EXHIBIT 2.5
AGREEMENT AND PLAN OF REORGANIZATION
dated as of the ____ day of February, 1998
by and among
UNITED ROAD SERVICES, INC.
▇▇▇▇▇ AUTO WORKS, INC.
and
the STOCKHOLDERS named herein
TABLE OF CONTENTS
Page
1. THE MERGER 1
1.1 Delivery and Filing of Articles of Merger 1
1.2 Effective Time of the Merger 2
1.3 Certificate of Incorporation, Bylaws and Board of
Directors of Surviving Corporation 2
1.4 Certain Information With Respect to the Capital Stock
of the COMPANY and URSI 2
1.5 Effect of Merger 3
2. CONVERSION OF STOCK 3
2.1 Manner of Conversion 3
2.2 Calculation of URSI Shares 4
3. DELIVERY OF SHARES 4
4. PRE-CLOSING 5
4.1 Pre-Closing 5
4.2 Closing 5
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND
STOCKHOLDERS 6
(A) Representations and Warranties of COMPANY and
STOCKHOLDERS 6
5.1 Due Organization 7
5.2 Authorization 7
5.3 Capital Stock of the COMPANY 7
5.4 Transactions in Capital Stock 8
5.5 No Bonus Shares 8
5.6 Subsidiaries 8
5.7 Predecessor Status; etc 8
5.8 Spin-off by the COMPANY 8
5.9 Financial Statements 9
5.10 Liabilities and Obligations 9
5.11 Accounts and Notes Receivable 10
5.12 Permits and Intangibles 11
5.13 Environmental Matters 11
5.14 Real and Personal Property 12
5.15 Significant Customers; Material Contracts and
Commitments 13
5.16 Intentionally Omitted 14
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5.17 Insurance 14
5.18 Compensation; Employment Agreements 14
5.19 Employee Plans 14
5.20 Compliance with ERISA 16
5.21 Conformity with Law 19
5.22 Taxes 19
5.23 No Violations 23
5.24 Government Contracts 23
5.25 Absence of Changes 23
5.26 Deposit Accounts; Powers of Attorney 25
5.27 Validity of Obligations 25
5.28 Relations with Governments 25
5.29 Disclosure 25
(B) Representations and Warranties of STOCKHOLDERS 26
5.30 Authority; Ownership 26
5.31 Preemptive Rights 26
5.32 No Intention to Dispose of URSI Stock 26
6. REPRESENTATIONS OF URSI 26
6.1 Due Organization 27
6.2 URSI Stock 27
6.3 Validity of Obligations 27
6.4 Authorization 28
6.5 No Conflicts 28
6.6 Capitalization of URSI and Ownership of URSI STOCK 28
6.7 No Side Agreements 29
6.8 Subsidiaries 29
6.9 Business; Real Property; Material Agreements;
Financial Information 29
6.10 Conformity with Law 30
6.11 No Violations 30
6.12 Taxes 31
7. COVENANTS PRIOR TO CLOSING 32
7.1 Access and Cooperation; Due Diligence 32
7.2 Conduct of Business Pending Closing 32
7.3 Prohibited Activities 33
7.4 No Shop 35
7.5 Notice to Bargaining Agents 35
7.6 Termination of Plans 35
7.7 URSI Prohibited Activities 35
7.8 Notification of Certain Matters 36
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7.9 Amendment of Schedules 36
7.10 Cooperation in Preparation of Registration Statement 37
7.11 Examination of Final Financial Statements 38
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF
STOCKHOLDERS AND COMPANY 38
8.1 Representations and Warranties; Performance
of Obligations 38
8.2 Satisfaction 38
8.3 No Litigation 39
8.4 Stockholders' Release 39
8.5 Opinion of Counsel 39
8.6 Director Indemnification 40
8.7 Registration Statement 40
8.8 Consents and Approvals 40
8.9 Good Standing Certificates 40
8.10 No Waivers 40
8.11 No Material Adverse Change 40
8.12 Transfer Restrictions 41
8.13 Employment Agreements, Consulting Agreements,
Leases and Cosale Agreement 41
8.14 Tax Opinion 41
8.15 CABI Closing 41
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF URSI 41
9.1 Representations and Warranties; Performance
of Obligations 41
9.2 No Litigation 41
9.3 Examination of Final Financial Statements 42
9.4 No Material Adverse Effect 42
9.5 STOCKHOLDERS' Release 42
9.6 Satisfaction 42
9.7 Termination of Related Party Agreements 42
9.8 Opinion of Counsel 42
9.9 Consents and Approvals 43
9.10 Good Standing Certificates 43
9.11 Registration Statement 43
9.12 Employment Agreements, Consulting Agreements
and Leases 43
9.13 Repayment of Indebtedness 43
9.14 FIRPTA Certificate 44
9.15 Insurance 44
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9.16 Releases 44
10. POST-CLOSING COVENANTS 44
10.1 Preservation of Tax and Accounting Treatment 44
10.2 Disclosure 45
10.3 Cooperation in Tax Return Preparation 45
10.4 Tax Return Preparation and Filing 45
10.5 Reorganization Status Information Reporting 46
10.6 Special Definitions Related to Tax Matters 46
10.7 Directors 47
10.8 Release from Guarantees 47
10.9 Preservation of Plans 48
11. INDEMNIFICATION 48
11.1 General Indemnification by the STOCKHOLDERS 48
11.2 Indemnification by URSI 49
11.3 Third Person Claims 49
11.4 Exclusive Remedy 51
11.5 Limitations on Indemnification 51
11.6 Special Tax Indemnity Provisions 53
11.7 Special Contest Rights Related to Tax Matters 55
11.8 Special Notification Requirements Regarding
Tax Disputes 56
11.9 Refunds 56
11.10 Optional Payment With Shares 56
12. TERMINATION OF AGREEMENT 56
12.1 Termination 56
12.2 Liabilities in Event of Termination 57
12.3 Use of Financial Statements 57
13. NONCOMPETITION 58
13.1 Prohibited Activities 58
13.2 Damages 59
13.3 Reasonable Restraint 59
13.4 Severability; Reformation 59
13.5 Independent Covenant 59
13.6 Materiality 60
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION 60
14.1 STOCKHOLDERS 60
14.2 URSI 61
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14.3 Damages 61
14.4 Survival 62
15. TRANSFER RESTRICTIONS 62
15.1 Transfer Restrictions 62
15.2 Permitted Transferees 62
16. FEDERAL SECURITIES ACT REPRESENTATIONS 63
16.1 Compliance with Law 63
16.2 Accredited Investors; Economic Risk; Sophistication 63
17. REGISTRATION RIGHTS 64
17.1 Piggyback Registration Rights 64
17.2 Demand Registration Rights 65
17.3 Registration Procedures 66
17.4 Underwriting Agreement 66
17.5 URSI Stock 67
17.6 Availability of Rule 144 67
17.7 Survival 67
18. GENERAL 67
18.1 Cooperation 67
18.2 Successors and Assigns 67
18.3 Entire Agreement 67
18.4 Counterparts 68
18.5 Brokers and Agents 68
18.6 Expenses 68
18.7 Notices 69
18.8 Governing Law; Forum 70
18.9 Survival of Representations and Warranties 70
18.10 Exercise of Rights and Remedies 70
18.11 Time 71
18.12 Reformation and Severability 71
18.13 Remedies Cumulative 71
18.14 Captions 71
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SCHEDULES and ANNEXES
Annex I - Consideration to Founding Companies
Annex II - Stockholders and Stock Ownership of the
COMPANY
Annex III - Stock Ownership of URSI
Annex IV - Certificate of Incorporation and Bylaws of URSI
Annex V - Form of Opinion of Howard, Rice, Nemerovski,
Canady, ▇▇▇▇ & ▇▇▇▇▇▇, A Professional Corporation
Annex VI - Form of Opinion of COMPANY Counsel
Annex VII - Form of Director Indemnification Agreement
Annex VIII A - Form A Employment Agreement
Annex VIII B - Form B Employment Agreement
Annex IX - Form Consulting Agreement
Annex X - Leases
Annex XI - Cosale Agreement
Schedule 1.3(iv) - Officers of the COMPANY
Schedule 5.1 - Qualifications to Do Business
Schedule 5.2 - Required Shareholder Approvals
Schedule 5.3 - Exceptions re Capital Stock of COMPANY
Schedule 5.4 - Transactions in Capital Stock; Options & Warrants to
Acquire Capital Stock
Schedule 5.5 - Stock Issued Pursuant to Awards, Grants and
Bonuses
Schedule 5.6 - Subsidiaries; Capitalization of Subsidiaries
Schedule 5.7 - Names of Predecessor Companies
Schedule 5.8 - Sales or Spin-offs of Significant Assets
Schedule 5.9 - Initial Financial Statements
Schedule 5.10 - Significant Liabilities and Obligations
Schedule 5.11 - Accounts and Notes Receivable
Schedule 5.12 - Licenses, Franchises, Permits and Other
Governmental Authorizations
Schedule 5.13 - Environmental Matters
Schedule 5.14 - Real Property, Leases and Significant Personal
Property
Schedule 5.15 - Significant Customers and Material Contracts
Schedule 5.17 - Insurance Policies and Claims
Schedule 5.18 - Officers, Directors and Key Employees, Employment
Agreements; Compensation
Schedule 5.19 - Employee Benefit Plans
Schedule 5.21 - Violations of Law, Regulations or Orders
Schedule 5.22 - Tax Returns and Examinations
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Schedule 5.22(v) - Federal, State, Local and Foreign Income Tax
Returns Filed
Schedule 5.23 - Violations of Charter Documents and Material
Defaults
Schedule 5.24 - Governmental Contracts Subject to Price
Redetermination or Renegotiation
Schedule 5.25 - Changes Since Balance Sheet Date
Schedule 5.26 - Bank Accounts; Powers of Attorney
Schedule 5.30 - Encumbrances on the COMPANY Stock
Schedule 6.9(a) - URSI Agreements
Schedule 6.9(b) - URSI's Financial Statements for the Year Ended
December 31, 1997
Schedule 6.11 - No Violations
Schedule 7.2 - Exceptions to Conducting Business in the Ordinary
Course Between Balance Sheet Date and Closing
Date
Schedule 7.3 - Prohibited Activities
Schedule 7.6 - Plans To Be Terminated By Pricing Date
Schedule 7.7 - Exceptions to Restrictions on URSI
Schedule 9.7 - Termination of Related Party Agreements
Schedule 9.12(a) - Employment Agreements
Schedule 9.12(b) - Consulting Agreements
Schedule 9.12(c) - Leases
Schedule 10.9 - Plans to be Preserved
Schedule 13.1 - Prohibited Activities
Schedule 16.2 - Non-Accredited Investors
Schedule 18.5 - Brokers and Agents
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TABLE OF DEFINITIONS
Defined Term Section
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accredited investor 16.2
Acquired Parties 5.22(i)
Affiliate 10.6(a)
Affiliates 5.8
Agreement Preamble
Agreement and Plan of
Reorganization Whereas
Articles of Merger 1.1
Balance Sheet Date 5.9
CABI 5.1
CABI Agreement 5.11
Charter Documents 5.1
Closing Date 4
Code Whereas
Company Preamble
COMPANY Financial Statements 5.9
COMPANY Stock 1.4(i)
COMPANY's Subsidiaries 5.1
Constituent Corporations Whereas
Consulting Agreement 9.12
controlled group 5.20
Defined Benefit Plan 5.19(iv)
Delaware GCL 1.5
Demand Registration 17.2
Effective Time of the Merger 1.2
Employment Agreements 9.12
Environmental Laws 5.13
ERISA 5.19
Expiration Date 5(A)
Fair Market Value Annex I, C.10
Founding Companies Whereas
group health plans 5.20(v)
▇▇▇▇▇▇ ▇▇▇▇ 4.1
Indemnification Threshold 11.5(i)
Indemnified Party 11.3
Indemnifying Party 11.3
Interim Period 10.6(b)
IPO 4
Leases 9.12
Material Adverse Effect 5.1
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Material Contracts 5.15
Material Documents 5.23
Merger Whereas
multi-employer pension plan 5.20
1933 Act 5(A)
1934 Act 5(A)
Offered Value 8.7
Other Agreements Whereas
Other Companies Whereas
PBGC 5.19(x)
Plans 5.19
Post-Closing Period 10.6(d)
Pre-Closing 4
Pre-Closing Period 10.6(c)
Pricing Date 4
Qualified Plans 5.19(iii)
Registration Statement 1.4(ii)
Relevant Group 5.22(i)
reportable events 5.20(iii)
SEC 8.2
Stockholders Preamble
Surviving Corporation 1.2
URSI Charter Documents 6.11
URSI Material Adverse Effect 6.1
URSI Material Documents 6.11
URSI Stock 1.4(ii)
URSI's Subsidiaries 6.8
Tax 10.6(e)
Tax Data 10.3
Tax Documentation 10.3
Tax Returns 10.6(f)
Taxing Authority 10.6(g)
Territory 13.1(i)
Third Person 11.3
Transfer Taxes 18.6
Underwriters 5.29
Underwriting Agreement 8.7
URSI Preamble
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
as of the ____ day of February, 1998, by and among UNITED ROAD SERVICES, INC., a
Delaware corporation ("URSI"), ▇▇▇▇▇ AUTO WORKS, INC., a Connecticut corporation
(the "COMPANY"), and the stockholders listed on Annex II (the "STOCKHOLDERS").
The STOCKHOLDERS are all the stockholders of the COMPANY.
WHEREAS, the respective Boards of Directors of URSI and the COMPANY
(which together are hereinafter collectively referred to as "Constituent
Corporations") deem it advisable and in the best interests of the Constituent
Corporations and their respective stockholders that the COMPANY merge with and
into URSI pursuant to this Agreement and the applicable provisions of the laws
of the State of Delaware, such transaction sometimes being herein called the
"Merger";
WHEREAS, URSI is entering into other separate agreements (the "Other
Agreements") substantially similar to this Agreement, each of which is entitled
"Agreement and Plan of Reorganization," with each of Absolute Towing and
Transporting, Inc., ASC Transportation Services, ▇▇▇▇▇ Auto Brokers, Inc.,
Falcon Towing and Auto Delivery, Inc., Keystone Towing, Inc., Northland Auto
Transporters, Inc., Northland Fleet Leasing Company, Silver State Tow &
Recovery, Inc. and ▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇ Enterprises, Inc. (the "Other Companies")
in order to acquire additional vehicle towing and transport companies (the Other
Companies, together with the COMPANY, are collectively referred to herein as the
"Founding Companies");
WHEREAS, the Boards of Directors of URSI and the COMPANY have
approved and adopted this Agreement as a reorganization described in Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
1. THE MERGER.
1.1 Delivery and Filing of Articles of Merger. The Constituent
Corporations will cause Articles of Merger with respect to the Merger (the
"Articles of Merger") to be signed, verified and delivered to the Secretary of
State of the State of Delaware and, if required, the Articles of Merger or a
similar document to be signed, verified and filed with the relevant authorities
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in the jurisdiction in which the COMPANY is organized, on or before the Closing
Date (as defined in Section 4).
1.2 Effective Time of the Merger. The "Effective Time of the Merger" shall
be the Closing Date as defined in Section 4. At the Effective Time of the
Merger, the COMPANY shall be merged with and into URSI in accordance with the
Articles of Merger, and the separate existence of the COMPANY shall cease. URSI
shall be the surviving party in the Merger and is hereinafter sometimes referred
to as the "Surviving Corporation." The Merger will be effected in a single
transaction.
1.3 Certificate of Incorporation, Bylaws and Board of Directors of
Surviving Corporation. At the Effective Time of the Merger:
(i) the Certificate of Incorporation of URSI then in effect shall
become the Certificate of Incorporation of the Surviving Corporation; and
subsequent to the Effective Time of the Merger, such Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation until changed as provided by law;
(ii) the Bylaws of URSI then in effect shall become the Bylaws of
the Surviving Corporation; and subsequent to the Effective Time of the Merger,
such Bylaws shall be the Bylaws of the Surviving Corporation until they shall
thereafter be duly amended;
(iii) the Board of Directors of the Surviving Corporation shall
consist of those persons who constituted the Board of Directors of URSI
immediately prior to the Merger, who shall hold office subject to the provisions
of the laws of the State of Delaware and of the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
(iv) the officers of the Surviving Corporation shall be the persons
who were officers of URSI immediately prior to the Merger, subject to the
provisions of the Certificate of Incorporation and Bylaws of the Surviving
Corporation and the Employment Agreements (as defined in Section 9.12) until
such officers' successors are duly elected and qualified.
1.4 Certain Information With Respect to the Capital Stock of the COMPANY
and URSI. The respective designations and numbers of outstanding shares and
voting rights of each class of outstanding capital stock of the COMPANY and URSI
as of the date of this Agreement are as follows:
(i) as of the date of this Agreement, the authorized capital stock
of the COMPANY consists of 5,000 shares of no par value common stock, ("COMPANY
Stock"), of which 100 shares are issued and outstanding; and
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(ii) immediately prior to the Closing Date, the authorized capital
stock of URSI will consist of 35,000,000 shares of common stock, $.001 par value
("URSI Stock"), of which the number of issued and outstanding shares will be set
forth in the Registration Statement referred to in Section 8.7 (the
"Registration Statement"), and 5,000,000 shares of preferred stock, $.001 par
value, of which no shares will be issued and outstanding.
1.5 Effect of Merger. At the Effective Time of the Merger, the effect of
the Merger shall be as provided in the applicable provisions of the General
Corporation Law of the State of Delaware (the "Delaware GCL"). Except as herein
specifically set forth, the identity, existence, purposes, powers, objects,
franchises, privileges, rights and immunities of the COMPANY shall continue
unaffected and unimpaired by the Merger and the corporate franchises, existence
and rights of the COMPANY shall be merged with and into URSI, and URSI, as the
Surviving Corporation, shall be fully vested therewith. At the Effective Time of
the Merger, the separate existence of the COMPANY shall cease and, in accordance
with the terms of this Agreement, the Surviving Corporation shall possess all
the rights, privileges, immunities and franchises of a public, as well as of a
private, nature, and all property, all debts due on whatever account, including
subscriptions to shares, all taxes, including those due and owing and those
accrued, all other chooses in action, and all and every other interest of or
belonging to or due to the COMPANY and URSI shall be taken and deemed to be
transferred to, and vested in, the Surviving Corporation without further act or
deed; and all property, rights and privileges, powers and franchises and all and
every other interest shall be thereafter as effectually the property of the
Surviving Corporation as they were of the COMPANY and URSI. Except as otherwise
provided herein, the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of the COMPANY and URSI and any
claim existing, or action or proceeding pending, by or against the COMPANY or
URSI may be prosecuted as if the Merger had not taken place, or the Surviving
Corporation may be substituted in their place. Neither the rights of creditors
nor any liens upon the property of the COMPANY or URSI shall be impaired by the
Merger, and all debts, liabilities and duties of the COMPANY and URSI shall
attach to the Surviving Corporation, and may be enforced against such Surviving
Corporation to the same extent as if said debts, liabilities and duties had been
incurred or contracted by such Surviving Corporation.
2. CONVERSION OF STOCK.
2.1 Manner of Conversion. The manner of converting the shares of COMPANY
Stock into URSI Stock shall be as follows:
As of the Effective Time of the Merger:
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(i) all of the shares of COMPANY Stock issued and outstanding
immediately prior to the Effective Time of the Merger, by virtue of the Merger
and without any action on the part of the holder thereof, automatically shall be
deemed to represent (1) that number of shares of URSI Stock determined pursuant
to Section 2.2 below and (2) the right to receive the amount of cash determined
pursuant to Section 2.2 below, such shares and cash to be distributed to
STOCKHOLDERS as provided in Part I of Annex I hereto;
(ii) all shares of COMPANY Stock that are held by COMPANY as
treasury stock or owned by any COMPANY Subsidiary shall be cancelled and retired
and no shares of URSI Stock or other consideration shall be delivered or paid in
exchange therefor.
At the Effective Time of the Merger, URSI shall have no class of
capital stock issued and outstanding which, as a class, shall have any rights or
preferences senior to the shares of URSI Stock received by the STOCKHOLDERS,
including, without limitation, any rights or preferences as to dividends or as
to the assets of URSI upon liquidation or dissolution or as to voting rights.
2.2 Calculation of URSI Shares. All COMPANY Stock shall be converted, as a
result of the Merger, into the number of shares of URSI Stock and the amount of
cash determined as set forth in Part I to Annex I attached hereto. The URSI
Stock and the amount of cash to be received, respectively, by the stockholders
of each of the Other Companies will be determined as set forth in Part II to
Annex I, provided that the stockholders of certain Other Companies may receive
URSI Stock or cash or both that is contingent upon future revenues, and Part II
to Annex I does not describe such contingent URSI Stock.
3. DELIVERY OF SHARES OF URSI STOCK.
3.1 At or after the Effective Time of the Merger:
(i) the STOCKHOLDERS, as the holders of all outstanding certificates
representing shares of COMPANY Stock, shall, upon surrender of such
certificates, be entitled to receive the number of shares of URSI Stock and the
amount of cash calculated pursuant to Section 2.2 above; and
(ii) until the certificates representing COMPANY Stock have been
surrendered by the STOCKHOLDERS and replaced by the URSI Stock, the certificates
for COMPANY Stock shall, for all corporate purposes, be deemed to evidence the
ownership of the number of shares of URSI Stock and cash which such STOCKHOLDER
is entitled to receive as a result of the Merger, as
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set forth in Section 2.2, notwithstanding the number of shares of COMPANY Stock
such certificates represent.
