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Exhibit 10.17
STOCK PURCHASE AGREEMENT
AMONG
ORIUS CORP.,
NATG HOLDINGS, LLC
AND
THE SHAREHOLDERS OF NETWORK CABLING SERVICES, INC.
FEBRUARY 23, 1999
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TABLE OF CONTENTS
1. DEFINITIONS................................................................. 1
2. PURCHASE AND SALE TRANSACTION............................................... 6
(a) BASIC TRANSACTION.................................................. 6
(b) INITIAL CONSIDERATION.............................................. 6
(c) EARN-OUT CONSIDERATION............................................. 6
(d) THE CLOSING........................................................ 8
(e) DELIVERIES AT CLOSING.............................................. 8
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION................... 8
(a) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS................. 8
(b) REPRESENTATIONS AND WARRANTIES OF BUYER............................ 10
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY....................... 11
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER................... 11
(b) CAPITALIZATION..................................................... 12
(c) NONCONTRAVENTION................................................... 12
(d) BROKERS' FEES...................................................... 12
(e) TITLE TO ASSETS.................................................... 12
(f) SUBSIDIARIES....................................................... 13
(g) FINANCIAL STATEMENTS............................................... 13
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END................... 13
(i) UNDISCLOSED LIABILITIES............................................ 15
(j) LEGAL COMPLIANCE................................................... 15
(k) TAX MATTERS........................................................ 15
(l) REAL PROPERTY...................................................... 17
(m) INTELLECTUAL PROPERTY.............................................. 18
(n) TANGIBLE ASSETS.................................................... 20
(o) INVENTORY.......................................................... 20
(p) CONTRACTS.......................................................... 20
(q) NOTES AND ACCOUNTS RECEIVABLE...................................... 20
(r) POWERS OF ATTORNEY................................................. 21
(s) INSURANCE.......................................................... 21
(t) LITIGATION......................................................... 21
(u) COMMITMENTS AND WARRANTIES......................................... 21
(v) LIABILITY FOR SERVICES PERFORMED................................... 22
(w) EMPLOYEES.......................................................... 22
(x) EMPLOYEE BENEFITS.................................................. 22
(y) GUARANTIES......................................................... 24
(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.......................... 24
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY.................... 25
(ab) CUSTOMERS AND SUPPLIERS............................................ 25
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5. PRE-CLOSING COVENANTS....................................................... 26
(a) GENERAL............................................................ 26
(b) NOTICES AND CONSENTS............................................... 26
(c) OPERATION OF BUSINESS ............................................. 26
(d) PRESERVATION OF BUSINESS .......................................... 26
(e) FULL ACCESS ....................................................... 26
(f) NOTICE OF DEVELOPMENTS............................................. 26
(g) EXCLUSIVITY........................................................ 27
(h) NO TERMINATION OF SHAREHOLDERS'S OBLIGATION BY
SUBSEQUENT INCAPACIT.............................................. 27
6. POST-CLOSING COVENANTS...................................................... 27
(a) GENERAL............................................................ 27
(b) LITIGATION SUPPORT................................................. 27
(c) TRANSITION......................................................... 27
(d) INDEPENDENT ACCOUNTANTS............................................ 28
(e) TAX MATTERS........................................................ 28
(f) STOCK OPTIONS...................................................... 28
(g) AUDITED FINANCIAL STATEMENTS....................................... 28
7. CONDITIONS TO OBLIGATION TO CLOSE........................................... 28
(a) CONDITIONS TO OBLIGATION OF THE BUYER.............................. 28
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS....................... 30
8. REMEDIES FOR BREACHES OF THIS AGREEMENT..................................... 31
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES......................... 31
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER................ 31
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
SHAREHOLDERS...................................................... 32
(d) MATTERS INVOLVING THIRD PARTIES.................................... 32
(e) DETERMINATION OF ADVERSE CONSEQUENCES.............................. 33
(f) OTHER INDEMNIFICATION PROVISIONS................................... 33
(g) LIMITATION ON LIABILITY..................................................... 34
9. POST-CLOSING ADJUSTMENT OF CONSIDERATION.................................... 34
10. TAX MATTERS................................................................. 35
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE................... 35
(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE
CLOSING DATE...................................................... 36
(c) COOPERATION ON TAX MATTERS......................................... 36
(d) TAX SHARING AGREEMENTS............................................. 37
(e) CERTAIN TAXES...................................................... 37
11. TERMINATION................................................................. 37
(a) TERMINATION OF AGREEMENT........................................... 37
(b) EFFECT OF TERMINATION.............................................. 37
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12. MISCELLANEOUS............................................................... 37
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS............................ 37
(b) NO THIRD-PARTY BENEFICIARIES....................................... 38
(c) ENTIRE AGREEMENT................................................... 38
(d) SUCCESSION AND ASSIGNMENT.......................................... 38
(e) COUNTERPARTS....................................................... 38
(f) HEADINGS........................................................... 38
(g) NOTICES............................................................ 38
(h) GOVERNING LAW...................................................... 39
(i) AMENDMENTS AND WAIVERS............................................. 39
(j) SEVERABILITY....................................................... 39
(k) EXPENSES........................................................... 39
(l) CONSTRUCTION....................................................... 39
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES.................. 40
(n) SPECIFIC PERFORMANCE............................................... 40
(o) SUBMISSION TO JURISDICTION......................................... 40
(p) WAIVER OF JURY TRIAL............................................... 40
Exhibit A: Debt Pay-Off Schedule
Exhibit B: Form of Employment Agreements
Exhibit C: Form of Non-Competition Agreements
Exhibit D: Financial Statements
Exhibit E: Form of Shareholder's Counsel Opinion
Exhibit F: Form of Subordination Agreement
Exhibit G: Form of Buyer's Counsel Opinion
Exhibit H: Form of Leases
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of February 23, 1999
by and among NATG Holdings, LLC, a Delaware limited liability company (the
"Buyer"), Orius Corp., a Delaware corporation and the parent company of the
Buyer ("Orius"), and the shareholders of Network Cabling Services, Inc., a
Texas corporation (the "Company") listed on the signature page to this
Agreement (the "Shareholders"). The Buyer and the Shareholders are referred to
collectively herein as the "Parties."
The Shareholders in the aggregate own all of the outstanding capital
stock of the Company.
This Agreement contemplates the sale by the Shareholders of all of the
issued and outstanding capital stock of the Company to Buyer. The Shareholders
will receive cash and capital stock in Orius, in exchange for their shares of
capital stock of the Company.
Simultaneously herewith, Orius Merger Corp., a Florida corporation and
a wholly-owned subsidiary of Buyer ("Merger Corp."), and North American Tel-Com
Group, Inc., a Florida corporation ("North American"), are entering into a
merger agreement (the "Merger Agreement") pursuant to which Merger Corp. will
be merged with and into North American. Buyer is also entering into stock
exchange agreements with the shareholders of ▇▇▇▇▇▇ Underground Cable, Inc.
("▇▇▇▇▇▇"), Copenhagen Utilities & Construction, Inc. ("CUC") and DAS-CO of
Idaho, Inc. ("Dasco") to acquire all of the issued and outstanding capital
stock of ▇▇▇▇▇▇, ▇▇▇ and Dasco (collectively with this Agreement and the Merger
Agreement, the "Exchange Agreements"). The parties to the Exchange Agreements
(other than the parties to the ▇▇▇▇▇▇ and Dasco Exchange Agreements) intend for
the transfers contemplated thereunder to be treated as a single transaction
qualifying under Section 351 of the Code (as hereinafter defined).
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation
D promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses, and any other cost of enforcing a party's rights under this
Agreement.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
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"Affiliated Group" means any affiliated group within the
meaning of Code Section 1504(a) or any similar group defined under a similar
provision of state, local or foreign law.
"Applicable Rate" means the corporate base rate of interest
publicly announced from time to time by PNC Bank, N.A.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms or could form the
basis for any specified consequence.
"Closing" has the meaning set forth in Section below.
"Closing Date" has the meaning set forth in Section below.
"Closing Date Balance Sheet" has the meaning set forth in
Section below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means any share of the common stock, par value
$.0001 par share, of Orius.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the common stock, $1.00
par value, of the Company.
"Consideration" has the meaning set forth in Section below.
"Controlled Group of Corporations" has the meaning set forth
in Code Section 1563.
"Disclosure Schedule" has the meaning set forth in Section
below.
"Draft Closing Date Balance Sheet" has the meaning set forth
in Section below.
"Earn-Out Consideration" shall mean the 1999 Earn-Out
Consideration and the 2000 Earn-Out Consideration.
"1999 Earn-Out Consideration has the meaning set forth in
Section 2(c) below.
"2000 Earn-Out Consideration has the meaning set forth in
Section 2(c) below.
"EBITDA" means earnings (net income) before the effect of
interest income and expense, income tax benefit and expense, depreciation
expense and amortization expense.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c)
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qualified defined benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), (d) Employee Welfare
Benefit Plan or (e) bonus, incentive, stock purchase, stock ownership, stock
option, stock appreciation right, severance, salary continuation, termination,
change of control or other material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
"Employment Agreements" means the Employment Agreements in
the form attached hereto as Exhibit B.
