EXHIBIT 10.31
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STOCK PURCHASE AGREEMENT
BY AND AMONG
PACER INTERNATIONAL, INC.,
ALL OF THE STOCKHOLDERS OF
RFI GROUP, INC.,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
AND
CERTAIN TRUSTS THAT ARE
OWNERS OF CERTAIN STOCKHOLDERS OF
RFI GROUP, INC.
Dated as of October 31, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I PURCHASE AND SALE OF SHARES......................................................................... 1
1.1 Transfer of Shares.......................................................................... 1
1.2 Purchase Price.............................................................................. 2
1.3 Payment at Closing.......................................................................... 2
1.4 Delivery of Shares.......................................................................... 2
1.5 Further Assurances.......................................................................... 2
ARTICLE II THE CLOSING........................................................................................ 2
ARTICLE III POST-CLOSING WORKING CAPITAL ADJUSTMENT........................................................... 3
3.1 Delivery of Closing Balance Sheet........................................................... 3
3.2 Review and Final Determination of Closing Net Working Capital............................... 3
3.3 Adjustment of Purchase Price; Payments...................................................... 4
ARTICLE IV SEVERAL REPRESENTATIONS AND WARRANTIES OF THE DESIGNATED STOCKHOLDERS AND THE ESOT................. 5
4.1 Title to the Shares......................................................................... 5
4.2 Organization, Power, Authority and Good Standing............................................ 5
4.3 Authority; Authorization, Execution and Delivery; Enforceability; No Conflict............... 6
4.4 Consents.................................................................................... 7
4.5 Brokers..................................................................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE DESIGNATED STOCKHOLDERS....................................... 8
5.1 Organization, Power, Authority and Good Standing............................................ 8
5.2 Authority; Authorization, Execution and Delivery; Enforceability; No Conflict............... 8
5.3 Consents.................................................................................... 9
5.4 Capitalization.............................................................................. 9
5.5 Subsidiaries; Investments................................................................... 10
5.6 Financial Information....................................................................... 10
5.7 Absence of Undisclosed Liabilities.......................................................... 11
5.8 Absence of Changes.......................................................................... 11
5.9 Tax Matters................................................................................. 13
5.10 Title to Assets, Properties and Rights and Related Matters.................................. 15
5.11 Real Property - Owned or Leased............................................................. 15
5.12 Intellectual Property....................................................................... 16
5.13 Agreements, No Defaults, Etc................................................................ 17
5.14 Litigation.................................................................................. 19
5.15 Compliance with Laws........................................................................ 19
5.16 Insurance................................................................................... 20
5.17 Labor Relations; Employees.................................................................. 21
5.18 Erisa Compliance............................................................................ 22
5.19 Environmental Matters....................................................................... 25
5.20 Brokers..................................................................................... 26
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5.21 Related Party Transactions................................................................. 26
5.22 Accounts and Notes Receivable.............................................................. 27
5.23 Bank Accounts; Powers of Attorney.......................................................... 28
5.24 Suppliers and Vendors...................................................................... 28
5.25 Customers.................................................................................. 28
5.26 Conflicts of Interest...................................................................... 28
5.27 Year 2000.................................................................................. 28
5.28 Disclosure................................................................................. 29
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................................................... 29
6.1 Organization; Corporate Authority.......................................................... 29
6.2 Authority; Authorization; Execution and Delivery; Enforceability; No Conflict.............. 29
6.3 Consents................................................................................... 30
6.4 Brokers.................................................................................... 30
6.5 SEC Reports................................................................................ 30
ARTICLE VII COVENANTS AND AGREEMENTS......................................................................... 31
7.1 Public Announcements....................................................................... 31
7.2 Non-Competition Covenant................................................................... 31
7.3 Disclosure of Information.................................................................. 32
7.4 Use of Proprietary Name.................................................................... 34
7.5 Certain Employee Matters................................................................... 34
7.6 Tax Covenants.............................................................................. 34
7.7 UCC-3 Termination Statements............................................................... 35
7.8 Stockholders' Representative............................................................... 35
ARTICLE VIII SIMULTANEOUS CLOSING OBLIGATIONS................................................................ 37
8.1 Closing Obligations of the Designated Stockholders and the ESOT............................ 37
8.2 Closing Obligations of the Purchaser....................................................... 39
ARTICLE IX INDEMNIFICATION................................................................................... 40
9.1 Generally.................................................................................. 40
9.2 Assertion of Claims........................................................................ 42
9.3 Notice and Defense of Third Party Claims................................................... 42
9.4 Survival of Representations and Warranties................................................. 43
9.5 Limitations on Indemnification............................................................. 44
9.6 Satisfaction of Indemnification Obligations................................................ 45
9.7 Recourse Against Options and Shares........................................................ 45
ARTICLE X MISCELLANEOUS PROVISIONS........................................................................... 46
10.1 Amendment.................................................................................. 46
10.2 Entire Agreement........................................................................... 46
10.3 Severability............................................................................... 46
10.4 Benefits of Agreement...................................................................... 47
10.5 Expenses; Sales and Transfer Taxes......................................................... 47
10.6 Remedies................................................................................... 47
10.7 Amendment and Termination of the ESOT...................................................... 48
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10.8 Indemnification of the ESOT Trustee......................................................... 48
10.9 Disclosure Covenant of the Designated Stockholders.......................................... 49
10.10 Notices..................................................................................... 49
10.11 Counterparts and Facsimile Execution........................................................ 51
10.12 Governing Law............................................................................... 51
10.13 Jurisdiction and Venue...................................................................... 52
10.14 Mutual Contribution......................................................................... 53
10.15 No Third Party Beneficiaries................................................................ 53
10.16 Independence of Covenants and Representations and Warranties................................ 53
10.17 Interpretation; Construction................................................................ 53
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ANNEXES, SCHEDULES AND EXHIBITS
Annexes
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Annex I.. - Stockholders
Annex II. - Certain Definitions
Annex III - Percentage Interests of the Designated Stockholders
Annex IV. - Calculation of Net Working Capital
Schedules
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Schedule 1.3 - Stockholder Percentages for Allocation of Purchase Price
Schedule 4.1 - Stockholder Agreements
Schedule 4.2 - ESOT Charter Documents
Schedule 4.4 - Consents
Schedule 5.1 - Foreign Qualifications for the Company and Its
Subsidiaries
Schedule 5.4(a) - Capitalization of the Company and Its Subsidiaries
Schedule 5.4(b) - Options, Warrants, Voting Agreements, etc.
Schedule 5.5 - Subsidiaries and Investments
Schedule 5.6(a) - Financial Statements
Schedule 5.6(c) - Accounts Payable and Accounts Receivable
Schedule 5.7 - Undisclosed Liabilities
Schedule 5.8 - Absence of Changes
Schedule 5.9(a) - Tax Matters
Schedule 5.9(c) - Taxing Authority Notifications
Schedule 5.10(a) - Encumbrances
Schedule 5.10(b) - Tangible Personal Property
Schedule 5.11(a) - Real Property
Schedule 5.11(b) - Real Property Proceedings, Notices and Exceptions
Schedule 5.12(a) - Intellectual Property Rights
Schedule 5.12(b) - Actions to Protect Intellectual Property Rights
Schedule 5.13(a) - Material Contracts
Schedule 5.13(d) - Funded Indebtedness
Schedule 5.14(a) - Litigation, Etc.
Schedule 5.14(b) - Resolved Litigation
Schedule 5.15 - Compliance with Laws
Schedule 5.16(a) - Insurance Policies
Schedule 5.16(b) - Insurance Claims, Etc.
Schedule 5.17(a) - Directors, Officers and Key Employees
Schedule 5.17(b) - Number of Employees, Independent Contractors, etc.
Schedule 5.17(c) - Labor Relations
Schedule 5.17(e) - Labor Proceedings
Schedule 5.17(f) - Joint Employer Matters
Schedule 5.17(g) - Independent Contractor Agreements
Schedule 5.18(a) - Employee Benefit Plans
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Schedule 5.18(b) - ERISA Compliance
Schedule 5.19(a) - Environmental Laws - Violations
Schedule 5.19(b) - Environmental Compliance - Previously Owned Properties
Schedule 5.21 - Related Party Transactions
Schedule 5.22 - Accounts and Notes Receivable
Schedule 5.23 - Bank Accounts; Powers of Attorney
Schedule 5.24 - Suppliers and Vendors
Schedule 5.25 - Customers
Schedule 6.1 - Foreign Qualifications for the Purchaser
Schedule 6.2(b) - Purchaser Encumbrances
Schedule 7.7 - UCC-3 Termination Statements
Exhibits
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Exhibit A - Form of Opinion of the Individual Stockholders' Counsel
Exhibit B - Form of Opinion of the Individual Stockholders' Special
Counsel
Exhibit C - Form of General Release
Exhibit D - Form of Employment Agreement with ▇▇▇▇ ▇. ▇▇▇▇
Exhibit E - Form of Option Agreements for ▇▇▇▇ ▇. ▇▇▇▇
Exhibit F - Form of Employment Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit G - Form of Option Agreements for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit H - Form of Employment Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit I - Form of Option Agreements for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Exhibit J - Form of Opinion of the ESOT's Counsel
Exhibit K - Form of Opinion of the Purchaser's Counsel
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INDEX OF DEFINED TERMS
The following capitalized terms, which may be used in more than one
Section or other location of this Agreement, are defined in the following
Sections or other locations:
Section or
Term other Location
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Affiliate................................................................................. Annex II
Aggregate Consideration................................................................... Annex II
Agreement................................................................................. 10.17
Arbitrating Accountants................................................................... Annex II
Audited Balance Sheet..................................................................... 5.6(a)(i)
Audited Balance Sheet Date................................................................ 5.6(a)(i)
Audited Financial Statements.............................................................. 5.6(a)(i)
▇▇▇▇ Option Agreements.................................................................... 8.1(e)(iii)
Best Knowledge............................................................................ 10.17
BFR Interest.............................................................................. Annex II
Business.................................................................................. Preamble
Business Day.............................................................................. Annex II
Capital Lease............................................................................. Annex II
Charter Documents......................................................................... Annex II
Closing................................................................................... Article II
Closing Balance Sheet..................................................................... 3.1
Closing Date.............................................................................. Article II
Closing Net Working Capital............................................................... 3.1
Closing Net Working Capital Statement..................................................... 3.1
Closing Payment........................................................................... 1.3
COBRA..................................................................................... 5.18(b)(viii)
Code...................................................................................... 5.9(a)
Common Stock.............................................................................. Preamble
Commission................................................................................ Annex II
Company................................................................................... Caption
Company Employee Plans.................................................................... 5.18(a)
Competing Business........................................................................ 7.2(b)
Confidential Information.................................................................. 7.3(a)
Contract.................................................................................. Annex II
Control .................................................................................. Annex II
Corporate Stockholders ................................................................... Annex II
Covered Properties........................................................................ 5.19(b)
Designated Stockholders................................................................... Annex II
Designated Stockholder Group.............................................................. Annex II
Employee Benefit Plan..................................................................... Annex II
Encumbrances.............................................................................. Annex II
Environmental, Health and Safety Laws..................................................... Annex II
ERISA..................................................................................... Annex II
ERISA Affiliate........................................................................... Annex II
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Section or
Term other Location
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ESOP...................................................................................... Annex II
ESOT...................................................................................... Annex II
ESOT Trustee.............................................................................. Annex II
Exchange Act.............................................................................. Annex II
Excluded Purchaser Representations........................................................ 9.5(c)
Excluded Seller Representations........................................................... 9.5(a)
Fair Market Value......................................................................... Annex II
Final Determination Date.................................................................. 3.2
Financial Statements...................................................................... 5.6(a)(iii)
▇▇▇▇▇▇▇ Option Agreements................................................................. 8.1(e)(vii)
Funded Indebtedness....................................................................... Annex II
GAAP...................................................................................... Annex II
General Release........................................................................... 8.1(e)(i)
Governmental Entity....................................................................... Annex II
Guaranty.................................................................................. Annex II
HIPAA..................................................................................... 5.18(b)(viii)
Hired Employees........................................................................... 7.5
Immediately Available Funds............................................................... Annex II
Income Taxes.............................................................................. Annex II
Indemnified Persons....................................................................... Annex II
Indemnifying Persons...................................................................... Annex II
Individual Stockholders................................................................... Annex II
Intellectual Property Rights.............................................................. Annex II
Interim Balance Sheets.................................................................... 5.6(a)(ii)
Interim Financial Statements.............................................................. 5.6(a)(ii)
IRS....................................................................................... 10.7
Latest Balance Sheet...................................................................... 5.6(a)(iii)
Latest Balance Sheet Date ................................................................ 5.6(a)(iii)
Latest Financial Statements............................................................... 5.6(a)(iii)
Law....................................................................................... Annex II
Leased Property........................................................................... 5.11(a)
Liability................................................................................. Annex II
Licensed Requisite Rights................................................................. 5.12(a)(i)
Litigation Expense........................................................................ Annex II
Losses.................................................................................... Annex II
Management Stockholders................................................................... Annex II
Material Adverse Effect................................................................... Annex II
Material Contracts........................................................................ 5.13(b)
NASDAQ.................................................................................... Annex II
Notice of Disagreement.................................................................... 3.2
Options................................................................................... Annex II
Orders.................................................................................... Annex II
Other Designated Stockholder.............................................................. Annex II
Overpayment Amount........................................................................ 3.3(a)
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Section or
Term other Location
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Owned Requisite Rights.................................................................... 5.12(a)(i)
Percentage Interest....................................................................... Annex II
Permits................................................................................... Annex II
Permitted Encumbrances.................................................................... Annex II
Person.................................................................................... Annex II
Post-Closing Returns...................................................................... 7.6
Proceeding................................................................................ Annex II
Purchase Price............................................................................ 1.2
Purchaser................................................................................. Caption
Purchaser Indemnified Persons............................................................. Annex II
Purchaser Indemnifying Persons............................................................ Annex II
Purchaser Losses.......................................................................... Annex II
Purchaser's Notice of Adjustment.......................................................... 3.1
Related Documents......................................................................... 8.1(e)
Representatives........................................................................... 7.3(a)
Requisite Rights.......................................................................... 5.12(a)(i)
Restrictive Period........................................................................ 7.2(a)
RFI....................................................................................... Annex II
▇▇▇▇▇▇▇ Option Agreements................................................................. 8.1(e)(v)
SEC Reports............................................................................... 6.5
Securities................................................................................ Annex II
Securities Act............................................................................ Annex II
Seller Indemnified Persons................................................................ Annex II
Seller Indemnifying Persons............................................................... Annex II
Seller Losses............................................................................. Annex II
Series A Preferred........................................................................ Preamble
Shares.................................................................................... Preamble
Stock..................................................................................... Preamble
Stockholders.............................................................................. Caption
Stockholders' Representative.............................................................. Annex II
Subsidiary................................................................................ Annex II
Survival Date............................................................................. 0
Target Net Working Capital Amount......................................................... Annex II
Tax Return................................................................................ Annex II
Taxes..................................................................................... Annex II
Third Party............................................................................... 5.17(f)
Third Party Claim......................................................................... 9.3
Trusts.................................................................................... Annex II
Underpayment Amount....................................................................... 3.3(b)
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of October 31, 2000, is by and
among PACER INTERNATIONAL, INC., a Tennessee corporation (the "Purchaser"); the
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stockholders of RFI GROUP, INC., a Delaware corporation (the "Company"), each of
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whom is listed on Annex I attached to this Agreement (collectively, the
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"Stockholders"); ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an
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individual; and the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000, the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October
25, 2000, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000, and the ▇▇▇▇▇
▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000. Certain capitalized terms used in this
Agreement are defined on Annex II attached to this Agreement.
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PREAMBLE
The Company, together with its Subsidiaries, is engaged in the
business (collectively, the "Business") of (i) providing international freight
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forwarding and freight transportation services, and (ii) operating as a non-
vessel operating common carrier.
The Stockholders constitute all of the Company's stockholders with (i)
the ESOT owning all of the issued and outstanding shares of the Company's Series
A ESOP Convertible Preferred Stock, $1.00 par value per share (the "Series A
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Preferred"), and (ii) the Designated Stockholders (other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇) owning of record all of the issued and outstanding
shares of the Company's Class A Stock, $.001 par value per share (the "Common
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Stock," and collectively with the Series A Preferred, the "Stock"). Each
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Stockholder owns of record that number of shares of Stock set forth opposite
his, her or its name on Annex I attached to this Agreement. The shares of Stock
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owned by the Stockholders are collectively referred to as the "Shares." The
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Stockholders desire to sell to the Purchaser, and the Purchaser desires to
purchase from the Stockholders, all of the Shares, on the terms and subject to
the conditions contained in this Agreement.
ACCORDINGLY, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Transfer of Shares.
On the terms and subject to the conditions contained in this Agreement, at
the Closing, the Stockholders shall sell, transfer, convey and assign to the
Purchaser, and the Purchaser shall purchase and acquire from the Stockholders,
all of the Shares, free and clear of all Encumbrances.
1.2 Purchase Price.
The aggregate purchase price paid by the Purchaser to the Stockholders for
the Shares shall be $18,000,000.00 less the amount of the Funded Indebtedness
outstanding at the Closing as set forth on Schedule 5.13(d), subject to
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adjustment, if at all, pursuant to Article III and Article IX (the "Purchase
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Price"). The Purchase Price shall be paid in accordance with Section 1.3.
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1.3 Payment at Closing.
At the Closing Date, the Purchaser shall pay or deliver the Purchase Price
(the "Closing Payment") to or as directed by the Stockholders, to be paid to
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each Stockholder in accordance with the percentages set forth on Schedule 1.3,
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by wire transfer of Immediately Available Funds to the account or accounts
designated to the Purchaser in writing not later than three (3) Business Days
prior to the Closing Date, against receipt at the Closing of the certificate or
certificates representing all of the Shares pursuant to Section 1.4.
1.4 Delivery of Shares.
In consideration of the Purchaser's delivery of the Purchase Price pursuant
to Section 1.3, prior to or at the Closing, the Stockholders shall deliver to
the Company the certificate or certificates representing the Shares, duly
endorsed for transfer to the Purchaser or accompanied by duly executed stock
powers transferring the Shares to the Purchaser, in each case sufficient in form
and substance to convey to the Purchaser good title to all of the Shares, free
and clear of all Encumbrances.
1.5 Further Assurances.
The Stockholders, at any time after the Closing, upon the request of the
Purchaser, shall do, execute, acknowledge and deliver, and cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, documents,
instruments, assignments, transfers, conveyances, powers of attorney and other
assurances as may be required to (a) transfer, convey, grant and confirm to and
vest in the Purchaser good title to the Shares, free and clear of all
Encumbrances, and (b) confirm to the Purchaser that (i) the Shares constitute
all of the duly and validly issued and outstanding shares of capital stock of
the Company and (ii) the Company and its Subsidiaries, as applicable, are the
sole owners, of record and beneficially, of all of the duly and validly issued
and outstanding shares of capital stock (or other equity ownership interests) of
the Subsidiaries.
ARTICLE II
THE CLOSING
On the terms and subject to the conditions contained in this Agreement, the
closing (the "Closing") of the transactions contemplated by this Agreement shall
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take place simultaneously with the execution and delivery of this Agreement on
the date hereof at the offices of ▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company and
the Individual Stockholders, at the address set forth in Section 10.10, or at
such other place as shall be mutually agreed upon by the parties hereto. The
date on which the Closing occurs shall be referred to as the "Closing Date."
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ARTICLE III
POST-CLOSING WORKING CAPITAL ADJUSTMENT
3.1 Delivery of Closing Balance Sheet.
As soon as practicable (but in any event within thirty (30) days) following
the Closing Date, the Purchaser shall prepare and deliver to the Stockholders'
Representative (i) a consolidated balance sheet (the "Closing Balance Sheet") of
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the Company and its Subsidiaries reflecting the consolidated financial position
of the Company and its Subsidiaries as of the close of business on the Closing
Date, (ii) a statement (the "Closing Net Working Capital Statement") setting
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forth the Purchaser's computation of the Closing Net Working Capital as of the
close of business on the Closing Date, and (iii) a notice (the "Purchaser's
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Notice of Adjustment") setting forth its proposed adjustment, if any, of the
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Purchase Price as contemplated hereby. The Closing Balance Sheet shall be
prepared in accordance with GAAP applied on a basis consistent with the Audited
Balance Sheet. As used in this Agreement, the "Closing Net Working Capital"
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shall mean the total current assets minus the total current liabilities
(excluding all Funded Indebtedness) of the Company and its Subsidiaries on a
consolidated basis as reflected on the Closing Balance Sheet. Annex IV attached
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hereto contains, among other things, an example prepared by the Company of its
calculation of the consolidated net working capital of the Company and its
Subsidiaries as of September 30, 2000.
3.2 Review and Final Determination of Closing Net Working Capital.
The Stockholders' Representative (with Ernst & Young LLP) shall be entitled
to review and, if applicable, object to the Purchaser's Notice of Adjustment for
a period of fifteen (15) days following receipt of the same. The Purchaser's
Notice of Adjustment shall become final and binding upon the parties hereto on
the sixteenth (16/th/) day following delivery thereof unless the Stockholders'
Representative prior to such date gives written notice to the Purchaser of his
disagreement therewith (a "Notice of Disagreement"). Any Notice of Disagreement
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shall specify in reasonable detail the nature of any disagreement so asserted.
