STOCK PURCHASE AGREEMENT
Dated as of March 7, 1997
BETWEEN AND AMONG
▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C.,
Purchaser,
AND
CROWN NORTHCORP, INC.,
Seller
TABLE OF CONTENTS
Page
ARTICLE I - The First Purchase and Sale ..................... 1
SECTION 1.1. Terms of the First Purchase and Sale ........ 1
SECTION 1.2. The First Closing . . . . . . . 1
SECTION 1.3. Conditions to the Obligation of the
Purchaser to Consummate the Transactions
to be Consummated Hereunder at the First
Closing ..................................... 2
SECTION 1.4. Conditions to the Obligation of the Seller
to Consummate the Transactions to be
Consummated Hereunder at the First
Closing ..................................... 3
ARTICLE II - The Second Purchases and Sales ................. 5
SECTION 2.1. Terms of the Second Purchases and
Sales ...................................... 5
SECTION 2.2. The Second Closings . . . . . . 6
SECTION 2.3. Conditions to the Obligation of the
Purchaser to Consummate the Transactions
to be Consummated Hereunder at a
Second Closing ............................. 7
SECTION 2.4. Conditions to the Obligation of the Seller
to Consummate the Transactions to be
Consummated Hereunder at a Second Closing.... 8
SECTION 2.5. Option to Purchase ......................... 10
ARTICLE III - The Third Purchase and Sale ................... 11
SECTION 3.1. Terms of the Third Purchase and Sale ........ 11
SECTION 3.2. The Third Closing ........................... 11
SECTION 3.3. Conditions to the Obligation of the
Purchaser to Consummate the Transactions
to be Consummated Hereunder at the
Third Closing ............................... 12
SECTION 3.4. Conditions to the Obligation of the
Seller to Consummate the Transactions to
be Consummated Hereunder at the
Third Closing ............................... 13
SECTION 3.5. Option to Purchase ......................... 15
ARTICLE IV - Representations and Warranties of the Seller ... 16
SECTION 4.1. First Closing Representations
and Warranties ............................. 16
SECTION 4.2. Second Closing, Third Closing
and Option Representations and
Warranties ................................. 26
ARTICLE V - Representations and Warranties of the Purchaser.. 28
SECTION 5.1. Organization ............................... 28
SECTION 5.2. Authority to Buy ........................... 28
SECTION 5.3. Non-Distributive Intent ..................... 28
SECTION 5.4. Investment Company ......................... 29
SECTION 5.5. Compliance with Laws ....................... 29
SECTION 5.6. Broker Fees ................................. 29
Page
ARTICLE VI - Covenants of the Seller ....................... 29
SECTION 6.1. Furnish Future Information ................. 29
SECTION 6.2. Board Representation ....................... 30
SECTION 6.3. Corporate Governance ....................... 31
SECTION 6.4. Reasonable Best Efforts ..................... 31
SECTION 6.5. Reservation of Authorized Shares ............ 31
SECTION 6.6. Anti-Dilution ............................... 31
ARTICLE VII - Covenants of the Purchaser ................... 32
SECTION 7.1. Compliance with Securities Laws ............ 32
SECTION 7.2. Director Filings ........................... 32
SECTION 7.3. Change of Residence and Principal
Executive Office ........................... 32
ARTICLE VIII - Repurchase Rights of the Seller .............. 32
ARTICLE IX - Indemnification ............................... 34
SECTION 9.1. Indemnification by the Seller ............... 34
SECTION 9.2. Indemnification by the Purchaser ........... 34
SECTION 9.3. Method of Asserting Claims ................. 35
SECTION 9.4. Payment ..................................... 36
SECTION 9.5. Arbitration ................................. 37
SECTION 9.6. Other Rights and Remedies Not
Affected ................................... 37
ARTICLE X - Miscellaneous ................................... 38
SECTION 10.1. Further Actions ............................ 38
SECTION 10.2. Availability of Equitable
Remedies .................................. 38
SECTION 10.3. Survival .................................. 38
SECTION 10.4. Modification ............................... 38
SECTION 10.5. Notices .................................... 38
SECTION 10.6. Waiver ..................................... 39
SECTION 10.7. Binding Effect ............................ 40
SECTION 10.8. No Third Party Beneficiaries ............... 40
SECTION 10.9. Separability .............................. 40
SECTION 10.10.Headings .................................. 40
SECTION 10.11.Counterparts; Governing Law ................ 40
SECTION 10.12.Assignments ................................ 40
(ii)
EXHIBIT A - Seller's Officer's Certificate - First Closing
(Section 1.3(a))
EXHIBIT B - Opinion of Seller's Counsel
(Sections 1.3(b); 2.3(b); 3.3(b))
EXHIBIT C - Purchaser's Officer's Certificate - First Closing
(Section 1.4(a))
EXHIBIT D - Opinion of Purchaser's Counsel
(Sections 1.4(b); 2.4(b); 3.4(b))
EXHIBIT E - Escrow Agreement
(Section 2.1(a))
EXHIBIT F - Acquisition Criteria
(Section 2.3(a))
EXHIBIT G - Seller's Officer's Certificate - Second Closing
(Section 2.3(b))
EXHIBIT H - Purchaser's Officer's Certificate - Second Closing
(Section 2.4(a))
EXHIBIT I - Fund Criteria
(Section 3.3(a))
EXHIBIT J - Seller's Officer's Certificate - Third Closing
(Section 3.3(b))
EXHIBIT K - Purchaser's Officer's Certificate - Third Closing
(Section 3.4(a))
EXHIBIT L - Voting Agreement
(Sections 1.3(h); 1.4(b))
Schedule 4.1(a) Subsidiaries
Schedule 4.1(b) Capitalization
Schedule 4.1(e) Litigation
Schedule 4.1(f) Properties
Schedule 4.1(g) Contracts
Schedule 4.1(h) ERISA
Schedule 4.1(j) Consents
Schedule 4.1(k) Intellectual Property
Schedule 4.1(l) Insurance
Schedule 4.1(m) Related Party Transactions
(iii)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated
as of March 7, 1997, is between and among HARBERT EQUITY FUND I,
L.L.C., a Georgia limited liability company with offices at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
Purchaser ), and CROWN NORTHCORP, INC., a Delaware corporation
with offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ (the
"Seller").
WITNESSETH:
WHEREAS, the Purchaser desires to purchase from the Seller,
and the Seller desires to sell to the Purchaser, certain shares
of the Common Stock, par value $.01 per share, of the Seller (the
Seller Common Stock ) on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the adequacy, sufficiency,
and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
The First Purchase and Sale
SECTION 1.1. Terms of the First Purchase and Sale. On the
basis of the representations and warranties set forth in Section
4.1 and Article V, and subject to the terms and conditions set
forth herein:
(a) The Seller shall issue at the First Closing (as
hereinafter defined) to the Purchaser a certificate registered in
the name of the Purchaser for 1,000,000 shares (the First
Closing Shares ) of Seller Common Stock.
(b) As consideration for the First Closing Shares, the
Purchaser shall deliver at the First Closing to the Seller
$1,000,000 in cash, by certified check, or by wire transfer of
immediately available funds to an account designated in writing
by the Seller.
SECTION 1.2. The First Closing. The closing of the
transactions contemplated by Section 1.1 (the "First Closing")
shall take place at the offices of Powell, Goldstein, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
at 11:00 A.M., local time, on March 7, 1997 (the "First Closing
Date"). The First Closing may occur at such different place,
such different time, or such different date or a combination
thereof as the Purchaser and the Seller agree in writing.
SECTION 1.3. Conditions to the Obligation of the Purchaser
to Consummate the Transactions to be Consummated Hereunder at the
First Closing. The obligations of the Purchaser to consummate
the transactions to be consummated hereunder at the First Closing
are subject to the following conditions (unless waived by the
Purchaser in its discretion):
(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Seller
contained in Section 4.1 of this Agreement shall be true and
correct as of the First Closing; as of the First Closing the
Seller shall have performed and complied with all covenants and
agreements and satisfied all conditions required to be performed
and complied with by the Seller at or before such time by this
Agreement; and the Purchaser shall have received a certificate
executed by the Chairman of the Board and Chief Executive Officer
of the Seller, dated the First Closing Date, to that effect,
substantially in the form of Exhibit A.
(b) Opinion of Counsel. The Seller shall have delivered to
the Purchaser on the First Closing Date the favorable opinions of
each of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
Seller and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of the Seller, each dated
as of such date, collectively addressing the matters set forth in
Exhibit B and each in the form agreed upon by the Purchaser and
the Seller, each acting reasonably and in good faith.
(c) Other Closing Documents. The Seller shall have
delivered to the Purchaser on or prior to the First Closing such
other documents as the Purchaser may reasonably request in order
to enable the Purchaser to determine whether the conditions to
its obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
(d) Legal Action. A third party shall not have instituted
or threatened any legal proceeding relating to, or seeking to
prohibit or otherwise challenge the consummation of, the
transactions contemplated by this Agreement or any of the other
agreements, instruments, and other documents executed or to be
executed and delivered pursuant hereto or in connection therewith
(collectively, and including this Agreement, the "Operative
Documents"), or to obtain substantial damages with respect
thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
Operative Documents, by any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Purchaser, (i) makes any
of the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Purchaser to
consummate any of the transactions contemplated by this
Agreement, (iii) imposes material limitations on the ability of
the Purchaser, other than those imposed by the Voting Agreement
(as hereinafter defined) effectively to exercise full rights of
ownership of the First Closing Shares including the right to vote
the First Closing Shares on all matters properly presented to the
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stockholders of the Seller except as contemplated by the Voting
Agreement, or (iv) otherwise prohibits, restricts, or materially
delays consummation of any of the transactions contemplated by
this Agreement.
(f) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
resides as shall be necessary for the Seller to legally issue the
First Closing Shares to the Purchaser under the state securities
laws of such state.
(g) Contractual Consents Needed. The Seller shall have
obtained at or prior to the First Closing all consents, if any,
required for the consummation of the transactions to be
consummated hereunder at the First Closing from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any of its consolidated
subsidiaries or consolidated affiliates (each, a "Subsidiary",
and collectively, the "Subsidiaries") is a party, or to which any
of them or any of their respective businesses, properties, or
assets are subject.
(h) Voting Agreement. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ Holding
Company, Ltd. shall have executed and delivered to the Purchaser
the Voting Agreement in the form of Exhibit L (the Voting
Agreement ).
SECTION 1.4. Conditions to the Obligation of the Seller to
Consummate the Transactions to be Consummated Hereunder at the
First Closing. The obligations of the Seller to consummate the
transactions to be consummated hereunder at the First Closing are
subject to the following conditions (unless waived by the Seller
in its discretion):
(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Purchaser
contained in Article V of this Agreement shall be true and
correct as of the First Closing; as of the First Closing the
Purchaser shall have performed and complied with all covenants
and agreements and satisfied all conditions required to be
performed and complied with by the Purchaser at or before such
time by this Agreement; and the Seller shall have received a
certificate executed by the President or any Vice President of
▇▇▇▇▇▇▇ Management Corporation, an Alabama corporation (the
"Manager"), the Manager of the Purchaser, dated the date of the
First Closing, to that effect, substantially in the form of
Exhibit C.
(b) Opinion of Counsel. The Purchaser shall have delivered
to the Seller on the date of the First Closing the favorable
opinion of each of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to the
Purchaser, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, General Counsel of ▇▇▇▇▇▇▇
Management Corporation, each dated as of such date, collectively
addressing the matters set forth in Exhibit D and each in the
form agreed upon by the Seller and the Purchaser, each acting
reasonably and in good faith.
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(c) Other Closing Documents. The Purchaser shall have
delivered to the Seller at or prior to the First Closing such
other documents, including, without limitation, an Investors
Questionnaire, as the Seller may reasonably request in order to
enable the Seller to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to
carry out the provisions of this Agreement.
(d) Legal Action. A third party shall not have instituted
or threatened any legal proceeding relating to, or seeking to
prohibit or otherwise challenge the consummation of, the
transactions contemplated by the Operative Documents or in
connection therewith, or to obtain substantial damages with
respect thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
Operative Documents, by any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Seller, (i) makes any of
the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Seller to
consummate any of the transactions contemplated by this
Agreement, or (iii) otherwise prohibits, restricts, or materially
delays consummation of any of the transactions contemplated by
this Agreement.
(f) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
resides as shall be necessary for the Seller to legally issue the
First Closing Shares to the Purchaser under the state securities
laws of such state.
(g) Contractual Consents Needed. The Seller shall have
obtained on or prior to the First Closing all consents required
for the consummation of the transactions to be consummated
hereunder at the First Closing from any party to any contract,
agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any Subsidiary is a party,
or to which any of them or any of their respective businesses,
properties, or assets are subject.
(h) Fairness Opinion. The Board of Directors of the Seller
shall have obtained the favorable opinion of Delta Financial
Group, Inc. as to the fairness, from a financial point of view,
of the transactions contemplated hereby to the stockholders of
the Seller, which opinion shall be in form and substance
satisfactory to the Board of Directors of the Seller (the
"Fairness Opinion").
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(i) Voting Agreement. The Purchaser shall have executed
and delivered the Voting Agreement to each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇ Holding Company, Ltd.