3.2 The STOCKHOLDERS shall deliver to URSI at Pre-Closing (as defined
below in Section 4) the certificates representing COMPANY Stock, duly endorsed
in blank by the STOCKHOLDERS, or accompanied by blank stock powers, and with all
necessary transfer tax and other revenue stamps, acquired at the STOCKHOLDERS'
expense, affixed and cancelled. The STOCKHOLDERS agree promptly to cure any
deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such COMPANY Stock or with respect to
the stock powers accompanying any COMPANY Stock.
4. PRE-CLOSING AND CLOSING.
4.1 Pre-Closing. On the date (the "Pricing Date") on which the public
offering price of the shares of URSI Stock in the initial public offering of
URSI Stock (the "IPO") described in the Registration Statement is determined,
the parties shall take all actions necessary to effect (i) the Merger
(including, if permitted by applicable state law, the filing with the
appropriate state authorities of the Articles of Merger and any similar document
to become effective on the Closing Date (as defined below)), (ii) the conversion
of shares of COMPANY Stock into shares of URSI Stock and (iii) the delivery of
shares of URSI Stock (hereinafter referred to as the "Pre-Closing"); provided,
that the actual Merger, the conversion of shares of COMPANY Stock into shares of
URSI Stock and the delivery of shares of URSI Stock shall not take place until
the Closing Date as herein provided. The Pre-Closing shall take place at the
offices of Howard, Rice, Nemerovski, Canady, ▇▇▇▇ & ▇▇▇▇▇▇, A Professional
Corporation ("▇▇▇▇▇▇ ▇▇▇▇") at ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
4.2 Closing. On the date when the closing with respect to the IPO occurs
("the Closing Date"), the Articles of Merger shall be filed with the appropriate
state authorities, or if already filed shall become effective, and all
transactions contemplated by this Agreement, including the conversion of shares
of COMPANY Stock into shares of URSI Stock, the delivery of shares of URSI
Stock, and the delivery of a certified check or checks in an amount equal to the
cash portion of the consideration which the STOCKHOLDERS shall be entitled to
receive pursuant to the Merger, shall occur and be deemed to be completed. If so
requested by any STOCKHOLDER at or prior to the Pre-Closing, URSI will use its
best efforts to cause all cash to be paid to such STOCKHOLDER on the CLOSING
DATE to be paid by the Underwriters (as defined in Section 5.29) by initiating a
wire transfer payment pursuant to instructions included in STOCKHOLDER's
request. After the Pre-Closing and until the Closing Date, no party may
withdraw, terminate or rescind any
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delivery made at the Pre-Closing unless this Agreement is terminated as provided
in Section 12. All documents delivered at the Pre-Closing shall be held by
▇▇▇▇▇▇ ▇▇▇▇ for final delivery on the Closing Date as directed by the parties
and their counsel at the Pre-Closing, provided only that the Articles of Merger
and any similar document may be filed to become effective on the Closing Date.
Should the Agreement be terminated as provided in Section 12 prior to the
Closing Date, the parties shall take all steps necessary to rescind any such
filings, ▇▇▇▇▇▇ ▇▇▇▇ shall return all documents delivered at the Pre-Closing to
the parties who delivered the same, all such deliveries at the Pre-Closing will
be rescinded and a nullity, the Merger shall not become effective, the shares of
COMPANY Stock will not be converted into URSI Stock, and shares of URSI Stock
will not be delivered to STOCKHOLDERS. The documents delivered at Pre-Closing
shall include documents required to rescind, prior to the Closing Date, any
filing of the Articles of Merger and any similar document.
5. REPRESENTATIONS AND WARRANTIES OF COMPANY AND STOCKHOLDERS.
(A) Representations and Warranties of COMPANY and STOCKHOLDERS. The
COMPANY and each of the STOCKHOLDERS jointly and severally represent and warrant
that all of the following representations and warranties in this Section 5(A)
are true at the date of this Agreement and, subject to Section 7.9 hereof, shall
be true at the time of Pre-Closing and the Closing Date, and that such
representations and warranties shall survive the Closing Date for a period of
four (4) years (the last day of such period being hereinafter called the
"Expiration Date"), except that (i) the warranties and representations set forth
in Section 5.13 hereof shall survive the Closing Date for a period of eight (8)
years, the last day of which shall be deemed to be the Expiration Date for
Section 5.13, (ii) the warranties and representations set forth in Sections 5.19
and 5.20 hereof shall survive the Closing Date until such date as the
limitations period has run for each act, inaction, fact, event or circumstance
which constitutes a breach thereof, which date shall be deemed to be the
Expiration Date for Sections 5.19 and 5.20, (iii) the warranties and
representations set forth in Section 5.22 hereof shall survive the Closing Date
until such date as the limitations period has run for all tax periods ended on
or prior to the Closing Date, which date shall be deemed to be the Expiration
Date for Section 5.22, and (iv) solely for purposes of Section 11.1(iii) hereof,
all warranties and representations shall survive until such date as the
limitations period has run under the Securities Act of 1933, as amended (the
"1933 Act"), the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and all other applicable Federal or state securities laws, which date shall be
deemed to be the Expiration Date for purposes of Section 11.1(iii) hereof.
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5.1 Due Organization. Each of the COMPANY and the subsidiaries of the
COMPANY (the "COMPANY's Subsidiaries") set forth on Schedule 5.6 is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, and is duly authorized and qualified to do
business under all applicable laws, regulations, ordinances and orders of public
authorities to carry on its business in the places and in the manner as now
conducted except (i) as disclosed on Schedule 5.1 or (ii) where the failure to
be so authorized or qualified would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or otherwise),
of the COMPANY and ▇▇▇▇▇ Auto Brokers, Inc., a Connecticut corporation ("CABI")
and the COMPANY's and CABI's Subsidiaries, taken as a whole (a "Material Adverse
Effect"). Schedule 5.1 contains a list of all jurisdictions in which the COMPANY
is authorized or qualified to do business. True, complete and correct copies of
the Certificate of Incorporation and Bylaws, each as amended, of the COMPANY and
each of the COMPANY's Subsidiaries (collectively, the "Charter Documents"),
certified by the Secretary or Assistant Secretary of the COMPANY, are all
attached hereto as Schedule 5.1. A true, complete and correct copy of each
Certificate of Incorporation included in the Charter Documents, certified by the
Secretary of State or other appropriate authority of the state of incorporation
of the COMPANY or the applicable Subsidiary of the COMPANY, as applicable, shall
be delivered to URSI at the Pre-Closing. Except as set forth on Schedule 5.1,
the minute books of the COMPANY and each of the COMPANY's Subsidiaries, as
heretofore made available to URSI, are correct and complete in all material
respects.
5.2 Authorization. (i) The representatives of the COMPANY executing this
Agreement have the authority to enter into and bind the COMPANY to the terms of
this Agreement and (ii) the COMPANY has the full legal right, power and
authority to enter into this Agreement and the Merger.
5.3 Capital Stock of the COMPANY. The authorized capital stock of the
COMPANY is as set forth in Section 1.4(i). All of the issued and outstanding
shares of the capital stock of the COMPANY are owned by the STOCKHOLDERS and in
the amounts set forth in Annex II and further, except as set forth on Schedule
5.3, are owned free and clear of all liens, security interests, pledges,
charges, voting trusts, restrictions, encumbrances and claims of every kind. All
of the issued and outstanding shares of the capital stock of the COMPANY have
been duly authorized and validly issued, are fully paid and nonassessable, are
owned of record and beneficially by the STOCKHOLDERS and further, such shares
were offered, issued, sold and delivered by the COMPANY in compliance with all
applicable state and federal laws concerning the issuance of securities.
Further, none of such shares were issued in violation of the preemptive rights
of any past or present stockholder.
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5.4 Transactions in Capital Stock. Except as set forth on Schedule 5.4,
neither the COMPANY nor any of the COMPANY's Subsidiaries has acquired any
COMPANY Stock since January 1, 1993. No option, warrant, call, conversion right
or commitment of any kind exists which obligates the COMPANY or any of the
COMPANY's Subsidiaries to issue any of their respective authorized but unissued
capital stock. Except as set forth on Schedule 5.4, the COMPANY has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof. Except as set forth on Schedule 5.4,
there has been no transaction or action taken with respect to the equity
ownership of the COMPANY, or any of the COMPANY's Subsidiaries, in contemplation
of the transactions described in this Agreement.
5.5 No Bonus Shares. Except as set forth in Schedule 5.5, since January 1,
1995 none of the shares of COMPANY Stock was issued for less than the fair
market value thereof at the time of issuance or was issued in exchange for
consideration other than cash.
5.6 Subsidiaries. Schedule 5.6 attached hereto lists the name of each of
the COMPANY's Subsidiaries and sets forth the number of shares and class of the
authorized capital stock of each of the COMPANY's Subsidiaries and the number of
shares of each of the COMPANY's Subsidiaries which are issued and outstanding,
all of which shares (except as set forth on Schedule 5.6) are owned by the
COMPANY, free and clear of all liens, security interests, pledges, voting
trusts, equities, restrictions, encumbrances and claims of every kind. Except as
set forth in Schedule 5.6, the COMPANY does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity nor is the COMPANY, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
5.7 Predecessor Status; etc. Set forth in Schedule 5.7 is a listing of all
names of all predecessor companies for the past five years of the COMPANY,
including the names of any entities from whom the COMPANY previously acquired
material assets. Except as disclosed in Schedule 5.7, the COMPANY has not been a
subsidiary or division of another corporation or a part of an acquisition which
was later rescinded.
5.8 Spin-off by the COMPANY. Except as set forth on Schedule 5.8, there
has not been any sale, spin-off or split-up of material assets of either the
COMPANY or any of the COMPANY's Subsidiaries or any other person or entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the COMPANY
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("Affiliates") other than in the ordinary course of business, within the
preceding two years.
5.9 Financial Statements. Attached hereto as Schedule 5.9 are copies of
the following financial statements (the "COMPANY Financial Statements") of the
COMPANY: the combined Balance Sheet of the COMPANY and CABI as of September 30,
1997 and 1996 and the related combined Statements of Operations, Cash Flows and
Retained Earnings for each of the years in the three-year period ended September
30, 1997 (September 30, 1997 being hereinafter referred to as the "Balance Sheet
Date"). Such Financial Statements have been prepared in accordance with KPMG
Peat Marwick LLP's interpretation of generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as
noted). Except as set forth on Schedule 5.9, such Balance Sheets as of September
30, 1997 and 1996 present fairly the combined financial position of the COMPANY
and CABI (and each of the COMPANY's Subsidiaries on a consolidated basis) as of
the dates indicated thereon, and such Statements of Operations, Cash Flows and
Retained Earnings present fairly the results of their combined respective
operations for the periods indicated thereon.
5.10 Liabilities and Obligations. The COMPANY has delivered to URSI an
accurate list (Schedule 5.10) with respect to the COMPANY and its Subsidiaries
of:
(i) all liabilities which are reflected on the balance sheet of the
COMPANY at the Balance Sheet Date;
(ii) all liabilities of the COMPANY not reflected on the balance
sheet of the Company at the Balance Sheet Date exceeding $10,000 which either
(x) should have properly been accrued on the balance sheet of the Company as of
the Balance Sheet Date in accordance with generally accepted accounting
principles consistently applied, or (y) are liabilities of the nature described
in Section 5.13, Section 5.20 and/or Section 5.22 (excluding items subject to
any knowledge qualifications contained in any of these sections);
(iii) to the knowledge of the COMPANY, all liabilities not reflected
on the balance sheet of the Company at the Balance Sheet Date exceeding $10,000
and existing as of the Balance Sheet Date which are not otherwise described in
the immediately preceding subclause (ii);
(iv) in the case of any supplement or amendment pursuant to Section
7.9, all liabilities which were incurred after the cutoff date for Schedule 5.10
or any supplement or amendment thereto and were incurred other than in the
ordinary course of business or exceed $10,000 if (and only if) such liabilities
would either be accrued on the balance sheet of the COMPANY in accordance
-9-
with generally accepted accounting principles consistently applied if such
balance sheet were being prepared immediately prior to Closing or if such
liabilities represent liabilities of the nature described in Section 5.13,
Section 5.20 and/or Section 5.22 (excluding items subject to any knowledge
qualifications contained in any of these sections); and
(v) to the knowledge of the COMPANY, in the case of any supplement
or amendment pursuant to Section 7.9, all liabilities which were incurred after
the cutoff date for Schedule 5.10 or any supplement or amendment thereto, and
were incurred other than in the ordinary course of business or exceed $100,000
and are not otherwise described in the immediately preceding subclause (iv).
Any reference to "all liabilities" in the preceding subclauses (i) through (v)
inclusive shall mean, in each such instance, all liabilities of the COMPANY (or
the COMPANY'S Subsidiaries) of any kind, character or description, whether
accrued, absolute, secured or unsecured, contingent or otherwise. The COMPANY
has also delivered to URSI on Schedule 5.10, in the case of those liabilities
which are contingent, a reasonable estimate of the maximum amount which may be
payable. For each such contingent liability, the COMPANY has provided to URSI
the following information:
(vi) a summary description of the liability together with the
following:
(a) copies of all relevant documentation relating thereto;
(b) amounts claimed and any other action or relief sought;
and
(c) name of claimant and all other parties to the claim,
suit or proceeding;
(vii) the name of each court or agency before which such claim, suit
or proceeding is pending; and
(viii) the date such claim, suit or proceeding was instituted.
5.11 Accounts and Notes Receivable. The COMPANY has delivered to URSI an
accurate list (Schedule 5.11) of the accounts and notes receivable of the
COMPANY (including the COMPANY's Subsidiaries), as of the Balance Sheet Date,
including any such amounts which are not reflected in the balance sheet as of
the Balance Sheet Date, and including receivables from and advances to employees
and the STOCKHOLDERS. Except to the extent reflected on Schedule 5.11, such
accounts and notes are collectible in the
-10-
amount shown on Schedule 5.11, net of reserves reflected in the balance sheet as
of the Balance Sheet Date.
5.12 Permits and Intangibles. The COMPANY and each of the COMPANY's
Subsidiaries holds all licenses, franchises, permits and other governmental
authorizations including permits, titles (including motor vehicle titles and
current registrations), fuel permits, licenses, franchises, certificates,
trademarks, trade names, patents, patent applications and copyrights, the
absence of any of which would have a Material Adverse Effect. The COMPANY has
delivered to URSI an accurate list and summary description (Schedule 5.12) of
all such licenses, franchises, permits and other governmental authorizations,
provided that copyrights need not be listed unless registered. To the knowledge
of the COMPANY, the licenses, franchises, permits and other governmental
authorizations listed on Schedule 5.12 are valid, and neither the COMPANY nor
any of the COMPANY's Subsidiaries has received any notice that any governmental
authority intends to cancel, terminate or not renew any such license, franchise,
permit or other governmental authorization. The COMPANY (including the COMPANY's
Subsidiaries) has conducted and is conducting its business in compliance with
the requirements, standards, criteria and conditions set forth in applicable
permits, licenses, orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing except where such non-compliance or
violation would not have a Material Adverse Effect. Except as specifically
provided in Schedule 5.12, the transactions contemplated by this Agreement will
not result in a default under or a breach or violation of, or have a Material
Adverse Effect upon the rights and benefits afforded to the COMPANY (including
the COMPANY's Subsidiaries) by, any such licenses, franchises, permits or
government authorizations.
5.13 Environmental Matters. Except as set forth on Schedule 5.13, and
except to the extent that noncompliance with any Environmental Law (as defined
below), either singly or in the aggregate, does not have a Material Adverse
Effect, (i) the COMPANY and the COMPANY's Subsidiaries have complied with and
are in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to any of them or any of their respective
properties, assets, operations and businesses relating to environmental
protection (collectively "Environmental Laws") including, without limitation,
Environmental Laws relating to protection of the air, water or land or to the
generation, storage, use, handling, transportation, treatment or disposal of
Solid Wastes, Hazardous Wastes or Hazardous Substances (as such terms are
defined in any applicable Environmental Law); (ii) the COMPANY and the COMPANY's
Subsidiaries have obtained and complied with all necessary permits and other
approvals necessary to treat, transport, store, dispose of or otherwise handle
Solid Wastes, Hazardous Wastes or
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Hazardous Substances and have reported, to the extent required by all
Environmental Laws, all past and present sites owned and operated by the COMPANY
or any of the COMPANY's Subsidiaries where Solid Wastes, Hazardous Wastes or
Hazardous Substances have been treated, stored, used, disposed of or otherwise
handled; (iii) there have been no releases (as defined in Environmental Laws)
at, from, under, in or on any property owned or operated by the COMPANY or any
of the COMPANY's Subsidiaries except as permitted by Environmental Laws; (iv) to
the knowledge of the COMPANY there is no on-site or off-site location to which
the COMPANY or any of the COMPANY's Subsidiaries has transported or disposed of
Solid Wastes, Hazardous Wastes or Hazardous Substances or arranged for the
transportation of Solid Wastes, Hazardous Wastes or Hazardous Substances, which
site is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the COMPANY,
any of the COMPANY's Subsidiaries or URSI for any clean-up cost, remedial work,
damage to natural resources or personal injury, including, but not limited to,
any claim under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended; and (v) to the knowledge of the COMPANY the
COMPANY has no contingent liability in connection with any release of any Solid
Waste, Hazardous Waste or Hazardous Substance into the environment. Schedule
5.13 lists all releases of Hazardous Wastes or Hazardous Substances by the
COMPANY.
5.14 Real and Personal Property. The COMPANY has delivered to URSI an
accurate list (Schedule 5.14) of (x) all real and personal property included (or
that will be included) on the balance sheet of the COMPANY, (y) all other real
and personal property of the COMPANY (including the COMPANY's Subsidiaries) with
a value in excess of $2,500 (i) as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date, and (z) all leases for real and personal property
to which the COMPANY or any of its subsidiaries is a party involving real or
personal property having a value in excess of $2,500, including in the case of
(z) true, complete and correct copies of all such leases and including in cases
(x), (y) and (z) an indication as to which real and personal property is
currently owned, or was formerly owned, by STOCKHOLDERS or business or personal
affiliates of the COMPANY or STOCKHOLDERS. Except as shown on Schedule 5.14, all
of the trucks and other material machinery and equipment of the COMPANY and the
COMPANY's Subsidiaries listed on Schedule 5.14 are in good working order and
condition, ordinary wear and tear excepted. All leases set forth on Schedule
5.14 are in full force and effect and constitute valid and binding agreements on
the COMPANY (or a COMPANY Subsidiary, as applicable), and to the knowledge of
the COMPANY, constitute valid and binding agreements on the other parties
thereto (and their successors) thereto in accordance with their respective
terms. All fixed assets used by the COMPANY and the COMPANY's Subsidiaries that
are material to the
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operation of their respective businesses are either owned by the COMPANY or the
COMPANY's Subsidiaries or leased under an agreement indicated on Schedule 5.14.
Schedule 5.14 shall, without limitation, contain true, complete and correct
copies of all title reports and title insurance policies received or owned by
the COMPANY or the COMPANY's Subsidiaries. The COMPANY has also provided in
Schedule 5.14 a summary description of all plans or projects which have been
memorialized in any written or electronic document or file and involves the
opening of new operations, expansion of any existing operations or the
acquisition of any real property or existing business, with respect to which the
COMPANY (or any of the COMPANY's Subsidiaries) has made any expenditure in the
two-year period prior to the date of the Agreement in excess of $10,000, or
which if pursued by the COMPANY (or such Subsidiary) would require additional
expenditures of capital in excess of $10,000. Except as set forth on Schedule
5.14 and except for liens excepted in Section 7.3(vi)(1) and (3), there are no
liens against the COMPANY's properties.
5.15 Significant Customers; Material Contracts and Commitments. The
COMPANY has delivered to URSI an accurate list (Schedule 5.15) of (i) all
significant customers (i.e., those customers representing five percent (5%) or
more of the COMPANY's revenues for the 12 months ended on the Balance Sheet
Date, or who have paid to the COMPANY $100,000 or more over any four consecutive
fiscal quarters in the three years ended on the Balance Sheet Date) and (ii) all
contracts requiring payment or performance by the COMPANY or any COMPANY
Subsidiary in an amount or with a value in excess of $10,000 ("Material
Contracts") to which the COMPANY or any of its Subsidiaries is a party or by
which any of them or any of their respective properties are bound (including,
but not limited to, contracts with significant customers, joint venture or
partnership agreements, contracts with any labor organizations, loan agreements,
indemnity or guaranty agreements, bonds, mortgages, options to purchase land,
leases, liens, pledges or other security agreements) (a) as of the Balance Sheet
Date and (b) entered into since the Balance Sheet Date, and in each case has
delivered true, complete and correct copies of such agreements to URSI, except
that leases set forth on Schedule 5.14 need not be set forth on Schedule 5.15.
Except to the extent set forth on Schedule 5.15, (i) none of the COMPANY's
(including the COMPANY's Subsidiaries) significant customers has cancelled or
substantially reduced or, to the knowledge of the COMPANY, is currently
attempting or threatening to cancel any Material Contract or substantially
reduce utilization of the services provided by the COMPANY (including the
COMPANY's Subsidiaries), and (ii) the COMPANY and the COMPANY's Subsidiaries
have complied with all material commitments and obligations pertaining to any
Material Contract, and are not in default under any such Material Contract, and
no notice of default has been received, and no Stockholder or any affiliate of
any Stockholder is a party to any such Material Contract. Except as set
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forth in Schedule 5.15, the COMPANY and the COMPANY's Subsidiaries have not been
the subject of any election in respect of union representation of employees and
are not bound by or subject to (and none of its respective assets or properties
is bound by or subject to) any arrangement with any labor union. Except as set
forth on Schedule 5.15, no employees of the COMPANY or its Subsidiaries are
represented by any labor union or covered by any collective bargaining agreement
and no campaign to establish such representation has ever occurred or is in
progress. There is no pending or, to the COMPANY's knowledge, threatened labor
dispute involving the COMPANY (including the COMPANY's Subsidiaries) and any
group of its employees, nor has the COMPANY (including the COMPANY's
Subsidiaries) experienced any labor interruptions over the past three years, and
the COMPANY considers its relationship with employees to be good.
