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Exhibit 10.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
FOR THE ACQUISITION OF
UNICCO SECURITY SERVICES, INC.
DATED AS OF OCTOBER 26, 1998
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TABLE OF CONTENTS
ARTICLE 1. Closing............................................................1
1.1 Sale and Purchase of Capital Stock................................1
1.2 Purchase Price....................................................1
1.3 Transfer of Shares................................................1
1.4 Closing...........................................................2
ARTICLE 2. Representations and Warranties of Purchaser........................2
2.1 Organization and Standing.........................................2
2.2 Authorization.....................................................2
2.3 Consents and Approvals............................................3
2.4 Brokers' and Finders' Fees........................................3
2.6 Disclosure........................................................3
ARTICLE 3. Representations and Warranties of Seller and Shareholder...........3
3.1 Organization, Good Standing, Power and Authority..................4
3.2 Authorization.....................................................4
3.3 Consents and Approvals............................................4
3.4 Ownership of the Shares...........................................4
3.5 Litigation........................................................5
3.6 Power, Authority and Ownership of Shareholder.....................5
ARTICLE 4. Representations and Warranties of Shareholder, Seller and the
Company.........................................................5
4.1 Organization, Good Standing, Power and Authority..................6
4.2 Authorization.....................................................6
4.3 Consents and Approvals............................................6
4.4 Charter and Bylaws; Corporate Records.............................6
4.5 Capitalization....................................................6
4.6 Subsidiaries......................................................7
4.7 Financial Statements..............................................7
4.8 Undisclosed Liabilities...........................................8
4.9 Absence of Certain Changes and Events.............................8
4.10 Tax Matters.......................................................9
4.11 Title to Personal Property and Condition of Assets...............11
4.12 Material Contracts...............................................12
4.13 Intellectual Property............................................13
4.14 Employee Matters.................................................14
4.15 Labor Matters....................................................16
4.16 Environmental Matters............................................18
4.17 Insurance........................................................19
4.18 Permits; Compliance With Law.....................................19
4.19 Litigation.......................................................19
(i)
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4.20 List of Personnel................................................20
4.21 Transactions With Affiliates.....................................20
4.22 Brokers and Finders' Fees........................................20
4.23 Books and Records; Internal Controls.............................20
4.24 Customers........................................................21
4.25 Disclosure.......................................................21
ARTICLE 5. Pre-Closing Covenants.............................................21
5.1 Access to Information............................................21
5.2 Conduct of Business..............................................21
5.3 Pre-Closing Activities...........................................22
5.4 Efforts to Consummate............................................23
5.5 No Shop..........................................................24
5.6 Notice...........................................................24
5.7 Performance Bonds................................................24
5.8 Use of the Name..................................................25
5.9 Termination of Certain Vehicles..................................25
5.10 Use of Office Space..............................................25
5.11 Assumption of Liabilities........................................25
5.12 Releases.........................................................25
5.13 Vesting of Retirement Plans......................................26
5.14 Assignment of Certain Contracts..................................26
5.15 Employee Payments................................................26
5.16 Employment Agreements............................................26
5.17 Employment Policies..............................................26
5.18 Adverse Changes in Condition.....................................27
5.19 Supplements to Schedules.........................................27
ARTICLE 6. Conditions to Closing.............................................27
6.1 Conditions to Purchaser's Obligations............................27
6.2 Conditions to Seller's Obligations...............................29
6.3 Materiality Defined..............................................30
ARTICLE 7. Additional Agreements.............................................31
7.1 Further Assurances...............................................31
7.2 Certain Tax Matters..............................................31
7.3 Litigation Support...............................................32
7.4 Noncompetition and Confidential Information......................32
ARTICLE 8. Indemnification...................................................35
8.1 Seller and Shareholder...........................................35
8.2 Purchaser........................................................37
(ii)
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ARTICLE 9. Modification, Waivers and Termination.............................39
9.1 Modification.....................................................39
9.2 Waivers..........................................................39
9.3 Termination......................................................39
9.4 Effect of Termination............................................40
ARTICLE 10. Miscellaneous....................................................40
10.1 Notices..........................................................40
10.2 Entire Agreement.................................................41
10.3 Benefits; Binding Effect; Assignment.............................41
10.4 Waiver...........................................................41
10.5 No Third Party Beneficiary.......................................41
10.6 Severability.....................................................41
10.7 Expenses.........................................................41
10.8 Headings.........................................................42
10.9 Counterparts.....................................................42
10.10 Governing Law....................................................42
10.11 Equitable Remedies...............................................42
10.12 Construction.....................................................42
10.13 Knowledge Defined................................................43
(iii)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), made and entered into
this 26th day of October, 1998 by and among XXXXXXXXXXX SECURITY, INC., a
Georgia corporation (referred to herein as "Purchaser"); UNICCO SECURITY
SERVICES, INC., a Delaware corporation (the "Company"), USC, INC., a
Massachusetts corporation ("Seller"), and UNICCO SERVICE COMPANY, a
Massachusetts business trust ("Shareholder");
WITNESSETH:
WHEREAS, Seller owns all of the issued and outstanding shares of capital
stock of the Company;
WHEREAS, Shareholder owns all of the issued and outstanding shares of
capital stock of Seller;
WHEREAS, subject to the terms and conditions of this Agreement, Seller
desires to sell, and Purchaser desires to purchase, all of the issued and
outstanding shares of capital stock of the Company; and
WHEREAS, Purchaser, Seller and Shareholder desire to make certain
representations, warranties and agreements in connection with the sale of
capital stock of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and agreements contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE 1.
CLOSING
1.1 SALE AND PURCHASE OF CAPITAL STOCK. On the "Closing Date" (as defined
herein), Seller shall sell, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase and accept delivery of, 100 shares of common stock of
the Company, par value $1.00 per share (collectively, the "Shares"), which
Shares constitute all of the issued and outstanding shares of capital stock of
the Company, for a purchase price determined as provided in Section 1.2 hereof.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase Price") for
the Shares will be Twelve Million Dollars ($12,000,000), payable in cash to
Seller at the Closing, by wire transfer of immediately available funds to the
account or accounts designated by Seller to Purchaser in writing prior to the
Closing, or by such other method of payment as is acceptable to the parties.
1.3 TRANSFER OF SHARES. At the Closing, in consideration of Purchaser's
delivery of the Purchase Price pursuant to Section 1.2 hereof, Seller shall
deliver to Purchaser certificates
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representing the Shares, duly endorsed in blank for transfer or accompanied by
stock powers duly executed in blank, sufficient in form and substance to convey
to Purchaser good title to all of the Shares, free and clear of all liens,
charges, claims, restrictions, encumbrances, security interests or pledges of
any kind whatsoever or any obligations or liabilities (absolute or contingent)
(a "Lien").
1.4 CLOSING. Subject to the fulfillment or waiver of the conditions
precedent set forth in Article 6 hereof, and subject to any extension permitted
under clause (y) of Section 9.3(b) hereof, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Posternak, Xxxxxxxxxx & Xxxx, L.L.P., at 000 Xxxxxxx Xxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000, on such date as may be agreed upon by the parties;
provided that such date shall be no later than ten days after the receipt by the
parties of confirmation that the waiting periods, if any, required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), have expired or been terminated (such date, the "Closing Date"); provided
further, however, that at or prior to the Closing, the parties shall make such
adjustments as may be necessary to account for the mid-period transfer of
payroll, customer receipts and similar items. Except as otherwise provided
herein, all proceedings to be taken and all documents to be executed at the
Closing shall be deemed to have been taken, delivered and executed
simultaneously, and no proceeding shall be deemed taken nor documents deemed
executed or delivered until all have been taken, delivered and executed.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
In order to induce Seller, the Company and Shareholder to enter into this
Agreement and to consummate the transactions contemplated hereby, Purchaser
represents and warrants to Seller and the Shareholder as follows:
2.1 ORGANIZATION AND STANDING. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Georgia.
Purchaser has all requisite corporate right, power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. Purchaser
is not in default under any provisions of its Articles of Incorporation or
bylaws. Purchaser has all requisite corporate power and authority to own, lease
and operate its properties and to conduct its business in the manner as now
conducted and is duly licensed or qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
its properties and assets or the conduct of its business requires it to be so
licensed or qualified, except where the failure to be so qualified would not
have a material adverse effect on the business, assets, properties, results of
operation, financial condition or prospects of Purchaser.
2.2 AUTHORIZATION. Except as set forth on SCHEDULE 2.2 hereto, this
Agreement and its execution, delivery and performance have been duly authorized
by all necessary corporate action on the part of Purchaser and are within its
corporate power. This Agreement has been duly executed
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and delivered by Purchaser and constitutes the legal, valid and binding
agreement of Purchaser, enforceable against it in accordance with its terms.
2.3 CONSENTS AND APPROVALS. The execution, delivery and performance by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice or the lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
(each, a "Law") to which Purchaser is subject, (ii) violate any order, judgment
or decree applicable to Purchaser, or (iii) violate, conflict with, or result in
a breach or default under, or cause the termination of, any term or condition of
any agreement, document or other instrument to which Purchaser is a party or by
which Purchaser or Purchaser's properties may be bound which would have a
material adverse effect on Purchaser's business, assets, properties, results of
operation, financial condition or prospects of Purchaser, or the ability of the
Purchaser to consummate the transactions contemplated by this Agreement. Except
as set forth on SCHEDULE 2.3 hereto, no filing with, and no permit,
authorization, consent or approval of, any federal, state, local or foreign
governmental regulatory agency, commission, bureau, authority, court or
arbitration tribunal (each, an "Authority") or any other person, corporation,
limited liability company, unincorporated organization, partnership,
association, joint-stock company, joint venture, trust or government or any
agency or political subdivision of any government (each, a "Person") is
necessary for the consummation by Purchaser of the transactions contemplated by
this Agreement, other than (x) compliance with any applicable requirements of
the HSR Act; (y) compliance with any applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and (z) compliance with
any applicable requirements of state blue sky laws.
2.4 BROKERS' AND FINDERS' FEES. Except as set forth on SCHEDULE 2.4 hereto,
neither Purchaser nor anyone acting on its behalf has done anything to cause or
incur any liability which would be payable by Seller or the Company to any party
for any brokers' or finders' fees or the like in connection with this Agreement
or any transaction contemplated hereby.
2.5 PURCHASE FOR OWN ACCOUNT. Purchaser is purchasing and acquiring the
Shares for its own account and without a view to their distribution or resale.
2.6 DISCLOSURE. None of the representations and warranties by Purchaser in
this Agreement and no statement on the part of Purchaser contained in any of the
Schedules hereto contains or will contain as to the applicable representation
and warranty any untrue statement of material fact or omits or will omit to
state any material fact necessary in order to make any of the statements herein
or therein, in light of the circumstances under which it was made, not
misleading.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
In order to induce Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, Seller and Shareholder hereby jointly and
severally represent and warrant (other than in the case of Section 3.6 hereof)
to Purchaser that, as of the date hereof:
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3.1 ORGANIZATION, GOOD STANDING, POWER AND AUTHORITY. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts. Seller has all requisite corporate right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. Seller is not in default under any provisions
of its Articles of Organization or bylaws. Seller has all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business in the manner as now conducted and is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its properties and assets or the conduct of its business
requires it to be so licensed or qualified, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
properties, results of operation, financial condition or prospects of Seller.
3.2 AUTHORIZATION. This Agreement and its execution, delivery and
performance have been duly authorized by all necessary corporate action on the
part of Seller and are within its corporate power. This Agreement has been duly
executed and delivered by Seller and constitutes the legal, valid and binding
agreement of Seller, enforceable against it in accordance with its terms.
3.3 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 3.3 hereto, the
execution, delivery and performance by Seller of this Agreement and the
consummation of the transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both, (i) violate any provision of
Law to which Seller is subject, (ii) violate any order, judgment or decree
applicable to Seller, or (iii) violate, conflict with, or result in a breach or
default under, or cause the termination of, any term or condition of any
agreement, document or other instrument to which Seller is a party or by which
Seller or Seller's properties may be bound. Except as set forth on SCHEDULE 3.3
hereto, no filing with, and no permit, authorization, consent or approval of,
any Authority or any other Person is necessary for the consummation by Seller of
the transactions contemplated by this Agreement, other than (x) compliance with
any applicable requirements of the HSR Act; (y) compliance with any applicable
requirements of the Exchange Act; and (z) compliance with any applicable
requirements of state blue sky laws.
3.4 OWNERSHIP OF THE SHARES.
(a) Seller owns good and marketable record title to, and all
beneficial interest in, the Shares, and such Shares (i) are validly issued,
fully paid and nonassessable, and (ii) except as set forth on SCHEDULE 3.4
hereto, are owned by Seller free and clear of any Liens, with no defects of
title whatsoever. Other than the Shares described in the foregoing
sentence, Seller owns no shares of capital stock of the Company or any
other equity security of the Company or any right of any kind to have any
such equity security issued.
(b) Except as set forth on SCHEDULE 3.4 hereto, Seller has the
exclusive right, power and authority to vote the Shares, and is not party
to or bound by any agreement affecting or relating to Seller's right to
transfer or vote the Shares. There are no proxies outstanding or powers of
attorney granted by Seller with respect to any of the Shares.
