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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
DATED AS OF THE 13TH DAY OF JULY 2000
BY
AND
AMONG
NOBLE INTERNATIONAL, LTD.
NOBLE HOLDINGS, INC.
AND
DSI HOLDINGS, INC.,
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AND
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 13th
day of July, 2000 ("Effective Date") by and among Noble International, Ltd. a
Delaware corporation ("Parent"), Noble Holdings, Inc., a Michigan corporation
("Buyer"), DSI Holdings, Inc., a Texas corporation ("Holdings"), ▇▇▇▇▇▇▇ ▇▇▇
Savant, an individual residing in Katy, ▇▇▇▇▇▇ County, Texas ("Savant"), ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, an individual residing in Highland Village, ▇▇▇▇▇▇ County, Texas
("▇▇▇▇▇"), ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual residing in ▇▇▇▇▇▇, ▇▇▇▇▇▇
County, Texas ("▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, an individual
residing in Cypress, ▇▇▇▇▇▇ County, Texas ("▇▇▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an
individual residing in Katy, ▇▇▇▇▇▇ County, Texas ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇, an
individual residing in Richmond, Fort Bend County, Texas ("▇▇▇▇▇▇"), and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ an individual residing in Houston, ▇▇▇▇▇▇ County, Texas ("Fields").
Savant, Yates, Cassels, Delahoussaye, DeVaughn, Browne, and Fields are
referenced to herein individually as an "Owner" and collectively as the
"Owners."
WHEREAS, Buyer has agreed to purchase and the Owners have agreed to
sell one hundred percent (100%) of the outstanding capital stock of Holdings
(the "Stock") under the terms and conditions of this Agreement.
WHEREAS, the following entities are wholly owned subsidiaries of
Holdings: (a) DSI Franchising, Inc., a Texas corporation ("DSIF"); (b) SYG
Franchisee Services, Inc., a Texas corporation ("SYG"); (c) Destination
Solutions, Inc. a Texas corporation ("Solutions"); and (d) Dedicated Services,
Inc., a Texas corporation ("Services"); (e) Dedicated Services Memphis Inc., a
Texas corporation ("Memphis"); (f) Dedicated Services New York, Inc., a Texas
corporation ("New York"); (g) Dedicated Services Ohio, Inc., a Texas corporation
("Ohio"); and (h) Dedicated Services California, Inc., a Texas corporation
("California"). DSIF, SYG, Solutions, Services, Memphis, New York, Ohio and
California are collectively referenced to herein as the "Subsidiaries."
WHEREAS, each Owner has deemed it advisable he enter into this
Agreement; and
WHEREAS, Parent and Buyer have deemed it advisable to enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE 1.
PURCHASE AND SALE
Section 1.1 The Purchase. Upon the terms and subject to the conditions
of this Agreement, at Closing (as defined below), Buyer shall purchase from the
Owners the capital stock of Holdings owned by the Owners so that after Closing
Buyer shall own one hundred percent (100%) of Holdings in exchange for the
consideration set forth in SECTION 1.2.
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Section 1.2 Purchase Price. The purchase price ("Purchase Price") for
the Stock shall be Nineteen Million Eight Hundred Twenty Nine Thousand Four
Hundred Eighty Six and 00/100 Dollars ($19,829,486.00), subject to adjustment as
provided herein and based upon an agreed value per share of Parent's Stock (as
hereinafter defined) of Thirteen Dollars ($13.00), and shall be payable as
follows:
(a) Seventeen Million Nine Hundred Thousand and 00/100 Dollars
($17,900,000.00) payable to the Owners in the proportions set forth in SCHEDULE
1.2(A) by federal wire transfer on the date of Closing in accordance with such
instructions as the Owners may provide to the Purchaser at least 72 hours prior
to the Closing.
(b) One hundred forty eight thousand four hundred twenty two
(148,422) shares of common stock of the Parent ("Parent's Stock"). The Parent's
Stock will be delivered to the Owners in the amounts set forth in SCHEDULE
1.2(B). The Parent's Stock will carry a legend providing an annual put right to
the holder of the Parent's Stock. The put right will allow each holder of the
Parent's Stock to annually, beginning on December 31, 2001, put a maximum of
twenty five percent (25%) of the Parent's Stock owned by him ("Put Stock") to
Parent. The put right will require Parent to purchase the Put Stock for thirteen
dollars ($13.00) per share. The holder of the Parent's Stock must notify Parent
of his intent to put some or all of the shares available to be put ("Put
Notice") on or before January 30 of any year beginning January 30, 2002. Parent
shall pay the holder of the put shares, in cash, within five (5) business days
after the Put Notice. If a holder does not put all the Parent's Stock available
to be put in a given year, the holder shall have forfeited his right to put
those shares; provided, however, that the holder's right to put the remaining
shares in a subsequent year shall not be affected. Notwithstanding the
foregoing, all put rights with respect to the Parent's Stock shall terminate in
the event that the trading price of the common stock of the Parent exceeds
thirteen dollars ($13.00) per share at any time during seven (7) out of twenty
(20) consecutive trading days.
Section 1.3 Closing. A Closing on the transactions contemplated by this
Agreement (the "Closing") shall take place no later than July 26, 2000 (the
"Closing Date"). If the Closing has not occurred before July 26, 2000 then
either party may terminate this Agreement. The Closing shall take place on the
designated day at 9:00 a.m. in the office of ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ or such other place and time as the
parties may agree. The Buyer and the Owners agree that they will use their best
efforts and negotiate in good faith to resolve any disputes between the parties
related to this Agreement.
Section 1.4 Other Deliveries on the Closing Date.
(a) Holdings' and Owners' Obligations. On the Closing Date,
Holdings and the Owners, as applicable, shall deliver to Buyer each of the
following documents in form and substance reasonably satisfactory to Buyer:
(1) A good standing certificate for Holdings and each of the
Subsidiaries from the Comptroller of the State of Texas dated no
more than ten (10) days prior to Closing.
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(2) A Certificate of Existence from the Secretary of State of
the State of Texas for Holdings and each of the Subsidiaries dated
no more than ten (10) days prior to Closing.
(3) A certificate from Holdings and a certificate from the
Owners that the representations and warranties of, respectively,
Holdings and the Owners contained herein are true and correct as
of the Closing Date (except to the extent that any such
representation or warranty relates by its express terms solely to
a prior date, in which event such representation or warranty was
true and correct as of such date) and that Holdings and the Owners
shall have performed (or caused to be performed) all covenants,
agreements and conditions contained herein to be performed and
observed by them on or before the Closing Date.
(4) A certificate of the Secretary of Holdings certifying
resolutions duly adopted by Holdings' Board of Director's obtained
at least ten (10) days prior to Closing (i) authorizing the
execution, delivery and performance of this Agreement on behalf of
Holdings and (ii) accepting the duly submitted resignation of all
board members and officers of Holdings and each of the
Subsidiaries.
(5) A revocation of the Shareholders' Agreement of Holdings
in a form reasonably acceptable to Buyer.
(6) A certificate from Holdings, dated the Closing Date,
stating that any and all outstanding debt of Holdings, other than
the Permitted Total Liabilities (as defined in SECTION 1.9), has
been paid in full prior to the Closing.
(7) Such other documents and certificates as reasonably may
be required by Buyer to consummate this Agreement and the
transactions contemplated herein.
(b) Parent's and Buyer's Obligations. On the Closing Date, Parent
and Buyer shall deliver to the Owners each of the following documents in form
and substance reasonably satisfactory to them:
(1) Certificates of Existence from the Secretaries of State
of the States of Delaware and Michigan for Parent and Buyer,
respectively.
(2) Certificates from authorized representatives of Parent
and Buyer that their respective representations and warranties
contained herein are true and correct as of the Closing Date
(except to the extent that any such representation or warranty
relates by its express terms solely to a prior date, in which
event such representation or warranty was true and correct as of
such date), and Parent and Buyer shall have performed (or caused
to be performed) all covenants, agreements and conditions
contained herein to be performed and observed by them at or before
the Closing Date.
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(3) Certificates of the Secretary of Parent and Buyer
certifying a resolution duly adopted by Parent's and Buyer's
Boards of Directors obtained at least ten (10) days before Closing
authorizing the execution, delivery and performance of this
Agreement on behalf of Parent and Buyer.
(4) Such other documents and certificates as reasonably may
be required by the Owners to consummate this Agreement and the
transactions contemplated herein.
Section 1.5 Employment Agreements. At Closing, Holdings shall enter
into the following agreements:
(a) A Noncompete Agreement and Limited Personal Services Agreement
with Savant which will be agreed upon by Savant and Buyer before Closing. In the
Noncompete Agreement and Limited Personal Services Agreement Savant shall agree
to a five (5) year non-compete with Holdings and he shall provide consulting
services to Holdings or the Subsidiaries for a maximum of four (4) hours per
month, which will include telephone conferences and attendance at Board of
Directors meeting. At Closing, Savant shall be paid One Hundred Thousand Dollars
($100,000.00) in cash for entering into such agreement.
(b) An Employment and/or Noncompete Agreement with each of Yates,
Cassels, Delahoussaye, DeVaughn, ▇▇▇▇▇▇ and Fields (collectively "Key
Management") in a form acceptable to Parent and Buyer and the applicable member
of Key Management.
Section 1.6 Due Diligence. From the Effective Date until Closing,
Parent and Buyer will have access to the books, records, assets, and facilities
of Holdings and each of the Subsidiaries. Parent and Buyer acknowledge that the
employees of Holdings and the Subsidiaries are not aware of this Agreement and
in an effort to keep this Agreement confidential agree that the books and
records may be produced to Parent and Buyer at the Owners' attorneys' offices
instead of at the offices of Holdings and each of the Subsidiaries and
inspections of the assets and facilities of Holdings and each of the
Subsidiaries may take place after regular business hours. Prior to Closing, but
after completion of the initial stages of due diligence, the Parent and Buyer,
together with representatives of Holdings, shall visit up to five (5)
franchisees or customers chosen by Parent and Buyer. Holdings will cooperate
fully to arrange these meetings and obtain information prior to and during the
meetings. If, after its due diligence review, Parent and Buyer determine in good
faith that the condition or prospects of Holdings are materially different then
as represented by Holdings during the negotiation of this Agreement, Parent and
Buyer may terminate this Agreement.
Section 1.7 Owner Representative.
(a) Each Owner hereby irrevocably appoints and designates Savant
as his representative and attorney-in-fact (the "Representative").
(b) The Owners hereby authorize the Representative (i) to take all
action necessary in connection with (AA) the waiver of any condition to the
obligations of any Owner to consummate the transactions contemplated hereby, or
(BB) the defense and/or settlement of any claims for which any Owner may be
required to indemnify Buyer pursuant to ARTICLE 5
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hereof; (ii) to give and receive all notices required or permitted under this
Agreement, and (iii) to take any and all additional action as is contemplated to
be taken by or on behalf of the Owners by the terms of this Agreement.
(c) In the event that the Representative dies, becomes unable to
perform his responsibilities hereunder or resigns from such position, the Owners
will select another representative to fill each such vacancy and such
substituted representative will be irrevocably appointed and designated the
Representative for all purposes of this Agreement.
(d) All decisions and actions by the Representative, including,
without limitation, (i) any agreement between the Representative and Parent or
Buyer relating to the waiver of any condition to the obligations of any Owner to
consummate the transaction contemplated hereby, or (ii) the defense or
settlement of any claims for which the Owners may be required to indemnify
Parent or Buyer pursuant to ARTICLE 5 hereof will be binding upon all of the
Owners, and no Owner will have the right to object, dissent, protest or
otherwise contest the same.
