EXHIBIT 10.9
STOCK PURCHASE AGREEMENT
BETWEEN
ATC GROUP SERVICES INC.
AND
BING YEN & ASSOCIATES, INC.
and
▇▇▇▇▇ ▇▇▇▇▇▇
November 26, 1997
TABLE OF CONTENTS
Page No.
I. SALE AND PURCHASE..........................................................1
ss. 1.01 Terms of Sale and Purchase..............................1
ss. 1.02 Indemnity Against Debts and Liabilities.................3
ss. 1.03 Right of Set-Off........................................6
II. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS............................6
ss. 2.01 Organization and Qualification..........................7
ss. 2.02 Capitalization..........................................7
ss. 2.03 Financial Condition.....................................8
ss. 2.04 Tax and Other Liabilities...............................8
ss. 2.05 Litigation and Claims...................................9
ss. 2.06 Properties and Accounts Receivable......................9
ss. 2.07 Contracts and Other Instruments........................10
ss. 2.08 Employees..............................................12
ss. 2.09 Patents, Trademarks, Etc...............................12
ss. 2.10 Questionable Payments..................................13
ss. 2.11 Authority to Sell......................................13
ss. 2.12 Restricted Professional and Small
Business Set-Aside Revenues............................14
ss. 2.13 Loans to be Repaid.....................................14
ss. 2.14 Fictitious Names.......................................14
ss. 2.15 Absence of Undisclosed Liabilities.....................14
ss. 2.16 Hazardous Materials....................................14
ss. 2.17 Completeness of Disclosure.............................15
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER.............................15
ss. 3.01 Organization And Good Standing.........................15
ss. 3.02 Execution and Performance Authorized...................15
ss. 3.03 Absence of Litigation..................................16
ss. 3.04 No Other Default.......................................16
ss. 3.05 Permits and Filings....................................16
ss. 3.06 Absence of Lien........................................16
ss. 3.07 Solvency...............................................16
ss. 3.08 Corporate Documents....................................16
ss. 3.09 Purchase for Investment Purposes Only..................17
ss. 3.10 Reliance on ATC Public Information.....................17
ss. 3.11 Springing Representation and Warranty..................17
IV. COVENANTS................................................................17
ss. 4.01 Insurance..............................................17
ss. 4.02 Release by Shareholders................................18
ss. 4.03 Collection of Accounts Receivable......................18
ss. 4.04 Noncompetition.........................................18
ss. 4.05 Public Statements......................................21
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ss. 4.06 Books, Records, Access to Information, Cooperation.....21
ss. 4.07 Bankruptcy.............................................22
ss. 4.08 Transaction Costs and Expenses.........................22
ss. 4.09 Delivery of Property...................................22
ss. 4.10 Related Agreements.....................................22
ss. 4.11 Continuing Cooperation, Reporting of Changes,
Breaches and Status....................................22
ss. 4.12 Profit Sharing Plan....................................23
ss. 4.13 Cooperation Regarding Contingent Achievement...........23
ss. 4.14 BYA Employee Bonuses...................................24
ss. 4.15 Receipt of Notices.....................................24
ss. 4.16 Transaction Notes Are Senior Indebtedness..............24
ss. 4.17 Acceleration of ▇▇▇▇▇▇ Note, Transaction Note..........24
V. RELATED ARGUMENTS.........................................................26
ss. 5.01 Related Agreements.....................................26
VI. CLOSING................................................................26
ss. 6.01 Closing, the Closing Date, and Effective Time..........26
ss. 6.02 Shareholders' Obligations at Closing...................26
ss. 6.03 Purchaser's Obligations at Closing.....................27
VII. MISCELLANEOUS...........................................................27
ss. 7.01 Brokerage Fees and Shareholders' Legal Fees............27
ss. 7.02 Further Actions........................................28
ss. 7.03 Availability of Equitable Remedies.....................28
ss. 7.04 Limitation on Survival of Representations
and Warranties.........................................28
ss. 7.05 Modification...........................................28
ss. 7.06 Notices................................................28
ss. 7.07 Waiver.................................................29
ss. 7.08 Binding Effect.........................................29
ss. 7.09 No Third-Party Beneficiaries...........................29
ss. 7.10 Severability...........................................29
ss. 7.11 Headings; Gender.......................................30
ss. 7.12 Governing Law..........................................30
ss. 7.13 Separate Counterparts..................................30
ss. 7.14 Incorporation of Recitals, Exhibits and Schedules......30
ss. 7.15 Obligations in Payment Ratio...........................30
ss. 7.16 Arbitration; Attorneys' Fees; Undisputed
Actions for Payment....................................30
ss. 7.17 Opportunity to Cure....................................31
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EXHIBITS AND SCHEDULES
Exhibit 1.01B(2)
Exhibit 1.01B(3)
Exhibit 1.01B(4)
Exhibit 3.11-A
Exhibit 3.11-B
Schedule 2.01A
Schedule 2.01B
Schedule 2.02A
Schedule 2.02B
Schedule 2.03
Schedule 2.04
Schedule 2.05
Schedule 2.06A
Schedule 2.06B
Schedule 2.06C
Schedule 2.06D
Schedule 2.07
Schedule 2.07B
Schedule 2.07C
Schedule 2.07D
Schedule 2.07E
Schedule 2.08A
Schedule 2.09
Schedule 2.1
Schedule 2.12
Schedule 2.14
Schedule 2.16A
Schedule 3.03
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STOCK PURCHASE
AGREEMENT
This Agreement (including the exhibits and schedules hereto)
(collectively, the "Agreement") is entered into as of ____________, 1997 by and
between ATC GROUP SERVICES INC., a Delaware corporation with its principal
office at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Purchaser"), BING YEN
& ASSOCIATES, INC. (a California corporation with its principal office at ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BYA"), and Bing Yen and ▇▇▇▇▇ ▇▇▇▇▇▇
(collectively, "Shareholders").
Purchaser desires to acquire all of the issued and outstanding
shares of stock of BYA and certain noncompetition covenants in exchange for
cash, contingent and noncontingent promissory notes and other consideration
potentially totaling approximately Five Million Four Hundred Thousand Dollars
($5,400,000), as hereinafter provided, Shareholders desire to effect such
exchange and BYA desires to implement such transaction. Now, therefore, in
consideration of the mutual covenants set forth below, and for reliance of each
other, the parties agree as follows.
I. SALE AND PURCHASE
1.01 Terms of Sale and Purchase
Subject to the terms and conditions set forth below:
A. At Closing (as defined in ss. 6.01 below), Shareholders
shall sell to Purchaser all issued and outstanding shares of common
stock of BYA (the "Shares") and shall deliver to Purchaser certificates
evidencing all the Shares properly endorsed to effect the assignment of
the Shares to Purchaser.
B. Purchaser shall at Closing:
(1) As partial consideration for the Shares, pay to
Shareholders an aggregate of $2,750,000 in the ratio to 4/5 to
▇▇. ▇▇▇ and 1/5 to ▇▇. ▇▇▇▇▇▇ (the "Payment Ratio"), as
follows: wire transfer $2,200,000 to ▇▇. ▇▇▇ to the wire
address to be supplied by ▇▇. ▇▇▇ and deliver to ▇▇. ▇▇▇▇▇▇ a
promissory note (the "▇▇▇▇▇▇ Note") in the amount of $550,000
in the form of Exhibit 1.01B(1).
(2) As additional consideration for the Shares,
execute and deliver to Shareholders in the Payment Ratio
promissory notes in the form of Exhibit 1.01B(2) (the "Notes")
evidencing Purchaser's obligation to pay to Shareholders the
aggregate sum of Three Hundred Fifty Thousand Dollars
($350,000) in three equal annual installments of One Hundred
Sixteen Thousand Six Hundred Sixty-Six Dollars and Sixty-Seven
Cents ($116,666.67) with eight percent (8%) interest on the
unpaid balance on the first business days of January 1999,
2000 and 2001.
(3) Execute and deliver to Shareholders in the
Payment Ratio unsecured promissory notes in the form of
Exhibit 1.01B(3) (the "Non-Compete Notes") evidencing
Purchaser's obligation to pay to Shareholders the aggregate
sum of Eight Hundred Thousand Dollars ($800,000) in three (3)
equal annual installments of Two Hundred Sixty-Six Thousand
Six Hundred Sixty-Six Dollars and Sixty-Seven Cents
($266,666.67) with eight percent (8%) interest on the unpaid
principal on each of the first business days of January 1999,
2000 and 2001.
(4) Execute and deliver to Shareholders in the
Payment Ratio the Contingent Achievement Promissory Notes in
the form of Exhibit 1.01B(4) (the "Contingent Notes") in the
maximum aggregate principal amount of One Million Five Hundred
Thousand Dollars ($1,500,000).
Shareholders shall have the right to assign or redirect to others any
portion or all of the amounts otherwise payable to Shareholders under
any or all of the promissory notes described in B(2),(3) and (4) above
(collectively the "Transaction Notes").
C. Within ninety (90) days following the Closing Date, BYA
shall provide to Shareholders a draft unaudited compiled balance sheet
(the "Closing Balance Sheet") and statements of income, retained
earnings and cash flows of BYA for the period beginning January 1, 1997
ending at the Effective Time (as defined in ss. 6.01 below) (the
"Closing Financial Statements"). The Closing Financial Statements shall
be prepared in accordance with generally accepted accounting principles
(GAAP) consistently applied throughout the period involved (except for
the absence of cash and reserves (unless expressly approved by
Shareholders in writing), and except for such other adjustments thereto
which are known to and are expressly approved in writing by Purchaser
and Shareholders) (the "Agreed Accounting Method"). At such time as the
Closing Balance Sheet has been finally determined between the parties,
a final adjustment to the principal amount of the Transaction Notes
shall be made equal to the amount by which the total assets less the
total liabilities of BYA (the "Equity Value") as of the Effective Time
(as defined in ss. 6.01 below) as shown on the Closing Balance Sheet
exceeds or is less than Two Million Three Hundred Forty-Seven Thousand
Dollars ($2,347,000). If BYA's Equity Value as of the Effective Time as
so finally determined is less than Two Million Three Hundred
Forty-Seven Thousand Dollars ($2,347,000), Purchaser shall offset such
amount, in the Payment Ratio, and against the next available cash
payments to be made, first against the Non-Compete Notes, then against
the Contingent Notes, and finally against the Notes (the "Set-Off
Order"). By the foregoing the parties intend that if an offset is
required under this paragraph (or under ss. 1.03 below), all payments
on all of said notes shall be subject to offset as soon as possible in
the order due and payable but not before January 4, 1999, using all
such notes as sources of setoff, but if less than all cash payments to
be made thereunder are necessary to satisfy the setoff, then the setoff
shall be effected from cash payments to be made only in the Set-Off
Order. If the final Equity Value is greater than Two Million Three
Hundred Forty-Seven Thousand Dollars ($2,347,000), Purchaser shall add
such amount in the Payment Ratio to the Notes. In such case,
Shareholders shall cancel and return to Purchaser the previously
executed Notes, and Purchaser shall issue new Notes to reflect the
increased principal amount owing thereunder.