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3.5 LITIGATION. There are no actions, suits, claims or proceedings pending
or, to the best knowledge of Seller, threatened against or involving Seller or
any of Seller's assets or properties by or before any Authority that question
the validity of this Agreement or seek to prohibit, enjoin or otherwise
challenge the consummation of the transactions contemplated hereby. There are no
outstanding orders, judgments, injunctions, stipulations, awards or decrees of
any Authority against Seller or any of Seller's assets or properties that
prohibit or enjoin the consummation of the transactions contemplated hereby.
3.6 POWER, AUTHORITY AND OWNERSHIP OF SHAREHOLDER. Shareholder represents
and warrants that:
(a) Shareholder has the right, power and capacity to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Shareholder and constitutes the legal, valid and binding obligation of
Shareholder, enforceable against it in accordance with its terms.
(b) Except as set forth on SCHEDULE 3.6 hereto, the execution,
delivery and performance by Shareholder of this Agreement and the
consummation of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time, or both, (i) violate any
provision of Law to which Shareholder is subject, (ii) violate any order,
judgment or decree applicable to Shareholder, or (iii) violate, conflict
with, or result in a breach or default under, or cause the termination of,
any term or condition of any agreement, document or other instrument to
which Shareholder is a party or by which Shareholder or its properties may
be bound.
(c) Shareholder owns good and marketable record and beneficial title
to all of the outstanding capital stock of Seller (the "Seller Stock"), all
of which is (i) validly issued, fully paid and nonassessable, and (ii)
except as set forth on SCHEDULE 3.6 hereto, free and clear of any Liens,
with no defects of title whatsoever. Except as set forth on SCHEDULE 3.6
hereto, Shareholder has the exclusive right, power and authority to vote
the Seller Stock.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER, SELLER AND THE COMPANY
In order to induce Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereby, Shareholder, Seller and the Company
jointly and severally represent and warrant to Purchaser as follows:
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4.1 ORGANIZATION, GOOD STANDING, POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate right, power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The Company is not in default under any provisions of its
Certificate of Incorporation or bylaws. The Company has all requisite corporate
power and authority to own, lease and operate its properties and to conduct its
business in the manner as now conducted and is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its properties and assets or the conduct of its business
requires it to be so licensed or qualified, except where the failure to be so
qualified would not have a material adverse effect on the business, assets,
properties, results of operation, financial condition or prospects of the
Company.
4.2 AUTHORIZATION. This Agreement and its execution, delivery and
performance have been duly authorized by all necessary corporate action on the
part of the Company, and are within its corporate power. The Agreement has been
duly executed and delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms.
4.3 CONSENTS AND APPROVALS. Except as set forth on SCHEDULE 4.3 hereto, and
subject to the exception set forth below, the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby will not, with or without the giving of notice
or the lapse of time, or both, (i) violate any provision of Law to which the
Company is subject, (ii) violate any order, judgment or decree applicable to the
Company, or (iii) violate, conflict with, or result in a breach or default
under, or cause the termination of, any term or condition of any agreement,
document or other instrument to which the Company is a party or by which the
Company or its properties may be bound. Except as set forth on SCHEDULE 4.3
hereto, and subject to the exception set forth below, no filing with, and no
permit, authorization, consent or approval of, any Authority or any other Person
is necessary for the consummation by the Company of the transactions
contemplated by this Agreement, other than (x) compliance with any applicable
requirements of the HSR Act; (y) compliance with any applicable requirements of
the Exchange Act; and (z) compliance with any applicable requirements of state
blue sky laws. Notwithstanding the foregoing, no representation or warranty is
given regarding the requirement of any consents or approvals with respect to the
ongoing validity or effectiveness of any agreement, document or other instrument
or Permit (as defined in Section 4.18 hereof) to which the Company will be a
party after the Closing (other than this Agreement and the agreements executed
in connection herewith).
4.4 CHARTER AND BYLAWS; CORPORATE RECORDS. Copies of the Certificate of
Incorporation and bylaws of the Company and all amendments thereto as in effect
on the date hereof have been delivered to Purchaser and are complete and correct
as of the date hereof. The corporate minutes and stock records of the Companies
from and after June 28, 1996 have been made available to Purchaser and are
complete and correct in all material respects as of the date hereof.
4.5 CAPITALIZATION. The authorized capital stock of the Company consists of
5,000 shares
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of common stock, par value $1.00 per share, of which 100 shares are issued and
outstanding, and 5,000 shares of preferred stock, par value $1.00 per share, of
which no shares are issued and outstanding. All of the issued and outstanding
shares of capital stock of the Company (x) are duly authorized, validly issued,
fully paid and nonassessable, (y) are held of record by Seller, and (z) were not
issued in violation of the preemptive rights of any Person or any agreement or
Law by which the Company at the time of issuance was bound. Except as disclosed
on SCHEDULE 4.5 hereto, (i) no shares of capital stock of the Company are
reserved for issuance or are held as treasury shares, (ii) there are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, subscriptions, claims of any character, agreements,
obligations, convertible or exchangeable securities or other plans or
commitments, contingent or otherwise, relating to the capital stock of the
Company; (iii) there are no outstanding contracts or other agreements of Seller,
the Company or any other person to purchase, redeem or otherwise acquire any
outstanding shares of the capital stock of the Company, or securities or
obligations of any kind convertible into any shares of the capital stock of the
Company; (iv) there are no dividends that have accrued or been declared but are
unpaid on the capital stock of the Company; and (v) there are no outstanding or
authorized stock appreciation, phantom stock, stock plans or similar rights with
respect to the Company.
4.6 SUBSIDIARIES. There is no corporation, association, subsidiary,
partnership, limited liability company or other entity of which the Company owns
or controls, or has since June 28, 1996 owned or controlled, directly or
indirectly, more than 50% of the outstanding equity interests.
4.7 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 4.7 are copies of (i)
the unaudited balance sheets and statements of income of the Company for the
three months ended September 30, 1998 (the "Interim Financial Statements"), and
(ii) the unaudited balance sheets and related statements of operations, retained
earnings and cash flows of the Company for the years ended June 29, 1997 and
June 28, 1998 (the "Annual Financial Statements"). Except as described below,
the Interim Financial Statements and the Annual Financial Statements
(collectively, the "Financial Statements") (x) are complete and correct in all
material respects and have been prepared in accordance with the books and
records of the Company, (y) present fairly in all material respects the
financial condition of the Company, the results of its operations, and the
changes in shareholders' equity and cash flows, as the case may be, as at and
for the respective periods then ended, (z) have been extracted from, and are a
material component of, the audited financial statements for the consolidated
group of which the Company is a member, which such financial statements have
been prepared in compliance with generally accepted accounting principles in
effect in the United States of America at the time of application thereof
applied on a basis consistent with the prior applications of those principles in
the financial statements of the Company ("GAAP"), subject to year end
adjustments in the case of any interim financial statements. Seller further
represents, and Purchaser acknowledges that, due to the fact that the Company is
a wholly-owned, indirect subsidiary of Shareholder, the Financial Statements do
not reflect (a) allocations for the Company's portion of certain expenses, such
as executive management and corporate overhead, information systems (including,
without limitation, use of the X. X. Xxxxxxx software), litigation support
services and other corporate support functions, and (b) use of the Seller Space
(as such term is defined in Section
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5.10(a) hereof) on a rent-free basis.
4.8 UNDISCLOSED LIABILITIES. Except as and to the extent reflected on the
Interim Balance Sheet or in SCHEDULE 4.8 hereto, the Company has no material
liabilities, commitments or obligations of any nature (whether absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary
course of business consistent with past practice since the date of the Interim
Balance Sheet.
4.9 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as contemplated by this
Agreement or as set forth on SCHEDULE 4.9 hereto, since September 30, 1998:
(a) the business of the Company has been operated only in the usual
and ordinary course and there has not been:
(i) any material adverse change in the financial condition,
business, results of operations or prospects of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the properties, business
or business prospects of the Company;
(iii) any distribution, declaration, setting aside or payment of
any dividend, or any other distribution with respect to the capital
stock of the Company or any direct or indirect redemption, purchase or
other acquisition of any such stock or sale of any such stock by the
Company;
(iv) any material or unusual increase in the fixed compensation
payable to or to become payable by the Company to any officer, key
employee or agent of the Company, or in any insurance, pension or
other benefit plan, payment, or arrangement made to, for or with any
such officers, key employees or agents of the Company;
(v) any commission or bonus paid to any such officers, key
employees or agents, other than commissions and bonuses paid in the
ordinary course of business;
(vi) any material change in the operation of the business of the
Company or any material transactions entered into, except such changes
and transactions occurring in the ordinary course of business and not
otherwise required to be disclosed pursuant to this Section 4.9; or
(vii) any agreement to do any of the foregoing; and
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(b) the Company has not:
(i) purchased, sold or transferred any asset except in the
ordinary course of its business;
(ii) canceled any debts or waived any claims or rights of
substantial value, or sold, transferred or otherwise disposed of, any
properties or assets (real, personal or mixed, tangible or intangible)
of substantial value, except, in each such case, in transactions in
the ordinary course of business and consistent with past practice and
which in any event, do not exceed $25,000 individually;
(iii) made any capital expenditures or commitments in the
ordinary course of business in excess of $50,000 individually, or
$100,000 in the aggregate; or
(iv) been the subject of or experienced any strike or other work
stoppage or concerted slow down or threat thereof, union election or
attempted collective bargaining of employees.
4.10 TAX MATTERS.
(a) For purposes of this Agreement, (i) "Taxes" shall mean all taxes,
assessments, charges, duties, fees, levies or other governmental charges
(including interest, penalties or additions associated therewith),
including federal, state, city, county, foreign or other income, franchise,
capital stock, real property, personal property, tangible, withholding,
FICA unemployment compensation, disability, transfer, sales, use, excise,
gross receipts and all other taxes of any kind for which the Company may
have any liability imposed by the United States or any state, county, city,
country or government or subdivision thereof whether disputed or not, and
any charges, interest or penalties imposed by any taxing authority as the
result of the failure to file any Tax Return; and (ii) "Tax Return" shall
mean any report, return, declaration or other information required to be
supplied to a taxing authority, including estimated returns and reports of
every kind, in connection with Taxes.
(b) Except as otherwise disclosed on SCHEDULE 4.10 hereto: (i) all Tax
Returns required to be filed by the Company have been timely and properly
filed in accordance with any applicable Law or any applicable extensions,
and all such Tax Returns were correct and complete in all respects; (ii)
all Taxes, deposits or other payments for which the Company has any
liability through the date hereof (whether or not shown on any Tax Return),
have been paid in full or are accrued or will be accrued as of Closing as
liabilities for Taxes on the books and records of the Company; (iii) the
amounts so paid on or before the date hereof, together with any amounts
accrued as liabilities for Taxes (including Taxes accrued as currently
payable) on the books of the Company and reflected in the Financial
Statements (excluding any such liabilities for deferred Taxes established
to reflect timing differences between book and tax income) will be adequate
based on the tax rates, Laws and regulations in effect on the date hereof
to satisfy all liabilities for Taxes of the Company in any
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jurisdiction through the Closing Date, including Taxes accruable upon
income earned through the Closing Date; (iv) there are not now any
extensions of time in effect with respect to the dates on which any Tax
Returns were or are due to be filed; (v) all deficiencies asserted as a
result of any examination of any Tax Return have been paid in full, accrued
on the books of the Company, or finally settled, and no issue has been
raised in any such examination that, by application of the same or similar
principles, reasonably could be expected to result in a proposed deficiency
for any other period not so examined; (vi) no claims have been asserted and
no proposals or deficiencies for any Taxes are being asserted, proposed or
threatened, and no audit or investigation of any Tax Return is currently
underway, pending or threatened; (vii) no Tax Return relating to taxable
periods ending on or after December 31, 1996 has been examined or audited
by any governmental authorities; (viii) there are no outstanding waivers or
agreements by Seller or the Company for the extension of time for the
assessment of any Taxes or deficiency thereof, nor are there any requests
for rulings, outstanding subpoenas or requests for information, notice of
proposed reassessment of any property owned or leased by the Company or any
other matter pending between the Company and any taxing authority; and (x)
to the best of Seller's and the Company's knowledge, there are no liens for
Taxes not yet due, nor are there any liens that are pending or threatened.
(c) The Company has delivered to Purchaser true and complete copies of
all income Tax Returns for the three most recent years for which Tax
Returns are due to have been filed.
(d) Neither Seller nor the Company has filed a consent pursuant to
Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code").
(e) No assets of the Company or of any "Related Person," as that term
is defined in Section 144(a)(3) of the Code (or Section 103(b)(6)(c) of the
Internal Revenue Code of 1954, as amended (the "1954 Code"), whether owned
or leased pursuant to a capital lease, have been financed by private
activity bonds within the meaning of Section 141 of the Code (or industrial
development bonds within the meaning of Section 103(b) of the 1954 Code),
and neither the Company nor any Related Person is a "principal user," as
that term is used in the context of Section 144(a) of the 1986 Code (or
Section 103(b) of the 1954 Code) of any building which has been so
financed.
(f) Except as disclosed on SCHEDULE 4.10 hereto, the Company is not a
party to any written agreement providing for the allocation or sharing of
Taxes.