5.16 Intentionally Omitted.
5.17 Insurance. The COMPANY has delivered to URSI an accurate list
(Schedule 5.17) as of the Balance Sheet Date of all insurance policies carried
by the COMPANY (including the COMPANY's Subsidiaries) and, except as set forth
on Schedule 5.17, has delivered to URSI an accurate list (attached to Schedule
5.17) of all insurance loss runs or worker's compensation claims received for
the past three (3) policy years. Also attached to Schedule 5.17 are true,
complete and correct copies of all policies currently in effect. Such insurance
policies are currently in full force and effect and shall remain in full force
and effect through the Closing Date. No insurance carried by the COMPANY
(including any of the COMPANY's Subsidiaries) has ever been cancelled by the
insurance company, and the COMPANY (including such COMPANY's Subsidiaries) has
never submitted a written application for insurance and been denied coverage.
5.18 Compensation; Employment Agreements. The COMPANY has delivered to
URSI an accurate schedule (Schedule 5.18) showing all officers, directors and
key managers of the COMPANY (including the COMPANY's Subsidiaries), listing all
employment agreements with such officers, directors and key managers and the
rate of compensation (and the portions thereof attributable to salary, bonus and
other compensation, respectively) of each of such persons as of (i) the Balance
Sheet Date and (ii) the date hereof. The COMPANY has provided to URSI true,
complete and correct copies of any employment agreements for persons listed on
Schedule 5.18. Since the Balance Sheet Date there have been no increases in the
compensation payable or any special bonuses to any officer, director or key
manager, except as listed on Schedule 5.18.
5.19 Employee Plans. Schedule 5.19 attached hereto sets forth complete and
accurate lists of all employee benefit plans, all employee welfare benefit
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plans, all employee pension benefit plans, all multi-employer plans and all
multi-employer welfare arrangements (as defined in Sections 3(3), (1), (2), (37)
and (40), respectively, of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), which are currently maintained and/or sponsored by the
COMPANY (or any of the COMPANY's Subsidiaries), or to which any COMPANY (or any
of the COMPANY's Subsidiaries) currently contributes, or has an obligation to
contribute in the future (including, without limitation, benefit plans or
arrangements that are not subject to ERISA, such as employment agreements and
any other agreements containing "golden parachute" provisions and deferred
compensation agreements), together with a classification of employees covered
thereby (collectively, the "Plans"). Schedule 5.19 sets forth all of the Plans
that have been terminated within the past six years. The COMPANY has heretofore
delivered to URSI correct and complete copies of each of the following:
(i) Each Plan and all amendments thereto; the trust agreement and/or
insurance contracts, if any, forming a part of such Plan and all amendments
thereto; and the resolutions and agreements, if any by which the COMPANY (or any
of the COMPANY's Subsidiaries) adopted such Plan.
(ii) All written, and descriptions of all oral, employment,
termination, and severance agreements, contracts, arrangements and
understandings listed in Schedule 5.19.
(iii) Sample benefit distribution forms that pertain to all Plans
that are intended to qualify (the "Qualified Plans") under Section 401(a) of the
Code.
(iv) The most recent actuarial report and the most recent executed
Form PBGC-1 with respect to each Plan that is a defined benefit pension plan as
defined in Section 414(j) of the Code (a "Defined Benefit Plan").
(v) Forms 5500 or, as applicable Forms 5500-C/R, filed with respect
to the three most recent plan years of each Plan, and all schedules thereto.
(vi) The most recent determination letter issued by the Internal
Revenue Service regarding the qualified status of each Qualified Plan.
(vii) The most recent accountant's report, if any, with respect to
each Plan.
(viii) The most recent summary plan description, and any subsequent
summaries of material modifications, with respect to each Plan.
(ix) The bond required by Section 412 of ERISA, if any.
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(x) All documents required to be filed with the Internal Revenue
Service, the Pension Benefit Guaranty Corporation (the "PBGC"), or distributed
to participants and beneficiaries in connection with the termination of any
Qualified Plan listed on Schedule 5.19 as terminated.
5.20 Compliance with ERISA. Except for the Plans, neither the COMPANY nor
any of the COMPANY's Subsidiaries maintains or sponsors, or is a contributing
employer to, a pension, profit-sharing, deferred compensation, stock option,
employee stock purchase or other employee benefit plan, employee welfare benefit
plan, or any other arrangement with their respective employees, whether or not
subject to ERISA. All Plans are in all material respects in compliance with all
applicable provisions of ERISA and the regulations issued thereunder, the Code
and the regulations issued thereunder, as well as with all other applicable
laws, and have been administered, operated and managed in accordance with the
governing documents. All Qualified Plans are qualified under Section 401(a) of
the Code and have been determined by the Internal Revenue Service to be so
qualified or application for determination letters have been timely submitted to
the Internal Revenue Service and nothing has occurred since the date of each
Qualified Plan's most recent determination letter that would adversely affect
such Plan's tax-qualified status. To the extent that any Qualified Plans have
not been amended to comply with applicable law, the remedial amendment period
permitting retroactive amendment of such Qualified Plans has not expired and
will not expire within one hundred twenty (120) days after the Closing Date. All
reports and other documents required to be filed with any governmental agency or
distributed to plan participants or beneficiaries (including, but not limited
to, annual reports, summary annual reports, actuarial reports, PBGC-1 Forms,
audits or tax returns) have been timely filed or distributed. None of: (i) the
STOCKHOLDERS; (ii) any Plan; or (iii) the COMPANY (including any of the
COMPANY's Subsidiaries) has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No Plan has
incurred an accumulated funding deficiency, as defined in Section 412(a) of the
Code and Section 302(1) of ERISA; and no circumstances exist pursuant to which
the COMPANY (including any of the COMPANY's Subsidiaries) could have any direct
or indirect liability whatsoever (including being subject to any statutory lien
to secure payment of any such liability), to the PBGC under Title IV of ERISA or
to the Internal Revenue Service for any excise tax or penalty with respect to
any plan now or hereinafter maintained or contributed to by the COMPANY or any
member of a "controlled group" (as defined in Section 4001(a)(14) of ERISA) that
includes the COMPANY; and neither the COMPANY (including any of the COMPANY's
Subsidiaries) nor any member of a "controlled group" (as defined above) that
includes the COMPANY currently has (or at the Closing Date will have) any
obligation whatsoever to contribute to any "multi-employer pension plan" (as
defined in ERISA Section 4001(a)(14)), nor has any
-16-
withdrawal liability whatsoever (whether or not yet assessed) arising under or
capable of assertion under Title IV of ERISA (including, but not limited to,
Sections 4201, 4202, 4203, 4204, or 4205 thereof) been incurred by any Plan.
Further, except as set forth in Schedule 5.20:
(i) there have been no terminations, partial terminations or
discontinuance of contributions to any Qualified Plan without a determination by
the Internal Revenue Service that such action does not adversely affect the
tax-qualified status of such Qualified Plan;
(ii) no Plan which is subject to the provisions of Title IV of ERISA
has been terminated;
(iii) there have been no "reportable events" (as that phrase is
defined in Section 4043 of ERISA) with respect to any Plan which were not
properly reported;
(iv) the valuation of assets of any Defined Benefit Plan, as of the
Closing Date, shall equal or exceed the actuarial present value of all accrued
pension benefits under any such Defined Benefit Plan in accordance with the
assumptions contained in the Regulations of the PBGC governing the funding of
terminated Defined Benefit Plans;
(v) with respect to Plans which qualify as "group health plans"
under Section 4980B of the Internal Revenue Code and Section 607(l) of ERISA and
related regulations (relating to the benefit continuation rights imposed by
"COBRA"), the COMPANY (including any of the COMPANY's Subsidiaries) and the
STOCKHOLDERS have complied in all material respects (and on the Closing Date
will have complied in all material respects) with all reporting, disclosure,
notice, election and other benefit continuation requirements imposed thereunder
as and when applicable to such plans, and the COMPANY (including the COMPANY's
Subsidiaries) has not incurred (and will not incur) any direct or indirect
liability and is not (and will not be) subject to any loss, assessment, excise
tax penalty, loss of federal income tax deduction or other sanction, arising on
account of or in respect of any direct or indirect failure by the COMPANY
(including any of the COMPANY's Subsidiaries) or the STOCKHOLDERS, at any time
prior to the Closing Date, to comply with any such federal or state benefit
continuation requirement, which is capable of being assessed or asserted before
or after the Closing Date directly or indirectly against the COMPANY (including
any of the COMPANY's Subsidiaries) or the STOCKHOLDERS with respect to such
group health plans;
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(vi) The COMPANY (including any of the COMPANY's Subsidiaries) is
not now nor has it been within the past five years a member of a "controlled
group" as defined in ERISA Section 4001(a)(14);
(vii) there is no pending litigation, arbitration, or disputed
claim, settlement or adjudication proceeding, and to the COMPANY's knowledge,
there is no threatened litigation, arbitration or disputed claim, settlement or
adjudication proceeding, audit or any governmental or other proceeding, audit or
investigation with respect to any Plan, or with respect to any fiduciary,
administrator, or sponsor thereof (in their capacities as such), or any party in
interest thereof;
(viii) the Financial Statements as of the Balance Sheet Date reflect
the approximate total pension, medical and other benefit expense for all Plans,
and no material funding changes or irregularities are reflected thereon which
would cause such Financial Statements to be not representative of prior periods;
(ix) The COMPANY (including any of the COMPANY's Subsidiaries) has
not incurred liability under Section 4062 of ERISA;
(x) Each Qualified Plan that is listed as terminated on Schedule
5.19 was terminated in compliance with all applicable requirements of ERISA and
the Code;
(xi) Except for any Qualified Plan that is categorized on Schedule
5.19 as having been merged with another Qualified Plan, no Qualified Plan of the
COMPANY (including any of the COMPANY's Subsidiaries) has been merged during the
six years immediately before the Closing Date;
(xii) Each Qualified Plan that is categorized on Schedule 5.19 as
having been merged was merged in compliance with all applicable requirements of
ERISA and the Code;
(xiii) Apart from health benefits provided to former employees under
Section 4980B of the Code and Part 6 of Title I(B) of ERISA, the COMPANY
(including any of the COMPANY's Subsidiaries) has no obligation to provide
health or medical benefits to anyone other than its active employees;
(xiv) The COMPANY (including any of the COMPANY's Subsidiaries) does
not sponsor, contribute to, or have any obligation to contribute to any
voluntary employees beneficiary association, as described in Section 501(c)(9)
of the Code; and
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(xv) Except as set forth in Section 5.19, the consummation of the
transactions contemplated hereby will not result in any obligation to pay any
employee of the COMPANY (including any of the COMPANY's Subsidiaries) severance
or termination benefits so long as such employee remains employed by the COMPANY
(including any of the COMPANY's Subsidiaries) after the Closing Date.
5.21 Conformity with Law. Except to the extent set forth on Schedule 5.21,
the COMPANY (including the COMPANY's Subsidiaries) is not in violation of any
law or regulation or any order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them which would have a Material
Adverse Effect; and except to the extent set forth in Schedule 5.10, there are
no claims, actions, suits or proceedings pending or, to the knowledge of the
COMPANY, threatened, against or affecting the COMPANY (including the COMPANY's
Subsidiaries), at law or in equity, or before or by any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over any of them which would have a Material
Adverse Effect, and no notice of any such claim, action, suit or proceeding,
whether pending or threatened, has been received. The COMPANY (including all of
the COMPANY's Subsidiaries) has conducted and is conducting its business in
compliance with the requirements, standards, criteria and conditions set forth
in applicable federal, state and local statutes, ordinances, orders, approvals,
variances, rules and regulations and is not in violation of any of the foregoing
which would have a Material Adverse Effect.
5.22 Taxes. Except as set forth in Schedule 5.22,
(i) All Tax Returns required to have been filed by or with respect
to the COMPANY and any affiliated, combined, consolidated, unitary or similar
group of which the COMPANY is or was a member (a "Relevant Group") with any
Taxing Authority have been duly filed, and each such Tax Return correctly and
completely reflects the income, franchise or other Tax liability and all other
information, including the tax basis and recovery periods for assets, required
to be reported thereon. The Company has furnished or made available to URSI
complete and accurate copies of all income and franchise tax returns, and any
amendments thereto, filed by the Company and any Acquired Party for all taxable
years ending on or after December 31, 1994. All Taxes (whether or not shown on
any Tax Return and whether or not assessed) owed by the COMPANY, its
Subsidiaries and any member of a Relevant Group (collectively, the "Acquired
Parties") have been paid.
(ii) The provisions for Taxes due by the COMPANY and its
Subsidiaries (as opposed to any reserve for deferred Taxes established to
reflect
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timing differences between book and Tax income) in the COMPANY Financial
Statements are sufficient for, and adequate to cover, all unpaid Taxes of such
Acquired Party.
(iii) No Acquired Party is a party to any current agreement
extending the time within which to file any Tax Return. No claim has ever been
made by any Taxing Authority in a jurisdiction in which an Acquired Party does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(iv) Each Acquired Party has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(v) No Acquired Party expects any Taxing Authority to assess any
additional Taxes against or in respect of it for any past period. There is no
dispute or claim concerning any Tax liability of any Acquired Party either (i)
claimed or raised by any Taxing Authority or (ii) otherwise known to any
Acquired Party. No issues have been raised in any examination by any Taxing
Authority with respect to any Acquired Party which, by application of similar
principles, reasonably could be expected to result in a proposed deficiency for
any other period not so examined. Schedule 5.22(v) attached hereto lists all
federal, state, local and foreign income Tax Returns filed by or with respect to
any Acquired Party for all taxable periods ended on or after December 31, 1993,
indicates those Tax Returns, if any, that have been audited, and indicates those
Tax Returns that currently are the subject of audit. Each Acquired Party has
delivered to URSI complete and correct copies of all federal, state, local and
foreign income Tax Returns filed by, and all Tax examination reports and
statements of deficiencies assessed against or agreed to by, such Acquired Party
since January 1, 1993.
(vi) No Acquired Party has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to any Tax
assessment or deficiency.
(vii) No Acquired Party has made any payments, is obligated to make
any payments, or is a party to any agreement that under certain circumstances
could require it to make any payments, that would not be deductible by reason of
the application of Section 280G of the Code.
(viii) No Acquired Party is a party to or has any ongoing liability
under any Tax allocation or sharing agreement.
(ix) None of the assets of any Acquired Party constitutes tax-exempt
bond financed property or tax-exempt use property, within the
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meaning of Section 168 of the Code. No Acquired Party is a party to any "safe
harbor lease" that is subject to the provisions of Section 168(f)(8) of the
Internal Revenue Code as in effect prior to the Tax Reform Act of 1986, or to
any "long-term contract" within the meaning of Section 460 of the Code.
(x) No Acquired Party is a party to any joint venture, partnership
or other arrangement that is treated as a partnership for federal income Tax
purposes.
(xi) To the knowledge of the COMPANY, there are no accounting method
changes, or proposed or threatened accounting method changes, of any Acquired
Party that could give rise to an adjustment under Section 481 of the Code for
periods after the Closing Date.
(xii) No Acquired Party has received any written ruling of a Taxing
Authority related to Taxes or entered into any written and legally binding
agreement with a Taxing Authority relating to Taxes.
(xiii) Each Acquired Party has substantial authority for the
treatment of, or has disclosed (in accordance with Section 6662(d)(2)(B)(ii) of
the Code) on its federal income Tax Returns, all positions taken on its relevant
federal income Tax Returns that could give rise to a substantial understatement
of federal income Tax within the meaning of Section 6662(d) of the Code.
(xiv) No Acquired Party has any liability for Taxes of any Person
other than such Acquired Party (i) under Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local or foreign law), (ii) as a
transferee or successor, (iii) by contract or (iv) otherwise.
(xv) No consent has been filed relating to the Company or any
Acquired Party pursuant to Section 341(f) of the Code, nor has the Company or
any Acquired Party made any tax election that would materially increase the
amount of Taxes payable by the Company or any Acquired Party in any Post-Closing
Period.
(xvi) There is no current plan or intention by any STOCKHOLDER to
sell, exchange, or otherwise dispose of a number of shares of URSI Stock
received in the Merger that would reduce the STOCKHOLDERS' ownership of URSI
Stock to a number of shares having a value, as of the Closing Date, of less than
fifty percent (50%) of the value of all of the formerly outstanding stock of the
COMPANY, respectively, as of the same date. For purposes of this representation,
shares of COMPANY Stock exchanged for cash or other property, shares of the
COMPANY Stock surrendered by dissenters, if any, and shares of COMPANY Stock
exchanged for cash in lieu of fractional shares of URSI Stock will be treated as
outstanding COMPANY Stock on the date of
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the transaction. Moreover, shares of COMPANY Stock and shares of URSI Stock held
by STOCKHOLDERS and otherwise sold, redeemed, or disposed of on or after January
1, 1997, including after the Closing Date, will be considered in making this
representation.
(xvii) The STOCKHOLDERS and the COMPANY and, to the knowledge of the
COMPANY and STOCKHOLDERS, URSI will each pay their respective expenses, if any,
incurred in connection with the Merger in accordance with Section 18.6 hereof.
(xviii) There is no intercorporate indebtedness existing between
URSI and the COMPANY that was issued, acquired, or will be settled at a
discount.
(xix) The COMPANY is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(xx) The fair market value of the assets of the COMPANY transferred
to URSI exceeds the sum of its liabilities, plus the amount of liabilities, if
any, to which the transferred assets are subject.
(xxi) The liabilities of the COMPANY assumed by URSI and the
liabilities to which the transferred assets are subject were incurred by the
COMPANY in the ordinary course of its business.
(xxii) The COMPANY is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(xxiii) None of the compensation received by any
STOCKHOLDER-employees of the COMPANY will be separate consideration for, or
allocable to, any of their shares of the COMPANY; none of the shares of URSI
Stock received by any STOCKHOLDER-employees in the Merger will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any STOCKHOLDER-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services.
(xxiv) The fair market value of the URSI Stock and other
consideration to be received by each STOCKHOLDER pursuant to the Merger, will be
approximately equal to the fair market value of the COMPANY Stock surrendered in
the Merger.
(xxv) To the knowledge of the STOCKHOLDERS, the fair market value as
of the Closing Date of the right of the STOCKHOLDERS to receive contingent
consideration pursuant to Section 2.2 of the Agreement will not
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exceed 7.5% of the aggregate consideration to be received by such STOCKHOLDERS
pursuant to the Merger.
(xxvi) Intentionally Omitted.
(xxvii) Intentionally Omitted.
Certain of the defined terms used in this Section 5.22 have the
meaning ascribed to them in Section 10.
5.23 No Violations. Neither the COMPANY (including the COMPANY's
Subsidiaries) nor, to the knowledge of the COMPANY, any other party thereto is
(i) in violation of any Charter Document or (ii) in default under any material
lease, instrument, agreement, license, or permit to which it is a party or by
which its properties are bound (the "Material Documents"); and, except as set
forth in the schedules and documents attached to this Agreement, (a) to the
knowledge of the COMPANY the transactions contemplated hereby will not have a
Material Adverse Effect on the rights and benefits of the COMPANY (including the
COMPANY's Subsidiaries) under the Material Documents and (b) except as set forth
on Schedule 5.23, the execution of this Agreement and the performance of the
obligations hereunder and the consummation of the transactions contemplated
hereby will not result in any material violation or breach or constitute a
default under any of the terms or provisions of the Material Documents or the
Charter Documents. Except as set forth on Schedule 5.23, none of the Material
Documents requires notice to, or the consent or approval of, any governmental
agency or other third party to any of the transactions contemplated hereby to
remain in full force and effect or give rise to any right to termination,
cancellation or acceleration or loss of any right or benefit.
5.24 Government Contracts. Except as set forth on Schedule 5.24, the
COMPANY (including the COMPANY's Subsidiaries) is not now a party to any
governmental contracts subject to price redetermination or renegotiation.
5.25 Absence of Changes. Since the Balance Sheet Date, except as set forth
on Schedule 5.25, there has not been with respect to the COMPANY and the
COMPANY's Subsidiaries:
(i) any event or circumstance (either singly or in the aggregate)
which would constitute a Material Adverse Effect;
(ii) any change in its authorized capital, or securities
outstanding, or ownership interests or any grant of any options, warrants,
calls, conversion rights or commitments;
-23-
(iii) any declaration or payment of any dividend or distribution in
respect of its capital stock or any direct or indirect redemption, purchase or
other acquisition of any of its capital stock, except any declaration of
dividends payable by any COMPANY Subsidiary to the COMPANY;
(iv) any increase in the compensation, bonus, sales commissions or
fee arrangement payable or to become payable by it to any of its respective
officers, directors, stockholders, employees, consultants or agents, except for
ordinary and customary bonuses and salary increases for employees (other than
the STOCKHOLDERS) in accordance with past practice;
(v) any work interruptions, labor grievances or claims filed, or any
similar event or condition of any character that would have a Material Adverse
Effect;
(vi) any distribution, sale or transfer, or any agreement to sell or
transfer any material assets, property or rights of any of its respective
business to any person, including, without limitation, the STOCKHOLDERS and
their affiliates, other than distributions, sales or transfers in the ordinary
course of business to persons other than the STOCKHOLDERS and their affiliates;
(vii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to it, including without limitation any indebtedness or
obligation of any STOCKHOLDERS or any affiliate thereof, provided that it may
negotiate and adjust bills in the course of good faith disputes with customers
in a manner consistent with past practice, provided, further, that such
adjustments shall not be deemed to be included in Schedule 5.11 unless
specifically listed thereon;
(viii) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of its assets, property or
rights or requiring consent of any party to the transfer and assignment of any
such assets, property or rights;
(ix) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire any property, rights or assets outside of the
ordinary course of business;
(x) any waiver of any of its material rights or claims;
(xi) any transaction by it outside the ordinary course of their
respective businesses; or
(xii) any cancellation or termination of a Material Contract.
