STOCK PURCHASE AGREEMENT
DATED
NOVEMBER 4, 1996
BETWEEN
HANDEX CORPORATION
AND
ECB, INC.
TABLE OF CONTENTS
------------------
PAGE
DEFINITIONS................................................1
1. SALE AND TRANSFER OF SHARES; CLOSING.......................9
1 SHARES................................................9
2 CONSIDERATION........................................10
3 CLOSING..............................................10
4 CLOSING OBLIGATIONS..................................10
5 ADJUSTMENT AMOUNT....................................12
6 ADJUSTMENT PROCEDURE.................................12
2. REPRESENTATIONS AND WARRANTIES OF SELLER..................12
1 ORGANIZATION AND GOOD STANDING.......................13
2 AUTHORITY; NO CONFLICT...............................13
3 CAPITALIZATION.......................................14
4 FINANCIAL STATEMENTS.................................14
5 BOOKS AND RECORDS....................................15
6 TITLE TO PROPERTIES; ENCUMBRANCES....................15
7 TAXES................................................16
8 NO MATERIAL ADVERSE CHANGE...........................17
9 EMPLOYEE BENEFITS....................................17
10 COMPLIANCE WITH LEGAL REQUIREMENTS;
GOVERNMENTAL AUTHORIZATIONS..........................22
11 LEGAL PROCEEDINGS; ORDERS............................23
12 ABSENCE OF CERTAIN CHANGES AND EVENTS................24
13 CONTRACTS; NO DEFAULTS...............................25
14 INSURANCE............................................27
15 ENVIRONMENTAL MATTERS................................28
16 LABOR RELATIONS; COMPLIANCE..........................30
17 INTELLECTUAL PROPERTY................................30
18 DISCLOSURE...........................................33
19 RELATIONSHIPS WITH RELATED PERSONS...................33
20 BROKERS OR FINDERS...................................34
21 SUFFICIENCY OF ASSETS................................34
22 CURRENT CLIENTS......................................34
23 INVENTORY............................................34
24 NO UNDISCLOSED LIABILITIES...........................34
25 EMPLOYEES............................................35
26 INVESTMENT INTENT....................................35
3. REPRESENTATIONS AND WARRANTIES OF BUYER...................35
1 ORGANIZATION AND GOOD STANDING.......................35
2 AUTHORITY; NO CONFLICT...............................35
3 INVESTMENT INTENT....................................36
4 CERTAIN PROCEEDINGS..................................36
5 BROKERS OR FINDERS...................................36
6 UNDISCLOSED KNOWLEDGE................................37
7 CAPITALIZATION; LIABILITIES; SOLVENCY................37
4. COVENANTS OF SELLER PRIOR TO CLOSING DATE.................38
1 ACCESS AND INVESTIGATION.............................38
2 OPERATION OF THE BUSINESSES OF THE
ACQUIRED COMPANIES...................................38
3 NEGATIVE COVENANT....................................38
4 REQUIRED APPROVALS...................................38
5 NOTIFICATION.........................................39
6 NO NEGOTIATION.......................................39
7 BEST EFFORTS.........................................39
5. COVENANTS OF BUYER PRIOR TO CLOSING DATE..................39
1 REQUIRED APPROVALS...................................39
2 BEST EFFORTS.........................................40
3 NEGATIVE COVENANT....................................40
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.......40
1 ACCURACY OF REPRESENTATIONS..........................40
2 SELLER'S PERFORMANCE.................................40
3 CONSENTS.............................................40
4 ADDITIONAL DOCUMENTS.................................41
5 NO PROCEEDINGS.......................................41
6 NO CLAIM REGARDING STOCK OWNERSHIP OR
SALE PROCEEDS........................................41
7 NO PROHIBITION.......................................41
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE......41
1 ACCURACY OF REPRESENTATIONS..........................41
2 BUYER'S PERFORMANCE..................................42
3 ADDITIONAL DOCUMENTS; CONSENTS.......................42
4 NO PROCEEDINGS OR PROHIBITION........................42
8. TERMINATION...............................................42
1 TERMINATION EVENTS...................................42
2 EFFECT OF TERMINATION................................43
9. INDEMNIFICATION; REMEDIES.................................44
1 SURVIVAL............................................44
2 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY SELLER...........................................44
3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY
SELLER--ENVIRONMENTAL MATTERS.......................44
4 INDEMNIFICATION AND PAYMENT OF DAMAGES
BY BUYER............................................45
5 TIME AND KNOWLEDGE LIMITATIONS......................46
6 LIMITATIONS ON AMOUNT--SELLER.......................46
7 LIMITATIONS ON AMOUNT--BUYER........................46
8 RIGHT OF SET-OFF....................................47
9 PROCEDURE FOR INDEMNIFICATION--THIRD
PARTY CLAIMS........................................47
10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.........48
11 EXCLUSIVE REMEDY....................................49
12 DISPUTE RESOLUTION..................................49
10. GENERAL PROVISIONS AND COVENANTS TO BE PERFORMED
AFTER CLOSING.............................................50
1 EXPENSES............................................50
2 PUBLIC ANNOUNCEMENTS................................50
3 CONFIDENTIALITY.....................................50
4 NOTICES.............................................50
5 FURTHER ASSURANCES..................................51
6 WAIVER..............................................52
7 ENTIRE AGREEMENT AND MODIFICATION...................52
8 DISCLOSURE SCHEDULE.................................52
9 ASSIGNMENTS, SUCCESSORS, AND NO
THIRD-PARTY RIGHTS..................................52
10 SEVERABILITY........................................53
11 SECTION HEADINGS; CONSTRUCTION......................53
12 TIME OF ESSENCE.....................................53
13 GOVERNING LAW.......................................53
14 COUNTERPARTS........................................53
15 CORPORATE NAME; TRADEMARKS..........................53
16 TAX RETURNS, PAYMENTS AND ELECTIONS.................53
17
18
19
SELLER'S DISCLOSURE SCHEDULE
Schedule 3.1 Acquired Companies
Schedule 3.2 Conflicts/Violations Preventing Transfer
Schedule 3.3 Contracts to Acquire Interest in Other Entities
Schedule 3.4 Financial Statements Not Consistent With GAAP
Schedule 3.6 Real Estate, Real Property Leases and Equipment Leases
Schedule 3.7(a) Payment or Provision For Payment of Taxes
Schedule 3.7(b) Audits of Tax Returns Since 12/31/93
Schedule 3.7(c) Adequacy of Tax Reserves
Schedule 3.7(d) Completeness of Returns, Target Affiliates
Schedule 3.9(i) Company Plans and Company Other Benefits
Schedule 3.9(ii) ERISA Affiliate Plans
Schedule 3.9(iii) Post Retirement Benefit Obligations
Schedule 3.9(iv) Costs of Undisclosed Plans
Schedule 3.9(vi) Compliance Obligations
Schedule 3.10 Compliance: Legal Requirements and Governmental Obligations
Schedule 3.11(a) Legal Proceedings - Against Seller, et al.
Schedule 3.11(b) Legal Proceedings - By Seller, et al.
Schedule 3.11(c) Legal Proceedings - Orders Seller Subject To
Schedule 3.11(d) Legal Proceedings - Seller in Compliance with Orders
Schedule 3.12 Absence of Certain Changes and Events
Schedule 3.13(a) Applicable Contracts
Schedule 3.13(a)(v) Applicable Contracts - Form of Employee Agreement
Schedule 3.13(b) Applicable Contracts - No Rights Under Material Applicable
Contracts
Schedule 3.13(c) Applicable Contract - Material Applicable Contracts Validity
Schedule 3.13(d) Applicable Contracts - Material Applicable Contracts
Compliance
Schedule 3.13(e) Applicable Contracts - No Renegotiation
Schedule 3.13(f) Applicable Contracts - Consideration in Violation
Schedule 3.14(b) Insurance - Status
Schedule 3.15 Environmental Matters
Schedule 3.16 Labor Matters
Schedule 3.17(b) Intellectual Property - Relating to Applicable Contracts
Schedule 3.17(c) Intellectual Property - Employees Restricted
Schedule 3.17(d) Intellectual Property - Patents
Schedule 3.17(e) Intellectual Property - Trademarks
Schedule 3.17(f) Intellectual Property - Copyrights
Schedule 3.17(g) Intellectual Property - Trade Secrets
Schedule 3.19 Relationships with Related Persons
Schedule 3.21 Sufficiency of Assets
Schedule 3.22 Current Clients - Possible Terminations
Schedule 3.25 Employees
Schedule 10.4 Indemnification by Buyer
BUYER'S SCHEDULES
Schedule 4.2 Authority; No Conflict
Schedule 4.7(b) Capitalization; Liabilities; Solvency
EXHIBITS
2.2(b) -- Promissory Note
2.2(c) -- Terms of Preferred Shares
2.2(d) -- Warrant A
2.2(e) -- Warrant B
2.4(a)(ii) -- Receivables Collection Agreement
2.4(a)(v) -- Subordination Agreement
2.4(a)(vi) -- Completion Assistance Agreement
2.4(a)(vii) -- Shareholders Agreement
2.4(b)(v) -- Sublease
2.4(b)(viii) -- Corporate Guaranty and Pledge Agreement
2.4(b)(ix) -- Pledge Agreement
2.4(b)(x) -- Nonrecourse Individual Guaranty and Pledge Agreement
2.6(a) -- Financial Calculations
7.4(a) -- Form of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ legal opinion
7.4(b) -- Form of ▇▇▇▇ ▇. ▇▇▇▇ legal opinion
8.3(a) -- Form of ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇ legal opinion
10.8 -- Claims Escrow Agreement
88/HANDEX/199843.15
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of November 4, 1996,
by ECB, INC., a Florida corporation ("Buyer"), and HANDEX CORPORATION, a
Delaware Corporation ("Seller").
RECITALS
Seller desires to sell, and Buyer desires to purchase, all of the issued
and outstanding shares (the "Shares") of capital stock of Handex Environmental,
Inc., a Delaware corporation (the "Company"), for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Acquired Assets"--all assets, properties and rights of the Acquired
Companies, whether tangible or intangible, real, personal or mixed, including
the Net Acquired Current Assets and Net P, P & E, but exclusive of the Retained
Contracts, Retained Miscellaneous Assets and Retained Trade Receivables.
"Acquired Companies"--the Company and its Subsidiaries, collectively.
"Adjustment Amount"--as defined in Section 2.5.
"Applicable Contract"--any Contract other than a Retained Contract (a)
under which any Acquired Company has any rights, (b) under which any Acquired
Company has become subject to any obligation or liability, or (c) by which any
Acquired Company or any of the assets owned or used by it is bound.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to cause such result to be achieved as
expeditiously as practicable; provided, however, that an obligation to use Best
Efforts under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement and the Contemplated Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision, or (b) any
claim (by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant, obligation, or other
provision, and the term "Breach" means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
"Buyer"--as defined in the first paragraph of this Agreement.
"Buyer's Closing Documents" --as defined in Section 4.2(a).
"Buyer's Shareholders"--as defined in Section 4.7.
"Claims Escrow Agreement"--as defined in Section 10.8.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes
place.
"Company"--as defined in the Recitals of this Agreement.
"Completion Assistance Agreement"--as defined in Section 2.4(a)(vi).
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including:
the sale of the Shares by Seller to Buyer;
issuance of the Promissory Note, Preferred Shares and Warrants by
Buyer to Seller;
the execution, delivery, and performance of the Deposit Escrow
Agreement, Completion Assistance Agreement, Receivables Collection Agreement,
Sublease, Shareholders Agreement, Subordination Agreement, Pledge Agreement;
Corporate Guaranty and Pledge Agreement; and the Nonrecourse Individual Guaranty
and Pledge Agreement; and
the performance by Buyer and Seller of their respective covenants and
obligations under this Agreement.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Corporate Guaranty and Pledge Agreement"--as defined in Section
2.4(b)(viii).
"Damages"--as defined in Section 10.2.
"Deposit Escrow Agreement"--the Deposit Escrow Agreement of even date
herewith between Seller, Buyer and SouthTrust Asset Management Company of
Florida, N.A.
"Disclosure Schedule"--the Schedules delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement.
"Eligible Receivables"--accounts receivable of the Acquired Companies
against which Buyer may borrow at least 75% of the face value on the Closing
Date.