(g) Except as disclosed on SCHEDULE 4.10 hereto, the Company has never
filed or been included in any combined or consolidated Tax Return with any
Person or been a member of an affiliated group, within the meaning of
Section 1504 of the Code, filing a consolidated federal income Tax Return,
other than a group the common parent of which is Seller.
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15
(h) The Company does not have any liability for the Taxes of any
person (other than the Company under Treasury Regulation Section 1.1502-6
(or any similar provision of state, local or foreign law), except as may be
assumed by Seller under the Assumption of Liabilities (as defined in
Section 5.11 hereof).
4.11 TITLE TO PERSONAL PROPERTY AND CONDITION OF ASSETS.
(a) The Interim Balance Sheet of the Company reflects all the real and
personal properties presently owned by the Company and used in its
business, except for (a) assets acquired or disposed of by the Company in
the ordinary course of its business since the date of the Interim Balance
Sheet, (b) properties that have been fully depreciated or the cost of which
has been expensed by the Company and (c) properties leased by the Company.
Except as disclosed on SCHEDULE 4.11 hereto, the Company has good and
marketable title to all of its properties, including, without limitation,
all properties and assets that are reflected in the Interim Balance Sheet
(except properties and assets sold or otherwise disposed of in the ordinary
course of business subsequent to the dates of the Interim Balance Sheet),
free and clear of all Liens, except liens of current state and local
property Taxes not yet due and payable. Except as disclosed on SCHEDULE
4.11 hereto, all properties and assets of the Company are in the possession
and control of the Company. To the best knowledge of the Company and
Seller, all properties and assets owned, used or occupied by the Company
have been used and maintained in a manner consistent with industry
practices. To the best knowledge of the Company and Seller, the Company is
not in violation of any applicable zoning regulation, ordinance or other
Law, order, regulation, restriction or requirement relating to its
operations or properties, whether such properties are owned or leased.
(b) To the best knowledge of the Company and Seller, the Company
enjoys peaceful and undisturbed possession under all leases of personal
property under which it operates. There are no existing material defaults,
or events that with the passage of time or the giving of notice, or both,
would constitute material defaults under any such lease by the Company or,
to the best knowledge of the Company and Seller, by any other party to any
such lease.
(c) Except for leasehold interests and other leased properties and the
personal property identified on SCHEDULE 4.11 hereto, and except for assets
owned by Shareholder that are not material, either individually or in the
aggregate, to the business or financial condition of the Company, there are
no assets owned by any third party that are used in the operations of the
business of the Company.
(d) Without limiting Purchaser's rights under this Agreement, and
after taking into account Seller's and Shareholder's disclosures in, and
the conveyances by the Company to Seller or Shareholder contemplated by,
this Agreement, Seller acknowledges that, upon the Closing, the Company
will own, lease or license (and Purchaser thus will indirectly acquire) the
furniture, fixtures, equipment (including computer hardware and software,
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vehicles, office supplies, deposits, prepaids, names, customer lists,
contracts, personnel and marketing databases, other intangible assets and
other assets used in the ordinary course of business.
4.12 MATERIAL CONTRACTS. Except as set forth on SCHEDULE 4.12 hereto, and
except for oral agreements and understandings with Shareholder regarding the
matters described in the last sentence of Section 4.7 hereof, the Company is not
a party to, or otherwise bound by, any contract or other agreement (whether oral
or written):
(a) involving amounts payable by or to the Company during any 12-month
period of $50,000 or more;
(b) that is a management, consultant or employment contract,
collective bargaining or other labor or union agreement;
(c) that is a license or franchise contract or agreement;
(d) with Seller, with any director or officer of the Company, with any
person related to Seller or with any company or other organization in which
Seller, any director or officer of the Company, or any person related to
Seller has a direct or indirect financial interest;
(e) that is a loan, factoring, credit line or subordination agreement
or other agreement relating to borrowing of money, extension of credit, or
granting of liens or encumbrances;
(f) that is a lease of real, personal or mixed property under which
the Company is a lessor or lessee;
(g) that is a joint venture or other agreement involving sharing of
profits;
(h) creating a power of attorney empowering any Person to act on
behalf of the Company;
(i) constituting an offer, bid or proposal binding on the Company
that, if accepted, would result in a contract requiring the Company to pay,
or by which the Company would receive, in the aggregate, $500,000 or more
to or from a single source in any 12- month period;
(j) constituting a guaranty, subordination or other similar type of
agreement, whether or not entered into in the ordinary course of business;
(k) not made in the ordinary course of business;
(l) that is a minority or set-aside contract;
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17
(m) creating a bonus plan or profit sharing plan for any officer,
employee or agent of the Company (including, without limitation, any such
plans maintained by Seller or Shareholder that cover any employees of the
Company);
(n) that limits the ability of the Company or any material employee of
the Company from engaging in any business in any jurisdiction, or that
limits others from competing with the Company;
(o) that is an employment or consulting agreement, or that provides
for the payment of commissions or royalties of any type; or
(p) that is a service, supply or maintenance agreement, open purchase
order or other arrangement requiring notice prior to termination.
True and complete copies of all such contracts, agreements and other documents
listed on SCHEDULE 4.12 hereto (such contracts, agreements and other documents
are hereinafter referred to as "Material Contracts") have been furnished to
Purchaser. The Company has complied in all material respects with all its
material obligations under each Material Contract and the Company is not in
default in any material respect as to any Material Contract. To the best
knowledge of the Company and Seller, no condition or state of facts exists that,
with notice or the passage of time, or both, would constitute a default under
any Material Contract, and all Material Contracts are in full force and effect
and are enforceable by the Company against all other parties thereto in all
material respects.
4.13 INTELLECTUAL PROPERTY.
(a) Except as set forth on SCHEDULE 4.13(a) hereto, the Company does
not own or license any United States and foreign patents, trademarks, trade
names, service marks, copyrights and applications therefor (hereinafter the
"Patent and Trademark Rights"). The business of the Company as now
conducted, to the best knowledge of the Company and Seller, does not
conflict with and has not been alleged to conflict with any patents,
trademarks, trade names, service marks or copyrights of others. The Company
does not know of any use by others of any of the Patent and Trademark
Rights set forth on SCHEDULE 4.13(a) that would be material to the business
of the Company as presently conducted.
(b) SCHEDULE 4.13(b) hereto sets forth a true and correct list of (i)
all computer software programs licensed to the Company that are material to
the conduct of the business of the Company other than "off-the-shelf"
software owned by or licensed to the Company (the "Software"); (ii) all
agreements relating to Software that is owned by a third party and that the
Company is licensed or otherwise authorized to use; and (iii) all
agreements relating to the use by third parties of Software that is owned
by the Company. The Company owns, or possesses valid license rights to, all
Software. There are no infringement suits, actions or proceedings pending
or, to the best knowledge of the Company and Seller, threatened against the
Company with respect to any Software. To the best knowledge of the Company
and Seller, there are no infringement suits, actions or proceedings pending
or threatened against
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the owner of any Software that is owned by a third-party. With respect to
Software that is owned by a third-party and that the Company is licensed or
otherwise authorized to use, the license, sublicense, agreement or
permission covering such Software is (i) legal, valid, binding and
enforceable and is in full force and effect and (ii) has not, to the best
knowledge of the Company and Seller been breached by the Company or the
third-party. The consummation of the transactions contemplated hereby will
not result in the loss or impairment of the Company's right to use any
Software that is owned by a third-party and that the Company is licensed or
otherwise authorized to use.
4.14 EMPLOYEE MATTERS.
(a) SCHEDULE 4.14(a) hereto contains a true and complete list of each
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, phantom stock, severance or termination pay, hospitalization or
other health, life, disability or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to
or required to be contributed to for the benefit of any officer, director,
employee or former officer, director or employee of the Company, whether
formal or informal and whether legally binding or not (the "Plans").
SCHEDULE 4.14(a) identifies each of the Plans that is an "employee welfare
benefit plan," or "employee pension benefit plan" as such terms are defined
in Sections 3(1) and 3(2) of the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder
("ERISA") (such plans being hereinafter referred to collectively as the
"ERISA Plans").
(b) With respect to each of the Plans, the Company has heretofore
delivered or made available to Purchaser true and complete copies of each
of the following documents:
(i) a copy of the Plans and related summary plan descriptions
(including all amendments thereto and any trust agreements or other
contracts or agreements that are a part of such Plans);
(ii) a copy of the annual report, if required under ERISA, with
respect to each such Plan for the last three years;
(iii) a copy of the actuarial report, if required under ERISA,
with respect to each such Plan for the last three years; and
(iv) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan that is intended to
be qualified under Section 401 of the Code and copies of all other
Internal Revenue Service, Department of Labor and Pension Benefit
Guaranty Corporation ("PBGC") rulings or determinations with respect
to each Plan.
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19
(c) No liability under Title IV of ERISA has been incurred by the
Company or any trade or business, whether or not incorporated, that
together with the Company would be deemed a "single employer" within the
meaning of Section 4001(b)(1) of ERISA (an "ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and no
condition exists that presents a risk to the Company or an ERISA Affiliate
of incurring a liability under such title, other than liability for
premiums due the PBGC, which payments have been or will be made when due.
(d) Neither the Company, any of the ERISA Plans, any trust created
thereunder nor any trustee or administrator thereof has engaged in a
transaction or has taken or failed to take any action in connection with
which the Company, any of the ERISA Plans, any such trust, any trustee or
administrator thereof, or any party dealing with the ERISA Plans or any
such trust could be subject to either any liability under Section 409 or
502(i) or 502(l) of ERISA or a Tax imposed pursuant to Section 4975, 4976
or 4980B of the Code.
(e) Each of the ERISA Plans that is intended to be "qualified" within
the meaning of Section 401(a) of the Code is so qualified.
(f) All of the assets that have been set aside in a trust or insurance
company separate account to satisfy any obligations under any Plan are
shown on the books and records of each such trust and each such account at
their current fair market value as of the most recent valuation date for
such trust or account, the fair market value of all the assets so set aside
for a Plan as of each such valuation date equals or exceeds the present
value of any obligation under such Plan, and the liabilities for all other
obligations under any Plan are accurately set forth in the Company's most
recent financial statement.
(g) Except as disclosed on SCHEDULE 4.14(g), each Plan has been
established, maintained and administered in compliance with the terms of
such Plan and all applicable laws, and all applicable reporting and
disclosure requirements with respect to each Plan have been satisfied on a
timely basis, including all such requirements under the Code and ERISA.
Except as set forth on SCHEDULE 4.15, no Plan is described in ERISA
Sections 3(37), 4(b)(4), 4063 or 4064 or is subject to Code Section 412,
and the Company has never maintained or contributed directly or indirectly
to (or had an obligation to contribute directly or indirectly to) such a
plan. No ERISA Plan that is described in ERISA Section 3(1) provides any
benefits after a termination of employment except to the extent such
benefits are required to satisfy the minimum requirements under Part 6 of
Subtitle B of Title I of ERISA.
(h) Except as provided in SCHEDULE 4.14(h) hereto, there are no
pending or threatened claims with respect to a Plan (other than routine and
reasonable claims for benefits made in the ordinary course of a Plan's
operations) or with respect to the terms and conditions of employment or
termination of employment of any employee or former employee of the
Company, which claims could reasonably be expected to result in any
liability to the Company, and no audit or investigation by any domestic or
foreign
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20
governmental or other law enforcement agency is pending or, to the
Company's knowledge, has been proposed with respect to any Plan.
(i) Except as set forth on SCHEDULE 4.15, the Company has the right
pursuant to the terms of each Plan and all agreements related to such Plan
unilaterally to terminate such Plan (or its participation in such Plan) or
to amend the terms of such Plan at any time without triggering a penalty or
an obligation to make any additional contributions to such Plan, and the
Company immediately after the Closing shall have the right to unilaterally
terminate its participation in each Plan without triggering any penalty or
any obligation to make any additional contributions to such Plan.
(j) Except as provided in SCHEDULE 4.14(j) hereto, the transactions
contemplated by this Agreement will not result in any additional payments,
including severance payments, to or benefit accruals for, or any increase
in the vested interest of, any current or former officer, employee or
director or their dependents under any Plan. The transactions contemplated
by this Agreement will not result in any payments to any current or former
officer, employee or director of the Company or an ERISA Affiliate that
will be subject to Section 280G of the Code.
(k) The Company has provided Purchaser with a copy of the Company's
policy for providing leaves of absence under the Family and Medical Leave
Act ("FMLA") and has complied with the FMLA in all material respects.
(l) The Company possess proper verification and authorization
documentation on each and every employee of the Company as required by the
Immigration and Reform Control Act of 1986.
(m) Seller has conducted, or has had conducted in accordance with
applicable state law, a thorough criminal conviction check of all employees
of the Company (based on the employee's then-present state of residence),
and none of such employees had criminal convictions that would prohibit
hiring under applicable state law as of the date of such check; provided,
however, that where a Material Contract may have a different standard
regarding criminal background checks, the Company has complied, in all
material respects, with the provisions of such Material Contracts regarding
criminal checks.