(e) By their execution of this Agreement, each of the Owners agree
that:
(1) Parent and Buyer will be able to rely conclusively on the
written instructions and written decisions of the Representative
as to (AA) the settlement of any claims made pursuant to ARTICLE 5
hereof, and (BB) any other actions required to be taken by the
Representative hereunder, and no party hereunder will have any
cause of action against Parent or Buyer for any action taken by
Parent or Buyer in reliance upon the instructions or decisions of
the Representative;
(2) all actions, decisions and instructions of the
Representative will be conclusive and binding upon all of the
Owners, and, except as otherwise agreed to by the Owners, no party
hereto will have any cause of action against the Representative,
in his capacity as a Representative, for any action taken,
decision made or instruction given by the Representative under
this Agreement, except for fraud or willful misconduct by the
Representative;
(3) the provisions of this SECTION 1.7 are independent and
severable, are irrevocable and coupled with an interest and will
be enforceable notwithstanding any rights or remedies that any
Owner may have in connection with the transactions contemplated by
this Agreement; and
(4) the provisions of this SECTION 1.7 will be binding upon
the executors, heirs, legal representatives and successors of each
Owner, and any references in this Agreement to an Owner will mean
and include the successors to the rights of the Owners hereunder,
whether pursuant to testamentary disposition, the laws of descent
and distribution or otherwise.
Notwithstanding the foregoing, the Representative may not bind any
Owner with respect to matters pertaining to ARTICLE 7 hereof.
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Section 1.8 Excluded Assets. The vehicle and laptop computer described
in SCHEDULE 1.8, which may be shown as assets of Holdings or the Subsidiaries,
shall be transferred to Savant prior to the Closing Date.
Section 1.9 Limitation on Total Liabilities; Purchase Price Adjustment.
The amount of Total Liabilities (as defined herein) of Holdings and the
Subsidiaries at Closing shall be no more than Four Hundred Thousand Dollars
($400,000) plus the amount of Independent Contractor Payables (as defined
herein) (collectively, the "Permitted Total Liabilities"). In the event that the
amount of Total Liabilities upon Closing is more than the Permitted Total
Liabilities, then Buyer shall be entitled to offset the amount of such
difference from the cash portion of the Purchase Price. Except for the amount
permitted under SECTION 9.7 hereof, neither Holdings nor the Subsidiaries shall
have any outstanding liabilities for costs or expenses related to the
transaction, including, but not limited to, legal fees, upon Closing. Except as
provided in the next sentence, no inter-company related assets or liabilities
will be outstanding at Closing. The promissory note dated June 21, 1999 in the
original principal amount of Nine Hundred Thirty Thousand Dollars ($930,000)
made by Services in favor of Solutions (the "Solutions Note") shall be paid or
extinguished prior to Closing unless it is demonstrated to the Buyer, to its
reasonable satisfaction, that such promissory note will not have a net cash
effect on Buyer and will not have a negative effect on earnings. For purposes of
this SECTION 1.9, "Total Liabilities" means the aggregate amount of the total
liabilities of Holdings and the Subsidiaries as of the Closing Date determined
in accordance with generally accepted accounting principles consistently applied
("GAAP"). "Independent Contractor Payables" means the aggregate amount payable
to Holdings' independent contractors as of the Closing Date. The determination
of the Total Liabilities, and in accordance with SECTION 1.2 the amount of the
final Purchase Price, shall be accomplished at and after the Closing in the
following manner:
(a) Within thirty (30) days of the Closing Date, Buyer shall
prepare a balance sheet as of the Closing Date (the "Closing Balance Sheet") in
accordance with GAAP and shall deliver a copy thereof to the Representative.
Buyer shall prepare a computation of the Total Liabilities of the Company based
on the Closing Balance Sheet and shall submit such computation to the
Representative in writing at the same time that copies of the Closing Balance
Sheet are delivered. The Closing Balance Sheet shall not allocate an amount to
any contingent liability unless: there is a present obligation (legal or
constructive) as a result of a past event; it is probable (i.e. more likely than
not) that an outflow of resources embodying economic benefits will be required
to settle the obligation; and a reliable estimate can be made of the amount of
the obligation.
(b) The Owners shall have twenty-one (21) business days after
receipt of the Closing Balance Sheet (the "Review Period") to review and verify
the Closing Balance Sheet and notify Buyer as to whether they disagree with any
of the amounts included in the Closing Balance Sheet. If such notice is not
given, the Closing Balance Sheet will be final and conclusive for all purposes.
If the parties are unable to resolve their differences within 60 days of Buyer's
original delivery of the Closing Balance Sheet, Buyer and the Owners agree to
retain a national accounting firm, other than the independent auditors used by
Parent, Buyer or Holdings, to arbitrate the dispute and render a decision within
30 days of such retention, which decision will be final and binding for all
purposes. Any award pursuant to this SECTION 1.9(B)
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may be entered in and enforced by any court having jurisdiction over the matter.
Buyer and the Owners will each pay one-half of the costs of services rendered by
said accounting firm.
(c) Within ten (10) days after the expiration of the Review Period
or, if notice of an objection to the Closing Balance Sheet is given, within ten
(10) days after the resolution of all disputes pursuant to SECTION 1.9(B), if
applicable, the Owners shall pay to Buyer the amount of Total Liabilities in
excess of Permitted Total Liabilities. To the extent contingent liabilities
exist, the Owners shall remain liable for such liabilities for the time periods
provided for herein.
Section 1.10 Exclusivity. Owners and Holdings shall not, directly or
indirectly, through any of their respective directors, officers and employees,
independent contractors, consultants, counsel, accountants, investment advisors
and other representatives or agents (collectively, "Representatives") or
otherwise, solicit or entertain offers from, negotiate with or in any manner
encourage, discuss, accept or consider any proposal of any other person relating
to the sale of the Stock or substantially all of Holdings or the Subsidiaries
assets or businesses whether through direct purchase, merger, consolidation, or
other business combination (other than sales of franchises in the ordinary
course) or relating to a sale or transfer of more than 25% of the outstanding
stock of Holdings or the Subsidiaries (a "Proposal"). The Buyer acknowledges
that Holdings and the Owners have previously actively marketed the sale of the
business and the Stock and that the receipt of and response to a Proposal shall
not constitute a breach of this SECTION 1.10 if such response does no more than
indicate that (a) the Proposal has been received, (b) the Owners or Holdings
have entered into an agreement with respect to the acquisition and (c) the
Owners or Holdings will not negotiate with the parties offering the Proposal at
this time. In the event that the Owners or Holdings breach the agreement set
forth in this SECTION 1.10 and within twelve (12) months after such breach, the
Owners or Holdings close a transaction with a party contained in a Proposal then
immediately upon such Closing, the Owners or Holdings, as applicable, shall pay,
to Buyer the sum of Two Hundred Thousand Dollars ($200,000.00) plus all of
Parent's and Buyer's reasonable costs and expenses relating to the transactions
contemplated herein, including without limitation, fees and expenses of legal
counsel, accountants, investment bankers, brokers or finders, printers, copiers,
consultants or other representatives for the services used, hired or connected
with this Agreement.
Section 1.11 Break-up Fee. If following the execution and delivery of
this Agreement the Boards of Directors of Holdings or the Subsidiaries fail to
approve this Agreement on the terms set out herein, or Holdings fails to obtain
stockholder approval for this Agreement on the terms set out herein, Holdings
shall be liable to the Buyer in an amount equal to One Hundred Fifty Thousand
Dollars ($150,000.00).
Section 1.12 Termination of this Agreement. Buyer may terminate this
Agreement any time prior to Closing as set forth in SECTION 1.6. The Owners or
Holdings may terminate this Agreement if the Closing has not occurred as set
forth in SECTION 1.3. If either party terminates this Agreement all parties
shall have no further liability to the other party, except for liabilities under
SECTIONS 1.10 AND 1.11, AND ARTICLE 6.
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ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND OWNERS
Holdings, and the Owners, jointly and severally, represent and warrant
to Parent and Buyer as follows:
Section 2.1 Schedules. The schedules to this Agreement (the
"Schedules") are true, accurate and complete in all respects. Nothing in the
Schedules will be deemed adequate to disclose an exception to a representation
or warranty made herein, however, unless the Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item will not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless the
representation or warranty has to do with the existence of the document or other
item itself). Disclosures in any Schedule shall not constitute disclosure for
purposes of any other Schedule or other section of this Agreement or any exhibit
to or other writing which is designated herein as being part of this Agreement.
Section 2.2 Due Organization. Holdings and each of the Subsidiaries are
Texas corporations and each is duly organized, validly existing and in good
standing under the laws of the State of Texas with corporate power and authority
to carry on their respective businesses as they are now being conducted and to
own, operate and lease their properties and assets. Copies of the Articles of
Incorporation and By-laws of Holdings and each of the Subsidiaries are attached
hereto as SCHEDULE 2.2. The stock records and minute books of Holdings and each
of the Subsidiaries, which have been made available to Buyer, are correct and
complete in all respects. Except as listed in SCHEDULE 2.2, neither Holdings nor
any of the Subsidiaries owns (and has not at any time during the five (5) years
preceding the date set forth above owned) of record or beneficially any
outstanding equity securities or other ownership interest in any corporation,
partnership or other legal entity.
Section 2.3 State Qualifications. SCHEDULE 2.3 contains a list of all
the jurisdictions in which Holdings or any of the Subsidiaries are authorized,
qualified, or registered to do business or where there is a franchise
registration. Holdings and the Subsidiaries are each duly qualified or
registered to do business, and are in good standing, in each jurisdiction where
the character of the properties owned or leased by them, or the nature of their
activities, are such that authorization, qualification, or registration to do
business in that jurisdiction is required by law, except in any such case where
the failure to be so qualified or registered and in good standing would not have
a Material Adverse Effect. "Material Adverse Effect" with respect to Holdings
and the Subsidiaries means an individual or cumulative adverse change in or
effect on the business, customers, customer relations, operations, properties,
working capital condition (financial or otherwise), assets, properties or
liabilities of Holdings or the Subsidiaries which is reasonably expected to be
materially adverse to the business, properties, working capital condition
(financial or otherwise), assets, or liabilities of Holdings or the Subsidiaries
or would prevent Holdings or the Owners from consummating the transactions
contemplated hereby.
Section 2.4 Authorization; Non-Contravention; Approvals. Holdings has
the full legal right, power and authority to enter into this Agreement, free and
clear of any statutory,
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contractual or other limitations, and to perform its obligations under this
Agreement. Each Owner has the full legal right, power and authority to enter
into this Agreement, free and clear of any statutory, contractual or other
limitations, and to perform his obligations under this Agreement. The execution,
delivery and performance of this Agreement have been approved by all necessary
corporate consents and by the Owners. No additional proceedings or other actions
on the part of Holdings or the Owners are necessary to authorize the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby. If required, the consent of the spouse of each Owner has
been obtained. This Agreement has been duly and validly executed and delivered
by Holdings and the Owners, and, assuming the due authorization, execution and
delivery hereof by Parent and Buyer, constitutes a legal, valid and binding
agreement of Holdings and each of the Owners enforceable against each of them in
accordance with its terms, subject to limitations on enforcement due to
bankruptcy, insolvency, other matters affecting the rights of creditors
generally and the discretion of courts as to application of equitable remedies.
Except as disclosed in SCHEDULE 2.4, the execution and delivery of this
Agreement by Holdings and the Owners does not, and the consummation by them of
the transactions contemplated hereby will not, violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance against or upon
any of the properties or assets of Holdings, the Subsidiaries or the Owners
under any of the terms, conditions or provisions of (a) Holdings' or the
Subsidiaries' constituent documents, (b) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Holdings, the Subsidiaries or any
of their properties or assets, or (c) any agreement, note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, lease or other
instrument, obligation or agreement of any kind to which Holdings, any of the
Subsidiaries or any of the Owners is now a party or by which Holdings, any of
the Subsidiaries or any of the Owners or any of their properties or assets, is,
or may be, bound or affected.
No declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body or
authority or any third party is necessary for the execution and delivery of this
Agreement by Holdings or any Owner or the consummation by it or any of them of
the transactions contemplated hereby. Except as set forth on SCHEDULE 2.4, no
agreements to which Holdings or the Subsidiaries are a party require notice to,
or the consent or approval of, any governmental agency or any third party to any
of the transactions contemplated hereby.
