it.
5.03 Capitalization. The authorized capital stock of Parent consists of
--------------
30,000,000 Parent Shares and 5,000,000 shares of undesignated preferred stock.
As of the date hereof, 13,174,118 Parent Shares are issued, outstanding, fully
paid and nonassessable, and 1,157,982 Parent Shares are reserved for issuance
(less options exercised subsequent to December 30, 1997) pursuant to Buyer's
1997 Stock Option and Incentive Plan. All issued and outstanding shares and
options to acquire shares (i) have been duly authorized and validly issued, (ii)
are fully paid and nonassessable, and (iii) were issued in compliance with all
applicable state and federal laws concerning the issuance of securities. When
issued in compliance with the provisions of this Agreement, the Parent Shares
will be validly issued, fully paid and nonassessable, and will be free and clear
of any and all liens, encumbrances, restrictions on transfer, charges or claims,
under Article 8 of any applicable state version of the Uniform Commercial Code,
including but not limited to Massachusetts and Delaware, or otherwise, except
for restrictions on transferability under applicable securities laws.
5.04 Authority of Buyer. Buyer has full right, authority and power to
------------------
enter into this Agreement and each agreement, document and instrument to be
executed and delivered by the Buyer pursuant to this Agreement and to carry out
the transactions contemplated hereby and thereby, including, without limitation,
the authorization, sale, issuance and delivery of the Parent Shares. The
execution, delivery and performance by Buyer of this Agreement and each such
other agreement, document and instrument have been duly authorized by all
necessary corporate action of Buyer and no other action on the part of Buyer is
required in connection
31
therewith. This Agreement and each other agreement, document and instrument
constitute, or when executed and delivered will constitute, valid and binding
obligations of Buyer enforceable in accordance with their terms, except as
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights and
(ii) general principles of equity that restrict the availability of equitable
remedies. The execution, delivery and performance by Buyer of this Agreement and
each such agreement, document and instrument:
(A) does not and will not violate any provision of the
Certificate of Incorporation or by-laws of Buyer; and
(B) does not and will not violate any federal, state or
local laws applicable to Buyer or require Buyer to obtain any approval, consent
or waiver of, or make any filing with, any person or entity (governmental or
otherwise) which has not been obtained or made.
5.05 Litigation. There is no litigation pending or, to Buyer's knowledge,
----------
threatened against Buyer which would prevent or hinder the consummation of the
transactions contemplated by this Agreement.
5.06 Finder's Fee. Buyer has not incurred or become liable for any
------------
broker's commission or finder's fee which would be payable by any Stockholder or
the Company relating to or in connection with the transactions contemplated by
this Agreement.
SECTION 6. COVENANTS OF BUYER.
-----------------------------
6.01 Making of Covenants and Agreements. Buyer hereby makes the covenants
----------------------------------
and agreements set forth in this Section 6.
6.02 Confidentiality. Buyer agrees that, unless and until the Closing has
---------------
been consummated, Buyer and its officers, directors, agents and representatives
will hold in strict confidence, and will not use, any confidential or
proprietary data or information obtained from the Company or the Stockholders
with respect to the business or financial condition of the Company except for
the purpose of evaluating, negotiating and completing the transactions
contemplated hereby. Information generally known in the industries of the
Company or which has been disclosed to Buyer by third parties which have a right
to do so shall not be deemed confidential or proprietary information for
purposes of this Agreement. If the transactions contemplated by this Agreement
are not consummated, Buyer will return to the Company (or certify that it has
destroyed) all copies of such data and information, including, but not limited
to, financial information, customer lists, business and corporate records,
worksheets, test reports, tax returns, lists, memoranda and other documents
prepared by or made available to Buyer in connection with the transactions.
Notwithstanding the foregoing, Buyer shall be permitted to disclose such
information about the Company, the Stockholders and the
32
transactions contemplated hereby as may be legally required, and otherwise
reasonably necessary, in the preparation, completion, filing and distribution of
such reports, filings and other documents required by the Securities Act, the
Exchange Act or New York Stock Exchange rules.
6.03 Consents. Buyer shall make all filings with and notifications of
--------
governmental authorities, regulatory agencies and other entities required to be
made by Buyer in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; and Buyer shall
obtain all authorizations, waivers, consents and permits, from all third
parties, including, without limitation, applicable governmental authorities,
regulatory agencies, lessors, lenders and contract parties, required to permit
the consummation of the transactions contemplated by this Agreement, and to
avoid any breach, default, termination, acceleration or modification of any
material agreement, contract, lease or permit as a result of, or in connection
with, the execution and performance of this Agreement.
6.04 Consummation of Agreement. Buyer shall use its best efforts to
-------------------------
perform and fulfill all conditions and obligations on its part to be performed
and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
SECTION CONDITIONS.
------------------
7.01 Conditions to the Obligations of Buyer. The obligation of Buyer to
--------------------------------------
consummate this Agreement and the transactions contemplated hereby are subject
to the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of the Company and the Stockholders contained in
this Agreement shall be true and correct in all material respects (except for
such representations and warranties that are qualified by their terms as to
materiality, which representations and warranties as so qualified shall be true
in all respects) as of the date of this Agreement and as of the Closing Date as
though made on and as of the Closing; and the Company and each of the
Stockholders shall, on or before the Closing, have performed in all material
respects all of their obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
(b) No Material Change. There shall have been no change in the
------------------
financial condition, prospects, properties, assets, liabilities, business or
operations of the Company since the date hereof which has resulted in or is
reasonably likely to result in a Material Adverse Effect on the Company taken as
a whole, whether or not in the ordinary course of business.
(c) Retained Deficit. Prior to giving effect to the transactions
----------------
contemplated by this Agreement, excluding the effect of the payment of all fees
and expenses of the
33
Company incurred or to be incurred in connection with the transactions
contemplated hereby, including, without limitation, legal and accounting
expenses, the Company's retained deficit shall not be more than $500,000, the
Company's current assets and current liabilities (each as measured according to
GAAP) shall be consistent with levels maintained in the Company's normal course
of business over the most recently completed fiscal year, and Buyer shall have
received a certificate to such effect from the Company's President and Chief
Financial Officer or Treasurer.
(d) Certificate from Officers. The Stockholders shall have delivered
-------------------------
to Buyer a certificate of the Company's President and Chief Financial Officer or
Treasurer dated as of the Closing Date to the effect that the statements set
forth in paragraphs (a) and (b) above are true and correct.
(e) Approval of Buyer's Counsel. All actions, proceedings,
---------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, as
counsel for Buyer, and such counsel shall have received on behalf of Buyer such
other certificates, opinions and documents in form reasonably satisfactory to
such counsel, as Buyer may reasonably require from the Company and the
Stockholders to evidence compliance with the terms and conditions hereof as of
the Closing and the correctness as of the Closing of the representations and
warranties of the Company and the Stockholders and the fulfillment of their
respective covenants.
(f) Opinion of Counsel. On the Closing Date, Buyer shall have
------------------
received from ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, counsel for the Company and the
Stockholders, an opinion as of said date, in the form attached hereto as Exhibit
-------
B.
-
(g) No Litigation. There shall have been no determination by Buyer,
-------------
acting in good faith, that the consummation of the transactions contemplated by
this Agreement has become inadvisable or impracticable by reason of the
institution or threat by any person or any federal, state, foreign or other
governmental authority of litigation, proceedings or other action against Buyer,
the Company or any Stockholder.
(h) Consents. The Company or the Stockholders shall have made all
--------
filings with and notifications of governmental authorities, regulatory agencies
and other entities required to be made by the Company or the Stockholders in
connection with the execution and delivery of this Agreement, the performance of
the transactions contemplated hereby and the continued operation of the business
of the Company by Buyer subsequent to the Closing. The Company, the Stockholders
and Buyer shall have received all authorizations, waivers, consents and permits,
in form and substance reasonably satisfactory to Buyer, from all third parties,
including, without limitation, applicable governmental authorities, regulatory
agencies, lessors, lenders and contract parties, required to permit the
continuation of the business of the Company and the consummation of the
transactions contemplated by this Agreement, and to avoid a breach, default,
termination, acceleration or modification of any indenture, loan or
34
credit agreement or any other material agreement, contract, instrument,
mortgage, lien, lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award as a result of, or in connection
with, the execution and performance of this Agreement.
(i) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All required filings under the ▇▇▇▇-▇▇▇▇▇-
-----------------
▇▇▇▇▇▇ Act (if any) shall have been completed and all applicable time
limitations under such Act shall have expired without a request for further
information by the relevant federal authorities under such Act, or in the event
of such a request for further information, the expiration of all applicable time
limitations under the Act shall have occurred without the objection of such
federal authorities.
(j) Employment and Non-Competition Agreements. Each of ▇▇▇▇▇▇ ▇.
-----------------------------------------
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall have executed and delivered to Buyer an
Employment Agreement in substantially the form of Exhibit C attached hereto.
---------
▇▇. ▇▇▇▇▇▇▇ shall have executed and delivered to Buyer a Non-Competition
Agreement in substantially the form of Exhibit D attached hereto.
---------
(k) FIRPTA Withholding. At or prior to the Closing, Buyer shall have
------------------
received from each Stockholder a "transferor's certificate of non-foreign
status" as provided in the Treasury Regulations under Section 1445 of the Code
in the form attached hereto as Exhibit E.
---------
(l) Acquisition Audit. Buyer shall have received a satisfactory audit
-----------------
report from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C. with respect to the financial statements
and financial condition of the Company as of January 31, 1998.
(m) Massachusetts Tax Certificate. At or prior to the Closing, Buyer
-----------------------------
shall have received from the Company a certificate of payment/good standing from
the Commissioner of Revenue as provided in Massachusetts General Laws Chapter
62C, Section 44(a).
(n) Employee Programs. The Company shall have taken all steps
-----------------
necessary under the relevant documents and applicable law to maintain the
qualification of each Employee Program identified in Schedule 2.28
-------------
notwithstanding the purchase of the Company Shares by Buyer.