ARTICLE II
The Second Purchases and Sales
SECTION 2.1. Terms of the Second Purchases and Sales. On
the basis of the representations and warranties set forth in
Section 4.1 and Article V as qualified and revised from time to
time as provided herein and subject to the terms and conditions
set forth herein:
(a) On the date hereof, the Purchaser, the Seller, and
AmSouth Bank of Alabama, as escrow agent (the "Escrow Agent"),
have executed and delivered an Escrow Agreement in the form
attached as Exhibit E (the "Escrow Agreement") providing for the
creation of an escrow fund (the "Escrow Fund"). During the
period commencing on the First Closing Date and terminating at
5:00 p.m., Eastern Standard Time, on the first anniversary
thereof (the "Second Closing Period"), the Seller shall be
entitled to deliver to the Purchaser a written notice of a
proposed Third Party Acquisition (as defined in Section 2.3(a))
at any time after the conditions precedent to such Third Party
Acquisition set forth in Section 2.3(a) have been satisfied,
which notice shall summarize the proposed terms of such Third
Party Acquisition, including without limitation the amount of the
purchase consideration relating thereto approved by the Seller's
Board of Directors (the "Acquisition Price"). Any Third Party
Acquisition with respect to which such notice has been delivered
to the Purchaser is referred to herein as a "Noticed Third Party
Acquisition." Within three business days after the date of such
notice, the Purchaser shall deposit into the Escrow Fund a sum
equal to the related Acquisition Price (each, a "Deposit," and
the date that such Deposit is made being referred to herein as
the related "Deposit Date"). Notwithstanding any provision of
this Agreement to the contrary, the aggregate Deposits required
to be made into the Escrow Fund by the Purchaser hereunder, minus
all Deposits released and paid to the Purchaser pursuant to
Section 2.1(c), shall not exceed $2,000,000. From time to time
during the Second Closing Period and for such period thereafter
during which any Noticed Third Party Acquisition is pending, the
Seller shall promptly inform the Purchaser in writing of any and
all material developments pertaining to the negotiation,
consummation, and termination of all Noticed Third Party
Acquisitions; provided, however, that the Seller shall not hereby
be required to violate any applicable law.
(b) From time to time during the Second Closing Period, if
the Seller enters into a contract (each, an "Acquisition
Agreement") providing for the consummation of a Noticed Third
Party Acquisition, the Seller shall promptly deliver to the
Purchaser a written notice of such occurrence (an "Acquisition
Notice") summarizing the material terms of such Acquisition
Agreement and accompanied by a true and correct copy of such
Acquisition Agreement (the date of each such notice being
referred to herein as a "Second Closing Notice Date"). Provided
that all of the conditions precedent set forth in Section 2.3 and
2.4 have been satisfied or waived as to the related Third Party
Acquisition as of the date that such Third Party Acquisition is
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to be consummated (a "Second Closing Date"), as early as
practicable on the related Second Closing Date the Seller shall
deliver a certificate (a "Seller Release Certificate") to the
Escrow Agent and to the Purchaser, in compliance with paragraphs
4(a) and (c) of the Escrow Agreement, instructing the Escrow
Agent to release and pay to the Seller, as early as is
practicable on such Second Closing Date, a portion of the Escrow
Fund (each, a "Second Closing Payment") equal to the lesser of
(i) the amount then in the Escrow Fund, and (ii) the cash
consideration to be paid by the Purchaser or any of its
Subsidiaries to the seller(s) in such Third Party Acquisition,
and the Seller, one or more of its Subsidiaries, or both (as
applicable) shall utilize such Second Closing Payment to pay such
cash consideration to such seller(s). As consideration therefor,
the Seller shall promptly issue to the Purchaser on such Second
Closing Date the number of shares of Seller Common Stock equal to
the quotient obtained by dividing the related Second Closing
Payment by $1.05, and shall promptly deliver to the Purchaser a
certificate for such shares registered in the name of the
Purchaser. The consummation of the transactions contemplated by
this Section 2.1(b) with respect to any Third Party Acquisition
as well as the consummation of the transactions contemplated by
Section 2.5 shall each constitute a "Second Closing" for purposes
of this Agreement except as set forth in Section 2.5(a), and all
shares of Seller Common Stock issued in connection with Second
Closings as of any date are referred to herein as the "Second
Closing Shares."
(c) Notwithstanding any provision of this Agreement to the
contrary, (i) if the Seller or a Subsidiary fails to consummate a
Noticed Third Party Acquisition within 60 days after the related
Deposit Date, or if the Acquisition Agreement relating to such
Noticed Third Party Acquisition is earlier terminated, the
Purchaser will have the right to issue to the Escrow Agent a
certificate, in compliance with paragraphs 4(b) and (c) of the
Escrow Agreement, instructing the Escrow Agent to release and pay
to the Purchaser the related Deposit, together with all accrued
interest thereon, and (ii) on the later of (x) the expiration of
the Second Closing Period, or (y) the date that is 60 days after
the Deposit Date pertaining to a Noticed Third Party Acquisition
which has not been consummated and has not been terminated on or
prior to the end of such 60 day period (the later of such dates
being referred to herein as the "Second Closing Expiration
Date"), the Purchaser will have the right to issue to the Escrow
Agent a certificate, in compliance with paragraphs 4(b) and (c)
of the Escrow Agreement, instructing the Escrow Agent to release
and pay to the Purchaser any and all amounts (if any) then
remaining in the Escrow Fund, together with all accrued interest
thereon.
SECTION 2.2. The Second Closings. All Second Closings
shall take place at the offices of Powell, Goldstein, ▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
at 9:00 A.M., local time on the related Second Closing Date. Any
Second Closing may occur at such different place, such different
time, or such different date or a combination thereof as the
Purchaser and the Seller agree in writing.
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SECTION 2.3. Conditions to the Obligation of the Purchaser
to Consummate the Transactions to be Consummated Hereunder at a
Second Closing. The obligations of the Purchaser to consummate
the transactions to be consummated hereunder at a Second Closing
are subject to the following conditions (unless waived by the
Purchaser in its sole discretion):
(a) Acquisition. During the Second Closing Period and with
respect to the related Second Closing, (i) the Seller, in regular
consultation with the Purchaser, shall have identified the
related acquisition (each, a "Third Party Acquisition") to be
made by the Seller, one or more Subsidiaries, or both, as the
case may be, that satisfies all of the criteria set forth in
Exhibit F (the "Second Closing Criteria"), and (ii) the Board of
Directors of the Seller shall have approved such Third Party
Acquisition.
(b) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Seller
contained in Section 4.1 of this Agreement, as qualified and
revised pursuant to the related Seller Disclosure Schedule (as
hereinafter defined), shall be true and correct as of such Second
Closing; as of such Second Closing the Seller shall have
performed and complied with all covenants and agreements and
satisfied all conditions required to be performed and complied
with by the Seller at or before such time by this Agreement; and
the Purchaser shall have received a certificate executed by the
Chief Executive Officer, the President, or any Vice President of
the Seller, dated as of the related Second Closing Date, to that
effect, substantially in the form of Exhibit G.
(c) Opinion of Counsel. The Seller shall have delivered to
the Purchaser on the related Second Closing Date the favorable
opinions of each of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel to the Seller, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of the
Seller, each dated as of such date, collectively addressing the
matters set forth in Exhibit B and each in the form agreed upon
by the Purchaser and the Seller, each acting reasonably and in
good faith.
(d) Other Closing Documents. The Seller shall have
delivered to the Purchaser on or prior to the related Second
Closing Date such other documents as the Purchaser may reasonably
request in order to enable the Purchaser to determine whether the
conditions to its obligations under this Agreement have been met
and otherwise to carry out the provisions of this Agreement.
(e) Legal Action. An unaffiliated third party shall not
have instituted or threatened any legal proceeding relating to,
or seeking to prohibit or otherwise challenge the consummation
of, the transactions contemplated by this Agreement or any of the
other Operative Documents, or to obtain substantial damages with
respect thereto.
(f) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
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Operative Documents by, any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Purchaser, (i) makes any
of the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Purchaser to
consummate any of the transactions contemplated by this
Agreement, (iii) imposes material limitations, other than those
imposed by the Voting Agreement, on the ability of the Purchaser
effectively to exercise full rights of ownership of the Seller
Common Stock to be issued to the Purchaser at such Second
Closing, including the right to vote such Seller Common Stock on
all matters properly presented to the stockholders of the Seller
except as contemplated by the Voting Agreement, or (iv) otherwise
prohibits, restricts, or materially delays consummation of any of
the transactions contemplated by this Agreement.
(g) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
resides as shall be necessary for the Seller to legally issue the
Seller Common Stock to be issued to the Purchaser at such Second
Closing under the state securities laws of such state.
(h) Contractual Consents Needed. The Seller shall have
obtained on or prior to the related Second Closing Date all
consents, if any, required for the consummation of the
transactions to be consummated hereunder at such Second Closing
from any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which the Seller or any
Subsidiary is a party, or to which any of them or any of their
respective businesses, properties, or assets are subject.
(i) No Material Adverse Effect. The Seller Disclosure
Schedule relating to such Second Closing (i) shall not reflect
the occurrence of an event that had a Material Adverse Effect (as
hereinafter defined) between the First Closing and such Second
Closing, and (ii) shall not reflect the occurrence of any event
that could reasonably be expected to have a Material Adverse
Effect. As used herein, "Material Adverse Effect" means a
material adverse effect upon the business, financial condition,
or results of operations of the Seller and the Subsidiaries,
considered as a whole.
(j) No Material Breach. There shall not have been any
material breach of any of the representations and warranties made
by the Seller pursuant to Sections 4.1 or 4.2 in connection with
any previous Closing.
SECTION 2.4. Conditions to the Obligation of the Seller to
Consummate the Transactions to be Consummated Hereunder at a
Second Closing. The obligations of the Seller to consummate the
transactions to be consummated hereunder at a Second Closing are
subject to the following conditions (unless waived by the Seller
in its discretion):
-8-
(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Purchaser
contained in this Agreement, as qualified and revised pursuant to
the related Purchaser Disclosure Schedule (as hereinafter
defined), shall be true and correct as of such Second Closing; as
of such Second Closing the Purchaser shall have performed and
complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by the
Purchaser at or before such time by this Agreement; and the
Seller shall have received a certificate executed by the
President or Vice President of the Manager or other governing
Person (as hereinafter defined) of the Purchaser, dated the
Second Closing Date, to that effect, among other things,
substantially in the form of Exhibit H.
(b) Opinion of Counsel. The Purchaser shall have delivered
to the Seller on the Second Closing Date the favorable opinion of
each of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to the Purchaser, and
Alabama counsel to the Manager or other governing Person of the
Purchaser, each dated as of such date, collectively addressing
the matters set forth in Exhibit D and each in the form agreed
upon by the Seller and the Purchaser, each acting reasonably and
in good faith.
(c) Other Closing Documents. The Purchaser shall have
delivered to the Seller on or prior to the related Second Closing
Date such other documents as the Seller may reasonably request,
including, without limitation, an Investors Questionnaire, in
order to enable the Seller to determine whether the conditions to
its obligations under this Agreement have been met and otherwise
to carry out the provisions of this Agreement.
(d) Legal Action. There shall not have been instituted or
threatened by any Person other than the Seller or its affiliates
any legal proceeding relating to, or seeking to prohibit or
otherwise challenge the consummation of, the transactions
contemplated by the Operative Documents or in connection
therewith, or to obtain substantial damages with respect thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
Operative Documents by any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Seller, (i) makes any of
the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Seller to
consummate any of the transactions contemplated by this
Agreement, or (iii) otherwise prohibits, restricts, or materially
delays consummation of any of the transactions contemplated by
this Agreement.
(f) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
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resides as shall be necessary for the Seller to legally issue the
Seller Common Stock to be issued to the Purchaser at such Second
Closing under the state securities laws of such state.
(g) Contractual Consents Needed. The Seller shall have
obtained on or prior to the related Second Closing Date all
consents required for the consummation of the transactions to be
consummated at such Second Closing from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any Subsidiary is a party,
or to which any of them or any of their respective businesses,
properties, or assets are subject.
(h) Fairness Opinion Not Withdrawn. Subject to the
Seller's compliance with Section 6.4, the Fairness Opinion shall
not have been withdrawn.
SECTION 2.5. Option to Purchase.
(a) Grant of Option. For a period (the "Second Closing
Option Period") commencing on the date hereof and terminating ten
business days after the date that the Second Closing Period
terminates, the Purchaser will have the right and option (the
"Second Closing Option"), but not the obligation, to purchase a
number of shares (the "Second Closing Option Shares") of Seller
Common Stock equal to 1,904,762 less the aggregate number of
shares of Seller Common Stock purchased by the Purchaser in
Second Closings as of the Second Option Closing Date (as defined
in paragraph (c) below), for a purchase price of $1.05 per share
(the "Second Closing Option Price").
(b) Exercise of Option. The Purchaser may exercise the
Second Closing Option at any time during the Second Closing
Option Period by delivery of written notice thereof to the
Seller. The delivery of such notice shall suspend (i) any and
all obligations of the Purchaser to effect Deposits pursuant to
Section 2.1, and (ii) the Seller's rights and obligations
pursuant to Section 2.1 with respect to Third Party Acquisitions
that are not Noticed Third Party Acquisitions and with respect to
which a Deposit has not been effected as of the date of such
notice (including, without limitation, the right to issue any
related Seller Release Certificate); and upon the closing of the
Second Closing Option all of such obligations shall terminate and
shall have no further force or effect.
