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Exhibit 2.1
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement, dated as of June 17, 1997 (this
"Agreement"), is made by and among OHM Corporation, an Ohio corporation
("Buyer"), Beneco Enterprises, Inc., a Utah corporation (the "Company"), Xxxxxx
Xxxxx, Xx., Xxxxxx Xxxxxxxx and Xxxxx Xxxxx (collectively, the "Shareholders").
R E C I T A L S:
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A. The Shareholders are the beneficial and record owners of all the
issued and outstanding shares of capital stock of the Company (the "Shares").
B. The Shareholders desire to sell to Buyer, and Buyer desires to
purchase from the Shareholders, all of the Shares upon the terms set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and subject to
the terms herein set forth, the parties hereby agree as follows:
SECTION 1. DEFINITIONS
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For purposes of this Agreement:
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section
4.19.
"ACTIONS" shall mean any pending, threatened or potential claim,
demand, dispute, litigation, action, suit, indictment, investigation,
proceeding, hearing, complaint, assessment, fine, penalty, inquiry or judgment,
administrative or judicial, at law or in equity.
"AFFILIATE" shall mean with respect to any Person, any Person which
directly or indirectly controls, is controlled by, or is under common control
with such Person. A Person shall be deemed to control another Person if such
Person owns 10% or more of any class of stock of the "controlled" Person or
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the controlled Person, whether through ownership
of stock or partnership interests, by contract, or otherwise.
"AGREEMENT" has the meaning set forth in the preamble hereto.
"ANCILLARY AGREEMENTS" shall mean the Employment Agreements and any
other agreement or certificate contemplated by this Agreement, in each case only
as applicable to the relevant
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party or parties to such Ancillary Agreement, as indicated by the context in
which such term is used.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.9(a).
"BUYER" shall have the meaning set forth in the preamble hereto.
"CERCLA" shall have the meaning set forth in Section 4.17(b)(viii).
"CLAIMANT" shall have the meaning set forth in Section 7.3.
"CLOSING" shall have the meaning set forth in Section 3.1.
"CLOSING DATE" shall have the meaning set forth in Section 3.1.
"CODE" shall have the meaning set forth in Section 4.29(d).
"COMMON SHARES" shall mean the common stock, par value $0.01 per
share, of the Company.
"COMPANY" shall have the meaning set forth in the preamble hereto.
"CONSENTS" shall mean any consent, approval, authorization,
qualification, waiver, novation or notification of a Governmental Authority or
any other Person.
"CONTAMINANTS" shall mean any contaminant, pollutant or hazardous
substance, as defined by CERCLA, as well as any waste materials, petroleum and
petroleum products and/or derivatives, or polychlorinated biphenyls (PCBs).
"CONTRACTS" shall have the meaning specified in Section 4.3.
"DAMAGES" shall mean all damages, dues, penalties, assessments, fines,
costs, amounts paid in settlement, liabilities, obligations, Taxes, Liens,
losses, expenses, and fees, including court costs and attorney's fees and
expenses, as well as such consequences resulting from Actions or Orders.
"DEDUCTIBLE" shall have the meaning set forth in Section 7.8.
"EFFECTIVE DATE" shall have the meaning set forth in Section 3.4.
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"EMPLOYEE PLANS" shall have the meaning set forth in Section 4.29(a).
"EMPLOYMENT AGREEMENTS" shall mean the agreements to be delivered at
the Closing as set forth in Section 3.2(g).
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section
4.17(a).
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" shall mean any government or political
subdivision, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any federal,
state, local or foreign court or arbitrator.
"GOVERNMENT CONTRACTS" shall mean Contracts relating to procurements
by or on behalf of any Governmental Authority, including instances when the
Company has acted as a subcontractor at any tier.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section
7.4(a).
"INDEMNIFYING PARTY" shall have the meaning set forth in Section
7.4(a).
"INDEMNITOR" shall have the meaning set forth in Section 7.3.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
4.14.
"INTERIM FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 4.9(a).
"INVESTMENT" shall mean any equity interest, directly or indirectly,
in any Person.
"IRS" shall have the meaning set forth in Section 4.29(e).
"LAWS" shall mean any law, statute, code, ordinance, rule, regulation,
administrative or executive order, constitution, treaty, principle of common law
or other
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requirement of any Governmental Authority, including, without limitation, the
Fair Labor Standards Act and the Xxxxx-Xxxxx Act.
"LIENS" shall mean any mortgage, easement, right of way, lien, option,
pledge, encumbrance, adverse claim, security interest, community property
interest, claim, charge, defect in title, right of first refusal or restriction
of any kind, including any restrictions on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership.
"MARCH 31 INCOME AND CASH FLOW STATEMENTS" shall have the meaning set
forth in Section 4.9(a).
"MARCH 31 BALANCE SHEET" shall have the meaning set forth in Section
4.9(a).
"MATERIAL CUSTOMERS" shall have the meaning set forth in Section 4.24.
"NET ASSET VALUE" shall mean the difference between (i) the total
assets of the Company as of the date of determination excluding cash reduced by
(ii) the total liabilities of the Company as of the date of determination, in
each case as determined in accordance with GAAP by Buyer and reviewed by Buyer's
accountants.
"NET WORKING CAPITAL VALUE" shall mean the difference between (i) the
total current assets of the Company (excluding cash) as of the date of
determination reduced by (ii) the total current liabilities of the Company as of
the date of determination, in each case as determined in accordance with GAAP by
Buyer and reviewed by Buyer's accountants.
"NOTES" shall have the meaning set forth in Section 2.2(b).
"OPTIONS" shall mean any option, warrant, call, convertible or
exchangeable security, right of conversion or exchange, subscription,
unsatisfied preemptive right, other agreement or right of similar nature,
whether oral or written.
"ORDERS" shall mean any order, judgment, injunction, award, decree,
ruling, charge or writ of any Governmental Authority.
"ORDINARY COURSE OF BUSINESS" shall mean with respect to any Person,
the ordinary course of business consistent with past custom and practice of such
Person.
"PERMITS" shall mean any license, permit, authorization, grant,
approval, franchise, waiver, Consent, qualification or similar document or
authority issued or granted by any Governmental Authority.
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"PERSON" shall mean any individual, sole proprietorship, partnership,
corporation, limited liability company, unincorporated society or association,
trust or other entity.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"RELEASE" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment.
"SHAREHOLDERS" shall have the meaning set forth in the preamble
hereto.
"SHARES" shall have the meaning set forth in the recitals to this
Agreement.
"SUBSIDIARIES" shall mean any Person of which the outstanding shares
or other equity interests having ordinary voting power for the election of
directors or comparable managers of such Person, whether or not at the time the
shares of any other class or classes or other equity interests of such Person
shall have or might have voting power by reason of the happening of any
contingency, are at the time owned, directly or indirectly, by the Company, by
one or more Subsidiaries, or by the Company and one or more Subsidiaries.
"TAXES" shall mean any domestic or foreign federal, state or local
income, franchise, business, occupation, sales/use, manufacturer's excise,
payroll, withholding, Federal Insurance Contributions Act and employment and
unemployment taxes, personal and real property taxes and all other taxes or
charges (including all interest and penalties) measured, assessed, levied or
imposed by any Governmental Authority.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section
7.4(a).
"1933 ACT" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, all as in effect from time to
time.