If a timely Notice of Disagreement is received by the Purchaser, then the
Closing Net Working Capital set forth therein (as revised in accordance with
clause (i) or clause (ii) below) shall become final and binding upon the parties
hereto on the earlier of (i) the date on which the Purchaser and the
Stockholders' Representative resolve in writing any differences they have with
respect to any and all matters specified in the Notice of Disagreement, or (ii)
the date on which any and all matters in dispute are finally resolved in writing
by the Arbitrating Accountants. The date on which the Closing Net Working
Capital becomes final and binding pursuant to this Section 3.2 is called the
"Final Determination Date." During the fifteen (15) days immediately following
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the delivery of any Notice of Disagreement, the Purchaser and the Stockholders'
Representative shall seek in good faith to resolve in writing any differences
that they may have with respect to any matter specified in such Notice of
Disagreement. At the end of such fifteen (15) day period, the Purchaser and the
Stockholders' Representative shall submit to the Arbitrating Accountants for its
review and resolution any and all matters that remain in dispute and that were
included in any Notice of Disagreement as well as its calculation of the Closing
Net Working Capital, revised as such party deems necessary or appropriate at the
time of such submission. The Arbitrating Accountants shall be required to reach
a final, binding resolution of the matters that remain in dispute and provide
their own calculation of the Closing Net Working Capital (which calculation
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must be within the range of the calculations submitted by the Purchaser and the
Stockholders' Representative), whereupon such calculation shall be the final
calculation of the Closing Net Working Capital. The Arbitrating Accountants'
resolution of such dispute and calculation of the Closing Net Working Capital
shall be (a) in writing, (b) furnished to the Purchaser and the Stockholders'
Representative as soon as practicable after the items in dispute have been
referred to the Arbitrating Accountants, (c) made in accordance with this
Agreement, and (d) conclusive and binding upon the parties to this Agreement.
The Closing Net Working Capital, as determined by the Arbitrating Accountants,
shall become final and binding on the parties hereto on the date the Arbitrating
Accountants deliver their final resolution to the Purchaser and the
Stockholders' Representative. The parties hereto shall endeavor in good faith to
cause the Arbitrating Accountants to so deliver their final determination within
ninety (90) days after the Closing Date. Each party hereto shall pay his, her or
its own fees, costs and expenses incurred in connection with the discussion and
negotiation of any and all disputes that may arise as to the determination of
the Closing Net Working Capital; provided, however, that the fees and
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disbursements of the Arbitrating Accountants shall be borne fifty percent (50%)
by the Purchaser and fifty percent (50%) by the Stockholders (jointly and
severally).
3.3 Adjustment of Purchase Price; Payments.
(a) If the Closing Net Working Capital is less than the Target Net
Working Capital Amount (the amount of such deficit being referred to herein as
the "Overpayment Amount"), then, (i) within ten (10) days following the Final
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Determination Date, the Stockholders shall jointly and severally pay to the
Purchaser, in cash, an amount equal to the Overpayment Amount, and (ii) the
Purchase Price shall be deemed to be decreased by an amount equal to the amount
actually paid to the Purchaser pursuant to clause (i) of this sentence.
(b) If the Closing Net Working Capital is greater than the Target Net
Working Capital Amount (the amount of such excess being referred to herein as
the "Underpayment Amount"), then, (i) within ten (10) days following the Final
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Determination Date, the Purchaser shall pay to each Stockholder, his, her or its
pro rata portion (based upon the amount of the Closing Payment received by such
Stockholder), in cash, of the Underpayment Amount, and (ii) the Purchase Price
shall be deemed to be increased by an amount equal to the aggregate amount
actually paid to the Stockholders pursuant to clause (i) of this sentence.
(c) If the Closing Net Working Capital is equal to the Target Net Working
Capital Amount, then (i) neither the Purchaser nor any of the Stockholders shall
be required to make any additional payment pursuant to this Article III, and
(ii) no adjustment to the Purchase Price shall be made pursuant to this Article
III.
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ARTICLE IV
SEVERAL REPRESENTATIONS AND WARRANTIES
OF THE DESIGNATED STOCKHOLDERS AND THE ESOT
Each of the Designated Stockholders and the ESOT, severally as to himself,
herself or itself only and not jointly with or as to any of the other Designated
Stockholders or the ESOT, as the case may be (it being understood and agreed,
however, that each member of a Designated Stockholder Group listed on Annex III
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is making the following representations and warranties in this Article IV
jointly and severally with, and as to, each other member of such Designated
Stockholder Group), hereby represents and warrants to the Purchaser as of the
Closing as follows:
4.1 Title to the Shares.
If the Designated Stockholder is a Stockholder, then such Stockholder (i)
is the lawful owner, of record and beneficially, of the number of Shares set
forth opposite his, her or its name on Annex I, provided that a Corporate
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Stockholder may be deemed to share such beneficial ownership with the Trust
owning the capital stock thereof and the beneficiaries of such Trust, and (ii)
has good title to such Shares, free and clear of any and all Encumbrances
whatsoever and with no restriction on the voting rights and other incidents of
record and beneficial ownership pertaining thereto. Such Designated Stockholder
or the ESOT, as the case may be, is not the subject of any bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar
Proceeding affecting creditors' rights and remedies generally. Except for this
Agreement and except as set forth on Schedule 4.1 (none of which Contracts,
------------
understandings or arrangements (other than this Agreement) shall continue to
apply to any of the Shares or any other Securities of the Company or any of its
Subsidiaries at and after the Closing), there are no Contracts or other
understandings or arrangements between such Designated Stockholder or the ESOT,
as the case may be, and any other Person (including any of the other Designated
Stockholders, the ESOT, the Company, or any of the Company's Subsidiaries) with
respect to the acquisition, disposition, transfer, registration or voting of, or
any other matters in any way pertaining or relating to, any of the capital stock
or other securities of the Company or any of its Subsidiaries (including the
Shares owned by such Designated Stockholder or the ESOT, if applicable). Such
Designated Stockholder or the ESOT, as the case may be, does not have any right
whatsoever to receive or acquire any additional shares of capital stock or other
securities of the Company or any of its Subsidiaries. All shares of the Series
A Preferred have been allocated properly and completely to the ESOP
participants.
4.2 Organization, Power, Authority and Good Standing.
(a) Each of the Corporate Stockholders is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite power and authority (corporate or otherwise)
to own, lease and operate its assets and properties and to carry on its business
as presently conducted and as presently proposed to be conducted. The Purchaser
has been furnished with true, correct and complete copies of the Charter
Documents of each of the Corporate Stockholders, in each case as amended and in
effect on and as of the date hereof.
-5-
(b) The ESOP includes within its provisions the language and agreements
necessary to establish the ESOT under the Laws of New York and the applicable
provisions of the Code and ERISA, and the ESOT constitutes a validly existing
trust that is exempt from all federal Taxes under Section 501(a) of the Code.
The ESOT confers upon the ESOT Trustee the requisite power and authority to own
and manage the ESOT's assets and properties and to carry out the purposes for
which it was established. Schedule 4.2 lists all of the ESOT's Charter
------------
Documents, in each case as amended and in effect on and as of the date hereof.
The Purchaser has been furnished with true, correct and complete copies of each
of the documents listed on Schedule 4.2.
------------
(c) Each of the trust agreements listed on Annex III contains all
---------
requisite language and agreements necessary to establish the relevant Trust
listed together with such trust agreement on Annex III under the Laws of the
---------
jurisdiction under which such Trust is created, and there are no other
agreements, documents or instruments governing the creation or establishment of
such Trust and the conduct of its affairs (including such Trust's execution and
delivery of this Agreement, compliance with the terms and provisions hereof,
performance of its obligations hereunder and consummation of the transactions
contemplated hereby). Such Trust constitutes a validly existing trust. The
Purchaser has been furnished with true, correct and complete copies of each such
trust agreement.
4.3 Authority; Authorization, Execution and Delivery; Enforceability; No
Conflict.
(a) Each Designated Stockholder (other than the Corporate Stockholders
and the Trusts) has the full and absolute legal right, capacity and power to
execute, deliver and perform his or her obligations under this Agreement and
each Related Document to which he or she is or will be a party, and to
consummate the transactions contemplated hereby and thereby. Each of the ESOT
and the Trusts has the full and absolute legal right, power and authority to
execute, deliver and perform its obligations under this Agreement, and to
consummate the transactions contemplated hereby. The ESOT's execution and
delivery of this Agreement, and the performance by the ESOT of its obligations
hereunder, have been duly and validly authorized by all requisite action on the
part of the ESOT (including the ESOT Trustee). Each Trust's execution and
delivery of this Agreement, and the performance of its obligations hereunder,
have been duly and validly authorized by all requisite action on the part of
such Trust (including the trustee thereof). Each of the Corporate Stockholders
has all requisite power and authority (corporate or otherwise) to execute,
deliver and perform its obligations under this Agreement and each Related
Document to which it is or will be a party, and to consummate the transactions
contemplated hereby and thereby. Each Corporate Stockholder's execution and
delivery of this Agreement and each Related Document to which it is or will be a
party, and the performance by such Corporate Stockholder of its obligations
hereunder and thereunder, have been duly and validly authorized by all requisite
action (corporate or otherwise) on the part of such Corporate Stockholder
(including its Board of Directors and all committees thereof and its
stockholders).
(b) This Agreement and each Related Document to which such Designated
Stockholder or the ESOT, as the case may be, is or will be a party has been, or
upon the execution hereof and thereof will be, duly and validly executed and
delivered by such Designated Stockholder or the ESOT, as the case may be, and
constitutes, or upon such Designated Stockholder's or the ESOT's execution and
delivery hereof and thereof, will constitute, a valid and binding obligation of
such Designated Stockholder or the ESOT, as the
-6-
case may be, enforceable against him, her or it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors'
rights and remedies generally, and, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity).
(c) Neither the execution and delivery by such Designated Stockholder or
the ESOT, as the case may be, of, nor the performance of his, her or its
obligations under, this Agreement or any of the Related Documents to which he,
she or it is or will be a party, nor the consummation by such Designated
Stockholder or the ESOT, as the case may be, of the transactions contemplated
hereby or thereby, nor the compliance by such Designated Stockholder or the
ESOT, as the case may be, with any of the provisions hereof or thereof, will (i)
conflict with, or result in any violation of, or cause a default (with or
without notice or lapse of time or both) under, any provision of the Company's
or any of its Subsidiaries' Charter Documents, or any Corporate Stockholder's
Charter Documents, or the ESOP or the ESOT's other Charter Documents, or with
respect to each Trust, the applicable trust agreement listed on Annex III or any
---------
other Charter Documents of such Trust (if any), (ii) conflict with, or result in
any violation of, or cause a default (with or without notice or lapse of time or
both) under, or give rise to any right of termination, amendment, cancellation
or acceleration of any obligations contained in, or the loss of any benefit
under, any term, condition or provision of any provision of any Contract to
which such Designated Stockholder or the ESOT, as the case may be, or the
Company or any of the Company's Subsidiaries is a party or by which such
Designated Stockholder or the ESOT, as the case may be, or the Company, any of
the Company's Subsidiaries, or any of his, her, its, or their assets or
properties are or may be bound, (iii) violate any Law applicable to such
Designated Stockholder or the ESOT, as the case may be, or the Company or any of
the Company's Subsidiaries, (iv) result in an Encumbrance on or against any of
the Shares held of record or beneficially by such Designated Stockholder (to the
extent applicable) or the ESOT, as the case may be, or (v) result in an
Encumbrance on or against any assets, rights or properties of such Designated
Stockholder or the ESOT, as the case may be (other than the Shares held of
record or beneficially by such Designated Stockholder (to the extent applicable)
or the ESOT, as the case may be), or the Company or any of the Company's
Subsidiaries, or on or against any capital stock or other securities of the
Company or any of its Subsidiaries, or give rise to any claim against the
Company, any of the Company's Subsidiaries or the Purchaser.
4.4 Consents.
Except as set forth on Schedule 4.4, no Permit, authorization, consent or
------------
approval of or by, or any notification of or filing with, any Person
(governmental or private) is required for, as a result of, or in connection with
the execution, delivery and performance by such Designated Stockholder or the
ESOT, as the case may be, of this Agreement or any of the Related Documents to
which such Designated Stockholder or the ESOT, as the case may be, is or will be
a party or the consummation of the transactions contemplated hereby or thereby.
4.5 Brokers.
Such Designated Stockholder or the ESOT, as the case may be, has not
employed any broker or finder or incurred any Liability for any brokerage fees,
commissions or finders' fees or
-7-
similar compensation or transaction based payments in connection with the
transactions contemplated by this Agreement or any of the Related Documents.
4.6 Certain Relationships.
Solely as to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, such Designated Stockholder is the settlor of
that Trust listed on Annex III together with such Designated Stockholder, and
---------
such Trust is the sole stockholder, of record and beneficially, of that
Corporate Stockholder listed on Annex III together with such Designated
---------
Stockholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE DESIGNATED STOCKHOLDERS
The Designated Stockholders hereby jointly and severally represent and
warrant to the Purchaser as of the Closing as follows:
5.1 Organization, Power, Authority and Good Standing.
Each of the Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and has all requisite power and authority (corporate or otherwise)
to own, lease and operate its assets and properties and to carry on its business
(all of which collectively comprise the Business) as presently conducted and as
presently proposed to be conducted. Each of the Company and its Subsidiaries is
duly qualified and in good standing to transact business as a foreign Person in
those jurisdictions set forth on Schedule 5.1, which jurisdictions constitute
------------
all of the jurisdictions in which the failure to obtain such qualification would
reasonably be expected to have a Material Adverse Effect on the Company and its
Subsidiaries when taken as a whole. The Purchaser has been furnished with true,
correct and complete copies of the Charter Documents of the Company and each of
its Subsidiaries, in each case as amended and in effect on and as of the date
this representation is being made and is deemed made hereunder. Except as set
forth on Schedule 5.1, neither the Company nor any of its Subsidiaries has (i)
------------
engaged in any business or activity other than the Business, or (ii) used any
trade name or assumed name or other corporate name at any time within the past
ten (10) years.
5.2 Authority; Authorization, Execution and Delivery; Enforceability; No
Conflict.
(a) The Company has all requisite power and authority (corporate or
otherwise) to execute, deliver and perform its obligations under each Related
Document to which it is or will be a party, and to consummate the transactions
contemplated hereby and thereby. The Company's execution and delivery of each
Related Document to which it is or will be a party, and the performance by the
Company of its obligations hereunder and thereunder, have been duly and validly
authorized by all requisite action (corporate or otherwise) on the part of the
Company (including its Board of Directors and all committees thereof and its
stockholders). Each Related Document to which the Company is or will be a party
has been, or upon the Company's execution hereof and thereof will be, duly and
validly executed and delivered by the
-8-
Company and constitutes, or upon the Company's execution and delivery hereof and
thereof will constitute, a valid and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(b) Neither the execution and delivery by the Company, the Designated
Stockholders and the ESOT of, nor the performance of their respective
obligations under, this Agreement or any of the Related Documents, as
applicable, nor the consummation by the Company, the Designated Stockholders and
the ESOT of the transactions contemplated hereby or thereby, nor the compliance
by the Company, the Designated Stockholders and the ESOT with any of the
provisions hereof and thereof, will (i) conflict with, or result in any
violation of, or cause a default (with or without notice or lapse of time or
both) under, any provision of the Company's or any of its Subsidiaries' Charter
Documents, (ii) conflict with, or result in any violation of, or cause a default
(with or without notice or lapse of time or both) under, or give rise to any
right of termination, amendment, cancellation or acceleration of any obligations
contained in, or the loss of any benefit under, any term, condition or provision
of any provision of any Contract to which the Company or any of its Subsidiaries
is a party, or by which the Company or any of its Subsidiaries or any of their
respective assets or properties are or may be bound, (iii) violate any Law
applicable to the Company or any of its Subsidiaries, (iv) result in an
Encumbrance on or against any of the Shares held of record or beneficially by
any Stockholder, or (v) result in an Encumbrance on or against any assets,
rights or properties of the Company or any of its Subsidiaries, or on or against
any capital stock or other securities of the Company or any of its Subsidiaries,
or give rise to any claim against the Company, any of the Company's Subsidiaries
or the Purchaser.
5.3 Consents.
Except as set forth on Schedule 4.4, no Permit, authorization, consent or
------------
approval of or by, or notification of or filing with, any Person (governmental
or otherwise) is required for, as a result of, or in connection with the
execution, delivery and performance by the Company of any of the Related
Documents to which it is or will be a party or the consummation of the
transactions contemplated by this Agreement or such Related Documents.
5.4 Capitalization.
(a) The authorized capital stock of the Company and each of its
Subsidiaries is set forth on Schedule 5.4(a), which Schedule also sets forth the
---------------
total number of outstanding shares of the Company and each of its Subsidiaries.
All such outstanding shares disclosed on Schedule 5.4(a) are duly and validly
---------------
issued and outstanding, fully paid and non-assessable, with no personal
Liability attached to the ownership thereof, and are held of record and
beneficially by the Persons, and in the respective amounts, set forth on
Schedule 5.4(a), without Encumbrance (except for those Encumbrances set forth on
---------------
Schedule 5.4(a)).
---------------
(b) Except as set forth on Schedule 5.4(b), there are no outstanding
---------------
securities that are convertible into, exchangeable for, or carrying the right to
acquire, any equity securities of the Company or any of its Subsidiaries, or
subscriptions, warrants, options, calls, puts, convertible
-9-
securities, registration or other rights, arrangements or commitments obligating
the Company or any of its Subsidiaries to issue, sell, register, purchase or
redeem any of its respective securities or any ownership interest or rights
therein. Except as set forth on Schedule 5.4(b), there are no Contracts,
---------------
commitments, arrangements, understandings or restrictions to which any
Designated Stockholder, the ESOT or any other Person is bound relating in any
way to any shares of capital stock or other securities of the Company or any of
its Subsidiaries, including voting trusts or other similar agreements or
understandings with respect to the voting of the Company's or any of its
Subsidiaries' capital stock or other securities. There are no stock appreciation
rights, phantom stock rights, or similar rights or arrangements outstanding with
respect to the Company or any of its Subsidiaries.
(c) All securities issued by the Company or any of its Subsidiaries have
been issued in transactions exempt from registration under the Securities Act
and all applicable state securities or "blue sky" Laws, and neither the Company
nor any of its Subsidiaries has violated the Securities Act or any applicable
state securities or "blue sky" Laws in connection with the issuance of any such
securities.
5.5 Subsidiaries; Investments.
Except as set forth on Schedule 5.5, neither the Company nor any of its
------------
Subsidiaries owns or holds, directly or indirectly, of record or beneficially,
any equity interest in or debt obligation of (excluding accounts receivable
arising in the ordinary course of business, consistent with past practice) any
other Person. Immediately prior to, and as a condition precedent to, the
Closing, the Company distributed the BFR Interest to the Stockholders. The
distribution of the BFR Interest complied with all Laws.
5.6 Financial Information.
(a) Schedule 5.6(a) contains true, correct and complete copies of the
---------------
following:
(i) the audited consolidated balance sheets of the Company and its
Subsidiaries as of December 31, 1999 (the "Audited Balance Sheet"; and such
---------------------
date being referred to as the "Audited Balance Sheet Date"), December 31,
--------------------------
1998, December 31, 1997, and December 31, 1996, and the related audited
consolidated statements of income, stockholders' equity and cash flows of
the Company and its Subsidiaries for the fiscal years then ended, including
the footnotes and schedules thereto, as audited by Ernst & Young LLP (all
of the foregoing, together with the report of such audit, being
collectively referred to as the "Audited Financial Statements");
----------------------------
(ii) the unaudited consolidated balance sheets of the Company and
its Subsidiaries as of January 31, 2000, February 29, 2000, March 31, 2000,
April 30, 2000, May 31, 2000, and June 30, 2000 (collectively, the "Interim
-------
Balance Sheets"), and the unaudited consolidated statements of income,
--------------
stockholders' equity and cash flows of the Company and its Subsidiaries for
the respective one-month, two-month, three-month, four-month, five-month
and six-month periods then ended, including any and all footnotes and
schedules thereto (all of the foregoing, including the Interim Balance
Sheets, being collectively referred to as the "Interim Financial
-----------------
Statements"); and
----------
-10-
(iii) the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of July 31, 2000 (the "Latest Balance Sheet"; and such
--------------------
date being referred to as the "Latest Balance Sheet Date"), and the
-------------------------
unaudited consolidated statements of income, stockholders' equity and cash
flows of the Company and its Subsidiaries for the five-month period then
ended, including any and all footnotes and schedules thereto (all of the
foregoing, including the Latest Balance Sheet, being collectively referred
to as the "Latest Financial Statements"; and the Audited Financial
---------------------------
Statements, the Interim Financial Statements and the Latest Financial
Statements being collectively referred to as the "Financial Statements").
--------------------
(b) The Financial Statements (i) are true, correct and complete, (ii)
fairly present the consolidated financial position of the Company and each of
its Subsidiaries as of the dates indicated and the consolidated results of
operations of the Company and each of its Subsidiaries for the periods
indicated, (iii) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby (subject in the case of the Interim
Financial Statements and the Latest Financial Statements to (A) the absence of
footnotes and schedules that may be required by GAAP, and (B) normal year-end
adjustments that are not material individually or in the aggregate), and (iv)
are in accordance with the books and records of the Company and each of its
Subsidiaries, which books and records are true, correct and complete in all
material respects and have been maintained in a manner consistent with
historical practice.
(c) Schedule 5.6(c) contains a true, correct and complete summary of all
---------------
accounts payable, accrued expenses and accounts receivable of the Company and
each of its Subsidiaries as of the most recent practicable date prior to the
date hereof, which Schedule sets forth the name of the account debtor (in the
case of accounts receivable) or account creditor (in the case of accounts
payable) and the amount owed by such account debtor or owing to such account
creditor (identifying the portion of such amount that is current, thirty (30)
days past due, sixty (60) days past due, ninety (90) days past due, and more
than ninety (90) days past due).
