Exhibit (2) (i)
CONFIDENTIAL TREATMENT REQUESTED
Confidential Portions of This Agreement Which Have Been Redacted Are Marked
With Brackets ("[***]"). The Omitted Material Has Been Filed Separately With The
United States Securities and Exchange Commission.
Exhibit 2.1 EXECUTION COPY
ASSET PURCHASE AGREEMENT
by and among
ORKIN, INC.
and
WESTERN INDUSTRIES, INC.
WESTERN EXTERMINATING COMPANY, INC.
WESTERN EXTERMINATING CO., INCORPORATED
WESTERN EXTERMINATING COMPANY OF ATLANTIC CITY, INC.
WESTERN EXTERMINATING COMPANY OF DELAWARE
WESTERN EXTERMINATING COMPANY OF FLORIDA, INC.
WESTERN EXTERMINATING COMPANY OF MARYLAND, INC.
WESTERN EXTERMINATING COMPANY OF PENNSYLVANIA
WESTERN EXTERMINATING COMPANY OF VIRGINIA, INC.
JBD INCORPORATED
WESTERN TERMITE & PEST CONTROL OF NORTH CAROLINA, INC.
MEA REALTY CO., L.L.C.
WEME ASSOCIATES, L.L.C.
WECO REALTY CORPORATION
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Dated MARCH 8, 2004
TABLE OF CONTENTS
Page
1. DEFINITIONS AND USAGE.....................................................1
1.1 Definitions.........................................................1
1.2 Usage...............................................................14
2. SALE AND TRANSFER OF ASSETS; CLOSING......................................15
2.1 Assets To Be Sold...................................................15
2.2 Excluded Assets.....................................................17
2.3 Consideration.......................................................17
2.4 Liabilities.........................................................18
2.5 Allocation..........................................................20
2.6 Closing.............................................................21
2.7 Closing Obligations.................................................21
2.8 Adjustments to Purchase Price.......................................23
2.9 Adjustment Procedures...............................................24
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS.................26
3.1 Organization And Good Standing......................................26
3.2 Enforceability; Authority; No Conflict..............................27
3.3 Capitalization......................................................28
3.4 Financial Statements................................................28
3.5 Books And Records; Financial Controls...............................29
3.6 Sufficiency Of Assets...............................................29
3.7 Description Of Real Property........................................29
3.8 Description Of Real Property Leases.................................29
3.9 Title To Assets; Encumbrances.......................................29
3.10 Condition Of Facilities.............................................30
3.11 Accounts Receivable.................................................30
3.12 Inventories.........................................................31
3.13 No Undisclosed Liabilities..........................................31
3.14 Taxes...............................................................31
3.15 No Material Adverse Change..........................................33
3.16 Employee Benefits...................................................33
3.17 Compliance With Legal Requirements; Governmental Authorization......36
3.18 Legal Proceedings; Orders...........................................37
3.19 Absence Of Certain Changes And Events...............................38
3.20 Contracts; No Defaults..............................................39
3.21 Insurance...........................................................41
3.22 Environmental Matters...............................................43
3.23 Employees...........................................................46
3.24 Labor disputes, Compliance..........................................46
3.25 Intellectual Property Assets........................................47
3.26 Relationships With Related Persons..................................50
3.27 Advisers............................................................50
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Page
3.28 Disclosure..........................................................50
4. REPRESENTATIONS AND WARRANTIES OF BUYER...................................51
4.1 Organization And Good Standing......................................51
4.2 Authority; No Conflict..............................................51
4.3 Certain Proceedings.................................................52
4.4 Brokers Or Finders..................................................52
5. COVENANTS OF SELLER PRIOR TO CLOSING......................................52
5.1 Access And Investigation............................................52
5.2 Operation Of The Business Of Seller.................................53
5.3 Negative Covenant...................................................54
5.4 Required Approvals..................................................54
5.5 Notification........................................................54
5.6 No Negotiation......................................................55
5.7 Best Efforts........................................................55
5.8 Interim Financial Statements........................................55
5.9 Payment Of Liabilities..............................................55
5.10 Lien Releases.......................................................55
5.11 Additional Real Property Matters....................................55
6. COVENANTS OF BUYER PRIOR TO CLOSING.......................................56
6.1 Required Approvals..................................................56
6.2 Best Efforts........................................................57
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.......................57
7.1 Accuracy Of Representations.........................................57
7.2 Seller's Performance................................................57
7.3 Consents............................................................57
7.4 Additional Documents................................................57
7.5 No Proceedings......................................................58
7.6 No Conflict.........................................................59
7.7 Title Insurance.....................................................59
7.8 Governmental Authorizations.........................................59
7.9 Employees...........................................................59
7.10 Ancillary Agreement.................................................59
7.11 Revenue Validation..................................................60
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE......................60
8.1 Accuracy Of Representations.........................................60
8.2 Buyer's Performance.................................................60
8.3 Consents............................................................60
8.4 Additional Documents................................................60
8.5 No Injunction.......................................................61
9. TERMINATION...............................................................61
9.1 Termination Events..................................................61
9.2 Effect Of Termination...............................................62
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Page
10. ADDITIONAL COVENANTS......................................................62
10.1 Employees And Employee Benefits.....................................62
10.2 Certain Tax Matters.................................................66
10.3 Payment Of Other Retained Liabilities...............................67
10.4 Reports and Returns.................................................67
10.5 Assistance In Proceedings; Enforcement of Obligations...............67
10.6 Noncompetition, Nonsolicitation And Nondisparagement................67
10.7 Customer And Other Business Relationships...........................68
10.8 Retention Of And Access To Records..................................68
10.9 Termite Contract Covenants..........................................69
10.10 Receivables Repurchase Obligations..................................69
10.11 Disposal of Obsolete inventory......................................70
10.12 Further Assurances..................................................70
11. INDEMNIFICATION; REMEDIES.................................................70
11.1 Survival............................................................70
11.2 Indemnification And Reimbursement By Seller And Shareholders........71
11.3 Indemnification and Reimbursement by Buyer..........................72
11.4 Limitations On Amount -- Seller And Shareholders....................72
11.5 Limitations On Amount -- Buyer......................................73
11.6 Time Limitations....................................................73
11.7 Payment; Escrow.....................................................74
11.8 Third-Party Claims..................................................74
11.9 Procedures for Indemnification......................................76
11.10 Indemnification In Case Of Strict Liability Or Negligence of
Indemnified Person..................................................76
11.11 Environmental Work at Designated Facilities.........................77
11.12 Miscellaneous.......................................................78
12. CONFIDENTIALITY...........................................................79
12.1 Definition Of Confidential Information..............................79
12.2 Restricted Use Of Confidential Information..........................80
12.3 Exceptions..........................................................80
12.4 Legal Proceedings...................................................81
12.5 Return Or Destruction Of Confidential Information...................81
12.6 Attorney-Client Privilege...........................................81
13. GENERAL PROVISIONS........................................................82
13.1 Expenses............................................................82
13.2 Public Announcements................................................82
13.3 Notices.............................................................83
13.4 Jurisdiction; Service Of Process....................................84
13.5 Enforcement Of Agreement............................................84
13.6 Waiver; Remedies Cumulative.........................................84
13.7 Entire Agreement And Modification...................................85
13.8 Disclosure Letter...................................................85
13.9 Assignments, Successors And No Third-Party Rights...................85
13.10 Severability........................................................85
iii
Page
13.11 Construction........................................................86
13.12 Time Of Essence.....................................................86
13.13 Governing Law.......................................................86
13.14 Execution Of Agreement..............................................86
13.15 Shareholder Obligations.............................................86
13.16 Representative Of Seller And Shareholders...........................86
iv
TABLE OF DEFINITIONS
Accounts Receivable............................................................1
Active Employees...............................................................2
Actual Net Asset Adjustment....................................................2
Actual Payment.................................................................2
Adjustment Amounts.............................................................2
Appraised Real Property Value..................................................2
Appurtenances..................................................................2
Assets.........................................................................2
Assignment and Assumption Agreement............................................2
Assumed Liabilities............................................................2
Assumed Payables...............................................................2
Assumed Payables and Equivalents...............................................2
Assumed Plans..................................................................2
Balance Sheet..................................................................2
Basket.........................................................................2
Best Efforts...................................................................2
▇▇▇▇ of Sale...................................................................3
Breach.........................................................................3
Bulk Sales Laws................................................................3
Business Day...................................................................3
Buyer..........................................................................3
Buyer Closing Documents........................................................3
Buyer Contact..................................................................3
Buyer Group....................................................................3
Buyer Indemnified Persons......................................................3
Buyer Net Cost.................................................................3
Closing........................................................................3
Closing Acquired New Assets....................................................3
Closing Cash Payment...........................................................3
Closing Date...................................................................3
COBRA..........................................................................4
Code...........................................................................4
Competing Business.............................................................4
Confidential Information.......................................................4
Consent........................................................................4
Consulting Agreement...........................................................4
Contemplated Transactions......................................................4
Contract.......................................................................4
Copesan........................................................................4
Copesan Receivable.............................................................4
Copyrights.....................................................................4
Damages........................................................................4
DC Plan........................................................................4
DC Plan Trust Agreement........................................................4
1
Page
Deemed Real Property Value....................................................10
Deferred Revenue...............................................................4
Designated Employees...........................................................4
Designated Facilities..........................................................4
Disclosure Letter..............................................................4
Effective Time.................................................................4
Employee Plans.................................................................5
Employment Agreement...........................................................5
Encumbrance....................................................................5
Environmental Assessment Report................................................5
Environmental Law..............................................................5
Environmental Permits..........................................................6
Environmental Reports..........................................................6
Environmental Work.............................................................6
Environmental, Health and Safety Liabilities...................................5
ERISA..........................................................................6
ERISA Affiliate................................................................6
Escrow.........................................................................6
Escrow Agreement...............................................................6
Estimated Acquired Net Assets..................................................6
Exchange Act...................................................................6
Excluded Assets................................................................6
Facilities.....................................................................6
Final Touch Agreement..........................................................6
GAAP...........................................................................6
Governing Documents............................................................6
Governmental Authorization.....................................................7
Governmental Body..............................................................7
Hazardous Material.............................................................7
Hired Active Employees.........................................................7
HSR Act........................................................................7
Improvements...................................................................7
Indemnified Person.............................................................7
Indemnifying Person............................................................7
Intellectual Property Assets...................................................8
Interim Balance Sheet and Operating Statement..................................8
Inventories....................................................................8
IRS............................................................................8
ISRA...........................................................................8
Knowledge......................................................................8
Land...........................................................................8
Lease..........................................................................8
Legal Requirement..............................................................8
Liability......................................................................8
Marks..........................................................................9
2
Page
Material Adverse Effect........................................................9
Material Consents..............................................................9
Maximum Indemnification Amount.................................................9
Negotiation Period............................................................76
Net Asset Adjustment Amount....................................................9
Net Names......................................................................9
Noncompetition Agreements......................................................9
Nonmaterial Consents...........................................................9
Non-Real Estate Encumbrance....................................................9
Occupational Safety and Health Law.............................................9
Occupational Safety and Health Liabilities.....................................9
Order..........................................................................9
Ordinary Course of Business....................................................9
Part..........................................................................10
Patents.......................................................................10
Permit........................................................................10
Permitted Encumbrances........................................................10
Permitted Non-Real Estate Encumbrances........................................10
Person........................................................................10
Pest Business.................................................................10
Pest Services.................................................................10
Potential Successor Tax.......................................................10
Proceeding....................................................................10
Purchase Price................................................................10
QSub..........................................................................10
Real Estate Encumbrances......................................................10
Real Property.................................................................10
Real Property Lease...........................................................10
Receivable Date...............................................................10
Receivable Notice.............................................................11
Record........................................................................11
Related Person................................................................11
Release.......................................................................12
Remedial Action...............................................................12
Representative................................................................12
Residex Assets................................................................12
Residex Receivable............................................................12
Restricted Material Contracts.................................................12
Restricted Nonmaterial Contracts..............................................12
Restricted Other Material Contracts...........................................12
Restricted Pest Service Material Contracts....................................12
Retained Liabilities..........................................................12
Reviewed Financial Statements.................................................12
S Corporation.................................................................12
Securities Act................................................................12
3
Page
Seller........................................................................12
Seller Closing Documents......................................................12
Seller Contact................................................................12
Seller Contract...............................................................12
Severance Escrow..............................................................13
Shareholders..................................................................13
Software......................................................................13
Special Severance Arrangement.................................................13
Specified Employee Liabilities................................................13
Subsidiary....................................................................13
Tangible Personal Property....................................................13
Tax...........................................................................13
Tax Return....................................................................14
Termite Guarantee Contract....................................................14
Third Party...................................................................14
Third Party Claim.............................................................14
Threat of Release.............................................................14
Title Comitments..............................................................14
Title Objection...............................................................14
Trade Secrets.................................................................14
Transfer Taxes................................................................14
WARN Act......................................................................14
Work Plan.....................................................................14
4
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is dated March 8, 2004, by and
among ORKIN, INC., a Delaware corporation ("Buyer"); WESTERN INDUSTRIES, INC., a
New Jersey corporation, WESTERN EXTERMINATING COMPANY, INC., a New Jersey
corporation, WESTERN EXTERMINATING CO., INCORPORATED, a Delaware corporation,
WESTERN EXTERMINATING COMPANY OF ATLANTIC CITY, INC., a New Jersey corporation,
WESTERN EXTERMINATING COMPANY OF DELAWARE, a Delaware corporation, WESTERN
EXTERMINATING COMPANY OF FLORIDA, INC., a Florida corporation, WESTERN
EXTERMINATING COMPANY OF MARYLAND, INC., a Maryland corporation, WESTERN
EXTERMINATING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation, WESTERN
EXTERMINATING COMPANY OF VIRGINIA, INC., a Virginia corporation, JBD
INCORPORATED, a Delaware corporation, WESTERN TERMITE & PEST CONTROL OF NORTH
CAROLINA, INC., a North Carolina corporation, MEA REALTY CO., L.L.C., a New
Jersey limited liability company, WEME ASSOCIATES, L.L.C., a New Jersey limited
liability company, and WECO REALTY CORPORATION, a New Jersey corporation
(collectively, "Seller"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a resident of New Jersey ("▇▇▇▇▇▇");
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a resident of New Jersey ("Dick"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, a
resident of New Jersey ("▇▇▇"; Jeanne, Dick, and ▇▇▇ are referred to herein as
"Shareholders").
RECITALS
WHEREAS, Seller is engaged in the Pest Business; and
WHEREAS, the Shareholders own all of the issued and outstanding equity
interests of Seller; and
WHEREAS, Buyer desires to purchase substantially all of the assets owned
and used by Seller in connection with the Pest Business and assume certain
liabilities of Seller in connection therewith, all upon terms and conditions
hereinafter set forth.
The parties, intending to be legally bound, agree as follows:
1 DEFINITIONS AND USAGE
1.1 Definitions
For purposes of this Agreement, the following terms and variations thereof
have the meanings specified or referred to in this Section 1.1:
"Accounts Receivable" -- (a) all trade accounts receivable and other rights
to payment from customers of Seller and the full benefit of all security for
such accounts or rights to payment, including all trade accounts receivable
representing amounts receivable in respect of goods shipped or products sold or
services rendered to customers of Seller, (b) all other accounts or notes
receivable of Seller and the full benefit of all security for such accounts or
notes and (c) any claim, remedy or other right related to any of the foregoing.
Provided, however, that
1
Accounts Receivable shall not include any Related Person Receivable, any Copesan
Receivable or any Residex Receivable.
"Active Employees" - as defined in Section 10.1(a).
"Actual Net Asset Adjustment" - as defined in Section 2.9(b).
"Actual Payables" - as defined in Section 2.9(b).
"Adjustment Amounts" - those adjustments defined in Section 2.8.
"Appraised Real Property Value" - the value of each parcel of Real
Property, as determined pursuant to the most recent appraisals of the Real
Property prior to the date of this Agreement.
"Appurtenances" -- all privileges, rights, easements, hereditaments and
appurtenances belonging to or for the benefit of the Land, including all
easements appurtenant to and for the benefit of any Land (a "Dominant Parcel")
for, and as the primary means of access between, the Dominant Parcel and a
public way, or for any other use upon which lawful use of the Dominant Parcel
for the purposes for which it is presently being used is dependent, and all
rights existing in and to any streets, alleys, passages and other rights-of-way
included thereon or adjacent thereto (before or after vacation thereof) and
vaults beneath any such streets.
"Assets" -- as defined in Section 2.1.
"Assignment and Assumption Agreement" -- as defined in Section 2.7(a)(ii).
"Assumed Liabilities" -- as defined in Section 2.4(a).
"Assumed Payables" -- those Assumed Liabilities described in Sections
2.4(a)(i), 2.4(a)(ii) and 2.4(a)(iii).
"Assumed Payables and Equivalents" -- the Assumed Payables, and the
Specified Employee Liabilities.
"Assumed Plans" - as defined in Section 2.l(m).
"Balance Sheet" -- as defined in Section 3.4.
"Basket" - as defined in Section 11.4(b).
"Best Efforts" -- the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to achieve that result as
expeditiously as possible, provided, however, that a Person required to use Best
Efforts under this Agreement will not be thereby required to take actions that
would result in a material adverse change in the benefits to such Person of this
Agreement and the Contemplated Transactions or to dispose of or make any change
to its business, expend any material funds or incur any other material burden.
2
"▇▇▇▇ of Sale" -- as defined in Section 2.7(a)(i).
"Breach" -- any breach of, or any inaccuracy in, any representation or
warranty or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.
"Bulk Sales Laws" -- as defined in Section 5.9.
"Business Day" -- any day other than (a) Saturday or Sunday or (b) any
other day on which banks in New York, New York are permitted or required to be
closed.
"Buyer" -- as defined in the first paragraph of this Agreement.
"Buyer Closing Documents" - as defined in Section 4.2(a).
"Buyer Contact" - as defined in Section 12.2(a).
"Buyer Group" - as defined in Section 5.1.
"Buyer Indemnified Persons" -- as defined in Section 11.2.
"Buyer Net Cost" - the amount equal to actual, out-of-pocket costs incurred
by Buyer on the Environmental Work, as adjusted by the Tax benefit with regard
to such actual, out-of-pocket costs obtained by Buyer. For purposes of the
initial determination of Buyer Net Cost, the Tax benefit obtained by Buyer shall
be assumed to be equal to [***]% of the actual, out of pocket costs incurred, so
that the Buyer Net Cost of each dollar of expenditure shall initially be assumed
to be [***] cents. Buyer may determine its actual effective Tax rate for the Tax
year in which the withdrawal from the Escrow for such expenditure was made
pursuant to Section 11.11 and propose an adjustment based on a comparison of
that rate to [***]%.
"Closing" -- as defined in Section 2.6.
"Closing Cash Payment" - as defined in Section 2.3.
"Closing Date" -- the date on which the Closing actually takes place.
"Closing Acquired Net Assets" - equal to the [***] of Accounts Receivable,
Inventory, Tangible Personal Property, Improvements to Real Property leased by
Seller from Third Parties, and Assets described in Section 2.1(l) hereof, [***]
Deferred Revenue, all as determined in accordance with Section 2.9 hereof.
"COBRA" -- as defined in Section 3.16(d).
"Code" -- the Internal Revenue Code of 1986, as amended.
"Competing Business" - as defined in Section 3.26.
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
3
"Confidential Information" -- as defined in Section 12.1.
"Consent" -- any approval, consent, ratification, waiver or other
authorization.
"Consulting Agreement" - as defined in Section 10.1(k).
"Contemplated Transactions" -- all of the transactions contemplated by this
Agreement.
"Contract" -- any agreement, contract, Lease, consensual obligation,
promise or undertaking (whether written or oral and whether express or implied),
whether or not legally binding.
"Copesan" - Copesan Services, Inc., an alliance of regional pest management
companies through which the member companies provide pest control services to
customers.
"Copesan Receivable" - receivables derived from the performance of Pest
Services pursuant to a contract or subcontract with Copesan.
"Copyrights" -- as defined in Section 3.25(a)(iii).
"Damages" -- as defined in Section 11.2.
"DC Plan" -- as defined in Section 2.4(a)(x).
"DC Plan Trust Agreement" -- as defined in Section 2.4(a)(x).
"Deferred Revenue" - the deferred termite reinspection revenue resulting
from the sale of termite guarantee contracts which expire after the year sold,
and/or deferred pest control service contract revenue resulting from the sale of
service contracts payable in advance.
"Designated Employees" - as defined in Section 10.1(i)(ii).
"Designated Facilities" - as defined in Section 11.11.
"Disclosure Letter" -- the disclosure letter delivered by Seller and
Shareholders to Buyer concurrently with the execution and delivery of this
Agreement.
"Effective Time" - 12:01 a.m. on the Closing Date.
"Employee Plans" -- as defined in Section 3.16(a).
"Employment Agreement" -- as defined in Section 2.7(a)(viii).
"Encumbrance" -- any charge, claim, community or other marital property
interest, condition, equitable interest, lien, option, pledge, security
interest, mortgage, right of way, easement, encroachment, servitude, right of
first option, right of first refusal or similar restriction, including any
restriction on use, voting (in the case of any security or equity interest),
4
transfer, receipt of income or exercise of any other attribute of ownership,
other than those arising in connection with taxes not yet due or payable.
"Environmental Assessment Report" - all reports of environmental due
diligence, borings, samplings and other environmental, geological, engineering,
percolation, hydrologic, feasibility or landscaping tests or studies conducted
by or on behalf of Buyer or the Buyer Group pursuant to Section 5.1.
"Environmental Law" -- all Legal Requirements existing as of the date
hereof relating to pollution or protection of the environment, including Legal
Requirements governing the use, storage, disposal, discharge, cleanup or
reporting of Hazardous Materials. "Environmental Law" specifically includes but
is not limited to: (i) ISRA; (ii) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.A. ss.9601 et seq. ("CERCLA"); (iii)
the Resource Conservation and Recovery Act of 1976, 42 U.S.C.A. ss.6901 et seq.
("RCRA"); (iv) the Clean Water Act, 33 U.S.C.A. ss.1344 et seq.; (v) the New
Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq.; (vi)
the New Jersey Underground Storage Tank Act, N.J.S.A. 58:10A-21 et seq.; (vii)
the New Jersey Freshwater Wetlands Protection Act, N.J.S.A. 13:9B-1 et seq.;
(viii) the New Jersey Hazardous Substances Discharge Reports and Notices Act,
N.J.S.A. 13:1K-15 et seq.; and (ix) the New Jersey Water Pollution Control Act,
N.J.S.A. 58:10A-1 et seq.; together with, in each case, the accompanying
regulations, all as may be amended from time to time prior to the date hereof.
"Environmental Liabilities" -- any Liability, cost, damages, expense, or
obligation arising from or under any Environmental Law including those
consisting of or relating to:
(a)......any environmental matter or condition (including on-site or
off-site contamination and regulation of any chemical substance or product);
(b)......any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response, remedial or
inspection cost or expense arising under any Environmental Law;
(c)......financial responsibility under any Environmental Law for cleanup
costs or corrective action, including any cleanup, removal, containment or other
remedial or response actions required by any Environmental Law and for any
natural resource damages under any Environmental Law; or
(d)......any other compliance, corrective or remedial measure required
under any Environmental Law, including any Remedial Action.
The terms "removal," "remedial" and "response action" include the
activities covered by CERCLA.
"Environmental Permits" - as defined in Section 3.22(p).
"Environmental Reports" - as defined in Section 3.22(i).
5
"Environmental Work" -- any environmental assessment, environmental
remediation, environmental report or evaluation, or related activities (to
include professional services rendered by consultants and/or attorneys) which
are undertaken (a) to comply with Environmental Laws; (b) to comply with the
provisions of any lease or similar agreement; (c) to avoid the imposition on
Buyer of any Environmental Liability; or (d) to address an imminent and
substantial threat to human health or the environment, other than activities
undertaken to comply with the requirements of the ISRA.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate" - as defined in Section 3.16(a).
"Escrow" - as defined in Section 2.7(b)(ii).
"Escrow Agreement" -- as defined in Section 2.7(a)(x).
"Estimated Acquired Net Assets" - as defined in Section 2.8(b).
"Exchange Act" -- the Securities Exchange Act of 1934.
"Excluded Assets" -- as defined in Section 2.2.
"Facilities" -- any real property, leasehold or other interest in real
property currently owned or operated by Seller, including the Tangible Personal
Property used or operated by Seller at the locations specified in Section 3.7
and Section 3.8. Notwithstanding the foregoing, for purposes of the definition
of "Remedial Action," Section 3.22 and Section 11.11, "Facilities" shall mean
any real property, leasehold or other interest in real property currently or
formerly owned or operated by Seller or by Residex Corporation, a New Jersey
corporation and a Related Person of Seller.
"[***] Agreement" - the Asset Purchase Agreement dated February 2, 2004 by
and among Western Exterminating Company of Atlantic City, Inc., [***] Termite &
Pest, Inc., a New Jersey corporation, and [***].
"GAAP" -- generally accepted accounting principles for financial reporting
in the United States, applied on a basis consistent with the basis on which the
Reviewed Financial Statements and the other financial statements referred to in
Section 3.4 were prepared.
"Governing Documents" -- with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership agreement and
the certificate of limited partnership; (d) if a limited liability company, the
articles of organization and operating agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders'
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
6
obligations of the equityholders of any Person; and (g) any amendment or
supplement to any of the foregoing.
"Governmental Authorization" -- any Consent, license, registration or
permit issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" -- any:
(a)......nation, state, county, city, town, borough, village, district or
other jurisdiction;
(b)......federal, state, local, municipal, foreign or other government;
(c)......governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court, tribunal or
other entity exercising governmental or quasi-governmental powers);
(d)......multinational organization or body;
(e)......body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or
(f)......official of any of the foregoing.
"Hazardous Material" -- (A) any chemical, substance, waste or pollutant
defined as or deemed hazardous or toxic or otherwise regulated under any
Environmental law, including "hazardous substances", "hazardous wastes" or
"hazardous materials" defined as such in (or for purposes of) any Environmental
Law; and (B) any petroleum product or by-product, asbestos or
asbestos-containing materials, urea formaldehyde, mold, asbestos or PCBs.