(o) Resignations. The Company shall have delivered to Buyer
------------
resignations of all of the directors of the Company, except for ▇▇. ▇▇▇▇▇▇▇ who
shall remain as a director of the Company for so long as he is an employee of
the Company, and of such officers of the Company as may be requested by Buyer at
least five (5) days prior to the Closing, such resignations to be effective at
the Closing.
35
(p) Releases. The Company shall have delivered to Buyer general
--------
releases signed by each Stockholder and by each officer and director of the
Company of all claims which any of them have against the Company in the form
attached hereto as Exhibit F.
---------
(q) Conversion of Class A Preferred Stock; Redemption of Class B
------------------------------------------------------------
Preferred Stock. All shares of Class A Preferred Stock shall have been
---------------
converted solely into shares of Common Stock, and all shares of Class B
Preferred Stock shall have been redeemed by the Company as described in this
Agreement.
(r) Registration Rights Agreement. The Stockholders shall have
-----------------------------
executed and delivered to Buyer a Registration Rights Agreement in substantially
the form of Exhibit G attached hereto.
---------
(s) Registration Statement. On the Closing Date, there shall be a
----------------------
valid, effective Registration Statement on Form S-1 on file with the SEC
applicable to the resale of the Parent Shares to be issued to the Stockholders
in connection with the transactions contemplated hereby.
7.02 Conditions to Obligations of the Company and the Stockholders. The
-------------------------------------------------------------
obligations of the Company and the Stockholders to consummate this Agreement and
the transactions contemplated hereby is subject to the fulfillment, prior to or
at the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. Each of the
--------------------------------------
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as though made on and as of the
Closing Date. Buyer shall, on or before the Closing, have performed in all
material respects all of its obligations hereunder which by the terms hereof are
to be performed on or before the Closing. Buyer shall have delivered to the
Company and the Stockholders a certificate of the President or any Vice
President of Buyer dated the Closing Date to such effect.
(b) Approval of the Company's Counsel. All actions, proceedings,
---------------------------------
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP, as counsel for
the Company and the Stockholders, and such counsel shall have received on behalf
of the Company and the Stockholders such other certificates, opinions and
documents in form reasonably satisfactory to such counsel, as the Company may
reasonably require from Buyer to evidence compliance with the terms and
conditions hereof as of the Closing and the correctness as of the Closing of the
representations and warranties of Buyer and the fulfillment of its covenants.
(c) Opinion of Counsel. On the Closing Date, the Stockholders shall
------------------
have received from ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP, counsel for Buyer, an opinion as
of said date, in the form attached hereto as Exhibit H.
---------
36
(d) No Litigation. There shall have been no determination by the
-------------
Company, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state, foreign or
other governmental authority of litigation, proceedings or other action against
Buyer, the Company or any Stockholder.
(e) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. All required filings under the ▇▇▇▇-▇▇▇▇▇-
-----------------
▇▇▇▇▇▇ Act (if any) shall have been completed and all applicable time
limitations under such Act shall have expired without a request for further
information by the relevant federal authorities under such Act, or in the event
of such a request for further information, the expiration of all applicable time
limitations under the Act shall have occurred without the objection of such
federal authorities.
(f) Employment and Non-Competition Agreements. Buyer shall have
-----------------------------------------
executed and delivered to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ an
Employment Agreement in substantially the form of Exhibit C attached hereto.
---------
Buyer shall have executed and delivered to ▇▇. ▇▇▇▇▇▇▇ a Non-Competition
Agreement in substantially the form of Exhibit D attached hereto.
---------
(g) Registration Rights Agreement. Buyer shall have executed and
-----------------------------
delivered to the Stockholders a Registration Rights Agreement in substantially
the form of Exhibit G attached hereto.
---------
(h) Registration Statement. On the Closing Date, there shall be a
----------------------
valid, effective Registration Statement on Form S-1 on file with the SEC
applicable to the resale of the Parent Shares to be issued to the Stockholders
in connection with the transactions contemplated hereby.
SECTION 8. TERMINATION OF AGREEMENT; RIGHTS TO PROCEED.
------------------------------------------------------
8.01 Termination. At any time prior to the Closing, this Agreement may be
-----------
terminated as follows:
(i) by mutual written consent of all of the parties to this
Agreement;
(ii) by Buyer (A) if the Company or any Stockholder is in
material breach of this Agreement and such breach shall remain uncured for a
period of five (5) business days after Buyer shall have given written notice of
such breach to the Company and, if applicable, such Stockholder, or (B) if at or
prior to Closing, any of the conditions in Section 7.01 shall not have been
satisfied, complied with or performed in all material respects (unless such
failure of satisfaction, noncompliance or nonperformance is the result directly
or indirectly of any action or failure to act on the part of Buyer) and Buyer
shall not have waived such failure of satisfaction, noncompliance or
nonperformance;
37
(iii) by the Company, and the Stockholders, (A) if Buyer is in
material breach of this Agreement and such breach shall remain uncured for a
period of five (5) business days after the Company shall have given written
notice of such breach to Buyer, or (B) if at or prior to Closing, any of the
conditions in Section 7.02 shall not have been satisfied, complied with or
performed in all material respects (unless such failure of satisfaction,
noncompliance or nonperformance is the result directly or indirectly of any
action or failure to act on the part of the Company or any Stockholder) and the
Company and the Stockholders shall not have waived such failure of satisfaction,
noncompliance or nonperformance; or
(iv) by Buyer or the Company and the Stockholders, if the
Closing has not occurred on or before July 31, 1998.
8.02 Effect of Termination. All obligations of the parties hereunder shall
---------------------
cease upon any termination pursuant to Section 8.01; provided, however, that (i)
-------- -------
the provisions of this Section 8, Section 4.08, Section 6.02, Section 11.01 and
Section 11.09 hereof shall survive any termination of this Agreement, (ii)
subject to Section 1.09, nothing herein shall relieve any party from any
liability for a material error or omission in any of its representations or
warranties contained herein or a material failure to comply with any of its
covenants, conditions or agreements contained herein, and (iii) any party may
proceed as further set forth in Section 8.03 below.
8.03 Right to Proceed. Anything in this Agreement to the contrary
----------------
notwithstanding, if any of the conditions specified in Section 7.01 hereof have
not been satisfied, Buyer shall have the right to proceed with the transactions
contemplated hereby without waiving any of its rights hereunder, and if any of
the conditions specified in Section 7.02 hereof have not been satisfied, the
Stockholders shall have the right to proceed with the transactions contemplated
hereby without waiving any of their rights hereunder.
SECTION 9. SURVIVAL
-------------------
9.01 Survival of Warranties. Each of the representations, warranties,
----------------------
agreements, covenants and obligations herein or in any Schedule, Exhibit,
Certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and, with the exception of the
representations, warranties and covenants with respect to Taxes or tax related
matters which shall survive until the termination of the applicable statute of
limitations, shall survive the Closing for eighteen months regardless of any
investigation and shall not merge in the performance of any obligation by either
party hereto.
38
SECTION 10. INDEMNIFICATION
---------------------------
10.01 Indemnification by the Stockholders. The Stockholders severally and
-----------------------------------
not jointly agree subsequent to the Closing to indemnify and hold the Company,
Buyer and their respective subsidiaries and affiliates and persons serving as
officers, directors, partners or employees thereof (individually, a "Buyer
Indemnified Party" and, collectively, the "Buyer Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs and expenses (including, without limitation, reasonable fees of counsel)
of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement of
the foregoing) which may be sustained or suffered by any of them arising out of
or based upon any of the following matters:
(a) Fraud, intentional misrepresentation or a deliberate or willful
breach by the Company or any Stockholder of any of their representations,
warranties or covenants under this Agreement or in any Certificate, Schedule or
Exhibit delivered pursuant hereto;
(b) Any other breach of any representation, warranty or covenant of
the Company or any Stockholder under this Agreement or in any Certificate,
Schedule or Exhibit delivered pursuant hereto, or by reason of any claim, action
or proceeding asserted or instituted growing out of any matter or thing
constituting a breach of such representations, warranties or covenants; and
(c) Any liability of the Company for Taxes arising from an event or
transaction prior to the Closing or as a result of the Closing which have not
been paid or provided for or reserved against by the Company including, without
limitation, any increase in Taxes due to the unavailability of any loss or
deduction claimed by the Company.
10.02 Limitations on Indemnification by the Stockholders. Notwithstanding
--------------------------------------------------
the foregoing, the right of Buyer Indemnified Parties to indemnification under
Section 10.01 shall be subject to the following provisions:
(a) No indemnification shall be payable pursuant to Subsection
10.01(b) above to any Buyer Indemnified Party, unless the total of all claims
for indemnification pursuant to Section 10.01 shall exceed $200,000 in the
aggregate, whereupon the full amount of such claims shall be recoverable in
accordance with the terms hereof;
(b) No indemnification shall be payable by any Stockholder pursuant
to Section 10.01 above to the Buyer Indemnified Parties in an aggregate amount
in excess of such Stockholder's net proceeds received pursuant to Section 1.02
hereof; and
(c) No indemnification shall be payable to a Buyer Indemnified Party
with respect to claims asserted pursuant to Subsection 10.01(b) (exclusive of
any claims for indemnification for Taxes or based upon or related to a breach of
any representation, warranty or covenant with respect to Taxes or tax related
matters) after the eighteen month anniversary
39
of the Closing Date (the "Indemnification Cut-Off Date"), except for claims made
pursuant hereto within the time period set forth in Section 9.1, in which case
such claims shall survive, and indemnification (if any) shall be payable with
respect thereto, until finally resolved.
10.03 Indemnification by Buyer. Buyer agrees to indemnify and hold the
------------------------
Stockholders (individually, each a "Stockholder Indemnified Party" and,
collectively, the "Stockholder Indemnified Parties") harmless from and against
any damages, liabilities, losses and expenses (including, without limitation,
reasonable fees of counsel) of any kind or nature whatsoever (whether or not
arising out of third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) which may be sustained or
suffered by any of them arising out of or based upon any breach of any
representation, warranty or covenant made by Buyer in this Agreement or in any
Certificate delivered by Buyer hereunder, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting such a breach.