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After Closing Shareholders' independent accountants shall be
afforded free and full access to the nonproprietary working papers and records
used by independent accountants and in-house accountants in preparing the
Closing Financial Statements. In addition, Purchaser shall cause BYA's
independent accountants and in-house accountants promptly to advise Shareholders
as soon as any of them becomes aware of any items in BYA's draft of the Closing
Financial Statements that may be different from the Interim Financial Statements
(as defined in ss. 2.03). If Shareholders notify Purchaser of any difference of
opinion as to the general acceptability or consistency of any of the accounting
principles followed under the Agreed Accounting Method in connection with such
review and preparation of the Closing Financial Statements, or the results
indicated thereby, then they and/or their accountants shall promptly confer in
an effort to resolve such difference within thirty (30) days. If they are unable
to resolve any difference within thirty (30) days, then the difference shall be
resolved by the dispute resolution provisions of ss. 7.16.
1.02 Indemnity Against Debts and Liabilities
A. In addition to Purchaser's other rights and remedies
available at law or in equity (and not by way of limitation), Shareholders
shall, in the Payment Ratio, protect, defend, indemnify and hold harmless
Purchaser, BYA, and their successors against, and in respect of, any and all:
(1) Claims, suits, actions, proceedings (formal or informal),
governmental investigations, judgments, deficiencies, set-offs,
damages, settlements, liabilities, and reasonable legal and other
expenses (including reasonable attorneys' fees and defense costs), as
and when incurred, arising out of, or based upon, any breach of any
representation, warranty or covenant of Shareholders contained in this
Agreement, but excluding any Related Agreements (as defined in ss. 5.01
below), and
(2) Debts or liabilities of any kind, whether known or
unknown, asserted or unasserted, and claims, liens, set-offs, suits,
actions, and proceedings (formal and informal) of persons or entities
and related judgments, deficiencies, damages, settlements, set-offs,
liens, liabilities, and legal and other expenses (including reasonable
attorneys' fees), as and when incurred, arising out of, or based upon,
the acts, omissions, contractual performance, or conduct of the
business of BYA before the Effective Time.
B. In addition to Shareholders' other rights and remedies
available at law or in equity (and not by way of limitation), Purchaser shall
protect, defend, indemnify and hold harmless Shareholders and their successors
against and in respect of any and all:
(1) Claims, suits, actions, proceedings (formal or informal),
governmental investigations, judgments, deficiencies, set-offs,
damages, settlements, liabilities, and reasonable legal and other
expenses (including reasonable attorneys' fees and costs of defense),
as and when incurred, arising out of, or based upon, any breach of any
representation, warranty or covenant of Purchaser contained in this
Agreement; and
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(2) Debts or liabilities of any kind, whether known or
unknown, asserted or unasserted, and claims, liens, set-offs, suits,
actions, and proceedings (formal and informal) of persons or entities
and related judgments, deficiencies, damages, settlements, set-offs,
liens, liabilities, and reasonable legal and other expenses (including
reasonable attorneys' fees), as and when incurred, arising out of: (i)
the acts, omissions, contractual performance or conduct of the business
of BYA after the Effective Time, except for BYA's debts or liabilities
caused or continuing from items described in 1.02A above so long as
Purchaser does not directly or indirectly cause or materially
exacerbate the continuation of such debts or liabilities; or (ii) or
based upon, the acts, omissions, contractual performance or conduct of
the business of Purchaser whether before or after the Effective Time.
C. The parties' respective indemnity and other obligations
under this Agreement for debts and liabilities shall be subject to the following
terms, limitations and conditions:
(1) Purchaser and Shareholders shall each give the other
prompt notice of any allegedly indemnifiable item incurred, asserted or
threatened on the basis of which an indemnitee intends to seek
indemnification from an indemnitor as provided herein; provided,
however, that the obligation of an indemnitee shall be reduced for the
failure to give notice at any particular time only to the extent that
the ability of the indemnitor to defend or settle the item has been
actually monetarily prejudiced thereby. Any indemnitee shall have the
right (but not the obligation) to select and be represented by counsel
of its or his choice, to manage its or his own legal representation or
defense and to settle any claim, debt or other indemnified matter
hereunder. In the following cases, an indemnitee's expenses associated
with electing to provide his or its own defense shall constitute
indemnified costs: (i) when the indemnitor has failed to assume the
defense of the claim within ten days following receipt of the
indemnitee's notice of the claim; (ii) when the claim involves
assertions of liability against both the indemnitee and indemnitor,
including a cross claim or other assertion by the indemnitor that
indemnitee is liable for all or a portion of such claim, under
circumstances where the indemnitee's and indemnitor's interests are
sufficiently adverse in the proceeding to result in a conflict of
interest in representation under the rules of professional conduct for
attorneys; (iii) when the claim is one directly between an indemnitee
and the indemnitor involving a matter arising under this Agreement; and
(iv) when the claim seeks an order, injunction or other equitable
relief against the indemnitee which if successful, could reasonably be
expected to materially interfere with the business, operations, assets
or condition (financial or otherwise) of the indemnitee. With respect
to (ii) and (iii) that proportion of the costs of the indemnitee's own
defense shall be borne by indemnitee in the same proportion as
comparative liability for the claim is ultimately apportioned to lie
with indemnitee.
(2) With respect to any claim for which an indemnitor shall
indemnify any indemnitee, the indemnitor shall be subrogated to all
rights of indemnitees against any and all third parties up to the
amount paid by indemnitor to indemnitees or set off against an
indemnitor.
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(3) Notwithstanding anything in this Agreement to the
contrary, Shareholders shall be liable to Purchaser under this
Agreement (including, without limitation, under ▇▇.▇▇. 1.02 and 1.03
hereof) for any claim that would be covered by the Continuing Insurance
or the E&O Insurance only after Purchaser has filed such claim with the
carrier providing such coverage and then only to the extent that: (i)
with respect to defense of the claim and the costs thereof, defense of
the claim is not assumed by the insurer; (ii) the insurer denies
coverage; or (iii) the insurance proceeds are less than the total
amount of indemnified loss and expense from the claim. Without limiting
the generality of the foregoing, no party shall be liable for that
portion of any claim for which the other party actually receives the
cost of defense or insurance proceeds covering such claim. (The
deductible pertaining to any such insurance shall not be considered to
be cost of defense or insurance proceeds.) Furthermore, in no event
shall Shareholders be liable for any claim that would have been covered
by the Continuing Insurance if Purchaser had maintained it in
accordance with ss. 4.01.
(4) The indemnity covenants contained in this Agreement shall
inure only to the benefit of Purchaser, BYA and Shareholders,
respectively (and their respective employees and successors to the
extent they are indemnitees), and shall not be for the benefit of any
other person or entity. These indemnity provisions shall not be
construed to abrogate the corporate liability shield as provided by
law, to extend a right of action to any third party not otherwise
available, or to enlarge the underlying liability of any indemnitor or
indemnitee to any third party.
(5) Subject to (7) below, the maximum aggregate liability of
Shareholders under this Agreement shall not exceed the sum of
$2,750,000 plus the amounts paid and yet to be paid under the Notes,
the Non-Compete Notes and the Contingent Notes (the "Total Maximum
Purchase Price"), and Shareholders shall not be liable to Purchaser
under this Agreement until and to the extent such liability exceeds
$25,000 in the aggregate for all liability other than liability based
upon the breach of Shareholders' warranty under ss. 2.06B with respect
to collectibility of accounts receivable and work-in-process or based
upon breach of the covenant set forth in ss. 4.12.
(6) Notwithstanding anything in this Agreement to the
contrary, in no event shall Shareholders be liable under this Agreement
for any liabilities quantified and reserved on the Closing Balance
Sheet.
(7) Notwithstanding anything in this Agreement to the
contrary, Shareholders shall not be obligated to make any payments
under ss. 1.02 of this Agreement until January 4, 1999. Then and
thereafter all obligations, if any, payable pursuant to ss. 1.02 shall
be satisfied first by exercise of set-off rights under ss. 1.03 below
and only after all set-off rights have been exhausted against the
unpaid principal balance of the Transaction Notes in the Set-Off Order
shall Purchaser have the right to demand, and Shareholder have the duty
to pay, cash in an amount up to the cash amount paid at Closing
($2,750,000), plus cash payments made in satisfaction of the
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principal amounts of the Transaction Notes. For this purpose the
principal balance of the Contingent Notes shall not be deemed to exist,
except to the extent any portion or all of the principal thereof is no
longer contingent.
1.03 Right of Set-Off
A. Without limiting such other rights as it may have at law or
equity or by agreement (but subject to the limitations described in ss. 1.02C
and this ss.1.03), Purchaser shall have the right upon fifteen (15) days' notice
to Shareholders and in the Payment Ratio to set off against, and withhold from,
any payment otherwise due to Shareholders as set forth in this Agreement and the
Transaction Notes in the Set-Off Order: (i) any amount necessary to cure or
remedy any breach, default or deficiency of performance or warranty by
Shareholders under this Agreement; (ii) any amount for which Purchaser or BYA
(or their employees or successors) is entitled to indemnification under ss.