"Environmental, Health, and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Hazardous Materials (which, for purposes of this Agreement, shall ▇▇▇▇▇ any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation), each as
amended and as now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" means (i) any corporation included with the
Company in a controlled group of corporations within the meaning of Section
414(b) of the Code; (ii) any trade or business (whether or not incorporated)
which is under common control with the Company within the meaning of Section
414(c) of the Code; (iii) any member of an affiliated service group of which
the Company is a member within the meaning of Section 414(m) of the Code; or
(iv) any other person or entity treated as an affiliate of the Company under
Section 414(o) of the Code.
"Estimated Closing Balance Sheet" has the given that term in
Section hereof.
"Fiduciary" has the meaning set forth in ERISA Section 3(21).
"Financial Statement" has the meaning set forth in Section
below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Indemnified Party" has the meaning set forth in Section
below.
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"Indemnifying Party" has the meaning set forth in Section
below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means that which is known by a person and that of
which a person has constructive knowledge based upon information readily
available to that person in the performance of such person's duties. In the
case of the Buyer or the Company, "Knowledge" means the "Knowledge" of its
respective directors and executive officers.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Effect" means, individually or together
with other adverse effects, any material adverse effect on the assets,
liabilities, results of operations, business condition (financial or otherwise)
or prospects of the Company or on the Company's ability to consummate the
transactions contemplated hereby or the ability of the Buyer to operate the
business of the Company immediately after the Closing in substantially the same
manner as such business is conducted prior to Closing.
"Most Recent Balance Sheet" means the balance sheet contained
within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in Section below.
"Most Recent Fiscal Period End" has the meaning set forth in
Section below.
"Most Recent Fiscal Year End" has the meaning set forth in
Section below.
"Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37).
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"National Securities Exchange" shall have the meaning
ascribed to that term in the rules and regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
"Noncompetition Agreements" means the Noncompetition
Agreements in the form attached hereto as Exhibit C.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Orius" has the meaning set forth in the preface above.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in
ERISASection 406 and Code Section 4975.
"Reportable Event" has the meaning set forth in ERISA Section
4043.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens that could not reasonably be expected to have
a Material Adverse Effect, (b) liens for Taxes not yet due and payable or for
Taxes that the taxpayer is contesting in good faith through appropriate
proceedings disclosed on Section of the Disclosure Schedule, (c) purchase money
liens and liens securing rental payments under capital lease arrangements
disclosed in the Most Recent Financial Statements, and (d) other liens arising
in the Ordinary Course of Business and not incurred in connection with the
borrowing of money, so long as such liens could not reasonably be expected to
have a Material Adverse Effect.
"Shareholders" has the meaning set forth in the preface
above.
"Shareholders Agreement" means that certain Shareholders
Agreement among Orius and the shareholders of Orius dated as of February 26,
1999.
"Subordination Agreement" means the subordination agreement
in substantially the form attached hereto as Exhibit F.
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"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not,
and any obligations under any agreements or arrangements with respect to any of
the foregoing.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section
below.
2. PURCHASE AND SALE TRANSACTION.
(a) BASIC TRANSACTION. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to purchase from the
Shareholders, and the shareholders agree to sell to the Buyer, all of their
respective Company Shares for the consideration specified below in this
Section .
(b) INITIAL CONSIDERATION. The Buyer agrees to deliver at
Closing to the Shareholders (A) cash in the amount of $5,050,000.00, less the
debt pay-off amounts shown on Exhibit A hereto (the "Pay-Off Amount"), payable
by wire transfer or other immediately available funds; and (B) 30,000 shares of
Common Stock (the "Initial Consideration"). The Initial Consideration and the
Earn-Out Consideration (as defined below) are collectively referred to
hereinafter as the "Consideration.") The Consideration shall be allocated as
set forth in Section 4(b) to the Disclosure Schedule. The Consideration shall
be subject to adjustment pursuant to the provisions of Section 2(c) and Section
hereof.
(c) EARN-OUT CONSIDERATION.
(i) The Buyer shall pay to the Shareholders cash in
the amount of $500,000 not later than 30 days after the Buyer's receipt of
audited financial statements of the Company for the calendar year 1999 (the
"1999 Earn-Out Consideration"); provided, however, that in the event that the
Company's EBITDA for calendar year 1999, as determined by Orius's independent
auditors (the "Actual 1999 EBITDA"), is less than $1,700,000.00 (the "Target
1999 EBITDA"), then the 1999 Earn-Out Consideration shall be reduced in
accordance with Section 2(c)(ii) hereof.
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(ii) In the event that the Actual 1999 EBITDA is
less than $1,445,000.00 (the "1999 Minimum Target EBITDA"), then the 1999
Earn-Out Consideration shall be $0; provided, however, that in the event that
the Actual 1999 EBITDA is greater than the 1999 Minimum Target EBITDA, then the
1999 Earn-Out Consideration shall be reduced by the difference (expressed as a
positive integer) between (A) $500,000.00 and (B) the product of (x)
$500,000.00 and (y) a fraction, the number of which is the Actual 1999 EBITDA
and the denominator of which is the Target 1999 EBITDA.
(iii) The Buyer shall pay to the Shareholders cash
in the amount of $500,000 not later than 30 days after the Buyer's receipt of
audited financial statements of the Company for the calendar year 2000 (the
"2000 Earn-Out Consideration"); provided, however, that in the event that the
Company's EBITDA for calendar year 2000, as determined by Orius's independent
auditors (the "Actual 2000 EBITDA"), is less than $2,000,000.00 (the "Target
2000 EBITDA"), then the 2000 Earn-Out Consideration shall be reduced in
accordance with Section 2(c)(iv) hereof.
(iv) In the event that the Actual 2000 EBITDA is
less than $1,700,000.00 (the "2000 Minimum Target EBITDA"), then the 2000
Earn-Out Consideration shall be $0; provided, however, that in the event that
the Actual 2000 EBITDA is greater than the 2000 Minimum Target EBITDA, then the
2000 Earn-Out Consideration shall be reduced by the difference (expressed as a
positive integer) between (A) $500,000.00 and (B) the product of (x)
$500,000.00 and (y) a fraction, the number of which is the Actual 2000 EBITDA
and the denominator of which is the Target 2000 EBITDA.
(v) Notwithstanding anything to the contrary
contained herein, if the Company's combined EBITDA for the calendar years 1999
and 2000, as determined by the Buyer, is greater than $3,700,000.00, then the
reductions to the 1999 Earn-Out Consideration and the 2000 Earn-Out
Consideration otherwise required pursuant to Section 2(c)(ii) and Section
2(c)(iv) hereof, respectively, shall not apply and the total amount of Earn-Out
Consideration to be paid to the Shareholders hereunder shall be $1,000,000.00.
The Earn-Out Consideration shall be payable as follows: not later than 30 days
after the Buyer's receipt of audited financial statements of the Company for
the calendar year 2000, the Buyer shall pay to the Shareholders the sum of (x)
the difference between the amount previously paid to the Shareholders as 1999
Earn-Out Consideration and $500,000.00; and (y) $500,000.00.
(vi) All payments of Earn-Out Consideration are
subject to the provisions of the Subordination Agreement. In the event that the
payment of Earn-Out Consideration is not made when due as a result of Buyer's
compliance with the terms and provisions of the Subordination Agreement,
interest shall accrue on such amount of unpaid Earn-Out Consideration at the
rate of 8% per annum.
(vii) If the Shareholders have any objections to the
calculation of Actual 1999 EBITDA or Actual 2000 EBITDA, they will deliver a
detailed statement describing their objections to the Buyer within 15 days
after receiving the calculation of Actual 1999 EBITDA or Actual 2000 EBITDA, as
the case may be. The Buyer and the Shareholders will use reasonable efforts to
resolve any such objections themselves. If the Parties do not obtain a final
resolution within 30 days after the Buyer has received the statement of
objections, however, the
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Buyer and Shareholders will select an accounting firm mutually acceptable to
them to resolve any remaining objections. If the Buyer and the Shareholders are
unable to agree on the choice of an accounting firm, they will select a
nationally-recognized accounting firm by lot (after excluding their respective
regular outside accounting firms). The determination of any accounting firm so
selected will be set forth in writing and will be conclusive and binding upon
the Parties.
(viii) In the event the Parties submit any
unresolved objections to an accounting firm for resolution as provided in
Section 2(c)(vii) above, any expenses relating to the engagement of the
accounting firm shall be allocated between the Shareholders and the Buyer by
the accounting firm in the proportion that the amount in dispute which is
decided in favor of the challenging party bears to the entire amount in
dispute.
(d) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Holland &
Knight LLP in Ft. Lauderdale, Florida, commencing at 9:00 a.m. local time on
February 26, 1999 or such other date, time and place as the Parties may
mutually determine (the "Closing Date").
(e) DELIVERIES AT CLOSING. At the Closing, (i) the
Shareholders will deliver to the Buyer the various certificates, instruments,
and documents referred to in Section below, (ii) the Buyer will deliver to the
Shareholders the various certificates, instruments, and documents referred to
in Section below, and (iii) the Shareholders will deliver to the Buyer stock
certificates representing all of their Company Shares, endorsed in blank or
accompanied by duly executed assignment documents, and (iv) the Buyer will
deliver to the Shareholders the Initial Consideration specified in Section
above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. Each
Shareholder severally represents and warrants to the Buyer that the statements
contained in this Section are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section ), except as set forth on Section of the
Disclosure Schedule (as hereinafter defined). The Disclosure Schedule shall be
effective to modify only those representations and warranties to which the
Disclosure Schedule makes explicit reference. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3(a).
