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EXHIBIT 10.31
STOCK PURCHASE AGREEMENT
between
▇▇▇▇▇▇▇▇ GROUP, INC.,
and
LKC ACQUISITION CORP.
Dated as of April 3, 1997
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TABLE OF CONTENTS
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ARTICLE I
Section 1.1 Specific Definitions.................................... 2
Section 1.2 Other Terms............................................. 5
Section 1.3 Other Definitional Provisions .......................... 5
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares............................. 6
Section 2.2 Purchase Price Adjustments.............................. 8
Section 2.3 Effective Date; Closing; Delivery.......................
and Payment Effective Date............................ 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 3.1 Organization and Authority
of Seller............................................. 10
Section 3.2 Capitalization of LKC................................... 12
Section 3.3 Consents and Approvals.................................. 12
Section 3.4 No Other Representations
or Warranties......................................... 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.1 Organization and Authority of Buyer..................... 13
Section 4.2 Financial Capability.................................... 15
Section 4.3 Securities Act.......................................... 15
Section 4.4 Consents and Approvals.................................. 15
Section 4.5 No Other Representations
or Warranties......................................... 15
ARTICLE V
TAX MATTERS
Section 5.1 Tax Sharing............................................. 16
Section 5.2 Tax Indemnification..................................... 16
Section 5.3 Tax Returns............................................. 18
Section 5.4 Contest Provisions...................................... 20
Section 5.5 Assistance and Cooperation.............................. 21
Section 5.6 Post-Closing Actions Which
May Affect Seller's Liability
for Taxes............................................. 23
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Section 5.7 Computation of Losses Subject
to Indemnification.................................... 23
Section 5.8 Transfer Taxes.......................................... 23
Section 5.9 Alternative Minimum Tax Credits......................... 23
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF SELLER AND BUYER
Section 6.1 Conduct of Business..................................... 24
Section 6.2 Certain Obligations of the Parties...................... 25
Section 6.3 Retention of Books and Records.......................... 26
Section 6.4 Closing Date Financial Information...................... 27
Section 6.5 Registrations, Filings and Consents..................... 28
Section 6.6 Further Assurances...................................... 28
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of Buyer...................... 28
Section 7.2 Conditions to Obligations of Seller..................... 30
ARTICLE VIII
TERMINATION
Section 8.1 Termination............................................. 31
Section 8.2 Effect of Termination................................... 32
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival of Representations,
Warranties, Covenants and
Agreements; Knowledge of Breach....................... 32
Section 9.2 Indemnification......................................... 34
Section 9.3 Method of Asserting claims, etc......................... 36
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment and Modification; Waiver...................... 39
Section 10.2 Expenses................................................ 40
Section 10.3 Public Disclosure....................................... 40
Section 10.4 Assignment.............................................. 41
Section 10.5 Entire Agreement........................................ 41
Section 10.6 Fulfillment of Obligations.............................. 41
Section 10.7 Parties in Interest; No
Third Party Beneficiaries............................. 41
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Section 10.8 Schedules .................................................. 42
Section 10.9 Counterparts ............................................... 42
Section 10.10 Section Headings ........................................... 42
Section 10.11 Notices .................................................... 42
Section 10.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM 43
Section 10.13 Severability ............................................... 44
SCHEDULES
Schedule 2.1 LKC Accounting Policies
Schedule 3 Consents
Schedule 5.2(a) Election under Section 338(h)(10)
Schedule 5.2(b) LKC State Income Tax Payments
Schedule 7.2(b) Form of Opinion of Counsel of Buyer
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STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of April 3, 1997,
among ▇▇▇▇▇▇▇▇ Group, Inc., a corporation organized under the laws of New York
("Seller"), and LKC Acquisition Corp., a corporation organized under the laws of
Delaware ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of ▇.▇. ▇▇▇▇▇▇▇▇ & Company, Inc., a corporation organized under
the laws of New York ("LKC" or the "Company") (consisting of 1,200 shares of
common stock, par value $0.25 per share (the "Shares"));
WHEREAS, Seller desires to sell the Shares to certain members of the
current management of LKC ("Management"), as more specifically provided herein;
WHEREAS, Management has incorporated Buyer for the purposes of
acquiring the Shares;
WHEREAS, it is the intention of the parties that, following the
acquisition of the Shares by Buyer, LKC will continue its operations and conduct
its business substantially as conducted and operated prior to the date hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
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ARTICLE I
Section 1.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by or under common control with that
Person.
"Agreement" shall mean this Agreement and all Schedules hereto.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York City, New York are authorized or obligated by law
or executive order to close.
"Buyer" shall have the meaning set forth in the Preamble.
"Claim Notice" shall have the meaning set forth in Section 9.3(b).
"Closing" shall have the meaning set forth in Section 2.3(b).
"Closing Date" shall have the meaning set forth in Section 2.3(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the Preamble.
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"Deductible" shall have the meaning set forth in Section 9.1(a).
"Effective Date" shall mean January 1, 1997.
"Election" shall have the meaning set forth in Section 5.2(a).
"Encumbrances" shall have the meaning set forth in Section 3.2.
"Indemnified Party" shall have the meaning set forth in Section 9.2(a).
"Indemnifying Party" shall have the meaning set forth in Section
9.2(a).
"LKC" shall have the meaning set forth in the Preamble.
"Material Adverse Effect" shall mean a material adverse effect on the
business, financial condition, properties, operations or results of operations
of LKC other than as may arise from changes in general economic conditions or
the construction business generally or as a result of the public disclosure of
the transactions contemplated by this Agreement.
"Notice Period" shall have the meaning set forth in Section 9.3(b).
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
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"Pre-Closing Tax Period" shall have the meaning set forth in Section
5.2(b).
"Purchase Price" shall have the meaning set forth in Section 2.1(b).
"Safe Harbor Lease" shall mean the agreement between American
Airlines, Inc. and LKC regarding the participation of LKC in the purchase of
the Federal Income Tax benefits in one Boeing 767 aircraft to be owned and
operated by American Airlines, Inc., including all Schedules and Exhibits
thereto, dated December 15, 1983.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the Preamble.
"SGI" shall mean Spie Group, Inc., a corporation organized under the
laws of Delaware.
"SGI Note" shall mean the note between SGI and Seller, which was
transferred by Seller to LKC on December 31, 1995, originally in the amount of
$7,115,124 and subsequently reduced such that as of the date hereof there
remains $3,615,124 in principal and $1,129,669 in accrued interest owing
thereunder.
"Shares" shall have the meaning set forth in the Preamble.
"63rd and White Plains Projects" shall mean New York City Transit
Authority project Contracts (a) C-20204,
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63rd Street Line to Queens Boulevard, Connection Track and Signal Work, "B"
Division (BMT and IND) in the Borough of Queens, and (b) ▇-▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ Park East to ▇▇▇▇▇ ▇▇▇▇▇▇ Station, Signal System Modernization, "A"
Division in the Borough of the Bronx.