1.02A; and (iii) Purchaser's or BYA's reasonable costs or expenses (including
reasonable attorneys' fees) related to (i), (ii) or (iii).
B. Purchaser shall have the right to redirect temporarily as
described below in ss. 1.03C all payments due and payable under the Transaction
Notes in the event (i) it determines in good faith with a reasonable belief that
its right to set-off has matured or will imminently mature with respect to any
particular matter, event or condition and, (ii) within the time limits set forth
in the following sentence it commences and diligently pursues an arbitration
proceeding in accordance with ss. 7.16 below to determine whether there is a
substantial probability that an event or condition will occur or has occurred
and will cause or has caused Purchaser to be entitled to exercise its set-off
rights hereunder. If the parties have a dispute involving the exercise of
set-off rights, including any issue as to insurance coverage or liability
exposure, then Shareholders and Purchaser shall within three (3) days of
commencement of any such dispute confer in good faith in an effort to resolve
the dispute; and if the parties are unable to reach agreement within ten (10)
days following commencement of any such dispute, then such dispute shall be
resolved by binding arbitration as provided under ss. 7.16 of this Agreement.
C. Pending delivery of an award in the arbitration described
in ss. 1.03B, Purchaser shall have the right, in lieu of making payments
directly to the Shareholders, to make all payments then due under the
Transaction Notes to the registry of a court, arbitration panel or joint bank
account (accessible only by the joint signatures of Purchaser and the subject
Shareholder(s)), or otherwise as agreed in writing by the subject parties.
II. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
As a material inducement to Purchaser to enter into this
Agreement, and subject to the following sentence, Shareholders represent in the
Payment Ratio, and, also, Shareholders warrant in the Payment Ratio, to
Purchaser the truth, correctness and completeness of the matters stated or
described in this Article II. The phrase "to the knowledge of Shareholders"
shall be deemed to modify each and every representation given by Shareholders in
▇▇.▇▇. 2.03-2.18 of this Article II; provided, however, that in each such
instance it shall modify and limit only the representation made by
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Shareholders, but in no way does the phrase modify, limit or otherwise affect
the concurrent warranty being made by Shareholders.
2.01 Organization and Qualification
A. Except as listed in Schedule 2.01A, BYA has no subsidiary
or affiliated corporations or business enterprises of any type. Schedule 2.01A
sets forth as to BYA: its place of incorporation, principal place(s) of
business, jurisdictions in which it is qualified to do business, and locations
in which it currently maintains a place of business. BYA is a corporation duly
organized, validly existing, and in good standing under the laws of California,
with all requisite power and authority, and all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and other tribunals, to own, lease,
license, and use its properties and assets and to carry on the business in which
it is now engaged. BYA is duly qualified to transact the business in which it is
engaged and is in good standing as a foreign corporation in every jurisdiction
in which its ownership, leasing, licensing, or use of property or assets or the
conduct of the business makes such qualification necessary.
B. BYA has furnished to Purchaser its Articles of
Incorporation and Bylaws and all amendments thereto, as presently in effect. BYA
is not in violation or breach of, or in default with respect to, any term of its
Articles of Incorporation or Bylaws in a manner which would have a material and
adverse effect on BYA's business or operations and/or except as described on
Schedule 2.01B.
2.02 Capitalization
A. Schedule 2.02A correctly sets forth: (i) all authorized,
issued and outstanding capital stock and all ownership interests of BYA of any
type, including all options, warrants or other rights under which an ownership
right of any type may be acquired; and (ii) the name and address of each owner
of, or claimant to, any such right. The Shares constitute all of the issued and
outstanding shares of capital stock of all classes of BYA. Except as set forth
on Schedule 2.02A, each of such outstanding Shares or rights is validly
authorized, validly issued, fully paid, and nonassessable, has not been issued
and is not owned or held in violation of any preemptive right of Shareholders,
and is owned of record and beneficially by the person so listed. There is no
commitment, plan, arrangement to issue, option, warrant, security, or other
right calling for the issuance of, any share of capital stock or other ownership
interest in BYA or any security or other instrument convertible into,
exercisable for, or exchangeable for, capital stock of, or ownership in, BYA,
except as set forth in Schedule 2.02A.
B. Schedule 2.02B sets forth, with respect to all stock and
other ownership interests or rights in BYA, all liens, security interests,
pledges, charges, encumbrances, Shareholders' agreements, voting trusts, or
other restriction or covenant respecting any such interest. Except as set forth
on Schedule 2.02B, all the Shares are free and clear of such encumbrances or
restrictions.
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2.03 Financial Condition
Attached hereto as Schedule 2.03 are true and correct copies
of the following: (i) unaudited, compiled balance sheets, statements of income
and statements of retained earnings of BYA for the last three completed fiscal
years and (ii) the unaudited, compiled balance sheet (the "Interim Balance
Sheet") and statements of income and retained earnings of BYA for the period
from January 1, 1997 through October 31, 1997 (collectively, the "Interim
Financial Statements").
The Interim Financial Statements have been prepared in
accordance with the Agreed Accounting Method, are correct and complete in all
respects, and are in accordance with the books and records of BYA.
There is no fact presently known to BYA which could materially
and adversely affect the financial condition, results of operations, business,
properties, assets, liabilities, or future business prospects of BYA, except as
otherwise agreed in this Agreement or as recorded on Schedule 2.03 or the other
schedules to this Agreement and as will be quantified and reserved on the
Closing Financial Statements; provided, however, that Shareholders express no
representation or warranty as to political or economic matters of general
applicability (except as to adverse market conditions or client relations of
which either has present knowledge).
2.04 Tax and Other Liabilities67
A. Except as disclosed on Schedule 2.04, or another schedule
to this Agreement dealing with liabilities, BYA has no liability of any nature,
accrued or contingent, including, without limitation, liabilities for payroll
and other employee taxes, federal, state, local, or foreign taxes or liabilities
to customers or suppliers, other than liabilities which are reflected on the
Interim Balance Sheet or will be reflected on the Closing Balance Sheet or which
are incurred in the ordinary and usual course of business and/or in connection
with this transaction.
B. Without limiting the generality of the foregoing, the
amounts reserved for taxes on the Interim Balance Sheet and the Closing Balance
Sheet are and will be as of their dates sufficient for all accrued and unpaid
federal, state, local, employee-related and foreign taxes of BYA, whether or not
due and payable, and whether or not disputed, under tax laws in effect on the
Closing Date for the period ended on such date and for all fiscal years prior
thereto. BYA has filed all payroll and other federal, state, local, and foreign
tax returns required to be filed by it, has delivered to Purchaser a true and
correct copy thereof; has paid all taxes, assessments, and other governmental
charges payable or remittable by it, or levied upon it or its properties,
assets, income, or franchises which are due and payable; and has delivered to
Purchaser a true and correct copy of any report as to any audit or adjustments
received by BYA (or any of BYA's officers concerning BYA) from any taxing
authority during the past five (5) years and a statement as to any litigation,
governmental or other proceeding (formal or informal), or audit or investigation
pending, threatened or in prospect, with respect to any such report or the
subject matter of such report.
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C. Except otherwise provided in this Agreement, Shareholders
have paid or will pay all taxes, other liabilities and Shareholders' and BYA's
expenses accrued as of the Closing Date resulting from the preparation of, or
the transactions contemplated by, this Agreement.
D. Purchaser will incur no liability as a result of
environmental or geotechnical conditions associated with any acts, omissions, or
real property ownership or leasing by BYA prior to the Effective Time.
2.05 Litigation and Claims
A. Except as set forth on Schedule 2.05: (i) there is no
material litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending or threatened (or any basis
therefor known to Shareholders) with respect to BYA or any of its business,
properties, or assets; (ii) BYA is not affected by any present or threatened
strike, or other labor disturbance, or is any union currently representing, or
attempting to represent, any employee of BYA as collective bargaining agent;
(iii) BYA is not in violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, including any insurance or environmental
laws or regulations. Schedule 2.05 sets forth with respect to BYA, among other
matters, all past and current citations, violations, fines, judgments, decrees,
orders, consent decrees or orders, and pending proceedings of any type issued
since January 1, 1987, arising out of the alleged violation of any federal,
state or local criminal, bidding or procurement, environmental, health and
safety, insurance, licensing or labor law or regulation, or out of any alleged
act or omission, negligence, intentionally wrongful act or breach of contract in
the performance of services or otherwise.
B. Except for the liabilities included on the Closing Balance
Sheet, neither BYA, nor Purchaser will incur any liability, including any
environmental liability, as a result of BYA's acts, omissions, sales, litigation
support services, consulting services or contractual performance prior to the
Effective Time.
2.06 Properties and Accounts Receivable
A. Except as set forth on Schedule 2.06A or Schedule 2.07, BYA
has good title to all properties and assets used in its business, or owned by
it, free and clear of all liens, mortgages, security interests, pledges,
charges, and encumbrances.
B. All accounts receivable and work-in-process of BYA recorded
on the interim Balance Sheet are described on Schedule 2.06B, and those
reflected on the Closing Balance Sheet have or will have arisen from valid
transactions in the ordinary course of BYA's business, have been fully earned
prior to Closing, and except as described on Schedule 2.06B, will be collected
by BYA within twelve (12) months after the Closing Date, employing reasonable
and customary collection procedures (i.e., the cost of measures such as legal
action, referral to outside collection agency or liens shall be a charge against
collections from such accounts) and any extraordinary measures agreed upon as
contemplated by ss. 4.03B below. All accounts receivable and work in process of
BYA recorded on the Interim Balance Sheet and the Closing Balance Sheet as of
their dates were or will be fully earned as of the Effective
9
Time, and Purchaser will have no performance obligations for which it will not
be entitled to ▇▇▇▇ (no account receivable or work in process entry represents a
pre-billing except to the extent an allowance is reserved for it).
C. Schedule 2.06C sets forth a ledger of all properties and
assets, owned, leased, or licensed by BYA, for which a value is recorded on the
Interim Balance Sheet, detailing estimated value with respect to all such
properties current as of the Effective Time; all such properties and assets
owned by BYA as of the date of the Interim Balance Sheet are reflected on the
Interim Balance Sheet; and all assets and properties owned by BYA as of the date
of the Closing Balance Sheet will be reflected on the Closing Balance Sheet.