(i) AUTHORIZATION OF TRANSACTION. Such Shareholder
has full power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of such Shareholder, enforceable in accordance with
its terms and conditions except to the extent enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency or moratorium
laws, or other laws affecting the enforcement of creditors' rights or by the
principles governing the availability of equitable remedies. Such Shareholder
need not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency or any other
Person in order to consummate the transactions contemplated by this Agreement.
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(ii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which such Shareholder is
subject or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
such Shareholder is a party or by which he is bound.
(iii) BROKERS' FEES. Such Shareholder has, or prior
to Closing will have, paid any fees or commissions due from Shareholders to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement. Such Shareholder agrees that he will pay any additional amounts that
may become due from him or, to the extent of his proportionate ownership
interest in the Company as set forth on Section 4(b) of the Disclosure
Schedule, the Company, to any such broker, finder or agent in the future,
including as a result of any indemnification obligations.
(iv) INVESTMENT. Such Shareholder understands that
(A) the Common Stock that he or she will receive as part of the Consideration
have not been, and will not be, registered under the Securities Act, or under
any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public
offering, (B) he or she is acquiring such shares of Common Stock solely for his
own account for investment purposes, and not with a view to the distribution
thereof, (C) he or she is a sophisticated investor with knowledge and
experience in business and financial matters, (D) he or she has received
certain information concerning the Buyer and has had the opportunity to obtain
additional information as desired in order to evaluate the merits and the risks
inherent in holding the Common Stock and (E) he or she is able to bear the
economic risk and lack of liquidity inherent in holding the Common Stock.
(v) COMPANY SHARES. Such Shareholder holds of record
and owns beneficially the number of Company Shares set forth opposite such
Shareholder's name, in Section of the Disclosure Schedule, free and clear of
any restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Security Interests liens or other
encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Such Shareholder is not a party to any option,
warrant, purchase right, or other contract or commitment that could require
such Shareholder to sell, transfer, or otherwise dispose of any capital stock
of the Company (other than this Agreement). Such Shareholder is not a party to
any voting trust, proxy, shareholders agreement, or other agreement or
understanding with respect to the voting of any capital stock of the Company.
(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Buyer by such Shareholder with respect to
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
each statement contained herein or therein not misleading. There is no fact
which such Shareholder has not disclosed to the Buyer herein and of which such
Shareholder is aware which could be anticipated to have a Material Adverse
Effect.
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(b) REPRESENTATIONS AND WARRANTIES OF BUYER. The Buyer
represents and warrants to the Shareholders that the statements contained in
this Section are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section ), except as set forth in the disclosure schedule
delivered by the Buyer to the Shareholders on the date hereof (the "Buyer
Disclosure Schedule"). The Buyer Disclosure Schedule shall be effective to
modify only those representations and warranties to which the Buyer Disclosure
Schedule makes explicit reference. The Buyer Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3(b).
(i) ORGANIZATION OF THE BUYER. The Buyer is a
limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware. Correct and complete copies
of the governing documents of the Buyer (as amended to date) are included as
part of the Buyer Disclosure Schedule. The manager of the Buyer and the names
and titles of the executive officers and directors of Orius are set forth on
the Buyer Disclosure Schedule.
(ii) CAPITALIZATION OF ORIUS. The entire authorized
capital stock of Orius consists of 4,700,000 shares of Common Stock and 300,000
shares of preferred stock. The issued and outstanding capital stock of Orius as
of the Closing Date is set forth and held of record as set forth on Buyer
Disclosure Schedule. All of the issued and outstanding shares of Common Stock
as of the Closing Date will be duly authorized, validly issued, fully paid, and
nonassessable. Except as disclosed in Buyer Disclosure Schedule, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Orius to issue, sell, or otherwise cause to become
outstanding any of its capital stock. Except as disclosed in the Buyer
Disclosure Schedule, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to Orius.
Except as disclosed in the Buyer Disclosure Schedule, there are no voting
trusts, proxies or other agreements or understandings with respect to the
voting of the capital stock of Orius. Orius owns beneficially and of record all
of the limited liability company interests of Buyer.
(iii) AUTHORIZATION OF TRANSACTION. The Buyer has
full power and authority (including full power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions except to the extent enforcement
thereof may be limited by applicable bankruptcy, reorganization, insolvency or
moratorium laws, or other laws affecting the enforcement of creditors' rights
or by the principles governing the availability of equitable remedies. The
Buyer need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency or
any other Person in order to consummate the transactions contemplated by this
Agreement.
(iv) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
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other restriction of any government, governmental agency, or court to which the
Buyer is subject or any provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Buyer is a party or by
which the Buyer is bound or to which any of its assets is subject.
(v) BROKERS' FEES. The Buyer has, or prior to the
Closing will have, paid any fees or commissions due from the Buyer to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement. The Buyer agrees that they will pay any additional amounts it may
become due from the Buyer to any such broker, finder or agent in the future,
including as a result of any indemnification obligations.
(vi) DISCLOSURE. Neither this Agreement nor any of
the exhibits, attachments, written statements, documents, certificates or other
items prepared for or supplied to the Shareholders by the Buyer with respect to
the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
each statement contained herein or therein not misleading. There is no fact
which the Buyer has not disclosed to the Shareholders herein and of which the
Buyer or any of the its officers or directors is aware and which could be
anticipated to have a material adverse effect on the operations of the Buyer
after the Closing.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Shareholders represent and warrant to the Buyer that the statements contained
in thisSection are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout thisSection ), except as set forth in the Disclosure Schedule
delivered by the Shareholders to the Buyer on the date hereof and initialed by
the Parties (the "Disclosure Schedule"); provided, however that any
indemnification liability resulting from a breach of the representations and
warranties set forth in thisSection 4 shall be subject to the terms ofSection 8
hereof. The Disclosure Schedule shall be effective to modify only those
representations and warranties to which the Disclosure Schedule makes explicit
reference. The Disclosure Schedule will be arranged in paragraphs corresponding
to the lettered and numbered paragraphs contained in this Section .
(a) ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties owned and used
by it. Section of the Disclosure Schedule lists the directors and officers of
the Company. Correct and complete copies of the charter and bylaws of the
Company (as amended to date) are included as part of Section of the Disclosure
Schedule. The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Company are correct and complete and a true and correct copy
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thereof has been provided to the Buyer. The Company is not in default under or
in violation of any provision of its charter or bylaws.
(b) CAPITALIZATION. The entire authorized capital stock of
the Company consists of 10,000 Company Shares, of which 2,000 Company Shares
are issued and outstanding and no Company Shares are held in treasury. All of
the issued and outstanding Company Shares have been duly authorized, are
validly issued, fully paid, and nonassessable, and are held of record and owned
beneficially by the Shareholders in the amounts set forth in Section of the
Disclosure Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights,
preemptive rights or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock or securities convertible or exchangeable for, or any options,
warranties, or rights to purchase, any of such capital stock. There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any capital stock or any securities convertible into or exchangeable
for such capital stock or any options, warrants or rights to purchase such
capital stock or securities. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting, transfer, dividend or
other rights (such as registration rights under the Securities Act) of the
capital stock of the Company.
(c) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other restriction of
any government, governmental agency, or court to which the Company is subject
or any provision of the charter or bylaws or similar governance documents of
the Company or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Company is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). The Company need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any Person, government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) BROKERS' FEES. The Company has, or prior to Closing will
have, paid any fees or commissions due from the Company to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement. The
Shareholders agree that they will pay any additional amounts that may become
due from the Company to any such broker, finder or agent in the future,
including as a result of any indemnification obligations.
(e) TITLE TO ASSETS. The Company has good and marketable
title to, or a valid leasehold interest in, the properties and assets used by
it, located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests
(other than the Security Interests disclosed on the face of the Most Recent
Balance Sheet), except for properties and assets disposed of in the Ordinary
Course of Business since the date of the Most Recent Balance Sheet, none of
which disposals are expected to have a Material
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Adverse Effect. The consummation of the transactions contemplated by this
Agreement will not affect the Company's good and marketable title to, or valid
leasehold interest in, the properties and assets described in the preceding
sentence.
(f) SUBSIDIARIES. Except as set forth in Section of the
Disclosure Schedule, the Company does not currently have, and has never had,
any Subsidiaries and does not own any securities of any other Person.
(g) FINANCIAL STATEMENTS. Attached hereto as Exhibit D are
the following financial statements (collectively the "Financial Statements"):
(i) unaudited consolidated balance sheets and statements of income, including
the independent accountant's report thereon as of and for the fiscal year ended
September 30, 1998 (the "Most Recent Fiscal Year End") for the Company; (ii)
audited consolidated balance sheets and statements of income, including the
independent accountant's report thereon as of and for the fiscal years ended
September 30, 1994, September 30, 1995, September 30, 1996 and September 30,
1997; and (iii) unaudited consolidated balance sheets and statements of income,
(the "Most Recent Financial Statements") as of and for the period from October
1, 1998, through December 31, 1998 for the Company (the "Most Recent Fiscal
Period End"). The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Company
as of such dates and the results of operations of the Company for such periods,
are correct and complete in all material respects, and are consistent with the
books and records of the Company (which books and records are correct and
complete).
