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Exhibit 2.01
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AGREEMENT AND PLAN OF MERGER
by and among
UNICAPITAL CORPORATION
(a Delaware corporation),
USTEC ACQUISITION CORP.
(a Delaware corporation),
and
UNITED STATES TURBINE ENGINE CORP.
(a Connecticut corporation),
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Dated as of July 27, 1998
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Table of Contents
Page
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1. The Merger...............................................................................................1
1.1 The Merger......................................................................................1
1.2 Closing.........................................................................................2
1.3 Effective Time..................................................................................2
1.4 Certificate of Incorporation, Bylaws, Board of Directors and Officers of the Surviving
Corporation.....................................................................................2
1.5 Effects of the Merger...........................................................................3
1.6 Further Assurances..............................................................................3
2. MERGER CONSIDERATION.....................................................................................3
2.1 Conversion of Capital Stock, Merger Consideration...............................................3
2.2 Exchange Procedures.............................................................................3
2.3 Earn-Out Consideration..........................................................................4
3. POST-CLOSING ADJUSTMENT; STOCKHOLDERS' REPRESENTATIVE....................................................5
3.1 Computation.....................................................................................5
3.2 Disputes........................................................................................6
3.3 Stockholders' Representative....................................................................7
4. INDEMNITY HOLDBACK.......................................................................................8
4.1 Creation of Escrow Holdback.....................................................................8
4.2 Duration and Terms..............................................................................8
4.3 Voting and Investment...........................................................................9
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS...........................................................9
5.1 Corporate Existence.............................................................................9
5.2 Corporate Power; Authorization; Enforceable Obligations.........................................9
5.3 Authority; Validity of Contemplated Transactions................................................9
5.4 Capital Stock and Ownership....................................................................10
5.5 Transactions in Capital Stock..................................................................10
5.6 No Bonus Shares................................................................................10
5.7 Subsidiaries...................................................................................10
5.8 Predecessor Status; etc........................................................................10
5.9 Spin-offs by Companies.........................................................................10
5.10 No Third Party Options.........................................................................11
5.11 Financial Statements...........................................................................11
5.12 Liabilities and Obligations....................................................................12
5.13 Accounts and Notes Receivable..................................................................12
5.14 Permits........................................................................................13
5.15 Real and Personal Property.....................................................................13
5.16 Contracts and Commitments......................................................................14
5.17 Government Contracts...........................................................................15
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5.18 Real Property..................................................................................16
5.19 Insurance......................................................................................16
5.20 Employees......................................................................................16
5.21 Employee Benefit Plans and Arrangements........................................................16
5.22 Compliance with Law; Authorizations............................................................17
5.23 Transactions With Affiliates...................................................................17
5.24 Litigation.....................................................................................17
5.25 Restrictions...................................................................................18
5.26 Taxes..........................................................................................18
5.27 Intellectual Property Matters..................................................................19
5.28 Completeness...................................................................................20
5.29 Existing Condition.............................................................................20
5.30 Deposit Accounts; Powers of Attorney...........................................................21
5.31 Books of Account...............................................................................22
5.32 Environmental Matters..........................................................................22
5.33 No Illegal Payments............................................................................23
5.34 Leases.........................................................................................23
5.35 Lease Funding..................................................................................26
5.36 Inventory......................................................................................26
5.37 Product Liability Claims.......................................................................26
5.38 Service Companies..............................................................................26
5.39 Independent Contractors........................................................................26
5.40 UniCapital Prospectus; Securities Representations..............................................26
5.41 Disclosure.....................................................................................27
6. REPRESENTATIONS OF UNICAPITAL AND NEWCO.................................................................27
6.1 Corporate Existence............................................................................27
6.2 UniCapital Stock...............................................................................27
6.3 Corporate Power and Authorization..............................................................28
6.4 No Conflicts...................................................................................28
6.5 Litigation.....................................................................................28
7. COVENANTS...............................................................................................28
7.1 Pre-Closing Covenants..........................................................................28
7.2 Post-Closing Covenants.........................................................................33
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS.................................34
8.1 Representations and Warranties; Performance of Obligations.....................................34
8.2 Employment Agreements..........................................................................34
8.3 HSR Act........................................................................................34
8.4 Repayment of Stockholder Loans.................................................................34
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF UNICAPITAL AND NEWCO.............................................35
9.1 Representations and Warranties; Performance of Obligations.....................................35
9.2 No Litigation..................................................................................35
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9.3 Examination of Financial Statements............................................................35
9.4 No Material Adverse Change.....................................................................35
9.5 Regulatory Review..............................................................................35
9.6 Stockholders' Release..........................................................................36
9.7 Employment Agreement...........................................................................36
9.8 Opinion of Counsel.............................................................................36
9.9 Consents and Approvals.........................................................................37
9.10 Good Standing Certificates.....................................................................37
9.11 HSR Act........................................................................................37
9.12 Due Diligence..................................................................................37
10. INDEMNIFICATION; SURVIVAL...............................................................................37
10.1 General Indemnification by Stockholders........................................................37
10.2 Specific Indemnification by Stockholders.......................................................38
10.3 Indemnification by UniCapital and Newco........................................................38
10.4 Third Party Claims.............................................................................38
10.5 Limitations on Indemnification.................................................................39
10.6 Survival of Representations and Warranties.....................................................40
11. TERMINATION OF AGREEMENT................................................................................41
11.1 Termination by UniCapital......................................................................41
11.2 Termination by the Stockholders................................................................41
11.3 Automatic Termination..........................................................................42
12. NONCOMPETITION AND NONSOLICITATION......................................................................42
12.1 Noncompetition.................................................................................42
12.2 Damages........................................................................................43
12.3 Reasonable Restraint...........................................................................43
12.4 Severability; Reformation......................................................................43
12.5 Independent Covenant...........................................................................43
12.6 Materiality....................................................................................43
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION...............................................................43
13.1 Stockholders...................................................................................43
13.2 UniCapital.....................................................................................44
13.3 Damages........................................................................................44
14. FEDERAL SECURITIES AND CONTRACTUAL RESTRICTIONS ON UNICAPITAL STOCK.....................................44
14.1 Investment Intent..............................................................................44
14.2 Sales of UniCapital Stock......................................................................45
14.3 Economic Risk Sophistication...................................................................45
14.4 Information Supplied...........................................................................45
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15. SECURITIES LEGENDS......................................................................................46
16. GENERAL.................................................................................................47
16.1 Cooperation....................................................................................47
16.2 Successors and Assigns.........................................................................47
16.3 Entire Agreement...............................................................................47
16.4 Counterparts...................................................................................47
16.5 Brokers and Agents.............................................................................47
16.6 Expenses.......................................................................................47
16.7 Notices........................................................................................48
16.8 Governing Law..................................................................................49
16.9 Exercise of Rights and Remedies................................................................49
16.10 Reformation and Severability...................................................................49
16.11 Remedies Cumulative............................................................................50
16.12 Captions, Interpretation.......................................................................50
17. DEFINITIONS.............................................................................................50
ANNEX I Form of Delaware Certificate of Merger
ANNEX II Form of Connecticut Certificate of Merger
ANNEX III Allocation of Merger Consideration and Earn-Out Consideration
ANNEX IV Form of Indemnity Escrow Agreement
ANNEX V Form of Employment Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of the
27 day of July, 1998, among UniCapital Corporation, a Delaware corporation
("UniCapital"), USTEC Acquisition Corp., a Delaware corporation ("Newco"),
United States Turbine Engine Corp., a Connecticut corporation (the "Company"),
▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ are collectively referred to herein as the
"Stockholders." Certain other capitalized terms used herein are defined in
Section 17 hereof.
WHEREAS, the Stockholders own 1000 shares of common stock, in the
aggregate, no par value per share, of the Company, constituting all issued and
outstanding shares of capital stock of the Company;
WHEREAS, Newco was incorporated on July 16, 1998 under the laws of the
State of Delaware solely for the purpose of completing this transaction, and is
a wholly-owned subsidiary of UniCapital;
WHEREAS, the Board of Directors of UniCapital, Newco and the Company
have each determined that it is advisable and in the best interests of their
respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which the Company would be merged
with and into Newco and Newco would survive and continue to be a wholly-owned
subsidiary of UniCapital (the "Merger");
WHEREAS, the respective Boards of Directors of UniCapital and the
Company have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is fair to and in the best
interests of their respective stockholders, and UniCapital has approved this
Agreement and the Merger as the sole stockholder of Newco;
WHEREAS, UniCapital, Newco, the Company and the Stockholders desire to
make certain representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), the Company shall
be merged with and into Newco in accordance with the Connecticut Business
Corporation Act (the "CBCA") and the General Corporation Law of the State of
Delaware (the "DGCL"). At the Effective Time, the separate existence of the
Company shall cease and Newco shall continue as the surviving corporation in the
Merger (the "Surviving Corporation"). Newco and the Company are sometimes
referred to herein as the "Constituent Corporations." As a result of the Merger,
the
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outstanding shares of capital stock of the Constituent Corporations shall be
converted or cancelled in the manner provided in Section 2. All references
herein to the "Company", insofar as they relate to any period from and after the
Merger, are intended to be references to Newco as the Surviving Corporation.
1.2 CLOSING. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
11, and subject to the satisfaction or waiver (where applicable) of the
conditions set forth in Sections 8 and 9, the closing of the Merger (the
"Closing") will take place at the offices of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time,
on the second business day following satisfaction or waiver (where applicable)
of the last remaining condition set forth in Sections 8 and 9, unless another
date, time or place is agreed to in writing by the parties hereto (the "Closing
Date"). At the Closing there shall be delivered to UniCapital, Newco and the
Company the certificates and other documents and instruments required to be
delivered under Sections 8 and 9.
1.3 EFFECTIVE TIME. At the Closing, certificates of merger (each a
"Certificate of Merger"; and together, the "Certificates of Merger"), in
substantially the forms attached as Annex I and Annex II hereto, shall be duly
prepared and executed by the Surviving Corporation and thereafter delivered to
the Secretary of State of the State of Delaware and the Secretary of State of
the State of Connecticut, respectively (each, a "Secretary of State"; and
together, the "Secretaries of State") for filing, as provided in Section 252 of
the DGCL and Chapter 601, Section 33-819 of the CBCA, as soon as practicable on
the Closing Date. The Merger shall become effective at the time of the filing of
both Certificates of Merger with the Secretaries of State or such other time and
date as specified therein (the date and time of such effectiveness being
referred to herein as the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION, BYLAWS, BOARD OF DIRECTORS AND
OFFICERS OF THE SURVIVING CORPORATION. Upon the effectiveness of the Merger:
(a) the Certificate of Incorporation of Newco shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law;
(b) the Bylaws of Newco shall be the Bylaws of the Surviving
Corporation and shall remain so until thereafter duly amended;
(c) in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation, the Surviving Corporation shall have a
Board of Directors consisting of three members, who shall be ▇▇▇▇▇▇ ▇. New,
▇▇▇▇▇▇▇▇ New and ▇▇▇▇▇▇ ▇▇▇▇ commencing upon the effectiveness of the Merger and
who shall hold office subject to the laws of the State of Delaware and the
Certificate of Incorporation and Bylaws of the Surviving Corporation; and
(d) the officers of Newco immediately prior to the Closing
Date shall continue as the officers of the Surviving Corporation in the same
capacity or capacities, each of such officers to serve, subject to the
provisions of the Certificate of Incorporation and Bylaws of the Surviving
Corporation, until his successor is elected and qualified.
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1.5 Effects of the Merger. Subject to the foregoing, the effects of the
Merger shall be as provided in the applicable provisions of the DGCL and the
CBCA.
1.6 Further Assurances. Each party hereto will, either prior to or
after the Effective Time, execute such further documents, instruments, deeds,
bills of sale, assignments and assurances and take such further actions as may
reasonably be requested by one or more of the others to consummate the Merger,
to vest the Surviving Corporation with full title to all assets, properties,
rights, approvals, immunities and franchises of either of the Constituent
Corporations or to effect the other purposes of this Agreement.
2. MERGER CONSIDERATION
2.1 CONVERSION OF CAPITAL STOCK, MERGER CONSIDERATION.
(a) Upon the effectiveness of the Merger, all of the shares of
capital stock of the Company which are issued and outstanding immediately prior
to thc effectiveness of the Merger ("Company Stock") shall, by virtue of the
Merger and without any action on the part of the holder thereof but subject to
the effectiveness of the Merger, automatically be converted into the right to
receive in the aggregate, without interest:
(i) $50,000,000.55 in cash,
(ii) 2,739,726 shares of the common stock, par value
$.001 per share, of UniCapital ("UniCapital Stock") (the consideration
referred to in clauses (i) and (ii) of this Section 2.l(a) is referred
to in this Agreement as the "Closing Date Consideration" and the shares
of UniCapital Stock which are to be distributed to the Stockholders on
the Closing Date, subject to Section 4 hereof, are referred to in this
Agreement as the "Merger Consideration Shares"), and
(iii) any Earn-Out Consideration as described in
Section 2.3 to be distributed to the Stockholders within 45 days
following the applicable Anniversary Date (as defined in Section
2.3(b)), all as finally determined in accordance with Section 2.3(e),
in the percentages set forth on Annex III.
(b) The Closing Date Consideration and the Earn-Out
Consideration are sometimes collectively referred to in this Agreement as the
"Merger Consideration."
(c) At the Effective Time, by virtue of the Merger and without
any action on the part of the holder thereof, each issued and outstanding share
of the common stock, par value $.01 per share, of Newco ("Newco Common Stock")
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock"). Each certificate representing outstanding shares of
Newco Common Stock shall at the Effective Time represent an equal number of
shares of Surviving Corporation Common Stock.
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2.2 EXCHANGE PROCEDURES. On the Closing Date, upon surrender to
UniCapital of certificates representing all of the issued and outstanding shares
of Company Stock (the "Certificates"), the Stockholders shall, subject to
Section 4 and in such proportion as is set forth on Annex III, be entitled to
receive, in exchange therefor, $44,400,000 (which shall be paid via wire
transfers or the delivery of certified bank checks pursuant to the instructions
received by UniCapital from such Stockholders), and certificates representing
2,279,452 Merger Consideration Shares in respect of the Certificates surrendered
and each Certificate so surrendered shall forthwith be canceled. On the Closing
Date, and subject to and in accordance with the provisions of Section 4,
UniCapital shall cause to be distributed to the Indemnity Escrow Agent (as
defined in Section 4.1(a)), (a) a certificate or certificates representing the
Holdback Shares (as defined in Section 4.1(a)(i)), which shall be registered in
the name of the Indemnity Escrow Agent as nominee for the Stockholders and shall
be held in accordance with the provisions of Section 4 and the Indemnity Escrow
Agreement referred to therein and (b) cash representing the Holdback Cash (as
defined in Section 4.1(a)(ii)).
2.3 EARN-OUT CONSIDERATION.
(a) The Stockholders collectively shall be entitled to receive
an aggregate amount equal to 50% of the amount by which (i) the Company's
earnings before taxes (the "EBT"), computed in accordance with generally
accepted accounting principles ("GAAP"), for the period beginning on the first
day of the month immediately following the Closing Date and ending twelve months
thereafter (the "First Anniversary Date"), exceeds (ii) $15,400,000.
(b) The Stockholders collectively shall be entitled to receive
an aggregate amount equal to 50% of the amount by which (i) the EBT, computed in
accordance with GAAP, for the period beginning on the First Anniversary Date and
ending twelve months thereafter (the "Second Anniversary Date"; and together
with the First Anniversary Date, each an "Anniversary Date"), exceeds (ii) the
greater of (x) the EBT, computed in accordance with GAAP, for the twelve month
period ending on the First Anniversary Date or (y) $15,400,000.
(c) The amounts (if any) that the Stockholders become entitled
to receive pursuant to Sections 2.3(a) and (b) are referred to herein as the
"Earn-Out Consideration." The Earn-Out Consideration shall be paid 50% in cash
and 50% in fully paid and non-assessable shares of UniCapital Stock, valued at
the average of the closing prices per share of UniCapital Stock as reported by
the New York Stock Exchange for the 10 trading days preceding the Anniversary
Date to which the portion of Earn-Out Consideration in question applies;
provided, however, UniCapital, at its sole discretion, may pay in cash any or
all of the Earn-Out Consideration otherwise payable in shares of UniCapital
Stock in cash; provided, further, however, UniCapital will not pay any portion
otherwise payable in shares of UniCapital Stock in cash if UniCapital reasonably
determines, after consultation with the Company's counsel and counsel to the
Stockholders, that such payment in cash could reasonably be expected to
jeopardize the Stockholders' tax-free receipt of UniCapital Stock under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). Any
Earn-Out Consideration shall be allocated to each Stockholder in such proportion
as is set forth on Annex III.
(d) The EBT for each of the First Anniversary Date and the
Second Anniversary Date shall be computed within 45 days following the
applicable Anniversary Date
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by Price Waterhouse LLP, or such other accounting firm regularly employed by
UniCapital, in accordance with GAAP, and shall be received by each of the
Stockholders within such applicable 45-day period.