(c) Closing. The closing of the Second Closing Option
shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m.
local time, on the 30th day after the exercise thereof in
compliance with the terms hereof (the "Second Option Closing
Date"). At such closing, (i) the Seller shall issue to the
Purchaser a certificate registered in the name of the Purchaser
for the Second Closing Option Shares (which number and kind of
shares shall be equitably and proportionately adjusted for stock
splits, stock dividends, and other changes to the Seller Common
Stock that are approved or implemented on or prior to the Second
Option Closing Date), and (ii) as consideration for the Second
Closing Option Shares, the Purchaser shall deliver to the Seller
the Second Closing Option Price by certified check or by wire
transfer of immediately available funds to an account previously
designated in writing by the Seller, provided that any and all
amounts (if any) then remaining in the Escrow Fund, together with
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all accrued interest applicable thereto, shall be released by the
Escrow Agent to the Seller on the Second Option Closing Date and
credited to the Purchaser's account at the closing toward the
Second Closing Option Option Price, and the Purchaser will cause
such release to be effected by issuing to the Escrow Agent a
certificate, in compliance with Paragraphs 4(b) and (c) of the
Escrow Agreement, instructing the Escrow Agent to effect such
release. Notwithstanding any provision of this Agreement to the
contrary, the closing of the Second Closing Option shall
constitute a "Second Closing" for all purposes of this Agreement
other than Section 2.5(a), and the respective obligations of the
Seller and Purchaser to consummate the Second Closing Option
shall be subject to prior satisfaction (or waiver) of the
conditions set forth in Section 2.3, 2.4, and 4.2 of this
Agreement, and to Article VIII (if applicable), except that the
condition precedent set forth in Section 2.3(a) need not be
satisfied by the Seller.
ARTICLE III
The Third Purchase and Sale
SECTION 3.1. Terms of the Third Purchase and Sale. On the
basis of the representations and warranties set forth in Section
4.1 and Article V, as qualified and revised from time to time as
provided herein, and subject to the terms and conditions set
forth herein:
(a) The Seller shall issue at the Third Closing (as
hereinafter defined) to the Purchaser a certificate registered in
the name of the Purchaser for 1,904,762 shares (the Third
Closing Shares ; each of the First Closing Shares, the Second
Closing Shares, and the Third Closing Shares are collectively
referred to herein as the "Shares") of the Seller Common Stock
(which number and kind of shares shall be equitably and
proportionately adjusted for stock splits, stock dividends, and
other previous changes to the Seller Common Stock that are
approved or implemented on or prior to the date of the Third
Closing).
(b) As consideration for the Third Closing Shares, the
Purchaser shall deliver at the Third Closing to the Seller
$2,000,000 in cash, by certified check, or by wire transfer of
immediately available funds to an account previously designated
in writing by the Seller.
SECTION 3.2. The Third Closing. The closing of the
transactions contemplated by Section 3.1 (such closing, as well
as the consummation of the transactions contemplated by Section
3.5, shall each constitute a "Third Closing;" each of the First
Closing, the Second Closings, and the Third Closing are
generically referred to herein as a "Closing") shall take place
at the offices of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 11:00 A.M.,
local time, on the fifth business day after the date that each of
the conditions precedent to the transactions to be consummated
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hereunder at the Second Closing set forth in Section 3.3(a),
Section 3.3(g), and Section 3.4(f) have been satisfied. The
Third Closing may occur at such different place, such different
time, or such different date or a combination thereof as the
Purchaser and the Seller agree in writing.
SECTION 3.3. Conditions to the Obligation of the Purchaser
to Consummate the Transactions to be Consummated Hereunder at the
Third Closing. The obligations of the Purchaser to consummate
the transactions to be consummated hereunder at the Third Closing
are subject to the following conditions (unless waived by the
Purchaser in its discretion):
(a) Creation of Fund or Investment. Within one calendar
year after the date that the First Closing actually occurs, the
Board of Directors of the Seller and the Purchaser, in their
discretion, shall have (i) approved the creation of a fund that
satisfies the criteria set forth in Exhibit I, and (ii)
determined that such fund satisfies such criteria.
(b) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Seller
contained in Section 4.1 of this Agreement, as qualified and
revised pursuant to the Seller Disclosure Schedule applicable to
the Third Closing, shall be true and correct as of the Third
Closing; as of the Third Closing the Seller shall have performed
and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by the
Seller at or before such time by this Agreement; and the
Purchaser shall have received a certificate executed by the Chief
Executive Officer, President, or any Vice President of the
Seller, dated the date of the Third Closing, to that effect,
substantially in the form of Exhibit J.
(c) Opinion of Counsel. The Seller shall have delivered to
the Purchaser on the date of the Third Closing the favorable
opinions of each of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP,
counsel to the Seller, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary of the
Seller, each dated as of such date, collectively addressing the
matters set forth in Exhibit B and each in the form agreed upon
by the Purchaser and the Seller, each acting reasonably and in
good faith.
(d) Closing Documents. The Seller shall have delivered to
the Purchaser at or prior to the Third Closing such other
documents as the Purchaser may reasonably request in order to
enable the Purchaser to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to
carry out the provisions of this Agreement.
(e) Legal Action. An unaffiliated third party shall not
have instituted or threatened any legal proceeding relating to,
or seeking to prohibit or otherwise challenge the consummation
of, the transactions contemplated by this Agreement or any of the
other Operative Documents, or to obtain substantial damages with
respect thereto.
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(f) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
Operative Documents, by any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Purchaser, (i) makes any
of the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Purchaser to
consummate any of the transactions contemplated by this
Agreement, (iii) imposes material limitations, other than those
imposed by the Voting Agreement, on the ability of the Purchaser
effectively to exercise full rights of ownership of the Third
Closing Shares, including the right to vote the Third Closing
Shares on all matters properly presented to the stockholders of
the Seller except as contemplated by the Voting Agreement, or
(iv) otherwise prohibits, restricts, or materially delays consum-
mation of any of the transactions contemplated by this Agreement.
(g) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
resides as shall be necessary for the Seller to legally issue the
Third Closing Shares to the Purchaser under the state securities
laws of such state.
(h) Contractual Consents Needed. The Seller shall have
obtained on or prior to the Third Closing all consents, if any,
required for the consummation of the transactions to be
consummated hereunder at the Third Closing from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any Subsidiary is a party,
or to which any of them or any of their respective businesses,
properties, or assets are subject.
(i) No Material Adverse Effect. The Seller Disclosure
Schedule relating to the Third Closing (i) shall not reflect the
occurrence of an event that had a Material Adverse Effect between
the First Closing and the Third Closing, and (ii) shall not
reflect any transaction or occurrence that could reasonably be
expected to have a Material Adverse Effect.
(j) No Material Breach. There shall not have been any
material breach of any of the representations or warranties made
by the Seller pursuant to Sections 4.1 or 4.2 in connection with
any previous Closing.
SECTION 3.4. Conditions to the Obligation of the Seller to
Consummate the Transactions to be Consummated Hereunder at the
Third Closing. The obligations of the Seller to consummate the
transactions to be consummated hereunder at the Third Closing are
subject to the following conditions (unless waived by the Seller
in its discretion):
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(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Purchaser
contained in this Agreement (as qualified and revised pursuant to
the Purchaser Disclosure Schedule applicable to the Third
Closing) shall be true and correct as of the Third Closing; as of
the Third Closing the Purchaser shall have performed and complied
with all covenants and agreements and satisfied all conditions
required to be performed and complied with by the Purchaser at or
before such time by this Agreement; and the Seller shall have
received a certificate executed by the President or Vice
President of the Manager or other governing Person of the
Purchaser, dated the date of the Third Closing, to that effect,
among other things, substantially in the form of Exhibit K.
(b) Opinion of Counsel. The Purchaser shall have delivered
to the Seller on the date of the Third Closing the favorable
opinion of each of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to the
Purchaser, and Alabama counsel to the Manager or other governing
Person of the Purchaser, each dated as of such date, collectively
addressing the matters set forth in Exhibit D and each in the
form agreed upon by the Seller and the Purchaser, each acting
reasonably and in good faith.
(c) Other Closing Documents. The Purchaser shall have
delivered to the Seller on or prior to the Third Closing such
other documents, including, without limitation, an Investors
Questionnaire, as the Seller may reasonably request in order to
enable the Seller to determine whether the conditions to its
obligations under this Agreement have been met and otherwise to
carry out the provisions of this Agreement.
(d) Legal Action. There shall not have been instituted or
threatened any legal proceeding relating to, or seeking to
prohibit or otherwise challenge the consummation of, the
transactions contemplated by the Operative Documents or in
connection therewith, or to obtain substantial damages with
respect thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree
proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by any of the
Operative Documents, by any federal, state, local, or other
governmental authority or by any court or other tribunal,
including the entry of a preliminary or permanent injunction,
which, in the reasonable judgment of the Seller, (i) makes any of
the transactions contemplated by this Agreement illegal, (ii)
results in a delay in the ability of the Seller to consummate any
of the transactions contemplated by this Agreement, or (iii)
otherwise prohibits, restricts, or delays consummation of any of
the transactions contemplated by this Agreement.
(f) Blue-Sky Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications,
and other authorizations from the state securities authorities
having jurisdiction over the state in which the Purchaser then
resides as shall be necessary for the Seller to legally issue the
Third Closing Shares to the Purchaser under the state securities
laws of such state.
-14-
(g) Contractual Consents Needed. The Seller shall have
obtained on or prior to the Third Closing all consents, if any,
required for the consummation of the transactions to be
consummated hereunder at the Third Closing from any party to any
contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any Subsidiary is a party,
or to which any of them or any of their respective businesses,
properties, or assets are subject.
(h) Fairness Opinion Not Withdrawn. Subject to the
Seller's compliance with Section 6.4, the Fairness Opinion shall
not have been withdrawn.
SECTION 3.5. Option to Purchase.
(a) Grant of Option. For a period (the "Third Closing
Option Period") commencing on the date hereof and terminating ten
business days after the first anniversary of the First Closing
Date, the Purchaser will have the right and option (the "Third
Closing Option" and, together with the Second Closing Option,
generically an "Option"), but not the obligation, to purchase the
Third Closing Shares for a total purchase price of $2,000,000
($1.05 per share), exercisable only if the Purchaser has not
previously purchased the Third Closing Shares pursuant to Section
3.1.
(b) Exercise of Option. The Purchaser may exercise the
Third Closing Option at any time during the Third Closing Option
Period by delivery of written notice thereof to the Seller.
(c) Closing. The closing of Third Closing Option shall
take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m.
local time, on the 30th day after the exercise thereof in
compliance with the terms hereof (the "Third Option Closing
Date"; each of the Second Option Closing Date and the Third
Option Closing Date being generically referred to herein as an
"Option Closing Date"). At such closing, (i) the Seller shall
issue to the Purchaser a certificate registered in the name of
the Purchaser for the Third Closing Option Shares (which number
and kind of shares shall be equitably and proportionately
adjusted for stock splits, stock dividends, and other changes to
the Seller Common Stock that are approved or implemented on or
prior to the Third Option Closing Date), and (ii) as
consideration for the Third Closing Option Shares, the Purchaser
shall deliver to the Seller $2,000,000 by certified check, or by
wire transfer of immediately available funds to an account
previously designated in writing by the Seller. The closing of
the Third Closing Option shall constitute the "Third Closing" for
purposes of this Agreement, and the respective obligations of the
Seller and Purchaser to consummate the Third Closing Option shall
be subject to prior satisfaction (or waiver) of the conditions
set forth in Section 3.3, 3.4 and 4.2 of this Agreement, and to
Article VIII (if applicable), except that the conditions
precedent set forth in Section 3.3(a) need not be satisfied by
the Seller.
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ARTICLE IV
Representations and Warranties of the Seller
SECTION 4.1. First Closing Representations and Warranties.
The Seller represents and warrants to the Purchaser as of the
First Closing as follows:
(a) Organization and Qualification. The Seller owns,
either directly or through one or more wholly-owned subsidiaries,
all the outstanding shares of capital stock of the Subsidiaries.
All of the Subsidiaries are listed on Schedule 4.1(a). Other
than the Subsidiaries, neither the Seller nor any Subsidiary has
a consolidated subsidiary or consolidated affiliate corporation
or owns any material interest in any other person, firm or entity
("Person") except as set forth on Schedule 4.1(a). Schedule
4.1(a) also correctly sets forth as to the Seller and as to each
Subsidiary its place of incorporation or organization, principal
place of business, jurisdictions in which it is qualified to do
business, and the business which it currently conducts; and as to
each Subsidiary its authorized capitalization (if applicable),
its shares of capital stock or other equity interests
outstanding, and the record and beneficial owner of those shares.
Each of Seller and each of the Subsidiaries is a corporation,
limited partnership, or limited liability company duly organized,
validly existing, and in good standing under the laws of its
jurisdiction of incorporation or organization, with all requisite
power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and
other tribunals, to own, lease, license, and use its properties
and assets and to carry on the business in which it is now
engaged, in each case except for such consents, authorizations,
approvals, orders, licenses, certificates, permits, declarations,
and filings, the absence of which, individually or in the
aggregate, could not reasonably be expected to have a Material
Adverse Effect. Each of the Seller and each of the Subsidiaries
is duly qualified to transact the business in which it is engaged
and is in good standing as a foreign corporation in every
jurisdiction in which its ownership, leasing, licensing, or use
of property or assets or the conduct of its business makes such
qualification necessary, except where the absence of such
qualification or good standing could not reasonably be expected
to have a Material Adverse Effect.