(h) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except
as set forth on Section 4(h) of the Disclosure Schedule, since the Most Recent
Fiscal Year End, there has not been any occurrence, event, incident, action,
failure to act or transaction that constitutes the Basis of a Material Adverse
Effect on the Company or any that is outside the Ordinary Course of
BusineSection Without limiting the generality of the foregoing, since that
date:
(i) The Company has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) The Company has not entered into any
agreements, contracts, leases, or licenses either involving more than $10,000
in the aggregate, having a term greater than 12 months or outside the Ordinary
Course of Business;
(iii) No party (including the Company) has
accelerated, terminated, modified, or cancelled any agreements, contracts,
leases, or licenses involving more than $10,000 in the aggregate to which the
Company is a party or by which it is bound;
(iv) The Company has not imposed or allowed to be
imposed any Security Interest upon any of its assets, tangible or intangible;
(v) The Company has not made any capital
expenditures involving more than $10,000 in the aggregate or outside the
Ordinary Course of Business;
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(vi) The Company has not made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person;
(vii) The Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation involving more
than $10,000 in the aggregate;
(viii) The Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course
of Business;
(ix) The Company has not cancelled, compromised,
waived, or released any right or claim involving more than $10,000 in the
aggregate and outside the Ordinary Course of Business;
(x) The Company has not granted any license or
sublicense of any rights under or with respect to any Intellectual Property;
(xi) There has been no change made or authorized in
the charter or bylaws of any of the Company;
(xii) The Company has not issued, sold, or otherwise
disposed of any of its capital stock or securities convertible into or
exchangeable for such stock, or granted any options, warrants, or other rights
to purchase or obtain any of such capital stock or securities;
(xiii) The Company has not declared, set aside, or
paid any dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its capital stock or other securities;
(xiv) The Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property
involving more than $10,000 in the aggregate;
(xv) The Company has not made any loan to, or
entered into any other transaction with, any of its directors, officers, and
employees or their "Associates" (as defined in Rule 12b-2 under the Exchange
Act);
(xvi) The Company has not entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvii) The Company has not granted any increase in
any compensation of any of its directors, officers, or other employees;
(xviii) The Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
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(xix) The Company has not made any other change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) The Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) The Company has not increased, or experienced
any change in assumptions underlying or method of calculating, any bad debt,
contingency, tax or other reserves or changed its accounting practices, methods
or assumptions (including changes in estimates or valuation methods); or
written down the value of any assets;
(xxii) The Company has not granted any bonuses or
made any other payments of any kind (other than base compensation in the
Ordinary Course of Business) to any officer, director or employee of the
Company, or to any Person related to any of the foregoing; and
(xxiii) The Company has not committed to any of the
foregoing.
(i) UNDISCLOSED LIABILITIES. Except as disclosed in Section
of the Disclosure Schedule, the Company does not have any Liability, except for
(i) Liabilities set forth on the face of the Most Recent Balance Sheet (rather
than in any notes thereto) and (ii) Liabilities which have arisen after the
Most Recent Fiscal Period End in the Ordinary Course of Business (none of which
results from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement, or violation of
law and none of which could reasonably be expected to have a Material Adverse
Effect).
(j) LEGAL COMPLIANCE. The Company and its predecessors and
Affiliates have complied, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(k) TAX MATTERS.
(i) The Company has filed all Tax Returns that it
was required to file prior to the date hereof and will have filed all Tax
Returns that it will have been required to file prior to the Closing Date. All
such Tax Returns were correct and complete in all material respects. All Taxes
owed by the Company (whether or not shown on any Tax Return) have been paid or
are fully and adequately accrued and adequately disclosed on the Most Recent
Balance Sheet. The Company is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Company that arose in connection with any
failure (or alleged failure) to pay any Tax.
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(ii) The Company has withheld and paid when due all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any former or current employee, independent contractor,
subcontractor, creditor, stockholder, or other third party.
(iii) Neither Shareholders nor the Company has
Knowledge that any authority expects to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no action, suit or
proceeding, investigation, dispute or claim now pending or, to the Knowledge of
the Shareholders, threatened concerning any Tax Liability of the Company or
proposed adjustment to the taxable income of the Company either (A) claimed or
raised by any authority in writing or (B) as to which any of the Shareholders
and the Company has Knowledge based upon personal contact with any agent of
such authority. Section of the Disclosure Schedule contains a summary of all
Tax Returns filed with respect to the Company for the last three completed tax
years, indicates those Tax Returns that have been audited, and indicates those
Tax Returns that currently are the subject of audit. The Shareholders have made
available to the Buyer correct and complete copies of all Tax Returns of the
Company, examination reports, and statements of deficiencies assessed against
or agreed to by the Company since January 1, 1994.
(iv) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) The Company has not filed a consent under Code
Section 341(f) concerning collapsible corporations. The Company has not made
any payments, is not obligated to make any payments, or is not a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G or that would give
rise to any obligation to indemnify any Person for any excise tax payable
pursuant to Code Section 4999. The Company has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). The
Company has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662. Neither the Company nor any
predecessor or affiliate thereof is a party to any Tax allocation, sharing,
indemnification or similar agreement. The Company (A) has not been a member of
an Affiliated Group filing a consolidated federal income Tax Return (other than
a group the common parent of which was the Company) and (B) does not have any
Liability for the Taxes of any Person (other than any of the Company and its
Subsidiaries) under Reg. Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or
otherwise. No indebtedness of the Company consists of "corporate acquisition
indebtedness" within the meaning of Code Section 279.
(vi) Section of the Disclosure Schedule sets forth
as of the most recent practicable date the basis for Federal income tax
purposes of the Company in its assets.
(vii) The unpaid Taxes of the Company (A) did not,
as of the Most recent Fiscal Period End, exceed the reserve for Tax Liability
set forth on the face of the Most Recent Balance Sheet (rather than in any
notes thereto) and (B) do not, and will not as of the
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Closing Date, exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company
in filing its Tax Returns.
(l) REAL PROPERTY. The Company does not own any real
property. Section of the Disclosure Schedule lists and describes briefly all
real property leased or subleased to the Company. The Shareholders have
delivered to the Buyer correct and complete copies of the leases and subleases
listed in Section of the Disclosure Schedule (as amended to date). With respect
to each lease and sublease listed in Section of the Disclosure Schedule:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
(iii) the Company is not and to the Knowledge of the
Shareholders, no other party to the lease or sublease is in breach or default,
and no event has occurred which, with notice or lapse of time, would constitute
a breach or default or permit termination, modification, or acceleration
thereunder;
(iv) no party to the lease or sublease has
repudiated any provision thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) the Company has not received a notice from the
lessor indicating that the lease will not be renewed at the end of its current
term for any additional terms provided for in the lease;
(vii) the term of the lease will continue for a
minimum of six months past the Closing Date;
(viii) with respect to each sublease, the
representations and warranties set forth in subsections (i) through (vii) above
are true and correct with respect to the underlying lease;
(ix) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(x) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations;
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(xi) all facilities leased or subleased thereunder
are supplied with utilities and other services necessary for the operation of
said facilities; and
(xii) the Shareholders are not aware of any pending
or threatened foreclosure or other enforcement proceedings relating to the real
property underlying the leases or subleases set forth in Section of the
Disclosure Schedule that could result in the Company's loss of possession of
such real property.
(m) INTELLECTUAL PROPERTY.
(i) Section 4(m)(i) of the Disclosure Schedule lists
the Intellectual Property owned by the Company. The Company owns or has the
right to use pursuant to license, sublicense, agreement, or permission in
writing all Intellectual Property necessary for the operation of the businesses
of the Company as presently conducted and as presently proposed to be
conducted. Each item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned or available for use
by the Company on identical terms and conditions immediately subsequent to the
Closing hereunder. The Company has taken all necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(ii) The Company has not interfered with, infringed
upon, misappropriated, or otherwise come into conflict with any Intellectual
Property rights of third parties, and none of the Shareholders and the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Company has ever received any charge, complaint,
claim, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of Shareholders and the Company, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(iii) Section of the Disclosure Schedule identifies
each patent or registration which has been issued to the Company with respect
to any of its Intellectual Property, identifies each pending patent application
or application for registration which the Company has made with respect to any
of its Intellectual Property, and identifies each license, agreement, or other
permission which the Company has granted to any third party with respect to any
of its Intellectual Property (together with any exceptions). The Shareholders
have delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date) and have made available to the Buyer correct and complete copies of
all other written documentation evidencing ownership and prosecution (if
applicable) of each such item. Section of the Disclosure Schedule also
identifies each trade name or unregistered trademark used by the Company in
connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section of the Disclosure
Schedule:
(A) The Company possesses all right, title,
and interest in and to the item, free and clear of any Security Interest,
license, or other restriction;
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(B) The item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(C) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, enforceability, use, or ownership of
the item; and
(D) The Company has never agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item.