Section 2.5 Capitalization. The authorized capital stock of Holdings
consists of 100,000 shares of common stock, par value of $.01, of which the 1000
shares are each duly authorized, validly issued and outstanding, fully paid and
non-assessable. All of the outstanding capital stock in Holdings is owned
beneficially and of record by the Owners free and clear of any claims, liens,
pledges, security interests, hypothecations, options, restrictions, charges or
encumbrances. The Stock was issued and delivered by Holdings in compliance with
all applicable state and federal laws concerning the issuance of securities in a
private sale. None of such interest was issued in violation of the preemptive
rights of any past or present shareholder
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or any other person or entity. The transfer of the Stock to Buyer pursuant to
the terms of this Agreement, will transfer to Buyer absolute and good and
marketable title to the Stock free and clear of any and all liens, encumbrances,
pledges, hypothecations, options, charges and claims of any kind whatsoever. No
subscription, option, warrant, call, convertible or exchangeable security, other
conversion right or commitment of any kind exists which permits or would permit
any person or entity to (i) subscribe for, purchase or otherwise acquire any of
the capital stock of Holdings or any of the Subsidiaries or (ii) purchase or
otherwise acquire any Stock. All of the outstanding capital stock of each of the
Subsidiaries is duly authorized, validly issued, fully paid and non-assessable.
All of the outstanding capital stock of each of the Subsidiaries is owned by
Holdings free and clear of any claims, liens, pledges, security interests,
hypothecations, options, restrictions, charges or encumbrances.
Section 2.6 Financial Statements. Holdings has delivered to Buyer
complete and correct copies of the following financial statements:
(a) the audited consolidated balance sheet of Holdings as of
December 31, 1999 and the related consolidated statements of income,
stockholder's equity, and of cash flows for the year ended December 31, 1999,
together with the related work papers, notes and schedules duly audited and
prepared by ▇▇▇▇, Frankfort, ▇▇▇▇▇ & ▇▇▇▇, independent financial accountant to
Holdings (such balance sheets, the related statements of operations, of
stockholder's equity and of cash flows and the related notes and schedules are
referred to herein as the "Audited Financial Statements").
(b) the unaudited consolidated balance sheet (the "Interim Balance
Sheet") of Holdings as of June 30, 2000 (the "Balance Sheet Date") and the
related statements of operations, of stockholder's equity, and of cash flows for
the six month period ended June 30, 2000, together with the related work papers,
notes and schedules duly reviewed and prepared by ▇▇▇▇, Frankfort, ▇▇▇▇▇ & ▇▇▇▇
(such balance sheets, the related statements of operations, of stockholder's
equity and of cash flows and the related notes and schedules are referred to
herein as the "Interim Financial Statements"). The Audited Financial Statements
and the Interim Financial Statements (collectively, the "Financial Statements")
are attached as SCHEDULE 2.6 to this Agreement, or, with respect to the Interim
Financial Statements will be attached as part of SCHEDULE 2.6 prior to the
Closing Date.
The Financial Statements are true, complete and correct and have been
prepared in accordance with the books and records of Holdings and have been
prepared in accordance with GAAP; the balance sheets in the Financial Statements
fairly present the financial position and assets of Holdings as of their
respective dates and set forth in full and reflect all indebtedness and known
liabilities, including Taxes, of Holdings (whether accrued, absolute, contingent
or otherwise) as of such dates; the income statements fairly present the results
of operations of Holdings for the periods indicated and covered thereby; and the
Owners' equity of Holdings as of such dates was as set forth in the Financial
Statements, after full provision and reserves for all Taxes and other known
liabilities for all periods up to the dates thereof.
Section 2.7 Accounts Receivable; Accounts Payable.
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(a) SCHEDULE 2.7 sets forth the accounts receivable of Holdings
and each of the Subsidiaries as of the Balance Sheet Date and through the
Closing Date, including any such amounts which are not reflected in the Interim
Balance Sheet. Receivables from and advances to employees, the Owners and any
entities or persons related to or affiliated with the Owners are separately
identified in SCHEDULE 2.7. Except as set forth in SCHEDULE 2.7, (i) Holdings
and the Subsidiaries have good right, title and interest in and to all trade
accounts receivable and notes receivable reflected in the Interim Balance Sheet
and those acquired and generated since the date of the Interim Balance Sheet
(except for those paid since the date of the Interim Balance Sheet) (the
"Account Receivables"); (ii) none of such Account Receivables is subject to any
Lien, other than Permitted Liens; (iii) all of the Account Receivables owing to
Holdings and the Subsidiaries constitute valid and enforceable claims arising
from bona fide transactions in the ordinary course of business, and there are no
known claims, refusals to pay or other rights of set-off against any thereof;
(iv) no account or note debtor is delinquent in payment by more than 60 days;
(v) the aging schedule of the Account Receivables attached to SCHEDULE 2.7 is
complete and accurate; and (vi) the reserve established by Holdings on the
Interim Balance Sheet is adequate to cover any doubtful accounts.
(b) The Disclosure Schedule contains a listing of all trade
accounts payable and notes payable of Holdings and the Subsidiaries reflected in
the Interim Balance Sheet and those acquired and generated since the date of the
Interim Balance Sheet (except for those paid since the date of the Interim
Balance Sheet) (the "Account Payables"). All such Accounts Payables arose from
bona fide transactions in the ordinary course of business and, except as set
forth in SCHEDULE 2.7, no such Account Payable is delinquent by more than 30
days in its payment.
Section 2.8 Tangible Assets. SCHEDULE 2.8 sets forth a list of all
personal property included in "property and equipment" on the Interim Balance
Sheet and all other tangible assets of Holdings and each of the Subsidiaries
with an individual value in excess of $2,500 and either (a) owned by Holdings or
any of the Subsidiaries as of the Balance Sheet Date; or (b) acquired since the
Balance Sheet Date. Except as set forth in SCHEDULE 2.8, to Holdings' knowledge,
the tangible assets of Holdings and each of the Subsidiaries are in good state
of repair and in good operating condition, ordinary wear and tear excepted, and
are fit for their intended purposes, and no maintenance, replacement or repair
has been deferred or neglected. Neither Holdings nor any of the Subsidiaries
owns any real property.
Section 2.9 Title of Assets. Except as set forth in SCHEDULE 2.9, Holdings
and the Subsidiaries have good and marketable title to all of their assets and
properties whether or not reflected in the Interim Balance Sheet or acquired
after the date thereof, free and clear of any Lien, other than Permitted Liens.
"Liens" means any mortgage, pledge, lien, security interest, conditional or
installment sales agreement, encumbrance, claim, easement, right of way,
tenancy, covenant, encroachment, restriction or charge of any kind or nature
(whether or not of record). "Permitted Liens" means (i) liens securing specific
Liabilities shown on the Interim Balance Sheet with respect to which no breach,
violation or default exists; (ii) mechanics,' carriers', workers' or other like
liens arising in the ordinary course of business; (iii) minor imperfections of
title which do not individually or in the aggregate, impair the continued use
and operation of the real property assets and fixtures to which they relate in
the operation of the Company as currently conducted; and (iv) liens for current
taxes not yet due and payable. Holdings and the Subsidiaries own or lease all of
the assets and properties, and are parties to all licenses and other agreements,
presently used or necessary to carry on the business or operations of Holdings
and the
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Subsidiaries as presently conducted. Holdings and the Subsidiaries do
not own or lease any assets or properties that are not used in the ordinary
course of their businesses. Upon the Closing of the transactions contemplated by
this Agreement, no Owner will have any claim against any of the assets of
Holdings, the Subsidiaries or Buyer as a result of any buy-sell, tax sharing or
other similar agreement among the Owners.
Section 2.10 Material Contracts.
(a) SCHEDULE 2.10 sets forth an accurate list of all material
contracts, commitments and similar agreements to which Holdings or any of the
Subsidiaries is currently a party including, but not limited to, contracts with
clients, dealers, carriers, distributors, franchisees, independent contractors,
consultants, government authority, or brokers; contracts with any labor
organizations; loan agreements; pledge and security agreements; noncompete
agreements; indemnity or guaranty agreements; bonds; notes; mortgages; real
estate management or operation agreements; joint venture or partnership
agreements; options to purchase real or personal property; and agreements
relating to the purchase, acquisition, transfer or sale by Holdings or the
Subsidiaries of assets or securities (including inventory and Proprietary
Rights). SCHEDULE 2.10 lists and contains complete copies of all such contracts
and agreements (including oral and informal arrangements) or a summary thereof.
(b) Except for the contracts, warranties, and other agreements
set forth in SCHEDULE 2.10 or any other Schedule to this Agreement
(collectively, the "Contracts"), Holdings is not a party to, nor is its property
subject to or bound by, any oral or written (i) output or requirements
agreement, (ii) contract, agreement or commitment not entered into in the
ordinary course of business, (iii) indenture, mortgage, deed of trust, security
agreement, guarantee, promissory note or loan agreement relating to the lending
or borrowing of money or for lines of credit, (iv) document granting any power
of attorney with respect to the affairs of Holdings, (v) contract or commitment
limiting, restraining or restricting Holdings from engaging or competing in any
line of business or with any person, (vi) agreement requiring the performance by
Holdings of any obligation for a period of time extending beyond one year from
Closing or calling for consideration paid or to be paid by, to or on behalf of
Holdings in an amount or of a value greater than $20,000, except purchase orders
to vendors from Holdings not exceeding $20,000 individually and sales orders to
the customers of Holdings not exceeding $20,000 individually, in each case
incurred in the ordinary course of business (which are all in the form of
purchase and sales orders attached to SCHEDULE 2.10 except for changes necessary
to reflect applicable fees, products and time periods and other immaterial
changes), (vii) joint venture, partnership or other agreement involving a
sharing of profits, losses, costs or liabilities with any other person, (viii)
agreement in which Holdings is explicitly responsible for consequential damages,
(ix) licensing agreement or other contract with respect to patents, trademarks,
copyrights, or other Intellectual Property; or (x) contract that is material, or
by its term would be material, to the business, operations, prospects, assets,
liabilities or condition, financial or other, of Holdings, (xi) agreement that
by its terms is unusual in duration or amount or not in the ordinary course of
business.
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(c) Except as set forth in SCHEDULE 2.10, each of the Contracts
constitutes a legal, valid and binding obligation of, and is enforceable (except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws or public policy affecting creditors' rights
generally and except that the remedy of specific performance and injunctive and
other forms of equitable relief are subject to certain equitable defenses and to
the discretion of the court before which any proceedings therefor may be
brought) in accordance with its terms against Holdings; to its knowledge,
Holdings is in compliance, with the provisions thereof, and, to its knowledge,
there is no material default or event that with or without notice or lapse of
time, or both, would constitute a default or an event of acceleration by any
party to any of the Contracts or would give any party to such Contracts the
right to terminate, modify, cancel or exercise any remedy under any of the
Contracts. All Governmental Authorizations with respect to the Contracts have
been obtained. Holdings has not given or received any notice or other
communication (oral or written) regarding any actual, alleged, violation or
breach of, or default under any Contract, and neither Holdings nor any Owner has
any knowledge that any party to any of the Contracts intends to cancel or
terminate any Contract or to exercise or not exercise any options under any
Contract.
Section 2.11 Leases. SCHEDULE 2.11 is a copy of each Lease (as hereinafter
defined), to which Holdings or any of the Subsidiaries are a party with respect
to real property or tangible property. For purposes of this Agreement, "Lease"
shall mean any lease, sublease, sub-sublease, prime lease, or similar interest
in real property or tangible personal property under which Holdings or the
Subsidiaries are a party or hold such property.
(a) To the Owners' and Holdings' knowledge, no condemnation
proceedings have been instituted with respect to any real property that is
subject to a Lease.
(b) Holdings and/or the Subsidiaries is/are in peaceful and
undisturbed possession of the space and estate under each Lease; and no right
adverse to the rights of Holdings or the Subsidiaries have, to Holdings' or the
Owners' knowledge, been asserted by any third person.
(c) No Owners nor any officer, director or key employee of
Holdings or the Subsidiaries, nor any spouse, child or relative of any of these
persons, owns or has any interest, directly or indirectly, in any of the real or
personal property leased to Holdings or the Subsidiaries.
(d) Each Lease listed in SCHEDULE 2.11 is valid and in full
force, and there does not exist any default or event that with notice or lapse
of time, or both, would constitute a default or event of acceleration under any
of Lease.