(b) Capitalization. The authorized capital stock of the
Seller consists of (i) 30,000,000 shares of Seller Common Stock,
of which 8,776,723 shares are outstanding as of the date hereof
(excluding the First Closing Shares), and (ii) 1,000,000 shares
of Preferred Stock, par value $.01 per share ("Preferred Stock"),
of which (A) 450 shares of Series A Convertible Preferred Stock,
par value $.01 per share, (B) 2,000 shares of Series B Preferred
Stock, par value $.01 per share, and (C) 500 shares of Series C
Convertible Preferred Stock, par value $.01 per share, are
outstanding as of the date hereof. Each of such outstanding
shares of Seller Common Stock and each outstanding share of each
outstanding series of Preferred Stock is duly authorized, validly
-16-
issued, fully paid, and nonassessable, and was not issued in
violation of any applicable law or of any preemptive right of
stockholders. All persons who, to the Knowledge of the Seller
(as hereinafter defined), own of record or beneficially five
percent or more of any class or series of capital stock of the
Seller are set forth on Schedule 4.1(b). Except for this
Agreement and as set forth on Schedule 4.1(b), there is no
commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of, any
share of capital stock of the Seller or of any Subsidiary or any
security or other instrument convertible into, exercisable for,
or exchangeable for capital stock of the Seller or of any
Subsidiary. Except as set forth on Schedule 4.1(b), there is
outstanding no security or other instrument convertible into or
exchangeable for capital stock of the Seller or of any
Subsidiary. As used herein, "Knowledge of the Seller" means the
actual knowledge of any one or more of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, or ▇▇▇▇▇▇▇ ▇▇▇▇▇, assuming that each possesses the
actual knowledge that an officer or director with their
responsibilities would possess after reasonable inquiry into the
applicable matter.
(c) Financial Condition. The Seller has delivered to the
Purchaser true and correct copies of the following: audited
consolidated balance sheets of the Seller as of December 31, 1995
and December 31, 1994; the unaudited consolidated balance sheet
of the Seller as of December 31, 1996 (the "Unaudited Balance
Sheet"); audited consolidated statements of income, consolidated
statements of retained earnings, and consolidated statements of
cash flows of the Seller for the years ended December 31, 1995
and December 31, 1994; and the unaudited consolidated statement
of income, consolidated statement of retained earnings, and
consolidated statement of cash flows of the Seller for the year
ended December 31, 1996 (collectively the "Financial
Statements"). Each such consolidated balance sheet presents
fairly the financial condition, assets, liabilities, and
stockholders' equity of the Seller and its consolidated
subsidiaries as of its date; each such consolidated statement of
income and consolidated statement of retained earnings presents
fairly the results of operations of the Seller and its
consolidated subsidiaries for the period indicated; and each such
consolidated statement of cash flows presents fairly the
information purported to be shown therein, in each case subject
in the case of such unaudited consolidated balance sheet,
consolidated statement of income, consolidated statement of
retained earnings, and consolidated balance sheet to changes
resulting from year-end audit adjustments. The financial
statements referred to in this Section 4.1(c) have been prepared
in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved
except as otherwise permitted by GAAP or, with respect to
financial statement footnotes, the rules and regulations of the
Securities and Exchange Commission (the "Commission") and are in
accordance with the books and records of the Seller and its
consolidated subsidiaries. Since December 31, 1996 (the
"Reference Date"):
(i) There has at no time been a material adverse change in
the business, financial condition, or results of operations of
the Seller and its consolidated subsidiaries, considered as a
whole (including, without limitation, any adverse change in the
rating of the Seller as a special servicer by any nationally
recognized rating agency);
-17-
(ii) Except as required or permitted by the terms of any
outstanding series of Preferred Stock, neither the Seller nor any
Subsidiary has authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its
capital stock or other outstanding equity interests or any direct
or indirect redemption, purchase, or other acquisition of any
stock of the Seller or any equity interest of any Subsidiary;
(iii) The operations and business of the Seller and each
Subsidiary have been conducted in all respects only in the
ordinary course; and
(iv) Neither the Seller nor any Subsidiary has suffered an
extraordinary loss (whether or not covered by insurance) or
waived any right of material value.
(d) Tax and Other Liabilities. Neither the Seller nor any
Subsidiary has any liability of any nature, whether accrued,
absolute, known, unknown, contingent or otherwise, including
without limitation liabilities for federal, state, local, or
foreign taxes and penalties, interest, and additions to tax
( Taxes ) and liabilities to customers or suppliers, other than
the following:
(i) Liabilities for which full provision has been made on
the Unaudited Balance Sheet; and
(ii) Other liabilities arising since the Reference Date and
prior to the First Closing in the ordinary course of business
which are not inconsistent with the representations and
warranties of the Seller set forth in Section 4.1. Without
limiting the generality of the foregoing, the amounts set up as
provisions for Taxes on the Unaudited Balance Sheet are
sufficient for all accrued and unpaid Taxes of the Seller and the
Subsidiaries, whether or not due and payable and whether or not
disputed, under tax laws, as in effect on the Unaudited Balance
Sheet Date, for the period ended on such date and for all fiscal
periods prior thereto. Each of Seller and each of the
Subsidiaries has filed all federal, state, local, and foreign tax
returns required to be filed by it; has delivered to the
Purchaser a true and correct copy of each such return which was
filed in the past three years; has paid (or has established on
the Unaudited Balance Sheet a reserve for) all Taxes,
assessments, and other governmental charges payable or remittable
by it or levied upon it or its properties, assets, income, or
franchises which are due and payable, in each case as of the
Reference Date; and has delivered to the Purchaser a true and
correct copy of any report as to adjustments received by it from
any taxing authority during the past three years and a statement
as to any litigation, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect
with respect to any such report or the subject matter of such
report. Except as set forth in Schedule 4.1(d), neither the
Seller nor any Subsidiary is a party to any contract or
commitment to guarantee the payment or performance of any
liability or other obligation by any other Person, or pursuant to
which the Seller or any Subsidiary is or may become liable for
the indebtedness or other obligations of any other Person.
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Except as set forth on Section 4.1(d), Seller is not a party to
any currently effective tax sharing agreement or arrangement or a
control person for tax purposes of any Person other than the
Subsidiaries.
(e) Litigation and Claims. Except as set forth on Schedule
4.1(e), there is no litigation, arbitration, claim, governmental
or other proceeding (formal or informal), or investigation
pending or, to the Knowledge of the Seller, threatened or in
prospect (or any basis therefor to the Knowledge of the Seller)
with respect to the Seller, any Subsidiary, or any of their
respective businesses, properties, or assets. None of the
matters disclosed on Schedule 4.1(e) could reasonably be expected
to have a Material Adverse Effect. Neither the Seller nor any
Subsidiary is affected by any current or threatened strike or
other labor disturbance nor to the Knowledge of the Seller is any
union attempting to represent any employee of the Seller or of
any Subsidiary as collective bargaining agent. Neither the
Seller nor any Subsidiary is in violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or
decree, which violation or default could reasonably be expected
to have a Material Adverse Effect; nor to the Knowledge of the
Seller is the Seller or any Subsidiary required to take any
action in order to avoid such violation or default.
(f) Properties. (i) Each of the Seller and each of the
Subsidiaries has good and marketable title in fee simple absolute
to all real properties and good title to all other properties and
assets used in its business or owned by it (except such real and
other properties and assets as are held pursuant to leases or
licenses described in Schedule 4.1(f)), free and clear of all
liens, mortgages, security interests, pledges, charges, and
encumbrances (except such as are listed on Schedule 4.1(f)).
(ii) Set forth on Schedule 4.1(f) is a true, correct, and
complete list of all real and other properties and assets owned
by the Seller and the Subsidiaries or leased or licensed by the
Seller or by any Subsidiary from or to a third party, including
with respect to such properties and assets owned by the Seller or
by any Subsidiary a statement of cost, book value and (except for
land) reserve for depreciation of each item for tax purposes, and
net book value of each item for financial reporting purposes,
and, with respect to such properties and assets leased or
licensed by the Seller or by any Subsidiary, a description of
such lease or license. All such real and other properties and
assets owned by the Seller or by any Subsidiary are reflected on
the Last Balance Sheet (except for acquisitions subsequent to the
Last Balance Sheet Date). All real and other tangible properties
and assets owned, leased, or licensed by the Seller or by any
Subsidiary are in good and usable condition (ordinary wear and
tear excepted), except for such properties and assets as are
obsolete.
(iii) The real and other properties and assets owned by
the Seller and each Subsidiary or leased or licensed by the
Seller or such Subsidiary from a third party constitute all such
properties and assets which are necessary to the business of the
Seller or such Subsidiary as currently conducted.
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(iv) The current use, occupancy and operation of the real
properties owned by the Seller or any Subsidiary (the "Real
Properties"), and all aspects of the improvements thereon and
thereto (the "Real Properties Improvements"), are in compliance
in all material respects with all material applicable federal,
state and local laws and regulations and with all private
restrictive covenants of record, and to the Knowledge of the
Seller there is not any proposed change therein that would affect
any of the Real Properties or its use, occupancy or operation.
All Real Property Improvements are located within the lot lines
(and within the mandatory set-backs from such lot lines
established by applicable law or otherwise) and not over areas
subject to easements or rights of way. All Real Property
Improvements are in good condition and repair, suited for the
operation of the business of the Seller or the relevant
Subsidiary.
(g) Contracts and Other Instruments. Schedule 4.1(g)
accurately and completely sets forth the information required to
be contained therein regarding all contracts, agreements,
instruments, leases, licenses, arrangements, or understandings
with respect to the Seller and each Subsidiary, identifying
whether the matter disclosed therein relates to the Seller or to
a Subsidiary named therein. The Seller has furnished to the
Purchaser (i) the certificate of incorporation (or other charter
or organizational document) and by-laws (or other governing
document) of the Seller and each Subsidiary and all amendments
thereto, as currently in effect, and (ii) the following: (a)
true and correct copies of all contracts, agreements, and
instruments referred to in Schedule 4.1(g); and (ii) true and
correct copies of all leases and licenses referred to in Schedule
4.1(g). Neither the Seller, any Subsidiary, nor (to the
Knowledge of the Seller) any other party to any such contract,
agreement, instrument, lease, or license is now or expects in the
future to be in violation or breach of, or in default with
respect to complying with, any material term thereof; each such
contract, agreement, instrument, lease, or license that is
material to the business of the Seller is in full force and
effect and is the legal, valid, and binding obligation of the
parties thereto and (subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of
creditors' rights generally) is enforceable as to them in
accordance with its terms; and each such contract, agreement,
instrument, lease or license that is not material to the business
of the Seller is, to the Knowledge of the Seller, in full force
and effect and is the legal, valid, and binding obligation of the
parties thereto and (subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of
creditors' rights generally) is enforceable as to them in
accordance with its terms. Each such financing or other
arrangement or understanding is to the Knowledge of the Seller a
valid and continuing arrangement or understanding; neither the
Seller, any Subsidiary, nor any other party to any such
arrangement or understanding has given notice of termination or
to the Knowledge of the Seller taken any action inconsistent with
the continuance of such arrangement or understanding; and the
execution, delivery, and performance of this Agreement will not
prejudice any such arrangement or understanding in any way. Each
of the Seller and each of the Subsidiaries enjoys peaceful and
undisturbed possession under all leases and licenses under which
it is operating. Neither the Seller nor any Subsidiary is in
violation or breach of, or in default with respect to, any term
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of its certificate of incorporation (or other charter or
organizational document) or by-laws (or other governing
document). Neither the Seller nor any Subsidiary is a member of
a customer or user organization or of a trade association.
(h) Employees. (i) Except as set forth on Schedule
4.1(h), neither the Seller nor any Subsidiary has, or contributes
to, any pension, profit-sharing, option, other incentive plan, or
any other type of Employee Benefit Plan (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ( ERISA )), or has any obligation to or customary
arrangement with employees for bonuses, incentive compensation,
vacations, severance pay, insurance, or other benefits. The
Seller has furnished to the Purchaser: (A) true and correct
copies of all documents evidencing plans, obligations, or
arrangements referred to in Schedule 4.1(h) (or true and correct
written summaries of such plans, obligations, or arrangements to
the extent not evidenced by documents) and true and correct
copies of all documents evidencing trusts, summary plan
descriptions, and any other summaries or descriptions relating to
any such plans; and (B) the two most recent annual reports (Form
5500's), if any, including all schedules thereto and the most
recent annual and periodic accounting of related plan assets with
respect to each Employee Benefit Plan.
(ii) All Accrued Liabilities (for contributions or
otherwise) (as defined in this Section 4.1(h)(ii)) of the Seller
or any Subsidiary as of the First Closing Date to each Employee
Benefit Plan and with respect to each obligation to or customary
arrangement with employees for bonuses, incentive compensation,
vacations, severance pay, insurance, or other benefits have been
paid or accrued for all periods ending prior to the date of the
First Closing and no payment to any Employee Benefit Plan or with
respect to any such obligation or arrangement since the Last
Balance Sheet Date has been disproportionately large compared to
prior payments. For purposes of the preceding sentence, Accrued
Liabilities shall include a pro rata contribution to each
Employee Benefit Plan or with respect to each such obligation or
arrangement for that portion of a plan year or other applicable
period which commences prior to and ends after the First Closing
Date, and Accrued Liabilities for any portion of a plan year or
other applicable period shall be determined by multiplying the
liability for the entire such year or period by a fraction, the
numerator of which is the number of days preceding the date of
the First Closing in such year or period and the denominator of
which is the number of days in such year or period, as the case
may be.