D. Except as noted on Schedule 2.06D, no real property owned,
leased, licensed, or used by BYA lies in an area which is subject to zoning use,
environmental or building code restrictions which would prohibit, and no state
of facts relating to the condition of any building or property or action or
inaction of a person or entity or the ownership, leasing, licensing, use or
regulation or any real or personal property exists or, to BYA's knowledge will
or is likely to exist which would prevent the continued leasing of such real
property by Purchaser in the business in which BYA is now engaged. Purchaser
will incur no environmental liability as a result of this transaction associated
with any real property owned, leased or used by BYA prior to Closing.
2.07 Contracts and Other Instruments
A. Schedule 2.07 sets forth a true and correct listing of all
material contracts to which BYA is a party, including leases and licenses and
all supply, distribution agency, financing or other arrangements and
understandings. Shareholders have provided to Purchaser, or at Purchaser's
election made available for its review, all of the items so listed and
described, including, but not limited to, the following: (i) true and correct
copies of all written contracts, agreements, and instruments; (ii) true and
correct copies of all leases and licenses; and (iii) true and correct written
descriptions of all supply, distribution, agency, financing, or other
arrangements or understandings. Except as disclosed in Schedule 2.07 or Schedule
2.11, neither BYA, nor any other party to any such contract, agreement,
instrument, lease, or license is now, or expects in the future to be, in
violation or breach of, or in default with respect to complying with any
material provision thereof and each such contract, agreement, instrument, lease,
or license is in full force and is the legal, valid, and binding obligation of
the parties thereto and is enforceable as to them in accordance with its terms.
Except as is disclosed on Schedule 2.07, neither BYA, nor any other party to any
such arrangement or understanding has given notice of termination or taken any
action inconsistent with the continuance of such arrangement or understanding;
and the execution, delivery, and performance of this Agreement will not
materially violate any such arrangement or understanding.
B. Except for situations disclosed on Schedule 2.07B and for
the cost of correction of which an adequate reserve is, or will be, recorded on
the Interim Balance Sheet (except for those incurred in the ordinary and usual
course of business) and the Closing Balance Sheet as a liability: all services
rendered and products supplied by BYA prior to the Effective Time will have been
in conformity with the scope of performance defined by the
10
contract or arrangement; and no BYA client is dissatisfied with such service or
products, and, no curative or corrective work, replacements or payments are
necessary to render such performance legally or contractually sufficient; and,
all costs for performance completed prior to Closing shall have been and will be
duly recorded as of their respective dates as liabilities on the Interim Balance
Sheet (except for those incurred in the ordinary and usual course of business),
and the Closing Balance Sheet. ▇▇▇▇▇▇▇▇ by BYA on each contract or arrangement
shall not, as of the Effective Time, have constituted a greater percentage of
total allowable ▇▇▇▇▇▇▇▇ under such contract than the percentage of work
performed, or other costs accrued prior to the Effective Time, shall have
constituted, of total work to be performed, or costs to be incurred, under such
contracts. Except as so disclosed, no contract entered into by BYA prior to the
Effective Time will be a "Loss Contract." "Loss Contract" means a contract for
which fully-burdened costs to be incurred after the Effective Time in completing
the contract, utilizing performance at industry standards of skill, efficiency
and competence billable at Purchaser's standard rate, exceeds amounts remaining
to be billed under such contract after the Effective Time.
C. Schedule 2.07C sets forth a description of each agreement,
or understanding entered into, by any Shareholders or BYA as a condition for
obtaining any consent, authorization, approval, order, license, certificate, or
permit required for the consummation of the transactions contemplated by this
Agreement.
D. Schedule 2.07D sets forth a list of BYA's order backlog as
of the Effective Time. This schedule includes the customer's name, project name,
dollar amount and anticipated performance dates. The backlog items listed on
such schedule represent written commitments or expressions of interest by
customers for the performance of services by BYA.
F. BYA enjoys peaceful and undisturbed possession under all
leases and licenses under which it is operating. BYA is not a party to or bound
by any contract, agreement, instrument, lease, license, arrangement, or
understanding, or subject to any charter or other restriction, which has had, or
to the knowledge of BYA is likely in the future to have, a material adverse
affect on BYA's operations or business. BYA has neither engaged within the last
five years in, is engaging in, nor intends to engage in any transaction with,
nor has had within the last five years, now has, or intends to have any
contract, agreement, lease, license, arrangement, or understanding with, any
Shareholders, any director, officer, or employee of BYA, any relative or
affiliate of any Shareholders or of any such director, officer, or employee, or
any other corporation or enterprise in which BYA, any such director, officer, or
employee, or any such relative or affiliate then had or now has a five percent
(5%) or greater equity or voting or other substantial interest, other than such
contracts and agreements as so listed and specified on Schedule 2.07E. There
exists no contract, agreement, right or understanding material to the business
or officers of BYA which is in the name of any principal, officer, director,
Shareholders or any other person or entity other than Seller except as disclosed
and so identified on Schedule 2.07F. Shareholders, on behalf of themselves and
as authorized representatives of the lessor of the premises in Irvine,
California in which BYA maintains its principal office, hereby represent and
warrant that the lease for such premises is in full force and effect, rent has
been paid through November 1997 and BYA does not owe or has not incurred any
unpaid debt or liability to said lessor, and said lessor hereby consents to the
11
change of control of BYA and the deemed assignment thereby of said lease. The
foregoing sentence is not intended to expand any duty or obligation of
Shareholders otherwise provided for in this Agreement.
2.08 Employees
A. Schedule 2.08A sets forth a description of all of BYA's
pension, profit-sharing, option, other incentive plans, or any other type of
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA")), and all material obligations to, or
arrangements with, employees for wages, salary, bonuses, incentive compensation,
vacations, severance pay, insurance, or other benefits. BYA has furnished, or
made available, to Purchaser true and correct copies of all documents evidencing
such plans, obligations or arrangements referred to in Schedule 2.08A (or
written summaries of such plans, obligations, or arrangements to the extent not
evidenced by documents) and true and correct copies of all documents evidencing
trusts relating to any such plans. Schedule 2.08A includes a true and correct
ledger containing the name, position/title, and present rate of compensation
(whether in the form of salary, bonuses, commissions, or other supplemental
compensation now or hereafter payable) of each director, officer, employee or
sales agent of BYA. All material notices and performance required under COBRA
and other ERISA plans prior to the Effective Time have been properly given and
performed. Except for BYA's pension plan, all obligations, debts and liabilities
associated with BYA's employees or agents, including all of the above-referenced
matters have been paid or discharged in full by BYA prior to Effective Time or
will be properly reflected as liabilities on Closing Balance Sheet in accordance
with ss. 2.03.
B. Except as described on Schedule 2.05, there is no
litigation, arbitration, claim, governmental or other proceedings (formal or
informal), or investigation pending, or to Shareholders' knowledge threatened
(or any basis for such known to Shareholders), with respect to any such employee
benefit plan, compensation arrangement or BYA's acts or omissions with respect
to its employees or its work environment.
C. Except for BYA's pension plan and except for the
liabilities recorded on the Closing Balance Sheet, neither BYA, nor Purchaser
will incur any liability to, or on behalf of, BYA's employees arising out of
their employment with BYA prior to the Effective Time or out of BYA's acts or
omission prior to the Effective Time, including (but not limited to) any
liability under ERISA or the Internal Revenue Code for obligations to, or
arrangements with, employees for wages, salary, bonuses, incentive compensation,
vacation pay, severance pay, insurance or other benefits, or employee taxes; for
personal injury or property damage; or for discrimination, harassment, or
wrongful discharge under federal, state or local laws.
2.09 Patents, Trademarks, Etc.67
Except as described in Schedule 2.09, BYA neither owns nor has
pending, or is licensed under, any patent, patent application, trademark,
trademark application, trade name, service ▇▇▇▇, copyright, franchise, or other
intangible property or asset (all of the foregoing being herein called
"Intangibles"), and neither any Shareholder, any director, officer, or
12
employee of BYA, any relative or affiliate of any Shareholders or of any such
director, officer, or employee, nor any other corporation or enterprise in which
any Shareholders, any such director, officer, or employee, or any such relative
or affiliate had or now has a five percent (5%) or greater equity or voting or
other substantial interest, possesses any Intangible which relates to the
business of BYA. There is no right, under any Intangible, necessary to the
business of BYA as presently conducted or as it contemplates conducting. BYA has
neither infringed, is infringing, nor has received notice of infringement of
Intangibles of others. As far as Shareholders can foresee, there is no
Intangible of others which may materially adversely affect the financial
condition, results of operations, business, properties, assets, liabilities, or
future prospects of BYA.
2.10 Questionable Payments
Neither BYA, nor any director, officer, agent, employee,
Shareholders or other person associated with, or acting on behalf of, BYA has,
directly or indirectly: (a) used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses relating to political activity,
(b) made any unlawful payment to foreign or domestic governmental officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (c) violated any provision of the Foreign Corrupt Practices Act
of 1977, (d) established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; (e) made any false or fictitious entry on the
books or records of BYA; (f) made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; (g) given any favor or gift which is not
deductible for federal income tax purposes; or (h) made any bribe, kickback, or
other payment of a similar or comparable nature, whether lawful or not, to any
person or entity, private or public, regardless of form, whether in money,
property, or services, to obtain favorable treatment in securing business or to
obtain special concessions, or to pay for favorable treatment for business
secured or for special concessions already obtained.
2.11 Authority to Sell
Shareholders and BYA have all requisite power and authority to
execute, deliver, and perform this Agreement. All necessary corporate
proceedings of BYA have been, or as of the Closing Date will have been, duly
taken to authorize the execution, delivery, and performance of this Agreement by
BYA. This Agreement has been duly authorized, executed, and delivered by
Shareholders, constitutes the legal, valid, and binding obligation of
Shareholders, and, except for the duration of the noncompetition covenant of ▇▇.
▇▇▇ in ss. 4.04 hereof, is enforceable as to them in accordance with its terms.