"Tax Returns" shall mean all federal, state, local or foreign tax
returns, tax reports, and declarations of estimated tax.
"Taxes" shall mean all federal, state, local or foreign income, gross
receipts, windfall or excess profits, severance, property, production, sales,
use, license, excise, franchise, employment, withholding or similar taxes,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"Third Party Claim Notice" shall have the meaning set forth in Section
9.3(b).
Section 1.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
indicated throughout this Agreement.
Section 1.3 Other Definitional Provisions. (a) The words "hereof",
"herein" and "hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
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(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States
dollars.
ARTICLE II
PURCHASE AND SALE OF SHARES
Section 2.1 Purchase and Sale of Shares.
(a) Buyer agrees to purchase from Seller, and Seller agrees
to sell to Buyer, the Shares, in exchange for payment of the Purchase Price by
Buyer. Seller shall transfer all of the Shares of LKC to Buyer at Closing.
(b) As consideration for the transfer by Seller of the Shares
to Buyer, Buyer agrees to:
(i) at the Closing pay to Seller an amount equal to $5
million, plus accrued interest thereon in accordance with Section 2.3, subject
to any adjustment as provided by Section 2.2;
(ii) pay to Seller, within 120 days of December 31, 1997,
1998 and 1999, respectively, an amount in dollars equal to 30% of the annual
net income before taxes of LKC for such year (as defined in LKC's audited
financial statements for such year); provided, however, that the aggregate
amount of all payments made pursuant to this clause (ii) shall not exceed $2.5
million;
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(iii) pay to Seller, within 120 days of December 31, 1997,
1998 and 1999, an amount in dollars equal to 40% of the annual net income before
taxes of LKC for such year (as defined in LKC's audited financial statements
for such year) provided, however, that no amount need be paid under this clause
(iii) until the date when the aggregate amount of annual net income after taxes
of LKC (as defined in LKC's audited financial statements for such year), after
deduction of any amount paid to Seller pursuant to clause (ii) above, shall
exceed $5 million; and provided, further, that the aggregate amount of all
payments made pursuant to this clause (iii) shall not exceed $2.5 million (the
aggregate of all sums payable by Buyer pursuant to clauses (i), (ii) and (iii)
shall constitute the "Purchase Price").
(c) Notwithstanding anything to the contrary herein, Buyer
and Seller agree that, for the purposes of calculating the annual net income of
LKC in connection with this Section 2.1, all annual or interim financial
statements of LKC for each fiscal year (commencing with the fiscal year
starting on January 1, 1997) and each interim period during such fiscal years
shall be prepared or restated, as the case may be, in accordance with the
accounting policies set forth in Schedule 2.1 hereto.
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(d) Buyer and Seller agree that Buyer may satisfy its
obligations under clauses (ii) and (iii) of paragraph (b) above by causing LKC
to make payments of such amounts directly to Seller. Buyer agrees to
indemnifying Seller and its Affiliates (and any director or officer thereof)
and hold them harmless from all and any liability to third parties arising from
any such payment by LKC and to reimburse them for any costs or expenses
(including reasonable fees of legal counsel) incurred by any of them in
connection therewith.
Section 2.2 Purchase Price Adjustments. On or prior to
Closing, Seller and Buyer shall have established a list of all intercompany
accounts between LKC and Seller and its Affiliates, other than the intercompany
accounts set forth in Section 6.2(b), which list shall become, as of the date
thereof, an integral part of this Agreement for all purposes hereunder. Such
list shall set forth in reasonable detail the difference between (i) the
aggregate amounts owed by LKC to Seller or its Affiliates and (ii) the
aggregate amounts owed to LKC by Seller or its Affiliates, in each case with
accrued interest thereon (calculated on the basis of the actual number of days
elapsed divided by 360) at the rate of 8.25% for the period up to, but
excluding, the Closing Date. The amount to be paid by Buyer pursuant to Section
2.1(b)(i) shall be increased by the amount of such difference if the aggregate
amounts owed by LKC are greater
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than the aggregate amounts owned to LKC, in each case to Seller or its
Affiliates, and shall otherwise be decreased by the amount of such difference.
Upon payment of the amount set forth in Section 2.1(b)(i) as adjusted by this
Section 2.2, all such intercompany accounts will be extinguished.
Section 2.3 Effective Date; Closing; Delivery and Payment Effective
Date.
(a) Subject to the Closing taking place in accordance with this Section
2.3, the parties agree that for the purposes of this Agreement all transactions
contemplated under Sections 2.1(a), 2.2(b)(i), and 2.2 shall be deemed to have
been consummated, and the obligations of the parties pursuant to such Sections
shall be deemed to have been performed, on the Effective Date.
(b) The closing ("Closing") shall be held at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 AM on April 3, 1997
unless otherwise mutually agreed by the parties. The date on which Closing
occurs is herein after referred to as the "Closing Date."
(c) On the Closing Date, (i) Seller shall deliver to Buyer
certificates representing the Shares duly endorsed and in form for transfer to
Buyer and (ii) Buyer shall pay to Seller the amount set forth in Section
2.1(b)(i) (as adjusted pursuant to Section 2.2) in immediately available funds
to an account designed by Seller (which account
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shall be designated not less than two business days prior to Closing)
(d) The parties agree that all amounts payable on Closing as set forth
in paragraph (c) above shall be paid with accrued interest thereon (calculated
on the basis of the actual number of days elapsed divided by 360) at the rate
of 8.25% for the period from, and including, the Effective Date to, and
excluding, the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as of the date hereof and as
of the Closing Date (except that representations and warranties that are made
as of a specific date need be true only as of such date) as follows with
respect to itself:
Section 3.1 Organization and Authority of Seller. Seller has been duly
incorporated, is validly existing and is in good standing under the laws of the
State of New York, with full power and authority to enter into this Agreement
and to perform its obligations hereunder. This Agreement has been duly
authorized, executed and delivered by Seller and constitutes a legal, valid and
binding obligation of Seller, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditor's
rights and to general
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equity principles, and no other proceedings on its part are necessary to
authorize this Agreement and the consummation to the transactions contemplated
hereby. Neither the execution and delivery of this Agreement by Seller nor the
compliance with its terms and provisions by Seller will (a) violate any
provision of its certificate of incorporation or by-laws; (b) subject to
obtaining any consents referred to in Section 3.3, conflict with or result in
the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the giving of notice or the lapse
of time or both) of any of the rights or obligations of Seller or result in a
loss of any benefit to which Seller is entitled under, any contract, franchise,
license, agreement, lease, indenture or other instrument to which Seller is a
party; or (c) to Seller's knowledge, as the case may be, violate or result in a
breach of or constitute a default under any law, rule, regulation, judgment,
injunction, order, decree or other restriction of any court of governmental
authority to which it is subject, except where, in all cases, individually or in
the aggregate such violation, conflict, breach, termination, default,
cancellation, acceleration or loss would not be reasonably likely to prohibit or
materially impair or delay Seller's performance of its obligations under this
Agreement.