5.7 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 5.7, neither the Company nor any of its
------------
Subsidiaries has any Liability except (i) to the extent reflected or reserved
against on the Latest Balance Sheet, (ii) Liabilities under Contracts (other
than any Liability arising from any breach or violation thereof or default
thereunder), and (iii) Liabilities incurred in the ordinary course of business,
consistent with past practice, since the Latest Balance Sheet Date (other than
any such Liability arising from any breach or violation of, or default under,
any Contract, or arising from any breach of warranty, tort, infringement, or
violation of any Law or any Proceeding). There are no loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975) of or affecting the
Company or any of its Subsidiaries that are not adequately provided for or
disclosed on the Latest Balance Sheet or in the footnotes or schedules thereto.
5.8 Absence of Changes.
Since June 30, 2000, except as set forth on Schedule 5.8, the Company and
------------
each of its Subsidiaries have been operated in the ordinary course of business,
consistent with past practice, and there has not been:
-11-
(a) any event or condition that has had or could reasonably be expected to
have a Material Adverse Effect on the Company and its Subsidiaries when taken as
a whole, or any material casualty loss or damage to the assets or properties of
the Company or any of its Subsidiaries, whether or not covered by insurance;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock or other securities of
the Company or any of its Subsidiaries, or any direct or indirect redemption,
purchase or other acquisition of any capital stock or other securities of the
Company or any of its Subsidiaries, or any other payments of any nature directly
or indirectly to or for the benefit of any Designated Stockholder, the ESOT or
any Affiliate of the Company (whether or not on or with respect to any shares of
capital stock or other securities of the Company or any of its Subsidiaries
owned by such Designated Stockholder, the ESOT or such Affiliate), other than
salaries and benefits paid in the ordinary course of business, consistent with
past practice;
(c) any general uniform increase in the compensation of employees
(including any increase pursuant to any bonus, pension, profit-sharing or other
plan or commitment) of the Company or any of its Subsidiaries, or any increase
in or prepayment of any such compensation payable to or to become payable to any
Designated Stockholder, director, officer or key employee;
(d) any acquisition or disposition of assets or properties owned by the
Company or any of its Subsidiaries, other than the sale or other disposition of
worn or obsolete furniture, fixtures or equipment for fair value in the ordinary
course of business, consistent with past practice;
(e) any agreement or commitment on the part of the Company or any of its
Subsidiaries to merge, amalgamate or consolidate with or into, or otherwise
acquire, any other Person or division thereof;
(f) any change in depreciation or amortization policies or rates
previously adopted, any change in income or expense recognition or bad debt
reserve, write-down or write-off policies previously adopted, any write-up or
write-down of inventory or other assets or any other change in other accounting
or in Tax reporting or methods or practices followed by the Company or any of
its Subsidiaries;
(g) any material change in the manner in which products or services of the
Company or any of its Subsidiaries are marketed (including any change in
prices), any change in the manner in which the Company or any of its
Subsidiaries extends discounts or credit to customers, or any change in the
manner or terms by which the Company or any of its Subsidiaries collects
accounts receivable;
(h) any acceleration, cancellation, termination or modification of any
Contract (or series of related Contracts) involving aggregate payments to or
from the Company or any of its Subsidiaries of more than $10,000, or any notice
in writing delivered to the Company or any of its Subsidiaries, or to the best
knowledge of the Designated Stockholders, orally, that any other party to any
Contract intends to take any such action;
-12-
(i) any failure by the Company or any of its Subsidiaries to make
scheduled capital expenditures or investments, or any failure to pay trade
accounts payable in the ordinary course of business, consistent with past
practice, or any other Liability of the Company or any of its Subsidiaries when
due; or
(j) any Contract or other understanding or arrangement (other than this
Agreement and the Related Agreements), whether in writing or otherwise, to take
any of the actions specified in the foregoing clauses (a) through (i).
5.9 Tax Matters.
(a) Except as set forth on Schedule 5.9(a), the Company, each of its
---------------
Subsidiaries, and each other Person included in any consolidated or combined Tax
Return and part of an affiliated group, within the meaning of Section 1504 of
the Internal Revenue Code of 1986, as amended (the "Code"), of which the Company
----
or any of its Subsidiaries is or has been a member:
(i) has timely paid or caused to be paid all Taxes required to be
paid by it through the date hereof and as of the Closing Date (including
any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and proper manner
(within any applicable extension periods) all Tax Returns required to be
filed by it with the appropriate Governmental Entities in all jurisdictions
in which such Tax Returns are required to be filed; and
(iii) has not requested or caused to be requested any extension of
time within which to file any Tax Return, which Tax Return has not since
been filed.
(b) The Company has previously delivered to the Purchaser true, correct
and complete copies of all Tax Returns filed by or on behalf of the Company and
each of its Subsidiaries for all completed Tax years of the Company or such
Subsidiary that remain open for audit or review by the relevant Taxing
authority. All such Tax Returns were true, correct and complete in all respects.
(c) Except as set forth in Schedule 5.9(c):
---------------
(i) neither the Company nor any of its Subsidiaries has been
notified in writing or, to the best knowledge of the Designated
Stockholders, orally by the Internal Revenue Service or any other Taxing
authority that any issues have been raised (and no such issues are
currently pending) by the Internal Revenue Service or any other Taxing
authority in connection with any Tax Return of the Company or any of its
Subsidiaries, there are no pending Tax audits with respect to the Company
or any of its Subsidiaries, and no waivers of statutes of limitations
related to Taxes have been given or requested with respect to the Company
or any of its Subsidiaries;
(ii) full and adequate provision has been made (A) on the Latest
Balance Sheet for all Taxes payable by the Company and each of its
Subsidiaries for all periods ending on or prior to the Latest Balance Sheet
Date, and (B) on the books and records of
-13-
the Company and each of its Subsidiaries for all Taxes payable by the
Company and such Subsidiaries for all periods beginning on or after the
Latest Balance Sheet Date;
(iii) neither the Company nor any of its Subsidiaries has incurred
any Tax Liability from and after the Latest Balance Sheet Date other than
Taxes incurred in the ordinary course of business, consistent with past
practice;
(iv) neither the Company nor any of its Subsidiaries (A) is, or has
made an election to be treated as, a "consenting corporation" under Section
341(f) of the Code, or (B) is, or has been, a "personal holding company"
within the meaning of Section 542 of the Code;
(v) each of the Company and its Subsidiaries has complied in all
respects with all applicable Laws relating to the collection or withholding
of Taxes (including sales Taxes and the withholding of Taxes from the wages
of employees);
(vi) neither the Company nor any of its Subsidiaries is, or has ever
been, a party to any Tax sharing, indemnity of similar agreement with any
Person;
(vii) neither the Company nor any of its Subsidiaries has incurred
any Liability to make or possibly make any payments, either alone or in
conjunction with any other payments, that:
(A) are not deductible under, or would otherwise constitute a
"parachute payment" within the meaning of, Section 280G of the Code
(or any corresponding provision of domestic or foreign income Tax
Law); or
(B) are or may be subject to the imposition of an excise Tax
under Section 4999 of the Code;
(viii) neither the Company nor any of its Subsidiaries has agreed
to, or is required to, make any adjustments or changes either on, before or
after the Closing Date, to its accounting methods pursuant to Section 481
of the Code, and the Internal Revenue Service has not proposed any such
adjustments or changes in the accounting methods of the Company or any such
Subsidiary;
(ix) no claim has ever been made and delivered to the Company or
any of its Subsidiaries in writing or, to the best knowledge of the
Designated Stockholders, orally by any Taxing authority in a jurisdiction
in which the Company or any of it Subsidiaries does not file Tax Returns
that the Company or any such Subsidiary is, or may be subject to, taxation
by that jurisdiction; and
(x) neither the Company, any of its Subsidiaries, any Designated
Stockholder nor the ESOT is a foreign Person within the meaning of Section
1.1445-2(b) of the rules and regulations promulgated under Section 1445 of
the Code.
-14-
5.10 Title to Assets, Properties and Rights and Related Matters.
(a) Each of the Company and its Subsidiaries, as applicable, has good title
(or a valid leasehold or licensee interest) to all of the assets, properties and
interests in properties, real, personal or mixed, reflected on the Latest
Balance Sheet or acquired after the Latest Balance Sheet Date (except for assets
or properties sold or otherwise disposed of since the Latest Balance Sheet Date
in the ordinary course of business, consistent with past practice, and accounts
receivable and notes receivable paid in full subsequent to the Latest Balance
Sheet Date in the ordinary course of business, consistent with past practice),
free and clear of all Encumbrances, of any kind or character, except for those
Encumbrances set forth on Schedule 5.10(a) and Permitted Encumbrances. Such
----------------
assets are in good operating condition and repair (normal wear and tear
excepted), are sufficient to operate the Business as presently conducted and as
presently proposed to be conducted, are suitable for the uses for which they are
used in the Business, and are not subject to any condition that materially
interferes with the economic value or use thereof. With respect to any leased
assets, such assets are in such condition as to permit the surrender thereof to
the lessors thereunder on the date hereof without any cost or expense for repair
or restoration as if the related leases were terminated or expired on the date
hereof in the ordinary course of business, consistent with past practice.
(b) Schedule 5.10(b) contains a true, correct and complete list of all
----------------
tangible personal property with a fair market value greater than $2,500 owned by
the Company and each of its Subsidiaries as of the Closing Date. Except for any
inventory, supplies, equipment, tractors, trailers and automobiles in transit in
the ordinary course of business, consistent with past practice, all tangible
personal property listed on Schedule 5.10(b) is located on the Company's or its
----------------
Subsidiaries' premises listed on Schedule 5.11(a).
----------------
5.11 Real Property - Owned or Leased.
(a) Schedule 5.11(a) contains a list and brief description of all of the
----------------
real property owned, leased, subleased or otherwise occupied by the Company or
any of its Subsidiaries. The description of each parcel of real property
subject to one or more leases (the "Leased Property") includes the names of the
---------------
lessor and the lessee and the basic terms thereof. The lease rate charged to
the Company or any of its Subsidiaries, as applicable, for each parcel of Leased
Property that is leased by the Company or any of its Subsidiaries, as
applicable, from a Designated Stockholder or the ESOT, or from an Affiliate of
the Company or any of its Subsidiaries, is not greater than the fair market
value rental that would be obtained by the Company or any such Subsidiary in an
arms' length transaction with a Person that is not an Affiliate of the Company
or any such Subsidiary. The real property listed on Schedule 5.11(a)
----------------
constitutes all real property used or occupied by the Company or any of its
Subsidiaries in connection with the Business.
(b) With respect to the real property listed on Schedule 5.11(a), except
----------------
as set forth on Schedule 5.11(b):
----------------
(i) no portion of the real property is subject to any pending
condemnation or other Proceeding, and, to the best knowledge of the
Designated Stockholders, there is no threatened condemnation or other
Proceeding with respect thereto;
-15-
(ii) the physical condition of the real property is sufficient to
permit the continued conduct of the Business as presently conducted and as
presently proposed to be conducted, subject to the provision of usual and
customary maintenance and repairs performed in the ordinary course of
business, consistent with past practice, with respect to similar properties
of like age and construction;
(iii) the Company and its Subsidiaries, as applicable, indicated
on Schedule 5.11(b) are the owners and holders of all the leasehold estates
----------------
purported to be granted by the leases associated with the Leased Property,
as applicable;
(iv) there are no Contracts to which the Company, any of its
Subsidiaries, or any of their respective Affiliates is a party, granting to
any party or parties the right of use or occupancy of any portion of the
real property;
(v) there are no parties (other than the Company and its
Subsidiaries) in possession of any portion of the real property; and
(vi) no notice of any increase in the assessed valuation of any
portion of the real property and no notice of any contemplated special
assessment with respect to any portion of the real property has been
received by the Company or any of its Subsidiaries, and, to the best
knowledge of the Designated Stockholders, there is no threatened increase
in assessed valuation or threatened special assessment pertaining to any
portion of the real property.
(c) Neither the Company nor any of its Subsidiaries currently is or has
ever been the owner of any fee interest in any real property.
5.12 Intellectual Property.
(a) Except as set forth on Schedule 5.12(a):
----------------
(i) the Company and each of its Subsidiaries, as applicable, own,
have the right to use, sell, license and dispose of, and have the right to
bring actions for the infringement of, all Intellectual Property Rights
used in, necessary for, or required for the conduct of the Business as
presently conducted and as presently proposed to be conducted
(collectively, the "Owned Requisite Rights"), other than those Intellectual
----------------------
Property Rights for which the Company or any such Subsidiary has a valid
license, all of which are listed on Schedule 5.12(a) (collectively, the
----------------
"Licensed Requisite Rights"; and together with the Owned Requisite Rights,
-------------------------
the "Requisite Rights"), and such rights to use, sell, license, dispose of
---------------
and bring actions are exclusive with respect to the Owned Requisite Rights;
(ii) neither the Company nor any of its Subsidiaries has granted
any Person the right to use any of the Owned Requisite Rights;
(iii) there exists no default, or any event which upon the giving
of notice or the passage of time, or both, would give rise to a claim of a
default by the Company or any of its Subsidiaries under the licenses
granting the Company and/or any of its Subsidiaries the Licensed Requisite
Rights;
-16-
(iv) the Company and each of its Subsidiaries have taken all
commercially reasonable and practicable steps designed to safeguard and
maintain (A) the secrecy and confidentiality of the Company's and its
Subsidiaries' Confidential Information, and (B) the proprietary rights of
the Company and each of its Subsidiaries in all of the Requisite Rights;
(v) neither the Company nor any of its Subsidiaries has interfered
with, infringed upon, misappropriated or otherwise come into conflict with
any Intellectual Property Rights of any Person or committed any acts of
unfair competition or received from any Person in the past five years any
written or, to the best knowledge of the Designated Stockholders, oral
notice, charge, complaint, claim or assertion thereof, and no such charge,
complaint, claim or assertion is impliedly threatened by an offer to
license from another Person; and
(vi) neither the Company nor any of its Subsidiaries has sent to any
Person in the past five years, or otherwise communicated to any Person, any
notice, charge, complaint, claim or other assertion of any present,
impending or threatened interference with, infringement upon,
misappropriation of, or other conflict with any Intellectual Property
Rights of the Company or any of its Subsidiaries by such other Person or
any acts of unfair competition by such other Person, nor, to the best
knowledge of the Designated Stockholders, is any such interference,
infringement, misappropriation, conflict or act of unfair competition
occurring or threatened.
(b) Schedule 5.12(b) contains a true, correct and complete list of all
----------------
applications, filings and other formal actions made or taken pursuant to any
Laws by the Company and/or any of its Subsidiaries to perfect or protect their
respective interests in their respective Intellectual Property Rights.
5.13 Agreements, No Defaults, Etc.
(a) Schedule 5.13(a) contains a true, correct and complete list of all
----------------
Contracts to which the Company or any of its Subsidiaries is a party, under
which the Company or any of its Subsidiaries may have any continuing or future
Liability, and (x) that were entered into or made outside the ordinary course of
business, consistent with past practice, or (y) that were entered into or made
in the ordinary course of business, consistent with past practice, and are
described in clauses (i) through (xiii) of the next sentence of this Section
5.13. Except as set forth on Schedule 5.13(a), neither the Company nor any of
----------------
its Subsidiaries is a party to any of the following Contracts under which the
Company or any of its Subsidiaries may have any continuing or future Liability:
(i) distributorship, dealer, sales, advertising, agency,
manufacturer's representative, or any other Contract relating to the
payment of a commission;
(ii) any Contract relating to the employment of any officer, employee
or consultant or any other type of Contract or other understanding or
arrangement with any officer, employee or consultant, including any
Contract or other understanding or arrangement relating to severance
payments;
-17-
(iii) any indenture, mortgage, promissory note, loan agreement,
pledge agreement, guaranty or conditional sale or other Contract relating
to the borrowing of money, a line of credit or a Capital Lease;
(iv) any Contract for charitable contributions in excess of $5,000
individually or $10,000 in the aggregate;
(v) any Contract for capital expenditures in excess of $10,000
individually or $50,000 in the aggregate;
(vi) any Contract for the sale of any assets, properties or rights
other than the sale of services or products in the ordinary course of
business, consistent with past practice;
(vii) any Contract pursuant to which the Company or any of its
Subsidiaries is a lessee of or holds or operates any machinery, equipment,
motor vehicles, office furniture, fixtures, products, merchandise or other
personal property owned by any other Person in excess of $10,000
individually or $50,000 in the aggregate;
(viii) any Contract relating to the lending or investing of funds;
(ix) any Contract relating to any form of intangible property,
including any Intellectual Property Rights;
(x) any Contract that restricts the Company or any of its
Subsidiaries from engaging in any aspect of the Business or any other
business anywhere in the world;
(xi) any Contract or group of related Contracts with the same Person
or group of Affiliated Persons (excluding purchase orders entered into in
the ordinary course of business, consistent with past practice, that are to
be completed within three months of entering into such purchase orders) for
the purchase or sale of products or services under which the undelivered or
unperformed balance or portion thereof (including the aggregate undelivered
or unperformed balance or portion under any such Contracts between the same
Person and the Company or any of its Subsidiaries) has a selling price in
excess of $50,000;
(xii) any Contract for the acquisition or disposition of a Person or a
division of a Person made within the preceding five years (whether or not
such acquisition or disposition was consummated); or
(xiii) any other Contract material to the Business.
(b) The Contracts disclosed on Schedule 5.4(b), the leases (and any
---------------
other Contracts) disclosed on Schedule 5.11(a), the licenses (and any other
----------------
Contracts) disclosed on Schedule 5.12(a), the insurance policies (and any other
-------------------
Contracts) disclosed on Schedule 5.16(a), the Company Employee Plans (and any
----------------
other Contracts) disclosed on Schedule 5.18(a), and the Contracts disclosed on
----------------
Schedule 5.21 are incorporated by reference onto Schedule 5.13(a). The
------------- ----------------
Contracts disclosed on Schedule 5.13(a), together with the Contracts
----------------
incorporated by reference onto Schedule 5.13(a), are collectively referred to as
----------------
the "Material Contracts."
------------------
-18-
(c) All Material Contracts (i) are in full force and effect, (ii)
constitute legal, valid and binding obligations of the Company and/or its
Subsidiaries that are parties thereto and, to the best knowledge of the
Designated Stockholders, the other parties thereto, and (iii) are enforceable in
accordance with their terms against the Company and/or its Subsidiaries that are
parties thereto and, to the best knowledge of the Designated Stockholders, the
other parties thereto, in each case subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Each of the Company
and its Subsidiaries has performed all of its obligations required to be
performed by them to date pursuant to the terms of the Material Contracts, and
there exists no default, or any event which upon the giving of notice or the
passage of time, or both, would give rise to a claim of a default in the
performance by the Company or any of its Subsidiaries or, to the best knowledge
of the Designated Stockholders, any other party to any of the Material Contracts
of their respective obligations thereunder. The Purchaser has been furnished
with true, correct and complete copies of all written Material Contracts and
Schedule 5.13(a) (including Contracts incorporated by reference thereon)
----------------
contains true, correct and complete descriptions of all oral Contracts listed on
Schedule 5.13(a) (including Contracts incorporated by reference thereon).
----------------
(d) Schedule 5.13(d) contains a true, correct and complete list of all
----------------
Funded Indebtedness of the Company and each of its Subsidiaries, in each case
showing the aggregate principal amount thereof (and the aggregate amount of any
undrawn commitments with respect thereto), the name of the lender, and the name
of the respective borrower and any other Person that directly or indirectly
guaranteed such Funded Indebtedness.
5.14 Litigation.
(a) Except as disclosed on Schedule 5.14(a), there are no (i) Proceedings
----------------
pending or, to the best knowledge of the Designated Stockholders, threatened
against the Company or any of its Subsidiaries, whether at law or in equity,
civil or criminal in nature, or before or by any Governmental Entity or
arbitrator, nor, to the best knowledge of the Designated Stockholders, does
there exist any basis therefor, or (ii) Orders of any Governmental Entity or
arbitrator with respect to, involving or against the Company or any of its
Subsidiaries. The Company and each of its Subsidiaries have delivered to the
Purchaser all material documents and correspondence relating to the matters
disclosed on Schedule 5.14(a).
----------------
(b) Schedule 5.14(b) lists each matter described in Section 5.14(a) that
----------------
(i) resulted in any criminal sanctions against the Company or any of its
Subsidiaries, or (ii) was in existence within the last five years and resulted
in payments in excess of $10,000 by the Company or any of its Subsidiaries
(whether as a result of a judgment, civil fine, settlement or otherwise).
5.15 Compliance with Laws.
The Company and each of its Subsidiaries (a) have complied with, and are in
compliance with, all Laws, Orders and Permits applicable to them and the
Business, and (b) have all Permits used in or necessary for the conduct of the
Business. All of the Permits referred to in the preceding sentence are listed
on Schedule 5.15 and are in full force and effect. No violations with respect
-------------
to any of the Permits listed on Schedule 5.15 have occurred or are or have been
-------------
-19-
recorded, and no Proceeding is pending or, to the best knowledge of the
Designated Stockholders, threatened to revoke or limit any such Permits. No
investigation or review by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending or, to the best knowledge of the
Designated Stockholders, threatened, nor has any Governmental Entity notified
the Company or any of its Subsidiaries of its intention to conduct the same. To
the best knowledge of the Designated Stockholders, there is no proposed change
in any applicable Law that would require the Company or any of its Subsidiaries
to obtain any Permit not listed on Schedule 5.15 in order to conduct the
-------------
Business as presently conducted and as presently proposed to be conducted.
Neither the Company nor any of its Subsidiaries has received any opinion or
memorandum from legal counsel to the effect that it is exposed, from a legal
standpoint, to any Liability or disadvantage that reasonably could be expected
to be material to its business, financial condition, operations, property or
affairs. To the best knowledge of the Designated Stockholders, there is no
proposed Law that, if enacted, would prohibit or restrict the Company or any of
its Subsidiaries from, or otherwise have a Material Adverse Effect on the
Company and its Subsidiaries when taken as a whole in, conducting the Business
in any jurisdiction in which the Company or any such Subsidiary is presently
conducting business or is presently proposing to conduct business.