SECTION 2. SALE AND PURCHASE OF STOCK
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2.1 SALE AND PURCHASE OF STOCK. At the Closing (a) the Shareholders
shall sell, assign and transfer all of the Shares to Buyer, (b) each of the
Shareholders shall deliver to Buyer one or more stock certificates representing
the Shares owned by that Shareholder, with duly executed stock powers attached
reasonably satisfactory to Buyer in proper form for transfer, (c) Buyer shall
purchase all of the Shares free and
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clear of all Liens, and (d) Buyer shall pay and deliver to the Shareholders the
Purchase Price.
2.2 PURCHASE PRICE. In full consideration for the Shares, Buyer shall
(a) pay to the Shareholders by bank wire transfer an aggregate amount in cash
equal to $9,700,000 at the Closing, which will be distributed among the
Shareholders as set forth in SCHEDULE 2.2, and (b) deliver to the Shareholders
subordinated, unsecured promissory notes in the aggregate principal amount of
$5,000,000 (collectively, the "Notes"), which will be issued and payable to the
Shareholders as set forth in SCHEDULE 2.2. The cash and Notes are referred to
herein as the "Purchase Price".
SECTION 3. CLOSING AND DELIVERIES
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3.1 CLOSING. The closing of the transactions contemplated hereby (the
"Closing") shall take place at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, North
Point, 000 Xxxxxxxx Xxx., Xxxxxxxxx, Xxxx 00000, at 10:00 a.m., Cleveland time,
or such other place as the parties mutually agree upon, June 17, 1997 (the
"Closing Date"), simultaneously with the execution and delivery of this
Agreement.
3.2 DELIVERIES BY THE SHAREHOLDERS. At the Closing, the Shareholders
shall deliver or cause to be delivered to Buyer the following:
(a) one or more certificates representing the Shares, accompanied by
duly executed stock powers in proper form for transfer;
(b) the Articles of Incorporation of the Company, certified by the
Secretary of State of the State of Utah;
(c) a good standing certificate issued by the Secretary of State of
the State of Utah;
(d) a certificate of the Secretary of the Company certifying as to (i)
the resolutions authorizing this Agreement, the Ancillary Agreements and the
transactions contemplated by this Agreement and (ii) the Bylaws of the Company;
(e) a tax certificate showing that the Company has paid its franchise
taxes in the State of Utah;
(f) all documents requested by Buyer necessary to reconstitute the
Board of Directors of the Company;
(g) the Employment Agreements executed by Xxxxxx Xxxxx, Xx., Xxxxxx
Xxxxxxxx and Xxxxx Xxxxx;
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(h) the legal opinion of Xxxxxx & XxXxxxxx, in form and substance
reasonably satisfactory to Buyer;
(i) all books and records in their respective possession or under
their respective control relating to the Company, including, without limitation,
all tax returns and other books and records relating to Taxes;
(j) evidence, in form reasonably satisfactory to Buyer that, as of the
Closing Date, (i) the balance sheet and bank accounts of the Company each
reflects a cash balance of at least $3,000,000 plus the aggregate net income of
the Company from the Effective Date through the Closing Date, and (ii) all
outstanding indebtedness of the Company shall have been satisfied, extinguished
or eliminated other than current trade payables, deferred revenues and accrued
expenses (which in each case shall be consistent with, and incurred in, the
Ordinary Course of Business and consistent with sound and past practices, but in
any event any trade payables shall be current within 30 days of Closing);
(k) evidence, in form reasonably satisfactory to Buyer, that the
Company's S corporation status shall have been terminated as of a date
acceptable to Buyer;
(l) evidence that the waiting period under the HSR Act shall have been
terminated early or shall have expired; and
(m) a certificate, executed by a duly authorized officer of the
Company, certifying as to (i) the accuracy of the Company's and the
Shareholders' representations and warranties set forth herein, (ii) the
Company's and the Shareholders' compliance with their respective covenants and
agreements, and (iii) the absence of any Action, Order or Law which prohibits or
has the effect of prohibiting the consummation of the transactions contemplated
hereby or makes such consummation illegal.
3.3 DELIVERIES BY BUYER. At the Closing, Buyer shall (a) deliver or
cause to be delivered cash in the amount set forth in Section 2.2(a) and payable
as set forth in SCHEDULE 2.2, (b) the Notes in the aggregate amount set forth in
Section 2.2(b) and payable as set forth in SCHEDULE 2.2, and (c) the Employment
Agreements, executed by Buyer and the Company.
3.4 EFFECTIVE DATE. For tax and accounting purposes, the effective
date of the transactions contemplated hereby shall be June 1, 1997 (the
"Effective Date").
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SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND THE COMPANY
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Each of the Shareholders and the Company, jointly and severally,
represents and warrants to Buyer that:
4.1 ORGANIZATION, POWER AND AUTHORITY. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Utah and has the corporate power and authority to own, operate and
lease its properties and to carry on its business as presently being conducted.
Except as disclosed on SCHEDULE 4.1, neither the Company nor any predecessor
thereof has, during the preceding five years, been known as or used any
corporate, fictitious or trade names or trade styles. SCHEDULE 4.1 contains
copies of the Articles of Incorporation and Bylaws of the Company that are true,
correct and complete copies thereof.
4.2 VALIDITY OF AGREEMENTS; AUTHORITY. This Agreement and the
Ancillary Agreements constitute the legal, valid and binding obligations of the
Shareholders and the Company, enforceable against the Shareholders and the
Company in accordance with their terms. The Company has the corporate power and
authority to enter into this Agreement and the Ancillary Agreements and to
undertake and perform fully the transactions contemplated hereby or thereby. All
necessary corporate action has been taken by and on behalf of the Company with
respect to the authorization, execution, delivery and performance of this
Agreement and the Ancillary Agreements. Each of the Shareholders has full
capacity, authority, power and right to (i) execute and deliver this Agreement
and the Ancillary Agreements, (ii) transfer and deliver to Buyer the Shares
owned by such Shareholder and (iii) perform their other obligations under this
Agreement and the Ancillary Documents. The Shareholders are acquiring the Notes
for their own account and not with a view to their distribution within the
meaning of Section 2(11) of the 1933 Act. Each Shareholder is an "accredited
investor" as such term is defined in Rule 501(a) under the 1933 Act.
4.3 NO BREACH. Neither the execution and delivery of this Agreement or
the Ancillary Agreements by the Shareholders and the Company nor the performance
of their obligations hereunder or thereunder will, directly or indirectly (with
or without notice or lapse of time, or both): (a) violate, conflict with or
result in a breach of any Laws or Orders or the Articles of Incorporation or
Bylaws of the Company, (b) violate, conflict with or result in a breach or
termination of, or otherwise give any contracting party additional rights or
compensation under, or the right to terminate or accelerate, or constitute a
default under the terms of, any note, deed, lease, instrument, security
agreement, mortgage, commitment, contract, agreement, license, arrangement or
other instrument, whether written or oral, express or implied (collectively,
"Contracts"), to which the Company or any Shareholder is a party or by which any
of the assets or
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properties of the Company are bound, (c) result in the creation or imposition of
any Liens with respect to, or otherwise have an adverse effect upon, the Shares
or any of the properties or assets of the Company; (d) cause Buyer to become
subject to, or become liable for the payment of any Tax, except those Taxes
which Buyer will incur in the ordinary course of business in connection with the
operations of the Company after the Effective Date, or (e) cause any assets
owned by the Company to be reassessed or revalued by any taxing authority or
other Governmental Authority.