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5.26 Deposit Accounts; Powers of Attorney. The COMPANY has delivered to
URSI an accurate schedule (Schedule 5.26) as of the date of the Agreement, of:
(i) the name of each financial institution in which the COMPANY has
accounts or safe deposit boxes;
(ii) the names in which the accounts or boxes are held;
(iii) the type of account and account number; and
(iv) the name of each person authorized to draw thereon or have
access thereto.
Schedule 5.26 also sets forth the name of each person, corporation,
firm or other entity holding a general or special power of attorney from the
COMPANY or any of the COMPANY's Subsidiaries and a description of the terms of
such power.
5.27 Validity of Obligations. The execution and delivery of this Agreement
by the COMPANY and the performance of the transactions contemplated herein have
been duly and validly authorized by the Board of Directors and shareholders of
the COMPANY and this Agreement has been duly and validly authorized by all
necessary corporate action and, assuming due authorization, execution and
delivery by URSI, is a legal, valid and binding obligation of the COMPANY,
enforceable against the COMPANY in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies.
5.28 Relations with Governments. The COMPANY has not made, offered or
agreed to offer anything of value to any governmental official, political party
or candidate for government office which would cause the COMPANY to be in
violation of the Foreign Corrupt Practices Act of 1977, as amended or any law of
similar effect.
5.29 Disclosure. Without waiving any rights under Section 8.7 or Section
12.1, the COMPANY and the STOCKHOLDERS acknowledge and agree that (i) there
exists no firm commitment, binding agreement, or promise or other assurance of
any kind, whether express or implied, oral or written, that a Registration
Statement will become effective or that the IPO pursuant thereto will occur at a
particular price or within a particular range of prices or occur at all; (ii)
neither URSI nor any of its officers, directors, agents or representatives nor
any prospective underwriters in the IPO (the "Underwriters") shall have any
liability to the COMPANY, the
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STOCKHOLDERS or any other person affiliated or associated with the COMPANY for
any failure of the Registration Statement to become effective, or of the IPO to
occur at a particular price or within a particular range of prices or to occur
at all; and (iii) the decision of STOCKHOLDERS to enter into this Agreement, or
to vote in favor of or consent to the proposed Merger, has been made independent
of, and without reliance upon, any statements, opinions or other communications
of, or due diligence investigations which have been or will be made or performed
by any prospective Underwriter, relative to URSI or the prospective IPO. The
Underwriters shall have no obligation to the STOCKHOLDERS with respect to any
disclosure contained in the Registration Statement.
(B) Representations and Warranties of STOCKHOLDERS. Each STOCKHOLDER
severally represents and warrants that the representations and warranties set
forth below are true as of the date of this Agreement and, subject to Section
7.9 hereof, shall be true at the time of Pre-Closing and on the Closing Date,
and that such representations and warranties as made on the Closing Date shall
survive until the Expiration Date.
5.30 Authority; Ownership. Such STOCKHOLDER has the full legal right,
power and authority to enter into this Agreement. Such STOCKHOLDER owns
beneficially and of record all of the shares of the COMPANY stock identified on
Annex II as being owned by such STOCKHOLDER, and, except as set forth on
Schedule 5.30 hereof, such COMPANY Stock is owned free and clear of all liens,
encumbrances and claims of every kind.
5.31 Preemptive Rights. Such STOCKHOLDER does not have, or hereby waives,
any preemptive or other right to acquire shares of COMPANY Stock or URSI Stock
that such STOCKHOLDER has or may have had other than rights of any STOCKHOLDER
to acquire URSI Stock pursuant to (i) this Agreement or (ii) any option granted
by URSI.
5.32 No Intention to Dispose of URSI Stock. There is no current plan or
intention by such STOCKHOLDER to sell, exchange or otherwise dispose of a number
of shares of URSI Stock received in the Merger that would reduce such
STOCKHOLDER's ownership of URSI stock to a number of shares having a value, as
of the Closing Date, of less than fifty percent (50%) of the value of all of the
formerly outstanding stock of the COMPANY held by such STOCKHOLDER immediately
prior to the Merger.
6. REPRESENTATIONS OF URSI.
URSI represents and warrants that (i) all of the following
representations and warranties are true at the date of this Agreement and shall
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be true at the time of Pre-Closing and the Closing Date and that such
representations and warranties shall survive the Closing Date until the
Expiration Date and (ii) solely for purposes of Section 11.2(iv) hereof, and
solely to the extent that in connection with the IPO the STOCKHOLDERS actually
incur liability under the 1933 Act, the 1934 Act, or any other federal or state
securities laws, the representations and warranties set forth herein shall
survive until the expiration of any applicable limitations period.
6.1 Due Organization. URSI is duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is duly authorized and
qualified under all applicable laws, regulations, and ordinances of public
authorities to carry on its business in the places and in the manner as now
conducted except for where the failure to be so authorized or qualified would
not have a material adverse effect on the business, operations, affairs,
properties, assets or condition (financial or otherwise), of URSI and on URSI's
Subsidiaries (as defined in Section 6.8 herein), taken as a whole (a "URSI
Material Adverse Effect"). True, complete and correct copies of the Certificate
of Incorporation and the Bylaws of URSI, certified by the Secretary or an
Assistant Secretary of URSI, are attached hereto as Annex IV. A true, complete
and correct copy of the Certificate of Incorporation of URSI, certified by the
Secretary of State of the State of Delaware, shall be delivered at the
Pre-Closing.
6.2 URSI Stock. The URSI Stock to be delivered to the STOCKHOLDERS on the
Closing Date shall constitute valid and legally issued shares of URSI, fully
paid and nonassessable, and except as set forth in this Agreement, will be owned
free and clear of all liens, security interests, pledges, charges, voting
trusts, restrictions, encumbrances and claims of every kind created by URSI, and
will be legally equivalent in all respects to the URSI Stock issued and
outstanding as of the date hereof. The shares of URSI Stock to be issued to the
STOCKHOLDERS pursuant to this Agreement will not be registered under the 1933
Act, except as provided in Section 17 hereof.
6.3 Validity of Obligations. The execution and delivery of this Agreement,
the Employment Agreements (as defined in Section 9.12), the Consulting
Agreements (as defined in Section 9.12) and the Leases (as defined in Section
9.12) by URSI and the performance by URSI of the transactions contemplated
herein or therein have been or will be duly and validly authorized by the Board
of Directors of URSI, and this Agreement, the Employment Agreements, the
Consulting Agreements and the Leases have been or will be duly and validly
authorized by all necessary corporate action, duly executed and delivered and
are or will be legal, valid and binding obligations of URSI, enforceable against
URSI in accordance with their respective terms.
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6.4 Authorization. The representatives of URSI executing this Agreement
have the corporate authority to enter into and bind URSI to the terms of this
Agreement. URSI has the full legal right, power and authority to enter into this
Agreement and the Merger.
6.5 No Conflicts. The execution, delivery and performance of this
Agreement, the consummation of any transactions herein referred to or
contemplated by and the fulfillment of the terms hereof and thereof will not:
(i) conflict with, or result in a breach or violation of, the
Certificate of Incorporation or Bylaws of URSI;
(ii) materially conflict with, or result in a material default (or
would constitute a default but for any requirement of notice or lapse of time or
both) under any document, agreement or other instrument to which URSI is a
party, or result in the creation or imposition of any lien, charge or
encumbrance on any of URSI's properties pursuant to (A) any law or regulation to
which URSI or any of its property is subject, or (B) any judgment, order or
decree to which URSI is bound or any of its property is subject; or
(iii) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of URSI.
6.6 Capitalization of URSI and Ownership of URSI STOCK. The authorized and
outstanding capital stock of URSI is as set forth in Section 1.4(ii). All of the
issued and outstanding shares of URSI are owned beneficially and of record by
the persons set forth on Annex III. All issued and outstanding shares of URSI
stock are duly authorized, validly issued, fully paid and nonassessable. There
are no obligations of URSI to repurchase, redeem or otherwise acquire any shares
of URSI stock. Except as described in the Registration Statement and except with
respect to a contemplated stock split prior to the filing of the Registration
Statement, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which URSI or any of its
subsidiaries are a party or by which they are bound obligating URSI or any of
its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock of URSI or any of its subsidiaries or
obligating URSI or any of its subsidiaries to grant, extend, accelerate the
vesting of or enter into any such option, warrant, equity security, call, right,
commitment or agreement. To the knowledge of URSI, as of the Closing Date, none
of the STOCKHOLDERS set forth on Annex III will be a party to or subject to any
voting trust, proxy or other agreement or understanding with respect to the
shares of capital stock of URSI owned by such STOCKHOLDER. All of the shares of
URSI Stock to be issued to the STOCKHOLDERS in accordance herewith will be duly
authorized, validly
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issued, fully paid and nonassessable. All of the shares of URSI Stock issued to
persons set forth on Annex III and, based on the representations of STOCKHOLDERS
contained in this Agreement and in the documents delivered to URSI pursuant
hereto, to STOCKHOLDERS pursuant to this Agreement, were or will be offered,
issued, sold and delivered by URSI in compliance with all applicable state and
federal laws concerning the issuance of securities and none of such shares were
or will be issued in violation of the preemptive rights of any past or present
stockholder. On the Closing Date the capitalization of URSI will be as set forth
in the Registration Statement.
6.7 No Side Agreements. URSI has not entered into any agreement with any
of the Founding Companies or any of the stockholders of the Founding Companies
other than the Other Agreements and the agreements contemplated by each of the
Other Agreements, including the employment agreements referred to therein. URSI
has made available to the COMPANY copies of all agreements entered into between
(i) URSI and its affiliates and (ii) URSI and the Founding Companies or any
stockholders of the Founding Companies. Further, URSI will make available to the
COMPANY copies of any of the foregoing agreements entered into between the date
hereof and the Closing Date promptly after such agreements are entered into.
6.8 Subsidiaries. Except for those companies set forth on Schedule 6.8
(collectively, "URSI's Subsidiaries"), URSI does not presently own, of record or
beneficially, or control, directly or indirectly, any capital stock, securities
convertible into capital stock or any other equity interest in any corporation,
association or business entity. URSI is not, directly or indirectly, a
participant in any joint venture, partnership or other non-corporate entity.
6.9 Business; Real Property; Material Agreements; Financial Information.
URSI has not conducted any business since the date of its inception, except in
connection with this Agreement, the Other Agreements and the IPO of URSI Stock
contemplated by Section 8.7. URSI does not own any real property or any material
personal property and is not a party to any other agreement, except as listed on
Schedule 6.9(a) and except that URSI is a party to the Other Agreements and the
agreements contemplated thereby and to such agreements as will be filed as
Exhibits to the Registration Statement. URSI was formed in 1997, and has
historical financial statements only for the year ended December 31, 1997.
Attached hereto as Schedule 6.9(b) are URSI's audited historical financial
statements for the year ended December 31, 1997. Such URSI financial statements
have been prepared in accordance with generally accepted accounting principles
and present fairly the financial position of URSI as of the dates indicated
thereon, and such financial statements present fairly the results of their
respective operations for the periods indicated thereon. URSI has no material
liabilities, accrued or
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contingent, other than those incurred in connection with this Agreement, the
Other Agreements and the contemplated IPO of URSI Stock.
6.10 Conformity with Law. URSI is not in violation of any law or
regulation or any order of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over either of them which would have a URSI Material Adverse
Effect. There are no claims, actions, suits or proceedings, pending or, to the
knowledge of URSI, threatened, against or affecting URSI, at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality having jurisdiction over
either of them and no notice of any claim, action, suit or proceeding, whether
pending or threatened, has been received. URSI (including URSI's Subsidiaries)
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in applicable
Federal, state and local statutes, ordinances, orders, approvals, variances,
rules and regulations and is not in violation of any of the foregoing which
would have a URSI Material Adverse Effect.
6.11 No Violations. A certified copy of the Certificate of Incorporation
and a true, complete and correct copy of the Bylaws of URSI, both as amended to
date, (the "URSI Charter Documents"), have been or will be delivered to the
COMPANY. URSI is not (i) in violation of any URSI Charter Document or (ii) in
default under any material lease, instrument, agreement, license, permit to
which it is a party or by which its properties are bound (the "URSI Material
Documents"); and, except as set forth in the schedules and documents listed in
the Registration Statement, (a) the rights and benefits of URSI (including
URSI's Subsidiaries) under the URSI Material Documents will not be materially
and adversely affected by the transactions contemplated hereby and (b) the
execution of this Agreement and the performance of the obligations hereunder and
the consummation of the transactions contemplated hereby will not result in any
material violation or breach or constitute a default under any of the terms or
provisions of the URSI Material Documents or the URSI Charter Documents. Except
as set forth on Schedule 6.11, none of the URSI Material Documents requires
notice to, or the consent or approval of, any governmental agency or other third
party to any of the transactions contemplated hereby to remain in full force and
effect or give rise to any right to termination, cancellation or acceleration or
loss of any right or benefit. The minute books of URSI and each of URSI's
subsidiaries as heretofore made available to the COMPANY are true and correct.
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6.12 Taxes.
(i) URSI has no plan or intention for either it or any affiliated
party to purchase or reacquire any of the URSI stock issued in connection with
the Merger.
(ii) URSI and, to the knowledge of URSI, the STOCKHOLDERS will each
pay their respective expenses, if any, incurred in connection with the Merger in
accordance with Section 18.6 hereof.
(iii) There is no intercorporate indebtedness existing between URSI
and the COMPANY that was issued, acquired, or will be settled at a discount.
(iv) URSI is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
(v) URSI intends after the Closing Date to continue the historic
business of the COMPANY or to use a significant portion of the COMPANY's
historic business assets in a business.
(vi) URSI has no plan or intention to sell or otherwise dispose of
any of the assets of the COMPANY (including the stock or assets of any Acquired
Party) acquired in the transaction, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C) of the
Internal Revenue Code.
(vii) None of the compensation received by any STOCKHOLDER-employees
of the COMPANY after the Merger will be separate consideration for, or allocable
to, any of their shares of the COMPANY; none of the shares of URSI Stock
received by any STOCKHOLDER-employees in the Merger will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any STOCKHOLDER-employees after the Merger pursuant to
arrangements entered into after the Merger will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
(viii) The proposed Merger is being undertaken for reasons germane
to the business of URSI.
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7. COVENANTS PRIOR TO CLOSING.
7.1 Access and Cooperation; Due Diligence.
(i) Between the date of this Agreement and the Closing Date, the
COMPANY will afford to the officers and authorized representatives of URSI and
the Founding Companies other than the COMPANY access to all of the COMPANY's
(including the COMPANY's Subsidiaries) key employees, sites, properties, books
and records and will furnish URSI with such additional financial and operating
data and other information as to the business and properties of the COMPANY
(including the COMPANY's Subsidiaries) as URSI or the Founding Companies other
than the COMPANY may from time to time reasonably request. The COMPANY will
cooperate with URSI and the Founding Companies other than the COMPANY, its
representatives, auditors and counsel in the preparation of any documents or
other material which may be required in connection with any documents or
materials required by this Agreement. URSI, the STOCKHOLDERS and the COMPANY
will treat all information obtained in connection with the negotiation and
performance of this Agreement or the due diligence investigations conducted with
respect to the Founding Companies other than the COMPANY as confidential in
accordance with the provisions of Section 14 hereof. In addition, URSI will
cause each of the Founding Companies other than the COMPANY to enter into a
provision similar to this Section 7.1 requiring each such Founding Company to
keep confidential any information obtained by such Founding Company.
(ii) Between the date of this Agreement and the Closing Date, URSI
will afford to the officers and authorized representatives of the COMPANY access
to all of URSI's sites, properties, books and records and will furnish the
COMPANY with such additional financial and operating data and other information
as to the business and properties of URSI as the COMPANY may from time to time
reasonably request. URSI will cooperate with the COMPANY, its representatives,
engineers, auditors and counsel in the preparation of any documents or other
material which may be required in connection with any documents or materials
required by this Agreement. The COMPANY will cause all information obtained in
connection with the negotiation and performance of this Agreement to be treated
as confidential in accordance with the provisions of Section 14 hereof.
7.2 Conduct of Business Pending Closing. Between the date of this
Agreement and the Closing Date, the COMPANY will, and will cause the COMPANY's
subsidiaries to, except as set forth on Schedule 7.2:
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(i) carry on its respective businesses in substantially the same
manner as it has heretofore and not introduce any material new method of
management, operation or accounting;
(ii) maintain its respective properties and facilities, including
those held under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
(iii) perform all of its respective obligations under agreements to
which it is a party relating to or affecting its respective assets, properties
or rights;
(iv) subject to Section 7.6, keep in full force and effect present
insurance policies or other comparable insurance coverage;
(v) use best efforts to maintain and preserve its business
organization intact, retain its respective present employees and maintain its
respective relationships with suppliers, customers and others having business
relations with it;
(vi) maintain compliance with all material permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities; and
(vii) maintain compliance with all present debt and lease
instruments and not enter into new or amended debt or lease instruments over
$2,500, without the knowledge and consent of URSI (which consent shall not be
unreasonably withheld).
7.3 Prohibited Activities. Except as disclosed on Schedule 7.3,
between the date of this Agreement and the Closing Date, the COMPANY has not
and, without the prior written consent of URSI, will not:
(i) make any change in its Articles of Incorporation or Bylaws;
(ii) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind other than in
connection with the exercise of options or warrants listed on Schedule 5.4;
(iii) declare or pay any dividend, or make any distribution in
respect of its stock whether now or hereafter outstanding, or purchase, redeem
or otherwise acquire or retire for value any shares of its stock;
(iv) enter into any contract (including any contract to provide
services to customers) or commitment or incur or agree to incur any liability or
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make any capital expenditures, except if (x) it is in the normal course of
business (consistent with past practice) or (y) when aggregated with all other
such contracts, commitments, liabilities and capital expenditures not in the
normal course of business consistent with past practice, it involves an amount
not in excess of $25,000;
(v) increase the compensation payable or to become payable to any
officer, director, STOCKHOLDER, employee or agent, or make any bonus or
management fee payment to any such person, except (x) bonuses to employees
(other than the STOCKHOLDERS or their affiliates) consistent with past practice
and (y) increases in salaries and commissions payable to employees (other than
to STOCKHOLDERS and their affiliates), provided that neither the salary nor the
commission payable to any employee may increase to a level higher than one
hundred ten percent (110%) of such employee's current salary or bonus, whichever
is applicable;
(vi) create, assume or permit to exist any mortgage, pledge or other
lien or encumbrance upon any assets or properties whether now owned or hereafter
acquired, except (1) with respect to purchase money liens incurred in connection
with the acquisition of equipment with an aggregate cost not in excess of
$10,000 necessary or desirable for the conduct of the businesses of the COMPANY
(including the COMPANY's Subsidiaries), or (2) liens set forth on Schedule 5.15
hereto or (3) liens for taxes either not yet due or materialmen's, mechanics',
workers', repairmen's, employees' or other like liens arising in the ordinary
course of business;
(vii) sell, assign, lease or otherwise transfer or dispose of any
property or equipment except in the normal course of business;
(viii) negotiate for the acquisition of any business or the start-up
of any new business;
(ix) merge or consolidate or agree to merge or consolidate with or
into any other corporation;
(x) waive any material rights or claims of the COMPANY, provided
that the COMPANY may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice, provided,
further, that such adjustments shall not be deemed to be included in Schedule
5.11 unless specifically listed thereon;
(xi) commit a material breach or amend or terminate any Material
Contract, or material permit, license or other right of the COMPANY, or make or
terminate any election involving Taxes which would in any way adversely
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affect the Tax liability of the Company or any Acquired Party (or URSI following
the Merger) in any taxable period; or
(xii) enter into any other transaction outside the ordinary course
of its business or prohibited hereunder.
7.4 No Shop. None of the STOCKHOLDERS, COMPANY, any of the COMPANY's
Subsidiaries nor any agent, officer, director or any representative of any of
the foregoing will, during the period commencing on the date of this Agreement
and ending with the earlier to occur of the Closing Date or the termination of
this Agreement in accordance with its terms, directly or indirectly:
(i) solicit or initiate the submission of proposals or offers from
any person for,
(ii) participate in any discussions pertaining to or
(iii) furnish any information to any person other than URSI or the
Founding Companies relating to, any acquisition or purchase of all or a material
amount of the assets of, or any equity interest in, the COMPANY or a merger,
consolidation or business combination of the COMPANY.
7.5 Notice to Bargaining Agents. Prior to the Pricing Date, the COMPANY
shall satisfy any requirement for notice of the transactions contemplated by
this Agreement under applicable collective bargaining agreements, and shall
provide URSI with proof that any required notice has been sent.
7.6 Termination of Plans. Prior to the Pricing Date, the COMPANY shall
terminate all Plans listed in Schedule 7.6.
7.7 URSI Prohibited Activities. Between the date of this Agreement and the
Closing Date, except as set forth on Schedule 7.7, URSI will not:
(i) issue any securities, options, warrants, calls, conversion
rights or commitments relating to its securities of any kind;
(ii) make any changes in its Certificate of Incorporation or Bylaws
other than one or more amendments to the Certificate of Incorporation to
accomplish a split or reverse split of the URSI Stock (provided that in the
event of any such split or reverse split, the number of shares of URSI Stock to
be delivered to the STOCKHOLDERS, and to the stockholders of the Other
Companies, as set forth on Annex I, will be adjusted accordingly);
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(iii) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures that would be material to
URSI and the URSI Subsidiaries;
(iv) hire or appoint any officer or director or increase the
compensation payable or to become payable to any officer or director; and
(v) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to URSI and the URSI Subsidiaries.
