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EXHIBIT 10.10
STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION OF
UNICCO SECURITY SERVICES, INC.
DATED AS OF OCTOBER 26, 1998
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TABLE OF CONTENTS
ARTICLE 1. Closing...............................................................................................1
1.1 Sale and Purchase of Capital Stock..............................................................1
1.2 Purchase Price..................................................................................1
1.3 Transfer of Shares..............................................................................1
1.4 Closing.........................................................................................2
ARTICLE 2. Representations and Warranties of Purchaser...........................................................2
2.1 Organization and Standing.......................................................................2
2.2 Authorization...................................................................................2
2.3 Consents and Approvals..........................................................................3
2.4 Brokers' and Finders' Fees......................................................................3
2.6 Disclosure......................................................................................3
ARTICLE 3. Representations and Warranties of Seller and Shareholder..............................................3
3.1 Organization, Good Standing, Power and Authority................................................4
3.2 Authorization...................................................................................4
3.3 Consents and Approvals..........................................................................4
3.4 Ownership of the Shares.........................................................................4
3.5 Litigation......................................................................................5
3.6 Power, Authority and Ownership of Shareholder...................................................5
ARTICLE 4. Representations and Warranties of Shareholder, Seller and the Company.................................5
4.1 Organization, Good Standing, Power and Authority................................................6
4.2 Authorization...................................................................................6
4.3 Consents and Approvals..........................................................................6
4.4 Charter and Bylaws; Corporate Records...........................................................6
4.5 Capitalization..................................................................................6
4.6 Subsidiaries....................................................................................7
4.7 Financial Statements............................................................................7
4.8 Undisclosed Liabilities.........................................................................8
4.9 Absence of Certain Changes and Events...........................................................8
4.10 Tax Matters.....................................................................................9
4.11 Title to Personal Property and Condition of Assets.............................................11
4.12 Material Contracts.............................................................................12
4.13 Intellectual Property..........................................................................13
4.14 Employee Matters...............................................................................14
4.15 Labor Matters..................................................................................16
4.16 Environmental Matters..........................................................................18
4.17 Insurance......................................................................................19
4.18 Permits; Compliance With Law...................................................................19
4.19 Litigation.....................................................................................19
(i)
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4.20 List of Personnel..............................................................................20
4.21 Transactions With Affiliates...................................................................20
4.22 Brokers and Finders' Fees......................................................................20
4.23 Books and Records; Internal Controls...........................................................20
4.24 Customers......................................................................................21
4.25 Disclosure.....................................................................................21
ARTICLE 5. Pre-Closing Covenants................................................................................21
5.1 Access to Information..........................................................................21
5.2 Conduct of Business............................................................................21
5.3 Pre-Closing Activities.........................................................................22
5.4 Efforts to Consummate..........................................................................23
5.5 No Shop........................................................................................24
5.6 Notice.........................................................................................24
5.7 Performance Bonds..............................................................................24
5.8 Use of the Name................................................................................25
5.9 Termination of Certain Vehicles................................................................25
5.10 Use of Office Space............................................................................25
5.11 Assumption of Liabilities......................................................................25
5.12 Releases.......................................................................................25
5.13 Vesting of Retirement Plans....................................................................26
5.14 Assignment of Certain Contracts................................................................26
5.15 Employee Payments..............................................................................26
5.16 Employment Agreements..........................................................................26
5.17 Employment Policies............................................................................26
5.18 Adverse Changes in Condition...................................................................27
5.19 Supplements to Schedules.......................................................................27
ARTICLE 6. Conditions to Closing................................................................................27
6.1 Conditions to Purchaser's Obligations..........................................................27
6.2 Conditions to Seller's Obligations.............................................................29
6.3 Materiality Defined............................................................................30
ARTICLE 7. Additional Agreements................................................................................31
7.1 Further Assurances.............................................................................31
7.2 Certain Tax Matters............................................................................31
7.3 Litigation Support.............................................................................32
7.4 Noncompetition and Confidential Information....................................................32
ARTICLE 8. Indemnification......................................................................................35
8.1 Seller and Shareholder.........................................................................35
8.2 Purchaser......................................................................................37
(ii)
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ARTICLE 9. Modification, Waivers and Termination................................................................39
9.1 Modification...................................................................................39
9.2 Waivers........................................................................................39
9.3 Termination....................................................................................39
9.4 Effect of Termination..........................................................................40
ARTICLE 10. Miscellaneous.......................................................................................40
10.1 Notices........................................................................................40
10.2 Entire Agreement...............................................................................41
10.3 Benefits; Binding Effect; Assignment...........................................................41
10.4 Waiver.........................................................................................41
10.5 No Third Party Beneficiary.....................................................................41
10.6 Severability...................................................................................41
10.7 Expenses.......................................................................................41
10.8 Headings.......................................................................................42
10.9 Counterparts...................................................................................42
10.10 Governing Law..................................................................................42
10.11 Equitable Remedies.............................................................................42
10.12 Construction...................................................................................42
10.13 Knowledge Defined..............................................................................43
(iii)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), made and entered into
this 26th day of October, 1998 by and among ▇▇▇▇▇▇▇▇▇▇▇ SECURITY, INC., a
Georgia corporation (referred to herein as "Purchaser"); UNICCO SECURITY
SERVICES, INC., a Delaware corporation (the "Company"), USC, INC., a
Massachusetts corporation ("Seller"), and UNICCO SERVICE COMPANY, a
Massachusetts business trust ("Shareholder");
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares of
capital stock of the Company;
WHEREAS, Shareholder owns all of the issued and outstanding shares of
capital stock of Seller;
WHEREAS, subject to the terms and conditions of this Agreement, Seller
desires to sell, and Purchaser desires to purchase, all of the issued and
outstanding shares of capital stock of the Company; and
WHEREAS, Purchaser, Seller and Shareholder desire to make certain
representations, warranties and agreements in connection with the sale of
capital stock of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE 1.
Closing
1.1 Sale and Purchase of Capital Stock. On the "Closing Date" (as
defined herein), Seller shall sell, transfer, convey and deliver to Purchaser,
and Purchaser shall purchase and accept delivery of, 100 shares of common stock
of the Company, par value $1.00 per share (collectively, the "Shares"), which
Shares constitute all of the issued and outstanding shares of capital stock of
the Company, for a purchase price determined as provided in Section 1.2 hereof.
1.2 Purchase Price. The aggregate purchase price (the "Purchase
Price") for the Shares will be Twelve Million Dollars ($12,000,000), payable in
cash to Seller at the Closing, by wire transfer of immediately available funds
to the account or accounts designated by Seller to Purchaser in writing prior to
the Closing, or by such other method of payment as is acceptable to the parties.
1.3 Transfer of Shares. At the Closing, in consideration of
Purchaser's delivery of the Purchase Price pursuant to Section 1.2 hereof,
Seller shall deliver to Purchaser certificates
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representing the Shares, duly endorsed in blank for transfer or accompanied by
stock powers duly executed in blank, sufficient in form and substance to convey
to Purchaser good title to all of the Shares, free and clear of all liens,
charges, claims, restrictions, encumbrances, security interests or pledges of
any kind whatsoever or any obligations or liabilities (absolute or contingent)
(a "Lien").
1.4 Closing. Subject to the fulfillment or waiver of the
conditions precedent set forth in Article 6 hereof, and subject to any extension
permitted under clause (y) of Section 9.3(b) hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Posternak, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, on such date as may be agreed upon by the
parties; provided that such date shall be no later than ten days after the
receipt by the parties of confirmation that the waiting periods, if any,
required by the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), have expired or been terminated (such date, the "Closing
Date"); provided further, however, that at or prior to the Closing, the parties
shall make such adjustments as may be necessary to account for the mid-period
transfer of payroll, customer receipts and similar items. Except as otherwise
provided herein, all proceedings to be taken and all documents to be executed at
the Closing shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed.
ARTICLE 2.
Representations and Warranties of Purchaser
In order to induce Seller, the Company and Shareholder to enter into
this Agreement and to consummate the transactions contemplated hereby, Purchaser
represents and warrants to Seller and the Shareholder as follows:
2.1 Organization and Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. Purchaser has all requisite corporate right, power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. Purchaser is not in default under any provisions of its Articles of
Incorporation or bylaws. Purchaser has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
in the manner as now conducted and is duly licensed or qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the nature of its properties and assets or the conduct of its business requires
it to be so licensed or qualified, except where the failure to be so qualified
would not have a material adverse effect on the business, assets, properties,
results of operation, financial condition or prospects of Purchaser.
2.2 Authorization. Except as set forth on Schedule 2.2 hereto,
this Agreement and its execution, delivery and performance have been duly
authorized by all necessary corporate action on the part of Purchaser and are
within its corporate power. This Agreement has been duly executed
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and delivered by Purchaser and constitutes the legal, valid and binding
agreement of Purchaser, enforceable against it in accordance with its terms.
2.3 Consents and Approvals. The execution, delivery and
performance by Purchaser of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate any provision of law, statute, rule
or regulation (each, a "Law") to which Purchaser is subject, (ii) violate any
order, judgment or decree applicable to Purchaser, or (iii) violate, conflict
with, or result in a breach or default under, or cause the termination of, any
term or condition of any agreement, document or other instrument to which
Purchaser is a party or by which Purchaser or Purchaser's properties may be
bound which would have a material adverse effect on Purchaser's business,
assets, properties, results of operation, financial condition or prospects of
Purchaser, or the ability of the Purchaser to consummate the transactions
contemplated by this Agreement. Except as set forth on Schedule 2.3 hereto, no
filing with, and no permit, authorization, consent or approval of, any federal,
state, local or foreign governmental regulatory agency, commission, bureau,
authority, court or arbitration tribunal (each, an "Authority") or any other
person, corporation, limited liability company, unincorporated organization,
partnership, association, joint-stock company, joint venture, trust or
government or any agency or political subdivision of any government (each, a
"Person") is necessary for the consummation by Purchaser of the transactions
contemplated by this Agreement, other than (x) compliance with any applicable
requirements of the HSR Act; (y) compliance with any applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (z)
compliance with any applicable requirements of state blue sky laws.
2.4 Brokers' and Finders' Fees. Except as set forth on Schedule
2.4 hereto, neither Purchaser nor anyone acting on its behalf has done anything
to cause or incur any liability which would be payable by Seller or the Company
to any party for any brokers' or finders' fees or the like in connection with
this Agreement or any transaction contemplated hereby.
2.5 Purchase for Own Account. Purchaser is purchasing and
acquiring the Shares for its own account and without a view to their
distribution or resale.
2.6 Disclosure. None of the representations and warranties by
Purchaser in this Agreement and no statement on the part of Purchaser contained
in any of the Schedules hereto contains or will contain as to the applicable
representation and warranty any untrue statement of material fact or omits or
will omit to state any material fact necessary in order to make any of the
statements herein or therein, in light of the circumstances under which it was
made, not misleading.
ARTICLE 3.
Representations and Warranties of Seller and Shareholder
In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller and Shareholder hereby
jointly and severally represent and warrant (other than in the case of Section
3.6 hereof) to Purchaser that, as of the date hereof:
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3.1 Organization, Good Standing, Power and Authority. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts. Seller has all requisite corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Seller is not in default under any provisions
of its Articles of Organization or bylaws. Seller has all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business in the manner as now conducted and is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its properties and assets or the conduct of its business
requires it to be so licensed or qualified, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
properties, results of operation, financial condition or prospects of Seller.
3.2 Authorization. This Agreement and its execution, delivery and
performance have been duly authorized by all necessary corporate action on the
part of Seller and are within its corporate power. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
agreement of Seller, enforceable against it in accordance with its terms.
3.3 Consents and Approvals. Except as set forth on Schedule 3.3
hereto, the execution, delivery and performance by Seller of this Agreement and
the consummation of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time, or both, (i) violate any
provision of Law to which Seller is subject, (ii) violate any order, judgment or
decree applicable to Seller, or (iii) violate, conflict with, or result in a
breach or default under, or cause the termination of, any term or condition of
any agreement, document or other instrument to which Seller is a party or by
which Seller or Seller's properties may be bound. Except as set forth on
Schedule 3.3 hereto, no filing with, and no permit, authorization, consent or
approval of, any Authority or any other Person is necessary for the consummation
by Seller of the transactions contemplated by this Agreement, other than (x)
compliance with any applicable requirements of the HSR Act; (y) compliance with
any applicable requirements of the Exchange Act; and (z) compliance with any
applicable requirements of state blue sky laws.
3.4 Ownership of the Shares.
(a) Seller owns good and marketable record title to, and
all beneficial interest in, the Shares, and such Shares (i) are validly
issued, fully paid and nonassessable, and (ii) except as set forth on
Schedule 3.4 hereto, are owned by Seller free and clear of any Liens,
with no defects of title whatsoever. Other than the Shares described in
the foregoing sentence, Seller owns no shares of capital stock of the
Company or any other equity security of the Company or any right of any
kind to have any such equity security issued.
(b) Except as set forth on Schedule 3.4 hereto, Seller
has the exclusive right, power and authority to vote the Shares, and is
not party to or bound by any agreement affecting or relating to
Seller's right to transfer or vote the Shares. There are no proxies
outstanding or powers of attorney granted by Seller with respect to any
of the Shares.