4.15 LABOR MATTERS. Except to the extent set forth in SCHEDULE 4.15 hereto:
(a) none of the Company's employees are or have been represented by a labor
organization that was either National Labor Relations Board ("NLRB") certified
or voluntarily recognized or recognized under foreign law; (b) the Company has
not been and is not a signatory to a collective bargaining agreement with any
labor organization; (c) the Company is not obligated, by any collective
bargaining agreement or other agreement, to contribute to any multiemployer
pension benefit plan covering employees, retirees and/or beneficiaries; (d) the
Company has not conducted negotiations with respect to any future contract with
or commitment to any labor union or association and, to the best knowledge of
the Company and Seller, there are no current or threatened attempts to organize
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21
or establish any labor union or association, (e) no representation election
petition filed by employees of the Company is pending with the NLRB and, to the
best knowledge of the Company and Seller, no union organizing campaign involving
employees of the Company is in progress; (f) no NLRB unfair labor practice
charges or litigation are presently pending against the Company or any labor
organization representing any of their employees; (g) no grievance or
arbitration demand, whether or not filed pursuant to a collective bargaining
agreement, is pending against the Company; (h) no labor dispute, walkout,
strike, slowdown, handbilling, picketing, work stoppage (sympathetic or
otherwise), or other "concerted action" involving the employees of the Company
is in progress and none of the Company's employees have engaged in any such
actions at any time since June 28, 1996; (i) no breach of contract and/or denial
of fair representation claim is pending against the Company and/or, to the best
knowledge of the Company and Seller, any labor organization representing any of
its employees; (j) no claim for unpaid wages or overtime or for child labor or
record-keeping violations has been filed, threatened, or is pending against the
Company under the Fair Labor Standards Act, Xxxxx-Xxxxx Act, Xxxxx-Xxxxxx Act,
or Service Contract Act or any other Federal, state, local or foreign Law; (k)
no discrimination and/or retaliation claim is pending, or to the best knowledge
of the Company and Seller, threatened against the Company under the 1866, 1877,
1964 or 1991 Civil Rights Acts, the Equal Pay Act, the Age Discrimination in
Employment Act, as amended, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Fair Labor Standards Act, ERISA or any other Federal Law
or any comparable state or local fair employment practices act or foreign Law
regulating discrimination in the workplace and no wrongful discharge, liable,
slander or other claim under any state law is pending or threatened which arises
out of the employment relationship with respect to any person or the termination
of any such relationship; (l) if the Company is a Federal, state or provincial
contractor obligated to develop and maintain an affirmative action plan, no
discrimination claim, show cause notice, conciliation proceeding, sanctions or
debarment proceeding is pending or has been threatened against the Company with
the Office of Federal Contract Compliance Programs ("OFCCP") or any other
Federal agency or any comparable state or foreign agency or court and no desk
audit or on-site review is in progress; (m) no citation has been issued or is
pending before the Occupational Safety and Health Administration ("OSHA") or
applicable state plans against the Company, and no notice of contest or OSHA
administrative enforcement proceeding involving the Company has been filed or is
pending; (n) no material workers' compensation or retaliation claim is pending
against the Company, and the Company maintains adequate insurance with respect
to workers compensation claims pursuant to insurance policies that are currently
in force, or has accrued an adequate liability for such obligations, including,
without limitation, adequate accruals with respect to accrued but not reported
claims and retroactive insurance premiums, which is accurately set forth in the
Financial Statements; (o) no investigation or citation of the Company is
outstanding and no enforcement proceeding has been initiated or is pending under
Federal or foreign immigration law; (p) the Company has not taken any action
that would constitute a "Mass Layoff" or "Plant Closing" within the meaning of
the Worker Adjustment and Retraining Notification ("WARN") Act or would
otherwise trigger notice requirements or liability under any state, provincial,
local or foreign plant closing notice Law, and to the extent any liability
arises between the date of this Agreement and the Closing Date as a result of
employment actions of the Company, the Company will be solely responsible
therefor; and (q) the Company has not entered into, nor is it otherwise bound
by, any employment contract or
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severance agreement with any employee of the Company. The proposed terms of the
renewal of the collective bargaining contracts between the Company and The
General Service Employees Union, Local 73, SEIU, AFL-CIO, CLC (the "Union
Contracts") are as set forth on SCHEDULE 4.15 hereto. Except as set forth on
SCHEDULE 4.15 hereto, the Company is in material compliance with all Federal,
state, provincial, local and foreign laws respecting employment and employment
practices, terms and conditions of employment, wages and hours, is not liable
for any arrears or wages or penalties for failure to comply with any of the
foregoing, and is not engaged in any unfair labor or unlawful employment
practice.
4.16 ENVIRONMENTAL MATTERS.
(a) The Company has not received any written communication from any
Person (including any Authority) stating that the Company may be a
potentially responsible party under any Environmental Law (as defined in
Section 4.16(c) hereof) with respect to any actual or alleged environmental
contamination; neither the Company nor, to the best knowledge of the
Company and Seller, any Authority, is conducting or has conducted any
environmental remediation or environmental investigation that could
reasonably be expected to result in liability for the Company under any
Environmental Law, including without limitation with relation to properties
that are not owned or leased by the Company; and the Company has not
received any request for information under any Environmental Law from any
Authority with respect to any actual or alleged environmental
contamination.
(b) Since June 28, 1996, the Company has not received any written
communication from any person or entity (including any Authority) stating
or alleging that the Company may have violated any Environmental Law, or
any permit issued pursuant to any Environmental Law, or that the Company
has caused or contributed to any environmental contamination that has
caused any property damage or personal injury under any Environmental Law.
(c) The Company has provided Purchaser with copies of (i) any material
environmental investigation, study, audit, test, review and other analysis
in the possession of the Company conducted in relation to the business of
the Company or any property or facility now or previously owned, operated
or leased by the Company; and (ii) any consent decree, consent order or
similar document in force and to which it is a party relating to any
property currently owned, leased or operated by the Company.
(d) For purposes of this Section 4.16, "Environmental Law" means all
applicable state, federal and local laws, regulations and rules, including
common law, judgment, decrees and orders relating to pollution, the
preservation of the environment, and the release of hazardous substances,
toxic or hazardous waste or petroleum or petroleum products as those terms
are defined by Environmental Laws.
(e) To the best knowledge of the Company and Seller (i) no release of
any hazardous substance has occurred on any property owned or leased by the
Company, (ii) no
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underground storage tanks or asbestos containing materials exist on any
property owned or leased by the Company, (iii) the Company has all permits
and approvals and has filed all notices required to comply with applicable
environmental laws, and (iv) the Company has not entered into any consent
decree, consent order or other type of agreement with any Person, including
any Authority, resulting in any alleged violation of any Environmental Law
or any permit issued pursuant to any Environmental Law or to remediate any
environmental condition pursuant to any Environmental Law.
4.17 INSURANCE. SCHEDULE 4.17 hereto sets forth a complete and correct list
of all insurance policies currently in effect that are owned or held by the
Company (or that are owned or held by Seller or Shareholder for the benefit of
the Company), insuring the products, properties, assets, business and operations
of the Company and its potential liabilities to third parties, and all general
liability policies maintained by the Company. All such policies are in full
force and effect and all premiums due and payable in respect thereof have been
paid. Since the respective dates of such policies, no notice of cancellation or
non-renewal with respect to any such policy has been received by the Company.
SCHEDULE 4.17 sets forth a list of all pending claims and the status as of the
date of this Agreement of all deductibles with respect to all such policies, and
all loss runs, as of the date of this Agreement, with respect to such policies.
4.18 PERMITS; COMPLIANCE WITH LAW. The Company holds and is in material
compliance with all permits, orders, approvals, registrations, authorizations,
consents and qualification filings with all Authorities required under
applicable Laws in connection with the operation of the business of the Company
(collectively, "Permits") and is in material compliance with all material
requirements of all applicable Laws. No notice, citation, summons or order has
been received by the Company, no complaint has been filed and served on the
Company, no penalty has been assessed and no investigation, proceeding or review
is pending or, to the best knowledge of the Company and Seller, threatened (i)
with respect to any alleged material violation by the Company of any Law or
Permit, or (ii) with respect to any alleged failure by the Company to have any
Permit. True and correct copies of all Permits relating to Company Activities
(as defined in Section 7.4 hereof) is set forth on SCHEDULE 4.18 hereto. No
event has occurred or circumstance exists that will (with or without notice or
lapse of time) (x) constitute or result in a violation of or a failure to comply
with any material term or requirement of any Permit or, to the best knowledge of
the Company and Seller, any Law in any material respect, or (y) result in the
revocation, withdrawal, suspension, cancellation or termination of, or
modification to, any Permit.
4.19 LITIGATION. SCHEDULE 4.19 hereto sets forth a list and brief
description of all material actions, suits, claims or proceedings pending or, to
the best knowledge of the Company and Seller, threatened against or involving
the Company, or any of its assets or properties, by or before any Authority
(including but not limited to all actions involving workers' compensation,
employment discrimination, wrongful termination, the Equal Employment
Opportunity Commission and general liabilities). There are no outstanding
orders, judgments, injunctions, stipulations, awards or decrees of any Authority
against the Company, or any of its assets or properties that prohibit or enjoin
the consummation of the transactions contemplated hereby. To the best knowledge
of the Company and
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24
Seller, no event has occurred or circumstance exists that may (with or without
notice or lapse of time) give rise to or serve as the basis for any material
action, suit, claim or proceeding against or involving the Company.
4.20 LIST OF PERSONNEL. SCHEDULE 4.20 hereto sets forth (i) the name and
total base compensation of each officer and director of the Company and each
other salaried or hourly administrative employee of the Company, (ii) all
commitments or agreements by the Company to increase the wages or modify the
conditions or terms of employment of any of its employees, and (iii) a detailed
listing of commissions and bonuses paid by, or due from, the Company since June
28, 1998, including amounts accrued through the Closing Date.
4.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on SCHEDULE 4.21
hereto, and except for oral agreements and understandings with Shareholder
regarding the matters described in the last sentence of Section 4.7 hereof, the
Company has not purchased, acquired or leased any property or services from, or
sold, transferred or leased any property or services to, or loaned or advanced
any money to, or borrowed any money from or entered into or been subject to any
management, consulting or similar agreement with, any officer, director or
shareholder of the Company or any of their respective Affiliates (as hereinafter
defined). Except as set forth on SCHEDULE 4.21, no Affiliate of the Company is
indebted to the Company for money borrowed or other loans or advances, and the
Company is not indebted to any such Affiliate. For purposes of this Section
4.21, an "Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person. For purposes of this Agreement, (i) "control", when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and (ii) "controlling"
and "controlled" have meanings correlative to the foregoing.
4.22 BROKERS AND FINDERS' FEES. Except as set forth on SCHEDULE 4.22
hereto, neither Seller nor the Company has employed any broker or finder nor
incurred nor will incur any broker's, finder's or similar fees, commissions or
expenses payable by Seller or the Company in connection with the transactions
contemplated by this Agreement.
4.23 BOOKS AND RECORDS; INTERNAL CONTROLS. Subject to the qualifications
set forth in Section 4.7 hereof, the books and records of the Company accurately
and fairly reflect the transactions and dispositions of assets of the Company.
The Company's system of internal accounting controls is sufficient to provide
reasonable assurances that transactions are executed in accordance with
management's general or specific authorization and that transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets.
4.24 CUSTOMERS. SCHEDULE 4.24 hereto lists the customers of the Company as
of the date hereof that (i) are parties to written contracts with the Company
that have a remaining term in excess of one year and that do not permit the
customer to terminate its obligations to the Company without
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cause upon the provision of notice to the Company or (ii) the Company's 25
largest current customers (measured in terms of annualized revenues to the
Company). All of the aforementioned contracts are included in the Company's
Material Contracts. Except as set forth on SCHEDULE 4.24, (i) the Company has
not received notice of termination of its agreement with any such customer or
the occurrence of an event of default under its agreement that would allow such
customer to terminate such agreement, and (ii) there has not been, to the best
knowledge of Seller and the Company, with respect to any such customer, a
material adverse change in the business relationship with any such customer.
4.25 DISCLOSURE. None of the representations and warranties by the Company,
Seller or Shareholder in this Agreement and no statement on the part of any of
the foregoing contained in any of the Schedules hereto contains or will contain
as to the applicable representation and warranty any untrue statement of
material fact or omits or will omit to state any material fact necessary in
order to make any of the statements herein or therein, in light of the
circumstances under which it was made, not misleading.
ARTICLE 5.
PRE-CLOSING COVENANTS
5.1 ACCESS TO INFORMATION. From and after the date hereof and until the
Closing, Seller will cause the Company (a) to give to Purchaser and Purchaser's
authorized representatives reasonable access during normal business hours to its
books and records, officers, managers, supervisors, facilities, personnel and
accountants, (b) to furnish and make available to Purchaser and its authorized
representatives all such documents and copies of documents and all such
additional financial and operating data and other information pertaining to the
affairs of the Company as Purchaser and its authorized representatives may
reasonably request and which is reasonably available to Seller, Shareholder or
the Company, and (c) to give Purchaser permission (acting together with a
representative of the Company) to contact management and those clients of the
Company identified on SCHEDULE 5.1 hereto, and to visit the Company's operating
locations and the locations of such clients; provided, however, that the
activities of Purchaser and its representatives shall be conducted in such a
manner as not to interfere unreasonably with the operation of the business of
the Company.