(iv) Section of the Disclosure Schedule identifies
each item of Intellectual Property that any third party owns and that the
Company uses pursuant to license, sublicense, agreement, or permission. The
Shareholders have delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions (as amended to date).
With respect to each item of Intellectual Property required to be identified in
Section of the Disclosure Schedule:
(A) The license, sublicense, agreement, or
permission covering the item is legal, valid, binding, enforceable, and in full
force and effect;
(B) The license, sublicense, agreement, or
permission will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby;
(C) No party to the license, sublicense,
agreement, or permission is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(D) No party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
(E) With respect to each sublicense, the
representations and warranties set forth in subsections (A) through (D) above
are true and correct with respect to the underlying license;
(F) The underlying item of Intellectual
Property is not subject to any outstanding injunction, judgment, order, decree,
ruling, or charge;
(G) No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or is threatened
which challenges the legality, validity, or enforceability of the underlying
item of Intellectual Property; and
(H) The Company has never granted any
sublicense or similar right with respect to the license, sublicense, agreement,
or permission.
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(v) To the Knowledge of Shareholders and the
Company, the Company will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its businesses as presently
conducted and as presently proposed to be conducted.
(vi) None of the Shareholders or the Company has any
Knowledge of any new products, inventions, procedures, or methods of
manufacturing or processing that any competitors or other third parties have
developed which, to the Knowledge of the Shareholders, reasonably could be
expected to supersede or make obsolete any product or process of any of the
Company.
(n) TANGIBLE ASSETS. The Company owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of its business as presently conducted and as presently proposed to be
conducted. Each such tangible asset has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used and presently is proposed to be used. Section of the Disclosure
Schedule lists all tangible assets owned by the Company.
(o) INVENTORY. The inventory of the Company shown on the Most
Recent Balance Sheet consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
and none of which is slow-moving, obsolete, damaged, or defective, subject only
to the reserve for inventory writedown set forth on the face of the Most Recent
Balance Sheet (rather than in any notes thereto) as adjusted for the passage of
time through the Closing Date in accordance with the past custom and practice
of the Company.
(p) CONTRACTS. Section of the Disclosure Schedule lists all
the contracts and other agreements to which the Company is a party. The
Shareholders have delivered to the Buyer a correct and complete copy of each
written agreement listed in Section of the Disclosure Schedule (as amended to
date). With respect to each such agreement: (A) the agreement is legal, valid,
binding, enforceable, and in full force and effect; (B) the agreement will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or permit
termination, modification, or acceleration, under the agreement; and (D) no
party has repudiated any provision of the agreement. Section of the Disclosure
Schedule lists each currently outstanding bid or proposal for business
submitted by the Company in excess of $1,000,000.
(q) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of the Company are reflected properly on the Most Recent Balance
Sheet in accordance with GAAP, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and, will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the
Company.
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(r) POWERS OF ATTORNEY. There are no outstanding powers of
attorney executed on behalf of the Company.
(s) INSURANCE. Section of the Disclosure Schedule includes a
true, correct and complete list of all policies of insurance (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company is a party, a
named insured, or otherwise the beneficiary of coverage. Genuine and complete
copies of each of the insurance policies listed in Section of the Disclosure
Schedule have been provided to the Buyer. With respect to each such insurance
policy: (A) the policy is legal, valid, binding, enforceable, and in full force
and effect; (B) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) neither the Company
nor, to the Knowledge of the Shareholders, any other party to the policy is in
breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; (D) neither the Company, any
ERISA Affiliate nor the Buyer shall be subject to a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability
and (E) to Shareholders' or the Company's Knowledge, no party to the policy has
repudiated any provision thereof. The Company has been fully covered at all
times during the past 5 years by insurance in scope and amount customary and
reasonable for the businesses in which it has engaged during the aforementioned
period. Section of the Disclosure Schedule describes any self-insurance
arrangements affecting the Company.
(t) LITIGATION. Section of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party, or
to the Knowledge of Shareholders or the Company, is threatened to be made a
party to any claim, action, suit, proceeding, hearing, or investigation of, in,
or before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator. Except as set
forth in Section of the Disclosure Schedule, there is no other pending, or to
the knowledge of Shareholders or the Company, threatened claim, arbitration
proceeding, action, suit, investigation or other proceeding against or
involving the Company or any property or rights of the Company or any officer
or director or the Company. None of the actions, suits, proceedings, hearings,
and investigations set forth in Section of the Disclosure Schedule could result
in any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of the Company. Neither
the Shareholders nor the directors and officers (and employees with
responsibility for litigation matters) of the Company has any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Company.
(u) COMMITMENTS AND WARRANTIES. All services provided by the
Company have been performed in all material respects in conformity with all
applicable contractual commitments (written or oral) and all express and
implied warranties (written or oral), and the Company has no Liability and, to
the Knowledge of the Shareholders and the Company, there is no Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against any of them giving rise to any Liability in
connection with any such services. Section of the Disclosure Schedule includes
copies of the standard forms of
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agreement entered into between the Company and its customers. The Company has
not entered into any written or oral agreements with any of its customers that
include guaranties, warranties, or indemnity provisions other than those
included in the agreements included as part of Section of the Disclosure
Schedule.
(v) LIABILITY FOR SERVICES PERFORMED. The Company has no
Liability (and, to Shareholders' knowledge, there is no Basis for any present
or future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand against any of them giving rise to any Liability) arising out
of any injury to individuals or property as a result of or in connection with
any services provided by the Company.
(w) EMPLOYEES. To the Knowledge of the Shareholders or the
Company, no executive, key employee, or group of employees has any plans to
terminate employment with the Company. The Company is not currently, nor at any
prior time has been, a party to or bound by any collective bargaining
agreement, nor has the Company experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes. The Company
has not committed any unfair labor practice. Neither the Shareholders nor the
Company have any Knowledge of any organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company.
(x) EMPLOYEE BENEFITS.
(i) Section of the Disclosure Schedule lists each
Employee Benefit Plan that the Company or any ERISA Affiliate maintains,
contributes to, or is required to contribute to or under which the Company or
any ERISA Affiliate has any liability.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable requirements of ERISA,
the Code, and other applicable laws.
(B) All required reports and disclosures
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(C) All contributions (including all
employer contributions and employee salary reduction contributions) which are
due have been paid to each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such Employee
Pension Benefit Plan or accrued in accordance with the past custom and practice
of the Company and in accordance with GAAP. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with respect to
each such Employee Benefit Plan which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which
is an Employee Pension Benefit Plan now meets, in all material respects, and at
all times since inception have
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met, in all material respects, the requirements of a "qualified plan" under
Code Section 401(a) and has received a favorable determination letter from the
Internal Revenue Service.
(E) As of the Closing Date, the market
value of assets under each such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) will equal or exceed
the present value of all vested and nonvested Liabilities thereunder determined
in accordance with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on such date.
(F) The Shareholders have delivered to the
Buyer correct and complete copies of the plan documents and summary plan
descriptions including all amendments thereto, the most recent determination
letter received from the Internal Revenue Service, the three most recent Form
5500 Annual Reports (including all schedules thereto), the three most recent
annual premium payment forms filed with the PBGC, and all related trust
agreements, insurance contracts, and other funding agreements which implement
each such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that
the Company or any ERISA Affiliate maintains, contributes to, or is required to
contribute to or under which the Company or any ERISA Affiliate has any
liability:
(A) No such Employee Benefit Plan which is
an Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No proceeding by
the PBGC to terminate any such Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or threatened.
(B) There have been no Prohibited
Transactions with respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. Neither the Shareholders
nor the Company has any Knowledge of any Basis for any such action, suit,
proceeding, hearing, or investigation.
(C) Neither the Company nor any ERISA
Affiliate has incurred, and none of the Shareholders and the directors and
officers (and employees with responsibility for employee benefits matters) of
the Company has any reason to expect that the Company or any ERISA Affiliate
will incur, any Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(iii) Neither the Company nor any ERISA Affiliate
contributes to, ever has contributed to, or ever has been required to
contribute to any Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
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(iv) Neither the Company nor any ERISA Affiliate
maintains or contributes to, or has ever been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life insurance or
other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Section 4980B).
(y) GUARANTIES. The Company is not a guarantor or otherwise
is liable for any Liability or obligation (including indebtedness) of any other
Person.
(z) ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS.
(i) The Company and its predecessors and Affiliates
have complied and are in compliance with all Environmental, Health, and Safety
Requirements.
(ii) Without limiting the generality of the
foregoing, the Company and its Affiliates have obtained and complied with, and
are in compliance with, all permits, licenses and other authorizations that are
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business; a list of all
such permits, licenses and other authorizations is set forth on the attached
"Environmental and Safety Permits Schedule."
(iii) Neither the Company nor its predecessors or
Affiliates has received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), including any investigatory,
remedial or corrective obligations, relating to any of them or its facilities
arising under Environmental, Health, and Safety Requirements.
(iv) To the Knowledge of the Shareholders, none of
the following exists at any property or facility owned or operated by the
Company: (1) underground storage tanks, (2) asbestos-containing material in any
form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills, surface impoundments, or disposal areas.