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3.5 Litigation. There are no actions, suits, claims or proceedings
pending or, to the best knowledge of Seller, threatened against or involving
Seller or any of Seller's assets or properties by or before any Authority that
question the validity of this Agreement or seek to prohibit, enjoin or otherwise
challenge the consummation of the transactions contemplated hereby. There are no
outstanding orders, judgments, injunctions, stipulations, awards or decrees of
any Authority against Seller or any of Seller's assets or properties that
prohibit or enjoin the consummation of the transactions contemplated hereby.
3.6 Power, Authority and Ownership of Shareholder. Shareholder
represents and warrants that:
(a) Shareholder has the right, power and capacity to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Shareholder and constitutes the
legal, valid and binding obligation of Shareholder, enforceable against
it in accordance with its terms.
(b) Except as set forth on Schedule 3.6 hereto, the
execution, delivery and performance by Shareholder of this Agreement
and the consummation of the transactions contemplated hereby will not,
with or without the giving of notice or the lapse of time, or both, (i)
violate any provision of Law to which Shareholder is subject, (ii)
violate any order, judgment or decree applicable to Shareholder, or
(iii) violate, conflict with, or result in a breach or default under,
or cause the termination of, any term or condition of any agreement,
document or other instrument to which Shareholder is a party or by
which Shareholder or its properties may be bound.
(c) Shareholder owns good and marketable record and
beneficial title to all of the outstanding capital stock of Seller (the
"Seller Stock"), all of which is (i) validly issued, fully paid and
nonassessable, and (ii) except as set forth on Schedule 3.6 hereto,
free and clear of any Liens, with no defects of title whatsoever.
Except as set forth on Schedule 3.6 hereto, Shareholder has the
exclusive right, power and authority to vote the Seller Stock.
ARTICLE 4.
Representations and Warranties of Shareholder, Seller and the Company
In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Shareholder, Seller and the
Company jointly and severally represent and warrant to Purchaser as follows:
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4.1 Organization, Good Standing, Power and Authority. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company has all requisite corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The Company is not in default under any
provisions of its Certificate of Incorporation or bylaws. The Company has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its business in the manner as now conducted and is duly licensed
or qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the nature of its properties and assets or the
conduct of its business requires it to be so licensed or qualified, except where
the failure to be so qualified would not have a material adverse effect on the
business, assets, properties, results of operation, financial condition or
prospects of the Company.
4.2 Authorization. This Agreement and its execution, delivery and
performance have been duly authorized by all necessary corporate action on the
part of the Company, and are within its corporate power. The Agreement has been
duly executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms.
4.3 Consents and Approvals. Except as set forth on Schedule 4.3
hereto, and subject to the exception set forth below, the execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate any provision of Law to which the
Company is subject, (ii) violate any order, judgment or decree applicable to the
Company, or (iii) violate, conflict with, or result in a breach or default
under, or cause the termination of, any term or condition of any agreement,
document or other instrument to which the Company is a party or by which the
Company or its properties may be bound. Except as set forth on Schedule 4.3
hereto, and subject to the exception set forth below, no filing with, and no
permit, authorization, consent or approval of, any Authority or any other Person
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, other than (x) compliance with any applicable
requirements of the HSR Act; (y) compliance with any applicable requirements of
the Exchange Act; and (z) compliance with any applicable requirements of state
blue sky laws. Notwithstanding the foregoing, no representation or warranty is
given regarding the requirement of any consents or approvals with respect to the
ongoing validity or effectiveness of any agreement, document or other instrument
or Permit (as defined in Section 4.18 hereof) to which the Company will be a
party after the Closing (other than this Agreement and the agreements executed
in connection herewith).
4.4 Charter and Bylaws; Corporate Records. Copies of the
Certificate of Incorporation and bylaws of the Company and all amendments
thereto as in effect on the date hereof have been delivered to Purchaser and are
complete and correct as of the date hereof. The corporate minutes and stock
records of the Companies from and after June 28, 1996 have been made available
to Purchaser and are complete and correct in all material respects as of the
date hereof.
4.5 Capitalization. The authorized capital stock of the Company
consists of 5,000 shares
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of common stock, par value $1.00 per share, of which 100 shares are issued and
outstanding, and 5,000 shares of preferred stock, par value $1.00 per share, of
which no shares are issued and outstanding. All of the issued and outstanding
shares of capital stock of the Company (x) are duly authorized, validly issued,
fully paid and nonassessable, (y) are held of record by Seller, and (z) were not
issued in violation of the preemptive rights of any Person or any agreement or
Law by which the Company at the time of issuance was bound. Except as disclosed
on Schedule 4.5 hereto, (i) no shares of capital stock of the Company are
reserved for issuance or are held as treasury shares, (ii) there are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities or other plans or
commitments, contingent or otherwise, relating to the capital stock of the
Company; (iii) there are no outstanding contracts or other agreements of Seller,
the Company or any other person to purchase, redeem or otherwise acquire any
outstanding shares of the capital stock of the Company, or securities or
obligations of any kind convertible into any shares of the capital stock of the
Company; (iv) there are no dividends that have accrued or been declared but are
unpaid on the capital stock of the Company; and (v) there are no outstanding or
authorized stock appreciation, phantom stock, stock plans or similar rights with
respect to the Company.
4.6 Subsidiaries. There is no corporation, association,
subsidiary, partnership, limited liability company or other entity of which the
Company owns or controls, or has since June 28, 1996 owned or controlled,
directly or indirectly, more than 50% of the outstanding equity interests.
4.7 Financial Statements. Attached hereto as Schedule 4.7 are
copies of (i) the unaudited balance sheets and statements of income of the
Company for the three months ended September 30, 1998 (the "Interim Financial
Statements"), and (ii) the unaudited balance sheets and related statements of
operations, retained earnings and cash flows of the Company for the years ended
June 29, 1997 and June 28, 1998 (the "Annual Financial Statements"). Except as
described below, the Interim Financial Statements and the Annual Financial
Statements (collectively, the "Financial Statements") (x) are complete and
correct in all material respects and have been prepared in accordance with the
books and records of the Company, (y) present fairly in all material respects
the financial condition of the Company, the results of its operations, and the
changes in shareholders' equity and cash flows, as the case may be, as at and
for the respective periods then ended, (z) have been extracted from, and are a
material component of, the audited financial statements for the consolidated
group of which the Company is a member, which such financial statements have
been prepared in compliance with generally accepted accounting principles in
effect in the United States of America at the time of application thereof
applied on a basis consistent with the prior applications of those principles in
the financial statements of the Company ("GAAP"), subject to year end
adjustments in the case of any interim financial statements. Seller further
represents, and Purchaser acknowledges that, due to the fact that the Company is
a wholly-owned, indirect subsidiary of Shareholder, the Financial Statements do
not reflect (a) allocations for the Company's portion of certain expenses, such
as executive management and corporate overhead, information systems (including,
without limitation, use of the ▇. ▇. ▇▇▇▇▇▇▇ software), litigation support
services and other corporate support functions, and (b) use of the Seller Space
(as such term is defined in Section
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5.10(a) hereof) on a rent-free basis.
4.8 Undisclosed Liabilities. Except as and to the extent reflected
on the Interim Balance Sheet or in Schedule 4.8 hereto, the Company has no
material liabilities, commitments or obligations of any nature (whether
absolute, accrued, contingent or otherwise) other than those incurred in the
ordinary course of business consistent with past practice since the date of the
Interim Balance Sheet.
4.9 Absence of Certain Changes and Events. Except as contemplated
by this Agreement or as set forth on Schedule 4.9 hereto, since September 30,
1998:
(a) the business of the Company has been operated only in
the usual and ordinary course and there has not been:
(i) any material adverse change in the financial
condition, business, results of operations or prospects of the Company;
(ii) any damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting the
properties, business or business prospects of the Company;
(iii) any distribution, declaration, setting aside
or payment of any dividend, or any other distribution with respect to
the capital stock of the Company or any direct or indirect redemption,
purchase or other acquisition of any such stock or sale of any such
stock by the Company;
(iv) any material or unusual increase in the
fixed compensation payable to or to become payable by the Company to
any officer, key employee or agent of the Company, or in any insurance,
pension or other benefit plan, payment, or arrangement made to, for or
with any such officers, key employees or agents of the Company;
(v) any commission or bonus paid to any such
officers, key employees or agents, other than commissions and bonuses
paid in the ordinary course of business;
(vi) any material change in the operation of the
business of the Company or any material transactions entered into,
except such changes and transactions occurring in the ordinary course
of business and not otherwise required to be disclosed pursuant to this
Section 4.9; or
(vii) any agreement to do any of the foregoing;
and
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(b) the Company has not:
(i) purchased, sold or transferred any asset
except in the ordinary course of its business;
(ii) canceled any debts or waived any claims or
rights of substantial value, or sold, transferred or otherwise disposed
of, any properties or assets (real, personal or mixed, tangible or
intangible) of substantial value, except, in each such case, in
transactions in the ordinary course of business and consistent with
past practice and which in any event, do not exceed $25,000
individually;
(iii) made any capital expenditures or commitments
in the ordinary course of business in excess of $50,000 individually,
or $100,000 in the aggregate; or
(iv) been the subject of or experienced any
strike or other work stoppage or concerted slow down or threat thereof,
union election or attempted collective bargaining of employees.
4.10 Tax Matters.
(a) For purposes of this Agreement, (i) "Taxes" shall
mean all taxes, assessments, charges, duties, fees, levies or other
governmental charges (including interest, penalties or additions
associated therewith), including federal, state, city, county, foreign
or other income, franchise, capital stock, real property, personal
property, tangible, withholding, FICA unemployment compensation,
disability, transfer, sales, use, excise, gross receipts and all other
taxes of any kind for which the Company may have any liability imposed
by the United States or any state, county, city, country or government
or subdivision thereof whether disputed or not, and any charges,
interest or penalties imposed by any taxing authority as the result of
the failure to file any Tax Return; and (ii) "Tax Return" shall mean
any report, return, declaration or other information required to be
supplied to a taxing authority, including estimated returns and reports
of every kind, in connection with Taxes.
(b) Except as otherwise disclosed on Schedule 4.10
hereto: (i) all Tax Returns required to be filed by the Company have
been timely and properly filed in accordance with any applicable Law or
any applicable extensions, and all such Tax Returns were correct and
complete in all respects; (ii) all Taxes, deposits or other payments
for which the Company has any liability through the date hereof
(whether or not shown on any Tax Return), have been paid in full or are
accrued or will be accrued as of Closing as liabilities for Taxes on
the books and records of the Company; (iii) the amounts so paid on or
before the date hereof, together with any amounts accrued as
liabilities for Taxes (including Taxes accrued as currently payable) on
the books of the Company and reflected in the Financial Statements
(excluding any such liabilities for deferred Taxes established to
reflect timing differences between book and tax income) will be
adequate based on the tax rates, Laws and regulations in effect on the
date hereof to satisfy all liabilities for Taxes of the Company in any
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14
jurisdiction through the Closing Date, including Taxes accruable upon
income earned through the Closing Date; (iv) there are not now any
extensions of time in effect with respect to the dates on which any Tax
Returns were or are due to be filed; (v) all deficiencies asserted as a
result of any examination of any Tax Return have been paid in full,
accrued on the books of the Company, or finally settled, and no issue
has been raised in any such examination that, by application of the
same or similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined; (vi) no
claims have been asserted and no proposals or deficiencies for any
Taxes are being asserted, proposed or threatened, and no audit or
investigation of any Tax Return is currently underway, pending or
threatened; (vii) no Tax Return relating to taxable periods ending on
or after December 31, 1996 has been examined or audited by any
governmental authorities; (viii) there are no outstanding waivers or
agreements by Seller or the Company for the extension of time for the
assessment of any Taxes or deficiency thereof, nor are there any
requests for rulings, outstanding subpoenas or requests for
information, notice of proposed reassessment of any property owned or
leased by the Company or any other matter pending between the Company
and any taxing authority; and (x) to the best of Seller's and the
Company's knowledge, there are no liens for Taxes not yet due, nor are
there any liens that are pending or threatened.
(c) The Company has delivered to Purchaser true and
complete copies of all income Tax Returns for the three most recent
years for which Tax Returns are due to have been filed.
(d) Neither Seller nor the Company has filed a consent
pursuant to Section 341(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
(e) No assets of the Company or of any "Related Person,"
as that term is defined in Section 144(a)(3) of the Code (or Section
103(b)(6)(c) of the Internal Revenue Code of 1954, as amended (the
"1954 Code"), whether owned or leased pursuant to a capital lease, have
been financed by private activity bonds within the meaning of Section
141 of the Code (or industrial development bonds within the meaning of
Section 103(b) of the 1954 Code), and neither the Company nor any
Related Person is a "principal user," as that term is used in the
context of Section 144(a) of the 1986 Code (or Section 103(b) of the
1954 Code) of any building which has been so financed.
(f) Except as disclosed on Schedule 4.10 hereto, the
Company is not a party to any written agreement providing for the
allocation or sharing of Taxes.
(g) Except as disclosed on Schedule 4.10 hereto, the
Company has never filed or been included in any combined or
consolidated Tax Return with any Person or been a member of an
affiliated group, within the meaning of Section 1504 of the Code,
filing a consolidated federal income Tax Return, other than a group the
common parent of which is Seller.
- 10 -
15
(h) The Company does not have any liability for the Taxes
of any person (other than the Company under Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law),
except as may be assumed by Seller under the Assumption of Liabilities
(as defined in Section 5.11 hereof).
