1
EXHIBIT 10.32
ASSET PURCHASE AGREEMENT,
BETWEEN
AMERICAN TEMPORARY SANITATION, INC.
AND
▇.▇. ▇▇▇▇▇▇▇▇ RESIDENTIAL, INC.
DATED DECEMBER 4, 1998
2
ASSET PURCHASE AGREEMENT
This Agreement ("Agreement") is made as of this 4th day of December,
1998, between AMERICAN TEMPORARY SANITATION, INC., a New York corporation, whose
address is ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Purchaser"), and ▇.▇.
▇▇▇▇▇▇▇▇ RESIDENTIAL, INC., a California corporation, whose address is ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ("Seller"). Purchaser and
Seller are collectively sometimes referred to in this Agreement as "Parties" or,
individually, as a "Party".
INTRODUCTION
WHEREAS, Purchaser wishes to purchase from Seller, and Seller wishes to
sell to Purchaser, substantially all of the assets of Seller used in the
[industrial services business] conducted by the Seller as of the date hereof
(the "Business"), which sale and purchase shall hereinafter be referred to as
the "Acquisition";
NOW THEREFORE, in consideration of the following representations,
warranties, covenants and agreements, the parties agree as follows:
DEFINITIONS
"Accounts Receivable" means the accounts receivable of the Business as
of the Closing Date, including work in progress that has been accrued but not
yet invoiced as of the Closing Date, as shown on the Accounts Receivables
Schedule.
"Accounts Receivable Schedule" means the schedule of the Seller's
accounts receivable as of the Closing Date to be delivered by Seller to the
Purchaser pursuant to Section 2.4.
"Acquisition" has the meaning set forth in the preface above.
"Acquisition Proposal" means any proposal for a merger, consolidation
or other business combination involving the Seller for the acquisition or
purchase of any equity interest in or material portion of the assets of the
Seller, other than the transactions with Purchaser contemplated by this
Agreement.
"Adjustment Amount" has the meaning set forth in Section 2.3.1 below.
"Adverse Consequences" has the meaning set forth in Section 4.1.1
below.
"Assets" has the meaning set forth in Section 2.1 below.
"Assumed Liabilities" has the meaning set forth in Section 3.1.6 below.
"Benefit Plan" has the meaning set forth in Section 5.1.14 below.
"▇▇▇▇ of Sale" has the meaning set forth in Section 2.8.1 below.
1
3
"Business" has the meaning set forth in the preface above.
"Business Data" has the meaning set forth in Section 2.1.7 below.
"Cash Consideration" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 1.1 below.
"Completed Project" means a project in which, as of the Closing Date,
the Company has within the one-year period immediately preceding the Closing,
completed all services required to be performed thereunder and that has been
closed out and fully invoiced.
"Contract Value" means the amount (including expenses) that each party
with whom the Seller is engaged in a Project is required to pay to the Seller
upon completion of such Project, as set forth on the Job Summary Schedule.
"Contracts" as the meaning set forth in Section 2.1.3 below.
"Encumbrances" means all liens, security interests, pledges, mortgages,
deeds of trust, claims, rights of first refusal, options, charges, restrictions
or conditions to transfer or assignment, liabilities, obligations, privileges,
equities, easements, rights of way, limitations, reservations, restrictions, and
other encumbrances of any kind or nature.
"Environmental Laws" means: (i) the Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. sec 9601 et seq., the
Resource Conservation and Recovery Act, 42. U.S.C. sec 6901 et seq., the Clean
Water Act, 33 U.S.C. sec 1251 et seq., the Clean Air Act, 42 U.S.C. sec 7401 et
seq., the Toxic Substances Control Act, 15 U.S.C. sec 2601 et seq.; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. sec 136; the Occupational
Safety and Health Act, 29 U.S.C. sec 651 et seq. ("OSHA"); the Pollution
Prevention Act, 42 U.S.C. sec 13101 et seq.; the Oil Pollution Act, 33 U.S.C.
sec 2701 et seq.; the Safe Drinking Water Act, 42 U.S.C. sec 300 et seq.; and
(ii) national, state, regional and local counterparts to any of the foregoing
statutes, both within and outside the U.S.; (iii) national, state, regional and
local enactments which regulate or address Environmental Matters, both within
and outside of the U.S.; and, (iv) regulations, codes, plans, orders, decrees,
judgments, notices guidelines, authoritative interpretations or demands issued,
entered, promulgated or approved under any of the foregoing.
"Environmental Matters" means all matters relating in any way to (i)
soil, air and water and groundwater pollution or contamination, including
without limitation, any on-site or off-site pollution or contamination; (ii)
damages to the natural environment or natural resources; (iii) releases or
discharges of waste, Hazardous Materials, or pollutants or contaminants; (iv)
occupational health and safety; or (v) the generation, transport, storage,
recycling or disposal of Hazardous Materials or wastes (including, without
limitation, garbage, refuse, slag, sludge and other discarded materials, whether
solid, liquid, semisolid or gaseous and whether on-site or off-site).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Hazardous Materials" means those elements, compounds and substances
identified in any of the Environmental Laws as "hazardous materials", "hazardous
substances", or "hazardous wastes", as well as any other elements, compounds or
substances which are listed or identified as "pollutants",
2
4
"contaminants", "hazardous" or "toxic" (or by other terms of similar meaning)
under any of the Environmental Laws. The term "Hazardous Materials"
specifically includes, without limitation, radioactive materials, petroleum
products and asbestos.
"Indemnifying Party" has the meaning set forth in Section 4.2 below.
"Intellectual Property" means all of the Seller's rights to the names
under which it is incorporated or under which it currently conducts its
business, and all of the Seller's rights to any patents, patent applications,
trademarks and service marks (including registrations and applications
therefor), trade names, logos, copyrights and written know-how, trade secrets,
licenses and sublicenses and all similar proprietary data and the goodwill
associated therewith.
"Inventory and Supplies" has the meaning set forth in Section 2.1.5 below.
"Job Summary Schedule" means the schedule of Projects and their related
Contract Values, Recognized ▇▇▇▇▇▇▇▇ and Recognized Costs to be delivered by
the Seller to the Purchaser three days before the Closing Date in accordance
with Section 2.5.
"Leased Properties" has the meaning set forth in Section 2.1.3 below.
"Licenses and Permits" has the meaning set forth in Section 2.1.6 below.
"Material" means any amount, effect, changed circumstance or condition
significant or substantive to the business, operations, assets or financial
condition or results of operations of the Party or Parties at issue, unless
such amount, effect, changed circumstance or condition is due to general changes
in the economy or the general industry in which the Party at issue operates.
"Ongoing Project" means a project that is not a Completed Project and for
which the Seller has incurred Recognized ▇▇▇▇▇▇▇▇ and Recognized Costs, but has
not received the entire Contract Value therefor.
"Personal Property" has the meaning set forth in Section 2.1.2 below.
"Project" means any project that has been assigned a job number in the
Company's accounting system and in which the Seller is performing services
pursuant to the Business as of the date of the Job Summary Schedule, all of
which are set forth on the Job Summary Schedule.
"Properties" has the meaning set forth in Section 2.1.3 below.
"Purchase Price" means an amount equal to the Cash Consideration and the
initial principal amounts of the Secured Note.
"Purchaser" has the meaning set forth in the preface above.
"Real Property" has the meaning set forth in Section 2.1.1 below.
"Recognized ▇▇▇▇▇▇▇▇" means the amount of revenue, calculated in
accordance with the Seller's accounting procedures recognized on the Job
Summary Schedule, with respect to each Project.
3
5
"Recognized Costs" means the amount of Seller's costs, calculated in
accordance with Seller's accounting procedures, recognized on the Job Summary
Schedule with respect to each Project.
"Retained Assets" has the meaning set forth in Section 2.2 below.
"Secured Note" has the meaning set forth in Section 2.3 below.
"Seller" has the meaning set forth in the preface above.
"Title Policy" has the meaning set forth in Section 3.2 below.
"Transaction Documents" means this Agreement, the Secured Note, the
Security Agreement-Pledge and the Employment Agreements.