10.04 Limitation on Indemnification by Buyer. Notwithstanding the
--------------------------------------
foregoing, the right of Stockholder Indemnified Parties to indemnification under
Section 10.03 shall be subject to the following provisions:
(a) No indemnification pursuant to Section 10.03 shall be payable to
the Stockholders, unless the total of all claims for indemnification pursuant to
Section 10.03 shall exceed $200,000 in the aggregate, whereupon the full amount
of such claims shall be recoverable in accordance with the terms hereof; and
(b) No indemnification shall be payable to the Stockholders with
respect to claims asserted pursuant to Section 10.03 above after the
Indemnification Cut-Off Date.
10.05 Notice; Defense of Claims. An indemnified party may make claims for
-------------------------
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within 20 days after receiving such notice the indemnifying party shall give
written notice to the indemnified party stating whether it disputes the claim
for indemnification and whether it will defend against any third-party claim or
liability at its own cost and expense. If the indemnifying party fails to give
notice that it disputes an indemnification claim within 20 days after receipt of
notice thereof, it shall be deemed to have accepted and agreed to the claim,
which shall become immediately due and payable. The indemnifying party shall be
entitled to direct the defense against a third-party claim or liability with
counsel selected by it (subject to the consent of the indemnified party, which
consent shall not be unreasonably withheld) as long as the indemnifying party is
40
conducting a good faith and diligent defense. The indemnified party shall at
all times have the right to fully participate in the defense of a third-party
claim or liability at its own expense directly or through counsel; provided,
--------
however, that if the named parties to the action or proceeding include both the
-------
indemnifying party and the indemnified party and the indemnified party is
advised that representation of both parties by the same counsel would be
inappropriate under applicable standards of professional conduct, the
indemnified party may engage separate counsel at the expense of the indemnifying
party. If no such notice of intent to dispute and defend a third-party claim or
liability is given by the indemnifying party, or if such good faith and diligent
defense is not being or ceases to be conducted by the indemnifying party, the
indemnified party shall have the right, at the expense of the indemnifying
party, to undertake the defense of such claim or liability (with counsel
selected by the indemnified party), and to compromise or settle it, exercising
reasonable business judgment. If the third-party claim or liability is one that
by its nature cannot be defended solely by the indemnifying party, then the
indemnified party shall make available such information and assistance as the
indemnifying party may reasonably request and shall cooperate with the
indemnifying party in such defense, at the expense of the indemnifying party.
SECTION 11. MISCELLANEOUS.
-------------------------
11.01 Fees and Expenses. Each of the parties will bear its own expenses in
-----------------
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement, and no expenses of the Company or the
Stockholders relating in any way to the transactions contemplated hereby,
including, without limitation, legal, accounting or other professional expenses
and any broker's commission or finder's fee, shall be charged to, paid by or
reflected in any account of the Company or Buyer; provided, however, that the
-------- -------
Company shall pay the customary fees and expenses related to the audit of the
Company's financial statements for the fiscal year ended January 31, 1998.
11.02 Governing Law. This Agreement shall be construed under and governed
-------------
by the internal laws of The Commonwealth of Massachusetts without regard to its
conflict of laws provisions.
11.03 Notices. Any notice, request, demand or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been
given if delivered or sent by facsimile transmission, upon receipt, or if sent
by registered or certified mail, upon the sooner of the date on which receipt is
acknowledged or the expiration of three (3) days after deposit in United States
post office facilities properly addressed with postage prepaid. All notices to a
party will be sent to the addresses set forth below or to such other address or
person as such party may designate by notice to each other party hereunder:
41
TO BUYER: Mac-Gray Services, Inc.
--------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Chief Executive Officer
With a copy to: ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
Exchange Place
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. Cable, Esq.
TO COMPANY: Copico, Inc.
-----------
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
With a copy to: ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
TO ANY STOCKHOLDER: At the address set forth under such Stockholder's
------------------
name on the Signature pages hereto.
With a copy to: ▇▇▇▇▇ and ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
11.04 Entire Agreement. This Agreement, including the Schedules and
----------------
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings.
11.05 Assignability; Binding Effect. This Agreement shall only be
-----------------------------
assignable by Buyer, whether in whole or in part, to an entity controlling,
controlled by or under common
42
control with Buyer upon written notice to the Company and the Stockholders, and
such assignment shall not relieve Buyer of any liability hereunder. This
Agreement may not be assigned by the Company or the Stockholders without the
prior written consent of Buyer. This Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
11.06 Captions and Gender. The captions in this Agreement are for
-------------------
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
11.07 Execution in Counterparts. For the convenience of the parties and to
-------------------------
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
11.08 Amendments. This Agreement may not be amended or modified, nor may
----------
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by Buyer, the Company and the Stockholders,
or in the case of a waiver, the party waiving compliance.
11.09 Publicity and Disclosures. No press releases or public disclosure,
-------------------------
either written or oral, of the transactions contemplated by this Agreement,
shall be made by a party to this Agreement without the prior knowledge and
written consent of Buyer, the Company and the Stockholders; provided, however,
-------- -------
that Buyer shall be permitted to disclose such information about the Company,
the Stockholders and the transactions contemplated hereby as may be legally
required, and otherwise reasonably necessary, in the preparation, completion,
filing and distribution of such reports, filings and other documents required by
the Securities Act, the Exchange Act or New York Stock Exchange rules; provided,
--------
further, that Buyer shall be permitted to make such press releases related to
-------
the execution of this Agreement as may be reasonably approved by the
Stockholders.
11.10 Dispute Resolution. Except as provided in Section 11.11 below, any
------------------
dispute arising out of or relating to this Agreement or the breach, termination
or validity hereof shall be finally settled by binding arbitration conducted
expeditiously in accordance with the Center for Public Resources Rules for
Nonadministered Arbitration of Business Disputes (the "CPR Rules"). The Center
for Public Resources shall appoint a neutral advisor from its National CPR
Panel. The arbitration shall be governed by the United States Arbitration Act, 9
U.S.C. (S)(S)1-16, and judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof. The place of arbitration
shall be Boston, Massachusetts.
Such proceedings shall be administered by the neutral advisor in accordance
with the CPR Rules as he/she deems appropriate, however, such proceedings shall
be guided by the following agreed upon procedures:
43
(i) mandatory exchange of all relevant documents, to be
accomplished within forty-five (45) days of the initiation of the procedure;
(ii) no other discovery;
(iii) hearings before the neutral advisor which shall consist of
a summary presentation by each side of not more than three hours; such hearings
to take place in one or two days at a maximum; and
(iv) decision to be rendered not later than 10 days following
such hearings.
Each of Parent, Buyer, the Company and the Stockholders (a) hereby
unconditionally and irrevocably submits to the jurisdiction of the United States
District Court for the District of Massachusetts, for the purpose of enforcing
the award or decision in any such proceeding and (b) hereby waives, and agrees
not to assert in any civil action to enforce the award, any claim that it is not
subject personally to the jurisdiction of the above-named court, that its
property is exempt or immune from attachment or execution, that the civil action
is brought in an inconvenient forum, that the venue of the civil action is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives and agrees not to seek any review by
any court of any other jurisdiction which may be called upon to grant an
enforcement of the judgment of any such court. Each of Parent, Buyer, the
Company and the Stockholders hereby consents to service of process by certified
mail or by a nationally recognized overnight courier at the address to which
notices are to be given. Each of Parent, Buyer, the Company and the Stockholders
agrees that its submission to jurisdiction and its consent to service of process
by certified mail or by courier is made for the express benefit of the other
parties hereto. Final judgment against Parent, Buyer, the Company or the
Stockholders in any such action, suit or proceeding may be enforced in other
jurisdictions by suit, action or proceeding on the judgment, or in any other
manner provided by or pursuant to the laws of such other jurisdiction.
11.11 Specific Performance. The parties agree that it would be difficult to
--------------------
measure damages which might result from a breach of this Agreement by the other
parties hereto and that money damages would be an inadequate remedy for such a
breach. Accordingly, if there is a breach or proposed breach of any provision of
this Agreement by the other party hereto and the non-breaching party does not
elect to terminate under Section 8, such non-breaching party shall be entitled,
in addition to any other remedies which it may have, to an injunction or other
appropriate equitable relief to restrain such breach without having to show or
prove actual damage to such non-breaching party.
[End of Text]
44
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
BUYER:
-----
MAC-GRAY SERVICES, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
COMPANY:
-------
COPICO, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
PRINCIPAL STOCKHOLDERS:
----------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:____________________________
____________________________
____________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:____________________________
____________________________
____________________________
OTHER STOCKHOLDERS:
------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Address:____________________________
____________________________
____________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Address:____________________________
____________________________
____________________________
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Address:____________________________
____________________________
____________________________
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Address:____________________________
____________________________
____________________________
MASSACHUSETTS CAPITAL
RESOURCE COMPANY
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address:____________________________
____________________________
____________________________
The undersighned hereby joins as an additional signatory to that certain
Stock Purchase Agreement dated as of March 31, 1998 with respect to any
provisions of such Agreement applicable to, or creating binding obligations with
respect to, Parent Shares.
▇▇▇-▇▇▇▇ CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: __________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
48
List of Exhibits and Schedules
------------------------------
Exhibit A List of Stockholders, Stockholdings and Consideration to be Paid
B Form of Opinion of Counsel for the Company and the Stockholders
C Form of Employment Agreement
D Form of Non-Competition Agreement
E FIRPTA Representation
F Form of General Release
G Form of Registration Rights Agreement
H Form of Opinion of Counsel for Buyer
Schedule 2.03 Voting Agreements, etc.