7.8 Notification of Certain Matters. The STOCKHOLDERS and the COMPANY
shall give prompt notice to URSI of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty of the COMPANY or the STOCKHOLDERS contained herein
to be untrue or inaccurate in any material respect on or prior to the Closing
Date and (ii) any material failure of any STOCKHOLDER or the COMPANY to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by such person hereunder, provided no such notice shall be required
until the Pricing Date with respect to the occurrence in the ordinary course of
business of any event which would cause Schedules 5.10, 5.11 or 5.14 to be
incorrect. URSI shall give prompt notice to the COMPANY of (i) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of URSI contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing Date and
(ii) any material failure of URSI to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this Section 7.8 shall not be deemed to (i)
modify the representations or warranties hereunder of the party delivering such
notice, which modification may only be made pursuant to Section 7.9, (ii) modify
the conditions set forth in Sections 8 and 9, or (iii) limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
7.9 Amendment of Schedules. Each party hereto agrees that, with respect to
the representations and warranties of such party contained in this Agreement,
such party shall have the continuing obligation until the Pre-Closing to
supplement or amend promptly the Schedules hereto with respect to any matter
hereafter arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Schedules, provided however, that supplements and amendments to Schedules 5.10,
5.11 and 5.14 shall only have to be delivered at the Pre-
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Closing, unless such Schedule is to be amended to reflect an event occurring
other than in the ordinary course of business. In the event that the COMPANY
amends or supplements a Schedule pursuant to this Section 7.9, and URSI and a
majority of the Founding Companies do not consent to the effectiveness of such
amendment or supplement at or before the Pre-Closing, this Agreement shall be
deemed terminated by mutual consent as set forth in Section 12.1(i) hereof. In
the event that URSI amends or supplements a Schedule pursuant to this Section
7.9 and COMPANY and a majority of the Founding Companies do not consent to the
effectiveness of such amendment or supplement at or before the Pre-Closing, this
Agreement shall be deemed terminated by mutual consent as set forth in Section
12.1(i) hereof. For all purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Sections 8.1 and
9.1 have been fulfilled, the Schedules hereto shall be deemed to be the
Schedules as amended or supplemented pursuant to this Section 7.9. In the event
that one of the other Founding Companies amends or supplements a Schedule
pursuant to Section 7.9 of one of the Other Agreements, URSI shall give the
COMPANY notice promptly after it has knowledge thereof. If URSI, COMPANY and a
majority of the Founding Companies do not consent to the effectiveness of such
amendment or supplement at or before the Pre-Closing, this Agreement shall be
deemed terminated by mutual consent as set forth in Section 12.1(i) hereof. For
purposes of this Section 7.9, URSI shall be deemed to have given its consent to
the effectiveness of any amendment or supplement to a Schedule if URSI does not
notify COMPANY of its disapproval within 48 hours after URSI is notified of such
amendment or supplement, and COMPANY and each other Founding Company shall be
deemed to have given its consent to the effectiveness of any amendment or
supplement to a Schedule if COMPANY or such other Founding Company, as
applicable, does not notify URSI of its disapproval within 48 hours after
COMPANY or such other Founding Company, as applicable, is notified of such
amendment or supplement. Except as otherwise provided herein, no amendment of or
supplement to a Schedule shall be made after the Pre-Closing.
7.10 Cooperation in Preparation of Registration Statement. The COMPANY and
STOCKHOLDERS shall furnish or cause to be furnished to URSI and the Underwriters
all of the information concerning the COMPANY or the STOCKHOLDERS reasonably
requested by URSI and the Underwriters, and will cooperate with URSI and the
Underwriters in the preparation of the Registration Statement and the prospectus
included therein (including audited financial statements prepared in accordance
with generally accepted accounting principles). The COMPANY and the STOCKHOLDERS
agree promptly to advise URSI if at any time during the period in which a
prospectus relating to the offering is required to be delivered under the
Securities Act, any information contained in the prospectus concerning the
COMPANY or the
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STOCKHOLDERS becomes incorrect or incomplete in any material respect, and to
provide the information needed to correct such inaccuracy.
7.11 Examination of Final Financial Statements. To the extent that
combined financial statements of the COMPANY and CABI for any quarter subsequent
to December 31, 1997 are required to be included in the Registration Statement,
the COMPANY shall provide, and URSI shall have had sufficient time to review,
the unaudited combined balance sheet and statements of income, cash flows and
retained earnings of the COMPANY and CABI as of the end of such quarter,
disclosing no Material Adverse Change in the combined financial condition or
results of operations of the COMPANY and CABI. Such financial statements, which
shall be deemed to be Financial Statements (as described in Section 5.9), shall
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as noted
therein). To the extent such Financial Statements shall be included or reflected
in the Registration Statement, any events or circumstances reflected therein
which might constitute a Material Adverse Effect with respect to the COMPANY and
CABI shall be deemed to have been waived by URSI and URSI shall have no rights
in respect of such Material Adverse Effect.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF STOCKHOLDERS AND COMPANY.
The obligations of STOCKHOLDERS and the COMPANY with respect to
actions to be taken on the Pricing Date are subject to the satisfaction or
waiver on or prior to the Pricing Date of all of the following conditions. The
obligations of the STOCKHOLDERS and the COMPANY with respect to actions to be
taken on the Closing Date are subject to the satisfaction or waiver on or prior
to the Closing Date of the conditions set forth in Sections 8.1 and 8.11.
8.1 Representations and Warranties; Performance of Obligations. All
representations and warranties of URSI contained in Section 6 shall be true and
correct in all material respects as of the Pricing Date and the Closing Date as
though such representations and warranties had been made as of that date; each
and all of the terms, covenants and conditions of this Agreement to be complied
with and performed by URSI on or before the Pricing Date and the Closing Date
shall have been duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Pricing Date and the Closing Date
and signed by the President or any Vice President of URSI shall have been
delivered to the STOCKHOLDERS.
8.2 Satisfaction. All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
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legal matters shall be satisfactory to the COMPANY and its counsel. The
STOCKHOLDERS and the COMPANY shall be satisfied that the Registration Statement
and the prospectus forming a part thereof, including any amendments thereof or
supplement thereto, shall not contain any untrue statement of a material fact,
or omit to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that the
condition contained in this sentence shall be deemed satisfied if (i) URSI shall
have made available to the COMPANY copies of each draft (or changed pages of
such draft) of the Registration Statement produced prior to the initial filing
with the Securities and Exchange Commission (the "SEC") the effectiveness
thereof and the filing with the SEC of any amendment or supplement thereto after
the effectiveness thereof (including any prospectus filed pursuant to Rule 424
under the ▇▇▇▇ ▇▇▇) and (ii) the COMPANY or STOCKHOLDERS shall have failed to
inform URSI in writing prior to the filing or the effectiveness thereof, as the
case may be, of the existence of an untrue statement of a material fact or the
omission of such a statement of a material fact, provided however, that for the
period commencing 72 hours prior to any such filing or effectiveness, URSI can
make such draft or changed pages available by facsimile.
8.3 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to restrain
or prohibit the Merger or the offering and sale by URSI of URSI Stock pursuant
to the Registration Statement and no governmental agency or body shall have
taken any other action or made any request of the COMPANY as a result of which
the management of the COMPANY deems it inadvisable to proceed with the
transactions hereunder.
8.4 Stockholders' Release. Each stockholder of URSI immediately prior to
the Pricing Date who is an officer or director of URSI shall have delivered to
the COMPANY an instrument dated the Pricing Date releasing URSI from any and all
claims of such stockholders against URSI and obligations of URSI to such
stockholders other than obligations arising in connection with this Agreement,
obligations to ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ for loans made to the COMPANY which
are disclosed in the Registration Statement, the Other Agreements, any
employment agreements between such stockholders and URSI, any options to
purchase URSI Stock granted by URSI to such stockholder and any right to the
issuance of the shares of URSI Stock set forth in Annex III hereto.
8.5 Opinion of Counsel. The COMPANY shall have received an opinion from
counsel for URSI, dated the Closing Date, in the form annexed hereto as Annex V.
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8.6 Director Indemnification. URSI shall have obtained directors and
officers liability insurance from a reputable insurance company in type and
amount as is customary for companies similarly situated and URSI shall have
entered into an indemnification agreement with each STOCKHOLDER, if any, who
will become a director of URSI substantially in the form attached as Annex VII.
8.7 Registration Statement. URSI shall have filed with the SEC a
registration statement on Form S-1 covering the offer and sale of shares of URSI
Stock having a value (the "Offered Value") of at least $40,000,000. The
Registration Statement shall have been declared effective by the SEC and the
underwriters named therein shall have agreed to acquire on a firm commitment
basis such shares of URSI Stock, subject to the conditions set forth in an
underwriting agreement (the "Underwriting Agreement"), on terms such that the
aggregate value of the cash and of the number of shares of URSI Stock (valued at
the IPO initial public offering price) to be received by the STOCKHOLDERS as
shown on Annex I is not less than the Minimum Value set forth on Annex I.
8.8 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the transaction
contemplated herein shall have been obtained and made and no action or
proceeding shall have been instituted or threatened to restrain or prohibit the
Merger and no governmental agency or body shall have taken any other action or
made any request of COMPANY as a result of which COMPANY deems it inadvisable to
proceed with the transactions hereunder.
8.9 Good Standing Certificates. URSI shall have delivered to the COMPANY a
certificate, dated as of a date no later than ten days prior to the Pricing
Date, duly issued by the Delaware Secretary of State and in each state in which
URSI is authorized to do business, showing that URSI is in good standing and
authorized to do business and that all state franchise and/or income tax returns
and taxes for URSI, for all periods prior to the Pre-Closing have been filed and
paid.
8.10 No Waivers. URSI shall not have waived any closing condition under
any Other Agreement, unless such condition does not constitute a Material
Adverse Effect (as defined in such Other Agreement) on the Founding Company
party to such Other Agreement.
8.11 No Material Adverse Change. No event or circumstance shall have
occurred which would constitute a URSI Material Adverse Effect; and the COMPANY
shall have received a certificate signed by URSI dated the Pricing Date and the
Closing Date.
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8.12 Transfer Restrictions. Each stockholder named on Annex III who is an
officer or director of URSI shall have entered into an agreement with URSI
pursuant to which such stockholder agrees to restrictions on such stockholder's
ability to transfer securities similar to the restrictions imposed on the
STOCKHOLDERS pursuant to Section 15 hereof.
8.13 Employment Agreements, Consulting Agreements, Leases and Cosale
Agreement. URSI shall have entered the Employment Agreements, Consulting
Agreements and Leases (all as defined in Section 9.12); and ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ shall have entered into a cosale agreement for the
benefit of the Stockholders and the stockholders of Other Companies in the form
attached as Annex XI.
8.14 Tax Opinion. The STOCKHOLDERS shall have received an opinion dated
the Closing Date of Fabian & ▇▇▇▇▇▇▇▇▇ to the effect that the Merger qualifies
as a reorganization as defined in Section 368(a)(i)(A) of the Code. The
STOCKHOLDERS shall provide such certificates as may be reasonably required by
such firm in rendering such opinion.
8.15 CABI Closing. CABI shall be acquired by URSI on the Closing Date.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF URSI.
The obligations of URSI with respect to actions to be taken on the
Pricing Date are subject to the satisfaction or waiver on or prior to the
Pricing Date of all of the following conditions. The obligations of URSI with
respect to actions to be taken on the Closing Date are subject to the
satisfaction or waiver on or prior to the Closing Date of the conditions set
forth in Sections 9.1 and 9.4.
9.1 Representations and Warranties; Performance of Obligations. All the
representations and warranties of the STOCKHOLDERS and the COMPANY contained in
this Agreement shall be true and correct in all material respects as of the
Pricing Date and the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date; each and
all of the terms, covenants and conditions of this Agreement to be complied with
or performed by the STOCKHOLDERS and the COMPANY on or before the Pricing Date
or the Closing Date, as the case may be, shall have been duly performed or
complied with in all material respects; and the STOCKHOLDERS shall have
delivered to URSI a certificate dated the Pricing Date and the Closing Date and
signed by them to such effect.
9.2 No Litigation. No action or proceeding before a court or any other
governmental agency or body shall have been instituted or threatened to
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restrain or prohibit the Merger or the offering and sale by URSI of URSI Stock
pursuant to the Registration Statement and no governmental agency or body shall
have taken any other action or made any request of URSI as a result of which the
management of URSI deems it inadvisable to proceed with the transactions
hereunder.
9.3 Examination of Final Financial Statements. Prior to the Closing Date,
URSI shall have had sufficient time to review the unaudited consolidated balance
sheets of the COMPANY and CABI for the fiscal quarters beginning after the
Balance Sheet Date, and the unaudited consolidated combined statement of income,
cash flows and retained earnings of the COMPANY and CABI for the fiscal quarters
beginning after the Balance Sheet Date, disclosing no material adverse change in
the financial condition of the COMPANY and CABI or the results of their
operations from the financial statements as of the Balance Sheet Date.
9.4 No Material Adverse Effect. No event or circumstance shall have
occurred which would constitute a Material Adverse Effect; and URSI shall have
received a certificate signed by the STOCKHOLDERS dated the Pricing Date to such
effect.
9.5 STOCKHOLDERS' Release. The STOCKHOLDERS shall have delivered to URSI
immediately prior to the Pricing Date an instrument dated the Pricing Date
releasing the COMPANY from any and all claims of the STOCKHOLDERS against the
COMPANY and obligations of the COMPANY to the STOCKHOLDERS, except for items
specifically identified on Schedules 5.10 and 5.15 as being claims of or
obligations to the STOCKHOLDERS and continuing obligations to STOCKHOLDERS
relating to their employment by the Surviving Corporation.
9.6 Satisfaction. All actions, proceedings, instruments and documents
required to carry out the transactions contemplated by this Agreement or
incidental hereto and all other related legal matters shall have been approved
by counsel to URSI.
9.7 Termination of Related Party Agreements. All existing agreements
between the COMPANY and the STOCKHOLDERS or business or personal affiliates of
the COMPANY or STOCKHOLDERS, other than those set forth on Schedule 9.7 shall
have been cancelled.
9.8 Opinion of Counsel. URSI shall have received an opinion from ▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, counsel to the COMPANY and the STOCKHOLDERS, dated the
Pricing Date, in the form annexed hereto as Annex VI, and the Underwriters shall
have received a copy of the same opinion addressed to them.
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9.9 Consents and Approvals. All necessary consents of and filings with any
governmental authority or agency relating to the consummation of the
transactions contemplated herein shall have been obtained and made; the COMPANY
shall have obtained and delivered to URSI such additional consents to the Merger
as URSI may reasonably request including, without limitation, URSI's receipt on
or prior to the Pricing Date of those licenses, franchises, permits or
governmental authorizations set forth on Schedule 5.12 pursuant to the last
sentence of Section 5.12, or assurances reasonably acceptable to it that such
licenses, franchises, permits or governmental authorizations will be received on
the Closing Date or that the failure to receive such licenses, franchises,
permits or governmental authorizations on the Closing Date will not adversely
affect its ability to conduct the business of the Company as conducted prior to
the Closing Date; and no action or proceeding shall have been instituted or
threatened to restrain or prohibit the Merger and no governmental agency or body
shall have taken any other action or made any request of URSI as a result of
which URSI deems it inadvisable to proceed with the transactions hereunder.
9.10 Good Standing Certificates. The COMPANY shall have delivered to URSI
a certificate, dated as of a date no later than ten days prior to the Pricing
Date, duly issued by the appropriate governmental authority in the COMPANY's
state of incorporation and, unless waived by URSI, in each state in which the
COMPANY is authorized to do business, showing the COMPANY is in good standing
and authorized to do business and that all state franchise and/or income tax
returns and taxes due by the COMPANY for all periods prior to the Pre-Closing
have been filed and paid.
9.11 Registration Statement. The Registration Statement shall have been
declared effective by the SEC.
9.12 Employment Agreements, Consulting Agreements and Leases. Each of the
persons listed on Schedule 9.12(a) shall have entered into an employment
agreement with URSI substantially in the form of Annex VIII A or Annex VIII B,
whichever is indicated on Schedule 9.12(a) (each an "Employment Agreement"),
each of the STOCKHOLDERS listed on Schedule 9.12(b) shall have entered into a
consulting agreement with URSI substantially in the form of Annex IX (each a
"Consulting Agreement"), and each of the STOCKHOLDERS listed on Schedule 9.12(c)
shall have entered into leases with URSI substantially in the form attached as
Annex X (collectively the "Leases").
9.13 Repayment of Indebtedness. Prior to the Pricing Date, the
STOCKHOLDERS shall have repaid the COMPANY (including the Company's
Subsidiaries) in full all amounts owing by the STOCKHOLDERS to the COMPANY
(including the COMPANY's Subsidiaries).
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9.14 FIRPTA Certificate. Each STOCKHOLDER shall have delivered to URSI a
certificate to the effect that such STOCKHOLDER is not a foreign person pursuant
to Section 1.1445-2(b) of the Treasury regulations.
9.15 Insurance. URSI shall be named as an additional named insured on, or
alternatively the insurer shall have been notified of the Merger and shall have
confirmed in writing that the Surviving Corporation will be an insured under,
each of the COMPANY's insurance policies.
9.16 Releases. The Company shall have been released from its obligations
as guarantor of those mortgage obligations described in Schedule 5.10 of which
▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLC are the obligors, or received
assurances reasonably acceptable to URSI that URSI, as the successor to the
Company, will be released from such obligations promptly following the Closing
Date.
10. POST-CLOSING COVENANTS AND SPECIAL TAX MATTERS.
10.1 Preservation of Tax and Accounting Treatment. After the Closing Date,
none of the parties shall knowingly undertake any act, or knowingly permit any
subsidiary or affiliate to undertake any act, that would jeopardize the status
of the Merger as a reorganization described in Section 368(a)(1)(A) of the Code.
Such acts shall include, but not be limited to, the following:
(i) for a period of two years following the Closing Date, the
retirement or reacquisition, directly or indirectly, by URSI of all or part of
the URSI Stock issued in connection with the transactions contemplated hereby
pursuant to a plan considered or adopted by URSI on or before the Closing Date;
(ii) the provision of any financial and/or economic benefits by URSI
to the STOCKHOLDERS in their capacity as such, except as expressly provided in
this Agreement;
(iii) the disposition of any material part of the assets of the
COMPANY within two years following the Closing Date except (x) in the ordinary
course of business, (y) to eliminate duplicate services or excess capacity or
(z) to address financial matters or performance issues which were not reasonably
expected to occur as of the Closing Date;
(iv) in the absence of compelling financial concerns not otherwise
present on the Closing Date or other changed circumstances not otherwise
anticipated on the Closing Date, the discontinuance of the historic business of
the COMPANY; or
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(v) for a period of one year following the Closing Date, in the
absence of materially changed circumstances not anticipated on the Closing Date,
the disposition by the STOCKHOLDERS of a material amount of URSI Stock issued in
connection with the Merger.
10.2 Disclosure. If, subsequent to the Pricing Date and prior to the 25th
day after the date of the final prospectus of URSI utilized in connection with
the IPO, the COMPANY or the STOCKHOLDERS become aware of any fact or
circumstance which would change (or, if after the Closing Date, would have
changed) a representation or warranty of COMPANY or STOCKHOLDERS in this
Agreement or would affect any document delivered pursuant hereto in any material
respect, the COMPANY and the STOCKHOLDERS shall promptly give notice of such
fact or circumstance to URSI.
10.3 Cooperation in Tax Return Preparation. Each party hereto shall at
their own expense cooperate with each other and make available to each other
such Tax data and other information as may be reasonably required in connection
with (i) the preparation or filing of any Tax Return, election, consent or
certification, or any claim for refund, (ii) any determinations of liability for
Taxes, or (iii) an audit, examination or other proceeding with respect to Taxes
("Tax Data"). Such cooperation shall include, without limitation, making their
respective employees and independent auditors reasonably available on a mutually
convenient basis for all reasonable purposes, including, without limitation, to
provide explanations and background information and to permit the copying of
books, records, schedules, workpapers, notices, revenue agent reports,
settlement or closing agreements and other documents containing the Tax Data
("Tax Documentation"). The Tax Data and the Tax Documentation shall be retained
until one year after the expiration of all applicable statutes of limitations
(including extensions thereof); provided, however, that in the event an audit,
examination, investigation or other proceeding has been instituted prior to the
expiration of an applicable statute of limitations, the Tax Data and Tax
Documentation relating thereto shall be retained until there is a final
determination thereof (and the time for any appeal has expired).
10.4 Tax Return Preparation and Filing.
(i) URSI will be responsible for preparing and filing (or causing
the preparation and filing of) all income Tax Returns with respect to URSI or
any Acquired Party for any taxable period beginning on or after the Closing
Date. The parties hereto acknowledge that the Closing Date shall be the last day
of a taxable period of the Company pursuant to Code Section 381 and the
regulations promulgated thereunder.
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(ii) STOCKHOLDERS will be responsible for preparing and filing (or
causing the preparation and filing of) all income Tax Returns with respect to
the COMPANY and any Acquired Party for any taxable period ending on or before
the Closing Date. URSI and the STOCKHOLDERS shall (a) with respect to such
income Tax Returns, determine the income, gain, expenses, losses, deductions,
and credits of the COMPANY and any Acquired Party in a manner consistent with
prior practice and in a manner that apportions such income, gain, expenses,
loss, deductions and credits equitably from period to period and (b) prepare
such Tax Returns in a manner consistent with prior years, in each case as
determined in the good faith judgment of the preparer of such returns; provided,
however, that in all events such Tax Returns shall be prepared in a manner
consistent with applicable laws.