1. CLOSING
1. Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place on a date mutually acceptable to Seller and
Purchaser no later than 30 days after all of the conditions precedent described
in Sections 10 and 11 hereof have been satisfied or waived (the "Closing Date"),
but in no event shall the Closing be later than December 31, 1998. The Closing
shall take place at 10:00 a.m. on the Closing Date at the offices of__________.
2. PURCHASE, SALE AND RELATED MATTERS
2.1. Assets. At Closing, Seller will sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser will purchase and acquire from Seller, all
of Seller's assets (the "Assets"), including, but not limited to, the following
assets:
2.1.1. Real Property. The real property set forth in Schedule
2.1.1 together with all buildings, improvements, easements,
restrictions and fixtures relating thereto (collectively, the "Real
Property");
2.1.2. Machinery and Equipment. All machinery, equipment,
vehicles, furniture, office equipment, computers and computer
accessories, spare parts and all other items of tangible personal
property owned or used (but excluding leased personal property) by
Seller in the Business, including without limitation those items set
forth in Schedule 2.1.2 (collectively, the "Personal Property");
2.1.3. Contracts and Leased Properties. To the extent
transferable or assignable, without further consideration, the
contracts, purchase orders, leases, lease improvements, noncompete
agreements, vendor approvals, confidentiality agreements, insurance
policies, performance bonds, claims, benefits under all liens, warrants
and guarantees, bids and proposals (whether or not awarded), work in
progress and other agreements associated with the Business, including
without limitation those set forth in Schedule 2.1.3 (collectively, the
"Contracts"). Schedule 2.1.3 also identifies all leases of real
property used or occupied by Seller (the "Leased Properties"; the Real
Property and Leased Properties are collectively referred to in this
Agreement as the "Properties");
4
6
2.1.4. Intellectual Property. The Intellectual Property and
associated licenses and sublicenses used by the Seller and Seller's
rights to the Intellectual Property, all material items of which are
listed on Schedule 2.1.4, remedies against infringements of the
Intellectual Property, and rights to protection of the Intellectual
Property under the laws of all jurisdictions;
2.1.5. Inventory and Supplies. To the extent owned by Seller,
all work-in-process, inventory, materials, finished products, supplies
(including marketing materials and brochures), and packaging supplies,
including, without limitation, those set forth in Schedule 2.1.5
(collectively, the "Inventory and Supplies");
2.1.6. Licenses and Permits. To the extent transferable, all
governmental licenses, permits, authorizations and approvals,
franchises, consents, filings and applications for any of the
foregoing, used by Seller in the Business, including without limitation
those set forth in Schedule 2.1.6 (collectively, the "Licenses and
Permits");
2.1.7. Business Data. All information, documents and records
(such as customer files, pricing data and supplier data) used by Seller
in connection with the Business or used in connection with any of the
Assets (collectively, the "Business Data");
2.1.8. Accounts Receivable. The accounts receivable of the
Business as of the Closing Date as shown on the Accounts Receivable
Schedule;
2.1.9. Lock Boxes. To the extent transferable, any and all
lock-boxes of Seller, all of which are listed on Schedule 2.1.9;
2.1.10. Tax and Accounting Records. All tax and accounting
records and files relating to the Business;
2.1.11. Personnel Files. All personnel files and records
related to any employee of Seller who gives permission to Seller to
transfer such records to Purchaser;
2.1.12. Prepaid Expenses. The expenses of the Seller and the
Business, to the extent pre-paid as of the Closing, including, but not
limited to, pre-paid taxes, pre-paid rent, pre-paid service contracts,
and pre-paid miscellaneous expenses;
2.1.13. Cash. All cash;
2.1.14. Other Assets. All other assets shown on the worksheet
attached as Schedule 2.1.14., and all of the additional privileges,
rights, interests, properties and assets of the Seller of every kind
and description and wherever located that are used in the Business or
intended for use in the Business in connection with, or that are
necessary for the continued conduct of, the Business.
2.2. Retained Assets. Seller shall retain all right, title and interest
in and to the following assets (collectively, the "Retained Assets"), all of
which are itemized on Schedule 2.2.
2.2.1. Tax Refunds and Other Credits. All tax refunds,
insurance proceeds and credits
5
7
attributable to the Business before the Closing Date or resulting from the
consummation of the transactions contemplated herein;
2.2.2 Personnel Files. All personnel files and records related to any
employee of Seller who does not give permission to provide such records to
Purchaser;
2.2.3 Employee Benefit Plans. All right, title, or interest in any
employee benefit plan of Seller;
2.2.4 Corporate Charter and Related Documents. The corporate charter,
qualifications to conduct business as a foreign corporation, arrangements
with registered agents relating to foreign qualifications, taxpayer and
other identification numbers, seals, minute books, stock transfer books,
blank stock certificates, and other documents relating to the organization,
maintenance, and existence of Seller as a corporation;
2.2.5 Lawsuits. All records relating to pending lawsuits to which
Seller is a party (provided that copies of non-privileged material and that
relate to or involve the Business shall, upon request, be furnished to
Purchaser);
2.2.6 Property Unrelated to the Business. All owned or leased real
and personal property that is not associated with the Business, together
with all of the structures, fixtures and improvements located thereon;
2.2.7 Purchase Price. The consideration to be delivered to Seller
pursuant to this Agreement.
2.2.8 Seller's Contractual Rights. Any of the rights of Seller under
this Agreement (or under any side agreement between Seller on the one hand
and the Purchaser on the other hand entered into on or after the date of
this Agreement); and,
2.2.9 Assets Unrelated to the Business. Every other asset that is not
an Asset relating to the Business.
2.3 Purchase Price. As consideration for the Assets, the Purchaser shall
pay to the Seller $2,400,000. The Purchase Price shall be adjusted after the
Closing in accordance with Section 2.3.1 by adding the Adjustment Amount to the
Purchase Price.
2.3.1 Adjustment Amount. The Adjustment Amount (which may be a
positive or negative number) will be equal to (a) Accounts Receivable less
i) allowance for bad debt and ii) Accounts Payable, minus (b) $1,250,000.
2.4 Uncollectible Accounts Receivable. At the Closing, Seller shall
deliver to the Purchaser the Accounts Receivable Schedule, which shall show the
Accounts Receivable of the Business as of the Closing Date, along with a
breakdown of all invoiced Accounts Receivable and all accrued Accounts
Receivable that have not been invoiced.
2.4.1 With respect to any Accounts Receivable on the Accounts
Receivable Schedule that relate to Completed Projects, if any such Accounts
Receivable prove to be uncollectible
6
8
within 120 days of the Closing Date, the Purchaser shall assign such
Accounts Receivable to the Seller or its designee and the principal
amount of the Purchase Price shall be reduced by the amount, if any, by
which the amount of such Accounts Receivable exceeds the accrual for
bad debts as of the Closing Date.
2.4.2. With respect to any other Accounts Receivable on the
Accounts Receivable Schedule: (i) if any such Accounts Receivable
prove to be uncollectible within 120 days of the later of the invoice
date or the Closing Date; and, (ii) if the collectibility of such
Accounts Receivable shall not have been adversely affected by the act
or omission of the Purchaser on or after the Closing, the Purchaser
shall assign such Accounts Receivable to the Seller or its designee and
the principal amount of the Purchase Price will be reduced by the
amount, if any, by which the amount of such Accounts Receivable exceeds
the accrual for bad debts as of the Closing Date.
2.4.3. The total of all reductions in the principal amount of
the Purchase Price pursuant to sections 2.4.1 and 2.4.2 above, the
Seller shall pay to the Purchaser the amount by certified or bank check
within 30 days of receiving Purchaser's invoice for such amount
accompanied by an assignment of the Accounts Receivable in question.
2.5. Recognized Costs. No less than three days before the Closing, the
Seller shall deliver to the Purchaser a schedule (the "Job Summary Schedule")
setting forth, with respect to each Project, the Contract Value, the Recognized
Costs, and the identification of the Project as a Completed Project or an
Ongoing Project.
2.5.1. With respect to each Completed Project, if there are
costs attributable to such Completed Project in excess of the
Recognized Costs set forth on the Job Summary Schedule, the Purchaser
shall provide to Seller documentation substantiating such costs and
the principal amount of the Purchase Price shall be reduced by the
amount of such costs; provided, however, that there shall be no
adjustment of the principal amount of the Purchase Price until the
aggregate amount of such costs for all Completed Projects exceeds
$10,000. If and when the aggregate amount of such costs for all
Completed Projects exceeds $10,000, the principal amount of the
Purchase Price shall be reduced by the amount of the total of all such
costs.