4.4 CAPITALIZATION. The authorized capital stock of the Company
consists of 5,000,000 Common Shares, of which only 11,574 Common Shares are
issued and outstanding, all of which were duly issued and are fully paid and
nonassessable. There are no other equity or debt interests in the Company and no
outstanding options, warrants, scrip, participation capital, rights to subscribe
to, calls, commitments or agreements of any character whatsoever relating to or
securities or rights convertible into or exchangeable for, equity or debt
interests of the Company. Each of the Shareholders (a) is the record and
beneficial owner of all of the Shares set forth opposite his name on SCHEDULE
4.4; (b) has full power, right and authority, and any approval required by Law,
to make and enter into this Agreement and the Ancillary Agreements and to sell,
assign, transfer and deliver the Shares to Buyer, and (c) has good and
marketable title to the Shares set forth opposite his name on SCHEDULE 4.4 free
and clear of all Liens or Options. Upon the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof, Buyer shall
acquire good and marketable title to the Shares, free and clear of all Liens. No
legend or other reference to any purported Lien appears upon any certificate
representing equity securities of the Company. None of the outstanding
securities or other securities of the Company was issued in violation of the
1933 Act or any other Law.
4.5 OPTIONS OR OTHER RIGHTS. There are no authorized or outstanding
Options providing for or relating to the issuance, transfer or voting of any
Shares or any unissued securities of the Company.
4.6 SUBSIDIARIES AND INVESTMENTS. The Company has no Subsidiaries and
has no Investments.
4.7 DISTRIBUTIONS. Except as set forth in SCHEDULE 4.7, the Company
has not made any distributions or payments to the Shareholders since December
31, 1996, except for normal salaries and fees for services rendered.
4.8 CONSENTS. Except as set forth in SCHEDULE 4.8, no Consents are
required in connection with the execution and delivery by the Shareholders or
the Company of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby.
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4.9 FINANCIAL STATEMENTS.
(a) The Company has delivered to Buyer correct and complete copies of
(i) the audited balance sheets of the Company as of December 31, 1996 and 1995,
and the related audited statements of income and cash flows for the years then
ended, together with the notes thereto and the reports thereon of the
independent auditors of the Company, and the other financial information
included therewith (collectively, the "Audited Financial Statements"), and (ii)
the unaudited balance sheet of the Company as of March 31, 1997 (the "March 31
Balance Sheet") and the related unaudited statement of income for the
three-month period then ended (the "March 31 Income Statement," together with
the March 31 Balance Sheet, the "Interim Financial Statements").
(b) The Audited Financial Statements and the Interim Financial
Statements (i) are accurate and complete in all material respects and are
consistent with the books and records of the Company (which are accurate and
complete in all material respects), (ii) have been prepared in accordance with
GAAP, consistently applied throughout the periods indicated, and (iii) fairly
present the financial position, results of operations and cash flows of the
Company at the respective dates thereof and for the periods therein indicated.
4.10 NO MATERIAL ADVERSE CHANGE. Except as set forth in SCHEDULE 4.10,
from December 31, 1996 to the date of this Agreement, there has been no material
adverse change in the assets or liabilities, financial condition, business,
results of operations or prospects of the Company, and no event has occurred or
circumstances exist that may result in such a material adverse change. Since
December 31, 1996, the Company has conducted its business only in the Ordinary
Course of Business and there has not been any:
(a) Change in such stated capital or equity interests of the Company;
grant of any option or right to purchase shares of the Company; issuance of any
security convertible into such shares; grant of any registration rights;
purchase, redemption, retirement or other acquisition by the Company of any such
shares; or declaration or payment of any shares in the Company's profits;
(b) Amendment to the organizational documents of the Company;
(c) Payment or increase by the Company of any bonuses, salaries or
other compensation to any shareholder, director, officer or employee or entry
into any employment, severance or similar Contract with any director, officer or
employee;
(d) Damage to or destruction or loss of any asset or property of the
Company, whether or not covered by insurance,
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materially and adversely affecting the properties, assets, business, financial
condition or prospects of the Company;
(e) Sale, lease or other disposition of any asset or property of the
Company or mortgage, pledge or imposition of any Lien on any material asset or
property of the Company, including the sale, lease or other disposition of any
of the Intellectual Property;
(f) Change in the accounting methods used by the Company;
(g) Incurrence or payment (other than regularly scheduled payments
under debt obligations existing as of December 31, 1996) of any indebtedness for
borrowed money or any incurrence of or commitment to incur any material capital
expenditures by the Company, in each case, in excess of $5,000;
(h) Acquisition of any assets or properties or any commitment to do so
by the Company, in each case, in excess of $5,000; or
(i) Agreement, whether oral or written, by the Company to do any of
the foregoing.
4.11 AGREEMENTS. Except as set forth in SCHEDULE 4.11, the Company is
not a party to or bound by (a) any Contracts relating to the employment of any
Person by the Company, or any bonus, deferred compensation, pension, profit
sharing, stock option, employee stock purchase, retirement insurance, health,
welfare or other employee benefit plan, (b) any loan or advance to, or
investment in, any other Person or any Contracts relating to the making of any
such loan, advance or investment, (c) any indemnity, or any guarantee or other
contingent liability, whether written or oral, in respect of any indebtedness or
obligation of any other Person (other than the endorsement of negotiable
instruments for collection in the Ordinary Course of Business), (d) any
Contracts limiting the freedom of the Company to engage in any line of business
or to compete with any other Person, (e) Contracts requiring future payments in
excess of $10,000, (f) any Government Contract, (g) any Contract upon which any
material part of the business of any of the Company is dependent or which, if
breached, would have a material adverse effect on the assets, liabilities,
properties, operations, prospects, business or results of operations of the
Company, (h) any Contract with any officer, director, shareholder, partner or
Affiliate of any the Shareholders or the Company, (i) any Contract pursuant to
which any Lien against any asset or property of any of the Company is created or
imposed or (j) any other material Contract. All of such Contracts and
instruments set forth in SCHEDULE 4.11 (or required to be set forth in SCHEDULE
4.11) are in full force and effect, there exists no default or breach thereunder
by any party thereto, and the Company has not received any notice claiming that
the Company
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has committed any such default or breach or indicating the desire or intention
of any party thereto to amend, modify, rescind or terminate the same. True,
correct and complete copies of all Contracts, including all amendments, listed
in SCHEDULE 4.11 have been furnished to Buyer. The Contracts listed in SCHEDULE
4.11 constitute all of the Contracts necessary to conduct the business of the
Company as currently conducted.
4.12 LABOR RELATIONS AND PRACTICES. There are no material
controversies pending, or to the best knowledge of the Company and the
Shareholders, threatened between the Company and its employees. The Company has
no Contracts with any labor union or other labor organization or employee
bargaining group relating to its employees. The Company has no knowledge of any
efforts being made on the part of any labor union or other labor organization or
employee bargaining group or any employee with respect to representation or
organization of any of the Company's employees. SCHEDULE 4.12 contains a
complete and accurate list of all open claims for workers' compensation,
including the names of the claimants, the claim numbers, the potential dollar
liabilities to the insurer or the Company and the amounts paid to date.
4.13 LICENSES AND PERMITS. SCHEDULE 4.13 sets forth a complete and
accurate list and description of all Permits and other authorizations of any
Governmental Authority held by the Company. Each of the Permits listed on
SCHEDULE 4.13 is valid and in full force and effect. The Company is in full
compliance with the terms of such Permits and authorizations and there is no
pending or, to the best knowledge of the Company and the Shareholders,
threatened termination, expiration or revocation thereof. The Permits listed on
SCHEDULE 4.13 collectively constitute all of the Permits necessary to permit the
Company to lawfully conduct and operate its business in the manner currently
conducted and operate such business and to permit the Company to own and use its
assets in the manner in which it currently owns and uses such assets.