"Hired Active Employees" - as defined in section 10.1(b)(i).
"HSR Act" -- the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act.
"Improvements" -- all buildings, structures, fixtures and improvements
attached to and located on the Land, including those under construction.
"Indemnified Person" -- as defined in Section 11.8(a).
"Indemnifying Person" -- as defined in Section 11.8(a).
"Intellectual Property Assets" -- as defined in Section 3.25(a).
"Interim Balance Sheet and Operating Statement" -- as defined in Section
3.4.
"Inventories" -- all inventories of Seller, wherever located, including all
finished goods, work in process, raw materials, spare parts and all other
materials and supplies to be used or consumed by Seller in the production of
finished goods or delivery of services.
7
"IRS" -- the United States Internal Revenue Service and, to the extent
relevant, the United States Department of the Treasury.
"ISRA" -- the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et
seq., and the accompanying -- --- regulations, as amended from time to time.
"Knowledge" -- an individual will be deemed to have Knowledge of a
particular fact or other matter if:
(a)......that individual is actually aware of that fact or matter; or
(b)......a prudent individual could be expected to discover or otherwise
become aware of that fact or matter in the course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or
warranty contained in this Agreement.
A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving as a director,
officer, partner, executor or trustee of that Person (or in any similar
capacity) has Knowledge of that fact or other matter (as set forth in (a) and
(b) above), and any such individual (and any individual party to this Agreement)
will be deemed to have conducted a reasonably comprehensive investigation
regarding the accuracy of the representations and warranties made herein by that
Person or individual.
"Land" -- all parcels and tracts of land in which Seller has an ownership
interest.
"Lease" -- any Real Property Lease or any lease or rental agreement,
license, right to use or installment and conditional sale agreement to which
Seller is a party and any other Seller Contract pertaining to the leasing or use
of any Tangible Personal Property.
"Legal Requirement" -- any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"Liability" -- with respect to any Person, any liability or obligation of
such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
"Marks" -- as defined in Section 3.25(a)(i).
"Material Adverse Effect" - with respect to a Person is an event, change or
occurrence that individually, or together with any other event, change or
occurrence, has a material adverse impact on the financial position, business or
results of operations of such Person; provided, however, that the term "Material
Adverse Effect" shall not include (i) changes in the overall industry or markets
in which the Person operates, (ii) changes in GAAP; (iii) actions or
8
omissions of such Person taken with the prior written consent of the other party
to this Agreement, (iv) changes of which the other party to this Agreement has
prior knowledge that result from actions taken or to be taken in connection with
the sale of the Assets, or (v) any state of facts described in the Disclosure
Letter attached hereto (without regard to any amendment or supplement thereto
from and after the date hereof).
"Material Consents" -- as defined in Section 7.3.
"Maximum Indemnification Amount" - as defined in Section 11.4(a).
"Net Names" - as defined in section 3.25(a)(vi).
"Net Asset Adjustment Amount" - as defined in Section 2.8(b).
"Noncompetition Agreements" -- as defined in Section 2.7(a)(ix).
"Nonmaterial Consents" - as defined in Section 2.10(b).
"Non-Real Estate Encumbrance" - as defined in Section 3.9(d).
"Occupational Safety and Health Law" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, including the federal Occupational Safety and Health Act.
"Occupational Safety and Health Liabilities" - any cost, damages, expense,
liability, obligation or other responsibility arising from or under any
Occupational Safety and Health Law.
"Order" -- any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
"Ordinary Course of Business" -- an action taken by a Person will be deemed
to have been taken in the Ordinary Course of Business only if that action:
(a)......is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
(b)......does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
(c)......is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal, day-to-day operations of other Persons that are in the same line of
business as such Person.
"Part" -- a part or section of the Disclosure Letter.
"Patents" -- as defined in Section 3.25(a)(ii).
9
"Permit" -- any approval, consent, license, permit, waiver, or other
authorization issued, granted, given, or otherwise made available by or under
the authority of any Governmental Body or pursuant to any Environmental Law.
"Permitted Encumbrances" -- as defined in Section 3.9(d).
"Permitted Non-Real Estate Encumbrances" - as defined in Section 3.9(d).
"Permitted Real Estate Encumbrance" - as defined in Section 5.11.
"Person" -- an individual, partnership, corporation, business trust,
limited liability company, limited liability partnership, joint stock company,
trust, unincorporated association, joint venture or other entity or a
Governmental Body.
"Pest Business" -- the provision of Pest Services by Seller to customers.
"Pest Services" -- the provision of termite, pest control, pest
elimination, or fumigation services.
"Potential Successor Tax" -- any Taxes owed by Seller as of the Closing
Date with respect to which Buyer may have successor liability.
"Proceeding" -- any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Purchase Price" -- as defined in Section 2.3.
"QSub" -- qualified subchapter S subsidiary within the meaning of Section
1361(b)(3)(B) of the Code.
"Real Estate Encumbrances" - as defined in Section 3.9(a).
"Real Property" -- the Land, Improvements, and all Appurtenances thereto.
"Real Property Lease" - any lease or rental agreement pertaining to the
occupancy of any improved space on any real property other than the Land.
"Receivable Date" - as defined in Section 10.10(b).
"Receivable Notice" - as defined in Section 10.10(b).
"Record" -- information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.
"Related Person" --
10
With respect to a particular individual:
(a)......each other member of such individual's Family;
(b)......any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c)......any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d)......any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a)......any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control with
such specified Person;
(b)......any Person that holds a Material Interest in such specified
Person;
(c)......each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar capacity);
(d)......any Person in which such specified Person holds a Material
Interest; and
(e)......any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree and (iv) any other natural person who resides with such individual; and
(c) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
"Release" -- any release, spill, emission, leaking, pumping, pouring,
dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching
or migration on or into the Environment or into or out of any property.
"Remedial Action" -- all actions required under applicable Environmental
Law at any Facility (a) to clean up, remove or treat any Hazardous Material; (b)
to prevent the Release or
11
Threat of Release, to address the presence of, or to minimize the further
Release of any Hazardous Material; (c) to perform pre-remedial studies and
investigations or any monitoring or post-remedial care with respect to a release
of Hazardous Materials; or (d) to comply with, or to bring the Facility and the
operations conducted thereon into compliance with, Environmental Laws.
"Representative" -- with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, accountant, financial
advisor, legal counsel or other representative of that Person.
"Restricted Material Contracts" - as defined in Section 2.10(a)(ii).
"Restricted Nonmaterial Contracts" - as defined in Section 2.10(b)
"Restricted Other Material Contracts" - as defined in Section 2.10(a)(ii).
"Restricted Pest Service Material Contracts" - as defined in Section
2.10(a)(i).
"Residex Assets"-- assets (other than Land) used by Seller solely in the
operation of its chemical distribution business.
"Residex Receivable" -- receivables attributable to the conduct by Seller
of its chemical distribution business.
"Retained Liabilities" -- as defined in Section 2.4(b).
"Reviewed Financial Statements" -- as defined in Section 3.4.
"S Corporation" -- an S corporation within the meaning of Section
1361(a)(1) of the Code.
"Securities Act" - the Securities Act of 1933.
"Seller" -- as defined in the first paragraph of this Agreement.
"Seller Closing Documents" - as defined in Section 3.2(a).
"Seller Contact" - as defined in Section 12.2(a).
"Seller Contract" -- any Contract (a) under which Seller has or may acquire
any rights or benefits; (b) under which Seller has or may become subject to any
obligation or liability; or (c) by which Seller or any of the assets owned or
used by Seller is or may become bound.
"Severance Escrow" - as defined in Section 10.1(i).
"Shareholders" -- as defined in the first paragraph of this Agreement.
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"Software" -- all computer software and subsequent versions thereof,
including source code, object, executable or binary code, objects, comments,
screens, user interfaces, report formats, templates, menus, buttons and icons
and all files, data, materials, manuals, design notes and other items and
documentation related thereto or associated therewith.
"Special Severance Arrangement" - as defined in Section 10.1(i).
"Specified Employee Liabilities" -- as defined in Section 2.4(a)(ix).
"Subsidiary" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.
"Tangible Personal Property" -- all machinery, equipment, tools, furniture,
office equipment, computer hardware, supplies, materials, vehicles and other
items of tangible personal property (other than Inventories or Improvements) of
every kind owned or leased by Seller (wherever located and whether or not
carried on Seller's books), together with any express or implied warranty by the
manufacturers or sellers or lessors of any item or component part thereof and
all maintenance records and other documents relating thereto.
"Tax" or "Taxes" -- (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind, imposed by any Governmental Body,
including, without limitation, taxes or other charges on, measured by, or with
respect to income, franchise, windfall, or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth taxes; taxes or
other charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
custom's duties, tariffs and similar charges; (ii) any liability for the payment
of any amounts of the type described in (i) as a result of being a member of an
affiliated, combined, consolidated or unitary group for any taxable period;
(iii) any liability for the payment of any amounts of the type described in (i)
as a result of being a person required by law to withhold or collect taxes
imposed on another person; (iv) any liability for the payment of amounts of the
type described in (i), (ii) or (iii) as a result of being a transferee of, or a
successor in interest to, any person, or as a result of an express or implied
obligation to indemnify any person (including by reason of a tax sharing, tax
reimbursement or tax indemnification agreement); and (v) any and all interest,
penalties (civil or criminal), additions to tax and additional amounts imposed
in connection with or with respect to any amounts described in (i), (ii), (iii)
or (iv), and any liability, loss, cost or expense (including professional fees)
in connection with the determination, settlement or litigation of any Tax
liability.
"Tax Return" -- any return, report, statement, form or other documentation
(including any additional or supporting material and any amendments or
supplements (including claims for refund)) filed or maintained, or required to
be filed or maintained, with respect to or in
13
connection with the calculation, determination, assessment, collection or
administration of any Taxes.
"Termite Guarantee Contract" -- a contract entered into to guarantee
retreatment or replacement of structures damaged by termites.
"Third Party" -- a Person that is not a party to this Agreement.
"Third-Party Claim" -- any claim against any Indemnified Person by a Third
Party, whether or not involving a Proceeding.
"Threat of Release" -- a reasonable likelihood of a Release that may
require action in order to prevent or mitigate damage to the environment that
may result from such Release.
"Title Commitments" - as defined in Section 5.11.
"Title Objection" - as defined in Section 5.11(a)
"Trade Secrets" - as defined in Section 3.25(a)(v).
"Transfer Taxes" -- all sales, use, transfer, documentary, stamp, recording
and similar non-income taxes or fees (including penalties or interest) that
arise as a result of the sale of the Assets pursuant to this Agreement.
"WARN Act" -- as defined in Section 3.23(d).
"Work Plan" - as defined in Section 11.11(b).
1.2......Usage
(a)......Interpretation. In this Agreement, unless a clear contrary
intention appears:
(i)......the singular number includes the plural number and vice
versa;
(ii).....reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are not prohibited by this Agreement, and reference to a
Person in a particular capacity excludes such Person in any other
capacity or individually;
(iii)....reference to any gender includes each other gender;
(iv).....reference to any agreement, document or instrument means
such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof;
(v)......reference to any Legal Requirement means such Legal
Requirement as amended, modified or codified, in whole or in part, and
in effect as of the date of this Agreement and the Effective Time,
including rules and regulations promulgated thereunder (including,
14
without limitation, IRS revenue rulings), and reference to any
section or other provision of any Legal Requirement means that
provision of such Legal Requirement in effect as of the date of this
Agreement and the Effective Time and constituting the substantive
amendment, modification or codification of such section or other
provision;
(vi)....."hereunder," "hereof," "hereto," and words of similar
import shall be deemed references to this Agreement as a whole and not
to any particular Article, Section or other provision hereof;
(vii)...."including" (and with correlative meaning "include")
means including without limiting the generality of any description
preceding such term;
(viii)..."or" is used in the inclusive sense of "and/or";
(ix).....with respect to the determination of any period of time,
"from" means "from and including" and "to" means "to but excluding";
and
(x)......references to documents, instruments or agreements shall
be deemed to refer as well to all addenda, exhibits, schedules or
amendments thereto.
(b)......Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted and
all accounting determinations hereunder shall be made in accordance with
GAAP.
(c)......Legal Representation of the Parties. This Agreement was
negotiated by the parties with the benefit of legal representation, and any
rule of construction or interpretation otherwise requiring this Agreement
to be construed or interpreted against any party shall not apply to any
construction or interpretation hereof.
2........SALE AND TRANSFER OF ASSETS; CLOSING
2.1......Assets To Be Sold
Upon the terms and subject to the conditions set forth in this Agreement,
at the Closing and effective as of the Effective Time, Seller shall sell,
convey, assign, transfer, and deliver to Buyer, and Buyer shall purchase and
acquire from Seller, free and clear of any Encumbrances other than Permitted
Encumbrances, all of Seller's right, title, and interest in and to all of
Seller's property and assets, real, personal, or mixed, tangible and intangible,
of every kind and description, wherever located, belonging to Seller and which
relate to the Pest Business, including the following (but excluding the Excluded
Assets):
(a)......all Real Property;
(b)......all Tangible Personal Property, including those items
described in Part 2.1(b); -----------
(c)......all Inventories;
15
(d)......all Accounts Receivable;
(e)......all Real Property Leases except as specifically excluded
under Part 2.2(m); -----------
(f)......all Seller Contracts, including those listed in Part 3.20(a)
and not excluded under Part 2.2(m), and all outstanding offers or
solicitations made by or to Seller to enter into any Contract;
(g)......all Governmental Authorizations and all pending applications
therefore or renewals thereof, in each case to the extent transferable to
Buyer, including those listed in Part 3.17(b);
(h)......all data and Records related to the operations of Seller,
including client and customer lists and Records, referral sources, research
and development reports and Records, production reports and Records,
service and warranty Records, equipment logs, operating guides and manuals,
financial and accounting Records, Tax Returns and other Tax Records (except
that with respect to Tax Returns and other Tax Records, only copies
thereof) creative materials, advertising materials, promotional materials,
studies, reports, correspondence and other similar documents and Records
and, subject to Legal Requirements, copies of all personnel Records and
other Records described in Section 2.2(i);
(i)......all of the intangible rights and property of Seller,
including Intellectual Property Assets, going concern value, goodwill,
telephone, telecopy and e-mail addresses and listings and those items
listed in Parts 3.25(d), (e), (f) and (h);
(j)......all insurance benefits, including rights and proceeds,
arising from or relating to the Assets or the Assumed Liabilities prior to
the Effective Time, unless expended in accordance with this Agreement;
(k)......all claims of Seller against third parties relating to the
Assets, whether ▇▇▇▇▇▇ or inchoate, known or unknown, contingent or
noncontingent, including all such claims listed in Part 2.1(k);
(l)......all rights of Seller relating to deposits, prepaid rent, and
other prepaid expenses, claims for refunds and rights to offset in respect
thereof that are not excluded under Section 2.2(j);
(m)......all rights of Seller relating to its sponsorship of each
Employee Plan listed on Part 2.1(m) (the "Assumed Plans"); and
(n)......all other properties and assets of every kind, character, and
description, tangible or intangible, owned by Seller and used or held for
use in connection with the Pest Business, whether or not similar to the
items specifically set forth above.
All of the property and assets to be transferred to Buyer hereunder are
herein referred to collectively as the "Assets."
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Notwithstanding the foregoing, the transfer of the Assets pursuant to this
Agreement shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a).
2.2......Excluded Assets
Notwithstanding anything to the contrary contained in Section 2.1 or
elsewhere in this Agreement, the following assets of Seller (collectively, the
"Excluded Assets") are not part of the sale and purchase contemplated hereunder,
are excluded from the Assets and shall remain the property of Seller after the
Closing:
(a)......all cash, cash equivalents, securities available for sale and
short-term investments;
(b)......the Copesan Receivables;
(c)......ownership interests in C.P.S. Insurance Company, Ltd. and
Copesan;
(d)......intercompany accounts, advances to affiliates and amounts due
from Related Persons;
(e)......Residex Assets and Residex Receivables;
(f)......all minute books, stock Records and corporate seals;
(g)......the shares of capital stock of Seller held in treasury;
(h)......all life insurance policies and rights thereunder, except as
otherwise set forth herein;
(i)......all personnel Records and other Records that Seller is
required by law to retain in its possession;
(j)......any refunds or rights or claims to refunds of Taxes for
periods prior to the Effective Time, including all rights and claims for
any Taxes of Seller related to the Business;
(k)......all rights of Seller under this Agreement, the ▇▇▇▇ of Sale,
the Assignment and Assumption Agreement and the Escrow Agreement;
(l)......each Employee Plan other than an Assumed Plan; and
(m)......the property and assets expressly designated in Part 2.2(m).
2.3......Consideration
The consideration for the Assets and the Noncompetition Agreements (the
"Purchase Price") will be (a) ONE HUNDRED AND THREE MILLION DOLLARS
($103,000,000), [***] the Assumed Payables and Equivalents; [***] [***]
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
17
[***] DOLLARS AND [***] CENTS ($[***]), as reimbursement for the cash payment
under Section 1.3(a) of the [***] Agreement; plus or minus the Net Asset
Adjustment Amount; and (b) the assumption of the Assumed Liabilities. At the
Closing, the Purchase Price shall be delivered by Buyer to Seller as follows:
(a) [***] DOLLARS ($[***]) shall be paid to the escrow agent pursuant to the
Escrow Agreement and Section 2.7(b)(ii); (b) [***] DOLLARS ($[***]) shall be
deposited into the Severance Escrow as provided in Section 10.1(i); (c) Buyer
shall assume the Assumed Liabilities by the execution and delivery of the
Assignment and Assumption Agreement; and (d) the remainder of the Purchase
Price, preliminarily determined as set forth in Sections 2.8 and 2.9 below (the
"Closing Cash Payment"), shall be paid by wire transfer at the Closing.
2.4......Liabilities
(a)......Assumed Liabilities. On the Closing Date, but effective as of
the Effective Time, Buyer shall assume and agree to discharge only the
following Liabilities of Seller (the "Assumed Liabilities"):
(i)......any account payable or accrued expense reflected on the
Interim Balance Sheet and Operating Statement (other than an
obligation to any Shareholder or a Related Person of Seller or any
Shareholder) that remains unpaid as of the Effective Time;
(ii).....any account payable or accrued expense (other than an
obligation to any Shareholder or a Related Person of Seller or any
Shareholder) incurred by Seller in the Ordinary Course of Business
between the date of the Interim Balance Sheet and Operating Statement
and the Effective Time that remains unpaid at and is not delinquent as
of the Effective Time, whether or not such account payable or accrued
expense would have been disputed by Seller;
(iii)....accruals for obligations under the contracts set forth
on Part 2.4(a)(iii); ----------------
(iv).....any Liability to Seller's customers incurred by Seller
in the Ordinary Course of Business for nondelinquent orders
outstanding as of the Effective Time reflected on Seller's books
(other than any Liability arising out of or relating to a Breach that
occurred prior to the Effective Time);
(v)......any Liability to Seller's customers under written
Termite Guarantee Contracts entered into by Seller with its customers
in the Ordinary Course of Business prior to the Effective Time
(subject, however, to the limitations set forth in Section 10.9
hereof);
(vi).....any Liability arising after the Effective Time under the
Seller Contracts described in Part 3.20(a) and not excluded under Part
2.2(m) (other than any Liability arising out of or relating to a
Breach that occurred prior to the Effective Time);
(vii)....any Liability of Seller arising after the Effective Time
under any Seller Contract included in the Assets that is entered into
by Seller after the date hereof in
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
18
accordance with the provisions of this Agreement (other than any
Liability arising out of or relating to a Breach that occurred prior
to the Effective Time);
(viii)...Liabilities secured by the Real Property which are set
forth on Part 2.4(a)(viii);
(ix).....those Liabilities set forth on Part 2.4(a)(ix)
("Specified Employee ---------------- Liabilities");
(x)......any Liability under the Assumed Plans; provided,
however, that Buyer shall in no event assume or discharge Seller's
"Change of Control" contribution obligation under Section 1(f) of the
Trust Agreement dated August 29, 1994 or any subsequent amendment or
restatement thereof (the "DC Plan Trust Agreement") for the Western
Industries, Inc. Deferred Compensation Plan (the "DC Plan"); and
(xi).....any Liability of Seller described in Part 2.4(a)(xi).
---------------
(b)......Retained Liabilities. The Retained Liabilities shall remain
the sole responsibility of and shall be retained, paid, performed and
discharged solely by Seller. "Retained Liabilities" shall mean every
Liability of Seller other than the Assumed Liabilities, including:
(i)......any Liability arising out of or relating to products or
services of Seller to the extent sold or provided prior to the
Effective Time other than to the extent assumed under Section 2.4(a);
(ii).....any Liability under any Contract other than a Termite
Guarantee Contract assumed by Buyer pursuant to Section 2.4(a) that
arises after the Effective Time but that arises out of or relates to
any Breach that occurred prior to the Effective Time;
(iii)....any Liability for Taxes of Seller, except Taxes prorated
pursuant to Section 2.8(c), including (A) any Taxes arising as a
result of Seller's operation of its business or ownership of the
Assets prior to the Effective Time, (B) any Taxes that will arise as a
result of the sale of the Assets pursuant to this Agreement and (C)
any deferred Taxes of any nature;
(iv).....any Liability under any Contract not assumed by Buyer
under Section 2.4(a), including any Liability arising out of or
relating to Seller's credit facilities or any security interest
related thereto;
(v)......any Environmental Liabilities arising out of or relating
to (A) the ownership or operation of the business by Seller, (B)
Seller's leasing, ownership or operation of the Facilities, (C) any
act or omission of Seller prior to the Closing, or (D) any condition
or occurrence at the Facilities existing or occurring at or before the
Closing;
(vi).....any Occupational Safety and Health Liabilities arising
out of or relating to the operation of the business by Seller or
Seller's leasing, ownership or operation of real property;
19
(vii)....except for amounts included in the Assumed Payables and
Equivalents, or except as set forth in Section 2.4(a)(ix), Section
2.4(a)(x), or on Part 2.4(a)(xi), as applicable, any Liability under
the Employee Plans or relating to payroll, workers' compensation,
unemployment benefits, pension benefits, employee stock option or
profit-sharing plans, health care plans or benefits or any other
employee plans or benefits of any kind for Seller's employees or
former employees or both;
(viii)...except as set forth in Sections 2.4(a)(ix) and 10.1(i),
any Liability under any employment, severance, retention or
termination agreement with any employee of Seller or any of its
Related Persons;
(ix).....any Liability arising out of or relating to any employee
grievance whether or not the affected employees are hired by Buyer;
(x)......any Liability of Seller to any Shareholder or Related
Person of Seller or any Shareholder;
(xi).....any Liability to indemnify, reimburse or advance amounts
to any officer, director, employee or agent of Seller;
(xii)....any Liability to distribute to any of Seller's
shareholders or otherwise apply all or any part of the consideration
received hereunder;
(xiii)...any Liability arising out of any Proceeding pending as
of the Effective Time;
(xiv)....any Liability arising out of any Proceeding commenced
after the Effective Time and arising out of or relating to any
occurrence or event happening prior to the Effective Time;
(xv).....any Liability arising out of or resulting from Seller's
compliance or noncompliance with any Legal Requirement or Order of any
Governmental Body;
(xvi)....any Liability of Seller under this Agreement or any
other document executed in connection with the Contemplated
Transactions; and
(xvii)...any Liability of Seller based upon Seller's acts or
omissions occurring after the Effective Time.
2.5......Allocation
The parties agree that the Purchase Price, as adjusted hereunder, and all
other amounts constituting consideration within the meaning of Section 1060 of
the Code, shall be allocated among the Assets pursuant to Section 1060 of the
Code, in accordance with Exhibit 2.5 to which Buyer and Seller have agreed.
Seller and Buyer agree to report the federal, state and local income and other
Tax consequences of the transactions contemplated hereby, and in particular to
report the information required by Section 1060(b) of the Code, in a manner
consistent with the
20
agreed upon allocation, and to file all other applicable Tax Returns and forms
to reflect such purchase price allocation. Within 30 days after the
determination of the Purchase Price adjustments set forth in Section 2.8, Buyer
shall prepare and deliver IRS Form 8594 reflecting and in accordance with the
allocation set forth in Exhibit 2.5 to Seller to be filed with the IRS. In any
Proceeding related to the determination of any Tax, neither Buyer nor Seller or
Shareholders shall take a position inconsistent with such allocation, unless
required to do so by application of Law.
2.6......Closing
The purchase and sale provided for in this Agreement (the "Closing") will
take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, Buyer's counsel, in
Atlanta, Georgia, commencing at 10:00 a.m. (local time) on the later of (a)
March 31, 2004, or (b) the date that is five (5) Business Days following the
termination of the applicable waiting period under the HSR Act, unless Buyer and
Seller otherwise agree. Subject to the provisions of Article 9, failure to
consummate the purchase and sale provided for in this Agreement on the date and
time and at the place determined pursuant to this Section 2.6 will not result in
the termination of this Agreement and will not relieve any party of any
obligation under this Agreement. In such a situation, the Closing will occur as
soon as practicable, subject to Article 9.