2.5.2. With respect to each Ongoing Project, if there are
costs that were incurred before the date of the Job Summary Schedule
attributable to such Ongoing Project in excess of the Recognized Costs
set forth on the Job Summary Schedule, the Purchaser shall provide to
Seller documentation substantiating such costs and the principal
amount of the Purchase Price shall be reduced by the amount of such
costs; provided, however, that there shall be no adjustment of the
principal amount of the Purchase Price until the aggregate amount of
such costs for all Ongoing Projects exceeds $10,000. If and when the
aggregate amount of such costs for all Ongoing Projects exceeds
$10,000, the principal amount of the Purchase Price shall be reduced by
the amount of the total of all such costs.
2.5.3. The total of all reductions in the principal amount of
the Purchase Price pursuant to Sections 2.5.2 and 2.5.3 above, the
Seller shall pay to the Purchaser the excess amount by certified or
bank check within 30 days of receiving Purchaser's invoice for such
amount accompanied by the substantiating documentation.
7
9
2.6. Allocation of the Purchase Price. Seller and Purchaser shall use
their best efforts to agree, within 90 days of the Closing Date, to an
allocation of the Purchase Price (together with liabilities assumed hereunder
and other relevant items) among the Assets. Seller and Purchaser represent,
warrant and agree that such allocation will be determined through arm's length
negotiations. If the Parties are unable to agree on the allocation, the
allocation shall be determined by an independent accounting firm acceptable to
Purchaser and Seller, such agreement not to unreasonably withheld, conditioned
or delayed, whose resolution shall be binding and enforceable against the
Parties hereto. Such allocation will comply with the requirements of Section
1060 of the Code. Purchaser will prepare IRS Form 8594 for Seller's review and
comment. Seller and Purchaser each agrees that, to the extent permitted by
applicable law, it will adopt and use the amounts allocated to each asset or
class of assets for purposes of all Federal, state and other income Tax returns
or reports of any nature filed by it, and that it will not voluntarily take any
position inconsistent therewith upon examination of any such Tax returns or
reports, in any claim for refund, in any litigation or otherwise with respect
to such Tax returns or reports. Notwithstanding any other provisions of this
Agreement, the foregoing agreement shall survive the Closing Date without
limitation.
2.7. Further Assurances. At the Closing, and from time to time after the
Closing:
2.7.1. Conveyance Documents. At the request of Purchaser, and without
further consideration, Seller shall promptly execute and deliver to
Purchaser such certificates and other instruments of sale, conveyance,
assignment and transfer, and take such other action, as may reasonably be
requested by Purchaser to sell, convey, assign and transfer to and vest in
Purchaser or to put Purchaser in possession of the Assets;
2.7.2. Assumption Documents. At the request of Seller and without
further consideration, Purchaser shall promptly execute and deliver to
Seller such certificates and other instruments of assumption, and take such
other action, as may reasonably be requested by Seller more effectively to
confirm and carry out the assumption by Purchaser of the obligations of
Seller assumed by Purchaser hereunder.
2.7.3. Consents and Related Matters. To the extent that any consents,
waivers or approvals necessary to convey items of Assets to Purchaser are
not obtained before the Closing, Seller shall use its reasonable best
efforts to:
2.7.3.1. Benefits of Assets. Provide to Purchaser, at the request
of Purchaser, the benefits of any such Asset;
2.7.3.2. Cooperation. Cooperate in any reasonable and lawful
arrangement, approved by Purchaser, designed to provide such benefits
to Purchaser; and
2.7.3.3. Exercise of Rights. Enforce and perform, at the request
and expense of Purchaser, and for the liability and account of
Purchaser, any rights or obligations of Seller arising from any such
Asset against or in respect of any third person (including a
government or governmental unit), including the right to elect to
terminate any contract, arrangement or agreement in accordance with
the terms thereof upon the advice of Purchaser;
2.8. Instruments of Conveyance, Transfer, Assumption, Etc. Seller shall
properly execute
8
10
and deliver to Purchaser at the Closing:
2.8.1. ▇▇▇▇ of Sale. The ▇▇▇▇ of Sale, substantially the form
of Exhibit B, evidencing the sale of the Assets to the Purchaser,
assigning to the Purchaser the assignable Contracts, the assignable
leases for the Leased Properties, and the Licenses and Permits, and
transferring to Purchaser all of Seller's right, title and interest in
and to the Intellectual Property included in the Assets.
2.8.2. Deeds. Deeds in the form of Exhibit C; and,
2.8.3. Other. Such other necessary documents as Purchaser may
reasonably request.
2.9. Risk of Loss. The risk of loss or damage to all Assets shall
remain with Seller until consummation of the Closing.
3. CERTAIN LIABILITIES
3.1. Liabilities Assumed. At the Closing, and on and subject to the
terms and conditions of this Agreement, the Purchaser shall assume and become
responsible for only the following liabilities:
3.1.1. Accounts Payable. Seller's accounts payable as of the
Closing, including purchase orders issued in the ordinary course of
business, but not yet booked as an account payable as of the Closing
Date;
3.1.2. Unpaid Taxes. All liabilities of Seller for unpaid
taxes with respect to periods after the Closing;
3.1.3. Employees. All liabilities and obligations for all
periods as of and after the Closing Date with respect to Seller's
employees who become employed by Purchaser, including all liabilities
and obligations with respect to such employees for disability or
workers' compensation claims, that arise out of incidents occurring
after the Closing Date, it being understood that the Seller will retain
all liabilities and obligations for all periods before the Closing Date
with respect to Seller's employees, including all liabilities and
obligations with respect to such employees for disability or workers'
compensation claims that arose out of events occurring before the
Closing Date;
3.1.4. Liabilities Relating to the Assets. Other than the
liabilities and obligations identified on Schedule 3.1.4, all
liabilities and obligations of Seller under the agreements, contracts,
leases, licenses, and other arrangements referred to in the definition
of Assets;
3.1.5. Environmental Liabilities. All liabilities relating to
Environmental Matters arising out of acts or omissions occurring as of
or after the Closing Date; it being understood that the Seller will
remain obligated for any liabilities relating to Environmental Matters
arising out of acts or omissions occurring before the Closing Date.
3.1.6. Other. All other liabilities and obligations of Seller
or the Business arising as of or after the Closing (collectively, and
together with amounts described in Section 3.2, the "Assumed
Liabilities").
9
11
3.2. Transfer Taxes and Expenses. Purchaser assumes liability for and
shall pay all sales, use, privilege and other transfer or similar Taxes imposed
on it by law as a result of the transactions contemplated hereby. Purchaser
shall pay all recording fees and costs, and all transfer taxes or revenue stamps
incidental to the recordation of the deed(s) conveying the Real Property. Seller
shall pay all survey costs and Purchaser shall pay all title commitment (the
"Title Policy") and title insurance premiums in connection with the Real
Property.
4. INDEMNIFICATION AND RELATED COVENANTS.
4.1. Indemnification.
4.1.1. Indemnification by the Seller. Seller shall indemnify
the Purchaser from and against any and all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders, decrees, rulings, damages, dues,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses
(collectively, "Adverse Consequences") that the Purchaser shall suffer
through and after the date of the claim for indemnification (but
excluding any Adverse Consequences the Purchaser shall suffer after the
end of any applicable survival period) caused by: (i) Seller's breach
of any of its representations, warranties, covenants or agreements
contained in this Agreement; or (ii) any liability of Seller that is
not an Assumed Liability (including any liability of Seller that
becomes a liability of the Purchaser under any bulk transfer law of any
jurisdiction, under any common law doctrine of defacto merger or
successor liability (including, but not limited to ERISA), or otherwise
by operation of law); provided, however, that Seller shall not have any
obligation to indemnify the Purchaser under this Section 4.1.1:
4.1.1.1. Deductible. Until the Purchaser has suffered
Adverse Consequences by reason of all such breaches in excess
of a $10,000 aggregate deductible (after which point Seller
will be obligated only to indemnify the Purchaser from and
against further such Adverse Consequences); or,
4.1.1.2. Limits on Indemnification. To the extent the
Adverse Consequences the Purchaser has suffered by reason of
all such breaches exceeds a ceiling equal to the Purchase
Price (after which point Seller will have no obligation to
indemnify the Purchaser from and against further such Adverse
Consequences).