5.2 CONDUCT OF BUSINESS. During the period from the date hereof to the
Closing Date, and subject to the provisions of this Agreement, Seller will cause
the Company to (a) continue to conduct its business affairs only in the usual
and ordinary course of business and in substantially the same manner as
previously conducted, (b) maintain, or cause to be maintained in full force and
effect, all of its Permits, insurance policies and bank accounts currently held
or maintained by the Company, and (c) keep its business and properties
substantially intact, including its present operations, physical facilities and
relationships with lessors, licensors, suppliers, customers and employees, in a
manner consistent with the conduct of business in the ordinary course.
5.3 PRE-CLOSING ACTIVITIES. Except as otherwise required or permitted by
this Agreement,
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as agreed to by Purchaser in writing or as set forth on SCHEDULE 5.3 hereto,
prior to the Closing Date, the Company shall not, and Seller shall not take any
action to cause the Company, and shall not permit the Company, to:
(a) declare or pay any dividend or other distribution on or with
respect to any shares of its capital stock or make any direct or indirect
redemption, retirement, purchase or other acquisition of any shares of its
capital stock;
(b) create, incur or assume any indebtedness for borrowed money,
assume or become subject to, whether directly or indirectly, by way of
guaranty or otherwise, any obligation or liability (whether absolute,
accrued, contingent or otherwise and whether due or to become due);
(c) cause or permit any material damage, destruction or other casualty
loss (whether or not covered by insurance) to or affecting the business or
assets of the Company;
(d) fail to discharge or to satisfy any Lien on any property of the
Company or pay or satisfy any claim, obligation or liability (whether
absolute, accrued, contingent or otherwise) of the Company when the same
shall become due and payable;
(e) sell, lease, assign, transfer or otherwise dispose of any property
or asset;
(f) permit or allow any property or asset of the Company to be
subjected to any Lien, or enter into any conditional sale or other title
retention agreement with respect to any property or asset;
(g) change in any respect the accounting methods or practices followed
by the Company;
(h) amend or modify in any way its Certificate of Incorporation or
bylaws;
(i) reclassify, combine, split, subdivide or redeem or otherwise
repurchase any capital stock of the Company, or create, authorize, issue,
sell, deliver, pledge or encumber any additional capital stock (whether
authorized but unissued or held in treasury) or other securities equivalent
to or exchangeable for capital stock, or grant or otherwise issue any
options, warrants or other rights with respect thereto;
(j) acquire or agree to acquire by merging or consolidating with, or
by purchasing any portion of the capital stock, partnership interests or
assets of, or by any other manner, any business or any corporation, limited
liability company, partnership, association or other business organization
or division thereof;
(k) make any loan or advance (whether in cash or other property), or
make any investment in or capital contribution to, or extend any credit to,
any Person, except
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short-term investments pursuant to customary cash management policies;
(l) enter into any agreement with any labor union or association
representing any employee (other than the Union Contracts with
substantially the terms disclosed to the Company in SCHEDULE 4.15), or,
other than in the ordinary course consistent with the past practices of the
Company, make any wage or salary increase or bonus, agree to the payment of
severance to any employee, or increase in any other direct or indirect
compensation, for or to any of its officers, directors or employees;
(m) enter into, amend, terminate or fail to renew any Material
Contract except in the ordinary course of business consistent with past
practices;
(n) make any payment to Seller or any affiliate of any Seller or
forgive any indebtedness due or owing from Seller or any affiliate of
Seller to the Company;
(o) make any tax election or settle or compromise any tax liability
other than in the ordinary course of business, consistent with past
practices, and other than an election under Section 338(h)(10) of the Code
with respect to the transactions contemplated by this Agreement in
accordance with Section 7.2 hereof;
(p) fail to perform in all material respects all of its obligations
under all Material Contracts (except those being contested in good faith);
(q) fail to use all commercially reasonable efforts to maintain in
full force and effect and in the same amounts policies of insurance
comparable in amount and scope of coverage to that now maintained by the
Company;
(r) fail to use all commercially reasonable efforts to continue to
collect its accounts receivable in the ordinary course of business and
consistent with past practice;
(s) fail to prepare and file all Tax Returns or extensions required to
be filed by it;
(t) institute or amend any employee benefit plan except as may be
required by Law, or enter into or modify any written employment arrangement
with any individual; or
(u) enter into any agreement or commitment to do any of the foregoing.
5.4 EFFORTS TO CONSUMMATE. Subject to the terms and conditions of this
Agreement, each party hereto shall use reasonable efforts to take or cause to be
taken all actions and do or cause to be done all things required under
applicable Laws in order to consummate the transactions contemplated hereby,
including, without limitation, (a) obtaining all authorizations, consents and
approvals of any Person or Authority that are required for or in connection with
the consummation of the transactions contemplated hereby and by the other
documents describing the transactions
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contemplated hereby (collectively, the "Transaction Documents"), including,
without limitation, approvals required under the HSR Act, but not including any
consents or approvals required by any agreement, document or other instrument or
Permit that is excluded from Section 4.3 hereof pursuant to the last sentence
thereof, (b) taking any and all reasonable actions necessary to satisfy all of
the conditions to such party's obligations hereunder as set forth in Article 6,
and (c) executing and delivering all agreements and documents required by the
terms hereof to be executed and delivered by such party on or prior to the
Closing. Nothing in this Agreement shall be construed as an attempt or an
agreement by the Company to assign or cause the assignment of any contract or
agreement which is by Law nonassignable without the consent of the other party
or parties thereto, unless such consent shall have been given. Without limiting
the generality of the foregoing, on or prior to the Closing Date, Seller and the
Company shall have taken all reasonable steps necessary to cause the assignment
or transfer to Purchaser (or, if applicable, to the Company as the wholly-owned
subsidiary of Purchaser) of those contracts, agreements and other rights listed
on SCHEDULE 5.4 hereto.
5.5 NO SHOP. From the date of this Agreement until the earlier of (i) the
Closing Date, or (ii) the termination of this Agreement, Seller shall not, and
shall cause the Company and its officers, directors, employees, affiliates and
other agents not to, directly or indirectly, take any action to solicit,
initiate or encourage any offer or proposal or indication of interest in a sale,
merger, consolidation or other business combination involving any equity
interest in, or a substantial portion of the assets of the Company, other than
in connection with the transactions contemplated by this Agreement. Seller shall
immediately advise Purchaser of the terms of any written offer, proposal or
indication of interest that it or the Company receives or of which it otherwise
becomes aware after the date of this Agreement. If either Seller or the Company,
its officers, directors, employees, affiliates or agents violate any of the
provisions of this Section 5.5, and the transactions contemplated by this
Agreement do not close, in addition to other remedies available to Purchaser,
Seller shall promptly, on demand, pay and reimburse Purchaser all out-of-pocket
and professional fees and expenses incurred by Purchaser or any of its
affiliates in connection with this Agreement or any of the transactions
contemplated hereby.
5.6 NOTICE. The Company shall promptly notify Purchaser of any material
change in the normal course of the Company's businesses or in the operation of
its properties and of the receipt by the Company of notice of any governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated) or the receipt by the Company of a notice of the
institution or the threat of litigation involving the Company, and will keep
Purchaser fully informed with respect to such events.
5.7 PERFORMANCE BONDS. Seller, Shareholder, the Company and Purchaser shall
use their reasonable best efforts to cause the issuer thereof to transfer to
Purchaser the performance bonds listed on SCHEDULE 5.7 hereto (the "Performance
Bonds"); provided, however, that, at the Closing, Purchaser shall take all steps
necessary to substitute its own collateral for any collateral of Seller or
Shareholder securing the Performance Bonds.
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5.8 USE OF THE NAME. Seller, Shareholder and the Company will permit
Purchaser to use the name "UNICCO Security Services, Inc." in the conduct of its
business and the business of the Company through December 31, 1999, all in
accordance with the Tradename License Agreement substantially in the form of
EXHIBIT A hereto (the "Tradename License").
5.9 TERMINATION OF CERTAIN VEHICLES. Effective no later than the Closing
Date, (a) Seller shall have caused the Company to terminate any responsibilities
of the Company under the GE Fleet Service Master Lease Agreement (the "Master
Lease") with respect to certain vehicles used for personal use, a complete list
of which is set forth on SCHEDULE 5.9 hereto (the "Terminated Vehicles"), and
(b) Purchaser shall have entered into a new lease agreement for the continued
lease by the Company of the remaining Company vehicles under the Master Lease
(the "Retained Vehicles"). As of the Closing Date, the Company shall have no
obligation or liability with respect to any of the Terminated Vehicles.
5.10 USE OF OFFICE SPACE.
(a) Subject to Seller's receipt of the consent of the applicable
landlord, commencing on the Closing Date and continuing through December
31, 1999, Seller will permit the Company to use the office space described
in greater detail on SCHEDULE 5.10(A) hereto (the "Seller Space"), on the
terms and conditions set forth in a letter agreement substantially in the
form of EXHIBIT B hereto (the "Seller Space Agreement"). Seller shall use
its best efforts to (i) obtain the required consents of the applicable
landlords, and (ii) continue to lease the Seller Space through December 31,
1999.
(b) Commencing on the Closing Date and continuing for a period of 60
days after the Closing Date, the Company will permit Seller to use the
office space described in greater detail on SCHEDULE 5.10(B) hereto (the
"Company Space"), on the same terms and conditions on which Seller has used
the Company Space immediately prior to the date hereof; provided, however,
that Seller shall be permitted to use the Company Space free of charge.
Seller will use commercially reasonable efforts to vacate the Company Space
as soon as possible.
5.11 ASSUMPTION OF LIABILITIES. On or prior to the Closing, Seller shall
take all steps necessary to assume or otherwise discharge all outstanding
liabilities and obligations of the Company arising or attributable to events
occurring prior to the Closing (including, without limitation, those certain
letter agreements listed on SCHEDULE 4.20 hereto) (the "Excluded Liabilities").
In connection with the foregoing, at the Closing, Seller shall execute an
Assumption of Liabilities Agreement substantially in the form of EXHIBIT C
hereto (the "Assumption of Liabilities").
5.12 RELEASES. On or prior to the Closing, Seller shall take all steps
necessary to obtain releases on behalf of Seller, Shareholder and the Company in
respect of those obligations identified on SCHEDULE 4.3 hereto. In connection
with the foregoing, at the Closing, Seller shall deliver copies of such releases
(collectively, the "Releases") in form and substance reasonably acceptable to
Purchaser.
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5.13 VESTING OF RETIREMENT PLANS. On or prior to the Closing, Seller agrees
to take whatever action is necessary to cause employees of the Company who are
participants in Shareholder's 401(k) Plan to terminate their active
participation in Shareholder's 401(k) Plan, and to cause Shareholder's 401(k)
Plan to permit a distribution to participants of their vested account balances
in accordance with Section 401(k)(10)(A)(iii) of the Code in connection with the
transactions contemplated by this Agreement (subject to the repayment of any
loans from such plans to any such participants to the extent required to be
repaid under the terms of Shareholder's 401(k) Plan).
5.14 ASSIGNMENT OF CERTAIN CONTRACTS. On or prior to the Closing, Seller
shall have caused the assignment from the Company or, at the option of Seller,
the termination of, those contracts listed on SCHEDULE 5.14 hereto (the
"Terminated Contracts"). As of the Closing Date, the Company shall have no
obligation or liability with respect to any of the Terminated Contracts.
5.15 EMPLOYEE PAYMENTS. As soon as is reasonably practicable after the
Closing (but in no event later than 30 days after the Closing Date), Seller
shall estimate the total amount of vacation pay, sick leave pay and other
amounts accrued by, but not paid to (or assumed by Seller under the Assumption
of Liabilities), employees of the Company on or prior to the Closing Date
(collectively, the "Accrued Pay"), and shall pay to Purchaser, in cash, an
amount equal to 50% of such estimated amount (the "Estimated Payment"). On the
date one year after the Closing Date, Seller shall pay to Purchaser, in cash, an
amount equal to the excess, if any, of (i) any Accrued Pay that has been paid by
Purchaser, over (ii) the Estimated Payment; provided, however that Purchaser
shall provide Seller with such reasonable documentation as is requested by
Seller in connection with such payments by Purchaser. Notwithstanding the
foregoing, if Purchaser is not obligated to pay all of the Estimated Payment to
employees of the Company (whether because of early termination of such employees
or otherwise), Purchaser shall pay to Seller, in cash, on the date one year
after the Closing Date, an amount equal to the excess of (x) of the Estimated
Payment, over (y) any Accrued Pay that has been paid by Purchaser.
5.16 EMPLOYMENT AGREEMENTS. Each of Seller and Purchaser shall use
commercially reasonable efforts to cause each of Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxxx and Xxxxx X. Xxxxxxx to enter into employment agreements with the
Company (or Purchaser, if applicable), in form and substance reasonably
satisfactory to Purchaser.