(e) Notwithstanding anything in this Section 2.3 to the
contrary, if the Stockholders dispute the determination of the EBT, then the
Stockholders' Representative (as defined in Section 3.3) shall notify UniCapital
in writing of such dispute and specify the amount thereof of such dispute within
20 business days after notification of the determination of the EBT for the
applicable year. If UniCapital and the Stockholders' Representative cannot
resolve any such dispute which would affect the Earn-Out Consideration, then
such dispute shall be resolved by an Independent Accounting Firm (as defined in
Section 3.2). The determination of the Independent Accounting Firm shall be made
as promptly as practicable and shall be final and binding upon the parties,
absent manifest error (which error may only be corrected by such Independent
Accounting Firm). The Independent Accounting Firm shall only be entitled to
decide on any disputed item in favor of the position of the Stockholders, on the
one hand, and UniCapital, on the other hand, or any range in between such
positions. In rendering its decision, the Independent Accounting Firm shall
strictly follow the provisions of this Agreement. The costs of the Independent
Accounting Firm shall be borne by the party (either UniCapital, or the
Stockholders as a group) whose determination of the EBT, computed in accordance
with GAAP, for the period in question was further from the determination of the
Independent Accounting Firm. Once the EBT is finally determined, the Earn-Out
Consideration attendant thereto shall be paid in accordance with this Section
2.3; provided that in the event the Stockholders' determination of EBT was
closer to the determination of the Independent Accounting Firm than UniCapital's
determination of EBT, the Stockholders shall receive such Earn-Out Consideration
plus interest which shall accrue at the rate of 10% per annum on any such
Earn-Out Consideration that is resolved in the Stockholders favor from the date
the Earn-Out Consideration was first payable through the date on which the
Earn-Out Consideration is received by the Stockholders. Pending resolution of
any such dispute by the Independent Accounting Firm, only the amount of the
Earn-Out Consideration as determined by Price Waterhouse LLP shall be paid by
UniCapital. Once the EBT is finally determined, the Earn-Out Consideration
attendant thereto not previously paid, if any, shall be paid in accordance with
this Section 2.3.
(f) Except as set forth in Schedule 2.3(f), the EBT of the Company
shall be calculated in accordance with GAAP, consistently
applied as it relates to the Company.
(g) Any Earn-Out Consideration paid by UniCapital shall be treated
as additional consideration paid by UniCapital for the shares
of Company Stock and, therefore, shall not be affected by any
termination of either of the Employment Agreements described
in Section 9.7.
3. POST-CLOSING ADJUSTMENT; STOCKHOLDERS' REPRESENTATIVE
3.1 COMPUTATION. As soon as practicable, but in any event within 30
days after the Closing, Price Waterhouse LLP, or such other accounting firm
regularly employed by UniCapital, shall prepare, in accordance with GAAP in a
manner consistent in all material
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respects with the preparation of the audited balance sheet of the Company at
March 31, 1998 that was certified by Price Waterhouse LLP, a balance sheet of
the Company (the "Closing Date Balance Sheet") as of the end of business on the
day prior to the Closing Date, and deliver a copy thereof to the Stockholders'
Representative and UniCapital.
(a) If the combined stockholders' equity of the Company as
shown on the Closing Date Balance Sheet (the "Closing Net Worth") is less than
$250,000, then, subject to Section 3.2, the aggregate Merger Consideration shall
be adjusted downward, dollar-for-dollar in the amount of any such deficiency
(the "Net Worth Deficiency"). Following delivery of the Closing Date Balance
Sheet to UniCapital (or if applicable, after the final determination of any
Disputed Amounts in accordance with Section 3.2), UniCapital shall be entitled
to recover from the Indemnity Escrow pursuant to Section 4 that portion of any
Net Worth Deficiency which does not exceed one-half of the initial balance of
the Indemnity Escrow. For any amount by which any Net Worth Deficiency exceeds
one-half of the initial balance of the Indemnity Escrow, such portion of the Net
Worth Deficiency shall be paid by the Stockholders not later than the 25th
business day after the delivery of the Closing Date Balance Sheet (or if
applicable, not later than the fifth business day after the final determination
of any Disputed Amount in accordance with Section 3.2). At its sole and
exclusive option, and at any time after such 25th business day (or if
applicable, not later than the 5th business day after the final determination of
any Disputed Amounts in accordance with Section 3.2), UniCapital shall be
entitled to recover from the Indemnity Escrow pursuant to Section 4 all or any
portion of the amount of the Net Worth Deficiency not paid by the Stockholders
as required by this Section 3.
(b) If the combined stockholder's equity of the Company as
shown on the Closing Date Balance Sheet is more than $250,000, then, subject to
Section 3.2, the aggregate Merger Consideration shall be adjusted upward,
dollar-for-dollar in the amount of any such excess and the amount thereof shall
be paid to the Stockholders in such proportion as is set forth in Annex III not
later than the 25th business day after the delivery of the Closing Date Balance
Sheet (or if applicable, not later than the fifth business day after the final
determination of any Disputed Amount in accordance with Section 3.2).
3.2 DISPUTES. Notwithstanding anything in this Section 3 to the
contrary, if the Stockholders dispute any item contained on the Closing Date
Balance Sheet, then the Stockholders' Representative shall notify UniCapital in
writing of each disputed item (collectively, the "Disputed Amounts") and specify
the amount thereof in dispute within 30 business days after the delivery of the
Closing Date Balance Sheet. If UniCapital and the Stockholders' Representative
cannot resolve any such dispute which would eliminate or otherwise mutually
resolve the calculation of the Closing Net Worth, then such dispute shall be
resolved by an independent nationally recognized accounting firm which is
reasonably acceptable to UniCapital and the Stockholders' Representative (the
"Independent Accounting Firm"). The determination of the Independent Accounting
Firm shall be made as promptly as practical and shall be final and binding on
the parties, absent manifest error which error may only be corrected by such
Independent Accounting Firm. The Independent Accounting Firm shall only be
entitled to decide on any disputed item in favor of the position of the
Stockholders, on the one hand, or UniCapital, on the other hand, or any range in
between such positions. In rendering its decision, the Independent Accounting
Firm shall strictly follow the provisions of this Agreement. Any expenses
relating to the engagement of the Independent Accounting Firm
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shall be allocated between UniCapital and the Stockholders so that the
Stockholders' aggregate share of such costs shall bear the same proportion to
the total costs that the Disputed Amounts unsuccessfully contested by the
Stockholders' Representative (as finally determined by the Independent
Accounting Firm) bear to the total of the Disputed Amounts so submitted to the
Independent Accounting Firm. Pending resolution of any such dispute by the
Independent Accounting Firm, no such Disputed Amount shall be due to or by
UniCapital. Once any such Disputed Amount is finally determined to be due to or
by UniCapital, UniCapital shall recover or pay such amount, as applicable, in
the manner set forth in Section 3.1.
3.3 STOCKHOLDERS' REPRESENTATIVE.
(a) Each Stockholder, by signing this Agreement, designates
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (or, in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is unable or
unwilling to serve or resigns, ▇▇▇▇▇ ▇. ▇▇▇▇) to be such Stockholders'
representative for purposes of this Agreement (the "Stockholders'
Representative"). The Stockholders shall be bound by any and all actions taken
by the Stockholders' Representative on their behalf. As among themselves, the
Stockholders agree that all decisions shall be made by mutual decision.
(b) UniCapital and Newco shall be entitled to rely upon any
communication or writing given or executed by the Stockholders' Representative.
All communications or writings to be sent to Stockholders pursuant to this
Agreement may be addressed to the Stockholders' Representative and any
communication or writing so sent shall be deemed notice to all of the
Stockholders hereunder. The Stockholders hereby consent and agree that the
Stockholders' Representative is authorized to accept deliveries including any
notice, on behalf of the Stockholders pursuant hereto.
(c) The Stockholders' Representative is hereby appointed and
constituted the true and lawful attorney-in-fact of each Stockholder, with full
power in his or her name and on his or her behalf to act according to the terms
of this Agreement in the absolute discretion of the Stockholders'
Representative, and in general to do all things and to perform all acts
including, executing and delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or deemed advisable in
connection with Section 10 of this Agreement. This power of attorney and all
authority hereby conferred is granted subject to and coupled with the interest
of such Stockholder and the other Stockholder hereunder and in consideration of
the mutual covenants and agreements made herein, and shall be irrevocable and
shall not be terminated by any act of any Stockholder, by operation of law,
whether by such Stockholder's death or any other event.
(d) Notwithstanding the foregoing, the Stockholder
Representative shall promptly inform the other Stockholders of all notices
received, and of all actions, decisions, notices and exercises of any rights,
power or authority proposed to be done, given or taken by such Stockholder
Representative. As between themselves, the Stockholders agree that the
Stockholders' Representative shall only take action, or refrain from taking
action, upon consultation with and the prior approval of the other Stockholders.
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4. INDEMNITY HOLDBACK
4.1 CREATION OF ESCROW HOLDBACK.
(a) At the Closing, as collateral security for the payment of
any indemnification obligations of the Stockholders pursuant to Sections 10.1
and 10.2 hereof and for the payment of amounts due pursuant to Section 3 hereof,
the following shall be delivered to the Chase Manhattan Trust Company, N.A. as
indemnity escrow agent (the "Indemnity Escrow Agent"):
(i) 460,274 shares of UniCapital Stock issuable to
the Stockholders as part of the Closing Date Consideration in
accordance with Annex III, rounded up to the nearest whole share (the
"Holdback Shares"); and
(ii) $5,600,000 of the total cash portion of the
Closing Date Consideration payable to the Stockholders in accordance
with Annex III, rounded up to the nearest whole cent (the "Holdback
Cash").
(b) The Holdback Shares and the Holdback Cash are referred to
together as the "Escrow Property." In addition, the Escrow Property shall
include all interest, cash and non-cash dividends and other property at any time
received or otherwise distributed on, in respect of or in exchange for any or
all of the Escrow Property, all securities hereafter issued in substitution for
any of the foregoing, all certificates and instruments representing or
evidencing such securities, all cash and non-cash proceeds of all of the
foregoing property and all rights, titles, interests, privileges and preferences
appertaining or incident to the foregoing property, except as provided in
Section 4.3.
4.2 Duration and Terms. The Escrow Property shall be held and disbursed
by the Indemnity Escrow Agent in accordance with the terms of an Indemnity
Escrow Agreement substantially in the form attached hereto as Annex IV. Any
claim pursuant to Section 10 herein shall be first recovered from the Indemnity
Escrow. The Indemnity Escrow Agent shall hold the Escrow Property pursuant to
the Indemnity Escrow Agreement until the later of: (a) November 30, 2001; and
(b) the resolution of any claim for indemnification or payment that is pending
on November 30, 2001, but only to the extent of the amount of such pending
claim; provided, however, the Indemnity Escrow Agent shall disburse to the
Stockholders on the First Anniversary Date (the "First Anniversary Escrow
Disbursement") a portion of the Escrow Property equal to $10,000,000 plus
interest thereon (after deducting the applicable dollar amounts under clauses
(i) and (ii) for purposes of calculating such interest) through such date, minus
(i) the Disputed Amounts as of the First Anniversary Date, (ii) the amounts of
any claims of UniCapital or its officers, stockholders, directors, divisions,
subdivisions, affiliates, subsidiaries, parents, agents, employees, successors
and assigns (collectively, the "Affiliates") under Sections 10.1 and 10.2, which
as of the First Anniversary Date are unpaid or unresolved, and (iii) the
amounts, if any, theretofore disbursed from the escrow. In the event the First
Anniversary Escrow Disbursement is made, it shall be comprised of 50% in cash
and 50% in UniCapital Stock, with such stock valued at the average of the
closing prices per share of UniCapital Stock as reported by the New York Stock
Exchange for the 10 trading days ending on and including the third trading day
prior to the First Anniversary Date.
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4.3 Voting and Investment. The Stockholders shall be entitled to
exercise all voting powers incident to the Holdback Shares held by the Indemnity
Escrow Agent as their nominee, but shall not be entitled to exercise any
investment or dispositive powers over such Holdback Shares. The Holdback Cash
shall be invested from time to time by the Indemnity Escrow Agent as provided in
the Indemnity Escrow Agreement.
5. REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
As of the date hereof and as of the Closing Date, each Stockholder and
the Company, jointly and severally (except individually, and not severally, with
respect to the first sentence of Section 5.4), represents and warrants to
UniCapital and Newco as follows:
5.1 CORPORATE EXISTENCE. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation. The Company is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction where the conduct of its
business requires it to be so qualified, all of which jurisdictions are listed
on Schedule 5.1.
5.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
agreements, documents and instruments required to be delivered by the Company in
accordance with the provisions hereof (collectively, the "Company Documents")
will be duly executed and delivered on behalf of the Company, as applicable, in
each case by duly authorized officers of such corporation. The Company
Documents, when executed and delivered by the Company, will constitute, the
legal, valid and binding obligations of the Company and each Stockholder, as
applicable, enforceable against it in accordance with their respective terms.
5.3 AUTHORITY; VALIDITY OF CONTEMPLATED TRANSACTIONS. Each Stockholder
has the full legal right, capacity and authority to enter into this Agreement.
Except as set forth in Schedule 5.3, the execution, delivery and performance of
this Agreement by each Stockholder and the Company does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under (a) any existing
law, ordinance, or governmental rule or regulation to which the Company or any
Stockholder is subject, (b) any judgment, order, writ, injunction, decree or
award of any Governmental Entity which is applicable to the Company or any
Stockholder, (c) the partnership agreement or other organizational documents of
the Stockholders, (d) the charter documents of the Company or any securities
issued by the Company, or (e) any mortgage, indenture, agreement, contract,
commitment, lease, plan, Authorization (as defined in Section 5.22), or other
instrument, document or understanding, oral or written, to which the Company or
any Stockholder is a party, by which the Company or any Stockholder may have
rights or by which any of the properties or assets of the Company or any
Stockholder may be bound or affected, or give any party with rights thereunder
the right to terminate, modify, accelerate or otherwise change the existing
rights or obligations of the Company or any Stockholder thereunder. Except for
the filing of the Certificate of Merger with the Secretary of the State, filings
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇")
and as aforesaid, no authorization, approval or consent of, and no registration
or filing with, any Governmental Entity is required in
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connection with the execution, delivery or performance of this Agreement by the
Company or any Stockholder.
5.4 CAPITAL STOCK AND OWNERSHIP. The Stockholders own beneficially and
of record all of the outstanding capital stock of the Company free and clear of
all liens, security interests, pledges, charges, voting trusts, equities,
restrictions, encumbrances and claims of every kind except as otherwise set
forth in Schedule 5.4. All of the issued and outstanding capital stock of the
Company has been duly authorized and validly issued, fully paid and
nonassessable and have been offered, issued, sold and delivered by the Company
in compliance with all applicable state and federal laws concerning the
offering, sale or issuance of securities. None of such shares have been issued
in violation of the preemptive rights of any past or present stockholder,
whether contractual or statutory. As of the Effective Time, UniCapital shall
have acquired valid title to all of the issued and outstanding capital stock of
the Company, free and clear of all liens, security interests, pledges, charges,
voting trusts, equities, restrictions, encumbrances and claims of every kind
other than those imposed by or in respect of UniCapital.
5.5 TRANSACTIONS IN CAPITAL STOCK. Except as set forth on Schedule 5.5,
the Company has not issued or acquired any of its capital stock since December
31, 1995. Except as set forth on Schedule 5.5, as of the date of this Agreement
there is no, and immediately prior to the Effective Time there shall be no,
existing option, warrant, call, conversion right or commitment of any kind which
obligates the Company to issue any of its authorized but unissued capital stock.
Except as set forth on Schedule 5.5, the Company has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
5.6 NO BONUS SHARES. As of the date of this Agreement, none of the
shares of capital stock of the Company were, and immediately prior to the
Effective Time, none of the shares of capital stock of the Company stock will
be, issued pursuant to any awards, grants or bonuses, whether of stock or of
options or other rights.
5.7 SUBSIDIARIES. As of the date hereof, the Company has no
subsidiaries. Except as set forth in Schedule 5.7, the Company does not own, of
record or beneficially, or control, directly or indirectly, any capital stock,
any securities convertible into capital stock or any other equity interest in
any corporation, association or other business entity. Except as set forth on
Schedule 5.7, the Company is not, directly or indirectly, a participant in any
joint venture, partnership or other non-corporate entity.
5.8 PREDECESSOR STATUS; ETC. Schedule 5.8 lists all of the names of all
entities from whom the Company previously acquired assets representing all or
substantially all of the assets of such entity. Except as set forth on Schedule
5.8, the Company has never been a subsidiary of another corporation or been a
part of an acquisition which was later rescinded.
5.9 SPIN-OFFS BY COMPANIES. Since December 31, 1995 through the date of
this Agreement, the Company has not effected a sale or distribution of all or
any substantial portion of its assets, except for sales of aircraft engines and
spare parts by the Company in the ordinary course of business.
16
5.10 NO THIRD PARTY OPTIONS. Except as set forth in Schedule 5.10, and
except for sales of aircraft engines and spare parts by the Company in the
ordinary course of business, there are no existing agreements, options,
commitments or rights with, of or to any person to acquire any material assets
or rights of the Company or any interest therein.
5.11 FINANCIAL STATEMENTS. Attached hereto as Schedule 5.11 are copies
of:
(a) the audited balance sheet of the Company at March 31, 1998
and related statements of operations, cash flows and stockholders' equity for
the fiscal year then ended, as certified by Price Waterhouse LLP, together with
the reports of such independent public accountants thereon (collectively, the
"Audited Financial Statements"); and
(b) the unaudited balance sheets of the Company at June 30,
1998, and the related unaudited statements of operations, stockholders' equity
and cash flows for the portion of the fiscal year then ended (the "Unaudited
Financial Statements"; and together with the Audited Financial Statement, the
"Financial Statements").