(e) Except as set forth in SCHEDULE 2.11, all real properties
leased by Holdings or the Subsidiaries, are free from any structural defects, in
good operating condition and repair other than ordinary wear and tear, with no
material maintenance, repair or replacement having been deferred or neglected,
suitable for the intended use and free from other material defects. Except as
set forth in SCHEDULE 2.11, each such real property and its present use conform
in all respects to all occupational, safety or health, zoning, planning,
subdivision, platting and similar Laws. Except as set forth in SCHEDULE 2.11,
all public utilities necessary for the use and
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operation of any facilities on the aforesaid real properties are available for
use or access at such properties and there is no legal or physical impairment to
free ingress or egress from any of such facilities or real properties.
Section 2.12 No Breach or Default. Except as set forth in SCHEDULE 2.12,
to the knowledge of Holdings, the Subsidiaries and the Owners, neither Holdings
nor any of the Subsidiaries are in breach, violation or default (including
nonpayment of monies owed to creditors) under any contract or agreement
(including any Lease or related guaranty) to which they are a party or by which
they are bound, nor has any event occurred which, after the giving of notice or
the passage of time or both, would constitute an uncured breach, violation or
default under any such agreement or contract, and neither Holdings nor any of
the Subsidiaries have received notice of any claim or assertion that there is or
may be any such breach, violation or default.
Section 2.13 Environmental Matters. Except as set forth on the Disclosure
Schedule:
(a) None of Holdings, any of the Subsidiaries or any former
subsidiary of Holdings, nor, to the best of the Owners' knowledge, any previous
owner, tenant, occupant or user of any property owned or leased by or to
Holdings or by or to any of the Subsidiaries or any former subsidiary (the
"Properties") engaged in or permitted, direct or indirect operations or
activities upon, or any use or occupancy of the Properties, or any portion
thereof, for the purpose of or in any way involving the handling (except for
automotive parts in suitable containers or packages), manufacture, treatment,
storage, use, generation, emission, release, discharge, refining, dumping or
disposal of any Environmentally Regulated Materials (whether legal or illegal,
accidental or intentional, direct or indirect) on, under, in or about the
Properties, or transported any Environmentally Regulated Materials to, from or
across the Properties (except for automotive parts in suitable containers or
packages), nor are any Environmentally Regulated Materials presently
constructed, deposited, stored, placed or otherwise located on, under, in or
about the Properties, nor have any Environmentally Regulated Materials migrated
from the Properties upon or beneath other properties, nor have any
Environmentally Regulated Materials migrated or threatened to migrate from other
properties upon, about or beneath the Properties. The Properties do not contain
any: (i) underground or aboveground storage tanks; (ii) asbestos; (iii)
equipment using PCBs; (iv) underground injection ▇▇▇▇▇; or (v) septic tanks in
which process waste water or any Environmentally Regulated Materials have been
disposed.
(b) (i) To Owners' knowledge, no violation or noncompliance
with Environmental and Occupational Safety and Health Laws
has occurred with respect to the Properties or operations
conducted thereon during the period in which Holdings or any
of the Subsidiaries operated such Properties and conducted
such operations and prior to such time as Holdings or any of
the Subsidiaries operated such Properties and conducted such
operations; Holdings or the appropriate Subsidiary has
obtained all permits, licenses and authorizations required
by, and Holdings, the Subsidiaries and the Properties are in
compliance with, all Environmental and Occupational Safety
and Health Laws including, without limitation, all
applicable restrictions, conditions, standards, limitations,
prohibitions, requirements, obligations, schedules and
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timetables contained in the Environmental and Occupational
Safety and Health Laws or contained in any regulation, code,
plan, order, decree, judgment, injection, notice or demand
letter issued, entered, promulgated or approved thereunder;
(ii) no enforcement, investigation, cleanup, removal,
remediation or response or other governmental or regulatory
actions have been, or could have been at any time in the
past, asserted or threatened (A) with respect to operations
conducted by the Company on the Properties or, (B) to
Owners' knowledge with respect to the Properties themselves
or (C) against the Company or any subsidiary or former
subsidiary with respect to or in any way regarding the
Properties pursuant to any Environmental and Occupational
Safety and Health Laws; and
(iii) no claims or settlements relating to or arising out of
Environmental and Occupational Safety and Health Laws or
Environmentally Regulated Materials, have been made or, to
the knowledge of the Owners, been threatened by any third
party, including any Authority, nor, to the knowledge of the
Owners, does there exist any basis for any such claim (any
such enforcement, investigation, cleanup, removal,
remediation or response, other governmental or regulatory
action, claim or settlement is herein referred to as an
"Environmental Claim") against Holdings or any of the
Subsidiaries or any former subsidiaries with respect to the
Properties or operations conducted thereon, or with respect
to the Properties or the operations thereon.
(c) To Owners' knowledge, with regard to Holdings, the
Subsidiaries and the Properties, there are no past or present events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance or continued compliance with
Environmental and Occupational Health and Safety Laws, as in effect on the
Closing Date.
(d) For purposes of this Agreement, "Environmental and
Occupational Safety and Health Law" means any common law or duty, caselaw or
other Law, that (i) regulates, creates standards for or imposes liability or
standards of conduct concerning any element, compound, pollutant, contaminant,
or toxic or hazardous substance, material or waste, or any mixture thereof, or
relates in any way to emissions or releases into the environment or ambient
environmental conditions, or conduct affecting such matters, or (ii) is designed
to provide safe and healthful working conditions or reduce occupational safety
and health hazards. Such laws shall include, but not be limited to, the National
Environmental Policy Act, 42 U.S.C.ss.ss.4321 et seq., the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss.ss.9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C.ss.ss.6901 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C.ss.ss.1251 et seq., the
Federal Clean Air Act, 42 U.S.C.ss.ss.7401 et seq., the Toxic Substances Control
Act, 15 U.S.C.ss.ss.2601 et seq., the Emergency Planning and Community Right to
Know Act, 42 ▇.▇.▇.▇▇. 11011, the Hazard Communication Act, 29 U.S.C.ss.ss.651
et seq., the Occupational Safety and Health Act, 29 U.S.C.ss.ss.651 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act, 7 ▇.▇.▇.▇▇. 136,
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and any caselaw interpretations, amendments or restatements thereof, or similar
enactments thereto, as is now or at any time hereafter may be in effect, as well
as their international, state and local counterparts. For purposes of this
Agreement, "Environmentally Regulated Materials" means any element, compound,
pollutant, contaminant, substance, material or waste, or any mixture thereof,
designated, listed, referenced, regulated or identified pursuant to any
Environmental and Occupational Safety and Health Law.
Section 2.14 Labor and Employee Relations. Neither Holdings nor any of the
Subsidiaries is bound by or subject to any arrangement with any labor union. No
employee of Holdings or any subsidiary is represented by any labor union or
covered by any collective bargaining agreement nor, to the best of the Owners'
and Holdings' knowledge, is any campaign to establish such representation in
progress. There is no pending or threatened labor dispute involving Holdings or
the Subsidiaries and any group of its employees or agents nor has Holdings or
the Subsidiaries experienced any labor interruptions. There is no unfair labor
practice charge or complaint against Holdings or the Subsidiaries pending before
the National Labor Relations Board or any other governmental agency arising out
Holdings' activities, and neither Holdings nor the Owners have any knowledge of
any facts or information which would give rise thereto.
Section 2.15 Insurance. SCHEDULE 2.15 sets forth an accurate and complete
list of all policies of fire and other casualty, auto, liability, general
liability, theft, life, workers' compensation, health, directors and officers,
business interruption and other forms of insurance owned or held by Holdings or
the Subsidiaries, specifying the insurer, the policy number, the term of
coverage, a description of any retroactive premium adjustments or other material
loss-sharing arrangements and, in the case of any "claims made" coverage, the
same information as to predecessor policies for the past five years. With
respect to each such insurance policy: (i) the policy is legal, valid, binding,
enforceable, and in full force and effect in all material respects; (ii) none of
Holdings, the Subsidiaries or any other party to the policy is in material
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a material breach or default, or permit termination,
modification, or acceleration, under the policy; and (iii) no party to the
policy has repudiated any material provision thereof. SCHEDULE 2.15 also
describes any material self-insurance arrangements affecting Holdings or the
Subsidiaries.
Section 2.16 Employee Benefit Plans. Neither Holdings nor any of the
Subsidiaries has in the past maintained, sponsored, or contributed to or
currently maintain, sponsor or contribute to any employee benefit plans or
deferred compensation agreements.
Section 2.17 No Undisclosed Liabilities. Except as set forth in SCHEDULE
2.17, there are no Liabilities of Holdings or the Subsidiaries including
Liabilities which may become known or which arise only after the Closing and
which result from acts, omissions or occurrences of the Owners, Holdings or the
Subsidiaries prior to the Closing other than: (i) Liabilities and obligations
which are fully reflected or reserved for in the Interim Balance Sheet; (ii)
Liabilities for express executory obligations to be performed after the Closing
(other than any express executory obligations that might arise due to any
default or other failure of performance by Holdings, the Subsidiaries or the
Owners prior to the Closing Date) under the contracts described in SCHEDULES
2.10, 2.11, 2.20, AND 2.25; and (iii) Liabilities incurred by Holdings or the
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Subsidiaries in the ordinary course of business since the Interim Balance Sheet
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of Law). "Liability" or "Liabilities" means any liabilities,
obligations or claims of any kind whatsoever whether absolute, accrued or
unaccrued, fixed or contingent, matured or unmatured, asserted or unasserted,
known or unknown, direct or indirect, contingent or otherwise and whether due or
to become due, including without limitation any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
Holdings' or the Subsidiaries' income, or any other debts, liabilities or
obligations relating to or arising out of any act, omission, transaction,
circumstance, sale of goods or services, state of facts or other condition which
occurred or existed on or before the date hereof, whether or not known, due or
payable. Except as disclosed in SCHEDULE 2.10, neither Holdings nor any of the
Subsidiaries is subject to any obligation or requirement to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any person or entity.
Section 2.18 Accounts with Banks and Brokerages. SCHEDULE 2.18 sets forth
an accurate schedule as of the date of the Agreement, of (i) the name of each
financial institution or brokerage firm in which Holdings and the Subsidiaries
have accounts or safe deposit boxes; (ii) the names in which the accounts or
boxes are held; and (iii) the name of each person authorized to draw thereon or
have access thereto.
Section 2.19 Compliance with Regulations. For purposes of this Agreement
"Licenses" shall include all licenses, including permits, authorizations,
certificates, approvals, variances, waivers or consents, or applications for any
of the foregoing issued to Holdings and the Subsidiaries by any federal, state,
or local governmental entity or municipality or subdivision thereof or any
authority, department, commission, board, agency, court or instrumentality
thereof which are necessary for Holdings' and the Subsidiaries' operation of
their businesses. Except as noted in Schedule 2.19, to Holdings and the Owners'
knowledge, all of the Licenses are valid and in good standing and full force and
effect, and there is no pending or, threatened action by any Governmental
Authority or third party to suspend, revoke, terminate or challenge any of the
Licenses.
Section 2.20 Compensation; Employment Agreements. SCHEDULE 2.20 lists all
officers, directors, and employees of Holdings and each of the Subsidiaries
listing all employment agreements with such officers, directors, and employees.
Attached to SCHEDULE 2.20 are true, complete and correct copies of all such
employment agreements.
Section 2.21 Litigation and Compliance with Law. Except as set forth in
SCHEDULE 2.21, there are no tax audits, claims, actions, suits, arbitrations,
investigations or proceedings, pending or, to Holdings' and the Owners'
knowledge, threatened against or affecting Holdings or any of the Subsidiaries,
at law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over Holdings or any of the Subsidiaries. No notice of any
claim, action, suit or proceeding, whether pending or threatened, has been
received by Holdings or any of the Subsidiaries. Except as set forth in SCHEDULE
2.21, there are presently no outstanding judgments, decrees or orders of any
court, arbitrator, or any governmental or administrative agency against or
affecting Holdings or the Subsidiaries or their operations, business, properties
or assets.
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Except as shown in SCHEDULE 2.21 and as set forth herein, to Holdings', each of
the Subsidiary's and the Owners' knowledge, Holdings and the Subsidiaries have
conducted and do conduct their business in compliance with all laws,
regulations, writs, injunctions, decrees and orders applicable to Holdings, the
Subsidiaries or their assets, the non-compliance of which would have a material
adverse effect on Holdings or the Subsidiaries.