(v) To the Knowledge of the Shareholders, none of
the Company or its predecessors or Affiliates has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or released
any substance, including without limitation any hazardous substance, or owned
or operated any property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or would give
rise to liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources damages or
attorney fees, pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), the Solid Waste
Disposal Act, as amended ("SWDA") or any other Environmental, Health, and
Safety Requirements.
(vi) Neither this Agreement nor the consummation of
the transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or consent of
government agencies or third parties, pursuant to any of the
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so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(vii) Neither the Company nor its predecessors or
Affiliates has, either expressly or by operation of law, assumed or undertaken
any liability, including without limitation any obligation for corrective or
remedial action, of any other Person relating to Environmental, Health, and
Safety Requirements.
(viii) To the Knowledge of the Shareholders, no
facts, events or conditions relating to the past or present facilities,
properties or operations of the Company or any of its predecessors or
Affiliates will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health, and
Safety Requirements (whether on-site or off-site), or give rise to any other
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise)
pursuant to Environmental, Health, and Safety Requirements, including without
limitation any relating to onsite or offsite releases or threatened releases of
hazardous materials, substances or wastes, personal injury, property damage or
natural resources damage.
(aa) CERTAIN BUSINESS RELATIONSHIPS WITH THE COMPANY. Neither
the Shareholders, their respective Affiliates, any director or employee of the
Company, or any relatives of the Shareholders, or any person living in the same
residence as such persons, has been involved in any business arrangement or
relationship with the Company within the past 12 months, and neither the
Shareholders nor their respective Affiliates nor any of such other persons own
leases, licenses, or otherwise has any interest in any asset, tangible or
intangible, which is used in the business of the Company or any contract, lease
or commitment to which the Company is a party. The Company is not indebted to
any officer, director or employee of the Company for any liability or
obligation. No officer, director or employee of the Company is indebted to the
Company for any liability or obligation.
(ab) CUSTOMERS AND SUPPLIERS. No purchase order or commitment
of the Company is in excess of normal requirements, nor are prices provided
therein in excess of current market prices for the products or services to be
provided thereunder. No material supplier of the Company has advised the
Company in writing within the past year that it will stop, or decrease the rate
of, supplying materials, products or services to the Company and no material
customer of the Company has advised the Company in writing within the past year
that it will stop, or decrease the rate of buying materials, products or
services from the Company. Section of the Disclosure Schedule sets forth a list
of (a) each customer that accounted for more than 5% of the consolidated
revenues of the Company during the last full fiscal year or the interim period
through the date of the Most Recent Financial Statements and the amount of
revenues accounted for by such customer during each such period and (b) each
supplier that is the sole supplier of any significant product or component to
the Company. The consummation of the transactions contemplated hereby will not
have a Material Adverse Effect on the Company's relationship with any customer
or supplier listed in Section of the Disclosure Schedule.
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5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use his or its best
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Section below).
(b) NOTICES AND CONSENTS. The Shareholders will cause the
Company to give any notices to third parties, and will cause the Company to use
its best efforts to obtain any third party consents required in connection with
the matters referred to in Section above. Each of the Parties will (and the
Shareholders will cause the Company to) give any notices to, make any filings
with, and use its best efforts to obtain any authorizations, consents, and
approvals of governments and governmental agencies in connection with the
matters referred to in Section and Section above.
(c) OPERATION OF BUSINESS. Except as set forth on Section
4(h) of the Disclosure Schedule, the Shareholders will not cause or permit the
Company to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, and except as set forth on Section 4(h) of the
Disclosure Schedule, the Shareholders will not cause or permit the Company to
(i) declare, set aside, or pay any dividend or make any distribution with
respect to its capital stock or redeem, purchase, or otherwise acquire any of
its capital stock or (ii) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section above. The
Shareholders will immediately notify the Buyer in writing with respect to any
proposed capital expenditures in excess of $10,000.
(d) PRESERVATION OF BUSINESS. The Shareholders will cause
the Company to keep its business and properties substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) FULL ACCESS. The Shareholders will permit, and will
cause the Company to permit, representatives of the Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company. At the request of the Buyer, Shareholders will
permit, and will cause the Company to permit, the Buyer's lenders, and their
respective counsel, to have the same access as permitted to the Buyer in
accordance with the immediately preceding sentence.
(f) NOTICE OF DEVELOPMENTS. The Shareholders will give prompt
written notice to the Buyer of any breach of any of the representations and
warranties in Section above. Each Party will give prompt written notice to the
others of any breach of any of his or its own representations and warranties in
Section above. No disclosure by any Party pursuant to this Section , however,
shall be deemed to amend or supplement the Buyer Disclosure Schedule or the
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Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(g) EXCLUSIVITY. The Shareholders will not (and the
Shareholders will not cause or permit the Company to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other manner any
effort or attempt by any Person to do or seek any of the foregoing. The
Shareholders will notify the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) NO TERMINATION OF SHAREHOLDERS'S OBLIGATION BY SUBSEQUENT
INCAPACITY. Each Shareholder specifically agrees that his obligations
hereunder, including, without limitation, the obligations pursuant to Section
hereof, shall not be eliminated by his or her death or incapacity.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the
requesting Party (unless the requesting Party is entitled to indemnification
therefor under Section below). The Shareholders acknowledge and agree that from
and after the Closing the Buyer will be entitled to possession of all
documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Company.
(b) LITIGATION SUPPORT. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor under
Section below).
(c) TRANSITION. The Shareholders will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier, or other business associate of the Company from
maintaining the same business relationships with the Company after the Closing
as it maintained with the Company prior to the Closing. The Shareholders will
refer all customer inquiries relating to the businesses of the Company to the
Buyer from and after the Closing.
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(d) INDEPENDENT ACCOUNTANTS. After the Closing, Shareholders
shall (i) use reasonable efforts to cause the Company's past and present
independent auditors and accounting personnel to make available to the Buyer
and its representatives all financial information, including the right to
examine all working papers pertaining to audits or reviews previously or
hereafter made by such auditors, and (ii) provide such cooperation as the Buyer
and its representatives may request in connection with any audit or review of
the Company that the Buyer may direct its representatives to make. Without
limiting the generality of the foregoing, the Shareholders agree that they will
cooperate with, and will use their best efforts to cause the Company's past and
present independent auditors, accounting personnel and other necessary persons
to cooperate with the Buyer and Orius in the preparation of any documents filed
by Orius with the U.S. Securities and Exchange Commission in connection with an
offering of securities, to the extent information about the Company is required
therein.
(e) TAX MATTERS. The Shareholders covenant and agree not to
take any action, or fail to take any action, with respect to Taxes, that would
have an adverse effect on the Buyer on or after the Closing Date, including,
without limitation, amending or otherwise supplementing any Tax Return or
report of the Company with respect to any period prior to the Closing Date
without the consent of the Buyer. If any taxing authority conducts any audit or
investigation relating to the Company prior to the Closing Date, the Buyer may,
in its sole election, have the right to supervise such audit or investigation
and provide any response required in connection therewith.
(f) STOCK OPTIONS. Orius has adopted a stock incentive plan
(the "Stock Incentive Plan") pursuant to which stock options and other forms of
stock-based compensation may be awarded to the officers, directors and
employees of the Buyer and its subsidiaries. The key employees of the Company,
collectively, shall be eligible to receive awards under the Stock Incentive
Plan of options to acquire 5,000 shares of Common Stock. Within 60 days of the
Closing, the officers of the Company shall recommend to the Stock Option
Committee under the Stock Incentive Plan the terms, conditions and amounts of
awards to be granted and the identity of the key employees of the Company to
receive such awards, however, all such awards, and the terms and conditions
thereof, shall be finally determined by the Stock Option Committee.
(g) AUDITED FINANCIAL STATEMENTS. Shareholders shall cause
the Company's auditors to cooperate with the Buyer's auditors in the
preparation of audited consolidated balance sheets and statements of income,
changes in stockholders' equity, and cash flow including the audit report
thereon as of and for the 12-month periods December 31, 1996, December 31, 1997
and December 31, 1998 for the Company. All costs associated with the
preparation and audit of the Company's December 31, 1996, December 31, 1997 and
December 31, 1998 financial statements shall be paid by the Buyer.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
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(i) The representations and warranties set forth in
Section and Section above shall be true and correct in all material respects at
and as of the Closing Date and there shall not have occurred any Material
Adverse Effect;
(ii) The Shareholders and the Company shall have
performed and complied with all of his covenants hereunder in all material
respects through the Closing;
(iii) The Company shall have procured all of the
third party consents specified in Section above;
(iv) No action, suit, or proceeding shall be pending
or threatened before any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction, or before any arbitrator,
wherein an unfavorable injunction, judgment, order, decree, ruling, or charge
would (A) prevent consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this Agreement to
be rescinded following consummation, (C) affect adversely the right of the
Company to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) The Shareholders shall have delivered to the
Buyer a certificate, to the effect that each of the conditions specified above
in Section through is satisfied in all respects;
(vi) The Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section and Section above;
(vii) The Buyer shall have received from counsel to
the Shareholders an opinion in form and substance as set forth in Exhibit E
attached hereto, addressed to the Buyer and dated as of the Closing Date;
(viii) ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
shall have entered into the Employment Agreements;
(ix) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have entered into the
Noncompetition Agreement;
(x) The Shareholders shall have entered into
Subordination Agreements in substantially the form attached hereto as Exhibit
F;
(xi) All actions to be taken by the Shareholders in
connection with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer.