(iii) There has been no violation of the reporting and
disclosure requirements imposed either under ERISA or the
Internal Revenue Code of 1986, as amended, or its predecessor
statute (the Code ) for which a penalty has been or may be
imposed with respect to any Employee Benefit Plan of the Seller
or of any Subsidiary and which could reasonably be expected to
have a Material Adverse Effect. No Employee Benefit Plan or
related trust of the Seller or any Subsidiary has any material
liability of any nature, accrued or contingent, including without
limitation liabilities for Taxes (other than for routine payments
to be made in due course to participants and beneficiaries,
except as set forth in Schedule 4.1(h)) which liabilities could
reasonably be expected to have a Material Adverse Effect. There
has been no violation by any Employee Benefit Plan of the Seller
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or any Subsidiary which is a group health plan within the meaning
of Section 162(i)(3) of the Code with the applicable requirements
of Section 162(k) of the Code. Other than the health care
continuation requirements of Section 162(k) of the Code, neither
the Seller nor any Subsidiary has any obligation to provide post-
retirement medical benefits or life insurance coverage to any
current or former employees. There is no litigation,
arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in prospect
(or any basis therefor to the Knowledge of the Seller) with
respect to any Employee Benefit Plan or related trust or with
respect to any fiduciary, administrator, or sponsor (in its
capacity as such) of any Employee Benefit Plan, which could
reasonably be expected to have a Material Adverse Effect. No
Employee Benefit Plan or related trust and no such obligation or
arrangement is in material violation of, or in default with
respect to, any law, rule, regulation, order, judgment, or
decree, which violation or default could reasonably be expected
to have a Material Adverse Effect nor to the Knowledge of the
Seller is the Seller, any Subsidiary, any Employee Benefit Plan,
or any related trust required to take any action in order to
avoid violation or default. No event has occurred or is
threatened or about to occur which would constitute a prohibited
transaction under Section 406 of ERISA and which could reasonably
be expected to have a Material Adverse Effect.
(iv) Each Pension Plan maintained for the employees of the
Seller or of any Subsidiary has been qualified, from its
inception, under Section 401(a) of the Code and any related trust
has been an exempt trust for such period under Section 501 of the
Code. Each Pension Plan has been operated in accordance with its
terms, except where the failure to so operate could not
reasonably be expected to have a Material Adverse Effect. No
investigation or review by the Internal Revenue Service is
currently pending or (to the Knowledge of the Seller) is
contemplated in which the Internal Revenue Service has asserted
or may assert that any Pension Plan is not qualified under
Section 401(a) of the Code or that any related trust is not
exempt under Section 501 of the Code. No assessment of any
federal taxes has been made or (to the Knowledge of the Seller)
is contemplated against the Seller, any Subsidiary, or any
related trust of any Pension Plan and nothing has occurred which
would result in the assessment of unrelated business taxable
income under the Code. Form 5500's have been timely filed with
respect to all Pension Plans.
(v) Neither the Seller nor any Subsidiary currently
contributes to or since December 31, 1994 has effectuated either
a complete or partial withdrawal from any multiemployer Pension
Plan within the meaning of Section 3(37) of ERISA or sponsored or
otherwise maintained a Pension Plan subject to Title IV of ERISA.
(vi) Schedule 4.1(f) contains a true and correct statement
of the names, relationship with the Seller or any Subsidiary,
current rates of compensation (whether in the form of salary,
bonuses, commissions, or other supplemental compensation now or
hereafter payable), and aggregate compensation for the fiscal
year ended December 31, 1996 of each director, officer, or other
employee of the Seller or of any Subsidiary whose aggregate
compensation for the fiscal year ended December 31, 1996 exceeded
$75,000 or whose aggregate compensation currently exceeds the
rate of $75,000 per annum. Since February 1, 1997, neither the
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Seller nor any Subsidiary has changed the rate of compensation of
any of its directors, officers, or employees, nor has any
Employee Benefit Plan or program been instituted or amended to
increase benefits thereunder.
(i) Questionable Payments. Neither the Seller, any
Subsidiary, nor any director, officer, employee, or other person
associated with the Seller or any Subsidiary when acting on
behalf of the Seller or any Subsidiary, has, directly or
indirectly: used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to
political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or
domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; established or maintained any unlawful or
unrecorded fund of corporate monies or other assets; made any
false or fictitious entry on the books or records of the Seller
or any Subsidiary; made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment; given any favor or
gift which is not deductible for federal income tax purposes; or
made any bribe, kickback, or other payment of a similar or
comparable nature, whether lawful or not, to any person or
entity, private or public, regardless of form, whether in money,
property, or services, to obtain favorable treatment in securing
business or to obtain special concessions, or to pay for
favorable treatment for business secured or for special
concessions already obtained.
(j) Authority to Sell. The Seller has all requisite power
and authority to execute, deliver, and perform this Agreement and
each of the Operative Documents to which the Seller is a party.
All necessary corporate proceedings of the Seller have been duly
taken to authorize the execution, delivery, and performance of
this Agreement and each of the Operative Documents to which the
Seller is a party by the Seller. Each of this Agreement and each
of the Operative Documents to which the Seller is a party has
been duly authorized, executed, and delivered by the Seller,
constitutes the legal, valid, and binding obligation of the
Seller, and is enforceable against it in accordance with its
terms. Except as set forth on Schedule 4.1(j), no consent,
authorization, approval, order, license, certificate, or permit
of or from, or declaration or filing with, any federal, state,
local, or other governmental authority or any court or other
tribunal is required by the Seller or any Subsidiary for the
execution, delivery, or performance of this Agreement or any of
the other Operative Documents to which the Seller is a party by
the Seller. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to
which the Seller or any Subsidiary is a party, or to which it or
any of their respective businesses, properties, or assets are
subject, is required for the execution, delivery, or performance
of this Agreement or any of the other Operative Documents to
which the Seller is a party (except such consents referred to in
Schedule 4.1(j)); and the execution, delivery, and performance of
this Agreement and each of the Operative Documents to which the
Seller is a party will not (if the consents referred to in
Schedule 4.1(j) are obtained prior to the First Closing) violate,
result in a breach of, conflict with, or (with or without the
giving of notice or the passage of time or both) entitle any
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party to terminate or call a default under, entitle any party to
rights and privileges that such party was not receiving or
entitled to receive immediately before this Agreement or any of
the Operative Documents (if now executed) were executed under, or
create any obligation on the part of the Seller or any Subsidiary
that it was not paying or obligated to pay immediately before
this Agreement or any of the Operative Documents (if now
executed) were executed under, any term of any such contract,
agreement, instrument, lease, license, arrangement, or
understanding, or violate or result in a breach of any term of
the certificate of incorporation (or other charter or
organizational document) or by-laws (or other governing document)
of the Seller or any Subsidiary, or (if each of the conditions
precedent set forth herein or in a schedule hereto are satisfied)
violate, result in a breach of, or conflict with any law, rule,
regulation, order, judgment, or decree binding on the Seller or
any Subsidiary or to which it or any of its respective
businesses, properties, or assets are subject. Upon their
issuance pursuant hereto, the First Closing Shares will be
validly authorized, validly issued, fully paid, and nonassessable
and will not have been issued in violation of any preemptive
right of stockholders, and the Purchaser will have good title to
the First Closing Shares, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts other than as set forth in the
Operative Documents. Assuming the accuracy of the
representations and warranties made by the Purchaser pursuant to
Article V, the issuance of the First Closing Shares to the
Purchaser hereunder will be exempt from registration under the
Securities Act and will comply with the state securities laws of
the State of Alabama.
(k) Intellectual Property Rights. Neither the Seller nor
any Subsidiary owns any patents, patent applications and
registrations, trademarks, trademark applications and
registrations, copyright applications and registrations, trade
names or industrial designs. The Seller and the Subsidiaries
license computer software as listed on Schedule 4.1(k), and to the Knowledge
of the Seller neither the Seller nor any of the Subsidiaries is in violation
of any of such licenses. The Seller and the Subsidiaries own
computer software as listed on Schedule 4.1(k), and the conduct
of the business of the Seller and the Subsidiaries and the use of
such software does not infringe upon, and neither the Seller nor
any Subsidiary has received any notice, complaint, threat, or
claim alleging infringement of, any patent, trademark, trade
name, copyright, industrial design, trade secret, or any other
intellectual property right or proprietary right of any Person.
(l) Insurance. The Seller and the Subsidiaries are the
respective owners of the insurance policies set forth on Schedule
4.1(l), which policies provide adequate coverage to insure the
assets, properties, and businesses of the Seller and the
Subsidiaries against such risks and in such amounts as are
prudent and customary for companies similar to the Seller and the
Subsidiaries, and all of such policies are in full force and
effect.
(m) Related Party Transactions. Except as set forth on
Schedule 4.1(m), neither the Seller nor any Subsidiary is
directly a party to any oral or written contract, agreement,
lease, or arrangement with, or commitment to, any Related Party
-24-
(as defined below). Except as set forth on Schedule 4.1(m), no
Related Party directly or indirectly owns or controls any assets
or properties used in the business of the Seller or any
Subsidiary, and no Related Party, directly or indirectly, engages
in or has any significant interest in any business which is a
competitor, customer, or supplier of the Seller or any
Subsidiary. As used herein, the term "Related Party" means,
collectively, (A) any Person which, to the Knowledge of the
Seller, owns 5% or more of any class of the outstanding
securities of the Seller or any Subsidiary, (B) any director,
officer, or employee of the Seller or any Subsidiary, or (C) any
Person in which any director or officer of the Seller or any
Subsidiary or any Person referred to in clause (A) above is a
partner or member, or holds a 5% or more equity interest.
(n) Environmental Conditions. To the Knowledge of the
Seller:
(i) There is no existing or pending Environmental Law
(as hereinafter defined) with a future compliance date that will
require operational changes, business practice modifications, or
capital expenditures at any Real Property or Real Property
Improvements;
(ii) All hazardous substances and solid waste on, in,
or under any Real Property or Real Property Improvements,
wherever located, have been properly removed and disposed of, and
no past or current disposal, discharge, spill, or other release
of, or treatment, transportation, or other handling of hazardous
materials or solid waste on, in or under any Real Property or
Real Property Improvements, will subject the Seller or any
Subsidiary to corrective or compliance action or any other
liability; and
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(iii) There are no currently pending or overtly
threatened legal action or administrative proceedings or orders,
judgments, decrees, or rulings against or involving the Seller or
any Subsidiary relating to any alleged past or ongoing violation
of any Environmental Law, nor is the Seller or any Subsidiary
subject to any liability for any such past or ongoing violation.
As used herein, "Environmental Law" means any federal,
state, local, or municipal statute, rule, regulation, or
ordinance ("Law") relating to health, safety, or the environment,
including, without limitation, any Law relating to the
manufacture, generation, processing, distribution, application,
use, treatment, transport or handling, storage of, or emissions,
discharges, releases, or threatened releases into the environment
of, pollutants, contaminants, hazardous substances, petroleum
products, chemicals or industrial waste, other solids, liquids,
gases, or wastes, heat, light, noise, radiation, electro-magnetic
fields and other forms of matter and energy of every kind and
nature and the proper containment and disposal of the same.
(o) Disclosure. Neither this Agreement or any of the
Operative Documents, nor any other written document, description,
certificate, or statement furnished to the Purchaser by or on
behalf of the Seller pursuant hereto or thereto, contains or will
contain any untrue statement of a material fact, or omits or will
-25-
omit to state a material fact, necessary to make the statements
contained herein and therein not misleading in light of the
circumstances under which they have been or will be made.
(p) Brokerage Fees. Neither the Seller nor any Subsidiary
has created any liability of any Person for any brokerage or
finders fee in connection with the transactions contemplated by
this Agreement.
SECTION 4.2. Second Closing, Third Closing and Option
Representations and Warranties.
(a) Not later than three (3) business days before each
Closing (other than the First Closing), the Seller shall deliver
to the Purchaser a written document (a "Seller Disclosure
Schedule") containing such qualifications and other revisions to
its representations and warranties set forth in Section 4.1
(excluding the representations and warranties set forth in the
first three sentences of Section 4.1(j)) and to the schedules
attached hereto and referenced in Section 4.1 (such
representations and warranties and such schedules being
collectively referred to herein as the "Original Schedules") as
may be necessary to make the representations and warranties made
by the Seller in Section 4.1 true and correct, as of the date of
such delivery, and specifying the representations and warranties
so qualified or revised. The Seller shall have the right to so
deliver a revised Seller Disclosure Schedule to the Purchaser
prior to each Closing prior to the consummation of the
transactions relating thereto (provided that the revisions
reflected therein shall be limited solely to those which occurred
or of which the Seller first became aware after the delivery of
the Seller Disclosure Schedule that it revises), which shall then
be deemed to be substituted in lieu of the previously delivered
Seller Disclosure Schedule that it revises. Each Seller
Disclosure Schedule delivered to the Purchaser hereunder shall
cumulatively contain all qualifications and revisions to the
Original Schedules, regardless of whether such qualifications and
revisions, or any of them, were included in any previously
delivered Seller Disclosure Schedule. If the Seller fails to
prepare and deliver any Seller Disclosure Schedule as provided
above, then the Seller shall be deemed to have irrevocably
adopted the Original Schedules as such Seller Disclosure
Schedule; provided, however, that if one or more Closings (other
than the First Closing, but including Option Closings) have then
previously been consummated, the Seller shall be deemed to have
irrevocably adopted the Seller Disclosure Schedule duly delivered
by the Seller in connection with the then most recently
consummated Closing or Option Closing, as the case may be.