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, air (including
indoor air), plant and animal life, and any other environmental medium or
natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. S9601 et seq., as amended ("CERCLA").
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants
or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting self-
appointed representatives of the public interest to recover for injuries done to
public assets.
"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities"--any real property, leaseholds, or other interests currently
or formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"GAAP"--generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in Section 3.4(a) were prepared.
"Governmental Authorization"--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
Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"Intellectual Property Assets"--as defined in Section 3.22.
"Interim Balance Sheet"--as defined in Section 3.4.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (a) such individual is actually aware of such
fact or other matter or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the course of
performing his duties.
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 of the date
of this Agreement, as a director, officer, partner, executor, or trustee of such
Person (or in any similar capacity) has, or at any time had, Knowledge of such
fact or other matter.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty in effect on
the date of this Agreement or on the Closing Date.
"Material Applicable Contract"--the Applicable Contracts listed or required
to be listed on Schedule 3.13(a) including such Applicable Contracts as are
disclosed on other Schedules.
"Minimum Net Acquired Current Assets"--Five Million Ninety-Eight Thousand
Two Hundred Sixty-Eight Dollars ($5,098,268).
"Minimum Net P, P & E"--Five Million Two Hundred Thirty Seven Thousand
Dollars ($5,237,000) less Eighty Thousand Dollars ($80,000) per month (or a
prorated fraction thereof for a period less than a month) between December 31,
1996 and the Closing Date.
"Net Acquired Balance Sheet Assets"--the Net Acquired Current Assets and
Net Acquired P, P & E.
"Net Acquired Current Assets"--the following assets of the Acquired
Companies: Eligible Receivables aggregating Eight Million Six Hundred Sixty-
Seven Thousand Dollars ($8,667,000); inventories; prepaid expenses; other
current and miscellaneous assets (other than the Retained Contracts Retained
Miscellaneous Assets); less the following liabilities of the Acquired Companies:
accounts payable; payroll and sales taxes payable; payroll; and other accrued
liabilities, all as more fully described on Exhibit 2.6(a).
"Net Acquired P, P & E"--the property, plant and equipment, net of reserves
for depreciation, of the Acquired Companies.
"Nonrecourse Individual Guaranty and Pledge Agreement--as defined in
Section 2.4(b)(x).
"Occupational Safety and Health Law"--any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, consent decree, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any 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 such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership; (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) any charter or similar document adopted or filed in connection
with the creation, formation, or organization of a Person; and (e) any amendment
to any of the foregoing.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Permitted Transfers"--any transfer by any Acquired Company to Seller of
the Retained Contracts, Retained Miscellaneous Assets or Retained Trade
Receivables.
"Plan"--as defined in Section 3.13.
"Pledge Agreement"--as defined in Section 2.4(b)(ix).
"Preferred Shares"--as defined in Section 2.2(c).
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Promissory Note"--as defined in Section 2.2(b).
"Receivables Collection Agreement"--as defined in Section 2.4(a)(ii).
"Related Person"--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 such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or 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;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) 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
(b) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 2% of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least 2% of the outstanding equity securities or equity
interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Retained Contracts"--the contracts with customers identified in the
Completion Assistance Agreement, including all work-in-process related thereto.
"Retained Miscellaneous Assets"--the following assets of the Acquired
Companies, which Buyer acknowledges may be transferred to Seller at any time on
or before the Closing Date: cash; marketable securities; loans receivable from
officers, cash value of life insurance; refundable taxes and prepaid directors
fees, all as more fully described on Exhibit 2.6(a).
"Retained Receivables"--all of the trade accounts receivable and other
receivables of the Acquired Companies other than the Eligible Receivables
included in the Net Acquired Current Assets, as well as all claims relating to
the matters described in Schedule 3.11(b), which Buyer acknowledges may be
transferred to Seller at any time on or before the Closing Date.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller"--as defined in the first paragraph of this Agreement.
"Seller's Closing Documents"--as defined in Section 3.2(a).
"Shareholders Agreement"--as defined in Section 2.4(a)(vii).
"Shares"--as defined in the Recitals of this Agreement.
"Solvent"--as to any Person, means such Person (i) owns property, real,
personal and mixed, whose aggregate fair saleable value is greater than the
amount required to pay all of its liabilities, including contingent liabilities,
(ii) is able to pay all of its liabilities as such liabilities mature and (iii)
has sufficient capital to carry on its business and all business and
transactions in which it is about to engage.
"Southcoast"--Southcoast Capital Corporation.
"Southcoast Warrant"--as defined in the Warrants.
"SouthTrust"--SouthTrust Bank of Alabama, N.A.
"Subordination Agreement"--as defined in Section 2.4(a)(v).
"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.
"Tax"--any tax (including any income tax, capital gains tax, value-added
tax, sales tax, property tax) levy, assessment, tariff, duty (including any
customs duty), deficiency, or other fee, and any related charge or amount
(including any fine, penalty, interest, or addition to tax), imposed, assessed,
or collected by or under the authority of any Governmental Body or payable
pursuant to any tax-sharing agreement or any other Contract relating to the
sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency,
or fee.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment
of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing) or if
any other event has occurred, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
"Warrants"--collectively Warrant A and Warrant B as described in Sections
2.2(d) and 2.2(e).
SALE AND TRANSFER OF SHARES; CLOSING
SHARES
Subject to the terms and conditions of this Agreement, at the
Closing, Seller will sell and transfer the Shares to Buyer, and Buyer will
purchase the Shares from Seller.
CONSIDERATION
As consideration for the Shares, Buyer will pay or deliver, or cause
to be paid or delivered, to Seller, the following:
(a) Four Million Six Hundred Thousand Dollars ($4,600,000);
(b) a promissory note payable to Seller in the original principal
amount of Three Million Seven Hundred Thousand Dollars ($3,700,000) ("Promissory
Note") having the terms, including provision for addition of the Adjustment
Amount, as set forth in Exhibit 2.2(b);
(c) 2,000 shares of Series A Preferred Stock ("Preferred Shares") of
Buyer having the terms set forth in Exhibit 2.2(c);
(d) a Warrant to acquire 300,000 shares of Common Stock in Buyer at a
price of $1.32 per Share and having the terms set forth in Exhibit 2.2(d)
("Warrant A");
(e) a Warrant to acquire 85,000 shares of Common Stock in Buyer at a
price of $1.60 per share and having the terms set forth in Exhibit 2.2(e)
("Warrant B"); and
(f) one third (1/3) of the Redemption Value of Amoco Marketing
Environmental Services Company (as defined in the Amended and Restated Articles
of Incorporation of such company) when paid or available to be paid to Buyer (or
its successors or assigns).
CLOSING
The purchase and sale (the "Closing") provided for in this Agreement
will take place at the offices of Seller at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m. (local time) on December 27, 1996, or at such other
time and place as the parties may agree. Subject to the provisions of Section
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 2.3 will
not result in the termination of this Agreement and will not relieve any party
of any obligation under this Agreement.
CLOSING OBLIGATIONS
At the Closing:
(a) Seller will deliver to Buyer:
a certificate representing the Shares, duly endorsed (or
accompanied by duly executed stock power), for transfer to Buyer;
the Receivables Collection Agreement in the form of Exhibit
2.4(a)(ii) executed by Seller;
a certificate executed by Seller representing and warranting
to Buyer that each of Seller's Closing Documents were duly executed and
delivered and that each of Seller's representations and warranties in this
Agreement is accurate in all respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure Schedule
that were delivered by Seller to Buyer prior to the Closing Date in accordance
with Section 5.5);
a Trademark Assignment of the two service marks for "Handex"
held by Seller in form satisfactory for filing with the United States Patent and
Trademark Office; and The Subordination Agreement with Buyer and SouthTrust in
the form of Exhibit 2.4(a)(v) executed by Seller;
(vi) the Completion Assistance Agreement in the form of Exhibit
2.4(a)(vi) executed by Seller; and
(vii) the Shareholders Agreement among Seller, Buyer and
Buyer's Shareholders in the form of Exhibit 2.4(a)(vii) executed by Seller.
(b) Buyer will deliver to Seller:
(i) Four Million Six Hundred Thousand Dollars ($4,600,000) by
wire transfer to an account specified by Seller;
(ii) the Promissory Note, Preferred Shares and Warrants;
(iii) the Completion Assistance Agreement;
(iv) a certificate executed by Buyer to the effect that each of
Buyer's Closing Documents was duly executed and delivered and that each of
Buyer's representations and warranties in this Agreement is accurate in all
respects as of the Closing Date as if made on the Closing Date;
(v) a Sublease for a portion of the premises located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ in the form of Exhibit 2.4 (b)(v),
provided that the landlord consents to the sublease if such consent is required;
(vi) the Receivables Collection Agreement executed by Buyer;
(vii) the Subordination Agreement executed by Buyer and
SouthTrust;
(viii) the Corporate Guaranty and Pledge Agreement in the form
of Exhibit 2.4(b)(viii) executed by each of the Acquired Companies;
(ix) the Pledge Agreement in the form of Exhibit 2.4(b)(ix)
executed by Buyer;
(x) the Nonrecourse Individual Guaranty and Pledge Agreement
from Buyer's Shareholders in the form of Exhibit 2.4(b)(x); and
(xi) the Shareholders Agreement executed by Buyer, Buyer's
Shareholders and Southcoast.
ADJUSTMENT AMOUNT
The Adjustment Amount (which may be a positive or negative number)
will be equal to (a) the Net Acquired Balance Sheet Assets of the Acquired
Companies, minus (b) Ten Million Three Hundred Thirty-Five Thousand Two Hundred
Sixty-Eight Dollars ($10,335,268).
ADJUSTMENT PROCEDURE
Seller will prepare and will cause KPMG Peat Marwick, LLP, the
Company's certified public accountants, to audit a determination of the Net
Acquired Balance Sheet Assets of the Acquired Companies as of the Closing Date
("Closing Financial Determination"). Such determination shall be made in
accordance with GAAP consistent with the accounting methods, principles, and
conventions historically applied by Seller and used in determining Exhibit
2.6(a) hereto. Seller will deliver the Closing Financial Determination to Buyer
within sixty days after the Closing Date. If within thirty days following
delivery of the Closing Financial Determination, Buyer has not given Seller
notice of its objection to the Closing Financial Determination (such notice must
contain a statement of the basis of Buyer's objection), then the Net Acquired
Balance Sheet Assets reflected in the Closing Financial Determination will be
used in computing the Adjustment Amount. If Buyer gives such notice of
objection, then the issues in dispute will be submitted to Price, Waterhouse
LLP, certified public accountants (the "Accountants"), for resolution. If
issues in dispute are submitted to the Accountants for resolution, (i) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party or its Subsidiaries (or its independent public
accountants), and will be afforded the opportunity to present to the Accountants
any material relating to the determination and to discuss the determination with
the Accountants; (ii) the determination by the Accountants, as set forth in a
notice delivered to both parties by the Accountants, will be binding and
conclusive on the parties; and (iii) Buyer and Seller will each bear the fees of
the Accountants for such determination in inverse proportion to the respective
amounts of the Adjustment Amount which are resolved in its favor.
On the tenth business day following the final determination of
the Adjustment Amount, any positive Adjustment Amount shall be paid by Buyer to
Seller in the manner prescribed by the Promissory Note and any negative
Adjustment Amount shall be paid by Seller to Buyer by cash if the Net Acquired
P, P & E is less than the Minimum Net P, P & E and/or by cash and/or assignment
of Eligible Receivables if the Net Acquired Current Assets is less than the
Minimum Net Acquired Current Assets.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
ORGANIZATION AND GOOD STANDING
Schedule 3.1 of the Disclosure Schedule contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
organization, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder and the number of
shares held by each). Each Acquired Company is validly existing and in good
standing under the laws of its jurisdiction of organization, with full corporate
or limited liability company 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 Applicable Contracts.
Each Acquired Company is duly qualified to do business as a foreign corporation
or limited liability company 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.
Seller has made available to Buyer copies of the Organizational
Documents of each Acquired Company as currently in effect.