4.11 Title to Personal Property and Condition of Assets.
(a) The Interim Balance Sheet of the Company reflects all
the real and personal properties presently owned by the Company and
used in its business, except for (a) assets acquired or disposed of by
the Company in the ordinary course of its business since the date of
the Interim Balance Sheet, (b) properties that have been fully
depreciated or the cost of which has been expensed by the Company and
(c) properties leased by the Company. Except as disclosed on Schedule
4.11 hereto, the Company has good and marketable title to all of its
properties, including, without limitation, all properties and assets
that are reflected in the Interim Balance Sheet (except properties and
assets sold or otherwise disposed of in the ordinary course of business
subsequent to the dates of the Interim Balance Sheet), free and clear
of all Liens, except liens of current state and local property Taxes
not yet due and payable. Except as disclosed on Schedule 4.11 hereto,
all properties and assets of the Company are in the possession and
control of the Company. To the best knowledge of the Company and
Seller, all properties and assets owned, used or occupied by the
Company have been used and maintained in a manner consistent with
industry practices. To the best knowledge of the Company and Seller,
the Company is not in violation of any applicable zoning regulation,
ordinance or other Law, order, regulation, restriction or requirement
relating to its operations or properties, whether such properties are
owned or leased.
(b) To the best knowledge of the Company and Seller, the
Company enjoys peaceful and undisturbed possession under all leases of
personal property under which it operates. There are no existing
material defaults, or events that with the passage of time or the
giving of notice, or both, would constitute material defaults under any
such lease by the Company or, to the best knowledge of the Company and
Seller, by any other party to any such lease.
(c) Except for leasehold interests and other leased
properties and the personal property identified on Schedule 4.11
hereto, and except for assets owned by Shareholder that are not
material, either individually or in the aggregate, to the business or
financial condition of the Company, there are no assets owned by any
third party that are used in the operations of the business of the
Company.
(d) Without limiting Purchaser's rights under this
Agreement, and after taking into account Seller's and Shareholder's
disclosures in, and the conveyances by the Company to Seller or
Shareholder contemplated by, this Agreement, Seller acknowledges that,
upon the Closing, the Company will own, lease or license (and Purchaser
thus will indirectly acquire) the furniture, fixtures, equipment
(including computer hardware and software,
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16
vehicles, office supplies, deposits, prepaids, names, customer lists,
contracts, personnel and marketing databases, other intangible assets
and other assets used in the ordinary course of business.
4.12 Material Contracts. Except as set forth on Schedule 4.12
hereto, and except for oral agreements and understandings with Shareholder
regarding the matters described in the last sentence of Section 4.7 hereof, the
Company is not a party to, or otherwise bound by, any contract or other
agreement (whether oral or written):
(a) involving amounts payable by or to the Company during
any 12-month period of $50,000 or more;
(b) that is a management, consultant or employment
contract, collective bargaining or other labor or union agreement;
(c) that is a license or franchise contract or agreement;
(d) with Seller, with any director or officer of the
Company, with any person related to Seller or with any company or other
organization in which Seller, any director or officer of the Company,
or any person related to Seller has a direct or indirect financial
interest;
(e) that is a loan, factoring, credit line or
subordination agreement or other agreement relating to borrowing of
money, extension of credit, or granting of liens or encumbrances;
(f) that is a lease of real, personal or mixed property
under which the Company is a lessor or lessee;
(g) that is a joint venture or other agreement involving
sharing of profits;
(h) creating a power of attorney empowering any Person to
act on behalf of the Company;
(i) constituting an offer, bid or proposal binding on the
Company that, if accepted, would result in a contract requiring the
Company to pay, or by which the Company would receive, in the
aggregate, $500,000 or more to or from a single source in any 12- month
period;
(j) constituting a guaranty, subordination or other
similar type of agreement, whether or not entered into in the ordinary
course of business;
(k) not made in the ordinary course of business;
(l) that is a minority or set-aside contract;
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17
(m) creating a bonus plan or profit sharing plan for any
officer, employee or agent of the Company (including, without
limitation, any such plans maintained by Seller or Shareholder that
cover any employees of the Company);
(n) that limits the ability of the Company or any
material employee of the Company from engaging in any business in any
jurisdiction, or that limits others from competing with the Company;
(o) that is an employment or consulting agreement, or
that provides for the payment of commissions or royalties of any type;
or
(p) that is a service, supply or maintenance agreement,
open purchase order or other arrangement requiring notice prior to
termination.
True and complete copies of all such contracts, agreements and other documents
listed on Schedule 4.12 hereto (such contracts, agreements and other documents
are hereinafter referred to as "Material Contracts") have been furnished to
Purchaser. The Company has complied in all material respects with all its
material obligations under each Material Contract and the Company is not in
default in any material respect as to any Material Contract. To the best
knowledge of the Company and Seller, no condition or state of facts exists that,
with notice or the passage of time, or both, would constitute a default under
any Material Contract, and all Material Contracts are in full force and effect
and are enforceable by the Company against all other parties thereto in all
material respects.
4.13 Intellectual Property.
(a) Except as set forth on Schedule 4.13(a) hereto, the
Company does not own or license any United States and foreign patents,
trademarks, trade names, service marks, copyrights and applications
therefor (hereinafter the "Patent and Trademark Rights"). The business
of the Company as now conducted, to the best knowledge of the Company
and Seller, does not conflict with and has not been alleged to conflict
with any patents, trademarks, trade names, service marks or copyrights
of others. The Company does not know of any use by others of any of the
Patent and Trademark Rights set forth on Schedule 4.13(a) that would be
material to the business of the Company as presently conducted.
(b) Schedule 4.13(b) hereto sets forth a true and correct
list of (i) all computer software programs licensed to the Company that
are material to the conduct of the business of the Company other than
"off-the-shelf" software owned by or licensed to the Company (the
"Software"); (ii) all agreements relating to Software that is owned by
a third party and that the Company is licensed or otherwise authorized
to use; and (iii) all agreements relating to the use by third parties
of Software that is owned by the Company. The Company owns, or
possesses valid license rights to, all Software. There are no
infringement suits, actions or proceedings pending or, to the best
knowledge of the Company and Seller, threatened against the Company
with respect to any Software. To the best knowledge of the Company and
Seller, there are no infringement suits, actions or proceedings pending
or threatened against
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18
the owner of any Software that is owned by a third-party. With respect
to Software that is owned by a third-party and that the Company is
licensed or otherwise authorized to use, the license, sublicense,
agreement or permission covering such Software is (i) legal, valid,
binding and enforceable and is in full force and effect and (ii) has
not, to the best knowledge of the Company and Seller been breached by
the Company or the third-party. The consummation of the transactions
contemplated hereby will not result in the loss or impairment of the
Company's right to use any Software that is owned by a third-party and
that the Company is licensed or otherwise authorized to use.
4.14 Employee Matters.
(a) Schedule 4.14(a) hereto contains a true and complete
list of each bonus, deferred compensation, incentive compensation,
stock purchase, stock option, phantom stock, severance or termination
pay, hospitalization or other health, life, disability or other
insurance, supplemental unemployment benefits, profit-sharing, pension,
or retirement plan, program, agreement or arrangement, and each other
employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to for the
benefit of any officer, director, employee or former officer, director
or employee of the Company, whether formal or informal and whether
legally binding or not (the "Plans"). Schedule 4.14(a) identifies each
of the Plans that is an "employee welfare benefit plan," or "employee
pension benefit plan" as such terms are defined in Sections 3(1) and
3(2) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder ("ERISA")
(such plans being hereinafter referred to collectively as the "ERISA
Plans").
(b) With respect to each of the Plans, the Company has
heretofore delivered or made available to Purchaser true and complete
copies of each of the following documents:
(i) a copy of the Plans and related summary plan
descriptions (including all amendments thereto and any trust
agreements or other contracts or agreements that are a part of
such Plans);
(ii) a copy of the annual report, if required
under ERISA, with respect to each such Plan for the last three
years;
(iii) a copy of the actuarial report, if required
under ERISA, with respect to each such Plan for the last three
years; and
(iv) the most recent determination letter
received from the Internal Revenue Service with respect to
each Plan that is intended to be qualified under Section 401
of the Code and copies of all other Internal Revenue Service,
Department of Labor and Pension Benefit Guaranty Corporation
("PBGC") rulings or determinations with respect to each Plan.
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19
(c) No liability under Title IV of ERISA has been
incurred by the Company or any trade or business, whether or not
incorporated, that together with the Company would be deemed a "single
employer" within the meaning of Section 4001(b)(1) of ERISA (an "ERISA
Affiliate") since the effective date of ERISA that has not been
satisfied in full, and no condition exists that presents a risk to the
Company or an ERISA Affiliate of incurring a liability under such
title, other than liability for premiums due the PBGC, which payments
have been or will be made when due.
(d) Neither the Company, any of the ERISA Plans, any
trust created thereunder nor any trustee or administrator thereof has
engaged in a transaction or has taken or failed to take any action in
connection with which the Company, any of the ERISA Plans, any such
trust, any trustee or administrator thereof, or any party dealing with
the ERISA Plans or any such trust could be subject to either any
liability under Section 409 or 502(i) or 502(l) of ERISA or a Tax
imposed pursuant to Section 4975, 4976 or 4980B of the Code.
(e) Each of the ERISA Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so
qualified.
(f) All of the assets that have been set aside in a trust
or insurance company separate account to satisfy any obligations under
any Plan are shown on the books and records of each such trust and each
such account at their current fair market value as of the most recent
valuation date for such trust or account, the fair market value of all
the assets so set aside for a Plan as of each such valuation date
equals or exceeds the present value of any obligation under such Plan,
and the liabilities for all other obligations under any Plan are
accurately set forth in the Company's most recent financial statement.
(g) Except as disclosed on Schedule 4.14(g), each Plan
has been established, maintained and administered in compliance with
the terms of such Plan and all applicable laws, and all applicable
reporting and disclosure requirements with respect to each Plan have
been satisfied on a timely basis, including all such requirements under
the Code and ERISA. Except as set forth on Schedule 4.15, no Plan is
described in ERISA Sections 3(37), 4(b)(4), 4063 or 4064 or is subject
to Code Section 412, and the Company has never maintained or
contributed directly or indirectly to (or had an obligation to
contribute directly or indirectly to) such a plan. No ERISA Plan that
is described in ERISA Section 3(1) provides any benefits after a
termination of employment except to the extent such benefits are
required to satisfy the minimum requirements under Part 6 of Subtitle B
of Title I of ERISA.
(h) Except as provided in Schedule 4.14(h) hereto, there
are no pending or threatened claims with respect to a Plan (other than
routine and reasonable claims for benefits made in the ordinary course
of a Plan's operations) or with respect to the terms and conditions of
employment or termination of employment of any employee or former
employee of the Company, which claims could reasonably be expected to
result in any liability to the Company, and no audit or investigation
by any domestic or foreign
- 15 -
20
governmental or other law enforcement agency is pending or, to the
Company's knowledge, has been proposed with respect to any Plan.
(i) Except as set forth on Schedule 4.15, the Company has
the right pursuant to the terms of each Plan and all agreements related
to such Plan unilaterally to terminate such Plan (or its participation
in such Plan) or to amend the terms of such Plan at any time without
triggering a penalty or an obligation to make any additional
contributions to such Plan, and the Company immediately after the
Closing shall have the right to unilaterally terminate its
participation in each Plan without triggering any penalty or any
obligation to make any additional contributions to such Plan.
(j) Except as provided in Schedule 4.14(j) hereto, the
transactions contemplated by this Agreement will not result in any
additional payments, including severance payments, to or benefit
accruals for, or any increase in the vested interest of, any current or
former officer, employee or director or their dependents under any
Plan. The transactions contemplated by this Agreement will not result
in any payments to any current or former officer, employee or director
of the Company or an ERISA Affiliate that will be subject to Section
280G of the Code.
(k) The Company has provided Purchaser with a copy of the
Company's policy for providing leaves of absence under the Family and
Medical Leave Act ("FMLA") and has complied with the FMLA in all
material respects.
(l) The Company possess proper verification and
authorization documentation on each and every employee of the Company
as required by the Immigration and Reform Control Act of 1986.
(m) Seller has conducted, or has had conducted in
accordance with applicable state law, a thorough criminal conviction
check of all employees of the Company (based on the employee's
then-present state of residence), and none of such employees had
criminal convictions that would prohibit hiring under applicable state
law as of the date of such check; provided, however, that where a
Material Contract may have a different standard regarding criminal
background checks, the Company has complied, in all material respects,
with the provisions of such Material Contracts regarding criminal
checks.