The Financial Statements have been prepared in accordance with GAAP consistently
applied throughout the periods involved. The Financial Statements, including the
related notes, fairly presents the financial position, assets and liabilities
(whether accrued, absolute, contingent or otherwise) of the Company as of the
date indicated and the statements of operations, cash flows and changes in
stockholders' equity included in the Financial Statements fairly present in all
material respects the results of operations, cash flows and changes in
stockholders' equity of the Company for the period indicated, in each case in
accordance with GAAP consistently applied (except no footnotes or year-end
adjustments appear as part of the Unaudited Financial Statements).
17
5.12 LIABILITIES AND OBLIGATIONS.
(a) Except as reflected or reserved against in the balance
sheet as at March 31, 1998 (the "Audited Balance Sheet Date") included in the
Audited Financial Statements or in the notes to the Audited Financial
Statements, there are no liabilities against, relating to or affecting the
Company as of such date that would otherwise have been required to be reflected
or reserved against on such Audited Financial Statements. Attached hereto as
Schedule 5.12(a) is an accurate list, as of a date not more than two days prior
to the date of this Agreement and as amended as of a date not more than two days
prior to the Closing Date, of each Liability incurred by the Company after the
Audited Balance Sheet Date which exceeds $17,500, except for scheduled payments
pursuant to any of the Material Contracts and any of the Company's ordinary
course of business liabilities under purchase orders issued by the Company in
its ordinary course of business consistent with past practice for the purchase
of engine, engine parts and repair services . Each of the foregoing liabilities
that has not heretofore been paid or discharged is so noted on Schedule 5.12(a).
For purposes of this Agreement, "Liabilities" means liabilities of any kind,
character or description, whether accrued, absolute, secured or unsecured,
contingent or otherwise. For purposes of determining whether any contingent or
other Liability exceeds $17,500 for the purposes of being included on Schedule
5.12(a) as required by this Section 5.12, such amount shall be determined on a
basis that assumes the ultimate assessment against the Company of the full
amount of such contingent or other Liability.
(b) For each such liability for which, to the knowledge of the
Company or the Stockholders, the amount is contested, Schedule 5.12(b) includes
a summary description of the liability, together with copies of all relevant
documentation relating thereto, detail of all amounts claimed and any other
action or relief sought, the names of the claimant and all other parties to the
claim, suit or proceeding, the name of each court or agency before which such
claim, suit or proceeding is pending, the date such claim, suit or proceeding
was instituted, and a best estimate of the maximum amount, if any, which is
likely to become payable with respect to each such liability. If no estimate is
provided, the best estimate shall for purposes of this Agreement be deemed to be
zero.
(c) Except as set forth on Schedules 5.12(a) or (b) and except
for Liabilities not required to be set forth thereon pursuant to Section 5.12(a)
or liabilities reflected on the Audited Financial Statements, the Company has no
material Liabilities or obligations, whether direct or indirect, matured or
unmatured, absolute, contingent or otherwise, and there is no condition,
situation or set of circumstances which are reasonably to be expected to result
in any such material liability.
(d) As disclosed on Schedule 5.12(d), the aggregate amount of
principal and accrued and unpaid interest of Stockholder loans reflected on the
Financial Statements and to be repaid prior to the Closing Date pursuant to
Section 8.4 (the "Stockholder Loans") is $11,274,315.07.
5.13 ACCOUNTS AND NOTES RECEIVABLE. Attached hereto as Schedule 5.13 is
a complete and accurate list, as of a date not more than two days prior to the
date of this Agreement, of the accounts and notes receivable of the Company with
an amount due that exceeds $10,000 (including receivables from and advances to
any employees or any Stockholder) excluding those
18
arising out of Leases (collectively, the "Accounts Receivable"). Schedule 5.13
includes an aging of all Accounts Receivable showing amounts due in 30-day aging
categories. On the Closing Date, the Stockholders will deliver to UniCapital a
complete and accurate list, as of a date not more than two days prior to the
Closing Date, of the Accounts Receivable. Except as set forth on Schedule 5.13
(as such Schedule shall be updated and delivered with the aging of Accounts
Receivable not more than two days prior to the Closing Date), all Accounts
Receivable represent valid obligations arising from bona fide business
transactions in the ordinary course of business. The Accounts Receivable are,
and as of the Closing Date will be, collectible or actually collected, in each
case net of any respective reserves shown on the Company's books and records as
of their respective dates (which reserves are adequate and calculated in
accordance with GAAP, consistent with past practice). Subject in the case of
Accounts Receivable reflected on the balance sheet of the Company to such
reserves reflected on such balance sheet, subject in the case of Accounts
Receivable arising subsequent to the date of such balance sheet to such reserves
reflected on the Company's books and records which are consistent in magnitude
and nature with the reserves reflected on such prior balance sheet and except as
set forth in Schedule 5.13, each of the Accounts Receivable included in Schedule
5.13 as of the date this Agreement will be collected in full within ninety (90)
days after the day on which it first became due and payable. Except as set forth
on Schedule 5.13, there is no contest, claim, counterclaim, defense or right of
set-off, other than rebates and returns in the ordinary course of business,
under any contract with any obligor of any Account Receivable relating to the
amount or validity of such Account Receivable. The allowance for collection
losses on the balance sheet included in the Audited Financial Statements has
been determined in accordance with GAAP.
5.14 PERMITS. Each material license, permit, certificate of authority,
authorization, approval, registration, franchise and similar consent granted or
issued by any Governmental Entity (each a "Permit") held by the Company,
together with the name of the Governmental Entity issuing such Permit, is set
forth on Schedule 5.14. Except as set forth on Schedule 5.14, such Permits are
valid and in full force and effect and none of such Permits will be terminated
or impaired or become terminable as a result of the transactions contemplated by
this Agreement. Upon consummation of such transactions, the Surviving
Corporation will have all of the Company's right, title and interest in its
Permits.
5.15 REAL AND PERSONAL PROPERTY. Attached hereto as Schedule 5.15 is an
accurate list including substantially complete descriptions as of the Audited
Balance Sheet Date, of all the real and personal property (which in the case of
personal property had an original cost in excess of $25,000), excluding engine
or engine parts which constitute inventory, owned or where the Company is a
lessee, including true and correct copies of leases for equipment and properties
on which are situated buildings, warehouses and other structures used in the
operation of the business of the Company and including an indication as to which
assets were formerly owned by any Stockholder or affiliate (which term, as used
herein, shall have the meaning ascribed thereto in Rule 144(a)(1) promulgated
under the Securities Act of 1933, as amended (the "Securities Act")), of the
Company. Except as set forth on Schedule 5.15, all of the Company's leasehold
improvements, facilities, equipment and other material items of tangible
property and assets, excluding engine or engine parts which constitute
inventory, are in good operating condition and repair, subject to normal wear
and maintenance, are able in the regular and ordinary course of business and
conform to all applicable laws, ordinances, codes, rules and regulations, and
Authorizations relating to their construction, use and operation. All leases set
forth on Schedule
19
5.15 have been duly authorized, executed and delivered and constitute the legal,
valid and binding obligations of the Company, as applicable, and, to the
knowledge of the Company and any Stockholder, no other party to any such lease
is in default thereunder and such leases constitute the legal, valid and binding
obligations of such other parties. All fixed assets used by the Company in the
operation of its business are either owned by the Company or leased under an
agreement set forth on Schedule 5.15. The Company or the Stockholders have
heretofore delivered to UniCapital copies of any title reports and title
insurance policies, if any, received or held by the Company. There are no plans
or projects involving the opening of new operations, expansion of any existing
operations or the acquisition of any real property or existing business in
respect of which the Company has any Liabilities or obligations. Schedule 5.15
identifies the personal property of the Stockholders which may be located at the
Company's premises or be used by the Company in its business. Anything herein to
the contrary notwithstanding, such personal property shall remain the personal
property of the Stockholders.
5.16 CONTRACTS AND COMMITMENTS. Schedule 5.16 sets forth an accurate,
correct and complete list of all agreements, contracts, commitments,
arrangements and understandings, written or oral, including all amendments and
supplements thereto, of the Company other than Leases (the "Material
Contracts"), to which the Company is a party or is bound, or by which any of its
assets are bound, and which involve any:
(a) agreement, contract, commitment, arrangement or
understanding with any present or former employee or consultant or for the
employment of any person, including any consultant;
(b) agreement, contract, commitment, arrangement or
understanding for the future purchase of, or payment for, supplies or products,
or for the performance of services by a third party involving in any one case
$37,500 or more;
(c) agreement, contract, commitment, arrangement or
understanding to sell or supply products or to perform services involving in any
one case $37,500 or more;
(d) agreement, contract, commitment, arrangement or
understanding containing minimum purchase requirements or "take or pay"
provisions;
(e) agreement, contract, commitment, arrangement or
understanding not otherwise listed on Schedule 5.16 and continuing over a period
of more than six months from the date hereof and exceeding $37,500 in value;
(f) distribution, dealer, representative or sales agency
agreement, contract, commitment, arrangement or understanding exceeding $17,500
in value;
(g) agreement, contract, commitment, arrangement or
understanding containing a provision to indemnify any person or entity with
respect to, or to assume, any tax or environmental liability;
(h) agreement, contract, commitment, arrangement or
understanding with federal, state, local, regulatory or other governmental
entities;
20
(i) note, debenture, bond, equipment trust agreement, letter
of credit agreement, loan agreement or other contract or commitment for the
borrowing or lending of money or agreement or arrangement for a line of credit
or guarantee, pledge or undertaking of the indebtedness for money borrowed of
any other person;
(j) agreement, contract, commitment, arrangement or
understanding for any charitable or political contribution;
(k) agreement, contract, commitment, arrangement or
understanding for any capital expenditure or leasehold improvement in excess of
$37,500;
(l) agreement, contract, commitment, arrangement or
understanding limiting or restraining the Company or any successor thereto, or
to the knowledge of the Company or any Stockholder, any employee of the Company
or any successor thereto, from engaging or competing in any manner or in any
business;
(m) license, franchise, distributorship or other agreement
which relates in whole or in part to any software, patent, trademark, trade
name, service ▇▇▇▇ or copyright or to any ideas, technical assistance or other
know-how of or used by, and, in any such case, material to, the Company; and
(n) agreement, contract, commitment, arrangement or
understanding to which the Company, on the one hand, and any present or former
affiliate, officer, director or stockholder of the Company or partner of any
stockholder, on the other hand, are parties.
Purchase orders or sale orders issued or received in the ordinary course of
business consistent with past practice and containing ordinary or customary
terms and conditions that would be required to be included on Schedule 5.16
pursuant to paragraphs (b) or (c) above, do not have to be included on Schedule
5.16, but shall each be a Material Contract for all other purposes of this
Agreement. Each of the Material Contracts, except as set forth on Schedule 5.16,
is valid and enforceable in accordance with its terms; the Company is, and to
the knowledge of the Company and each Stockholder, all other parties thereto
are, in compliance with the provisions thereof. Except as set forth on Schedule
5.16, the Company is not and to the knowledge of the Company and the
Stockholders, no other party thereto is, in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
contained therein; and no event has occurred which with or without the giving of
notice or lapse of time, or both, would constitute a default thereunder. Except
as set forth on Schedule 5.16(a), none of the rights of the Company under any
Material Contract will be impaired by the consummation of the transactions
contemplated hereby, and all such rights will be enforceable by the applicable
Surviving Corporation after the Closing Date without the consent or agreement of
any other party. The items listed on Schedule 5.16(a), individually or in the
aggregate, could not be expected to have a material adverse effect on the
business, assets, financial condition, results of operations or prospects of the
Company. The Company or the Stockholders have delivered accurate and complete
copies or provided direct access to each Material Contract to UniCapital.
5.17 GOVERNMENT CONTRACTS. The Company is not now or has it ever been a
party to any contract with any Governmental Entity subject to price
redetermination or renegotiation.
21
5.18 REAL PROPERTY. The Company does not own any real property.
5.19 INSURANCE. The assets, properties and operations of the Company
are insured under various policies of general liability and other forms of
insurance as listed on Schedule 5.19, true and correct copies of which have been
provided to UniCapital. All such policies are in full force and effect in
accordance with their terms, no notice of cancellation has been received, and
there is no existing default or event which, with the giving of notice or lapse
of time or both, would constitute a default thereunder. To the knowledge of the
Stockholders, such policies are in amounts which are reasonable in relation to
the business and assets of the Company. All premiums due under such policies to
date have been paid in full. The Company has not been refused any insurance, nor
has the Company's coverage been limited, by any insurance carrier to which it
has applied for insurance or with which it has carried insurance during the past
five years. Schedule 5.19 also contains a true and complete description of all
outstanding bonds and other surety arrangements issued or entered into in
connection with the business, assets and liabilities of the Company.
5.20 EMPLOYEES. The Company has no employees. Except as disclosed on
Schedule 5.20: (a) there have not been in the past five years any labor
disputes, work stoppages, requests for representation, pickets or work
slow-downs due to labor disagreements; (b) there have been no unresolved
violations of any Laws of any Governmental Entity respecting the employment of
any employees; (c) there is no unfair labor practice, charge or complaint
pending, unresolved or, to the knowledge of the Company and the Stockholders,
threatened before the National Labor Relations Board or similar body in any
foreign country; (d) there is no employment handbook, personnel policy manual,
or similar document that creates prospective employment rights or obligations;
(e) the Company has provided or will timely provide prior to Closing all notices
required by law to be given prior to Closing to all local, state, federal or
national labor, wage-payment, equal employment opportunity, unemployment
insurance and related agencies; and (f) the transactions contemplated by this
Agreement will not create liability under any Laws of any Governmental Entity
respecting reductions in force or the impact on employees on plant closing or
sales of businesses. All employees of the Company are legally able to work in
the United States.
5.21 EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS. The Company has never
maintained, sponsored or contributed to any Benefit Plan covering any present or
former officer, employee or director of the Company, and currently, the Company
does not maintain, sponsor or contribute to or have any Liability with respect
to, any Benefit Plan covering any present or former officer, employee, director
or Affiliate of the Company. "Benefit Plan" means each "employee pension benefit
plan" (as defined in Section 3(3) of ERISA), "employee welfare benefit plan" (as
defined in Section 3(2) of ERISA) and each other plan or arrangement (written or
oral) relating to deferred compensation, bonus, performance compensation, stock
purchase, stock option, stock appreciation, severance, vacation, sick leave,
holiday pay, fringe benefits, personnel policy, reimbursement program,
incentive, insurance, welfare or similar plan, program, policy or arrangement,
in each case maintained or contributed to, or required to be maintained or
contributed to, by the Company or its affiliates or any other person or entity
that, together with the Company, is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
22
5.22 COMPLIANCE WITH LAW; AUTHORIZATIONS. The Company has complied with
each, and is not in violation in any material respect of any, law, ordinance or
governmental or regulatory rule or regulation, whether federal, state, local or
foreign ("Regulations"), to which the Company's business, operations, assets or
properties is subject, except for immaterial failures to comply of which neither
the Company nor any Stockholder has any knowledge. The Company owns, holds,
possesses or lawfully uses in the operation of its business all franchises,
licenses, permits, easements, rights, applications, filings, registrations and
other authorizations ("Authorizations") which are in any manner necessary for it
to conduct its business as now or previously conducted or for the ownership and
use of the assets owned or used by the Company in the conduct of the business of
the Company, free and clear of all liens, charges, restrictions and encumbrances
and in compliance with all Regulations. All such Authorizations are listed and
described in Schedule 5.22. The Company is not in default, except for immaterial
defaults of which neither the Company nor any Stockholder has any knowledge, nor
has the Company received any notice of any claim of such a default, with respect
to any such Authorization. All such Authorizations are renewable by their terms
or in the ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than routine filing
fees. None of such Authorizations will be adversely affected by consummation of
the transactions contemplated hereby. No Stockholder and no director, officer,
employee or former employee of the Company, or any affiliates of the Company, or
any other person, firm or corporation, owns or has any proprietary, financial or
other interest (direct or indirect) in any Authorization which the Company owns,
possesses or uses in the operation of the business of thc Company as now or
previously conducted.
5.23 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule
5.23, no Stockholder, no partner of a Stockholder and no director, officer or
employee of the Company, or any member of his or her immediate family or any
other of its, his or her affiliates, owns or has a 5% or more ownership interest
in any corporation or other entity that is or was during the last three years a
party to, or in any property which is or was during the last three years the
subject of, any contract, agreement or understanding, business arrangement or
relationship with the Company.
5.24 LITIGATION. (a) Except as set forth on Schedule 5.24, no
litigation, including any arbitration, investigation or other proceeding of or
before any court, arbitrator or governmental or regulatory official, body or
authority is pending or, to the knowledge of the Company or any Stockholder,
threatened against the Company or which relates to the transactions contemplated
by this Agreement.
(b) Except as set forth on Schedule 5.24, no litigation,
including any arbitration, investigation or other proceeding of or before any
court, arbitrator or governmental or regulatory official, body or authority is
pending or, to the knowledge of the Company or any Stockholder, threatened
against the Company or which relates to the Company.
(c) Neither the Company nor any Stockholder knows of any
reasonably likely basis for any litigation, arbitration, investigation or
proceeding referred to in Sections 5.24(a) or (b).