AUTHORITY; NO CONFLICT
Subject to the Consent of the stockholders of Seller required by
applicable Legal Requirements, this Agreement constitutes the legal, valid, and
binding obligation of Seller, enforceable against Seller in accordance with its
terms. Upon the execution and delivery by Seller of the Receivables Collection
Agreement, Subordination Agreement, Completion Assistance Agreement, Sublease
and Shareholders Agreement (collectively, the "Seller's Closing Documents"), the
Seller's Closing Documents will constitute the legal, valid, and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms. Seller has the corporate power and authority to execute and
deliver this Agreement and the Seller's Closing Documents and to perform its
obligations under this Agreement and the Seller's Closing Documents.
Except as set forth in Schedule 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement by Seller nor the
consummation or performance of any of the Contemplated Transactions by Seller
will, directly or indirectly (with or without notice or lapse of time):
contravene, conflict with, or result in a violation of
(A) any provision of the Organizational Documents of the Acquired Companies, or
(B) any resolution adopted by the board of directors or the stockholders of any
Acquired Company;
contravene, conflict with, or result in a violation of, 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 any Acquired Company or Seller, or
any of the assets owned or used by any Acquired Company, is subject;
contravene, conflict with, or result in a violation 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 any Acquired Company or that otherwise relates to the business
of, or any of the assets owned or used by, any Acquired Company;
cause any Acquired Company to become subject to, or to
become liable for the payment of, any Tax;
cause any of the assets owned by any Acquired Company to be
reassessed or revalued by any taxing authority or other Governmental Body;
contravene, conflict with, or result in a violation or
breach of 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
to cancel, terminate, or modify, any Material Applicable Contract; or
result in the imposition or creation of any Encumbrance upon or
with respect to any of the assets owned or used by any Acquired Company.
Except as set forth in Schedule 3.2 of the Disclosure Schedule,
neither Seller nor any Acquired Company is or will be 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.
CAPITALIZATION
The authorized equity securities of the Company consist of Three
Thousand (3,000) shares of common stock, par value $.01 per share, of which One
Hundred (100) shares are issued and outstanding and constitute the Shares.
Seller is and will be on the Closing Date the record and beneficial owner and
holder of the Shares, free and clear of all Encumbrances. With the exception of
the Shares (which are owned by Seller), all of the outstanding equity securities
and other securities of each Acquired Company are owned of record and
beneficially by one or more of the Acquired Companies, free and clear of all
Encumbrances. No legend or other reference to any purported Encumbrance appears
upon any certificate representing equity securities of any Acquired Company
other than the standard reference to the restrictions imposed by the Securities
Act. All of the outstanding equity securities of each Acquired Company have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of any Acquired Company. None of the outstanding
equity securities or other securities of any Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement. Except as set
forth in Schedule 3.3 of the Disclosure Schedule, no Acquired Company owns, or
has any Contract to acquire, any equity securities or other securities of any
Person (other than Acquired Companies) or any direct or indirect equity or
ownership interest in any other business.
FINANCIAL STATEMENTS
Seller has delivered to Buyer: (a) an audited consolidated balance
sheet of Seller as at January 1, 1994 (including the notes thereto), and the
related consolidated statement of income, changes in stockholders' equity, and
cash flow for the fiscal year then ended, together with the report thereon of
KPMG Peat Marwick, independent certified public accountants; (b) unaudited
consolidated balance sheets of the Acquired Companies as at December 31, 1994
and December 30, 1995 (the "Balance Sheet") and the related unaudited
consolidated statements of income for each of the fiscal years then ended; and
(c) an unaudited consolidated balance sheet of the Acquired Companies as at
August 24, 1996 (the "Interim Balance Sheet") and the related unaudited
statement of income for the thirty-four weeks then ended. Such financial
statements fairly present the financial condition and the results of operations,
and, where provided, changes in stockholders' equity and cash flow as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP, except as set forth in such statements
or on Schedule 3.4 and subject, in the case of interim financial statements, to
normal recurring year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse) and, in the case of all
unaudited financial statements, to the absence of notes; the financial
statements referred to in this Section 3.4 reflect the consistent application of
such accounting principles throughout the periods involved, except as disclosed
in such financial statements, the notes to such financial statements or Schedule
3.4. No financial statements of any Person other than the Acquired Companies
are required by GAAP to be included in the consolidated financial statements of
the Company.
BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Acquired Companies, all of which have been made available to
Buyer, are complete and correct in all material respects and have been
maintained in accordance with sound business practices and the requirements of
Section 13(b)(2) of the Securities Exchange Act of 1934, as amended (regardless
of whether or not the Acquired Companies are subject to that Section), including
the maintenance of an adequate system of internal controls. The minute books of
the Acquired Companies contain accurate and complete records of all meetings
held of, and corporate actions taken by, the stockholders, the Boards of
Directors, and committees of the Boards of Directors of the Acquired Companies,
and no meeting of any such stockholders, Board of Directors, or committee has
been held for which minutes have not been prepared and are not contained in such
minute books. At the Closing, all of those books and records will be in the
possession of the Acquired Companies.
TITLE TO PROPERTIES; ENCUMBRANCES
Schedule 3.6 of the Disclosure Schedule contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by any Acquired Company (the "Property"). Seller has delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which the Acquired Companies acquired such Property, and copies of all title
insurance policies, opinions, abstracts, and surveys in the possession of Seller
or the Acquired Companies and relating to such Property ("Title Evidence"). The
Acquired Companies own (with good and marketable title in the case of real
property, subject only to the matters permitted by the following sentence) all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that they purport to own located in premises owned or operated by
the Acquired Companies or reflected as owned in the books and records of the
Acquired Companies, including all of the properties and assets reflected in the
Interim Balance Sheet (except for assets held under capitalized leases disclosed
or not required to be disclosed in Schedule 3.6 of the Disclosure Schedule and
property and assets sold since the date of the Interim Balance Sheet). All
material properties and assets reflected in the Interim Balance Sheet are free
and clear of all Encumbrances and are not, in the case of real property, subject
to any rights of way, building use restrictions, exceptions, variances,
reservations, or limitations of any nature, except (a) mortgages or security
interests shown on the Interim Balance Sheet as securing specified liabilities
or obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after the date of the Interim Balance Sheet (such mortgages and security
interests being limited to the property or assets so acquired), with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (c) liens for current taxes not yet due, and
(d) with respect to real property, (i) minor imperfections of title, if any,
none of which is substantial in amount, materially detracts from the value or
impairs the use of the property subject thereto, or impairs the operations of
any Acquired Company, (ii) zoning laws and other land use restrictions that do
not impair the present or anticipated use of the property subject thereto and
(iii) reservations, restrictions, conditions, easements and other exceptions of
record or described or referenced in the Title Evidence. Except as provided in
the Title Evidence, all improvements owned by the Acquired Companies lie wholly
within the boundaries of the Property and do not encroach upon the property of,
or otherwise conflict with the property rights of, any other Person.
TAXES
The Acquired Companies have filed or caused to be filed all Tax
Returns that are or were required to be filed by or with respect to any of them,
either separately or as a member of a group of corporations, pursuant to
applicable Legal Requirements, except for such Tax Returns for which a timely
request for an extension for filing has been made. Seller has made available to
Buyer copies of all such Tax Returns filed since December 31, 1993. Seller or
the Acquired Companies have paid, or made provision (as disclosed in Schedule
3.7 of the Disclosure Schedule) for the payment of, all Taxes that have become
due pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by Seller or any Acquired Company, except such Taxes, if any, as are
listed in Schedule 3.7 of the Disclosure Schedule and are being contested in
good faith and as to which adequate reserves (determined in accordance with
GAAP) have been provided in the Interim Balance Sheet.
Schedule 3.7 of the Disclosure Schedule contains a complete and
accurate list of all audits of all United States federal and state income Tax
Returns of each Acquired Company subject to such Taxes since December 31, 1993,
including a reasonably detailed description of the nature and outcome of each
audit. All deficiencies proposed as a result of such audits have been paid,
reserved against, settled, or, as described in Schedule 3.7 of the Disclosure
Schedule, are being contested in good faith by appropriate proceedings.
Schedule 3.7 of the Disclosure Schedule describes all adjustments to the United
States federal income Tax Returns filed by any Acquired Company or any group of
corporations including any Acquired Company for all taxable years since December
31, 1993, and the resulting deficiencies proposed by the IRS. Except as
described in Schedule 3.7 of the Disclosure Schedule, neither Seller nor any
Acquired Company has given or been requested to give waivers or extensions (or
is or would be subject to a waiver or extension given by any other Person) of
any statute of limitations relating to the payment of Taxes of any Acquired
Company or for which any Acquired Company may be liable.
Except as set forth on Schedule 3.7 the charges, accruals, and
reserves with respect to Taxes on the respective books of each Acquired Company
are adequate (determined in accordance with GAAP) and are at least equal to that
Acquired Company's liability for Taxes. There exists no proposed tax assessment
against any Acquired Company except as disclosed in the Balance Sheet or in
Schedule 3.7 of the Disclosure Schedule. No consent to the application of
Section 341(f)(2) of the IRC has been filed with respect to any property or
assets held, acquired, or to be acquired by any Acquired Company. All Taxes
that any Acquired Company is or was required by Legal Requirements to withhold
or collect have been duly withheld or collected and, to the extent required,
have been paid to the proper Governmental Body or other Person.
All Tax Returns filed by (or that include on a consolidated
basis) any Acquired Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by any Acquired Company after
the date of this Agreement. No Acquired Company is, or within the five-year
period preceding the Closing Date has been, an "S" corporation. During the
consistency period (as defined in Section 338(h)(4) of the IRC with respect to
the sale of the Shares to Buyer), no Acquired Company or target affiliate (as
defined in Section 338(h)(6) of the IRC with respect to the sale of the Shares
to Buyer) has sold or will sell any property or assets to Buyer or to any member
of the affiliated group (as defined in Section 338(h)(5) of the IRC) that
includes Buyer. Schedule 3.7 of the Disclosure Schedule lists all such target
affiliates.
NO MATERIAL ADVERSE CHANGE
Since the date of the Interim Balance Sheet, there has not been any
material adverse change in the business, operations, properties, assets, or
condition of the Acquired Companies, taken as a whole, and, excluding changes in
general economic or industry conditions, no event has occurred or circumstance
arisen that will, or that could reasonably be expected to, result in such a
material adverse change.
EMPLOYEE BENEFITS
As used in this Section 3.9, the following terms have the
meanings set forth below.
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by an Acquired Company or an ERISA Affiliate of an
Acquired Company.
"Company Plan" means all Plans of which an Acquired Company or an
ERISA Affiliate of an Acquired Company is or was a Plan Sponsor, or to which an
Acquired Company or an ERISA Affiliate of an Acquired Company otherwise
contributes or has contributed, or in which an Acquired Company or an ERISA
Affiliate of an Acquired Company otherwise participates or has participated.
All references to Plans are to Company Plans unless the context requires
otherwise.
"ERISA Affiliate" means, with respect to an Acquired Company, any
other person that, together with the Company, would be treated as a single
employer under IRC S 414.
"Multi-Employer Plan" has the meaning given in ERISA S 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees, or agents, other than obligations, arrangements, and
practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC S 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Pension Plan" has the meaning given in ERISA S 3(2)(A).
"Plan" has the meaning given in ERISA S 3(3).
"Plan Sponsor" has the meaning given in ERISA S 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC S 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. S1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
S 501(c)(9).
"Welfare Plan" has the meaning given in ERISA S 3(1).
(i) Schedule 3.9(i) of the Disclosure Schedule contains a
complete and accurate list of all Company Plans and Company Other Benefit
Obligations, and identifies as such all Company Plans that are Qualified Plans.
(ii) Schedule 3.9(ii) of the Disclosure Schedule contains a
complete and accurate list of (A) all ERISA Affiliates of each Acquired Company,
and (B) all Plans of which any such ERISA Affiliate is or was a Plan Sponsor, in
which any such ERISA Affiliate participates or has participated, or to which any
such ERISA Affiliate contributes or has contributed.
(iii) Schedule 3.9(iii) of the Disclosure Schedule sets forth a
calculation of the liability of the Acquired Companies for post-retirement
benefits other than pensions, made in accordance with Financial Accounting
Statement 106 of the Financial Accounting Standards Board, regardless of whether
any Acquired Company is required by this Statement to disclose such information.
(iv) Schedule 3.9(iv) of the Disclosure Schedule sets forth the
financial cost of all obligations owed under any Company Plan or Company Other
Benefit Obligation that is not subject to the disclosure and reporting
requirements of ERISA.