No consent, authorization, approval, order, license, certificate, or permit of
or from, or declaration or filing with, any federal, state, local, or other
governmental authority or any court or other tribunal is required by
Shareholders for the execution, delivery, or performance of this Agreement by
them. Except as described in Schedule 2.11 hereof, no consent of any party to
any material contract, agreement, instrument, lease, license, arrangement, or
understanding to which BYA or Shareholders is a party, or to which it or they,
or any of its or their properties or assets, are subject, is required for the
execution, delivery, or performance of this Agreement (except such consents as
have been obtained at or prior to the date of this Agreement, true and correct
copies of which have been delivered to Purchaser). Except as described in
Schedule 2.11, the execution, delivery,
13
and performance of this Agreement will not violate, result in a material breach
of, conflict with, or (with or without the giving of notice or the passage of
time or both) entitle any party to terminate or call a default under any term of
any such contract, agreement, instrument, lease, license, arrangement, or
understanding, or materially violate or result in a breach of any term of the
Articles of Incorporation or Bylaws of BYA, or violate, result in a breach of,
or conflict with, any law, rule, regulation, order, judgment, or decree binding
on BYA or any Shareholders, or to which any of their operations, business,
properties, or assets are subject. Upon Closing, Purchaser will have good title
to the Shares, free and clear of all liens, security interests, pledges,
charges, Shareholders' agreements, and encumbrances except those, if any,
expressly consented to by Purchaser in writing.
2.12 Restricted Professional
and Small Business Set-Aside Revenues
Schedule 2.12 sets forth the gross revenues of BYA for each of
the previous two (2) fiscal years and for the period covered by the Interim
Financial Statements, received from: (a) services of any type which BYA would be
precluded from performing after Closing because of Purchaser's ownership of the
Shares, Bylaws or regulations pertaining to the licensing or regulation of
persons or corporations engaging in such business; or, (b) from contracts or
subcontracts (or services otherwise performed) under Small Business Set Aside or
comparable business size or racial, gender or other class-restricted programs of
the Small Business Administration or other federal or state agency.
2.13 Loans to be Repaid
BYA has not made any loans to Shareholders, officers,
directors, employees or any other affiliated person or entity other than the
loans set forth on Schedule 2.03 or 2.07.
2.14 Fictitious Names
Schedule 2.14 sets forth each name, other than its corporate
name, under which BYA has done business or registered in any jurisdiction,
together with the jurisdiction of registration of each such name.
2.15 Absence of Undisclosed Liabilities
Except as set forth in the Schedules to this Agreement or
incurred in the usual and ordinary course of business, and quantified and
reserved on the Closing Balance Sheet, BYA has no obligations or liabilities of
any kind, fixed, accrued or contingent, including, but not limited to,
obligations to perform after Closing under contracts or other commitments which
would adversely affect BYA's financial condition or business.
2.16 Hazardous Materials
A. Except as disclosed on Schedule 2.16A, as of the Closing
Date BYA is not in possession of, or responsible for the care, custody or
disposal of, any hazardous substances, pollutants or contaminants (as those
terms are defined in 42 U.S.C. ss. 9601 or under any
14
applicable state or local law) or of any petroleum wastes or asbestos-containing
materials, except for soil or groundwater samples, unused laboratory chemicals
or commercially packaged supplies used in BYA's business.
B. In BYA's files, books and records are materially complete
descriptions of all laboratory samples upon which work has been completed,
including the location, composition, quantity, method of storage, intended
disposal or management plan for the particular material, any contractual
commitments related to continuing custody, and all costs related to BYA's
responsibilities thereto.
2.17 Completeness of Disclosure
No representation or warranty by Shareholders in this
Agreement contains any materially untrue statement of a material fact, or omits
or will omit, to state a material fact necessary to make the statements made not
misleading.
III. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As a material inducement to Shareholders to enter into this
Agreement, Purchaser hereby makes the following representations and warranties:
3.01 Organization And Good Standing
Purchaser is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Delaware with full power and
authority to enter into and perform each of the transactions contemplated by
this Agreement.
3.02 Execution and Performance Authorized
The execution, delivery and performance of this Agreement, and
all other documents and Related Agreements contemplated hereunder, have been
duly approved by Purchaser's board of directors and at Closing will have been
executed and delivered by Purchaser's duly authorized officers. Such execution
and delivery, and the consummation by Purchaser of the transactions contemplated
hereunder have been duly authorized by all necessary corporate action, and no
further action is required by law, its corporate charter, Bylaws, or otherwise
to authorize all action to be taken by Purchaser with respect to this Agreement
and the consummation of the transactions contemplated hereunder. The Agreement
and the other documents contemplated hereunder are binding and are enforceable
against Purchaser in accordance with their terms.
15
3.03 Absence of Litigation
Except as set forth on Schedule 3.03, there is no action,
lawsuit, proceeding, or investigation of any kind or nature pending or
threatened against Purchaser before any court, tribunal, or administrative
agency or board which Purchaser reasonably expects, individually or in the
aggregate, to materially and adversely affect (i) Purchaser's solvency, (ii) its
ability to perform hereunder, or (iii) to render any one or more of the
transactions contemplated hereunder void or voidable.
3.04 No Other Default
The execution and delivery of this Agreement by Purchaser, and
the consummation of the transactions contemplated hereunder, will not conflict
with, or violate, or require any consent under, and will not result in any
breach or termination of Purchaser's corporate charter, Bylaws or minutes, or
any agreement to which Purchaser is a party, or by which any of its property is
subject, or by which it is bound.
3.05 Permits and Filings
There is no requirement applicable to Purchaser to make any
further filing with, or to obtain any permit, authorization, consent or approval
of any governmental or other regulatory authority as a condition of the lawful
consummation of the transactions contemplated under this Agreement.
3.06 Absence of Lien
The monies and promissory notes to be paid or delivered by
Purchaser under ss. 1.01 shall be paid by Purchaser and received by Shareholders
free and clear of any lien, charge or encumbrance arising out of any agreement
or instrument to which Purchaser is subject or by which its properties are
bound.
3.07 Solvency
At Closing and after payment of the purchase price as required
under ss. 1.01, Purchaser will be, and will remain, solvent under all applicable
federal and state laws and regulations. Purchaser will not intentionally cause
its business to be conducted in a manner that results in its becoming insolvent;
provided, however, that consistent with the foregoing, this covenant shall not
restrict the future business decisions of Purchaser which relate to its or to
BYA's business.
3.08 Corporate Documents
Purchaser has furnished to Shareholders its Certificate of
Incorporation and a Certificate of Good Standing in Delaware dated within thirty
(30) days of Closing and evidence of Purchaser's qualification as a foreign
corporation in California.
16
3.09 Purchase for Investment Purposes Only
Purchaser is acquiring the Shares from Shareholders for
investment purposes only and not with the view to the resale or distribution
thereof. Purchaser is an "accredited investor" under the regulations promulgated
under the Securities Act of 1933 as amended. Purchaser has not received any
representations or warranties from BYA or Shareholders other than those
contained in this Agreement and the attached schedules and/or exhibits hereto.
Purchaser represents and warrants that it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment. Purchaser understands and acknowledges that the Shares
have not been registered under the Act or under any state securities acts as may
be applicable and are being sold to Purchaser pursuant to an exemption from
registration under said Act. Shareholders' reliance upon such exemption, is
predicated upon Purchaser's representations and warranties contained herein. In
this regard, Purchaser understands and agrees that there may be affixed to the
certificates representing the Shares a legend advising of the unregistered,
restricted nature of the Shares.
3.10 Reliance on ATC Public Information
The information filed since February 27, 1997, by Purchaser
with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 are materially accurate, complete and not
misleading.
3.11 Springing Representation and Warranty
The information set forth in the draft Offering Memorandum,
subject to completion, with respect to $100,000,000 in Senior Subordinated Notes
due 2007, in the form attached hereto as Exhibit 3.11-A and supplemented by the
information attached hereto as Exhibit 3.11-B is materially accurate, complete
and not misleading. The merger (the "Acquisition Merger") of Purchaser and
Acquisition Corp., a Delaware corporation referred to in said Offering
Memorandum, shall not be completed prior to January 3, 1998.
IV. COVENANTS
4.01 Insurance
For a period of at least three (3) years following Closing,
Purchaser shall cause BYA to continue to carry insurance against risks similar
to that provided in BYA's insurance coverage as of the date of Closing and with
coverage limits not less than $10,000,000 and a deductible not greater than
$250,000 (the "Continuing Insurance"). Prior to or concurrent with Closing,
Shareholders shall purchase and maintain in force an extended period of BYA's
current Errors and Omissions (Professional) Liability Policy ("E&O Insurance")
for a period of three (3) years following Closing.
17
4.02 Release by Shareholders
Effective at Closing, each Shareholder hereby releases and
waives all claims he now has against BYA, or the Shares for any past
compensation, bonus, distribution, dividend, or other consideration or claim for
payment from any cause that may have otherwise been due such Shareholders at the
time of Closing, except that ▇▇▇▇▇ ▇▇▇▇▇▇ does not waive his right to payment
under the BYA 401(k) profit sharing plan and neither of the Shareholders waives
any right to payment under BYA's pension plan.
4.03 Collection of Accounts Receivable
A. Any account receivable recorded on the Closing Balance
Sheet or work in process for which revenue is recorded on the Closing Balance
Sheet and warranted as collectible under ss. 2.06B, which has not been collected
by Purchaser within twelve (12) months after Closing, shall be deemed to be
uncollected and uncollectible by Purchaser or BYA, except as Purchaser shall
otherwise agree in writing. Accounts or work-in-process may also be deemed
uncollectible by agreement of the parties as provided in ss. 4.03B. All
uncollected accounts and work-in-process shall be subject to Purchaser's set-off
rights under ss. 1.03 (or, if set-off is not available, then by Purchaser's
indemnification and repayment rights under ss. 1.02). Purchaser's set-off rights
shall be applicable for uncollected accounts or work in process at the earlier
of: (i) twelve (12) months after the Closing Date; or, (ii) such earlier time as
the account is agreed to be uncollectible by Shareholders under this ss. 4.03.