Section 3.2 Capitalization of LKC. Seller represents and warrants that
the Shares are duly authorized,
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validly issued, fully paid and nonassessable and are owned of record and
beneficially by Seller. Seller has good and valid title to the Shares and, upon
consummation of the transactions contemplated in this Agreement, shall have
transferred such title to the Shares to Buyer pursuant to the terms of this
Agreement, free and clear of any liens, charges, pledges, security interests,
adverse claims or other encumbrances (collectively, "Encumbrances"), other than
such Encumbrances which were incurred by Buyer or caused to be incurred by LKC
by Buyer or as a result of the transactions contemplated by this Agreement.
There are no preemptive or other outstanding rights, subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible securities or
other agreements or arrangements of any character or nature whatsoever under
which Seller is or may become obligated to vote, issued, assign or transfer any
shares of the capital stock, or rights or warrants to acquire, or securities
convertible into shares of capital stock, of LKC.
Section 3.3 Consents and Approvals. Except for any consents to be
obtained by LKC pursuant to any agreement to which it is a party which Buyer
shall obtain or cause to be obtained prior to Closing, the execution, delivery
and performance of this Agreement by Seller will not require Seller to obtain
any consent, waiver, authorization or approval of, or make any filing with or
give notice to, any
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Person, except for such consents, waivers, authorizations or approvals other
than those the failure of which to obtain would not be reasonably likely to
prohibit or materially impair or delay Seller's performance of its obligations
under this Agreement.
Section 3.4 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither Seller
nor any other Person makes any other express or implied representation or
warranty on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof and as
of the Closing date (except that representations and warranties that are made
as of a specific date need be true only as of such date) as follows:
Section 4.1 Organization and Authority of Buyer. Buyer has been duly
incorporated, is validly existing and is in good standing under the laws of
Delaware, with full power and authority to enter into this Agreement and
perform its obligations hereunder. This Agreement has been duly authorized,
executed and delivered by Buyer and constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or
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affecting creditors' rights and to general equity principles, and no other
proceedings on the part of Buyer are necessary to authorize this Agreement and
the consummation of transactions contemplated hereby. Neither the execution and
delivery of this Agreement nor compliance by Buyer with its terms and
provisions will (a) violate any provision of the certificate of incorporation
or by-laws of Buyer of LKC; (b) subject to obtaining the consents referred to
in Section 4.4, conflict with, or result in the breach of, or constitute a
default under, or result in the termination, cancellation or acceleration
(whether after the giving of notice or the lapse of time or both) of any right
or obligation of Buyer or LKC, or result in a loss of any benefit to which
Buyer or LKC is entitled under, any contract, franchise, license, agreement,
lease, indenture or other instrument to which Buyer or LKC is a party; or (c)
to the knowledge of Buyer, violate or result in a breach of or constitute a
default under any law, rule, regulation, judgment, injunction, order, degree or
other restriction of any court of governmental authority to which buyer of LKC
is subject, except where, in all cases, such a violation would not be reasonably
likely to prohibit or materially impair or delay Buyer's performance of its
obligations under this Agreement or have a Material Adverse Effect.
Section 4.2 Financial Capability. On the Closing Date, Buyer will have
sufficient funds to purchase the
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Shares on the terms and conditions contemplated by this Agreement.
Section 4.3 Securities Act. Buyer is acquiring the Shares solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Buyer
Acknowledges that the Shares are not registered under the Securities Act or any
applicable state securities law, and that such Shares may not be transferred or
sold except pursuant to the registration provisions of such Securities Act or
pursuant to an applicable exemption therefrom and pursuant to state securities
laws and regulations as applicable.
Section 4.4 Consents and Approvals. The execution, delivery and
performance of this Agreement will not require Buyer or LKC to obtain any
consent, waiver, authorization or approval of, or make any filing with or
give notice to, any Person.
Section 4.5 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of Buyer.
ARTICLE V
TAX MATTERS
SECTION 5.1 TAX SHARING. Any and all tax sharing agreements and
arrangements shall be cancelled as between
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Seller and/or SGI, on the one hand, and LKC, on the other, and no further
payments shall be made by LKC to Seller and/or SGI, or by Seller and/or SGI to
LKC, pursuant thereto.
Section 5.2 Tax Indemnification. (a) ▇▇▇▇▇▇▇▇▇ Electric Holdings,
Inc., as the common parent of the federal income tax consolidated return group
of which Seller is a member on the Effective Date, and Buyer shall make an
election under Section 338(h) (10) of the Code (and any corresponding elections
understate, local and foreign tax law) (collectively the "Election") with
respect to the purchase of the Shares. Seller shall pay any Taxes attributable
to the making of the Election and shall indemnify the Buyer and LKC and hold
them harmless from any and all liabilities for any such Taxes) attributable to
an election under state, local and foreign tax similar to the election available
under Section 338 of the Code (or which results from the making of an election
under Section 338 of the Code) with respect to the purchase of the Shares.
▇▇▇▇▇▇▇▇▇ Electric Holdings, Inc. and Buyer shall execute the Election,
substantially in the form attached as Schedule 5.2(a), and shall file it as soon
as possible thereafter and not later than 60 days following the Closing (and
Buyer agrees and
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acknowledges that ▇▇▇▇▇▇▇▇▇ Electric Holdings, Inc. shall have the right to
execute and file the Election jointly with Buyer). Seller and Buyer agree to
treat any additional Purchase Price paid pursuant to Sections 2.1(b)(ii) and
2.1(b)(iii) and any amounts paid pursuant to Section 5.9 in accordance with
section 338(h)(10) of the Code and the regulations thereunder as of the date
such amounts are paid.
(b) Seller hereby agrees to indemnify Buyer and hold it harmless
from all liability for Taxes imposed on LKC for any taxable year or period
ending on or before the Effective Date and, in the case of any taxable year or
period beginning before and ending after the Effective Date, the portion of
such period ending on the Effective Date (the "Pre-Closing Tax Period").
Notwithstanding the preceding sentence, Buyer specifically acknowledges that
Seller is not indemnifying Buyer or LKC for any claim for Taxes which would
adversely affect the liability for Taxes of the Buyer or LKC for any period
after the Effective Date, which arises from any tax authority's
recharacteriztion of the tax consequences of the Election. Seller shall be
entitled to all refunds of which Taxes which apply to a period or portion
thereof ending on or before the Effective Date. Notwithstanding the preceding
sentence, LKC shall be entitled to retain all refunds and obligated to make all
payments associate with the filing of the 1996 state income tax returns
described in attached Schedule 5.2(b).