4.15 Labor Matters. Except to the extent set forth in Schedule 4.15
hereto: (a) none of the Company's employees are or have been represented by a
labor organization that was either National Labor Relations Board ("NLRB")
certified or voluntarily recognized or recognized under foreign law; (b) the
Company has not been and is not a signatory to a collective bargaining agreement
with any labor organization; (c) the Company is not obligated, by any collective
bargaining agreement or other agreement, to contribute to any multiemployer
pension benefit plan covering employees, retirees and/or beneficiaries; (d) the
Company has not conducted negotiations with respect to any future contract with
or commitment to any labor union or association and, to the best knowledge of
the Company and Seller, there are no current or threatened attempts to organize
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21
or establish any labor union or association, (e) no representation election
petition filed by employees of the Company is pending with the NLRB and, to the
best knowledge of the Company and Seller, no union organizing campaign involving
employees of the Company is in progress; (f) no NLRB unfair labor practice
charges or litigation are presently pending against the Company or any labor
organization representing any of their employees; (g) no grievance or
arbitration demand, whether or not filed pursuant to a collective bargaining
agreement, is pending against the Company; (h) no labor dispute, walkout,
strike, slowdown, handbilling, picketing, work stoppage (sympathetic or
otherwise), or other "concerted action" involving the employees of the Company
is in progress and none of the Company's employees have engaged in any such
actions at any time since June 28, 1996; (i) no breach of contract and/or denial
of fair representation claim is pending against the Company and/or, to the best
knowledge of the Company and Seller, any labor organization representing any of
its employees; (j) no claim for unpaid wages or overtime or for child labor or
record-keeping violations has been filed, threatened, or is pending against the
Company under the Fair Labor Standards Act, ▇▇▇▇▇-▇▇▇▇▇ Act, ▇▇▇▇▇-▇▇▇▇▇▇ Act,
or Service Contract Act or any other Federal, state, local or foreign Law; (k)
no discrimination and/or retaliation claim is pending, or to the best knowledge
of the Company and Seller, threatened against the Company under the 1866, 1877,
1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age Discrimination in
Employment Act, as amended, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Fair Labor Standards Act, ERISA or any other Federal Law
or any comparable state or local fair employment practices act or foreign Law
regulating discrimination in the workplace and no wrongful discharge, liable,
slander or other claim under any state law is pending or threatened which arises
out of the employment relationship with respect to any person or the termination
of any such relationship; (l) if the Company is a Federal, state or provincial
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanctions or
debarment proceeding is pending or has been threatened against the Company with
the Office of Federal Contract Compliance Programs ("OFCCP") or any other
Federal agency or any comparable state or foreign agency or court and no desk
audit or on-site review is in progress; (m) no citation has been issued or is
pending before the Occupational Safety and Health Administration ("OSHA") or
applicable state plans against the Company, and no notice of contest or OSHA
administrative enforcement proceeding involving the Company has been filed or is
pending; (n) no material workers' compensation or retaliation claim is pending
against the Company, and the Company maintains adequate insurance with respect
to workers compensation claims pursuant to insurance policies that are currently
in force, or has accrued an adequate liability for such obligations, including,
without limitation, adequate accruals with respect to accrued but not reported
claims and retroactive insurance premiums, which is accurately set forth in the
Financial Statements; (o) no investigation or citation of the Company is
outstanding and no enforcement proceeding has been initiated or is pending under
Federal or foreign immigration law; (p) the Company has not taken any action
that would constitute a "Mass Layoff" or "Plant Closing" within the meaning of
the Worker Adjustment and Retraining Notification ("WARN") Act or would
otherwise trigger notice requirements or liability under any state, provincial,
local or foreign plant closing notice Law, and to the extent any liability
arises between the date of this Agreement and the Closing Date as a result of
employment actions of the Company, the Company will be solely responsible
therefor; and (q) the Company has not entered into, nor is it otherwise bound
by, any employment contract or
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22
severance agreement with any employee of the Company. The proposed terms of the
renewal of the collective bargaining contracts between the Company and The
General Service Employees Union, Local 73, SEIU, AFL-CIO, CLC (the "Union
Contracts") are as set forth on Schedule 4.15 hereto. Except as set forth on
Schedule 4.15 hereto, the Company is in material compliance with all Federal,
state, provincial, local and foreign laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, is not liable
for any arrears or wages or penalties for failure to comply with any of the
foregoing, and is not engaged in any unfair labor or unlawful employment
practice.
4.16 Environmental Matters.
(a) The Company has not received any written
communication from any Person (including any Authority) stating that
the Company may be a potentially responsible party under any
Environmental Law (as defined in Section 4.16(c) hereof) with respect
to any actual or alleged environmental contamination; neither the
Company nor, to the best knowledge of the Company and Seller, any
Authority, is conducting or has conducted any environmental remediation
or environmental investigation that could reasonably be expected to
result in liability for the Company under any Environmental Law,
including without limitation with relation to properties that are not
owned or leased by the Company; and the Company has not received any
request for information under any Environmental Law from any Authority
with respect to any actual or alleged environmental contamination.
(b) Since June 28, 1996, the Company has not received any
written communication from any person or entity (including any
Authority) stating or alleging that the Company may have violated any
Environmental Law, or any permit issued pursuant to any Environmental
Law, or that the Company has caused or contributed to any environmental
contamination that has caused any property damage or personal injury
under any Environmental Law.
(c) The Company has provided Purchaser with copies of (i)
any material environmental investigation, study, audit, test, review
and other analysis in the possession of the Company conducted in
relation to the business of the Company or any property or facility now
or previously owned, operated or leased by the Company; and (ii) any
consent decree, consent order or similar document in force and to which
it is a party relating to any property currently owned, leased or
operated by the Company.
(d) For purposes of this Section 4.16, "Environmental
Law" means all applicable state, federal and local laws, regulations
and rules, including common law, judgment, decrees and orders relating
to pollution, the preservation of the environment, and the release of
hazardous substances, toxic or hazardous waste or petroleum or
petroleum products as those terms are defined by Environmental Laws.
(e) To the best knowledge of the Company and Seller (i)
no release of any hazardous substance has occurred on any property
owned or leased by the Company, (ii) no
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23
underground storage tanks or asbestos containing materials exist on any
property owned or leased by the Company, (iii) the Company has all
permits and approvals and has filed all notices required to comply with
applicable environmental laws, and (iv) the Company has not entered
into any consent decree, consent order or other type of agreement with
any Person, including any Authority, resulting in any alleged violation
of any Environmental Law or any permit issued pursuant to any
Environmental Law or to remediate any environmental condition pursuant
to any Environmental Law.
4.17 Insurance. Schedule 4.17 hereto sets forth a complete and
correct list of all insurance policies currently in effect that are owned or
held by the Company (or that are owned or held by Seller or Shareholder for the
benefit of the Company), insuring the products, properties, assets, business and
operations of the Company and its potential liabilities to third parties, and
all general liability policies maintained by the Company. All such policies are
in full force and effect and all premiums due and payable in respect thereof
have been paid. Since the respective dates of such policies, no notice of
cancellation or non-renewal with respect to any such policy has been received by
the Company. Schedule 4.17 sets forth a list of all pending claims and the
status as of the date of this Agreement of all deductibles with respect to all
such policies, and all loss runs, as of the date of this Agreement, with respect
to such policies.
4.18 Permits; Compliance With Law. The Company holds and is in
material compliance with all permits, orders, approvals, registrations,
authorizations, consents and qualification filings with all Authorities required
under applicable Laws in connection with the operation of the business of the
Company (collectively, "Permits") and is in material compliance with all
material requirements of all applicable Laws. No notice, citation, summons or
order has been received by the Company, no complaint has been filed and served
on the Company, no penalty has been assessed and no investigation, proceeding or
review is pending or, to the best knowledge of the Company and Seller,
threatened (i) with respect to any alleged material violation by the Company of
any Law or Permit, or (ii) with respect to any alleged failure by the Company to
have any Permit. True and correct copies of all Permits relating to Company
Activities (as defined in Section 7.4 hereof) is set forth on Schedule 4.18
hereto. No event has occurred or circumstance exists that will (with or without
notice or lapse of time) (x) constitute or result in a violation of or a failure
to comply with any material term or requirement of any Permit or, to the best
knowledge of the Company and Seller, any Law in any material respect, or (y)
result in the revocation, withdrawal, suspension, cancellation or termination
of, or modification to, any Permit.
4.19 Litigation. Schedule 4.19 hereto sets forth a list and brief
description of all material actions, suits, claims or proceedings pending or, to
the best knowledge of the Company and Seller, threatened against or involving
the Company, or any of its assets or properties, by or before any Authority
(including but not limited to all actions involving workers' compensation,
employment discrimination, wrongful termination, the Equal Employment
Opportunity Commission and general liabilities). There are no outstanding
orders, judgments, injunctions, stipulations, awards or decrees of any Authority
against the Company, or any of its assets or properties that prohibit or enjoin
the consummation of the transactions contemplated hereby. To the best knowledge
of the Company and
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24
Seller, no event has occurred or circumstance exists that may (with or without
notice or lapse of time) give rise to or serve as the basis for any material
action, suit, claim or proceeding against or involving the Company.
4.20 List of Personnel. Schedule 4.20 hereto sets forth (i) the
name and total base compensation of each officer and director of the Company and
each other salaried or hourly administrative employee of the Company, (ii) all
commitments or agreements by the Company to increase the wages or modify the
conditions or terms of employment of any of its employees, and (iii) a detailed
listing of commissions and bonuses paid by, or due from, the Company since June
28, 1998, including amounts accrued through the Closing Date.
4.21 Transactions With Affiliates. Except as set forth on Schedule
4.21 hereto, and except for oral agreements and understandings with Shareholder
regarding the matters described in the last sentence of Section 4.7 hereof, the
Company has not purchased, acquired or leased any property or services from, or
sold, transferred or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from or entered into or been subject to any
management, consulting or similar agreement with, any officer, director or
shareholder of the Company or any of their respective Affiliates (as hereinafter
defined). Except as set forth on Schedule 4.21, no Affiliate of the Company is
indebted to the Company for money borrowed or other loans or advances, and the
Company is not indebted to any such Affiliate. For purposes of this Section
4.21, an "Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this Agreement, (i) "control", when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and (ii) "controlling"
and "controlled" have meanings correlative to the foregoing.
4.22 Brokers and Finders' Fees. Except as set forth on Schedule
4.22 hereto, neither Seller nor the Company has employed any broker or finder
nor incurred nor will incur any broker's, finder's or similar fees, commissions
or expenses payable by Seller or the Company in connection with the transactions
contemplated by this Agreement.
4.23 Books and Records; Internal Controls. Subject to the
qualifications set forth in Section 4.7 hereof, the books and records of the
Company accurately and fairly reflect the transactions and dispositions of
assets of the Company. The Company's system of internal accounting controls is
sufficient to provide reasonable assurances that transactions are executed in
accordance with management's general or specific authorization and that
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets.
4.24 Customers. Schedule 4.24 hereto lists the customers of the
Company as of the date hereof that (i) are parties to written contracts with the
Company that have a remaining term in excess of one year and that do not permit
the customer to terminate its obligations to the Company without
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cause upon the provision of notice to the Company or (ii) the Company's 25
largest current customers (measured in terms of annualized revenues to the
Company). All of the aforementioned contracts are included in the Company's
Material Contracts. Except as set forth on Schedule 4.24, (i) the Company has
not received notice of termination of its agreement with any such customer or
the occurrence of an event of default under its agreement that would allow such
customer to terminate such agreement, and (ii) there has not been, to the best
knowledge of Seller and the Company, with respect to any such customer, a
material adverse change in the business relationship with any such customer.
4.25 Disclosure. None of the representations and warranties by the
Company, Seller or Shareholder in this Agreement and no statement on the part of
any of the foregoing contained in any of the Schedules hereto contains or will
contain as to the applicable representation and warranty any untrue statement of
material fact or omits or will omit to state any material fact necessary in
order to make any of the statements herein or therein, in light of the
circumstances under which it was made, not misleading.
ARTICLE 5.
Pre-Closing Covenants
5.1 Access to Information. From and after the date hereof and
until the Closing, Seller will cause the Company (a) to give to Purchaser and
Purchaser's authorized representatives reasonable access during normal business
hours to its books and records, officers, managers, supervisors, facilities,
personnel and accountants, (b) to furnish and make available to Purchaser and
its authorized representatives all such documents and copies of documents and
all such additional financial and operating data and other information
pertaining to the affairs of the Company as Purchaser and its authorized
representatives may reasonably request and which is reasonably available to
Seller, Shareholder or the Company, and (c) to give Purchaser permission (acting
together with a representative of the Company) to contact management and those
clients of the Company identified on Schedule 5.1 hereto, and to visit the
Company's operating locations and the locations of such clients; provided,
however, that the activities of Purchaser and its representatives shall be
conducted in such a manner as not to interfere unreasonably with the operation
of the business of the Company.
5.2 Conduct of Business. During the period from the date hereof to
the Closing Date, and subject to the provisions of this Agreement, Seller will
cause the Company to (a) continue to conduct its business affairs only in the
usual and ordinary course of business and in substantially the same manner as
previously conducted, (b) maintain, or cause to be maintained in full force and
effect, all of its Permits, insurance policies and bank accounts currently held
or maintained by the Company, and (c) keep its business and properties
substantially intact, including its present operations, physical facilities and
relationships with lessors, licensors, suppliers, customers and employees, in a
manner consistent with the conduct of business in the ordinary course.