(b) At each Closing, the Seller shall be deemed to
represent, warrant and covenant to the Purchaser that the
representations and warranties made by the Seller in Section 4.1
with respect to the First Closing are, subject only to the
qualifications and other revisions set forth in the Seller
Disclosure Schedule applicable to such Closing, true and correct
as of the date of such Closing. For the foregoing purposes, (i)
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the term "Financial Statements" (when used in this Agreement)
shall be deemed to refer to all financial statements of the
Seller theretofore furnished to the Purchaser pursuant to Section
6.1, in addition to all those described in the Original
Schedules, (ii) the term "Reference Date" (whenever used in this
Agreement) shall be deemed to refer to the date specified therein
or, if more recent, to the date of the most recent unaudited
balance sheet of the Seller furnished to the Purchaser pursuant
to Section 6.1, (iii) the terms "First Closing" and "First
Closing Date", wherever used in Section 4.1, shall be deemed to
refer to related Second Closing or Second Closing Date,
respectively, or the Third Closing or the Third Closing Date,
respectively, and (iv) the term "First Closing Shares," whenever
used in Section 4.1, shall be deemed to refer to the Seller
Common Stock to be delivered at the related Second Closing or the
Third Closing Shares, as the case may be.
(c) Not later than three (3) business days before each
Closing (other than the First Closing), the Purchaser shall
deliver to the Seller a written document (a "Purchaser Disclosure
Schedule") containing such qualifications and other revisions to
the representations and warranties set forth in Article V
(excluding the representations, warranties, and covenants made by
the Purchaser in Sections 5.2 and 5.3) as may be necessary to
make the representations and warranties made by the Purchaser in
Article V true and correct, as of the date of such delivery, and
specifying the representations and warranties so qualified or
revised. The Purchaser shall have the right to so deliver a
revised Purchaser Disclosure Schedule to the Seller prior to each
Closing prior to the consummation of the transactions relating
thereto (provided that the revisions reflected therein shall be
limited solely to those which occurred or of which the Purchaser
first became aware after the delivery of the Purchaser Disclosure
Schedule that it revises), which shall then be deemed to be
substituted in lieu of the previously delivered Purchaser
Disclosure Schedule that it revises. Each Purchaser Disclosure
Schedule delivered to the Seller hereunder shall cumulatively
contain all such qualifications and revisions to Article V,
regardless of whether such qualifications and revisions, or any
of them, were included in any previously delivered Purchaser
Disclosure Schedule. If the Purchaser fails to prepare and
deliver any Purchaser Disclosure Schedule as provided above, then
the Purchaser shall be deemed to have irrevocably adopted Article
V as such Purchaser Disclosure Schedule; provided, however, that
if one or more Closings (other than the First Closing) have then
previously been consummated, the Purchaser shall be deemed to
have irrevocably adopted the Purchaser Disclosure Schedule duly
delivered by the Purchaser in connection with the then most
recently consummated Closing or Option Closing, as the case may
be. In addition to the other conditions precedent provided
herein, the obligation of the Seller to consummate any Closing
shall be conditioned on the contents of the related Purchaser
Disclosure Schedule pertaining thereto not disclosing any
occurrence that is reasonably likely to have a material adverse
effect upon the legality or the enforceability of any Operative
Document against the Purchaser.
(d) At each Closing, the Purchaser shall be deemed to
represent, warrant and covenant to the Seller that the
representations and warranties made by the Purchaser in Article V
with respect to the First Closing are, subject only to the
qualifications and other revisions set forth in the Purchaser
Disclosure Schedule applicable to such Closing, true and correct
-27-
as of the date of such Closing. For such purposes, the term
"First Closing" wherever used in Article V, shall be deemed to
refer to the related Second Closing or the Third Closing, as
appropriate, and the term "First Closing Shares," whenever used
in Article V, shall be deemed to refer to the Seller Common Stock
to be delivered at the related Second Closing or the Third
Closing Shares, as the case may be.
ARTICLE V
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Seller as of
each of the Closings as follows:
SECTION 5.1. Organization. The Purchaser is a limited
liability company duly organized, validly existing, and in good
standing under the laws of the State of Georgia, with all
requisite power and authority to own, lease, license, and use its
properties and assets and to carry on the business in which it is
now engaged and to own securities issued by the Company as herein
contemplated. Each of the Purchaser, the Manager, and each
member of the Purchaser that is an affiliate of the Manager is
either duly organized, validly existing, and in good standing in
the State of Alabama or is duly qualified to do business and is
in good standing in the State of Alabama, as the case may be.
SECTION 5.2. Authority to Buy. The Purchaser has all
requisite power and authority to execute, deliver, and perform
this Agreement and each of the other Operative Documents to which
it is or is to be a party. All necessary proceedings of the
Purchaser have been duly taken to authorize the execution,
delivery, and performance of this Agreement and each of the other
Operative Documents to which the Purchaser is or is to be a party
by the Purchaser. This Agreement and each of the Operative
Documents to which the Purchaser is a party has been duly
authorized, executed, and delivered by the Purchaser, is the
legal, valid, and binding obligation of the Purchaser, and is
enforceable against the Purchaser in accordance with its terms.
SECTION 5.3. Non-Distributive Intent. The Purchaser is an
"accredited investor" (as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act")). The
Purchaser is acquiring the securities to be acquired by it at
such Closing for its own account (and not for the account of
others) for investment and not with a view to the resale or other
distribution thereof. The Purchaser will not sell or otherwise
dispose of such securities (whether pursuant to a liquidating
dividend or otherwise) without registration under the Securities
Act or an exemption therefrom, and the certificate or
certificates representing such securities may contain a legend to
the foregoing effect and all legends necessary or desirable, in
the judgment of the Purchaser, pursuant to any applicable state
securities law, rule, or regulation. By virtue of its position,
the Purchaser has access to the kind of financial and other
information about the Seller as would be contained in a
registration statement filed under the Securities Act. The
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Purchaser understands that it may not sell or otherwise dispose
of such Shares in the absence of either a registration statement
under the Securities Act or an exemption from the registration
provisions of the Securities Act.
SECTION 5.4. Investment Company. The Purchaser is not
subject to regulation as an investment company under the
Investment Company Act of 1940, as amended.
SECTION 5.5. Compliance with Laws. The Purchaser is in
compliance in all material respects with all applicable federal
and state securities laws, rules, and regulations, including,
without limitation, the Exchange Act and the Investment Advisors
Act of 1940, as amended.
SECTION 5.6. Broker Fees. Neither the Purchaser nor any
of its subsidiaries or parents has created any liability of any
Person for any brokerage or finders fee in connection with the
transactions contemplated by this Agreement.
ARTICLE VI
Covenants of the Seller
The Seller covenants to the Purchaser as follows:
SECTION 6.1. Furnish Future Information. After the First
Closing, the Seller shall deliver to the Purchaser the following
so long as the Purchaser owns any of the Shares:
(a) within 45 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of the Seller, a
consolidated balance sheet of the Seller and its consolidated
subsidiaries as at the end of such period, and a consolidated
statement of income, consolidated statement of retained earnings,
and consolidated statement of cash flows of Seller and its
consolidated subsidiaries for such period, in each case prepared
from the books and records of the Seller and its consolidated
subsidiaries in accordance with GAAP consistently applied
throughout the periods involved except as permitted by GAAP or,
with respect to financial statement footnotes, by the applicable
rules and regulations of the Commission , setting forth in each
case in comparative form the figures for the corresponding period
of the previous fiscal year, all in reasonable detail, subject to
changes resulting from year-end audit adjustments;
(b) within 90 days after the end of each fiscal year of the
Seller, a consolidated balance sheet of the Seller and its
consolidated subsidiaries as at the end of such year, and a
consolidated statement of income, consolidated statement of
retained earnings, and consolidated statement of cash flows of
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the Seller and its consolidated subsidiaries for such year,
setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail, such
consolidated financial statements to be audited by and to be
accompanied by an opinion of the Seller's independent certified
public accountants of recognized national standing, which opinion
shall state that such consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles consistently applied and that the audit by such
accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted
auditing standards;
(c) promptly upon their becoming available, copies of all
financial statements, reports, notices, and proxy statements sent
by the Seller to its stockholders, all regular and periodic
reports filed by the Seller with any securities exchange or with
the Commission, and all press releases; and
(d) with reasonable promptness, such other material and
public or nonmaterial information and data with respect to the
Seller or any of its Subsidiaries as from time to time may be
requested by the Purchaser.
SECTION 6.2. Board Representation. Effective as of the
First Closing Date, the Board of Directors of the Seller will
appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to the Board of
Directors of the Seller, each to fill an existing vacancy on the
Seller's Board of Directors until the next Annual Meeting of the
Stockholders of the Seller or until their earlier resignation,
retirement, or death. Until the first to occur of (i) the
passage of five calendar years after the First Closing Date, (ii)
the date (if any) on which the Purchaser and all Persons
controlling, controlled by, or under common control with the
Purchaser no longer collectively own at least five percent of the
outstanding Seller Common Stock, and (iii) the occurrence of a
Purchaser Breach (as hereinafter defined) (the "Corporate
Governance Period"), the Seller shall nominate two individuals
designated by the Purchaser for election to the Seller's Board of
Directors; provided, however, that notwithstanding the foregoing,
the Purchaser agrees that the Board of Directors of the Seller
shall not be required to so nominate any individual designated by
the Purchaser (a) with respect to whom disclosure would have to
be made in any report or proxy material required to be filed with
the Commission pursuant to the Exchange Act that was subject,
directly or indirectly, to the disclosure requirements of either
Item 401(f) of Regulation S-K, Item 401(d) of Regulation S-B, or
any successor provision of any of the foregoing, in compliance
with Item 401(f) of Regulation S-K, Item 401(d) of Regulation S-
B, or any successor provision of any of the foregoing, or (b) who
does not agree in writing to such nomination and to serve as a
Director of the Seller if elected as such by the stockholders of
the Seller. In addition, during the Corporate Governance Period,
the Seller will appoint one designee of the Purchaser to the
Advisory Committee to the Seller's Board of Directors; provided,
however, that notwithstanding the foregoing, the Purchaser agrees
that the Seller shall not be required to so appoint any
individual designated by the Purchaser with respect to whom, if a
Director of the Seller, disclosure would have to be made in any
report or proxy material required to be filed with the Commission
pursuant to the Exchange Act that was subject, directly or
indirectly, to the disclosure requirements of either Item 401(f)
of Regulation S-K, Item 401(d) of Regulation S-B, or any
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successor provision of any of the foregoing, in compliance with
Item 401(f) of Regulation S-K, Item 401(d) of Regulation S-B, or
any successor provision of any of the foregoing. Notwithstanding
any provision of this Agreement to the contrary, however, in the
event that neither a Second Closing nor a Third Closing occurs
hereunder, then the Seller shall only be required pursuant to
this Section 6.2 to nominate one such individual designated by
the Purchaser for election to the Seller's Board of Directors for
the remainder, if any, of the Corporate Governance Period.
SECTION 6.3. Corporate Governance. As soon as practicable
after the First Closing Date and throughout the Corporate
Governance Period, the Board of Directors of the Seller will
create, appoint, and maintain a Compensation and Employee Benefit
Plan Committee of the Board of Directors that will be comprised
exclusively of Directors of the Seller who are not officers of
the Seller. The Seller agrees that, during the Corporate
Governance Period, such Compensation and Employee Benefit Plan
Committee shall have the right to approve, by majority vote, the
compensation of the Chief Executive Officer and the Chief
Operating Officer of the Seller and to approve or disapprove, by
majority vote, all material transactions between the Seller and
one or more of its employees or affiliates. During the Corporate
Governance Period, the Seller agrees to continue to appoint one
Director of the Seller nominated by the Purchaser to such
Compensation and Employee Benefit Plan Committee.
SECTION 6.4. Reasonable Best Efforts. Each of the Seller
and the Purchaser agrees to cooperate and to use its reasonable
best efforts to cause the conditions precedent to all Closings to
be satisfied in a timely manner except for Section 3.3(a), with
respect to which the parties agree to act in good faith. Without
limiting the generality of the foregoing, the Seller shall use
its reasonable best efforts to obtain the Fairness Opinion and,
in the event of the termination or revocation of the Fairness
Opinion, to obtain a substitute fairness opinion as soon as
reasonably practicable.
SECTION 6.5. Reservation of Authorized Shares. From the
date hereof through the last to occur of the Closings hereunder,
the Seller shall continuously hold in reserve sufficient shares
of Seller Common Stock to consummate each of the Closings
contemplated hereunder.
SECTION 6.6. Anti-Dilution. From the date hereof through
the date that is five business days after any Closing could occur
hereunder, if at any time the Seller issues or sells (a "Dilution
Event") any shares of Seller Common Stock or any other class of
voting common stock issued by the Seller for per share
consideration of less than the average per share consideration
theretofore paid by the Purchaser for Seller Common Stock
hereunder (such consideration, from time to time, being referred
to herein as the "Dilution Share Price"), or if applicable, the
Dilution Share Price then deemed to have been paid by the
Purchaser for Seller Common Stock hereunder, in each case other
than with respect to an employee stock option plan for employees
of the Seller and its subsidiaries or pursuant to obligations,
contracts, or other arrangements existing on the date hereof,
then simultaneously with such Dilution Event the Seller shall
issue to the Purchaser, without additional consideration payable
therefor, the number of additional shares of Seller Common Stock
that the Purchaser would have received in connection with
Closings consummated on or before the date of the Dilution Event
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("Previous Closings") had the purchase price per share of Seller
Common Stock payable by the Purchaser at such Previous Closings
been equal to the Dilution Share Price, and shall issue and
deliver to the Purchaser a certificate registered in the name of
the Purchaser for such additional shares (whereupon, for purposes
of the subsequent application of this Section 6.6, the purchase
price paid by the Purchaser for shares at Previous Closings will
be deemed to be such Dilution Share Price until the occurrence of
another Dilution Event, if any). Notwithstanding anything to the
contrary herein, the purchase price payable by the Purchaser at
all Closings subsequent to any Dilution Event shall be equal to
the then-current Dilution Share Price.