2.7......Closing Obligations
In addition to any other documents to be delivered under other provisions
of this Agreement, at the Closing:
(a)......Seller and Shareholders, as the case may be, shall deliver to
Buyer:
(i)......a ▇▇▇▇ of sale for all of the Assets that are Tangible
Personal Property in the form of Exhibit 2.7(a)(i) (the "▇▇▇▇ of
Sale") executed by Seller; -----------------
(ii).....an assignment of all of the Assets that are intangible
personal property in the form of Exhibit 2.7(a)(ii), which assignment
shall also contain Buyer's undertaking and assumption of the Assumed
Liabilities (the "Assignment and Assumption Agreement") executed by
Seller;
(iii)....for each interest in Real Property identified on Part
3.7 a recordable limited -------- or special warranty deed or such
other appropriate document or instrument of transfer, as the case may
require, each in form and substance satisfactory to Seller and Buyer
and their counsel and executed by Seller;
(iv).....for each Real Property Lease identified in Part 3.8, an
Assignment and --------- Assumption of Lease in the form of Exhibit
2.7(a)(iv) or such other appropriate document or instrument of
transfer, as the case may require, each in form and substance
satisfactory to buyer and its counsel and executed by Seller;
(v)......assignments of all Intellectual Property Assets and
assignments of all registered Marks, Patents and Copyrights in the
form of Exhibit 2.7(a)(v) executed by Seller;
21
(vi).....affidavits or certificates of title for the benefit of
Buyer's Title Insurer, in form and substance reasonably acceptable to
such Title Insurer;
(vii)....such other bills of sale, assignments, documents and
other instruments of transfer as may reasonably be requested by Buyer,
each in form and substance reasonably satisfactory to Buyer and its
legal counsel and executed by Seller;
(viii)...employment agreements in the form of Exhibit
2.7(a)(viii), executed by each of -------------------- Bob and Dick
("Employment Agreements");
(ix).....noncompetition agreements in the form of Exhibit
2.7(a)(ix), executed by each ------------------ Shareholder (the
"Noncompetition Agreements");
(x)......an escrow agreement in the form of Exhibit 2.7(a)(x),
executed by Seller and ------------------ each Shareholder (the
"Escrow Agreement");
(xi).....a certificate executed by Seller and each Shareholder as
to the accuracy of their representations and warranties as of the date
of this Agreement and as of the Closing in accordance with Section
7.1, in each case as modified by any supplement to the Disclosure
Letter delivered to Buyer in compliance with Section 5.5, and as to
their compliance with and performance of their covenants and
obligations to be performed or complied with at or before the Closing
in accordance with Section 7.2;
(xii)....a certificate of the Secretary of Seller certifying, as
complete and accurate as of the Closing, attached copies of the
Governing Documents of Seller, certifying and attaching all requisite
resolutions or actions of Seller's board of directors and shareholders
approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Seller executing this
Agreement and any other document relating to the Contemplated
Transactions;
(xiii)...for each Assumed Plan that is intended to be qualified
under Section 401(a) of the Code, documents, in form and substance
satisfactory to Buyer and its legal counsel, evidencing that Seller
has filed with the IRS (on or before the Closing Date) an application
for a determination that such Employee Plan's plan document complies
with those certain laws known collectively as "GUST";
(xiv)....with respect to each Assumed Plan, documents, in form
and substance satisfactory to Buyer and its legal counsel, evidencing
that Seller has satisfied its annual reporting obligations with
respect to such Employee Plans, for all years such Employee Plans have
been maintained; and
(xv).....with respect to the DC Plan and the DC Plan Trust
Agreement, documents, in form and substance satisfactory to Buyer and
its legal counsel, evidencing that Seller has adopted such amendments
as the Buyer may reasonably request.
(b)......Buyer shall deliver to Seller and Shareholders, as the case
may be:
22
(i)......the Closing Cash Payment, by wire transfer to an account
specified by Seller and the Shareholders in a writing delivered to
Buyer at least two (2) Business Days prior to the Closing Date;
(ii).....the Escrow Agreement, executed by Buyer, together with
the delivery of [***] ($[***]) to the escrow agent
thereunder, by wire transfer to an account specified by the escrow
agent (the "Escrow");
(iii)....the Assignment and Assumption Agreement executed by
Buyer;
(iv).....the Assignment and Assumption of Leases executed by
Buyer;
(v)......the Employment Agreements executed by Buyer;
(vi).....the Noncompetition Agreements executed by Buyer;
(vii)....a certificate executed by Buyer as to the accuracy of
its representations and warranties as of the date of this Agreement
and as of the Closing in accordance with Section 8.1 and as to its
compliance with and performance of its covenants and obligations to be
performed or complied with at or before the Closing in accordance with
Section 8.2; and
(vii)....a certificate of the Secretary of Buyer certifying, as
complete and accurate as of the Closing, attached copies of the
Governing Documents of Buyer and certifying and attaching all
requisite resolutions or actions of Buyer's board of directors
approving the execution and delivery of this Agreement and the
consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing this
Agreement and any other document relating to the Contemplated
Transactions.
2.8......Adjustments to Purchase Price
(a)......The Assumed Payables and Equivalents shall be a reduction in
arriving at the Purchase Price.
(b)......The "Net Asset Adjustment Amount" will be equal to the amount
determined by subtracting the Estimated Acquired Net Assets from the
Closing Acquired Net Assets. If the Net Asset Adjustment Amount is
positive, the Net Asset Adjustment Amount shall be an increase in arriving
at the Purchase Price. If the Net Asset Adjustment Amount is negative, then
the Net Asset Adjustment Amount shall be a reduction in arriving at the
Purchase Price. For purposes hereof, the "Estimated Acquired Net Assets"
shall mean [***] $[***], which was determined in the manner set forth
on Exhibit 2.8(b).
(c)......To the extent that ad valorem real and tangible personal
property taxes have not been accrued for by the Seller, the Purchase Price
shall also be adjusted for ad valorem real and tangible personal property
taxes applicable to the Assets for the calendar year in which the Closing
occurs. Such taxes shall be prorated between Seller and Buyer as of the
Closing Date on the basis of no applicable discount. If the amount of such
taxes with respect to any of
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
23
the Assets for the calendar year in which the Closing occurs has not been
determined as of the Closing Date, then the taxes with respect to such Assets
for the preceding calendar year, on the basis of no applicable discount, shall
be used to calculate such prorations, with known changes in valuation or millage
applied. The prorated taxes shall be an adjustment to the Closing Cash Payment.
On or before the [***]th day after the Closing, Buyer shall deliver a written
notice to Seller setting forth the actual amount of such taxes paid as of the
date of such notice. If the Seller's actual share of such taxes is greater than
the estimated amount used in determining the Closing Cash Payment, then the
Seller shall wire transfer such difference to the Buyer within two (2) Business
Days after such determination. If the Seller's share of such taxes is less than
the estimated amount used in determining the Closing Cash Payment, then the
Buyer shall wire transfer such difference to the Seller within two (2) Business
Days after such determination. If the Seller does not wire transfer the
adjustment within such time, then the Buyer shall have the right, under the
Escrow Agreement, to cause such adjustment to be withdrawn from the Escrow. Such
reimbursement shall not be subject to the Basket.
2.9......Adjustment Amount Procedures; Payment
(a)......No later than two (2) Business Days prior to the Closing
Date, Buyer and Seller shall make a good faith estimate as of the Closing
Date of the Assumed Payables and Equivalents (the "Estimated Payables") and
the Net Asset Adjustment Amount (the "Estimated Net Asset Adjustment"),
which estimates shall be used in determining the Closing Cash Payment.
(b)......After the Closing, Buyer shall determine the actual Assumed
Payables and Equivalents (the "Actual Payables") and the actual Net Asset
Adjustment Amount (the "Actual Net Asset Adjustment") as of the Effective
Time in accordance with GAAP on the same basis and applying the same
accounting principles, policies and practices that were used in preparing
the Reviewed Financial Statements. Buyer shall deliver an explanation of
its determination of the Actual Payables and the Actual Net Asset
Adjustment to the Seller within [***] ([***]) days following
the Closing Date.
(c)......If within [***] ([***]) days following delivery of such
explanation Seller has not given Buyer written notice of its objection
thereto (which notice shall state the basis of Seller's objection), Buyer's
determination of the Actual Payables and the Actual Net Asset Adjustment
shall be binding and conclusive on the parties and be used in adjusting the
Purchase Price. If the aggregate change to the Purchase Price is a decrease
because of (i) the difference between the Actual Payables and the Estimated
Payables and (ii) the difference between the Actual Net Asset Adjustment
and the Estimated Net Asset Adjustment, then the Seller shall wire transfer
such difference to the Buyer within two (2) Business Days after such final
determination. If the Seller does not wire transfer the aggregate
adjustment within such time, then the Buyer shall have the right, under the
Escrow Agreement, to cause such aggregate adjustment to be withdrawn from
the Escrow. Such reimbursement shall not be subject to the Basket. If the
aggregate change to the Purchase Price is an increase because of (i) the
difference between the Actual Payables and the Estimated Payables and (ii)
the difference between the Actual Net Asset Adjustment and the Estimated
Net Asset Adjustment, then the Buyer shall wire transfer such difference to
the Seller within two (2) Business Days after such final determination.
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
24
(d) If Seller duly gives Buyer notice of objection, and if Seller and
Buyer fail to resolve the issues outstanding with respect thereto within
[***] ([***]) days of Buyer's receipt of Seller's objection notice, Seller
and Buyer shall submit the issues remaining in dispute to Deloitte &
Touche, LLP, independent public accountants (the "Independent
Accountants"), for resolution applying the principles, policies and
practices referred to in Section 2.9(b). If issues are submitted to the
Independent Accountants for resolution, (i) Seller and Buyer shall furnish
or cause to be furnished to the Independent Accountants such work papers
and other documents and information relating to the disputed issues as the
Independent Accountants may request and are available to that party or its
agents and shall be afforded the opportunity to present to the Independent
Accountants any material relating to the disputed issues and to discuss the
issues with the Independent Accountants; (ii) the determination by the
Independent Accountants, as set forth in a notice to be delivered to both
Seller and Buyer within sixty (60) days of the submission to the
Independent Accountants of the issues remaining in dispute, shall be final,
binding and conclusive on the parties and shall be used in the calculation
of the Closing Cash Payment; and (iii) Seller and Buyer will each bear
[***] ([***]%) of the fees and costs of the Independent Accountants for
such determination. If the aggregate change to the Purchase Price is a
decrease because of (i) the difference between the Actual Payables and the
Estimated Payables and (ii) the difference between the Actual Net Asset
Adjustment and the Estimated Net Asset Adjustment, then the Seller shall
wire transfer such difference to the Buyer within two (2) Business Days
after such final determination. If the Seller does not wire transfer the
aggregate adjustment within such time, then the Buyer shall have the right,
under the Escrow Agreement, to cause such aggregate adjustment to be
withdrawn from the Escrow. Such reimbursement shall not be subject to the
Basket. If the aggregate change to the Purchase Price is an increase
because of (i) the difference between the Actual Payables and the Estimated
Payables and (ii) the difference between the Actual Net Asset Adjustment
and the Estimated Net Asset Adjustment, then the Buyer shall wire transfer
such difference to the Seller within two (2) Business Days after such final
determination.
2.10.....Consents
(a) (i) .....Seller Contracts for Pest Services. If there are any
Material Consents for contracts entered into by Seller for the
provision of Pest Services that have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing, in the
case of each such Seller Contract as to which such Material Consents
were not obtained (or otherwise are not in full force and effect) (the
"Restricted Pest Service Material Contracts"), Buyer will waive the
closing conditions as to any such Material Consent and Seller will
continue its efforts to obtain the Material Consents.
(ii).....Other Seller Contracts. If there are any Material
Consents for contracts entered into by Seller other than for the
provision of Pest Services that have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing, in the
case of each such Seller Contract as to which such Material Consents
were not obtained (or otherwise are not in full force and effect) (the
"Restricted Other Material Contracts"; Restricted Pest Service
Material Contracts and Restricted Other Material Contracts are
collectively the "Restricted Material Contracts"), Buyer may waive the
closing conditions as to any such Material Consent and either (i)
elect to have Seller continue its efforts to obtain the Material
Consents, or (ii) elect
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
25
to have Seller retain that Restricted Other Material Contract and all
Liabilities arising therefrom or relating thereto.
(iii)....When the Closing occurs, notwithstanding Sections 2.1
and 2.4, neither this Agreement nor the Assignment and Assumption
Agreement nor any other document related to the consummation of the
Contemplated Transactions shall constitute a sale, assignment,
assumption, transfer, conveyance or delivery or an attempted sale,
assignment, assumption, transfer, conveyance or delivery of the
Restricted Material Contracts, and following the Closing, the parties
shall use Best Efforts, and cooperate with each other, to obtain the
Material Consent relating to each Restricted Material Contract (other
than Restricted Other Material Contracts which are rejected pursuant
to Section 2.10(a)(ii) above) as quickly as practicable. Pending the
obtaining of such Material Consents relating to any Restricted
Material Contract, the parties shall cooperate with each other in any
reasonable and lawful arrangements designed to provide to Buyer the
benefits of use of the Restricted Material Contract for its term (or
any right or benefit arising thereunder, including the enforcement for
the benefit of Buyer of any and all rights of Seller against a third
party thereunder). Once a Material Consent for the sale, assignment,
assumption, transfer, conveyance and delivery of a Restricted Material
Contract is obtained, Seller shall promptly assign, transfer, convey
and deliver such Restricted Material Contract to Buyer, and Buyer
shall assume the obligations under such Restricted Material Contract
assigned to Buyer from and after the date of assignment to Buyer
pursuant to a special-purpose assignment and assumption agreement
substantially similar in terms to those of the Assignment and
Assumption Agreement (which special-purpose agreement the parties
shall prepare, execute and deliver in good faith at the time of such
transfer, all at no additional cost to Buyer).
(b)......If there are any Consents not listed on Exhibit 7.3 necessary
for the assignment and transfer of any Seller Contracts to Buyer (the
"Nonmaterial Consents") which have not yet been obtained (or otherwise are
not in full force and effect) as of the Closing, Buyer will at the Closing,
in the case of each of the Seller Contracts as to which such Nonmaterial
Consents were not obtained (or otherwise are not in full force and effect)
(the "Restricted Nonmaterial Contracts") accept the assignment of such
Restricted Nonmaterial Contract, in which case, as between Buyer and
Seller, such Restricted Nonmaterial Contract shall, to the maximum extent
practicable and notwithstanding the failure to obtain the applicable
Nonmaterial Consent, be transferred at the Closing pursuant to the
Assignment and Assumption Agreement as elsewhere provided under this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and each Shareholder represent and warrant, jointly and severally,
to Buyer as follows:
3.1......Organization And Good Standing
(a)......Part 3.1(a) contains a complete and accurate list of Seller's
jurisdiction of incorporation and any other jurisdictions in which it is
qualified to do business as a foreign corporation. Seller is a corporation
duly organized, validly existing and in good standing under
26
the laws of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being conducted, to own
or use the properties and assets that it purports to own or use, and to
perform all its obligations under the Seller Contracts. Seller is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the nature of
the activities conducted by it, requires such qualification except for such
states where the failure to be so qualified would not prevent the Seller
from enforcing its contracts, bringing suits or enforcing its judgments.
(b)......Complete and accurate copies of the Governing Documents of
Seller, as currently in effect, have been provided to Buyer.
(c)......Except as set forth on Part 3.1(c), Seller has no Subsidiary
and, except as disclosed in Part 3.1(c), does not own any shares of capital
stock or other securities of any other Person.
3.2......Enforceability; Authority; No Conflict
(a)......This Agreement constitutes the legal, valid and binding
obligation of Seller and each Shareholder, enforceable against each of them
in accordance with its terms. Upon the execution and delivery by Seller and
Shareholders of the ▇▇▇▇ of Sale, the Assignment and Assumption Agreement,
the Assignment and Assumption of Leases, the Warranty Deeds for the Real
Property, the Intellectual Property Asset Assignments, the Escrow
Agreement, the Employment Agreements, the Noncompetition Agreements and
each other agreement to be executed or delivered by any or all of Seller
and Shareholders at the Closing (collectively, the "Seller Closing
Documents"), each of Seller Closing Documents will constitute the legal,
valid and binding obligation of each of Seller and the Shareholders,
enforceable against each of them in accordance with its terms. Seller has
the absolute and unrestricted right, power and authority to execute and
deliver this Agreement and the Seller Closing Documents to which it is a
party and to perform its obligations under this Agreement and the Seller
Closing Documents, and such action has been duly authorized by all
necessary action by Seller's shareholders and board of directors. Each
Shareholder has all necessary legal capacity to enter into this Agreement
and the Seller Closing Documents to which such Shareholder is a party and
to perform his obligations hereunder and thereunder.
(b)......Except as set forth in Part 3.2(b), neither the execution and
delivery of this Agreement nor the consummation or performance of any of
the Contemplated Transactions will, directly or indirectly (with or without
notice or lapse of time):
(i)......breach (A) any provision of any of the Governing
Documents of Seller or (B) any resolution adopted by the board of
directors or the shareholders of Seller;
(ii).....breach or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to exercise
any remedy or obtain any relief under any Legal Requirement or any
Order to which Seller or either Shareholder, or any of the Assets, may
be subject;
27
(iii)....contravene, conflict with or result in a violation or
breach of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by
Seller or that otherwise relates to the Assets or to the business of
Seller;
(iv).....breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or payment under, or to cancel, terminate
or modify, any Seller Contract;
(v)......result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets; or
(vi).....result in any shareholder of the Seller having the right
to exercise dissenters' appraisal rights.
(c)......Except as set forth in Part 3.2(c), neither Seller
nor any Shareholder is required to give any notice to or obtain
any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
3.3......Capitalization
The authorized equity securities of Seller consist of the number of
shares or interests, and are owned by such Persons, as set forth on Part
3.3. No Person other than the Shareholders or trusts established by the
Shareholders are record or beneficial owners of such equity securities, and
the Shareholders are and will be on the Closing Date the record and
beneficial owners and holders of the shares owned by each of them, free and
clear of all Encumbrances. There are no Contracts relating to the issuance,
sale or transfer of any equity securities or other securities of Seller.
3.4......Financial Statements
Seller has delivered to Buyer: (a) unaudited, reviewed consolidated
balance sheets of Seller, including its wholly-owned subsidiary, Residex
Corporation, as of December 31 in each of the fiscal years 2000 through
2002, and the related reviewed consolidated statements of income, changes
in shareholders' equity and cash flows for each of the fiscal years then
ended, including in each case the notes thereto (the "Reviewed Financial
Statements"); and (b) an unaudited consolidated balance sheet of Seller,
excluding its wholly-owned subsidiary, Residex Corporation, at September
30, 2003 and an unaudited operating statement for the nine-months ended
September 30, 2003 (the "Interim Balance Sheet and Operating Statement").
The Reviewed Financial Statements have been prepared in accordance with
GAAP, as reflected by the review report by Wiss & Company, and fairly
present, in all material respects, the financial position and results of
operations, changes in shareholders' equity and cash flows of Seller as of
the respective dates and for the periods referred to in such financial
statements, except for potential exceptions as disclosed on Part 3.4. The
Interim Balance Sheet and Operating Statement at September 30, 2003 and the
nine-months then ended have been prepared in
28
accordance with GAAP from the accounting records of Seller consistent with
Seller's past practice and methodology for preparing interim, internal
balance sheets and operating statements, except as set forth on Part 3.4.
The interim balance sheets and operating statements to be delivered
pursuant to Section 5.8 will reflect the consistent application of such
past practices and methodology used in the preparation of the Interim
Balance Sheet and Operating Statement.
3.5......Books And Records; Financial Controls
The books of account and other financial Records of Seller, all of
which have been made available to Buyer, are complete and correct and
represent actual, bona fide transactions and have been maintained in
accordance with sound business practices. Each of the Seller and all
Subsidiaries maintains accurate books and records reflecting its assets and
liabilities and maintains proper and adequate internal accounting controls
which provide assurance that (i) transactions are executed with
management's authorization; (ii) transactions are recorded as necessary to
permit preparation of the consolidated financial statements of the Seller
and to maintain accountability for the Seller's consolidated assets; (iii)
access to the Seller's assets is permitted only in accordance with
management's authorization; (iv) the reporting of the Seller's assets is
compared with existing assets at regular intervals; and (v) accounts, notes
and other receivables and inventory are recorded accurately, and proper and
adequate procedures are implemented to effect the collection thereof on a
current and timely basis.
3.6......Sufficiency Of Assets
Except as set forth in Part 3.6, the Assets (a) constitute all of the
assets, tangible and intangible, of any nature whatsoever, necessary to
operate Seller's business in the manner presently operated by Seller and
(b) include all of the operating assets of Seller.
3.7......Description Of Real Property
Part 3.7 contains a street address, tax parcel identification number,
and the Appraised Real Property Value, of all pieces of Real Property.
3.8......Description Of Real Property Leases
Part 3.8 contains an accurate description (by location, date of Lease
and term expiry date) of all Real Property Leases.
3.9......Title To Assets; Encumbrances
(a)......Seller owns the Real Property , free and clear of any
Encumbrances, other than those described in Part 3.9(a) ("Real Estate
Encumbrances").
(b)......Except as set forth on Part 3.9(b), the Real Property
Leases are in full force and effect, and Seller has not received any
written notices of default that have not been cured.
29
(c)......Seller shall, within five (5) business days after the
date hereof, deliver or otherwise make available to Buyer all books,
records, and other writings in Seller's possession related in any
material way to the Real Property Leases and to the use, ownership, or
operation of the Real Property.
(d)......Seller owns all of the other Assets free and clear of
any Encumbrances other than those described in Part 3.9(d) ("Non-Real
Estate Encumbrances"). Seller warrants to Buyer that, at the time of
Closing, all other Assets shall be free and clear of all Non-Real
Estate Encumbrances other than those identified on Part 3.9(d) as
acceptable to Buyer ("Permitted Non-Real Estate Encumbrances" and,
together with the Permitted Real Estate Encumbrances, "Permitted
Encumbrances").
3.10.....Condition Of Facilities
(a)......Use of the Facilities for the various purposes for which
each of them is presently being used is permitted as of right under
all applicable zoning legal requirements and is not subject to
"permitted nonconforming" use or structure classifications. All
Improvements are in compliance with all applicable Legal Requirements,
including those pertaining to zoning, building and the disabled, are
in good repair and in good condition, ordinary wear and tear excepted,
and are free from latent and patent defects. No part of any
Improvement encroaches on any real property not included in the Real
Property, and there are no buildings, structures, fixtures or other
Improvements primarily situated on adjoining property which encroach
on any part of the Land. Each Facility abuts on and has direct
vehicular access to a public road or has access to a public road, via
a permanent, irrevocable, appurtenant easement benefiting the Land and
comprising a part of the Real Property, or otherwise. Each Facility is
supplied with public or quasi-public utilities and other services
appropriate for the operation of such Facility and is not located
within any flood plain or area subject to wetlands regulation or any
similar restriction. To the Knowledge of Seller and the Shareholders,
there is no existing or proposed plan to modify or realign any street
or highway or any existing or proposed eminent domain proceeding that
would result in the taking of all or any part of any Facility or that
would prevent or hinder the continued use of any Facility as
heretofore used in the conduct of the business of Seller.
(b)......Each item of Tangible Personal Property is in good
repair and good operating condition, ordinary wear and tear excepted,
is suitable for immediate use in the Ordinary Course of Business and
is free from latent and patent defects. No item of Tangible Personal
Property is in need of repair or replacement other than as part of
routine maintenance in the Ordinary Course of Business. Except as
disclosed in Part 3.10(b), all Tangible Personal Property used in
Seller's business is in the possession of Seller.
3.11.....Accounts Receivable
(a)......All Accounts Receivable that are reflected on the
Reviewed Financial Statements, the Interim Balance Sheet and Operating
Statement or on the accounting Records of Seller as of the Closing
Date represent or will represent valid obligations arising from sales
actually made or services actually performed by Seller in the Ordinary
Course of Business. Except to the extent paid prior to the Closing
Date, such Accounts Receivable are or will be as of
30
the Closing Date current and collectible net of reserves determined
and calculated consistent with past practice and, in any event, which
shall not represent a greater percentage of the Accounts Receivable as
at Closing than the reserves reflected on the Reviewed Financial
Statements or the Interim Balance Sheet and Operating Statement
represented of the Accounts Receivable reflected thereon, will not
represent a material adverse change in the composition of such
Accounts Receivable in terms of aging. There is no contest, claim,
defense or right of setoff, other than returns in the Ordinary Course
of Business of Seller, under any Contract with any account debtor of
an Account Receivable relating to the amount or validity of such
Account Receivable. Part 3.11 contains a summary listing of all
Accounts Receivable as of December 31, 2003, which list sets forth the
total amount of the Accounts Receivable in each aging category.
3.12.....Inventories
All items included in the Inventories consist of a quality and
quantity usable in the Ordinary Course of Business of Seller except for
obsolete items and items of below-standard quality, all of which have been
written off or written down to net realizable value in the Reviewed
Financial Statements or the Interim Balance Sheet and Operating Statement
or on the accounting Records of Seller as of the Closing Date, as the case
may be. Seller is not in possession of any Inventory not owned by Seller,
including goods already sold. All of the Inventories have been valued at
the lower of cost or market value on a first in, first out basis.
Inventories now on hand that were purchased after the date of the Reviewed
Financial Statements or the Interim Balance Sheet and Operating Agreement
were purchased in the Ordinary Course of Business of Seller at a cost not
exceeding market prices prevailing at the time of purchase. The quantities
of each item of Inventories are not excessive but are reasonable in the
present circumstances of Seller consistent with seasonal demand.
3.13.....No Undisclosed Liabilities
Except as set forth in Part 3.13, Seller has no Liability except for
Liabilities reflected or reserved against in the Reviewed Financial
Statement or the Interim Balance Sheet and Operating Statement and current
liabilities incurred in the Ordinary Course of Business of Seller since the
date of the Interim Balance Sheet and Operating Statement.
3.14.....Taxes
(a)......Tax Returns Filed and Taxes Paid. Seller has filed or
caused to be filed on a timely basis all material Tax Returns and all
material reports with respect to Taxes related to the Assets that are
or were required to be filed pursuant to applicable Legal
Requirements. All such Tax Returns and reports filed by Seller are
true, correct and complete. Seller has paid, or made provision for the
payment of, all Taxes related to the Assets that have or may have
become due for all periods covered by the Tax Returns or otherwise, or
pursuant to any assessment received by Seller, except such Taxes, if
any, as are listed in Part 3.14(a) and are being contested in good
faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Reviewed Financial Statements and the
Interim Balance Sheet and Operating Statement. No claim is expected by
Seller to be made by any Governmental Body in a jurisdiction where
Seller does not file Tax Returns related to the Assets that it is or
may be
31
subject to taxation with respect to the Assets by that jurisdiction.
There are no Encumbrances on any of the Assets that arose in
connection with any failure (or alleged failure) to pay any Tax, and
Seller has no Knowledge of any basis for assertion of any claims
attributable to Taxes which, if adversely determined, would result in
any such Encumbrance.