4.14 INTELLECTUAL PROPERTY. SCHEDULE 4.14 sets forth an accurate and
complete list of all letters patents, patents, patent applications, patent
licenses, software licenses, know-how, licenses, trade names, brand names, trade
secrets, trademarks, copyrights, service marks, trademark registrations and
applications, service xxxx registrations and applications and copyright
registrations and applications and all other intangible property rights or
technology owned or used by the Company in the operation of its business
(collectively, the "Intellectual Property"). Except as set forth in SCHEDULE
4.14, the Company, without payment of any license fee, royalty or similar
charge, owns the entire right, title and interest in and to the Intellectual
Property, and the Company has the exclusive right to use and license the same to
others without infringement or violation of the rights of others. To the best
knowledge of the Company and the Shareholders, there are no Actions, Orders or
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other adverse claims affecting or challenging the Intellectual Property. To the
best knowledge of the Company and the Shareholders, no Person is infringing the
Intellectual Property.
4.15 LITIGATION AND ORDERS. (a) Except as set forth on SCHEDULE 4.15,
there are no Actions against or affecting the Company or any of its properties
or assets, including any seeking to enjoin or prevent the consummation of the
transactions contemplated hereby, or otherwise claiming this Agreement or the
Ancillary Agreements or the transactions contemplated hereby or thereby are
improper. There is no basis upon which any such Actions could reasonably be
brought or initiated. (b) The Company and its properties and assets are not
subject to any Orders. SCHEDULE 4.15 lists all Actions or series of related
Actions against the Company or any predecessor (whether arising out of similar
facts or circumstances, a consistent or pervasive course of conduct or practice
or otherwise) which have been settled in the last five years for amounts in
excess of $200,000 or settlements which have a material adverse effect on the
assets or liabilities, financial condition, business, results of operations or
prospects of the Company.
4.16 TAXES. (a) All federal, state, local and foreign tax returns and
reports that are or were required to be filed before the Closing by, or with
respect to, the Company have been duly filed or caused to be filed, and, except
with respect to the 1996 federal and state income tax returns of the Company
(the "1996 Tax Returns"), no filing extension from the appropriate Governmental
Authority has been obtained. All Taxes and assessments shown on such returns and
reports as payable by or due from the Company have been timely paid. The
properties and assets of the Company are not subject to any Liens, whether or
not perfected, for any Taxes or assessments or similar government charges.
(b) The Company made a timely and valid election to be treated as an
"S corporation" for federal income tax purposes pursuant to Section 1362 of the
Code (and for state purposes in all states in which the Company is engaged in
business that permits such election) effective as of March 9, 1979 and such S
corporation election has not been terminated or revoked. All Taxes owed, or
which may be claimed to be owed, by the Company to any Governmental Authority
for or with respect to periods ending at or before the date of this Agreement
and all interest, penalties, assessments and deficiencies relating thereto, have
been paid in full or accrued for in full and all statutes of limitations for
assessment of Taxes due from the Company with respect to such periods have
expired.
4.17 ENVIRONMENTAL.
(a) The Company's operations, properties and assets (i) are and have
been in full compliance with the requirements of
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all applicable federal, state, local and foreign environmental, health and
safety statutes and regulations, Orders, common law and other requirements
having the force and effect of Law relating to public or workplace health and
safety or pollution and protection of the environment (including, without
limitation, those relating to the Release of materials into the environment)
(collectively, "Environmental Laws"), and (ii) are not the subject of any
federal, state, local or foreign investigation evaluating whether any remedial
action is needed to respond to a Release or threatened Release of any
Contaminant into the environment. The Company possesses, is in compliance in all
respects with, and has complied in all respects with, all Permits required for
the conduct of the Company's business under Environmental Laws. All such permits
are presently in full force and effect. For purposes of this Section 4.17,
references to the Company shall be deemed to include any Affiliate and
predecessor thereof and any such contractor of the Company for whose conduct or
omission the Company may be held liable.
(b) Except as set forth in SCHEDULE 4.17:
(i) The Company has not generated, stored, transported,
recycled, treated, disposed of or otherwise handled in any way any
Contaminants for itself or for any other Person, nor has any other
Person at any time stored, transported, recycled, treated, disposed of
or otherwise handled in any way any Contaminants on any property owned
or leased by the Company at any time;
(ii) There are no locations where any Contaminants from the
operation of the Company's business have been stored, treated,
recycled or disposed of;
(iii) There are no Contaminants located on, within or under
any land, buildings or other improvements owned or leased by the
Company at any time, including any surface and subsurface waters on or
under any real property owned or leased by the Company at any time;
(iv) There is no ongoing or threatened Release, and there
has been no past Release, of Contaminants into the environment from
the operation of the Company or from any facility at which any
Contaminants generated by the Company have been stored, treated,
recycled or disposed of;
(v) There are no PCB's nor any asbestos located on or within
any land, building or other improvement owned or leased by the
Company;
(vi) The Company is not under any current obligation imposed
by any Governmental Authority to
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make any expenditure to achieve or maintain compliance with any
environmental requirement;
(vii) The Company has no knowledge of any information
indicating that any Person, including any employee, may have impaired
health, or that the environment may have been damaged, as the result
of the operation of the business of the Company or the Release of
Contaminants from or on any land, building or other improvement owned
or leased by the Company;
(viii) The Company has not received any oral or written
notice that it is considered to be a potentially responsible party
pursuant to the terms of the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended ("CERCLA"); and
(ix) No underground storage tanks are or have ever been
located on any properties owned or leased by the Company.
4.18 INSURANCE. (a) The Company has insurance policies in full force
and effect for such amounts as are sufficient (i) for material compliance with
all requirements of Law and of all Contracts to which the Company is a party or
by which it is bound and (ii) to provide adequate insurance coverage for the
assets and operations of the Company for all risks customarily insured against
by a Person engaged in a similar business.
(b) Set forth in SCHEDULE 4.18 is a list of all fire, liability and
other forms of insurance and all fidelity bonds held by or applicable to the
Company or its business or properties, setting forth in respect of each such
policy the policy name, policy number, carrier, term, type of coverage and
annual premium. Except as noted on SCHEDULE 4.18, each policy is in full force
and effect and will remain in full force and effect through the Closing. Except
as set forth on SCHEDULE 4.18, no event relating to the Company or its business
has occurred which can reasonably be expected to result in a material
retroactive upward adjustment in premiums under any such insurance policies or
which is likely to result in a material prospective upward adjustment in such
premiums. Excluding insurance policies that have expired and been replaced in
the Ordinary Course of Business, no insurance policy has been cancelled within
the last two years and, to the best knowledge of the Company and the
Shareholders, no threat has been made to cancel any insurance policy of the
Company during such period. To the best knowledge of the Company and the
Shareholders, no event has occurred, including, without limitation, the failure
by the Company to give any notice or information or the Company giving any
inaccurate or erroneous notice or information, which limits or impairs the
rights of the Company under any such insurance policies. The Shareholders shall
have delivered to Buyer true, correct and
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complete copies of all insurance policies listed on SCHEDULE 4.18.