ARTICLE VII
Covenants of the Purchaser
The Purchaser covenants to the Seller as follows:
SECTION 7.1. Compliance with Securities Laws. The
Purchaser agrees to make all filings required to be made by it
under the Exchange Act with respect to its holdings of securities
issued by the Seller on a timely basis.
SECTION 7.2. Director Filings. The Purchaser agrees to
cause its nominees for election as Directors of the Seller to
file all filings required to be made by it under the Exchange Act
with respect to their holdings of securities issued by the Seller
on a timely basis.
SECTION 7.3. Change of Residence and Principal Executive
Office. The Purchaser agrees to promptly notify the Seller of
any change in the state of its residence or any change in the
state that its principal executive office is located or any
change in its Manager.
ARTICLE VIII
Repurchase Rights of the Seller
Upon and for a period of ninety days after the occurrence of
a Purchaser Breach (as hereinafter defined), the Seller shall
have the right (but not the obligation), upon ten business day's
prior written notice to the Purchaser, to elect to repurchase the
securities heretofore purchased by the Purchaser hereunder, as
adjusted for subsequent changes in such securities, at a price
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equal to the price actually paid by the Purchaser for such
securities. The closing of such repurchase shall take place at
the offices of Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, at
11:00 A.M., local time, on the tenth business day after such
notice is sent to the Purchaser by the Seller. Such closing may
occur at such different place, such different time, or such
different date or a combination thereof as the Purchaser and the
Seller may agree in writing. At such closing:
(a) The Purchaser shall deliver to the Seller certificates
for such securities, duly endorsed for transfer to the Seller,
with signatures guaranteed by a commercial bank located in
Birmingham, Alabama, and with all applicable stamp taxes paid;
and
(b) As consideration for such securities, the Seller shall
deliver at such closing to the Purchaser a sum equal to the
purchase price for such securities, in cash, by certified check,
or by wire transfer of immediately available funds to an account
designated in writing by the Purchaser.
As used herein, "Purchaser Breach" shall mean either:
(i) each of the applicable conditions precedent to the
Purchaser's obligation to consummate the transactions to be
consummated hereunder at a Second Closing set forth in Sections
2.3(a) (if applicable), (b), (d), (e), (f), (g), (h), (i), and
(j) are satisfied, assuming that the Purchaser's representations
and warranties, and covenants set forth in Sections 5.3 and 5.4
are then true and satisfied, but the Second Closing does not
otherwise occur due to either:
(A) the failure to satisfy a condition precedent to
the Seller's obligation to consummate the transactions to be
consummated hereunder at the Second Closing pursuant to Sections
2.4(a) or (c); or
(B) the Purchaser's breach or anticipatory breach of
its obligation to pay consideration for securities issued by the
Seller under circumstances where the Seller could satisfy the
condition precedent set forth in Section 2.3(c) were such payment
so made;
OR
(ii) each of the applicable conditions precedent to the
Purchaser's obligation to consummate the transactions to be
consummated hereunder at the Third Closing set forth in Sections
3.3(a) (if applicable), (b), (d), (e), (f), (g), (h), (i), and
(j) are satisfied, assuming that the Purchaser's representation
and warranty set forth in Sections 5.3 and 5.4 are then true, but
the Third Closing does not otherwise occur due to either:
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(A) the failure to satisfy a condition precedent to
the Seller's obligation to consummate the transactions to be
consummated hereunder at the Third Closing pursuant to Sections
3.4 (a) or (c); or
(B) the Purchaser's breach or anticipatory breach of
its obligation to pay consideration for securities issued by the
Seller under circumstances where the Seller could satisfy the
conditions precedent set forth in Section 3.3(c) were the related
payment so made.
The parties agree that the provisions of this Article VIII
are a bargained-for exchange, negotiated at arm's-length in
advance of any event that could cause the provisions of this
Article VIII to be utilized. Accordingly, the Purchaser hereby
irrevocably waives any rights or remedies that it may have, under
the Securities Act or otherwise, relating in any manner to any
disclosure, or the absence thereof, made to the Purchaser by the
Seller relating to the affairs of the Seller in connection with
the purchase and sale of securities contemplated by this
Article VIII.
ARTICLE IX
Indemnification
SECTION 9.1. Indemnification by the Seller. The Seller
hereby agrees to defend, indemnify and hold harmless the
Purchaser, its affiliates, subsidiaries, and parent entities, and
their respective past, current, and future officers, directors,
employees, counsel, agents, and equity holders, and each person,
if any, who controls, controlled, or will control any of them
within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act (the "Purchaser Indemnitees"), from and
against any and all losses, liabilities, damages, costs and
expenses whatsoever (including but not limited to reasonable
attorneys' fees of one counsel and any and all expenses
whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim
whatsoever, and any claims whatsoever, and any and all amounts
paid in settlement of any claim or litigation), as and when
incurred, arising out of, based upon, or in connection with any
material misrepresentation or breach of any warranty made by the
Seller contained in any Operative Document. The foregoing
agreement to indemnify shall be in addition to any liability the
Seller may otherwise have, including without limitation
liabilities arising out of any Operative Document.
SECTION 9.2. Indemnification by the Purchaser. The
Purchaser hereby agrees to defend, indemnify and hold harmless
the Seller, its subsidiaries and affiliates, and their respective
past, current, and future officers, directors, employees,
counsel, agents, and equity holders, and each person, if any, who
controls, controlled, or will control any of them within the
meaning of Section 15 of the Securities Act or Section 20(a) of
the Exchange Act (the "Seller Indemnitees"), from and against any
and all losses, liabilities, damages, costs and expenses
whatsoever (including but not limited to reasonable attorneys'
fees of one counsel and any and all expenses whatsoever incurred
in investigating, preparing, or defending against any litigation,
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commenced or threatened, or any claim whatsoever, and any claims
whatsoever, and any and all amounts paid in settlement of any
claim or litigation), as and when incurred, arising out of, based
upon, or in connection with any material misrepresentation or
breach of any warranty made by the Purchaser contained in any
Operative Document. The foregoing agreement to indemnify shall
be in addition to any liability the Purchaser may otherwise have,
including without limitation liabilities arising out of any
Operative Document.
SECTION 9.3. Method of Asserting Claims. In the event
that any claim or demand for which the Seller could be liable to
a Purchaser Indemnitee hereunder is asserted or sought to be
collected from a Purchaser Indemnitee by a third party, the
Purchaser Indemnitee shall promptly notify the Seller in writing
of such claim or demand, specifying the nature of such claim or
demand and the amount or estimated amount thereof to the extent
then feasible, which estimate shall not be conclusive of the
final amount of such claim and demand (the "Claim Notice"). The
Seller shall have 20 days from the date that such Claim Notice is
made hereunder (the "Notice Period") to notify the Purchaser
Indemnitee in writing (A) whether or not it disputes its
liability to the Purchaser Indemnitee hereunder with respect to
such claim or demand, and (B) notwithstanding any such dispute,
whether or not it desires, at its sole cost and expense, to
defend the Purchaser Indemnitee against such claim or demand.
(a) If the Seller disputes its liability with respect to
such claim or demand or the amount thereof (whether or not the
Seller desires to defend the Purchaser Indemnitee against such
claim or demand as provided in subsections (b) and (c) below),
such dispute shall be resolved in compliance with Section 9.5.
Pending the resolution of any dispute by the Seller of its
liability with respect to any claim or demand, such claim or
demand shall not be settled without the prior written consent of
the Purchaser Indemnitee.
(b) In the event that the Seller notifies the Purchaser
Indemnitee within the Notice Period that it desires to defend the
Purchaser Indemnitee against such claim or demand then, except as
hereinafter provided, the Seller shall have the right to defend
the Purchaser Indemnitee by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by it to a
final conclusion in such a manner as to avoid any risk of the
Purchaser Indemnitee becoming subject to liability for any other
matter; provided, however, that the Seller shall not, without the
prior written consent of the Purchaser Indemnitee, consent to the
entry of any judgment against the Purchaser Indemnitee or enter
into any settlement or compromise which does not include, as an
unconditional term thereof, the giving by the claimant or
plaintiff to the Purchaser Indemnitee of a release, in form and
substance satisfactory to the Purchaser Indemnitee, from all
liability or obligations in respect of such claim or litigation.
If the Purchaser Indemnitee desires to participate in, but not
control, any such defense or settlement, it may do so at its sole
cost and expense through counsel of its choice. If, in the
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reasonable opinion of the Purchaser Indemnitee, any such claim or
demand or the litigation or resolution of any such claim or
demand involves an issue or matter which could have a material
adverse effect on the business, operations, assets, properties,
or prospects of the Purchaser Indemnitee, then the Purchaser
Indemnitee shall have the right to control the defense or
settlement of any such claim or demand and its reasonable costs
and expenses shall be included as part of the indemnification
obligation of the Seller hereunder; provided, however, that the
Purchaser Indemnitee shall not settle any such claim or demand
without the prior written consent of the Seller, which consent
shall not be unreasonably delayed or withheld. If the Purchaser
Indemnitee should elect to exercise such right, the Seller shall
have the right to participate in, but not control, the defense or
settlement of such claim or demand at its sole cost and expense.
(c) (i) If the Seller elects not to defend the Purchaser
Indemnitee against such claim or demand, whether by not giving
the Purchaser Indemnitee timely notice as provided above or
otherwise, then the amount of any such claim or demand, or, if
the same may be defended by the Seller or by the Purchaser
Indemnitee (but the Purchaser Indemnitee shall not have any
obligation to defend any such claim or demand), then that portion
thereof as to which such defense is unsuccessful, in each case
shall be conclusively deemed to be a liability of the Seller
hereunder unless the Seller has disputed its liability to the
Purchaser Indemnitee as provided in subsection (a) above, in
which case such dispute shall be resolved as provided in Section
9.5.
(ii) In the event that a Purchaser Indemnitee should
have a claim or demand against the Seller that does not involve a
claim or demand being asserted or sought to be collected from it
by a third party, the Purchaser Indemnitee shall promptly send a
Claim Notice with respect to such claim to the Seller. If the
Seller disputes its liability with respect to such claim or
demand, such dispute shall be resolved in accordance with
Section 9.5; if the Seller does not notify the Purchaser
Indemnitee within the Notice Period that it disputes such claim,
the amount of such claim shall be conclusively deemed a liability
of the Seller hereunder.
(d) All claims for indemnification by a Seller Indemnitee
hereunder shall be asserted and resolved utilizing the procedures
set forth above, substituting in the appropriate place "Seller
Indemnitee" for "Purchaser Indemnitee" and variations thereof and
"Purchaser" for "Seller."
SECTION 9.4. Payment. Upon the determination of the
liability under Section 9.1, 9.2, or 9.3, the appropriate party
shall pay to the other, as the case may be, within 10 days after
such determination, the amount of any claim for indemnification
made hereunder. In the event that the indemnified party is not
paid in full for any such claim pursuant to the foregoing
provisions promptly after the other party's obligation to
indemnify has been determined in accordance herewith, it shall
have the right, notwithstanding any other rights that it may have
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against any other person or entity, to setoff the unpaid amount
of any such claim against any amounts owed by it under any of the
Operative Documents. Upon the payment in full of any claim,
either by setoff or otherwise, the entity making payment shall be
subrogated to the rights of the indemnified party against any
person or entity with respect to the subject matter of such
claim.
SECTION 9.5. Arbitration.
(a) Subject to Sections 9.5(b) and 9.6, all disputes under
this Article IX shall be settled by arbitration in Atlanta,
Georgia before a single arbitrator pursuant to the rules of the
American Arbitration Association (the "Rules"). Arbitration may
be commenced at any time by any party hereto giving written
notice to each other party to a dispute that such dispute has
been referred to arbitration under this Section 9.5. The
arbitrator shall be selected by the agreement of the Seller and
the Purchaser, but if they do not so agree within 20 days after
the date of the notice referred to above, the selection shall be
made pursuant to the Rules from the panel of arbitrators
maintained by the Association. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties
hereto; provided, however, that any such award shall be
accompanied by a written opinion of the arbitrator giving the
reasons for the award. This provision shall be specifically
enforceable by the parties and the decision of the arbitrator in
accordance herewith shall be final and binding, and there shall
be no right of appeal therefrom. Each party shall pay its own
expense of arbitration and the expenses of the arbitrator shall
be equally shared; provided, however, that if in the opinion of
the arbitrator any party to the arbitration has raised a
frivolous claim, defense, or objection, then the arbitrator may
assess, as a part of his award, all or any part of the
arbitration expenses of the other party (including reasonable
attorneys' fees) against the party raising such frivolous claim,
defense, or objection.
(b) Subject to Section 10.11, to the extent that
arbitration may not be legally permitted hereunder or the parties
to any dispute hereunder may not at the time of such dispute
mutually agree to submit such dispute to arbitration, any party
may commence a civil action in a court of appropriate
jurisdiction to resolve disputes hereunder. None of the
provisions of this Section 9.5 shall prevent the parties from
settling any dispute by mutual agreement at any time.