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(c) Buyer hereby agrees to indemnify Seller and its Affiliates and
hold them harmless from all liability for Taxes imposed on LKC for any taxable
year or period beginning after the Effective Date and, in the case of any
taxable year or period beginning before and ending after the Effective Date, the
portion of such period beginning after the Effective Date, except as otherwise
expressly provided in Section 5.2(a).
(d) Whenever it is necessary to determine liability for Taxes for
a portion of a taxable year of period beginning before and ending after the
Effective Date, the determination shall be made assuming that there was a
closing of the books on the Effective Date, except that Taxes (other than Taxes
measured by net income or gains), exemptions, allowances or deductions that are
calculated on an annual basis shall be apportioned on a time basis.
Section 5.3 Tax Returns. Subject to review and approval by Seller,
LKC shall prepare and file or cause to be filed when due all Tax Returns,
including the 1996 consolidated federal income tax return of SGI, Seller and
LKC, that are required to be filed by or with respect to LKC for taxable years
or periods in the last sentence of Section 5.2(b), Seller shall pay (or
reimburse LKC for) any Taxes due in respect of such Tax Returns. Subject to
review and approval by Seller, LKC shall prepare and file or cause
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to be filed when due all Tax Returns, including the 1996 consolidated federal
income tax return of SGI, Seller and LKC, that are required to be filed by or
with respect to SGI and/or Seller for taxable years or periods ending before
the Effective Date. Seller shall pay (or reimburse LKC for) any Taxes due in
respect of such Tax Returns. Buyer shall file or cause to be filed when due
all Tax Returns that are required to be filed by or with respect to LKC for
taxable years or periods ending after the Effective Date and shall remit any
Taxes due in respect of such Tax Returns. Seller shall file or cause to be
filed when due all Tax Returns that are required to be filed by or with respect
to LKC as a result of the making of the Election described in Section 5.2(a).
Seller shall pay LKC the Taxes for which Seller is liable pursuant to Section
5.2(b) but which are payable with Tax Returns to be filed by LKC pursuant to
this Section 5.3 within 10 days prior to the due date for the payment of
estimated Taxes in accordance with the requirements of federal, state and local
laws and regulations, provided that promptly upon filing by LKC of any Tax
Return for the period in respect of which such estimated taxes were paid, (i)
LKC shall reimburse Seller for the difference between (A) the amount paid by
Seller pursuant to this Section 5.3 and (B) the amount payable by LKC pursuant
to such Tax Return, if such amount is positive.
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and (ii) Seller shall reimburse LKC for the amount of such difference, if such
amount is negative.
Section 5.4 Contest Provision. (a) Buyer shall promptly notify Seller
in writing upon receipt by Buyer, any of its Affiliates or LKC of notice of any
pending or threatened federal, state, local or foreign income or franchise tax
audits or assessments which may materially affect the tax liabilities of LKC for
which Seller would be required to indemnify Buyer pursuant to Section 5.2 (a)
or 5.2 (b), provided that failure to comply with this provision shall not
affect Buyer's right to indemnification hereunder, except to the extent that
Seller is prejudice by such failure to notify. Seller shall have the sole
right to represent LKC's interests in any tax audit or administrative or court
proceeding relating to (i) the making of the Election described in Section 5.2
(a) or (ii) taxable periods ending before the Effective Date as described in
5.2 (b), and to employ counsel of its choice at its expense. Notwithstanding
the foregoing, Seller shall not be entitled to settle, either administratively
or after the commencement of litigation, any claim for Taxes of the Buyer or
LKC for any period after the Effective Date to any extent (including, but not
limited to, the reduction of asset basis or cost adjustments, the lengthening
of any amortization or
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depreciation periods, the denial of amortization or depreciation deductions, or
the reduction of loss or credit carryforwards) without the prior written
consent of Buyer. Such consent shall not be unreasonably withheld, and shall
not be necessary to the extent that Seller has indemnified Buyer against the
effects of any such settlement.
(b) Seller shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the Effective
Date which may be the subject of indemnification by Seller pursuant to Section
5.2 (b) and, with the written consent of Buyer, and at its sole expense, may
assume the entire defense of such tax claim. Neither Buyer nor LKC may agree to
settle any tax claim for the portion of the year or period ending on the
Effective Date which may be the subject of indemnification by Seller under
Section 5.2 (b) without the prior written consent of Seller, which consent
shall not be unreasonably withheld.
Section 5.5 Assistance and Cooperation. (a) After the Closing Date,
each of Seller and Buyer shall:
(i) to the extent reasonably requested, assist (and cause their
respective Affiliates to assist) the other party in preparing any Tax Returns
or reports which such other party is responsible for preparing and filing in
accordance with this Article V;
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(ii) to the extent reasonably requested, cooperate fully in preparing
for any audits of, or disputes with taxing authorities regarding, any Tax
returns of LKC, SGI or Seller;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records and documents relating to Taxes
of LKC, SGI or Seller;
(iv) provide timely notice to the other in writing of any pending or
threatened tax audits or assessments of LKC, SGI or Seller for taxable periods
for which the other may have a liability under this Article V; and
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any such taxable period.
(b) Within 180 days after the Closing Date, Buyer and LKC shall use
their best efforts to supply Seller with all accounting and tax records of LKC,
SGI and Seller necessary to sufficiently document the federal and state tax
attributes retained by Seller, SGI and LKC for all relevant Pre-Closing Tax
Periods. These accounting and tax records shall include, but not necessarily be
limited to, federal and state tax returns, audited financial statements and
general ledgers for 1983-1996. Seller shall provide a
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written request to Buyer and LKC of any additional records required within this
180 day period. Seller agrees to cooperate fully with Buyer and LKC to minimize
the potential business disruption to Buyer and LKC associated with supplying
these records.
Section 5.6 Post-Closing Actions Which May Affect Seller's Liability
for Taxes. Except to the extent required by law, neither Buyer nor LKC shall,
and each of Buyer and LKC agrees to use its best efforts to cause its
Affiliates not to, without the prior written consent of Seller, amend and Tax
Return filed by, or with respect to, LKC (during any taxable period, or portion
thereof, ending before the Effective Date) for any taxable period, or portion
thereof, beginning before the Effective Date.
Section 5.7 Computation of Losses Subject to Indemnification. The
amount of any liability or loss for which indemnification is provided under
this Agreement shall be computed net of the Tax benefit or savings realized or
realizable with respect to such liability or loss.
Section 5.8 Transfer Taxes. Buyer shall be liable for all sales,
transfer or other similar Taxes arising from the sale of the Shares.
Section 5.9 Alternative Minimum Tax Credits. In the event Seller
(including, for purposes of this Section, any successor in interest to Seller)
shall claim any alternative minimum tax credit related to the Company, then
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Seller shall pay Buyer within 30 days after filing of the return on which
Seller has claimed such credit an amount in cash equal to the amount of the
credit then claimed by Seller up to an aggregate amount of $658,621. Buyer and
Seller agree to treat any such payment as a reduction of the Purchase Price.