(iii) In order appropriately to apportion any Taxes relating to a
taxable period that includes (but that would not, but for this section, close
on) the Closing Date, the parties hereto will, to the extent permitted by
applicable law, elect with the relevant taxing authority to treat for all
purposes the Closing Date as the last day of a taxable period of the Company and
any Acquired Party, and such taxable period shall be treated as a Pre-Closing
Period for purposes of this Agreement. In any case where applicable law does not
permit the Company or an Acquired Party to treat the Closing Date as the last
day of a taxable period, then for purposes of this Agreement, the portion of
each such Tax that is attributable to the operations of the Company or an
Acquired Party for such Interim Period shall be (i) in the case of a Tax that is
not based on income or gross receipts, the total amount of such Tax for the
period in question multiplied by a fraction, the numerator of which is the
number of days in the Interim Period, and the denominator of which is the total
number of days in such period, and (ii) in the case of a Tax that is based on
income or gross receipts, the Tax that would be due with respect to the Interim
Period, if such Interim Period constituted an entire taxable period.
10.5 Reorganization Status Information Reporting. Each of the parties
agrees to file whatever information returns may be required to treat the merger
of URSI and the COMPANY pursuant to this Agreement as a reorganization described
in Section 368(a)(1)(A) of the Code, and, in particular, to comply with the tax
reporting requirements of Section 1.368-3 of the Treasury Regulations.
10.6 Special Definitions Related to Tax Matters. For all purposes of this
Agreement related to any Tax matters (including Sections 5.22 and 6.12):
(a) "Affiliate" of a person or entity shall mean a person or entity
that directly or indirectly controls, is controlled by or is under common
control with that person or entity.
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(b) "Interim Period" shall mean any taxable period commencing prior
to the Closing Date and ending after the Closing Date.
(c) "Pre-Closing Period" shall mean (i) any taxable period that
begins before the Closing Date and ends on or before the Closing Date and (ii)
the portion of any Interim Period through and including the Closing Date.
(d) "Post-Closing Period" means any taxable period that begins after
the Closing Date, and, with respect to any Interim Period, the portion of such
Interim Period commencing on the Closing Date.
(e) "Tax" means any federal, state, local, or foreign income, gross
receipts, ad valorem, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Section 59A), customs duties, capital stock, net worth, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
workers compensation, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever imposed by any federal, state, local or foreign government
or any agency or political subdivision of any such government, including any
interest, penalty, or addition thereto, without regard to whether such tax is
disputed or not or arose before, on or after the Closing Date.
(f) "Tax Returns" means all reports, elections, declarations, claims
for refund, estimates, information statements and returns (including any
schedules and attachments thereto) relating to, or required to be filed in
connection with, any Taxes pursuant to the statutes, rules and regulations of
any federal, state, local or foreign government taxing authority.
(g) "Taxing Authority" means any governmental agency, board, bureau,
body, department or authority of any United States federal, state or local
jurisdiction, having or purporting to have jurisdiction with respect to any Tax.
10.7 Directors. The persons named in the Registration Statement shall be
appointed as directors of URSI on or before the Closing Date.
10.8 Release from Guarantees. URSI shall use its best efforts to have the
STOCKHOLDERS released from any and all guarantees on any obligations of the
COMPANY that they personally guaranteed for the benefit of the COMPANY
(including the COMPANY's Subsidiaries), with all such guarantees on indebtedness
being assumed by URSI. URSI agrees to indemnify the STOCKHOLDERS against any and
all claims made by lenders under such guarantee which arise as a result of
URSI's failure to cause such guarantee to be released on or prior to the
Closing.
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10.9 Preservation of Plans. For a period of five (5) years following the
Closing Date, URSI will use its best efforts to maintain in full force and
effect each Plan listed in Schedule 10.9, and if any such Plan is a Qualified
Plan, will continue to make contributions to such Plan at or above the level
stated in Schedule 10.9, unless and until (i) in the case of any Qualified Plan
listed in Schedule 10.9, URSI establishes a defined contribution plan intended
to qualify under Section 401(a) of the Code and makes contributions to such plan
at or above the level stated in Schedule 10.9, or (ii) in the case of each other
Plan, URSI establishes a replacement Plan providing equivalent or better
benefits, provided that if the cost of providing equivalent benefits should, in
the good faith judgment of URSI, become commercially unreasonable, the
replacement plan established by URSI may have benefits that are, in the good
faith judgment of URSI, as close to equivalent as can be obtained at
commercially reasonable cost. There are no intended third party beneficiaries of
this Section 10.9, and after the Closing Date it can be waived or modified by
URSI and STOCKHOLDERS (or their successors) shown as owning two-thirds of
COMPANY Stock on Annex II.
11. INDEMNIFICATION.
The STOCKHOLDERS and URSI each make the following covenants that are
applicable to them, respectively:
11.1 General Indemnification by the STOCKHOLDERS. The STOCKHOLDERS
covenant and agree that they, jointly and severally (except with respect to
Sections 5.30 through 5.32, which shall be several), will indemnify, defend,
protect and hold harmless URSI, the COMPANY and the Surviving Corporation at all
times from and after the date of this Agreement until the Expiration Date as
defined in Section 5 above, from and against all claims, damages, actions,
suits, proceedings, demands, assessments, adjustments, costs and expenses
(including specifically, but without limitation, reasonable attorneys' fees and
expenses of investigation) incurred by URSI, the COMPANY or the Surviving
Corporation as a result of or arising from (i) any breach of the representations
and warranties of the STOCKHOLDERS or the COMPANY set forth herein or on the
schedules or certificates delivered in connection herewith (other than the
representations and warranties provided in Section 5.22, for which Section 11.6
provides special indemnity provisions); (ii) any nonfulfillment of any agreement
on the part of the STOCKHOLDERS or the COMPANY under this Agreement; or (iii)
any liability under the 1933 Act, the 1934 Act or other Federal or state law or
regulation, at common law or otherwise, (x) arising out of or based upon any
untrue statement of a material fact relating to the COMPANY (including the
COMPANY's Subsidiaries) or the STOCKHOLDERS that is provided to URSI or its
counsel by the COMPANY or the STOCKHOLDERS and contained in any preliminary
prospectus relating to the IPO, the Registration Statement or any prospectus
forming a part
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thereof, or any amendment thereof or supplement thereto, or (y) arising out of
or based upon any omission to state therein a material fact relating to the
COMPANY (including the COMPANY's Subsidiaries) or the STOCKHOLDERS that is
required to be stated therein or necessary to make the statements therein not
misleading, and not provided to URSI or its counsel by the COMPANY or the
STOCKHOLDERS, provided, however, that such indemnity shall not inure to the
benefit of URSI, the COMPANY or the Surviving Corporation to the extent that
such untrue statement (or alleged untrue statement) was made in, or omission (or
alleged omission) occurred in, any preliminary prospectus and the STOCKHOLDERS
provided, in writing, corrected information to URSI counsel and to URSI for
inclusion in the final prospectus, and such information was not so included.
11.2 Indemnification by URSI. URSI covenants and agrees that it will
indemnify, defend, protect and hold harmless the COMPANY and the STOCKHOLDERS at
all times from and after the date of this Agreement until the Expiration Date,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by the COMPANY and the STOCKHOLDERS as a result of or arising from (i)
any breach by URSI of its representations and warranties set forth herein or on
the schedules or certificates attached hereto; (ii) any nonfulfillment of any
agreement on the part of URSI under this Agreement; (iii) any liabilities which
the COMPANY or the STOCKHOLDERS may incur due to URSI's failure to be
responsible for the liabilities and obligations of the COMPANY as provided in
Section 1 hereof (except to the extent that URSI has claims against the
STOCKHOLDERS by reason of such liabilities); or (iv) any liability under the
1933 Act, the 1934 Act or other Federal or state law or regulation, at common
law or otherwise, arising out of or based upon any untrue statement or alleged
untrue statement of a material fact relating to URSI or any of the Founding
Companies other than the COMPANY contained in any preliminary prospectus, the
Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to URSI
or any of the Founding Companies other than the COMPANY that is required to be
stated therein or necessary to make the statements therein not misleading.
11.3 Third Person Claims. Promptly after any party hereto (hereinafter the
"Indemnified Party") has received notice of or has knowledge of any claim by a
person not a party to this Agreement ("Third Person"), or the commencement of
any action or proceeding by a Third Person, the Indemnified Party shall, as a
condition precedent to a claim with respect thereto being made against any party
obligated to provide indemnification pursuant to Section 11.1 or 11.2 hereof
(hereinafter the "Indemnifying Party"),
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give the Indemnifying Party written notice of such claim or the commencement of
such action or proceeding. Such notice shall state the nature and the basis of
such claim and a reasonable estimate of the amount thereof. The Indemnifying
Party shall have the right to defend and settle, at its own expense and by its
own counsel, any such matter so long as the Indemnifying Party pursues the same
in good faith and diligently, provided that the Indemnifying Party shall not
settle any criminal proceeding without the consent of the Indemnified Party. If
the Indemnifying Party undertakes to defend or settle, it shall promptly notify
the Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party that are in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
provided that if such counsel shall have a conflict of interest that prevents
such counsel from representing Indemnified Party, Indemnified Party shall have
the right to participate in such matter through counsel of its own choosing and
Indemnifying Party will reimburse the Indemnified Party for the expenses of its
counsel. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense, the
Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability, except to the extent such participation is requested
by the Indemnifying Party, in which event the Indemnified Party shall be
reimbursed by the Indemnifying Party for reasonable additional legal expenses
and out-of-pocket expenses. If the Indemnifying Party desires to accept a final
and complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person and the Indemnified
Party shall reimburse the Indemnifying Party for any additional costs of defense
which it subsequently incurs with respect to such claim and all additional costs
of settlement or judgment. If the Indemnifying Party does not undertake to
defend such matter as to which the Indemnified Party is entitled to
indemnification hereunder, or fails diligently to pursue such defense, the
Indemnified Party may undertake such defense through counsel of its choice, at
the cost and expense of the Indemnifying Party, and the Indemnified Party may
settle such matter, and the Indemnifying Party shall reimburse the Indemnified
Party for the amount paid in such settlement and any other liabilities or
expenses incurred by the Indemnified Party in connection therewith, provided,
however, that under no circumstances shall the Indemnified Party settle any
Third Person claim
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without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld or delayed. All settlements hereunder shall effect a
complete release of the Indemnified Party, unless the Indemnified Party
otherwise agrees in writing. The parties hereto will make appropriate
adjustments for any Tax benefits, Tax detriments or insurance proceeds in
determining the amount of any indemnification obligation under this Section,
provided that no Indemnifying Party shall be obligated to seek any payment
pursuant to the terms of any insurance policy. All indemnification payments
under this Section shall be deemed adjustments to the Merger consideration
provided for herein.
11.4 Exclusive Remedy. The indemnification provided for in this Section 11
shall be the exclusive remedy in any action seeking damages or any other form of
monetary relief brought by any party to this Agreement against another party,
provided that nothing herein shall be construed to limit the right of a party,
in a proper case, to seek injunctive relief for a breach of this Agreement.
11.5 Limitations on Indemnification.
(i) The first amounts otherwise payable by one or more STOCKHOLDERS
(whether jointly and severally or severally) pursuant to Sections 11.1 and 11.3
to URSI, the COMPANY and the Surviving Corporation will be offset and reduced
(but not below zero) by the Indemnification Threshold. The "Indemnification
Threshold" is an amount equal to two percent (2%) of the aggregate value of the
consideration paid to the STOCKHOLDERS on the Closing Date pursuant to Section
2.2 of this Agreement plus the aggregate value of the consideration paid to the
stockholders of CABI pursuant to Section 2.2 of the Agreement and Plan of
Reorganization among URSI, CABI and the stockholders of CABI ("CABI Agreement")
unless this Agreement is terminated prior to the Closing Date, in which event
the Indemnification Threshold is an amount equal to two percent (2%) of the
Minimum Value set forth in Annex I. All such amounts otherwise payable by one or
more STOCKHOLDERS in excess of the amount so offset and reduced shall be paid
without offset or reduction pursuant to this Section 11.5(i). This Section
11.5(i) shall not apply to amounts payable pursuant to Section 11.6. For
purposes of determining the Indemnification Threshold, the URSI Stock shall be
valued at the initial price of the URSI Stock sold to the public in the IPO.
(ii) The first amounts otherwise payable by URSI pursuant to
Sections 11.2 and 11.3 to STOCKHOLDERS and the COMPANY will be offset and
reduced (but not below zero) by an amount equal to the Indemnification
Threshold. All such amounts otherwise payable by URSI in excess of the amount so
offset and reduced shall be paid without offset or reduction
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pursuant to this Section 11.5(ii). This Section 11.5(ii) shall not apply to
amounts payable pursuant to Section 11.6.
(iii) If this Agreement is terminated prior to the Closing Date, in
no event shall any STOCKHOLDER be liable under this Agreement, including this
Section 11, to pay more than one-half the Minimum Value set forth in Annex I,
multiplied by such STOCKHOLDER's percentage ownership of issued and outstanding
COMPANY Stock, with respect to Specially Limited Claims. If this Agreement is
not terminated prior to the Closing Date, in no event shall any STOCKHOLDER be
liable under this Agreement, including this Section 11, and the CABI Agreement
to pay more than one-half the amount of the proceeds received by such
STOCKHOLDER pursuant to this Agreement, and the CABI Agreement calculated as
provided in Section 11.5(iv), with respect to Specially Limited Claims and
"Specially Limited Claims" as such term is defined in the CABI Agreement.
Specially Limited Claims are all claims that may be made pursuant to this
Agreement, including this Section 11, and the CABI Agreement except claims based
on (a) breach of representations and warranties in Section 5.13, (b) breach of
representations and warranties in Section 5.19 or Section 5.20 or (c) Section
11.6.
(iv) If this Agreement is terminated prior to the Closing Date, then
notwithstanding any other term of this Agreement, in no event shall any
STOCKHOLDER be liable under this Agreement, including this Section 11, for
amounts which in the aggregate exceed the Minimum Value set forth in Annex I,
multiplied by such STOCKHOLDER's percentage ownership of issued and outstanding
COMPANY Stock. If this Agreement is not terminated prior to the Closing Date,
then notwithstanding any other term of this Agreement, in no event shall any
STOCKHOLDER be liable under this Agreement, including this Section 11, for
amounts which in the aggregate exceed the amount of proceeds received by such
STOCKHOLDER pursuant to this Agreement and the CABI Agreement. The amount of
proceeds received by each STOCKHOLDER pursuant to this Agreement shall be
calculated (for purposes of Section 11.5(iii) and this Section 11.5(iv)) by
adding (a) the cash proceeds paid to such STOCKHOLDER pursuant to Section 2.2
hereof prior to the date that the indemnity obligation of such STOCKHOLDER is
paid, plus (b) the net proceeds to such STOCKHOLDER from the sale of such
STOCKHOLDER's URSI Stock received pursuant to Section 2.2 hereof prior to the
date that the indemnity obligation of such STOCKHOLDER is paid, plus (c) the
Fair Market Value (as defined in Annex I) of the unsold shares of URSI Stock
received by such STOCKHOLDER pursuant to Section 2.2 prior to the date that the
indemnity obligation of such STOCKHOLDER is paid, valued on the trading day
prior to the day the indemnification obligation is paid. The amount of proceeds
received by a STOCKHOLDER under the CABI agreement shall be determined as set
forth in Section 11.5(iv) thereof.
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(v) In the event that any STOCKHOLDER has requested registration of
any shares of URSI Stock pursuant to the last paragraph of Section 17.2, the
amount of any indemnification obligation that is to be paid from the proceeds of
the sale of such shares of URSI Stock shall not be payable until ten (10) days
after such shares may be sold pursuant to such registration statement.
(vi) Notwithstanding any other provision of this Agreement, no
STOCKHOLDER shall have any obligation to indemnify URSI or its successors with
respect to a breach of a representation made in Section 5.9 to the extent that
such breach arises either (a) by reason of KPMG Peat Marwick LLP's
interpretation of generally accepted accounting principles as reflected in the
Financial Statements, or (b) by reason of KPMG Peat Marwick, having first been
provided by COMPANY or such STOCKHOLDER with all necessary and relevant
information relating to an item to be set forth on the Financial Statements, not
including or properly presenting such item on the Financial Statements in
accordance with generally accepted accounting principles consistently applied,
provided, however, that the limitation on liability set forth in subsection (b)
above shall not limit the liability of any STOCKHOLDER to URSI with respect to
any item if such STOCKHOLDER prior to the Closing Date has actual knowledge
(including, if applicable, an actual knowledge of the generally accepted
accounting principles relevant to an item) of a failure by KPMG Peat Marwick LLP
to so include or properly present an item and did not prior to the Closing Date
inform URSI of any such item as to which such STOCKHOLDER has such actual
knowledge. The provisions and limitations of this section shall have no
relevance to, and shall not be applied against or otherwise serve to reduce, any
basket or cap provided for in this Agreement.
11.6 Special Tax Indemnity Provisions.
(i) From and after the Closing Date, the STOCKHOLDERS, jointly and
severally, shall indemnify and save URSI, the COMPANY and any Acquired Party
harmless from, and shall be entitled to any refund of, any and all Taxes
(including without limitation any obligation to contribute to the payment of, or
be entitled to share in the refund of, a Tax determined on a consolidated,
combined or unitary basis with respect to a group of corporations that includes
or included the COMPANY or any Acquired Party) which are (i) imposed on any
member (other than the COMPANY or any Acquired Party) of the consolidated,
unitary or combined group which includes or included the COMPANY or any Acquired
Party or (ii) imposed on the COMPANY or any Acquired Party in respect of its
income, business, property or operations or for which the COMPANY or any
Acquired Party may otherwise be liable (A) for any Pre-Closing Period, (B)
resulting by reason of the several liability of the COMPANY or any Acquired
Party pursuant to Treasury Regulations section
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1.1502-6 or any analogous state, local or foreign law or regulation or by reason
of the COMPANY or any Acquired Party having been a member of any consolidated,
combined or unitary group on or prior to the Closing Date, (C) resulting from
the COMPANY or any Acquired Party ceasing to be a member of any affiliated group
(within the meaning of Section 1504(a) of the Code), (D) in respect of any
Post-Closing Period, attributable to events, transactions, sales, deposits,
services or rentals occurring, received or performed in a Pre-Closing Period,
(E) in respect of any Post-Closing Period, attributable to any change in
accounting method employed by the COMPANY or any Acquired Party during any of
the four previous taxable years, (F) in respect of any Post-Closing Period,
attributable to any items of income or gain of an entity treated as a
partnership reported by the COMPANY or any Acquired Party as a partner, to the
extent such items are properly attributable to periods of the "partnership"
ending on or before the Closing Date, or (G) attributable to any discharge of
indebtedness that may result from any capital contributions by STOCKHOLDERS (or
an affiliate of STOCKHOLDERS) to the COMPANY or any Acquired Party of any
intercompany indebtedness owed by COMPANY to any STOCKHOLDER (or an affiliate of
any STOCKHOLDER), but, in each case, only to the extent such Taxes or the
entitlement to such refund are not reflected on the applicable Company Financial
Statements as of the Balance Sheet Date.
(ii) From and after the Closing Date, STOCKHOLDERS shall, jointly
and severally, indemnify and save URSI, the COMPANY and any Acquired Party
harmless from (x) any Taxes imposed on URSI, the COMPANY and any Acquired Party
(or any affiliate of URSI, the COMPANY or any Acquired Party) attributable to
any breach of a warranty or representation made by STOCKHOLDERS in Section
5.22(xx), Section 5.22(xxiv) or Section 5.22(xxv) and (y) any liability imposed
on URSI, the COMPANY and any Acquired Party (or any affiliate of such companies)
attributable to any breach of a warranty or representation made by STOCKHOLDERS
in Section 5.22, excluding Section 5.22(xx), Section 5.22(xxiv) and Section
5.22(xxv).
(iii) From and after the Closing Date, and except as expressly
provided otherwise in Section 11.6 (ii) or elsewhere in this Section 11.6, URSI
and the COMPANY shall indemnify and hold harmless STOCKHOLDERS from (x) any
Taxes imposed on URSI, the COMPANY or any Acquired Party with respect to any
Post-Closing Period and (y) any liability imposed on STOCKHOLDERS attributable
to any breach of a warranty or representation made by URSI in Section 6.12.
(iv) To the extent any party to this Agreement is entitled to
indemnification from another party under this Section 11.6, such claim for
indemnification shall include the right to recover any losses, damages,
liabilities, expenses and costs related thereto, including, without limitation,
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reasonable attorney's and expert witness fees and other costs of investigating
or attempting to avoid the same or oppose the imposition thereof, together with
interest thereon at the prime rate in effect from time to time as determined by
Bank of America N.T. & S.A., compounded quarterly from the date incurred.
(v) Except to the extent expressly provided to the contrary in this
Section 11.6, the general procedures regarding notice and pursuit of
indemnification claims set forth in Sections 11.1 through 11.5 shall apply to
all claims for indemnification made under this Section 11.6. Notwithstanding the
immediately preceding sentence and any provision of Section 11 to the contrary,
if a claim for indemnification involves any matter covered in this Section 11.6,
then the contest provisions of Section 11.7, as applicable, shall control
regarding the defense and handling of any such third-party claim that could give
rise to an indemnification obligation on the part of one party to another. In
addition, and notwithstanding anything else in Article 11 to the contrary, the
party with the right to control a contest has the right to choose counsel of its
choice regarding such contest. Furthermore, there shall be no limit on (i) the
time period during which a claim for indemnification may be made under this
Section 11.6 or (ii) the minimum or maximum amount of indemnity payments that
may be recovered pursuant to this Section 11.6 (other than (x) each party's
obligation to make claims for indemnification promptly and without undue delay
and (y) the aggregate limit for all indemnity payments imposed on a STOCKHOLDER
provided in Section 11.5(iv)).