Upon such remedy, the account shall be assigned to Shareholders.
B. Purchaser shall provide Shareholders with a monthly aging
report of the purchased accounts receivable and work-in-process, together with
contact log summary of problem accounts. If, at any time, Purchaser determines
that measures in addition to Purchaser's customary collection procedures (e.g.,
measures, such as mechanics lien, legal action, or referral to collection
agency) should be employed on a specific account to obtain collection, Purchaser
shall notify Shareholders in writing of the measures proposed to be taken. If
Shareholders agree in writing that the proposed extraordinary measures should be
taken, or if Shareholders deem such action to be necessary without notice from
Purchaser, Shareholders shall notify Purchaser in writing of their agreement to
such measures. Shareholders' agreement to the employment of extraordinary
collection measures shall constitute their agreement to having the cost of such
measures subject to remedy by set-off or refund, if set-off is not available
pursuant to this Agreement.
C. At any time the parties may, by mutual written agreement,
deem an account uncollectible, Purchaser shall assign it to Shareholders and
subject it to remedy under ss. 1.03 or, if set-off is not available, a claim for
refund under ss. 1.02. Upon written notice to Purchaser, Shareholders may
request to have any account receivable which is uncollected assigned to
Shareholders. Purchaser shall not unreasonably deny such request. Such request
by Shareholders for assignment shall constitute Shareholders' agreement to
subject it to remedy under ss. 1.03 or, if set-off is not available, a claim for
refund under ss. 1.02.
18
4.04 Noncompetition
A. As consideration for the Notes, the Non-Compete Notes and
the Contingent Notes, for a period of twenty (20) years after Closing Date ▇▇.
▇▇▇ shall not, and for a period commencing on the Closing Date and ending two
(2) years after the Closing Date, ▇▇. ▇▇▇▇▇▇ shall not:
(1) Noncompetition. Within the regulated zone, either directly
or indirectly, perform-for-hire or participate in any business or
enterprise (including a sole proprietorship consisting of only Messrs.
Yen or ▇▇▇▇▇▇), which performs the same or similar services in which
BYA has been engaged within one (1) year prior to the Effective Time,
other than for BYA or Purchaser, without the express written consent of
Purchaser. The "regulated zone" means Orange, Los Angeles, San Diego
and Ventura Counties. The services which BYA has been performing,
within one (1) year prior to the Effective Time include (but are not
necessarily limited to): all specialties and subspecialties associated
with any and all geotechnical and environmental services and
capabilities.
(2) Nondisclosure. Use for his benefit, or disclose,
communicate or divulge to, or use for the direct or indirect benefit of
any person, firm, association or company other than BYA or its
affiliates, any confidential information regarding the business
methods, business policies, procedures, techniques, research, or
development projects or results, trade secrets, customers, clients, or
any other confidential information relating to, or dealing with, the
business operations of BYA, Purchaser or their affiliates.
(3) Nonsolicitation - Employees. Either directly or
indirectly, for himself or any person or entity other than BYA or
Purchaser hire or induce or attempt to induce any employee or former
employee of BYA, Purchaser or their affiliates to terminate such
employment. An "employee" shall be considered a "former employee" for a
period of one (1) year following termination of employment with BYA,
Purchaser or their affiliates.
(4) Nonsolicitation - Customers. Within the regulated zone,
and with respect to any customer with whom he has developed a
relationship, or about whom he acquired knowledge of its needs,
preferences, pricing or other information of material competitive value
while associated with BYA, within any location where anyone BYA
performed services for or sent a proposal to is doing business:
directly or indirectly, on behalf of himself or any third parry, make
any sales contact with, or solicit, or accept business from, any
customers, provided, however, that this restriction shall apply only to
products or services which are competitive with those of BYA within one
(1) year prior to the Effective Time.
(5) Use of Names. Within the regulated zone, except for the
benefit of BYA, Purchaser, or their affiliates, use the name "Bing Yen
& Associates" or "BYA" or any customarily utilized portion or
abbreviation thereof as a business name, either
19
alone, or in conjunction with, other words, or represent to any
potential client that they are the "old" or "real" BYA or Bing Yen &
Associates.
B. Except as otherwise defined in this section, or as the
context otherwise plainly requires, terms used in this section shall have the
same meaning as elsewhere in this Agreement. Undefined terms shall have their
ordinary meaning. The term "participate in" means "directly or indirectly, for
his or their own benefit, or for, with, or through any other person or entity,
own, manage, operate, control, loan money to, give money to, or participate in
the ownership (except as a noncontrolling owner of less than 5 percent of the
stock of a publicly held corporation), management, operation, or control of, or
be connected as a director, shareholder, officer, employee, partner, member,
advisor, joint venturer, consultant, agent, independent contractor, or otherwise
with, or acquiesce in the use of his name in."
C. Messrs. Yen and ▇▇▇▇▇▇ agree that the restrictive covenants
of this ss. 4.04 are reasonable in scope and duration and are necessary to
protect the bona fide confidential business information of BYA, its contracts,
its customer and employee relationships, its assets, its good will and the value
of the Shares. They expressly agree that the customer names and other customer
and business information, both developed by BYA before Closing, or developed by
BYA or Purchaser after Closing, is proprietary, and Messrs. Yen and ▇▇▇▇▇▇ agree
that a breach of any of these provisions will be subject to ▇▇.▇▇. 1.03, 7.03
and 7.16 of this Agreement.
D. If any restrictive covenant contained in this ss. 4.04
shall be deemed by a court or arbitrator to be invalid, illegal, or
unenforceable under the laws of any jurisdiction, by reason of the extent,
duration, or geographical scope thereof or otherwise, the balance of this
section shall remain in effect in such jurisdiction, and the entire agreement
shall remain in effect in all jurisdictions in which such provision is lawful
and enforceable. If any such provision is unenforceable as to any circumstance,
it shall nevertheless remain applicable to all other circumstances. The court or
arbitrator shall be authorized to reform such provision by reducing such extent,
duration, geographical scope, or other provisions hereof, or otherwise modifying
or limiting such provision to the minimum extent necessary to render such
provision enforceable, and in its reformed form such restriction shall be
enforceable in the manner contemplated hereby.
E. The covenants, restrictions and limitations imposed upon
Messrs. Yen and ▇▇▇▇▇▇ under this ss. 4.04 are conditioned upon, and shall
remain in effect, only so long as there shall be no failure by Purchaser, its
successors and assigns, to make any one or more of the payments as and when due
and within any applicable grace periods under the Transaction Notes, provided
that Purchaser's recourse to the set-off provisions of ss. 1.03 or to any
provision of law which permits a party to withhold performance following a
material first breach by the other parry shall not constitute breaches or
violations of this Agreement under this paragraph. Without limiting the
generality of the foregoing, any breach by a Shareholder of this ss. 4.04 shall
be subject to arbitration as provided in ss. 7.16 to determine the extent of
damage suffered by Purchaser and/or BYA and the application of all applicable
indemnification and set-off rights under ▇▇.▇▇. 1.02 and 1.03 hereof.
20
F. Nothing contained in this ss. 4.04 shall be construed to
prohibit Shareholders from teaching in, or otherwise being retained or employed
by, a university, college or high school to teach geotechnical, environmental,
engineering and related subjects.
4.05 Public Statements
Before Shareholders, or either of them shall release any
information concerning this Agreement or the transactions contemplated by this
Agreement which is intended for, or may result in, public dissemination thereof,
they shall cooperate with Purchaser, shall furnish drafts of all documents or
proposed oral statements to Purchaser for comments, and shall not release any
such statement or information without the written consent of Purchaser. Nothing
contained herein shall prevent Shareholders from furnishing any information to
any governmental authority, if required to do so by law.
4.06 Books, Records, Access to Information, Cooperation
A. Each party shall provide to the other, with reasonable
promptness following a request in writing not to exceed ten (10) business days,
such information and data with respect to (1) BYA's business before the
Effective Time, (2) this transaction and (3) the parties' ongoing
representations, warranties, covenants and agreements after the Effective Time
pursuant to this Agreement, as may from time-to-time reasonably be requested by
the other party. In the event either Purchaser, or any Shareholder is required
to prepare audited statements, or to produce or compile information for a
government agency which requires access to information or for any other
reasonable purpose, including the verification of any information provided to
the other party relative to this Agreement, the parties shall allow the other
party reasonable access to records, including the nonproprietary working papers
of the other party's accountants, and to provide reasonable cooperative
assistance in the preparation of reports, documents, etc. without charge, except
for reimbursement of any actual out-of-pocket expenses, exclusive of the cost of
in-house staff time. Notwithstanding the foregoing, in the event that a party
is, or anticipates becoming, a party to litigation, this ss. 4.06 or any other
provision of this Agreement shall not be construed to require such party to
provide information to the other which could prevent such party from making a
bona fide claim of attorney/client privilege or such other privileges as may be
applicable with respect to such information.
B. Except for archived job files, neither party shall
intentionally dispose of or destroy any of the records of BYA in its possession,
except in conformity with the procedures set forth in this section. If a party
wishes to dispose of or destroy any of such records, it shall first give thirty
(30) days' prior written notice to the other party of the action it intends to
take, and the other party shall have the right, at its option and expense, upon
prior written notice to the notifying party within such thirty-day period, to
take possession of such affected records within thirty (30) days after the date
of the notice of intent to take possession.
C. Each party shall exercise reasonable care in the care,
custody and maintenance of the records of BYA in its possession. A party shall
be responsible for actual damage caused to the other party only as a result of
its negligence or intentionally wrongful act in maintaining
21
the records. Neither party shall have liability to the other party or any other
person as a consequence of the nonexistence of any record, or such party's
inability to locate any record, unless the loss or destruction of the record is
proven, by clear and convincing affirmative evidence, to have been due to the
allegedly possessing party's negligence or intentionally wrongful act.
4.07 Bankruptcy
For a period of one (1) year after Closing, no party to this
Agreement shall file an application or petition for voluntary bankruptcy under
the United States Bankruptcy Code or any application under any similar state or
federal statute.