4.19 ACCOUNTS RECEIVABLE. All trade and other accounts receivable of
the Company that are reflected in the Audited Financial Statements or the
Interim Financial Statements or on the accounting records of the Company as of
the Closing Date (collectively, the "Accounts Receivable") represent or will
represent valid obligations arising from sales actually made or services
actually performed by the Company in the ordinary course of business. Unless
paid prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Audited Financial Statements or the Interim Financial Statements or on the
accounting records of the Company as of the Closing Date (which reserves are
adequate and calculated consistent with past practice and, in the case of the
reserve as of the Closing Date, except for an increase in such reserve of
$50,000, will not represent a greater percentage of the Accounts Receivable as
of the Closing Date than the reserve reflected in the March 31 Balance Sheet
represented of the Accounts Receivable reflected therein and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging). Subject to such reserves, each of the Accounts Receivable
either has been or will be collected in full, without any set-off, within ninety
days after the Effective Date except for the Accounts Receivable owing by
Xxxxxxx Engineering Company, Inc. which will be collected in full, without any
setoff by Xxxxxxx, by the second anniversary of the Effective Date. There is no
contest, claim or right of set-off under any Contract with any obligor of an
Accounts Receivable relating to the amount or validity of such Accounts
Receivable. SCHEDULE 4.19 hereto contains a complete and accurate list of all
Accounts Receivable as of May 30, 1997, which list sets forth the aging of such
Accounts Receivable.
4.20 REAL PROPERTY AND LEASES. SCHEDULE 4.20 constitutes a complete
and correct list of all real properties owned or leased by the Company. The
Company has delivered or caused to be delivered true, complete and correct
copies of all documents evidencing the ownership or the lease of the owned or
leased properties reflected in SCHEDULE 4.20. The Company has good and
marketable title to, or valid and enforceable leasehold interests in, all its
real properties, free and clear of all Liens except (i) Liens set forth in
SCHEDULE 4.20 and (ii) Liens for current Taxes, assessments or other
governmental charges not yet due and delinquent. As of the Closing, the Company
and the Shareholders have no knowledge of any defects in title, Liens, adverse
claims or other matters materially affecting the Company's real properties that
are not disclosed in the public records.
4.21 TITLE TO ASSETS AND PROPERTIES. The Company has good and
marketable title to, or valid and enforceable leasehold interests in, all of its
tangible assets and properties, free and
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clear of all Liens, except (i) Liens set forth in SCHEDULE 4.21 and (ii) Liens
for current Taxes, assessments or other governmental charges not yet due and
delinquent. The assets and properties owned or leased by the Company are in good
condition and repair (subject to normal wear and tear consistent with the age of
the assets and properties) and are sufficient for the continued conduct of the
Company's business as presently conducted. The parties acknowledge and agree
that all personal property contained in the respective offices of the
Shareholders located at the Company's principal executive offices is the
property of the respective Shareholders and that all other personal property
relating to the business of the Company is the property of the Company.
4.22 GOVERNMENT CONTRACTS. (a) Except as set forth on SCHEDULES 4.15
AND 4.23, the Company has complied fully with all applicable Laws, rules,
policies, procedures, regulations, accounting standards, cost principles, cost
accounting standards, solicitation provisions and contract clauses in conducting
all past and present activities relating to Government Contracts and Government
Contract procurements, including, without limitation, accounting and record
keeping activities, disclosures, reports, wage and hour regulations,
certifications and representations, testing and marketing activities, proposal
and bid preparation and submissions, negotiations as well as contract
performance. All proposals, representations, statements, disclosures, reports,
invoices and certifications made in connection with Government Contracts were
current, accurate and complete. There are not now, nor have there been within
the last five years any government investigations or audits of the Company or
any officer or employee of the Company in connection with Government Contract
activities. Except as set forth in SCHEDULE 4.22 hereto, each Government
Contract of the Company is expected to finish on schedule and within budget and
the Company presently has no basis to conclude that existing schedules or
budgets are not reasonable.
(b) The Company has not been determined to be "non-responsible" in
connection with any Government Contract procurement. Except as set forth in
SCHEDULE 4.22 hereto, the Company has not received any notice, and neither the
Company nor any Shareholder is aware of any circumstances that would justify
such a notice, that any of its Government Contracts have been or may be
terminated, either for convenience or default. The Company is not presently
debarred or suspended, or proposed for debarment or suspension from procurements
or non-procurements at the federal, state or local governmental levels, and are
not aware of any circumstances that would justify a proposal or decision to
suspend or debar the Company from procurement or non-procurement activities.
The Company and its personnel have all necessary security clearances to perform
outstanding Government Contracts and neither the Company nor any Shareholder is
aware of any circumstances that may lead to the suspension or revocation of such
security clearances. The Company has not engaged in any
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illegal, fraudulent or improper conduct in connection with Government Contract
activities.
(c) Except as set forth in SCHEDULE 4.22, none of the Government
Contracts of the Company were awarded on the basis of the Company being
classified as a small business, small disadvantaged business or minority-owned
business under any set aside or similar program under any federal, state or
local Laws or procurement regulations.
(d) Except as set forth in SCHEDULE 4.22, neither the Company nor any
Shareholder shall have received notice (whether oral or written) from, or
engaged in any discussions with, any Governmental Authority regarding the
termination of any Government Contract, the cessation of any delivery orders
thereunder, any reduction by any Governmental Authority in the amount of its
business with the Company or defective pricing.
(e) Except as set forth in SCHEDULE 4.22, there have been no
outstanding claims submitted by or against the Company in connection with its
government contracting activities and the Company has no basis to conclude that
any claims may be submitted by or against the Company in connection with past
and present government contracting activities.
4.23 UNDISCLOSED LIABILITIES. Except (a) as set forth in SCHEDULE
4.23, (b) as set forth in the March 31 Balance Sheet, or (c) for trade debt and
accrued expenses as may have arisen in the Ordinary Course of Business after
March 31, 1997, there are no debts, liabilities or obligations of any nature
(whether known or unknown, accrued, contingent or otherwise) of the Company.
4.24 CUSTOMERS AND SUPPLIERS. SCHEDULE 4.24 sets forth all customers
and other Persons each of which accounted for 5% or more of the Company's
revenues for the year ended December 31, 1996 ("Material Customers"). Except as
set forth on SCHEDULE 4.24, (a) all Material Customers continue to be customers
of the Company and none of such Material Customers has reduced materially its
business with the Company from the levels achieved during the year ended
December 31, 1996, and neither the Company nor any Shareholder has any reason to
believe that any such reduction will occur; (b) the Company is not involved in
any claim, dispute or controversy with any of its Material Customers other than
claims, disputes or controversies arising in the Ordinary Course of Business
which do not involve more than $5,000 in the aggregate with respect to any one
Material Customer; and (c) the Company is not involved in any claim, dispute or
controversy with any of its other customers or any of its suppliers which,
individually or in the aggregate, could reasonably be anticipated to have a
material adverse effect upon the Company's assets, properties, liabilities,
financial condition, results of operations, business or prospects.
4.25 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth in SCHEDULE
4.25, (a) the Company has complied with, and is
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not in violation of or in default under, any Laws or Orders applicable to the
Company or to its business or to any of its assets, properties or employees, (b)
neither the Company nor any Shareholder has received any written or oral notice
of or citation for noncompliance with any such Laws or Orders, and (c) to the
best knowledge of the Company and the Shareholders, there exists no fact,
condition, situation or circumstance, which, after notice or lapse of time, or
both, would constitute noncompliance with or give rise to future liability with
respect to any such Laws or Orders.
4.26 NO BROKERS', FINDERS' OR INSIDER FEES. No Person has, or
immediately following the consummation of the transactions contemplated hereby
will have, as a result of any act or omission of the Shareholders or the
Company, any right, interest, or valid claim against the Shareholders, the
Company or Buyer for any commission, fee or other compensation as a finder or
broker in connection with the transactions contemplated by this Agreement, nor
are there any fees or any payments or promises of payment, however
characterized, which have been paid or which are or may become payable in
connection with the transactions contemplated hereby to the Shareholders, the
Company or any director, officer or employee of the Company, or any Affiliate of
any of the foregoing.