Section 2.22 Regulatory Filings. With the exception of tax returns the
filing of which is addressed in SECTION 2.23, Holdings and the Subsidiaries have
timely filed all financial reports and registrations, reports, statements,
notices, and other filings required to be filed by Holdings or the Subsidiaries
with any regulatory authority or any other governmental agency, body or
official, in any jurisdiction including all required amendments or supplements
to any of the foregoing .
Section 2.23 Taxes. For purposes of this Agreement, the term "Tax" or
"Taxes" shall mean all taxes, charges, fees, levies, claims or other assessments
including, without limitation, income, gross receipts, excise, real or personal
property, sales, withholding, social security, unemployment, occupation, use,
service, service use, license, ad valorem, profits, lease, payroll, employment,
severance, stamp, premium, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments.
(a) Except as set forth in SCHEDULE 2.23, Holdings and each of
the Subsidiaries have filed all federal, state and local income, and other tax
returns and reports or extensions (collectively the "Tax Returns") that they
were required to file. All such Tax Returns were correct and complete in all
respects. All taxes owed by Holdings and each of the Subsidiaries (whether or
not shown on any Tax Return) have been paid. Holdings and each of the
Subsidiaries are not currently the beneficiary of any extension of time within
which to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where Holdings and each of the Subsidiaries does not file Tax
Returns that it is or may be subject to Taxes by that jurisdiction. There are no
liens on any of the assets of Holdings and each of the Subsidiaries that arose
in connection with any failure (or alleged failure) to pay any Taxes.
(b) There is no dispute or claim concerning any Taxes of Holdings
and each of the Subsidiaries either (1) claimed or raised by any authority in
writing, or (2) as to which any of the Owners and the directors and officers
(and employees responsible for Tax matters) of Holdings and each of the
Subsidiaries has knowledge based upon personal contact with any agent of such
authority. The Owners have delivered to the Buyer correct and complete copies of
all Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by Holdings and each of the Subsidiaries.
(c) Holdings and each of the Subsidiaries has not waived any
statute of limitations in respect of Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency.
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(d) Holdings has had in effect for each taxable year since its
incorporation a valid election under Internal Revenue Code Section 1362 to be
treated as an "S corporation", neither Holdings nor any of the Owners have taken
any action to revoke that election, neither Holdings nor any of the Owners are
aware of any basis or the existence of any facts that would permit the Internal
Revenue Service to revoke that election for any period prior to the Closing
Date, and, since the effective date of its election as an S corporation to and
including the Closing Date, Holdings will not have incurred or become liable for
the payment of any corporate-level income tax (including, without limitation any
tax imposed pursuant to Section 1374 of the Internal Revenue Code), or any
related penalties or interest.
(e) For purposes of computing Taxes and the filing of Tax
Returns, Holdings and the Subsidiaries have not failed to treat as "employees"
any individual providing services to Holdings or the Subsidiaries who would be
classified as an "employee" under applicable rules or regulations of any taxing
authority with respect to such classification.
(f) The Owners covenant and agree that they will be responsible
for and will pay all Taxes attributable to or arising from the business and
operations of Holdings and the Subsidiaries conducted on or before the Closing
Date and will be responsible for their own and Holdings' and the Subisidiaries'
income and franchise taxes, if any, arising from the transactions contemplated
by this Agreement.
Section 2.24 Absence of Changes. Except as shown in SCHEDULE 2.24, since
December 31, 1999, Holdings and the Subsidiaries have conducted their operations
in the ordinary course of business and consistent with past practice. Without
limiting the generality of the foregoing, since December 31, 1999 there has not
been:
(a) Any issuance or redemption of any shares of Holding's or any
Subsidiaries' capital stock, options, warrants or other rights to acquire stock
(other than issuances of common stock to which the Buyer has given its prior
written consent, which shall not unreasonably be withheld).
(b) Payment of any dividends or any other distributions or
payments to the Owners (other than salary, bonus, distributions, and benefits as
reflected on the projections of Holdings, or consistent with past practices).
Notwithstanding the foregoing, Buyer understands and agrees that Holdings and
the Subsidiaries have and will continue to make distributions prior to Closing
of all profits to their shareholders.
(c) Disposition of, except in the ordinary course of business,
any of Holdings' or any Subsidiaries' assets without the prior written consent
of the Buyer.
(d) Material increase in the level of compensation of any
employee, or provision of any increase for employees whose base salary exceeds
$75,000. Notwithstanding the foregoing, Buyer understands and agrees that
Holdings and the Subsidiaries have and will continue to make distributions prior
to Closing of all profits to their shareholders.
(e) Any accelerated payments on the inter-company obligations of
Holdings or the Subsidiaries other than related to the Solutions Note.
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(f) Any change experienced by Holdings or any of the Subsidiaries
which has had a Material Adverse Effect on Holdings or the Subsidiaries or any
event or failure to take any action which reasonably could be expected to result
in a Material Adverse Effect on Holdings or the Subsidiaries.
(g) Any material loss, damage, destruction of property or assets
or other casualty to property or assets (whether or not covered by insurance)
suffered by Holdings or any of the Subsidiaries;
(h) Any loss of officers, directors, employees, dealers,
distributors, independent contractors, customers or suppliers suffered by
Holdings or any of the Subsidiaries which had or may reasonably be expected to
result in a Material Adverse Effect.
(i) Any event which if consummated following the date hereof
would constitute a violation of SECTION 8.1 hereof.
Notwithstanding the foregoing the Buyer understands and agrees that
Holdings and the Subsidiaries will be opening new company stores prior to
Closing.
Section 2.25 Books and Records. The books of account, minute books, stock
record books, and other records of Holdings and the Subsidiaries, all of which
have been made available to the Buyer, are complete and correct in all material
respects and have been maintained in accordance with reasonable business
practices. The minute books of Holdings and the Subsidiaries contain accurate
and complete records of all formal meetings held of, and corporate action taken
by, the stockholders, the Boards of Directors, and committees of the Boards of
Directors of Holdings and the Subsidiaries. At the Closing, all of those books
and records will be in the possession of Holdings or its counsel.
Section 2.26 Intangible Property. SCHEDULE 2.26 sets forth an accurate
list and brief description of all trademarks, service marks, trade dress, logos,
trade names, corporate names, patents, copyrights or proprietary property rights
owned, used, registered or applied for registration by Holdings or the
Subsidiaries. The matters described in the preceding sentence are collectively
referred to as "Proprietary Rights." The Proprietary Rights have been duly
applied for or registered, filed in or issued by the appropriate government
office and Holdings or the Subsidiaries own or possess sufficient legal rights
to use all of such items without conflict with or infringement of the rights of
others. To Owners' knowledge, except as set forth on SCHEDULE 2.26 and except
for franchisees, Holdings and/or the Subsidiaries are the only persons entitled
to use the Proprietary Rights, free and clear of any claims or demands of any
other person. Except as set forth in SCHEDULE 2.26, Holdings and the
Subsidiaries do not use any of the Proprietary Rights by consent of any other
rightful owner thereof and none of Holdings, the Subsidiaries nor any of the
Owners know of any attachments, liens or encumbrances thereon. Except as set
forth on SCHEDULE 2.26, Holdings, the Subsidiaries and the Owners have no
knowledge of any claims by or demands of any other person, firm or corporation,
against Holdings or the Subsidiaries pertaining to any of the Proprietary Rights
and have no knowledge of any proceedings which have been instituted or are
pending or threatened which challenge the rights of Holdings or the Subsidiaries
with respect thereto, or that the Proprietary Rights infringe or are being
infringed by others or are subject to any outstanding order, decree, judgment or
stipulation.
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Section 2.27 Access to Information; Full Knowledge.
(a) The Parent's Stock to be received by the Owners pursuant to
this Agreement are being acquired for each of the Owner's own account for
investment purposes only and not with a view to any public resale, public
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "1933 Act") or any state securities or Blue Sky law and
such Parent's Stock will not be sold or otherwise disposed of except in
compliance with the 1933 Act, or in reliance upon an exemption therefrom and in
compliance with any state securities or Blue Sky laws, or pursuant to the put
right set forth in SECTION 1.2(B). The Parent's Stock has not been registered
under the 1933 Act or any state securities or Blue Sky law.
(b) The Owners agree that each of them, either alone or with a
representative, have such knowledge and experience in financial and business
matters that the Owners are capable of evaluating the merits and risks of the
prospective investment in the Parent's Stock and are able to bear the economic
consequences thereof. In making the decision to invest in the Parent's Stock,
each of the Owners have relied upon independent investigations made by them and,
to the extent believed by the Owners to be appropriate, Owners' representatives,
including each of the Owner's own professional, tax and other advisors.
(c) The Owners and their representatives have been given a full
opportunity to examine all documents and to ask questions of, and to receive
answers from, Buyer and its representatives concerning the terms of the transfer
of the Stock to Buyer, the Owners' investment in the Parent's Stock and the
business of Buyer and such other information as each of the Owners desires in
order to evaluate an investment in the Parent's Stock, and all such questions
have been answered to the full satisfaction of the Owners. The Owners have
evaluated the merits and risks of an investment in the Parent's Stock and have
determined that the Parent's Stock is a suitable investment for the Owners in
light of each of the Owners' overall financial condition and prospects. Each of
the Owners have been furnished with all publicly available information about
Parent's and Buyer's assets, operations, and business activities which the
Owners have requested and which the Owners consider necessary or relevant to
enable each of the Owners to make a prudent decision about the sale of the Stock
to Buyer and the Owners' acquisition of the Parent's Stock. The Owners
acknowledge that they have received the following reports filed by Buyer with
the Securities and Exchange Commission during the past 12 months pursuant to
Section 13(a) of the Securities Exchange Act of 1934: Annual Report on Form 10-K
for the year ended December 31, 1999, Quarterly Reports on Form 10-Q for the
quarters ending June 30 and September 30, 1999 and March 31, 2000 and Proxy
Statement for the 2000 Annual Meeting of Stockholders.
(d) The Owners have not relied upon any representation or
warranty from Buyer or any of its directors, officers, employees, agents,
affiliates or representatives, with respect to the value of the Parent's Stock,
other than as set forth in the publicly available information described in this
SECTION 2.27. Buyer has not made any representation, warranty, acknowledgment or
covenant, in writing or otherwise, to the Owners regarding the value of the
Parent's Stock or the tax consequences, if any, of the sale of the Stock or of
the resale of the Parent's Stock by the Owners. Each of the Owners has been
advised, and is aware, that the market prices of shares of stock of publicly
traded companies fluctuate and that there can be no
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assurance as to the future performance of any given securities, including shares
of Parent's common stock.
(e) The Owners acknowledge that the shares of Parent's Stock are
personal to each of the Owners and, pursuant to and except as provided in
SECTION 3.4 hereof, may not be transferred or assigned. Each Owner has consented
to the placing of the following legends on the certificates for the Parent's
Stock.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY BE SOLD,
PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED ONLY IF A REGISTRATION
STATEMENT DESCRIBING SUCH PROPOSED TRANSACTION IS IN EFFECT PURSUANT TO
THE PROVISIONS OF THAT ACT OR IF, IN THE OPINION OF COUNSEL, WHICH
OPINION AND COUNSEL SHALL BE SATISFACTORY TO THE ISSUER OF THESE SHARES
AND ITS COUNSEL, AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT IS AVAILABLE.
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE MAY BE PUT
TO THE ISSUER OF THE SHARES IN ACCORDANCE WITH THE TERMS OF SECTION
1.2(b) OF THAT CERTAIN STOCK PURCHASE AGREEMENT DATED JULY 13, 2000
PURSUANT TO WHICH THE SHARES WERE ISSED.
Section 2.28 Brokers. Except as set forth in SCHEDULE 2.28, none of
Holdings, the Subsidiaries or any of the Owners, nor any of their respective
directors, officers or employees has employed any broker, finder, or financial
advisor or incurred any liability for any brokerage fee or commission, finder's
fee or financial advisory fee, in connection with the transactions contemplated
hereby, nor is there any basis known to the Owners for any such fee or
commission to be claimed by any person or entity.