(vi) All amounts paid pursuant to this Section 11.6 by one party to
another party (other than interest payments) shall be treated by such parties as
an adjustment to the value of the merger consideration provided pursuant to this
Agreement.
11.7 Special Contest Rights Related to Tax Matters.
(i) The STOCKHOLDERS shall have the sole right (but not the
obligation) to control, defend, settle, compromise or prosecute in any manner
any audit, examination, investigation, hearing or other proceeding with respect
to any Tax Return of the COMPANY or any Acquired Party involving only
Pre-Closing Periods.
(ii) Except as expressly provided to the contrary in this Section
11.7, URSI shall have the sole right (but not the obligation) to control,
defend, settle, compromise, or prosecute in any manner an audit, examination,
investigation, hearing or other proceeding with respect to any Tax Return of the
COMPANY or any Acquired Party; provided, however, that any liability for Taxes
or Tax issues related to an Interim Period may not be settled or compromised
without the consent of the STOCKHOLDERS, which consent
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shall not be unreasonably withheld or delayed. In addition, (i) URSI shall keep
the STOCKHOLDERS duly informed of any proceedings in connection with an Interim
Period and (ii) the STOCKHOLDERS shall be entitled to receive copies of all
correspondence and documents relating to such proceedings and may, at their
option, observe such proceedings (including any associated meetings or
conferences).
11.8 Special Notification Requirements Regarding Tax Disputes. URSI and
the COMPANY (including any Acquired Party) shall promptly forward to the
STOCKHOLDERS all written notifications and other written communications from any
Tax Authority received by URSI or the COMPANY (including any Acquired Party)
relating solely to any Pre-Closing Period of the COMPANY (including any Acquired
Party), and URSI and the COMPANY (including any Acquired Party) shall execute or
cause to be executed any power of attorney or other document or take such
actions as requested by the STOCKHOLDERS to enable the STOCKHOLDERS to take any
action STOCKHOLDERS deem appropriate with respect to any proceedings relating
thereto.
11.9 Refunds. A party receiving a refund, credit or similar offset (or the
benefit thereof) with respect to Tax effectively paid by another party shall
immediately pay an amount equal to such refund, credit, offset or benefit
(including any interest thereon) to the party that effectively paid the Tax with
respect to which the refund, credit, offset or benefit relates. A party entitled
to a deduction on account of a Tax effectively paid by another party shall pay
an amount equal to any Taxes saved by reason of such deduction to the party that
effectively bore the economic cost of the Tax with respect to which such
deduction relates, such amount to be paid immediately after such saving is
realized.
11.10 Optional Payment With Shares. Subject to Section 10.1, any
STOCKHOLDER may make any payment to URSI required by this Section 11 by
tendering shares of URSI Stock obtained by such STOCKHOLDER pursuant to Sections
2 and 3 of this Agreement, with shares so tendered being valued at Fair Market
Value on the trading day prior to the day the indemnification obligation is
paid. No STOCKHOLDER will be entitled to make payment with any other shares of
URSI Stock.
12. TERMINATION OF AGREEMENT.
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date solely:
(i) by mutual consent of the boards of directors of URSI and the
COMPANY;
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(ii) at or before the Pre-Closing, by the STOCKHOLDERS or COMPANY,
on the one hand, or by URSI, on the other hand, if the Pre-Closing has not been
completed by June 1, 1998, time being of the essence, unless the failure of such
completion is due to the willful failure of the party seeking to terminate this
Agreement to perform any of its obligations under this Agreement to the extent
required to be performed by it prior to or on the Pricing Date;
(iii) at or before the Pre-Closing, by the STOCKHOLDERS or COMPANY,
on the one hand, or by URSI, on the other hand, if a material breach or default
shall be made by the other in the observance or in the due and timely
performance of any of the covenants, agreements or conditions contained herein,
and such default shall not have been cured and shall not reasonably be expected
to be cured on or before the Pricing Date;
(iv) at or before the Pre-Closing, pursuant to Section 7.9 hereof;
(v) after the Pre-Closing and before the Closing Date, by the
STOCKHOLDERS or COMPANY, on the one hand, or URSI, on the other hand, if the
Underwriting Agreement is terminated; or
(vi) after the Pre-Closing and before the Closing Date, by the
STOCKHOLDERS or COMPANY, on the one hand, or URSI, on the other hand, if the
Closing Date does not occur within ten (10) days after the Pricing Date, time
being of the essence.
12.2 Liabilities in Event of Termination. In the event of termination of
this Agreement as provided in this Section there shall be no liability or
obligation on the part of any party hereto except to the extent that such
liability is based on the breach by a party of any of its representations,
warranties or covenants set forth in this Agreement, provided however, that
there shall be no liability for a breach of representation or warranty if such
representation or warranty was made in good faith and with no reason to know
such representation or warranty was not true at the time made.
12.3 Use of Financial Statements. If this Agreement is terminated prior to
the Closing Date, COMPANY may retain copies of any financial statements prepared
by KPMG Peat Marwick LLP only if (i) such termination is not based on Section
7.9 or a material breach or default by any STOCKHOLDER or COMPANY and (ii)
COMPANY reimburses URSI for all fees paid to KPMG Peat Marwick LLP. In no event
shall COMPANY or any STOCKHOLDER use any such financial statement within one
year of the termination of this Agreement in connection with any merger or
consolidation of COMPANY with or into any entity in a consolidation transaction
substantially similar to URSI's
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proposed transaction with the COMPANY and the Other Companies as contemplated by
this Agreement and the Other Agreements.
13. NONCOMPETITION.
13.1 Prohibited Activities. Except as set forth on Schedule 13.1, the
STOCKHOLDERS will not, for a period of five (5) years following the Closing
Date, for any reason whatsoever, directly or indirectly, for themselves or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant or advisor, or as a sales representative, in the vehicle
towing, transport, salvage or auction businesses, within one hundred (100) miles
of where the COMPANY conducted business prior to the effectiveness of the Merger
(the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of URSI (including the subsidiaries thereof) in a
managerial capacity for the purpose or with the intent of enticing such employee
away from or out of the employ of URSI (including the subsidiaries thereof),
provided that any STOCKHOLDER shall be permitted to call upon and hire any
member of his or her immediate family;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of URSI
(including the subsidiaries thereof) within the Territory for the purpose of
soliciting or selling products or services in direct competition with URSI
within the Territory;
(iv) call upon any prospective acquisition candidate, on any
STOCKHOLDER's own behalf or on behalf of any competitor in the vehicle towing or
transport business, which candidate was either called upon by URSI (including
the subsidiaries thereof) or for which URSI (or any subsidiary thereof) made an
acquisition analysis, for the purpose of acquiring such entity, provided that no
STOCKHOLDER shall be charged with a violation of this Section unless and until
such STOCKHOLDER shall have knowledge or notice that such prospective
acquisition candidate was called upon, or that an acquisition analysis was made,
for the purpose of acquiring such entity; or
(v) disclose customers, whether in existence or proposed, of the
COMPANY (or the COMPANY's Subsidiaries) to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever excluding
disclosure to URSI or any of URSI's Subsidiaries.
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Notwithstanding the above, the foregoing covenant shall not be
deemed to prohibit any STOCKHOLDER from acquiring as an investment not more than
three percent (3%) of the capital stock of any business whose stock is traded on
a national securities exchange or over-the-counter.
13.2 Damages. Because of the difficulty of measuring economic losses to
URSI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to URSI for which it would
have no other adequate remedy, each STOCKHOLDER agrees that the foregoing
covenant may be enforced by URSI, in the event of breach by such STOCKHOLDER, by
injunctions and restraining orders.
13.3 Reasonable Restraint. It is agreed by the parties hereto that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
STOCKHOLDERS in light of the activities and business of URSI (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of URSI; but it is also the intent of URSI and the STOCKHOLDERS
that such covenants be construed and enforced in accordance with the changing
activities and business of URSI (including the subsidiaries thereof) throughout
the term of this covenant.
It is further agreed by the parties hereto that, in the event that
any STOCKHOLDER who has entered into an Employment Agreement shall thereafter
cease to be employed thereunder, and such STOCKHOLDER shall enter into a
business or pursue other activities not in competition with URSI and/or any
subsidiary thereof, or similar activities or business in locations the operation
of which, under such circumstances, does not violate clause (i) of this Section
13, and in any event such new business, activities or location are not in
violation of this Section 13 or of such STOCKHOLDER's obligations under this
Section 13, if any, such STOCKHOLDER shall not be chargeable with a violation of
this Section 13 if URSI and/or any subsidiary thereof shall thereafter enter the
same, similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
13.4 Severability; Reformation. The covenants in this Section 13 are
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 Independent Covenant. All of the covenants in this Section 13 shall
be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any
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STOCKHOLDER against URSI (including the subsidiaries thereof), whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by URSI of such covenants. It is specifically agreed that the period
of five (5) years stated at the beginning of this Section 13, during which the
agreements and covenants of each STOCKHOLDER made in this Section 13 shall be
effective, shall be computed by excluding from such computation any time during
which such STOCKHOLDER is in violation of any provision of this Section 13. The
covenants contained in this Section 13 shall not be affected by any breach of
any other provision hereof by any party hereto, except that upon URSI's
admission in writing, or a final judicial determination which is not the subject
of appeal or further appeal by URSI, that URSI has materially breached a
STOCKHOLDER's Employment Agreement (if applicable), right to have URSI Stock
registered under the 1933 Act pursuant to Section 17.1 or 17.2, or right to
receive contingent consideration as provided in section C of Annex I, and URSI's
failure to cure such material breach within 30 days of such admission or final
judicial determination, whichever is applicable, then the covenants contained in
this Section 13 with respect to such STOCKHOLDER will expire. The covenants
contained in this Section 13 shall have no effect if the transactions
contemplated by this Agreement are not consummated.
13.6 Materiality. The COMPANY and the STOCKHOLDERS hereby agree that this
covenant is a material and substantial part of this transaction.
14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
14.1 STOCKHOLDERS. The STOCKHOLDERS recognize and acknowledge that they
had in the past, currently have, and in the future may possibly have, access to
certain confidential information of the COMPANY and/or URSI, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the COMPANY's and/or URSI's respective
businesses. The STOCKHOLDERS agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
URSI, (b) following the Closing Date, as required in the course of performing
their duties for URSI, and (c) to counsel and other advisers, provided that such
advisers (other than counsel) agree to the confidentiality provisions of this
Section 14.1; provided, further, that confidential information shall not include
(i) such information which becomes known to the public generally through no
fault of the STOCKHOLDERS, (ii) information required to be disclosed by law or
the order of any governmental authority under color of law, provided that prior
to disclosing any information pursuant to this clause (ii), the STOCKHOLDERS
shall, if possible, give prior written notice thereof to URSI and provide URSI
with the opportunity to contest such disclosure, or (iii) the disclosing party
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reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party. In the event of a breach or
threatened breach by any of the STOCKHOLDERS of the provisions of this section,
URSI shall be entitled to an injunction restraining such STOCKHOLDERS from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting URSI from pursuing any other available remedy
for such breach or threatened breach, including the recovery of damages.
14.2 URSI. URSI recognizes and acknowledges that it had in the past and
currently has access to certain confidential information of the COMPANY, such as
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the COMPANY's business. URSI agrees that,
prior to the Closing, it will not disclose such confidential information to any
person, firm, corporation, association or other entity for any purpose or reason
whatsoever, except (a) to authorized representatives of the COMPANY, (b) to
counsel and other advisers, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 14.2 and (c) to the
Founding Companies other than the COMPANY and their representatives pursuant to
Section 7.1(i), unless (i) such information becomes known to the public
generally through no fault of URSI (ii) disclosure is required by law or the
order of any governmental authority under color of law, provided that prior to
disclosing any information pursuant to this clause (ii), URSI shall, if
possible, give prior written notice thereof to the COMPANY and the STOCKHOLDERS
and provide the COMPANY and the STOCKHOLDERS with the opportunity to contest
such disclosure, or (iii) the disclosing party reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party. Upon termination of this Agreement prior to the Closing Date
for any reason other than the material breach or default of any STOCKHOLDER or
COMPANY, URSI will return to COMPANY all documents containing confidential
information of COMPANY that were provided to URSI by COMPANY or STOCKHOLDERS and
all summaries, abstractions, projections, pro formas or like material prepared
by URSI incorporating such confidential information. In the event of a breach or
threatened breach by URSI of the provisions of this section, the COMPANY and the
STOCKHOLDERS shall be entitled to an injunction restraining URSI from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting the COMPANY and the STOCKHOLDERS from pursuing
any other available remedy for such breach or threatened breach, including the
recovery of damages.
14.3 Damages. Because of the difficulty of measuring economic losses as a
result of the breach of the foregoing covenants in Section 14.1 and 14.2, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, the parties hereto agree
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that, in the event of a breach by any of them of the foregoing covenants, the
covenant may be enforced against the other parties by injunctions and
restraining orders.
14.4 Survival. The obligations of the parties under this Article 14 shall
survive the termination of this Agreement.
15. TRANSFER RESTRICTIONS.
15.1 Transfer Restrictions. Except for transfers pursuant to Section 17
hereof and except for transfers as set forth in Section 15.2 below to persons or
entities who agree to be bound by the restrictions set forth in this Section
15.1, for a period of one year from the Closing Date none of the STOCKHOLDERS
shall (i) sell, assign, exchange, transfer, encumber, pledge, distribute,
appoint, or otherwise dispose of (a) any shares of URSI Stock received by the
STOCKHOLDERS in the Merger, or (b) any interest (including, without limitation,
an option to buy or sell) in any such shares of URSI Stock, in whole or in part,
and no such attempted transfer shall be treated as effective for any purpose; or
(ii) engage in any transaction, whether or not with respect to any shares of
URSI Stock or any interest therein, the intent or effect of which is to reduce
the risk of owning the shares of URSI Stock acquired pursuant to Section 2
hereof (including, by way of example and not limitation, engaging in put, call,
short-sale, straddle or similar market transactions). The certificates
evidencing the URSI Stock delivered to the STOCKHOLDERS pursuant to Section 3 of
this Agreement will bear a legend substantially in the form set forth below and
containing such other information as URSI may deem necessary or appropriate:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED,
APPOINTED OR OTHERWISE DISPOSED OF, AND THE ISSUER SHALL NOT BE
REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE, ASSIGNMENT, EXCHANGE,
TRANSFER, ENCUMBRANCE, PLEDGE, DISTRIBUTION, APPOINTMENT OR OTHER
DISPOSITION PRIOR TO [insert the first anniversary of the Closing
Date]. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE,
THE ISSUER AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP
ORDER PLACED WITH THE TRANSFER AGENT) AFTER THE DATE SPECIFIED
ABOVE.
15.2 Permitted Transferees. Notwithstanding the provisions of Section
15.1, a STOCKHOLDER shall have the right to transfer some or all of the shares
of URSI stock to any one or more of the following, provided that the transferee
agrees to be bound (in a form satisfactory to URSI and its counsel)
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by the terms and conditions of this Agreement with respect to any further
transfer of such shares: (a) any family member of a STOCKHOLDER (including,
without limitation, any transfer to a custodian under any gift to minors
statute), with family members being defined as any spouse, lineal descendant or
ancestor of a STOCKHOLDER), (b) any trust which is for the benefit of one or
more family members of a STOCKHOLDER and (c) any corporation, partnership,
limited liability company or other entity (x) of which a majority of the
interests therein by value is owned by the STOCKHOLDER and members of the
STOCKHOLDER's family, and (y) which is and continues to be controlled by the
STOCKHOLDER and members of the STOCKHOLDER'S family for the period set forth in
Section 15.1.
16. FEDERAL SECURITIES ACT REPRESENTATIONS.
The STOCKHOLDERS acknowledge that the shares of URSI Stock to be
delivered to the STOCKHOLDERS pursuant to this Agreement have not been and will
not be registered under the Act and therefore may not be resold without
compliance with the Act. The URSI Stock to be acquired by such STOCKHOLDERS
pursuant to this Agreement is being acquired solely for their own respective
accounts, for investment purposes only, and with no present intention of
distributing, selling or otherwise disposing of it in connection with a
distribution.
16.1 Compliance with Law. The STOCKHOLDERS covenant, warrant and represent
that none of the shares of URSI Stock issued to such STOCKHOLDERS will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Act and the rules and regulations of the SEC. All the URSI Stock shall
bear the following legend in addition to the legend required under Section 15 of
this Agreement:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY ONLY BE SOLD OR
OTHERWISE TRANSFERRED IF THE HOLDER HEREOF COMPLIES WITH THE 1933
ACT AND APPLICABLE SECURITIES LAWS.
16.2 Accredited Investors; Economic Risk; Sophistication. Except as
disclosed on Schedule 16.2, each STOCKHOLDER represents and warrants that such
STOCKHOLDER is an "accredited investor," as that term is defined in Regulation D
promulgated by the SEC under the 1933 Act. The STOCKHOLDERS are able to bear the
economic risk of an investment in the URSI Stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and have
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits
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and risks of the proposed investment in the URSI Stock. The STOCKHOLDERS or
their respective purchaser representatives have had an adequate opportunity to
ask questions and receive answers from the officers of URSI concerning any and
all matters relating to the transactions described herein including, without
limitation, the background and experience of the current and proposed officers
and directors of URSI, the plans for the operations of the business of URSI, the
business, operations and financial condition of the Founding Companies other
than the COMPANY, and any plans for additional acquisitions and the like.
17. REGISTRATION RIGHTS.
17.1 Piggyback Registration Rights. At any time following the Closing
Date, whenever URSI proposes to register any URSI Stock for its own or others'
account under the 1933 Act for a public offering, other than (i) registrations
of shares to be used as consideration for acquisitions of additional businesses
by URSI and (ii) registrations relating to employee benefit plans, URSI shall
give each of the STOCKHOLDERS prompt written notice of its intent to do so. Upon
the written request of any of the STOCKHOLDERS given within thirty (30) days
after receipt of such notice, URSI shall cause to be included in such
registration all of the URSI Stock issued pursuant to this Agreement which any
such STOCKHOLDER requests, provided that URSI shall have the right to reduce the
number of shares included in such registration to the extent that inclusion of
such shares could, in the opinion of tax counsel to URSI or its independent
auditors, jeopardize the status of the transactions contemplated hereby and by
the Registration Statement as a reorganization described in Section 368(a)(1)(A)
of the Code. In addition, if URSI is advised in writing in good faith by any
managing underwriter of an underwritten offering of the securities being offered
pursuant to any registration statement under this Section 17.1 that the number
of shares to be sold by persons other than URSI is greater than the number of
such shares which can be offered without adversely affecting the offering, URSI
may reduce the number of shares offered for the accounts of such persons to a
number deemed satisfactory by such managing underwriter, provided that such
reduction shall be made first by reducing the number of shares to be sold by
persons other than URSI, the stockholders named on Annex III hereto, the
stockholders of the Founding Companies, and any person or persons who have
required such registration pursuant to "demand" registration rights granted by
URSI; thereafter, if a further reduction is required, it shall be made first by
reducing the number of shares to be sold by the stockholders named on Annex III
hereto and the stockholders of the Founding Companies, with such further
reduction being made so that to the extent any shares can be sold by
stockholders named in Annex III hereto and the stockholders of the Founding
Companies, each such stockholder will be permitted to sell a number of shares
proportionate to the number of shares of
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URSI Stock owned by such stockholder immediately after the Closing, provided
that if any stockholder does not wish to sell all shares such stockholder is
permitted to sell, the opportunity to sell additional shares shall be
reallocated in the same manner to those stockholders named in Annex III hereto
and stockholders of the Founding Companies who wish to sell more shares until no
more shares can be sold by such stockholders.
17.2 Demand Registration Rights. At any time after the date two years
after the Closing Date, the holders of shares of URSI Stock issued to the
Founding Stockholders pursuant to this Agreement and the Other Agreements which
have (i) not been previously registered or sold, (ii) which are not entitled to
be sold under Rule 144(k) (or any similar or successor provision) and (iii)
which have an aggregate market value in excess of $5 million (based on the
average closing price on the five days prior to the date of such request)
promulgated under the 1933 Act may request in writing that URSI file a
registration statement under the 1933 Act covering the registration of the
shares of URSI Stock issued to the Founding Stockholders pursuant to this
Agreement and the Other Agreements disclosed in the Registration Statement then
held by such Founding Stockholders (a "Demand Registration"). Within ten (10)
days of the receipt of such request, URSI shall give written notice of such
request to all other Founding Stockholders and shall, as soon as practicable,
file and use its best efforts to cause to become effective a registration
statement covering all such shares. URSI will use its best efforts to keep such
Demand Registration current and effective for one hundred twenty (120) days (or
such shorter period during which holders shall have sold all URSI Stock which
they requested to be registered). URSI shall be obligated to effect only two (2)
Demand Registrations for all Founding Stockholders, and the second request may
not be made until at least one (1) year after the effective date of the
registration statement for the first Demand Registration.
Notwithstanding the foregoing paragraph, following such a demand a
majority of the COMPANY's disinterested directors (i.e, directors who have not
demanded or elected to sell shares in any such public offering) may postpone the
filing of the registration statement for a thirty (30) day period beyond the
period provided above.
If at the time of any request by the Founding Stockholders for a
Demand Registration URSI has fixed plans to file within sixty (60) days after
such request a registration statement covering the sale of any of its securities
in a public offering under the 1933 Act, no registration of the Founding
Stockholders' URSI Stock shall be initiated under this Section 17.2 until ninety
(90) days after the effective date of such registration unless URSI is no longer
proceeding diligently to effect such registration; provided that URSI shall
provide the Founding Stockholders the right to participate in such public
offering pursuant to, and subject to, Section 17.1 hereof.