(xii) At least five business days prior to the
Closing, the Buyer shall have received a balance sheet prepared by the Company,
estimating the assets, liabilities and
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shareholders' equity of the Company as of the Closing Date (the "Estimated
Closing Balance Sheet"). The Estimated Closing Balance Sheet shall be prepared
in accordance with the method set forth in Section for the preparation of the
Draft Closing Balance Sheet and will reflect (A) Shareholders' Equity of at
least $2,100,000.00 (prior to the payment of any debt at Closing); (B) working
capital of not less than $1,920,000.00 (including the current portion of any
debt); and (C) total debt payable of not more than $2,450,000.00. The Buyer
shall not have objected to, challenged or otherwise repudiated any of the
amounts included in the Estimated Closing Balance Sheet.
(xiii) The Company shall have delivered evidence of
its qualification to do business in each jurisdiction where it is so qualified
and a certificate of good standing issued by the Secretary of State of each
such jurisdiction demonstrating that the Company is in good standing in that
jurisdiction;
(xiv) Each of the Shareholders shall have been made
parties to the Shareholders Agreement;
(xv) The board of directors of the Buyer shall have
approved the consummation of the transaction contemplated by this Agreement;
and
(xvi) All actions to be taken by the Shareholders in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Buyer.
The Buyer may waive any condition specified in this Section if it executes a
writing so stating at or prior to the Closing.
(b) CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS. The
obligation of the Shareholders to consummate the transactions to be performed
by them in connection with the Closing is subject to satisfaction of the
following conditions:
(i) The representations and warranties set forth in
Section above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) The Buyer shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction, or before any
arbitrator, wherein an unfavorable injunction, judgment, order, decree, ruling,
or charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
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(iv) The Buyer shall have delivered to the
Shareholders a certificate to the effect that each of the conditions specified
above in Section - is satisfied in all respects;
(v) The Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section and Section above;
(vi) The Shareholders shall have received from
counsel to the Buyer an opinion in form and substance as set forth in Exhibit G
attached hereto, addressed to the Shareholders, and dated as of the Closing
Date;
(vii) The Buyer shall have entered into the
Employment Agreements;
(viii) The Buyer shall have entered into leases with
RGL Interests with respect to the two property locations in Houston, Texas
substantially the form attached hereto as Exhibit H;
(ix) All actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to the Shareholders.
The Shareholders may waive any condition specified in this Section if they
execute a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and agreements of the Parties contained
in this Agreement or in any certificate, document, instrument or agreement
delivered pursuant to this Agreement shall survive the Closing hereunder
(notwithstanding any due diligence investigations that may have been undertaken
by the damaged Party) and continue in full force and effect for a period of
three (3) years following the Closing Date; a claim for indemnification in
respect of a breach of the representations, warranties, covenants and
agreements contained herein, or in any certificate, document, instrument or
agreement delivered pursuant to this Agreement, may be made only within such
period of three (3) years following the Closing Date. Notwithstanding the
foregoing, a claim for indemnification in respect of a breach of the
representations and warranties set forth in Section , , -, , and may be made at
any time following the Closing Date and are not subject to the foregoing
limitation.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
(i) In the event the Shareholders breach (or in the
event that any third party alleges facts that, if true, would mean that the
Shareholders have breached) any of their representations, warranties (or any of
such representations or warranties is untrue or inaccurate), covenants and
agreements contained herein or in any certificate, document, instrument or
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agreement delivered pursuant to this Agreement, and, provided that the
Indemnified Buyers (as hereafter defined) make a written claim for
indemnification against the Shareholders pursuant to Section 12(g) below within
the applicable claim period provided in Section above, then the Shareholders
agree to indemnify the Buyer and each of its officers, directors, employees,
representatives and shareholders (the "Indemnified Buyers") from and against
the entirety (subject to the provisions of Section 8(g) hereof) of any Adverse
Consequences the Indemnified Buyers may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the
Indemnified Buyers may suffer after the end of any applicable claim period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach).
(ii) Without limiting any other indemnification
provided in this Section , and subject to the provisions of Section 8(g)
hereof, the Shareholders agree to indemnify the Indemnified Buyers from and
against the entirety of any Adverse Consequences they may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
activities of any entity which at any time has been owned, in whole or in part,
by the Company.
(iii) All of the indemnification obligations of
Shareholders under this Section shall be joint and several, subject to the
provisions of Section 8(g) hereof.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE
SHAREHOLDERS.
In the event the Buyer breaches (or in the event any
third party alleges facts that, if true, would mean the Buyer had breached) any
of their representations, warranties (or any of such representations or
warranties is untrue or inaccurate), covenants and agreements contained herein
or in any certificate, document, instrument or agreement delivered pursuant to
this Agreement, and, provided that the Shareholders makes a written claim for
indemnification against the Buyer pursuant to Section 8(d) below within the
applicable claim period provided in 8(a) above, then the Buyer agrees to
indemnify the Shareholders and each of his representatives (the "Indemnified
Shareholders") from and against the entirety of any Adverse Consequences the
Indemnified Shareholders may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Indemnified
Shareholders may suffer after the end of any applicable claim period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach
(or the alleged breach).
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any party
entitled to indemnification hereunder (the "Indemnified Party") with respect to
any matter (a "Third Party Claim") which may give rise to a claim for
indemnification against any other Party (the "Indemnifying Party") under this
Section 8(d) then the Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is materially prejudiced.
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(ii) Any Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A) the
Indemnifying Party notifies the Indemnified Party in writing within 15 days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (C) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (D) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, (E) the named
parties to the Third Party Claim do not include both the Indemnified Party and
the Indemnifying Party, and (F) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with Section
above, (A) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party Claim, (B)
the Indemnified Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnifying Party (not to be withheld unreasonably),
and (C) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in Section
above is or becomes unsatisfied, however, (A) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including reasonable attorneys' fees and expenses), and (C) the Indemnifying
Parties will remain responsible for any Adverse Consequences the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Section .
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall
take into account the time cost of money (using the Applicable Rate as the
discount rate) in determining Adverse Consequences for purposes of this
Section. All indemnification payments under this Section shall be deemed
adjustments to the Consideration.
(f) OTHER INDEMNIFICATION PROVISIONS. The foregoing
indemnification provisions are in addition to, and not in derogation of, any
statutory, equitable, or common law remedy (including without limitation any
such remedy arising under Environmental, Health, and
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Safety Requirements) any Party may have with respect to the Company, or the
transactions contemplated by this Agreement. Each Shareholder hereby agrees
that he will not make any claim for indemnification against the Company by
reason of the fact that he was a director, officer, employee, or agent of the
Company or was serving at the request of the Company as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by the Buyer
against such Shareholder (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable law, or otherwise).
(g) LIMITATION ON LIABILITY. Neither the Shareholders,
considered for purposes of this Section 8(g) as a single party in interest, nor
the Buyer, shall (i) have aggregate indemnification obligations in an amount
greater than $5,000,000 (the "Cap") (minus any adjustments pursuant to Section
9(e) of Section 9(f) hereof, plus any adjustments pursuant to Section 9(g)
hereof) with the indemnification obligations of each of the Shareholders
limited, in any event, to an amount equal to that percentage of the Cap set
forth beside the name of such Shareholder on Section 4(b) of the Disclosure
Schedule; or (ii) be entitled to indemnification hereunder unless the aggregate
amount of claims for indemnification by such party exceeds $75,000 in which
event such party shall be entitled to indemnification for the amount of all
such claims in excess of $75,000.
9. POST-CLOSING ADJUSTMENT OF CONSIDERATION.
(a) Within 90 days after the Closing Date, the Buyer will
prepare and deliver to Shareholders a draft balance sheet (the "Draft Closing
Date Balance Sheet") for the Company as of the close of business on the Closing
Date (determined as though the Parties had not consummated the transactions
contemplated by this Agreement), prepared in accordance with GAAP applied on a
basis consistent with the preparation of the Financial Statements; except that
the Draft Closing Date Balance Sheet shall include all of the same types of
adjustments as were made in connection with the preparation of the Most Recent
Fiscal Year End Financial Statements.
(b) If the Shareholders have any objections to the Draft
Closing Date Balance Sheet, they will deliver a detailed statement describing
their objections to the Buyer within 30 days after receiving the Draft Closing
Date Balance Sheet. The Buyer and the Shareholders will use reasonable efforts
to resolve any such objections themselves. If the Parties do not obtain a final
resolution within 30 days after the Buyer has received the statement of
objections, however, the Buyer and Shareholders will select an accounting firm
mutually acceptable to them to resolve any remaining objections. If the Buyer
and the Shareholders are unable to agree on the choice of an accounting firm,
they will select a nationally-recognized accounting firm by lot (after
excluding their respective regular outside accounting firms). The determination
of any accounting firm so selected will be set forth in writing and will be
conclusive and binding upon the Parties. The Buyer will revise the Draft
Closing Date Balance Sheet as appropriate to reflect the resolution of any
objections thereto pursuant to this Section . The "Closing Date Balance Sheet"
shall mean the Draft Closing Date Balance Sheet together with any revisions
thereto pursuant to this Section 9(b).