(b)......Delivery of Tax Returns and Information Regarding Audits
and Potential Audits. Seller has delivered or made available to Buyer
copies of all income Tax Returns filed since January 1, 2000, and Part
3.14(b) contains a complete and accurate list of, all income Tax
Returns filed since January 1, 2002. Part 3.14(b) contains a complete
and accurate list of all Tax Returns of Seller that have been audited
or are currently under audit and accurately describes any deficiencies
or other amounts that were paid or are currently being contested. All
deficiencies proposed as a result of such audits have been paid,
reserved against, settled or are being contested in good faith by
appropriate proceedings as described in Part 3.14(b). Seller has
delivered, or made available to Buyer, copies of any examination
reports, statements or deficiencies or similar items with respect to
such audits.
(c)......Proper Accrual. The charges, accruals and reserves with
respect to Taxes related to the Assets on the Records of Seller are
adequate (determined in accordance with GAAP) and are at least equal
to Seller's liability for Taxes related to the Assets. There exists no
proposed tax assessment or deficiency related to the Assets against
Seller except as disclosed in the Interim Balance Sheet and Operating
Statement or in Part 3.14(c).
(d)......Specific Potential Tax Liabilities and Tax Situations.
(i)......Withholding. All Taxes related to the Assets that
Seller is or was required by Legal Requirements to withhold,
deduct or collect have been duly withheld, deducted and collected
and, to the extent required, have been paid to the proper
Governmental Body or other Person.
(ii).....Part 3.14(d)(ii) lists the federal tax
classification of each Seller (including, with respect to each
corporation or entity treated as an association taxable as a
corporation for federal tax purposes, whether such entity is an S
Corporation or a QSub). With respect to the disclosures made in
Part 3.14(d)(ii): (A) each Seller that is an S Corporation has a
valid S Corporation election in effect since the effective date
of such S Corporation election, and will be a valid S Corporation
up to and including the Closing Date; (B) each Seller that is a
QSub has a valid QSub election in effect since the effective date
of such QSub election, and will be a valid QSub up to and
including the Closing Date; (C) except for JBD Incorporated, each
Seller that is a corporation or entity treated as an association
taxable as a corporation for federal tax purposes is either an S
Corporation or a QSub; and (D) each Seller that is a limited
liability company is a partnership or ignored as a separate
entity for federal tax purposes, as the case may be, and not as a
corporation or an association taxable as a corporation, and will
continue to be a partnership or ignored as a separate entity for
federal tax purposes, as the case may be, up to and including the
Closing Date.
(iii)....Part 3.14(d)(iii) lists all the states and
localities with respect to which Seller is required to file any
corporate or partnership income or franchise tax returns.
32
(iv).....Foreign Person. Seller is not a "foreign person" as
defined in Section 1445(f)(3) of the Code.
(v)......Non-deductible Payments. Except as set forth in
Part 3.14(d)(v), Seller has not made any payments, is not
obligated to make any payments and is not a party to any
agreement that could obligate it to make any future payments that
will not be fully deductible under Section 280G of the Code.
3.15.....No Material Adverse Change
Since June 30, 2003, there has not been any material adverse change in
the business, operations, prospects, assets, results of operations or
condition (financial or other) of Seller, and no event has occurred or
circumstance exists that may result in such a material adverse change.
3.16.....Employee Benefits
(a)......Set forth in Part 3.16(a) is a complete and correct list
of all "employee benefit plans" as defined by Section 3(3) of ERISA,
all specified fringe benefit plans as defined in Section 6039D of the
Code, and all other bonus, incentive-compensation,
deferred-compensation, profit-sharing, stock-option,
stock-appreciation-right, stock-bonus, stock-purchase,
employee-stock-ownership, savings, severance, change-in-control,
supplemental-unemployment, layoff, salary-continuation, retirement,
pension, health, life-insurance, disability, accident,
group-insurance, vacation, holiday, sick-leave, fringe-benefit or
welfare plan, and any other employee compensation or benefit plan,
agreement, policy, practice, commitment, contract or understanding
(whether qualified or nonqualified, currently effective or terminated,
written or unwritten) that (i) is maintained or contributed to by
Seller or any other corporation or trade or business controlled by,
controlling or under common control with Seller (within the meaning of
Section 414 of the Code or Section 4001(a)(14) or 4001(b) of ERISA)
("ERISA Affiliate") or has been maintained or contributed to in the
last six (6) years by Seller or any ERISA Affiliate, or with respect
to which Seller or any ERISA Affiliate has or may have any liability,
and (ii) provides benefits, or describes policies or procedures
applicable to any current or former director, officer, employee or
service provider of Seller or any ERISA Affiliate, or the dependents
of any thereof, regardless of how (or whether) liabilities for the
provision of benefits are accrued or assets are acquired or dedicated
with respect to the funding thereof (collectively the "Employee
Plans"). No Employee Plan is a "Defined Benefit Plan" (as defined in
Section 3(35) of ERISA) or a "Multiemployer Plan" (as defined in
Section 3(37) of ERISA). Also set forth on Part 3.16(a) is a complete
and correct list of all ERISA Affiliates of Seller during the last six
(6) years.
(b)......Seller has made available to Buyer true, accurate and
complete copies of (i) the documents comprising each Employee Plan
(or, with respect to any Employee Plan which is unwritten, a detailed
written description of eligibility, participation, benefits, funding
arrangements, assets and any other matters which relate to the
obligations of Seller or any ERISA Affiliate); (ii) all trust
agreements, insurance contracts or any other funding instruments
related to the Employee Plans; (iii) all rulings, determination
letters, no-action letters or advisory opinions from the IRS, the U.S.
Department of Labor, or any other Governmental Body that
33
pertain to each Employee Plan and any open requests therefor; (iv) the
most recent financial reports (audited and/or unaudited) and the
annual reports filed with any Government Body with respect to the
Employee Plans during the current year and each of the three preceding
years; (v) all collective bargaining agreements pursuant to which
contributions to any Employee Plan(s) have been made or obligations
incurred (including both pension and welfare benefits) by Seller or
any ERISA Affiliate, and all collective bargaining agreements pursuant
to which contributions are being made or obligations are owed by such
entities; (vi) all contracts with third-party administrators,
actuaries, investment managers, consultants and other independent
contractors that relate to any Employee Plan, and (vii) all summary
plan descriptions, summaries of material modifications and memoranda,
employee handbooks and other written communications regarding the
Employee Plans.
(c)......Except as disclosed in Part 3.16(c), full payment has
been made, or the liability for such payment has been accrued as a
liability, of all amounts that are required under the terms of each
Employee Plan to be paid as contributions with respect to all periods
prior to and including the last day of the most recent fiscal year of
such Employee Plan ended on or before the date of this Agreement and
all periods thereafter prior to the Closing Date. Notwithstanding
anything in this Section 3.16(c) to the contrary, Seller has made, or
has accrued as a liability, the following contributions: (i) to
Seller's 401(k) plan: (A) any portion of any matching contribution
under the 401(k) plan (calculated as [***]% of participant elective
contributions not in excess of [***]% of eligible plan compensation)
that is attributable to elective contributions made to the 401(k) plan
by participants with respect to all periods prior to and including the
last day of the 2003 401(k) plan year and all periods of the 2004
401(k) plan year that end on or before the Closing Date; (B) a
"Company Additional Contribution" (as such term is described in the
401(k) plan's summary plan description dated July 8, 2003) that is
equal to (I) [***]% of aggregate participant eligible plan
compensation for the 2003 401(k) plan year, plus (II) [***]% of
estimated aggregate participant eligible plan compensation for the
portion of the 2004 401(k) plan year that ends on the Closing Date,
and (ii) to the DC Plan, any "Employer contributions" (as such term is
defined in Section 1(j) of the DC Plan) under the DC Plan with respect
to all periods prior to and including the last day of the 2003 DC Plan
year and the portion of the 2004 DC Plan year that ends on the Closing
Date, giving full effect to (A) all participant elective contributions
to the DC Plan during such periods as "Salary Reduction Contributions"
(as such term is defined in Section 1(r) of the DC Plan), and (B) all
401(k) plan contributions required to be made by Seller under the
foregoing provisions of this Section 3.16(c) as "Qualified Plan
Employer Contributions" (as such term is defined in Section 1(q) of
the DC Plan). Seller has paid in full all required insurance premiums,
subject only to normal retrospective adjustments in the ordinary
course, with regard to the Employee Plans for all policy years or
other applicable policy periods ending on or before the Closing Date.
(d)......Seller has, at all times, complied with the applicable
continuation requirements of Section 4980B of the Code and Sections
601 through 608, inclusive, of ERISA, which provisions are hereinafter
referred to collectively as "COBRA." Part 3.16(d) lists the name of
each individual who has experienced a "Qualifying Event" (as defined
in COBRA) with respect to an Employee Plan who is eligible for
"Continuation Coverage" (as defined in COBRA) and whose maximum period
for Continuation Coverage required by COBRA has not expired. Included
in such list are the current address for each such individual, the
date and type
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
34
of each Qualifying Event, whether the individual has already elected
Continuation Coverage and, for any individual who has not yet elected
Continuation Coverage, the date on which such individual was notified
of his or her rights to elect Continuation Coverage. Part 3.16(d) also
lists the name of each individual who, as of the date hereof, is on a
leave of absence (whether or not pursuant to the Family and Medical
Leave Act of 1993, as amended ("FMLA")) and is receiving or entitled
to receive health coverage under an Employee Plan, whether pursuant to
FMLA, COBRA or otherwise. Part 3.16(d) also lists the name of each
individual who, as of the date hereof, is on a leave of absence, and
whose reemployment is governed by the Uniformed Services Employment
and Reemployment Rights Act of 1994.
(e)......The form of all Employee Plans is in compliance with the
applicable terms of ERISA, the Code, and any other applicable laws,
including the Americans with Disabilities Act of 1990, FMLA and the
Health Insurance Portability and Accountability Act of 1996, and such
plans have been operated in compliance with such laws and the written
Employee Plan documents. Neither Seller nor any fiduciary of an
Employee Plan has violated the requirements of Section 404 of ERISA.
Except as described in Part 3.16(e), all required reports and
descriptions of the Employee Plans (including Internal Revenue Service
Form 5500 Annual Reports, Summary Annual Reports and Summary Plan
Descriptions and Summaries of Material Modifications) have been (when
required) timely filed with the IRS, the U.S. Department of Labor or
other Governmental Body and distributed as required, and all notices
required by ERISA or the Code or any other Legal Requirement with
respect to the Employee Plans have been appropriately given.
(f)......Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code has received a favorable opinion
letter from the IRS, and Seller has no Knowledge of any circumstances
that will or could result in revocation of any such favorable opinion
letter. Each trust created under any Employee Plan intended to be
qualified under Section 401(a) of the Code has been determined to be
exempt from taxation under Section 501(a) of the Code, and Seller is
not aware of any circumstances that will or could result in a
revocation of such exemption. No Employee Welfare Benefit Plan
utilizes a funding vehicle described in Section 501(c)(9) of the Code.
With respect to each Employee Plan, no event has occurred or condition
exists that will or could give rise to a loss of any intended tax
consequence or to any Tax under Section 511 of the Code.
(g)......There is no pending or threatened Proceeding relating to
any Employee Plan, and no facts or circumstances exist that might give
rise to the basis for any such Proceeding. No fiduciary of an Employee
Plan has engaged in a transaction with respect to any Employee Plan
that, assuming the taxable period of such transaction expired as of
the date hereof, could subject Seller or Buyer to a Tax or penalty
imposed by either Section 4975 of the Code or Section 502(l) of ERISA
or a violation of Section 406 of ERISA. The Contemplated Transactions
will not result in the potential assessment of a Tax or penalty under
Section 4975 of the Code or Section 502(l) of ERISA nor result in a
violation of Section 406 of ERISA.
(h)......Seller has maintained workers' compensation coverage as
required by applicable state law through purchase of insurance and not
by self-insurance or otherwise except as disclosed to Buyer on Part
3.16(h).
35
(i)......Except as disclosed to Buyer on Part 3.16(i), as
required by Legal Requirements and as provided in Section 10.1(d), the
consummation of the Contemplated Transactions will not accelerate the
time of vesting or the time of payment, or increase the amount, of
compensation or employee benefits due to any director, employee,
officer, former employee or former officer of Seller. There are no
contracts or arrangements providing for payments that could subject
any person to liability for tax under Section 4999 of the Code.
(j)......Except for the continuation coverage requirements of
COBRA, Seller has no obligations or potential liability for benefits
to employees, former employees or their respective dependents
following termination of employment or retirement under any of the
Employee Plans that are Employee Welfare Benefit Plans.
(k)......Except as provided in Section 10.1(d), none of the
Contemplated Transactions will result in an amendment, modification or
termination of any of the Employee Plans. No written or oral
representations have been made to any employee or former employee of
Seller promising or guaranteeing any employer payment or funding for
the continuation of medical, dental, life or disability coverage for
any period of time beyond the end of the current plan year (except to
the extent of coverage required under COBRA).
3.17.....Compliance With Legal Requirements; Governmental
Authorizations
(a)......Except as set forth in Part 3.17(a) and except for Taxes
(which are exclusively represented in Section 3.14 hereof), Employee
Benefits (which are exclusively represented in Section 3.16 hereof)
and Environmental Matters (which are exclusively represented in
Section 3.22 hereof):
(i).....Seller is, and at all times since January 1, 2003,
has been, in full compliance with each Legal Requirement that is
or was applicable to it or to the conduct or operation of its
business or the ownership or use of any of its assets;
(ii).....No event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or
result in a violation by Seller of, or a failure on the part of
Seller to comply with, any Legal Requirement or (B) may give rise
to any obligation on the part of Seller to undertake, or to bear
all or any portion of the cost of, any Remedial Action of any
nature; and
(iii)....Seller has not received, at any time since January
1, 2003, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding
(A) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or (B) any actual,
alleged, possible or potential obligation on the part of Seller
to undertake, or to bear all or any portion of the cost of, any
Remedial Action of any nature.
(b)......Part 3.17(b) contains a complete and accurate list of
each Governmental Authorization that is required for the operation of
a Pest Business by Seller, other than a Governmental Authorization
which is applicable to businesses generally, such as a general
36
business license requirement. Each such Governmental Authorization is
valid and in full force and effect. Except as set forth in Part
3.17(b):
(i)......Seller is, and at all times since January 1, 2003,
has been, in full compliance with all of the terms and
requirements of each Governmental Authorization identified or
required to be identified in Part 3.17(b); ------------
(ii).....No event has occurred or circumstance exists that
may (with or without notice or lapse of time) (A) constitute or
result directly or indirectly in a violation of or a failure to
comply with any term or requirement of any Governmental
Authorization listed or required to be listed in Part 3.17(b) or
(B) result directly or indirectly in the revocation, withdrawal,
suspension, cancellation or termination of, or any modification
to, any Governmental Authorization listed or required to be
listed in Part 3.17(b);
(iii)....Seller has not received, at any time since January
1, 2003, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding
(A) any actual, alleged, possible or potential violation of or
failure to comply with any term or requirement of any
Governmental Authorization or (B) any actual, proposed, possible
or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization;
(iv).....All applications required to have been filed for
the renewal of the Governmental Authorizations listed or required
to be listed in Part 3.17(b) have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other
filings required to have been made with respect to such
Governmental Authorizations have been duly made on a timely basis
with the appropriate Governmental Bodies; and
(v)......The Governmental Authorizations listed in Part
3.17(b) collectively constitute all of the Governmental
Authorizations (other than Governmental Authorizations that are
applicable to businesses generally, such as general business
license requirements) necessary to permit Seller to lawfully
conduct and operate a Pest Business in the manner in which it
currently conducts and operates its Pest Business.
3.18.....Legal Proceedings; Orders
(a)......Except as set forth in Part 3.18(a), there is no pending
or, to Seller's Knowledge, threatened Proceeding:
(i)......by or against Seller or that otherwise relates to
or may affect the Pest Business or any of the Assets; or
(ii).....that challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of Seller, no event has occurred or
circumstance exists that is reasonably likely to give rise to or
serve as a basis for the commencement of any such Proceeding.
Seller has delivered to Buyer copies of all pleadings,
correspondence and other
37
documents relating to each Proceeding listed in Part 3.18(a).
There are no Proceedings listed or required to be listed in Part
3.18(a) that could have a Material Adverse Effect on the
business, operations, assets, condition or prospects of Seller or
upon the Assets.
(b)......Except as set forth in Part 3.18(b):
(i)......there is no Order to which Seller, its business or
any of the Assets is subject; and
(ii).....to the Knowledge of Seller, no officer, director,
agent or employee of Seller is subject to any Order that
prohibits such officer, director, agent or employee from engaging
in or continuing any conduct, activity or practice relating to
the business of Seller.
(c) Except as set forth in Part 3.18(c):
(i)......Seller is, and, at all times since January 1, 2003,
has been in compliance with all of the terms and requirements of
each Order to which it or any of the Assets is or has been
subject;
(ii).....no event has occurred or circumstance exists that
is reasonably likely to constitute or result in (with or without
notice or lapse of time) a violation of or failure to comply with
any term or requirement of any Order to which Seller or any of
the Assets is subject; and
(iii)....Seller has not received, at any time since January
1, 2003, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding
any actual, alleged, possible or potential violation of, or
failure to comply with, any term or requirement of any Order to
which Seller or any of the Assets is or has been subject.
3.19.....Absence Of Certain Changes And Events
Except as set forth in Part 3.19, since June 30, 2003, Seller has
conducted its business only in the Ordinary Course of Business and there
has not been any:
(a)......change in Seller's authorized or issued capital stock,
grant of any stock option or right to purchase shares of capital stock
of Seller or issuance of any security convertible into such capital
stock;
(b)......amendment to the Governing Documents of Seller;
(c)......payment (except in the Ordinary Course of Business) or
increase by Seller of any bonuses, salaries or other compensation to
any shareholder, director, officer or employee or entry into any
employment, severance or similar Contract with any director, officer
or employee, except routine annual increases in employees' salaries
consistent with Seller's Ordinary Course of Business;
38
(d)......adoption of, amendment to or increase in the payments to
or benefits under, any Employee Plan;
(e)......damage to or destruction or loss of any Asset, whether
or not covered by insurance;
(f)......entry into, termination of or receipt of notice of
termination of (i) any license, distributorship, dealer, sales
representative, joint venture, credit or similar Contract to which
Seller is a party, or (ii) any Contract or transaction involving a
total remaining commitment by Seller of at least [***] dollars
($[***]);
(g)......sale (other than sales of Inventories in the Ordinary
Course of Business), lease or other disposition of any Asset or
property of Seller (including the Intellectual Property Assets) or the
creation of any Encumbrance on any Asset;
(h)......cancellation or waiver of any claims or rights with a
value to Seller in excess of [***] dollars ($[***]);
(i)......indication by any customer whose contract requires
aggregate payments greater than [***] dollars ($[***]) per
year, or a supplier, of an intention to discontinue or change the
terms of its relationship with Seller;
(j)......material change in the accounting methods used by
Seller; or
(k)......Contract by Seller to do any of the foregoing.
3.20.....Contracts; No Defaults
(a)......Part 3.20(a) contains an accurate and complete list, and
Seller has delivered to Buyer accurate and complete copies, of:
(i)......each Seller Contract that involves performance of
services or delivery of goods or materials by Seller of an amount
or value in excess of [***] dollars ($[***]);
(ii).....each Seller Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or
receipts of Seller in excess of [***] dollars ($[***]);
(iii)....each Seller Contract affecting the ownership of,
leasing of, title to, use of or any leasehold or other interest
in any real or personal property (except personal property leases
and installment and conditional sales agreements having a value
per item or aggregate payments of less than [***]dollars ($[***])
and with a term of less than [***]);
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
39
(iv).....each Seller Contract with any labor union or other
employee representative of a group of employees relating to
wages, hours and other conditions of employment;
(v)......each Seller Contract (however named) involving a
sharing of profits, losses, costs or liabilities by Seller with
any other Person;
(vi).....each Seller Contract containing covenants that in
any way purport to restrict Seller's business activity or limit
the freedom of Seller to engage in any line of business or to
compete with any Person;
(vii)....each Seller Contract providing for payments to or
by any Person based on sales, purchases or profits, other than
direct payments for goods;
(viii)...each power of attorney of Seller that is currently
effective and outstanding;
(ix).....each Seller Contract entered into other than in the
Ordinary Course of Business that contains or provides for an
express undertaking by Seller to be responsible for consequential
damages;
(x)......each Seller Contract for capital expenditures in
excess of [***] dollars ($[***]);
(xi).....each Seller Contract not denominated in U.S.
dollars;
(xii)....each written warranty, guaranty and/or other
similar undertaking with respect to contractual performance
extended by Seller other than in the Ordinary Course of Business;
and
(xiii)...each amendment, supplement and modification
(whether oral or written) in respect of any of the foregoing.
(b)......Except as set forth in Part 3.20(b), no Shareholder has
or may acquire any rights under, and no Shareholder has or may become
subject to any obligation or liability under, any Contract that
relates to the business of Seller or any of the Assets.
(c)......Except as set forth in Part 3.20(c): ------------
(i)........each Contract identified or required to be
identified in Part 3.20(a) and ------------- which is to be
assigned to or assumed by Buyer under this Agreement is in full
force and effect and is valid and enforceable in accordance with
its terms;
(ii).......each Contract identified or required to be
identified in Part 3.20(a) and which is being assigned to or
assumed by Buyer is assignable by Seller to Buyer without the
consent of any other Person; and
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
40
(iii)......to the Knowledge of Seller, no Contract
identified or required to be identified in Part 3.20(a) and which
is to be assigned to or assumed by Buyer under this Agreement
will upon completion or performance thereof have a Material
Adverse Effect on the business, assets or condition of Seller or
the business to be conducted by Buyer with the Assets.
(d) Except as set forth in Part 3.20(d):
(i)......Seller is, and at all times since January 1, 2003,
has been, in compliance with all applicable terms and
requirements of each Seller Contract which is being assumed by
Buyer;
(ii).....to the Knowledge of Seller and Shareholders, each
other Person that has or had any obligation or liability under
any Seller Contract which is being assigned to Buyer is, and at
all times since January 1, 2003, has been, in full compliance
with all applicable terms and requirements of such Contract;
(iii)....no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene,
conflict with or result in a Breach of, or give Seller or other
Person the right to declare a default or exercise any remedy
under, or to accelerate the maturity or performance of, or
payment under, or to cancel, terminate or modify, any Seller
Contract that is being assigned to or assumed by Buyer;
(iv).....no event has occurred or circumstance exists under
or by virtue of any Contract that (with or without notice or
lapse of time) would cause the creation of any Encumbrance
affecting any of the Assets; and
(v)......Seller has not given to or received from any other
Person, at any time since January 1, 2003, any written notice or
other written communication regarding any actual, alleged,
possible or potential violation or Breach of, or default under,
any Contract which is being assigned to or assumed by Buyer.
(e)......There are no renegotiations of, attempts to renegotiate
or outstanding rights to renegotiate any material amounts paid or
payable to Seller under current or completed Contracts with any Person
having the contractual or statutory right to demand or require such
renegotiation and no such Person has made written demand for such
renegotiation.
(f)......Each Contract relating to the sale, design, manufacture
or provision of products or services by Seller has been entered into
in the Ordinary Course of Business of Seller and has been entered into
without the commission of any act alone or in concert with any other
Person, or any consideration having been paid or promised, that is or
would be in violation of any Legal Requirement.
3.21.....Insurance
(a) Seller has delivered to Buyer:
41
(i)......accurate and complete copies of all policies of
insurance (and correspondence relating to coverage thereunder) to
which Seller is a party or under which Seller is or has been
covered at any time since January 1, 2003, a list of which is
included in Part 3.21(a);
(ii).....accurate and complete copies of all pending
applications by Seller for policies of insurance; and
(iii)....any statement by the auditor of Seller's financial
statements or any consultant or risk management advisor with
regard to the adequacy of Seller's coverage or of the reserves
for claims.
(b) Part 3.21(b) describes:
(i)......any self-insurance arrangement by or affecting
Seller, including any reserves established thereunder;
(ii).....any Contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk to which
Seller is a party or which involves the business of Seller; and
(iii)....all obligations of Seller to provide insurance
coverage to Third Parties (for example, under Leases or service
agreements).
(c)......Part 3.21(c) sets forth, by year, for the current policy
year and each of 2001, 2002 and 2003:
(i)......a summary of the loss experience under each policy
of insurance;
(ii).....a statement describing each claim under a policy of
insurance for an amount in excess of [***] dollars
($[***]), which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii)....a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate
cost of such claims.
(d) Except as set forth in Part 3.21(d):
(i)......all policies of insurance to which Seller is a
party or that provide coverage to Seller:
(A) are valid, outstanding and enforceable;
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
42
(B) are issued by an insurer that is, to the Knowledge
of Seller and Shareholders, financially sound and reputable;
(C) taken together, provide adequate insurance coverage
for the Assets and the operations of Seller for all risks
normally insured against by a Person carrying on the same
business or businesses as Seller in the same location; and
(D) are sufficient for compliance with all Legal
Requirements and Seller Contracts;
(ii).....Seller has not received (A) any refusal of coverage
or any notice that a defense will be afforded with reservation of
rights or (B) any notice of cancellation or any other indication
that any policy of insurance is no longer in full force or effect
or that the issuer of any policy of insurance is not willing or
able to perform its obligations thereunder;
(iii)....Seller has paid all premiums due, and has otherwise
performed all of its obligations, under each policy of insurance
to which it is a party or that provides coverage to Seller; and
(iv).....Seller has given notice to the insurer of all
claims that may be insured thereby.