23
(d) Except as set forth on Schedule 5.24, the Company is not a
party to or subject to the provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory official,
body or authority.
5.25 RESTRICTIONS. Except as set forth on Schedule 5.25, the Company is
not a party to any indenture, agreement, contract, commitment, lease, plan,
license, Permit, Authorization or other instrument, document or understanding,
oral or written, or subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree or award which materially adversely
affects or materially restricts or, so far as the Company or any Stockholder now
reasonably foresees, may in the future materially adversely affect or materially
restrict, the consolidated business, operations, assets, properties, prospects
or condition (financial or otherwise) of the Company after consummation of the
transactions contemplated hereby.
5.26 TAXES. All federal, state, local and foreign tax returns, reports,
statements and other similar filings required to be filed by the Company, (the
"Tax Returns") with respect to any federal, state, local or foreign taxes,
assessments, interest, penalties, deficiencies, fees and other governmental
charges or impositions (including all income tax, unemployment compensation,
social security, payroll, sales and use, excise, privilege, property, ad
valorem, franchise, license, school and any other tax or similar governmental
charge or imposition under laws of the United States or any state or municipal
or political subdivision thereof or any foreign country or political subdivision
thereof) (the "Taxes") have been timely filed with the appropriate governmental
agencies in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns properly reflect the liabilities of the Company
for Taxes for the periods, property or events covered thereby. All Taxes,
including those which are called for by the Tax Returns, required to be paid,
withheld or accrued by the Company and any deficiency assessments, penalties and
interest have been timely paid, withheld or accrued. The accruals for Taxes
contained in the Audited Balance Sheet are adequate to cover the Tax liabilities
of the Company as of that date and include adequate provision for all deferred
Taxes, and nothing has occurred subsequent to that date to make any of such
accruals inadequate. The Company's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal income tax
deductions is accurately reflected on such Company's Tax books and records. The
Company is not or has not at any time ever been a party to a Tax sharing, Tax
indemnity or Tax allocation agreement, and the Company has not assumed any Tax
liability of any other person or entity under contract. The Company has not
received any notice of assessment or proposed assessment in connection with any
Tax Returns and there are not pending Tax examinations of or Tax claims asserted
against the Company or any of its assets or properties. The Company has not
extended, or waived the application of, any statute of limitations of any
jurisdiction regarding the assessment or collection of any Taxes. There are now
(and as of immediately following the Closing there will be) no liens (other than
any lien for current Taxes not yet due and payable) on any of the assets or
properties of the Company relating to or attributable to Taxes. To the knowledge
of the Company and the Stockholders, there is no basis for the assertion of any
claim relating to or attributable to Taxes which, if adversely determined, would
result in any lien on the assets of the Company or otherwise have an adverse
effect on the Company or its business, operations, assets, properties, prospects
or condition (financial or otherwise). Neither the Company nor any Stockholder
has any knowledge of any basis for any additional assessment of any Taxes. All
Tax payments related to employees, including income tax withholding FICA, FUTA,
unemployment and worker's compensation, required to be made by the Company have
24
been fully and properly paid, withheld, accrued or recorded. There are no
contracts, agreements, plans or arrangements, including the provisions of this
Agreement, covering any employee or former employee of the Company that,
individually or collectively, could give rise to any payment (or portion
thereof) that would not be deductible by reason of Sections 280G, 404 or 162 of
the Code. Two correct and complete copies of (a) all Tax examinations, (b) all
extensions of statutory limitations and (c) all federal, state and local income
tax returns and franchise tax returns of the Company for the last five fiscal
years, or such shorter period of time as any of them shall have existed, will be
delivered by the Company and the Stockholders to UniCapital within 5 days after
the date of this Agreement. The Company has a taxable year ended March 31 and
the Company has not made an election to retain a fiscal year other than March 31
under Section 444 of the Code. Except as set forth on Schedule 5.26, the Company
currently utilize the accrual method of accounting for income tax purposes and
has not changed its method of accounting for income tax purposes in the past
five years.
5.27 INTELLECTUAL PROPERTY MATTERS.
(a) The Company has not utilized or does not currently utilize
any patent, trademark, trade name, service ▇▇▇▇, copyright, software, trade
secret or know-how material to the business of the Company, except for
commercial software generally available and those listed on Schedule 5.27 (the
"Intellectual Property"), all of which are owned by the Company free and clear
of any liens, claims, charges or encumbrances. The Intellectual Property
constitutes all such assets, properties and rights which are used or held for
use in, or are necessary for, the conduct of the business of the Company.
(b) Except as set forth in Schedule 5.27 and except for
"shrink wrap" agreements covering software, there are no royalty, commission or
similar arrangements, and no licenses, sublicenses or agreements, pertaining to
any of the Intellectual Property.
(c) Except as set forth in Schedule 5.27, the Company does not
infringe upon unlawfully or wrongfully use any patent, trademark, trade name,
service ▇▇▇▇, copyright or trade secret owned or claimed by another. No action,
suit, proceeding or investigation has been instituted or, to the knowledge of
the Company or the Stockholders, threatened relating to any, patent, trademark,
trade name, service ▇▇▇▇, copyright or trade secret formerly or currently used
by the Company. Except as set forth in Schedule 5.27, none of the Intellectual
Property is subject to any outstanding order, decree or judgment. The Company
has not agreed to indemnify any person or entity for or against any infringement
of or by the Intellectual Property.
(d) Except as set forth in Schedule 5.27, no present or former
employee of the Company and no other person or entity owns or has any
proprietary, financial or other interest, direct or indirect, in whole or in
part, in any of the Intellectual Property. Schedule 5.27(d) lists all
confidentiality or non-disclosure agreements currently in force and effect in
connection with the Intellectual Property to which the Company or any of its
respective employees is a party.
(e) None of the Company's Intellectual Property is registered
in, filed in or issued by the United States Copyright Office or the United
States Patent and Trademark Office, or in any offices in the various states of
the United States and any offices in other jurisdictions.
25
(f) All Intellectual Property in the form of computer software
that is utilized by the Company in the operations of its respective business is
capable of processing date data between and within the twentieth and
twenty-first centuries, or can be rendered capable of processing such data
within 30 days by the expenditure of no more than $10,000 in the aggregate.
5.28 COMPLETENESS. The certified copies of the Certificate of
Incorporation and Bylaws, both as amended to date, of the Company, and the
copies of all Material Contracts and Permits which are included on schedules
attached hereto or which have been delivered or have been made available to
UniCapital to the extent required by the terms of this Agreement, are complete
and correct; neither the Company nor, to the knowledge of the Company or any
Stockholder, any other party to any of the foregoing is in material default
thereunder; and, except as set forth in the schedules and documents attached to
this Agreement, the rights and benefits of the Company thereunder will not be
materially and adversely affected by the transactions contemplated hereby, and
the execution of this Agreement and the performance of the obligations hereunder
will not result in a material violation or breach or constitute a material
default under any of the terms or provisions thereof. Except as set forth on
Schedule 5.28, none of such Material Contracts or Permits requires notice to, or
the consent or approval of, any governmental agency or other third party to any
of the transactions contemplated hereby to remain in full force and effect. The
consummation of the transactions contemplated hereby will not give rise to any
right of termination, cancellation or acceleration or result in the loss of any
right or benefit thereunder.
5.29 EXISTING CONDITION. Except as set forth in Schedule 5.29, between
the Audited Balance Sheet Date and the date of this Agreement, the Company has
not:
(a) incurred any liabilities, other than liabilities incurred
in the ordinary course of business consistent with past practice, or discharged
or satisfied any lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or will cause any material damage or risk of material loss to it or any
of its assets or properties;
(b) sold, encumbered, assigned or transferred any assets,
properties or rights or any interest therein, except for the sales in the
ordinary course of business consistent with past practice, or made any agreement
or commitment or granted any option or right with, of or to any person to
acquire any assets, properties or rights of the Company or any interest therein;
(c) created, incurred, assumed or guaranteed any indebtedness
for money borrowed, or mortgaged, pledged or subjected any of its assets to any
mortgage, lien, pledge, security interest, conditional sales contract or other
encumbrance other than in the ordinary course of business consistent with past
practice;
(d) except in the ordinary course of business consistent with
past practice, made or suffered any amendment or termination of any material
agreement, contract, commitment, lease or plan to which it is a party or by
which it is bound, or canceled, modified or waived any substantial debts or
claims held by it or waived any rights of substantial value, where such
26
amendments, terminations, cancellations, modifications and waivers in the
aggregate do not or could not reasonably be expected to have a material adverse
effect on the business, operations, assets, properties, prospects or condition
(financial or otherwise) of the Company;
(e) suffered any damage, destruction or loss, whether or not
covered by insurance, (i) materially and adversely affecting its business,
operations, assets, properties or prospects or (ii) of any item or items carried
on its books of account individually or in the aggregate at more than $25,000,
or suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility or other services required to conduct its
business and operations;
(f) suffered any material adverse change in its business,
operations, assets, properties, prospects or condition (financial or otherwise),
other than as directly caused by adverse economic conditions not specific to, or
having an extraordinary impact upon, the Company;
(g) received notice or had knowledge of any actual or
threatened labor trouble, strike or other occurrence, event or condition of any
similar character which has had or might have an adverse effect on its business,
operations, assets, properties or prospects;
(h) made commitments or agreements for capital expenditures or
capital additions or betterments exceeding in the aggregate $25,000, except in
the ordinary course of business consistent with past practice or such as may be
involved in ordinary repair, maintenance or replacement of its assets;
(i) increased the salaries or other compensation of, or made
any advance (excluding advances for ordinary and necessary business expenses) or
loan to, any of its officers, directors, employees or Agents (as defined in
Section 7.1(j)) or made any increase in, or any addition to, other benefits to
which any of such persons may be entitled;
(j) changed any of the accounting principles followed by it or
the methods of applying such principles;
(k) changed its authorized capital or its securities
outstanding or otherwise changed its ownership interests, or granted any
options, warrants, calls, conversion rights or commitments with respect to any
of its capital stock or other ownership interests; or
(l) agreed to take any of the actions referred to above.
5.30 DEPOSIT ACCOUNTS; POWERS OF ATTORNEY. Attached hereto as Schedule
5.30 is an accurate list, as of the date of this Agreement, of:
(a) the name of each financial institution in which the
Company has accounts or safe deposit boxes;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
27
(d) the name of each person authorized to draw thereon or have
access thereto; and
(e) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms of such power.
5.31 BOOKS OF ACCOUNT. The books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions and the
assets and liabilities of the Company. The Company has not engaged in any
transaction, maintained any bank account or used any material funds of the
Company except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the business, except
as set forth on Schedule 5.31.
5.32 ENVIRONMENTAL MATTERS. (a) The Company has secured, and is in
compliance with, all Environmental Permits, with respect to any premises on
which its business is operated, all of which Environmental Permits shall vest in
the applicable Surviving Corporation upon consummation of the transactions
contemplated hereby. The Company is in compliance with all Environmental Laws.
(b) Neither the Company nor any Stockholder has received any
communication from any Governmental Entity that alleges that the Company is not
in compliance with any Environmental Laws or Environmental Permits.
(c) The Company has not entered into or agreed to any court
decree or order, and is not subject to any judgment, decree or order, relating
to compliance with any Environmental Law or, except as described on Schedule
5.32(c), to any investigation or cleanup of a Hazardous Substance under any
Environmental Law.
(d) No lien, charge, interest or encumbrance has been
attached, asserted, or to the knowledge of the Company or any Stockholder,
threatened to or against any assets or properties of the Company pursuant to any
Environmental Law.
(e) Except as described on Schedule 5.32(e), there has been no
treatment, storage, disposal or release of any Hazardous Substance on any
property owned, operated or leased by the Company.
(f) The Company has not received a CERCLA 104(e) information
request and has not been named a potentially responsible party for any National
Priorities List site under CERCLA or any site under analogous state law or
received an analogous notice or request from any non-U.S. Governmental Entity,
which notice, request or any resulting inquiry or litigation has not been fully
and finally resolved without possibility of reopening.
(g) Except as described on Schedule 5.32(g), there are no
aboveground tanks or underground storage tanks on, under or about any property
owned, operated or leased by the Company and any former aboveground or
underground tanks on any property owned, operated or leased by the Company have
been removed in accordance with all Environmental Laws and no residual
contamination, if any, remains at such sites in excess of applicable standards.
28
(h) There are no polychlorinated biphenyls ("PCBs") leaking
from any article, container or equipment on, under or about any property owned,
operated or leased by the Company and there are no such articles, containers or
equipment containing PCBs, and there is no asbestos containing material in a
condition or location currently constituting a violation of any Environmental
Law at, on, under or within any property owned, operated or leased by the
Company.
(i) The Company and the Stockholders collectively have
provided to UniCapital true and complete copies of, or access to, all written
environmental assessment materials and reports in their possession that have
been prepared by or on behalf of the Company during the past five years.
5.33 NO ILLEGAL PAYMENTS. The Company and, to the knowledge of the
Company and any Stockholder, no affiliate, officer, agent or employee thereof,
directly or indirectly, has, during the past five years, on behalf of or with
respect to the Company or any affiliate thereof, (a) made any unlawful domestic
or foreign political contributions, (b) made any payment or provided any
services which were not legal to make or provide or which the Company or any
affiliate thereof or any such officer, agent or employee should have known were
not legal for the payee or the recipient of such services to receive, (c)
received any payment or any services which were not legal for the payer or the
provider of such services to make or provide, (d) made any payment to any person
or entity, or agent or employee thereof, in connection with any Lease (as
hereinafter defined), purchase or sale, or other transaction to induce such
person or entity to enter into a lease, purchase or sale, or other transaction,
(e) had any material transactions or material payments related to the Company
which are not recorded in their accounting books and records or (f) except for
▇▇▇▇▇ cash for office use, had any off-book bank or cash accounts or "slush
funds" related to the Company.
5.34 LEASES. Schedule 5.34 hereto sets forth the Company's
lease/financing arrangements as of the Audited Balance Sheet Date (which,
together with all other lease/financing arrangements entered into by the Company
between such date and the Closing Date, are referred to herein as the "Leases").
The term "Lease Documents" means the lease arrangements and financing contracts
evidencing the Leases described on Schedule 5.34, together with all related
documents and agreements including master lease agreements, schedules or other
addenda to such Leases, certificates of delivery and acceptance, UCC financing
statements, remarketing agreements, residual guaranty agreements, insurance
policies, guaranty agreements and other credit supports. The term "Equipment"
means all equipment, inventory and other property described as being leased
pursuant to a Lease, or in which the Company is granted a security interest
pursuant to a Lease. The term "Obligor" means any lessee party or other party
obligated to pay or perform any obligations under or in respect of a Lease or
the Equipment covered by a Lease (excluding the lessor party thereunder, but
otherwise including any guarantor of a Lease or any vendor, manufacturer or
similar party under a remarketing agreement, residual guaranty or similar
agreement). The term "Scheduled Payments" means the monthly or periodic rental
payments or installments of principal and interest under the terms of the
Leases. Except as set forth in Schedule 5.34:
(a) There is no restriction or limitation in any of the Lease
Documents or otherwise, restricting the Company from executing this Agreement or
entering into the
29
transactions contemplated by this Agreement, other than costs which have been,
or prior to the Closing will have been, obtained.
(b) The Company owns or validly leases the Equipment covered
by each Lease or has a vested and perfected first priority security interest in
the Equipment.
(c) Each Lease is in full force and effect in accordance with
is terms, and, to the knowledge of any Stockholder, there has been no occurrence
which would or might permit any Obligor to terminate such Lease or suspend or
reduce any payments or obligations due or to become due in respect of such Lease
or the related Lease Documents by reason of default by the lessor party under
such Lease. To the knowledge of any Stockholder, none of the Obligors in respect
of a Lease or the related Lease Documents is the subject of a bankruptcy,
insolvency or similar proceeding.
(d) Except for the delinquency in the payment of any Scheduled
Payment that is not more than 90 days past due, there does not exist any default
in the payment of any Scheduled Payments due under any Lease or the related
Lease Documents, and there does not exist any other default, breach, violation
or event permitting acceleration, termination or repossession under any Lease or
the related Lease Documents or any event which, to the knowledge of any
Stockholder, with notice and the expiration of any applicable grace or cure
period, would constitute such a default, breach, violation or event permitting
acceleration, termination or repossession under such Lease or the related Lease
Documents.
(e) The Company has not acted in a manner which (nor has the
Company failed to act where such failure to act) would alter or reduce any of
such entity's rights or benefits under any manufacturer's or vendors' warranties
or guarantees with respect to any Equipment.
(f) The Company has complied with all requirements of any
federal, state or local law, including usury laws, applicable to each Lease.
(g) Except as set forth in Schedule 5.34, each Lease has the
following characteristics:
(i) such Lease was originated in the United States
and the Scheduled Payments thereunder are payable in U.S. dollars by
Obligors domiciled in the United States;
(ii) the lessee party under such Lease has
unconditionally accepted the Equipment covered by such Lease;
(iii) at least one Scheduled Payment has been made by
the Obligor under each such Lease; and
(iv) no Obligor in respect of such Lease is an
affiliate of the Company.
(h) Each Lease and the related Lease Documents are valid,
binding, legally enforceable and non-cancelable obligations of the Company, and
to the knowledge of any Stockholder, the other parties thereto, enforceable in
accordance with their respective terms.