Seller has delivered or made available to Buyer, or will deliver
or make available to Buyer within ten days of the date of this Agreement:
all documents that set forth the terms of each Company Plan
and Company Other Benefit Obligation and of any related trust, including but not
limited to (A) all Qualified Plan Documents and related trust agreements
together with any and all amendments thereto, (B) all plan descriptions and
summary plan descriptions of Company Plans for which Seller or the Acquired
Companies are required to prepare, file, and distribute plan descriptions and
summary plan descriptions, and (C) all summaries and descriptions furnished to
participants and beneficiaries regarding Company Plans and Company Other Benefit
Obligations for which a plan description or summary plan description is not
required;
all personnel, payroll, and employment manuals and policies,
and collective bargaining agreements;
a written description of any Company Plan or Company Other
Benefit Obligation that is not otherwise in writing;
all registration statements filed with, the United States
Department of Labor or with any other governmental agency with respect to any
Company Plan;
all insurance policies purchased by or to provide benefits
under any Company Plan;
all contracts with third party administrators, investment
managers, consultants, and other independent contractors that relate to any
Company Plan or Company Other Benefit Obligation;
all reports submitted within the four years preceding the date
of this Agreement by third party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to any Company Plan
or Company Other Benefit Obligation;
all notifications to employees or former employees of their
rights under ERISA S601 et seq. and IRC S4980B;
the Form 5500 filed in each of the most recent three plan
years [with respect to each Company Plan], including all schedules thereto and
the opinions of independent accountants;
all material notices that were given by any Acquired Company
or any ERISA Affiliate of an Acquired Company or any Company Plan to the IRS,
the PBGC, pursuant to statute, within the four years preceding the date of this
Agreement, including notices that are expressly mentioned elsewhere in this
Section 3.9;
all notices that were given by the IRS, the PBGC, or the
Department of Labor to any Acquired Company, any ERISA Affiliate of an Acquired
Company, or any Company Plan within the four years preceding the date of this
Agreement; and
the most recent IRS determination letter for each Plan of the
Acquired Companies that is a Qualified Plan.
Except as set forth in Schedule 3.9(vi) of the Disclosure
Schedule:
The Acquired Companies have performed all of their
respective obligations under all Company Plans and Company Other Benefit
Obligations. The Acquired Companies have made appropriate entries in their
financial records and statements for all obligations and liabilities under such
Plans and Other Benefit Obligations that have accrued but are not due.
No statement, either written or oral, has been made by any
Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit Obligation
and that could have an adverse economic consequence to any Acquired Company or
to Buyer.
The Acquired Companies, with respect to all Company Plans and
Company Other Benefits Obligations are, and each Company Plan and Company Other
Benefit Obligation is, in compliance with ERISA, the IRC, and other applicable
Laws including the provisions of such Laws expressly mentioned in this Section
3.9 and with any applicable collective bargaining agreement.
No transaction prohibited by ERISA S 406 and no
"prohibited transaction" under IRC S 4975(c) have occurred with respect to any
Company Plan.
Neither Seller nor any Acquired Company has any
liability to the IRS with respect to any Plan, including any liability imposed
by Chapter 43 of the IRC.
Neither Seller nor any Acquired Company has any
liability to the PBGC with respect to any Plan or has any liability under ERISA
S 502.
All filings required by ERISA and the IRC as to each
Plan have been timely filed, and all notices and disclosures to participants
required by either ERISA or the IRC have been timely provided.
All contributions and payments made or accrued with
respect to all Company Plans and Company Other Benefit Obligations are
deductible under IRC S 162 or S 404. No amount of any Company Plan's income, or
any asset of any Company Plan, is subject to tax as unrelated business taxable
income.
Each Company Plan can be terminated within thirty days,
without payment of any additional contribution or amount and without the vesting
or acceleration of any benefits promised by such Plan other than as required by
ERISA or the IRC.
Since January 1, 1994, there has been no establishment or
amendment of any Company Plan or Company Other Benefit Obligation.
To the Knowledge of Seller and the Acquired Companies, no
event has occurred that could result in a material increase in premium costs of
Company Plans and Company Other Benefit Obligations that are insured, or a
material increase in benefit costs of such Plans and Obligations that are self-
insured.
Other than claims for benefits submitted by participants or
beneficiaries, no claim against, or legal proceeding involving, any Company Plan
or Company Other Benefit Obligation is pending or, to the Knowledge of Seller or
the Acquired Companies, is Threatened.
No Company Plan is a stock bonus, pension, or profit-sharing
plan within the meaning of IRC S 401(a).
Each Qualified Plan of each Acquired Company is qualified in
form and operation under IRC S 401(a); each trust for each such Plan is exempt
from federal income tax under IRC S501(a). No event has occurred or
circumstance exists that will or could give rise to disqualification or loss of
tax-exempt status of any such Plan or trust.
No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to, or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Title IV Plan.
No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to, or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any VEBA.
No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Pension Plan subject to the requirements of ERISA S302 and
IRC S412.
No Acquired Company or any ERISA Affiliate of an Acquired
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or otherwise
participate in, any Multi-Employer Plan.
Except to the extent required under ERISA S 601 et seq. and IRC
S4980B, no Acquired Company provides health or welfare benefits for any retired
or former employee or is obligated to provide health or welfare benefits to any
active employee following such employee's retirement or other termination of
service.
Each Acquired Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired and
active employees.
Seller and all Acquired Companies have complied with the
provisions of ERISA S601 et seq. and IRC S4980B.
No payment that is owed or may become due to any director,
officer, employee, or agent of any Acquired Company will be non-deductible to
the Acquired Companies or subject to tax under IRC S280G or S4999; nor will any
Acquired Company be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such person.
The consummation of the Contemplated Transactions will not
result in the payment, vesting, or acceleration of any benefit.
COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
Except as set forth in Schedule 3.10 of the Disclosure Schedule:
each Acquired Company is in compliance with the Legal
Requirements applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets;
no event has occurred or circumstance exists that (with or
without notice or lapse of time) (A) would, or could reasonably be expected to,
constitute or result in a violation by any Acquired Company of, or a failure on
the part of any Acquired Company to comply with, any Legal Requirement, or (B)
would, or could reasonably be expected to, give rise to any obligation on the
part of any Acquired Company to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature; and
no Acquired Company has received, at any time since January
1, 1995, 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 any Acquired Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
Each Governmental Authorization held by any Acquired Company is
valid and in full force and effect. Except as set forth in Schedule 3.10 of the
Disclosure Schedule:
each Acquired Company is in compliance with all of the terms
and requirements of each Governmental Authorization;
no event has occurred or circumstance exists that (with or
without notice or lapse of time) would, or could reasonably be expected to (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 or (B)
result directly or indirectly in the revocation, withdrawal, suspension,
cancellation, or termination of, or any modification to, any Governmental
Authorization;
no Acquired Company has received, at any time since January 1,
1995, 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; and
all applications required to have been filed for the renewal
of the Governmental Authorizations 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.
The Governmental Authorizations held by the Acquired Companies
collectively constitute all of the Governmental Authorizations necessary to
permit the Acquired Companies to lawfully conduct and operate their businesses
in the manner they currently conduct and operate such businesses and to permit
the Acquired Companies to own and use their assets in the manner in which they
currently own and use such assets.
LEGAL PROCEEDINGS; ORDERS
Except as set forth in Schedule 3.11(a) of the Disclosure
Schedule, there is no pending Proceeding:
that has been commenced against any Acquired Company or to
the Knowledge of Seller and the Acquired Companies that otherwise could
reasonably be expected to materially adversely affect the business of the
Acquired Companies taken as a whole; or
that has been commenced against Seller or any Acquired
Company 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 and the Acquired Companies, no such
Proceeding has been Threatened. Seller has made available to Buyer copies of
all pleadings, audit letters and statements prepared by legal counsel to support
public disclosures required by Legal Requirements relating to each Proceeding
listed in Schedule 3.11(a) of the Disclosure Schedule.
Except as set forth in Schedule 3.11(b) of the Disclosure
Schedule, there is no pending Proceeding commenced by any Acquired Company.
Except as set forth in Schedule 3.11(c) of the Disclosure
Schedule:
there is no Order to which any of the Acquired Companies, or
any of the assets owned or used by any Acquired Company, is subject;
Seller is not subject to any Order that relates to the
business of, or any of the assets owned or used by, any Acquired Company; and
to the Knowledge of Seller and the Acquired Companies, no
employee of any Acquired Company is subject to any Order that prohibits such
employee from engaging in or performing his normal duties on behalf of the
business of any Acquired Company.
Except as set forth in Schedule 3.11(d) of the Disclosure
Schedule:
each Acquired Company is in compliance with all of the terms
and requirements of each Order to which it, or any of the assets owned or used
by it, is subject;
no event has occurred or circumstance exists that may
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 any
Acquired Company, or any of the assets owned or used by any Acquired Company, is
subject; and
no Acquired Company has received, at any time since January 1,
1995, any notice or other communication (whether written or oral) 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 any Acquired Company, or any of the assets owned or used by
any Acquired Company, is or has been subject.
ABSENCE OF CERTAIN CHANGES AND EVENTS
Except for the Permitted Transfers and as set forth in Schedule 3.12
of the Disclosure Schedule, since the date of the Interim Balance Sheet, the
Acquired Companies have conducted their businesses only in the Ordinary Course
of Business and there has not been any:
change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
amendment to the Organizational Documents of any Acquired
Company;
payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
adoption of, or increase in the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of any
Acquired Company;
damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by any Acquired Company of at least
$150,000.00;
sale, lease or other disposition of any asset or property of any
Acquired Company or imposition of any Encumbrance on any material asset or
property of any Acquired Company, other than in the Ordinary Course of Business;
cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $50,000.00;
material change in the accounting methods used by any Acquired
Company; or
agreement, whether oral or written, by any Acquired Company to do
any of the foregoing.
CONTRACTS; NO DEFAULTS
Schedule 3.13(a) of the Disclosure Schedule contains a complete
and accurate list as of the date of this Agreement, and Seller has made
available to Buyer true and complete copies, of:
each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more Acquired Companies of
a remaining amount or value in excess of $150,000.00;
each Applicable Contract that involves performance of
services or delivery of goods or materials to one or more Acquired Companies of
a remaining amount or value in excess of $50,000.00;
each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of one or
more Acquired Companies in excess of $25,000.00;
each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable 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 $50,000.00 and with terms of less than one
year);
each licensing agreement or other Applicable Contract with
respect to patents, trademarks, copyrights, or other intellectual property,
other than agreements with current or former employees in a form substantially
similar to Exhibit 3.13(a)(v) of the Disclosure Schedule, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
each joint venture, partnership, and other Applicable Contract
(however named) involving a sharing of profits, losses, costs, or liabilities by
any Acquired Company with any other Person;
each Applicable Contract containing covenants that in any way
purport to restrict the business activity of any Acquired Company or limit the
freedom of any Acquired Company to engage in any line of business or to compete
with any Person;
each Applicable Contract providing for payments to or by any
Person based on sales, purchases, or profits, other than direct payments for
goods;
each power of attorney that is currently effective and
outstanding;
each Applicable Contract entered into other than in the Ordinary
Course of Business that contains or provides for an express undertaking by any
Acquired Company to be responsible for consequential damages;
each Applicable Contract for capital expenditures in excess of
$50,000.00;
each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business; and
each amendment, supplement, and modification (whether oral or
written) in respect of any of the foregoing.
Except as provided herein or as set forth in Schedule 3.13(b) of
the Disclosure Schedule:
Seller (and no Related Person of Seller) does not have and
will not acquire any rights under, any Material Applicable Contract that relates
to the business of, or any of the assets owned or used by, any Acquired Company;
and
to the Knowledge of Seller and the Acquired Companies, no
agent or employee is bound by any Contract that purports to limit the ability of
such agent or employee to (A) engage in the business of any Acquired Company, or
(B) assign to any Acquired Company or to any other Person any rights to any
invention, improvement, or discovery.
Except as set forth in Schedule 3.13(c) of the Disclosure
Schedule, each Material Applicable Contract is in full force and effect and is
valid and enforceable in accordance with its terms.