2.05 Liens, etc.
2.06(a) Real Property
2.06(b) Personal Property
2.07 Vending Service Agreements
2.08 Equipment
2.09 Title
2.10 Financial Statements
2.11 Tax Disclosures
2.12 Affiliated Accounts Receivable
2.13 Inventories
2.14 Absence of Changes
2.16 Banking Arrangements
2.17 Intellectual Property
2.18 Contracts, etc.
2.19 Litigation
2.20 Compliance with Laws
2.21 Insurance
2.22 Warranty Claims
2.25 Permit; Burdensome Agreements
2.27 Transactions with Interested Persons
2.28 Employee Benefit Programs
2.29 Environmental Matters
2.30 Officers and Directors
2.31 Labor Matters
2.34 Customers, Distributors and Suppliers
2.36 Stock Repurchases
49
EXHIBIT A
---------
List of Stockholders, Stockholdings and Consideration to be Paid
----------------------------------------------------------------
=========================
CONSIDERATION PAYABLE
BY BUYER
================================================================================
OWNERSHIP OF OWNERSHIP OF PARENT
COMPANY COMPANY CASH SHARES
NAME OF SECURITIES AT SHARES AT AT AT
STOCKHOLDER MARCH 31, 1998 CLOSING CLOSING CLOSING
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 350 350 Shares * 67,900
27.16%
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 350 350 Shares * 67,900
27.16%
-------------------------------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇ 0 13 Shares * 2,500
1.00 %
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 300 300 Shares * 58,200
23.28 %
-------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 0 13 Shares * 2,500
1.00%
-------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 0 13 Shares * 2,500
1.00%
-------------------------------------------------------------------------------
Massachusetts Capital 250 250 Shares * 48,500
Resource Company 19.40%
===============================================================================
* To be determined at closing, based on percentage set forth above
Exhibit B
---------
[To be agreed upon prior to closing]
Exhibit C
---------
EMPLOYMENT AGREEMENT
This AGREEMENT (the "Agreement") is made as of April __, 1998 (the
"Effective Date"), by and between Mac-Gray Services, Inc., a Delaware
corporation with its headquarters located in Cambridge, Massachusetts (the
"Employer"), and [▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇] [▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇] (the "Employee").
Reference is made to that certain Stock Purchase Agreement, dated as of March
31, 1998 (the "Purchase Agreement"), by and among ▇▇▇-▇▇▇▇ Corporation, a
Delaware corporation (the "Parent"), the Employer, Copico, Inc., a Massachusetts
corporation ("Copico"), the Employee and the other parties named therein
(together with the Employee, the "Stockholders").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties thereto are consummating the transactions contemplated by the
Purchase Agreement, pursuant to which the Stockholders will sell, and the
Employer will buy, all of the issued and outstanding capital stock of Copico in
exchange for cash and shares of the Parent's common stock (the "Purchase");
WHEREAS, prior to the Purchase, the Employee was a principal stockholder
of, and was principally involved in the management of the business of, Copico;
WHEREAS, the parties hereto desire to assure that the Employee's knowledge
and experience will continue to be available after the Purchase; and
WHEREAS, as a material inducement to the Parent, the Employer and the
Employee to consummate the transactions contemplated by the Purchase Agreement,
the Employer, the Parent (as guarantor) and the Employee are executing and
delivering this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Employment. The Employer agrees to employ the Employee and the
----------
Employee agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. Capacity. The Employee shall initially serve the Employer as [VICE-
--------
PRESIDENT][DIRECTOR OF SALES] of the Employer's Business Services Division,
subject to election by the Board of Directors of the Employer (the "Board of
Directors"). The Employee shall also serve the Employer in such other or
additional offices as the Employee may be requested to serve by the Board of
Directors or the Chief Executive Officer. In such capacity or capacities, the
Employee shall perform such services and duties in connection with the business,
affairs and operations of the Employer as may be assigned or delegated to the
Employee from time to time by or under the authority of the Board of Directors
or the Chief
Executive Officer. The Employee shall report to the Executive Vice President of
Sales and Marketing.
3. Term. Subject to the provisions of Section 6, the term of employment
----
pursuant to this Agreement (the "Term") shall be two (2) years from the
Effective Date.
4. Compensation and Benefits. The regular compensation and benefits
-------------------------
payable to the Employee under this Agreement shall be as follows:
(a) Salary. For all services rendered by the Employee under this
------
Agreement, the Employer shall pay the Employee a salary (the "Salary") at the
annual rate of One Hundred Fifty Thousand Dollars ($150,000) payable bi-weekly
in arrears, subject to increase from time to time in the discretion of the Board
of Directors or the Compensation Committee of the Board of Directors (the
"Compensation Committee").
(b) Bonus. Beginning with the fiscal year ending December 31, 1998,
-----
the Employee shall be entitled to participate in an annual incentive program
established by the Board of Directors or the Compensation Committee with such
terms as may be established in the sole discretion of the Board of Directors or
the Compensation Committee.
(c) Regular Benefits. The Employee shall also be entitled to
----------------
participate in any employee benefit plans, medical insurance plans, life
insurance plans, disability income plans, retirement plans, vacation plans,
expense reimbursement plans and other benefit plans which the Employer or the
Parent may from time to time have in effect for all or most of its senior
executives. Such participation shall be subject to the terms of the applicable
plan documents, generally applicable policies of the Employer, applicable law
and the discretion of the Board of Directors, the Compensation Committee or any
administrative or other committee provided for in or contemplated by any such
plan.
(d) Taxation of Payments and Benefits. The Employer shall undertake
---------------------------------
to make deductions, withholdings and tax reports with respect to payments and
benefits under this Agreement to the extent that it reasonably and in good faith
believes that it is required to make such deductions, withholdings and tax
reports. Payments under this Agreement shall be in amounts net of any such
deductions or withholdings. Nothing in this Agreement shall be construed to
require the Employer to make any payments to compensate the Employee for any
adverse tax effect associated with any payments or benefits or for any deduction
or withholding from any payment or benefit.
(e) Reimbursement. The Employer shall promptly reimburse the Employee
-------------
for all reasonable business expenses incurred by the Employee during the Term in
accordance with the Employer's practices for executive officers of the Employer
with a similar level of responsibility, as in effect from time to time.
2
(f) Vacation. During the Term, the Employee shall receive paid
--------
vacation annually in accordance with the Employer's practices for executive
officers, as in effect from time to time, but in any event not less than four
(4) weeks per annum.
(g) Exclusivity of Salary and Benefits. The Employee shall not be
----------------------------------
entitled to any payments or benefits other than those provided under this
Agreement. Compliance with the provisions of this Section 4 shall in no way
create or be deemed to create any obligation, express or implied, on the part of
the Employer or any of its affiliates with respect to the continuation of any
particular benefit or other plan or arrangement maintained by them or their
subsidiaries as of or prior to the date hereof or the creation and maintenance
of any particular benefit or other plan or arrangement at any time after the
date hereof.
5. Extent of Service. During the Employee's employment under this
-----------------
Agreement, the Employee shall, subject to the direction and supervision of the
Board of Directors or the Chief Executive Officer, devote the Employee's full
business time, best efforts and business judgment, skill and knowledge to the
advancement of the Employer's interests and to the discharge of the Employee's
duties and responsibilities under this Agreement. The Employee shall not engage
in any other business activity, except as may be approved by the Board of
Directors; provided that nothing in this Agreement shall be construed as
--------
preventing the Employee from:
(a) investing the Employee's assets in any company or other entity in
a manner not prohibited by [THAT CERTAIN NON-COMPETITION AGREEMENT, DATED AS OF
EVEN DATE HEREWITH, BY AND BETWEEN THE PARENT AND THE EMPLOYEE (THE "NON-
COMPETITION AGREEMENT")] [SUBSECTION 7(F)] and in such form or manner as shall
not require any material activities on the Employee's part in connection with
the operations or affairs of the companies or other entities in which such
investments are made; or
(b) engaging in religious, charitable or other community or non-profit
activities that do not impair the Employee's ability to fulfill the Employee's
duties and responsibilities under this Agreement.
6. Termination and Termination Benefits. Notwithstanding the provisions
------------------------------------
of Section 3, the Employee's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) Termination by the Employer for Cause. The Employee's employment
-------------------------------------
under this Agreement may be terminated for cause without further liability on
the part of the Employer effective immediately upon a vote of the Board of
Directors and written notice to the Employee. Only the following shall
constitute "cause" for such termination:
(i) dishonest statements or acts of the Employee with respect to
the Employer or any affiliate of the Employer;
3
(ii) the commission by or indictment of the Employee for (A) a
felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or
fraud ("indictment," for these purposes, meaning an indictment, probable cause
hearing or any other procedure pursuant to which an initial determination of
probable or reasonable cause with respect to such offense is made);
(iii) failure to perform to the reasonable satisfaction of the
Board of Directors a substantial portion of the Employee's duties and
responsibilities assigned or delegated under this Agreement, which failure
continues, in the reasonable judgment of the Board of Directors;
(iv) gross negligence, willful misconduct or insubordination of
the Employee with respect to the Employer or any affiliate of the Employer; or
(v) material breach by the Employee of any of the Employee's
obligations under this Agreement;
provided, however, that the term "cause" shall not include the occurrence of
-------- -------
events described in clause (iii) or (v) above if such occurrence is remedied by
the Employee within thirty (30) calendar days after receipt of written notice of
termination for cause by the Employer setting forth in specific detail the facts
and circumstances resulting in the cause upon which the termination is based.
(b) Termination by the Employee. The Employee's employment under this
---------------------------
Agreement may be terminated by the Employee by written notice to the Board of
Directors at least thirty (30) days prior to such termination.
(c) Termination by the Employer Without Cause. The Employee's
-----------------------------------------
employment under this Agreement may be terminated by the Employer without cause
upon written notice to the Employee by a vote of the Board of Directors.
(d) Certain Termination Benefits.
----------------------------
(i) Upon termination of the Employee's employment under this
Agreement pursuant to Subsection 6(a), 6(b) or 6(c), all obligations of the
Employer under this Agreement shall thereupon immediately terminate other than
any obligations with respect to Salary during the Term (such Salary to be paid
subject to and in accordance with Section 4). Payment or payments of such
liquidated amount is agreed by the parties hereto to be in full satisfaction and
compromise of any claims arising out of any such termination of the Employee's
employment. Following a termination under Subsection 6(a), 6(b) or 6(c), the
Employer shall have any and all rights and remedies under applicable law in
connection with any breach of this Agreement by the Employee, and the Employee
shall be subject to the provisions of Section 7.
4
(ii) Notwithstanding clause (i) of this Subsection 6(d), in the
event of termination of the Employee's employment under this Agreement pursuant
to Subsection 6(c), the Employee shall be entitled to the continuation of group
health plan benefits to the extent authorized by and consistent with 29 U.S.C.