4.1.2. Indemnification by Purchaser. Purchaser shall indemnify
Seller from and against any and all Adverse Consequences Seller shall
suffer through and after the date of the claim for indemnification (but
excluding any Adverse Consequences Seller shall suffer after the end of
any applicable survival period) arising from or relating to Purchaser's
breach any of its representations, warranties, covenants or agreements
contained in this Agreement; any Assumed Liability; or, the Business or
the Assets (other than those matters for which Seller shall indemnify
Purchaser under Section 4.1.1 above); provided, however, that Purchaser
shall not have any obligation to indemnify the Seller under this
Section 4.1.2:
4.1.2.1. Deductible. Until the Seller has suffered
Adverse Consequences by reason of all such breaches in excess
of a $10,000 aggregate deductible (after which point Purchaser
will be obligated only to indemnify the Seller from and
against further
10
12
such Adverse Consequence);
4.1.2.2. Limitation on Indemnification. To the extent
the Adverse Consequences the Seller has suffered by reason of
all such breaches exceeds a ceiling equal to the Purchase
Price (after which point Purchaser will have no obligation to
indemnify the Seller from and against further such Adverse
Consequences).
4.2. Indemnification Procedure. If any Party hereto discovers or
otherwise become aware of a claim with respect to which a claim for
indemnification may be made pursuant to Sections 4.1.1 or 4.1.2 of this
Agreement (including any third party claim) (the "Indemnified Party"), such
Indemnified Party shall give written notice to the other Party (the
"Indemnifying Party"), specifying such claim; provided, however, that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of any obligations hereunder to the extent the
Indemnifying Party is not Materially prejudiced thereby. Further, promptly after
receipt by an Indemnified Party hereunder of written notice of the commencement
of any action or proceeding with respect to which a claim for indemnification
may be made pursuant to this Section 4, such Indemnified Party shall, if a claim
in respect thereof is to be made against any Indemnifying Party, give written
notice to the latter of the commencement of such action; provided, however, that
the failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of any obligations hereunder to the extent the
Indemnifying Party is not Materially prejudiced thereby. In case any such action
is brought against an Indemnified Party, the Indemnifying Party shall assume the
defense thereof to the extent that it may wish, with counsel reasonably
satisfactory to such Indemnified Party, and after such notice from the
Indemnifying Party to such Indemnified Party of its assumption of the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof unless the Indemnifying Party has failed to
assume the defense of such claim and to employ counsel reasonably satisfactory
to such Indemnified Party. An Indemnifying Party who does not assume the defense
of a claim shall not be liable for the fees and expenses of more than one
counsel in any single jurisdiction for all parties indemnified by such
Indemnifying Party with respect to such claim or with respect to claims separate
but similar or related in the same jurisdiction arising out of the same general
allegations. Notwithstanding any of the foregoing to the contrary, the
Indemnified Party will be entitled to select its own counsel and assume the
defense of any action brought against it if the Indemnifying Party fails to
select counsel reasonably satisfactory to the Indemnified Party, the expenses of
such defense to be paid by the Indemnifying Party. No Indemnifying Party shall
consent to entry of any judgment or enter into any settlement with respect to a
claim without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld, or unless such judgment or settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim. No
Indemnified Party shall consent to entry of any judgment or enter into any
settlement of any such action, the defense of which has been assumed by an
Indemnifying Party, without the consent of such Indemnifying Party, which
consent shall not be unreasonably withheld or delayed. All costs and expenses to
be paid by an Indemnifying Party on behalf of an Indemnified Party shall be paid
on a current basis as incurred.
4.3. Determination of Adverse Consequences. The Purchaser and Seller
shall make appropriate adjustments for insurance coverage in determining Adverse
Consequences for purposes of this Section 4. All indemnification payments made
by the Seller under this Section 4 shall be deemed adjustments to the Purchase
Price.
4.4. Exclusive Remedy. The Purchaser and Seller acknowledge and agree
that other
11
13
than as set forth in Sections 2.4 and 2.5, the foregoing
indemnification provisions in this Section 4 shall be the exclusive
remedy of the Purchaser and Seller with respect to the transactions
contemplated by this Agreement.
4.5. Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this
Agreement, other than the representations and warranties of the Seller
contained in Sections 5.1.13 and 5.1.14, shall survive the Closing
(even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and
continue in full force and effect for a period of two years thereafter.
The representations and warranties of the Seller contained in Sections
5.1.13 and 5.1.14 of this Agreement shall survive the Closing (even if
the damaged Party knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing) and continue in full
force and effect until the statute of limitations relating to the
action giving rise to the potential liability has expired.
5.1. Representations and Warranties. Seller represents and warrants to
the Purchaser as follows:
5.1.1. Organization and Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Venezuela has full requisite corporate power and authority to carry on
its business as it is currently conducted, and to own and operate the
properties currently owned and operated by it, and is duly qualified or
licensed to do business and is in good standing as a foreign
corporation authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the businesses
conducted by it would make such qualification or licensing necessary.
5.1.2. Agreements Authorized and their Effect on Other
Obligations. Seller has requisite power and authority to execute and
deliver this Agreement and the other Transaction Documents to which it
is a party. The execution and delivery of this Agreement and the other
Transaction Documents to which the Seller is a party have been
authorized by all necessary corporate, shareholder and other action on
the part of the Seller, and this Agreement and the other Transaction
Documents to which the Seller is a party are the valid and binding
obligations of the Seller, enforceable against the Seller in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally and subject to normal
equitable principles. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Seller is a
party, and the consummation of the transactions contemplated hereby and
thereby, will not conflict with or result in a violation or breach of
any term or provision of, nor constitute a default under (i) the
charter or bylaws (or other organizational documents) of the Seller,
(ii) any obligation, indenture, mortgage, deed of trust, lease,
contract or other agreement to which the Seller is a party or by which
the Seller or its properties are bound; or (iii) any provision of any
law, rule, regulation, order, permit, certificate, writ, judgment,
injunction, decree, determination, award or other decision of any
court, arbitrator, or other governmental authority to which the Seller
or any of its properties are subject.
5.1.3. Subsidiaries. The Seller does not have any subsidiary
corporations or any interest in any other organization, incorporated or
unincorporated, partnership or any other entity of any type.
12
14
5.1.4. Contracts. Schedule 2.1.3 hereto sets forth a true, complete
and accurate list of all Material Contracts of the Seller, including leases
under which the Seller is lessor or lessee, which relate to the Assets or
the Business and are to be performed in whole or in part after the date
hereof. All of the Material Contracts are in full force and effect, and
constitute valid and binding obligations of the Seller. The Seller is not,
and to Seller's knowledge, no other party to any of the Material Contracts
is, in Material default thereunder, and no event has occurred that (with or
without notice, lapse of time, or the happening of any other event) would
constitute a Material default thereunder.
5.1.5. Title to and Condition of Assets. The Seller has good title to
all of the Assets, free and clear of any Encumbrances. The Seller will
transfer good title to the Assets and the Purchaser will acquire such good
title upon consummation of the transactions contemplated hereby. All of the
Assets are in a state of good operating condition and repair, ordinary wear
and tear excepted, and are free from any known defects except as may be
repaired by routine maintenance and such minor defects as to not
substantially interfere with the continued use thereof in the conduct of
normal operations. All of the Assets Materially conform to all applicable
laws governing their use. No notice of any violation of any law, statute,
ordinance, or regulation relating to any of the Assets has been received by
the Seller, except such as have been complied with in all Material
respects.
5.1.6. Intellectual Property. Schedule 2.1.4 hereto sets forth a true,
complete and accurate list of all of the Intellectual Property. Except as
set forth on Schedule 2.1.4, (i) the Intellectual Property is owned or
licensed by the Seller free and clear of any Encumbrances; (ii) the Seller
has not granted to any other person any license to use any Intellectual
Property; and (iii) the Seller has not received any notice of infringement,
misappropriation, or conflict with the intellectual property rights of
others in connection with the use by the Seller of the Intellectual
Property.