Section 5.10 Survival of Obligations. The obligations of the
parties set forth in this Article shall be unconditional and absolute and shall
remain in effect without limitation as to time.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
OF SELLER AND BUYER
Section 6.1 Conduct of Business. Prior to closing, and except
as otherwise expressly permitted by this Agreement or consented to or approved
by Buyer in writing, Seller covenants and agrees that, without the express
consent of Buyer:
(a) Seller shall not use its rights as a shareholder of LKC
to allow or cause LKC to operate its business in any manner other than
in the ordinary and usual course consistent with past practice;
(b) Seller shall not use its rights as a shareholder of LKC
to allow or cause LKC to (i) change or amend its certificate of
incorporation or by-laws, (ii) authorize, issue or sell any shares of
capital
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stock, or authorize, issue or sell any securities convertible into, or
options with respect to, or warrants to purchase or rights to
subscribe for, any shares of capital stock or enter into any agreement
obligating it to do any of the foregoing or (iii) declare or set aside
for payment any dividends or other distributions, except for
constructive dividends resulting from the loan forgiveness
contemplated by Section 6.2(b);
(c) Seller shall not use its rights as a shareholder of LKC
to allow or cause LKC to, directly or indirectly, redeem, purchase or
otherwise acquire any of the Shares; and
(d) Seller shall not use its rights as a shareholder of LKC
to allow or cause LKC to merge or consolidate with or into any other
Person.
Section 6.2 Certain Obligations of the Parties.
(a) Buyer shall provide for the release, on or prior to the
Closing of all guarantees or contingent payment obligations of Seller or any of
its Affiliates with respect to LKC, including, but not limited to, (i) the
indemnification obligations of Seller and ▇▇▇▇▇▇▇▇▇ for the ▇▇▇▇ ▇▇▇▇▇▇ and
White Plains Projects and (ii) all obligations under the outstanding general
agreement of indemnity, dated December 15, 1989, between Spie Enertrans and St.
▇▇▇▇ Seaboard.
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(b) On or prior to Closing, Buyer shall arrange for the SGI
Note now due and owing by SGI TO LKC to be discharged or otherwise forgiven by
LKC in a manner satisfactory to Seller, including, without limitation, any
indemnity reasonably requested by Seller.
(c) LKC shall retain the Safe Harbor Lease. For all purposes
of this Agreement, the parties shall treat the Safe Harbor Lease as disposed
of, and consequently terminated, in connection with the deemed asset sale under
the Election. Seller agrees to indemnify LKC against any losses sustained by
LKC as a result of any claim that any consent was required in connection with
such deemed asset sale.
Section 6.3 Retention of Books and Records. Buyer shall cause
LKC to retain, until all applicable tax statutes of limitations (including
periods of waiver) have expired, all books, records and other documents
pertaining to LKC, SGI and Seller in existence on the Closing Date that are
required to be retained under current retention policies and to make the same
available after the Closing Date for inspection and copying by Seller or its
agents at Seller's expense, during regular business hours and upon reasonable
request and upon reasonable advance notice. After the expiration of such
period, no such books and records shall be destroyed by Buyer without first
advising the tax director of Seller in writing detailing the contents thereof
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and giving Seller at least 120 days to obtain possession thereof. Seller agrees
that such records will be kept strictly confidential and used only for tax
purposes.
Section 6.4 Closing Date Financial Information. For a period of one
year from and after the Closing Date, to the extent reasonably necessary for
Seller, SGI or their Affiliates to prepare consolidated financial statements
or any governmental permits, licenses or required filings and to comply with
reporting obligations in respect thereof, upon written request of Seller, LKC
shall provide, and Buyer shall use it best efforts to cause LKC to provide, to
Seller, SGI and their accountants within a reasonable period of time (in light
of Seller's and SGI's needs) such computer support, access to employees and
Buyer's accountants and financial information of LKC as of the Closing Date as
Seller and SGI may reasonably request in the format customarily required by
Seller, SGI or their Affiliates and, upon Seller's or SGI's request, it will
be accompanied by supplemental financial schedules customarily required by
Seller, SGI or their Affiliates in support of such financial information.
Seller agrees that it shall, and that it shall use reasonable efforts to ensure
that its Affiliates shall, keep such records strictly confidential and use such
records only for tax purposes.
Section 6.5 Registrations, Filings and Consents. Seller and Buyer
shall cooperate and use their respective
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reasonable best efforts to fulfill the conditions precedent to the other party's
obligations hereunder, including but not limited to, securing as promptly as
practicable all consents, approvals, waivers and authorizations required,
necessary or desirable in connection with the transactions contemplated hereby.
Section 6.6 Further Assurances. At any time after the Closing
Date, each of Seller and Buyer shall, and Buyer agrees to cause LKC to,
promptly execute, acknowledge and deliver any other assurances or documents
reasonably requested by Seller, Buyer as the case may be, and necessary for each
of Seller and Buyer, as the case may be, to satisfy its obligations hereunder
or obtain the benefits contemplated hereby.
ARTICLE VII
CONDITIONS TO CLOSING
Section 7.1 Conditions to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Buyer in writing on or prior to the
Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Seller contained
in this Agreement shall be true in all material respects when made and as of
the Closing Date, with the same effect as though such representations and
warranties had been made on and as of the Closing Date
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(except (i) representations and warranties that are made as of a specific date
need be true, or true in all material respects, as the case may be, only as of
such date and (ii) as expressly permitted by this Agreement to change between
the date of this Agreement and the Closing Date); each of the covenants and
agreements of Seller to be performed on or prior to the Closing Date shall have
been duly performed in all material respects; and Buyer shall have received at
Closing certificates to that effect dated as of the Closing Date and executed
on behalf of Seller by its President or any of its Vice Presidents and its
Secretary or any of its Assistant Secretaries.
(b) Seller shall have delivered to Buyer resignations of all
directors of LKC who are not also employees of LKC.
(c) Seller and Buyer shall have established the list set forth in
Section 2.2.
(d) SGI and LKC shall have entered into an agreement providing for
the assignment to LKC of certain intellectual property rights and the
assumption by LKC of certain obligations under such intellectual property
rights (the "Assignment and Assumption Agreement").
Section 7.2 Conditions to Obligations of Seller.
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The obligations of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver in writing by Seller
on or prior to the Closing Date of each of the following conditions;
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall be true in all material respects when
made and as of the Closing Date, with the same effect as though such
representations and warranties had been made on and as of the Closing
Date (except (i) representations and warranties that are made as of a
specific date need be true, or true in all material respects, as the
case may be, only as of such date and (ii) as expressly permitted by
this Agreement to change between the date of this Agreement and the
Closing Date); each of the covenants and agreements of Buyer to be
performed on or prior to the Closing Date shall have been duly
performed in all material respects; and Seller shall have received at
the Closing certificates to that effect dated as of the Closing Date
and executed on behalf of Buyer by its President or any of its Vice
Presidents and its Secretary or any of its Assistant Secretaries.