4.27 INTERESTS IN CLIENTS, CUSTOMERS, ETC.. Except as set forth in
SCHEDULE 4.27, none of the Shareholders have any direct or indirect interest (a)
in, or is a director, officer or employee of, any entity which is a client,
customer, supplier, lessor, lessee, debtor, creditor or competitor or potential
competitor of the Company, (b) in any property, asset or right which is owned or
used by the Company in the conduct of its business, or (c) in any contractual
relationship with the Company other than the employment of each of the
Shareholders as an employee of the Company or as provided in this Agreement.
4.28 NET ASSET VALUE; NET WORKING CAPITAL VALUE; TRADE PAYABLES. (a)
The Net Asset Value of the Company as of the Closing Date shall not be less than
$1,350,000 and the Net Working Capital Value of the Company as of the Closing
Date shall not be less than $700,000. The balance sheet and bank accounts of the
Company each reflects as of the Effective Date a cash balance of at least
$3,000,000 and as of the Closing Date a cash balance of $3,000,000 plus the
aggregate net income of the Company from the Effective Date through the Closing
Date. If the Company's actual Net Asset Value, Net Working Capital Value and/or
cash balance as of the Effective Date or the Closing Date are less than the
respective amounts set forth or referred to in the preceding sentence, the
amount of any such shortfall shall constitute Damages for purposes of Section
7.1.
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(b) Prior to the Closing, the Company shall have conducted its
business, including, without limitation, the payment of trade payables,
consistent with its sound and past business practices but in any event such
trade payables shall be current within 30 days of the Closing. Prior to the
Closing, the Company shall not have accelerated for the purpose of increasing
its cash balances prior to Closing the receipt of any receivables other than in
the ordinary course of business consistent with sound and past business
practices, PROVIDED, HOWEVER, that the Company was permitted to distribute
dividends to its shareholders prior to the Effective Date provided that such
dividends shall not have reduced the cash balance of the Company to less than
$3,000,000 as of the Effective Date and provided further that the Company shall
have conducted its business as contemplated above with respect to its trade
payables and receivables.
4.29 EMPLOYEE BENEFIT PLANS; ERISA. (a) Except for the employee plans
disclosed on SCHEDULE 4.29 (the "Employee Plans"), the Company does not
maintain, contribute to or have an obligation to contribute to any Employee
Benefit Plan (as defined in Section 3(3) of ERISA), or any other severance,
bonus, stock option, stock appreciation, stock purchase, retirement, insurance,
health, welfare, vacation, pension, profit-sharing or deferred compensation
plan, agreement or arrangement providing benefits for employees or former
employees of the Company nor has the Company or any officer or director of the
Company taken any action directly or indirectly to obligate the Company to
institute any such employee benefit plan.
(b) The Company does not have any liability with respect to any plans,
arrangements or practices of the type described in the preceding sentence
previously maintained or contributed to by the Company, or to which the Company
previously had an obligation to contribute, which could have a material adverse
effect upon the assets and properties, operations, condition (financial or
otherwise) or business of the Company, taken as a whole. The Shareholders
previously delivered to Buyer or its counsel true, complete and correct copies
of each of the Employee Plans, including all amendments thereto, and any other
documents, forms or other instruments relating thereto reasonably requested by
Buyer or its counsel. All Employee Plans have been maintained in full compliance
with all Laws, including ERISA, and all Orders and have been administered in
accordance with the terms of the applicable plan documents, except where such
failure to comply could not have a material adverse effect on the assets and
properties, operations, condition (financial or otherwise) or business of the
Company, taken as a whole.
(c) Except as disclosed on SCHEDULE 4.29, the Company has not made any
promises or commitments to provide, and is under no obligation or liability to
provide, (i) medical benefits (including through insurance) to retirees of the
Company or their dependents or (ii) life insurance or other death benefits
(including through insurance) to retirees of the Company or their dependents.
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(d) No Employee Plan (i) is or at any time was funded through a
"welfare benefit fund" as defined in Section 419(e) of the Internal Revenue Code
of 1986, as amended (the "Code"), (ii) is or at any time was subject to Title IV
of ERISA, (iii) is or at any time was subject to the minimum funding standards
of Section 302 of ERISA or Section 412 of the Code, or (iv) is or at any time
was a "multiemployer plan" within the meaning of Section 3(37) or 4001(a)(13) of
ERISA, or Section 414(f) of the Code, or a "multiple employer plan" within the
meaning of Section 413(c) of the Code. No trade or business is or, at any time
within the past six years, has been, treated, together with the Company, as a
single employer under Section 414 of the Code or Section 4001 of ERISA.
(e) Each Employee Plan intended to be qualified under Section 401(a)
of the Code is so qualified and each trust created thereunder has heretofore
been determined by the Internal Revenue Service ("IRS") to be exempt from tax
under the provisions of Section 501(a) of the Code.
(f) With respect to any insurance policy that has, or does, provide
funding for benefits under any Employee Plan, (i) there is no liability of the
Company, in the nature of a retroactive or retrospective rate adjustment, loss
sharing arrangement, or other actual or contingent liability, nor would there be
any such liability if such insurance policy was terminated on the date hereof,
and (ii) no insurance company issuing any such policy is in receivership,
conservatorship, liquidation or similar proceeding and, to the knowledge of the
Shareholders and the Company, no such proceedings with respect to any insurer
are imminent.
(g) The execution and performance of this Agreement or any of the
Ancillary Agreements will not (i) constitute a stated triggering event under any
Employee Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from the Company to any present or former officer,
employee, director, shareholder or consultant, or former employee (or dependents
of any thereof), or (ii) accelerate the time of payment or vesting, or increase
the amount, of compensation due to any employee, officer, director, shareholder
or consultant of the Company.
(h) All contributions, transfers and payments by the Company in
respect of any Employee Plan have been or are fully deductible under the Code.
(i) No Employee Plan provides benefits to any individual who is not a
current or former employee of the Company, or the dependents or other
beneficiaries of any such current or former employee.
(j) Other than routine claims for benefits, there are no Actions with
respect to any Employee Plan, nor is there any basis for such Actions.
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(k) All (i) insurance premiums required to be paid with respect to,
(ii) benefits, expenses and other amounts due and payable under, and (iii)
contributions, transfers, or payments required to be made to, any Employee Plan
prior to the Closing will have been paid, made or accrued on or before the
Closing.
(l) The Company has reserved all rights necessary to amend or
terminate each of the Employee Plans without any Consents of any other Person.
(m) The execution and performance of this Agreement will not result in
payments (or transfers of property) which constitute "excess parachute payments"
within the meaning of Section 280G of the Code.
4.30 DISCLOSURE. Neither the Shareholders nor the Company have
withheld from Buyer any material facts relating to the assets, properties,
liabilities, business, operations, financial condition, results of operations or
prospects of the Company. Neither this Agreement (including the Exhibits and
Schedules hereto) or the Ancillary Agreements nor any other agreement, document,
certificate or written statement furnished to Buyer by or on behalf of the
Shareholders or the Company in connection with this Agreement or the Ancillary
Agreements or the transactions contemplated hereby contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
4.31 BOOKS AND RECORDS. The minute books of the Company that have been
made available to Buyer for its inspection contain accurate and complete records
of all meetings of and corporate actions or written consents by the shareholders
and Board of Directors (and all committees thereof) of the Company. The stock
ledgers of the Company that have been made available to Buyer for its inspection
are complete and accurately reflect all issuances, transfers, repurchases and
cancellations of shares of capital stock of the Company. All accounting,
financial, reporting, business, tax, corporate and other similar books and
records of the Company are true, correct and complete, have been maintained in
accordance with sound business practices and accurately reflect in all material
respects the business and financial condition of the Company. At the Closing,
all of the books and records of the Company will be in the possession of the
Company.