4.08 Transaction Costs and Expenses
Purchaser, on the one hand, and Shareholders and/or BYA, on
the other hand, shall each pay or cause to be paid their own respective costs
incurred in connection with this transaction, including, without limitation, all
brokerage, finders, legal, accounting, auditing and appraisal fees in
negotiating and preparing this Agreement and in consummating, closing and
carrying out the transactions contemplated hereby. Any costs to be charged to
BYA shall be included on the Closing Balance Sheet and included in the Equity
Value determination.
4.09 Delivery of Property
Purchaser and Shareholders shall each use their best efforts
to avoid opening mail or deliveries which rightfully belong to the other and
shall turn over to the other any property received by the party, including
checks or money, belonging to the other within twenty-four (24) hours after
determining its rightful ownership.
4.10 Related Agreements
▇▇. ▇▇▇▇▇▇ and BYA shall execute and deliver at Closing the
Related Agreements referenced in ss. 5.01 which require execution by them in
accordance with their terms.
4.11 Continuing Cooperation, Reporting of Changes, Breaches
and Status
The parties shall cooperate in good faith following Closing to
secure to each other the benefits and performance to be provided by this
Agreement and to promptly execute such documents or instruments as shall be
reasonably requested by another party, without charge, to that end. At any time
or times on or after Closing, Shareholders, BYA, and Purchaser shall execute,
acknowledge, and deliver any and all further assurances, documents, and
instruments reasonably requested by the other in order to effectively convey the
Shares and all ownership thereof free and clear of encumbrances or title
defects, except as expressly authorized herein and shall take any other action
consistent with the terms of this Agreement that may reasonably be requested by
the other party in order to effectuate the purposes and intent hereof. Promptly
after becoming aware, the parties shall each advise the other in writing of (i)
the occurrence of any event which renders any of the representations or
warranties set forth herein inaccurate in
22
any material respect, and (ii) the failure of the party to comply with or
accomplish any of the covenants or agreements set forth herein in any material
respect.
4.12 Profit Sharing Plan
Shareholders assume all cost, expense and liability for
correcting any underfunding of BYA's pension plan. Shareholders waive any and
all statutes of limitation with respect to this covenant. The limitations
imposed by ▇▇.▇▇. 7.04 and 1.02C(5) shall not apply to this section ss. 4.12.
4.13 Cooperation Regarding Contingent Achievement
A. Until an average of at least Three Million Dollars
($3,000,000) in "Net Revenue" in any one or more twelve-month period (as
described in the Contingent Notes) has been achieved (the "Net Revenue Target"),
or three (3) years after the Closing Date has passed, whichever occurs first
(collectively, the "Achievement Period"), Purchaser shall cause ▇▇. ▇▇▇ to be
employed as BYA's president and CEO at an annual salary of One Hundred Forty
Thousand Dollars ($140,000). In such capacities ▇▇. ▇▇▇ shall report to
Purchaser's president, or, in his absence, Purchaser's president's designee. BYA
shall pay to ▇▇. ▇▇▇ for a period of three (3) years so long as ▇▇. ▇▇▇ is an
employee of BYA, $300 per month as a car allowance. Notwithstanding the
foregoing, ▇▇. ▇▇▇'▇ employment as BYA's president and CEO is subject to the
provisions of ss. 4.13B. During the Achievement Period, Purchaser covenants that
it shall not, and that it shall cause BYA's board of directors to not, interfere
with BYA's business or business operations as conducted by ▇▇. ▇▇▇ and the other
BYA officers, including, without limitation, efforts to achieve the Net Revenue
Target, as long as such business and business operations are conducted in a
manner which is consistent with BYA's past practices. Notwithstanding the
foregoing provisions of this ss. 4.13A, ▇▇. ▇▇▇ agrees that all fixed fee
contracts over $150,000 and other contracts estimable in good faith to exceed
$150,000 must be approved by the president of Purchaser or the president's
designee, which approval shall not be unreasonably withheld or delayed. Without
limiting the general applicability of ss. 7.03 below, Purchaser acknowledges the
applicability of said ss. 7.03 to this ss. 4.13.
B. Notwithstanding the foregoing provisions of this ss. 4.13A:
(1) ▇▇. ▇▇▇'▇ employment with BYA shall be on an "at will" basis terminable by
BYA or by ▇▇. ▇▇▇ at any time without affecting the terms and conditions of the
Contingent Notes; provided, however, that upon any noncompliance by Purchaser of
its covenants under ss. 4.13A, or termination by BYA of ▇▇. ▇▇▇'▇ employment for
reasons other than as described in ss. 4.13(B)(2) or for ▇▇. ▇▇▇'▇ noncompliance
with ss. 4.13C(1), the entire unpaid maximum principal amount of the Contingent
Notes shall be immediately paid to Shareholders irrespective of whether or not
the Net Revenue Target has been achieved; and (2) should ▇▇. ▇▇▇ die or become
disabled for a period of six (6) or more consecutive months during the
Achievement Period, he and his beneficiaries and heirs shall still be paid the
entire unpaid principal amount due to him under the Contingent Notes, but only
if and when owed thereunder.
23
C. Notwithstanding the foregoing provisions of this ss. 4.13,
(1) ▇▇. ▇▇▇ shall be required while employed by BYA to work at least forty (40)
hours per month for one full year from the Closing Date, and (2) if ▇▇. ▇▇▇
terminates his employment at any time during the first year after the Closing
Date for reasons other than as described in ss. 4.13B or other than any
noncompliance by Purchaser under ss. 4.13A, ▇▇. ▇▇▇ shall no longer be eligible
for payments under the Contingent Notes issued to him, such Contingent Note
shall thereupon terminate and ▇▇. ▇▇▇ shall cancel and assign such Contingent
Note back to Purchaser.
4.14 BYA Employee Bonuses
On or before December 13, 1997, Purchaser shall cause BYA to
pay to its employees the sum of $50,000 as a December bonus. ▇▇. ▇▇▇ in
consultation with other officers of BYA shall determine who such bonus will be
paid to and in what amounts. Such bonus will not be used to provide additional
compensation to the Shareholders.
4.15 Receipt of Notices
Purchaser shall deliver or cause to be delivered to
Shareholders all notices delivered or to be delivered to holders of the Senior
Subordinated Notes identified in Exhibit 3.11-A within the time frames required
for the delivery of such notices to the holders of such Senior Subordinated
Notes.
4.16 Transaction Notes Are Senior Indebtedness
Subject only to the effectiveness of the Acquisition Merger,
Purchaser hereby represents, warrants and covenants for all purposes that the
Transaction Notes are Senior Indebtedness as referred to in Exhibit 3.11-A
hereto.
4.17 Acceleration of ▇▇▇▇▇▇ Note, Transaction Notes
A. Shareholders are accepting the Transaction Notes, including
without limitation their amount, terms and conditions, based in material part on
the material accuracy and completeness of the information set forth in the
Offering Memorandum, subject to completion, with respect to $100,000,000 in
principal amount of Senior Subordinated Notes due 2007, in the form attached
hereto as Exhibit 3.11-A and supplemented by the information attached hereto as
Exhibit 3.11-B. In the event both the Acquisition Merger is effected and either
(a) such Senior Subordinated Notes as finally issued, or the information in such
Offering Memorandum as finally distributed, are/is different from the form and
description attached as Exhibits 3.11-A and 3.11-B hereto in a manner which
materially and adversely affects Purchaser's ability to meet its obligations as
set forth in the Transaction Notes or (b) there is any unwaived or uncured
default under said Senior Subordinated Notes subsequent to any applicable grace
period, then either of the Shareholders or other holders of the Transaction
Notes shall have the right to give ten (10) calendar days written notice of
default under the Transaction Notes to Purchaser, whereupon the entire principal
balance of the Transaction Notes and all accrued and unpaid interest thereon
shall become immediately due and payable at the option of the applicable
Shareholder or the then holder of the Transaction Notes.
24
B. Shareholders are accepting the Transaction Notes, including
without limitation their amount, terms and conditions, based in material part on
the material accuracy and completeness of the information filed by Purchaser
since February 28, 1997, with the Securities and Exchange Commission pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. In the event such
information is inaccurate, incomplete or misleading in a manner which materially
and adversely affects Purchaser's ability to meet its obligations as set forth
in the Transaction Notes, then either of the Shareholders or other holders of
the Transaction Notes shall have the right to give ten (10) calendar days
written notice of default thereof to Purchaser, whereupon the entire principal
balance of the Transaction Notes and all accrued and unpaid interest thereon
shall become immediately due and payable at the option of the applicable
Shareholder or the then holder of the Transaction Notes.
C. If Purchaser fails to pay in full when due any installment
of principal and interest under the ▇▇▇▇▇▇ Note or any of the Transaction Notes,
or in the event of Purchaser's insolvency or bankruptcy under any applicable
federal or state laws or regulations, or in the event Purchaser materially
defaults or breaches its warranty, performance or obligation under any material
provision of Articles III or IV of this Agreement, undertaken, made or to be
performed by Purchaser hereunder, then either of the Shareholders or other
holders of the ▇▇▇▇▇▇ Note or any of the Transaction Notes shall have the right
to give written notice of default thereof to Purchaser. In the event Purchaser
fails to cure any such default within ten (10) calendar days following delivery
of such written notice to Purchaser, the entire principal balance of the ▇▇▇▇▇▇
Note and the Transaction Notes and all accrued and unpaid interest thereon shall
become immediately due and payable at the option of the applicable Shareholder
or the then current holder of the ▇▇▇▇▇▇ Note and the Transaction Notes,
respectively.
D. Subject to the limitations described in the following
sentence, following the Acquisition Merger the entire principal balance of the
Transaction Notes and all accrued and unpaid interest thereon shall be paid
prior to payment of any principal on the Senior Subordinated Notes described in
Exhibit 3.11-A hereto. Any principal or interest on the Non-Compete Notes and
the Contingent Notes not otherwise then due and payable at the time of principal
prepayment on said Senior Subordinated Notes shall be paid by Purchaser into a
trust (administered by a bank or trust company licensed in California with the
cost to be paid by Purchaser) for the benefit of Shareholders and Purchaser to
disburse the amounts paid into said trust to Shareholders and Purchaser in
accordance with the conditions precedent and subsequent, and subject to the
rights of acceleration, set-off, withholding and arbitration in this Agreement
and the Non-Compete Notes and Contingent Notes in the same manner as though no
prepayment of principal on said Senior Subordinated Notes had been made.