5.16 Insurance.
(a) Schedule 5.16(a) contains a true, correct and complete list of all
----------------
policies of liability, theft, fidelity, life, fire, product liability, cargo,
workers' compensation, health and other forms of insurance held by or on behalf
of the Company or any of its Subsidiaries (specifying the insurer, amount of
coverage, type of insurance, policy number and any pending claims thereunder).
All such coverages have been maintained at all times during the course of the
operation of the Business. To the best knowledge of the Designated
Stockholders, the Company and each of its Subsidiaries is insured against all
risks usually insured against by Persons conducting similar businesses and
operating similar properties in the localities where the Business is conducted
and the properties of the Company and its Subsidiaries are located, under
policies of such types and in such amounts as are customarily carried by such
Persons.
(b) Except as set forth on Schedule 5.16(b), with respect to each policy
----------------
of insurance listed on Schedule 5.16(a): (i) all premiums with respect thereto
----------------
are currently paid and are not subject to adjustment (except for those policies
of insurance that are subject to adjustment in the ordinary course of business),
(ii) neither the Company nor any of its Subsidiaries is in default in any
respect with respect to its respective obligations under such policy, (iii) to
the best knowledge of the Designated Stockholders, no basis exists that would
give any insurer under any such policy the right to cancel or unilaterally
reduce or limit the stated coverages contained in such policy, (iv) there are no
outstanding claims currently pending under such policy that reasonably could be
expected to cause an increase in the insurance rates of the Company or any of
its Subsidiaries, and no facts or circumstances exist that reasonably could be
expected to relieve the insurer under such policy of its obligations to satisfy
in full any claim thereunder, and (v) neither the Company nor any of its
Subsidiaries has received any written or, to the best knowledge of the
Designated Stockholders, oral notice that any such policy has been or shall be
canceled or terminated or will not be renewed on substantially the same terms as
are now in effect or that the premium on such policy shall be increased on the
renewal thereof.
-20-
5.17 Labor Relations; Employees.
(a) Schedule 5.17(a) sets forth a list of all directors, officers and
----------------
persons considered by the Designated Stockholders to be key employees of the
Company and each of its Subsidiaries as of the date hereof, together with their
respective titles (if any) and positions held, their current compensation
(including salary, wages, bonuses and commissions), and the respective dates on
which they commenced employment. To the extent any such officer or key employee
is on a leave of absence, Schedule 5.17(a) indicates the nature of such leave of
----------------
absence and such officer's or key employee's anticipated date of return to
active employment. No officer or key employee listed on Schedule 5.17(a) has
----------------
given the Company or any of its Subsidiaries written or, to the best knowledge
of the Designated Stockholders, oral notice, and, to the best knowledge of the
Designated Stockholders, no officer or key employee listed on Schedule 5.17(a)
----------------
has any plans or intends to terminate his or her employment with the Company or
such Subsidiary. No former director, officer or person considered by the
Designated Stockholders to be a key employee has left the service of the Company
or any of its Subsidiaries within the last six months.
(b) Schedule 5.17(b) sets forth the aggregate number of employees, other
----------------
non-supervisory personnel, independent contractors and owner/operators that work
for the Company or any of its Subsidiaries, specifying in the case of the
Company and each such Subsidiary the number that belong to a union or are
otherwise covered by an employment agreement or a collective bargaining
agreement, identified by terminal location or facility.
(c) Except as set forth on Schedule 5.17(c), (i) each of the Company and
----------------
its Subsidiaries generally enjoys good relations with all of their respective
employees, and there is no labor strike, dispute or grievance (other than minor
complaints received from individual employees that, individually or in the
aggregate, are not material to the Company or such Subsidiary), or work slowdown
or stoppage actually pending or, to the best knowledge of the Designated
Stockholders, threatened against or involving the Company or any of its
Subsidiaries, and (ii) neither the Company nor any of its Subsidiaries is a
party to or bound by any collective bargaining agreement, union Contract or
similar agreement, no such Contract or agreement is currently being negotiated
by the Company or any of its Subsidiaries, no labor union has taken any action
with respect to organizing the employees of the Company or any of its
Subsidiaries, and no representation question exists with respect to any such
employees.
(d) The Company, each of its Subsidiaries, and each of their respective
ERISA Affiliates have complied in all respects with all Laws relating to the
hiring and retention of all employees, leased employees and independent
contractors relating to wages, hours, Company Employee Plans, workers'
compensation, unemployment, equal opportunity, collective bargaining, and the
payment of social security and other Taxes.
(e) Schedule 5.17(e) sets forth a true, correct and complete list of any
----------------
and all unfair labor practice charges or other Proceedings before the National
Labor Relations Board, Equal Opportunity Employment Commission charges,
employment discrimination lawsuits, wrongful discharge lawsuits, Occupational
Safety and Health Administration citations and litigation, wage and hour charges
and litigation, and employment related litigation that are presently pending, or
to the best knowledge of the Designated Stockholders, threatened at law or in
equity, involving the Company or any of its Subsidiaries. Schedule 5.17(e) also
----------------
sets forth a true, correct and
-21-
complete list of those charges, lawsuits, citations, litigation and Proceedings
falling within the above categories that have been settled or otherwise disposed
of within the previous two years.
(f) Except as set forth in Schedule 5.17(f), neither the Company nor any
----------------
of its Subsidiaries is a joint employer or alter ego, as construed under the
National Labor Relations Act, as amended, with or of any of its suppliers,
distributors, customers or other Persons with which it has any Contract or other
understanding or arrangement, including any owner/operator with whom the Company
or any of its Subsidiaries has a Contract or other understanding or arrangement,
or any other Person with which the Company or any of its Subsidiaries has a
leasing arrangement (collectively referred to for the purposes of this Section
5.17(f) as "Third Parties"), and no Third Parties are alter egos of the Company
-------------
or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries (i)
exercises management power or authority over the operations or personnel of any
Third Party, (ii) supervises the employees of any Third Party, or (iii) is
responsible for, or has the authority to establish, implement or effectively
recommend the labor relations or employment policies or actions, including
wages, hours, working conditions or any terms of employment, for any employee of
any Third Party. There is no interchange of personnel, no common boards of
directors and no common officers, managers or employees between the Company or
any of its Subsidiaries and any Third Party. Neither the Company or any of its
Subsidiaries provides any administrative services for any Third Party that are
not required by Law or that are not provided in a bona fide, arms-length
transaction at fair market value. Any administrative services provided by the
Company or any of its Subsidiaries for any Third Party have been detailed on
Schedule 5.17(f).
----------------
(g) Except as set forth on Schedule 5.17(g), the Company's and each of its
----------------
Subsidiaries' Contracts and other understandings with owner/operators and
independent contractors establish a bona fide arrangement where such individuals
are independent contractors to, and are not employees of, the Company or any of
its Subsidiaries, and there are not any disputes, claims, charges or allegations
pending or, to the best knowledge of the Designated Stockholders, threatened at
law or in equity before any Governmental Entity that challenges the independent
contractor nature of such Contract or other understanding or arrangement.
5.18 ERISA Compliance.
(a) Schedule 5.18(a) contains a true, correct and complete list of all
----------------
Employee Benefit Plans of the Company and each of its Subsidiaries
(collectively, the "Company Employee Plans"), (i) that cover any current or
----------------------
former employees, contract employees, independent contractors or consultants of
or to the Company or any of its Subsidiaries or any spouses, family members or
beneficiaries thereof (A) that are maintained, sponsored or contributed to by
the Company or any of its Subsidiaries or (B) with respect to which the Company
or any of its Subsidiaries is obligated to contribute or has any Liability, or
(ii) with respect to which the Company or any of its Subsidiaries has any
Liability on account of the maintenance or sponsorship thereof or contribution
thereto by any present or former ERISA Affiliate of the Company or any of its
Subsidiaries.
(b) Except as set forth on Schedule 5.18(b), with respect to each Company
----------------
Employee Plan:
-22-
(i) such Company Employee Plan has been established, maintained,
operated and administered in accordance with its terms and in substantial
compliance with ERISA, the Code, and all other applicable Laws (including
with respect to reporting and disclosure), and the Company has not received
any notice from any Governmental Entity that the operation of such Company
Employee Plan violated any such Laws;
(ii) all required, declared or discretionary (consistent with past
practice) payments, premiums, contributions, reimbursements or accruals for
all periods ending prior to or as of the date hereof have been made or
properly accrued on the Latest Balance Sheet, or with respect to accruals
properly made after the Latest Balance Sheet Date, on the books and records
of the Company or its Subsidiaries and all amounts withheld from employees
have been timely deposited into the appropriate trust or account;
(iii) there is no unfunded Liability relating to such Company Employee
Plan that is not reflected on the Latest Balance Sheet, or with respect to
accruals properly made after the Latest Balance Sheet Date, on the books
and records of the Company or its Subsidiaries;
(iv) neither the Company, any of its Subsidiaries, any of their
respective ERISA Affiliates, nor any other "disqualified person" or "party
in interest" (as such terms are defined in Section 4975 of the Code and
Section 3(14) of ERISA, respectively) with respect to such Company Employee
Plan, has breached the fiduciary rules of ERISA or, to the best knowledge
of the Designated Stockholders, engaged in a prohibited transaction that
could subject any of the foregoing Persons to any Tax or penalty imposed
under Section 4975 of the Code or Section 502(i), Section 502(j) or Section
502(l) of ERISA;
(v) no Proceeding (other than routine claims for benefits) is
pending or, to the best knowledge of the Designated Stockholders,
threatened against or relating to such Company Employee Plan or any
fiduciary thereof, and there is, to the best knowledge of the Designated
Stockholders, no basis for any such Proceeding against any such Company
Employee Plan;
(vi) each Company Employee Plan, if intended to be "qualified" within
the meaning of Section 401(a) of the Code, has been determined by the
Internal Revenue Service to be so qualified and the related trusts are
exempt from Tax under Section 501(a) of the Code, and nothing has occurred
that, to the best knowledge of the Designated Stockholders, has or
reasonably could be expected to adversely affect such qualification or
exemption;
(vii) except as may be required under Laws of general application, no
Company Employee Plan obligates the Company or any of its Subsidiaries to
provide any employee or former employee, or their spouses, family members
or beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
-23-
(viii) each such Company Employee Plan that is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985, as
amended ("COBRA"), and the Health Insurance Portability and Accountability
-----
Act, as amended ("HIPAA"), has been maintained in compliance with COBRA and
-----
HIPAA, including all notice requirements, and no Tax payable on account of
Section 4980B or any other Section of the Code has been or is expected to
be incurred;
(ix) neither the Company, any of its Subsidiaries, nor any of their
respective ERISA Affiliates is or has ever maintained or been obligated to
contribute to a Multiemployer Plan (as defined in Section 3(37) of ERISA),
a Multiple Employer Plan (as defined in Section 413 of the Code), or a
Defined Benefit Pension Plan (as defined in Section 3(35) of ERISA);
(x) no benefit payable or that may become payable by the Company,
any of its Subsidiaries or any or their respective ERISA Affiliates
pursuant to such Company Employee Plan will constitute an "excess parachute
payment" within the meaning of Section 280G of the Code, which is or may be
subject to the imposition of a Tax under Section 4999 of the Code or that
would not be deductible by reason of Section 280G of the Code;
(xi) each such Company Employee Plan that is intended to meet the
requirements of Section 125 of the Code meets such requirements and each
program of benefits for which employee contributions are provided pursuant
to elections made under such Company Employee Plan meets the requirements
of the Code applicable thereto;
(xii) there has not been any act or omission by the Company, any of
its Subsidiaries, or any of their respective ERISA Affiliates that has
given rise to or reasonably could be expected to give rise to any fines,
penalties or related charges under ERISA or the Code for which the Company,
any of its Subsidiaries or any of their respective ERISA Affiliates
reasonably could be expected to be liable;
(xiii) all reporting and disclosure obligations imposed under ERISA
and the Code have been satisfied with respect to each Company Employee Plan
for periods completed prior to the Closing;
(xiv) neither the Company nor any of its Subsidiaries has made or
agreed to make, nor are they required to make (in order to bring any
Company Employee Plan into compliance with ERISA or the Code) any changes
in benefits that would materially increase the costs of maintaining any
Company Employee Plan, other than amendments required in connection with
the termination of the ESOP and the ESOT, and amendments required by the
Uruguay Round Agreements Act, the Uniformed Services Employment and
Reemployment Rights Act, the Small Business Job Protection Act of 1996, and
the Taxpayer Relief Act of 1997;
(xv) the Company and each of its Subsidiaries, as applicable, for
periods completed prior to the Closing, have timely deposited and
transmitted all amounts withheld from employees for contributions or
premium payments for each Company Employee Plan into the appropriate trusts
or accounts;
-24-
(xvi) each Company Employee Plan that allows loans to plan
participants has been operated in accordance with its terms, the plan's
written loan policy and all applicable laws; all outstanding loans from
such Company Employee Plans are current as of the Closing Date; and there
are no loans in default;
(xvii) each Employee Plan has been established and, prior to the
Closing, has been operated for the exclusive benefit of the participants
and beneficiaries of such Employee Plan; and
(xviii) each Employee Plan that holds employer securities has, since
its establishment and prior to the Closing, satisfied the requirements of
Section 401(a)(28) of the Code.
(c) The Purchaser has been provided with true, correct and complete
copies, to the extent applicable, of all documents pursuant to which each
Company Employee Plan is maintained and administered, the two most recent annual
reports (Form 5500 and attachments) and financial statements therefor, all
governmental rulings, determinations and opinions (and pending requests
therefor), and, if any Company Employee Plan provides post-employment or post-
retirement health and life insurance, accident or other "welfare-type" benefits,
the most recent valuation of the present and future obligations under such
Company Employee Plan. The foregoing documents, when taken together, reflect in
all material respects all of the terms of such Company Employee Plan (including
any agreement or provision that would limit the ability of the Company or any of
its Subsidiaries to make any prospective amendments or to terminate such Company
Employee Plan).
5.19 Environmental Matters.
(a) Except as set forth on Schedule 5.19(a), neither the Company, any of
----------------
its Subsidiaries, or any of their respective Affiliates has received any written
or, to the best knowledge of the Designated Stockholders, oral notice, report or
other information (i) regarding any actual or alleged violation of any
Environmental, Health and Safety Laws, or any Liabilities, including any
investigatory, remedial or corrective obligations, relating to (A) the Company,
any of its Subsidiaries, any of their respective Affiliates, or any of their
respective predecessors, (B) the Business, or (C) any of the Company's or any of
its Subsidiaries' currently or formerly owned or leased properties or
operations, or (ii) that the Company or any of its Subsidiaries is potentially
responsible under any Environmental, Health and Safety Laws for response costs,
corrective action or natural resource damages, as those terms are defined under
the Environmental, Health and Safety Laws, at any location.
(b) Schedule 5.19(b) sets forth a true, correct and complete list of all
----------------
properties and facilities previously owned, leased or operated by the Company,
any of its Subsidiaries, or any of their respective predecessors at any time
(together with the Leased Properties, the "Covered Properties"). There has been
------------------
no release, discharge, spill or disposal of any substance at any of the Covered
Properties so as to give rise to any Liability of the Company or any of its
Subsidiaries under any Environmental, Health and Safety Laws. Except as set
forth on Schedule 5.19(b), there is not now, nor has there ever been, any
----------------
asbestos-containing material in any form or condition, underground storage tank,
above-ground storage tank, landfill, waste pile, surface impoundment, disposal
area, or article of equipment containing polychlorinated biphenyls on or
-25-
at any of the Covered Properties during the time of the Company's, or any of its
Subsidiaries', or any of their respective predecessors-in-interests' use,
operation, maintenance or ownership thereof.
(c) Neither the Company, any of its Subsidiaries, any of their respective
Affiliates, nor any of their respective predecessors has treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled or
released any substance, or owned or operated any property or facility (and no
such property or facility is contaminated by any such substance) in a manner
that has given or would give rise to Liability pursuant to any Environmental,
Health and Safety Laws, including any Liability for response costs, corrective
action costs, personal injury, property damage, natural resources damage or
attorney fees, or any investigative, corrective or remedial obligations pursuant
to any Environmental, Health and Safety Laws.
(d) No facts, events or conditions relating to the past or present
operations of the Company, any of its Subsidiaries, any of their respective
Affiliates, any of their respective predecessors, or any of the Covered
Properties will prevent, hinder or limit continued compliance by the Company or
any of its Subsidiaries with any Environmental, Health and Safety Laws, or give
rise to any investigative, corrective or remedial obligations pursuant to any
Environmental, Health and Safety Laws, or give rise to any other Liability
pursuant to any Environmental, Health and Safety Laws, including any relating to
on-site or off-site releases or threatened releases of materials, substances or
wastes, personal injury, property damage or natural resources damage.
(e) Neither this Agreement nor the consummation of the transactions
contemplated by this Agreement or any of the Related Documents will result in
any obligations for site investigation or cleanup, or notification to or consent
of any Governmental Entity or other third party, pursuant to any of the so-
called "transaction-triggered" or "responsible property transfer" Environmental,
Health and Safety Laws.
(f) The Company has provided the Purchaser with true, correct and complete
copies of all reports and studies within the possession or control of the
Company and its Subsidiaries with respect to past and present environmental
conditions or events at any of the Covered Properties (all of which are listed
on Schedule 5.19(b)), and, to the best knowledge of the Designated Stockholders,
----------------
there are no other environmental reports or studies with respect thereto.
5.20 Brokers.
Neither the Company nor any of its Subsidiaries has employed any broker or
finder or incurred any Liability for any brokerage fees, commissions or finders'
fees or similar compensation or transaction based payments in connection with
the transactions contemplated by this Agreement or any of the Related Documents.
5.21 Related Party Transactions.
Except as set forth on Schedule 5.21, and except for compensation to bona
-------------
fide employees of any of the Company and its Subsidiaries for services rendered
in the ordinary course of business, consistent with past practice, no current or
former Affiliate of the Company
-26-
or any of its Subsidiaries or any "Associate" (as defined in the rules
promulgated under the Exchange Act) of any thereof, is now, or has been during
the last five fiscal years, (i) party to any transaction or Contract with the
Company or any of its Subsidiaries (including any Contract or other
understanding or arrangement providing for the furnishing of services by, or the
rental of real or personal property from, or otherwise requiring payments to,
any such Affiliate or Associate), or (ii) the direct or indirect owner of an
interest in any Person that is a present or potential competitor, supplier or
customer of the Company or any of its Subsidiaries (other than non-affiliated
holdings in publicly held companies). Except as set forth on Schedule 5.21,
-------------
neither the Company nor any of its Subsidiaries is a guarantor or otherwise
liable for any actual or potential Liability of its Affiliates or their
Associates. Except as set forth on Schedule 5.21, neither the Company nor any of
-------------
its Subsidiaries (x) owns or operates any vehicles, boats, aircraft, apartments
or other residential or recreational properties or facilities for executive,
administrative or sales purposes, or (y) owns or pays for any social club
memberships, whether or not for the benefit of the Company, any of its
Subsidiaries, and/or any of their respective executives.
5.22 Accounts and Notes Receivable.
Except as set forth on Schedule 5.22, and except for allowances for
-------------
doubtful accounts reflected on the Latest Balance Sheet, all accounts receivable
and notes receivable owing to the Company or any of its Subsidiaries as of the
date hereof constitute, and as of the Closing shall constitute, valid and
enforceable claims arising from bona fide transactions in the ordinary course of
business, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity), and, to the best knowledge of the Designated Stockholders, there are no
asserted claims, refusals to pay or other rights of set-off against any thereof.
Except as set forth on Schedule 5.22 (including those items categorized as
-------------
"legal" on such Schedule), there is (i) no account debtor or note debtor
(excluding those debtors attributable to RFI's "charter business," as defined on
Annex IV) that is delinquent by more than thirty (30) days for payments due from
--------
such account debtor or note debtor in excess of $10,000 in the aggregate, (ii)
no account debtor or note debtor attributable to RFI's "charter" business, as
defined on Annex IV, that owes any payments to the Company or any of its
--------
Subsidiaries that have been due for more than one hundred and twenty (120) days
from the invoice date for any such payment, (iii) no account debtor or note
debtor that has refused, or, to the best knowledge of the Designated
Stockholders, threatened to refuse, to pay its obligations to the Company or its
Subsidiaries, as the case may be, for any reason, or has otherwise made a claim
of set-off or similar claim (other than in amounts not in excess of $5,000 per
account debtor or note debtor, or $10,000 in the aggregate), and (iv) to the
best knowledge of the Designated Stockholders, no account debtor or note debtor
that owes the Company or any of its Subsidiaries amounts in excess of $10,000 in
the aggregate is insolvent or bankrupt. Those items categorized as "legal" on
Schedule 5.22 constitute all items that (x) have been placed in the hands of
-------------
third party collection agents, (y) are owed by account debtors or note debtors
with respect to whom bankruptcy or insolvency or other creditor protection
proceedings have been commenced, and/or (z) are owed by account debtors or note
debtors who have admitted to the Company an inability to pay all or any portion
of any such accounts or notes at any time.
-27-
5.23 Bank Accounts; Powers of Attorney.
Schedule 5.23 sets forth a true and complete list of (i) all bank accounts
-------------
and safe deposit boxes of the Company and each of its Subsidiaries and all
Persons who are signatories thereunder or who have access thereto, and (ii) the
names of all Persons holding general or special powers of attorney from the
Company or any of its Subsidiaries and a summary of the terms thereof (excluding
ministerial powers of attorney granted to representatives of the Company or any
of its Subsidiaries that are terminable at will).
5.24 Suppliers and Vendors.
Except as set forth on Schedule 5.24, no material supplier or vendor to the
-------------
Company or any of its Subsidiaries has canceled or otherwise terminated, or, to
the best knowledge of the Designated Stockholders, threatened to cancel or
otherwise terminate, its relationship with the Company or any of its
Subsidiaries or has decreased, limited or otherwise modified, or, to the best
knowledge of the Designated Stockholders, threatened to decrease, limit or
otherwise modify, the services, supplies or materials it provides to the Company
or any of its Subsidiaries.