30
Each Lease is a business obligation of the lessee thereunder and is not a
"consumer transaction" under any applicable federal or state regulation.
(i) To the knowledge of any Stockholder, no Lease or
related-Lease Document is the subject of a fraudulent scheme by any Obligor or
any supplier of Equipment.
(j) Each item of Equipment is subject to a Lease.
(k) Each Lease is a fixed rate lease contract.
(l) No Lease or related Lease Document is subject to any right
of rescission, setoff, counterclaim, abatement or defense, including any defense
of usury, nor will the operation of any of the terms of any Lease or any related
Lease Document or the exercise of any right or remedy thereunder render such
Lease or any related Lease Document or the obligations thereunder unenforceable,
or subject the same to any right of rescission, set-off, counterclaim, abatement
or defense. No Obligor has asserted any right of rescission, set-off,
counterclaim abatement or defense to its obligations under a Lease or any
related Lease Document.
(m) As to the Leases and thc related Lease Documents, (i) none
has been amended or modified (a) to extend the maturity date for a period of
more than one year, or (b) to alter the amount or time of payment of any amount
due thereunder; unless as to (a) and (b) such extension or alteration is
reasonably expected to result in a net economic benefit to the Company, (ii) no
indulgences or waivers have been granted in respect of the obligations of any
Obligor under any Lease, and (iii) the Company has not advanced any monies on
behalf of any Obligor.
(n) Each Lease requires the Obligor thereunder at its own cost
and expense to maintain the Equipment leased thereunder in good repair,
condition and working order, and to the knowledge of any Stockholder, each
Obligor under a Lease is currently in compliance with such requirement.
(o) Each Lease requires the Obligor thereunder (i) to pay all
fees, taxes (except income taxes), and other charges or liabilities arising with
respect to thc Equipment leased thereunder or the use thereof, (ii) to keep the
Equipment free and clear of any and all liens, security interests and other
encumbrances, other than security interests of the Company, (iii) to hold
harmless the lessor thereunder and its successors and assigns against the
imposition of any fees, charges, liabilities and encumbrances, (iv) to bear all
risk of loss associated with the Equipment covered by or securing the
obligations under such Lease during the term of such Lease and (v) to maintain
at the cost of the Obligor public liability and casualty insurance in respect of
such Equipment covered by such Lease.
(p) Except as set forth on Schedule 5.34, each Lease involves
either the lease of tangible personal property owned, either beneficially or
legally, or leased by the Company or the loan of money secured by a security
interest in tangible personal property owned by the Obligor thereunder.
(q) The Company has not received any notice challenging its
ownership or the priority of its security interest in the Equipment covered by
each Lease, and there are no proceedings pending before any court or
governmental entity or, to the knowledge of the
31
Stockholders, threatened by any Obligor or other party, (i) asserting the
invalidity of any Lease or the related Lease Documents, (ii) seeking to prevent
payment or performance by any Obligor of any Lease or any of the terms of the
related Lease Documents, or (iii) seeking any determination or ruling that might
adversely affect the validity or enforceability of any Lease or any of the terms
or provisions of the related Lease Documents.
(r) As to each Lease, there are no material agreements or
understandings between the Company and the Obligation in respect of such Lease
or otherwise binding on the Company other than as expressly set forth in the
Lease and the related Lease Documents.
5.35 LEASE FUNDING. The Company is in compliance with all of the
material terms and covenants of, and is not in material default or breach under,
each agreement, contract, understanding or arrangement with any funding source
for the Leases.
5.36 INVENTORY. The Inventories of the Company are of a quality and
quantity usable and saleable in the ordinary course of business; are fit and
sufficient for the purposes for which they are procured or manufactured; reflect
valuation at the lower of cost or market not in excess of the valuations of
inventories computed in accordance with GAAP applied on a consistent basis; and
could reasonably be expected to be sold in the ordinary course of business at an
amount not less than the amount reflected on the audited balance sheet of the
Company at March 31, 1998.
5.37 PRODUCT LIABILITY CLAIMS. Except as set forth on Schedule 5.37,
there are, and during the past five years there have been, no product liability
or warranty claims asserted, pending or, to the knowledge of the Company or the
Stockholders, threatened with respect to any products or services sold or
provided by the Company. Neither the Company nor any Stockholder is aware of any
condition, situation or set of circumstances which could reasonably be expected
to result in any such product liability or warranty claim.
5.38 SERVICE COMPANIES. The Company has no Liabilities or obligations,
whether direct or indirect, matured or unmatured, absolute, contingent or
otherwise, to or relating to Randmar, Inc., American Aviation Sales Corp.,
Randmar, LLC and American Aviation Sales LLC (collectively, the "Service
Companies"), except as described on Schedule 5.38. No assets or rights of any
kind that are used in the conduct of the business of the Company are held by
either of the Service Companies.
5.39 INDEPENDENT CONTRACTORS. All individuals engaged by the Company
function as independent contractors and have been treated as such for all tax
and reporting purposes. Such independent contractor status has been and will
continue to be respected by the Internal Revenue Service and under common law
principles.
5.40 UNICAPITAL PROSPECTUS; SECURITIES REPRESENTATIONS. Each
Stockholder has received and reviewed a copy of the prospectus dated July 23,
1998 including all supplements thereto (as supplemented, the "UniCapital
Prospectus") contained in UniCapital's registration statement on Form S-1 (File
No. 333-53779). Each Stockholder: (a) has such knowledge, sophistication and
expertise in business and financial matters that such Stockholder is capable of
evaluating the merits and risks of an investment in the shares of UniCapital
Stock, (b) fully
32
understands the nature, scope, and duration of the limitations on transfer
contained herein and under applicable law, and (c) can bear the economic risk of
any investment in the shares of UniCapital Stock and can afford a complete loss
of such investment. Each Stockholder has had an adequate opportunity to ask
questions and receive answers (and has asked such questions and received answers
to its satisfaction) from the officers of UniCapital concerning the business,
operations and financial condition of UniCapital. None of the Stockholders has
any contract, undertaking, agreement or arrangement, written or oral, with any
other person to sell, transfer or grant participation in any shares of
UniCapital Common Stock to be acquired by such Stockholder in the Merger. Each
Stockholder acknowledges and agrees that UniCapital has not and will not provide
such Stockholder or any other party with a prospectus for such Stockholder's use
in selling UniCapital Stock.
5.41 DISCLOSURE. The Company has delivered to UniCapital true and
complete copies of each agreement, contract, commitment or other document (or,
in the case of any such document not in the possession or reasonably available
to the Company or a Stockholder, accurate and complete summaries thereof) that
is referred to in the schedules to this Agreement that have been requested by
UniCapital or its representatives. Without limiting any exclusion, exception or
other limitation contained in any of the representations and warranties made
herein, this Agreement and the schedules hereto do not and will not include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements herein and therein not misleading. If a Stockholder
becomes aware of any fact or circumstance that would materially change a
representation or warranty of any Stockholder in this Agreement or any
representation made on behalf of the Company, then such Stockholder shall as
promptly as practical give notice of such fact or circumstance to UniCapital.
Such notification, however, shall not relieve the Company or any of the
Stockholders of their respective obligations under this Agreement, and at the
sole option of UniCapital, the truth and accuracy of any and all warranties and
representations of the Stockholders, at the date of this Agreement and at the
Closing, shall be a precondition to the consummation of this transaction.
6. REPRESENTATIONS OF UNICAPITAL AND NEWCO
As of the date hereof and as of the Closing Date, UniCapital and Newco,
jointly and severally, represent and warrant to the Company and the Stockholders
as follows:
6.1 CORPORATE EXISTENCE. UniCapital is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Newco is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation.
6.2 UNICAPITAL STOCK. The shares of UniCapital Stock to be issued and
delivered to the Stockholders on the Closing Date, when issued and delivered in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable shares, and except for restrictions upon resale, will be
legally equivalent in all respects to the majority of UniCapital Stock issued
and outstanding as of the date hereof. The UniCapital Stock to be issued upon
the conversion of Company Stock pursuant to the terms of this Agreement will be
free and clear of all liens, encumbrances and claims of every kind, other than
restrictions upon transfer contained
33
herein and other than any liens, encumbrances or claims arising other than by
the actions of UniCapital or Newco.
6.3 CORPORATE POWER AND AUTHORIZATION. UniCapital and Newco have the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement and all
related documents and agreements required to be executed and delivered by
UniCapital and Newco in accordance with the provisions hereof (the "UniCapital
Documents") have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by UniCapital and Newco and
constitutes, and the UniCapital Documents when executed and delivered will
constitute, the legal, valid and binding obligations of UniCapital and Newco
enforceable against UniCapital and Newco in accordance with their respective
terms. Newco will have the corporate power and authority to conduct the business
of the Company following the Closing.
6.4 NO CONFLICTS. The execution, delivery and performance of this
Agreement by UniCapital and Newco will not violate, conflict with or result in
the breach of any term, condition or provision of, or require the consent of any
other person under (a) any existing law, ordinance, or governmental rule or
regulation to which UniCapital or Newco is subject, (b) any judgment, order,
writ, injunction, decree or award of any Governmental Entity which is applicable
to UniCapital or Newco, (c) the charter documents of UniCapital or Newco, or (d)
subject to compliance with any agreements between UniCapital and its lenders,
any mortgage, indenture, agreement, contract, commitment, lease, plan,
Authorization, or other instrument, document or understanding, oral or written,
to which UniCapital or Newco is a party, by which UniCapital or Newco may have
rights or by which any of the properties or assets of UniCapital or Newco may be
bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of UniCapital or Newco thereunder. Except for filing the Certificate
of Merger, filings under the HSR Act and except as aforesaid, no authorization,
approval or consent of, and no registration or filing (provided that with
respect to such Act the representation set forth in this sentence shall be
limited to those facts relating to the Company and the Stockholders of which
UniCapital or Newco has knowledge), with any Governmental Entity is required in
connection with the execution, delivery or performance of this Agreement by
UniCapital or Newco.
6.5 LITIGATION. No litigation, including any arbitration, investigation
or other proceeding of or before any court, arbitrator or governmental or
regulatory official, body or authority is pending or, to the knowledge of
UniCapital and Newco, threatened against UniCapital or Newco which relates to
the transactions contemplated by this Agreement.
7. COVENANTS
7.1 PRE-CLOSING COVENANTS. The following covenants shall apply during
the period from and after the date hereof through the Closing Date:
(a) BUSINESS IN THE ORDINARY COURSE. Except as otherwise
expressly contemplated by this Agreement, the Stockholders shall cause the
Company to conduct its business solely in the ordinary course and consistent
with past practice.
34
(b) EXISTING CONDITIONS. To the extent within the reasonable
control of the Stockholders, the Stockholders shall not allow the Company to
cause or permit to occur any of the events or occurrences described in Section
5.29 hereof. In addition, the Company shall not make any distributions to the
Stockholders after the end of business on the day prior to the Closing Date.
(c) MAINTENANCE OF PROPERTIES AND ASSETS. Except as otherwise
expressly contemplated by this Agreement, the Stockholders shall cause the
Company to use its reasonable commercial efforts to, maintain and service its
properties and assets in order to preserve their value and usefulness in the
conduct of its business.
(d) EMPLOYEES AND BUSINESS RELATIONS. The Stockholders shall
cause the Company to use its reasonable commercial efforts to keep available the
services of its current employees and agents and to maintain its relations and
goodwill with its suppliers, customers, distributors and any others with whom or
with which it has business relations.
(e) MAINTENANCE OF INSURANCE. The Stockholders shall cause the
Company to notify UniCapital of any material changes in the terms of the
insurance policies and binders referred to on Schedule 5.19 hereto.
(f) COMPLIANCE WITH LAWS, ETC. The Stockholders shall cause
the Company to comply with all laws, ordinances, rules, regulations and orders
applicable to the Company or its business, operations, properties or assets,
except where the noncompliance with which could not reasonably be expected to
materially adversely affect the Company.
(g) CONDUCT OF BUSINESS. The Stockholders shall cause the
Company to use its reasonable commercial efforts to conduct its business in such
a manner that on the Closing Date the representations and warranties of the
Company and the Stockholders contained in this Agreement shall be true as though
such representations and warranties were made on and as of each such date
(except to the extent such representations or warranties expressly speak as of a
specific date), and the Stockholders shall cause the Company to use its
reasonable commercial efforts to cause all of the conditions to the obligations
of the Company and the Stockholders under this Agreement to be satisfied on or
prior to the Closing Date. The Stockholders shall cause the Company to maintain
credit underwriting standards consistent with past practices.
(h) ACCESS. Upon prior reasonable notice, the Stockholders
shall cause the Company to give to UniCapital's officers, employees, counsel,
accountants and other representatives free and full access to and the right to
inspect, during normal business hours, all of the premises, properties, assets,
records, contracts and other documents relating to the Company and shall permit
them to consult with the officers, employees, accountants, counsel and agents of
the Company for the purpose of making such investigation of such entities as
UniCapital shall reasonably request; provided that such investigation shall not
unreasonably interfere with such entities business operations, and provided,
further, that UniCapital shall not contact or consult with any non-officer
employees of the Company without the Company's prior consent, which consent
shall not be unreasonably withheld. Furthermore, the Stockholders shall cause
the Company to furnish to UniCapital all such documents and copies of documents
and records and information with respect to the affairs of such entity and
copies of any working
35
papers relating thereto as UniCapital shall from time to time reasonably
request. No information or knowledge obtained in any investigation pursuant to
this Section 7.1(h) or otherwise shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the Merger.
(i) PRESS RELEASE AND OTHER COMMUNICATIONS. The Stockholders
shall cause the Company to refrain from giving notice to third parties or
otherwise make any press release or other public statement concerning this
Agreement or the transactions contemplated hereby. No Stockholder shall, and the
Stockholders shall cause the Company not to, grant any interview, publish any
article, report or statement, or respond to any press inquiry or other inquiry
of any third party relating to this Agreement, the business of the Company, the
business (current and proposed) of UniCapital or any other matter connected with
any of the foregoing without the express prior written approval of UniCapital
and all inquiries and questions with respect to any of the foregoing shall be
coordinated through ▇▇▇▇▇▇ New, Chief Executive Officer of UniCapital. Each
Stockholder shall, and shall cause the Company to, coordinate all communications
with the employees and agents of the Company concerning this Agreement or the
transactions contemplated hereby through UniCapital prior to making any such
communication. Notwithstanding the above, the Stockholders may communicate,
whether orally or in writing, with any lenders, lessors, customers, suppliers or
any other parties from whom any consents, approvals or waivers are necessary or
advisable, or to whom notice is necessary or advisable, as well as with any
professional advisors with respect to the transactions contemplated by this
Agreement and related matters. Notwithstanding the foregoing, this Section
7.1(i) shall not be interpreted to prevent the Company or any Stockholder from
disclosing information as compelled by a court order or otherwise pursuant to
legal process, provided, however, that prior to disclosing any information
concerning this Agreement or the transaction contemplated hereby in response to
any such court order or legal process, the Stockholders shall, or shall cause
the Company to, provide UniCapital with prompt notice of the court order so that
UniCapital may take whatever action it deems appropriate to prohibit such
disclosure.
(j) EXCLUSIVITY. Except with respect to this Agreement and the
transactions contemplated hereby, no Stockholder and none of their affiliates
shall, and each of them shall cause the Company and their respective employees,
agents and representatives (including any investment banking, legal or
accounting firm retained by it or them and any individual member or employee of
the foregoing) (each, an "Agent") not to, (a) initiate, solicit or seek,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including any proposal or offer to its Stockholders or any of
them) with respect to a merger, acquisition, consolidation, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase of
all or any portion of the assets or any equity securities of, the Company other
than any such transaction effected or to be effected in the ordinary course of
business (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"), or (b) engage in any negotiations concerning, or
provide any confidential information or data to, or have any substantive
discussions with, any person relating to an Acquisition Proposal, (c) otherwise
cooperate in any effort or attempt to make, implement or accept an Acquisition
Proposal, or (d) enter into or consummate any agreement or understanding with
any person or entity relating to an Acquisition Proposal, and the Merger
contemplated hereby. If the Company or any Stockholder, or any of their
respective Agents, have provided any person or entity (other than UniCapital)
with any confidential information or data relating to an Acquisition Proposal,
then
36
the Stockholders shall request the immediate return thereof. The Stockholders
shall notify UniCapital immediately if any inquiries, proposals or offers
relating to an Acquisition Proposal are received by, any confidential
information or data is requested from, or any negotiations or discussions
related to an Acquisition Proposal are sought to be initiated or continued with,
it or any individual or entity referred to in the first sentence of this Section
7.1(j). The covenant contained in this Section 7.1(j) shall not survive any
termination of this Agreement pursuant to Sections 11.1, 11.2 or 11.3.
(k) SUPPLIER APPROVAL. Except for those agreements set forth
on Schedule 7.1(k), which individually or in the aggregate are not expected to
have a material adverse effect on the business, assets, financial condition,
results of operations or prospects of the Company, the Stockholders will cause
the Company to satisfy any requirement for notice and approval of the
transactions contemplated by this Agreement under applicable supplier
agreements, and shall provide UniCapital with satisfactory evidence of such
approvals.
(l) NOTICE TO BARGAINING AGENTS. Prior to the Closing Date,
the Stockholders will cause the Company to satisfy any requirement for notice of
the transactions contemplated by this Agreement under any applicable collective
bargaining agreement, and shall provide UniCapital with proof that any required
notice has been provided.