Except as set forth in Schedule 3.13(d) of the Disclosure
Schedule:
each Acquired Company is in compliance with all applicable
terms and requirements of each Material Applicable Contract under which such
Acquired Company has or had any obligation or liability or by which such
Acquired Company or any of the assets owned or used by such Acquired Company is
or was bound.
each other Person that has or had any obligation or
liability under any Material Applicable Contract under which an Acquired Company
has any rights is in compliance with all applicable terms and requirements of
such Contract;
no event has occurred or circumstance exists that (with or
without notice or lapse of time) would, or could reasonably be expected to, give
any other Person the right to exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Material
Applicable Contract; and
no Acquired Company has given to or received from any other
Person, at any time since October 8, 1996, any notice or other communication
(whether written or oral) regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Material Applicable Contract.
Except as set forth on Schedule 3.13(e), there are no
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate
any material amounts paid or payable to any Acquired Company under current or
completed Applicable Contracts with any Person and, to the Knowledge of Seller
and the Acquired Companies, no such Person has made written demand for such
renegotiation.
Except as set forth in Schedule 3.13(f), the Material Applicable
Contracts relating to the sale, design, manufacture, or provision of products or
services by the Acquired Companies have been entered into in the Ordinary Course
of Business and have 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.
INSURANCE
Seller has made available to Buyer:
true and complete copies of all policies of insurance to
which any Acquired Company is a party or under which any Acquired Company is or
has been covered at any time within the six (6) years preceding the date of this
Agreement;
true and complete copies of all pending applications for
policies of insurance which would cover any Acquired Company; and
any statement by the auditor of Seller's financial statements
with regard to the adequacy of Seller's coverage or of the reserves for claims.
Except as set forth on Schedule 3.14(b) of the Disclosure
Schedule:
All policies to which any Acquired Company is a party or
that provide coverage to any Acquired Company:
are valid, outstanding, and enforceable;
will be in full force and effect at the time of
consummation of the Contemplated Transactions; and
except as disclosed on Schedule 3.14(b)(i)(C), do not
provide for any retrospective premium adjustment or other experienced-based
liability on the part of any Acquired Company.
Neither Seller nor any Acquired Company has 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 insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
Seller or the Acquired Companies have paid all premiums due,
and have otherwise performed all of their respective obligations, under each
policy to which any Acquired Company is a party or that provides coverage to any
Acquired Company.
Seller or the Acquired Companies have given notice to the
insurer of all claims relating to an Acquired Company that may be insured
thereby.
ENVIRONMENTAL MATTERS
Except as set forth in Schedule 3.15 of the Disclosure Schedule:
Each Acquired Company is, and at all times has been, in full
compliance with, and has not been and is not in violation of or liable under,
any Environmental Law. Neither Seller nor any Acquired Company has any basis to
expect, nor has any of them or any other Person for whose conduct they are
responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which Seller or any Acquired Company has had an interest,
or with respect to any property or Facility at or to which Hazardous Materials
were generated, manufactured, refined, transferred, imported, used, or processed
by Seller, any Acquired Company, or any other Person for whose conduct they are
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
There are no pending or, to the Knowledge of Seller and the
Acquired Companies, Threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which any Acquired Company has or had an interest.
Neither Seller nor any Acquired Company has Knowledge of any
basis to expect, nor has any of them or any Person for whose conduct they are
responsible, received, any citation, directive, inquiry, notice, Order, summons,
warning, or other communication that asserts actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health,
and Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which Seller or any
Acquired Company had an interest, or with respect to any property or Facility to
which Hazardous Materials generated, manufactured, refined, transferred,
imported, used, transported or processed by any Acquired Company, or any Person
for whose conduct they are responsible have been transported, treated, stored,
handled, transferred, disposed, recycled, or received or at any property
geologically or hydrologically adjoining the Facilities or any such other
property or assets.
None of the Acquired Companies nor any Person for whose conduct
they are responsible, have any Environmental, Health, and Safety Liabilities
with respect to the Facilities or, to the Knowledge of Seller and the Acquired
Companies, with respect to any other properties and assets (whether real,
personal, or mixed) in which any Acquired Company (or any predecessor), has or
had an interest or at any property geologically or hydrologically adjoining the
Facilities or any such other property or assets.
Except in compliance with applicable Legal Requirements, there
are no Hazardous Materials present on or in the Environment at the Facilities
or, to the Knowledge of Seller and the Acquired Companies, at any geologically
or hydrologically adjoining property, including any Hazardous Materials
contained in barrels, above or underground storage tanks, landfills, land
deposits, dumps, equipment (whether moveable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or such adjoining property, or incorporated
into any structure therein or thereon. Neither Seller nor any Acquired Company
nor any Person for whose conduct they are responsible has permitted or
conducted, or is aware of, any Hazardous Activity conducted with respect to the
Facilities or any other properties or assets (whether real, personal, or mixed)
in which any Acquired Company has or had an interest except in compliance with
applicable Legal Requirements.
Except in compliance with applicable Legal Requirements, there
has been no Release or, to the Knowledge of Seller and the Acquired Companies,
any Threat of Release, of any Hazardous Materials at or from the Facilities or
at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed from
or by the Facilities, or from or by any other properties and assets (whether
real, personal, or mixed) in which any Acquired Company has or had an interest
or, to the Knowledge of Seller and the Acquired Companies, at any geologically
or hydrologically adjoining property.
Seller has made available to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Seller or any Acquired Company pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by or any Acquired Company with Environmental Laws.
LABOR RELATIONS; COMPLIANCE
Except as set forth in Schedule 3.16 of the Disclosure Schedule,
since January 1, 1994, no Acquired Company has been or is a party to any
collective bargaining or other labor Contract. Since January 1, 1994, there has
not been, there is not presently pending or existing, and to the Knowledge of
Seller and any Acquired Company there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
Proceeding against or affecting any Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor or
employment dispute against any of the Acquired Companies, or (c) any application
for certification of a collective bargaining agent. To Seller's Knowledge, no
event has occurred or circumstance exists that would, or could reasonably be
expected to, provide the basis for any work stoppage or other labor dispute.
There is no lockout of any employees by any Acquired Company, and no such action
is contemplated by any Acquired Company. Each Acquired Company has complied
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. No Acquired Company is liable for the
payment of any compensation, damages, taxes, fines, penalties, or other amounts,
however designated, for failure to comply with any of the foregoing Legal
Requirements.
INTELLECTUAL PROPERTY
Intellectual Property Assets--The term "Intellectual Property
Assets" includes:
the name "Handex," all fictional business names, trading
names, registered and unregistered trademarks, service marks, and applications
(collectively, "Marks");
all patents and patent applications (collectively,
"Patents");
all copyrights in both published works and unpublished works
(collectively, "Copyrights");
all rights in mask works (collectively, "Rights in Mask
Works");
all proprietary know-how, trade secrets, and other
confidential information (collectively, "Trade Secrets") owned, used, or
licensed as licensee by any Acquired Company.
Agreements--Schedule 3.17(b) of the Disclosure Schedule contains
a complete and accurate list and summary description, including any royalties
paid or received by the Acquired Companies, of all Applicable Contracts relating
to the Intellectual Property Assets to which any Acquired Company is a party or
by which any Acquired Company is bound, 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 $10,000.00 under which an Acquired
Company is the licensee. To Seller's Knowledge, there are no outstanding or
Threatened disputes or disagreements with respect to any such agreement.
Know-How Necessary for the Business
The Intellectual Property Assets are all those necessary for
the operation of the Acquired Companies' businesses as they are currently
conducted by the Acquired Companies. One or more of the Acquired Companies is
the owner 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, except
as set forth in Schedule 3.17(b) of the Disclosure Schedule.
Except as set forth in Schedule 3.17(c) of the Disclosure
Schedule, to the Knowledge of Seller and the Acquired Companies, no employee of
any Acquired Company has entered into any Contract, including any
confidentiality agreement, that restricts or limits in any way the scope or type
of work in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone other
than one or more of the Acquired Companies.
Patents
Schedule 3.17(d) of the Disclosure Schedule contains a
complete and accurate list and summary description of all Patents. One or more
of the Acquired Companies is the owner of all right, title, and interest in and
to each of the Patents, free and clear of all Encumbrances.
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) and are valid and enforceable.
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.
To Seller's knowledge, no Patent is infringed or has been
challenged or threatened in any way. To Seller's knowledge, none of the
products manufactured and sold, nor any process or know-how used, by any
Acquired Company infringes or is alleged to infringe any patent or other
proprietary right of any other Person.
Trademarks
Schedule 3.17(e) of Disclosure Schedule contains a complete
and accurate list and summary description of all Marks. Except for the logo and
stylized name "Handex" which is currently registered to Seller, one or more of
the Acquired Companies is the owner of all right, title, and interest in and to
each of the Marks, free and clear of all Encumbrances.
All Marks that 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.
No ▇▇▇▇ is now involved in any opposition, invalidation, or
cancellation and, to Seller's Knowledge, no such action is Threatened with the
respect to any of the Marks.
To Seller's Knowledge, there is no potentially interfering
trademark or trademark application of any third party.
To Seller's Knowledge, no ▇▇▇▇ is infringed or has been
challenged or threatened in any way. To Seller's Knowledge, none of the Marks
used by any Acquired Company infringes or is alleged to infringe any trade name,
trademark, or service ▇▇▇▇ of any third party.
Copyrights
Schedule 3.17(f) of the Disclosure Schedule contains a
complete and accurate list and summary description of all Copyrights registered
with the United States copyright office. One or more of the Acquired Companies
is the owner of all right, title, and interest in and to each of the Copyrights,
free and clear of all Encumbrances.
All registered Copyrights are currently in compliance with
formal legal requirements and are valid and enforceable.
To Seller's knowledge, no Copyright is infringed or has been
challenged or threatened in any way. To Seller's knowledge, 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 on the work of a
third party.
Trade Secrets
Except asset forth on Schedule 3.17(g), Seller and the
Acquired Companies have taken reasonable precautions to protect the
confidentiality of all Trade Secrets.
One or more of the Acquired Companies has good title and an
absolute (but not necessarily exclusive) right to use the Trade Secrets. To
Seller's knowledge, no Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way.
DISCLOSURE
No representation or warranty of Seller in this Agreement and no
statement in the Disclosure Schedule omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
No notice given pursuant to Section 5.5 will contain any untrue
statement or omit to state a material fact necessary to make the statements
therein or in this Agreement, in light of the circumstances in which they were
made, not misleading.
(c) There is no fact of which Seller has Knowledge that has specific
application to Seller or any Acquired Company (other than general economic or
industry conditions) and that materially adversely affects or materially
threatens, the assets, business, financial condition, or results of operations
of the Acquired Companies (on a consolidated basis) that has not been set forth
in this Agreement or the Disclosure Schedule.
RELATIONSHIPS WITH RELATED PERSONS
Except as set forth on Schedule 3.19 of the Disclosure Schedule, no
Seller nor any Related Person of Seller or of any Acquired Company has, or since
the first day of the next to last completed fiscal year of the Acquired
Companies has had, any interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the Acquired
Companies' businesses. Neither Seller nor any Related Person of Seller or of
any Acquired Company is, or since the first day of the next to last completed
fiscal year of the Acquired Companies has owned (of record or as a beneficial
owner) an equity interest or any other financial or profit interest in, a Person
that has (i) had business dealings or a material financial interest in any
transaction with any Acquired Company other than business dealings or
transactions conducted in the Ordinary Course of Business with the Acquired
Companies at substantially prevailing market prices and on substantially
prevailing market terms, or (ii) engaged in competition with any Acquired
Company with respect to any line of the products or services of such Acquired
Company (a "Competing Business") in any market presently served by such Acquired
Company. Except as set forth in Schedule 3.19 of the Disclosure Schedule,
neither Seller nor any Related Person of Seller or of any Acquired Company is a
party to any Contract with, or has any claim or right against, any Acquired
Company.
BROKERS OR FINDERS
Seller and its agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement, except to The Nassau
Group, Inc.
SUFFICIENCY OF ASSETS
To the Knowledge of Seller and the Acquired Companies, the buildings,
plants, structures, and equipment of the Acquired Companies are in all material
respects structurally sound, in good operating condition and repair, and
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs that are not material in nature or
cost. Except for (i) assets, properties and rights to be transferred by Seller
to the Acquired Companies after the Closing Date, (ii) matters disclosed on
Schedule 3.21 of the Disclosure Schedule, and (iii) working capital and the
financing to be provided by Buyer, the Acquired Assets are sufficient for the
continued conduct of the Acquired Companies' businesses after the Closing in
substantially the same manner as conducted prior to the Closing.