(S)1161 et seq. (commonly known as "COBRA"), with the cost of the regular
-- ---
premium for such benefits shared in the same relative proportion by the Employer
and the Employee as in effect on the date of termination; provided that in the
--------
event that the Employee commences any employment or self-employment during the
period during which the Employee is entitled to receive benefits under this
Subsection 6(d)(ii) (the "Benefits Period"), such payments shall cease effective
as of the date of commencement of such employment or self-employment.
Notwithstanding the foregoing, nothing in this Subsection 6(d)(ii) shall be
construed to affect the Employee's right to receive COBRA continuation entirely
at the Employee's own cost to the extent that the Employee may continue to be
entitled to COBRA continuation after the Employee's right to cost sharing under
this Subsection 6(d)(ii) ceases. The Employee shall be obligated to give prompt
notice of the date of commencement of any employment or self-employment during
the Benefits Period and shall respond promptly to any reasonable inquiries
concerning any employment or self-employment in which the Employee engages
during the Benefits Period.
(e) Death; Disability. Upon the death of the Employee or the
-----------------
permanent disability (as hereinafter defined) of the Employee continuing for a
period of one hundred and eighty (180) days, all obligations of the Employer
under this Agreement shall thereupon immediately terminate other than any
obligations with respect to Salary during the Term (such Salary to be paid
subject to and in accordance with Section 4); provided that the payments of such
--------
Salary shall be net of any disability pay or sick pay benefits to which the
Employee may be entitled under the Employer's policies. As used in this
Subsection 6(e), the term "permanent disability" means the inability of the
Employee, by reason of injury, illness or other similar cause, to perform a
major part of his duties and responsibilities in connection with the conduct of
the business and affairs of the Employer. Payment or payments of such
liquidated amount is agreed by the parties hereto to be in full satisfaction and
compromise of any claims arising out of any termination of the Employee's
employment. Following a termination of the Employee's employment with the
Employer under this Subsection 6(e), the Employer shall have any and all rights
and remedies under applicable law in connection with any breach of this
Agreement by the Employee, and the Employee shall be subject to the provisions
of Section 7. Nothing in this Subsection 6(e) shall be construed to waive the
Employee's rights, if any, under existing law including, without limitation, the
Family and Medical Leave Act of 1993, 29 U.S.C. (S)2601 et seq. and the
-- ---
Americans with Disabilities Act, 42 U.S.C. (S)12101 et seq.
-- ---
7. Confidential Information and Cooperation.
----------------------------------------
(a) Confidential Information. As used in this Agreement,
------------------------
"Confidential Information" means all information or material not generally known
to the public, which gives the Employer or any of its Affiliates (as hereinafter
defined) some competitive business advantage or the opportunity of obtaining
such advantage or the disclosure of which could be
5
detrimental to the interests of the Employer or any of its Affiliates,
including, without limitation, trade secrets, inventions, drawings, file data,
documentation, diagrams, specifications, know how, processes, formulas, models,
subscriber lists, sales representative lists, proprietary information, research
or development and test results, marketing techniques and materials, marketing
and development plans, price lists, pricing policies, business plans,
information relating to customers' and/or suppliers' identities, characteristics
and agreements, financial information and projections and employee files.
"Confidential Information" also includes any information described above which
the Employer or any of its Affiliates obtains from another party and which the
Employer or such Affiliate treats as proprietary or designates as Confidential
Information, whether or not owned or developed by the Employer or such
Affiliate. Notwithstanding the foregoing, Confidential Information does not
include information in the public domain, unless due to a breach of the
Employee's duties under Subsection 7(b).
As used in this Section 7, "Affiliate" means, with respect to any person or
entity (herein the "first party"), any other person or entity that directly or
indirectly controls, or is controlled by, or is under common control with, such
first party (the term "control" as used herein (including the terms "controlled
by" and "under common control with") means the possession, directly or
indirectly, of the power to (i) vote twenty-five percent (25%) or more of the
outstanding voting securities of such person or entity, or (ii) otherwise direct
the management or policies of such person or entity by contract or otherwise).
(b) Confidentiality. The Employee understands and agrees that the
---------------
Employee's employment creates a relationship of confidence and trust between the
Employee and the Employer with respect to all Confidential Information. At all
times, both during the Employee's employment with the Employer and after its
termination, the Employee will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Employer, except as may be
necessary in the ordinary course of performing the Employee's duties to the
Employer.
(c) Inventions. The Employee recognizes that the Employer and its
----------
Affiliates possess a proprietary interest in all of the Confidential Information
and have the exclusive right and privilege to use, protect by copyright, patent
or trademark, or otherwise exploit the processes, ideas and concepts described
therein to the exclusion of the Employee, except as otherwise agreed between the
Employer and the Employee in writing. The Employee expressly agrees that any
products, inventions, discoveries or improvements made by the Employee or his
agents or affiliates in the course of the Employee's employment, including any
of the foregoing which is based on or arises out of the Confidential
Information, shall be the property of and inure to the exclusive benefit of the
Employer. The Employee further agrees that any and all products, inventions,
discoveries or improvements developed by the Employee (whether or not able to be
protected by copyright, patent or trademark) during the course of his
employment, or involving the use of the time, materials or other resources of
the Employer or any of its affiliates, shall be promptly disclosed to the
Employer and shall
6
become the exclusive property of the Employer, and the Employee shall execute
and deliver any and all documents necessary or appropriate to implement the
foregoing.
(d) Business Opportunities. The Employee agrees, while he is employed
----------------------
by the Employer, to offer or otherwise make known or available to it, as
directed by the Board of Directors and without additional compensation or
consideration, any business prospects, contracts or other business opportunities
that he may discover, find, develop or otherwise have available to him in any
field in which the Employer or its Affiliates are engaged or propose to be
engaged, and further agrees that any such prospects, contacts or other business
opportunities shall be the property of the Employer.
(e) Documents, Records, etc. All documents, records, data, apparatus,
------------------------
equipment and other physical property, whether or not pertaining to Confidential
Information, which are furnished to the Employee by the Employer or are produced
by the Employee in connection with the Employee's employment will be and remain
the sole property of the Employer. The Employee will return to the Employer all
such materials and property as and when requested by the Employer. In any
event, the Employee will return all such materials and property immediately upon
termination of the Employee's employment for any reason. The Employee will not
retain with the Employee any such material or property or any copies thereof
after such termination.
[(F) NON-COMPETITION AND NON-SOLICITATION. DURING THE TERM AND FOR
------------------------------------
ONE (1) YEAR THEREAFTER (OR DURING THE BENEFITS PERIOD, IF LONGER), THE EMPLOYEE
(I) WILL NOT, DIRECTLY OR INDIRECTLY, WHETHER AS OWNER, PARTNER, SHAREHOLDER,
CONSULTANT, AGENT, EMPLOYEE, CO-VENTURER OR OTHERWISE, ENGAGE, PARTICIPATE,
ASSIST OR INVEST IN ANY COMPETING BUSINESS (AS HEREINAFTER DEFINED); (II) WILL
REFRAIN FROM DIRECTLY OR INDIRECTLY EMPLOYING, ATTEMPTING TO EMPLOY, RECRUITING
OR OTHERWISE SOLICITING, INDUCING OR INFLUENCING ANY PERSON TO LEAVE EMPLOYMENT
WITH THE EMPLOYER (OTHER THAN TERMINATIONS OF EMPLOYMENT OF SUBORDINATE
EMPLOYEES UNDERTAKEN IN THE COURSE OF THE EMPLOYEE'S EMPLOYMENT WITH THE
EMPLOYER); AND (III) WILL REFRAIN FROM SOLICITING OR ENCOURAGING ANY CUSTOMER OR
SUPPLIER TO TERMINATE OR OTHERWISE MODIFY ADVERSELY ITS BUSINESS RELATIONSHIP
WITH THE EMPLOYER. THE EMPLOYEE UNDERSTANDS THAT THE RESTRICTIONS SET FORTH IN
THIS SUBSECTION 7(F) ARE INTENDED TO PROTECT THE EMPLOYER'S INTEREST IN ITS
CONFIDENTIAL INFORMATION AND ESTABLISHED EMPLOYEE, CUSTOMER AND SUPPLIER
RELATIONSHIPS AND GOODWILL, AND AGREES THAT SUCH RESTRICTIONS ARE REASONABLE AND
APPROPRIATE FOR THIS PURPOSE. FOR PURPOSES OF THIS AGREEMENT, THE TERM
"COMPETING BUSINESS" SHALL MEAN A BUSINESS CONDUCTED ANYWHERE IN THE UNITED
STATES WHICH IS COMPETITIVE WITH ANY BUSINESS WHICH THE EMPLOYER OR ANY OF ITS
AFFILIATES CONDUCTS OR PROPOSES TO CONDUCT AT ANY TIME DURING THE EMPLOYMENT OF
THE EMPLOYEE. NOTWITHSTANDING THE FOREGOING, THE EMPLOYEE MAY OWN UP TO ONE
PERCENT (1%) OF THE OUTSTANDING STOCK OF A PUBLICLY HELD CORPORATION WHICH
CONSTITUTES OR IS AFFILIATED WITH A COMPETING BUSINESS.] [▇▇▇▇▇▇▇]
7
[(F) NON-COMPETITION AGREEMENT. THE EMPLOYEE ACKNOWLEDGES THAT THE
-------------------------
NON-COMPETITION AGREEMENT EXECUTED AND DELIVERED CONCURRENTLY HEREWITH IS AN
INTEGRAL PART OF HIS EMPLOYMENT ARRANGEMENTS WITH THE EMPLOYER.] [▇▇▇▇▇▇▇]
(g) Third-Party Agreements and Rights. The Employee hereby confirms
---------------------------------
that the Employee is not bound by the terms of any agreement with any previous
employer or other party which restricts in any way the Employee's use or
disclosure of information or the Employee's engagement in any business. The
Employee represents to the Employer that the Employee's execution of this
Agreement, the Employee's employment with the Employer and the performance of
the Employee's proposed duties for the Employer will not violate any obligations
the Employee may have to any such previous employer or other party. In the
Employee's work for the Employer, the Employee will not disclose or make use of
any information in violation of any agreements with or rights of any such
previous employer or other party, and the Employee will not bring to the
premises of the Employer any copies or other tangible embodiments of non-public
information belonging to or obtained from any such previous employment or other
party.