Notwithstanding the foregoing sentences, Purchaser shall have no duty to pay or
prepay any principal or interest on the Transaction Notes not then due and
payable in the event principal on said Senior Subordinated Notes is (i)
refinanced to reduce the interest rate thereon (and therewith other minor
revisions to the provisions thereof may be made which do not materially
adversely affect Purchaser's
25
ability to pay the Transaction Notes) or (ii) reduced in whole or in part with
the proceeds of an offering of equity securities by Purchaser.
V. RELATED AGREEMENTS
5.01 Related Agreements
The following related agreements (the "Related Agreements")
shall be executed at Closing by the applicable parties:
A. An Employment Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇ and BYA; and
B. An Employment Agreement between ▇▇▇▇▇ ▇▇▇▇▇▇ and BYA.
VI. CLOSING
6.01 Closing, the Closing Date, and Effective Time
Closing of the transactions contemplated hereunder ("Closing")
shall take place at the offices of ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, 8:30 a.m., November 26, 1997 unless
otherwise agreed in writing among the parties hereto (the "Closing Date"). The
effective time for the consummation of the transactions contemplated in this
Agreement to occur "at Closing" or "on the Closing Date" shall be 11:59 p.m. on
the Closing Date (the "Effective Time").
6.02 Shareholders' Obligations at Closing
At or prior to Closing, Shareholders shall deliver, or cause
to be delivered, to Purchaser, in form satisfactory to Purchaser, the following:
A. Stock certificates for all of the Shares, duly assigned to
Purchaser by Shareholders and their spouses, if any.
B. A true copy of the Minutes of the Meeting of BYA's Board of
Directors authorizing the execution, delivery, and performance of this
Agreement and any Related Agreement to which BYA is a party and
designating the officers entitled to execute it.
C. A Certificate of Good Standing for BYA issued within
twenty (20) days prior to the Closing Date by the Secretary of State
of California.
D. All other schedules, certificates, and other documents
required by this Agreement to be delivered by Shareholders on or
before Closing.
E. Their resignations as directors of BYA.
26
6.03 Purchaser's Obligations at Closing
At or prior to Closing, Purchaser shall deliver or cause to be
delivered to Shareholders, in executed form satisfactory to Shareholders, the
following:
A. The cash payable pursuant to ss. 1.01B(1).
B. The Notes, Non-Compete Notes and Contingent Notes.
C. A Certificate of Good Standing for Purchaser from the
Secretary of State of Delaware as of a date not more than twenty (20)
days prior to the Closing Date.
D. A true copy of the Minutes of the Meeting of the Board of
Directors of Purchaser authorizing its execution, delivery, and
performance of this Agreement and designating the office entitled to
execute it.
E. All other schedules, certificates, and other documents
required by this Agreement to be delivered by Purchaser on or before
Closing.
VII. MISCELLANEOUS
7.01 Brokerage Fees and Shareholders' Legal Fees
A. BYA acknowledges that Global Capital Markets, Incorporated
acted as a broker for BYA relative to this transaction. Subsequent to the
Closing, Shareholders shall indemnify and hold harmless BYA and Purchaser from
any liability for any commission to Global Capital Markets, Incorporated,
regardless of when such commission was or will be earned. BYA and Shareholders
acknowledge that Carlsmith Ball, Wichman, Case & Ichiki acted as legal counsel
for BYA and Shareholders relative to this transaction. Subsequent to the Closing
Shareholders shall indemnify and hold harmless BYA and Purchaser from any
liability for the obligation to pay any fee to Carlsmith, Ball, Wichman, Case &
Ichiki.
B. Purchaser acknowledges that Goldmark Advisers, Inc. acted
as a broker for Purchaser relative to this transaction, and Purchaser further
acknowledges that it is obligated to pay Goldmark Advisers, Inc. a commission
for such services. Purchaser agrees to pay such commission and to indemnify and
hold harmless Shareholders from any liability for the obligation to pay such
commission to Goldmark Advisers, Inc.
C. Except for such brokerage arrangements specified in ▇▇.▇▇.
7.01A and B, neither Purchaser nor BYA nor Shareholders have consented to or
authorized any broker or third party to act on their behalf, directly or
indirectly, as a broker or finder in connection with the transaction
contemplated by this Agreement. In the event any claim is made for a broker's or
finder's fee other than that described in ▇▇.▇▇. 7.01A and B in connection with
the transactions contemplated hereunder, the party responsible for retaining or
securing said broker or finder shall be solely responsible for the payment of
any broker's or finder's fees incurred as a result
27
thereof. Further, the responsible party shall indemnify the other party against
any loss or liabilities by reason of such broker's or finder's fees.
7.02 Further Actions
At any time and from time to time, each party shall, at its or
his expense, take such actions and to execute and deliver such documents as may
be reasonably necessary to effectuate the purposes of this Agreement.
7.03 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, either Purchaser, or either of
Shareholders shall be entitled, in addition to any other right or remedy
available to it or them, to a temporary restraining order, preliminary
injunction and an injunction restraining such breach or threatened breach and to
specific performance of any such provision of this Agreement, and the parties
hereby consent to the issuance of such an injunction and to the ordering of
specific performance without the requirement of a bond or proof of immediate and
irreparable harm.
7.04 Limitation on Survival of Representations and Warranties
Except as otherwise provided in this Agreement or construed by
its context, the representations and warranties contained in, or made pursuant
to, this Agreement shall survive the Closing Date for a period of three (3)
years, irrespective of any investigation made by or on behalf of any party.
7.05 Modification
The Agreement and the Exhibits, Schedules, and Related
Agreements hereto set forth the entire understanding of the parties with respect
to the subject matter hereof, supersede all existing agreements among them
concerning such subject matter, and may be modified only by a written instrument
duly executed by each party.
7.06 Notices
All notices, elections, reports or other correspondence
required or permitted hereunder shall be in writing and given or delivered by
certified mail, postage prepaid, delivered by overnight express courier,
delivery fees prepaid, or transmitted by fax with receipt confirmed, to the
party to whom directed at the below specified addresses:
If to Purchaser:
ATC GROUP SERVICES INC.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
28
If to Shareholders:
▇▇. ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any such notice shall be deemed given one (1) business day
following receipt thereof. The address of a party may be changed in accordance
with the notice provisions of this section.
7.07 Waiver
Any waiver by any party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of that provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions will not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
7.08 Binding Effect
The provisions of this Agreement shall be binding upon, and
inure to, the benefit of Purchaser and its respective successors and assigns,
and Shareholders and their assigns, heirs, and personal representatives, and
shall inure to the benefit of the indemnitees and their respective successors,
assigns, heirs, and personal representatives.
7.09 No Third-Party Beneficiaries
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any person not a party to this Agreement
(except as provided in ss. 7.08).
7.10 Severability
If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
29
7.11 Headings; Gender
The headings of this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement. Each reference to the masculine, feminine or neuter gender shall
include reference to all other genders unless the context otherwise requires.
7.12 Governing Law
To the extent permitted by law, this Agreement shall be
governed by and construed in accordance with the laws of the State of California
without giving effect to conflict of laws. To the maximum extent permitted by
law, any action or proceeding initiated by Purchaser, any Shareholders, any
indemnitee, or any other party claiming rights under this Agreement shall be
brought in an appropriate state or federal court in Orange County, California,
and any person claiming rights under this Agreement consents to the jurisdiction
and proper venue of such forum.
7.13 Separate Counterparts
This Agreement is being executed in several identical
counterparts, each one of which shall be considered an original and all of which
when taken together shall constitute but one instrument.
7.14 Incorporation of Recitals, Exhibits and Schedules
All exhibits and schedules attached hereto are incorporated
herein by this reference and expressly made a part of this Agreement.
7.15 Obligations in Payment Ratio
Notwithstanding anything in this Agreement to the contrary,
the representations, warranties, covenants, and agreements of Shareholders in
this Agreement are made in proportion to the Payment Ratio, and Shareholders
shall only be liable to Purchaser in the Payment Ratio for any liability under
this Agreement.
7.16 Arbitration; Attorneys' Fees; Undisputed Actions for
Payment
In the event there shall arise any dispute or claim in law or
equity arising out of this Agreement, or any breach thereof, or any resulting
transaction between the parties under this Agreement, the parties specifically
agree that such dispute shall be submitted to and decided by a neutral, binding
arbitration of three (3) arbitrators selected in accordance with the procedures
of the American Arbitration Association at a location mutually agreed to in
writing by the parties, or if they cannot agree, at the office of ▇▇▇▇▇▇▇▇▇,
Will & ▇▇▇▇▇, Newport Beach, California and in accordance with the Commercial
Arbitration Rules of the American Arbitration
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Association and not by court action, except as provided by California law for
judicial review of arbitration proceedings, with appropriate recovery of costs,
escrow fees, attorneys' and arbitration fees being awarded and apportioned by
the arbitrators in accordance with the comparative fault awarded by the
arbitrators. Judgment of the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof. Anything in the foregoing
notwithstanding, in the event either of the Shareholders or the holder thereof
has given written notice of default to Purchaser under the ▇▇▇▇▇▇ Note or any of
the Transaction Notes and Purchaser fails to dispute the merits of such written
demand within ten (10) calendar days following delivery of such written notice
to Purchaser, then such Shareholder or holder shall have the right to proceed to
enforce his or its rights under the subject instrument(s) in any court of
competent jurisdiction without proceeding to arbitration in accordance with this
paragraph.
7.17 Opportunity to Cure
All parties to this agreement shall be afforded a period of
ten (l0) days following notice thereof to cure any alleged breach of this
Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first set forth above.
ATC GROUP SERVICES INC. BING YEN & ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ Bing Yen
------------------------- ----------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Bing Yen
Title: Senior Vice President President and CEO
/s/ Bing Yen
----------------------
BING YEN
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------
▇▇▇▇ ▇▇▇▇▇▇
31