Section 2.29 Knowledge. As used in this Agreement with regard to the
knowledge of Holdings, the Subsidiaries, or any Owner, the term "knowledge"
means: (i) with respect to the Owners, the actual, direct or personal knowledge
of any Owner (with a duty of inquiry only as to managerial employees of Holdings
and the Subsidiaries); and (ii) with respect to Holdings or the Subsidiaries,
the actual, direct or personal knowledge of any director, officer or managerial
employee of Holdings or any of the Subsidiaries.
Section 2.30 Opportunity to Seek Independent Counsel. Each of the
Owners acknowledges that ▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P. has acted only as
counsel to Holdings and not as counsel to any Owner in connection with the
transactions contemplated by this Agreement. Each Owner further acknowledges
that he has been advised to seek independent legal counsel in connection with
the transactions contemplated by this Agreement and has had adequate opportunity
to do so.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer represents and warrants to the Owners as follows:
Section 3.1 Organization. Parent is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and is
duly authorized and qualified under all applicable laws, regulations, and
ordinances of public authorities to carry on its business in the places and in
the manner now conducted except where the failure to be so authorized or
qualified would not have a material adverse effect on its business. Buyer is
duly organized, validly existing and in good standing under the laws of the
State of Michigan, and is duly authorized and qualified under all applicable
laws, regulations, and ordinances of public authorities to carry on its business
in the places and in the manner now conducted except where the failure to be so
authorized or qualified would not have a material adverse effect on its
business.
Section 3.2 Authorization; Non-Contravention; Approvals. Each of
Parent and Buyer has the full legal right, power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby free and
clear of any statutory, contractual or other limitations, and to perform its
obligations under this Agreement. No additional proceedings on the part of
Parent or Buyer are necessary to authorize the execution and delivery of this
Agreement and the consummation by Parent and Buyer of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Buyer, and, assuming the due authorization, execution
and delivery by Holdings and the Owners, constitutes a valid and binding
agreement of Parent and Buyer, enforceable against Parent and Buyer in
accordance with its terms subject to limitations on enforcement due to
bankruptcy, insolvency, other matters affecting the rights of creditors
generally and the discretion of courts as to application of equitable remedies.
The execution and delivery of this Agreement by Parent and Buyer
and the consummation by Parent and Buyer of the transactions contemplated hereby
will not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or Buyer
under any of the terms, conditions or provisions of (a) its formation documents,
(b) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to Parent or Buyer or their assets or (c) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Parent
or Buyer is now a party or by which Parent or Buyer or any of their properties
or assets may be bound or affected.
Except for the items set forth in SCHEDULE 3.2 no declaration, filing
or registration with, or notice to, or authorization, consent or approval of,
any governmental or regulatory body or authority is necessary for the execution
and delivery of this Agreement by Parent and Buyer or the consummation by Parent
and Buyer of the transactions contemplated hereby.
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Section 3.3 No Adverse Proceedings. There are no court actions,
arbitrations, or regulatory proceedings pending, or to the best of Parent's or
Buyer's knowledge, threatened in which Buyer's acquisition of the interests in
Holdings is or is likely to be contested.
Section 3.4 Representations and Warranties Regarding the Parent's Stock.
The Parent's Stock shall be duly authorized, validly issued and outstanding,
fully paid and non-assessable at Closing. All of the Parent's Stock shall be
issued to the Owners free and clear of any claims, liens, pledges,
hypothecations, options, charges or encumbrances. The Parent's Stock will be
issued by Parent and delivered by Buyer in compliance with all applicable state
and federal laws concerning the issuance of these securities.
Parent covenants that it will at all times use its best efforts to
timely file any reports required to be filed by it under the 1933 Act and the
1934 Act and that it will take such other actions as may be necessary or any
Owner may reasonably request to enable the Owner to sell Parent's Stock received
by such Owner without registration under applicable exemptions provided for
under the 1933 Act including, without limitation, Rule 144.
The Parent's Stock will have the registration rights indicated in
Exhibit 3.4 attached hereto. In addition, the Parent's Stock will have the put
rights described in Section 1.2(b).
Section 3.5 Buyer's Representations and Warranties Regarding the
Acquisition of the Stock.
(a) Buyer (i) has adequate means of providing for its current
needs and possible contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risks of an
investment in Holdings for an indefinite period, (iv) at the present time, could
afford a complete loss of such investment, and (v) is an "accredited investor"
as that term is defined in Regulation D of the Securities Act of 1933, as
amended (the "Act").
(b) Buyer has sufficient knowledge and experience in financial,
tax and business matters so as to be capable of evaluating the merits and risks
of investments generally, and of its investment in Holdings.
(c) Buyer acknowledges that the Stock and the sale or transfer
thereof to it have not been registered under the Act, or under any state
securities laws. Buyer realizes that it may not be able to sell or dispose of
the Stock as there will be no public market available.
ARTICLE 4.
CONDITIONS PRECEDENT TO CLOSING
Section 4.1 Conditions to Obligations of Holdings and the Owners on the
Closing Date. This Agreement and the obligations of Holdings and the Owners to
consummate the transactions to be consummated on the Closing Date shall be
subject to the satisfaction of or waiver by them in writing of the following
conditions at or prior to the Closing Date:
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(a) Deliveries. Parent and Buyer shall have delivered to the
Owners each of the documents specified in SECTIONS 1.4 AND 1.5 hereof, made the
payments, and delivered the stock specified in SECTION 1.2 hereof.
(b) Litigation. No action or proceeding shall have been
instituted or threatened by third parties against any of the Owners, Holdings,
or Parent or Buyer to restrain or prohibit or to obtain damages in respect of
the transactions contemplated by this Agreement.
(c) Representations and Warranties. All representations and
warranties of Parent and Buyer are true and correct as of the Closing Date
(except to the extent that any such representation and warranty relates by its
express terms solely to a prior date).
Section 4.2 Conditions to Obligations of Parent and Buyer on the Closing
Date. This Agreement and the obligations of Parent and Buyer to consummate the
transaction to be consummated on the Closing Date shall be subject to the
satisfaction of or waiver by Parent and Buyer in writing of the following
conditions at or prior to the Closing Date:
(a) Deliveries. Holdings, and/or the Owners, as applicable, shall
have delivered to Parent and Buyer each of the documents specified in SECTIONS
1.4 AND 1.5 hereof and certificates representing the Stock, duly endorsed.
(b) Litigation. No action or proceeding shall have been
instituted or threatened by third parties against any of the Owners, Holdings or
Parent or Buyer to restrain or prohibit or to obtain damages in respect of the
transactions contemplated by this Agreement. No action is pending or threatened
which, in the reasonable satisfaction of Parent, Buyer or their legal counsel,
could have a material adverse effect on Holdings', the Subsidiaries' or Parent's
or Buyer's business, financial condition, prospects, assets or operation.
(c) Third Party Consents. Holdings and the Subsidiaries shall
have obtained and delivered to Buyer, on or prior to the Closing Date, such
material consents and approvals of third parties as may be required for the
consummation of the transactions contemplated herein.
(d) Due Diligence Satisfaction. Parent and Buyer shall have
completed their due diligence investigation to their complete satisfaction.
(e) Environmental Satisfaction. Holdings or the Subsidiaries
shall have resolved any potential environmental liabilities already known or
discovered by Parent and Buyer in their due diligence investigation, to the
reasonable satisfaction of Parent and Buyer.
(f) No Adverse Changes. Prior to Closing, there shall not have
been any material adverse change in the business, financial condition,
prospects, assets and operations of Holdings or the Subsidiaries since December
31, 1999.
(g) Representations and Warranties. All representations and
warranties of Holdings and the Owners are true and correct as of the Closing
Date (except to the extent that any such representation and warranty relates by
its express terms solely to a prior date).
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(h) Opinion of Counsel. Parent and Buyer shall have received an
opinion of counsel to Holdings, addressed to Parent and Buyer, in the form
attached hereto as EXHIBIT 4.2.
ARTICLE 5.
INDEMNIFICATION
Section 5.1 Indemnification by the Owners. Subject to the limitation
contained in SECTION 5.4 hereof, the Owners, jointly and severally, covenant and
agree to indemnify, defend, protect and hold harmless Buyer, from and after the
date of Closing, from and against any and all losses, payments, claims, damages,
liabilities, obligations, penalties, judgments, awards, costs, expenses,
interest, disbursements and any amounts due (including in settlement) as a
result of any and all actions, suits, proceedings, demands, assessments,
adjustments and investigations (collectively "Losses") incurred by Buyer as a
result of or arising from any of the following ("Seller Indemnifiable Claims"):
(a) Representations and Warranties. Any breach or inaccuracy of
any representations or warranties (excluding breaches or inaccuracies of
SECTIONS 2.13 OR 2.23) of Holdings or the Owners set forth herein or in this
Agreement including any Schedules, certificates or exhibits delivered in
connection herewith.
(b) Covenants. Any breach or nonfulfillment of any covenant or
agreement on the part of any of Holdings or the Owners under this Agreement;
provided, however, the indemnification shall be personal to the breaching Owner
and not joint and several with respect to the Limited Personal Services
Agreement, Employment Agreement or Noncompete Agreement executed by such Owner.
(c) Taxes. Any breach or inaccuracy of any representations or
warranties contained in SECTION 2.23 of Holdings or the Owners set forth herein
or in this Agreement including any Schedules, certificates or exhibits delivered
in connection herewith.
(d) Environmental Matters. Any breach or inaccuracy of any
representation or warranties contained in SECTION 2.13 of Holdings or the Owners
set forth herein or in this Agreement including any Schedules, certificates or
exhibits delivered in connection herewith.
Section 5.2 Indemnification by Buyer. Subject to SECTION 5.4 hereof,
Buyer covenants and agrees to indemnify, defend, protect and hold harmless each
of the Owners, from and after the date of this Agreement, from and against any
and all Losses incurred by the Owners as a result of or arising from any of the
following ("Buyer Indemnifiable Claims"): (a) any breach or inaccuracy of any
representation and warranty of Buyer set forth herein or in the Schedules or
certificates delivered in connection herewith; (b) any breach or nonfulfillment
of any covenant or agreement on the part of Buyer under this Agreement; or (c)
Buyer's operation of Holdings or the Subsidiaries after Closing.
Section 5.3 Procedure for Indemnification.
(a) Notice. Buyer and the Owners (herein referred to as the
"Indemnified Party") shall give written notice to the other (herein referred to
as the "Indemnifying Party") of any claim, suit, judgment or matter for which
indemnity may be sought under SECTIONS 5.1 AND
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5.2, promptly but in any event within 30 business days after the Indemnified
Party receives notice of the claim. Notice hereunder shall be given in
accordance with SECTION 9.4. The indemnification period provided for herein
shall be tolled for a particular claim for the period beginning on the date the
Indemnifying Party receives written notice of that claim until the final
resolution of such claim.