5.1.7. Licenses and Permits. Schedule 2.1.6 hereto sets forth a true,
complete and accurate list of all of the Licenses and Permits. Except as
set forth on Schedule 5.1.7, each of the Licenses and Permits and the
Seller's rights with respect thereto is valid and subsisting, in full force
and effect, and enforceable by the Seller subject to administrative powers
of regulatory agencies having jurisdiction. Except as set forth on Schedule
5.1.7, the Seller is in Material compliance with the terms of each of the
Licenses and Permits. None of the Licenses and Permits have been, or to the
knowledge of the Seller, are threatened to be, revoked, canceled, suspended
or modified. Upon consummation of the transactions contemplated hereby, all
of the Licenses and Permits that are assignable without the consent of any
governmental or other agency shall be assigned to the Purchaser.
5.1.8. Financial Statements. The Seller has delivered to the Purchaser
copies of the Seller's unaudited balance sheet as of October 31, 1998 and
related statements of income and shareholders' equity as of and for the
eight months ended October 31, 1998 (collectively, the "Financial
Statements"), copies of which are attached hereto as Schedule 5.1.8. The
Financial Statements are true, correct and complete in all Material
respects and present fairly and fully the financial condition of the Seller
as of the dates and for the periods indicated thereon, and have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as noted therein. The accounts
receivable reflected on the Financial Statements, or which have been
thereafter acquired by the Seller, have been collected or are collectible
at the aggregate recorded amounts thereof less applicable reserves, which
reserves are adequate.
13
15
5.1.9. Recognized ▇▇▇▇▇▇▇▇ and Costs. The Contract Values, Recognized
▇▇▇▇▇▇▇▇, Recognized Costs and the status of each Project set forth in the Job
Summary Schedule will be true, correct and complete in all Material respects as
of the date thereof and present fairly and fully such information regarding
each Project, and have been prepared in accordance with Seller's customary
accounting procedures.
5.1.10. Additional Information. Attached as Schedule 5.1.10.1 through
and including Schedule 5.1.10.12, which, expect for omissions and inaccuracies
that are not, in the aggregate, Material to the Business, are true, complete
and correct lists of the following items:
5.1.10.1. Receivables. All accounts and notes receivable
of the Seller as of October 31, 1998, together with (i) an appropriate
invoice date and due date aging schedule; (ii) the amounts provided for
as an allowance for bad debts; (iii) the identity and location of any
asset in which the Seller holds a security interest to secure payment
of the underlying indebtedness; and (iv) a description of the nature
and amount of any Encumbrances on such accounts and notes receivable;
5.1.10.2. Payables. All accounts and notes payable of the
Seller as of October 31, 1998, together with an appropriate aging
schedule;
5.1.10.3. Bank Accounts. The name of each bank in which the
Seller has an account, the names of all persons authorized to draw
thereon, the account balances and the account numbers of each such
account;
5.1.10.4. Employee Agreements. Any collective bargaining
agreements of the Seller with employees, including amendments,
supplements, and written understandings, and all written employment,
compensation or consulting agreements, of the Seller with any person;
5.1.10.5. Employees. All employees, their positions with the
Company and their compensation (including bonus);
5.1.10.6. Promissory Notes and Indebtedness. All long-term
and short-term promissory notes, installment contracts, loan
agreements, credit agreements and any other agreements of the Seller
relating thereto or with respect to collateral securing the same;
5.1.10.7. Guaranties. All indebtedness, liabilities and
commitments of others and as to which the Seller is a guarantor,
endorser, co-maker, surety, or accommodation maker, or is contingently
liable therefor (excluding liabilities as an endorser of checks and
the like in the ordinary course of business) and all letters of credit,
whether stand-by or documentary, issued by any third party.
5.1.10.8. Other Assets. Schedules 2.1.1, 2.1.2, 2.1.3,
2.1.4, 2.1.5 and 2.1.6 are true complete and correct listings of the
Real Property, Machinery and Equipment, Contracts and Leased
Properties, Intellectual Property, Inventory and Supplies, and
Licenses and Permits of the Company, except to the extent of
inaccuracies that are not Material to the assets of the Business.
5.1.11. Absence of Certain Changes and Events. Other than as a result
of the transactions contemplated by this Agreement or as set forth on Schedule
5.1.11, since October 31, 1998, there has
14
16
not been:
5.1.11.1. Financial Change. Any material adverse change in the Assets,
the Business or the financial condition, operations, liabilities or
prospects of the Seller;
5.1.11.2. Property Damage. Any material damage, destruction, or loss
to any of the Assets or the Business (whether or not covered by insurance);
5.1.11.3. Waiver. Any waiver or release of a material right of or
claim held by the Seller;
5.1.11.4. Change in Assets. Any acquisition, disposition, transfer,
dividend, encumbrance, mortgage, pledge or other encumbrance of any asset
of the Seller other than in the ordinary course of business.
5.1.11.6. Employment Arrangements. Any change in the duration or level
of compensation, bonus or severance payable under any employment or
contract arrangement with the Seller (whether by amendment to any existing
arrangement or by the entering into a new arrangement) outside of the
ordinary course of business; or
5.1.11.7. Other Material Changes. Any other event or condition known
to either the Seller that would or may have a Material adverse effect on
the Seller, the Assets or the Business.
5.1.12. Assets. The Assets constitute all of the assets used by Seller to
conduct the Business as historically conducted by the Seller.
5.1.13. Environmental Matters. Except as set forth on Schedule 5.1.13, none
of the current or past operations of the Business or any of the Assets is being
or has been conducted or used in such a manner as to constitute a Material
violation of any Environmental Law. The Seller has not received any written
notice from any entity, governmental agency or individual regarding any
existing, pending or threatened investigation or inquiry related to violations
of any Environmental Law or regarding any claims for remedial obligations or
contribution for removal costs or damages under any Environmental Law, which, in
the aggregate, would have a Material adverse effect on the Business or
operations of the Assets. There are no writs, injunction decrees, orders or
judgments outstanding, or lawsuits, claims, proceedings or investigations
pending or, to the knowledge of the Seller, threatened, relating to the
ownership, use, maintenance or operation of the Assets or the conduct of the
Business, nor, to the knowledge of the Seller, is there any basis for any of the
foregoing. Schedule 5.1.13 contains a list of all reports and environmental
assessments that the Seller has received with respect to any property owned,
operated or leased by the Seller, and the Seller has provided copies of such
reports and environmental assessments to the Purchaser. Except as set forth on
Schedule 5.1.13, the Seller has no liability at any third party site as a result
of disposing or arranging for the disposal of Hazardous Materials.
5.1.14. Employee Benefit Plans; Labor Issues. The Seller will deliver to
the Purchaser copies of the Employee Plans and any other health, dental and
life insurance plans, bonus, deferred compensation, pension, profit sharing and
retirement plans and all other employee benefit plans, programs or
arrangements providing benefits for employees of the Seller (the "Benefit
Plans").
15
17
5.1.15. Necessary Consents. As of the Closing Date, the Seller will
have obtained and delivered to the Purchaser all consents required to be
obtained from any governmental authority or from any other third party
necessary for the Seller to consummate the transactions contemplated hereby.
5.1.16. Investigations, Litigation. No investigation or review by any
governmental entity with respect to the Seller or any of the transactions
contemplated by this Agreement is pending or, to the knowledge of the Seller,
threatened, nor has any governmental entity indicated to the Seller an intention
to conduct the same. Except as disclosed on Schedule 5.1.16, there is no
material suit, action, or legal, administrative, arbitration or other
proceeding, or governmental investigation pending to which the Seller is a
party or, to the knowledge of the Seller, might become a party.
5.1.17. Transactions with Management. Except as set forth on
Schedule 5.1.17, the Seller is not a party to any contract, lease or
agreement with any of the officers or directors of the Seller.