3.22.....Environmental Matters
Except as set forth on Part 3.22:
(a) Neither Seller, nor to the Knowledge of Seller, any prior
owner, user or occupant of any of the Facilities has conducted or
authorized the storage, treatment, or disposal of any Hazardous
Materials on any of the Facilities, which, if discovered or reported,
is reasonably likely to give rise to an Environmental Liability on the
part of Seller or Buyer;
(b) There has been no Release, during Seller's ownership,
occupancy, or period of use of any of the Facilities, nor, to the
Knowledge of Seller, has any prior owner, user or occupant of any of
the Facilities Released any Hazardous Materials on, at, or under any
of the Facilities. To the Knowledge of Seller, there are no Hazardous
Materials migrating to or from any of the Facilities, and no Hazardous
Material currently exists on, at, in, under or about any of the
Facilities, which, if disclosed or discovered, is reasonably likely to
require remediation under applicable Environmental Law or give rise to
an Environmental Liability against Seller or Buyer;
(c) Seller has not received any written or actual notice of any
violation, complaint, suit, order or to the Knowledge of Seller, other
notice, under any Environmental Law with respect to the disposal or
release of Hazardous Materials from any of the Facilities onto any
other property, or that Seller has incurred any liability under any
Environmental Law, and Seller has no Knowledge that any such notice is
pending, threatened or otherwise anticipated from any Person,
including but not limited to a Governmental Body;
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(d) There is no pending litigation or administrative proceeding
to which Seller is a party or to the Knowledge of Seller, any
investigation under any applicable Environmental Law by any Person,
including but not limited to any Governmental Body, in which it is
alleged that there has been a Release or Threat of Release of any
Hazardous Material or any violation of Environmental Law with respect
to any of the Facilities, nor is Seller aware of any facts or
circumstances that would reasonably lead it to believe that any Person
or Governmental Body would allege any of the foregoing;
(e) There are no consent orders or memoranda of agreement or
similar written agreements between Seller and any Governmental
Authority relating in any way to the presence, spill, discharge,
release, threat of release, storage, treatment or disposal of any
Hazardous Material;
(f) There are no Environmental Laws applicable to any of the
Facilities that would require Seller to obtain the approval of or
provide notice to any Governmental Body (which has not been obtained
or provided) as a condition to the consummation of this transaction;
(g) Seller has owned, leased and operated the Pest Business and
all of the Facilities, including Facilities formerly owned, leased or
operated, in compliance with all applicable Environmental Laws;
(h) Seller has not incurred any Environmental Liabilities,
contingent or non-contingent, under the applicable Environmental Laws,
including but not limited to those pertaining to Hazardous Materials.
that remains unresolved or has not been complied with so as to bring
Seller or the Facilities into compliance with applicable Environmental
Laws;
(i) Seller has delivered or made available to Buyer true, correct
and complete copies of all correspondence, reports, inspections,
notices or tests with respect to the compliance of the Facilities and
the Pest Business with the Environmental Laws and/or the presence of
any Hazardous Materials on any of the Facilities, including such
documents that were (A) prepared for Seller; or (B) prepared for other
parties and are in the possession of Seller (collectively, the
"Environmental Reports");
(j) There are no leaking or non-compliant (with applicable
Environmental Laws) underground storage tanks owned or operated by
Seller on any of the Facilities, nor to Seller's Knowledge were there
any such leaking or non-compliant tank systems (with applicable
Environmental Laws) owned or operated by Seller on any of the
Facilities;
(k) Neither Seller nor, to the Knowledge of Seller, any prior
owner, user or occupant of the Facilities, have filed or otherwise
provided notice to any Governmental Body under any Environmental Law
of any past or present release or discharge of a Hazardous Material
into the environment;
(l) Seller has not received any written or actual notice, demand,
or information request regarding its alleged disposal of, or
arrangement for disposal of, any
44
Hazardous Materials on any real property not owned by Seller that is
on the USEPA's National Priorities List or the CERCLIS list or any
similar state list;
(m) To the Knowledge of Seller, during Seller's ownership,
leasing and/or occupancy of the Facilities, no construction debris or
other debris was buried on any of the Facilities, which, if disclosed
or discovered, is reasonably likely to require remediation under
applicable Environmental Laws;
(n) No lien, nor any deed notice or use restriction that
precludes any of the Facilities from being used for their current
commercial purposes, has been issued, filed, or recorded pursuant to
any Environmental Law with respect to any of the Facilities; and
(o) None of the New Jersey Facilities is an "industrial
establishment" as defined in ISRA or subject to the ISRA.
(p) Part 3.22(p) contains a complete and accurate list of each
material Permit under Environmental Laws ("Environmental Permits")
that is held by Seller or that otherwise relates to the Pest Business.
Each Environmental Permit listed or required to be listed in Part
3.22(p) is valid and in full force and effect.
(q) Except as set forth in Part 3.22(q):
(i)......Seller is, and at all times has been, in full
compliance with all of the terms and requirements of each
Environmental Permit identified or required to be identified in
Part 3.22(p): ------------
(ii).....To Seller's Knowledge, no event has occurred or
circumstance exists that may (with or without notice or lapse of
time) (x) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement
of any Environmental Permit listed or required to be listed in
Part 3.22(p); or (y) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination
of, or any modification to, any Environmental Permit listed or
required to be listed in Part 3.22(p);
(iii)....Seller has not received any written or actual
notice from any Governmental Body or any other Person regarding
(x) any actual, alleged or potential violation of or failure to
comply with any Environmental Permit, or (y) any actual, proposed
or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any Environmental Permit; and
(iv).....all applications required to have been filed for
the renewal of the Environmental Permits listed or required to be
listed in Part 3.22(p) have been duly filed on a timely basis
with the appropriate Governmental Bodies, and all other filings
required to have been made with respect to such Environmental
Permits have been duly made on a timely basis with the
appropriate Governmental Bodies.
(v)......the Environmental Permits listed in Part 3.22(p)
collectively constitute all of the material Environmental Permits
necessary to permit Seller to lawfully
45
conduct and operate the Pest Business in the manner it currently
conducts and operates such business and to permit it to own and
use its assets in the manner in which it currently owns and uses
such assets.
3.23.....Employees
(a)......Part 3.23(a) contains a complete and accurate list of
the following information for each employee, officer and director of
Seller, including each employee on leave of absence or layoff status:
branch location; name; job title; date of hiring or engagement; date
of commencement of employment or engagement; current annual salary;
and service credited for purposes of vesting and eligibility to
participate under any Employee Plan, or any other employee or director
benefit plan.
(b)......Part 3.23(b) contains a complete and accurate list of
the following information for each retired employee, officer or
director of Seller, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name; pension benefits;
pension option election; retiree medical insurance coverage; retiree
life insurance coverage; and other benefits.
(c)......Part 3.23(c) states the number of employees terminated
by Seller since January 1, 2002, and contains a complete and accurate
list of the following information for each employee of Seller who has
been terminated or laid off, or whose hours of work have been reduced
by more than fifty percent (50%) by Seller, in the six (6) months
prior to the date of this Agreement: (i) the date of such termination,
layoff or reduction in hours; and (ii) the location to which the
employee was assigned.
(d)......Seller has not violated the Worker Adjustment and
Retraining Notification Act (the "WARN Act") or any similar state or
local Legal Requirement. During the ninety (90) day period prior to
the date of this Agreement, Seller has terminated twenty six (26)
employees.
(e)......To the Knowledge of Seller, no officer, director, agent,
employee, consultant, or contractor of Seller is bound by any Contract
that purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor (i) to engage in or continue or
perform any conduct, activity, duties or practice relating to the
business of Seller, except as may be in favor of Seller, or (ii) to
assign to Seller or to any other Person any rights to any invention,
improvement, or discovery. No former or current employee of Seller is
a party to, or is otherwise bound by, any Contract that in any way
adversely affected, affects, or will affect the ability of Seller or
Buyer to conduct the business as heretofore carried on by Seller.
(f)......Except as set forth in Part 3.23(f), since January 1,
2000, Seller has complied with all Occupational Safety and Health
Laws.
3.24.....Labor Disputes; Compliance
(a)......Seller has complied in all respects with all Legal
Requirements relating to employment practices, terms and conditions of
employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining and other
requirements under applicable law, the payment of social security and
similar Taxes and
46
occupational safety and health. Seller is not liable for the payment
of any Taxes, fines, penalties, or other amounts, however designated,
for failure to comply with any of the foregoing Legal Requirements.
(b)......Except as disclosed in Part 3.24(b), (i) Seller has not
been, and is not now, a party to any collective bargaining agreement
or other labor contract; (ii) since January 1, 2001, there has not
been, there is not presently pending or existing, and to Seller's
Knowledge there is not threatened, any strike, slowdown, picketing,
work stoppage or employee grievance process involving Seller; (iii) to
Seller's Knowledge no event has occurred or circumstance exists that
could provide the basis for any work stoppage or other labor dispute;
(iv) there is not pending or, to Seller's Knowledge, threatened
against or affecting Seller any Proceeding relating to the alleged
violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed with the
National Labor Relations Board or any comparable Governmental Body,
and there is no organizational activity or other labor dispute against
or affecting Seller or the Facilities; (v) no application or petition
for an election of or for certification of a collective bargaining
agent is pending; (vi) no grievance or arbitration Proceeding exists
that might have a Material Adverse Effect upon Seller or the conduct
of its business; (vii) there is no lockout of any employees by Seller,
and no such action is contemplated by Seller; and (viii) to Seller's
Knowledge there has been no charge of discrimination filed against or
threatened against Seller with the Equal Employment Opportunity
Commission or similar Governmental Body.
3.25.....Intellectual Property Assets
(a)......The term "Intellectual Property Assets" means all
intellectual property owned or licensed (as licensor or licensee) by
Seller in which Seller has a proprietary interest, including:
(i)......Seller's name, all assumed fictional business
names, trade names, registered and unregistered trademarks,
service marks and trademark applications (collectively, "Marks");
(ii).....all patents, patent applications and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii)....all registered and unregistered copyrights in both
published works and unpublished works (collectively,
"Copyrights");
(iv).....all rights in mask works;
(v)......all know-how, trade secrets, confidential or
proprietary information, customer lists, Software, technical
information, data, process technology, plans, drawings and blue
prints (collectively, "Trade Secrets"); and
(vi).....all rights in internet web sites and internet
domain names presently used by Seller (collectively "Net Names").
48
(b)......Part 3.25(b) contains a complete and accurate list and
summary description, including any royalties paid or received by
Seller, and Seller has delivered to Buyer accurate and complete
copies, of all Seller Contracts relating to the Intellectual Property
Assets, except for any license implied by the sale of a product and
perpetual, paid-up licenses for commonly available Software programs
with a value of less than one thousand five hundred dollars ($1,500)
under which Seller is the licensee. There are no outstanding and, to
Seller's Knowledge, no threatened disputes or disagreements with
respect to any such Contract.
(c) (i)......Except as set forth in Part 3.25(c), the
Intellectual Property Assets are all those necessary for the
operation of Seller's business as it is currently conducted.
Seller is the owner or licensee of all right, title and interest
in and to each of the Intellectual Property Assets, free and
clear of all Encumbrances, and has the right to use without
payment to a Third Party all of the Intellectual Property Assets,
other than in respect of licenses listed in Part 3.25(c).
(ii).....Except as set forth in Part 3.25(c), all former and
current employees of Seller have executed written Contracts with
Seller that assign to Seller all rights to any inventions,
improvements, discoveries or information relating to the business
of Seller.
(d) (i)......Part 3.25(d) contains a complete and accurate list
and summary description of all Patents.
(ii).....All of the issued Patents are currently in
compliance with formal legal requirements (including payment of
filing, examination and maintenance fees and proofs of working or
use), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety
(90) days after the Closing Date.
(iii)....No Patent has been or is now involved in any
interference, reissue, reexamination, or opposition Proceeding.
To Seller's Knowledge, there is no potentially interfering patent
or patent application of any Third Party.
(iv).....Except as set forth in Part 3.25 (d), (A) to the
Knowledge of Seller and Shareholders, no Patent is infringed or
has been challenged or threatened in any way and (B) none of the
products manufactured or sold, nor any process or know-how used,
by Seller infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
(v)......All products made, used or sold under the Patents
have been marked with the proper patent notice.
(e) (i)......Part 3.25(e) contains a complete and accurate list
and summary description of all Marks.
(ii).....All Marks have been registered with the United
States Patent and Trademark Office, are currently in compliance
with all formal Legal Requirements (including the timely
post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and
enforceable and are not subject to any maintenance fees or taxes
or actions falling due within ninety (90) days after the Closing
Date.
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(iii)....No ▇▇▇▇ has been or is now involved in any
opposition, invalidation or cancellation Proceeding and, to
Seller's Knowledge, no such action is threatened with respect to
any of the Marks.
(iv).....To Seller's Knowledge, there is no potentially
interfering trademark or trademark application of any other
Person.
(v)......No ▇▇▇▇ is infringed or, to Seller's Knowledge, has
been challenged or threatened in any way. None of the Marks used
by Seller infringes or is alleged to infringe any trade name,
trademark or service ▇▇▇▇ of any other Person.
(vi).....All products and materials containing a ▇▇▇▇ ▇▇▇▇
the proper federal registration notice where permitted by law.
(f) (i)......Part 3.25(f) contains a complete and accurate list
and summary description of all Copyrights.
(ii).....All of the registered Copyrights are currently in
compliance with formal Legal Requirements, are valid and
enforceable, and are not subject to any maintenance fees or taxes
or actions falling due within ninety (90) days after the date of
Closing.
(iii)....To the Knowledge of Seller and Shareholders, no
Copyright is infringed or has been challenged or threatened in
any way. None of the subject matter of any of the Copyrights
infringes or is alleged to infringe any copyright of any Third
Party or is a derivative work based upon the work of any other
Person.
(iv).....All works encompassed by the Copyrights have been
marked with the proper copyright notice.
(g) (i) Seller has taken all reasonable precautions to protect
the secrecy, confidentiality and value of all Trade Secrets.
(ii).....Seller has good title to and an absolute right to
use the Trade Secrets. The Trade Secrets are not part of the
public knowledge or literature and, to Seller's Knowledge, have
not been used, divulged or appropriated either for the benefit of
any Person (other than Seller) or to the detriment of Seller. No
Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way or infringes any intellectual
property right of any other Person.
(h) (i)......Part 3.25(h) contains a complete and accurate list
and summary description of all Net Names.
(ii).....All Net Names have been registered in the name of
Seller and are in compliance with all formal Legal Requirements.
49
(iii)....No Net Name has been or is now involved in any
dispute, opposition, invalidation or cancellation Proceeding and,
to Seller's Knowledge, no such action is threatened with respect
to any Net Name.
(iv).....To Seller's Knowledge, there is no domain name
application pending of any other Person which would or would
potentially interfere with or infringe any Net Name.
(v)......To the Knowledge of Seller and Shareholders, no Net
Name is infringed or has been challenged, interfered with or
threatened in any way. No Net Name infringes, interferes with or
is alleged to interfere with or infringe the trademark, copyright
or domain name of any other Person.
3.26.....Relationships With Related Persons
Except as disclosed in Part 3.26, neither Seller nor any Shareholder
nor any Related Person of any of them has, or since January 1, 2002 has
had, any interest in any property (whether real, personal or mixed and
whether tangible or intangible) used in or pertaining to Seller's business.
Neither Seller nor either Shareholder nor any Related Person of any of them
owns, or since January 1, 2002 has owned, of record or as a beneficial
owner, an equity interest or any other financial or profit interest in any
Person that has (a) had business dealings or a material financial interest
in any transaction with Seller other than business dealings or transactions
disclosed in Part 3.26, each of which has been conducted in the Ordinary
Course of Business with Seller at substantially prevailing market prices
and on substantially prevailing market terms or (b) engaged in competition
with Seller with respect to any line of the products or services of Seller
(a "Competing Business") in any market presently served by Seller, except
for ownership of less than one percent (1%) of the outstanding capital
stock of any Competing Business that is publicly traded on any recognized
exchange or in the over-the-counter market. Except as set forth in Part
3.26, neither Seller nor either Shareholder nor any Related Person of any
of them is a party to any Contract with, or has any claim or right against,
Seller.
3.27.....Advisers
Except as set forth on Part 3.27, neither Seller nor any of its
Representatives have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payments in connection with the sale of Seller's business or the
Assets or the Contemplated Transactions.
3.28.....Disclosure
(a)......No representation or warranty or other statement made by
Seller or any Shareholder in this Agreement, the Disclosure Letter,
any supplement to the Disclosure Letter, the certificates delivered
pursuant to Section 2.7(a) contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
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(b)......Seller does not have Knowledge of any fact that has
specific application to Seller (other than general economic or
industry conditions) and that may materially adversely affect the
assets, business, prospects, financial condition or results of
operations of Seller that has not been set forth in this Agreement or
the Disclosure Letter.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and Shareholders as follows:
4.1......Organization And Good Standing
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to conduct its business as it is now conducted.
4.2......Authority; No Conflict
(a)......This Agreement constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its
terms. Upon the execution and delivery by Buyer of the Assignment and
Assumption Agreement, the Assignment and Assumption of Leases, the
Noncompetition Agreements, the Escrow Agreement, the Employment Agreements,
and each other agreement to be executed or delivered by Buyer at Closing
(collectively, the "Buyer's Closing Documents"), each of the Buyer's
Closing Documents will constitute the legal, valid and binding obligation
of Buyer, enforceable against Buyer in accordance with its respective
terms. Buyer has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and the Buyer's Closing Documents and
to perform its obligations under this Agreement and the Buyer's Closing
Documents, and such action has been duly authorized by all necessary
corporate action.
(b)......Neither the execution and delivery of this Agreement by Buyer
nor the consummation or performance of any of the Contemplated Transactions
by Buyer will give any Person the right to prevent, delay or otherwise
interfere with any of the Contemplated Transactions pursuant to:
(i)......any provision of Buyer's Governing Documents;
(ii).....any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii)....any Legal Requirement or Order to which Buyer may be
subject; or
(iv).....any Contract to which Buyer is a party or by which Buyer
may be bound.
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Buyer is not and will not be required to obtain any Consent from
any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 .....Certain Proceedings
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been threatened.
4.4......Advisers
Neither Buyer nor any of its Representatives have incurred any obligation
or liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with the Contemplated
Transactions.
5. COVENANTS OF SELLER PRIOR TO CLOSING
5.1......Access And Investigation
Between the date of this Agreement and the Closing Date, and upon
reasonable advance notice received from Buyer, Buyer shall coordinate with the
Representatives of Seller (▇▇▇ ▇▇▇▇▇▇▇ for operational matters and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ for financial matters), and Seller shall (and Shareholders shall cause
Seller to) (a) afford Buyer and its Representatives and prospective lenders and
their Representatives (collectively, the "Buyer Group") full and free access,
during regular business hours, to Seller's personnel, properties (including
subsurface testing), Contracts, Governmental Authorizations, books and Records
and other documents and data, such rights of access to be exercised in a manner
that does not unreasonably interfere with the operations of Seller; (b) furnish
the Buyer Group with copies of all such Contracts, Governmental Authorizations,
books and Records and other existing documents and data as Buyer may reasonably
request; (c) furnish the Buyer Group with such additional financial, operating
and other relevant data and information as Buyer may reasonably request; (d)
cooperate with Buyer in its review of the internal and disclosure controls of
Seller as Buyer shall deem necessary for Buyer to satisfy its obligations under
Section 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and any rules and
regulations promulgated thereunder; and (e) otherwise cooperate and assist, to
the extent reasonably requested by Buyer, with Buyer's investigation of the
properties, assets and financial condition related to Seller. In addition, Buyer
shall have the right to have the Real Property and Tangible Personal Property
inspected by the Buyer Group, at Buyer's sole cost and expense, for purposes of
determining the physical condition and legal characteristics of the Real
Property and Tangible Personal Property. In the event subsurface or other
invasive testing is recommended by any of the Buyer Group, Buyer shall, upon
notice to Seller, be permitted to have the same performed prior to the Closing
Date, provided such testing does not unreasonably interfere with the operation
of the Business at that location. Buyer agrees to indemnify Seller from any
physical damage to the Facilities that directly results from the Buyer Group's
inspection and subsurface or invasive testing.
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5.2......Operation Of The Business Of Seller
Between the date of this Agreement and the Closing, Seller shall (and
Shareholders shall cause Seller to):
(a) conduct its business only in the Ordinary Course of Business;
(b)......except as otherwise directed by Buyer in writing, and without
making any commitment on Buyer's behalf, use its Best Efforts to preserve
intact its current business organization, keep available the services of
its officers, employees and agents and maintain its relations and good will
with suppliers, customers, landlords, creditors, employees, agents and
others having business relationships with it;
(c)......confer with Buyer prior to implementing operational decisions
of a material nature;
(d)......otherwise report periodically to Buyer concerning the status
of its business, operations and finances;
(e)......make no material changes in management personnel without
prior consultation with Buyer;
(f)......maintain the Assets in a state of repair and condition that
complies with Legal Requirements and is consistent with the requirements
and normal conduct of Seller's business;
(g)......keep in full force and effect, without amendment, all
material rights relating to Seller's business;
(h)......comply with all Legal Requirements and contractual
obligations applicable to the operations of Seller's business;
(i)......continue in full force and effect the insurance coverage
under the policies set forth in Part 3.21(a) or substantially equivalent
policies;
(j)......except as required to comply with ERISA or to maintain
qualification under Section 401(a) of the Code, not amend, modify or
terminate any Assumed Plan without the express written consent of Buyer,
and except as required under the provisions of any Assumed Plan, not make
any contributions to or with respect to any Assumed Plan without the
express written consent of Buyer, provided that Seller shall contribute
that amount of cash to each Assumed Plan necessary to fully fund all of the
benefit liabilities of such Assumed Plan on a plan-termination basis as of
the Closing Date;
(k)......cooperate with Buyer and assist Buyer in (i) identifying the
Governmental Authorizations required by Buyer to operate the business from
and after the Closing Date and (ii) either transferring existing
Governmental Authorizations of Seller to Buyer, where permissible, or
obtaining new Governmental Authorizations for Buyer;
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(l)......upon request from time to time, execute and deliver all
documents, make all truthful oaths, testify in any Proceedings and do all
other acts that may be reasonably necessary or desirable in the opinion of
Buyer to consummate the Contemplated Transactions, all without further
consideration;
(m)......maintain all books and Records of Seller relating to Seller's
business in the Ordinary Course of Business; and
(n)......prepare and file, in accordance with applicable laws, all Tax
Returns and amendments thereto required to be filed by Seller taking into
account any extensions of time granted by any taxing authorities.
5.3......Negative Covenant
Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, Seller shall not, and Shareholders shall not
permit Seller to, without the prior written Consent of Buyer, (a) take any
affirmative action, or fail to take any reasonable action within its control, as
a result of which any of the changes or events listed in Sections 3.15 or 3.19
would be likely to occur; (b) make any modification to any material Contract or
Governmental Authorization; (c) allow the levels of raw materials, supplies or
other materials included in the Inventories to vary materially from the levels
customarily maintained; or (d) enter into any compromise or settlement of any
litigation, proceeding or governmental investigation relating to the Assets, the
business of Seller or the Assumed Liabilities.
5.4......Required Approvals
As promptly as practicable after the date of this Agreement, Seller shall
make all filings required by Legal Requirements to be made by it in order to
consummate the Contemplated Transactions (including all filings under the HSR
Act). Seller and Shareholders also shall cooperate with Buyer and its
Representatives with respect to all filings that Buyer elects to make or,
pursuant to Legal Requirements, shall be required to make in connection with the
Contemplated Transactions. Seller and Shareholders also shall cooperate with
Buyer and its Representatives in obtaining all Material Consents (including
taking all actions requested by Buyer to cause early termination of any
applicable waiting period under the HSR Act.)
5.5......Notification
Between the date of this Agreement and the Closing, Seller and Shareholders
shall promptly notify Buyer in writing if any of them becomes aware of (a) any
fact or condition that causes or constitutes a Breach of any of Seller's
representations and warranties made as of the date of this Agreement or (b) the
occurrence after the date of this Agreement of any fact or condition that would
or be reasonably likely to (except as expressly contemplated by this Agreement)
cause or constitute a Breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
Seller's or either Shareholders' discovery of, such fact or condition. Should
any such fact or condition require any change to the Disclosure Letter, Seller
shall promptly deliver to Buyer a supplement to the
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Disclosure Letter specifying such change. Such delivery shall not affect any
rights of Buyer under Section 9.2 and Article 11, except as provided in Section
11.12(c). During the same period, Seller and Shareholders also shall promptly
notify Buyer of the occurrence of any Breach of any covenant of Seller or
Shareholders in this Article 5 or of the occurrence of any event that may make
the satisfaction of the conditions in Article 7 impossible or unlikely.
5.6......No Negotiation
Until such time as this Agreement shall be terminated pursuant to Section
9.1, neither Seller nor either Shareholder shall directly or indirectly solicit,
initiate, encourage or entertain any inquiries or proposals from, discuss or
negotiate with, provide any nonpublic information to any Person (other than
Buyer) relating to any business combination transaction involving Seller,
including the sale by Shareholders of Seller's stock, the merger or
consolidation of Seller or the sale of Seller's business or any of the Assets
(other than in the Ordinary Course of Business). Seller and Shareholders shall
notify Buyer of any such inquiry or proposal within twenty-four (24) hours of
receipt or awareness of the same by Seller or any Shareholder.
5.7......Best Efforts
Seller and Shareholders shall use their Best Efforts to cause the
conditions in Article 7 and Section 8.3 to be satisfied.
5.8......Interim Financial Statements
Until the Closing Date, Seller shall deliver to Buyer within twenty-one
(21) days after the end of each month a copy of the balance sheet and income
statement for such month prepared in a manner and containing information
consistent with Seller's current practices and certified by Seller's chief
financial officer as to compliance with Section 3.4.
5.9......Payment Of Liabilities
Between the date of this Agreement and the Closing, Seller shall (and the
Shareholders shall cause Seller to) pay or otherwise satisfy in the Ordinary
Course of Business all of its Liabilities and obligations. Buyer and Seller
hereby waive compliance with the bulk-transfer provisions of the Uniform
Commercial Code (or any similar law) ("Bulk Sales Laws") in connection with the
Contemplated Transactions.
5.10.....Lien Releases. As soon as is reasonably possible after the date
hereof, but on or before the Closing, Seller shall furnish to Buyer, at Seller's
expense, termination statements for any and all Uniform Commercial Code
financing statements or other filings reflecting Encumbrances upon the Assets,
other than Permitted Encumbrances.