5.25 Customers.
Except as set forth on Schedule 5.25, no customer of the Company or any of
-------------
its Subsidiaries to which more than $50,000 of annual sales were attributable
during any of the preceding three fiscal years has notified the Company or any
of its Subsidiaries that it intends, or, to the best knowledge of the Designated
Stockholders, has threatened, to terminate or materially curtail its
relationship and dealings with the Company or any of its Subsidiaries.
5.26 Conflicts of Interest.
Neither the Company, any of its Subsidiaries, any Designated Stockholder,
the ESOT nor any officer, employee, agent or other Person acting on their behalf
has, directly or indirectly, given or agreed to give, any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business, consistent with past practice) to any customer, supplier, employee
or agent of a customer or supplier, or official or employee of any Governmental
Entity or other Person who was, is, or may be in a position to help or hinder
the Business (or assist in connection with any actual or proposed transaction)
that (i) might subject the Company or any of its Subsidiaries to any damage or
penalty in any Proceeding, (ii) if not given in the past, would have resulted in
a Material Adverse Effect on the Company and its Subsidiaries when taken as a
whole, or (iii) if not continued in the future, reasonably could be expected to
result in a Material Adverse Effect on the Company and its Subsidiaries when
taken as a whole. There is not now, and there has never been, any employment by
the Company or any of its Subsidiaries of, or beneficial ownership in the
Company or any of its Subsidiaries by, any governmental or political official in
any jurisdiction in which the Company or any of its Subsidiaries has conducted,
presently is conducting, or presently is proposing to conduct business.
5.27 Year 2000.
Neither the Company nor any of its Subsidiaries has experienced any effects
within the Business as a result of the "Y2K" issue (that is, the risk that
computer applications used by the
-28-
Company or any of its Subsidiaries may be unable to recognize and perform
property date-sensitive functions involving certain dates prior to and any date
after December 31, 1999). All computer applications used by the Company and each
of its Subsidiaries that are material to the Business are able to perform
properly date-sensitive functions for all dates before and after January 1,
2000.
5.28 Disclosure.
The representations and warranties made and the other information provided
by or on behalf of the Designated Stockholders and/or the ESOT in this
Agreement, including the Schedules, Annexes, attachments and Exhibits hereto, do
not contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained herein or therein, taken as a whole,
in light of the circumstances in which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the Designated
Stockholders as of the Closing as follows:
6.1 Organization; Corporate Authority.
The Purchaser is a corporation duly organized, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate or otherwise) to own, lease and operate
its assets and properties and to carry on its business as presently conducted
and as presently proposed to be conducted. The Purchaser is duly qualified and
in good standing to transact business as a foreign Person in those jurisdictions
set forth on Schedule 6.1, which jurisdictions constitute all of the
------------
jurisdictions in which the failure to obtain such qualification would reasonably
be expected to have a Material Adverse Effect on the Purchaser and its
Subsidiaries when taken as a whole. The Seller has been furnished with true,
correct and complete copies of the Purchaser's Charter Documents, in each case
as amended and in effect on the date this representation is being made and is
deemed made hereunder.
6.2 Authority; Authorization; Execution and Delivery; Enforceability; No
Conflict.
(a) The Purchaser has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The Purchaser's execution and
delivery of this Agreement and each Related Document to which it is or will be a
party, and the performance by the Purchaser of its obligations hereunder and
thereunder, have been duly and validly authorized by all requisite action on the
part of the Purchaser (including its Board of Directors and all committees
thereof and its stockholders). This Agreement and each Related Document to
which the Purchaser is or will be a party has been, or upon the Purchaser's
execution hereof and thereof will be, duly and validly executed and delivered by
the Purchaser and constitutes, or upon the Purchaser's execution and delivery
hereof and thereof will constitute, a valid and binding obligation of the
Purchaser,
-29-
enforceable against the Purchaser in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally, and, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(b) Except as set forth on Schedule 6.2(b), neither the execution and
---------------
delivery by the Purchaser of, and performance of its obligations under, this
Agreement or any of the Related Documents to which it is or will be a party, nor
the consummation by the Purchaser of the transactions contemplated hereby or
thereby, nor the compliance by the Purchaser with any of the provisions hereof
or thereof, will (i) conflict with, or result in any violation of, or cause a
default (with or without notice or lapse of time or both) under, any provision
of the Purchaser's Charter Documents, (ii) conflict with, or result in any
violation of, or cause a default (with or without notice or lapse of time or
both) under, or give rise to any right of termination, amendment, cancellation
or acceleration of any obligations contained in, or the loss of any benefit
under, any term, condition or provision of any provision of any Contract to
which the Purchaser is a party, or by which the Purchaser or any of its assets
or properties is or may be bound, (iii) violate any Law applicable to the
Purchaser, or (iv) result in an Encumbrance on or against any assets, rights or
properties of the Purchaser, or on or against any capital stock or other
securities of the Purchaser, or give rise to any claim against the Company, any
of the Company's Subsidiaries, or the Purchaser (other than Encumbrances and
claims arising out of or in connection with the Purchaser's credit and debt
facilities).
6.3 Consents.
No Permit, authorization, consent or approval of or by, or notification of
or filing with, any Person (governmental or otherwise) is required for, as a
result of, or in connection with the execution, delivery and performance by the
Purchaser of this Agreement or any of the Related Documents to which it is or
will be a party or the consummation of the transactions contemplated hereby or
thereby (other than those that have been (or will timely be) obtained or made).
6.4 Brokers.
The Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees or similar
compensation or transaction based payments in connection with the transactions
contemplated by this Agreement or any of the Related Documents.
6.5 SEC Reports.
The Purchaser's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, quarterly reports on Form 10-Q for the fiscal quarters ended
March 31, 2000, and June 30, 2000, and current report on Form 8-K filed January
28, 2000, as amended, in each case as filed with the Commission (collectively,
the "SEC Reports"), when taken together with the exhibits and schedules thereto,
-----------
did not contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading, in each case as of the
date filed with the Commission, it being understood that any statement contained
in the SEC Reports shall be deemed to have been modified or superseded for
purposes hereof to the extent that a statement in any document
-30-
included in the SEC Reports that was prepared or filed with the Commission on a
later date modifies or replaces such statement, whether or not such later
statement so states or provides. Since June 30, 2000, there has been no fact,
event or occurrence that has had a Material Adverse Effect on the Purchaser and
its Subsidiaries when taken as a whole.
ARTICLE VII
COVENANTS AND AGREEMENTS
7.1 Public Announcements.
From and after the date of this Agreement, each Designated Stockholder and
the ESOT agrees that, except (i) as otherwise required by Law, and (ii) for
disclosure to his, her or its respective directors, officers, employees,
financial advisors, financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a need-to-
know basis and with whom such party has a confidential relationship, he, she or
it will not issue any reports, statements or releases, in each case pertaining
to this Agreement or any Related Document to which he, she or it is a party or
the transactions contemplated hereby or thereby, without the prior written
consent of the Purchaser, which consent shall not unreasonably be withheld or
delayed.
7.2 Non-Competition Covenant.
(a) Each Designated Stockholder acknowledges and agrees that as a mutual
condition to the respective obligations of the parties at the Closing, and as a
material inducement to the Purchaser to enter into and perform its obligations
hereunder and in consideration of the payments and other consideration to be
received by the Designated Stockholders under this Agreement and the Related
Documents, such Designated Stockholder shall not, without the prior written
consent of the Purchaser, at any time during the period beginning on the Closing
Date and ending on the fifth (or third with respect to ▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ only) anniversary thereof (in each case, the "Restrictive Period"),
------------------
(i) directly or indirectly engage in, represent in any way, or be connected
with, any Competing Business (as defined below), whether such engagement shall
be as a director, an officer, an owner, an employee, a partner, an Affiliate or
other participant in such Competing Business, (ii) assist others in engaging in
any Competing Business in the manner described in clause (i) above, (iii) induce
any employees of the Purchaser or any of its Subsidiaries or other Affiliates,
or any employees of the Company or any of its Subsidiaries, at any time during
the Restrictive Period to terminate their employment with the Purchaser or any
of its Subsidiaries or other Affiliates, or to terminate their employment with
the Company or any of its Subsidiaries, or to engage in any Competing Business,
or (iv) induce any customer, vendor or agent or any other Person with which the
Purchaser or any or its Subsidiaries or other Affiliates, or with which the
Company or any of its Subsidiaries, has a business relationship, contractual or
otherwise, at any time during the Restrictive Period to terminate or alter such
business relationship. This covenant is considered an integral part of this
Agreement. The foregoing restriction shall not apply to a Designated
Stockholder's ownership of publicly traded Securities that represent less than
five percent (5%) of the ownership interests of the issuer.
-31-
(b) As used herein, the term "Competing Business" means (i) any
------------------
business conducted in (A) any county in the State of New York, and (B) every
other state, province, or other political subdivision of the United States,
Canada, Mexico, Japan, China or Europe that is engaged in the business of
providing freight forwarding or freight transportation services or operating as
a non-vessel operating common carrier, or (ii) any business described in the
foregoing clause (i) if such business or the services or products provided or
sold by it are competitive, directly or indirectly, with the Business on the
date hereof or on the Closing Date (or with respect to which there are fixed
plans on the date hereof or on the Closing Date for the provision or sale of the
same by the Business). Anything contained in the immediately preceding sentence
to the contrary notwithstanding, any entity that has separate divisions or
business units, one or more of which are engaged in a business described above,
will not be deemed a Competing Business with respect to those portions of such
entity that are not engaged in a business described above so long as such
Designated Stockholder's association with any such separate divisions or
business units (fully taking into account his, her or its functions and the
nature of his, her or its work at such division or business unit) does not
involve existing customers of the Company or any of its Subsidiaries or relate
in any material respect to that portion of such business that would be a
Competing Business hereunder.
(c) If, at the time of enforcement of this Section 7.2, a court holds
that the restrictions stated herein are unreasonable under the circumstances
then existing, the parties agree that the maximum period, scope or geographical
area reasonable under such circumstances shall be substituted for the stated
period, scope or geographical area. Additionally, with respect to each county in
the State of New York, the covenant not to compete set forth in Section 7.2(a)
is intended as a separate covenant with respect thereto. If any one of such
covenants is declared invalid for any reason, such determination shall not
affect the validity of the remainder of the covenants or any covenant covering
territory other than the State of New York. The other covenants set forth in
Section 7.2(a) shall remain in effect as if the provision had been executed
without the invalid covenants. The parties hereto hereby declare that they
intend that the remaining covenants of the provision continue to be effective
without any covenants that have been declared invalid. The parties hereto
acknowledge that money damages would be an inadequate remedy for any breach of
this Section 7.2. Therefore, in the event of a breach or threatened breach of
this Section 7.2, the Purchaser and/or its successors or assigns may, in
addition to other rights and remedies existing in its or their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
relief in order to enforce or prevent any violations of the provisions of this
Section 7.2 (without posting a bond or other security).
7.3 Disclosure of Information.
(a) As used in this Agreement, the term "Confidential Information" means,
------------------------
with respect to any Person, all information (whether written or oral) furnished
(whether before or after the date hereof) by such Person or its owners, members,
partners, directors, officers, employees, Affiliates, representatives (including
its financial advisors, attorneys and accountants) or agents (collectively,
"Representatives") to any other Person or its Representatives, and all analyses,
---------------
compilations, forecasts, studies or other documents prepared by such other
Person or its Representatives in connection with the transactions contemplated
by this Agreement that contain or reflect any such information; provided,
--------
however, that the term "Confidential Information" shall not include information
-------
that (i) is or becomes publicly available other than as a result of a
-32-
disclosure by any Person or its Representatives in violation of this Agreement,
or (ii) is or becomes available to such other Person on a non-confidential basis
from a source that is not prohibited from disclosing such information by any
legal, contractual or fiduciary obligation; provided further, however, that for
-------- ------- -------
purposes of this Section 7.3, from and after the Closing, Confidential
Information of the Company or any of its Subsidiaries shall be deemed
Confidential Information of the Purchaser and shall, as of such time, no longer
be deemed Confidential Information of the Company or such Subsidiaries, as
applicable.
(b) Each of the Designated Stockholders and the ESOT will keep all
Confidential Information of the Purchaser, the Company and each of their
respective Subsidiaries confidential and will not (except as required by
applicable Law, regulation or legal process, and then only after compliance with
the last sentence of this Section 7.3(b)), without the prior written consent of
the Purchaser, disclose any of such Confidential Information in any manner
whatsoever, directly or indirectly, and will not use any Confidential
Information of the Purchaser, the Company or any of their respective
Subsidiaries except for the purposes contemplated by this Agreement; provided,
--------
however, that the Designated Stockholders and the ESOT may reveal Confidential
-------
Information of the Purchaser, the Company and each of their respective
Subsidiaries to his, her or its Representatives (i) who need to know such
Confidential Information for the purposes contemplated by this Agreement, (ii)
who are informed by such Designated Stockholder or the ESOT, as the case may be,
of the confidential nature of the Confidential Information, and (iii) who agree
to act in accordance with the terms of this Section 7.3(b). Each Designated
Stockholder and the ESOT will cause his, her or its Representatives to observe
the terms of this Section 7.3(b), and will be responsible for any breach hereof
by any of his, her or its Representatives. In the event that any Designated
Stockholder or the ESOT, or any of their respective Representatives, is
requested pursuant to, or required by, applicable Law, regulation or legal
process to disclose any Confidential Information of the Purchaser, the Company
or any of their respective Subsidiaries, such Designated Stockholder or the
ESOT, as the case may be, will notify the Purchaser promptly so that it may seek
a protective order or other appropriate remedy or, in its sole and absolute
discretion, waive compliance with the terms of this Section 7.3(b). In any
event, such Designated Stockholder or the ESOT, as the case may be, will furnish
only that portion of the Confidential Information of the Purchaser, the Company
or such Subsidiary that he, she or it is advised by counsel is legally required
and will exercise all commercially reasonable efforts to obtain reliable
assurance, to the extent it is possible to obtain the same, that confidential
treatment will be afforded to such Confidential Information.
(c) Each of the Designated Stockholders and the ESOT, as the case may
be, recognizes and acknowledges that a breach of his, her or its covenants in
this Section 7.3 will cause irreparable and material loss and damage to the
Purchaser, the Company and/or their respective Subsidiaries, as the case may be,
the amount of which cannot be determined readily and as to which Purchaser, the
Company and/or their respective Subsidiaries, as the case may be, will not have
an adequate remedy at law or in damages. Accordingly, in addition to any remedy
Purchaser, the Company and/or their respective Subsidiaries, as the case may be,
may have in damages by an action at law, Purchaser, the Company and/or their
respective Subsidiaries, as the case may be, shall be entitled to the issuance
of an injunction restraining any such breach or threatened breach or any other
remedy at law or in equity for any such breach.
-33-
7.4 Use of Proprietary Name.
From and after the Closing, neither any Designated Stockholder nor the ESOT
shall use the names "RFI," "RFI Group," "RF Holding," "RF International,"
"▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Forwarding," "RF Container," "RF Consultants," "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Customs," "RF Acquisition," "RF," "Ocean World Lines," "Ocean World Lines
Europe," "Ocean World Lines Hamburg," "Ocean World Lines Bremen," "Ocean World
Lines France," "Ocean World Lines Ipswich," "Ocean World Lines Japan," "OWL,"
"International Logistics," "▇.▇. ▇▇▇▇▇▇," "Sea Express," or any derivation
thereof for any purpose, other than on the face of such Designated Stockholder's
resume, a job application for such Designated Stockholder or any other non-
commercial purpose.
7.5 Certain Employee Matters.
On the Closing Date the employees of the Company and each of its
Subsidiaries that are actively employed by the Company or such Subsidiaries in
the Business on the Closing Date shall continue their employment on terms and
conditions reasonably comparable to those provided by the Company or such
Subsidiaries prior to the Closing Date (any such employees who continue their
employment being referred to herein as the "Hired Employees"), and the Purchaser
---------------
initially shall provide benefits to the Hired Employees, effective as to group
health insurance benefits on the Closing Date and effective as to other employee
benefits as soon as practicable after the Closing Date, in each case that are
reasonably comparable on an overall basis to the benefits provided by the
Company or such Subsidiaries prior to the Closing Date to such employees,
subject in the case of the Management Stockholders to the terms and conditions
of their respective Employment Agreements, as applicable, entered into at the
Closing. In addition, for purposes of participating in the Purchaser's 401(k)
plan, each Hired Employee shall receive credit for his or her continuous
employment services provided to the Company or its Subsidiaries up to and
including the Closing Date. Nothing contained in this Agreement shall confer
upon any Hired Employee any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement, including any right to employment or
continued employment or to any benefits that may be provided, directly or
indirectly, under any employee benefit plan, policy or arrangement of the
Purchaser, nor shall anything contained in this Agreement constitute a
limitation on or restriction against the right of the Purchaser to amend, modify
or terminate any such plan, policy or arrangement at any time and from time to
time.
7.6 Tax Covenants.
(a) Post-Closing Returns.
--------------------
(i) After the Closing, the Purchaser shall prepare and file, or
cause to be prepared and filed, all Tax Returns required to be filed by or
with respect to each of the Company and its Subsidiaries for all periods
ending on, before or including the Closing Date and with due dates
(including extensions) after the Closing Date (collectively, the "Post-
----
Closing Returns"). The Purchaser shall provide the Stockholders'
---------------
Representative with a draft of each Post-Closing Return at least ten (10)
days prior to the filing thereof and shall make any changes requested by
the Stockholders' Representative so long as such changes either (A) do not
adversely affect positions that the Purchaser may be entitled to take in
any future Tax Returns or (B) are consistent with the Company's and its
Subsidiaries' Tax Returns filed prior to the Closing Date; provided that
--------
the Stockholders'
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Representative shall notify the Purchaser of any proposed changes within
five (5) days after its receipt of such draft Tax Return; and provided
--------
further that any requested changes shall be both reasonable and proper, as
-------
reasonably determined by the Purchaser.
(ii) At least three (3) Business Days prior to the due date of any
payment of Taxes required to be made with respect to any Post-Closing
Return, the Stockholders jointly and severally shall pay to the Purchaser,
in cash, an amount equal to the amount by which the portion of any such
payment that is attributable to any period ending on or prior to the
Closing Date exceeds the accrual for currently payable Taxes shown on the
Closing Balance Sheet (to the extent such accrual has not otherwise been
applied to any prior amounts payable by the Stockholders hereunder).
(iii) In the event the Company receives a refund after the Closing
Date that is attributable to a Tax Return filed for a period ending on or
prior to the Closing Date, the Purchaser, within ten (10) Business Days
after its receipt of such refund, shall pay to the Stockholders'
Representative, in cash, an amount equal to such refund; provided, however,
-------- -------
that the Purchaser shall not be obligated to make any payment pursuant to
this Section 7.6(a)(iii) if the Stockholders are not in full compliance
with their respective obligations set forth in this Section 7.6. In the
event a payment is made to the Stockholders' Representative pursuant to
this Section 7.6(a)(iii), the Stockholders' Representative then shall be
responsible for distributing such amount to the Stockholders, pro rata
based upon the amount of the Closing Payment received by each Stockholder.
(b) Section 338 Election. Each of the Purchaser, the Company and the
--------------------
Stockholders hereby agrees not to make, or cause to be made, any election under
Section 338 of the Code with respect to the transactions contemplated hereby.
7.7 UCC-3 Termination Statements.
Each of the Designated Stockholders and the ESOT hereby covenant and agree
that he, she or it, at their own expense, shall use all commercially reasonable
efforts to cause, as soon as practicable after the Closing, each Person from
whom the Company or any of its Subsidiaries has borrowed money (or guaranteed
the debt associated with such borrowing), or to whom such Person is otherwise
obligated with respect to any Encumbrance on or affecting any asset, property or
right of the Company or any of its Subsidiaries, or with whom the Company or any
of its Subsidiaries has entered into a lease or similar Contract, to execute and
file such UCC-3 termination statements and/or other similar instruments
evidencing the satisfaction of such indebtedness or other obligation,
satisfaction of judgment or termination documents in each jurisdiction where
evidence of such borrowing, guarantee, obligation, lease or similar Contract set
forth on Schedule 7.7; provided, however, that the Designated Stockholders and
------------ -------- -------
the ESOT shall not be required to comply with this Section 7.7 with respect to
any lease or similar Contract that has not been terminated by the parties
thereto or that has not expired by its terms.
7.8 Stockholders' Representative.
The Designated Stockholders and the ESOT hereby agree among themselves
(without prejudice to or affecting in any way the rights provided in this
Agreement or otherwise to the Purchaser) as follows:
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(a) Appointment. The Designated Stockholders and the ESOT, for
-----------
themselves and their personal representatives and other successors, hereby
constitute and appoint ▇▇▇▇ ▇. ▇▇▇▇ to act as their agent in the capacity as
Stockholders' Representative, with full power and authority, except as otherwise
expressly provided in this Agreement, in the name of and for and on behalf of
the Designated Stockholders and the ESOT, to take all action required or
permitted under this Agreement to be taken by the Stockholders' Representative
(including the giving and receiving of all accountings, reports, notices,
waivers and consents). In the event of the death, physical or mental incapacity,
or resignation of ▇▇▇▇ ▇. ▇▇▇▇ or any successor Stockholders' Representative,
the Designated Stockholders (acting by a majority in interest based on the
Percentage Interests set forth on Annex III) and the ESOT shall promptly appoint
---------
a substitute or substitutes and shall advise the Purchaser in writing thereof.