(b) Seller shall have received from ▇▇▇ ▇. ▇▇▇▇▇▇▇, general
counsel of Buyer, an opinion, dated as of the Closing Date,
substantially in the form of Schedule 7.2(b) hereof.
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(c) Seller and Buyer shall have established the list set forth in
Section 2.2.
(d) SGI and LKC shall have entered into the Assignment and Assumption
Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement my be terminated at any time
prior to Closing.
(a) by agreement of Seller and Buyer;
(b) by Seller or Buyer, by giving written notice of such termination to
the other parties hereto, if (x) any condition to the terminating party's
obligations hereunder has not been satisfied or waived and (y) Closing shall not
have occurred on or prior to April 4, 1997; provided that the terminating party
is not in material breach of its obligations under this Agreement;
(c) by Seller or Buyer, by giving written notice of such termination
to the other parities hereto, if (x) each condition thereto shall have been
satisfied or waived and (y) Closing shall not have occurred on or prior to
March 31, 1997; provided that the terminating party is not in material breach
of its obligations under this Agreement;
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(d) by Seller or Buyer if there shall be in effect any law or
regulation that prohibits the consummation of Closing or if consummation of
Closing would violate any non-applicable final order, decree or judgment of
any court or governmental body having competent jurisdiction; or
(e) by Seller if Closing shall not have occurred on or prior to 10
Business Days following the satisfaction of all the conditions to Closing set
forth in Section 7.1 hereof as a result of any action or inaction by Buyer.
Section 8.2 Effect of Termination. In the event of the termination of
this Agreement in accordance with Section 8.1 hereof, this Agreement shall
thereafter become void and have no effect, and no party hereto (or any of their
respective Affiliates, representatives, directors, officers or employees) shall
have any liability to the other party hereto contained in this Section 8.2 and
in Sections 10.2 and 10.3 hereof, and except that nothing herein will relieve
any party from liability for any breach of this Agreement prior to such
termination.
ARTICLE IX
SURVIVAL AND INDEMNIFICATION
Section 9.1 Survival of Representations,
Warranties, Covenants and Agreements; Knowledge of Breach.
(a) Notwithstanding any otherwise applicable statute of limitations,
the representations and warranties
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included or provided for herein shall survive Closing until one year after the
Closing Date; provided, however, that any representation or warranty contained
in Section 4.3 and Article V hereof shall survive Closing until the expiration
of the applicable statute of limitations (including any waivers or extensions
thereof) with respect to such matters. The covenants and other agreements
contained in this Agreement shall survive Closing until the date or dates
specified therein or the expiration of the applicable statute of limitations
(including any waivers or extensions thereof) with respect to such matters,
whichever is later. Except with respect to the representations, warranties,
covenants and agreements contained in Article V hereof, in no event shall Buyer
be liable to Seller or Seller be liable to Buyer, as the case may be, for any
breach of the representations, warranties, covenants and agreements included or
provided for herein or in any schedule or certificate or other document
delivered pursuant to this Agreement, unless and until all claims for which
damages are recoverable hereunder by Buyer or Seller, as the case may be, exceed
$1,000,000 (the "Deductible"), in which case Buyer or Seller, as the case may
be, shall be entitled to damages in an amount up to the Purchase Price in the
aggregate; provided, however, that Buyer or Seller, as the case may be, shall be
liable only for the amount by which all such recoverable damages exceed the
Deductible;
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provided, further that no such Deductible shall apply in connection with the
indemnification obligations provided in Section 6.2(c) hereof.
(b) No party hereto shall be deemed to have breached any
representation, warranty, covenant or agreement if (i) such party shall have
notified the other parties hereto in writing, on or prior to the Closing Date,
of the breach of, or inaccuracy in, or of any facts or circumstances
constituting or resulting in the breach of or inaccuracy in, such
representation, warranty, covenant or agreement, specifically referring to the
provisions of this Agreement so breached or rendered inaccurate, and (ii) such
other parties have permitted Closing to occur and, for purposes of this
Agreement, are thereby deemed to have waived such breach or inaccuracy;
provided, however, that a disclosure pursuant to this Section 9.1(b) shall not
prejudice the rights of the parties pursuant to Article VII hereof not to
consummate the transactions contemplated by this Agreement or to recover damages
incurred as a result of such breach or inaccuracy.
Section 9.2 Indemnification.
(a) For a period commencing on the Closing Date and ending, as the
case may be, upon the expiration of the periods specified in Section 9.1(a)
hereof, Seller, on the one hand, or Buyer, on the other hand (the "Indemnifying
Party"), shall, subject to the limitations set forth in
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Sections 9.1(a) and 9.1(b) hereof, indemnify respectively Buyer, on the one
hand, or Seller, on the other hand, as the case may be (the "Indemnified
Party"), against and in respect of all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees and expenses incurred in
investigating, preparing or defending any claims covered hereby) sustained or
incurred arising out of any breaches of the Indemnifying Party's
representations, warranties, covenants and agreements set forth in this
Agreement (other than representations, warranties, covenants and agreements set
forth in Article V, as to which the indemnification provisions set forth in
Article V shall govern), in each case net of any related tax deduction or other
tax benefit. Any payments pursuant to this Section 9.2 or Article V shall be
treated as an adjustment to the Purchase Price for all Tax purposes.
(b) The indemnity provided herein as it relates to this Agreement and
the transactions contemplated by this Agreement shall be the sole and exclusive
remedy of the parties hereto, their Affiliates, successors and assigns with
respect to any and all claims for losses, damages, liabilities, costs and
expenses sustained or incurred arising out of this Agreement and the
transactions contemplated by this Agreement, except for the right of the parties
hereto to seek specific performance of the obligations set forth in Article II
of this Agreement.
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Section 9.3 Method of Asserting Claims, etc.
(a) All claims for indemnification by any Indemnified party
hereunder shall be asserted and resolved as set forth in this Section 9.3,
except for claims pursuant to Article V hereof (as to which the provisions of
Article V shall be applicable).