5.11.....Additional Real Property Matters. As soon as reasonably
practicable after the date hereof, Buyer shall obtain commitments issued by a
title insurance company ("Title Insurer") to insure title to the Real Property
(the "Title Commitments").
(a)......If any of the following shall occur (each, a "Title
Objection"):
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(i)......any Title Commitment or other evidence of title or
search of the appropriate real estate records discloses that any party
other than Seller has title to the insured estate covered by the Title
Commitment;
(ii).....any title exception is disclosed in Schedule B to any
Title Commitment that (A) pertains to Encumbrances securing any loans
that do not constitute an Assumed Liability, and (B) any exceptions
that materially and adversely affect Buyer's use and enjoyment of the
Real Property described therein; or
(iii)....any survey of the Real Property obtained by Buyer
discloses any matter that materially and adversely affect Buyer's use
and enjoyment of the Real Property described therein;
then Buyer shall identify such matters to Seller in writing within ten
(10) Business Days after receiving all of the Title Commitment,
surveys and copies of any title exception documents listed in the
Title Commitment for the Real Property covered thereby and with such
notice shall provide Seller with copies of the Title Commitment,
survey and title exception documents.
(b)......Seller shall use its Best Efforts to cure each Title
Objection and take all steps required by the Title Insurer to eliminate
each Title Objection as an exception to the Title Commitment. Any Title
Objection that the Title Company is willing to insure over on terms
acceptable to Buyer is herein referred to as an "Insured Exception." The
Insured Exceptions, together with any Real Estate Encumbrances not objected
to by Buyer in the manner aforesaid shall be deemed to be "Permitted Real
Estate Encumbrances".
(c)......In the event that the Seller does not cure such Title
Objection prior to Closing in a manner such that the Title Insurer is able
to eliminate such Title Objection as an exception to the Title Commitment,
or if the Title Objection is not an Insured Exception, then, the Buyer may,
at its election, (i) accept the Real Property, which acceptance shall not,
however, waive Buyer's right to a claim of indemnification for a breach of
the representations and warranties set forth in Section 3.9(a) if the Buyer
suffers Damages as a result thereof, or (ii) require that such Real
Property be retained by the Seller, in which case Part 3.7 shall be deemed
amended to eliminate any references to such Real Property, and the Purchase
Price shall automatically be adjusted by an amount equal to the "Appraised
Real Property Value" for such Real Property as set forth on Part 3.7.
6. COVENANTS OF BUYER PRIOR TO CLOSING
6.1......Required Approvals
As promptly as practicable after the date of this Agreement, Buyer shall
make, or cause to be made, all filings required by Legal Requirements (including
all filings under the HSR Act) to be made by it to consummate the Contemplated
Transactions. Buyer also shall cooperate, and cause its Related Persons to
cooperate, with Seller (a) with respect to all filings Seller shall be required
by Legal Requirements to make and (b) in obtaining all Consents identified in
Part 7.3, provided, however, that Buyer shall not be required to dispose of or
make any change to its
56
business, expend any material funds or incur any other burden in order to comply
with this Section 6.1.
6.2......Best Efforts
Buyer shall use its Best Efforts to cause the conditions in Article 8 and
Section 7.3 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1......Accuracy Of Representations
Seller's and Shareholders' representations and warranties set forth in
Section 3.2 and 3.15 of this Agreement (considered collectively), and each of
these representations and warranties (considered individually), shall have been
accurate in all material respects as of the date of this Agreement, and shall be
accurate in all material respects as of the time of the Closing as if then made.
There shall not exist any inaccuracies in the other representations and
warranties of Seller and the Shareholders set forth in Article 3 of this
Agreement such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect; provided that, for
purposes of this sentence only, those representations and warranties that are
qualified by references to "material" or to the "Knowledge" of Seller or the
Shareholders shall be deemed not to include such qualifications.
7.2......Seller's Performance
All of the covenants and obligations that Seller and Shareholders are
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), shall have been duly performed and
complied with in all material respects.
7.3......Consents
Each of the Consents identified in Part 7.3 (the "Material Consents") shall
have been obtained and shall be in full force and effect.
7.4......Additional Documents
Seller and Shareholders shall have caused the documents and instruments
required by Section 2.7(a) and the following documents to be delivered (or
tendered subject only to Closing) to Buyer:
(a)......an opinion of ▇▇▇▇▇▇ & Bird LLP, dated the Closing Date, in
the form of Exhibit 7.4(a);
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(b)......The organizational documents and all amendments thereto of
Seller, duly certified as of a recent date by the Secretary of State of the
jurisdiction of Seller's incorporation;
(c)......If requested by Buyer, any Consents or other instruments that
may be required to permit Buyer's qualification in each jurisdiction in
which Seller is licensed or qualified to do business as a foreign
corporation under the name "Western Exterminating Company", Western Pest
Control", "Western Termite and Pest Control", or any derivative thereof;
(d)......A statement from the holder of each note and mortgage listed
on Part 2.4(a)(viii), if any, dated the Closing Date, setting forth the
principal amount then outstanding on the indebtedness represented by such
note or secured by such mortgage, the interest rate thereon, a statement to
the effect that Seller, as obligor under such note or mortgage, is not in
default under any of the provisions thereof, and a payoff amount, to
include per diem interest charges, as of the Closing Date;
(e)......Releases of all Encumbrances on the Assets, other than
Permitted Encumbrances;
(f) Evidence of compliance with Section 10.2(b) and all certificates,
clearances, correspondence and the like relating to the Seller's notices
and request pursuant to such Section;
(g)......Certification described in Section 10.2(c); and
(h)......Such other documents as Buyer may reasonably request for the
purpose of:
(i)......evidencing the accuracy of any of Seller's
representations and warranties, in each case as modified by any
supplement to the Disclosure Letter delivered to Buyer in compliance
with Section 5.5;
(ii)....evidencing the performance by Seller or any Shareholder
of, or the compliance by Seller or any Shareholder with, any covenant
or obligation required to be performed or complied with by Seller or
such Shareholder;
(iii)....evidencing the satisfaction of any condition referred to
in this Article 7; or
(iv).....otherwise facilitating the consummation or performance
of any of the Contemplated Transactions.
7.5......No Proceedings
Since the date of this Agreement, there shall not have been commenced or
threatened against Buyer, or against any Related Person of Buyer, any Proceeding
(a) involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated
58
Transactions or (b) that may have the effect of preventing, delaying, making
illegal, imposing limitations or conditions on or otherwise interfering with any
of the Contemplated Transactions.
7.6......No Conflict
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement or Order that
has been published, introduced or otherwise proposed by or before any
Governmental Body, excluding Bulk Sales Laws.
7.7......Title Insurance
Buyer shall have received unconditional and binding Title Commitments,
dated the Closing Date, in an aggregate amount equal to the amount of the
Purchase Price allocated to the Real Property, deleting all requirements listed
in ALTA Schedule B-1, amending the effective date to the date and time of
recordation of the deed transferring title to the Real Property to Buyer with no
exception for the gap between closing and recordation, deleting or insuring over
Title Objections, and otherwise in form reasonably satisfactory to Buyer
insuring Buyer's interest in each parcel of Real Property or interest therein.
Buyer shall be entitled to request that its Title Insurer provide such
endorsements (or amendments) to its owner's title insurance policies as Buyer
may reasonably require, provided that (a) such endorsements (or amendments)
shall impose no additional liability on Seller, and (b) Buyer's obligations
under this Agreement shall not be conditioned upon Buyer's ability to obtain
such endorsements.
7.8......Governmental Authorizations
Buyer shall have received such Governmental Authorizations as are necessary
or desirable to allow Buyer to operate the Assets from and after the Closing.
7.9......Employees
(a)......Buyer shall have entered into employment agreements with
those key employees of Seller identified in Part 7.9.
(b)......Those key employees of Seller identified on Part 7.9, or
substitutes therefore who shall be acceptable to Buyer, in its sole
discretion, shall have accepted employment with Buyer with such employment
to commence on and as of the Closing Date.
(c)......Substantially all other employees of Seller shall be
available for hiring by Buyer, in its sole discretion, on and as of the
Closing Date.
7.10.....Ancillary Agreements
Seller shall have used its Best Efforts to cause the relevant Persons to
enter into ancillary agreements in form and substance as set forth in Exhibit
7.10 hereto.
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7.11.....Revenue Validation
Buyer shall have validated, to its reasonable satisfaction, that the
Seller's revenues from its Pest Business (excluding revenues attributable to
revenues derived from the performance of Pest Services pursuant to a contract or
subcontract with Copesan) for the [***] period ending [***]
shall be no [***] than $[***].
8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller in whole or in part):
8.1......Accuracy Of Representations
Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), set forth in Section 4.2 shall have been accurate in all material
respects as of the date of this Agreement and shall be accurate in all material
respects as of the time of the Closing as if then made. There shall not exist
any inaccuracies in the other representations and warranties of Buyer set forth
in Article 4 of this Agreement such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect;
provided that, for purposes of this sentence only, those representations and
warranties that are qualified by references to "material" or to the "Knowledge"
of Buyer shall be deemed not to include such qualifications.
8.2......Buyer's Performance
All of the covenants and obligations that Buyer is required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
8.3......Consents
Each of the Consents identified in Exhibit 8.3 shall have been obtained and
shall be in full force and effect.
8.4......Additional Documents
Buyer shall have caused the documents and instruments required by Section
2.7(b) and the following documents to be delivered (or tendered subject only to
Closing) to Seller and Shareholders:
(a)......an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, dated the Closing
Date, in the form of Exhibit 8.4(a); and
(b)......such other documents as Seller may reasonably request for the
purpose of
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
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(i)......evidencing the accuracy of any representation or
warranty of Buyer,
(ii).....evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer or
(iii)....evidencing the satisfaction of any condition referred to
in this Article 8.
8.5......No Injunction
There shall not be in effect any Legal Requirement or any injunction or
other Order that (a) prohibits the consummation of the Contemplated Transactions
and (b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
9. TERMINATION
9.1......Termination Events
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
(a)......by Buyer if a Breach of any provision of this Agreement has
been committed by Seller or Shareholders and caused a Material Adverse
Effect, and such Breach has not been waived by Buyer;
(b)......by Seller if a Breach of any provision of this Agreement has
been committed by Buyer and caused a Material Adverse Effect, and such
Breach has not been waived by Seller;
(c)......by Buyer if any condition in Article 7 has not been satisfied
as of May 31, 2004 or such later date specified for Closing in accordance
with the first sentence of Section 2.6 or if satisfaction of such a
condition by such date is or becomes impossible (other than through the
failure of Buyer to comply with its obligations under this Agreement), and
Buyer has not waived such condition on or before such date;
(d)......by Seller if any condition in Article 8 has not been
satisfied as of May 31, 2004 or such later date specified for Closing in
accordance with the first sentence of Section 2.6 or if satisfaction of
such a condition by such date is or becomes impossible (other than through
the failure of Seller or the Shareholders to comply with their obligations
under this Agreement), and Seller has not waived such condition on or
before such date;
(e)......by mutual consent of Buyer and Seller;
(f)......by Buyer if the Closing has not occurred on or before May 31,
2004 or such later date as the parties may agree upon, unless the Buyer is
in material Breach of this Agreement; or
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(g)......by Seller if the Closing has not occurred on or before May
31, 2004 or such later date as the parties may agree upon, unless the
Seller or Shareholders are in material Breach of this Agreement.
9.2 .....Effect Of Termination
Each party's right of termination under Section 9.1 is in addition to any
other rights it may have under this Agreement or otherwise, and the exercise of
such right of termination will not be an election of remedies. If this Agreement
is terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Articles 12 and 13 (except for those in Section 13.5) will
survive, provided, however, that, if this Agreement is terminated because of a
Breach of this Agreement by the nonterminating party or because one or more of
the conditions to the terminating party's obligations under this Agreement is
not satisfied as a result of the party's failure to comply with its obligations
under this Agreement, the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
10. ADDITIONAL COVENANTS
10.1.....Employees And Employee Benefits
(a)......Information on Active Employees. For the purpose of this
Agreement, the term "Active Employees" shall mean all employees employed on
the Closing Date by Seller for its business who are:
(i)......bargaining unit employees currently covered by a
collective bargaining agreement or
(ii).....employed exclusively in Seller's Pest Business as
currently conducted, including employees on temporary leave of
absence, including family medical leave, military leave, temporary
disability or sick leave, but excluding employees on long-term
disability leave.
(b) Employment of Active Employees by Buyer.
(i)......Buyer will offer employment to all Active Employees,
except those Active Employees listed on Part 10.1(b)(i), who meet
Buyer's employment standards on terms acceptable to Buyer on the
Closing Date. Buyer will provide Seller with a list of Active
Employees to whom Buyer has made an offer of employment that has been
accepted to be effective on the Closing Date (the "Hired Active
Employees"). Subject to Legal Requirements, Buyer will have reasonable
access to the Facilities and personnel Records (including performance
appraisals, disciplinary actions, grievances and medical Records) of
Seller for the purpose of preparing for and conducting employment
interviews with all Active Employees and will conduct the interviews
as expeditiously as possible prior to the Closing Date. Access will be
provided by Seller upon reasonable prior notice during normal business
hours. Effective immediately before the Closing, Seller will terminate
the employment of all of its Hired Active Employees.
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(ii).....Neither Seller nor any Shareholder nor their Related
Persons shall solicit the continued employment of any Active Employee
(unless and until Buyer has informed Seller in writing that the
particular Active Employee will not receive any employment offer from
Buyer) or the employment of any Hired Active Employee after the
Closing. Buyer shall inform Seller promptly of the identities of those
Active Employees to whom it will not make employment offers and
provide the reasons under Buyer's employment standards. Seller shall
be solely responsible for complying with all applicable Legal
Requirements as to all Active Employees who are not hired Active
Employees. Buyer shall assist Seller in such compliance efforts.
(iii)....It is understood and agreed that (A) Buyer's covenants
as set forth in this section shall not constitute any commitment,
Contract or understanding (expressed or implied) of any obligation on
the part of Buyer to a post-Closing employment relationship of any
fixed term or duration or upon any terms or conditions other than
those that Buyer may establish pursuant to individual offers of
employment, and (B) employment offered by Buyer is "at will" and may
be terminated by Buyer or by an employee at any time for any reason
(subject to any written commitments to the contrary made by Buyer or
an employee and Legal Requirements). Nothing in this Agreement shall
be deemed to prevent or restrict in any way the right of Buyer to
terminate, reassign, promote or demote any of the Hired Active
Employees after the Closing or to change adversely or favorably the
title, powers, duties, responsibilities, functions, locations,
salaries, other compensation or terms or conditions of employment or
employee benefits of such employees.
(c)......Seller shall use its Best Efforts to assist Buyer in
obtaining, for each Assumed Plan, the consent of each insurance carrier and
service provider that provides insurance coverage and/or services to or
with respect to such Assumed Plan to the assumption by Buyer of the
applicable insurance policy or service contract.
(d) Salaries and Benefits.
(i)......Seller shall be responsible for (A) the payment of all
wages and other remuneration due to Active Employees with respect to
their services as employees of Seller through the close of business on
the date immediately preceding the Closing Date, including pro rata
bonus payments earned prior to the Closing Date; (B) the provision of
health plan continuation coverage in accordance with the requirements
of COBRA and Sections 601 through 608 of ERISA through the close of
business on the date immediately preceding the Closing Date; and (C)
any and all payments to employees required under the WARN Act relating
to actions taken by Seller prior to the Closing Date.
(ii).....Seller shall be liable for any claims made or incurred
by Active Employees and their beneficiaries and dependents through the
date immediately preceding the Closing Date under the Employee Plans.
For purposes of the immediately preceding sentence, a charge will be
deemed incurred, in the case of hospital, medical or dental benefits,
when the services that are the subject of the charge are performed
and, in the case of other benefits (such as disability or life
insurance), when an event has occurred or when a condition has been
diagnosed that entitles the employee to the benefit.
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(iii)....On or before the Closing Date, Seller shall adopt
appropriate corporate resolutions to transfer to Buyer the sponsorship
of each of the Assumed Plans, effective as of the Closing.
(iv).....On or before the Closing Date, Buyer shall adopt
appropriate corporate resolutions to assume from Seller the
sponsorship of each of the Assumed Plans, effective as of the Closing.
(v)......Buyer will continue to maintain and sponsor the Assumed
Plans until January 1, 2005.
(e)......Accrued and Unused Vacation. The Hired Active Employees may
take any vacation time accrued for the 2004 calendar year either before or
after the Closing pursuant to Seller's vacation policies. At the Closing,
the Buyer shall assume the obligations only for Hired Active Employees for
vacation time accrued, but not yet used, for the 2004 calendar year.
(f)......Buyer's Pension Plans. Notwithstanding anything herein to the
contrary, no employee of the Pest Business shall, by virtue of this
Agreement, be eligible to participate in the ▇▇▇▇▇▇▇, Inc. Retirement
Income Plan (which plan was previously "frozen" to new entrants).
(g)......Buyer's Retirement and Welfare Plans. Effective as of the
termination by Buyer of its sponsorship of any Assumed Plan, Buyer will, or
will cause its designated affiliate to, take all actions necessary to
ensure that each Hired Active Employee will be eligible to participate in a
similar employee benefit plan, program, policy or arrangement of Buyer or
its affiliates on the same basis as similarly situated employees of Buyer
and its affiliates. Buyer will cause each of its employee benefit plans in
which Hired Active Employees become eligible to participate to take into
account, for purposes of eligibility and vesting, the length of service of
such employees with the Seller as if such service were with Buyer or its
affiliate, to the same extent that such service was credited under the
comparable Assumed Plan. No Hired Active Employee (or any eligible
dependent) who elects to be covered under any medical or disability
insurance plan of Buyer or its affiliates will be excluded from coverage
under such plan on the basis of a pre-existing condition that was not also
excluded under the applicable medical or disability insurance Assumed Plan.
To the extent that a Hired Active Employee has satisfied, in whole or in
part, any annual deductible or paid any applicable out-of-pocket or
co-payment expenses under a medical insurance Assumed Plan for the plan
year during which the Buyer terminates its sponsorship of such plan, such
individual will be credited therefor under the corresponding provisions of
the corresponding plan of Buyer or its affiliates in which such individual
participates after such plan termination.
(h)......Collective Bargaining Matters. Buyer will set its own initial
terms and conditions of employment for the Hired Active Employees and
others it may hire, including work rules, benefits and salary and wage
structure, all as permitted by law. Buyer is not obligated to assume any
collective bargaining agreements under this Agreement. Any bargaining
obligations of Buyer with any union with respect to bargaining unit
employees subsequent to the Closing, whether such obligations arise before
or after the Closing, shall be the sole responsibility of Buyer.
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(i)......Severance Matters. At the Closing, Seller and Buyer shall
cause two hundred and twenty-eight thousand dollars ($228,000) of the
Purchase Price to be deposited into an interest-bearing account with
SunTrust Bank (the "Severance Escrow"). Immediately after the Closing,
Buyer shall implement a special severance pay arrangement to be applicable
to the Hired Active Employees ("Special Severance Arrangement").
(i)......Under the Special Severance Arrangement, (A) each Hired
Active Employee shall be entitled to a severance payment from Buyer in
the event that their employment with Buyer or any of its Affiliates is
terminated without cause on or before the eighteen (18)- month
anniversary of the Closing; (B) the tenure of each Hired Active
Employee with Seller will be recognized by Buyer for purposes of
determining entitlement to a payment under the Special Severance
Arrangement, in the manner set forth on Part 10.1(i)(i), and (C)
except for the Designated Employees, Buyer shall be solely responsible
for any and all payment obligations under the Special Severance
Arrangement.
(ii).....For those Hired Active Employees listed on Part
10.1(i)(ii) (the "Designated Employees"), the Special Severance
Arrangement shall include the following additional provisions: (A)
Buyer shall be responsible for two (2) weeks of severance pay for each
Designated Employee, and (B) any severance payment obligation to a
Designated Employee in excess of (A) above may be withdrawn from the
Severance Escrow by Buyer. In the event that the Severance Escrow is
exhausted on or before the eighteen (18)-month anniversary of the
Closing, Buyer shall be responsible for any and all additional
severance payment obligations to Designated Employees. If there are
funds remaining in the Severance Escrow on the date immediately
following the eighteen (18)-month anniversary of the Closing, and
Buyer has not notified the Selling Parties' Representative of unpaid
claims against the Severance Escrow, then such remaining funds shall
promptly thereafter be delivered to the Selling Parties'
Representative.
(iii)....Except as specifically set forth above, Seller shall be
solely responsible for any severance payment obligations that may
arise as a result of the Contemplated Transactions.
(j) General Employee Provisions.
(i)......Seller and Buyer shall give any notices required by
Legal Requirements and take whatever other actions with respect to the
plans, programs and policies described in this Section 10.1 as may be
necessary to carry out the arrangements described in this Section
10.1.
(ii).....Seller and Buyer shall provide each other with such plan
documents and summary plan descriptions, employee data or other
information as may be reasonably required to carry out the
arrangements described in this Section 10.1.
(iii)....If any of the arrangements described in this Section
10.1 are determined by the IRS or other Governmental Body to be
prohibited by law, Seller and Buyer shall modify such arrangements to
as closely as possible reflect their expressed intent and retain
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the allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by law.
(iv).....Seller shall provide Buyer with completed I-9 forms and
attachments with respect to all Hired Active Employees, except for
such employees as Seller certifies in writing to Buyer are exempt from
such requirement.
(k)......Consulting Agreement. On December 21, 2004, ▇▇▇ and Buyer
shall enter into a consulting agreement in substantially the form of
Exhibit 10.1(k) (the "Consulting Agreement").
10.2 Certain Tax Matters.
(a) Transfer Taxes. Seller shall pay all Transfer Taxes regardless of
the Person on whom such Taxes are imposed by Legal Requirements, and Seller
and Buyer shall cooperate in the timely execution and making of all
filings, returns, reports and forms as may be required in connection
therewith.
(b)......Potential Successor Taxes. Unless otherwise directed in
writing by Buyer, Seller shall give all required notices and make all
required filings, on behalf of Buyer when required, of the transactions
contemplated hereby, including any notices and filings required to obtain
tax good standing letters or tax clearances or certificates with the taxing
authorities of the States of New Jersey, Delaware, Florida, Maryland,
Pennsylvania, and Virginia, and any other state or any local Governmental
Body with which the Seller is required to file Tax Returns and/or pay Taxes
for which Buyer may have successor liability. If Seller does not provide to
Buyer at Closing all appropriate tax good standing letters and tax
clearances and certificates, or evidence that requests for such clearance
and certificates have been timely made in accordance with applicable Legal
Requirements, or, in jurisdictions where an application or request for such
clearance and certificates is not permitted to be made until after the
Closing, (i) evidence that any notice required to be given to any taxing
authority prior to Closing pursuant to applicable Legal Requirements
(including, without limitation, Section 1403 of the Pennsylvania Fiscal
Code, 72 P.S. ss.1403) was timely given in accordance with such Legal
Requirements, and (ii) a completed, but not submitted, application or
request for such clearance and certificates, then Buyer may withhold from
the Purchase Price, which shall correspondingly reduce the amount held
under the Escrow Agreement, the amount of the Potential Successor Taxes,
and Buyer shall thereafter cause such Taxes to be paid, to the extent of
such withholding, on the Seller's behalf.
(c)......Certification of Non-Foreign Status. At the Closing, each
Seller that is transferring Real Property to Buyer pursuant to this
Agreement will furnish to Buyer an affidavit stating, under penalties of
perjury, such Seller's United States taxpayer identification number and
that such Seller is not a foreign person in accordance with Section
1445(b)(2) of the Code and the Treasury Regulations promulgated thereunder.
66
10.3.....Payment Of Other Retained Liabilities
In addition to payment of Taxes pursuant to Section 10.2, Seller shall pay,
or make adequate provision for the payment, in full all of the Retained
Liabilities and other Liabilities of Seller under this Agreement.
10.4.....Reports And Returns
Seller shall promptly after the Closing prepare and file all reports and
returns required by Legal Requirements relating to the business of Seller as
conducted using the Assets, to and including the Effective Time.
10.5.....Assistance In Proceedings; Enforcement of Obligations
(a)......Seller will cooperate with Buyer and its counsel in the
contest or defense of, and make available its personnel and provide
any testimony and access to its books and Records in connection with,
any Proceeding involving or relating to (i) any Contemplated
Transaction or (ii) any action, activity, circumstance, condition,
conduct, event, fact, failure to act, incident, occurrence, plan,
practice, situation, status or transaction on or before the Closing
Date involving Seller or its business or either Shareholder.
(b)......Seller covenants and agrees that it shall, at the request of
Buyer after the Closing, use its Best Efforts to enforce its entitlements
under any noncompetition, nonsolicitation, or confidentiality agreement
against any Active Employee who is not a Hired Active Employee.
10.6.....Noncompetition, Nonsolicitation And Nondisparagement
(a)......Noncompetition. For a period of five (5) years after the
Closing Date, Seller shall not, anywhere in the United States, directly or
indirectly invest in, own, manage, operate, finance, control, advise,
render services to or guarantee the obligations of any Person engaged in or
planning to become engaged in the Pest Business ("Competing Business"),
provided, however, that Seller may purchase or otherwise acquire up to (but
not more than) two percent (2%) of any class of the securities of any
Person (but may not otherwise participate in the activities of such Person)
if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Exchange Act.
(b)......Nonsolicitation. For a period of five (5) years after the
Closing Date, Seller shall not, directly or indirectly:
(i)......solicit the business of any Person who is a customer of
Buyer;
(ii).....cause, induce or attempt to cause or induce any
customer, supplier, licensee, licensor, franchisee, employee,
consultant or other business relation of Buyer to cease doing business
with Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer;
67
(iii)....cause, induce or attempt to cause or induce any
customer, supplier, licensee, licensor, franchisee, employee,
consultant or other business relation of Seller on the Closing Date or
within the year preceding the Closing Date to cease doing business
with Buyer, to deal with any competitor of Buyer or in any way
interfere with its relationship with Buyer; or
(iv).....hire, retain or attempt to hire or retain any employee
or independent contractor of Buyer or in any way interfere with the
relationship between Buyer and any of its employees or independent
contractors.