The authority conferred under this Section 7.8(a) is an agency coupled with an
interest and all authority conferred hereby is irrevocable and not subject to
termination by the Designated Stockholders, or any of them, or the ESOT, or by
operation of law, whether by the death or incapacity, or the bankruptcy or
insolvency, or the dissolution or liquidation, of any Designated Stockholder,
the termination of any trust or estate, or the occurrence of any other event. If
any Designated Stockholder should die or become incapacitated, or become or be
declared bankrupt or insolvent, or be dissolved or liquidated, or if any trust
or estate should terminate, or if any other such event should occur, any action
taken by the Stockholders' Representative pursuant to this Section 7.8(a) shall
be as valid as if such death or incapacity, or bankruptcy or insolvency, or
dissolution or liquidation, or termination or other event had not occurred,
regardless of whether or not the Stockholders' Representative or the Purchaser
shall have received notice thereof.
(b) Reliance by Stockholders' Representative. The Stockholders'
----------------------------------------
Representative shall be entitled to rely, and shall be fully protected in
relying, upon any statements furnished to him, her or it by any Designated
Stockholder, the ESOT or the Company, or any other evidence deemed by the
Stockholders' Representative to be reliable, and the Stockholders'
Representative shall be entitled to act on the advice of counsel selected by
him, her or it. The Stockholders' Representative shall be fully justified in
failing or refusing to take any action under this Agreement unless he, she or it
shall have received such advice or concurrence of the Designated Stockholders
and/or the ESOT as he, she or it deems appropriate or he, she or it shall have
been expressly indemnified to his, her or its satisfaction by the Designated
Stockholders severally according to their respective Percentage Interests
against any and all Liability and expense that the Stockholders' Representative
may incur by reason of taking or continuing to take any such action. The
Stockholders' Representative shall in all cases be fully protected in acting, or
refraining from acting, under this Agreement in accordance with a request of
Designated Stockholders whose aggregate Percentage Interests equal or exceed
fifty-one percent (51%), and such request, and any action taken or failure to
act pursuant thereto, shall be binding upon all of the Designated Stockholders
and the ESOT.
(c) Expenses of Representative. The Stockholders' Representative shall
--------------------------
be entitled to retain counsel and to incur such expenses (including litigation
expenses) as the Stockholders' Representative deems to be necessary or
appropriate in connection with his, her or its performance of his, her or its
obligations under this Agreement, and all such fees and expenses (including
reasonable attorneys' fees) incurred by the Stockholders' Representative shall
be borne by the Stockholders, pro rata in accordance with the "Purchase Price
Allocation" set forth on Annex I.
-------
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(d) Indemnification. The Designated Stockholders hereby agree severally
---------------
to indemnify the Stockholders' Representative (in his, her or its capacity as
such) ratably according to their respective Percentage Interests against, and to
hold the Stockholders' Representative (in his, her or its capacity as such)
harmless from, any and all Liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of whatever kind
that may at any time be imposed upon, incurred by or asserted against the
Stockholders' Representative in such capacity in any way relating to or arising
out of his, her or its action or failure to take action pursuant to this
Agreement or in connection herewith or therewith in such capacity; provided,
--------
however, that no Designated Stockholder shall be liable for the payment of any
-------
portion of such Liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
gross negligence or willful misconduct of the Stockholders' Representative.
ARTICLE VIII
SIMULTANEOUS CLOSING OBLIGATIONS
8.1 Closing Obligations of the Designated Stockholders and the ESOT.
At the Closing, the Designated Stockholders and the ESOT shall cause the
following documents and certificates to be executed and delivered to the
Purchaser:
(a) Opinion of the Individual Stockholders' Counsel. The Designated
-----------------------------------------------
Stockholders shall cause ▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel for the Company and the
Individual Stockholders, to deliver to the Purchaser an opinion, dated the
Closing Date, substantially in the form of Exhibit A attached hereto.
---------
(b) Opinion of the Individual Stockholders' Special Counsel. The
-------------------------------------------------------
Designated Stockholders shall cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLC,
special counsel for the Company and the Individual Stockholders, to deliver to
the Purchaser an opinion, dated the Closing Date, substantially in the form of
Exhibit B attached hereto.
---------
(c) Consents and Approvals. The Designated Stockholders and the ESOT
----------------------
shall deliver to the Purchaser duly executed copies of all consents and
approvals required for or in connection with (i) the execution and delivery by
the Company, each Designated Stockholder and the ESOT of this Agreement and each
of the Related Documents to which each of them is a party, and the consummation
of the transactions contemplated hereby and thereby, in form and substance
reasonably satisfactory to the Purchaser and its counsel, and (ii) the continued
conduct of the Business as previously conducted (including any consent
identified on Schedule 5.3), in form and substance reasonably satisfactory to
------------
the Purchaser and its counsel.
(d) Delivery of the Shares. The Stockholders shall deliver to the
----------------------
Purchaser all of the Shares in accordance with Section 1.4.
(e) Related Documents. The Designated Stockholders and the ESOT shall
-----------------
cause each of the following documents (each, a "Related Document," and
----------------
collectively, the "Related Documents") to be executed and/or delivered by the
-----------------
Designated Stockholders (and, if applicable, the Company) that are parties
thereto at the Closing:
-37-
(i) General Release. Each of the Designated Stockholders shall
---------------
execute and deliver a General Release in favor of the Company and each of
its Subsidiaries substantially in the form of Exhibit C attached hereto
---------
(the "General Release");
---------------
(ii) ▇▇▇▇ Employment Agreement. ▇▇▇▇ ▇. ▇▇▇▇ shall execute and
-------------------------
deliver an employment agreement with the Company substantially in the form
of Exhibit D attached hereto;
---------
(iii) ▇▇▇▇ Option Agreements. ▇▇▇▇ ▇. ▇▇▇▇ and the Purchaser
----------------------
shall execute and deliver option agreements substantially in the form of
Exhibit E attached hereto (collectively, the "▇▇▇▇ Option Agreements");
--------- ----------------------
(iv) ▇▇▇▇▇▇▇ Employment Agreement. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall execute
----------------------------
and deliver an employment agreement with the Company substantially in the
form of Exhibit F attached hereto;
---------
(v) ▇▇▇▇▇▇▇ Option Agreements. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Purchaser
-------------------------
shall execute and deliver option agreements substantially in the form of
Exhibit G attached hereto (collectively, the "▇▇▇▇▇▇▇ Option Agreements");
--------- -------------------------
(vi) ▇▇▇▇▇▇▇ Employment Agreement. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall
----------------------------
execute and deliver an employment agreement with the Company substantially
in the form of Exhibit H attached hereto; and
---------
(vii) ▇▇▇▇▇▇▇ Option Agreements. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and the
-------------------------
Purchaser shall execute and deliver option agreements substantially in the
form of Exhibit I attached hereto (collectively, the "▇▇▇▇▇▇▇ Option
--------- --------------
Agreements").
----------
(f) Seller Certificates. The Designated Stockholders and the ESOT shall
-------------------
cause each of the following certificates to be executed and/or delivered, as the
case may be, by the Person who or which is the subject thereof:
(i) a certificate of the secretary of the Company, dated as of the
Closing Date, certifying (A) that true, correct and complete copies of the
Company's Charter Documents as in effect on the Closing Date are attached
thereto, (B) as to the incumbency and genuineness of the signatures of each
officer of the Company executing the Related Documents on behalf of the
Company; (C) the genuineness of the resolutions (attached thereto) of the
board of directors or similar governing body of the Company authorizing the
execution, delivery and performance of the Related Documents to which the
Company is a party and the consummation of the transactions contemplated
hereby and thereby, and (D) that each of the Company and its Subsidiaries
is duly qualified and in good standing to transact business as a foreign
Person in those jurisdictions set forth on Schedule 5.1;
------------
(ii) a certificate of the secretary of each of the Company's
Subsidiaries, dated as of the Closing Date, certifying that true and
complete copies of such Subsidiary's Charter Documents as in effect on the
Closing Date are attached thereto;
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(iii) certificates dated within ten (10) days of the Closing Date
of the secretaries of state of the states in which the Company and each of
its three (3) United States Subsidiaries is organized, certifying as to the
good standing and non-delinquent Tax status of such Person;
(iv) certificates dated on or after June 27, 2000, of the
secretaries of state of the states in which the Company and each of its
United States Subsidiaries is qualified to do business, certifying as to
the good standing and non-delinquent Tax status of such Person;
(v) certificates dated within ten (10) days of the Closing Date of
a government official of the countries in which each of the Company's
foreign Subsidiaries is organized and qualified to do business, certifying
as to the good standing of such Person; and
(vi) certificates of each Designated Stockholder, the ESOT and a
principal executive officer of the Company, each dated as of the Closing
Date, certifying that such Designated Stockholder, the ESOT and the
Company, as applicable, are not foreign persons within the meaning of
Section 1445 of the Code.
(g) Fairness Opinion. The ESOT Trustee is delivering to the Purchaser a
----------------
copy of the written opinion of Valuemetrics, Inc. finding (i) the consummation
of the transactions contemplated by this Agreement as fair to the ESOP and the
ESOT from a financial point of view, and (ii) the portion of the Purchase Price
being paid at the Closing for the ESOT's Shares to constitute adequate
consideration and not to be less than the fair market value of such Shares as of
the Closing Date.
(h) Opinion of the ESOT's Counsel. The Designated Stockholders and the
-----------------------------
ESOT shall cause The Law Offices of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., counsel for the ESOT
and the ESOT Trustee, to deliver to the Purchaser an opinion, dated the Closing
Date, substantially in the form of Exhibit J attached hereto.
---------
8.2 Closing Obligations of the Purchaser.
At the Closing, the Purchaser shall cause the following documents and
certificates to be executed and delivered to the Designated Stockholders and the
ESOT:
(a) Opinion of the Purchaser's Counsel. The Purchaser shall cause
----------------------------------
Holland & Knight LLP, counsel for the Purchaser, to deliver to the Stockholders'
Representative an opinion, dated the Closing Date and addressed to the
Designated Stockholders and the ESOT, substantially in the form of Exhibit K
---------
attached hereto.
(b) Consents and Approvals. The Purchaser shall deliver to the
----------------------
Stockholders' Representative duly executed copies of all consents and approvals
required for or in connection with the execution and delivery by the Purchaser
of this Agreement and each of the Related Documents to which it is a party, and
the consummation of the transactions contemplated hereby and thereby, in form
and substance reasonably satisfactory to the Stockholder's Representative.
(c) Related Documents. The Purchaser shall cause each of the Related
-----------------
Documents to which the Purchaser is a party to be executed and/or delivered by
the Purchaser at the Closing.
-39-
(d) Purchaser Certificates. The Purchaser shall cause each of the
----------------------
following certificates to be executed and/or delivered, as the case may be, by
the Person who or which is the subject thereof:
(i) a certificate of the secretary of the Purchaser, dated as of
the Closing Date, certifying (A) that true, correct and complete copies of
the Purchaser's Charter Documents as in effect on the Closing Date are
attached thereto, (B) as to the incumbency and genuineness of the
signatures of each officer of the Purchaser executing this Agreement and
the Related Documents on behalf of the Purchaser; and (C) the genuineness
of the resolutions (attached thereto) of the board of directors or similar
governing body of the Purchaser authorizing the execution, delivery and
performance of this Agreement and the Related Documents to which the
Purchaser is a party and the consummation of the transactions contemplated
hereby and thereby; and
(ii) certificates dated within ten (10) days of the Closing Date of
the secretary of state of the state in which the Purchaser is organized,
certifying as to the good standing and non-delinquent Tax status of the
Purchaser in such state.
(e) Funded Indebtedness. The Purchaser shall satisfy in full the Funded
-------------------
Indebtedness at the Closing, it being understood and agreed however that the
amount of the Funded Indebtedness required to be repaid or refinanced by the
Purchaser at the Closing will not be greater than the amount thereof taken into
account in computing the Purchase Price and, unless otherwise required by
applicable Law, will not be treated as consideration paid to the Stockholders
for Tax purposes.
ARTICLE IX
INDEMNIFICATION
9.1 Generally.
(a) Subject to the further provisions of this Article IX, the Seller
Indemnifying Persons jointly and severally shall indemnify the Purchaser
Indemnified Persons for, and hold each of them harmless from and against, any
and all Purchaser Losses arising from or in connection with any of the
following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of the Designated Stockholders contained in this Agreement (other
than Article IV) or any Related Document or in any certificate delivered by
the Designated Stockholders in connection herewith or therewith at or
before the Closing (or any facts or circumstances constituting any such
untruth, inaccuracy or breach);
(ii) the breach of any covenant or agreement of the Designated
Stockholders contained in this Agreement or any Related Document;
(iii) any Liability the facts and circumstances underlying which
are caused solely by the operation of the Company or the Business at or
before the Closing (including any Liability resulting from the pre-Closing
termination of any of the Company's employees and any Liability arising
under Environmental, Health and Safety
-40-
Laws) (but excluding, however, Liabilities expressly and properly reflected
and reserved against on the Financial Statements and Liabilities expressly
disclosed in this Agreement or on the Schedules attached hereto);
(iv) the creation, maintenance and operation of the ESOP and the
ESOT, including the issuance and sale to the ESOT of securities of the
Company and the repurchase or redemption from the ESOT or any of the
participants therein, or other retirement or cancellation of, securities of
the Company held of record or beneficially by the ESOT or any of the
participants therein;
(v) any Liability arising from or connected with the Company's or
any of its Subsidiaries' termination of its sales agent in Rotterdam, as
more particularly described on Schedule 5.14(a);
----------------
(vi) any pre-Closing Liability arising from or connected with the
Company's or any of its Subsidiaries' employment and independent contractor
relationships with ▇▇▇▇▇▇▇ ▇▇▇, as more particularly described on Schedule
--------
5.7;
---
(vii) any Liability arising from or connected with the Company's
or any of its Subsidiaries' contractual and other relationships with
▇▇▇▇▇▇▇▇.▇▇▇, L.L.C. and/or its Affiliates and predecessors (including
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC);
(viii) any Liability arising from or connected with the Company's
prior ownership and distribution of the BFR Interest to the Stockholders;
(ix) any Liability arising from or connected with the Company's or
any of its Subsidiaries' employment and independent contractor
relationships with Cord Brugge, as more particularly described on Schedule
--------
5.7; and
---
(x) any Liability arising from or connected with the Company's or
any of its Subsidiaries' (a) contractual and other relationships with
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇., Inc., including that relationship that resulted in
payments to the Federal Maritime Commission as described in that certain
Compromise Agreement, dated September 16, 1997, by and between the Federal
Maritime Commission and Ocean World Lines, Inc., and (b) other
noncompliance with or violation of any rule, regulation or other Law
promulgated by the Federal Maritime Commission.
(b) Subject to the further terms of this Article IX, each Designated
Stockholder Group, each Other Designated Stockholder and the ESOT, as the case
may be, severally and not jointly (it being understood and agreed, however, that
the indemnification obligations of each member of a Designated Stockholder Group
listed on Annex III shall be joint and several with all members of such
---------
Designated Group), shall indemnify the Purchaser Indemnified Persons for, and
hold each of them harmless from and against, any and all Purchaser Losses
arising from or in connection with any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of such Designated Stockholder or the ESOT, as the case may be,
contained in Article IV of this Agreement or any Related Document or in any
certificate delivered by such Designated Stockholder or the ESOT (in his,
her or its capacity as a stockholder of the Company), as
-41-
the case may be, in connection herewith or therewith at or before the
Closing (or any facts or circumstances constituting any such untruth,
inaccuracy or breach); and
(ii) the breach of any covenant or agreement of such Designated
Stockholder or the ESOT, as the case may be, contained in this Agreement or
any Related Document.
(c) Subject to the further terms of this Article IX, the Purchaser shall
indemnify the Seller Indemnified Persons for, and hold each of them harmless
from and against, any and all Seller Losses arising from or in connection with
any of the following:
(i) the untruth, inaccuracy or breach of any representation or
warranty of Purchaser contained in this Agreement or any Related Document
or in any certificate delivered by the Purchaser in connection herewith or
therewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any covenant or agreement of the Purchaser
contained in this Agreement or any Related Document; and
(iii) any Liability the facts and circumstances underlying which
are caused solely by the operation of the Company or the Business after the
Closing (including any Liability resulting from the post-Closing
termination of any of the Company's employees and any Liability arising
under Environmental, Health and Safety Laws).
9.2 Assertion of Claims.
No claim for indemnification shall be brought under Section 9.1 for a
breach of a representation or warranty unless the Indemnified Persons, or any of
them, at any time prior to the applicable Survival Date, give the Indemnifying
Persons (a) written notice of the existence of any such claim, specifying the
nature and basis of such claim and the amount thereof, to the extent known, or
(b) written notice pursuant to Section 9.3 of any Third Party Claim, the
existence of which might give rise to such a claim for indemnification. Upon
the giving of such written notice as aforesaid, the Indemnified Persons, or any
of them, shall have the right to commence legal proceedings subsequent to the
Survival Date for the enforcement of their rights under Section 9.1.
9.3 Notice and Defense of Third Party Claims.
The obligations and liabilities of an Indemnifying Person with respect to
Losses resulting from the assertion of liability by third parties, including any
assertion by a Governmental Entity, the ESOT Trustee or any ESOP participant
(each, a "Third Party Claim"), shall be subject to the following terms and
-----------------
conditions:
(a) The Indemnified Persons shall give prompt written notice to the
Indemnifying Persons of any Third Party Claim that might give rise to any Loss
by the Indemnified Persons, stating the nature and basis of such Third Party
Claim in reasonable detail, and the amount thereof to the extent known;
provided, however, that no delay on the part of the Indemnified Persons in
-------- -------
notifying any Indemnifying Persons shall relieve the Indemnifying Persons from
any liability or obligation hereunder unless (and then solely to the extent
that) the Indemnifying Person thereby is prejudiced by the delay. Such notice
shall be accompanied by copies of all
-42-
relevant documentation with respect to such Third Party Claim, including any
summons, complaint or other pleading that may have been served, any written
demand or any other document or instrument.
(b) If the Indemnifying Persons acknowledge in a writing delivered to
the Indemnified Persons that such Third Party Claim is properly subject to their
indemnification obligations hereunder, and the Indemnifying Persons demonstrate
to the Indemnified Persons' reasonable satisfaction that the Indemnifying
Persons have the financial resources to meet such indemnification obligations,
then the Indemnifying Persons shall have the right to assume the defense of any
Third Party Claim at their own expense and by their own counsel, which counsel
shall be reasonably satisfactory to the Indemnified Persons; provided, however,
-------- -------
that the Indemnifying Persons shall not have the right to assume the defense of
any Third Party Claim, notwithstanding the giving of such written
acknowledgment, if (i) the Indemnified Persons have been advised by counsel that
there are one or more legal or equitable defenses available to them that are
different from or in addition to those available to the Indemnifying Persons,
and, in the reasonable opinion of the Indemnified Persons, counsel for the
Indemnifying Persons could not adequately represent the interests of the
Indemnified Persons because such interests could be in conflict with those of
the Indemnifying Persons, (ii) such action or proceeding involves, or could have
a material effect on, any matter beyond the scope of the indemnification
obligation of the Indemnifying Persons, or (iii) the Indemnifying Persons have
not assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons assume the defense of a Third Party Claim
(under circumstances in which the proviso to Section 9.3(b) is not applicable),
the Indemnifying Persons shall not be responsible for any legal or other defense
costs subsequently incurred by the Indemnified Persons in connection with the
defense thereof. If the Indemnifying Persons do not exercise their right to
assume the defense of a Third Party Claim by giving the written acknowledgment
referred to in Section 9.3(b), or are otherwise restricted from so assuming by
the proviso to Section 9.3(b), the Indemnifying Persons nevertheless shall be
entitled to participate in such defense with their own counsel and at their own
expense. If the defense of a Third Party Claim is assumed by the Indemnified
Persons pursuant to clause (i) or clause (ii) of the proviso to Section 9.3(b),
the Indemnified Persons shall not be entitled to settle such Third Party Claim
without the prior written consent of the Indemnifying Persons, which consent
shall not be unreasonably withheld or delayed.
(d) If the Indemnifying Persons exercise their right to assume the defense
of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense, and
(ii) the Indemnifying Persons shall not make any settlement of any claims
without the prior written consent of the Indemnified Persons, which consent
shall not be unreasonably withheld or delayed.
9.4 Survival of Representations and Warranties.
Subject to the further provisions of this Section 9.4, the representations
and warranties of the Designated Stockholders contained in Article V or in any
certificate or other writing delivered in connection with this Agreement shall
survive the Closing, and shall expire on and be of no further force or effect on
and after April 30, 2002; provided, however, that the representations and
-------- -------
warranties contained in Article IV, Section 5.1, Section 5.2, Section 5.3,
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Section 5.4, Section 5.5, the first sentence of Section 5.10(a), and Section
5.20 shall survive the Closing indefinitely and the representations and
warranties contained in Section 5.9, Section 5.15, Section 5.18 and Section 5.19
shall survive the Closing until ninety (90) days after the expiration of the
applicable statutes of limitations for claims applicable to the matters covered
thereby. Subject to the further provisions of this Section 9.4, the
representations and warranties of the Designated Stockholders and the ESOT
contained in Article IV (or in any certificate or other writing delivered by any
Designated Stockholder and/or the ESOT in connection with this Agreement) and
the representations and warranties of the Purchaser contained in Article VI (or
in any certificate or other writing delivered by the Purchaser in connection
with this Agreement) shall survive the Closing indefinitely; provided, however,
-------- -------
that the representations and warranties of the Purchaser contained in Section
6.5 shall expire on and be of no further force or effect on and after April 30,
2002. The covenants and other agreements of the Designated Stockholders, the
ESOT and the Purchaser contained in this Agreement shall survive the Closing
until they are performed in full or otherwise expire or are terminated by their
terms. For convenience of reference, the date upon which any representation or
warranty contained herein shall terminate, if any, is referred to as the
"Survival Date."