CURRENT CLIENTS
Except for the Contemplated Transactions, Seller has no Knowledge
that any event has occurred that could, or could reasonably be expected to,
cause any customer which has purchased in excess of One Million Dollars
($1,000,000) of products or services from one or more of the Acquired Companies
since January 1, 1994 to terminate its existing business relationship with such
Acquired Company. Buyer acknowledges that Seller makes no representation or
warranty whatsoever with respect to the revenues to be derived by the Acquired
Companies for services rendered to any customer after the Closing Date.
INVENTORY
All inventory of the Acquired Companies, whether or not reflected in
the Interim Balance Sheet, consists of a quality and quantity usable and salable
in the Ordinary Course of Business, 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 Interim Balance Sheet or on the accounting records
of the Acquired Companies as of the Closing Date, as the case may be. All
inventories not written off have been priced at the lower of cost or market on a
first in, first out basis. The quantities of each item of inventory (whether
raw materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Acquired Companies.
NO UNDISCLOSED LIABILITIES
To the Knowledge of Seller the Acquired Companies have no liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent or otherwise) except for (i) liabilities or obligations
reflected or reserved against in the Balance Sheet or in the Interim Balance
Sheet and current liabilities incurred in the Ordinary Course of Business since
the respective dates thereof, (ii) liabilities or obligations contemplated by
this Agreement or referred to in the Disclosure Schedule, and (iii) liabilities
or obligations not required to be disclosed pursuant to Section 3 of this
Agreement or which otherwise do not constitute a breach of this Agreement.
EMPLOYEES
Schedule 3.25 of the Disclosure Schedule contains a complete and
accurate list of the following information for each employee of the Acquired
Companies as of October 18, 1996, including each employee on leave of absence or
layoff status: employer; name; job title and current compensation. The books
and records of the Acquired Companies, which have been provided to Buyer,
reflect the following information on each employee: any change in compensation
since commencement of employment; vacation accrued; and service credited for
purposes of vesting and eligibility to participate under any Acquired Company's
pension, retirement, profit-sharing, thrift-savings, deferred compensation,
stock bonus, stock option, cash bonus, employee stock ownership (including
investment credit or payroll stock ownership), severance pay, insurance,
medical, welfare, or vacation plan, other Employee Pension Benefit Plan or
Employee Welfare Benefit Plan, or any other employee benefit plan or any
Director Plan. Schedule 3.25 of the Disclosure Schedule also contains a
complete and accurate list of the following information for each retired
employee or director of the Acquired Companies, or their dependents, receiving
benefits or scheduled to receive benefits in the future: name, pension benefit,
pension option election, retiree medical insurance coverage, retiree life
insurance coverage, and other benefits.
INVESTMENT INTENT
Seller is acquiring the Promissory Note, Preferred Shares and
Warrants for its own account and not with a view to their distribution within
the meaning of Section 2(11) of the Securities Act. Seller is an "accredited
investor" as such term is defined in Rule 401(a) under the Securities Act.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. Buyer is not required to be
qualified to do business as a foreign corporation in any other state. Buyer has
delivered to Seller true and complete copies of the Organizational Documents of
Buyer.
AUTHORITY; NO CONFLICT
This Agreement and the Deposit Escrow Agreement constitute the
legal, valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms. Upon the execution and delivery by
Buyer and each of the Acquired Companies which is a party thereto of the
Promissory Note, Preferred Shares, Warrants, Completion Assistance Agreement,
Receivables Collection Agreement, Subordination Agreement, Corporate Guaranty
and Pledge Agreement, Pledge Agreement, Sublease and Shareholders Agreement
(collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding obligations of Buyer and each of
the Acquired Companies which is a party thereto, enforceable in accordance with
their respective terms. Buyer has the corporate power and authority to execute
and deliver this Agreement and the Buyer's Closing Documents to which it is a
party and to perform its obligations thereunder. Each of the Acquired Companies
which is a party to a Buyer's Closing Document has the corporate power and
authority to execute and deliver such document and to perform its obligations
thereunder.
Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions will give any Person the right to prevent,
delay, or otherwise interfere with any of the Contemplated Transactions pursuant
to:
any provision of Buyer's Organizational Documents;
any resolution adopted by the board of directors or the
stockholders of Buyer;
any Legal Requirement or Order to which Buyer may be
subject; or
any Contract to which Buyer is a party or by which Buyer may
be bound.
Except as set forth in Schedule 4.2, 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.
INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view
to their distribution within the meaning of Section 2(11) of the Securities Act.
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.
BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement, except
to Southcoast and New Street Investments LP.
UNDISCLOSED KNOWLEDGE
Neither Buyer nor any of its Representatives has Knowledge of any
Breach by Seller of the representations, warranties, covenants and obligations
of Seller in this Agreement, the Disclosure Schedule or any supplement to the
Disclosure Schedule which Buyer has not disclosed to Seller in writing.
CAPITALIZATION; LIABILITIES; SOLVENCY
(a) The authorized equity securities of Buyer consist of (i)
1,540,000 shares of Common Stock, par value $.01 per share ("Common Shares") and
(b) 3,000 shares of Series A Preferred Stock, par value $.01 per share and
stated value $1,000 per share. 819,000 Common Shares are currently issued and
outstanding ("Initial Shares") and owned of record and beneficially as follows:
▇▇▇▇▇ ▇▇▇▇▇▇ - 314,666.66; ▇▇▇▇▇▇ ▇▇▇▇▇▇ - 314,666.66; and S.C. ▇▇▇▇▇▇▇▇▇, Jr. -
189,666.66 ("Buyer's Shareholders"). Buyer's Shareholders' ownership of their
respective Initial Shares is free and clear of all Encumbrances except the
Nonrecourse Individual Guaranty and Pledge Agreement and Shareholders Agreement.
The Initial Shares have been duly authorized, validly issued and fully paid for
in cash at a price per share of not less than Eighty-Eight Cents ($0.88) and are
nonassessable. The common shareholders' equity of Buyer resulting from issuance
of the Initial Shares is at least Five Hundred Thousand Dollars ($500,000).
Except for the Warrants and the Excluded Shares (as defined in the Warrants),
there are no Contracts relating to the issuance of additional equity securities
of Buyer. The Common Shares of Buyer issuable upon exercise of the Warrants
have been validly reserved for issuance by Buyer and, upon such issuance, will
be duly authorized, validly issued, fully paid and nonassessable Common Shares
of Buyer. Upon issuance of the Preferred Shares to Seller, such shares will be
duly authorized, validly issued, fully paid and nonassessable. Except for the
Preferred Shares, the Warrants, the Southcoast Warrant and the Shareholders
Agreement, neither Buyer nor any of Buyer's Shareholders is a party to any
Contract pursuant to which it is or may become obligated to purchase or redeem
any shares of its capital stock or which restricts the transfer or affects the
voting rights of any shares of its capital stock.
(b) Schedule 4.7(b) sets forth an unaudited pro forma balance sheet
of Buyer as of the Closing Date, which balance sheet gives effect to the
Contemplated Transactions and the financing to be provided by SouthTrust. Such
balance sheet is a fair and accurate presentation of Buyer's financial condition
as of the Closing Date. Except as set forth on such pro forma balance sheet or
elsewhere on Schedule 4.7(b), Buyer will have no liabilities or obligations of
any nature (whether known or unknown and whether accrued, contingent or
otherwise) as of the Closing Date. Schedule 4.7(b) also contains a true and
complete copy of the commitment letter from SouthTrust relating to the financing
to be provided thereby in connection with the Contemplated Transactions.
(c) Buyer is now, and after giving effect to the SouthTrust financing
and the Contemplated Transactions, will be, Solvent.
COVENANTS OF SELLER PRIOR TO CLOSING DATE
ACCESS AND INVESTIGATION
Between the date of this Agreement and the Closing Date, Seller will,
and will cause each Acquired Company and its Representatives to furnish or make
available to Buyer and Buyer's Representatives such additional financial,
operating, and other data and information as Buyer may reasonably request in
light of the data and information previously furnished or made available to
Buyer.
OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANIES
Between the date of this Agreement and the Closing Date, Seller will,
and will cause each Acquired Company to:
conduct the business of such Acquired Company only in the
Ordinary Course of Business;
use their Best Efforts to preserve intact the current business
organization of such Acquired Company, keep available the services of the
current employees, and agents of such Acquired Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with such Acquired
Company;
confer with Buyer concerning operational matters of a material
nature and obtain Buyer's Consent (which shall not be unreasonably withheld) to
any sale or other disposition of any asset or property included in Net P, P & E.
pay any undisputed debts or trade accounts payable that have been
outstanding more than sixty (60) days.
otherwise respond to Buyer concerning the status of the business,
operations, and finances of such Acquired Company.
NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Seller will not, and will cause
each Acquired Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.12 is likely to occur.
REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Seller
will, and will cause each Acquired Company to, make all filings required by
Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will, and will cause each Acquired Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in Schedule 4.2.
NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller will
promptly notify Buyer in writing if Seller becomes aware of any fact or
condition that causes or constitutes a Breach of any of Seller's representations
and warranties as of the date of this Agreement, or if Seller becomes aware of
the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Schedule if the Disclosure Schedule were dated the date of the
occurrence or discovery of any such fact or condition, Seller will promptly
deliver to Buyer a supplement to the Disclosure Schedule specifying such change.
During the same period, each Seller will promptly notify Buyer of the occurrence
of any Breach of any covenant of Seller in this Section 5 or of the occurrence
of any event that may make the satisfaction of the conditions in Section 7
impossible or unlikely.
NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to
Section 9, Seller will not, and will cause each Acquired Company and each of
their Representatives not to, directly or indirectly solicit proposals from, or
negotiate with, any Person (other than Buyer) relating to any transaction
involving the sale of the business conducted by the Acquired Companies.
BEST EFFORTS
Between the date of this Agreement and the Closing Date, Seller will
use its Best Efforts to cause the conditions in Sections 7 and 8 to be
satisfied.
COVENANTS OF BUYER PRIOR TO CLOSING DATE
REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Buyer
will, and will cause each of its Related Persons to, make all filings required
by Legal Requirements to be made by them to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Buyer
will, and will cause each Related Person to, cooperate with Seller with respect
to all filings that Seller elects or to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (ii)
cooperate with Seller in obtaining all consents identified in Schedule 3.2 of
the Disclosure Schedule; provided that this Agreement will not require Buyer to
incur any burden to obtain a Governmental Authorization.
BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date
of this Agreement and the Closing Date, Buyer will use its Best Efforts to cause
the conditions in Sections 7 and 8 to be satisfied.
NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the Closing Date, Buyer will not, without the
prior consent of Seller, amend any of Buyer's Organizational Documents.
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares 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):
ACCURACY OF REPRESENTATIONS
All of Seller's representations and warranties in this Agreement
(considered collectively), and each of these representations and warranties
(considered individually), must be accurate in all material respects as of the
Closing Date as if made on the Closing Date, without giving effect to any
supplement to the Disclosure Schedule, except where such representations and
warranties are expressly made as of a particular date and with respect to
matters contemplated or permitted by this Agreement
Each of Seller's representations and warranties in Sections 3.3,
3.4, 3.8, and 3.19 must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Schedule, except where such representations and warranties are
expressly made as of a particular date and with respect to matters contemplated
or permitted by this Agreement.
SELLER'S PERFORMANCE
All of the covenants and obligations that Seller 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), must have been duly performed and complied with in
all material respects.
Each document required to be delivered pursuant to Section 2.4
must have been delivered, and each of the other covenants and obligations in
Sections 5.4 and 5.7 must have been performed and complied with in all respects.
CONSENTS
Each of the Consents identified in subparts 1 and 2 of Schedule 3.2
of the Disclosure Schedule, and each Consent identified in Schedule 4.2, must
have been obtained and must be in full force and effect.
ADDITIONAL DOCUMENTS
Each of the following documents must have been delivered to Buyer:
an opinion of ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇, dated the Closing Date,
in the form of Exhibit 7.4(a); and
an opinion of ▇▇▇▇ ▇. ▇▇▇▇, Esq., dated the Closing Date, in the
form of Exhibit 7.4(b).
NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced
or Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding involving any challenge to, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, any of the Acquired Companies,
or (b) is entitled to all or any portion of the consideration for the Shares.