5.1.18. Compliance with Other Laws. The Seller is not in
Material violation of or in material default with respect to, or in
alleged violation of or alleged default with respect to OSHA, or any
applicable law or any applicable rule, regulation, or any writ or
decree of any court or any governmental commission, board, bureau,
agency, or instrumentality, or delinquent with respect to any Material
report required to be filed with any governmental commission, board,
bureau, agency or instrumentality except for such defaults or
violations that will not have a Material adverse effect on the Assets
or the Business.
5.1.19. Finder's Fee. Except as set forth on Schedule 5.1.19,
all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by the Seller and its counsel
directly with Purchaser and its counsel, without the intervention of
any other person in such manner as to give rise to any valid claim
against any of the Parties hereto for a brokerage commission, finder's
fee or any similar payment.
6. PURCHASER'S REPRESENTATIONS AND WARRANTIES
6.1. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Texas, has
full requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned and
operated by it, and is duly qualified or licensed to do business and is in good
standing as a foreign corporation authorized to do business in all jurisdictions
in which the character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary.
6.2. Agreement Authorized and its Effect on Other Obligations. The
Purchaser has requisite power and authority to execute and deliver this
Agreement and the other Transaction Documents to which it is a party. The
execution and delivery of this Agreement and the other Transaction Documents to
which the Purchaser is a party have been authorized by all necessary corporate,
shareholder and other action on the part of the Purchaser, and this Agreement
and the other Transaction Documents to which the Purchaser is a party are the
valid and binding obligations of the Purchaser, enforceable against the
Purchaser in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting rights of creditors generally and subject to normal
equitable principles. The execution, delivery and
16
18
performance of this Agreement and the other Transactions Documents to which the
Purchaser is a party, and the consummation of the transactions contemplated
hereby and thereby, will not conflict with or result in a violation or breach
of any term or provision of, nor constitute a default under (i) the charter or
bylaws (or other organizational documents) of the Purchaser, (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which the Purchaser is a party or by which the Purchaser or its
properties are bound; or (iii) any provision of any law, rule, regulation,
order, permit, certificate, writ, judgment, injunction, decree, determination,
award or other decision of any court, arbitrator, or other governmental
authority to which the Purchaser or any of its properties are subject.
6.3. Necessary Consents. As of the Closing Date, the Purchaser will have
obtained and delivered to the Seller all consents required to be obtained from
any governmental authority or from any other third party necessary for the
Purchaser to consummate the transactions contemplated hereby.
6.4. Investigations. No investigation or review by any governmental
entity with respect to the Purchaser or any of the transactions contemplated by
this Agreement is pending, or to knowledge of Purchaser, threatened, nor has
any governmental entity indicated to Purchaser an intention to conduct the same.
6.5. Finder's Fee. Except as set forth on Schedule 6.5, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried on by the Purchaser and its counsel directly with the Seller and its
counsel, without the intervention of any other person in such manner as to give
rise to any valid claim against any of the Parties hereto for brokerage
commission, finder's fee or any similar payment.
7. SELLER'S COVENANTS
7.1. Seller ~ Covenants. In addition to those covenants of Seller in
Section 4 above, Seller covenants as follows:
7.1.1. Employees.
7.1.1.1. Liability for Retention Bonuses. The Seller acknowledges
that payment of any applicable retention bonuses to induce certain
employees to remain employed by the Business for a specified period of
time following the Closing Date is the obligation of the Seller or its
affiliates, and payment of retention bonuses will not be a liability
of the Purchaser under any circumstances.
7.1.1.2. Non-Solicitation of Employees. Except for those
individuals listed on Schedule 7.1.1.2, if Purchaser extends an offer of
employment to a Seller employee pursuant to Section 8.1.1 below, Seller and
Seller's affiliates shall not make a competing offer of employment in any
capacity to such employee for one year following the Closing Date and will
waive any non-competition or other employment contract obligation that might
otherwise restrict the employee's ability to be employed by Purchaser;
provided, that nothing shall prevent Seller from offering employment to any
present Seller employee who is not offered employment by Purchaser or whose
employment with Purchaser is terminated by Purchaser.
17
19
7.1.13. Medical Insurance. Seller shall arrange for
the benefits administration company currently coordinating the
medical benefits coverage for the Seller's employees to offer
to provide, at the expense of the Purchaser, continuation of
benefits, at Seller's existing pricing terms and conditions,
as of and after the Closing.
7.1.2. Name Change. Within 30 days following the Closing Date,
Seller shall apply to the appropriate governmental authorities to
change its corporate name to a name that is different from "▇.▇.
▇▇▇▇▇▇▇▇ Residential, Inc."
7.1.3. Covenant Against Competition. For a period of five
years following the Closing Date, Seller will not directly or
indirectly through any affiliate or subcontractor, (i) engage in any
manner in a business which is the equivalent of, or is competitive
with, the products and services of the Purchaser, within the United
States or any foreign country (a "Competing Business"), (ii) assist any
other person in engaging in a Competing Business or (iii) solicit or
contact any customer, supplier, employee or other person with a
business relationship with the Purchaser to influence such person or
entity to alter in any manner its or his relationship with the
Purchaser. If at the time of enforcement of this Section 7.1.3, a court
of competent jurisdiction should hold that the restrictions herein are
unreasonable under the circumstances then existing, the Parties agree
that the maximum duration, scope or geographical area legally
permissible under such circumstances will be substituted for the
duration, scope or area stated herein.
7.1.4. Further Assurances. To the extent any Licenses and
Permits are not transferable, the Seller will use its reasonable best
efforts to assist the Purchaser in obtaining newly issued Licenses and
Permits before the Closing Date.
7.1.5. Insurance, Performance Bonds and Guaranties. The
Seller will use its reasonable best efforts to keep in place, at
Purchaser's expense, all insurance policies, performance bonds and
guarantees maintained by, or for the benefit of, the Seller and listed
on Schedule 7.1.5 until the earlier of (i) the expiration of such
insurance policies, performance bonds and guaranties; (ii) until the
Purchaser has obtained substitute insurance policies, performance bonds
or guaranties; or (iii) six months after the Closing. The Purchaser
shall indemnify the Seller against any liabilities incurred by the
Seller under such performance bonds and guarantees listed on Schedule
7.1.5, and shall provide to the Seller backup guarantees, performance
bonds or other sources of security reasonably acceptable to the Seller
to secure the Purchaser's obligations pursuant to this Section 7.1.5.
8. PURCHASER'S COVENANTS
8.1 Purchaser's Covenants. In addition to those covenants of Purchaser
in Section 4 above, Purchaser covenants as follows:
8.1.1. Employees. On the Closing Date, Purchaser shall offer
employment to each of Seller's employees.
8.1.2. Bulk Sales Requirements. Purchaser hereby waives compliance
by Seller with any
18
20
bulk sales notice requirements under applicable law, and Seller shall
indemnify and hold Purchaser harmless from any and all losses, liabilities,
claims and expenses incurred by Purchaser as a result of Seller's failure
to comply with such requirements.
8.1.3. Closing of Seller's Books. Within 60 days of the Closing Date,
Purchaser shall close the books of the Business as of the Closing Date,
consistent with the Seller's past practice, and shall supply Seller with a
copy of the closing documents.
8.1.4. Full Access. On and after the Closing Date, representatives of
Seller shall have, upon reasonable notice, and for reasonable business
purposes (such as defense of litigation, response to inquiries from tax
and regulatory authorities, etc.), access at reasonable times during normal
business hours to the premises, senior management and employees, books,
records, contacts, and documents of Purchaser relating to the Business,
Assets, or any other liability or obligation that is not an Assumed
Liability; provided, however, that the representatives of Seller shall
comply with all security procedures and requirements of Purchaser with
respect to such premises, books, records, contracts, tax matters, and
documents, and that any such activities shall be conducted in a manner that
does not unreasonably interfere with Purchaser's operations.
9. PRE-CLOSING COVENANTS
9.1. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
9.1.1. General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things reasonably necessary to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Section 10 and Section 11 below).