--------------
9.5 Limitations on Indemnification.
(a) Indemnity Baskets for the Designated Stockholders. From and after the
-------------------------------------------------
Closing, the Purchaser Indemnified Persons shall not have the right to be
indemnified pursuant to Section 9.1(a)(i), Section 9.1(a)(iii) and/or Section
9.1(b)(i) unless and until the Purchaser Indemnified Persons (or any member
thereof) shall have incurred on a cumulative basis aggregate Losses in an amount
exceeding $300,000, whereupon the Purchaser Indemnified Persons (or any member
thereof) shall be entitled to indemnification for all Losses incurred by the
Purchaser Indemnified Persons (or any member thereof) in excess of $300,000;
provided, however, that in no event shall the limitations set forth in this
-------- -------
Section 9.5(a) apply with respect to (i) any breach of those representations and
warranties set forth in Article IV (excluding, however, clauses (ii), (iii) and
(v) of Section 4.3(c)), Section 5.1, Section 5.2 (excluding, however, clauses
(ii), (iii) and (v) of Section 5.2(b)), Section 5.3, Section 5.4(a), Section
5.4(b), Section 5.5, Section 5.9, Section 5.10, Section 5.13(d), Section 5.18 or
Section 5.20 (collectively, the "Excluded Seller Representations"), or (ii) any
-------------------------------
willful or knowing breach of any representation or warranty or any fraudulent or
intentional act or intentional misrepresentation of any Designated Stockholder.
(b) Indemnity Limitations for the Designated Stockholders. From and
-----------------------------------------------------
after the Closing, the sum of all Losses pursuant to which indemnification is
payable by any Seller Indemnifying Person pursuant to Section 9.1(a)(i), Section
9.1(a)(iii) and/or Section 9.1(b)(i) shall not exceed (i) with respect to those
Losses arising from, associated with or relating to a breach of any of the
Excluded Seller Representations (excluding, however, Section 4.1, Section 4.2,
Section 4.3(a), Section 4.3(b), clauses (i) and (iv) of Section 4.3(c), Section
5.1, Section 5.2(a), clauses (i) and (iv) of Section 5.2(b), Section 5.4(a),
Section 5.4(b), Section 5.5, the first sentence of Section 5.10(a), and Section
5.13(d)), the product of (x) his, her or its Percentage Interest multiplied by
(y) the Aggregate Consideration, and (ii) with respect to all other such Losses,
the product of (x) his, her or its Percentage Interest multiplied by (y) one-
half (1/2) of the Aggregate Consideration; provided, however, that in no event
-------- -------
shall the limitations set forth in this Section 9.5(b) apply with respect to (i)
any breach of those representations and warranties set forth in Section 4.1,
Section 4.2, Section 4.3(a), Section 4.3(b), clauses (i) and (iv) of Section
4.3(c), Section 5.1, Section 5.2(a), clauses (i) and (iv) of Section 5.2(b),
Section 5.4(a), Section
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5.4(b), Section 5.5, the first sentence of Section 5.10(a), and Section 5.13(d),
or (ii) any willful or knowing breach of any representation or warranty or any
fraudulent or intentional act or intentional misrepresentation of any Designated
Stockholder.
(c) Indemnity Baskets for the Purchaser. From and after the Closing,
-----------------------------------
the Seller Indemnified Persons shall not have the right to be indemnified
pursuant to Section 9.1(c)(i) and Section 9.1(c)(iii) unless and until the
Seller Indemnified Persons (or any member thereof) shall have incurred on a
cumulative basis aggregate Losses in an amount exceeding $300,000, whereupon the
Seller Indemnified Persons (or any member thereof) shall be entitled to
indemnification for all Losses incurred by the Seller Indemnified Persons (or
any member thereof) in excess of $300,000; provided, however, that in no event
-------- -------
shall the limitations set forth in this Section 9.5(c) apply with respect to (i)
any breach of those representations and warranties set forth in Section 6.1,
Section 6.2 (excluding, however, clauses (ii), (iii) and (iv) of Section
6.2(b)), Section 6.4 or Section 6.5 (collectively, the "Excluded Purchaser
------------------
Representations"), or (ii) any willful or knowing breach of any representation
---------------
or warranty or any fraudulent or intentional act or intentional
misrepresentation of the Purchaser.
(d) Indemnity Limitations for the Purchaser. From and after the
---------------------------------------
Closing, the sum of all Losses pursuant to which indemnification is payable by
the Purchaser pursuant to Section 9.1(c)(i) and Section 9.1(c)(iii) shall not
exceed one-half (1/2) of the Aggregate Consideration; provided, however, that in
-------- -------
no event shall the limitations set forth in this Section 9.5(d) apply with
respect to (i) the Excluded Purchaser Representations (except Section 6.5), or
(ii) any willful or knowing breach of such representations or warranties or any
fraudulent or intentional acts or intentional misrepresentations of the
Purchaser.
9.6 Satisfaction of Indemnification Obligations.
(a) Payments Generally. The obligations of the Seller Indemnifying persons
------------------
to indemnify the Purchaser Indemnified Persons for Purchaser Losses (including
those incurred as a result of the indemnification events set forth in Section
9.1(a) and Section 9.1(b)) shall be paid in cash by the Seller Indemnifying
Persons to the Purchaser Indemnified Persons by wire transfer of immediately
available funds to the account or accounts specified by the applicable Purchaser
Indemnified Persons for such purposes. The obligations of the Purchaser
Indemnifying Persons to indemnify the Seller Indemnified Persons for Seller
Losses (including those incurred as a result of the indemnification events set
forth in Section 9.1(c)) shall be paid in cash by the Purchaser Indemnifying
Persons to the Seller Indemnified Persons by wire transfer of immediately
available funds to the account or accounts specified by the Stockholders'
Representative for such purposes.
(b) Adjustment to Purchase Price. The parties agree that, to the extent
----------------------------
permitted by applicable Tax and other Laws, all indemnification payments made
pursuant to this Article IX shall be considered for tax reporting and all other
purposes to be adjustments of the Purchase Price under this Agreement.
9.7 Recourse Against Options and Shares.
In the event of a breach of any provision of this Agreement by any
Designated Stockholder (as finally determined pursuant to (i) a written
agreement by and between the
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Purchaser and the Stockholders' Representative (acting on behalf of the
Designated Stockholders), or (ii) a final, binding and non-appealable decision
from a court or arbitrator of competent jurisdiction), and the Purchaser has not
been paid in full as provided in Section 9.6 within thirty (30) days of such
final determination, then the Purchaser shall have, in addition to its
indemnification rights pursuant to this Article IX, the right and option to (a)
cancel any and all unexercised Options, and (b) satisfy in full or in part the
Seller Indemnifying Persons' obligation to indemnify and pay the Purchaser
Indemnified Persons for the unpaid Purchaser Losses by canceling shares of the
Purchaser's common stock acquired by any and all Designated Stockholders
pursuant to the exercise of Options. In the event the Purchaser elects to
exercise its right and option set forth in clause (b) of the immediately
preceding sentence, the Designated Stockholders whose shares will be cancelled
hereby agree that they will surrender to the Purchaser stock certificates
representing the number of shares to be cancelled, which number shall be arrived
at by dividing the amount of the unpaid Purchaser Losses by the Fair Market
Value of one share of the Purchaser's common stock (but the failure to surrender
any such shares shall not limit or otherwise affect the Purchaser's right to
cancel the same pursuant hereto).
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Amendment.
This Agreement may not be altered or otherwise amended except pursuant to
an instrument in writing signed by each party, except that any party may waive
any obligation owed to it by another party under this Agreement. No waiver by
any party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
10.2 Entire Agreement.
This Agreement and the other agreements and documents referenced herein
(including the Schedules, Annexes and Exhibits (in their executed form) attached
hereto) and any other document or agreement contemporaneously entered into with
this Agreement contain all of the agreements among the parties hereto with
respect to the transactions contemplated hereby and supersede all prior
agreements or understandings among the parties with respect thereto (including
the Letter of Intent dated April 21, 2000, by and between the Company and the
Purchaser and the Extension of the Letter of Intent dated July 27, 2000, by and
between the Company and the Purchaser).
10.3 Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining
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provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
10.4 Benefits of Agreement.
All of the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall not
confer any rights or remedies upon any Person other than the foregoing. Anything
contained herein to the contrary notwithstanding, (a) this Agreement shall not
be assignable by any Designated Stockholder without the express written consent
of the Purchaser, and (b) the Purchaser may, without the consent of any other
party hereto, assign any or all of its rights and interests hereunder as
security for any obligations arising in connection with the financing of the
transactions contemplated hereby, in any or all of which cases the Purchaser
nonetheless shall remain responsible for the performance of its obligations
under this Agreement.
10.5 Expenses; Sales and Transfer Taxes.
Except as otherwise provided in this Agreement, the Purchaser on the one
hand and the Stockholders on the other hand shall each bear their own expenses
(with the Stockholders' expenses being allocated among the Stockholders,
including the ESOT, pro rata in accordance with the "Purchase Price Allocation"
set forth on Annex I or as otherwise agreed among the Stockholders) incurred in
-------
connection with this Agreement and the Related Documents and the consummation of
the transactions contemplated hereby and thereby (including the legal,
accounting and due diligence fees, costs and expenses incurred by such party);
provided, however, that (i) subject to the next to last sentence of Section
-------- -------
10.7, the Stockholders shall pay all of the fees and expenses (including
reasonable attorneys' fees) of the Company and the ESOT Trustee, (ii) the
Stockholders shall pay all sales or transfer Taxes, up to $10,000, levied by the
State and City of New York with respect to the Company's lease of certain
property located at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, which levy is triggered
by the consummation of the transactions contemplated by this Agreement and,
following such $10,000 payment by the Stockholders, the Purchaser and the
Stockholders shall each pay one-half of all such sales or transfer Taxes that
exceed $10,000, and (iii) subject to clause (ii) of this Section 10.5, the
Stockholders shall pay all sales, use, gains and excise Taxes and all
registration or transfer taxes that may be payable in connection with the
transactions contemplated by this Agreement and the Related Documents.
10.6 Remedies.
Subject to the provisos in this sentence, the parties each shall have and
retain all rights and remedies existing in their favor under this Agreement, at
law or in equity, including rights to bring actions for specific performance,
injunctive and other equitable relief (including the remedy of rescission) to
enforce or prevent a breach or violation of any provision of this Agreement, and
all such rights and remedies shall, to the extent permitted by applicable Law,
be cumulative and a party's pursuit of any such right or remedy shall not
preclude such party from
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exercising or pursuing any other available right or remedy; provided, however,
-------- -------
that the remedies provided for in Article IX shall be the exclusive remedies of
the Indemnified Persons for money damages in connection with any loss, claim,
damage, or expense arising under this Agreement or in connection with the
transactions contemplated hereby; provided further, however, that nothing
-------- ------- -------
contained in this Section 10.6 shall be construed to limit in any way the rights
and benefits of, or the remedies available to, any party to this Agreement (a)
under or in respect of any other Contract or other understanding or arrangement
to which such Person may be a party, or (b) in the event of any willful or
knowing breach of this Agreement by any other party to this Agreement or for
fraud by any other party to this Agreement.
10.7 Amendment and Termination of the ESOT.
As soon as reasonably practicable after the Closing Date, the Purchaser
shall cause the Company to take all steps necessary to liquidate the ESOP (it
being understood that the Company terminated the ESOP immediately prior to the
Closing), liquidate and terminate the ESOT, and distribute the account balances
of each ESOP participant therein, all in accordance with the applicable
provisions of ERISA and the Code; provided, however, that the account balances
-------- -------
of the ESOT participants shall not be distributed until (i) there has been an
adjustment, if any, of the Purchase Price as contemplated in Article III, and
(ii) all Post-Closing Returns have been filed and all payments associated
therewith have been made. The Purchaser shall cause the Company to take all
actions, including the filing with the Internal Revenue Service (the "IRS") of
---
Form 5310, the giving of notices to the ESOP participants and the adoption of
any amendments to the ESOP and the ESOT, that may be necessary to effect their
respective terminations and liquidations. The Purchaser shall cause the Company
to cause the ESOT Trustee to make final distributions of the ESOT's assets as
soon as reasonably practicable after approval of the ESOP's termination from the
requisite Governmental Entities, including the IRS, has been received by the
Company. The Purchaser shall pay up to $20,000 of costs and expenses (including
reasonable attorneys' fees and expenses) incurred after the Closing by the
Company in connection with the respective terminations and liquidations of the
ESOP and the ESOT. In the event that neither ▇▇▇▇▇▇▇ ▇▇▇▇ nor ▇▇▇▇ ▇. ▇▇▇▇ is
serving as the ESOT Trustee at the time in question, the Stockholders'
Representative shall have the right to consent, which consent shall not be
unreasonably withheld or delayed, to any actions taken by the Company in
connection with the liquidation of the ESOP, the termination and the liquidation
of the ESOT, and the distribution of the account balances of each ESOP
participant therein if such action would reasonably be expected to have a
Material Adverse Effect on the Designated Stockholders.
10.8 Indemnification of the ESOT Trustee.
The Designated Stockholders jointly and severally shall indemnify the ESOT
Trustee for, and hold him harmless from and against, any and all Losses
sustained, suffered or incurred by the ESOT Trustee arising from or in
connection with the transactions contemplated by this Agreement and all actions
of the ESOT Trustee in such capacity since his appointment as the ESOT Trustee;
provided, however, that in no event shall the ESOT Trustee be entitled to
-------- -------
indemnification pursuant to this Section 10.8 if such Losses are due to the ESOT
Trustee's willful breach of the ESOT Trustee's responsibilities under the ESOP,
the ESOT, ERISA or any other applicable Law. For the avoidance of doubt, this
Section 10.8 shall not be subject to the limitations on indemnification set
forth in Section 9.5.
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10.9 Disclosure Covenant of the Designated Stockholders.
(a) The Designated Stockholders represent and warrant to the ESOT, the
ESOT Trustee and the Purchaser that, except for the distribution of the BFR
Interest to the Stockholders as contemplated by Section 5.5, and except for this
Agreement and the Related Documents (drafts of which have been previously
provided to the ESOT Trustee), there are no other Contracts or other
understandings or arrangements entered into or to be entered into between the
Purchaser or the Company, on the one hand, and any Designated Stockholder, any
family member of any Designated Stockholder or any entity in which any
Designated Stockholder has an interest, on the other hand, by which any
Designated Stockholder, any family member of any Designated Stockholder or any
entity in which any Designated Stockholder has an interest will (directly or
indirectly) receive any consideration in connection with the transactions
contemplated by this Agreement. At the Closing, the Company and the Designated
Stockholders are delivering to the ESOT Trustee executed copies of this
Agreement and the Related Documents.
(b) The parties hereto recognize and acknowledge that a breach of
Section 10.9(a) may cause irreparable and material loss and damage to the ESOT.
Accordingly, any Contract or other understanding or arrangement that is in
violation of Section 10.9(a) shall be null and void and of no further force or
effect as to the provision that requires that compensation be paid to such
Designated Stockholder, but shall not affect the validity or enforceability of
the remaining provisions of such Contract or other understanding or arrangement.
10.10 Notices.
All notices or other communications pursuant to this Agreement shall be
in writing and shall be deemed to be sufficient if delivered personally,
telecopied, sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to any Designated Stockholder (other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇), to:
such Designated Stockholder at his, her or its address set forth
on Annex I,
-------
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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(b) if to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
c/o RFI Group, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o RFI Group, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(d) if to the Purchaser, to:
Pacer International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Apollo Management, L.P.
1301 Avenue of the Americas, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(e) if to the ESOT or the ESOT Trustee, to:
the ESOT Trustee at his or her last known address,
with a copy to:
the Stockholders' Representative at his or her last known address.
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by telecopy, on the date of such delivery (if sent
on a Business Day, or if sent on other than a Business Day, on the next Business
Day after the date sent), (iii) in the case of delivery by nationally-
recognized, overnight courier guaranteeing next Business Day delivery, on the
Business Day following dispatch, and (iv) in the case of mailing, on the fifth
Business Day following such mailing.
10.11 Counterparts and Facsimile Execution.
This Agreement may be executed in two or more counterparts, and each such
counterpart shall be deemed to be an original instrument. All such counterparts
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
(by facsimile or otherwise) to the other parties, it being understood that all
parties need not sign the same counterpart. Any counterpart or other signature
hereupon delivered by facsimile shall be deemed for all purposes as constituting
good and valid execution and delivery of this Agreement by such party.
10.12 Governing Law.
(a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
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WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK TO BE APPLIED.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON, AND THE PARTIES WISH THAT APPLICABLE LAWS, EVIDENTIARY RULES AND
JUDICIAL PROCEDURES APPLY OR THAT APPLICABLE LAWS AND ARBITRATION RULES APPLY IN
CASES IN WHICH THE PARTIES HAVE EXPRESSLY AGREED TO SUBMIT ANY SUCH DISPUTES TO
BINDING ARBITRATION, THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS, EVIDENTIARY RULES AND JUDICIAL PROCEDURES,
OR BY AN ARBITRATOR APPLYING APPLICABLE LAWS AND ARBITRATION RULES IN SUCH CASES
WHERE THEY HAVE EXPRESSLY AGREED TO BINDING ARBITRATION. THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO. THE PARTIES HERETO AGREE THAT ALL
DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT SHALL
BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED IN THE CITY OF NEW
YORK, NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, OR BY AN ARBITRATOR
LOCATED IN NEW YORK, NEW YORK IN SUCH CASES WHERE THEY HAVE EXPRESSLY AGREED TO
BINDING ARBITRATION.
10.13 Jurisdiction and Venue.
(a) Each of the parties hereto hereby irrevocably and unconditionally
submits, for himself, herself or itself and his, her or its property, to the
exclusive jurisdiction of any New York state court or federal court of the
United States of America sitting in New York, New York, and any appellate court
from any thereof, in any suit, action or proceeding arising out of or relating
to this Agreement, any of the Related Documents or the transactions contemplated
hereunder or thereunder or for recognition or enforcement of any judgment
relating thereto, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such suit, action or
proceeding may be heard and determined in any such New York state court or, to
the extent permitted by law, in any such federal court. Each of the parties
hereto agrees that a final judgment in any such suit, action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent he, she or it may legally and effectively do so,
any objection that he, she or it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this
Agreement, any of the Related Documents or the transactions contemplated
-52-
hereunder or thereunder in any New York state court or federal court of the
United States of America sitting in New York, New York. Each of the parties
hereto hereby irrevocably waives, to the fullest extent he, she or it may
legally and effectively do so, the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court.
(c) Each of the parties hereto hereby agrees that the mailing by
certified or registered mail, return receipt requested, of any process required
by any such court shall constitute valid and lawful service of process against
them, without the necessity for service by any other means provided by law.
10.14 Mutual Contribution.
The parties to this Agreement and their respective counsel have
contributed mutually to the drafting of this Agreement. Consequently, no
provision of this Agreement shall be construed against any party on the ground
that a party drafted the provision or caused it to be drafted.
10.15 No Third Party Beneficiaries.
Except as expressly provided in this Agreement, this Agreement shall not
confer any rights or remedies upon any Person other than the parties hereto and
their respective successors and permitted assigns.
10.16 Independence of Covenants and Representations and Warranties.
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
10.17 Interpretation; Construction.
The term "Agreement" means this Stock Purchase Agreement together with all
---------
Schedules, Annexes and Exhibits hereto, as the same may from time to time be
amended, modified, supplemented or restated in accordance with the terms hereof.
Certain capitalized terms used and not otherwise defined elsewhere in this
Agreement have the meanings given to them in Annex II attached hereto. In this
--------
Agreement, the term "best knowledge" of any natural Person means (i) the actual
--------------
knowledge of such Person, and (ii) that knowledge that would have been acquired
by such Person after making such reasonable inquiry and exercising such
reasonable diligence as a prudent businessperson would have made or exercised in
the management of his or her business affairs, including reasonable inquiry of
those directors, officers, key employees and professional advisors (including
attorneys, accountants and consultants) of such Person who could reasonably be
expected to have actual knowledge of the matters in question. For purposes of
the preceding sentence, the knowledge, both actual and constructive, of each
Designated Stockholder, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and Cord Brugge shall be
imputed to each of the other Designated Stockholders. The use in this Agreement
of the word
-53-
"including" means "including, without limitation." The words "herein," "hereof,"
"hereunder," "hereby," "hereto," "hereinafter," and other words of similar
import refer to this Agreement as a whole, including the Schedules, Annexes and
Exhibits, as the same may from time to time be amended, modified, supplemented
or restated, and not to any particular article, section, subsection, paragraph,
subparagraph or clause contained in this Agreement. All references to articles,
sections, subsections, paragraphs, subparagraphs, clauses, Schedules, Annexes
and Exhibits mean such provisions of this Agreement and the Schedules, Annexes
and Exhibits attached to this Agreement, except where otherwise stated. The
title of and the article, section and paragraph headings in this Agreement are
for convenience of reference only and shall not govern or affect the
interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms also shall denote the other
forms, as in each case the context may require. Where specific language is used
to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to them under GAAP. Unless expressly provided otherwise, the measure of a
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if
--------
no corresponding date exists, the measure shall be that date of the following
month or year corresponding to the next day following the starting date. For
example, one month following February 18 is March 18, and one month following
March 31 is May 1.
* * * * *
-54-
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the date first written above.
The Purchaser:
-------------
PACER INTERNATIONAL, INC.