5.17 ADVERSE CHANGES IN CONDITION. Seller agrees to give written notice
promptly to Purchaser upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its affiliates
which (i) is reasonably likely to have, individually or in the aggregate, a
material adverse effect on the business, properties or financial condition of
the Company, (ii) would cause or constitute a material breach of any of its
representations, warranties or covenants contained in Section 3 or 4 hereof, or
(iii) which is reasonably likely to result in Seller's, Shareholder's or the
Company's inability to perform its obligations under this Agreement. Purchaser
agrees to give written notice promptly to Seller upon becoming aware of the
occurrence of any event or circumstance which is reasonably likely to result in
Purchaser's inability to perform
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its obligations under this Agreement.
5.18 SUPPLEMENTS TO SCHEDULES. From time to time prior to the Effective
Time, the Company, Seller, Shareholder and Purchaser will each promptly
supplement or amend the respective Schedules that they have delivered pursuant
to this Agreement with respect to any matter arising after the date of this
Agreement that, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in any such Schedules or that is
necessary to correct any information in any such Schedules that has been
rendered inaccurate by such matter. No supplement or amendment to any such
Schedules shall have any effect for the purpose of determining satisfaction of
the conditions set forth in Sections 6.1(a) or 6.2(a); provided, however that
the disclosure in any such supplement or amendment to the Schedules with respect
to any matter occurring after the date hereof (which did not exist on the date
hereof) shall not form the basis of a claim for misrepresentation or breach of a
representation, warranty, covenant or agreement hereunder.
ARTICLE 6.
CONDITIONS TO CLOSING
6.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of Purchaser to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction at or prior to the Closing of each of the following conditions
precedent, any one or more of which may be waived by Purchaser:
(a) Each of the representations and warranties of Shareholder, Seller
and the Company set forth in Articles 3 and 4 hereof shall be true and
correct in all materials respects on and as of the date of this Agreement
and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date; provided, however, that any such representation
or warranty that is already qualified by "materiality" shall be true in all
respects.
(b) Seller and the Company shall have performed and complied in all
material respects with the agreements, covenants and obligations required
under this Agreement to be performed or complied with by Seller prior to or
at the Closing.
(c) Each of Seller and the Company shall furnish Purchaser with a
certificate of its appropriate officers as to compliance with the
conditions set forth in Sections 6.1(a) and (b) hereof.
(d) Purchaser shall have received an opinion, dated the Closing Date,
of Posternak, Xxxxxxxxxx & Xxxx, L.L.P., counsel to the Company and Seller,
substantially in the form of EXHIBIT D hereto.
(e) The Company shall not have suffered any material adverse change
after
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August 23, 1998 in its businesses, prospects, customer contracts, financial
condition, working capital, assets, liabilities (absolute, accrued,
contingent or otherwise), reserves, operations or results of operations,
taken as a whole.
(f) Each of the officers and directors of the Company shall have
tendered to Purchaser resignation letters in form and substance reasonably
acceptable to Purchaser on or prior to the Closing Date, such resignations
to be effective at the Effective Time.
(g) Seller and the Company shall have obtained all authorizations,
consents, waivers and approvals identified on SCHEDULE 5.4 hereto.
(h) All filings that are required to have been made by Seller or the
Company with any Authority in order to carry out the transactions
contemplated by this Agreement shall have been made; all authorizations,
consents and approvals from all Authorities required for Seller or the
Company to carry out the transactions contemplated by this Agreement shall
have been received; provided, however that nothing herein shall be deemed a
requirement that Seller obtain any approvals with respect to the Permits;
and all statutory waiting periods in respect thereof shall have expired.
There shall be in force no claim, proceeding, action, order or decree by or
before any Authority of competent jurisdiction restraining, enjoining,
prohibiting, invalidating or otherwise preventing (or seeking to prevent)
the consummation of the transactions contemplated hereby.
(i) No proceeding in which Seller or the Company shall be a debtor,
defendant or party seeking an order for his or its own relief or
reorganization shall have been brought or be pending by or against such
person or entity under any United States or state bankruptcy or insolvency
Law.
(j) Purchaser shall have received a certificate issued by the
Secretary of State of the state in which the Company is incorporated and of
each state in which the Company is qualified as a foreign corporation, as
of a recent date, as to the good standing, non-dissolution or foreign
qualification, as applicable, of the Company in such state(s).
(k) Seller shall have delivered to Purchaser (i) a copy of the
Company's Certificate of Incorporation, as amended to date, certified as of
a recent date by the Secretary of State of Delaware, and (ii) all corporate
minute books, stock transfer books, blank stock certificates and corporate
seals of the Company.
(l) Seller and the Company, as appropriate, shall have executed and
delivered:(i) an Assumption of Liabilities; (ii) a Tradename License; (iii)
if necessary landlord approvals have been obtained, the Seller Space
Agreement; (iv) the Transition Agreement, substantially in the form of
EXHIBIT E hereto; (v) the Subcontractor Agreements (x) regarding the
contracts identified on SCHEDULE 6.1(l) hereto, substantially in the form
of EXHIBIT F hereto, and (y) with Xxxx Communications Research, Inc.
(together with the contracts listed on SCHEDULE 6.1(l), the "Prime
Contracts"), substantially in the form of EXHIBIT G hereto, subject, in the
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case of all Subcontractor Agreements, to any changes that are reasonably
acceptable to Purchaser and consistent with the Prime Contracts; (vi) the
Preferred Provider Agreement (including commission schedule), substantially
in the form of EXHIBIT H hereto; and (vii) the side letter substantially in
the form of EXHIBIT I hereto.
(m) Purchaser shall have received the consents and approvals described
in SCHEDULES 2.2 AND 2.3 hereof.
(n) Purchaser shall have received evidence satisfactory to it to the
effect that (i) the Terminated Vehicles have been terminated, and (ii) the
Terminated Contracts have been terminated or assigned, and, in each case,
are of no further force or effect as against the Company.
(o) The Company shall have complied with its obligations under Section
5.13 hereof.
(p) Seller shall deliver to Purchaser, on behalf of the Company,
executed contracts, or renewals thereof, or notifications of renewals
thereof, in form and substance reasonably acceptable to Purchaser, between
the Company and the parties listed on SCHEDULE 6.1(P) hereto.
(q) Seller shall have delivered to Purchaser the Releases, in form and
substance reasonably acceptable to Purchaser.
(r) Seller shall have complied with its obligations under Section 5.15
hereof.
(s) Early termination shall have been granted or applicable waiting
periods shall have expired under the HSR Act.
6.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller and
Shareholder to consummate the transactions contemplated by this Agreement are
subject to the satisfaction at or prior to the Closing of each of the following
conditions precedent, any one or more of which may be waived by Seller:
(a) Each of the representations and warranties of Purchaser set forth
in Article 2 shall be true and correct in all material respects on and as
of the date of this Agreement and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date; provided,
however, that any such representation or warranty that is already qualified
by "materiality" shall be true in all respects.
(b) Purchaser shall have performed and complied in all material
respects with the agreements, covenants and obligations required under this
Agreement to be performed or complied with by Purchaser prior to or at the
Closing.
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(c) Purchaser shall furnish Seller with a certificate of its
appropriate officers as to compliance with the conditions set forth in
Sections 6.2(a) and (b) hereof.
(d) All filings that are required to have been made by Purchaser with
any Authority in order to carry out the transactions contemplated by this
Agreement shall have been made; all authorizations, consents and approvals
from all Authorities required for Purchaser to carry out the transactions
contemplated by this Agreement shall have been received; and all statutory
waiting periods in respect thereof shall have expired.
(e) There shall be in force no claim, proceeding, action, order or
decree by or before any Authority of competent jurisdiction restraining,
enjoining, prohibiting, invalidating or otherwise preventing (or seeking to
prevent) the consummation of the transactions contemplated hereby.
(f) No proceeding in which Purchaser shall be a debtor, defendant or
party seeking an order for its own relief or reorganization shall have been
brought or be pending by or against Purchaser under any United States or
state bankruptcy or insolvency Law.
(g) Seller shall have obtained the Releases, in form and substance
reasonably acceptable to Seller.
(h) Seller shall have received the legal opinion of Purchaser's
counsel, King & Spalding, substantially in the form of EXHIBIT J hereto.
(i) Early termination shall have been granted or applicable waiting
periods shall have expired under the HSR Act.
(j) Neither Seller nor Shareholder shall have any collateral, letter
of credit or other obligation in respect of the Performance Bonds.
(k) Purchaser shall have received the consents and approvals described
in SCHEDULES 2.2 AND 2.3 hereof.
(l) Purchaser shall have complied with its obligations under Section
5.9 hereof.
6.3 MATERIALITY DEFINED. For purposes of this Article 6, a condition to
closing will be considered "material" if, in the aggregate, all adverse
conditions applicable to Seller or Purchaser, as the case may be (offset by all
beneficial conditions, if any arising since August 23, 1998), equal or exceed
$175,000 of operating income.
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ARTICLE 7.
ADDITIONAL AGREEMENTS
7.1 FURTHER ASSURANCES. The parties hereto shall deliver any and all other
instruments or documents required to be delivered pursuant to, or necessary or
proper in order to give effect to, all of the terms and provisions of this
Agreement including, without limitation, all necessary stock powers and such
other instruments of transfer as may be necessary or desirable to transfer
ownership of the Shares.
7.2 CERTAIN TAX MATTERS.
(a) Seller will join with Purchaser in making an election under
Section 338(h)(10) of the Code and Treasury Regulations Section
1.338(h)(10)-1 (and any corresponding elections under any applicable state
and local Laws) (collectively, a "Section 338(h)(10) Election") with
respect to the purchase and sale of the Shares hereunder. Seller will pay
any Tax attributable to the making of the Section 338(h)(10) Election
(including, without limitation, any Tax arising as the result of the
recognition of any built-in gain pursuant to the provisions of Section 1374
of the Code and any Tax arising as the result of the "recapture" of
previously deducted items) and Seller will indemnify Purchaser and the
Company from and against any and all damages, penalties, fines, costs,
reasonable amounts paid in settlement, liabilities, obligations, losses,
expenses and fees (including court costs and reasonable attorneys' fees and
expenses), including, as the context may require, any of the foregoing
which arise out of or in connection with any actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands,
injunctions, judgments, orders or rulings arising out of any failure to pay
such Tax.
(b) Seller will be responsible for preparing and filing all income or
franchise Tax Returns of the Company relating to Tax periods ending on or
before the Closing Date. Purchaser will be responsible for preparing and
filing the Section 338(h)(10) election (provided that Seller shall provide
such written consents and other items required by Seller to make such
election) all income and franchise Tax Returns of the Company relating to
periods beginning on or after the Closing Date. After the Closing has
occurred, Purchaser will cause the Company to provide, or cause to be
provided, to Seller, without charge, any information that may reasonably be
requested by Seller in connection with the preparation of any Tax Returns
relating to pre-Closing Tax periods.
(c) The parties hereto agree to cooperate with one another to allocate
the Purchase Price in a manner reasonably acceptable to the parties. Such
agreed allocation shall be binding on the Seller and Purchaser and their
respective affiliates for all purposes (including without limitation,
financial accounting purposes, financial and regulatory reporting purposes
and tax purposes) and none of the parties or such affiliates shall take for
tax purposes any position in any tax return, report, form, declaration or
questionnaire that is inconsistent with such allocation.
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7.3 LITIGATION SUPPORT. In the event and for so long as any party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any fact, situation,
circumstance, status, condition, activity, practice, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the parties will cooperate with the contesting or
defending party and its or their counsel in the contest or defense, all at the
sole cost and expense of the contesting or defending party (except to the extent
the contesting or defending party is entitled to indemnification therefor under
this Agreement).
7.4 NONCOMPETITION AND CONFIDENTIAL INFORMATION
(a) DEFINITIONS. For the purposes of this Section 7.4, the following
definitions shall apply:
(i) "Company Activities" shall mean the business of providing
commercial security services, including the provision of any armed
guard services, protection services, access control, fire and safety
administration (as provided by the Company prior to the Closing), and
road and highway distress services.
(ii) "Confidential Information" shall mean any data or
information of the Company, other than Trade Secrets, that is valuable
to the Company and not generally known to competitors of the Company.
(iii) "Noncompete Period" or "Nonsolicitation Period" shall mean
the period beginning the Closing Date and ending on the third
anniversary of the Closing Date.
(iv) "Territory" shall mean the areas where the Company conduct
business as of the Closing Date and surrounding areas into which
Purchaser has plans of expanding the business of the Company. The
Territory includes areas where customers or actively sought
prospective customers of the Company are located. For purposes of
reference, such areas include the entire United States.
(v) "Trade Secrets" shall mean information, without regard to
form, including, but not limited to, technical or nontechnical data, a
formula, pattern, compilation, program, device, method, technique,
drawing, process, financial data, financial plan, product plan, list
of actual or potential customers or suppliers, or other information
similar to any of the foregoing, which derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can derive
economic value from its disclosure or use, and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy.
(b) TRADE SECRETS. Seller and Shareholder shall hold, and shall cause
their
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respective officers, directors, officers, employees and agents
(collectively, together with Seller and Shareholder, the "Seller Group") to
hold, in confidence at all times after the date hereof, all Trade Secrets,
and shall not disclose, publish or make use at any time after the date
hereof of (or permit the disclosure, publishing or use by any member of the
Seller Group of) Trade Secrets without the prior written consent of
Purchaser, or unless required by law or legal proceeding, and then only to
the extent so required, and provided that prompt written notice of such
disclosure shall be delivered to Purchaser. Nothing in this Agreement shall
diminish the Company's or Purchaser's rights regarding the protection of
trade secrets pursuant to applicable Law.