(c)......Nondisparagement. After the Closing Date, Seller will not
disparage Buyer or any of Buyer's shareholders, directors, officers,
employees or agents.
(d)......Modification of Covenant. If a final judgment of a court or
tribunal of competent jurisdiction determines that any term or provision
contained in Section 10.8(a) through (c) is invalid or unenforceable, then
the parties agree that the court or tribunal will have the power to reduce
the scope, duration or geographic area of the term or provision, to delete
specific words or phrases or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or
unenforceable term or provision. This Section 10.6 will be enforceable as
so modified after the expiration of the time within which the judgment may
be appealed. This Section 10.6 is reasonable and necessary to protect and
preserve Buyer's legitimate business interests and the value of the Assets
and to prevent any unfair advantage conferred on Seller.
10.7.....Customer And Other Business Relationships
After the Closing, Seller will cooperate with Buyer in its efforts to
continue and maintain for the benefit of Buyer those business relationships of
Seller existing prior to the Closing and relating to the business to be operated
by Buyer after the Closing, including relationships with lessors, employees,
regulatory authorities, licensors, customers, suppliers and others, and Seller
will satisfy the Retained Liabilities in a manner that is not detrimental to any
of such relationships. Seller will refer to Buyer all inquiries relating to such
business. Neither Seller nor any of its officers, employees, agents or
shareholders shall take any action that would tend to diminish the value of the
Assets after the Closing or that would interfere with the business of Buyer to
be engaged in after the Closing, including disparaging the name or business of
Buyer.
10.8.....Retention Of And Access To Records
After the Closing Date, Buyer shall retain for a period consistent with
Buyer's record-retention policies and practices those Records of Seller
delivered to Buyer. Buyer also shall provide Seller and Shareholders and their
Representatives reasonable access thereto, during normal business hours and on
at least three days' prior written notice for any reasonable business purpose
specified by Seller and Shareholders in such notice. After the Closing Date,
Seller shall provide Buyer and its Representatives reasonable access to Records
that are Excluded Assets, during normal business hours and on at least three
days' prior written notice, for any reasonable business purpose specified by
Buyer in such notice. Buyer, on the one hand, and Seller and Shareholders, on
the other, shall have the right to make copies of the Records at its own
expense.
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In addition, if requested by Seller or Shareholders to defend any claims, Buyer
shall make former employees of Seller hired by Buyer reasonably available to
Seller and Shareholders, including for depositions. Seller and Shareholders
shall reimburse Buyer for any and all reasonable out of pocket expenses incurred
by it in connection with the covenants set forth in this Section 10.8.
10.9.....Termite Contract Covenants. After the Closing Date and subject to
the terms of this Section 10.9, Buyer shall be obligated to perform any and all
obligations of the Seller under any Termite Guarantee Contract. Unless and until
a customer under a specific Termite Guarantee Contract makes a renewal payment
to the Buyer, and the period for which such renewal payment date has commenced,
the Seller shall be responsible for any and all costs and/or expenses incurred
in performing such obligations under such Termite Guarantee Contract in excess
of $[***], and shall promptly reimburse Buyer for any such amounts upon receipt
of a statement therefor. Provided, however, that in the event that a customer
has asserted a claim under a Termite Guarantee Contract before the Closing, then
the Seller shall be responsible for all costs and/or expenses incurred by Buyer
in performing Seller's obligations under such Termite Guarantee Contract in
satisfying such claim, and shall promptly reimburse Buyer for any such amounts
upon receipt of a statement therefor. In the event that the Seller does not
remit such reimbursement to the Buyer within ten (10) days of the receipt of the
statement therefor, the Buyer shall no longer be obligated to perform further
services under such Termite Guarantee Contract, and such obligation shall revert
to the Seller. Additionally, the Seller shall have the right to cause such
reimbursement amount to be withdrawn from the Escrow, and such claim shall not
be subject to the Basket.
10.10....Receivables Repurchase Obligations.
(a)......Between the Closing Date and the Repurchase Date, Buyer shall
(i) use its Best Efforts to collect the Accounts Receivable, and (ii) shall
apply any payments received from any customer from whom an Accounts
Receivable is due to the oldest outstanding invoice from such customer,
unless such customer specifically designates a payment to be applied to a
particular invoice.
(b)......Buyer shall have the right, by written notice (the
"Receivables Notice") to Seller given on or after [***] ([***]) year
following the Closing Date (the "Repurchase Date"), to require Seller to
repurchase for cash and without recourse, within five (5) days of the date
of the Receivables Notice, all of the Accounts Receivable of Seller
reflected on the books and records of the Seller on the Closing Date that
are uncollected at the Repurchase Date. Seller shall repurchase uncollected
Accounts Receivable for a purchase price equal to their aggregate face
value. Seller shall deliver the purchase price for such Accounts Receivable
by wire transfer, and in the event that Seller shall not wire transfer the
purchase price within five (5) days of the Receivables Notice, then the
Buyer shall have the right, under the Escrow Agreement, to cause such
purchase price to be withdrawn from the Escrow. Such reimbursement shall
not be subject to the Basket.
(c)......Buyer shall execute and deliver to Seller all instruments as
shall be reasonably necessary to effectively vest in Seller all of the
right, title and interest of Buyer with
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
69
respect to any uncollected Accounts Receivable repurchased by Seller
pursuant to this subsection without representation or recourse.
(d)......Notwithstanding the foregoing provisions, in the event that
the cumulative amount of the Accounts Receivable collected as of the first
anniversary of the Closing Date exceeds the Net Purchased Receivables, then
Seller shall not have the obligation to repurchase, and Buyer does not have
any obligation to sell, any Accounts Receivable. As used herein, "Net
Purchased Receivables" shall mean the total amount of all Accounts
Receivable acquired by Buyer from Seller, less such reserves for
noncollectibility at the Closing, determined in accordance with the
representations and warranties set forth in Section 3.11 hereof.
10.11....Disposal of Obsolete Inventory. If any of the Inventories are not
labeled for current use under applicable Environmental Laws, then Seller shall,
after notice to the Buyer, dispose of such Inventory in accordance with
applicable Legal Requirements prior to the Closing. At the Closing, Seller shall
deliver to Buyer a certificate stating that Seller has complied with the
requirements of this Section 10.11.
10.12....Further Assurances
Subject to the proviso in Section 6.1, the parties shall cooperate
reasonably with each other and with their respective Representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement, and shall (a) furnish upon request to each
other such further information; (b) execute and deliver to each other such other
documents; and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.
11. INDEMNIFICATION; REMEDIES
11.1.....Survival
All representations, warranties, covenants and obligations in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, the
certificates delivered pursuant to Section 2.7 and any other certificate or
document delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Contemplated Transactions, subject to Section 11.6. Except
as provided in Section 11.12(c), the right to indemnification or reimbursement
based upon such representations, warranties, covenants and obligations shall not
be affected by any investigation (including any environmental investigation or
assessment) conducted with respect to, or any Knowledge acquired (or capable of
being acquired) at any time, whether before or after the execution and delivery
of this Agreement or the Closing Date, with respect to the accuracy or
inaccuracy of or compliance with any such representation, warranty, covenant or
obligation. The right to indemnification provided by this Article 11 shall be
the exclusive remedy for Damages arising from or in connection with the
occurrences in Section 11.2(a) through (j) or Section 11.3(a) through (f). The
waiver of any condition based upon the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, reimbursement or other
remedy based upon such representations, warranties, covenants and obligations.
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11.2.....Indemnification And Reimbursement By Seller And Shareholders
Subject to the provisions of this Article 11, Seller and each Shareholder,
jointly and severally, will indemnify and hold harmless Buyer, and its
Representatives, shareholders, subsidiaries and Related Persons (collectively,
the "Buyer Indemnified Persons"), and will reimburse the Buyer Indemnified
Persons for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees and expenses) or
diminution of value, whether or not involving a Third-Party Claim (collectively,
"Damages"), arising from or in connection with:
(a)......any Breach of any representation or warranty made by Seller
or any Shareholder in (i) this Agreement (without giving effect to any
supplement to the Disclosure Letter), (ii) the Disclosure Letter, (iii) the
supplements to the Disclosure Letter, (iv) the certificates delivered
pursuant to Section 2.7, (v) any transfer instrument or (vi) any other
certificate, document, writing or instrument delivered by Seller or either
Shareholder pursuant to this Agreement;
(b)......any Breach of any covenant or obligation of Seller or any
Shareholder in this Agreement or in any other certificate, document,
writing or instrument delivered by Seller or any Shareholder pursuant to
this Agreement;
(c)......any brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have
been made, by any Person with Seller or any Shareholder (or any Person
acting on their behalf) in connection with any of the Contemplated
Transactions;
(d)......any product or component thereof manufactured by or shipped,
or any services provided by, Seller, in whole or in part, prior to the
Closing Date;
(e)......any matter disclosed in Parts 3.18(a),(b), or (c) of the
Disclosure Letter;
(f)......any noncompliance with any Bulk Sales Laws or fraudulent
transfer law in respect of the Contemplated Transactions;
(g)......any liability under the WARN Act or any similar state or
local Legal Requirement that may result from an "Employment Loss", as
defined by 29 U.S.C. sect. 2101(a)(6), caused by any action of Seller prior
to the Closing;
(h)......any Employee Plan that is not an Assumed Plan;
(i)......any Assumed Plan, but only with respect to all periods ending
on or prior to the Closing Date; or
(j)......any Retained Liabilities, regardless of whether the Retained
Liability was known or disclosed to Buyer, or whether the existence of such
Liabilities breached any of Seller's warranties, representations, or
covenants set forth in Section 3.22.
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11.3.....Indemnification And Reimbursement By Buyer
Buyer will indemnify and hold harmless Seller, and will reimburse Seller,
for any Damages arising from or in connection with:
(a)......any Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(b)......any Breach of any covenant or obligation of Buyer in this
Agreement or in any other certificate, document, writing or instrument
delivered by Buyer pursuant to this Agreement;
(c)......any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting
on Buyer's behalf) in connection with any of the Contemplated Transactions;
(d)......any obligations of Buyer with respect to bargaining with the
collective bargaining representatives of Active Hired Employees subsequent
to the Closing; or
(e)......any Assumed Liabilities; and
(f)......any payments made by Western after the Closing Date with
respect to any guarantee of any Real Property Lease assigned to Buyer.
11.4.....Limitations On Amount -- Seller And Shareholders
(a)......The indemnification obligations of Seller and Shareholders under
Section 11.2 shall be limited to the maximum amount of [***] Dollars
($[***]) (the "Maximum Indemnification Amount"). If the Buyer does not
provide written notice to the Seller on or before the Closing Date that an
Environmental Assessment Report has identified one or more conditions which
require Remedial Actions under any Environmental Law or which could otherwise
reasonably be expected to give rise to liability or expense under any
Environmental Law, then the Maximum Indemnification Amount shall automatically
be reduced to [***] ($[***]) on the [***] anniversary of the Closing
Date; provided, however, that environmental conditions at Designated Facilities
shall not limit or bar the reduction of the Maximum Indemnification Amount under
this Section 11.4(a).
(b)......Seller and Shareholders shall have no liability (for
indemnification or otherwise) with respect to claims under Section 11.2 until
the total of all Damages with respect to such matters exceeds [***] Dollars
($[***]) (the "Basket") and then only for the amount by which such Damages
exceed the Basket. Provided, however, that this Section 11.4(b) will not apply
to claims or Damages attributable to claims under Sections 11.2(c), 11.2(e),
11.2(f), or 11.2(h), amounts paid by Buyer which should have been, but were not,
listed as an Assumed Payable or Equivalent in determining the Purchase Price,
any intentional Breach of any of Seller's and Shareholders' representations and
warranties, or any intentional Breach by
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
72
Seller or any Shareholder of any covenant or obligation, or any Retained
Liability described in Sections 2.4(b)(iii) (as to Taxes which are income taxes
or a Potential Successor Tax), 2.4(b)(iv), 2.4(b)(viii), 2.4(b)(x), 2.4(b)(xi),
2.4(b)(xii), 2.4(b)(xiii), or 2.4(b)(xvi), and Seller and the Shareholders will
be jointly and severally liable for all such claims and Damages.
11.5.....Limitations On Amount -- Buyer
(a)......The indemnification obligations of the Buyer under Section
11.3 shall be limited to the Maximum Indemnification Amount.
(b)......Buyer will have no liability (for indemnification or
otherwise) with respect to claims under Section 11.3 until the total of all
Damages with respect to such matters exceeds [***] Dollars
($[***]) and then only for the amount by which such Damages exceed [***]
Dollars ($[***]). However, this Section 11.5(b) will not
apply to any intentional Breach of any of Buyer's representations and
warranties or any intentional Breach by Buyer of any covenant or
obligation, and Buyer will be liable for all Damages with respect to such
Breaches.
11.6.....Time Limitations
(a)......If the Closing occurs, Seller and Shareholders will have
liability (for indemnification) with respect to any Breach of (i) a
covenant or obligation to be performed or complied with prior to the
Closing Date (other than those in Sections 2.1 and 2.4(b) and Articles 10
and 12) or (ii) a representation or warranty (other than those in Sections
3.9, 3.14, 3.16, 3.22 and 3.27), only if on or before the [***] ([***])
anniversary of the Closing Date, Buyer notifies Seller or Shareholders of a
claim specifying the factual basis of the claim in reasonable detail to the
extent then known by Buyer. Any claim of Breach of a covenant,
representation or warranty under Section 2.1 (Assets to be Sold) and claims
under Section 2.4(b) and Section 11.2(j) (Retained Liabilities) (except for
claims brought also as, that could properly be brought as, or that, but for
the expiration of the specific time periods referred to in this Section
11.6(a), could have been brought as, a Breach of a specific representation
and warranty, all of which shall be governed by the other provisions of
this Section 11.6(a)), claims under Articles 10 (Additional Covenants) and
12 (Confidentiality), and claims under Sections 3.9 (Title to Assets) and
3.27 (Advisers) may be made at any time; any claim of Breach of a covenant,
representation or warranty under Sections 3.14 (Taxes) and 3.16 (Employee
Benefits) may be made at any time until such claim is barred by the
applicable statute of limitations. Any claim for Environmental Liabilities
brought under, or that could properly be brought under, Section 11.2(j)
and/or a claim of Breach of a covenant, representation or warranty under
Section 3.22 (Environmental Matters) may be made at any time before the
[***] ([***]) anniversary of the Closing Date.
(b).....If the Closing occurs, Buyer will have liability (for
indemnification or otherwise) with respect to any Breach of (i) a covenant
or obligation to be performed or complied with prior to the Closing Date
(other than those in Article 12 (Confidentiality), as to which a claim may
be made at any time) or (ii) a representation or warranty (other than that
set forth in Section 4.4 (Advisers), as to which a claim may be made at any
time), only if on or before the [***] ([***]) anniversary of the Closing
Date, Seller or Shareholders notify Buyer of a
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
73
claim specifying the factual basis of the claim in reasonable detail to the
extent then known by Seller or Shareholders.
11.7.....Payment; Escrow
Upon notice to Seller specifying in reasonable detail the basis therefore,
Buyer may give notice of a claim in such amount under the Escrow Agreement. Upon
a determination of Damages that is binding on Seller and the Shareholders, the
amount of such Damages shall be paid first from the account established by the
Escrow Agreement until such account has been fully depleted, and after such
account has depleted, by wire transfer of immediately available funds from
Seller and the Shareholders to Buyer within ten (10) days of the date such
amount is determined. Upon a determination of Damages that is binding on Buyer,
the amount of such Damages shall be paid by wire transfer of immediately
available funds from Buyer to the Selling Parties Representative within ten (10)
days of the date such amount is determined.
11.8.....Third-Party Claims
(a)......Promptly after receipt by a Person entitled to indemnity
under Section 11.2 or 11.3 (an "Indemnified Person") of notice of the
assertion of a Third-Party Claim against it, such Indemnified Person shall
give notice to the Person obligated to indemnify under such Section (an
"Indemnifying Person") of the assertion of such Third-Party Claim, provided
that the failure to notify the Indemnifying Person will not relieve the
Indemnifying Person of any liability that it may have to any Indemnified
Person, except to the extent that the Indemnifying Person demonstrates that
the defense of such Third-Party Claim is prejudiced by the Indemnified
Person's failure to give such notice.
(b)......If an Indemnified Person gives notice to the Indemnifying
Person pursuant to Section 11.8(a) of the assertion of a Third-Party Claim,
the Indemnifying Person shall be entitled to participate in the defense of
such Third-Party Claim and, to the extent that it wishes (unless (i) the
Indemnifying Person is also a Person against whom the Third-Party Claim is
made and the Indemnified Person determines in good faith that joint
representation would be inappropriate or (ii) the Indemnifying Person fails
to provide reasonable assurance to the Indemnified Person of its financial
capacity to defend such Third-Party Claim and provide indemnification with
respect to such Third-Party Claim), to assume the defense of such
Third-Party Claim with counsel satisfactory to the Indemnified Person.
After notice from the Indemnifying Person to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person shall not, so long as it diligently conducts such defense, be liable
to the Indemnified Person under this Article 11 for any fees of other
counsel or any other expenses with respect to the defense of such
Third-Party Claim, in each case subsequently incurred by the Indemnified
Person in connection with the defense of such Third-Party Claim, other than
reasonable costs of investigation. If the Indemnifying Person assumes the
defense of a Third-Party Claim, (i) such assumption will conclusively
establish for purposes of this Agreement that the claims made in that
Third-Party Claim are within the scope of and subject to indemnification,
and (ii) no compromise or settlement of such Third-Party Claims may be
effected by the Indemnifying Person without the Indemnified Person's
Consent unless (A) there is no finding or admission of any violation of
Legal Requirement or any violation of the
74
rights of any Person; (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person; and (C) the Indemnified Person
shall have no liability with respect to any compromise or settlement of
such Third-Party Claims effected without its Consent. If notice is given to
an Indemnifying Person of the assertion of any Third-Party Claim and the
Indemnifying Person does not, within ten (10) days after the Indemnified
Person's notice is given, give notice to the Indemnified Person of its
election to assume the defense of such Third-Party Claim, the Indemnifying
Person will be bound by any determination made in such Third-Party Claim or
any compromise or settlement effected by the Indemnified Person to the
extent the Indemnifying Party is obligated to provide indemnification for
such matter.
(c)......Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability that a
Third-Party Claim may adversely affect it or its Related Persons other than
as a result of monetary damages for which it would be entitled to
indemnification under this Agreement, the Indemnified Person may, by notice
to the Indemnifying Person, assume the exclusive right to defend,
compromise or settle such Third-Party Claim, but the Indemnifying Person
will not be bound by any determination of any Third-Party Claim so defended
for the purposes of this Agreement or any compromise or settlement effected
without its Consent (which may not be unreasonably withheld).
(d)......Notwithstanding the provisions of Section 13.4, Seller and
each Shareholder hereby consent to the nonexclusive jurisdiction of any
court in which a Proceeding in respect of a Third-Party Claim is brought
against any Buyer Indemnified Person for purposes of any claim that a Buyer
Indemnified Person may have under this Agreement with respect to such
Proceeding or the matters alleged therein and agree that process may be
served on Seller and Shareholders with respect to such a claim anywhere in
the world.
(e)......With respect to any Third-Party Claim subject to
indemnification under this Article 11: (i) both the Indemnified Person and
the Indemnifying Person, as the case may be, shall keep the other Person
fully informed of the status of such Third-Party Claim and any related
Proceedings at all stages thereof where such Person is not represented by
its own counsel, and (ii) the parties agree (each at its own expense) to
render to each other such assistance as they may reasonably require of each
other and to cooperate in good faith with each other in order to ensure the
proper and adequate defense of any Third-Party Claim.
(f)......With respect to any Third-Party Claim subject to
indemnification under this Article 11, the parties agree to cooperate in
such a manner as to preserve in full (to the extent possible) the
confidentiality of all Confidential Information and the attorney-client and
work-product privileges. In connection therewith, each party agrees that:
(i) it will use its Best Efforts, in respect of any Third-Party Claim in
which it has assumed or participated in the defense, to avoid production of
Confidential Information (consistent with applicable law and rules of
procedure), and (ii) all communications between any party hereto and
counsel responsible for or participating in the defense of any Third-Party
Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.
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11.9.....Procedures for Indemnification
(a)......A claim for indemnification under this Article 11 (an
"Indemnification Claim") shall be made by the Indemnified Person by
delivery of a written declaration to the Indemnifying Person requesting
indemnification and specifying the basis on which indemnification is sought
and the amount of asserted Damages and, in the case of a Third Party Claim,
containing (by attachment or otherwise) such other information as the
Indemnified Person shall have concerning such Third Party Claim.
(b)......If the Indemnification Claim involves a Third Party Claim,
the procedures set forth in Section 11.8 hereof shall be observed by the
Indemnified Person and the Indemnifying Person.
(c)......If the Indemnification Claim involves a matter other than a
Third Party Claim for which the Indemnifying Person has assumed the defense
under Section 11.8, the Indemnifying Person shall have thirty (30) Business
Days to object to such Indemnification Claim by delivery of a written
notice of such objection to the Indemnified Person specifying in reasonable
detail the basis for such objection. Failure to timely so object shall
constitute a final and binding acceptance of the Indemnification Claim by
the Indemnifying Person and the Indemnification Claim shall be paid in
accordance with Section 11.7 hereof. If an objection is timely interposed
by the Indemnifying Person, then the Indemnified Person and the
Indemnifying Person shall negotiate in good faith for a period of sixty
(60) Business Days from the date (such period is hereinafter referred to as
the "Negotiation Period") the Indemnified Person receives such objection.
After the Negotiation Period, if the Indemnifying Person and the
Indemnified Person still cannot agree on an Indemnification Claim, either
the Indemnifying Person or the Indemnified Person may submit the dispute
for resolution to a court of competent jurisdiction.
(d)......Upon determination of the amount of an Indemnification Claim
that is binding on both the Indemnifying Person and the Indemnified Person,
the Indemnified Person shall have the right to cause the amount of such
Indemnification Claim to be withdrawn from the Escrow. If the Indemnifying
Person is Buyer, or if the Escrow has been exhausted or terminated, the
Indemnifying Person shall pay the amount of such Indemnification Claim by
wire transfer of immediately available funds within ten (10) days of the
date such amount is determined.
11.10 Indemnification In Case Of Strict Liability Or Negligence of
Indemnified Person
THE INDEMNIFICATION PROVISIONS IN THIS ARTICLE 11 SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS,
AND REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM
INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY
OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR
CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION;
PROVIDED, HOWEVER, SELLER AND SHAREHOLDERS SHALL
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NOT BE OBLIGATED TO IDEMNIFY THE BUYER GROUP FOR ANY LIABILITY OR DAMAGE IF, AND
ONLY TO THE EXTENT THAT, SUCH LIABILITY OR DAMAGE IS PROXIMATELY CAUSED BY A
MEMBER OF THE BUYER GROUP.
11.11....Environmental Work at Designated Facilities
Notwithstanding anything in this Agreement to the contrary, the parties
agree that this Section 11.11 shall govern the reimbursement of Buyer for any
Environmental Work to be performed at any of the Facilities listed on Part 11.11
(the "Designated Facilities") to the extent that such Environmental Work relates
to contamination existing prior to Closing, including any such contamination
that is reported in the Phase II Environmental Site Assessments prepared by
Conestoga-Rovers & Associates for the Residex Corporation, Branch #98/901
located in Clark, New Jersey, or that are referenced in Part 3.22 or otherwise:
(a)......Any Environmental Work shall be performed by Buyer or its
designee.
(b)......Buyer's environmental consultant shall prepare a work plan
setting forth the Environmental Work, including, without limitation, the
scope, methods, standards and levels of any remediation to be undertaken,
(a "Work Plan"), which shall be provided to Seller no less than thirty (30)
days prior to the time such work is to commence, unless a shorter time is
required by an applicable Environmental Law or by any governmental agency
requiring or overseeing the Environmental Work. If Seller's environmental
consultant has comments upon the Work Plan, he or she shall promptly
communicate such comments to the Buyer's environmental consultant. If
Seller or Seller's consultant reasonably disagrees with the content of the
Work Plan, Buyer shall, and shall cause its consultant to, endeavor, in
good faith, to resolve any such disagreements as expeditiously as possible.
If Seller has not provided either comments to or approval of the Work Plan
five (5) days prior to the date on which the work is scheduled to, or is
required to, begin, then the Work Plan shall be deemed approved.
(c)......From and after the approval of a Work Plan, the Buyer shall
thereafter be entitled to cause certain costs for performing the
Environmental Work set forth in the Work Plan to be withdrawn from the
Escrow, as follows:
(i)......For the first [***] Dollars
($[***]) spent on Environmental Work at the Designated Facilities,
Buyer shall be entitled to withdraw an amount equal to the Buyer Net
Cost of each dollar spent;
(ii) ....For any additional amounts spent on Environmental Work
at the Designated Facilities, Buyer shall be entitled to withdraw an
amount equal to [***] percent ([***]%) of the Buyer Net Cost of each
dollar spent until Buyer shall have spent $[***] of Buyer Net Cost
that is not reimbursable;
(iii)....For any additional amounts spent on Environmental Work
at the Designated Facilities, Buyer shall be entitled to withdraw an
amount equal to the Buyer Net Cost of each dollar spent.
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
77
(d)......After consultation and mutual agreement by Buyer's and
Seller's respective environmental consultants, Buyer shall apply for any
available environmental tax credits for all or any portion of the
Environmental Work. In the event that such credits are received, Buyer
shall be obligated to deposit into the Escrow an amount equal to the
credits received, as and when such credits are applied against a Buyer Tax
liability.
(e)......After the Escrow is fully depleted, then Seller and the
Shareholders shall jointly and severally be obligated to remit to Buyer,
promptly upon receipt of evidence thereof, an amount equal to the Buyer Net
Cost of each dollar spent.
(f)......Except as specifically set forth in this Section 11.11, the
other terms and conditions of this Agreement shall govern the obligations
as between the parties, including those pertaining to Environmental
Liabilities, Retained Liabilities, or the warranties set forth in Section
3.22.