5.3 Pre-Closing Activities. Except as otherwise required or
permitted by this Agreement,
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as agreed to by Purchaser in writing or as set forth on Schedule 5.3 hereto,
prior to the Closing Date, the Company shall not, and Seller shall not take any
action to cause the Company, and shall not permit the Company, to:
(a) declare or pay any dividend or other distribution on
or with respect to any shares of its capital stock or make any direct
or indirect redemption, retirement, purchase or other acquisition of
any shares of its capital stock;
(b) create, incur or assume any indebtedness for borrowed
money, assume or become subject to, whether directly or indirectly, by
way of guaranty or otherwise, any obligation or liability (whether
absolute, accrued, contingent or otherwise and whether due or to become
due);
(c) cause or permit any material damage, destruction or
other casualty loss (whether or not covered by insurance) to or
affecting the business or assets of the Company;
(d) fail to discharge or to satisfy any Lien on any
property of the Company or pay or satisfy any claim, obligation or
liability (whether absolute, accrued, contingent or otherwise) of the
Company when the same shall become due and payable;
(e) sell, lease, assign, transfer or otherwise dispose of
any property or asset;
(f) permit or allow any property or asset of the Company
to be subjected to any Lien, or enter into any conditional sale or
other title retention agreement with respect to any property or asset;
(g) change in any respect the accounting methods or
practices followed by the Company;
(h) amend or modify in any way its Certificate of
Incorporation or bylaws;
(i) reclassify, combine, split, subdivide or redeem or
otherwise repurchase any capital stock of the Company, or create,
authorize, issue, sell, deliver, pledge or encumber any additional
capital stock (whether authorized but unissued or held in treasury) or
other securities equivalent to or exchangeable for capital stock, or
grant or otherwise issue any options, warrants or other rights with
respect thereto;
(j) acquire or agree to acquire by merging or
consolidating with, or by purchasing any portion of the capital stock,
partnership interests or assets of, or by any other manner, any
business or any corporation, limited liability company, partnership,
association or other business organization or division thereof;
(k) make any loan or advance (whether in cash or other
property), or make any investment in or capital contribution to, or
extend any credit to, any Person, except
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27
short-term investments pursuant to customary cash management policies;
(l) enter into any agreement with any labor union or
association representing any employee (other than the Union Contracts
with substantially the terms disclosed to the Company in Schedule
4.15), or, other than in the ordinary course consistent with the past
practices of the Company, make any wage or salary increase or bonus,
agree to the payment of severance to any employee, or increase in any
other direct or indirect compensation, for or to any of its officers,
directors or employees;
(m) enter into, amend, terminate or fail to renew any
Material Contract except in the ordinary course of business consistent
with past practices;
(n) make any payment to Seller or any affiliate of any
Seller or forgive any indebtedness due or owing from Seller or any
affiliate of Seller to the Company;
(o) make any tax election or settle or compromise any tax
liability other than in the ordinary course of business, consistent
with past practices, and other than an election under Section
338(h)(10) of the Code with respect to the transactions contemplated by
this Agreement in accordance with Section 7.2 hereof;
(p) fail to perform in all material respects all of its
obligations under all Material Contracts (except those being contested
in good faith);
(q) fail to use all commercially reasonable efforts to
maintain in full force and effect and in the same amounts policies of
insurance comparable in amount and scope of coverage to that now
maintained by the Company;
(r) fail to use all commercially reasonable efforts to
continue to collect its accounts receivable in the ordinary course of
business and consistent with past practice;
(s) fail to prepare and file all Tax Returns or
extensions required to be filed by it;
(t) institute or amend any employee benefit plan except
as may be required by Law, or enter into or modify any written
employment arrangement with any individual; or
(u) enter into any agreement or commitment to do any of
the foregoing.
5.4 Efforts to Consummate. Subject to the terms and conditions of
this Agreement, each party hereto shall use reasonable efforts to take or cause
to be taken all actions and do or cause to be done all things required under
applicable Laws in order to consummate the transactions contemplated hereby,
including, without limitation, (a) obtaining all authorizations, consents and
approvals of any Person or Authority that are required for or in connection with
the consummation of the transactions contemplated hereby and by the other
documents describing the transactions
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28
contemplated hereby (collectively, the "Transaction Documents"), including,
without limitation, approvals required under the HSR Act, but not including any
consents or approvals required by any agreement, document or other instrument or
Permit that is excluded from Section 4.3 hereof pursuant to the last sentence
thereof, (b) taking any and all reasonable actions necessary to satisfy all of
the conditions to such party's obligations hereunder as set forth in Article 6,
and (c) executing and delivering all agreements and documents required by the
terms hereof to be executed and delivered by such party on or prior to the
Closing. Nothing in this Agreement shall be construed as an attempt or an
agreement by the Company to assign or cause the assignment of any contract or
agreement which is by Law nonassignable without the consent of the other party
or parties thereto, unless such consent shall have been given. Without limiting
the generality of the foregoing, on or prior to the Closing Date, Seller and the
Company shall have taken all reasonable steps necessary to cause the assignment
or transfer to Purchaser (or, if applicable, to the Company as the wholly-owned
subsidiary of Purchaser) of those contracts, agreements and other rights listed
on Schedule 5.4 hereto.
5.5 No Shop. From the date of this Agreement until the earlier of
(i) the Closing Date, or (ii) the termination of this Agreement, Seller shall
not, and shall cause the Company and its officers, directors, employees,
affiliates and other agents not to, directly or indirectly, take any action to
solicit, initiate or encourage any offer or proposal or indication of interest
in a sale, merger, consolidation or other business combination involving any
equity interest in, or a substantial portion of the assets of the Company, other
than in connection with the transactions contemplated by this Agreement. Seller
shall immediately advise Purchaser of the terms of any written offer, proposal
or indication of interest that it or the Company receives or of which it
otherwise becomes aware after the date of this Agreement. If either Seller or
the Company, its officers, directors, employees, affiliates or agents violate
any of the provisions of this Section 5.5, and the transactions contemplated by
this Agreement do not close, in addition to other remedies available to
Purchaser, Seller shall promptly, on demand, pay and reimburse Purchaser all
out-of-pocket and professional fees and expenses incurred by Purchaser or any of
its affiliates in connection with this Agreement or any of the transactions
contemplated hereby.
5.6 Notice. The Company shall promptly notify Purchaser of any
material change in the normal course of the Company's businesses or in the
operation of its properties and of the receipt by the Company of notice of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated) or the receipt by the Company of a
notice of the institution or the threat of litigation involving the Company, and
will keep Purchaser fully informed with respect to such events.
5.7 Performance Bonds. Seller, Shareholder, the Company and
Purchaser shall use their reasonable best efforts to cause the issuer thereof to
transfer to Purchaser the performance bonds listed on Schedule 5.7 hereto (the
"Performance Bonds"); provided, however, that, at the Closing, Purchaser shall
take all steps necessary to substitute its own collateral for any collateral of
Seller or Shareholder securing the Performance Bonds.
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29
5.8 Use of the Name. Seller, Shareholder and the Company will
permit Purchaser to use the name "UNICCO Security Services, Inc." in the conduct
of its business and the business of the Company through December 31, 1999, all
in accordance with the Tradename License Agreement substantially in the form of
Exhibit A hereto (the "Tradename License").
5.9 Termination of Certain Vehicles. Effective no later than the
Closing Date, (a) Seller shall have caused the Company to terminate any
responsibilities of the Company under the GE Fleet Service Master Lease
Agreement (the "Master Lease") with respect to certain vehicles used for
personal use, a complete list of which is set forth on Schedule 5.9 hereto (the
"Terminated Vehicles"), and (b) Purchaser shall have entered into a new lease
agreement for the continued lease by the Company of the remaining Company
vehicles under the Master Lease (the "Retained Vehicles"). As of the Closing
Date, the Company shall have no obligation or liability with respect to any of
the Terminated Vehicles.
5.10 Use of Office Space.
(a) Subject to Seller's receipt of the consent of the
applicable landlord, commencing on the Closing Date and continuing
through December 31, 1999, Seller will permit the Company to use the
office space described in greater detail on Schedule 5.10(a) hereto
(the "Seller Space"), on the terms and conditions set forth in a letter
agreement substantially in the form of Exhibit B hereto (the "Seller
Space Agreement"). Seller shall use its best efforts to (i) obtain the
required consents of the applicable landlords, and (ii) continue to
lease the Seller Space through December 31, 1999.
(b) Commencing on the Closing Date and continuing for a
period of 60 days after the Closing Date, the Company will permit
Seller to use the office space described in greater detail on Schedule
5.10(b) hereto (the "Company Space"), on the same terms and conditions
on which Seller has used the Company Space immediately prior to the
date hereof; provided, however, that Seller shall be permitted to use
the Company Space free of charge. Seller will use commercially
reasonable efforts to vacate the Company Space as soon as possible.
5.11 Assumption of Liabilities. On or prior to the Closing, Seller
shall take all steps necessary to assume or otherwise discharge all outstanding
liabilities and obligations of the Company arising or attributable to events
occurring prior to the Closing (including, without limitation, those certain
letter agreements listed on Schedule 4.20 hereto) (the "Excluded Liabilities").
In connection with the foregoing, at the Closing, Seller shall execute an
Assumption of Liabilities Agreement substantially in the form of Exhibit C
hereto (the "Assumption of Liabilities").
5.12 Releases. On or prior to the Closing, Seller shall take all
steps necessary to obtain releases on behalf of Seller, Shareholder and the
Company in respect of those obligations identified on Schedule 4.3 hereto. In
connection with the foregoing, at the Closing, Seller shall deliver copies of
such releases (collectively, the "Releases") in form and substance reasonably
acceptable to Purchaser.
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30
5.13 Vesting of Retirement Plans. On or prior to the Closing,
Seller agrees to take whatever action is necessary to cause employees of the
Company who are participants in Shareholder's 401(k) Plan to terminate their
active participation in Shareholder's 401(k) Plan, and to cause Shareholder's
401(k) Plan to permit a distribution to participants of their vested account
balances in accordance with Section 401(k)(10)(A)(iii) of the Code in connection
with the transactions contemplated by this Agreement (subject to the repayment
of any loans from such plans to any such participants to the extent required to
be repaid under the terms of Shareholder's 401(k) Plan).
5.14 Assignment of Certain Contracts. On or prior to the Closing,
Seller shall have caused the assignment from the Company or, at the option of
Seller, the termination of, those contracts listed on Schedule 5.14 hereto (the
"Terminated Contracts"). As of the Closing Date, the Company shall have no
obligation or liability with respect to any of the Terminated Contracts.
5.15 Employee Payments. As soon as is reasonably practicable after
the Closing (but in no event later than 30 days after the Closing Date), Seller
shall estimate the total amount of vacation pay, sick leave pay and other
amounts accrued by, but not paid to (or assumed by Seller under the Assumption
of Liabilities), employees of the Company on or prior to the Closing Date
(collectively, the "Accrued Pay"), and shall pay to Purchaser, in cash, an
amount equal to 50% of such estimated amount (the "Estimated Payment"). On the
date one year after the Closing Date, Seller shall pay to Purchaser, in cash, an
amount equal to the excess, if any, of (i) any Accrued Pay that has been paid by
Purchaser, over (ii) the Estimated Payment; provided, however that Purchaser
shall provide Seller with such reasonable documentation as is requested by
Seller in connection with such payments by Purchaser. Notwithstanding the
foregoing, if Purchaser is not obligated to pay all of the Estimated Payment to
employees of the Company (whether because of early termination of such employees
or otherwise), Purchaser shall pay to Seller, in cash, on the date one year
after the Closing Date, an amount equal to the excess of (x) of the Estimated
Payment, over (y) any Accrued Pay that has been paid by Purchaser.
5.16 Employment Agreements. Each of Seller and Purchaser shall use
commercially reasonable efforts to cause each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to enter into employment agreements with the
Company (or Purchaser, if applicable), in form and substance reasonably
satisfactory to Purchaser.
5.17 Adverse Changes in Condition. Seller agrees to give written
notice promptly to Purchaser upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its affiliates
which (i) is reasonably likely to have, individually or in the aggregate, a
material adverse effect on the business, properties or financial condition of
the Company, (ii) would cause or constitute a material breach of any of its
representations, warranties or covenants contained in Section 3 or 4 hereof, or
(iii) which is reasonably likely to result in Seller's, Shareholder's or the
Company's inability to perform its obligations under this Agreement. Purchaser
agrees to give written notice promptly to Seller upon becoming aware of the
occurrence of any event or circumstance which is reasonably likely to result in
Purchaser's inability to perform
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31
its obligations under this Agreement.
5.18 Supplements to Schedules. From time to time prior to the
Effective Time, the Company, Seller, Shareholder and Purchaser will each
promptly supplement or amend the respective Schedules that they have delivered
pursuant to this Agreement with respect to any matter arising after the date of
this Agreement that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in any such Schedules or
that is necessary to correct any information in any such Schedules that has been
rendered inaccurate by such matter. No supplement or amendment to any such
Schedules shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 6.1(a) or 6.2(a); provided, however that
the disclosure in any such supplement or amendment to the Schedules with respect
to any matter occurring after the date hereof (which did not exist on the date
hereof) shall not form the basis of a claim for misrepresentation or breach of a
representation, warranty, covenant or agreement hereunder.
ARTICLE 6.
Conditions to Closing
6.1 Conditions to Purchaser's Obligations. The obligations of
Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of each of the following
conditions precedent, any one or more of which may be waived by Purchaser:
(a) Each of the representations and warranties of
Shareholder, Seller and the Company set forth in Articles 3 and 4
hereof shall be true and correct in all materials respects on and as of
the date of this Agreement and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date;
provided, however, that any such representation or warranty that is
already qualified by "materiality" shall be true in all respects.
(b) Seller and the Company shall have performed and
complied in all material respects with the agreements, covenants and
obligations required under this Agreement to be performed or complied
with by Seller prior to or at the Closing.