9.1.2. Agreements of the Seller. Except as expressly contemplated
elsewhere in this Agreement, the Seller agrees that from the date hereof
until the Closing Date, the Seller will:
9.1.2.1. Maintenance of Present Business. Operate its business
only in the usual, regular, and ordinary manner so as to maintain the
goodwill it now enjoys and, to the extent consistent with such
operation, use its reasonable best efforts to preserve intact its
present business organization, keep available the services of its
present officers and employees, and preserve its relationship with
customers, suppliers, jobbers, distributors and others having business
dealings with it;
9.1.2.2. Maintenance of Properties. At its expense, consistently
with historic practices, maintain all of its property and Assets in
customary repair, order and condition, reasonable wear and tear
excepted;
9.1.2.3. Maintenance of Books and Records. Maintain its books of
account and records in the usual, regular, and ordinary manner, in
accordance with its customary accounting principles applied on a
consistent basis;
9.1.2.4. Compliance with Law. Comply with all laws applicable and
Material to the conduct of its business;
19
21
9.1.2.5. Prohibition of Certain Contracts and
Liabilities. Except for orders made and contracts entered into
in the ordinary course of business, not enter into any
contracts, enter into a commitment for expenditures or incur
any liability, in each case exceeding $5,000, unless approved
in writing by the Purchaser, which involve the payment of more
than $5,000 each;
9.1.2.6. Prohibition of Loans. Not incur any
obligations for borrowed money, except for loans in the
ordinary course of business;
9.1.2.7. Disposal of Assets. Not sell, dispose of, or
encumber any property or assets, except in the ordinary course
of business;
9.1.2.8. Maintenance of Insurance. Maintain insurance
upon all its properties and with respect to the conduct of its
business of such kinds and in such amounts as is not less than
that presently carried by it;
9.1.2.9. No Amendments to Charter Documents and
Related Matters. Not amend its charter documents, or merge or
consolidate with or into any person, change in any manner the
rights of its capital stock or the character of its business;
9.1.2.10. Prohibition on Dividends. Not declare any
dividend on shares of its capital stock or make any other
non-cash distribution of assets to the holders thereof;
9.1.2.11. Acquisition Proposals. Not directly or
indirectly (i) solicit, initiate or encourage any inquiry or
Acquisition Proposal from any person or (ii) participate in
any discussions or negotiations regarding, or furnish to any
person other than Purchaser or its representatives any
information with respect to, or otherwise facilitate or
encourage any Acquisition Proposal by any other person. The
Seller shall promptly communicate to Purchaser the terms of
any such written Acquisition Proposal that it may receive or
any written or oral inquiries made to Seller or any of its
directors, officers, representatives or agents.
9.1.3. Notices and Consents. The Seller will give any notices
to third parties, and the Seller will use its reasonable best efforts
to obtain any third party consents, that the Purchaser reasonably may
request in connection with the matters referred to in Section 5.1.15.
Each of the Parties will give any notices to, make any filings with,
and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in
connection with the matters referred to in Sections 5.1.15 and 6.3.
9.1.4. Full Access. The Seller will permit representatives of
the Purchaser to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of
the Seller, to all premises, properties, personnel, books, records
(including tax records), contracts, and documents of or pertaining to
the Seller and the Business.
9.1.5. Notice of Developments.
9.1.5.1. The Seller may, by written notice to
Purchaser elect, at any time before Closing, to update any of
the Schedules to this Agreement. Unless the Purchaser has the
right to terminate this Agreement pursuant to Section 12.1.2
below by reason of the update
20
22
and exercises that right within the period referred to in
Section 12.12 below, the written notice pursuant to this
Section 9.1.5.1 will be deemed to have amended the affected
Schedule(s) to have qualified the representations and
warranties contained in Section 5 above, and to have cured any
misrepresentation or breach of warranty that otherwise might
have existed.
9.1.5.2. Each Party will give prompt written notice
to the other Party of any act, omission, event or occurrence,
other than a Seller update described in Section 9.1.5.1,
above, causing a breach of any of its own representations and
warranties contained in this Agreement. No disclosure by any
Party pursuant to this Section 9.1.5.2, however, shall be
deemed to amend or supplement the Schedules or to prevent or
cure any misrepresentation or breach of warranty.
10. SELLER'S CONDITIONS PRECEDENT TO CLOSING
10.1 Seller's Obligation. Seller's obligation to enter into
and complete the Closing is subject to the fulfillment on or before the Closing
Date of each of the following conditions. Seller may waive any or all of these
conditions, in whole or in part, at Seller's sole option.
10.1.1. Representations, Warranties and Covenants.
The representations and warranties of the Purchaser contained
in this Agreement shall be true and correct in all Material
respects as of the date of this Agreement and as of the
Closing Date. Purchaser shall have performed and complied in
all Material respects with all covenants and agreements
required by this Agreement to be performed or complied with by
Purchaser on or before the Closing Date. Purchaser shall have
delivered to Seller a certificate, in form reasonably
satisfactory to Seller, dated as of the Closing Date and
signed by a duly authorized officer of Purchaser, to the
foregoing effect.
10.1.2. Consents. All governmental and third party
consents, approvals and waivers, if any, required for the
consummation of the Acquisition shall have been received.
10.1.3. No Material Litigation. No suit, action, or
other proceeding shall be pending, or to Seller's knowledge,
threatened, before any court or governmental agency in which
it will be, or it is, sought to restrain or prohibit or to
obtain damages or provide other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby.
10.1.4. Corporate Action. Seller shall have received:
10.1.4.1. Board Resolutions. A copy of the
resolution or resolutions duly adopted by the Board
of Directors of Purchaser authorizing the execution,
delivery and performance by the Purchaser of this
Agreement and the other Transaction Documents to
which the Purchaser is a Party, certified by its
Secretary;
10.1.4.2. Secretary's Certificate. A
certificate of the Secretary of Purchaser, in form
reasonably satisfactory to Seller, certifying the
incumbency and signature of the officers of Purchaser
executing this Agreement and the other Transaction
Documents to which the Purchaser is a Party, and
stating that the foregoing resolutions remain in
effect and unaltered; and
11. PURCHASER'S CONDITIONS PRECEDENT TO CLOSING
21
23
11.1. Purchaser's Obligation. Purchaser's obligation to enter into and
complete the Closing is subject to the fulfillment on or before the Closing Date
of each of the following conditions. Purchaser may waive any or all of these
conditions, in whole or in part, at Purchaser's sole option.
11.1.1. Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement
shall be true and correct in all Material respects as of the Closing
Date. Seller shall have performed and complied in all Material respects
with all covenants and agreements required by this Agreement to be
performed or complied with by Seller on or before the Closing Date.
Seller shall have delivered to Purchaser a certificate in form
reasonably satisfactory to Purchaser, dated as of the Closing Date and
signed by duly authorized officers of Seller, to the foregoing effect.
11.1.2. No Material Litigation. No suit, action, or other
proceeding shall be pending, or to the Purchaser's knowledge,
threatened, before any court or governmental agency in which it will
be, or it is, sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
11.1.3. Consents. All governmental and third party consents,
approvals and waivers, if any, required for the consummation of the
Acquisition shall have been received.
11.1.4. Corporate Action. Purchaser shall have received:
11.1.4.1. Board Resolutions. A copy of the resolution
or resolutions duly adopted by the Board of Directors of Seller
authorizing the execution, delivery and performance by Seller of this
Agreement and the other Transaction Documents to which Seller is a
party, certified by its Secretary;
11.1.4.2. Secretary's Certificate. Certificate of the
Secretary of Seller, in form reasonably satisfactory to Purchaser,
certifying the incumbency and signature of the officers of Seller
executing this Agreement and the other Transaction Documents to which
Seller is a party, and stating that the foregoing resolutions remain in
effect and unaltered; and
11.1.5. Transfer Documents.
11.1.5.1. ▇▇▇▇ of Sale and Deeds. Seller shall have
executed and delivered to Purchaser on the Closing Date the items
specified in Sections 2.8.1, 2.8.2 and 2.8.3.
11.1.5.2. Assignments of Contracts and Licenses and
Permits. All of the Contracts and Licenses and Permits that are
assignable as of the Closing Date shall have been validly assigned to
the Purchaser without the consent of any other Party thereto other than
consents that have been obtained as of the Closing Date.
11.1.6. Title Insurance/Surveys. Purchaser shall have received
from a title company and surveyor:
11.1.6.1. Title Policy. With respect to the Real
Property the Title Policy, in form reasonably acceptable to Purchaser,
at standard rates, together with copies of all documents
22
24
affecting title; and
11.1.6.2. Survey. A survey of the Real Property
certified to Purchaser and the title insurance company issuing
the Policy in a manner reasonably acceptable to Purchaser and
such title company.