(b) Defense of Claim. The Indemnifying Party shall have the right
to defend and settle, at its own expense and by its own counsel (reasonably
satisfactory to the Indemnified Party) any such matter so long as the
Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
provided that if counsel to the Indemnified Party shall have a conflict of
interest that prevents such counsel from representing a particular Indemnified
Party, such Indemnified Party shall have the right to participate in such matter
through counsel of its own choosing and the Indemnifying Party will reimburse
the Indemnified Party for the actual reasonable expenses of its counsel. After
the Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability. If the Indemnifying Party desires to accept a final and complete
settlement of any claim and the Indemnified Party refuses to consent to such
settlement, then the Indemnifying Party's liability under this SECTION 5.3 with
respect to such claim shall be limited to the amount so offered by the
Indemnifying Party in settlement and the Indemnified Party shall reimburse the
Indemnifying Party for any additional costs of defense which it subsequently
incurs with respect to such claim and all additional costs of settlement or
judgment. If the Indemnifying Party does not undertake to defend such matter to
which the Indemnified Party is entitled to indemnification hereunder, or fails
to diligently pursue such defense, the Indemnified Party may undertake such
defense through counsel of its choice, at the cost and expense of the
Indemnifying Party, and the Indemnified Party may settle such matter, and the
Indemnifying Party shall reimburse the Indemnified Party for the amount paid in
such settlement and any other liabilities or expenses incurred by the
Indemnified Party in connection therewith, provided, however, that under no
circumstances shall the Indemnified Party settle any claim without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
Section 5.4 Limitation Upon Indemnity. Rights to indemnification under
SECTION 5.1 or 5.2 hereof are subject to the following limitations:
(a) No amount shall be payable by any of the Owners in
indemnification under SECTION 5.1 hereof until and unless the aggregate of all
Losses incurred by Parent or Buyer with respect to one or more Seller
Indemnifiable Claims shall exceed two hundred ten thousand ($210,000.00), (the
"Threshold"), in which event the injured party shall be entitled to
indemnification under SECTION 5.1 hereof for all such Losses above the Threshold
incurred by
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Parent or Buyer with respect to all such Seller Indemnifiable Claims, subject to
the additional limitations set forth in SECTION 5.4(B) hereof. Notwithstanding
the foregoing, the Threshold amount for violations of SECTION 1.9 shall equal
four hundred thousand dollars ($400,000.00). Notwithstanding the foregoing, in
the event the Total Liabilities described in SECTION 1.9 exceed four hundred
thousand dollars ($400,000.00), the Owners shall be responsible for all amounts
in excess of four hundred thousand dollars ($400,000.00). The amount by which
the Total Liabilities exceed four hundred thousand dollars ($400,000.00) shall
not be aggregated to the Losses with respect to the Threshold and shall not be
subject to the additional limitations set forth in SECTION 5.4(B) hereof.
(b) Except as otherwise provided herein, the total liability of
the Owners under SECTION 5.1 hereof with respect to all Losses incurred by Buyer
with respect to Seller Indemnifiable Claims shall not exceed one million dollars
($1,000,000.00). The Owners shall be jointly and severally liable for Seller
Indemnifiable Claims; provided, however, that the Owners shall be liable only
severally and not jointly for Seller Indemnifiable Claims arising under ARTICLE
7. The Owners shall not be liable for Seller Indemnifiable Claims covered by
insurance actually received by Parent or Buyer; provided that: (i) the Owners
shall be liable for any deductible payable by Parent or Buyer in connection with
such an insurance claim, and (ii) in no event shall this provision be construed
as a waiver by Parent's or Buyer's insurer of any subrogation claim against
Owners.
(c) With respect to claims under SECTION 5.2 hereof, the Owners'
recourse and Buyer's total liability shall be limited to the assets of Holdings
and the Subsidiaries.
(d) Subject to SECTION 5.4(F) hereof, the obligations of the
Owners under SECTIONS 5.1 (A) AND (B) hereof with respect to any Losses incurred
by Buyer with respect to any Seller Indemnifiable Claim relating to any matter
referred to in SECTIONS 5.1 (A) AND (B) hereof shall survive until the
expiration of the applicable statue of limitations under which the underlying
claim is made. Subject to SECTION 5.4(F) hereof, the obligations of the Owners
under SECTIONS 5.1 (C) AND (D) hereof with respect to any Losses incurred by
Buyer with respect to any Seller Indemnifiable Claim relating to any matter
referred to in SECTION 5.1(C) AND (D) hereof shall only survive for a period of
one (1) year from the Closing.
(e) Subject to SECTION 5.4(F) hereof, the obligations of Buyer
under SECTION 5.2 hereof with respect to any Losses incurred by the Owners with
respect to any Buyer Indemnifiable Claim relating to any matter referred to in
SECTION 5.2 hereof shall survive until the expiration of the applicable statute
of limitations under which the underlying claim is made.
(f) The foregoing provisions of this SECTION 5.4 notwithstanding
if, prior to the termination of any obligation to indemnify, written notice of a
Seller Indemnifiable Claim or an Buyer Indemnifiable Claim, as the case may be,
is given by the Indemnified Party to the Indemnifying Party, or a suit or action
based upon a Seller Indemnifiable Claim or Buyer Indemnifiable Claim, as the
case may be, is commenced against the Indemnifying Party, the Indemnified Party
shall not be precluded from pursuing such claim, breach, occurrence, other
matter, or suit or action, or from recovering from the Indemnifying Party
(whether through the courts or otherwise) on the Seller Indemnifiable Claim or
Buyer Indemnifiable Claim, as the case may be, by reason of the termination
otherwise provided for above in this SECTION 5.4.
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Section 5.5 Tax Matters. The following provisions shall govern the
allocation of responsibility as between Buyer and Owners for certain Tax matters
following the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Owners
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for Holdings and each of the Subsidiaries for all periods ending on or
prior to the Closing Date which are filed after the Closing Date. Owners shall
permit Buyer to review and comment on each such Tax Return described in the
preceding sentence prior to filing. Except for Taxes which are the
responsibility of the Owners pursuant to SECTION 2.23 (F) hereof, Holdings and
each of the Subsidiaries will promptly pay any other Taxes with respect to such
periods.
(b) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of Holdings and each of the Subsidiaries for Tax periods which
begin before the Closing Date and end after the Closing Date. Holdings and each
of the Subsidiaries will promptly pay the Taxes with respect to such periods.
(c) Cooperation on Tax Matters.
(1) Buyer, Holdings and each of the Subsidiaries and Owners
shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to
this SECTION 5.5 and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon
the other party's request) the provision of records and information
which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material
provided hereunder. Holdings and each of the Subsidiaries and Owners
agree (A) to retain all books and records with respect to Tax matters
pertinent to Holdings and each of the Subsidiaries relating to any
taxable period beginning before the Closing Date until the expiration of
the statute of limitations (and, to the extent notified by the Buyer or
Owners, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any Tax
authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, Holdings and each of the
Subsidiaries or Owners, as the case may be, shall allow the other party
to take possession of such books and records.
(2) Buyer and Owners further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including,
but not limited to, with respect to the transactions contemplated
hereby).
(d) Section 338 Election. Buyer shall not make an Internal
Revenue Code Section 338 or Section 338 (h)(10) election.
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(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any New York
State Gains Tax, New York City Transfer Tax and any similar Tax imposed in other
states or subdivisions), shall be paid by Buyer when due, and Buyer will, at its
own expense, file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, and, if required by applicable law, Buyer will, and will cause
its affiliates to, join in the execution of any such Tax Returns and other
documentation.
(f) Liability. Any responsibility or liability of Owners under
this SECTION 5.5, with the exception of any Tax liability related to the
Solutions Note which is the obligation of the Owners without limitation, shall
be limited by SECTIONS 5.1 and 5.4 hereof.
ARTICLE 6.
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 6.1 General. The Owners and Parent and Buyer, on behalf of their
employees, recognize and acknowledge that they had in the past, currently have,
and in the future will have, access to certain confidential information of
Holdings and the Subsidiaries, such as lists of clients, operational policies,
and pricing and cost policies that are valuable, special and unique assets of
Holdings and the Subsidiaries. The Owners and Parents and Buyer, on behalf of
their employees agree that they will not disclose such confidential information
to any person, firm, corporation, association or other entity for any purpose
whatsoever, except as is required in the course of performing duties for
Holdings and the Subsidiaries, unless (a) such information becomes known to the
public generally through no fault of the disclosing party, or (b) disclosure is
required by law or the order of any governmental authority, provided, that prior
to disclosing any information pursuant to this clause (b) the disclosing party
shall, if possible, give prior written notice thereof to Holdings and the
Subsidiaries and provide Holdings and the Subsidiaries with the opportunity to
contest such disclosure. In the event of a breach or threatened breach of the
provisions of this SECTION 6.1, Holdings and the Subsidiaries shall be entitled
to an injunction restraining the disclosing party from disclosing, in whole or
in part, such confidential information. Nothing herein shall be construed as
prohibiting Holdings and the Subsidiaries from pursuing any other available
remedy for such breach or threatened breach, including the recovery of damages.
Section 6.2 Equitable Relief. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
Holdings and the Subsidiaries would have no other adequate remedy, it is agreed
that the foregoing covenants may be enforced against them by injunctions,
restraining orders and other equitable actions.
Section 6.3 Survival. The obligations of the parties under this ARTICLE 6
shall survive the termination of this Agreement. Upon termination of this
Agreement, Parent and Buyer agree to promptly return Holdings or the
Subsidiaries all original and duplicate copies of written materials containing
such confidential information should the transaction contemplated herein not
occur.
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ARTICLE 7.
NONCOMPETITION COVENANTS
Section 7.1 Prohibited Activities. The Owners will not, directly or
indirectly, for themselves or on behalf of or in conjunction with any other
person, company, partnership, corporation or business of whatever nature, for a
period of the later to occur of three (3) years from the Closing, with respect
to Messrs. Cassels, Delahoussaye, ▇▇▇▇▇▇ and Fields, five (5) years from the
Closing, with respect to Messrs. Savant and ▇▇▇▇▇, or two (2) years from the
Owner's termination of employment with Holdings:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative, in
the auto parts delivery business or businesses in which Holdings is then
engaging involving delivery or distribution of any product or services.
(b) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a client of Holdings or
the Subsidiaries for the purpose of soliciting or selling services in the auto
parts delivery business or businesses in which Holdings is then engaging
involving delivery or distribution of any product or services.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit any Owner from acquiring, as a passive investor with no involvement in
the operations of the business, not more than one percent (1%) of the capital
stock of a business whose stock is publicly traded on a national securities
exchange or over-the-counter.
Section 7.2 Equitable Relief. Because of the difficulty of measuring
economic losses to Holdings and the Subsidiaries as a result of a breach of the
foregoing covenant, and because of the immediate and irreparable damage that
could be caused to Holdings and the Subsidiaries for which they would have no
other adequate remedy, each Owner agrees that the foregoing covenant may be
enforced by Holdings or the Subsidiaries by injunctions, restraining orders and
other equitable actions.
Section 7.3 Reformation Severability. The covenants in this ARTICLE 7 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the continuing validity and enforceability of any other covenant. In
the event any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth in this ARTICLE 7 are unreasonable,
then it is the intention of the parties that such restrictions be enforced to
the fullest extent which the court deems reasonable and this Agreement shall
thereby be reformed.
Section 7.4 Material and Independent Covenant. The Owners acknowledge that
their agreements with the covenants set forth in this ARTICLE 7 are material
conditions to Parent's and Buyer's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. It is
specifically agreed that the period during which the agreements and covenants of
each Owner made in this ARTICLE 7 shall survive shall be computed by excluding
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from such computation any time during which such Owner is in violation of any
provision of this ARTICLE 7.
ARTICLE 8.