11.12 Miscellaneous.
(a) The parties hereby agree that any indemnification payments made
(and/or payments or adjustments) pursuant to this Agreement shall be
treated for all Tax purposes as an adjustment to the Purchase Price, unless
otherwise required by applicable Legal Requirements, in which event such
payments shall be made in an amount sufficient to indemnify the party on a
net after-Tax basis.
(b) Any amounts recoverable by an Indemnified Person shall be net of
any Tax benefits obtained by the Indemnified Person. To the extent that Tax
benefits are received after any recovery pursuant to this Article 11, there
shall be a corresponding adjustment among the parties without regard to any
time limits imposed under this Article 11. The amount of any Tax benefit
shall be determined by taking into account the effect, if any and to the
extent determinable, of timing differences resulting from the acceleration
or deferral of items of gain or loss resulting from such Damages and shall
otherwise be determined so that payment by the Indemnifying Person of the
Indemnification Claim, as adjusted to give effect to any such Tax benefit,
will make the Indemnified Person as economically whole as is reasonably
practicable with respect to the Damages to which the Indemnification Claim
is based.
(c) Buyer acknowledges that its officers, directors, employees and
authorized representatives and agents have been given an opportunity to
examine the agreements, instruments, documents and other information,
including the Assets, relating to the Pest Business that they have
requested to examine. To the extent that as a result of any such
investigation or examination or as a result of Seller's compliance with
Section 5.5, Buyer has actual knowledge of facts contrary to the statements
made in any representation, warranty, covenant or agreement of Seller or
the Shareholders set forth herein which, in each case could reasonably be
expected to lead to Damages in excess of [***] Dollars ($[***]), and
completes the Closing, Buyer shall be estopped from asserting reliance on
such contrary representation, warranty, covenant or agreement in connection
with any post-Closing claim for indemnification pursuant to this Article
11. Notwithstanding the foregoing, this Section 11.12(c) shall not apply to
any Environmental Liabilities or any breach of the warranties set forth in
Section 3.22.
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
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12. CONFIDENTIALITY
12.1.....Definition Of Confidential Information
(a)......As used in this Article 12, the term "Confidential
Information" includes any and all of the following information of Seller,
Buyer or Shareholders that has been or may hereafter be disclosed in any
form, whether in writing, orally, electronically or otherwise, or otherwise
made available by observation, inspection or otherwise by either party
(Buyer on the one hand or Seller and Shareholders, collectively, on the
other hand) or its Representatives (collectively, a "Disclosing Party") to
the other party or its Representatives (collectively, a "Receiving Party"):
(i)......all information that is a trade secret under applicable
trade secret or other law;
(ii).....all information concerning product specifications, data,
know-how, formulae, compositions, processes, designs, sketches,
photographs, graphs, drawings, samples, inventions and ideas, past,
current and planned research and development, current and planned
manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, market
studies, business plans, computer hardware, Software and computer
software and database technologies, systems, structures and
architectures;
(iii)....all information concerning the business and affairs of
the Disclosing Party (which includes historical and current financial
statements, financial projections and budgets, tax returns and
accountants' materials, historical, current and projected sales,
capital spending budgets and plans, business plans, strategic plans,
marketing and advertising plans, publications, client and customer
lists and files, contracts, the names and backgrounds of key personnel
and personnel training techniques and materials, however documented),
and all information obtained from review of the Disclosing Party's
documents or property or discussions with the Disclosing Party
regardless of the form of the communication; and
(iv).....all notes, analyses, compilations, studies, summaries
and other material prepared by the Receiving Party to the extent
containing or based, in whole or in part, upon any information
included in the foregoing.
(b)......Any trade secrets of a Disclosing Party shall also be
entitled to all of the protections and benefits under applicable trade
secret law and any other applicable law. If any information that a
Disclosing Party deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this
Article 12, such information shall still be considered Confidential
Information of that Disclosing Party for purposes of this Article 12 to the
extent included within the definition. In the case of trade secrets, each
of Buyer, Seller and Shareholders hereby waives any requirement that the
other party submit proof of the economic value of any trade secret or post
a bond or other security.
79
12.2.....Restricted Use Of Confidential Information
(a)......Each Receiving Party acknowledges the confidential and
proprietary nature of the Confidential Information of the Disclosing Party
and agrees that such Confidential Information (i) shall be kept
confidential by the Receiving Party; (ii) shall not be used for any reason
or purpose other than to evaluate and consummate the Contemplated
Transactions; and (iii) without limiting the foregoing, shall not be
disclosed by the Receiving Party to any Person, except in each case as
otherwise expressly permitted by the terms of this Agreement or with the
prior written consent of an authorized representative of Seller with
respect to Confidential Information of Seller or Shareholders (each, a
"Seller Contact") or an authorized representative of Buyer with respect to
Confidential Information of Buyer (each, a "Buyer Contact"). Each of Buyer
and Seller and Shareholders shall disclose the Confidential Information of
the other party only to its Representatives who require such material for
the purpose of evaluating the Contemplated Transactions and are informed by
Buyer, Seller or Shareholders, as the case may be, of the obligations of
this Article 12 with respect to such information. Each of Buyer, Seller and
Shareholders shall (iv) enforce the terms of this Article 12 as to its
respective Representatives; (v) take such action to the extent necessary to
cause its Representatives to comply with the terms and conditions of this
Article 12; and (vi) be responsible and liable for any breach of the
provisions of this Article 12 by it or its Representatives.
(b)......Unless and until this Agreement is terminated, Seller and
each Shareholder shall maintain as confidential any Confidential
Information (including for this purpose any information of Seller or
Shareholders of the type referred to in Sections 12.1(a)(i), (ii) and
(iii), whether or not disclosed to Buyer) of the Seller or Shareholders
relating to any of the Assets or the Assumed Liabilities. Notwithstanding
the preceding sentence, Seller may use any Confidential Information of
Seller before the Closing in the Ordinary Course of Business in connection
with the transactions permitted by Section 5.2.
(c)......From and after the Closing, the provisions of Section 12.2(a)
above shall not apply to or restrict in any manner Buyer's use of any
Confidential Information of the Seller or Shareholders relating to any of
the Assets or the Assumed Liabilities.
12.3.....Exceptions
Sections 12.2(a) and (b) do not apply to that part of the Confidential
Information of a Disclosing Party that a Receiving Party demonstrates (a) was,
is or becomes generally available to the public other than as a result of a
breach of this Article 12 by the Receiving Party or its Representatives; (b) was
or is developed by the Receiving Party independently of and without reference to
any Confidential Information of the Disclosing Party; (c) was, is or becomes
available to the Receiving Party on a nonconfidential basis from a Third Party
not bound by a confidentiality agreement or any legal, fiduciary or other
obligation restricting disclosure, or (d) is required to be disclosed by law or
by the rules and regulations of the New York Stock Exchange.
80
12.4.....Legal Proceedings
If a Receiving Party becomes compelled in any Proceeding or is requested by
a Governmental Body having regulatory jurisdiction over the Contemplated
Transactions to make any disclosure that is prohibited or otherwise constrained
by this Article 12, that Receiving Party shall provide the Disclosing Party with
prompt notice of such compulsion or request so that it may seek an appropriate
protective order or other appropriate remedy or waive compliance with the
provisions of this Article 12. In the absence of a protective order or other
remedy, the Receiving Party may disclose that portion (and only that portion) of
the Confidential Information of the Disclosing Party that, based upon advice of
the Receiving Party's counsel, the Receiving Party is legally compelled to
disclose or that has been requested by such Governmental Body, provided,
however, that the Receiving Party shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded by any Person to
whom any Confidential Information is so disclosed. The provisions of this
Section 12.4 do not apply to any Proceedings between the parties to this
Agreement.
12.5.....Return Or Destruction Of Confidential Information
If this Agreement is terminated, each Receiving Party shall (a) destroy all
Confidential Information of the Disclosing Party prepared or generated by the
Receiving Party without retaining a copy of any such material; (b) promptly
deliver to the Disclosing Party all other Confidential Information of the
Disclosing Party, together with all copies thereof, in the possession, custody
or control of the Receiving Party or, alternatively, with the written consent of
a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party)
destroy all such Confidential Information; and (c) certify all such destruction
in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party's Confidential Information is returned.
12.6.....Attorney-Client Privilege
The Disclosing Party is not waiving, and will not be deemed to have waived
or diminished, any of its attorney work product protections, attorney-client
privileges or similar protections and privileges as a result of disclosing its
Confidential Information (including Confidential Information related to pending
or threatened litigation) to the Receiving Party, regardless of whether the
Disclosing Party has asserted, or is or may be entitled to assert, such
privileges and protections. The parties (a) share a common legal and commercial
interest in all of the Disclosing Party's Confidential Information that is
subject to such privileges and protections; (b) are or may become joint
defendants in Proceedings to which the Disclosing Party's Confidential
Information covered by such protections and privileges relates; (c) intend that
such privileges and protections remain intact should either party become subject
to any actual or threatened Proceeding to which the Disclosing Party's
Confidential Information covered by such protections and privileges relates; and
(d) intend that after the Closing the Receiving Party shall have the right to
assert such protections and privileges. No Receiving Party shall admit, claim or
contend, in Proceedings involving either party or otherwise, that any Disclosing
Party waived any of its attorney work-product protections, attorney-client
privileges or similar protections and
81
privileges with respect to any information, documents or other material not
disclosed to a Receiving Party due to the Disclosing Party disclosing its
Confidential Information (including Confidential Information related to pending
or threatened litigation) to the Receiving Party.
13. GENERAL PROVISIONS
13.1.....Expenses
Except as otherwise provided in this Agreement, each party to this
Agreement will bear its respective fees and expenses incurred in connection
with the preparation, negotiation, execution and performance of this
Agreement and the Contemplated Transactions, including all fees and
expense of its Representatives. Seller will pay [***] of the fees and
expenses of the escrow agent under the Escrow Agreement. Buyer will pay
[***] amounts payable to the Title Insurer in respect of the Title
Commitments, the Title Policy, including premiums (including premiums for
endorsements) and search fees. Buyer will pay [***] and Seller will pay
[***] of (a) the HSR Act filing fee, (b) the fees and expenses of Standard
& Poor's Corporate Value Consulting, the appraiser of the Real Property,
and (c) any governmental filings or notifications necessitated by the
transactions contemplated hereby. If this Agreement is terminated, the
obligation of each party to pay its own fees and expenses will be subject
to any rights of such party arising from a Breach of this Agreement by
another party.
13.2.....Public Announcements
(a)......Any public announcement, press release or similar publicity
with respect to this Agreement or the Contemplated Transactions will be
issued, if at all, at such time and in such manner as the parties shall
mutually determine, or at such earlier time as the Buyer or its counsel
shall determine to be required by law or by the rules and regulations of
the New York Stock Exchange after reasonable notice to Seller. Except with
the prior consent of the other party or as permitted by this Agreement,
neither the Buyer, on the one hand, or the Seller and/or any Shareholder,
on the other hand, nor any of their Representatives shall disclose to any
Person (i) the fact that any Confidential Information of the other party
has been disclosed to the first party, that the first party has inspected
any portion of the Confidential Information of the other party, that any
Confidential Information of the first party has been disclosed to the other
party or their Representatives or that the other party or their
Representatives have inspected any portion of the Confidential Information
of the first party; or (ii) any information about the Contemplated
Transactions, including the status of such discussions or negotiations, the
execution of any documents (including this Agreement) or any of the terms
of the Contemplated Transactions or the related documents (including this
Agreement).
(b)......Seller and Buyer will consult with each other concerning the
means by which Seller's employees, customers, suppliers and others having
dealings with Seller will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such communication.
[***] - Confidential Portions of This Agreement Which Have Been Redacted Are
Marked With Brackets ("[***]"). The Omitted Material Has Been Filed Separately
With The United States Securities and Exchange Commission.
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13.3.....Notices
All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by facsimile or
e-mail with confirmation of transmission by the transmitting equipment; or (c)
received or rejected by the addressee, if sent by certified mail, return receipt
requested, in each case to the following addresses, facsimile numbers or e-mail
addresses and marked to the attention of the person (by name or title)
designated below (or to such other address, facsimile number, e-mail address or
person as a party may designate by notice to the other parties):
If to Seller: Western Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Parsippany, New Jersey 07054-0367
Telecopy Number: ______________
e-mail: _______________________
With a copy to: ▇▇▇▇▇▇ & Bird LLP
One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
If to Orkin: Orkin, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy to: General Counsel
▇▇▇▇▇▇▇, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy number: ▇▇▇-▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Arnall Golden & ▇▇▇▇▇▇▇
2800 One Atlantic Center
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
e-mail: ▇▇▇▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇.▇▇▇
13.4.....Jurisdiction; Service Of Process
Any Proceeding arising out of or relating to this Agreement or any
Contemplated Transaction may be brought in the courts of the State of Georgia,
▇▇▇▇▇▇ County, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Georgia, and each of the parties
irrevocably submits to the exclusive jurisdiction of each such court in any such
Proceeding, waives any objection it may now or hereafter have to venue or to
convenience of forum, agrees that all claims in respect of the Proceeding shall
be heard and determined only in any such court and agrees not to bring any
Proceeding arising out of or relating to this Agreement or any Contemplated
Transaction in any other court. The parties agree that either or both of them
may file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained agreement between the parties irrevocably to
waive any objections to venue or to convenience of forum. Process in any
Proceeding referred to in the first sentence of this section may be served on
any party anywhere in the world.
13.5.....Enforcement Of Agreement
Buyer, on the one hand, and Seller and Shareholders, on the other, each
acknowledge and agree that the other party would be irreparably damaged if any
of the provisions of this Agreement are not performed in accordance with their
specific terms and that any Breach of this Agreement by the other party could
not be adequately compensated in all cases by monetary damages alone.
Accordingly, in addition to any other right or remedy to which Buyer or the
Seller and the Shareholders, as appropriate, may be entitled, at law or in
equity, each party shall be entitled to enforce any provision of this Agreement
by a decree of specific performance and to temporary, preliminary and permanent
injunctive relief to prevent Breaches or threatened Breaches of any of the
provisions of this Agreement, without posting any bond or other undertaking.
13.6.....Waiver; Remedies Cumulative
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither any failure nor any delay by any party in exercising
any right, power or privilege under this Agreement or any of the documents
referred to in this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of
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that party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
13.7.....Entire Agreement And Modification
This Agreement supersedes all prior agreements, whether written or oral,
between the parties with respect to its subject matter (including any letter of
intent and any confidentiality agreement between Buyer and Seller) and
constitutes (along with the Disclosure Letter, Exhibits and other documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject matter.
This Agreement may not be amended, supplemented, or otherwise modified except by
a written agreement executed by the party to be charged with the amendment.
13.8.....Disclosure Letter
(a)......The information in the Disclosure Letter constitutes (i)
exceptions to particular representations, warranties, covenants and
obligations of Seller and Shareholders as set forth in this Agreement or
(ii) descriptions or lists of assets and liabilities and other items
referred to in this Agreement. If there is any inconsistency between the
statements in this Agreement and those in the Disclosure Letter (other than
an exception expressly set forth as such in the Disclosure Letter with
respect to a specifically identified representation or warranty), the
statements in this Agreement will control.
(b)......The statements in the Disclosure Letter, and those in any
supplement thereto, relate only to the provisions in the Section of this
Agreement to which they expressly relate and not to any other provision in
this Agreement unless appropriate cross referencing is made.
13.9.....Assignments, Successors And No Third-Party Rights
No party may assign any of its rights or delegate any of its obligations
under this Agreement without the prior written consent of the other parties,
except that Buyer may assign all, or any part of its rights and delegate any of
its obligations under this Agreement to any Related Person of Buyer and may
collaterally assign its rights hereunder to any financial institution providing
financing in connection with the Contemplated Transactions, provided that Buyer
is not relieved of any of its obligations hereunder by such assignment. Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any legal
or equitable right, remedy or claim under or with respect to this Agreement or
any provision of this Agreement, except such rights as shall inure to a
successor or permitted assignee pursuant to this Section 13.9.
13.10....Severability
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and
85
effect. Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
13.11....Construction
The headings of Articles and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Articles," "Sections" and "Parts" refer to the corresponding
Articles, Sections and Parts of this Agreement and the Disclosure Letter.
13.12....Time Of Essence
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
13.13....Governing Law
This Agreement will be governed by and construed under the laws of the
State of Georgia without regard to conflicts-of-laws principles that would
require the application of any other law.
13.14....Execution Of Agreement
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of which,
when taken together, will be deemed to constitute one and the same agreement.
The exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement
as to the parties and may be used in lieu of the original Agreement for all
purposes. Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
13.15....Shareholder Obligations
The liability of each Shareholder hereunder shall be joint and several with
Seller and with the other Shareholders. Where in this Agreement provision is
made for any action to be taken or not taken by Seller, Shareholders jointly and
severally undertake to cause Seller to take or not take such action, as the case
may be. Without limiting the generality of the foregoing, Shareholders shall be
jointly and severally liable with Seller for the indemnities set forth in
Article 11.
13.16....Representative Of Seller And Shareholders
(a)......Seller and each Shareholder hereby constitutes and appoints
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as their representative ("Selling Parties Representative")
and their true and lawful attorney in fact, with full power and authority
in each of their names and on behalf of each of them:
86
(i)......to act on behalf of each of them in the absolute
discretion of the Selling Parties Representative, but only with
respect to the following provisions of this Agreement, with the power
to: (A) designate the accounts for payment of the Purchase Price
pursuant to Section 2.7(b)(i); (B) act pursuant to Section 2.9 with
respect to any Purchase Price adjustment; (C) act under the Escrow
Agreement; (D) act pursuant to Section 10.1(i)(ii) with respect to the
Severance Escrow; (E) consent to the assignment of rights under this
Agreement in accordance with Section 13.9; (F) give and receive
notices pursuant to Section 13.3; (G) terminate this Agreement
pursuant to Section 9.1 or waive any provision of this Agreement
pursuant to Article 8, Section 9.1 and Section 13.6; (H) accept
service of process pursuant to Section 13.4; and (I) act in connection
with any matter as to which Seller and each of the Shareholders,
jointly and severally, have obligations, or are Indemnified Persons,
under Article 11; and
(ii).....in general, to do all things and to perform all acts,
including executing and delivering all agreements, certificates,
receipts, instructions and other instruments contemplated by or deemed
advisable to effectuate the provisions of this Section 13.16.
This appointment and grant of power and authority is coupled with
an interest and is in consideration of the mutual covenants made
herein and is irrevocable and shall not be terminated by any act of
either of the Shareholders or Seller or by operation of law, whether
by the death or incapacity of either Shareholder or by the occurrence
of any other event. Each Shareholder and Seller hereby consents to the
taking of any and all actions and the making of any decisions required
or permitted to be taken or made by the Selling Parties Representative
pursuant to this Section 13.16. Each of the Shareholders and Seller
agree that the Selling Parties Representative shall have no obligation
or liability to any Person for any action or omission taken or omitted
by the Selling Parties Representative in good faith hereunder, and
each of the Shareholders shall, on a proportionate basis in accordance
with his or her ownership interest in the Seller, indemnify and hold
the Selling Parties Representative harmless from and against any and
all loss, damage, expense or liability (including reasonable counsel
fees and expenses) which the Selling Parties Representative may
sustain as a result of any such action or omission by the Selling
Parties Representative hereunder.
(b)......Buyer and the escrow agent designated in the Escrow Agreement
shall be entitled to rely upon any document or other paper delivered by the
Selling Parties Representative as (i) genuine and correct and (ii) having
been duly signed or sent by the Selling Parties Representative, and neither
Buyer nor such escrow agent shall be liable to either of the Shareholders
or Seller for any action taken or omitted to be taken by Buyer or such
escrow agent in such reliance.
[SIGNATURES ON THE NEXT PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
BUYER:
ORKIN, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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SELLER:
WESTERN INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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WESTERN EXTERMINATING COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING CO., INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF ATLANTIC CITY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF DELAWARE
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF FLORIDA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF MARYLAND, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF PENNSYLVANIA
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WESTERN EXTERMINATING COMPANY OF VIRGINIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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JBD INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: President
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WESTERN TERMITE & PEST CONTROL OF NORTH CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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MEA REALTY CO., L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: President
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WEME ASSOCIATES, L.L.C.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: Partner
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WECO REALTY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: Partner
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SHAREHOLDERS:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ACCEPTANCE AND AGREEMENT OF
SELLING PARTIES REPRESENTATIVE
The undersigned, being the Selling Parties Representative designated in
Section 13.16 of the foregoing Asset Purchase Agreement, agrees to serve as the
Selling Parties Representative and to be bound by the terms of such Asset
Purchase Agreement pertaining thereto.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBITS
*Exhibit 2.5 Purchase Price Allocation
*Exhibit 2.7(a)(i) ▇▇▇▇ of Sale
*Exhibit 2.7(a)(ii) Assignment and Assumption Agreement
*Exhibit 2.7(a)(iv) Form of Assignment and Assumption of Lease
*Exhibit 2.7(a)(v) Form of Intellectual Property Asset Assignments
*Exhibit 2.7(a)(viii) Form of Employment Agreement
*Exhibit 2.7(a)(ix) Form of Noncompetition Agreement
*Exhibit 2.7(a)(x) Escrow Agreement
*Exhibit 2.8(b) Calculation methodology for Estimated Acquired Net
Assets
*Exhibit 7.4(a) Opinion of Seller's Counsel
*Exhibit 7.10 Ancillary Agreements
*Exhibit 8.3 Buyer Consents
*Exhibit 8.4(a) Opinion of Buyer's Counsel
*Exhibit 10.1(k) Consulting Agreement
* This Exhibit is omitted in accordance with Item 601(b)(2) of Regulation S-K.
▇▇▇▇▇▇▇, Inc. agrees to furnish a copy of any omitted Exhibit, on a supplemental
basis, to the Commission upon request.
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DISCLOSURE LETTER*
Part 2.1(b) Tangible Personal Property
Part 2.1(k) Acquired Claims against Third Parties
Part 2.1(m) Assumed Employee Plans
Part 2.2(m) Other Excluded Assets
Part 2.4(a)(iii) Specified Assumed Payables
Part 2.4(a)(viii) Assumed Mortgage Liabilities
Part 2.4(a)(ix) Specified Employee Liabilities
Part 2.4(a)(xi) Other Specified Assumed Liabilities
Part 3.1(a) List of Seller Entities; Jurisdiction of
Incorporation; Foreign Qualifications
Part 3.1(c) Subsidiaries; Other Equity Interests
Part 3.2(b) Breaches and Violations
Part 3.2(c) Required Consents
Part 3.3 Capitalization of Seller; Ownership
Part 3.4 Exceptions to GAAP, Exceptions to Consistent
Accounting Principles
Part 3.6 Exceptions to Sufficiency of Assets
Part 3.7 Real Property
Part 3.8 Real Property Leases
Part 3.9(a) Real Estate Encumbrances
Part 3.9(b) Defaults under Real Property Leases
Part 3.9(d) Non-Real Estate Encumbrances and Permitted Non-Real
Estate Encumbrances
Part 3.10(b) Tangible Personal Property not In the Possession of
Seller
Part 3.11 Accounts Receivable; Aging
Part 3.13 Non-Balance Sheet Liabilities
Part 3.14(a) Unpaid Taxes
Part 3.14(b) List of Tax Returns; Tax Proceedings
Part 3.14(c) Tax Assessments; Deficiencies
Part 3.14(d)(ii) Federal Tax Classification
Part 3.14(d)(iii) State Income or Franchise Tax Filings
Part 3.14(d)(iv) Nondeductible Payments
Part 3.16(a) Employee Benefit Plans
Part 3.16(c) Exceptions to Funding of Employee Benefit Plans
Part 3.16(d) Individuals subject to COBRA; FMLA; Uniformed
Services Employment and Reemployment Rights Act
Part 3.16(e) Employee Benefit Plan Filings
Part 3.16(h) Self-Insurance for Worker's Compensation
Part 3.16(i) Accelerated Compensation Obligations
Part 3.17(a) Exceptions to Compliance with Legal Requirements
Part 3.17(b) Governmental Authorizations
Part 3.18(a) Legal Proceedings that may affect Transaction
Part 3.18(b) Legal Proceedings that may restrict Business
1
Part 3.18(c) Violations of Orders
Part 3.19 Absence of Changes and Events
Part 3.20(a) Material Contracts
Part 3.20(b) Rights of Shareholders in Contracts
Part 3.20(c) Breaches; Consents
Part 3.20(d) Compliance with terms of Seller Contracts; Exceptions
Part 3.21(a) Policies of Insurance
Part 3.21(b) Self Insurance; Insurance-like arrangements
Part 3.21(c) Insurance Loss Experience
Part 3.21(d) Exceptions to Validity and Sufficiency of Insurance
Part 3.22 Environmental Matters
Part 3.22(p) Environmental Permits
Part 3.22(q) Exceptions to Environmental Compliance
Part 3.23(a) Active Employees
Part 3.23(b) Retired Employees entitled to benefits from Seller
Part 3.23(c) Terminated Employees
Part 3.23(f) Violations of Occupational Safety & Health Laws
Part 3.24(b) Collective Bargaining Agreements; Violations to Labor
Laws
Part 3.25(b) Seller Contracts relating to Intellectual Property
Assets
Part 3.25(c) Sufficiency of Intellectual Property Assets
Part 3.25(d) Patents
Part 3.25(e) Marks
Part 3.25(f) Copyrights
Part 3.25(h) Net Names
Part 3.26 Related Party Transactions
Part 3.27 Advisers
Part 7.3 Material Consents
Part 7.9 Key Employees
Part 10.1(b)(i) Excluded Active Employees
Part 10.1(i)(i) Calculation of Entitlement to Severance Payment
Part 10.1(i)(ii) Designated Employees
Part 11.11 Designated Facilities
* This Disclosure Letter is omitted in accordance with Item 601(b)(2) of
Regulation S-K. ▇▇▇▇▇▇▇, Inc. agrees to furnish a copy of any omitted Part, on a
supplemental basis, to the Commission upon request.
2