(c) Each of Seller and the Company shall furnish
Purchaser with a certificate of its appropriate officers as to
compliance with the conditions set forth in Sections 6.1(a) and (b)
hereof.
(d) Purchaser shall have received an opinion, dated the
Closing Date, of Posternak, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the
Company and Seller, substantially in the form of Exhibit D hereto.
(e) The Company shall not have suffered any material
adverse change after
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32
August 23, 1998 in its businesses, prospects, customer contracts,
financial condition, working capital, assets, liabilities (absolute,
accrued, contingent or otherwise), reserves, operations or results of
operations, taken as a whole.
(f) Each of the officers and directors of the Company
shall have tendered to Purchaser resignation letters in form and
substance reasonably acceptable to Purchaser on or prior to the Closing
Date, such resignations to be effective at the Effective Time.
(g) Seller and the Company shall have obtained all
authorizations, consents, waivers and approvals identified on Schedule
5.4 hereto.
(h) All filings that are required to have been made by
Seller or the Company with any Authority in order to carry out the
transactions contemplated by this Agreement shall have been made; all
authorizations, consents and approvals from all Authorities required
for Seller or the Company to carry out the transactions contemplated by
this Agreement shall have been received; provided, however that nothing
herein shall be deemed a requirement that Seller obtain any approvals
with respect to the Permits; and all statutory waiting periods in
respect thereof shall have expired. There shall be in force no claim,
proceeding, action, order or decree by or before any Authority of
competent jurisdiction restraining, enjoining, prohibiting,
invalidating or otherwise preventing (or seeking to prevent) the
consummation of the transactions contemplated hereby.
(i) No proceeding in which Seller or the Company shall be
a debtor, defendant or party seeking an order for his or its own relief
or reorganization shall have been brought or be pending by or against
such person or entity under any United States or state bankruptcy or
insolvency Law.
(j) Purchaser shall have received a certificate issued by
the Secretary of State of the state in which the Company is
incorporated and of each state in which the Company is qualified as a
foreign corporation, as of a recent date, as to the good standing,
non-dissolution or foreign qualification, as applicable, of the Company
in such state(s).
(k) Seller shall have delivered to Purchaser (i) a copy
of the Company's Certificate of Incorporation, as amended to date,
certified as of a recent date by the Secretary of State of Delaware,
and (ii) all corporate minute books, stock transfer books, blank stock
certificates and corporate seals of the Company.
(l) Seller and the Company, as appropriate, shall have
executed and delivered:(i) an Assumption of Liabilities; (ii) a
Tradename License; (iii) if necessary landlord approvals have been
obtained, the Seller Space Agreement; (iv) the Transition Agreement,
substantially in the form of Exhibit E hereto; (v) the Subcontractor
Agreements (x) regarding the contracts identified on Schedule 6.1(l)
hereto, substantially in the form of Exhibit F hereto, and (y) with
▇▇▇▇ Communications Research, Inc. (together with the contracts listed
on Schedule 6.1(l), the "Prime Contracts"), substantially in the form
of Exhibit G hereto, subject, in the
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33
case of all Subcontractor Agreements, to any changes that are
reasonably acceptable to Purchaser and consistent with the Prime
Contracts; (vi) the Preferred Provider Agreement (including commission
schedule), substantially in the form of Exhibit H hereto; and (vii) the
side letter substantially in the form of Exhibit I hereto.
(m) Purchaser shall have received the consents and
approvals described in Schedules 2.2 and 2.3 hereof.
(n) Purchaser shall have received evidence satisfactory
to it to the effect that (i) the Terminated Vehicles have been
terminated, and (ii) the Terminated Contracts have been terminated or
assigned, and, in each case, are of no further force or effect as
against the Company.
(o) The Company shall have complied with its obligations
under Section 5.13 hereof.
(p) Seller shall deliver to Purchaser, on behalf of the
Company, executed contracts, or renewals thereof, or notifications of
renewals thereof, in form and substance reasonably acceptable to
Purchaser, between the Company and the parties listed on Schedule
6.1(p) hereto.
(q) Seller shall have delivered to Purchaser the
Releases, in form and substance reasonably acceptable to Purchaser.
(r) Seller shall have complied with its obligations under
Section 5.15 hereof.
(s) Early termination shall have been granted or
applicable waiting periods shall have expired under the HSR Act.
6.2 Conditions to Seller's Obligations. The obligations of Seller
and Shareholder to consummate the transactions contemplated by this Agreement
are subject to the satisfaction at or prior to the Closing of each of the
following conditions precedent, any one or more of which may be waived by
Seller:
(a) Each of the representations and warranties of
Purchaser set forth in Article 2 shall be true and correct in all
material respects on and as of the date of this Agreement and as of the
Closing Date with the same force and effect as though made on and as of
the Closing Date; provided, however, that any such representation or
warranty that is already qualified by "materiality" shall be true in
all respects.
(b) Purchaser shall have performed and complied in all
material respects with the agreements, covenants and obligations
required under this Agreement to be performed or complied with by
Purchaser prior to or at the Closing.
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34
(c) Purchaser shall furnish Seller with a certificate of
its appropriate officers as to compliance with the conditions set forth
in Sections 6.2(a) and (b) hereof.
(d) All filings that are required to have been made by
Purchaser with any Authority in order to carry out the transactions
contemplated by this Agreement shall have been made; all
authorizations, consents and approvals from all Authorities required
for Purchaser to carry out the transactions contemplated by this
Agreement shall have been received; and all statutory waiting periods
in respect thereof shall have expired.
(e) There shall be in force no claim, proceeding, action,
order or decree by or before any Authority of competent jurisdiction
restraining, enjoining, prohibiting, invalidating or otherwise
preventing (or seeking to prevent) the consummation of the transactions
contemplated hereby.
(f) No proceeding in which Purchaser shall be a debtor,
defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against
Purchaser under any United States or state bankruptcy or insolvency
Law.
(g) Seller shall have obtained the Releases, in form and
substance reasonably acceptable to Seller.
(h) Seller shall have received the legal opinion of
Purchaser's counsel, King & Spalding, substantially in the form of
Exhibit J hereto.
(i) Early termination shall have been granted or
applicable waiting periods shall have expired under the HSR Act.
(j) Neither Seller nor Shareholder shall have any
collateral, letter of credit or other obligation in respect of the
Performance Bonds.
(k) Purchaser shall have received the consents and
approvals described in Schedules 2.2 and 2.3 hereof.
(l) Purchaser shall have complied with its obligations
under Section 5.9 hereof.
6.3 Materiality Defined. For purposes of this Article 6, a
condition to closing will be considered "material" if, in the aggregate, all
adverse conditions applicable to Seller or Purchaser, as the case may be (offset
by all beneficial conditions, if any arising since August 23, 1998), equal or
exceed $175,000 of operating income.
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35
ARTICLE 7.
Additional Agreements
7.1 Further Assurances. The parties hereto shall deliver any and
all other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms and provisions
of this Agreement including, without limitation, all necessary stock powers and
such other instruments of transfer as may be necessary or desirable to transfer
ownership of the Shares.
7.2 Certain Tax Matters.
(a) Seller will join with Purchaser in making an election
under Section 338(h)(10) of the Code and Treasury Regulations Section
1.338(h)(10)-1 (and any corresponding elections under any applicable
state and local Laws) (collectively, a "Section 338(h)(10) Election")
with respect to the purchase and sale of the Shares hereunder. Seller
will pay any Tax attributable to the making of the Section 338(h)(10)
Election (including, without limitation, any Tax arising as the result
of the recognition of any built-in gain pursuant to the provisions of
Section 1374 of the Code and any Tax arising as the result of the
"recapture" of previously deducted items) and Seller will indemnify
Purchaser and the Company from and against any and all damages,
penalties, fines, costs, reasonable amounts paid in settlement,
liabilities, obligations, losses, expenses and fees (including court
costs and reasonable attorneys' fees and expenses), including, as the
context may require, any of the foregoing which arise out of or in
connection with any actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions,
judgments, orders or rulings arising out of any failure to pay such
Tax.
(b) Seller will be responsible for preparing and filing
all income or franchise Tax Returns of the Company relating to Tax
periods ending on or before the Closing Date. Purchaser will be
responsible for preparing and filing the Section 338(h)(10) election
(provided that Seller shall provide such written consents and other
items required by Seller to make such election) all income and
franchise Tax Returns of the Company relating to periods beginning on
or after the Closing Date. After the Closing has occurred, Purchaser
will cause the Company to provide, or cause to be provided, to Seller,
without charge, any information that may reasonably be requested by
Seller in connection with the preparation of any Tax Returns relating
to pre-Closing Tax periods.
(c) The parties hereto agree to cooperate with one
another to allocate the Purchase Price in a manner reasonably
acceptable to the parties. Such agreed allocation shall be binding on
the Seller and Purchaser and their respective affiliates for all
purposes (including without limitation, financial accounting purposes,
financial and regulatory reporting purposes and tax purposes) and none
of the parties or such affiliates shall take for tax purposes any
position in any tax return, report, form, declaration or questionnaire
that is inconsistent with such allocation.
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36
7.3 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement, or (ii) any fact,
situation, circumstance, status, condition, activity, practice, occurrence,
event, incident, action, failure to act, or transaction on or prior to the
Closing Date involving the Company, each of the parties will cooperate with the
contesting or defending party and its or their counsel in the contest or
defense, all at the sole cost and expense of the contesting or defending party
(except to the extent the contesting or defending party is entitled to
indemnification therefor under this Agreement).
7.4 Noncompetition and Confidential Information
(a) Definitions. For the purposes of this Section 7.4,
the following definitions shall apply:
(i) "Company Activities" shall mean the business
of providing commercial security services, including the
provision of any armed guard services, protection services,
access control, fire and safety administration (as provided by
the Company prior to the Closing), and road and highway
distress services.
(ii) "Confidential Information" shall mean any
data or information of the Company, other than Trade Secrets,
that is valuable to the Company and not generally known to
competitors of the Company.
(iii) "Noncompete Period" or "Nonsolicitation
Period" shall mean the period beginning the Closing Date and
ending on the third anniversary of the Closing Date.
(iv) "Territory" shall mean the areas where the
Company conduct business as of the Closing Date and
surrounding areas into which Purchaser has plans of expanding
the business of the Company. The Territory includes areas
where customers or actively sought prospective customers of
the Company are located. For purposes of reference, such areas
include the entire United States.
(v) "Trade Secrets" shall mean information,
without regard to form, including, but not limited to,
technical or nontechnical data, a formula, pattern,
compilation, program, device, method, technique, drawing,
process, financial data, financial plan, product plan, list of
actual or potential customers or suppliers, or other
information similar to any of the foregoing, which derives
economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means
by, other persons who can derive economic value from its
disclosure or use, and is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.
(b) Trade Secrets. Seller and Shareholder shall hold, and
shall cause their
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respective officers, directors, officers, employees and agents
(collectively, together with Seller and Shareholder, the "Seller
Group") to hold, in confidence at all times after the date hereof, all
Trade Secrets, and shall not disclose, publish or make use at any time
after the date hereof of (or permit the disclosure, publishing or use
by any member of the Seller Group of) Trade Secrets without the prior
written consent of Purchaser, or unless required by law or legal
proceeding, and then only to the extent so required, and provided that
prompt written notice of such disclosure shall be delivered to
Purchaser. Nothing in this Agreement shall diminish the Company's or
Purchaser's rights regarding the protection of trade secrets pursuant
to applicable Law.
(c) Confidential Information. Seller and Shareholder
hereby agree that during the Noncompete Period, Seller and Shareholder
shall, and shall cause the members of the Seller Group to, hold in
confidence all Confidential Information and will not (and will not
permit members of the Seller Group to) (other than as an employee of or
a consultant to the Company or to Purchaser or an affiliate of
Purchaser) disclose, publish or make use of Confidential Information
without the prior written consent of the Company which is the source of
the Confidential Information, or unless required by law or legal
proceeding, and then only to the extent so required, and provided that
prompt written notice of such disclosure shall be delivered to
Purchaser.
(d) Noncompetition.
(i) Coverage and Acknowledgment. Seller and
Shareholder acknowledge that the Company conducts Company
Activities throughout the Territory and that to protect
adequately the interest of Purchaser in the business of the
Company it is essential that any noncompete covenant with
respect thereto cover all Company Activities and the entire
Territory. Seller and Shareholder further acknowledge that in
developing the business of the Company, Seller and Shareholder
have developed substantial personal contacts and strong
business and personal ties and goodwill within the Territory
and that the benefits of these ties and goodwill are an
essential factor in Purchaser's acquisition of the Company.
Because of the value to Purchaser of these contacts, ties and
goodwill, Seller and Shareholder make the covenants in this
Section 7.4(d) and Section 7.4(e) below.
(ii) Covenant. Seller and Shareholder hereby
agrees that they shall not, during the Noncompete Period,
directly or indirectly, engage in or have an equity or profit
interest in or render services (of an executive, marketing,
administrative, financial or consulting nature) to any
business that, directly or indirectly, is engaged in the
conduct of Company Activities in the Territory.