(c) CONFIDENTIAL INFORMATION. Seller and Shareholder hereby agree that
during the Noncompete Period, Seller and Shareholder shall, and shall cause
the members of the Seller Group to, hold in confidence all Confidential
Information and will not (and will not permit members of the Seller Group
to) (other than as an employee of or a consultant to the Company or to
Purchaser or an affiliate of Purchaser) disclose, publish or make use of
Confidential Information without the prior written consent of the Company
which is the source of the Confidential Information, or unless required by
law or legal proceeding, and then only to the extent so required, and
provided that prompt written notice of such disclosure shall be delivered
to Purchaser.
(d) NONCOMPETITION.
(i) COVERAGE AND ACKNOWLEDGMENT. Seller and Shareholder
acknowledge that the Company conducts Company Activities throughout
the Territory and that to protect adequately the interest of Purchaser
in the business of the Company it is essential that any noncompete
covenant with respect thereto cover all Company Activities and the
entire Territory. Seller and Shareholder further acknowledge that in
developing the business of the Company, Seller and Shareholder have
developed substantial personal contacts and strong business and
personal ties and goodwill within the Territory and that the benefits
of these ties and goodwill are an essential factor in Purchaser's
acquisition of the Company. Because of the value to Purchaser of these
contacts, ties and goodwill, Seller and Shareholder make the covenants
in this Section 7.4(d) and Section 7.4(e) below.
(ii) COVENANT. Seller and Shareholder hereby agrees that they
shall not, during the Noncompete Period, directly or indirectly,
engage in or have an equity or profit interest in or render services
(of an executive, marketing, administrative, financial or consulting
nature) to any business that, directly or indirectly, is engaged in
the conduct of Company Activities in the Territory. Notwithstanding
anything in this Section 7.4(d) to the contrary, nothing contained
herein shall prohibit Seller or Shareholder from (A) acquiring not
more than five percent (5%) of any company whose common stock is
publicly traded on a national securities exchange or in the
over-the-counter market, (B) performing Company Activities under any
contract to
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the extent the performance of Company Activities under the terms of
such contract involves less than 168 permanent man hours per week; (C)
performing its obligations under the terms of the Agreement dated
October 1, 1996, between Shareholder and General Services
Administration; and (D) engaging in any Company Activities if (x) the
opportunity to provide such Company Activity was first offered to
Purchaser in accordance with the Preferred Provider Agreement and was
not accepted by Purchaser, and (y) Seller has used its reasonable best
efforts to subcontract such Company Activity (including, without
limitation, by offering such Company Activity to subcontractors that
are reasonably acceptable to Seller on commercially reasonable terms).
(e) NONSOLICITATION. Seller and Shareholder hereby agree that they
shall not, during the Nonsolicitation Period, in any manner (other than as
an employee of or a consultant to the Company or to Purchaser or an
affiliate of Purchaser), directly or by assisting others:
(i) solicit or attempt to solicit any business from any of the
Company's or Purchaser's customers, including actively sought
prospective customers, for purposes of providing products or services
that constitute Company Activities; or
(ii) solicit or attempt to solicit, on Seller's or Shareholder's
behalf, or on behalf of any other Person, any employee of the Company
(or any employee of Purchaser or its affiliates who was an employee of
the Company immediately prior to the Closing) while such Person is
employed by the Company, Purchaser or its affiliates.
(f) SEVERABILITY. If a judicial determination is made that any of the
provisions of this Section 7.4 constitutes an unreasonable or otherwise
unenforceable restriction against Seller or Shareholder, the provisions of
this Section 7.4 shall be rendered void only to the extent that such
judicial determination finds such provisions to be unreasonable or
otherwise unenforceable. In this regard, Seller, Shareholder and Purchaser
hereby agree that any judicial authority construing this Agreement shall be
empowered to sever any portion of the Territory, any prohibited business
activity or any time period from the coverage of this Section 7.4 and to
apply the provisions of this Section 7.4 to the remaining portion of the
Territory, the remaining business activities and the remaining time period
not so severed by such judicial authority. Moreover, notwithstanding the
fact that any provision of this Section 7.4 is determined not to be
specifically enforceable, Purchaser shall nevertheless be entitled to
recover actual monetary damages as a result of the breach of such provision
by Seller and/or Shareholder.
ARTICLE 8.
INDEMNIFICATION
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8.1 SELLER AND SHAREHOLDER
(a) INDEMNITY. Seller and Shareholder shall, jointly and severally,
defend and indemnify Purchaser and hold the Purchaser wholly harmless from
and against any and all losses, liabilities, damages, costs (including,
without limitation, court costs) and expenses (including, without
limitation, reasonable attorneys' fees) (collectively, "Damages") that
Purchaser or the Company incurs as a result of, or with respect to:
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement by or on behalf of Shareholder, Seller or the
Company contained in this Agreement or contained in any certificate,
agreement or document of Shareholder, Seller or the Company delivered
to Purchaser in connection with the consummation of the transactions
contemplated hereunder;
(ii) any direct costs or expenses associated with any arbitration
award in the Xxxx Atlantic union dispute (including, without
limitation, any legal fees, back benefits or back pay owed, but not
including any consequential losses resulting therefrom);
(iii) the Excluded Liabilities (including, without limitation,
the Terminated Contracts, Terminated Vehicles, and any liability
incurred in respect of any EEOC claims or other litigation relating to
events occurring prior to the Closing Date);
(iv) any liabilities for Taxes levied on or calculated based upon
the revenues or income of the Company and payable by the Company on or
after the Closing Date with respect to any taxable period ending on or
prior to the Closing Date (treating any taxable period that begins
before and ends after the Closing Date as if such taxable period had
ended on the Closing Date), to the extent such liabilities exceed any
reserves for Tax liabilities on the Financial Statements.
(b) CLAIMS. In the event that Purchaser shall receive written notice
of any claim or proceeding against Purchaser or the Company that, if
successful, might result in a claim under Section 8.1(a) by Purchaser,
Purchaser shall give Seller prompt written notice of such claim or
proceeding and shall permit Seller to participate in the defense of, or, at
Seller's option, to assume the defense of, such claim or proceeding by
counsel of Seller's own choosing and at the sole cost and expense of
Seller. If Seller assumes the defense of such claim, Seller shall keep
Purchaser informed of the progress of the claim, and shall consult with
Purchaser in good faith regarding actions to be taken in respect of such
claim; provided, however, that if, in the reasonable opinion of Purchaser,
Seller does not diligently pursue the defense of such claim, Purchaser
shall be entitled to take over the defense of such claim at the sole cost
and expense of Seller, including, without limitation by hiring counsel of
Purchaser's own choosing for the defense of such claim. Seller will not
settle any such claim without the prior written consent of Purchaser;
provided, however that if Purchaser elects not to accept such settlement,
Purchaser may elect to continue the defense of such claim at the
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sole cost and expense of Purchaser; provided further, however, that (i) if
the liability in respect of such claim as finally determined is greater
than the liability that would have resulted from the acceptance of the
settlement in question, Seller shall only be liable in respect of such
claim for the amount of such settlement, plus costs and expenses through
the date of such settlement; and (ii) if the liability in respect of such
claim as finally determined is less than the liability that would have
resulted from the acceptance of the settlement in question, Seller shall
promptly reimburse Purchaser, in cash, for any costs and expenses incurred
by Purchaser (including without limitation reasonable legal expenses) in
respect of the pursuit of such claim; provided, however that Seller shall
not be obligated to pay or reimburse Purchaser for amounts in excess of the
amounts Seller would have been required to pay had such settlement been
accepted. Within ten business days of the final determination of the merits
and amount of such claim (after the expiration of all applicable appeal
periods), Seller shall pay to Purchaser immediately available funds in an
amount equal to the claim as so determined.
(c) TIME TO ASSERT CLAIM. Except as otherwise provided in this Section
8.1(c), the representations and warranties of Seller, Shareholder and the
Company shall survive until June 30, 2000, and any claim for
indemnification by Purchaser under Section 8.1(a)(i) hereof shall be
asserted by written notice to Seller on or before such date. On June 30,
2000, any matters as to which a claim has been asserted under Section
8.1(a)(i) shall continue to be covered by Section 8.1(a)(i) until finally
terminated or resolved. It is specifically acknowledged and agreed to that
the foregoing time limitation shall not be applicable with respect to a
claim for indemnification based upon the breach or inaccuracy of a
representation, warranty, covenant or agreement contained in Sections 3.1
(Seller's Organization, Good Standing, Power and Authority), 3.2
(Authorization), 3.4 (Consents and Approvals), 3.5 (Ownership of the
Shares), 3.6 (Power, Authority and Ownership of Shareholder), 4.1 (the
Company's Organization, Good Standing, Power and Authority), 4.2
(Authorization), 4.5 (Capitalization), 4.10 (Tax Matters), 4.14 (Employee
Matters), 4.22 (Brokers), 5.11 (Assumption of Liabilities), 5.12
(Releases), 5.13 (Vesting of Retirement Plans), 5.14 (Assignment of Certain
Contracts), 5.15 (Employee Payments), 7.2 (Certain Tax Matters), 7.4
(Noncompetition and Confidential Information), 8.1(a)(ii), 8.1(a)(iii) or
8.1(a)(iv) (the "Seller Surviving Matters") and there shall be no time
limit for any claim for indemnification for Seller Surviving Matters;
provided, however that such time period shall not be construed as any
attempted extension or waiver of any applicable statute of limitations.
(d) LIMITATIONS ON LIABILITY. Notwithstanding any implication to the
contrary contained herein, Seller and Shareholder shall have no liability
with respect to the breach of any representation, warranty, covenant or
obligation to be performed or complied with under the Agreement or with
respect to any indemnification under Section 8.1(a) hereof, until the total
amount of all Damages with respect to such matters exceeds $100,000
(including costs, expenses and liabilities incurred by Purchaser that would
not be considered "material" under the terms of Articles 3 and 4 hereof),
and then only for amounts by which such Damages
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41
exceed $100,000; provided, however, that the foregoing limitation shall not
apply to any Damages in respect of accounts payable, accrued wages, accrued
taxes, other accruals in accordance with GAAP, taxes payable, workers'
compensation claims (including incurred but not recorded claims), pension
plan claims, outstanding debt, and any claims described on Schedules 4.17
(loss runs only), 4.19 and 4.22 hereof. Furthermore, Seller and Shareholder
shall have no liability with respect to any of the foregoing for amounts in
excess of $12,000,000 in the aggregate. Notwithstanding the foregoing,
nothing contained herein shall limit Seller's or Shareholder's liability
under this Agreement to the extent such liability results from fraud or
wilful misconduct of Seller or Shareholder.
(e) LIMITATION ON THE SCOPE OF INDEMNIFICATION. Notwithstanding the
foregoing, Purchaser will not be entitled to indemnification with respect
to punitive damages, except in the case of fraud or wilful misconduct by
Seller or Shareholder. Any indemnification amounts payable by Seller or
Shareholder to Purchaser under this Section 8.1 shall be calculated after
giving effect to (i) any proceeds (net of retro-premium adjustments and
other expenses) actually received by Purchaser from insurance policies
covering the Damage that is the subject of such claim for indemnity; and
(ii) the actual recognized tax benefit (taking into account the timing of
the receipt of such benefit) resulting from the Damage that is the subject
of such claim for indemnity. For purposes of this Section 8.1(e), an actual
recognized tax benefit is an actual reduction in taxes payable or a refund
of taxes previously paid after taking into account the tax impact of any
indemnification from Seller or Shareholder.
8.2 PURCHASER.
(a) INDEMNITY. Purchaser shall defend and indemnify Seller, and hold
Seller wholly harmless from and against any and all Damages that Seller or
Shareholder incurs as a result of, or with respect to,
(i) any inaccuracy in or breach of any representation, warranty,
covenant or agreement by or on behalf of Purchaser contained in this
Agreement or contained in any certificate, agreement or document of
Purchaser delivered to Seller in connection with the consummation of
the transactions contemplated hereunder; or
(ii) any liability of the Company relating to the business of the
Company conducted on or after the Closing, including, without
limitation, any liability arising with respect to the use of the name
"UNICCO Security Services, Inc." by Purchaser and the occupance of the
Seller Space by Purchaser.