(m) NOTIFICATION OF CERTAIN MATTERS.
(i) The Company and the Stockholders shall give
prompt notice to UniCapital of (A) the occurrence or non-occurrence of
any event known to the Company or any Stockholder the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty contained in Section 5 to be untrue or inaccurate in any
material respect at or prior to the Closing Date and (B) any material
failure of the Company or any Stockholder to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by
such person hereunder.
(ii) UniCapital shall give prompt notice to each
Stockholder of (A) the occurrence or non-occurrence of any event known
to UniCapital the occurrence of nonoccurrence of which would be likely
to cause any representation or warranty contained in Section 6 to be
untrue or inaccurate in any material respect at or prior to the Closing
Date and (B) any material failure of UniCapital to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
(iii) The delivery of any notice pursuant to this
Section 7.1(m) shall not be deemed to (A) modify the representations or
warranties hereunder of the party delivering such notice, which
modification may only be made pursuant to Section 7.1(n), (B) modify
the conditions set forth in Sections 8 or 9 or (C) limit or otherwise
affect the remedies available hereunder to the party receiving such
notice.
(n) AMENDMENT OF SCHEDULES. Each party shall have, with
respect to the representations and warranties of such party contained in this
Agreement, an obligation until the Closing Date to supplement or amend the
schedules hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
37
required to be set forth or described in the schedules, provided that no
amendment or supplement to a Schedule that constitutes or reflects a material
adverse change in the business, operations, assets, properties, prospects or
condition (financial or otherwise) of the Company, taken as a whole (a "Material
Adverse Amendment"), may be made unless UniCapital consents to such amendment or
supplement; and provided further, however, that UniCapital may not withhold
consent to such Material Adverse Amendment if the same relates to (i) changes in
facts or circumstances occurring subsequent to the date hereof, or (ii) facts
and circumstances existing as of the date hereof that were not disclosed by the
Stockholders because they did not have knowledge of them (but, with respect to
facts and circumstances described in (ii) only to the extent that the omission
thereof from Schedules attached hereto as of the date hereof was not the result
of a lack of good faith diligence on the part of the Stockholders).
Notwithstanding the foregoing, if any such amendment or supplement relates to
changes in facts or circumstances occurring subsequent to the date of this
Agreement and such amendment or supplement constitutes or reflects a Material
Adverse Amendment, then such amendment or supplement shall be accepted by
UniCapital subject to the provisions of Section 10.2 hereof. Only (i) the
schedules attached to this Agreement at the time of its execution and (ii)
amended schedules as accepted under the standards and provisions of this Section
7.1(n), shall be deemed to be part of this Agreement in accordance with Section
16.3 hereof.
(o) LITIGATION MATTERS. The parties hereby agree that all
expenses, benefits, awards or ultimate liability associated with the litigation
as listed on Schedule 5.24 shall remain solely with the Stockholders. The
Stockholders shall be entitled to control the conduct, settlement or resolution
of such litigation; provided, however, if the existence of any such litigation
is having a materially adverse effect on the business of the Company or is
reasonably likely to have a material advance impact on the business of the
Company, then UniCapital shall have the right to participate in the conduct of
such litigation. UniCapital shall not under this Agreement or any other
agreement be entitled to, or subjected to, any expenses, benefits, awards or
ultimate liability associated with such litigation. Following the Closing,
UniCapital and the Company will take such action as may be necessary or
desirable to effectuate the foregoing.
(p) EXISTING DEBT AND LEASE INSTRUMENTS. The Stockholders
shall cause the Company to perform all of its obligations under existing debt
and lease agreements and other agreements relating to or affecting its assets,
properties, equipment and rights.
(q) ADDITIONAL DEBT AND LEASE INSTRUMENTS. Except as otherwise
expressly contemplated by Section 7.1(p) of this Agreement, the Stockholders
shall cause the Company not to enter into any new or amended debt or lease
instruments, other than in the ordinary course of business, without the prior
knowledge and consent of UniCapital.
(r) BULK SALES. The Stockholders shall cause the Company not
to make (i) any bulk sales of the Company's inventory or (ii) any other sales of
the Company's inventory except in the ordinary course of business consistent
with past practice.
(s) DISTRIBUTIONS. The Stockholders shall cause the Company
not to declare any dividends or pay out any bonuses, fees, commissions or any
other distributions of any kind to the Stockholders, directors, management or
other personnel which would, to the knowledge of the
38
Company or any Stockholder, result in a Net Worth Deficiency, without the prior
knowledge and consent of UniCapital.
(t) HSR FILING. Subject to the terms and conditions of this
Agreement and to the extent the Merger is a transaction subject to the filing of
the HSR Act, each of the parties will take promptly all actions necessary to
make the filings required of UniCapital and the Company or their affiliates
under the HSR Act. Each party shall pay all expenses associated with such
filings which are required to be made by such party.
7.2 POST-CLOSING COVENANTS. The following covenants shall apply
immediately following the Effective Time:
(a) UNICAPITAL STOCK OPTIONS. Immediately following the
Effective Time, UniCapital shall make available options to purchase that number
of shares of UniCapital Stock having a fair market value on the date of the
grant, based upon the Closing Date's closing price of UniCapital Stock as
reported by the New York Stock Exchange, equal to 6.25% of the Closing Date
Consideration (valuing the UniCapital Stock to be issued as part of the Closing
Date Consideration for the purposes of this Section 7.2(a)) to be granted from
time to time through the Second Anniversary Date to non-Stockholder key
employees of the Company (other than ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ or any
of their relatives) designated by ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
provided that, if requested by UniCapital, the Company shall reasonably
demonstrate to UniCapital that such individuals are actively involved in the
business of the Company as employees and contribute to the success of the
Company. Such options (reserved for future issuance in accordance with the terms
hereof) shall be granted at an exercise price equal to the fair market value of
UniCapital Stock as of the date of grant. All options shall be granted in
accordance with UniCapital's policies, and authorized and issued under the terms
of UniCapital's principal stock option plan for the benefit of employees of
UniCapital and its subsidiaries.
(b) RELEASE FROM GUARANTEES; INDEBTEDNESS. Not later than 120
days following the Closing Date, UniCapital shall cause the Stockholders to be
released from any and all personal guarantees of the indebtedness of the Company
at the Closing Date set forth on Schedule 7.2(b); provided, that, in the event
that the beneficiary of any such guarantee is unwilling to permit the
substitution of UniCapital's guarantee for the Stockholder's guarantee or the
assumption by UniCapital of the indebtedness, or in the event that the lender
with respect to the indebtedness to which such guarantee related accelerates
such indebtedness whether or not prior to such 120 day period because of the
consummation of the transactions contemplated hereby, UniCapital shall repay up
to that amount of recourse indebtedness set forth on Schedule 7.2(b). The
failure of the Company to obtain the consent of its lenders to the change of
control of the Company or the substitution of a UniCapital guaranty or the
assumption by UniCapital of the indebtedness set forth in Schedule 7.2(b) shall
not be deemed a breach hereunder.
(c) FORM I NEGATIVE DECLARATION. The Stockholders, solely at
their expense, will take the necessary steps to file a Form I negative
declaration with the Connecticut Department of Environmental Protection within
10 days of the transfer of any premises on which business is operated, provided
such premises constitutes an "establishment" under the Connecticut Transfer Act,
Conn. Gen. Stat. Section 22a-134.
39
(d) CREDIT FACILITY. UniCapital will take all reasonable
action to assure that an aggregate of up to $50,000,000 of capital will be made
available to the Company, as and when needed for transactions through the Second
Anniversary Date, which capital, at UniCapital's sole discretion, will be
comprised of funds from UniCapital's credit facility and/or UniCapital's general
corporate funds.
(e) TRANSFER OF CAR LEASES. No later than five business days
following the Closing, the Stockholders will transfer to the Stockholders or
such third party as the Stockholders elect (i) the lease between the Company and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc. d/b/a Continental BMW of Darien for the purpose of
leasing a 1998 BMW Model #750IL, Identification #▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ and (ii) the
lease between the Company and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Inc. d/b/a Continental BMW of
Darien for the purpose of leasing a 1998 BMW Model #750IL, Identification
#▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS
The obligations of the Stockholders hereunder are subject to the
satisfaction on or prior to the Closing Date (or such earlier date specified
below) of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS.
UniCapital and Newco shall have delivered to the Stockholders a certificate
dated the Closing Date and signed by them to the effect that all of the
representations and warranties of UniCapital and Newco contained in Section 6 of
this Agreement shall be true on and as of the Closing Date and (except to the
extent the representations and warranties expressly speak as of an earlier date)
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such dates, except for matters expressly
disclosed in the certificate or a schedule thereto (which shall not serve to
modify any representation or warranty made herein or in any other document or
otherwise in information supplied by UniCapital); and each and all of the
agreements of UniCapital and Newco to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed.
8.2 EMPLOYMENT AGREEMENTS. The Surviving Corporation shall have
executed and delivered Employment Agreements, in the form of Annex V attached
hereto (each, an "Employment Agreement"), to each of ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇.
8.3 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
8.4 REPAYMENT OF STOCKHOLDER LOANS. UniCapital shall have delivered to
the Company, by wire transfer pursuant to the instructions received by
UniCapital from the Stockholders, an amount equal to the aggregate outstanding
principal amount of the Stockholder Loans, together with accrued and unpaid
interest thereon through the Closing Date (the "Loan Proceeds"). Immediately
thereafter, the Loan Proceeds shall have been used by the Company to
40
repay in full the Stockholder Loans, by wire transfer of same day funds to such
accounts as shall have been designated by the Stockholders.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF UNICAPITAL AND NEWCO
The obligations of UniCapital and Newco hereunder are subject to the
satisfaction, on or prior to the Closing Date (or such earlier date specified
below), of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. The
Company and the Stockholders shall have delivered to UniCapital a certificate
dated the Closing Date and signed by them to the effect that all of the
representations and warranties of the Company and the Stockholders contained in
Section 5 of this Agreement shall be true on and as of the Closing Date and
(except to the extent the representations and warranties expressly speak as of
an earlier date) as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such dates, except for
matters expressly disclosed in the certificate or a schedule thereto (which
shall not serve to modify any representation or warranty made herein or in any
other document or otherwise in information supplied by the Company or any
Stockholder); and each and all of the agreements of the Stockholders and the
Company to be performed on or before the Closing Date pursuant to the terms
hereof shall have been performed.
9.2 NO LITIGATION. No action or proceedings before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the acquisition by UniCapital of the Company Stock and no
governmental agency or body shall have taken any other action or made any
request of UniCapital as a result of which the management of UniCapital deems it
inadvisable to proceed with the transactions hereunder.
9.3 EXAMINATION OF FINANCIAL STATEMENTS. Prior to the Closing Date,
UniCapital shall have had sufficient time to review the Company's financial
statements for the period ending March 31, 1998, the unaudited balance sheet of
the Company as of the end of the most recently completed calendar month (or the
preceding month if the Closing shall be on or before the 15th day of a month),
and the unaudited statements of operations, cash flows and stockholders' equity
of the Company for the periods then ended, which statements shall have disclosed
no material adverse change in the financial condition of the Company or the
results of operations of the Company from the financial statements originally
furnished as set forth in Schedule 5.11.
9.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
business, operations, assets, properties, prospects or condition (financial or
otherwise) of the Company shall have occurred, and the Company shall not have
suffered any material loss or damage to any of its properties or assets, whether
or not covered by insurance, since the Audited Balance Sheet Date, which change,
loss or damage materially affects or impairs the ability of such entity to
conduct its business as now conducted or as proposed to be conducted; and
UniCapital shall have received on the Closing Date a certificate signed by the
Company and the Stockholders and dated the Closing Date to such effect.
41
9.5 REGULATORY REVIEW. UniCapital, through its authorized
representatives, shall have completed a satisfactory review of the practices and
procedures of the Company including environmental and land use practices,
Occupational Safety and Health Act ("OSHA") practices, import and export laws,
compliance with contracts and federal, state and local laws and regulations
governing the respective operations of the Company, which review reflects
compliance with all applicable laws governing the Company, disclosing no
material actual or probable violations, compliance problems, required capital
expenditures or other substantive environmental, real estate and land use
related concerns and which review is otherwise satisfactory in all respects to
UniCapital, in its sole discretion.
9.6 STOCKHOLDERS' RELEASE. The Stockholders shall have delivered to
UniCapital an instrument dated the Closing Date releasing the Company from any
and all claims of the Stockholders against the Company. The Company shall have
delivered to UniCapital an instrument dated the Closing Date releasing the
Stockholders from any and all claims of the Company against each of the
Stockholders, except for any claims or obligations under this Agreement or any
other agreement contemplated hereby.
9.7 EMPLOYMENT AGREEMENT. ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall
have each executed and delivered an Employment Agreement in the form of Annex V
attached hereto.
9.8 OPINION OF COUNSEL. UniCapital shall have received an opinion from
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Stockholders, dated the Closing Date, in
form and substance reasonably satisfactory to UniCapital, that, with respect to
the Company:
(a) the Company has been duly organized and the Company is
validly existing under the laws of the state of its incorporation;
(b) based upon a review of the Company's minute books and the
Material Contracts, the authorized and outstanding capital stock of the Company
is as represented by the Stockholders in this Agreement and each share of such
stock has been duly and validly authorized and issued, is fully paid and
nonassessable and was not issued in violation of any statutory, or, to such
counsel's knowledge, contractual, preemptive rights of any stockholder;
(c) to such counsel's knowledge based upon a review of the
Company's minute books and the Material Contracts and except for this Agreement,
the Company has no outstanding options, warrants, calls, conversion rights or
other commitments of any kind to issue or sell any of its capital stock;
(d) this Agreement has been duly executed and delivered by
each Stockholder and constitutes a valid and binding agreement of such
Stockholder, enforceable in accordance with its terms, except (i) as such
enforceability may be subject to bankruptcy, moratorium, insolvency and other
similar laws relating to or affecting the rights of creditors, (ii) as the same
may be subject to the effect of general principles of equity or public policy
and (iii) that no opinion need be expressed as to the enforceability of
indemnification and non-competition provisions included herein;
42
(e) each Transaction Document contemplated by this Agreement
to be executed by the Company has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except (i) as such enforceability may
be subject to bankruptcy, moratorium, insolvency, reorganization, arrangement
and other similar laws relating to or affecting the rights of creditors, (ii) as
the same may be subject to the effect of general principles of equity and public
policy, and (iii) that no opinion need be expressed as to the enforceability of
indemnification and non-competition provisions included therein;
(f) to such counsel's knowledge, no notice to, consent,
authorization, approval or order of any court or governmental agency or body is
required in connection with the execution, delivery or consummation of this
Agreement by any Stockholders or for the transfer to UniCapital of the Company
Stock; and
(g) the execution of this Agreement and the performance of the
obligations hereunder will not violate or result in a breach or constitute a
default under any of the terms or provisions of the Company's charter documents
or the bylaws or any Material Contract or Lease listed on Schedule 5.16 and
5.34, other than the items listed on Schedule 5.16(a). Such opinion shall
include any other matters incident to the matters set forth herein as agreed to
by the parties and their respective counsel.
9.9 CONSENTS AND APPROVALS. All necessary consents of and filings with
any governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made.
9.10 GOOD STANDING CERTIFICATES. Stockholders shall have delivered to
UniCapital certificates, dated as of a date no earlier than five days prior to
the Closing Date, duly issued by the appropriate governmental authority in the
Company's state of incorporation and, unless waived by UniCapital, in each state
in which the Company is authorized to do business, showing that each such entity
is in good standing and authorized to do business and that all state franchise
and/or income tax returns and taxes for such entity for all periods prior to the
dates of such certificates have been filed and paid.
9.11 HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
9.12 Due Diligence. UniCapital and its representatives shall
have completed its due diligence investigation of the Company, with respect to
the Company's operations in its entirety, and concluded that the results of such
investigation are satisfactory to UniCapital.
10. INDEMNIFICATION; SURVIVAL
10.1 GENERAL INDEMNIFICATION BY STOCKHOLDERS. After the Effective Time,
subject to the limitations contained in Section 10.5 hereof, each Stockholder
shall indemnify, defend, protect and hold harmless UniCapital and its Affiliates
at all times from and after the date of this
43
Agreement until the Expiration Date (as defined in Section 10.6) from and
against all claims, damages, losses, liabilities, actions, suits, proceedings,
demands, agents, adjustments, costs and expenses (including reasonable
attorneys' fees and expenses of investigation) (collectively, "Losses") incurred
by UniCapital as a result of or arising from (a) any breach of the
representations and warranties made by the Stockholders set forth herein or on
the schedules or certificates delivered in connection herewith, and (b) any
nonfulfillment of any covenant or agreement on the part of any Stockholder under
this Agreement.
10.2 SPECIFIC INDEMNIFICATION BY STOCKHOLDERS. Subject to the
limitations contained in Section 10.5 hereof, notwithstanding any disclosure
made in this Agreement or in the schedules or exhibits hereto, and
notwithstanding any investigation by UniCapital or Newco, each Stockholder,
jointly and severally, shall indemnify, defend, protect and hold harmless
UniCapital and its Affiliates at all times from and after the date of this
Agreement, from and against all Losses as a result of or incident to: (a) the
litigation matters listed on Schedule 5.24; (b) the environmental matters listed
on Schedule 5.32; (c) any matters related to the employment status of any person
who, directly or through any entity, has provided or is providing services to
the Company; and (d) any Material Adverse Amendments.