(h) Litigation and Regulatory Cooperation. During and after the
-------------------------------------
Employee's employment, the Employee shall cooperate fully with the Employer in
the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Employer which relate
to events or occurrences that transpired while the Employee was employed by the
Employer. The Employee's full cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Employer at mutually convenient times. During and after the Employee's
employment, the Employee also shall cooperate fully with the Employer in
connection with any investigation or review of any federal, state or local
regulatory authority as any such investigation or review relates to events or
occurrences that transpired while the Employee was employed by the Employer.
The Employer shall reimburse the Employee for his out-of-pocket expenses
incurred in connection with the Employee's performance of obligations pursuant
to this Subsection 7(h).
(i) Injunction. The Employee agrees that it would be difficult to
----------
measure any damages caused to the Employer which might result from any breach by
the Employee of the promises set forth in this Section 7, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
subject to Section 8 of this Agreement, the Employee agrees that if the Employee
breaches, or proposes to breach, any portion of this Agreement, the Employer
shall be entitled, in addition to all other remedies that it may have, to an
injunction or other appropriate equitable relief to restrain any such breach
without showing or proving any actual damage to the Employer.
8. Arbitration of Disputes. Except as provided below, any dispute
-----------------------
arising out of or relating to this Agreement or the breach, termination or
validity hereof shall be finally settled by binding arbitration conducted
expeditiously in accordance with the
8
J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures (the "J.A.M.S.
Rules"). The arbitration shall be governed by the United States Arbitration Act,
9 U.S.C. (S)(S)1-16, and judgment upon the award rendered by the arbitrators may
be entered by any court having jurisdiction thereof. The place of arbitration
shall be Boston, Massachusetts.
Such proceedings shall be administered by the neutral arbitrator in
accordance with the J.A.M.S. Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral arbitrator which shall consist of a
summary presentation by each side of not more than three (3) hours; such
hearings to take place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following such
hearings.
Notwithstanding anything to the contrary contained herein, the provisions
of this Section 8 shall not apply with regard to any equitable remedies to which
any party may be entitled hereunder. Further, the parties hereto agree that
under no circumstances can the payment of Salary be arbitrated or litigated.
9. Consent to Jurisdiction. Each of the parties hereto (a) hereby
-----------------------
irrevocably submits to the jurisdiction of any United States District Court of
competent jurisdiction for the purpose of enforcing the award or decision in any
proceeding, (b) hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution (except as
protected by applicable law), that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives and agrees not to seek any review by
any court of any other jurisdiction which may be called upon to grant an
enforcement of the judgment of any such court. Each of the parties hereto
hereby consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its or his
submission to jurisdiction and its or his consent to service of process by mail
is made for the express benefit of the other parties hereto. Final judgment
against any party hereto in any such action, suit or proceeding may be enforced
in other jurisdictions by suit, action or proceeding on the judgment, or in any
other manner provided by or pursuant to the laws of such other jurisdiction.
9
10. Integration. This Agreement [, THE NON-COMPETITION AGREEMENT] and the
-----------
Purchase Agreement constitute the entire agreement between the parties
pertaining to their subject matter and supersede all prior agreements, whether
oral or written, between the parties with respect to any related subject matter.
11. Assignment; Successors and Assigns, etc. Neither the Employer nor the
---------------------------------------
Employee may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
--------
without the consent of the Employee in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Employee, their respective successors, executors,
administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement
--------------
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
------
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. All notices and other communications under this Agreement
-------
shall be in writing and shall be delivered in accordance with the provisions of
the Purchase Agreement.
15. Amendment. This Agreement may be amended or modified only by a
---------
written instrument signed by the Employee and by a duly authorized
representative of the Employer.
16. Governing Law. This is a Massachusetts contract and shall be
-------------
construed under and be governed in all respects by the laws of The Commonwealth
of Massachusetts, without giving effect to the conflict of laws principles of
such Commonwealth.
17. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
[End of Text]
10
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Employer, by its duly authorized officer, and by the Employee, as of the
Effective Date.
MAC-GRAY SERVICES, INC.
By:
_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
__________________________________________
[▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇][▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇]
The undersigned, as the sole stockholder of the Employer, hereby guarantees
the full payment and performance (as the case may be) of the Employer's
obligations under this Agreement.
▇▇▇-▇▇▇▇ CORPORATION
By:
_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chief Executive Officer
11
Exhibit D
---------
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT is made as of April __, 1998 by and between
▇▇▇-▇▇▇▇ Corporation, a Delaware corporation (together with its subsidiaries,
the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇▇"). Reference is made to
that certain Stock Purchase Agreement, dated as of March 31, 1998 (the "Purchase
Agreement"), by and among the Company, Mac-Gray Services, Inc., a Delaware
corporation ("Buyer"), Copico, Inc., a Massachusetts corporation ("Copico"), ▇▇.
▇▇▇▇▇▇▇ and the other persons named therein (together with ▇▇. ▇▇▇▇▇▇▇, the
"Stockholders").
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties thereto are consummating the transactions contemplated by the
Purchase Agreement, pursuant to which the Stockholders will sell, and the Buyer
will buy, all of the issued and outstanding capital stock of Copico in exchange
for cash and shares of the Company's common stock (the "Purchase");
WHEREAS, prior to the Purchase, ▇▇. ▇▇▇▇▇▇▇ was a principal stockholder of,
and was principally involved in the management of the business of, Copico;
WHEREAS, ▇▇. ▇▇▇▇▇▇▇ will receive substantial economic benefits under the
Purchase Agreement and pursuant to the terms hereof; and
WHEREAS, as a material inducement to the Company and ▇▇. ▇▇▇▇▇▇▇ to
consummate the transactions contemplated by the Purchase Agreement, the Company
and ▇▇. ▇▇▇▇▇▇▇ are executing and delivering this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Non-competition.
---------------
(a) In consideration of (i) the consummation of the transactions
contemplated by the Purchase Agreement, including the payments to be made by the
Company to ▇▇. ▇▇▇▇▇▇▇ thereunder, and (ii) the payment to be made by the
Company to ▇▇. ▇▇▇▇▇▇▇ pursuant to Section 2 hereof, ▇▇. ▇▇▇▇▇▇▇ covenants and
agrees that, for a period beginning on the date of this Agreement and expiring
on the second anniversary of the last date on which ▇▇. ▇▇▇▇▇▇▇'▇ employment
with the Company, the buyer or either of their respective subsidiaries
terminates for any reason (the "Termination Date"), he shall not, without the
express prior written consent of the Company, directly or indirectly, anywhere
in the Restricted Area (as defined below) (A) engage in any activity in the
Designated Industry (as defined below) or (B) engage, participate or invest in
or assist (whether as owner, part-owner,
shareholder, partner, member, director, officer, trustee, employee, agent or
consultant, or in any other capacity) any business organization whose
activities, products or services are in the Designated Industry; provided,
--------
however, that ▇▇. ▇▇▇▇▇▇▇ may make passive investments in a competitive
-------
enterprise, the shares of which are publicly traded, if ▇▇. ▇▇▇▇▇▇▇'▇ aggregate
investment in such enterprise constitutes less than one percent (1%) of the
equity ownership of such enterprise. Without implied limitation, the foregoing
non-competition covenant shall prohibit ▇▇. ▇▇▇▇▇▇▇ from (i) hiring, attempting
to hire or otherwise soliciting, for or on behalf of any entity or person, any
officer or other employee of the Company or any of its Affiliates (as defined
below), or authorizing or approving any such action by any other person, (ii)
encouraging for or on behalf of any entity or person any officer or other
employee to terminate his or her relationship or employment with the Company or
any of its Affiliates, (iii) soliciting for or on behalf of any entity or person
any customer of the Company or any of its Affiliates and (iv) diverting to any
entity or person any customer of the Company or any of its Affiliates.
(b) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Restricted Area" means each state of the United States (A)
---------------
in which Copico is, as of the date of this Agreement, conducting any business
activities and (B) in which the Company or any of its Affiliates are, as of the
date of this Agreement or at any time prior to the Termination Date, conducting
any business activities.
(ii) "Designated Industry" means the businesses of Copico and the
-------------------
Company as of the date of this Agreement, including the business of owning,
selling, leasing, operating or servicing card or coin-operated photocopier and
laundry machines.
(iii) "Affiliate" shall mean, with respect to any person or
---------
entity (herein the "first party"), any other person or entity that directly or
indirectly controls, or is controlled by, or is under common control with, such
first party (the term "control" as used herein (including the terms "controlled
by" and "under common control with") means the possession, directly or
indirectly, of the power to (A) vote twenty-five percent (25%) or more of the
outstanding voting securities of such person or entity, or (B) otherwise direct
the management or policies of such person or entity by contract or otherwise).
2. Payment. In consideration of the covenants contained in Section 1
-------
hereof, the Company shall pay to ▇▇. ▇▇▇▇▇▇▇ on the date hereof an additional
amount of Five-Hundred Thousand Dollars ($500,000) in immediately available
funds.
3. Scope of Agreement. The parties acknowledge that the time, scope,
------------------
geographic area and other provisions of this Agreement have been specifically
negotiated by sophisticated commercial parties and agree that (a) all such
provisions are reasonable under the circumstances of the transactions
contemplated by the Purchase Agreement, (b) are given as an integral and
essential part of the transactions contemplated by the Purchase Agreement and
2
(c) but for the covenants of ▇▇. ▇▇▇▇▇▇▇ contained in this Agreement, the
Company would not enter into the Purchase Agreement or consummate the
transactions contemplated thereby. ▇▇. ▇▇▇▇▇▇▇ has independently consulted with
his counsel and has been advised in all respects concerning the reasonableness
and propriety of the covenants contained herein, with specific regard to the
businesses conducted by the Company and its Affiliates.