(b) CLAIMS. In the event that Seller or Shareholder shall receive
written notice of any claim or proceeding against Seller or Shareholder
that, if successful, might result in a claim under Section 8.1(a) by Seller
or Shareholder, Seller shall give Purchaser prompt written notice of such
claim or proceeding and shall permit Purchaser to participate in the
defense of, or, at Purchaser's option, to assume the defense of, such claim
or proceeding by
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42
counsel of Purchaser's own choosing and at the sole cost and expense of
Purchaser. If Purchaser assumes the defense of such claim, Purchaser shall
keep Seller informed of the progress of the claim, and shall consult with
Seller in good faith regarding actions to be taken in respect of such
claim; provided, however, that if, in the reasonable opinion of Seller,
Purchaser does not diligently pursue the defense of such claim, Seller
shall be entitled to take over the defense of such claim at the sole cost
and expense of Purchaser, including, without limitation by hiring counsel
of Seller's own choosing for the defense of such claim. Purchaser will not
settle any such claim without the prior written consent of Seller;
provided, however that if Seller elects not to accept such settlement,
Seller may elect to continue the defense of such claim at the sole cost and
expense of Seller; provided further, however (i) if the liability in
respect of such claim as finally determined is greater than the liability
that would have resulted from the acceptance of the settlement in question,
Purchaser shall only be liable in respect of such claim for the amount of
such settlement, plus costs and expenses through the date of such
settlement; and (ii) if the liability in respect of such claim as finally
determined is less than the liability that would have resulted from the
acceptance of the settlement in question, Purchaser shall promptly
reimburse Seller, in cash, for any costs and expenses incurred by Seller
(including without limitation reasonable legal expenses) in respect of the
pursuit of such claim; provided, however that Seller shall not be obligated
to pay or reimburse Purchaser for amounts in excess of the amounts Seller
would have been required to pay had such settlement been accepted. Within
ten business days of the final determination of the merits and amount of
such claim (after the expiration of all applicable appeal periods), Seller
shall pay to Purchaser immediately available funds in an amount equal to
the claim as so determined.
(c) TIME TO ASSERT CLAIM. Except as otherwise provided in this Section
8.2(d), any claim for indemnification by Seller under Section 8.2(a) hereof
shall be asserted by June 30, 2000. Any matters as to which a claim has
been asserted under Section 8.2(a) on or June 30, 2000 shall continue to be
covered by Section 8.2(a) until finally terminated or resolved.
(d) LIMITATIONS ON LIABILITY. Notwithstanding any implication to the
contrary contained herein, Purchaser shall have no liability with respect
to the breach of any representation, warranty, covenant or obligation to be
performed or complied with under the Agreement or with respect to
indemnification under Section 8.2(a) hereof, until the total amount of all
Damages with respect to such matters exceeds $100,000, and then only for
amounts by which such Damages exceed $100,000. Furthermore, Purchaser shall
have no liability with respect to any of the foregoing for amounts in
excess of $12,000,000 in the aggregate. Notwithstanding the foregoing,
nothing contained herein shall limit Purchaser's liability under this
Agreement to the extent such liability results from fraud or wilful
misconduct of Purchaser.
(e) LIMITATION ON THE SCOPE OF INDEMNIFICATION. Notwithstanding the
foregoing, neither Seller nor Shareholder will be entitled to
indemnification with respect to punitive damages, except in the case of
fraud or wilful misconduct by Purchaser. Any
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43
indemnification amounts payable by Purchaser to Seller or Shareholder under
this Section 8.2 shall be calculated after giving effect to (i) any
proceeds (net of retro-premium adjustments and other expenses) actually
received by Seller or Shareholder from insurance policies covering the
Damage that is the subject of such claim for indemnity; and (ii) the actual
recognized tax benefit (taking into account the timing of the receipt of
such benefit) resulting from the Damage that is the subject of such claim
for indemnity. For purposes of this Section 8.2(e), an actual recognized
tax benefit is an actual reduction in taxes payable or a refund of taxes
previously paid after taking into account the tax impact of any
indemnification from Purchaser.
ARTICLE 9.
MODIFICATION, WAIVERS AND TERMINATION
9.1 MODIFICATION. The parties hereto may, by mutual consent, amend, modify
or supplement this Agreement in such manner as may be agreed upon by them in
writing at any time.
9.2 WAIVERS. Purchaser, by an instrument in writing, may extend the time
for or waive the performance of any of the obligations of Seller or Shareholder
or waive compliance by Seller or Shareholder with any of the covenants or
conditions of Seller and Shareholder contained herein, and Seller, by an
instrument in writing, may extend the time for or waive the performance of any
of the obligations of Purchaser or waive compliance by Purchaser with any of the
covenants or conditions of Purchaser contained herein.
9.3 TERMINATION. This Agreement may be terminated, and the transactions
contemplated hereby abandoned, prior to the Closing as follows:
(a) by Purchaser and Seller by mutual written consent at any time;
(b) by Purchaser by giving written notice to Seller at any time (i) in
the event Seller has breached any of its representations, warranties,
covenants or agreements contained in this Agreement in any material
respect, Purchaser has notified Seller of the breach and the breach has
continued without cure for a period of ten days after the notice of breach,
or (ii) if Purchaser reasonably determines in good faith that there will be
any change in the Company's relationships with its customers after the date
of this Agreement that will have a material adverse effect (as such term is
defined in Section 6.3 hereof) on the Company's ongoing business; provided,
however, that the receipt by Purchaser or Seller of any oral or written
notice to the effect that any customer intends to terminate or put to bid
any Material Contract, the loss of which would result in a "material
adverse effect" as defined in Section 6.3 hereof, shall be grounds for
termination for purposes of this Section 9.3), or (iii) subject to
satisfaction of the conditions to Closing set forth in Sections 6.1(s) and
6.2(i) hereof, if the Closing shall not have occurred on or before December
1, 1998 (unless the failure results (x) primarily from Purchaser itself
breaching any representation, warranty, covenant or agreement of Purchaser
contained in this Agreement; or (y) from an inability of Seller to
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44
satisfy the conditions to Closing set forth in Sections 6.1(g), (n), (o),
(p) or (q) hereof, in which event this Agreement shall not terminate, and
the Closing shall be delayed until such time as such condition or
conditions shall be satisfied; provided, however, that any delay in the
Closing pursuant to this clause (y) shall not extend beyond January 31,
1999);
(c) by Seller by giving written notice to Purchaser at any time (i) in
the event Purchaser has breached any representation, warranty, covenant or
agreement of Purchaser contained in this Agreement in any material respect,
Seller has notified Purchaser of the breach, and the breach has continued
without cure for a period of ten days after the notice of breach, or (ii)
subject to satisfaction of the conditions to Closing set forth in Sections
6.1(s) and 6.2(i) hereof, if the Closing shall not have occurred on or
before December 1, 1998 (unless the failure results primarily from (x)
Seller or Shareholder breaching any of their respective representations,
warranties, covenants or agreements contained in this Agreement), or (y) an
inability to satisfy the conditions to Closing set forth in Section 6.2(l)
hereof, in which event this Agreement shall not terminate, and the Closing
shall be delayed until such time as such condition or conditions shall be
satisfied; provided, however, that any delay in the Closing pursuant to
this clause (y) shall not extend beyond January 31, 1999); or
(d) by Seller or by Purchaser at any time prior to the Closing Date if
the Closing shall violate any order, decree or judgment of any court or any
Authority having competent jurisdiction.
9.4 EFFECT OF TERMINATION. In the event this Agreement is terminated
pursuant to Section 9.3 hereof, all rights and obligations of the parties
hereunder shall terminate without liability of any party to any other party;
provided, however, that the provisions of this Section 9.4 and Section 10.7
shall remain in full force and effect.
ARTICLE 10.
MISCELLANEOUS
10.1 NOTICES. Any notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and, except as
otherwise specified in writing, shall be given by personal delivery, facsimile
transmission, FedEx (or other similar courier service) or by registered or
certified mail, postage prepaid, return receipt requested (a) if to Purchaser,
c/o AHL Services, Inc., 3353 Peachtree Road, N.E., Xxxxx 0000, Xxxxx Xxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxx X. Xxxxxx, Telecopy No.: 000-000-0000;
with a copy to: King & Spalding, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000-0000, Attention: Xxxxxxx X. Xxxxxxxx, Telecopy No.: 404- 572-5100; and (b)
if to Seller or Shareholder, c/o UNICCO Service Company, Four Xxxxxx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx, CFO; with a copy to:
Posternak, Xxxxxxxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000-0000, Attention: Xxxx Xxxxxxxxx, or to such other addresses
as any party hereto may from time to time give notice of (complying as to
delivery with the terms of this Section 10.1) to the other. Notice by registered
or
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45
certified mail shall be effective three days after deposit in the United States
mail. Notice by any other permitted means will be effective upon receipt.
10.2 ENTIRE AGREEMENT. This Agreement (including the Annex and all of the
Schedules and Exhibits attached hereto) constitutes the entire agreement among
the parties hereto with respect to the transactions contemplated hereby and
supersedes all prior agreements, understandings, negotiations and discussions,
both written and oral, among the parties hereto with respect to thereto. Annex I
hereto lists all of the Schedules and Exhibits to this Agreement.
10.3 BENEFITS; BINDING EFFECT; ASSIGNMENT. This Agreement shall be for the
benefit of and binding upon the parties hereto, their respective successors and,
where applicable, assigns. No party may assign this Agreement or any of its
rights, interests or obligations hereunder without the prior approval of the
other party; provided, however, that (i) before the Closing is effected,
Purchaser may (A) assign any or all of its rights and interests hereunder to one
or more of its affiliates, and (B) designate one or more of its affiliates to
perform its obligations hereunder (but in any or all of such cases Purchaser
shall nonetheless remain responsible for the performance of all of its
obligations hereunder), and (ii) after the Closing is effected, any or all of
the rights and interests of Purchaser hereunder (A) may be assigned to any
purchaser of substantially all of the assets of Purchaser, (B) may be assigned
as a matter of law to the surviving entity in any merger of Purchaser, and (C)
may be assigned as collateral security to any lender or lenders (including any
agent for any such lender or lenders) providing financing to Purchaser in
connection with the transactions contemplated hereby, or to any assignee or
assignees of any such lender, lenders or agent.
10.4 WAIVER. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly so provided.
10.5 NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any Person
other than the parties hereto and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
10.6 SEVERABILITY. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be
more narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
10.7 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be
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46
consummated, all legal, accounting and other costs and expenses incurred in
connection with this Agreement and any of the transactions contemplated hereby
on behalf of Purchaser shall be borne and paid by Purchaser (including without
limitation fees incurred in respect of any HSR filings made by Purchaser in
respect of the transactions contemplated by this Agreement), and all such costs
and expenses incurred on behalf of the Company or Seller shall be borne and paid
by Seller whether or not included in the Interim Financial Statements
(including, without limitation fees incurred in respect of any HSR filings made
by Seller or Shareholder in respect of the transactions contemplated by this
Agreement).
10.8 HEADINGS. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of any provisions of this Agreement. Unless otherwise specified,
all references to Articles, Sections, Exhibits and Schedules are references to
Articles, Sections, Exhibits and Schedules of this Agreement.
10.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
shall be deemed to be one and the same instrument.
10.10 GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the domestic Laws of the State of Georgia, without giving effect
to any choice of Law or conflicting provision or rule (whether of the State of
Georgia or any other jurisdiction) that would cause the Laws of any jurisdiction
other than the State of Georgia to be applied. Notwithstanding the foregoing,
any suit for the enforcement of this Agreement may be brought in the courts of
the Commonwealth of Massachusetts or the State of Georgia, and all parties
consent to the jurisdiction of such courts and to the service of process in any
such suit being made upon any party by mail at its address set forth above.
10.11 EQUITABLE REMEDIES. The parties agree that the assets and business of
the Company as a going concern constitute unique property and that there is no
adequate remedy at law for the damage which any party might sustain for failure
of the other parties to consummate the transactions contemplated by this
Agreement, and accordingly, each party shall be entitled, at its option, to the
remedy of specific performance to enforce the consummation of the transactions
described in this Agreement. Further, Seller hereto acknowledges and agrees that
Purchaser would not have an adequate remedy at law in the event any of the
provisions of Sections 7.2 and 7.4 of this Agreement are not performed in
accordance with their specific terms or are breached. Accordingly, each of the
parties hereto agrees that Purchaser shall be entitled to an injunction or
injunctions to prevent breaches of Sections 7.2 and 7.4 of this Agreement and to
enforce specifically the terms and provisions hereof in any action instituted in
any court of competent jurisdiction, in addition to any other remedies which may
be available to it. Neither rescission nor reformation of this Agreement shall
be available as a remedy to any of the parties hereto.
10.12 CONSTRUCTION. The provisions of this Agreement shall be construed
according to their fair meaning and neither for nor against any party hereto
irrespective of which party caused such
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47
provisions to be drafted. Each of the parties acknowledge that it has been
represented by an attorney in connection with the preparation and execution of
this Agreement.
10.13 KNOWLEDGE DEFINED. The terms "to the best knowledge of the Company
and Seller" or any similar phase used in this Agreement means the knowledge of a
responsible officer of the Company or Seller, after making appropriate inquiries
into the matter in question.
- SIGNATURES ON THE FOLLOWING PAGE -
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48
IN WITNESS WHEREOF, the parties hereto have each executed and delivered
this Agreement as of the day and year first above written.
PURCHASER:
---------
XXXXXXXXXXX SECURITY, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Title: Vice President and
-------------------------
Chief Financial Officer
-------------------------
THE COMPANY:
-----------
UNICCO SECURITY SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Title: Authorized signatory
--------------------------
SELLER:
------
USC, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Title: President
--------------------------
- SIGNATURES CONTINUE ON THE FOLLOWING PAGE -
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49
SHAREHOLDER
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UNICCO SERVICE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Title: Chief Executive Officer
-------------------------