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In addition, in the event that a STOCKHOLDER is required to
indemnify URSI pursuant to Section 11 herein, and the amount of the
indemnification obligation exceeds the amount of cash such STOCKHOLDER received
from URSI on the date of the IPO plus the net proceeds received by such
STOCKHOLDER from sales of URSI Stock received pursuant to Section 2.2 hereof
prior to the time such claim is paid, such STOCKHOLDER may request in writing
that URSI file a registration statement under the 1933 Act requesting such
number of such STOCKHOLDER's shares of URSI Stock as is required to be sold to
pay the difference between the cash proceeds and the amount of the
indemnification obligation, plus legal and other expenses, including expenses of
the offering, provided arrangements are made to URSI's reasonable satisfaction
that the proceeds will be used solely for the purpose of such indemnification
and the payment of related expenses and that arrangements are made to the
reasonable satisfaction of URSI that the proceeds of such sale will be used
solely for the purpose of such indemnification and the payment of related
expenses, and that no such request may be made until after one hundred eighty
(180) days following the Closing Date without the consent of the managing
underwriter.
17.3 Registration Procedures. All expenses incurred in connection with the
registrations under this Article 17 (including all registration, filing,
qualification, legal, printer and accounting fees, but excluding underwriting
commissions and discounts), other than a request pursuant to the last paragraph
of Section 17.2, shall be borne by URSI. In connection with registrations under
Sections 17.1 and 17.2, URSI shall (i) prepare and file with the SEC as soon as
reasonably practicable, a registration statement with respect to the URSI Stock
and use its best efforts to cause such registration to promptly become and
remain effective for a period of at least one hundred twenty (120) days (or such
shorter period during which holders shall have sold all URSI Stock which they
requested to be registered); (ii) use its best efforts to register and qualify
the URSI Stock covered by such registration statement under applicable state
securities laws as the holders shall reasonably request for the distribution for
the URSI Stock; and (iii) take such other actions as are reasonable and
necessary to comply with the requirements of the 1933 Act and the regulations
thereunder.
17.4 Underwriting Agreement. In connection with each registration pursuant
to Sections 17.1 and 17.2 covering an underwritten registered public offering,
URSI and each participating holder agree to enter into a written agreement with
the managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of URSI's size and investment stature,
including indemnification. In a registration under Section 17.1, the managing
underwriters shall be selected by URSI (or, if required by a "demand"
registration right of a stockholder requiring such registration, by
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such requiring stockholder), and in a registration under Section 17.2, may be
selected by the holders of a majority of the shares that have demanded to be
included in such registration pursuant to Section 17.2, provided the managing
underwriters so selected by such majority are reasonably acceptable to URSI.
17.5 URSI Stock. For the purposes of this Section 17, URSI Stock issued
pursuant to this Agreement shall include shares issued as a stock dividend or
stock split, or otherwise distributed by URSI to its stockholders without
consideration, in respect of shares of URSI Stock previously issued pursuant to
this Agreement.
17.6 Availability of Rule 144. URSI shall not be obligated to register
shares of URSI Stock held by any STOCKHOLDER at any time when the resale
provisions of Rule 144(k) (or any similar or successor provision) promulgated
under the 1933 Act are available to such STOCKHOLDER.
17.7 Survival. The provisions of this Section 17 shall survive the
Pre-Closing and Closing Date until December 31, 2001.
18. GENERAL.
18.1 Cooperation. The COMPANY, STOCKHOLDERS and URSI shall each (i)
attempt in good faith (without being required to incur unreasonable expense) to
cause all conditions to actions to be taken on the Pricing Date and the Closing
Date to be satisfied, and (ii) deliver or cause to be delivered to the other on
the Pricing Date and Closing Date, and at such other times and places as shall
be reasonably agreed to, such additional instruments, and take such additional
actions as can be taken without unreasonable expense, as any other may
reasonably request for the purpose of carrying out this Agreement. The COMPANY
will cooperate and use its reasonable efforts to have the present officers,
directors and employees of the COMPANY cooperate with URSI on and after the
Closing Date in furnishing information, evidence, testimony and other assistance
in connection with any Return filing obligations, actions, proceedings,
arrangements or disputes of any nature with respect to matters pertaining to all
periods prior to the Closing Date.
18.2 Successors and Assigns. This Agreement and the rights of the parties
hereunder may not be assigned (except by operation of law) and shall be binding
upon and shall inure to the benefit of the parties hereto, the successors of
URSI, and the heirs and legal representatives of the STOCKHOLDERS.
18.3 Entire Agreement. This Agreement (including the schedules, exhibits
and annexes attached hereto) and the documents delivered pursuant hereto
constitute the entire agreement and understanding among the
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STOCKHOLDERS, the COMPANY and URSI and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement,
upon execution, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms. Except as otherwise stated herein,
this Agreement and the Annexes hereto may be modified or amended only by a
written instrument executed by the STOCKHOLDERS, the COMPANY and URSI, acting
through their respective officers, duly authorized by their respective Boards of
Directors. Any disclosure made on any Schedule delivered pursuant hereto shall
be deemed to have been disclosed for purposes of any other Schedule required
hereby.
18.4 Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
18.5 Brokers and Agents. Except as disclosed on Schedule 18.5, each party
represents and warrants that it employed no broker or agent in connection with
this transaction and agrees to indemnify the other against all loss, cost,
damages or expense arising out of claims for fees or commission of brokers
employed or alleged to have been employed by such indemnifying party.
18.6 Expenses. Whether or not the transactions herein contemplated shall
be consummated, (i) URSI will pay the fees, expenses and disbursements of URSI
and its agents, representatives, accountants and counsel incurred in connection
with the subject matter of this Agreement and any amendments thereto, including
all costs and expenses incurred in the performance and compliance with all
conditions to be performed by URSI under this Agreement, including the fees and
expenses of KPMG Peat Marwick LLP (including fees and expenses of such firm, if
any, arising from services contemplated by Section 7.11) and ▇▇▇▇▇▇ ▇▇▇▇, and
the costs of preparing the Registration Statement, and (ii) the STOCKHOLDERS
will pay from personal funds and not from COMPANY funds, the fees, expenses and
disbursements of their counsel and accountants for the STOCKHOLDERS and the
COMPANY incurred in connection with the subject matter of this Agreement or the
Registration Statement. The STOCKHOLDERS shall pay all sales, use, transfer,
recording, gains, stock transfer and other similar taxes and fees ("Transfer
Taxes") incurred in connection with the transactions contemplated by this
Agreement. The STOCKHOLDERS shall file all necessary documentation and Returns
with respect to such Transfer Taxes. In addition, each STOCKHOLDER acknowledges
that he, and not the COMPANY or URSI, will pay all taxes due upon receipt of the
consideration payable to such STOCKHOLDER pursuant to Section 2 hereof.
Notwithstanding the foregoing, any of the above fees, expenses or disbursements
fairly attributable to the Company but payable by the
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STOCKHOLDERS and incurred prior to the Pricing Date may be paid from COMPANY
funds rather than from personal funds of the STOCKHOLDERS, provided that the
STOCKHOLDERS provide to URSI, prior to the Pricing Date, a detailed statement
setting forth the type and amount of all such fees, expenses or disbursements so
paid, and, provided further, that the aggregate amount of same shall be
deducted, on a dollar-for-dollar basis, from the amount of cash into which the
COMPANY Stock shall be converted pursuant to Section 2.2 hereof. Notwithstanding
the foregoing provisions of Section 18.6, URSI shall further pay or reimburse
reasonable costs of counsel or co-counsel for the Company if and to the extent
so mutually agreed in advance between URSI and such counsel, in circumstances
where URSI believes it obtained or may have obtained a material benefit, in
light of market conditions and other factors, by reason of such counsel or
co-counsel expediting the transaction which is the subject of this Agreement and
reducing the time required to complete this Agreement and the Other Agreements.
18.7 Notices. All notices and other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in United
States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to such party (in the case of a STOCKHOLDER) or to an officer, general
partner, member or trustee of such party (in the case of parties other than
STOCKHOLDERS).
(a) If mailed to URSI addressed to it at:
United Road Services, Inc.
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
with copies to:
Howard, Rice, Nemerovski, Canady, ▇▇▇▇ & Rabkin,
A Professional Corporation
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(b) If mailed to the STOCKHOLDERS, addressed to them at their
addresses set forth on Annex II, with copies to such counsel as is set forth
with respect to each STOCKHOLDER on such Annex II;
(c) If mailed to the COMPANY, addressed to it at:
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▇▇▇▇▇ Auto Works, Inc.
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
and marked "Personal and Confidential" with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 18.7 from time to time. Notices mailed as specified above will
be effective upon delivery to the specified address; notices by personal
delivery will be effective upon actual receipt by the party or an officer,
general partner, member or trustee of the party, as applicable.
18.8 Governing Law; Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to laws concerning choice of law or conflicts of law. All disputes
arising out of this Agreement or the obligations of the parties hereunder and
initiated by any STOCKHOLDER or, prior to the Closing Date, the COMPANY,
including disputes that may arise following termination of this Agreement, shall
be subject to the exclusive jurisdiction and venue of the New York State courts
of Albany County, New York (or, if there is federal jurisdiction, then the
exclusive jurisdiction and venue of the United States District Court having
jurisdiction over Albany County). All disputes arising out of this Agreement or
the obligations of the parties hereunder and initiated by URSI or the Surviving
Company, including disputes that may arise following termination of this
Agreement,shall be subject to the exclusive jurisdiction and venue of the state
court of general jurisdiction in Hartford County (or, if there is federal
jurisdiction, then the exclusive jurisdiction and venue of the United States
District Court having jurisdiction over Hartford County). The parties hereby
consent to the personal and exclusive jurisdiction and venue of said courts.
18.9 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties made herein, or in writing
delivered pursuant to the provisions of this Agreement shall survive the
consummation of the transactions contemplated hereby and any examination on
behalf of the parties until the applicable Expiration Date.
18.10 Exercise of Rights and Remedies. Except as otherwise provided
herein, no delay of or omission in the exercise of any right, power or remedy
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accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power, or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
18.11 Time. Time is of the essence with respect to this Agreement.
18.12 Reformation and Severability. In case any provision of this
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
18.13 Remedies Cumulative. No right, remedy or election given by any term
of this Agreement shall be deemed exclusive but each shall be cumulative with
all other rights, remedies and elections available at law or in equity.
18.14 Captions. The headings of this Agreement are inserted for
convenience only, shall not constitute a part of this Agreement or be used to
construe or interpret any provision hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
WITNESS: UNITED ROAD SERVICES, INC.
By
----------------------------------- -----------------------------------
Name:
Title:
WITNESS: STOCKHOLDERS:
----------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
WITNESS: ▇▇▇▇▇ AUTO WORKS, INC.
By
----------------------------------- -----------------------------------
Name:
Title:
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ANNEX I
TO THAT CERTAIN
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
UNITED ROAD SERVICES, INC.,
▇▇▇▇▇ AUTO WORKS, INC.
AND
THE STOCKHOLDERS NAMED THEREIN
CONSIDERATION TO FOUNDING COMPANY STOCKHOLDERS
Part I
A. Aggregate fixed consideration to be paid to STOCKHOLDERS:
1. $1,500,000 in cash.
2. 125,000 shares of URSI Stock.
3. At the midrange IPO initial public offering price of $12, the
aggregate value of cash and URSI Stock would be $3,000,000.
4. STOCKHOLDERS and the COMPANY will not be obligated to consummate
the Merger if the aggregate value of cash and URSI Stock (valued at the IPO
initial public offering price) is less than the Minimum Value of $2,812,500.
B. Fixed consideration to be paid to each STOCKHOLDER:
Shares of Common
Stockholder Stock of URSI Cash
▇▇▇▇▇ ▇. ▇▇▇▇▇ 112,500 $1,350,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 6,250 75,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 6,250 75,000
------- ----------
TOTALS: 125,000 $1,500,000
C. Contingent (earnout) consideration to be paid to STOCKHOLDERS:
1. If STOCKHOLDERS have the right to be paid contingent consideration and
Year 1 Excess Revenues are greater than zero, then:
a. Two and one-half percent (2.5%) of Year 1 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 1 Payout Date.
b. Two and one-half percent (2.5%) of Year 1 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 2 Payout Date, provided that Year 2
Actual Revenues are equal to or greater than Year 1 Actual Revenues.
c. Two and one-half percent (2.5%) of Year 1 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 3 Payout Date, provided that Year 3
Actual Revenues are equal to or greater than Year 1 Actual Revenues.
d. Two and one-half percent (2.5%) of Year 1 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 4 Payout Date, provided that Year 4
Actual Revenues are equal to or greater than Year 1 Actual Revenues.
e. Two and one-half percent (2.5%) of Year 1 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 5 Payout Date, provided that Year 5
Actual Revenues are equal to or greater than Year 1 Actual Revenues.
2. If STOCKHOLDERS have the right to be paid contingent consideration and
Year 2 Excess Revenues are greater than zero, then:
a. Two and one-half percent (2.5%) of Year 2 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 2 Payout Date.
b. Two and one-half percent (2.5%) of Year 2 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 3 Payout Date, provided that Year 3
Actual Revenues are equal to or greater than Year 2 Actual Revenues.
c. Two and one-half percent (2.5%) of Year 2 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 4 Payout Date, provided that Year 4
Actual Revenues are equal to or greater than Year 2 Actual Revenues.
d. Two and one-half percent (2.5%) of Year 2 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 5 Payout Date, provided that Year 5
Actual Revenues are equal to or greater than Year 2 Actual Revenues.
3. If STOCKHOLDERS have the right to be paid contingent consideration and
Year 3 Excess Revenues are greater than zero, then:
a. Two and one-half percent (2.5%) of Year 3 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 3 Payout Date.
b. Two and one-half percent (2.5%) of Year 3 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 4 Payout Date, provided that Year 4
Actual Revenues are equal to or greater than Year 3 Actual Revenues.
c. Two and one-half percent (2.5%) of Year 3 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 5 Payout Date, provided that Year 5
Actual Revenues are equal to or greater than Year 3 Actual Revenues.
4. If STOCKHOLDERS have the right to be paid contingent consideration and
Year 4 Excess Revenues are greater than zero, then:
a. Two and one-half percent (2.5%) of Year 4 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 4 Payout Date.
b. Two and one-half percent (2.5%) of Year 4 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 5 Payout Date, provided that Year 5
Actual Revenues are equal to or greater than Year 4 Actual Revenues.
5. If STOCKHOLDERS have the right to be paid contingent consideration and
Year 5 Excess Revenues are greater than zero, then:
a. Two and one-half percent (2.5%) of Year 5 Excess Revenues will be
paid to STOCKHOLDERS on or about the Year 5 Payout Date.
6. For purposes of calculating the contingent consideration:
a. "Revenues" means that portion of the aggregate revenues reported
by URSI for a fiscal year that are generated by operations acquired by
URSI by means of the Merger and operations acquired by URSI by means of the
Merger transaction described in that certain Agreement and Plan of
Reorganization between URSI, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ Auto Brokers, Inc. (the
"CAB Merger"), provided that revenues reported by URSI for fiscal year 1998 will
be adjusted to reflect revenues of COMPANY and ▇▇▇▇▇ Auto Brokers, Inc. from
January 1, 1998 until the Closing Date.
b. "Year 1 Actual Revenues" means Revenues for fiscal year 1998.
c. "Year 2 Actual Revenues" means Revenues for fiscal year 1999.
d. "Year 3 Actual Revenues" means Revenues for fiscal year 2000.
e. "Year 4 Actual Revenues" means Revenues for fiscal year 2001.
f. "Year 5 Actual Revenues" means Revenues for fiscal year 2002.
g. "Year 1 Target Revenues" means $7,200,000.
h. "Year 2 Target Revenues" means the greater of (i) 110% of Year 1
Actual Revenues or (ii) 110% of Year 1 Target Revenues.
i. "Year 3 Target Revenues" means the greater of (i) 110% of Year 2
Actual Revenues or (ii) 110% of Year 2 Target Revenues.
j. "Year 4 Target Revenues" means the greater of (i) 110% of Year 3
Actual Revenues or (ii) 110% of Year 3 Target Revenues.
k. "Year 5 Target Revenues" means the greater of (i) 110% of Year 4
Actual Revenues or (ii) 110% of Year 4 Actual Revenues.
l. "Year 1 Excess Revenues" means the excess, if any, of Year 1
Actual Revenues over Year 1 Target Revenues. If Year 1 Target Revenues are equal
to or greater than Year 1 Actual Revenues, Year 1 Excess Revenues are zero.
m. "Year 2 Excess Revenues" means the excess, if any, of Year 2
Actual Revenues over Year 2 Target Revenues. If Year 2 Target Revenues are equal
to or greater than Year 2 Actual Revenues, Year 2 Excess Revenues are zero.
n. "Year 3 Excess Revenues" means the excess, if any, of Year 3
Actual Revenues over Year 3 Target Revenues. If Year 3 Target Revenues are equal
to or greater than Year 3 Actual Revenues, Year 3 Excess Revenues are zero.
o. "Year 4 Excess Revenues" means the excess, if any, of Year 4
Actual Revenues over Year 4 Target Revenues. If Year 4 Target Revenues are equal
to or greater than Year 4 Actual Revenues, Year 4 Excess Revenues are zero.
p. "Year 5 Excess Revenues" means the excess, if any, of Year 5
Actual Revenues over Year 5 Target Revenues. If Year 5 Target Revenues are equal
to or greater than Year 5 Actual Revenues, Year 5 Excess Revenues are zero.
q. "Year 1 Payout Date" means thirty days (30) days after URSI
announces its revenues and earnings for fiscal year 1998.
r. "Year 2 Payout Date" means thirty days (30) after URSI announces
its revenues and earnings for fiscal year 1999.
s. "Year 3 Payout Date" means thirty (30) days after URSI announces
its revenues and earnings for fiscal year 2000.
t. "Year 4 Payout Date" means thirty (30) days after URSI announces
its revenues and earnings for fiscal year 2001.
u. "Year 5 Payout Date" means thirty (30) days after URSI announces
its revenues and earnings for fiscal year 2002.
7. URSI will be entitled to make decisions that impact Revenues, including
without limitation decisions regarding the allocation and non-allocation of
capital and other resources, decisions regarding business that will be accepted
or rejected, personnel decisions including decisions to lay off employees, and
decisions to shut down or downsize operations, all without making any offsetting
adjustments to Revenues or contingent consideration, provided only that such
decisions are made in a good faith effort to maximize total return to the
shareholders of URSI to the extent that the same can be realized without undue
risk and in compliance with applicable laws.
8. If the fiscal year of URSI is changed or operations acquired by URSI by
means of the Merger or the CAB Merger are sold, a reasonable adjustment will be
made to these provisions so that the contingent consideration paid to
STOCKHOLDERS will be approximately the same as it
would have been if the fiscal year had not been changed or the sale had not been
made, as applicable.
9. The contingent consideration will be paid in URSI Stock, without
interest (even though interest may be imputed for purposes such as income
taxes).
10. For purposes of determining the number of shares of URSI Stock to be
paid as contingent consideration, URSI Stock will be valued at Fair Market Value
as of the trading day the day before the contingent consideration is paid. "Fair
Market Value" of the URSI Stock as of a date means the market price per share of
such Shares determined by the Board of Directors of URSI as follows: (a) if the
URSI Stock is traded on a stock exchange on the date in question, then the Fair
Market Value will be equal to the closing price reported by the applicable
composite-transactions report for such date; (b) if the URSI Stock is traded
over-the-counter on the date in question and is classified as a national market
issue, then the Fair Market Value will be equal to the last-transaction price
quoted by the NASDAQ system for such date; (c) if URSI Stock is traded
over-the-counter on the date in question but is not classified as a national
market issue, then the Fair Market Value will be equal to the mean between the
last reported representative bid and asked prices quoted by the NASDAQ system
for such date; and (d) if none of the foregoing provisions is applicable, then
the Fair Market Value will be determined by the Board of Directors of URSI in
good faith on such basis as it deems appropriate.
11. Despite anything to the contrary in this Annex I or elsewhere in the
Agreement, the total number of shares of URSI Stock issued to STOCKHOLDERS as
contingent consideration will not exceed the total number of shares of URSI
Stock issued to STOCKHOLDERS as fixed consideration, and contingent
consideration will be reduced to the extent (if any) necessary so that this
limitation will not be exceeded.
12. Any dispute concerning the amount of contingent consideration or the
number of shares of URSI Stock to be paid will be finally determined by the
independent certified public accountants engaged by URSI to audit the financial
statements of URSI for its most recently completed fiscal year.
13. The right to be paid contingent consideration is personal and cannot
be assigned by any STOCKHOLDER without the consent of URSI except upon the death
of the STOCKHOLDER.
14. The contingent consideration is not in any way dependent upon any
STOCKHOLDER being or remaining employed by URSI.
D. Contingent consideration (if any) to be paid to each STOCKHOLDER in the
following proportions:
STOCKHOLDER Percentage
▇▇▇▇▇ ▇. ▇▇▇▇▇ 90%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 5%
---
Total: 100%
Part II
Aggregate fixed consideration to be paid to the stockholders of each Other
Company:
Percentage of
Percentage of Fixed
Total Fixed Consideration
Shares of Consideration to be paid in
Common Stock to be paid Common Stock
Other Company of URSI in Cash of URSI
Absolute Towing and
Transporting, Inc. 297,267 50% 50%
ASC Transportation
Services 137,554 50% 50%
▇▇▇▇▇ Auto Brokers,
Inc. 125,000 50% 50%
Falcon Towing and
Auto Delivery, Inc. 356,850 50% 50%
Keystone Towing 377,624 50% 50%
Northland Auto
Transporters, Inc. 588,435 50% 50%
Northland Fleet
Leasing Company 103,842 50% 50%
Silver State Tow &
Recovery, Inc. 156,043 50% 50%
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇
Enterprises, Inc. 485,750 47% 53%
Total Shares 2,628,365