NO PROHIBITION
Neither the consummation nor the performance of any of the
Contemplated Transactions by Buyer will, directly or indirectly (with or without
notice or lapse of time), materially contravene, or conflict with, or result in
a material violation of, or cause Buyer to suffer any material adverse
consequence under any Legal Requirement or Order that has been published,
introduced, or otherwise formally proposed by or before any Governmental Body
after the date of this Agreement.
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Shares 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):
ACCURACY OF REPRESENTATIONS
Buyer's representations and warranties in the Deposit Escrow
Agreement and in Sections 4.1, 4.2(a) and 4.7(a) of this Agreement must be
accurate in all respects as of the date of this Agreement and as of the Closing
Date as if made on the Closing Date. All of Buyer's other representations and
warranties in this Agreement (considered collectively), and each of such other
representations and warranties (considered individually), must be accurate in
all material respects as of the Closing Date as if made on the Closing Date.
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), must have been performed and complied with in all
material respects.
Buyer must have delivered each of the documents required to be
delivered by Buyer pursuant to Section 2.4, must have made the payments required
to be made by Buyer pursuant to Sections 2.4(b)(i) and the covenants and
obligations in Section 6.2 must have been satisfied in all respects.
ADDITIONAL DOCUMENTS; CONSENTS
Buyer must have caused the following documents to be delivered to
Seller:
an opinion of ▇▇▇▇ ▇▇▇▇ & ▇▇▇▇, dated the Closing Date, in the
form of Exhibit 8.4(a); and
the Nonrecourse Individual Guaranty and Pledge Agreement executed
by each of Buyer's Shareholders.
Seller shall have obtained the Consent of its stockholders required
by applicable Legal Requirements.
NO PROCEEDINGS OR PROHIBITION
Since the date of this Agreement, there must not have been commenced
or Threatened against Seller, or against any Person affiliated with Seller, any
Proceeding (a) involving any challenge to, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. Neither the consummation nor the performance of any
of the Contemplated Transactions by Seller will, directly or indirectly (with or
without notice or lapse of time), materially contravene, or conflict with, or
result in a material violation of, any Legal Requirement or Order that is
published, introduced, or otherwise proposed by or before any Governmental Body
after the date of this Agreement.
TERMINATION
TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be
terminated:
by either Buyer or Seller if a material Breach of any provision
of this Agreement has been committed by the other party and such Breach has not
been waived or cured;
(i) by Buyer if any of the conditions in Section 7 has not been
satisfied as of the Closing Date or if satisfaction of such a condition 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 the Closing Date; or (ii) by Seller, if any of the conditions in Section
8 has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with their obligations under this Agreement) and Seller have not waived
such condition on or before the Closing Date;
by mutual consent of Buyer and Seller;
by either Buyer or Seller if the Closing has not occurred (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before January 27,
1997, or such later date as the parties may agree upon; or
by Seller if deemed necessary by Seller in order for its
directors to comply with their fiduciary duties under applicable Legal
Requirements.
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 a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further obligations of the
parties under this Agreement will terminate, except (i) the obligations in
Sections 11.1 and 11.3 will survive; (ii) if this Agreement is terminated by a
party because of the Breach of the Agreement by the other 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 other 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; and (iii) if
this Agreement is terminated by Seller pursuant to Section 9.1(e) Seller shall
pay Southcoast and Buyer termination fees of Three Hundred Thousand Dollars
($300,000) and Three Hundred Thousand Dollars ($300,000), respectively.
INDEMNIFICATION; REMEDIES
SURVIVAL
All representations, warranties, covenants, and obligations in this
Agreement, the Disclosure Schedule, the supplements to the Disclosure Schedule,
the certificates delivered pursuant to Sections 2.4(a)(iii) and 2.4(b)(iv), and
any other certificate or document delivered pursuant to this Agreement will
survive the Closing.
INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER
Seller will indemnify and hold harmless Buyer, the Acquired
Companies, and their respective Representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability, claim,
damage, expense (including costs of investigation and defense and reasonable
attorneys' fees), whether or not involving a third-party claim (collectively,
"Damages"), resulting from:
any Breach of any representation or warranty made by Seller in
this Agreement, the Disclosure Schedule or any of the other agreements and
instruments contemplated hereby as if such representation or warranty were made
on and as of the Closing Date without giving effect to any supplement to the
Disclosure Schedule, other than any such Breach that is disclosed in a
supplement to the Disclosure Schedule and is expressly identified in the
certificate delivered pursuant to Section 2.4(a)(iii) as having caused the
condition specified in Section 7.1 not to be satisfied;
any Breach by Seller of any covenant or obligation of Seller in
this Agreement or in any of the other agreements or instruments contemplated
hereby;
any product shipped or manufactured by, or any services provided
by, any Acquired Company prior to the Closing Date;
the matters disclosed in Schedules 3.7(a), 3.11(a) and 3.11(b) of
the Disclosure Schedule; or
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 any such Person with either Seller or any Acquired
Company (or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER-- ENVIRONMENTAL
MATTERS
In addition to the provisions of Section 10.2, Seller will indemnify
and hold harmless Buyer, the Acquired Companies, and the other Indemnified
Persons for, and will pay to Buyer, the Acquired Companies, and the other
Indemnified Persons the amount of, any Damages (including costs of Cleanup,
containment, or other remediation) resulting from:
any Environmental, Health, and Safety Liabilities arising out of
or relating to: (i) (A) the ownership, operation, or condition at any time on or
prior to the Closing Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Seller or any Acquired Company has or had an interest, or (B) any Hazardous
Materials that were present on the Facilities or such other properties and
assets at any time on or prior to the Closing Date; or (ii) (A) any Hazardous
Materials, wherever located, that were, or were allegedly, generated,
transported, stored, treated, Released, or otherwise handled by Seller or any
Acquired Company, or by any Person for whose conduct they are responsible at any
time on or prior to the Closing Date, (B) any Hazardous Activities that were,
or were allegedly, conducted by Seller or any Acquired Company or by any Person
for whose conduct they are responsible; or
any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real property), or other damage
of or to any Person, including any employee or former employee of any Acquired
Company or by any Person for whose conduct they are responsible in any way
arising from or allegedly arising from any Hazardous Activity conducted or
allegedly conducted with respect to the Facilities or the operation of the
Acquired Companies prior to the Closing Date, or from Hazardous Material that
was (i) present or suspected to be present on or before the Closing Date on or
at the Facilities (or present on any other property, if such Hazardous Material
emanated from any of the Facilities and was present on any of the Facilities on
or prior to the Closing Date) or (ii) Released by Seller or allegedly Released
by Seller or any Acquired Company or by any Person for whose conduct they are or
may be held responsible, at any time on or prior to the Closing Date.
Seller will be entitled to control any Cleanup, any related
Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
10.3. The procedure described in Section 10.9 will apply to any claim solely
for monetary damages relating to a matter covered by this Section 10.3.
INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Seller and its Representatives
and will pay to Seller and such Representatives the amount of any Damages
resulting from: (a) any Breach of any representation or warranty made by Buyer
in this Agreement, Buyer's Schedules or any of the other agreements and
instruments contemplated hereby; (b) any Breach by Buyer of any covenant or
obligation of Buyer in this Agreement or in any of the other agreements and
instruments contemplated hereby; (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 its behalf) in connection with any of the Contemplated Transactions;
(d) any product shipped or manufactured by, or any services provided by Buyer or
any Acquired Company after the Closing Date; and (e) the obligations of the
Acquired Companies for which Seller is or may be responsible set forth on
Schedule 10.4 of the Disclosure Schedule.
TIME AND KNOWLEDGE LIMITATIONS
If the Closing occurs, Seller will have no liability (for
indemnification or otherwise) with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, other than those in Sections 3.3, 3.7, 3.9, or 3.15 unless on or before
December 31, 1998 Buyer notifies Seller of a claim specifying the factual basis
of that claim in reasonable detail to the extent then known by Buyer; a claim
with respect to Sections 3.7 and 11.16 must be made within sixty (60) days after
expiration of the time period, including any extensions thereof, within which
any Tax may be assessed against any Acquired Company; a claim with respect to
Section 3.15 or Section 10.3 must be made on or before December 31, 2003; and a
claim with respect to Section 3.3, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with by Seller prior to the Closing
Date, may be made at any time. If the Closing occurs, Buyer will have no
liability (for indemnification or otherwise) with respect to any representation
or warranty, or covenant or obligation to be performed and complied with prior
to the Closing Date, other than in Sections 4.2(a) and 4.7(a), unless on or
before December 31, 1998 Seller notifies Buyer of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Seller; a
claim with respect to Section 4.2(a) or Section 4.7(a), or a claim for
indemnification or reimbursement not based upon any representation or warranty
or any covenant or obligation to be performed or complied with by Buyer prior to
the Closing Date, may be made at any time.
If the Closing occurs, Seller will have no liability (for
indemnification or otherwise) with respect to any Breach of any representation,
warranty or covenant or obligation of Seller in this Agreement or any instrument
or other agreement delivered pursuant to this Agreement if Buyer or its
Representatives had Knowledge of such Breach on or before the Closing Date.
LIMITATIONS ON AMOUNT--SELLER
Seller will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a), (b) (to the extent relating to
any Breach prior to the Closing Date) or (c) of Section 10.2 until the total of
all Damages with respect to such matters exceeds Two Hundred Thousand Dollars
($200,000), and then only for the amount by which such Damages exceed Two
Hundred Thousand Dollars ($200,000), or (b) to the extent the total of all
Damages with respect to such matters exceeds the sum of (x) One Million Three
Hundred Thousand Dollars ($1,300,000), (y) the aggregate principal balance which
would be payable under the Promissory Note as of the date of Buyer's notice
asserting a claim for indemnification (regardless of whether a greater or lesser
amount is actually then payable) and (z) amounts payable to Seller upon
redemption or liquidation of the Preferred Shares (other than for accrued
dividends). However, this Section 10.6 will not apply to any claims with
respect to Sections 3.3, 3.7, 3.9 or 11.16.
LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with
respect to the matters described in clause (a), (b) (to the extent relating to
Breach prior to the Closing Date), (d) or (e) of Section 10.4 until the total of
all Damages with respect to such matters exceeds Fifty Thousand Dollars
($50,000), and then only for the amount by which such Damages exceed Fifty
Thousand Dollars ($50,000).
RIGHT OF SET-OFF
Buyer may set off any amount to which it may be entitled under this
Section 10 against amounts of principal otherwise payable under the Promissory
Note or against amounts due Seller upon redemption or liquidation of the
Preferred Shares (other than for accrued dividends), provided it has given
notice to Seller of its claim for indemnification as provided for herein and its
intent to set-off amounts payable under the Promissory Note and/or Preferred
Shares and either (a) Seller has acknowledged Buyer's right of set-off and the
amount thereof or (b) Buyer's right to indemnification through such set-off and
the amount thereof has been otherwise determined in accordance with the terms of
this Agreement; otherwise, Buyer shall, at such time as the payment is due
Seller under the Promissory Note and/or Preferred Shares, (x) execute and
deliver to Seller the Claims Escrow Agreement set forth as Exhibit 10.8 after
being advised by Seller of the name and address (in Florida) of a national bank
or trust company having a place of business in Florida, and (y) pay the set-off
amount into the escrow established by the Claims Escrow Agreement to be held and
distributed in accordance therewith. The exercise of such right of set-off by
Buyer in good faith, whether or not ultimately determined to be justified, will
not constitute an event of default under the Promissory Note or failure to
comply with the terms of the Preferred Shares. Subject to the last sentence of
Section 10.6 and to Section 10.11, Buyer acknowledges that its exclusive
recourse against Seller (for indemnification or otherwise) with respect to the
matters described in clauses (a), (b) (to the extent relating to any Breach
prior to the Closing Date) or (c) of Section 10.2 after payment by Seller of One
Million Three Hundred Thousand Dollars ($1,300,000) with respect thereto shall
be such right of set-off, and that if Buyer is unable to pay the amounts due
under the Promissory Note and Preferred Shares neither Buyer nor its successors
or assigns shall have any recourse against Seller for claims in excess of such
cash payments by Seller. Notwithstanding the preceding sentence, if a claim for
which Buyer is entitled to indemnification shall arise after payments of
principal have been made under the Promissory Note or payments have been made
upon redemption or liquidation of the Preferred Shares and any such payments
remaining thereunder shall be insufficient to satisfy such claim, Buyer's
recourse against Seller shall, to the extent of all such prior payments, be
reinstated.
PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
Promptly after receipt by an indemnified party under Section
10.2, 10.4, or (to the extent provided in the last sentence of Section 10.3)
Section 10.3 of notice of any Threatened or actual Proceeding against it, such
indemnified party will, if a claim is to be made against an indemnifying party
under such Section, give notice to the indemnifying party of the commencement of
such claim, but the failure to notify the indemnifying party will not relieve
the indemnifying party of any liability that it may have to any indemnified
party, except to the extent that the indemnifying party demonstrates that the
defense of such action is prejudiced by the indemnifying party's failure to give
such notice.
Except as provided in Sections 10.3, 10.10 and 11.16(g), if any
Proceeding referred to in Section 10.9(a) is Threatened or brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Section 10 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of
any Threatened or actual Proceeding and the indemnifying party does not, within
twenty days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
Seller hereby consents to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agrees that
process may be served on Seller with respect to such a claim anywhere in the
world.
PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-
party claim may be asserted by notice to the party from whom indemnification is
sought. Any such notice shall be given within a reasonable time after the party
has knowledge of the facts which give or may give rise to such claim; provided,
however, that failure to notify the indemnifying party will not relieve the
indemnified parties of any liability it may have a to the indemnified party,
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnifying party's failure to give such
notice. With respect to the matters described in Section 10.2(d), Seller shall
have exclusive control of the defense and settlement thereof, and Buyer shall,
and shall cause each of the Acquired Companies to, cooperate with Seller in any
manner reasonably necessary for Seller to resolve such matters, including but
not limited to, and at no charge to Seller, (i) making available then current
employees with knowledge of such matters to serve as witnesses and/or to discuss
the matters with Seller's designated counsel and other representatives, (ii)
maintaining records of the last known addresses of former employees who have
knowledge of such matters, (iii) making available any and all applicable
documents relating to any such matters and (iv) preserving any and all
applicable documents unless and until Seller notifies Buyer that such matters
have been resolved by settlement or otherwise.
EXCLUSIVE REMEDY
The indemnification provisions of this Section 10 set forth the sole
and exclusive remedy of Buyer against Seller with respect to any claim for
Damages based upon, arising out of, or otherwise in respect of this Agreement
and the Contemplated Transactions, except claims for fraud or willful
misrepresentation.
DISPUTE RESOLUTION
The parties shall attempt to resolve any dispute between them
arising out of or relating to this Section 10 in accordance with the procedures
specified in this Section 10.12.
The parties shall attempt in good faith to resolve any dispute
arising out of or relating to this Agreement promptly by negotiation between
executives who have authority to settle the controversy and who are at a higher
level of management than the persons with direct responsibility for
administration of this Agreement. Any party may give the other party written
notice of any dispute not resolved in the normal course of business. Within 15
days after delivery of the notice, the receiving party shall submit to the other
a written response. The notice and the response shall include (i) a statement
of each party's position and a summary of arguments supporting that position,
and (ii) the name and title of the executive who will represent that party and
of any other person who will accompany the executive. Within 30 days after
delivery of the disputing party's notice, the executives of both parties shall
meet at a mutually acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the dispute. All reasonable
requests for information made by one party to the other will be honored.
If the matter has not been resolved within 60 days of the
disputing party's notice, or if the parties fail to meet within 30 days, either
party shall initiate mediation of the controversy or claim as provided hereinaf-
ter.
All negotiations pursuant to this clause are confidential and
shall be treated as compromise and settlement negotiations for purposes of the
Federal Rules of Evidence and state rules of evidence.
If the dispute has not been resolved by negotiation as provided
herein, the parties shall endeavor to settle the dispute by mediation under the
Center for Public Resources ("CPR") Model Procedure for Mediation of Business
Disputes in effect on the date of this Agreement. The neutral third party will
be selected from the CPR Panels of Neutrals, with the assistance of CPR, unless
the parties agree otherwise.
GENERAL PROVISIONS AND COVENANTS TO BE PERFORMED AFTER CLOSING
EXPENSES
Except as otherwise expressly provided in this Agreement, each party
to this Agreement will bear its respective expenses incurred in connection with
the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. Buyer will pay all amounts payable
to Southcoast Securities Corporation and New Street Investments LP in connection
with this Agreement and the Contemplated Transactions. Buyer will also
reimburse Seller for the cost of the audit of the Closing Financial
Determination to the extent such cost exceeds that which would be incurred by
Seller in auditing such items in connection with its customary fiscal year end
audit; provided, however, that Buyer's reimbursement for such cost shall in no
event exceed Twenty-Five Thousand Dollars ($25,000). Seller will pay all
amounts payable to The Nassau Group, Inc. in connection with this Agreement and
the Contemplated Transactions. In the event of termination of this Agreement,
the obligation of each party to pay its own expenses will be subject to any
rights of such party arising from a breach of this Agreement by another party.
PUBLIC ANNOUNCEMENTS
Before the Closing Date neither Buyer nor Seller shall make any
statement to employees or the public regarding the matters contemplated herein
without the consent of the other, except that (a) Buyer and Seller may each
continue such communications with their respective employees, customers,
suppliers, franchisees, lenders, lessors, shareholders, and other particular
groups as may be necessary or legally required for the prompt consummation of
the transactions contemplated by this Agreement, and (b) Seller may make such
public announcements as it deems legally advisable, it being agreed, however,
that Seller shall use reasonable efforts to notify Buyer in advance of any such
announcements.
CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer
shall, and shall cause its Representatives, including ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇, to be bound by the letter dated February 21, 1996 from ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇. to S.C. ▇▇▇▇▇▇▇▇, a copy of which is attached as Exhibit 11.3, with the
following amendments: (a) clauses (ii) and (iii) shall be deleted from paragraph
4 and (b) paragraph 7 shall be supplemented with the following language at the
end thereof "or solicit or cause to be solicited any customer of Company which
is currently doing business with Company or which has done so within the last
two (2) years."
NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
regular mail, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice to the other
parties):
Seller:
Handex Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Buyer:
ECB, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to 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 documents referred to in this Agreement.
WAIVER
Except as otherwise expressly provided herein, the rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither the failure nor any delay by any party in exercising any right, power,
or privilege under this Agreement or 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 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 such 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.
ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in 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 except by a written agreement executed by the party
to be charged with the amendment.
DISCLOSURE SCHEDULE
The disclosures made in any Disclosure Schedule, and those in any
supplement thereto, shall be deemed made with respect to any other Disclosure
Schedule to which they may relate notwithstanding the absence of a specific
cross-reference thereto.
ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Seller may assign its rights under this Agreement and, subject to
the terms thereof, transfer the Promissory Note, Preferred Shares and Warrants
to any Person. Buyer may not assign any of its rights under this Agreement
without the prior consent of Seller. Subject to the preceding sentences, 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. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and permitted assigns.
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 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.
SECTION HEADINGS; CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to
in this Agreement, time is of the essence.
GOVERNING LAW
This Agreement will be governed by the laws of the State of Florida
without regard to conflicts of laws principles.
COUNTERPARTS
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.
CORPORATE NAME; TRADEMARKS
If the Closing occurs, Selling will, within thirty days thereafter,
change its corporate name to one which does not include the word "Handex".
TAX RETURNS, PAYMENTS AND ELECTIONS
Seller will take all steps necessary and cause the Acquired
Companies to take all steps necessary to terminate any Tax sharing Contract
between Seller and any of the Acquired Companies as of the Closing Date and such
Tax sharing Contracts will have no further effect for any taxable year (whether
current, future or past).
Seller will include the income of the Acquired Companies
(including any deferred income triggered into income by IRC Reg. S1.1502-13 and
IRC Reg. S1.1502-14 and any excess lose accounts taken into income under IRC
Reg. S1.1502-19) on Seller's Tax Returns for all periods through the Closing
Date and pay any Taxes attributable to such income. The income of the Acquired
Companies will be apportioned to the period up to and including the Closing Date
and the period after the Closing Date by closing the books of the Acquired
Companies as of the end of the Closing Date.
For all periods ending on or before the Closing Date, Seller
will timely prepare and file all Tax Returns, after taking into account any
applicable filing extensions, that are or were required to be filed with respect
to the Acquired Companies pursuant to applicable Legal Requirements.
Buyer agrees to indemnify Seller for any additional tax owed by
Seller (including tax owed by Seller due to this indemnification payment)
resulting from any transaction not in the ordinary course of business of the
Acquired Companies occurring on the Closing Date after Buyer's purchase of the
Shares. Buyer and Seller agree to report all transactions not in the ordinary
course of business occurring on the Closing Date after Buyer's purchase of the
Shares on Buyer's federal income tax return to the extent permitted by IRC Reg.
S1.1502-76(b)(1)(B).
At Seller's request, Buyer will cause any of the Acquired
Companies to make or join with Seller in making any Tax election if the making
of such election does not have a material adverse impact on the Buyer (or any of
the Acquired Companies) for any Tax period after Buyer's purchase of the Shares.
Buyer will, and the Buyer will cause the Acquired Companies to,
maintain all books and records of the Acquired Companies relating to the Taxes
and Tax Returns of Seller and the Acquired Companies for so long as Seller shall
have any responsibility or liability therefor. Seller will maintain all books
and records in its possession which relate to the Taxes and Tax Returns of the
Acquired Companies for so long as the Buyer or the Acquired Companies shall have
any responsibility or liability therefor.
Further, Seller and Buyer hereby grant to the other and its
Representatives, and Buyer will cause each Acquired Company to grant Seller and
its Representatives, the right to inspect and make copies of all such books and
records to the extent reasonably necessary for Buyer or Seller to accurately
determine its liability for any Taxes and to prepare or amend its Tax Returns.
With respect to the fiscal period ending on the Closing Date, Buyer also
specifically agrees to cause the Acquired Companies to furnish such information
as shall be necessary for Seller to accurately prepare and timely file the Tax
Returns referenced in Section 11.16(b) above.
If any Proceeding referred to in Section 10.9(a) is Threatened
or brought against Buyer or any Acquired Company relating to Taxes for any
period through the Closing Date it shall give notice to Seller of the
commencement of such Proceeding, whereupon Seller shall be entitled, upon notice
to the Person from which notice was received, to assume exclusive control of the
defense and settlement of such Proceeding. In the event Seller assumes defense
of such Proceeding it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification by Seller and that neither Buyer nor any of the
Acquired Companies will have any liability with respect to any compromise,
settlement or adjudication of such claims. Notwithstanding anything to the
contrary expressed herein, Seller will not settle or otherwise resolve any issue
which may affect the liability for Taxes of the Buyer and the Acquired Companies
for any period subsequent to the Closing with respect to which the Buyer and the
Acquired Companies have any responsibility for payments thereof, without Buyer's
consent, which consent shall not be unreasonably withheld.
If the parties hereto agree that it is in their mutual best
interest, Buyer and Seller will join in making an election under Section
338(h)(10) of the Code (and any corresponding elections under state, local, or
foreign tax law) (collectively a "338(h)(10) Election") with respect to the
purchase and sale of the Shares. If the 338 (h)(10) Election is made, the
parties agree that (i) the Consideration specified in Section 2.2 and the
liabilities of the Acquired Companies (plus other relevant items) will be
allocated to the assets of the Acquired Companies for Tax purposes as shown on
Schedule 11.17 attached hereto and (ii) Buyer, the Acquired Companies and Seller
will file all Tax Returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
Except for Taxes, included as a liability in the Net Acquired
Current Assets, Seller will indemnify and hold the Buyer harmless against (i)
any and all liability assessed against the Buyer or any the Acquired Companies
for any Taxes for which Seller has responsibility under this Section 11.16, (ii)
any liability for Taxes assessed against the Buyer or the Acquired Companies
with respect to any period ending on or before the Closing Date by reason of the
Buyer or the Acquired Companies being severally liable for Income Taxes pursuant
to Treasury Reg. Section 1.1502-6 or any analogous State or local provisions,
and (iii) any other liability assessed against the Buyer or the Acquired
Companies for Taxes of the Seller for, or which relate to, periods ending on or
before the Closing Date.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Buyer: ECB, INC. Seller: HANDEX CORPORATION
By: By:
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Title: Title:
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88/HANDEX/199843.15