4. Specific Performance; Severability. It is specifically understood and
----------------------------------
agreed by the parties hereto that the breach by ▇▇. ▇▇▇▇▇▇▇ of any provision of
this Agreement will result in irreparable injury to the Company and its
Affiliates, that the remedy at law alone will be an inadequate remedy for such
breach and that, in addition to any other remedy they may have, the Company and
each of its Affiliates shall be entitled to enforce the specific performance of
this Agreement by ▇▇. ▇▇▇▇▇▇▇ through both temporary and permanent injunctive
relief without the necessity of proving actual damages. If the Company is
required to post a bond in connection with obtaining any temporary or permanent
injunctive relief, the parties hereto agree that such bond shall be limited in
amount to $10,000 and that such amount is reasonable and adequate for such bond.
In the event that any covenant or provision contained in this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too long a period of time or over too large a geographical
area or by reason of its being too extensive in any other respect, such covenant
or provision shall not be construed to be null, void and of no effect, but
rather shall be interpreted to extend only over the maximum period of time for
which it may be enforceable, and/or over the maximum geographical area as to
which it may be enforceable, and/or to the maximum extent in all other respects
as to which it may be enforceable, all as determined by such court in such
action. The existence of any claim or cause of action which ▇▇. ▇▇▇▇▇▇▇ may
have against the Company or any of its Affiliates shall not constitute a defense
or bar to the enforcement of any of the provisions of this Agreement and shall
be pursued through separate court action by ▇▇. ▇▇▇▇▇▇▇.
5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of The Commonwealth of Massachusetts, without regard to
the conflicts or choice of law provisions thereof.
6. Dispute Resolution. Except as provided below, any dispute arising out
------------------
of or relating to this Agreement or the breach, termination or validity hereof
shall be finally settled by binding arbitration conducted expeditiously in
accordance with the J.A.M.S./Endispute Comprehensive Arbitration Rules and
Procedures (the "J.A.M.S. Rules"). The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof. The place of arbitration shall be Boston, Massachusetts.
Such proceedings shall be administered by the neutral arbitrator in
accordance with the J.A.M.S. Rules as he/she deems appropriate, however, such
proceedings shall be guided by the following agreed upon procedures:
3
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
(c) hearings before the neutral arbitrator which shall consist of a
summary presentation by each side of not more than three (3) hours; such
hearings to take place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following such
hearings.
Notwithstanding anything to the contrary contained herein, the provisions
of this Section 6 shall not apply with regard to any equitable remedies to which
any party may be entitled hereunder.
7. Consent to Jurisdiction. Each of the parties hereto (a) hereby
-----------------------
irrevocably submits to the jurisdiction of any United States District Court of
competent jurisdiction for the purpose of enforcing the award or decision in any
proceeding, (b) hereby waives, and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution (except as
protected by applicable law), that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or the subject matter hereof may not be enforced
in or by such court, and (c) hereby waives and agrees not to seek any review by
any court of any other jurisdiction which may be called upon to grant an
enforcement of the judgment of any such court. Each of the parties hereto
hereby consents to service of process by registered mail at the address to which
notices are to be given. Each of the parties hereto agrees that its or his
submission to jurisdiction and its or his consent to service of process by mail
is made for the express benefit of the other parties hereto. Final judgment
against any party hereto in any such action, suit or proceeding may be enforced
in other jurisdictions by suit, action or proceeding on the judgment, or in any
other manner provided by or pursuant to the laws of such other jurisdiction.
8. Successors and Assigns. This Agreement shall inure to the benefit of,
----------------------
and be binding upon, the successors of the Company and its Affiliates by way of
merger, consolidation or transfer of all or substantially all of the assets of
the Company, and may not be assigned by ▇▇. ▇▇▇▇▇▇▇.
9. No Conflicting Obligations. ▇▇. ▇▇▇▇▇▇▇ hereby represents and
--------------------------
warrants to the Company that he is not now under, or bound to be under in the
future, any obligation to any person, firm or corporation which is or would be
inconsistent or in conflict with this Agreement or would prevent, limit or
impair in any way the full and absolute performance by
4
▇▇. ▇▇▇▇▇▇▇ of his obligations hereunder. In addition, ▇▇. ▇▇▇▇▇▇▇ covenants
that he will not enter into or discuss entering into any such agreement.
10. Entire Agreement; Modifications. This Agreement, the Purchase
-------------------------------
Agreement and that certain Employment Agreement dated as of even date herewith,
by and between the Company and ▇▇. ▇▇▇▇▇▇▇, constitute the entire agreement
between the parties pertaining to their subject matter and supersede all prior
and contemporaneous agreements, representations, negotiations and understandings
of the parties, whether oral or written. No supplement, modification or
amendment to this Agreement shall be binding unless executed in writing by all
the parties hereto.
11. Waivers. The failure of any party to require the performance or
-------
satisfaction of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent subsequent enforcement
of such term or obligation or be deemed a waiver of any subsequent failure or
breach.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. Notices. All notices and other communications under this Agreement
-------
shall be in writing and shall be delivered in accordance with the provisions of
the Purchase Agreement.
[End of Text]
5
IN WITNESS WHEREOF, the parties have duly executed this Non-Competition
Agreement as of the date and year first written above.
▇▇▇-▇▇▇▇ CORPORATION
By:
_____________________________________
Name:
Title:
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
6
Exhibit E
---------
FIRPTA NON-FOREIGN TRANSFEROR CERTIFICATE
------------------
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"),
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform Mac-Gray Services, Inc., a
Delaware corporation ("Buyer"), that withholding of tax is not required upon the
disposition of a U.S. real property interest by ________________ (the
"Stockholder"), the undersigned hereby certifies as follows:
1. The Stockholder is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Code and Income Tax Regulations);
2. The Stockholder's social security number or employer identification
number is ____________________; and
3. The Stockholder's address is:
________________________________
________________________________
The Stockholder understands that this certification may be disclosed to the
Internal Revenue Service by Buyer and that any false statement contained herein
could be punished by fine, imprisonment or both.
Under penalties of perjury, the undersigned declares that he has examined
this certification and to the best of his knowledge and belief it is true,
correct and complete, and he further declares that he has authority to sign this
document on behalf of the Stockholder.
Date: _____________________ ________________________________
[NAME/TITLE]
ACKNOWLEDGMENT
--------------
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF __________________
BEFORE ME, a Notary Public authorized to take acknowledgments in the State
and County set forth above, personally appeared ___________________, on behalf
of the Stockholder, known to me and known by me to be the person who executed
the foregoing and he acknowledged before me that he executed said instrument and
that the facts stated therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the State and County aforesaid, this the _____ day of April, 1998.
-----------------------
Notary Public
My Commission Expires:
Exhibit F
---------
[To be agreed upon prior to closing]
Exhibit G
---------
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
April __, 1998, by and among ▇▇▇-▇▇▇▇ Corporation, a Delaware corporation (the
"Company"), and the holders who are signatories hereto (each a "Holder" and
collectively, the "Holders"). This Agreement is contemplated by a certain Stock
Purchase Agreement, dated as of March 31, 1998 (the "Purchase Agreement"), by
and among the Company, Mac-Gray Services, Inc., a Delaware corporation, Copico,
Inc., a Massachusetts corporation, and the Holders.
The parties hereby agree as follows:
Section 1. Definitions.
-----------
As used in this Agreement, the following terms shall have the following
meanings:
"Business Day" means any day other than a day on which banks are authorized
------------
or required to be closed in The Commonwealth of Massachusetts.
"Closing Date" has the meaning ascribed thereto in the Purchase Agreement.
------------
"Commission" means the Securities and Exchange Commission.
----------
"Common Shares" means the 250,000 shares of Common Stock issued to the
-------------
Holders pursuant to the Purchase Agreement.
"Common Stock" means the common stock, par value $.01 per share, of the
------------
Company.
"Company" has the meaning set forth in the preamble and shall include the
-------
Company's successors by merger, acquisition, reorganization or otherwise.
"Controlling Persons" has the meaning set forth in Section 6(a).
-------------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
------------
time to time, or any successor statute, and the rules and regulations of the
Commission promulgated thereunder.
"Lock-up Period" has the meaning set forth in Section 7.
--------------
"Person" means any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to the prospectus, including post-effective
amendments, and in each case including all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"Registrable Securities" means the Common Shares except for (i) Common
----------------------
Shares the sale of which is covered by a Registration Statement that has been
declared effective under the Securities Act, (ii) Common Shares which may be
transferred pursuant to Rule 144 (or any similar provision then in force, but
not Rule 144A) under the Securities Act, including a sale pursuant to the
provisions of Rule 144(k), and (iii) Common Shares which cease to be
outstanding.
"Registration Expenses" has the meaning set forth in Section 5.
---------------------
"Registration Statement" means any registration statement of the Company
----------------------
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement (including the Shelf Registration Statement), and all amendments and
supplements to any such registration statement, including post-effective
amendments, in each case including the Prospectus, all exhibits, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"Securities Act" means the Securities Act of 1933, as amended from time to
--------------
time, or any successor statute, and the rules and regulations of the Commission
promulgated thereunder.
"Shelf Registration" has the meaning set forth in Section 2.
------------------
"Shelf Registration Statement" has the meaning set forth in Section 2.
----------------------------
"Suspension Period" has the meaning set forth in Section 4.
-----------------
"Suspension Notice" has the meaning set forth in Section 4.
-----------------
"Target Effective Period" has the meaning set forth in Section 2.
-----------------------
Section 2. Shelf Registration. Prior to the date hereof, the Company
------------------
has filed and caused to become effective under the Securities Act a shelf
registration statement (the "Shelf Registration Statement") on the appropriate
form for an offering to be made on a continuous basis pursuant to Rule 415 under
the Securities Act (or such successor rule or similar provision
2
then in effect) covering all of the Registrable Securities (a "Shelf
Registration"). The Company shall use commercially reasonable efforts to keep
such Shelf Registration Statement continuously effective for a period (the
"Target Effective Period") ending with the earlier of (a) the sale of all
Registrable Securities and (b) twelve (12) months following the Closing Date.
Section 3. Registration Procedures.