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(c) In the event the Parties submit any unresolved objections
to an accounting firm for resolution as provided in Section 9(b) above, any
expenses relating to the engagement of the accounting firm shall be allocated
between the Shareholders and the Buyer by the accounting firm in the proportion
that the amount in dispute which is decided in favor of the challenging party
bears to the entire amount in dispute.
(d) The Buyer will make the work papers and back-up materials
used in preparing the Draft Closing Date Balance Sheet available to the
Shareholders and their accountants and other representatives at reasonable
times and upon reasonable notice during (A) the preparation by the Buyer of the
Draft Closing Date Balance Sheet, (B) review by the Shareholders of the Draft
Closing Date Balance Sheet, and (C) the resolution by the Parties of any
objections thereto.
(e) If the shareholder's equity set forth in the Closing Date
Balance Sheet is less than $2,100,000.00 (prior to the payment of any debt at
Closing), the Shareholders will pay to the Buyer an amount equal to such
deficiency (plus interest thereon at the Applicable Rate from the Closing Date)
within three business days after the date on which the Closing Date Balance
Sheet finally is determined pursuant to Section 9(b).
(f) If the working capital set forth in the Closing Date
Balance Sheet is less than $1,920,000.00, the Shareholders will pay to the
Buyer an amount equal to such deficiency (plus interest thereon at the
Applicable Rate from the Closing Date) within three business days after the
date on which the Closing Date Balance Sheet finally is determined pursuant to
Section 9(b).
(g) If the working capital, excluding the current portion of
any debt, set forth in the Closing Date Balance Sheet is more than
$3,600,000.00, the Buyer will pay to the Shareholders an amount equal to such
excess, but not to exceed $550,000, on the later to occur of (i) three business
days after the date on which the Closing Date Balance Sheet finally is
determined pursuant to Section 9(b), or (ii) March 31, 1999.
10. TAX MATTERS. The following provisions shall govern the allocation
of responsibility as between the Buyer and Shareholders for certain tax matters
following the Closing Date:
(a) TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE.
Shareholders shall prepare or cause to be prepared and timely file or cause to
be timely filed all Tax Returns for the Company for all periods ending on or
prior to the Closing Date (the "Pre-Closing Period"). Such Tax Returns shall be
prepared by treating items on such Tax Return in a manner consistent with the
past practices with respect to such items, unless otherwise required by law.
Shareholders shall permit the Buyer to review and comment on each such Tax
Return described in the preceding sentence prior to filing. The Buyer shall pay
the amounts due for Taxes of the Company with respect to the Pre-Closing
Periods, up to the amount reflected in the reserve for Tax Liability shown on
the face of the Most Recent Balance Sheet. Shareholders jointly and severally
agree that they will pay, when due, all amounts due (subject to the provisions
of Section 8(g) hereof) for Taxes of the Company with respect to Pre-Closing
Periods, that exceed the reserve for Tax Liability.
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(b) TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. The Buyer shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of the Company for Tax periods which begin before the
Closing Date and end after the Closing Date. The Buyer shall permit
Shareholders to review and comment on each such Tax return described in the
preceding sentence prior to filing. Shareholders shall pay to the Buyer within
fifteen (15) days after the date on which Taxes are paid with respect to such
periods an amount equal to the portion of such Taxes which relates to the
portion of such Taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability shown on the face of
the Most Recent Balance Sheet. For purposes of this Section, in the case of any
Taxes that are imposed on a periodic basis and are payable for a Taxable period
that includes (but does not end on) the Closing Date, the portion of such Tax
which relates to the portion of such Taxable period ending on the Closing Date
shall (x) in the case of any real and personal property Taxes, be deemed to be
the amount of such Tax for the entire Taxable period multiplied by a fraction
the numerator of which is the number of days in the Taxable period ending on
the Closing Date and the denominator of which is the number of days in the
entire Taxable period, and (y) in the case of any other Tax be deemed equal to
the amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Taxable period that begins before and
ends after the Closing Date shall be taken into account as though the relevant
Taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the Company.
(c) COOPERATION ON TAX MATTERS.
(i) The Buyer, the Company and Shareholders shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and Shareholders agree (A) to retain
all books and records with respect to Tax matters pertinent to the Company
relating to any Taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by the
Buyer or Shareholders, any extensions thereof) of the respective Taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other party reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other party so requests, the Company or Shareholders, as the case may
be, shall allow the other party to take possession of such books and records.
(ii) The Buyer and Shareholders further agree, upon
request, to use their best efforts to obtain any certificate or other document
from any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
(iii) The Buyer and Shareholders further agree, upon
request, to provide the other party with all information that either party may
be required to report pursuant to Section 6043 of the Code and all Treasury
Department Regulations promulgated thereunder.
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(d) TAX SHARING AGREEMENTS. All tax sharing agreements or
similar agreements with respect to or involving the Company shall be terminated
as of the Closing Date and, after the Closing Date, the Company shall not be
bound thereby or have any liability thereunder.
(e) CERTAIN TAXES. All transfer, documentary, sales, use,
stamp, registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by
Shareholders when due, and Shareholders will, at their own expense, file all
necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and
fees, and, if required by applicable law, the Buyer will, and will cause its
affiliates to, join in the execution of any such Tax Returns and other
documentation.
11. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Shareholders may terminate
this Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by
giving written notice to the Shareholders at any time prior to the Closing (A)
in the event the Shareholders have breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer has
notified the Shareholders of the breach, and the breach has continued without
cure for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before February 28, 1999 by reason of the failure
of any condition precedent under Section hereof (unless the failure results
primarily from the Buyer itself breaching any representation, warranty, or
covenant contained in this Agreement); and
(iii) the Shareholders may terminate this Agreement
by giving written notice to the Buyer at any time prior to the Closing (A) in
the event the Buyer has breached any representation, warranty, or covenant
contained in this Agreement in any material respect, the Shareholders have
notified the Buyer of the breach, and the breach has continued without cure for
a period of 30 days after the notice of breach or (B) if the Closing shall not
have occurred on or before February 28, 1999 by reason of the failure of any
condition precedent under Section hereof (unless the failure results primarily
from the Shareholders himself breaching any representation, warranty, or
covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to Section above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
12. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior
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to the Closing without the prior written approval of the Buyer and the
Shareholders; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its best efforts to advise the other Parties prior to
making the disclosure).
(b) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns and the Indemnified Parties
referred to in Section hereof.
(c) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights, interests, or
obligations hereunder without the prior written approval of the Buyer and the
Shareholders; provided, however, that the Buyer may (i) assign any or all of
its rights and interests hereunder to one or more of its Affiliates, (ii)
designate one or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases the Buyer nonetheless shall remain responsible
for the performance of all of its obligations hereunder) and (iii) without the
approval of the Shareholders, assign its rights and interests hereunder to its
lenders (and any agent for the lenders), and the Parties consent to any
exercise by such lenders (and such agents) of their rights and remedies with
respect to such collateral.
(e) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to the Shareholders: Copy to:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to the Buyer: Copy to:
NATG Holdings, LLC Holland & Knight LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ One ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Florida or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Florida.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Shareholders. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(k) EXPENSES. Each of the Parties will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. The Shareholders
agree that the Company has not borne nor will bear any of the Shareholders'
costs and expenses (including, without limitation, any of their legal,
accounting or investment banking fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
(l) CONSTRUCTION. The Parties have participated jointly in
the negotiation of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
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independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The
Exhibits, Annexes, Schedules and Certificates identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) SPECIFIC PERFORMANCE. Each of the Parties acknowledges
and agrees that the other Parties would be damaged irreparably in the event any
of the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section below), in addition to any other remedy to which they may be
entitled, at law or in equity.
(o) SUBMISSION TO JURISDICTION. Each of the Parties submits
to the exclusive jurisdiction of any state or federal court sitting in Palm
Beach County, Florida, in any action or proceeding arising out of or relating
to this Agreement and agrees that all claims in respect of the action or
proceeding shall be heard and determined in any such court. Each of the Parties
waives any defense of inconvenient forum to the maintenance of any action or
proceeding so brought and waives any bond, surety, or other security that might
be required of any other Party with respect thereto. Any Party may make service
on any other Party by sending or delivering a copy of the process to the Party
to be served at the address and in the manner provided for the giving of
notices in Section 12(g) above. Each Party agrees that a final judgment in any
action or proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity. In any
action or proceeding arising out of or relating to this Agreement, the
prevailing party shall be entitled to recover reasonable attorney's fees and
costs from the other party to the action or proceeding.
(p) WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY
WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND TO
THE FULLEST EXTENT PERMITTED BY LAW WAIVE ANY RIGHTS THAT THEY MAY HAVE TO
CLAIM OR RECEIVE CONSEQUENTIAL OR SPECIAL DAMAGES IN CONNECTION WITH ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
NATG HOLDINGS, LLC
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
ORIUS:
ORIUS CORP.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
SHAREHOLDERS:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Kitty J. Cheverere
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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D. ▇▇▇▇▇▇ ▇▇▇▇▇▇
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