4.32 BANK ACCOUNTS; POWERS OF ATTORNEY. Set forth on SCHEDULE 4.32 is
an accurate and complete list showing (a) the name and address of each bank in
which the Company has an account or safe deposit box, the number of any such
account or any such box and the names of all Persons authorized to draw thereon
or to have access thereto, and (b) the names of all Persons, if any, holding
powers of attorney from the Company and a summary statement of the terms
thereof.
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4.33 ABSENCE OF CERTAIN COMMERCIAL PRACTICES. To the best knowledge of
the Company and the Shareholders, neither the Company nor any of its Affiliates
(nor any Person acting on behalf of the foregoing) has, directly or indirectly,
given or agreed to give any gift or similar benefit to any customer, supplier or
governmental employee or any other Person who is or may be in a position to help
or hinder the Company.
4.34 EMPLOYEES. SCHEDULE 4.34 contains a complete and accurate list of
the following information for each employee or director of the Company,
including each employee on leave of absence or layoff status: name; job title;
current rate of compensation; and service credited for purposes of vesting and
eligibility to participate under the Employee Plans.
4.35 RELATED PARTY TRANSACTIONS. There are no rights, privileges or
financial advantages now enjoyed by or inuring to the benefit of the Company as
a result of the Company's conduct of its business or the ownership of the
Company by the Shareholders which, to the best knowledge of the Company and the
Shareholders, might be lost as a result of the transactions contemplated by this
Agreement.
4.36 BID PROPOSALS. SCHEDULE 4.36 lists all currently outstanding bid
proposals of the Company and the outcome of all bid proposals of the Company
since December 31, 1996.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to the Shareholders that:
5.1 INVESTMENT INTENT. The Shares are being purchased for its own
account and not with the view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the 1933 Act.
5.2 VALIDITY OF AGREEMENTS. This Agreement and the Ancillary
Agreements constitute the legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms. Buyer has the
corporate power and authority to enter into this Agreement and the Ancillary
Agreements and to undertake and perform fully the transactions contemplated
hereby or thereby. All necessary corporate action has been taken by and on
behalf of Buyer with respect to the authorization, execution, delivery and
performance of this Agreement and the Ancillary Agreements.
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5.3 NO BREACH. Neither the execution and delivery of this Agreement or
the Ancillary Agreements by Buyer nor the performance of its obligations
hereunder or thereunder will violate, conflict with or result in a breach of any
Laws, Orders, the Articles of Incorporation or Amended and Restated Regulations
of Buyer.
5.4 NO BROKERS', FINDERS', OR INSIDER FEES. No Person has or,
immediately following the consummation of the transactions contemplated hereby,
will have, as a result of any act or omission of Buyer, any right, interest or
valid claim against the Shareholders, the Company or Buyer for any commission,
fee or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement nor are there any fees or any
payments or promises of payment, however characterized, which have been paid or
which are or may become payable in connection with the transactions contemplated
hereby to Buyer or any Affiliate of Buyer.
SECTION 6. POST-CLOSING COVENANTS
----------------------
6.1 GENERAL. If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
parties shall take such further action (including the execution and delivery of
such further instruments and documents) as any other party may reasonably
request, including, without limitation, any actions necessary to obtain any
consent or novation with respect to any Government Contract.
6.2 LITIGATION SUPPORT. In the event and for so long as any party
actively is contesting or defending against any Actions of third parties after
the Closing in connection with (a) any transaction contemplated by this
Agreement or the Ancillary Agreements or (b) any fact, situation, circumstances,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction on or prior to the Closing involving the
Company, each of the other parties shall cooperate in the defense or contest,
make available their personnel, and provide such testimony and access to their
books and records as shall be necessary in connection with the defense or
contest, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Section 7 below).
6.3 TRANSITION. Neither the Shareholders nor the Company shall take
any action that is designed or intended to have the effect of discouraging any
actual or potential lessor, licensor, customer, supplier or other business
associate of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior to the
Closing.
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6.4 COOPERATION ON TAX MATTERS. Buyer, the Company and the
Shareholders shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of tax returns and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include signing any tax return, amended tax returns, claims or other documents
necessary to settle any Tax controversy, the retention and (upon the other
party's request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding. The Company shall
file or cause to be filed the 1996 Tax Returns within sixty days of the Closing
Date and Xxxxxx Xxxxx shall pay any and all Taxes shown on such tax returns
prior to the first anniversary of the Effective Date7yy.
SECTION 7. INDEMNIFICATION AND SURVIVAL
----------------------------
7.1 INDEMNIFICATION BY THE SHAREHOLDERS. Subject to the terms and
conditions of this Section 7, in the event that any Shareholder or the Company
breaches any of their covenants or agreements contained herein, or there is any
inaccuracy in any representations or warranties made by the Shareholders or the
Company, then the Shareholders shall, jointly and severally, indemnify, defend
and hold harmless Buyer (which for purposes of this Section 7 shall include the
stockholders, directors, officers, employees, agents of Buyer and Affiliates of
Buyer) from and against any Damages affecting Buyer as a result of or relating
to such breach or inaccuracy or resulting, directly or indirectly, from or
arising in connection with the Company's failure to qualify as a foreign
corporation in jurisdictions in which such qualification was required.
7.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
this Section 7, in the event Buyer breaches any of its covenants or agreements
contained herein, or there is any inaccuracy in any representations or
warranties made by Buyer, then Buyer shall indemnify, defend and hold harmless
the Shareholders from and against any Damages affecting the Shareholders as a
result of or relating to such breach or inaccuracy.
7.3 DIRECT CLAIMS. In the event the Shareholders or Buyer (the
"Claimant") desires to make a claim for indemnification pursuant to Sections 7.1
or 7.2 hereof against the other (the "Indemnitor"), the Claimant shall give
prompt written notice of the claim to the Indemnitor, describing, in reasonable
detail, the nature of the claim. Failure to give such notice shall not affect
the indemnification provided hereunder except to the extent that such failure
shall have actually and materially prejudiced the Indemnitor as a result
thereof.
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7.4 THIRD PARTY CLAIMS. (a) If any third party shall notify one of the
Shareholders or Buyer (the "Indemnified Party") with respect to any matter (a
"Third Party Claim") which may give rise to a claim for indemnification against
the Shareholders or Buyer (the "Indemnifying Party") under this Section 7, then
the Indemnified Party shall promptly notify each Indemnifying Party thereof in
writing. Failure to give such reasonable notice shall not affect the
indemnification provided hereunder except to the extent that such failure shall
have actually and materially prejudiced the Indemnitor as a result thereof.
(b) Any Indemnifying Party will have the right to assume and
thereafter conduct at his or its own expense the defense of the Third Party
Claim with counsel of his or its choice, which shall be reasonably satisfactory
to the Indemnified Party; PROVIDED, HOWEVER, that the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of each
Indemnified Party. If the Indemnifying Party assumes the defense then the
Indemnified Party may participate in, but not control, any such defense or
settlement, at the Indemnified Party's sole cost and expense.
(c) Unless and until an Indemnifying Party assumes the defense of the
Third Party Claim as provided in Section 7.4(b) above, however, the Indemnified
Party may defend against the Third Party Claim in any manner he or it reasonably
deems appropriate. The costs of such defense shall be included in determining
the Damages relating to the Third Party Claim.