-----------------------
In connection with the obligations of the Company to register Registrable
Securities pursuant to the terms and conditions of this Agreement:
(a) The Company shall prepare and file with the Commission such post-
effective amendments to the Shelf Registration Statement as may be necessary to
keep such Shelf Registration Statement effective for the Target Effective
Period; shall cause the Prospectus included in such Shelf Registration Statement
to be supplemented by any required Prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act; and
shall comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered by such Shelf
Registration Statement.
(b) The Company shall furnish to any Holder, without charge, such
number of conformed copies of the Shelf Registration Statement and any post-
effective amendment thereto and such number of copies of the Prospectus
(including each preliminary Prospectus) and any amendments or supplements
thereto, as such Holder may reasonably request in order to facilitate the sale
of such Holder's Registrable Securities.
(c) The Company shall use commercially reasonable efforts to register
or qualify the Registrable Securities covered by the Shelf Registration
Statement under such other securities or "blue sky" laws of such states of the
United States as any Holder reasonably requests; provided, however, that the
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Company shall not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(c), (ii) to file any general consent to service of process, or (iii)
to subject itself to taxation in any jurisdiction where it would not otherwise
be subject to taxation.
(d) The Company shall promptly notify each Holder of the happening of
any event which makes any statement made in the Shelf Registration Statement or
related Prospectus untrue or which requires the making of any changes in such
Shelf Registration Statement or Prospectus so that it will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and promptly
following expiration of any Suspension Period (as defined in Section 4), the
Company shall prepare and file with the Commission and furnish a supplement or
amendment to such Prospectus so that, as thereafter deliverable to the
purchasers of Registrable Securities, such Prospectus will not contain any
untrue statement of a material fact or omit to state a
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material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(e) The Company shall use commercially reasonable efforts to prevent
the issuance of any order suspending the effectiveness of the Shelf Registration
Statement, and, if one is issued, the Company shall use commercially reasonable
efforts to obtain the withdrawal of such order as promptly as practicable.
(f) The Company shall cause the Registrable Securities included in any
Registration Statement to be listed on the New York Stock Exchange or such other
securities exchange on which similar securities issued by the Company are then
listed.
Section 4. Suspension Period.
-----------------
Each Holder, upon receipt of any notice (a "Suspension Notice") from the
Company of the happening of any event of the kind described in Section 4(e) or
of any event which, in the Company's reasonable business judgment, could become
such an event, shall immediately discontinue disposition of the Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 3(d) (the period from the date on which such
Holder receives a Suspension Notice to the date on which such Holder receives
copies of the supplemented or amended Prospectus is referred to herein as the
"Suspension Period"). If so directed by the Company, each Holder will deliver
to the Company all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable Securities that
is current at the time of receipt of such notice. In the event that the Company
shall give any Suspension Notice, (i) the Company shall use commercially
reasonable efforts and take such actions as are reasonably necessary to end the
Suspension Period as promptly as practicable and (ii) the Target Effective
Period shall be extended by the number of days during the Suspension Period.
Section 5. Registration Expenses.
---------------------
Subject to the proviso below, any and all expenses incident to the
Company's performance of or compliance with this Agreement, including, without
limitation, Commission and securities exchange registration and filing fees,
fees and expenses incurred in connection with compliance with state securities
or "blue sky" laws, printing expenses, fees and expenses incurred in connection
with the listing of the Registrable Securities and fees and disbursements of
counsel for the Company and of the independent certified public accountants of
the Company (all such expenses being herein called "Registration Expenses"),
will be borne by the Company; provided, however, that Registration Expenses
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shall not include (i) underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of Registrable Securities, (ii) any
fees or expenses of any counsel, accountants or other persons retained or
employed by the Holders, or (iii) out-of-pocket expenses of the Holders and
their agents, including, without limitation, any travel costs.
4
Section 6. Indemnification and Contribution.
--------------------------------
(a) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless, to the full extent permitted by law, each Holder, its
officers, directors, employees and agents and each Person, if any, which
controls such Holder within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, (collectively, "Controlling Persons"),
from and against all losses, claims, damages, liabilities and expenses
(including, without limitation, any legal or other fees and expenses reasonably
incurred by any Holder or any such Controlling Person in connection with
defending or investigating any action or claim in respect thereof)
(collectively, "Damages") to which any of them may become subject under the
Securities Act or otherwise, insofar as such Damages arise out of or are based
upon (i) any untrue or alleged untrue statement of material fact contained in
any Registration Statement (including any related preliminary or final
Prospectus) pursuant to which Registrable Securities were registered under the
Securities Act, or (ii) any omission or alleged omission to state therein a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as such
Damages arise out of or are based upon any such untrue statement or omission or
alleged untrue statement or omission based upon information furnished in writing
to the Company by such Holder expressly for use therein.
(b) Indemnification by the Holders. Each Holder agrees to indemnify
------------------------------
and hold harmless, to the full extent permitted by law, the Company, its
directors, officers, employees and agents and each Controlling Person of the
Company, from and against any and all Damages to which any of them may become
subject under the Securities Act or otherwise to the same extent as the
foregoing indemnity from the Company to such Holder, but only to the extent such
Damages arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission based upon information furnished to the
Company in writing by such Holder expressly for use in any Registration
Statement. In no event shall the liability of any Holder for indemnification
under this Section 6(b) in its capacity as such (and not in such Holder's
capacity as an officer or director of the Company) exceed the proceeds received
by such Holder from the sale of Registrable Securities under such Registration
Statement.
(c) Indemnification Procedures. In case any proceeding (including
--------------------------
any governmental investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to either paragraph (a) or (b)
above, such Person (the "indemnified party") shall promptly notify the Person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceedings and shall pay the fees and
disbursements of such counsel relating to such proceeding. The failure or delay
of an indemnified party to notify the indemnifying party with respect to a
particular proceeding shall not relieve the indemnifying party from any
obligation or liability which it may have pursuant
5
to this Agreement if the indemnifying party is not prejudiced by such failure or
delay. In any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent. No indemnifying party shall, without the prior written consent of any
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which such
indemnified party is a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release
of such indemnified party from all liability on all claims that are the subject
matter of such proceeding.
(d) Contribution. To the extent that the indemnification provided for
------------
in paragraph (a) or (b) of this Section 6 is held by a court of competent
jurisdiction to be unavailable to an indemnified party in respect of any
Damages, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such Damages (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand, and each Holder on the other, from the offering of
the Registrable Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, on the one hand, and the Holders, on the
other, in connection with the statements or omissions which resulted in such
Damages, as well as any other relevant equitable considerations. The relative
fault of the Company on the one hand and of the Holders on the other hand shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
If indemnification is available under paragraph (a) or (b) of this Section
6, the indemnifying parties shall indemnify each indemnified party to the full
extent provided in such paragraphs without regard to the relative benefits to or
relative fault of said indemnifying party or indemnified party or any other
equitable consideration provided for in this Section 7(d).
The Company and each Holder agrees that it would not be just or equitable
if contribution pursuant to this Section 6(d) were determined by pro rata
--- ----
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the Damages referred to in this Section 6
shall be deemed to include any legal or other expenses reasonably incurred (and
not otherwise reimbursed) by such indemnified party in connection with
investigating or defending any such action or claim. In no event shall any
Holder be required to contribute an amount under this Section 6(d) in excess of
the proceeds received by such Holder from the sale of Registrable Securities
under the relevant Registration Statement. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
6
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
Section 7. Restrictions on Sales by Holders.
--------------------------------
In the event of an underwritten public offering of securities of the
Company, each Holder shall, upon the written request of the managing underwriter
(or underwriters) of such offering, agree not to effect any sale or disposition
of any securities similar to those being registered in such offering, including,
without limitation, sales of Registrable Securities pursuant to the Shelf
Registration Statement, for such period (the "Lock-up Period"), not to exceed
180 days, as such underwriter may specify. Such agreement shall be in form and
substance satisfactory to the Company and such underwriter.
Section 8. Information Furnished by Holders.
--------------------------------
Each Holder shall furnish to the Company such information regarding such
Holder and such Holder's intended method of distribution of the Registrable
Securities as the Company may from time to time reasonably request in writing in
order to comply with the Securities Act and the provisions of this Agreement.
Each Holder agrees (a) to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by the Holder to the
Company or of the occurrence of any event, in either case as a result of which
any Prospectus contains or would contain an untrue statement of a material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities or omits or would omit to state any material fact
regarding the Holder or the Holder's intended method of distribution of the
Registrable Securities required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and (b) to promptly furnish to the Company any additional information required
to correct and update any previously furnished information or required so that
the Prospectus shall not contain, with respect to the Holder or the Holder's
intended method of distribution of the Registrable Securities, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
Section 9. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of the
Holders of a majority in interest of the Registrable Securities then
outstanding.
(b) Notices. All notices and other communications provided for or
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permitted hereunder shall be in writing and shall be deemed to have been duly
given if delivered personally or sent by telecopier, registered or certified
mail (return receipt
7
requested), postage prepaid or courier to the parties at their respective
addresses set forth on the signature pages hereof (or at such other address for
any party as shall be specified by like notice, provided that notices of a
change of address shall be effective only upon receipt thereof). All such
notices and communications shall be deemed to have been received: at the time
delivered by hand, if personally delivered; five (5) Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged,
if telecopied; and on the next Business Day, if timely delivered to a courier
guaranteeing overnight delivery.
(c) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors of each of the parties. No Holder may
assign any of its rights hereunder without the prior written consent of the
Company.
(d) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of The Commonwealth of Massachusetts without regard
to principles of conflicts of law.
(g) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the Holders
shall be enforceable to the fullest extent permitted by law.
(h) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and is intended to be the complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
[End of Text]
8
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
▇▇▇-▇▇▇▇ CORPORATION
By:_________________________
Name:
Title:
HOLDERS:
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____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
▇▇▇▇▇ ▇. ▇▇▇▇
____________________________
▇▇▇▇▇ ▇▇▇▇▇▇
____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
MASSACHUSETTS CAPITAL
RESOURCE COMPANY
By:_________________________
Name:
Title:
9
Exhibit H
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[To be agreed upon prior to closing]