ADDITIONAL COVENANTS
Section 8.1 Agreements as to Specified Matters. Except as specifically set
forth on the Schedules and except as may be otherwise agreed in writing by
Buyer, from the date hereof until the Closing, Holdings and the Subsidiaries
will conduct their business and operations according to their ordinary and usual
course of business, to preserve substantially intact the business organizations
of Holdings and the Subsidiaries and to preserve Holdings' and the Subsidiaries'
current relationships with customers, employees, franchisees, suppliers and
other persons with which they have significant business relations. Without
limiting the generality of the foregoing, and, except as otherwise expressly
provided in this Agreement, as set forth in SCHEDULE 8.1, or in the ordinary
course of business, prior to the Closing Date, without the prior written consent
of Buyer, Holdings and the Subsidiaries will not:
(a) Amend their articles of incorporation or code of regulations;
(b) Borrow or agree to borrow any funds;
(c) Incur, assume, suffer or become subject to, whether directly or
by way of guarantee or otherwise, any claims, obligations, liabilities or loss
contingencies which, individually or in the aggregate, are material to the
conduct of the businesses of Holdings or the Subsidiaries, or have or would have
a Material Adverse Effect on the financial condition of Holdings or the
Subsidiaries;
(d) Pay, discharge or satisfy any claims, liabilities or obligations
except in the ordinary course of business;
(e) Permit or allow any of the assets to be subjected to any Lien,
except Permitted Liens;
(f) Write off as uncollectable any Accounts Receivable;
(g) Cancel or amend any debts, waive any claims or rights or sell,
transfer or otherwise dispose of any properties or assets, other than for such
debts, claims, rights, properties or assets which, individually or in the
aggregate, are not material to the conduct of its business;
(h) License, sell, transfer, pledge, modify, disclose, dispose of or
permit to lapse any right to the use of any Intellectual Property Rights;
(i) Terminate, enter into, adopt, institute or otherwise become
subject to or amend in any material respect any collective bargaining agreement
or employment or similar agreement or arrangement with any of the directors,
officers or employees; (ii) terminate, enter into, adopt, institute or otherwise
become subject to or amend in any material respect any compensation plan; (iii)
contribute, set aside for contribution or authorize the contribution of any
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amounts for any such compensation plan; or (iv) grant or become obligated to
grant any general increase in the compensation of any directors, officers or
employees;
(j) Make or enter into any commitment for capital expenditures for
additions to property, plant or equipment individually in excess of $25,000.00;
(k) Declare, pay or set aside for payment any dividend or other
distribution in respect of their capital stock or other securities (including
without limitation distributions in redemption or liquidation) or redeem,
purchase or otherwise acquire any shares of their capital stock or other
securities; (ii) issue, grant or sell any shares of their capital stock or
equity securities of any class, or any options, warrants, conversion or other
rights to purchase or acquire any such shares or equity securities or any
securities convertible into or exchangeable for such shares or equity
securities; (iii) become a party to any merger, exchange, reorganization,
recapitalization, liquidation, dissolution or other similar corporate
transaction; or (iv) organize any new subsidiary, acquire any capital stock or
other equity securities or other ownership interest in, or assets of, any person
or entity or otherwise make any investment by purchase of stock or securities,
contributions to capital, property transfer or purchase of any properties or
assets of any person or entity;
(l) Pay, lend or advance any amounts to, or sell, transfer or lease
any properties or assets to, or enter into any agreement or arrangement with,
any director, officer or employee of Holdings or the Subsidiaries;
(m) Terminate, enter into or amend in any material respect any item
identified in SECTION 2.10 of the Disclosure Schedule, or take any action or
omit to take any action which will cause a breach, violation or default (however
defined) under any such items;
(n) Take any action that can be reasonably anticipated to have a
Material Adverse Effect on Holdings or the Subsidiaries or that could cause any
representation or warranty set forth in SECTION 2 hereof to be untrue or any
condition to the Closing not to be satisfied;
(o) Accelerate ▇▇▇▇▇▇▇▇, shipments to customers, payments from
customers or franchisees, orders from suppliers or payment of accounts payable
or adjust the level of inventory, except in the ordinary course of business
consistent with past practices;
(p) Acquire any of the business or assets of any other person, firm,
association or corporation;
(q) Do any act or omit to do any act, or permit any act or omission
to act, which could cause a breach or default by Holdings or the Subsidiaries
under any of their respective contracts, agreements, commitments or obligations;
(r) Enter into or amend any other agreements, commitments or
contracts which, individually or in the aggregate, are material to Holdings or
the Subsidiaries, except agreements for the purchase and sale of goods or
services in the ordinary course of business, consistent with past practice and
not in excess of current requirements; or
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(s) Agree, whether in writing or otherwise, to take any action
described in this subsection.
Section 8.2 Confidentiality.
(a) Holdings, Parent, Buyer, the Subsidiaries and the Owners agree
that they will not use, or permit the use of, any of the information relating to
another party furnished to it in connection with the transactions contemplated
herein ("Information") in a manner or for a purpose detrimental to such party or
otherwise than in connection with the transaction, and that it will not
disclose, divulge, provide or make accessible (collectively, "Disclose"), or
permit the Disclosure of any of the Information to any person or entity, other
than its directors, officers, employees, investment advisors, accountants,
counsel and other authorized representatives and agents, except as may be
required by judicial or administrative process or, in the opinion of such its
counsel, by other requirements of law; provided, however, that prior to any
Disclosure of any Information permitted hereunder, the disclosing party will
first obtain the recipients' undertaking to comply with the provisions of this
subsection with respect to such information. The term "Information" as used
herein will not include any information relating to a party which the party
disclosing such information can show: (i) to have been in its possession prior
to its receipt from another party hereto; (ii) to be now or to later become
generally available to the public through no fault of the disclosing party;
(iii) to have been available to the public at the time of its receipt by the
disclosing party; (iv) to have been received separately by the disclosing party
in an unrestricted manner from a person entitled to disclose such information;
or (v) to have been developed independently by the disclosing party without
regard to any information received in connection with this transaction.
(b) Each party hereto also agrees to promptly return to the party
from whom it originally received confidential information subject to this
SECTION 8.2 all original and duplicate copies of written materials containing
Information should the transactions contemplated herein not occur. The
provisions of this subsection shall survive termination or cancellation of this
Agreement.
Section 8.3 Filings; Consents; Removal of Objections. Subject to the terms
and conditions herein provided, the parties hereto will use their best efforts
to take or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all consents of any person or
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not in
limitation of the foregoing, it is the intent of the parties to consummate the
transactions contemplated herein at the earliest practicable time, and they
respectively agree to exert their best efforts to that end, including without
limitation: (i) the removal or satisfaction, if possible, of any objections to
the validity or legality of the transactions contemplated herein; and (ii) the
satisfaction of the conditions to consummation of the transactions contemplated
hereby.
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Section 8.4 Further Assurances; Cooperation; Notification.
(a) Each party hereto will, before, at and after the Closing,
execute and deliver such instruments and take such other actions as the other
party or parties, as the case may be, may reasonably require in order to carry
out the intent of this Agreement.
(b) Prior to the Closing, Holdings and the Owners will cooperate
with Buyer to promptly develop plans for the management of the business after
the Closing, including without limitation plans relating to productivity,
marketing, operations and improvements. Subject to applicable Law, prior to the
Closing Holdings will confer on a regular and reasonable basis with one or more
representatives of Buyer to report on material operational matters and the
general status of ongoing operations.
(c) At all times from the date hereof until the Closing, each
party will promptly notify the other in writing of the occurrence of any event
which it reasonably believes will or may result in a failure by such party to
satisfy the conditions specified in SECTION 4.1 and Section 4.2 hereof.
Section 8.5 Supplements to Disclosure Schedules. At least 48 hours prior
to the Closing, Holdings and the Owners will supplement or amend the Schedules
with respect to any event or development which, if existing or occurring at or
prior to the date of this Agreement, would have been required to be set forth or
described in the Schedules or which is necessary to correct any information in
the Schedules or in any representation and warranty which has been rendered
inaccurate by reason of such event or development. For purposes of determining
the accuracy as of the date hereof of the representations and warranties
contained in SECTION 2 hereof in order to determine the fulfillment of the
conditions set forth in Section 4.2(g), the Schedules will be deemed to exclude
any information contained in any supplement or amendment hereto delivered after
the delivery of the Schedules, provided that if the Closing will take place the
Schedules, as so amended, will be deemed the Schedules hereunder for all
purposes.
Section 8.6 Assignment of Claims. In addition to delivery of the Stock,
and as additional consideration for receipt of the Purchase Price from Buyer,
each Owner hereby assigns to Buyer, effective upon the Closing, any and all
claims or actions which such Owner has or may have against Holdings or any of
the Subsidiaries under the 1933 Act or any state securities or Blue Sky laws.
ARTICLE 9.
MISCELLANEOUS
Section 9.1 Successors and Assigns. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors and assignees of Holdings, the Subsidiaries and Buyer, and the
successors, assigns, heirs and legal representatives of the Owners..
Notwithstanding the foregoing, Buyer may assign this Agreement to an affiliated
entity, but such assignment shall not relieve Buyer of any of its obligations
hereunder.
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Section 9.2 Entire Agreement. This Agreement (including the Schedules and
exhibits attached hereto) and the documents delivered pursuant hereto constitute
the entire agreement and understanding among the Owners, Holdings and Buyer and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement. This Agreement may be modified or amended only by a written
instrument executed by all of the undersigned.
Section 9.3 Brokers and Agents. The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Group has acted as
the Broker in reference to the transactions contemplated herein. The ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Group shall be entitled to receive a fee as provided in a separate
agreement which shall be payable solely by the Owners notwithstanding any
agreement to which Holdings or the Subsidiaries are a party.
Section 9.4 Notices. All notices and communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, by national courier, or
by delivering the same in person to an officer or agent of such party, as
follows:
(a) If to Holdings, addressed to it at:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
(b) If to Parent or Buyer, addressed to it at:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
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(c) If to the Owners, to the Representative addressed to him at:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
or to such other address as any party hereto shall specify pursuant to this
SECTION 9.4 from time to time. Any notice, demand or communication required,
permitted or desired to be given hereunder shall be deemed effectively given
when personally delivered, sent for next business day by national courier,
delivered by confirmed facsimile, or mailed by prepaid certified mail, return
receipt requested.
Section 9.5 Governing Law; Consent to Jurisdiction. The laws of the State
of Texas shall govern the validity of this Agreement, the construction of its
terms, and the interpretation of the rights and duties of the parties hereto.
Each party hereto irrevocably and unconditionally hereby (i) agrees that any
action, claim, suit or other legal proceeding arising out of or relating to this
Agreement shall be brought in any court of general jurisdiction sitting in
▇▇▇▇▇▇ County, Texas; (ii) consents to the jurisdiction of any such court in any
such action, claim, suit or proceeding; (iii) agrees that venue for any such
action, claim, suit or proceeding shall lie exclusively in ▇▇▇▇▇▇ County, Texas
only; and (iv) waives any objection which such party may have to (x) submitting
to the jurisdiction of any such court or (y) the laying of venue of any such
action, claim, suit or proceeding in any such court.
Section 9.6 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
Section 9.7 Expenses. Each party shall bear their own costs and expenses
relating to this Agreement and the transactions contemplated herein including,
without limitation, fees and expenses of attorneys, accountants, investment
bankers, brokers, printers, copiers, consultants or other representatives.
Notwithstanding the foregoing, up to $10,000 of the Owner's fees may be paid by
Holdings.
Section 9.8 Closing of the Books. The parties agree to use the interim
closing of the books method of accounting for Holdings and the Subsidiaries for
tax purposes.
Section 9.9 Time. Time is of the essence with respect to this Agreement.
Section 9.10 Construction. This Agreement shall not be construed either
more favorably for or more strongly against any party hereto.
Section 9.11 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the
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parties, and if such modification is not possible, such provision shall be
severed from this Agreement, and in either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
Section 9.12 Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
Section 9.13 Public Announcements. Each of the parties hereto agrees that
it will not, without the prior written consent of the other party, make any
public announcement of this Agreement or any of the terms and conditions set
forth herein, except for such disclosure to the public or to governmental
agencies as its counsel shall deem necessary to comply with applicable law, rule
or regulation.
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the day and year first above written.
NOBLE INTERNATIONAL, LTD. DSI HOLDINGS, INC.,
a Delaware corporation a Texas corporation
By:____________________________ By:_______________________________
Name:__________________________ Name:_____________________________
Its:___________________________ Its:______________________________
NOBLE HOLDINGS, INC.
a Michigan corporation ______________________________
▇▇▇▇▇▇▇ ▇▇▇ SAVANT
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇:____________________________ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Name:__________________________
Its:___________________________ ______________________________
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Address: ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
______________________________
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: 7036 Auckland
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: 21207 Parkbluff
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
[SIGNATURES CONTINUED ON NEXT PAGE]
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_______________________________
▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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SCHEDULE 1.2(A)
ALLOCATION OF CASH PROCEEDS
The cash payable at closing for the Stock shall be distributed to the Owners as
follows:
--------------------------------------- ----------------------------------------
CASH DUE AT CLOSING
NAME FOR SALE OF THE STOCK
--------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇ Savant $12,300,000
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ $ 4,000,000
--------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ $ 400,000
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ $ 400,000
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ $ 400,000
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▇▇▇▇▇ ▇▇▇▇▇▇ $ 200,000
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ $ 200,000
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TOTAL $17,900,000
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43
SCHEDULE 1.2(B)
ALLOCATION OF THE PARENT'S STOCK
The Parent's Stock shall be issued and delivered to the Owner's as follows:
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NAME NUMBER OF SHARES
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▇▇▇▇▇▇▇ ▇▇▇ Savant 13,443
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▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ 13,443
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▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 30,384
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 30,384
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 30,384
--------------------------------------- ----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ 15,192
--------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 15,192
--------------------------------------- ----------------------------------------
TOTAL 148,422
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