Notwithstanding anything in this Section 7.4(d) to the
contrary, nothing contained herein shall prohibit Seller or
Shareholder from (A) acquiring not more than five percent (5%)
of any company whose common stock is publicly traded on a
national securities exchange or in the over-the-counter
market, (B) performing Company Activities under any contract
to
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the extent the performance of Company Activities under the
terms of such contract involves less than 168 permanent man
hours per week; (C) performing its obligations under the terms
of the Agreement dated October 1, 1996, between Shareholder
and General Services Administration; and (D) engaging in any
Company Activities if (x) the opportunity to provide such
Company Activity was first offered to Purchaser in accordance
with the Preferred Provider Agreement and was not accepted by
Purchaser, and (y) Seller has used its reasonable best efforts
to subcontract such Company Activity (including, without
limitation, by offering such Company Activity to
subcontractors that are reasonably acceptable to Seller on
commercially reasonable terms).
(e) Nonsolicitation. Seller and Shareholder hereby agree
that they shall not, during the Nonsolicitation Period, in any manner
(other than as an employee of or a consultant to the Company or to
Purchaser or an affiliate of Purchaser), directly or by assisting
others:
(i) solicit or attempt to solicit any business
from any of the Company's or Purchaser's customers, including
actively sought prospective customers, for purposes of
providing products or services that constitute Company
Activities; or
(ii) solicit or attempt to solicit, on Seller's
or Shareholder's behalf, or on behalf of any other Person, any
employee of the Company (or any employee of Purchaser or its
affiliates who was an employee of the Company immediately
prior to the Closing) while such Person is employed by the
Company, Purchaser or its affiliates.
(f) Severability. If a judicial determination is made
that any of the provisions of this Section 7.4 constitutes an
unreasonable or otherwise unenforceable restriction against Seller or
Shareholder, the provisions of this Section 7.4 shall be rendered void
only to the extent that such judicial determination finds such
provisions to be unreasonable or otherwise unenforceable. In this
regard, Seller, Shareholder and Purchaser hereby agree that any
judicial authority construing this Agreement shall be empowered to
sever any portion of the Territory, any prohibited business activity or
any time period from the coverage of this Section 7.4 and to apply the
provisions of this Section 7.4 to the remaining portion of the
Territory, the remaining business activities and the remaining time
period not so severed by such judicial authority. Moreover,
notwithstanding the fact that any provision of this Section 7.4 is
determined not to be specifically enforceable, Purchaser shall
nevertheless be entitled to recover actual monetary damages as a result
of the breach of such provision by Seller and/or Shareholder.
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ARTICLE 8.
Indemnification
8.1 Seller and Shareholder
(a) Indemnity. Seller and Shareholder shall, jointly and
severally, defend and indemnify Purchaser and hold the Purchaser wholly
harmless from and against any and all losses, liabilities, damages,
costs (including, without limitation, court costs) and expenses
(including, without limitation, reasonable attorneys' fees)
(collectively, "Damages") that Purchaser or the Company incurs as a
result of, or with respect to:
(i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement by or on
behalf of Shareholder, Seller or the Company contained in this
Agreement or contained in any certificate, agreement or
document of Shareholder, Seller or the Company delivered to
Purchaser in connection with the consummation of the
transactions contemplated hereunder;
(ii) any direct costs or expenses associated with
any arbitration award in the ▇▇▇▇ Atlantic union dispute
(including, without limitation, any legal fees, back benefits
or back pay owed, but not including any consequential losses
resulting therefrom);
(iii) the Excluded Liabilities (including, without
limitation, the Terminated Contracts, Terminated Vehicles, and
any liability incurred in respect of any EEOC claims or other
litigation relating to events occurring prior to the Closing
Date);
(iv) any liabilities for Taxes levied on or
calculated based upon the revenues or income of the Company
and payable by the Company on or after the Closing Date with
respect to any taxable period ending on or prior to the
Closing Date (treating any taxable period that begins before
and ends after the Closing Date as if such taxable period had
ended on the Closing Date), to the extent such liabilities
exceed any reserves for Tax liabilities on the Financial
Statements.
(b) Claims. In the event that Purchaser shall receive
written notice of any claim or proceeding against Purchaser or the
Company that, if successful, might result in a claim under Section
8.1(a) by Purchaser, Purchaser shall give Seller prompt written notice
of such claim or proceeding and shall permit Seller to participate in
the defense of, or, at Seller's option, to assume the defense of, such
claim or proceeding by counsel of Seller's own choosing and at the sole
cost and expense of Seller. If Seller assumes the defense of such
claim, Seller shall keep Purchaser informed of the progress of the
claim, and shall consult with Purchaser in good faith regarding actions
to be taken in respect of such claim; provided, however, that if, in
the reasonable opinion of Purchaser, Seller does not diligently pursue
the defense of such claim, Purchaser shall be entitled to take over the
defense of such claim at the sole cost and expense of Seller,
including, without limitation by hiring counsel of Purchaser's own
choosing for the defense of such claim. Seller will not settle any such
claim without the prior written consent of Purchaser; provided, however
that if Purchaser elects not to accept such settlement, Purchaser may
elect to continue the defense of such claim at the
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sole cost and expense of Purchaser; provided further, however, that (i)
if the liability in respect of such claim as finally determined is
greater than the liability that would have resulted from the acceptance
of the settlement in question, Seller shall only be liable in respect
of such claim for the amount of such settlement, plus costs and
expenses through the date of such settlement; and (ii) if the liability
in respect of such claim as finally determined is less than the
liability that would have resulted from the acceptance of the
settlement in question, Seller shall promptly reimburse Purchaser, in
cash, for any costs and expenses incurred by Purchaser (including
without limitation reasonable legal expenses) in respect of the pursuit
of such claim; provided, however that Seller shall not be obligated to
pay or reimburse Purchaser for amounts in excess of the amounts Seller
would have been required to pay had such settlement been accepted.
Within ten business days of the final determination of the merits and
amount of such claim (after the expiration of all applicable appeal
periods), Seller shall pay to Purchaser immediately available funds in
an amount equal to the claim as so determined.
(c) Time to Assert Claim. Except as otherwise provided in
this Section 8.1(c), the representations and warranties of Seller,
Shareholder and the Company shall survive until June 30, 2000, and any
claim for indemnification by Purchaser under Section 8.1(a)(i) hereof
shall be asserted by written notice to Seller on or before such date.
On June 30, 2000, any matters as to which a claim has been asserted
under Section 8.1(a)(i) shall continue to be covered by Section
8.1(a)(i) until finally terminated or resolved. It is specifically
acknowledged and agreed to that the foregoing time limitation shall not
be applicable with respect to a claim for indemnification based upon
the breach or inaccuracy of a representation, warranty, covenant or
agreement contained in Sections 3.1 (Seller's Organization, Good
Standing, Power and Authority), 3.2 (Authorization), 3.4 (Consents and
Approvals), 3.5 (Ownership of the Shares), 3.6 (Power, Authority and
Ownership of Shareholder), 4.1 (the Company's Organization, Good
Standing, Power and Authority), 4.2 (Authorization), 4.5
(Capitalization), 4.10 (Tax Matters), 4.14 (Employee Matters), 4.22
(Brokers), 5.11 (Assumption of Liabilities), 5.12 (Releases), 5.13
(Vesting of Retirement Plans), 5.14 (Assignment of Certain Contracts),
5.15 (Employee Payments), 7.2 (Certain Tax Matters), 7.4
(Noncompetition and Confidential Information), 8.1(a)(ii), 8.1(a)(iii)
or 8.1(a)(iv) (the "Seller Surviving Matters") and there shall be no
time limit for any claim for indemnification for Seller Surviving
Matters; provided, however that such time period shall not be construed
as any attempted extension or waiver of any applicable statute of
limitations.
(d) Limitations on Liability. Notwithstanding any
implication to the contrary contained herein, Seller and Shareholder
shall have no liability with respect to the breach of any
representation, warranty, covenant or obligation to be performed or
complied with under the Agreement or with respect to any
indemnification under Section 8.1(a) hereof, until the total amount of
all Damages with respect to such matters exceeds $100,000 (including
costs, expenses and liabilities incurred by Purchaser that would not be
considered "material" under the terms of Articles 3 and 4 hereof), and
then only for amounts by which such Damages
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41
exceed $100,000; provided, however, that the foregoing limitation shall
not apply to any Damages in respect of accounts payable, accrued wages,
accrued taxes, other accruals in accordance with GAAP, taxes payable,
workers' compensation claims (including incurred but not recorded
claims), pension plan claims, outstanding debt, and any claims
described on Schedules 4.17 (loss runs only), 4.19 and 4.22 hereof.
Furthermore, Seller and Shareholder shall have no liability with
respect to any of the foregoing for amounts in excess of $12,000,000 in
the aggregate. Notwithstanding the foregoing, nothing contained herein
shall limit Seller's or Shareholder's liability under this Agreement to
the extent such liability results from fraud or wilful misconduct of
Seller or Shareholder.
(e) Limitation on the Scope of Indemnification.
Notwithstanding the foregoing, Purchaser will not be entitled to
indemnification with respect to punitive damages, except in the case of
fraud or wilful misconduct by Seller or Shareholder. Any
indemnification amounts payable by Seller or Shareholder to Purchaser
under this Section 8.1 shall be calculated after giving effect to (i)
any proceeds (net of retro-premium adjustments and other expenses)
actually received by Purchaser from insurance policies covering the
Damage that is the subject of such claim for indemnity; and (ii) the
actual recognized tax benefit (taking into account the timing of the
receipt of such benefit) resulting from the Damage that is the subject
of such claim for indemnity. For purposes of this Section 8.1(e), an
actual recognized tax benefit is an actual reduction in taxes payable
or a refund of taxes previously paid after taking into account the tax
impact of any indemnification from Seller or Shareholder.
8.2 Purchaser.
(a) Indemnity. Purchaser shall defend and indemnify
Seller, and hold Seller wholly harmless from and against any and all
Damages that Seller or Shareholder incurs as a result of, or with
respect to,
(i) any inaccuracy in or breach of any
representation, warranty, covenant or agreement by or on
behalf of Purchaser contained in this Agreement or contained
in any certificate, agreement or document of Purchaser
delivered to Seller in connection with the consummation of the
transactions contemplated hereunder; or
(ii) any liability of the Company relating to the
business of the Company conducted on or after the Closing,
including, without limitation, any liability arising with
respect to the use of the name "UNICCO Security Services,
Inc." by Purchaser and the occupance of the Seller Space by
Purchaser.
(b) Claims. In the event that Seller or Shareholder shall
receive written notice of any claim or proceeding against Seller or
Shareholder that, if successful, might result in a claim under Section
8.1(a) by Seller or Shareholder, Seller shall give Purchaser prompt
written notice of such claim or proceeding and shall permit Purchaser
to participate in the defense of, or, at Purchaser's option, to assume
the defense of, such claim or proceeding by
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42
counsel of Purchaser's own choosing and at the sole cost and expense of
Purchaser. If Purchaser assumes the defense of such claim, Purchaser
shall keep Seller informed of the progress of the claim, and shall
consult with Seller in good faith regarding actions to be taken in
respect of such claim; provided, however, that if, in the reasonable
opinion of Seller, Purchaser does not diligently pursue the defense of
such claim, Seller shall be entitled to take over the defense of such
claim at the sole cost and expense of Purchaser, including, without
limitation by hiring counsel of Seller's own choosing for the defense
of such claim. Purchaser will not settle any such claim without the
prior written consent of Seller; provided, however that if Seller
elects not to accept such settlement, Seller may elect to continue the
defense of such claim at the sole cost and expense of Seller; provided
further, however (i) if the liability in respect of such claim as
finally determined is greater than the liability that would have
resulted from the acceptance of the settlement in question, Purchaser
shall only be liable in respect of such claim for the amount of such
settlement, plus costs and expenses through the date of such
settlement; and (ii) if the liability in respect of such claim as
finally determined is less than the liability that would have resulted
from the acceptance of the settlement in question, Purchaser shall
promptly reimburse Seller, in cash, for any costs and expenses incurred
by Seller (including without limitation reasonable legal expenses) in
respect of the pursuit of such claim; provided, however that Seller
shall not be obligated to pay or reimburse Purchaser for amounts in
excess of the amounts Seller would have been required to pay had such
settlement been accepted. Within ten business days of the final
determination of the merits and amount of such claim (after the
expiration of all applicable appeal periods), Seller shall pay to
Purchaser immediately available funds in an amount equal to the claim
as so determined.
(c) Time to Assert Claim. Except as otherwise provided in
this Section 8.2(d), any claim for indemnification by Seller under
Section 8.2(a) hereof shall be asserted by June 30, 2000. Any matters
as to which a claim has been asserted under Section 8.2(a) on or June
30, 2000 shall continue to be covered by Section 8.2(a) until finally
terminated or resolved.
(d) Limitations on Liability. Notwithstanding any
implication to the contrary contained herein, Purchaser shall have no
liability with respect to the breach of any representation, warranty,
covenant or obligation to be performed or complied with under the
Agreement or with respect to indemnification under Section 8.2(a)
hereof, until the total amount of all Damages with respect to such
matters exceeds $100,000, and then only for amounts by which such
Damages exceed $100,000. Furthermore, Purchaser shall have no liability
with respect to any of the foregoing for amounts in excess of
$12,000,000 in the aggregate. Notwithstanding the foregoing, nothing
contained herein shall limit Purchaser's liability under this Agreement
to the extent such liability results from fraud or wilful misconduct of
Purchaser.
(e) Limitation on the Scope of Indemnification.