(b) In the event that any written claim or demand for which an
Indemnifying Party would be liable to any Indemnified Party hereunder is
asserted against or sought to be collected from any Indemnified Party by a
third party, such Indemnified Party shall promptly, but in no event more than
15 days following such Indemnified Party's receipt of such claim or demand,
notify the Indemnifying Party of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
in any manner prejudice the right of the Indemnified Party to indemnification
to the fullest extent provided hereunder) (the "Third Party Claim Notice") and
in the event that an Indemnified Party shall assert a claim for indemnity under
this Article IX, not including a third party claim, the Indemnified Party shall
notify the Indemnifying Party promptly following its discovery of the facts or
circumstances giving rise thereto (together, with a Third Party Claim Notice, a
"Claim Notice"); provided that no such notice need be provided to an
Indemnifying Party if the Deductible has not been exceeded and will not be
exceeded by
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such claim or demand; and provided, further, that the failure to notify on the
part of the Indemnified Party in the manner set forth herein shall not
foreclose any rights otherwise available to such Indemnified Party hereunder,
except to the extent that the Indemnifying Party is prejudiced by such failure
to notify. The Indemnifying Party shall have 30 days from the personal delivery
or mailing of the Third Party Claim Notice (except that such a period shall be
decreased to a time 10 days before a scheduled appearance date in a litigated
matter) (the "Notice Period") to notify the Indemnified Party (i) whether or
not the Indemnifying Party disputes the liability of the Indemnifying Party to
the Indemnified Party hereunder with respect to such claim or demand and (ii)
whether or not it desires to defend the Indemnified Party against such claim or
demand, which it shall not be entitled to do until the Deductible is exceeded.
All costs and expenses incurred by the Indemnifying Party in defending such
claim or demand shall be a liability of, and shall be paid by, the Indemnifying
Party; provided, however, that the amount of such expenses shall be a liability
of the Indemnifying Party hereunder, subject to the limitations set forth in
Section 9.1 hereof. In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, which it shall not be entitled
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to do until the Deductible is exceeded and except as hereinafter provided, the
Indemnifying Party shall have the right to defend the Indemnified Party by
appropriate proceedings and by counsel reasonably acceptable to the Indemnified
Party. If any Indemnified Party desires to participate in, but not control, any
such defense or settlement it may do so at its sole cost and expense. The
Indemnified Party shall not settle a claim or demand without the consent of the
Indemnifying Party. The Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of, or which would otherwise have a material adverse
effect on, the Indemnified Party or any subsidiary or Affiliate thereof. If the
Indemnifying Party elects not to defend the Indemnified Party against such
claim or demand, whether by not giving the Indemnified Party timely notice as
provided above or otherwise, then the amount of any such claim or demand, or,
if the same be contested by the Indemnified Party, then that portion of any
such claim or demand as to which such defense is unsuccessful (and all
reasonable costs and expenses pertaining to such defense) shall be the
liability of the Indemnifying Party hereunder, subject to the limitations set
forth in Section 9.1 hereof. To the
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extent the Indemnifying Party shall control or participate in the defense or
settlement of any third party claim or demand, the Indemnified Party will give
to the Indemnifying Party and its counsel reasonable access to all business
records and other documents relevant to such defense or settlement, and shall
permit them to consult with the employees and counsel of the Indemnified Party.
The Indemnified Party shall use its best efforts in the defense of all such
claims, and in connection therewith shall be entitled to reimbursement by the
Indemnifying Party of expenses directly related to efforts undertaken at the
specific request of the Indemnifying Party.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment and Modification; Waiver. This Agreement may
be amended or modified only in writing, signed by Seller and Buyer, at any time
prior to Closing with respect to any of the terms contained herein. At any time
prior to Closing either Seller or Buyer may (i) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto, or (iii)
waive compliance with any of the agreements or conditions of the other party
contained herein. Any agreement on the part of a party hereto to any
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such extension or waiver shall be valid if set forth in an instrument in
writing signed by the party granting such extension or waiver.
Section 10.2 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, the parties shall bear their own respective expenses (including,
but not limited to, all compensation and expenses of counsel, financial
advisors, consultants, actuaries and independent accountants) incurred in
connection with this Agreement and the transactions contemplated hereby.
Section 10.3 Public Disclosure. Each of the parties to this Agreement
hereby agrees with the other parties hereto that, except as may be required to
comply with the requirements of applicable law or the rules and regulations of
each stock exchange upon which the securities upon which the securities of one
of the parties or its Affiliates is listed, no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by all parties hereto (which approval shall not be unreasonably
withheld); provided, however, that, to the extent that either party to this
Agreement is required by law or the rules and regulations of any stock exchange
upon which the securities of one of the parties or its Affiliates is listed
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to make such a public disclosure, such public disclosure shall only be made
after prior consultation with the other party to this Agreement.
Section 10.4 Assignment. No party to this Agreement may assign any of
its rights or obligations under this Agreement without the prior written consent
of the other party hereto.
Section 10.5 Entire Agreement. This Agreement (including all
schedules hereto) contains the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
Section 10.6 Fulfillment of Obligations. Any obligation of any party
to the any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
Section 10.7 Parties in Interest; No Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any Person other than
Seller, Spie Enertrans, Buyer, LKC or their successors or permitted assigns any
rights or remedies under or by reason of this Agreement.
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Section 10.8 Schedules. The inclusion of any matter in any schedule
to this Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate,
but inclusion therein shall expressly not be deemed to constitute an admission
by Seller, or otherwise imply, that any such matter is material or creates a
measure for materiality for the purposes of this Agreement.
Section 10.9 Counterparts. This Agreement and any amendments hereto
may be executed in on or more counterparts, each of which shall be deemed to be
an original by the parties executing such counterpart, but all of which shall
be considered one and the same instrument.
Section 10.10 Section Headings. The section and paragraph headings
and table of contents contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
Section 10.11 Notices. All notices hereunder shall be deemed given
if in writing and delivered personally or sent by telecopy, telex or telegram
or by registered or certified may (return receipt requested) to the parties at
the following addresses (or at such other addresses as shall be specified by
like notice):
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(a) if to Seller, to:
▇▇▇▇▇▇▇▇ GROUP, INC.
c/o Square D Company
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to Buyer, to:
LKC Acquisition Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
Any notice given by mail or telegram shall be effective when received. Any
notice given by telex shall be effective when the appropriate telex or telecopy
answerback is received.
Section 10.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION
OF FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE CHOICE OF LAW
PRINCIPLES THEREOF. EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY ACTION
OR PRECEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE
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TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR
CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE
OF NEW YORK FOR THE COUNTY OF NEW YORK (THE "CHOSEN COURTS:") AND (I)
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE
CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN COURTS ARE AN
INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY HERETO AND (IV)
AGREES THAT SERVICE OR PROCESS UPON SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING
SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH SECTION 9.1 OF THIS
AGREEMENT. SELLER IRREVOCABLY DESIGNATES CT CORPORATION AS ITS AGENT AND
ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS AND MAKING AN
APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH
ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT
UPON THE CHOSEN COURTS AND BUYER STIPULATES THAT SUCH CONSENT AND APPOINTMENT
ARE IRREVOCABLE AND COUPLED WITH AN INTEREST.
Section 10.13 Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
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thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidty or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf of each
of the parties hereto as of the date first written above.
▇▇▇▇▇▇▇▇ GROUP, INC.