By: ______________________________
Print Name:___________________
Title:________________________
The Stockholders:
----------------
ADE MANAGEMENT CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
______________________________
▇▇▇▇▇ ▇▇▇▇, its President
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
BERMOL ASSOCIATES CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
______________________________
▇▇▇▇▇ ▇▇▇▇, its President
▇▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its President
MOJAOIMALY CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
Signature Page-Stock Purchase Agreement
DZJ ASSOCIATES CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
_____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, Individually
/s/ ▇▇▇▇ ▇. ▇▇▇▇
_____________________________________
▇▇▇▇ ▇. ▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
RFI GROUP, INC. EMPLOYEE STOCK
OWNERSHIP TRUST
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇, as Trustee
Other Designated Stockholders:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Individually
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually
Trusts:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST U/A/D OCTOBER
25, 2000
By: /s/ ▇▇▇▇▇ ▇▇▇▇
_________________________________
▇▇▇▇▇ ▇▇▇▇, as Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST U/A/D OCTOBER
25, 2000
By: /s/ ▇▇▇▇▇ ▇▇▇▇
_________________________________
▇▇▇▇▇ ▇▇▇▇, as Trustee
Signature Page-Stock Purchase Agreement
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST U/A/D OCTOBER 25,
2000
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST U/A/D OCTOBER
25, 2000
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇ TRUST U/A/D OCTOBER 25,
2000
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee
Signature Page-Stock Purchase Agreement
ANNEX I
Stockholders
------------
Name and Address Number of Shares Purchase Price Allocation
---------------- ---------------- -------------------------
Series A Preferred:
------------------
28,216 $ 2,954,552.65
ESOT ------ --------------
c/o RFI Group, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇
Subtotal 28,216 $ 2,954,552.65
------ --------------
Common Stock:
------------
ADE Management Corp., a Delaware
corporation 245,000 $ 2,565,443.01
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇, President
▇▇▇▇▇▇ Corp., a Delaware corporation 180,000 1,884,815.27
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
Bermol Associates Corp., a Delaware
corporation 100,000 1,047,119.60
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇, President
Mojaoimaly Corp., a Delaware
corporation 72,500 759,161.71
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
DZJ Associates Corp., a Delaware
corporation 72,500 759,161.71
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
I-1
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
RFI Group, Inc. 75,000 785,339.70
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
RFI Group, Inc. 37,500 392,669.85
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
c/o RFI Group, Inc. 37,500 392,669.85
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ 29,487 308,800.15
c/o RFI Group, Inc.
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 20,000 209,423.92
------ ----------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Subtotal 869,487 $ 9,104,604.77
------- --------------
Total 1,151,647/1/ $12,059,157.42
============ ==============
______________
/1/ Assumes the conversion of the shares of Series A Preferred into shares of
Common Stock at a conversion rate equivalent to ten (10) shares of Common
Stock for each share of Series A Preferred.
I-2
ANNEX II
Certain Definitions
-------------------
"Affiliate" means, with respect to any Person, (i) a partner, member,
---------
owner, shareholder, trustee, director or officer of such Person or of any Person
identified in clause (iii) below, (ii) a spouse, parent, sibling or descendant
of such Person (or spouse, parent, sibling or descendant of any partner, member,
owner, shareholder, trustee, director or officer of such Person or of any Person
identified in clause (iii) below), and (iii) any other Person that, directly or
indirectly through one or more intermediaries, Controls, is Controlled by or is
under common Control with such Person.
"Aggregate Consideration" means the sum of the Purchase Price and the
-----------------------
Funded Indebtedness as of the Closing Date.
"Arbitrating Accountants" means such independent "Big 5" public
-----------------------
accounting firm as shall be agreed upon by the Purchaser and the Stockholders'
Representative in writing or, if the Purchaser and the Stockholders'
Representative cannot so agree, by lot from among the independent "Big 5" public
accounting firms (other than Ernst & Young LLP and PricewaterhouseCoopers LLP).
"BFR Interest" means the Company's interest in BFR Resources LLC,
------------
which in turn holds an interest in ▇▇▇▇▇▇▇▇.▇▇▇, L.L.C. (formerly known as
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC).
"Business Day" means any day that is not a Saturday, Sunday or a day
------------
on which banking institutions in New York, New York are authorized or required
to be closed.
"Capital Lease" means any obligation to pay rent or other amounts
-------------
under any lease of (or other arrangement conveying the right to use) assets or
properties, whether real, personal or mixed, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person as of such date computed in accordance with GAAP.
"Charter Documents" means, (i) as to any corporation, the articles,
-----------------
certificate or memorandum of incorporation or association of such corporation,
the by-laws of such corporation, and each other instrument or other document
governing such corporation's existence and internal affairs, (ii) as to any
limited partnership, the certificate of limited partnership of such partnership,
the agreement of limited partnership of such partnership, and each other
instrument or other document governing such partnership's existence and internal
affairs, (iii) as to any limited liability company, the articles, certificate or
memorandum of organization of such limited liability company, the operating
agreement of such limited liability company, and each other instrument or other
document governing such limited liability company's existence and internal
affairs, and (iv) as to any trust, the agreement or other instrument creating
such trust and any and all other documents, instruments and certificates
granting (and limiting) the powers and authorities of such trust and the
trustee(s) thereof and governing the activities and operations of such trust and
the trustee(s) thereof, in each case in clauses (i) through (iv) above, as
amended and restated and in effect at the time in question.
II-1
"Commission" means the Securities and Exchange Commission, or any
----------
Governmental Entity succeeding to the functions thereof.
"Contract" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, license, lease, sublease, grant of easement, right of way, purchase
order, sale order, service order, or other contract, agreement, commitment,
instrument, permit, concession, franchise or license, whether written or oral.
"Control" means, with respect to any Person, the possession, directly
-------
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
Contract or otherwise.
"Corporate Stockholders" means and includes each of ADE Management
----------------------
Corp., a Delaware corporation, Bermol Associates Corp., a Delaware corporation,
▇▇▇▇▇▇ Corp., a Delaware corporation, Mojaoimaly Corp., a Delaware corporation,
and DZJ Associates Corp., a Delaware corporation.
"Designated Stockholders" means (i) each of the Stockholders other
-----------------------
than the ESOT, (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (iii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and (iv) the
Trusts.
"Designated Stockholder Group" means each group of Designated
----------------------------
Stockholders listed as a "Designated Stockholder Group" on Annex III, comprised
---------
of the Individual Stockholder and the Trust and Corporate Stockholder named
together with such Individual Stockholder on Annex III.
---------
"Employee Benefit Plan" means (i) any qualified or non-qualified
---------------------
Employee Pension Benefit Plan (as defined in Section 3(2) of ERISA), including
any Multiemployer Plan (as defined in Section 3(37) of ERISA), Multiple Employer
Plan (as defined in Section 413 of the Code), or Defined Benefit Pension Plan
(as defined in Section 3(35) of ERISA), (ii) any Employee Welfare Benefit Plan
(as defined in Section 3(1) of ERISA), or (iii) any employee benefit, fringe
benefit, compensation, severance, incentive, bonus, profit-sharing, stock
option, stock purchase or other plan, program or arrangement, whether or not
subject to ERISA and whether or not funded.
"Encumbrances" means and includes security interests, mortgages,
------------
liens, pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
"Environmental, Health and Safety Laws" means all Laws, Permits,
-------------------------------------
Orders, Contracts and common law relating to or addressing pollution or
protection of the environment, public health and safety, or employee health and
safety, including all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, in each case as amended and in effect from time
to time.
II-2
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor legislation thereto, and the rules and regulations
promulgated thereunder, all as the same shall be in effect from time to time.
"ERISA Affiliate" means, with respect to any Person, any other Person
---------------
that is a member of a "controlled group of corporations" with, or is under
"common control" with, or is a member of the same "affiliated service group"
with such Person as defined in Section 414(b), 414(c), 414(m) or 414(o) of the
Code.
"ESOP" means the Company's Employee Stock Ownership Plan and Trust,
----
dated December 29, 1992, as amended.
"ESOT" means the RFI Group, Inc. Employee Stock Ownership Trust
----
created pursuant to the ESOP.
"ESOT Trustee" means ▇▇▇▇▇▇▇ ▇▇▇▇ or, at the election of the Company,
------------
▇▇▇▇ ▇. ▇▇▇▇ or any other Person designated by the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any successor federal statute, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect from time
to time.
"Fair Market Value" means:
-----------------
(i) if the shares of the Purchaser's common stock are publicly
traded and reported on a closing price basis, the average of the daily high
and low sales prices of such shares' sales on all United States securities
exchanges on which such shares may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest
bid and lowest asked prices on all such exchanges for such day, or, if on
any day such shares are not so listed, the average of the high and low
sales prices in NASDAQ on such day, or, if on any day such shares are not
quoted in NASDAQ, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar or successor
organization, in each such case averaged over a period of twenty-one (21)
days consisting of the day as of which the "Fair Market Value" is being
determined and the twenty (20) consecutive trading days before such day; or
(ii) if there is no public trading market for the shares of the
Purchaser's common stock, the fair value of such shares on the date of any
determination as reasonably determined in good faith by the Purchaser's
Board of Directors after taking into consideration all factors that it
deems appropriate, including recent sale and offer prices of shares of the
Purchaser's common stock in private transactions negotiated at arms'
length.
Anything contained in this Agreement to the contrary notwithstanding,
all determinations of Fair Market Value pursuant to this definition of Fair
Market Value shall be made without regard to any restriction other than a
restriction that, by its terms, will never lapse.
II-3
"Funded Indebtedness" means, without duplication, the aggregate amount
-------------------
(including the current portions thereof) of all (i) indebtedness for money
borrowed by the Company or any of its Subsidiaries from other Persons (including
any prepayment and similar penalties) and purchase money indebtedness (other
than accounts payable in the ordinary course of business, consistent with past
practice); (ii) indebtedness of the type described in clause (i) above
guaranteed, directly or indirectly, in any manner by the Company or any of its
Subsidiaries or in effect guaranteed, directly or indirectly, in any manner by
the Company or any of its Subsidiaries through a Contract or other understanding
or arrangement, contingent or otherwise, to supply funds to, or in any other
manner invest in, the debtor, or to purchase indebtedness, or to purchase and
pay for property if not delivered or pay for services if not performed,
primarily for the purpose of enabling the debtor to make payment of the
indebtedness or to assure the owners of the indebtedness against loss (any such
Contract or other understanding or arrangement being referred to as a
"Guaranty") (but the term "Guaranty" shall exclude endorsements of checks and
--------
other instruments in the ordinary course or business, consistent with past
practice); (iii) all indebtedness of the type described in clause (i) above
secured by any Encumbrance upon assets or properties owned by the Company or any
of its Subsidiaries even though the Company or any such Subsidiary has not in
any manner become liable for the payment of such indebtedness; (iv) Capital
Leases, and (v) all interest expense and other charges accrued but unpaid, and
all prepayment penalties and premiums, on or relating to any of such
indebtedness. Funded Indebtedness of the Company and each of its Subsidiaries
as of the date hereof is set forth on Schedule 5.13(d).
----------------
"GAAP" means generally accepted accounting principles in the United
----
States, as promulgated by the American Institute of Certified Public
Accountants, consistently applied.
"Governmental Entity" means any domestic or foreign government or
-------------------
political subdivision thereof, whether on a federal, state, provincial or local
level and whether legislative, executive, judicial in nature, including any
agency, authority, board, bureau, commission, court, department or other
instrumentality thereof.
"Guaranty" has the meaning given to it in the definition of Funded
--------
Indebtedness.
"Immediately Available Funds" means immediately available funds at a
---------------------------
bank located in New York, New York, which Funds are not subject to any
Encumbrance.
"Income Taxes" means all income Taxes (including any Tax on or based
------------
upon net income, gross income, income as specially defined, earnings, profits or
selected items of income, earnings or profits (including state Taxes imposed on
subchapter S corporations)).
"Indemnified Persons" means and includes the Seller Indemnified
-------------------
Persons and/or the Purchaser Indemnified Persons, as the case may be.
"Indemnifying Persons" means and includes the Seller Indemnifying
--------------------
Persons and/or the Purchaser Indemnifying Persons, as the case may be.
"Individual Stockholders" means each of the Designated Stockholders
-----------------------
who are natural persons.
II-4
"Intellectual Property Rights" means all intellectual property rights,
----------------------------
including patents, patent applications, trademarks, trademark applications,
trade names, service marks, service ▇▇▇▇ applications, trade dress, logos and
designs, and the goodwill connected with the foregoing, copyrights and copyright
applications, know-how, trade secrets, proprietary processes and formulae,
confidential information, franchises, licenses, inventions, instructions,
marketing materials and all documentation and media constituting, describing or
relating to the foregoing, including manuals, memoranda and records.
"Law" means any applicable domestic or foreign law, statute, treaty,
---
rule, directive, regulation, ordinance or similar provision having the force or
effect of law, whether on a federal, state, provincial or local level (including
all Environmental, Health and Safety Laws), or any applicable Order of any
Governmental Entity.
"Liability" means any actual or potential liability or obligation,
---------
whether known or unknown, asserted or unasserted, absolute or contingent,
accrued or unaccrued, or liquidated or unliquidated, and whether due or to
become due, regardless of when asserted.
"Litigation Expense" means any and all out-of-pocket expenses incurred
------------------
in connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder, including court filing fees, court costs, arbitration fees or
costs, witness fees, and fees and disbursements of outside legal counsel,
investigators, expert witnesses, accountants and other professionals.
"Losses" means any and all losses, claims, shortages, damages,
------
expenses (including reasonable attorneys' and accountants' and other
professionals' fees and Litigation Expenses), assessments, Taxes (including
interest and penalties thereon), and insurance premium increases arising from or
in connection with any such matter that is the subject of indemnification under
Article IX, as reduced by (i) the amount actually recovered under insurance
policies (net of deductibles and incidental expenses resulting therefrom), and
(ii) Tax benefits actually realized under Tax Laws in respect of such Losses,
net of all reasonable costs and expenses of recovering any such Tax benefits.
For purposes of determining Tax benefits actually realized, there shall be
included only those Tax benefits resulting from such Loss that are actually
realized before the taxable year in which a payment for a Loss is received and
Tax benefits resulting from such Loss that are actually realized in the taxable
year in which a payment for a Loss is received, as increased by (x) the amount
---------
of any Taxes payable on such indemnification payment and (y) the amount of any
Taxes payable on the payment referred to in clause (x) hereof.
----------
"Management Stockholders" means ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Material Adverse Effect" on any Person means a material adverse
-----------------------
effect on the business, operations, assets, condition (financial or otherwise),
operating results, liabilities, relations with employees, customers or suppliers
of such Person or any of its Subsidiaries.
"NASDAQ" means the National Association of Securities Dealers, Inc.
------
Automated Quotation System.
II-5
"Options" means, collectively, all options that are the subject of the
-------
▇▇▇▇ Option Agreements, the ▇▇▇▇▇▇▇ Option Agreements and the ▇▇▇▇▇▇▇ Option
Agreements.
"Orders" means judgments, writs, decrees, compliance agreements,
------
injunctions or judicial or administrative orders and determinations of any
Governmental Entity or arbitrator.
"Other Designated Stockholder" means either ▇▇▇▇ ▇. ▇▇▇▇ or ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as the case may be.
"Percentage Interest" means, with respect to each Designated
-------------------
Stockholder, that percentage set forth opposite such Designated Stockholder's
name on Annex III attached to this Agreement.
---------
"Permits" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, consents, certificates, variances and similar rights
obtained, or required to be obtained, from a Governmental Entity.
"Permitted Encumbrances" means (i) Encumbrances for Taxes not yet due
----------------------
and payable or being contested in good faith by appropriate Proceedings and for
which there are adequate reserves on the books, (ii) workers' or unemployment
compensation liens arising in the ordinary course of business, and (iii)
mechanic's, materialman's, supplier's, vendor's or similar liens arising in the
ordinary course of business, consistent with past practice, securing amounts
that are not delinquent.
"Person" shall be construed as broadly as possible and shall include
------
an individual or natural person, a partnership (including a limited liability
partnership), a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization, a
business, a Governmental Entity, and any other entity.
"Proceeding" means any action, suit, investigation or proceeding
----------
before any Governmental Entity or arbitrator.
"Purchaser Indemnified Persons" means and includes the Purchaser and
-----------------------------
its Affiliates (including the Company and each of its Subsidiaries), their
respective successors and assigns, and the respective officers, directors and
controlling parties of each of the foregoing; provided, however, that any such
-------- -------
Person who was, prior to the Closing Date, an officer, director, employee,
Affiliate, successor or assign of the Company or any of its Subsidiaries or the
ESOT, or a Designated Stockholder, shall not in such capacity, be a Purchaser
Indemnified Person with respect to a breach of this Agreement or any Related
Document based on facts or circumstances occurring, or actions taken by such
Person, at or prior to the Closing.
"Purchaser Indemnifying Persons" means the Purchaser and its
------------------------------
successors.
"Purchaser Losses" means any and all Losses sustained, suffered or
----------------
incurred by any Purchaser Indemnified Person arising from or in connection with
any matter that is the subject of indemnification under Article IX.
II-6
"RFI" means RF International, Ltd., a New York corporation and a
---
wholly-owned Subsidiary of the Company.
"Securities" means "securities" as defined in Section 2(1) of the
----------
Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor federal statute, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect from time to time.
"Seller Indemnified Persons" means and includes the Designated
--------------------------
Stockholders, the ESOT, and their respective Affiliates, directors, officers,
personal representatives, estates, heirs, successors and assigns, but excluding
the respective trustees of the Trusts.
"Seller Indemnifying Persons" means and includes the Designated
---------------------------
Stockholders and their respective personal representatives, estates, heirs,
successors and assigns, but excluding the respective trustees of the Trusts.
"Seller Losses" means any and all Losses sustained, suffered or
-------------
incurred by any Seller Indemnified Person arising from or in connection with any
matter that is the subject of indemnification under Article IX.
"Stockholders' Representative" means ▇▇▇▇ ▇. ▇▇▇▇, in his capacity as
----------------------------
Stockholders' Representative pursuant to Section 7.8, or his successor or
successors appointed to serve in such capacity pursuant to Section 7.8.
"Subsidiary" means, with respect to any Person, any other Person (i)
----------
whose Securities having a majority of the general voting power in electing the
board of directors or equivalent governing body of such Person (excluding
Securities entitled to vote only upon the failure to pay dividends thereon or
the occurrence of other contingencies) are, at the time as of which any
determination is being made, owned by such Person either directly or indirectly
through one or more other entities constituting Subsidiaries, or (ii) a fifty
percent (50%) interest in the profits or capital of whom is, at the time as of
which any determination is being made, owned by such Person either directly or
indirectly through one or more other entities constituting Subsidiaries.
"Target Net Working Capital Amount" means zero dollars ($0.00).
---------------------------------
"Tax Return" means any return, declaration, report, claim for refund,
----------
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means, with respect to any Person, (i) all Income Taxes and
-----
all gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax, and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person,
and (ii) any liability for the payment of any amount of the type described in
the foregoing clause (i) as a
II-7
result of (A) being a "transferee" (within the meaning of Section 6901 of the
Code or any other applicable Law) of another Person, (B) being a member of an
affiliated, combined or consolidated group, or (C) a Contract or other
understanding or arrangement.
"Trusts" means and includes each of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D
------
October 25, 2000, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000, the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October
25, 2000, and the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D October 25, 2000.
II-8
ANNEX III
Percentage Interests of the Designated Stockholders
---------------------------------------------------
Designated Stockholder Groups Percentage Interest
----------------------------- -------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D 36.31%
October 25, 2000, and ADE Management Corp.,
a Delaware corporation /(1)/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D 20.43%
October 25, 2000, and ▇▇▇▇▇▇ Corp., a
Delaware corporation /(1)/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D 12.48%
October 25, 2000, and Mojaoimaly Corp.,
a Delaware corporation /(1)/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D 11.35%
October 25, 2000, and Bermol Associates Corp.,
a Delaware corporation /(1)/
▇▇▇▇▇ ▇▇▇▇▇▇▇ Group
-------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, the ▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust U/A/D 12.48%
October 25, 2000, and DZJ Associates Corp.,
a Delaware corporation /(1)/
Other Designated Stockholders
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇ 4.68%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2.27%
------
Total 100.00%
======
/(1)/ For purposes of Article IX, each of the Persons listed is jointly and
severally liable for the Percentage Interest set forth opposite his, her
or its name on this Annex III. In order to avoid duplication under clauses
---------
(i) and (ii) of Section 9.5(b), in the case of the application of such
clauses to each individual named above together with his or her Trust and
Corporate Stockholder, the term "Seller Indemnifying Person" shall be
construed to mean, collectively, such Individual Stockholder and his or
her Trust and Corporate Stockholder, who taken together shall have the
Percentage Interest set forth opposite their names above and whose
aggregate liability under such clauses shall not exceed (x) in the case of
clause (i) of Section 9.5(b), such Percentage Interest multiplied by the
Aggregate Consideration, or (y) in the case of clause (ii) of Section
9.5(b), such Percentage Interest multiplied by one-half (1/2) of the
Aggregate Consideration.
III-1
ANNEX IV
Calculation of Net Working Capital
----------------------------------
See attached.
IV-1
EXHIBIT A
Form of Opinion of the Individual Stockholders' Counsel
-------------------------------------------------------
See attached.
A-1
EXHIBIT B
Form of Opinion of the Individual Stockholders' Special Counsel
---------------------------------------------------------------
See attached.
B-1
EXHIBIT C
Form of General Release
-----------------------
See attached.
C-1
EXHIBIT D
Form of Employment Agreement with ▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
See attached.
D-1
EXHIBIT E
Form of Option Agreements for ▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------
See attached.
E-1
EXHIBIT F
Form of Employment Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------------------
See attached.
F-1
EXHIBIT G
Form of Option Agreements for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
See attached.
G-1
EXHIBIT H
Form of Employment Agreement with ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------------
See attached.
H-1
EXHIBIT I
Form of Option Agreements for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
See attached.
I-1
EXHIBIT J
Form of Opinion of the ESOT's Counsel
-------------------------------------
See attached.
J-1
EXHIBIT K
Form of Opinion of the Purchaser's Counsel
------------------------------------------
See attached.
K-1