(d) In no event will the Indemnified Party consent to the entry of any
judgment or enter into any settlement with respect to a Third Party Claim
without the prior written consent of each of the Indemnifying Parties, which
consent shall not be unreasonably withheld.
7.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations, warranties, covenants and obligations of the Shareholders, the
Company and Buyer contained in this Agreement, the Schedules and any certificate
or document delivered pursuant to this Agreement shall survive the Closing
hereunder and continue in full force and effect indefinitely.
7.6 RIGHT OF SET-OFF. Upon notice to the Shareholders specifying in
reasonable detail the basis for such set-off, Buyer may set off any amount to
which it may be entitled under Section 7.1 against amounts otherwise payable
under the Notes and with respect to the amounts payable under Section 4 of the
Shareholders' employment agreements. Subject to Section 7.8, Buyer shall be
entitled to determine which Note or Notes and the amounts thereunder that shall
be subject to set-off and which portions of the amounts payable under Section 4
of the Shareholders' employment agreements shall be subject to set-off. The
exercise of such right of set-off by Buyer in good faith, whether or not
ultimately determined to be justified, will not
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constitute an event of default under the Notes or a breach of the Shareholders'
employment agreements with respect to the amounts payable under Section 4
thereof. Neither the exercise of, nor the failure to, exercise such right of
set-off will constitute an election of remedies or limit Buyer in any manner in
the enforcement of any other remedies that may be available to it.
7.7 NON-EXCLUSIVE REMEDY; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE. The remedies provided in Section 7.1 and 7.2 will not be exclusive of
or limit any other remedies that may be available to Buyer or the Shareholders.
The right to indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants and obligations will not be affected by
any investigation conducted with respect to, or any knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation.
7.8 LIMITATION; ADJUSTMENTS. Notwithstanding anything in Section 7.1
to the contrary, (a) except with respect to Section 4.28 or Damages related to
the Company's failure to qualify as a foreign corporation in jurisdictions in
which such qualification was required, no Shareholder shall be obligated to
indemnify any Person otherwise entitled to indemnification under this Agreement
unless and until the aggregate amount of all Damages exceeds $100,000 (the
"Deductible"), and then only to the extent that such Damages exceed the
Deductible, and (b) Xxxxx Xxxxx and Xxxxxx Xxxxxxxx'x obligations under Section
7.1 shall be limited, on a claim by claim basis, to an amount equal to the
aggregate Damages for which any Person is entitled to indemnification multiplied
by their respective percentage ownership interest in the Company as of the
Closing Date. The Deductible shall not be applicable for any indemnification
claim based on the inaccuracy of any representation or warranty set forth in
Section 4.28 or the Company's failure to qualify as a foreign corporation in
jurisdictions in which such qualification was required. Amounts paid to or on
behalf of Buyer or the Shareholders as indemnification shall be treated as
adjustments to the Purchase Price.
SECTION 8. MISCELLANEOUS
-------------
8.1 WAIVERS AND AMENDMENTS. This Agreement may be amended or modified
only by an instrument in writing duly executed by the parties to this Agreement.
8.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with proof of
service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:
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If to Buyer:
OHM Corporation
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Vice President, Legal and Secretary
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
If to the Company:
Beneco Enterprises,Inc.
X.X. Xxx 0000
Xxxxx, Xxxx 00000
Attention: President
If to the Shareholders:
Xxxxxx Xxxxx, Xx.
00 X. 0000 Xxxxx
Xxxxxxx, Xxxx 00000
Xxxxxx Xxxxxxxx
00 X. 0000 Xxxxx
Xxxxxxx, Xxxx 00000
Xxxxx Xxxxx
00 X. 0000 Xxxxx
Xxxxxxx, Xxxx 00000
With a copy to:
Xxxxxx & XxXxxxxx
1800 Eagle Gate Tower
00 Xxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxxx, Esq.
Fax No.: (000) 000-0000
8.3 FEES AND EXPENSES; TRANSFER TAXES. Except as provided in the next
sentence, each of Buyer, on the one hand, and the Shareholders, on the other
hand, shall bear his or its own costs and expenses (including attorneys' and
advisors' fees and expenses) incurred in connection with this Agreement, the
Ancillary Agreements and the transactions contemplated hereby or thereby. The
Shareholders shall be responsible for, and shall bear or pay, the costs and
expenses (including attorneys' and advisors' fees and expenses) incurred by the
Company in
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connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby or thereby. All stamp, transfer, documentary, sales, use,
recording, registration or other similar Taxes and fees (including any penalties
or interest) incurred by Buyer, the Company or the Shareholders in connection
with the transactions contemplated hereby shall be the responsibility of the
Shareholders and shall be timely paid by the Shareholders.
8.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and the successors and assigns of the
parties hereto. Neither this Agreement nor any rights, benefits or obligations
set forth herein may be assigned by the Shareholders or Buyer except that Buyer
may assign this Agreement and any provision hereof to any Affiliate of Buyer
without the consent of the Shareholders.
8.5 CHOICE OF LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the internal, substantive laws of the State
of Ohio. The Shareholders hereby consent and submit themselves to the
jurisdiction of the courts of the State of Ohio for the purposes of any legal
action or proceeding arising out of this Agreement.
8.6 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
8.7 ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements, or representations by or among the parties,
written or oral, to the extent they have related in any way to the subject
matter hereof.
8.8 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Unless the context otherwise requires, any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder. Unless the
context otherwise requires, the use of the singular shall include the plural,
the use of the masculine shall include the feminine, and vice versa. The word
"including" shall mean including without limitation.
8.9 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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8.10 HEADINGS AND RECITALS. The section Headings and Recitals
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of this Agreement.
8.11 COUNTERPARTS. This Agreement may be executed concurrently in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.12 ARBITRATION. Except as otherwise expressly provided herein, all
claims, disputes and other matters in question between the parties to the
Agreement, arising out of or in any way relating to this Agreement or the breach
thereof, shall be decided by arbitration in accordance with the rules of the
American Arbitration Association then in effect unless the parties mutually
agree otherwise. This agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law. Notice of the demand for arbitration shall
be filed in writing with the other parties to this Agreement and with the
American Arbitration Association. The demand shall be made within a reasonable
time after the claim, dispute or other matter in question has arisen. In no
event shall the demand for arbitration be made after the date when institution
of legal or equitable proceedings based on such claim, dispute or other matter
in question would be barred by this Agreement or the applicable statute of
limitations. The arbitration shall be before a single arbitrator who shall
interpret this Agreement in accordance with the laws of the State of Ohio. The
award rendered by the arbitrator shall be final, and judgment may be entered
upon it in accordance with the applicable law in any court having jurisdiction
thereof.
8.13 DIVESTMENT. If OHM determines to divest the Company while the
Shareholders remain employed by the Company, OHM shall (i) provide the
Shareholders with thirty days notice prior to any such divestment and (ii)
permit the Shareholders to submit a proposal to acquire the Company from OHM.
REMAINDER INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day and year first above written.
OHM CORPORATION
By: /S/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President &
Controller
BENECO ENTERPRISES, INC.
By: /S/ Xxxxxx Xxxxx, Xx.
------------------------------------------
Name: Xxxxxx Xxxxx, Xx.
Title: President
/S/ Xxxxxx Xxxxx, Xx.
-----------------------------------------------
Xxxxxx Xxxxx, Xx.
/S/ Xxxxxx Xxxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxxxx
/S/ Xxxxx Xxxxx
-----------------------------------------------
Xxxxx Xxxxx