SECTION 9.6. Other Rights and Remedies Not Affected. The
indemnification rights of the parties hereunder are independent
of and in addition to such rights and remedies as the parties may
have at law or in equity or otherwise for any misrepresentation,
breach of warranty, or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto, including
without limitation the right to seek specific performance,
rescission, or restitution, none of which rights or remedies
shall be affected or diminished hereby.
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ARTICLE X
Miscellaneous
SECTION 10.1. Further Actions. At any time and from time
to time, each party agrees, at its or his expense, to take such
actions and to execute and deliver such documents as may be
reasonably necessary to effectuate the purposes of this
Agreement.
SECTION 10.2. Availability of Equitable Remedies. Since a
breach of the provisions of this Agreement may not adequately be
compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to it, to an
injunction restraining such breach or a threatened breach and to
specific performance of any such provision of this Agreement, and
in either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to the
issuance of such an injunction and to the ordering of specific
performance.
SECTION 10.3. Survival. The covenants, agreements,
representations, and warranties contained in or made pursuant to
this Agreement shall survive the First Closing and any delivery
of any purchase price by the Purchaser, irrespective of any
investigation made by or on behalf of any party, as follows:
(a) the representations and warranties of the Seller
relating to Taxes, ERISA, the Foreign Corrupt Practices Act, and
environmental laws, rules and regulations shall survive until the
expiration of the applicable statute of limitation;
(b) all other representations and warranties contained
herein shall survive the Closing when made for a period of two
(2) calendar years after such Closing; and
(c) all other provisions of the Operative Documents shall
survive until the expiration of the applicable statute of
limitations.
SECTION 10.4. Modification. This Agreement and the
Exhibits and Schedules hereto and the other Operative Documents
set forth the entire understanding of the parties with respect to
the subject matter hereof, supersede all existing agreements
among them concerning such subject matter, and may be modified
only by a written instrument duly executed by each party (except
as otherwise provided in Section 10.5).
SECTION 10.5. Notices. Any notice or other communication
required or permitted to be given hereunder shall be in writing
and shall be mailed by certified mail, return receipt requested
(in which case it shall be deemed to be given five days after
mailing) or by Federal Express, Express Mail, or similar
overnight delivery or courier service (in which case it will be
deemed to be given upon actual receipt by the recipient) or
delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth
below (or to such other address as the party shall have furnished
-38-
in writing in accordance with the provisions of this Section
10.5):
If to the Purchaser:
▇▇▇▇▇▇▇ Equity Fund I, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to the Seller:
Crown NorthCorp, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Powell, Goldstein, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 10.6. Waiver. Any waiver by any party of a breach
of any term of this Agreement shall not operate as or be
construed to be a waiver of any other breach of that term or of
any breach of any other term of this Agreement. The failure of a
party to insist upon strict adherence to any term of this
Agreement on one or more occasions will not be considered a
waiver or deprive that party of the right thereafter to insist
-▇▇-
▇▇▇▇ ▇▇▇▇▇▇ adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
SECTION 10.7. Binding Effect. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
Seller, the Purchaser, and their respective successors and
assigns, and shall inure to the benefit of each Purchaser
Indemnitee, Seller Indemnitee, and their respective successors
and assigns (if not a natural person) and his assigns, heirs, and
personal representatives (if a natural person).
SECTION 10.8. No Third Party Beneficiaries. This Agreement
does not create, and shall not be construed as creating, any
rights enforceable by any person not a party to this Agreement
(except as provided in Section 10.7).
SECTION 10.9. Separability. If any provision of this
Agreement is invalid, illegal, or unenforceable, the balance of
this Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
SECTION 10.10. Headings. The headings in this Agreement are
solely for convenience of reference and shall be given no effect
in the construction or interpretation of this Agreement.
SECTION 10.11. Counterparts; Governing Law. This Agreement
may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall be governed by
and construed in accordance with the laws of the State of
Delaware, without giving effect to conflict of laws. Except as
contemplated by Section 9.5(a), any action, suit, or proceeding
arising out of, based on, or in connection with this Agreement or
the transactions contemplated hereby may be brought only in a
United States District Court located in the State of Georgia and
each party covenants and agrees not to assert, by way of motion,
as a defense, or otherwise, in any such action, suit, or
proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune
from attachment or execution, that the action, suit, or
proceeding is brought in an inconvenient forum, that the venue of
the action, suit, or proceeding is improper, or that this
Agreement or the subject matter hereof may not be enforced in or
by such court.
SECTION 10.12. Assignments. This Agreement may be assigned
by operation of law without the consent of any party hereto.
This Agreement may not otherwise be assigned by any party hereto
without the prior written consent of the other party hereto,
which consent shall not be unreasonably delayed or withheld.
-40-
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C.
By: ▇▇▇▇▇▇▇ Management Corporation,
Manager
[SEAL]
By:____________________________
Name:
Title:
CROWN NORTHCORP, INC.
[SEAL]
By:____________________________
Name:
Title:
-41-
EXHIBIT A
SELLER'S OFFICER'S CERTIFICATE - FIRST CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of February __, 1997, between
and among ▇▇▇▇▇▇▇ Equity Fund I, L.L.C. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the Chairman of the Board and Chief
Executive Officer of CROWN NORTHCORP, INC., a Delaware
corporation (the "Seller"), DOES HEREBY CERTIFY, in the name and
on behalf of the Company, as follows:
1. All representations and warranties of the Seller contained
in Section 4.1 of the Stock Purchase Agreement are true and
correct as of the date hereof.
2. As of the date hereof, the Seller has performed and complied
with all covenants and agreements, and satisfied all conditions
required to be performed and complied with, by the Seller at or
before the date hereof by the Stock Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of March
__, 1997.
CROWN NORTHCORP, INC.
By: _____________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
EXHIBIT B
OPINION OF SELLER'S COUNSEL
EXHIBIT C
PURCHASER'S OFFICER'S CERTIFICATE - FIRST CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of March __, 1997, between and
among ▇▇▇▇▇▇▇ Equity Fund I, L.L.P. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the ____________ of ▇▇▇▇▇▇▇
MANAGEMENT CORPORATION, an Alabama corporation that is the
Manager of ▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C., a Georgia limited
liability company (the "Purchaser"), DOES HEREBY CERTIFY, in the
name and on behalf of the Purchaser, as follows:
1. As of the date hereof, all representations and warranties of
the Purchaser contained in Article V of the Stock Purchase
Agreement are true and correct with respect to the First Closing
and the First Closing Shares as of the date hereof.
2. As of the date hereof, the Purchaser has performed and
complied with all covenants and agreements, and satisfied all
conditions required to be performed and complied with, by the
Purchaser at or before the date hereof by the Stock Purchase
Agreement.
3. The Purchaser is an "accredited investor," as defined in
Rule 501(a) under the Securities Act, because it is an entity in
which all of the owners are "accredited investors."
4. The Purchaser is purchasing the First Closing Shares for its
own account, for investment purposes only, and without a view
toward the resale or distribution thereof.
5. The Purchaser's chief executive office and principal place
of business is located in the State of Alabama.
6. The Seller has made available to the Purchaser a reasonable
time before the First Closing the opportunity to ask questions of
and receive answers concerning the Seller and the terms and
conditions of the transaction to be consummated at the First
Closing.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of March
__, 1997.
▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C.
By: ▇▇▇▇▇▇▇ Management Corporation,
Manager
By: _____________________________
Name:
Title:
-2-
EXHIBIT D
OPINION OF PURCHASER'S COUNSEL
EXHIBIT E
ESCROW AGREEMENT
-2-
EXHIBIT F
ACQUISITION CRITERIA
EXHIBIT G
SELLER'S OFFICER'S CERTIFICATE - SECOND CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of February __, 1997, between
and among ▇▇▇▇▇▇▇ Equity Fund I, L.L.C. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the _________________________ of
CROWN NORTHCORP, INC., a Delaware corporation (the "Seller"),
DOES HEREBY CERTIFY, in the name and on behalf of the Company, as
follows:
1. All representations and warranties of the Seller contained
in Section 4.1 of the Stock Purchase Agreement, as qualified and
revised by the attached Seller Disclosure Schedule, are true and
correct as of the date hereof.
2. As of the date hereof, the Seller has performed and complied
with all covenants and agreements, and satisfied all conditions
required to be performed and complied with, by the Seller at or
before the date hereof by the Stock Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of
_____________ __, 199_.
CROWN NORTHCORP, INC.
By:_____________________________
Name:
Title:
EXHIBIT H
PURCHASER'S OFFICER'S CERTIFICATE - SECOND CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of February __, 1997, between
and among ▇▇▇▇▇▇▇ Equity Fund I, L.L.C. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the ____________ of ▇▇▇▇▇▇▇
MANAGEMENT CORPORATION, an Alabama corporation that is the
Manager of ▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C., a Georgia limited
liability company (the "Purchaser"), DOES HEREBY CERTIFY, in the
name and on behalf of the Purchaser, as follows:
1. As of the date hereof, all representations and warranties of
the Purchaser contained in Article V of the Stock Purchase
Agreement, as qualified and revised by the attached Purchaser
Disclosure Schedule, are true and correct with respect to the
related Second Closing and the related Second Closing Shares as
of the date hereof.
2. As of the date hereof, the Purchaser has performed and
complied with all covenants and agreements, and satisfied all
conditions required to be performed and complied with, by the
Purchaser at or before the date hereof by the Stock Purchase
Agreement.
3. The Purchaser is an "accredited investor," as defined in
Rule 501(a) under the Securities Act, because it is an entity in
which all of the owners are "accredited investors."
4. The Purchaser is purchasing the Second Closing Shares for
its own account, for investment purposes only, and without a view
toward the resale or distribution thereof.
5. The Purchaser's chief executive office and principal place
of business is located in the State of Alabama.
6. The Seller has made available to the Purchaser a reasonable
time before the First Closing the opportunity to ask questions of
and receive answers concerning the Seller and the terms and
conditions of the transaction to be consummated at the related
Second Closing.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of
_____________ __, 199_.
▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C.
By: ▇▇▇▇▇▇▇ Management Corporation,
Manager
By: _____________________________
Name:
Title:
-2-
EXHIBIT I
FUND CRITERIA
EXHIBIT J
SELLER'S OFFICER'S CERTIFICATE - THIRD CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of February __, 1997, between
and among ▇▇▇▇▇▇▇ Equity Fund I, L.L.C. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the _________________________ of
CROWN NORTHCORP, INC., a Delaware corporation (the "Seller"),
DOES HEREBY CERTIFY, in the name and on behalf of the Company, as
follows:
1. All representations and warranties of the Seller contained
in Section 4.1 of the Stock Purchase Agreement, as qualified and
revised by the attached Seller Disclosure Schedule, are true and
correct as of the date hereof.
2. As of the date hereof, the Seller has performed and complied
with all covenants and agreements, and satisfied all conditions
required to be performed and complied with, by the Seller at or
before the date hereof by the Stock Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of
_____________ __, 199_.
CROWN NORTHCORP, INC.
By:_____________________________
Name:
Title:
EXHIBIT K
PURCHASER'S OFFICER'S CERTIFICATE - THIRD CLOSING
Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in that certain
Stock Purchase Agreement, dated as of February __, 1997, between
and among ▇▇▇▇▇▇▇ Equity Fund I, L.L.C. and Crown NorthCorp, Inc.
(the "Stock Purchase Agreement").
The undersigned, being the ____________ of ▇▇▇▇▇▇▇
MANAGEMENT CORPORATION, an Alabama corporation that is the
Manager of ▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C., a Georgia limited
liability company (the "Purchaser"), DOES HEREBY CERTIFY, in the
name and on behalf of the Purchaser, as follows:
1. As of the date hereof, all representations and warranties of
the Purchaser contained in Article V of the Stock Purchase
Agreement, as qualified and revised by the attached Purchaser
Disclosure Schedule, are true and correct with respect to the
Third Closing and the Third Closing Shares as of the date hereof.
2. As of the date hereof, the Purchaser has performed and
complied with all covenants and agreements, and satisfied all
conditions required to be performed and complied with, by the
Purchaser at or before the date hereof by the Stock Purchase
Agreement.
3. The Purchaser is an "accredited investor," as defined in
Rule 501(a) under the Securities Act, because it is an entity in
which all of the owners are "accredited investors."
4. The Purchaser is purchasing the Third Closing Shares for its
own account, for investment purposes only, and without a view
toward the resale or distribution thereof.
5. The Purchaser's chief executive office and principal place
of business is located in the State of Alabama.
6. The Seller has made available to the Purchaser a reasonable
time before the Third Closing the opportunity to ask questions of
and receive answers concerning the Seller and the terms and
conditions of the transaction to be consummated at the Third
Closing.
IN WITNESS WHEREOF, the undersigned has set his hand
hereunto, in the name and on behalf of the Company, as of
_____________ __, 199_.
▇▇▇▇▇▇▇ EQUITY FUND I, L.L.C.
By: ▇▇▇▇▇▇▇ Management Corporation,
Manager
By: _____________________________
Name:
Title:
-2-
EXHIBIT L
FORM OF VOTING AGREEMENT
SCHEDULE 4.1(a)
Subsidiaries
SCHEDULE 4.1(b)
Capitalization
SCHEDULE 4.1(e)
Litigation
SCHEDULE 4.1(f)
Properties
SCHEDULE 4.1(g)
Contracts
SCHEDULE 4.1(h)
ERISA
SCHEDULE 4.1(j)
Consents
SCHEDULE 4.1(k)
Intellectual Property
SCHEDULE 4.1(l)
Insurance
SCHEDULE 4.1(m)
Related Party Transactions