10.3 INDEMNIFICATION BY UNICAPITAL AND NEWCO. Subject to the
limitations contained in Section 10.5 hereof, UniCapital and Newco, jointly and
severally, shall indemnify, defend, protect and hold harmless the Stockholders
at all times from and after the date of this Agreement from and against all
Losses incurred by the Stockholders as a result of or arising from (a) any
breach of the representations and warranties made by UniCapital and Newco set
forth herein or on the schedules or certificates attached hereto and (b) any
nonfulfillment of any covenant or agreement on the part of UniCapital under this
Agreement.
10.4 THIRD PARTY CLAIMS
(a) In order for a party hereto eligible to be indemnified
hereunder (an "Indemnified Party") to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
claim or demand made by any person or entity against the Indemnified Party (a
"Third Party Claim"), such Indemnified Party must notify the parties obligated
to provide indemnification pursuant to Section 10.1, 10.2, or 10.3 hereof (each
an "Indemnifying Party") in writing, and in reasonable detail, of the Third
Party Claim within 30 business days after receipt by such Indemnified Party of
written notice of the Third Party Claim; providing, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the Indemnifying Party shall have been actually prejudiced
as a result of such failure. Such notice shall state the nature and the basis of
such claim and a reasonable estimate of the amount thereof. Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within five business
days after the Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to
the Third Party Claim. To the extent the Indemnifying Party has actually paid
any amount to the Indemnified Party in respect of any Loss in connection with
such Third Party Claim, the Indemnifying Party shall have a right of subrogation
with respect to such Third Party Claim to the extent of such payment.
44
(b) The Indemnifying Party shall have right to defend and
settle, at its own expense and by its own counsel (provided that such counsel is
not reasonably objected to by the Indemnified Party), any Third Party Claim as
the Indemnifying Party pursues the same in good faith and diligently and so long
as the Third Party Claim does not relate to an actual or potential Loss to which
Section 10.4(e) applies in which the Indemnified Party is UniCapital, Newco or
the Surviving Corporation. If the Indemnifying Party undertakes to defend or
settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Indemnifying Party and
its counsel in the defense thereof and in any settlement thereof. Such
cooperation shall include, but shall not be limited to, furnishing the
Indemnifying Party with any books, records or information reasonably requested
by the Indemnifying Party that are in the Indemnified Party's possession or
control. Notwithstanding the foregoing, the Indemnified Party shall have the
right to participate in any matter through counsel of its own choosing at its
own expense (unless there is a conflict of interest that prevents counsel for
the Indemnifying Party from representing the Indemnified Party, in which case
the Indemnifying Party will reimburse the Indemnified Party for the expenses of
its counsel). After the Indemnifying Party has notified the Indemnified Party of
its intention to undertake to defend or settle any such asserted liability, and
for so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except to the extent such participation is requested
by the Indemnifying Party, in which event the Indemnified Party shall be
reimbursed by the Indemnifying Party for reasonable additional legal expenses
and out-of-pocket expenses, and except in the case of a Third Party Claim
relating to an actual or potential Loss to which Section 10.4(e) applies in
which the Indemnified Party is UniCapital, Newco or the Surviving Corporation.
(c) No Indemnifying Party shall, in the defense of any Third
Party Claim, consent to entry of any judgment (other than a judgment of
dismissal on the merits without costs) or enter into any settlement, except with
the written consent of the Indemnified Party, which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
matter.
(d) If the Indemnifying Party does not assume the defense of
any Third Party Claim, then the Indemnified Party may defend against such Third
Party Claim in such manner as it deems appropriate at the expense of the
Indemnifying Party.
(e) Notwithstanding anything to the contrary in this Section
10, if at any time, in the reasonable opinion of UniCapital, as the Indemnified
Party (notice of which opinion shall be given in writing to the Indemnifying
Party), any Third Party Claim seeks material prospective relief (other than the
payment of monetary damages) which could have a material adverse effect on any
such Indemnified Party or any subsidiary, then such Indemnified Party shall have
the right to control or assume (as the case may be) the defense of any such
Third Party Claim and the amount of any judgment or settlement and the
reasonable costs and expenses of defense (including fees and disbursements of
counsel and experts, as well as any sampling, testing, investigation, removal,
treatment or remediation undertaken by UniCapital and all counseling or
engineering fees and expenses related thereto) shall be included as part of the
indemnification obligations of the Indemnifying Party hereunder. If the
Indemnified Party elects to exercise such
45
right, then the Indemnifying Party shall have the right to participate in, but
not control, the defense of such Third Party Claim at the sole cost and expense
of the Indemnifying Party.
10.5 LIMITATIONS ON INDEMNIFICATION. No Indemnified Party shall assert
any claim (other than a Third Party Claim) for indemnification hereunder until
such time as the aggregate of all claims which such Indemnified Party may have
against an Indemnifying Party shall exceed $1,000,000 (the "Basket Amount"), at
which time an Indemnified Party shall be entitled to seek indemnification
pursuant to this Section 10, but only to the extent that such claims, in the
aggregate, exceed the Basket Amount. For purposes of this Section 10.5, the
Stockholders shall be considered to be a single Indemnifying and Indemnified
Party and UniCapital and Newco shall be considered to be a single Indemnifying
and Indemnified Party. Notwithstanding any other term of this Agreement, in no
event shall any Stockholder be liable under this Section 10 or otherwise for an
amount which exceeds the aggregate value (determined at the Closing Date) of the
Merger Consideration received by such Stockholder under this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, the
limitations upon indemnification contained in this Section 10.5 shall not apply
to Losses arising out of (i) any breach of the representations and warranties of
the Stockholders contained in Sections 5.4, 5.13, 5.24, 5.26 and 5.32 hereof or
(ii) any breach by any party of any of its covenants under Section 7.2 of this
Agreement. Notwithstanding the foregoing, the Basket Amount shall automatically
increase by an amount (such amount is referred to as the "Basket Adjustment")
equal to one percent of any Earn-Out Consideration that is finally determined to
be due to the Stockholders pursuant to Section 2.3 hereof. If the Basket Amount
is adjusted pursuant to the preceding sentence after such time as any
Indemnified Party, pursuant to this Section 10, has collected an amount in
excess (such excess amount is referred to as the "Excess Indemnity") of the
Basket Amount (prior to giving effect to the applicable Basket Adjustment), then
such Indemnified Party, within 10 business days after the final determination of
such Earn-Out Consideration, shall pay to the Indemnifying Party an amount equal
to the lesser of applicable Basket Adjustment or the Excess Indemnity. In
addition, notwithstanding any provision of this Agreement to the contrary, for
the purposes of preventing a double recovery the Stockholders shall not be
obligated to indemnify UniCapital or any other indemnified parry pursuant to
Section 10.1 or 10.2 with respect to any particular act, omission, condition or
event if and to the extent that the loss resulting or arising from such act,
omission, condition or event has, directly or indirectly, been taken into
account in the computation of any Net Worth Deficiency provided for in Section
3.1.
10.6 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by the parties in this Agreement, or in any certificate or
other instrument delivered pursuant to this Agreement, shall survive for a
period of one year from the Closing Date (which date is hereinafter called the
"Expiration Date"), except that:
(a) the representations and warranties contained in Section
5.26 hereof shall survive until such time as the limitations period has run for
all tax periods ended prior to the Closing Date, which shall be deemed to be the
Expiration Date for purposes of this clause (a) and for claims arising from a
breach of the representations and warranties contained in such Section 5.26;
(b) the representations and warranties contained in Section
5.27(f) hereof shall survive until such time as one full fiscal year's cycle of
transactions occurring entirely within the
46
twenty-first century shall have been processed and UniCapital's consolidated
financial statements for the fiscal year in which the last such transaction to
be processed occurred have been audited, which shall be deemed to be the
Expiration Date for purposes of this clause (b) and for claims arising from a
breach of the representations and warranties contained in such Section 5.27(f);
(c) the representations and warranties contained in Section
5.32 hereof shall survive for a period of five years from the Closing Date,
which shall be deemed the Expiration Date for purposes of this clause (c) and
for claims arising from a breach of the representations and warranties contained
in such Section 5.32;
(d) the representations and warranties of the Stockholders
contained in Section 5.4 hereof shall survive the Closing Date without time
limitation; and
(e) any representations and warranties which serve as a basis
of the indemnity obligations of the Stockholders under Section 10.2(d) shall
survive the Closing Date for a period of one year unless the Material Adverse
Amendment is with respect to Sections 5.26, 5.27(f), 5.32 or 5.4, in which case
the time periods specified above shall govern, and (ii) the representations and
warranties contained in Section 5.34(d) regarding delinquent accounts identified
on Schedule 5.34(d) shall survive until the final resolution of such delinquent
accounts.
(f) From and after the Closing Date, to the extent permitted
by law, the indemnities set forth in this Article X shall be the exclusive
remedies of the parties hereto and their Affiliates for any misrepresentation,
breach of warranty or nonfulfillment or failure to be preformed of any covenant
or agreement contained in this Agreement, and the parties hereto shall not be
entitled to a rescission of this Agreement or to any further indemnification
rights or claims of any nature whatsoever in respect thereof, all of which the
parties hereto waive; provided that nothing herein shall be deemed to limit a
party hereto from seeking equitable remedies with respect to the breach of any
covenant.
11. TERMINATION OF AGREEMENT
11.1 TERMINATION BY UNICAPITAL. UniCapital may, by notice in the manner
hereinafter provided on or before the Closing Date, terminate this Agreement (a)
if a material default shall be made by the Company or the Stockholders in the
observance or due and timely performance of any of the covenants, agreements or
conditions contained herein, and the curing of such default shall not have been
made on or before the Closing Date and shall not reasonably be expected to
occur, (b) if UniCapital in its sole judgment determines that any condition
exists which has made or could reasonably be expected to make any of the
representations or warranties contained in Section 5 hereof untrue in any
material respect or (c) if UniCapital in its sole judgment determines that
information disclosed on the schedules to the Agreement delivered pursuant to
Section 7.1(n) has or could reasonably be expected to have a material adverse
effect on the business, operations, assets, properties, prospects or condition
(financial or otherwise) of the Company.
47
11.2 TERMINATION BY THE STOCKHOLDERS. The Stockholders may, by notice
in the manner hereinafter provided on or before the Closing Date, terminate this
Agreement if a material default shall be made by UniCapital in the observance or
due and timely performance of any of the material covenants, agreements or
conditions contained herein, and the curing of such default shall not have been
substantially made on or before the Closing Date and shall not reasonably be
expected to occur.
11.3 AUTOMATIC TERMINATION. This Agreement shall terminate
automatically if the Closing Date has not occurred prior to August 15, 1998.
12. NONCOMPETITION AND NONSOLICITATION
12.1 NONCOMPETITION
(a) In order to protect the value and goodwill of UniCapital,
the Company and their respective businesses, each Stockholder covenants that,
for the period ending two years after the Closing Date, such Stockholder will
not, directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as a partner, principal, agent, representative, consultant or
otherwise with, or use or permit such Stockholder's name to be used in
connection with, any business or enterprise which is engaged directly or
indirectly in competition anywhere in the United States with the business
conducted by UniCapital, the Surviving Corporation or any of its or their
respective subsidiaries or affiliates (the "Restricted Business"). Each
Stockholder recognizes that the Restricted Business is expected to be conducted
throughout the United States and that more narrow geographical limitations of
any nature on this non-competition covenant (and the non-solicitation covenant
set forth in subsection (b)) are therefore not appropriate. The foregoing
restrictions shall not be construed to prohibit the ownership by a Stockholder
as a passive investment (i) of not more than five percent of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "Exchange Act") or (ii) in any business or
enterprise that is not so directly or indirectly in competition with the
Restricted Business as it exists on the date of this Agreement.
(b) Each Stockholder further covenants that for the period
ending two years after the Closing Date, such Stockholder will not, either
directly or indirectly, (i) call on or solicit any customers or prospective
customers of the Restricted Business who were actually solicited by the Company
prior to the Effective Time, or (ii) solicit the employment of any person who is
employed by UniCapital, the Surviving Corporation or any of its or their
respective subsidiaries or affiliates in the Restricted Business during such
period.
(c) Each Stockholder recognizes and acknowledges that by
reason of such Stockholder's relationship to the Company, such Stockholder has
had access to confidential information relating to the Restricted Business. Each
Stockholder acknowledges that such confidential information is a valuable and
unique asset and covenants that such Stockholder will not disclose any such
confidential information after the Closing Date to any person for any reason
whatsoever, except (i) as compelled by a court order or otherwise pursuant to
legal
48
process, (ii) as to any information that becomes generally available to the
public other than as a result of disclosure by any of the Stockholders or their
Affiliates, and (iii) as to any information that becomes available to any of the
Stockholders or their Affiliates on a non-confidential basis from a source not
under an obligation of confidentiality other than UniCapital, the Company, or
any of their Affiliates.
12.2 DAMAGES. Each Stockholder acknowledges and agrees that measuring
economic losses to UniCapital and the Surviving Corporation as a result of the
breach of the foregoing covenants in this Section 12 would be impossible, and
that any breach of the foregoing covenants would result in immediate and
irreparable damage to UniCapital and the Surviving Corporation for which they
would have no other adequate remedy. Accordingly, the Stockholders agree that,
in the event of a breach by a Stockholder of the foregoing covenants, such
covenants may be enforced by UniCapital or the Surviving Corporation by, without
limitation, injunctions and restraining orders against such Stockholder.
12.3 REASONABLE RESTRAINT. The Parties agree that the foregoing
covenants in this Section 12 impose a reasonable restraint upon the Stockholders
in light of the activities and business of UniCapital on the date of the
execution of this Agreement and the current and future plans of UniCapital and
the Surviving Corporation (as successors to the businesses of the Company), and
that any violation will result in irreparable injury to UniCapital.
12.4 SEVERABILITY; REFORMATION. The covenants in this Section 12 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, if any court of
competent jurisdiction shall determine that the scope, time or territorial
restrictions set forth are unreasonable, then it is the intention of the parties
that such restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
12.5 INDEPENDENT COVENANT. All of the covenants in this Section 12
shall be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of any Stockholder
against the Company or UniCapital whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement of such covenants.
The parties specifically agree that the period of two years stated above shall
be computed by excluding from such computation any time during which any
Stockholder is found by a court of competent jurisdiction to be in violation of
any provision of this Section 12.
12.6 MATERIALITY. The Stockholders hereby acknowledge and agree that
thc covenants contained in this Section 12 are a material and substantial part
of this transaction and are entered into in connection with and as an inducement
to the acquisition by UniCapital of the Company.
13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
13.1 STOCKHOLDERS. The Stockholders recognize and acknowledge that they
have in the past, currently have, and in the future may possibly have, access to
certain confidential information of the Company and the Company, such as lists
of customers, operational policies,
49
and pricing and cost policies that are valuable, special and unique assets of
such corporations and their respective businesses. Neither the Company nor any
Stockholder shall use or disclose, nor shall the Stockholders cause the Company
from using or disclosing, any confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (i) to authorized representatives of UniCapital, (ii) as compelled by a
court order or otherwise pursuant to legal process, (iii) as to any information
that becomes generally available to the public other than as a result of
disclosure by any of the Stockholders or their Affiliates, and (iv) as to any
information that becomes available to any of the Stockholders or their
Affiliates on a non-confidential basis from a source other than UniCapital, the
Company or any of their Affiliates. In the event of a breach or threatened
breach by the Stockholders of the provisions of this Section 13.1, UniCapital
and the Surviving Corporation shall be entitled to an injunction restraining
Stockholders from using or disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting UniCapital and the
Surviving Corporation from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.
13.2 UNICAPITAL. UniCapital recognizes and acknowledges that it has in
the past, currently has, and prior to the Closing Date will have, access to (i)
certain confidential information solely of the Company in connection with their
respective businesses ("Company Information") and (ii) certain confidential
information concerning the Stockholders and certain business and activities of
the Stockholders that are not a part of the transactions contemplated by this
Agreement ("Stockholder Information"). Prior to the Closing Date with respect to
Company Information and at any time with respect to Stockholder Information,
UniCapital shall not disclose any such confidential information to any person,
firm, corporation, association, or other entity for any purpose or reason
whatsoever without prior written consent of the Stockholders. If at any time
prior to the Closing Date, the parties hereto do not wish to proceed with the
transactions contemplated by this Agreement, UniCapital will promptly (and in no
event later than five business days after such request) redeliver or cause to be
redelivered to the Company all copies of the Company Information and Stockholder
Information furnished to UniCapital by or on behalf of the Company and destroy
or cause to be destroyed all materials prepared by UniCapital or any of its
representatives in connection with the transactions contemplated hereby. In the
event of a breach or threatened breach by UniCapital of the provisions of this
Section 13.2, the Stockholders shall be entitled to an injunction restraining
UniCapital from disclosing, in whole or in part, such confidential information.
Nothing contained herein shall be construed as prohibiting the Stockholders from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
13.3 DAMAGES. Because of the difficulty of measuring economic losses as
a result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused for which they would have no other
adequate remedy, UniCapital the Surviving Corporation and the Stockholders agree
that, in the event of a breach by any of them of the foregoing covenants, such
covenants may be enforced against them by injunctions and restraining orders.