11.1.7. Additional Agreements. The following additional
agreements shall have been executed and delivered:
11.1.7.1. Employment Agreements. Purchaser and the
other parties thereto shall have entered into the Employment
Agreements.
11.1.7.2. Assignment of Indemnities. The indemnities
under the contracts and agreements listed on Schedule 11.1.7.2
currently running to the Seller or its affiliates shall be effectively
assigned to the Purchaser in such a fashion that the Purchaser will
have the full benefits thereof.
11.1.8. Completion of Due Diligence. The Purchaser
shall have completed and have been satisfied with the results of its
due diligence review of the Seller's Assets and the Business.
11.1.9. Opinion of Counsel. The Purchaser shall have
received from counsel to the Seller an opinion in form and substance
reasonably satisfactory to Purchaser and its counsel, addressed to the
Purchaser, and dated as of the Closing Date.
12. TERMINATION
12.1 Termination of Agreement. Either of the Parties may terminate
this Agreement as provided below:
12.1.1. By Mutual Consent. The Purchaser and the Seller may
terminate this Agreement by mutual written consent at any time before
the Closing.
12.1.2. By Purchaser Due to Material Adverse Effect. The
Purchaser may terminate this Agreement by giving written notice to the
Seller at any time before the Closing if (i) the Seller has within the
then previous 10 days given the Purchaser any notice updating the
Schedules to this Agreement pursuant to Section 9.1.5.1 above and (ii)
the development that is the subject of the notice has had a Material
adverse effect upon the financial condition of the Business or Assets
taken as a whole.
12.1.3. By Purchase Due to Breach of Representation or
Warranty. The Purchaser may terminate this Agreement by giving written
notice to the Seller at any time before the Closing if the Seller has
breached any representation, warranty or covenant contained in this
Agreement in any Material respect.
12.1.4. By Purchaser Due to Failure to Close Before December
31, 1998. The Purchaser may terminate this Agreement by giving written
notice to the Seller if the Closing shall not have occurred on or
before December 3, 1998, by reason of the failure of any condition
precedent under Section 11 hereof (unless the failure results
primarily from the Purchaser itself
23
25
breaching any representation, warranty, or covenant contained in this
Agreement).
12.1.5. By Seller Due to Breach of Representation or Warranty.
The Seller may terminate this Agreement by giving written notice to the
Purchaser at any time before the Closing if the Purchaser has breached
any representation, warranty or covenant contained in this Agreement in
any material respect.
12.1.6. By Seller Due to Failure to Close Before December __
1998. The seller may terminate this Agreement by giving written notice
to the Purchaser if the Closing shall not have occurred on or before
December __ 1998, by reason of the failure of any condition precedent
under Section 10 hereof (unless the failure results primarily from the
Seller itself breaching any representation, warranty, or covenant
contained in this Agreement).
12.2. Effect of Termination. If any Party terminates this Agreement
pursuant to Section 12.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party;
provided, however, that a termination of this Agreement shall not relieve any
party hereto from any liability for damages incurred as a result of a breach by
such party of its representations, warranties, covenants, agreements or other
obligations hereunder occurring before such termination.
13. ACTIONS AT CLOSING
13.1. Actions to be Taken by Seller at the Closing. Seller shall
deliver the items specified for delivery by Seller in Sections 11.1.1, 11.1.3,
11.1.4, 11.1.5, 11.1.6, 11.1.7 and 11.1.9 above, unless delivery has been waived
by Purchaser.
13.2. Action to be Taken by Purchaser at the Closing. Purchaser will
take the following actions at the Closing:
13.2.1. Purchaser shall deliver the items specified for
delivery by Purchaser in Sections 10.1.1, 10.1.4 and 10.1.5 above,
unless delivery has been waived by Seller.
13.2.2. Purchaser shall pay the consideration specified for
payment at Closing in Section 2.3 above.
14. MISCELLANEOUS
14.1. Publicity. Seller and Purchaser shall consult in advance on the
form, timing and contents of any publicity, announcement or disclosure with
respect to the Acquisition, whether to the financial community, governmental
authorities, the public generally or otherwise. Seller and Purchaser shall
issue, at a mutually acceptable date, a joint press release announcing the
change in ownership of the Assets.
14.2. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be addressed as follows and delivered
personally, sent by facsimile transmission or
24
26
sent by certified, registered or express mail, postage prepaid, or by a
nationally recognized overnight courier service marked for overnight delivery.
Any such notice shall be deemed received when so delivered personally; or when
sent by facsimile transmission (with immediate confirmation thereafter); or, if
mailed, upon receipt as confirmed by written receipt; or, if sent by overnight
courier marked for overnight delivery, upon receipt.
If to Purchaser, to: ▇▇▇▇▇ ▇▇▇▇▇▇
American Temporary Sanitation, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Seller, to:
▇.▇. ▇▇▇▇▇▇▇▇ Residential, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Any of the entities referred to above may, by notice given in accordance
with this Section 14.3 to the other entities, designate another address or
person for receipt of notices hereunder.
14.3. Assignment. This Agreement shall be binding upon and shall inure to
the benefit of, the parties hereto their respective successors and permitted
assigns. This Agreement may not be assigned or transferred in whole or in part
by either party hereto without the prior written consent of the other party, and
any attempt to assign or transfer this Agreement or any part of either in
violation of this Section 14.3 shall be void and of no effect.
14.4. Expenses. Each of the parties hereto shall be responsible for and
shall pay all of its own expenses incurred in connection with this Agreement
and the transactions contemplated herein, including without limitation all
legal fees and other expenses incident to the negotiation, preparation and
execution of this Agreement.
14.5. Controlling Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of the United States and the State of
California, without regard to the conflict of laws principles of that state or
any other jurisdiction. Judicial proceedings arising from or relating to this
Agreement shall only be instituted in the courts of the State of California and
the courts of the United States located in California. The Parties irrevocably
consent to the personal jurisdiction of the courts of State of California and
the Courts of the United States located in California and waive all defenses to
jurisdiction and objections to the propriety or convenience of these courts
that they may have.
14.6. Entire Agreement. This Agreement, the exhibits and schedules hereto,
constitute the entire Agreement and understanding of the parties relating to
the subject matter hereof, and shall supersede all prior and contemporaneous
agreements and understandings, representations and
25
27
warranties, whether oral or written, relating to the subject matter hereof,
including without limitation any Letter of Intent that may have been entered
into by either Party or their agents.
14.7. Modification, Waiver. No waiver, acquiescence or forbearance by
either party hereto of any breach or default this Agreement, and no course of
conduct or dealings between the parties that varies from the terms and
conditions of this Agreement, shall: (i) be deemed a waiver as to any subsequent
and/or similar breach or default by either Party; or, (ii) constitute or be
deemed a modification of this Agreement; or, (iii) affect the rights or
obligations of the Parties under this Agreement in any way. This Agreement
cannot be modified except by a writing executed by both parties and this Section
4.8 cannot be orally modified or waived.
14.8. Severability. If any term, provision, covenant or restrictions
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The Parties hereto stipulate and declare to
be their intention that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, void or unenforceable.
14.9. Captions. Captions contained in this Agreement are solely for
convenient reference and shall not be deemed to affect the meaning or
interpretation of any article, section or paragraph hereof.
14.10. Counterparts. Any number of counterparts of this Agreement may
be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
14.11. Headings. All headings in this Agreement, including the exhibits
and schedules, have been inserted for convenience only and shall not affect the
interpretation of any provision hereof.
14.12. Mutual Negotiations. This Agreement, including the exhibits and
schedules, has been arrived at through the mutual negotiation of the parties.
Accordingly, no provision shall be construed against one party or in favor of
another party merely because one party or the other drafted the provision.
14.13. IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first set forth above.
"SELLER"
▇.▇. ▇▇▇▇▇▇▇▇, RESIDENTIAL, INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Agent
"BUYER"
AMERICAN TEMPORARY SANITATION, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, PRESIDENT
-------------------------------------
Authorized Agent
26