Notwithstanding the foregoing, neither Seller nor Shareholder will be
entitled to indemnification with respect to punitive damages, except in
the case of fraud or wilful misconduct by Purchaser. Any
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43
indemnification amounts payable by Purchaser to Seller or Shareholder
under this Section 8.2 shall be calculated after giving effect to (i)
any proceeds (net of retro-premium adjustments and other expenses)
actually received by Seller or Shareholder from insurance policies
covering the Damage that is the subject of such claim for indemnity;
and (ii) the actual recognized tax benefit (taking into account the
timing of the receipt of such benefit) resulting from the Damage that
is the subject of such claim for indemnity. For purposes of this
Section 8.2(e), an actual recognized tax benefit is an actual reduction
in taxes payable or a refund of taxes previously paid after taking into
account the tax impact of any indemnification from Purchaser.
ARTICLE 9.
Modification, Waivers and Termination
9.1 Modification. The parties hereto may, by mutual consent,
amend, modify or supplement this Agreement in such manner as may be agreed upon
by them in writing at any time.
9.2 Waivers. Purchaser, by an instrument in writing, may extend
the time for or waive the performance of any of the obligations of Seller or
Shareholder or waive compliance by Seller or Shareholder with any of the
covenants or conditions of Seller and Shareholder contained herein, and Seller,
by an instrument in writing, may extend the time for or waive the performance of
any of the obligations of Purchaser or waive compliance by Purchaser with any of
the covenants or conditions of Purchaser contained herein.
9.3 Termination. This Agreement may be terminated, and the
transactions contemplated hereby abandoned, prior to the Closing as follows:
(a) by Purchaser and Seller by mutual written consent at
any time;
(b) by Purchaser by giving written notice to Seller at
any time (i) in the event Seller has breached any of its
representations, warranties, covenants or agreements contained in this
Agreement in any material respect, Purchaser has notified Seller of the
breach and the breach has continued without cure for a period of ten
days after the notice of breach, or (ii) if Purchaser reasonably
determines in good faith that there will be any change in the Company's
relationships with its customers after the date of this Agreement that
will have a material adverse effect (as such term is defined in Section
6.3 hereof) on the Company's ongoing business; provided, however, that
the receipt by Purchaser or Seller of any oral or written notice to the
effect that any customer intends to terminate or put to bid any
Material Contract, the loss of which would result in a "material
adverse effect" as defined in Section 6.3 hereof, shall be grounds for
termination for purposes of this Section 9.3), or (iii) subject to
satisfaction of the conditions to Closing set forth in Sections 6.1(s)
and 6.2(i) hereof, if the Closing shall not have occurred on or before
December 1, 1998 (unless the failure results (x) primarily from
Purchaser itself breaching any representation, warranty, covenant or
agreement of Purchaser contained in this Agreement; or (y) from an
inability of Seller to
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44
satisfy the conditions to Closing set forth in Sections 6.1(g), (n),
(o), (p) or (q) hereof, in which event this Agreement shall not
terminate, and the Closing shall be delayed until such time as such
condition or conditions shall be satisfied; provided, however, that any
delay in the Closing pursuant to this clause (y) shall not extend
beyond January 31, 1999);
(c) by Seller by giving written notice to Purchaser at
any time (i) in the event Purchaser has breached any representation,
warranty, covenant or agreement of Purchaser contained in this
Agreement in any material respect, Seller has notified Purchaser of the
breach, and the breach has continued without cure for a period of ten
days after the notice of breach, or (ii) subject to satisfaction of the
conditions to Closing set forth in Sections 6.1(s) and 6.2(i) hereof,
if the Closing shall not have occurred on or before December 1, 1998
(unless the failure results primarily from (x) Seller or Shareholder
breaching any of their respective representations, warranties,
covenants or agreements contained in this Agreement), or (y) an
inability to satisfy the conditions to Closing set forth in Section
6.2(l) hereof, in which event this Agreement shall not terminate, and
the Closing shall be delayed until such time as such condition or
conditions shall be satisfied; provided, however, that any delay in the
Closing pursuant to this clause (y) shall not extend beyond January 31,
1999); or
(d) by Seller or by Purchaser at any time prior to the
Closing Date if the Closing shall violate any order, decree or judgment
of any court or any Authority having competent jurisdiction.
9.4 Effect of Termination. In the event this Agreement is
terminated pursuant to Section 9.3 hereof, all rights and obligations of the
parties hereunder shall terminate without liability of any party to any other
party; provided, however, that the provisions of this Section 9.4 and Section
10.7 shall remain in full force and effect.
ARTICLE 10.
Miscellaneous
10.1 Notices. Any notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and, except as otherwise specified in writing, shall be given by personal
delivery, facsimile transmission, FedEx (or other similar courier service) or by
registered or certified mail, postage prepaid, return receipt requested (a) if
to Purchaser, c/o AHL Services, Inc., 3353 Peachtree Road, N.E., ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Telecopy No.:
▇▇▇-▇▇▇-▇▇▇▇; with a copy to: King & Spalding, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Telecopy No.: 404- 572-5100;
and (b) if to Seller or Shareholder, c/o UNICCO Service Company, Four ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO; with a
copy to: Posternak, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or to such other addresses
as any party hereto may from time to time give notice of (complying as to
delivery with the terms of this Section 10.1) to the other. Notice by registered
or
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45
certified mail shall be effective three days after deposit in the United States
mail. Notice by any other permitted means will be effective upon receipt.
10.2 Entire Agreement. This Agreement (including the Annex and all
of the Schedules and Exhibits attached hereto) constitutes the entire agreement
among the parties hereto with respect to the transactions contemplated hereby
and supersedes all prior agreements, understandings, negotiations and
discussions, both written and oral, among the parties hereto with respect to
thereto. Annex I hereto lists all of the Schedules and Exhibits to this
Agreement.
10.3 Benefits; Binding Effect; Assignment. This Agreement shall be
for the benefit of and binding upon the parties hereto, their respective
successors and, where applicable, assigns. No party may assign this Agreement or
any of its rights, interests or obligations hereunder without the prior approval
of the other party; provided, however, that (i) before the Closing is effected,
Purchaser may (A) assign any or all of its rights and interests hereunder to one
or more of its affiliates, and (B) designate one or more of its affiliates to
perform its obligations hereunder (but in any or all of such cases Purchaser
shall nonetheless remain responsible for the performance of all of its
obligations hereunder), and (ii) after the Closing is effected, any or all of
the rights and interests of Purchaser hereunder (A) may be assigned to any
purchaser of substantially all of the assets of Purchaser, (B) may be assigned
as a matter of law to the surviving entity in any merger of Purchaser, and (C)
may be assigned as collateral security to any lender or lenders (including any
agent for any such lender or lenders) providing financing to Purchaser in
connection with the transactions contemplated hereby, or to any assignee or
assignees of any such lender, lenders or agent.
10.4 Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall any such waiver constitute a continuing
waiver unless otherwise expressly so provided.
10.5 No Third Party Beneficiary. Nothing expressed or implied in
this Agreement is intended, or shall be construed, to confer upon or give any
Person other than the parties hereto and their respective successors and assigns
any rights or remedies under or by reason of this Agreement.
10.6 Severability. It is the desire and intent of the parties
hereto that the provisions of this Agreement be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
10.7 Expenses. Whether or not the transactions contemplated by this
Agreement shall be
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consummated, all legal, accounting and other costs and expenses incurred in
connection with this Agreement and any of the transactions contemplated hereby
on behalf of Purchaser shall be borne and paid by Purchaser (including without
limitation fees incurred in respect of any HSR filings made by Purchaser in
respect of the transactions contemplated by this Agreement), and all such costs
and expenses incurred on behalf of the Company or Seller shall be borne and paid
by Seller whether or not included in the Interim Financial Statements
(including, without limitation fees incurred in respect of any HSR filings made
by Seller or Shareholder in respect of the transactions contemplated by this
Agreement).
10.8 Headings. The section and other headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement. Unless otherwise specified,
all references to Articles, Sections, Exhibits and Schedules are references to
Articles, Sections, Exhibits and Schedules of this Agreement.
10.9 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
shall be deemed to be one and the same instrument.
10.10 Governing Law. This Agreement will be governed by and
construed in accordance with the domestic Laws of the State of Georgia, without
giving effect to any choice of Law or conflicting provision or rule (whether of
the State of Georgia or any other jurisdiction) that would cause the Laws of any
jurisdiction other than the State of Georgia to be applied. Notwithstanding the
foregoing, any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or the State of Georgia, and all
parties consent to the jurisdiction of such courts and to the service of process
in any such suit being made upon any party by mail at its address set forth
above.
10.11 Equitable Remedies. The parties agree that the assets and
business of the Company as a going concern constitute unique property and that
there is no adequate remedy at law for the damage which any party might sustain
for failure of the other parties to consummate the transactions contemplated by
this Agreement, and accordingly, each party shall be entitled, at its option, to
the remedy of specific performance to enforce the consummation of the
transactions described in this Agreement. Further, Seller hereto acknowledges
and agrees that Purchaser would not have an adequate remedy at law in the event
any of the provisions of Sections 7.2 and 7.4 of this Agreement are not
performed in accordance with their specific terms or are breached. Accordingly,
each of the parties hereto agrees that Purchaser shall be entitled to an
injunction or injunctions to prevent breaches of Sections 7.2 and 7.4 of this
Agreement and to enforce specifically the terms and provisions hereof in any
action instituted in any court of competent jurisdiction, in addition to any
other remedies which may be available to it. Neither rescission nor reformation
of this Agreement shall be available as a remedy to any of the parties hereto.
10.12 Construction. The provisions of this Agreement shall be
construed according to their fair meaning and neither for nor against any party
hereto irrespective of which party caused such
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provisions to be drafted. Each of the parties acknowledge that it has been
represented by an attorney in connection with the preparation and execution of
this Agreement.
10.13 Knowledge Defined. The terms "to the best knowledge of the
Company and Seller" or any similar phase used in this Agreement means the
knowledge of a responsible officer of the Company or Seller, after making
appropriate inquiries into the matter in question.
- SIGNATURES ON THE FOLLOWING PAGE -
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IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
PURCHASER:
▇▇▇▇▇▇▇▇▇▇▇ SECURITY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Title:
-----------------------------------
THE COMPANY:
UNICCO SECURITY SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title:
-----------------------------------
SELLER:
USC, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: President
-----------------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
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SHAREHOLDER
UNICCO SERVICE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Chief Executive Officer
-----------------------------------
50
ANNEX A
EXHIBITS AND SCHEDULES
EXHIBITS
EXHIBIT A - Tradename License Agreement
EXHIBIT B - Seller Space Agreement
EXHIBIT C - Assumption of Liabilities Agreement
EXHIBIT ▇ - ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, L.L.P. Opinion
EXHIBIT E - Transition Agreement
EXHIBIT F - Subcontractor Agreement
EXHIBIT G - ▇▇▇▇ Communications Research Subcontractor Agreement
EXHIBIT H - Preferred Provider Agreement
EXHIBIT I - Side Letter
EXHIBIT J - King & Spalding Opinion
SCHEDULES
SCHEDULE 2.2 - Purchaser Authorization
SCHEDULE 2.3 - Consents and Approvals of Purchaser
SCHEDULE 2.4 - Brokers' and Finder's Fees (Purchaser)
SCHEDULE 3.3 - Consents and Approvals of Seller
SCHEDULE 3.4 - Ownership of the Shares of the Company
SCHEDULE 3.6 - Power, Authority and Ownership of Shareholder of Seller
SCHEDULE 4.3 - Consents and Approvals of the Company
51
SCHEDULE 4.5 - Capitalization of the Company
SCHEDULE 4.7 - Financial Statements
SCHEDULE 4.8 - Undisclosed Liabilities
SCHEDULE 4.9 - Absence of Certain Changes and Events
SCHEDULE 4.10 - Tax Matters
SCHEDULE 4.11 - Title to Personal Property and Condition of Assets
SCHEDULE 4.12 - Material Contracts
SCHEDULE 4.13(a) - Intellectual Property
SCHEDULE 4.13(b) - Software
SCHEDULE 4.14(a) - Employee Benefits
SCHEDULE 4.14(g) - ERISA Requirements
SCHEDULE 4.14(h) - Plan Claims
SCHEDULE 4.14(j) - Additional Payments
SCHEDULE 4.14(k) - FMLA Employees
SCHEDULE 4.15 - Labor Matters (including Union Contracts)
SCHEDULE 4.17 - Insurance Policies
SCHEDULE 4.18 - Permits; Compliance with Law
SCHEDULE 4.19 - Litigation
SCHEDULE 4.20 - List of Personnel
SCHEDULE 4.21 - Transactions with Affiliates
SCHEDULE 4.22 - Brokers' and Finders' Fees (Seller)
SCHEDULE 4.24 - Customers
SCHEDULE 5.1 - List of Customers to be Contacted
SCHEDULE 5.3 - Pre-Closing Activities
52
SCHEDULE 5.4 - Assigned Agreements
SCHEDULE 5.7 - Performance Bonds
SCHEDULE 5.9 - Terminated Vehicles
SCHEDULE 5.10(a) - Seller Space
SCHEDULE 5.10(b) - Company Space
SCHEDULE 5.14 - Terminated Contracts
SCHEDULE 6.1(1) - Subcontractor Agreements
SCHEDULE 6.1(p) - Renewed Contracts