By: /s/
--------------------------------
Name: /s/
Title: /s/
LKC ACQUISITION CORP.
By: /s/
--------------------------------
Name: /s/
Title: /s/
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51
AGREEMENT
This Agreement dated as of January 8, 1998, among ▇▇▇▇▇▇▇▇ Group, Inc., a
New York corporation ("CGI"), LKC Acquisition Corp., a Delaware corporation
("LAC") and ▇.▇. ▇▇▇▇▇▇▇▇ & Company, Inc., a New York corporation ("LKC").
WHEREAS, pursuant to a Stock Purchase Agreement dated April 3, 1997 (the
"Stock Purchase Agreement"), CGI sold all of the issued and outstanding shares
of capital stock of LKC to LAC.
WHEREAS, the Stock Purchase Agreement sets forth the continuing rights and
obligations of the parties with respect to certain matters set forth in the
Stock Purchase Agreement, including but not limited to, cooperation as to tax
matters (Section 5.5(b)) and alternative minimum tax credits (Section 5.9).
WHEREAS, the parties desire to modify, amend, clarify or resolve certain
issues associated with the sections of the Stock Purchase Agreement noted
above.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, and subject to and on the terms and conditions herein set
forth, the parties hereto agree as follows:
1. CGI acknowledges the satisfactory delivery of those accounting and
tax records designated in the following schedule in accordance with Section
5.5(b) of the Stock Purchase Agreement. LAC and LKC shall each use their best
efforts to provide to CGI or its designated representatives, pursuant to
Section 5.5(b) of the Stock Purchase Agreement, the following accounting and
tax records in accordance with the following schedule:
Audited Financial Statements Complete
Consolidated Tax Returns Complete
State Tax Returns January 15, 1998
State NOL's January 15, 1998
State Audit Reports/Adjustments January 15, 1998
Federal Audit Reports/Adjustments January 15, 1998
Subsidiary Sale Agreements January 15, 1998
Tax Attribute Carryforward Workpapers January 15, 1998
General Ledgers and Trial Balances January 15, 1998
Accounts Payable To Be Determined
Journal Entries To Be Determined
Tax Schedules and Workpapers To Be Determined
Fixed Assets and Depreciation Schedules To Be Determined
Bank Statements To Be Determined
52
1(b). After delivery of the accounting and tax records described herein,
and upon reasonable notice, CGI, or its successors, shall use its best efforts
to make available to LAC or LKC those accounting and tax records which shall
have been requested by LAC or LKC.
2. In complete satisfaction of its obligation under Section 5.9 of the
Stock Purchase Agreement, CGI shall pay to LKC the sum of $500,000 on January
9, 1998. CGI shall have no obligation to pay any amount to LAC or LKC with
respect to any State of New York alternative minimum tax credits.
3. Except as otherwise set forth in this Agreement, the terms and
provisions of the Stock Purchase Agreement shall remain in full force and
effect.
4. This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters.
5. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
party hereto; provided that CGI may assign this Agreement to any affiliate
without prior written consent.
6. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without reference to the choice of law
principles thereof.
2
53
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as of the date first written above.
▇▇▇▇▇▇▇▇ GROUP INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. O'▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. O'▇▇▇▇▇▇
Title: Vice President & Assistant
Secretary
LKC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
▇.▇. ▇▇▇▇▇▇▇▇ & COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Lescaut
-----------------------------
Name: ▇▇▇▇▇▇ ▇. Lescaut
Title: CEO
3
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SECOND AMENDMENT
This SECOND AMENDMENT dated as of May 20, 1998 by and between Spie
Group Inc. a Delaware corporation ("SGI"), on its own behalf and on behalf of
▇▇▇▇▇▇▇▇ Group, Inc. ("CGI"), and ▇▇▇▇▇▇▇▇ Holdings Inc. a Delaware corporation
("CHI") amend that certain stock Purchase Agreement dated as of April 3, 1997
by and between the parties hereto or their predecessors (the "Agreement").
WHEREAS, subsequent to the date of the Agreement, LKC Acquisition
Corp. changed its name to ▇▇▇▇▇▇▇▇ Holdings Inc. and CGI merged with and into
SGI, such that SGI was the surviving corporation, and
WHEREAS, pursuant to the Agreement CGI sold all the issued and
outstanding shares of capital stock of ▇.▇. ▇▇▇▇▇▇▇▇ & Company, Inc. ("LKC") to
CHI, and
WHEREAS, the parties desire to modify and amend certain sections of
the Agreement and provide for certain consents under the Indemnity and
Cooperation Agreement dated as of April 3, 1997 by and between Spie Enertrans
S.A., CGI, LKC and CHI (the "Indemnity Agreement").
NOW THEREFORE, in consideration of the mutual convenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the parties hereto agree as follows:
1. Sections 2.1(b)(ii) and (iii) and Section 2.1 (c) are deleted
in their entirety and replaced by the following new Section 2.1 (b)(ii):
(ii) pay to Seller on or before September 9, 1998 the amount
of $1.6 million;"
2. Should said sum of $1.6 million not be paid by September 9,
▇▇▇▇, ▇▇▇ or CHI may declare this Second Amendment null and void by giving
written notice to the other party pursuant to Section 10.11 of the Agreement,
upon which event the Agreement shall continue in full force and effect in
accordance with its terms as if this Second Amendment had not been executed.
3. Said payment when made shall fulfill and release all payment
obligations of CHI under Sections 2.1 and 2.2 of the Agreement.
4. SGI expressly consents on its behalf and on behalf of CGI
pursuant to Sections 4 and 5 of the Indemnity Agreement, without regard to
whether such consent is required thereunder, to the merger of CHI into a
subsidiary of RailWorks Corporation ("RailWorks") pursuant
55
to a plan of merger by which CHI will become a wholly-owned subsidiary of
RailWorks.
5. SGI and CHI shall, at the reasonable request of the other
party, execute such other and further documents as may be necessary or desirable
to effectuate the intent of this Second Amendment.
6. Except as otherwise set forth in this Second Amendment, the
terms and provisions of the Agreement shall remain in full force and effect.
7. This Second Amendment contains the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such
matters.
8. No party to this Second Amendment may assign any of its
rights or obligations hereunder except wit the prior written consent of the
other party hereto; provided that CHI may assign its payment obligations
hereunder to an affiliate without prior written consent.
9. This Second Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York without reference to the
choice of law principles thereof.
IN WITNESS WHEREOF, the Second Amendment has been signed on behalf of
each of the parties hereto as of the date first above written.
SPIE GROUP, INC., on its own behalf and
on behalf of ▇▇▇▇▇▇▇▇ GROUP, INC.
By: /s/ Authorized Signature
------------------------------------
Name:
Title:
▇▇▇▇▇▇▇▇ HOLDINGS INC.
By: /s/ Authorized Signature
-----------------------------------
Name:
Title:
2