50
14. FEDERAL SECURITIES AND CONTRACTUAL RESTRICTIONS ON UNICAPITAL STOCK
14.1 INVESTMENT INTENT. The Stockholders represent and warrant that the
shares of UniCapital Stock to be acquired by the Stockholders pursuant to this
Agreement are being acquired solely for their own account, for investment
purposes only, and with no present intention of distributing, selling or
otherwise disposing of it in connection with a distribution.
14.2 SALES OF UNICAPITAL STOCK.
(a) No Stockholder will, directly or indirectly, offer, sell,
contract to sell, pledge or otherwise dispose of the shares of UniCapital Stock
to be received by such Stockholder in the Merger prior to the date that is (i)
with respect to the shares issued as of the Closing Date, including the Holdback
Shares, one year from the Closing Date and (ii) with respect to the shares
issued in payment of the Earn-Out Consideration, one year from the date of
determination of the Earn-Out Consideration. Notwithstanding the foregoing: (i)
after January 27, 1999, no Stockholder will be restricted from engaging in any
(A) hedging transaction (including, without limitation, any short sale, short
sale "against the box," "collar," "cap," purchase of a "put," sale of a "call"
or purchase or sale of any option (whether or not listed) or any other device
that would insulate the Stockholder from or mitigate the risk of a change in the
price of UniCapital Stock without involving an actual sale of the underlying
shares) with respect to any shares of UniCapital Stock or securities convertible
into or exchangeable for shares of UniCapital Stock owned by such Stockholder,
and (B) sale or other disposition of shares of UniCapital Stock, provided such
sale or other disposition is conducted in such manner as would be required by
law if such shares of UniCapital Stock were restricted stock within the meaning
of Rule 144 under the Securities Act ("Rule 144"), had not been held for the
minimum holding period specified in Section (d) of Rule 144, and were sold
without registration in accordance with the Securities Act; and (ii) on December
2, 1998, the restrictions set forth in this Section shall terminate with respect
to 547,945 shares of UniCapital Stock (the "Unrestricted Shares") in such
proportion as is set forth on Annex III.
(b) Each Stockholder acknowledges and agrees that UniCapital
will not provide such Stockholder with a prospectus for such Stockholder's use
in selling the shares of UniCapital Stock to be received by such Stockholder in
the Merger, and agrees to sell such shares only in accordance with the
requirements, if any, of Rule 145(d) promulgated under the Securities Act.
UniCapital acknowledges that the provisions of this Section 14.2(b) will be
satisfied as to any sale by a Stockholder of the UniCapital Stock Stockholder
may acquire in the Merger pursuant to Rule 145(d) under the Securities Act, by a
broker's letter and a letter from the Stockholder with respect to that sale
stating that the applicable requirements of Rule 145(d)(1) have been met or are
inapplicable by virtue of Rule 145(d)(2) or Rule 145(d)(3), provided, however,
that UniCapital has no reasonable basis to believe that such sales were not made
in compliance with such provisions of Rule 145(d) and subject to any changes in
Rule 145 after the date of this Agreement.
14.3 ECONOMIC RISK SOPHISTICATION. The Stockholders represent and
warrant that they are able to bear the economic risk of an investment in
UniCapital Stock acquired pursuant to this Agreement and can afford to sustain a
total loss of such investment. The Stockholders
51
further represent and warrant that they (a) fully understand the nature, scope
and duration of the limitations on transfer contained in this Agreement and (b)
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the UniCapital Stock.
14.4 INFORMATION SUPPLIED. The Stockholders represent and warrant that,
as of the date of this Agreement, they have had an adequate opportunity to ask
questions and receive answers from the officers of UniCapital concerning
UniCapital, its business, operations, plans and strategy, and the background and
experience of its officers and directors. The Stockholders represent and warrant
that they have asked any and all questions that they may have in the nature
described in the preceding sentence and that all such questions have been
answered to their satisfaction.
15. SECURITIES LEGENDS
The certificate or certificates evidencing the shares of UniCapital
Stock to be delivered to the Stockholders in the Merger will bear restrictive
legends substantially in the following forms:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. THESE SHARES MAY ONLY BE
TRANSFERRED PURSUANT TO A REGISTRATION STATEMENT COVERING THE
TRANSFER OF SUCH SHARES OR A VALID EXEMPTION FROM
REGISTRATION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
CONTRACTUAL HOLDING PERIOD EXPIRING ON ***, PURSUANT TO THAT
CERTAIN AGREEMENT AND PLAN OF MERGER, DATED AS OF JULY 27,
1998, AMONG THE ISSUER AND THE STOCKHOLDERS OF UNITED STATES
TURBINE ENGINE CORP., A CONNECTICUT CORPORATION. PRIOR TO THE
EXPIRATION OF SUCH HOLDING PERIOD, SUCH SHARES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR
ASSIGNMENT. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS
CERTIFICATE, THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE
LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT)
WHEN THE HOLDING PERIOD HAS EXPIRED.
52
*** The certificates issued in payment of the Closing Date Consideration
will read "July 27, 1999." The certificates issued in payment of the
Earn-Out Consideration will recite the date that is one year from the
determination of the Earn-Out Consideration.
In addition, such certificates shall also bear such other legends as counsel for
UniCapital reasonably determines are required under the applicable laws of any
state. Notwithstanding the foregoing, the certificate or certificates evidencing
the Unrestricted Shares shall bear only the restrictive legend contained in the
first bolded paragraph above.
16. GENERAL
16.1 COOPERATION. The Stockholders and UniCapital shall each deliver or
cause to be delivered to the other on the Closing Date, and at such other times
and places as shall be reasonably agreed to, such additional instruments as the
other may reasonably request for the purpose of carrying out this Agreement. The
Stockholders will cooperate and use their reasonable commercial efforts to have
the officers, directors and employees of the Company prior to the Closing Date
cooperate with UniCapital on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date; provided, however,
that UniCapital shall not make unreasonable demands of such Stockholder
following such Stockholder's termination of employment with UniCapital or its
Affiliates in light of such Stockholder's personal or professional obligations
at that time.
16.2 SUCCESSORS AND ASSIGNS. This Agreement and the rights of the
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the Surviving
Company, the successors of UniCapital, and the heirs and legal representatives
of the Stockholders.
16.3 ENTIRE AGREEMENT. This Agreement (including the schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Company, UniCapital and Newco and supersedes any prior agreements and
understandings relating to thc subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto,
enforceable in accordance with its terms, and may be modified or amended only by
a written instrument executed by the Stockholders (subject to the limitations
set forth below), and the Company, UniCapital and Newco acting through their
respective officers, duly authorized by their respective Boards of Directors.
16.4 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original and all of which
together shall constitute one and the same instrument.
16.5 BROKERS AND AGENTS. Each party represents and warrants that it
employed no broker or agent in connection with the transactions contemplated
hereby, and each of UniCapital and Newco, on the one hand, and the Stockholders,
on the other hand, agrees to indemnify the
53
other against all loss, liability, cost, damages or expense arising out of or
related to claims for fees or commissions of brokers employed or alleged to have
been employed by such indemnifying party.
16.6 EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, UniCapital will pay the fees, expenses and disbursements
of UniCapital and Newco and their respective agents, representatives,
accountants and counsel incurred in connection with the subject matter of this
Agreement and any amendments thereto. Whether or not the transactions herein
contemplated shall be consummated, the Stockholders (and not the Company) will
pay the fees, expenses and disbursements of the Stockholders, the Company and
their respective agents, representatives, accountants and counsel incurred in
connection with the subject matter of this Agreement and any amendments hereto
and all other costs and expenses incurred in the performance of this Agreement
by the Stockholders and the Company and in compliance with all conditions to be
performed by the Stockholders and the Company under this Agreement.
16.7 NOTICES. All notices and other communications hereunder shall be
in writing (including wire, telefax or similar writing) and shall be sent,
delivered or mailed, addressed, or telefaxed:
(a) If to UniCapital or Newco, addressed to them at:
UniCapital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Stockholders, addressed to them in care of
the Stockholders' Representative at:
United States Turbine Engine Corp.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Four ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telefax: (▇▇▇) ▇▇▇-▇▇▇▇ (direct)
(▇▇▇) ▇▇▇-▇▇▇▇ (general)
Each such notice, request or other communication shall be given by hand
delivery, by nationally recognized courier service or by telefax, receipt
confirmed. Each such notice, request or communication shall be effective (i) if
delivered by hand or by nationally recognized courier service, when delivered at
the address specified in this Section 16.7 (or in accordance with the latest
unrevoked written direction from such party) and (ii) if given by telefax, when
such telefax is transmitted to the telefax number specified in this Section 16.7
(or in accordance with the latest unrevoked written direction from such party),
and the appropriate confirmation is received.
16.8 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to any of the
provisions thereof that would require the application of the substantive laws of
any other jurisdiction. Each party to this Agreement: (a) agrees that any legal
action or proceeding under this Agreement shall be brought in the courts of the
State of New York or in the United States District Court for the Southern
District of New York; (b) irrevocably submits to the jurisdiction of such
courts; (c) agrees not to assert any claim or defense that it is not personally
subject to the jurisdiction of such courts, that any such forum is not
convenient or the venue thereof is improper, or that this Agreement or the
subject matter hereof may not be enforced in such courts; and (d) agrees to
accept service of process on it by certified or registered mail or by any other
method authorized by law.
16.9 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later, nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
16.10 REFORMATION AND SEVERABILITY. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such
55
modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
16.11 REMEDIES CUMULATIVE. No right remedy or election given by any
term of this Agreement shall be deemed exclusive but each shall be cumulative
with all other rights, remedies and elections available at law or in equity.
16.12 CAPTIONS, INTERPRETATION. The headings of this Agreement are
inserted for convenience only and shall not constitute a part of this Agreement
or be used to construe or interpret any provision hereof. Section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified. Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, and the
part the whole, (b) "or" has the inclusive meaning frequently identified with
the phrase "and/or" and (c) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to." Each accounting term used
herein that is not specifically defined herein shall have the meaning given to
it under GAAP. The "knowledge" of a Stockholder means, in the case of any
Stockholder which is a partnership, the knowledge of any partner of such
Stockholder or any person or entity having a direct or indirect equity interest
in any such partner.
17. DEFINITIONS
"Accounts Receivable" is defined in Section 5.13.
"Acquisition Proposal" is defined in Section 7.1(j).
"Affiliates" are defined in Section 4.2.
"Agent" is defined in Section 7.1(j).
"Agreement" is defined in the preamble to this Agreement.
"Anniversary Date" is defined in Section 2.3(b).
"Audited Balance Sheet Date" is defined in Section 5.12(a).
"Audited Financial Statements" are defined in Section 5.11(a).
"Authorizations" are defined in Section 5.22.
"Basket Adjustment" is defined in Section 10.5.
"Basket Amount" is defined in Section 10.5.
"Benefit Plan" is defined in Section 5.21.
56
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq.
"Certificates" are defined in Section 2.2.
"Certificate of Merger" is defined in Section 1.3.
"CBCA" is defined in Section 1.1.
"Closing" is defined in Section 1.2.
"Closing Date" is defined in Section 1.2.
"Closing Date Balance Sheet" is defined in Section 3. 1.
"Closing Date Consideration" is defined in Section 2.1(a)(ii).
"Closing Net Worth" is defined in Section 3.1(a).
"Code" is defined in Section 2.3(c).
"Company" is defined in the preamble to this Agreement.
"Company Documents" are defined in Section 5.2.
"Company Information" is defined in Section 13.2.
"Company Stock" is defined in Section 2.1(a).
"Constituent Corporations" are defined in Section 1.1.
"DGCL" is defined in Section 1.1.
"Disputed Amounts" are defined in Section 3.2.
"Earn-Out Consideration" is defined in Section 2.3(c).
"EBT" is defined in Section 2.3(a).
"Effective Time" is defined in Section 1.3.
"Employment Agreements" are defined in Section 8.2.
"Environmental Laws" mean any and all applicable treaties,
laws, regulations, ordinances, enforceable requirements, binding
determinations, orders, decrees, judgments, injunctions, permits,
approvals, authorizations, licenses or binding agreements issued,
promulgated or entered into by any Governmental Entity, relating to the
environment, preservation or reclamation of natural resources, or to
the management. Release or threatened Release of or exposure to
Hazardous Substances, including
57
CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et
seq., the Toxic Substances Control Act, 15 U.S.C Section 2601 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et. seq., the Safe Drinking Water Act, 42 U.S.C.
Section 300(f) et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., and any similar or implementing state or
local law and all amendments or regulations promulgated thereunder.
"Environmental Permits" mean all permits, licenses, approvals
or authorizations from any Governmental Entity required under
Environmental Laws for the operation of the business of the applicable
Company.
"Equipment" is defined in Section 5.34.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Property" is defined in Section 4.1(b).
"Excess Indemnity" is defined in Section 10.5.
"Exchange Act" is defined in Section 12.1(a).
"Expiration Date" is defined in Section 10.6.
"Financial Statements" are defined in Section 5.11(b).
"First Anniversary Date" is defined in Section 2.3(a).
"First Anniversary Escrow Disbursement" is defined in Section
4.2.
"GAAP" is defined in Section 2.3(a).
"Governmental Entity" means any court, administrative or
regulatory agency or commission, or other governmental authority or
instrumentality, domestic, foreign or supranational.
"Hazardous Substance" means, collectively, (a) any petroleum
or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and
transformers or other equipment that contain polychlorinated biphenyls,
(b) any chemicals or other materials or substance that are now or
hereafter become defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," "contaminants," "pollutants" or words of similar
import under any Environmental Law and (c) any other chemical or other
material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.
58
"Holdback Shares" are defined in Section 4.1(a)(ii).
"HSR Act" is defined in Section 5.3.
"Indemnified Party" is defined in Section 10.4(a).
"Indemnifying Party" is defined in Section 10.4(a).
"Indemnity Escrow Agent" is defined in Section 4.1(a).
"Independent Accounting Firm" is defined in Section 3.2.
"Intellectual Property" is defined in Section 5.27(a).
"Interim Balance Sheet Date" is defined in Section 5.11(b).
"Inventory" shall include all inventories of raw materials,
work-in-process, finished goods, products under research and
development, demonstration equipment, office and other supplies, parts,
packaging materials and other accessories related thereto which are
held at, or are in transit from or to, the locations at which the
business of the Company is conducted, or located at customers' or
suppliers' premises on consignment, in each case, which are used or
held for use by the Company in the conduct of its business, including
any of the foregoing purchased subject to any conditional sales or
title retention agreement in favor of any other person or entity,
together with all rights of the Company against suppliers of such
inventories.
"Lease Documents" are defined in Section 5.34.
"Leases" are defined in Section 5.34.
"Liabilities" are defined in Section 5.12(a).
"Loan Proceeds" are defined in Section 8.4.
"Losses" are defined in Section 10.1.
"Material Adverse Amendment" is defined in Section 7.1(n).
"Material Contracts" are defined in Section 5.16.
"Merger" is defined in the preamble to this Agreement.
"Merger Consideration" is defined in Section 2.1(b).
"Merger Consideration Shares" are defined in Section
2.1(a)(ii).
"Net Worth Deficiency" is defined in Section 3.1.
"Newco" is defined in the preamble to this Agreement.
▇▇
"▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇" is defined in Section 2.1(c).
"Obligor" is defined in Section 5.34.
"Ordinary course" or "ordinary course of business" means the
leasing, acquisition, sale and/or trading of engine and engine parts,
providing financial structures and similar products or services
relating to the engine and engine parts industry, and providing
consulting and/or advisory services with respect to any of the
foregoing.
"OSHA" is defined in Section 9.5.
"PCBs" are defined in Section 5.32(h).
"Permit" is defined in Section 5.14.
"Regulations" are defined in Section 5.22.
"Release" means any spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, emanation
or migration of any Hazardous Substance in, into, onto or through the
environment (including ambient air, surface water, ground water, soils,
land surface, subsurface strata, workplace or structure).
"Restricted Business" is defined in Section 12.1(a).
"Rule 144" is defined in Section 14.2(a).
"Scheduled Payments" are defined in Section 5.34.
"Second Anniversary Date" is defined in Section 2.3(b).
"Secretary of State" is defined in Section 1.3.
"Securities Act" is defined in Section 5.15.
"Stockholder Information" is defined in Section 13.2.
"Stockholder Loans" are defined in Section 5.12(d).
"Stockholders" are defined in the preamble to this Agreement.
"Stockholders' Representative" is defined in Section 3.3.
"Subsidiary" is defined in Section 5.1.
"Surviving Corporation" is defined in Section 1.1.
"Surviving Corporation Common Stock" is defined in Section
2.1(c).
"Tax Returns" are defined in Section 5.26.
60
"Taxes" are defined in Section 5.26.
"Third Party Claim" is defined in Section 10.4(a).
"Transaction Documents" means the Employment Agreements and
the Certificate of Merger.
"Unaudited Financial Statements" are defined in Section
5.11(b).
"UniCapital" is defined in the preamble to this Agreement.
"UniCapital Documents" are defined in Section 6.3.
"UniCapital Prospectus" is defined in Section 5.40.
"UniCapital Stock" is defined in Section 2.1(a)(ii).
"Unrestricted Shares" are defined in Section 14.2(a).
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IN WITNESS WHEREOF the parties hereto have executed this Merger
Agreement as of the day and year first above written.
UNICAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President & Treasurer
USTEC ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
UNITED STATES TURBINE ENGINE CORP.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